[Second Quarter 2025 Results Overview](index=1&type=section&id=NREF%20Announces%20Second%20Quarter%202025%20Results) NREF reported strong Q2 2025 financial performance with significant net income and CAD, supported by a diversified portfolio and strategic investments [Q2 2025 Financial Performance](index=1&type=section&id=Q2%202025%20Financial%20Performance) NexPoint Real Estate Finance (NREF) reported net income attributable to common stockholders of $12.3 million, or $0.54 per diluted share, and cash available for distribution (CAD) of $10.6 million, or $0.46 per diluted common share, for the second quarter ended June 30, 2025 Q2 2025 Key Financial Metrics | Metric | Q2 2025 Amount | Per Diluted Share | | :----------------------------------------- | :------------- | :---------------- | | Net income attributable to common stockholders | $12.3 million | $0.54 | | Cash available for distribution (CAD) | $10.6 million | $0.46 | [Management Commentary](index=1&type=section&id=Management%20Commentary) Matthew McGraner, CIO, expressed satisfaction with NREF's strong and consistent earnings, highlighting the company's disciplined and opportunistic investment approach in a challenging credit market. He emphasized their ability to effectively deploy capital to capture opportunities and generate long-term shareholder value - NREF reported a strong quarter with **consistent and resilient earnings** across core property sectors[3](index=3&type=chunk) - The company maintains a **disciplined, opportunistic, and strategic investment approach** amidst ongoing credit challenges faced by traditional lenders[3](index=3&type=chunk) - Effective capital deployment in the current complex credit landscape is expected to capture **compelling opportunities** and generate **long-term value for shareholders**[3](index=3&type=chunk) [Second Quarter 2025 Highlights](index=1&type=section&id=Second%20Quarter%202025%20Highlights) NREF's portfolio as of June 30, 2025, totaled $1.1 billion across 86 investments, with significant allocations to multifamily (49.5%), life sciences (32.7%), and single-family rental (15.5%). Key metrics included a weighted-average LTV of 58.5% and DSCR of 1.44x on senior loans and CMBS. The company also made new investments during the quarter, including preferred stock, a loan, and a CMBS I/O strip Q2 2025 Portfolio and Investment Metrics | Metric | Value | | :----------------------------------------- | :----------- | | Total portfolio outstanding | $1.1 billion | | Number of investments | 86 | | Weighted-average LTV (senior loans, CMBS) | 58.5% | | Weighted-average DSCR (senior loans, CMBS) | 1.44x | Q2 2025 Investment Portfolio Allocation | Investment Sector | % of Portfolio (as of June 30, 2025) | | :----------------------- | :----------------------------------- | | Multifamily | 49.5% | | Life sciences | 32.7% | | Single-family rental (SFR) | 15.5% | | Self-storage | 1.6% | | Marinas | 0.7% | | Specialty manufacturing | 0.1% | - During Q2 2025, NREF purchased **$39.5 million of preferred stock**, funded a **$6.5 million loan at SOFR + 900 bps**, and acquired a **$15.3 million CMBS I/O strip with a 7.24% bond equivalent yield**[9](index=9&type=chunk) [Third Quarter 2025 Guidance](index=2&type=section&id=Looking%20Ahead%3A%20Third%20Quarter%202025%20Guidance) NREF provides Q3 2025 guidance for EAD and CAD per diluted common share, including projected dividend coverage ratios [Earnings Available for Distribution (EAD) Guidance](index=2&type=section&id=Earnings%20Available%20for%20Distribution2) For Q3 2025, NREF projects EAD per diluted common share guidance at a midpoint of $0.425, with net income attributable to common stockholders estimated between $6.9 million and $9.4 million. The EAD dividend coverage ratio is projected to be 0.84x at the midpoint Q3 2025 EAD Guidance | Metric | Low (Sept 30, 2025) | Mid (Sept 30, 2025) | High (Sept 30, 2025) | | :----------------------------------------- | :------------------ | :------------------ | :------------------- | | Net income attributable to common stockholders (in thousands) | $6,946 | $8,245 | $9,382 | | EAD (in thousands) | $8,496 | $9,795 | $10,932 | | EAD per diluted common share | $0.37 | $0.42 | $0.47 | | EAD Dividend Coverage Ratio | 0.74x | 0.84x | 0.94x | [Cash Available for Distribution (CAD) Guidance](index=3&type=section&id=Cash%20Available%20for%20Distribution2) NREF's Q3 2025 CAD per diluted common share guidance is set at a midpoint of $0.505. The projected CAD dividend coverage ratio at the midpoint is 1.00x, indicating full coverage of dividends by CAD Q3 2025 CAD Guidance | Metric | Low (Sept 30, 2025) | Mid (Sept 30, 2025) | High (Sept 30, 2025) | | :----------------------------------------- | :------------------ | :------------------ | :------------------- | | EAD (in thousands) | $8,496 | $9,795 | $10,932 | | CAD (in thousands) | $10,303 | $11,602 | $12,739 | | CAD per diluted common share | $0.45 | $0.50 | $0.55 | | CAD Dividend Coverage Ratio | 0.90x | 1.00x | 1.10x | [Conference Call Details](index=3&type=section&id=Conference%20Call%20Details) Information regarding the conference call held to discuss NREF's Q2 2025 financial results, including access and replay options [Conference Call Information](index=3&type=section&id=Conference%20Call%20Information) NexPoint Real Estate Finance hosted a conference call on Thursday, July 31, 2025, at 11:00 a.m. ET to discuss its second quarter 2025 financial results. Details for live access, webcast, and replay were provided - A conference call was held on **July 31, 2025, at 11:00 a.m. ET** to discuss Q2 2025 financial results[14](index=14&type=chunk) - Access details for the live call (dial-in, **Conference ID 6891136**) and a live audio webcast on the company's website (https://nref.nexpoint.com) were provided[15](index=15&type=chunk) - An online replay is available for **60 days**, and a phone replay was available until **August 14, 2025**. Additional portfolio information is available in the earnings supplement on the company's website[15](index=15&type=chunk)[16](index=16&type=chunk) [Non-GAAP Financial Measures Reconciliation](index=4&type=section&id=Reconciliations%20of%20Non-GAAP%20Financial%20Measures) This section reconciles non-GAAP financial measures like EAD and CAD to GAAP net income, highlighting year-over-year changes and adjustments [EAD and CAD Reconciliation](index=4&type=section&id=EAD%20and%20CAD%20Reconciliation) The report provides a reconciliation of non-GAAP measures, EAD and CAD, to GAAP net income attributable to common stockholders for the three months ended June 30, 2025, and 2024. EAD decreased significantly year-over-year, while CAD also saw a notable reduction Q2 2025 vs Q2 2024 EAD and CAD Reconciliation | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | YoY Change (approx.) | | :----------------------------------------- | :--------------------- | :--------------------- | :------------------- | | Net income (loss) attributable to common stockholders | $12,286 | $7,488 | +64.1% | | EAD | $10,006 | $15,959 | -37.3% | | EAD per diluted common share | $0.43 | $0.68 | -36.8% | | CAD | $10,629 | $15,042 | -29.3% | | CAD per diluted common share | $0.46 | $0.64 | -28.1% | Q2 2025 Non-GAAP Adjustments | Adjustment (Q2 2025, in thousands) | Amount | | :----------------------------------------- | :------- | | Amortization of stock-based compensation | $1,688 | | Provision for credit losses | $5,284 | | Equity in (income) losses of equity method investments | $1,017 | | Unrealized (gains) or losses | $(13,706)| | Amortization of premiums | $2,558 | | Accretion of discounts | $(2,561) | | Depreciation and amortization of real estate investments | $614 | | Amortization of deferred financing costs | $12 | - Adjusted weighted-average common shares outstanding – diluted decreased from **23,431 thousand in Q2 2024 to 23,052 thousand in Q2 2025**[17](index=17&type=chunk) [About NexPoint Real Estate Finance, Inc.](index=4&type=section&id=About%20NexPoint%20Real%20Estate%20Finance%2C%20Inc.) NREF is a publicly traded REIT specializing in diverse real estate-related debt and equity investments across various property types [Company Overview](index=4&type=section&id=Company%20Overview) NexPoint Real Estate Finance, Inc. (NREF) is a publicly traded REIT listed on the NYSE, specializing in originating, structuring, and investing in various real estate-related debt and equity instruments. Its investment focus includes first-lien mortgage loans, mezzanine loans, preferred equity, convertible notes, multifamily properties, common equity, and commercial mortgage-backed securities securitizations - NREF is a publicly traded REIT (**NYSE: NREF**) with common stock and **8.50% Series A Cumulative Redeemable Preferred Stock** listed on the NYSE[18](index=18&type=chunk) - The company primarily focuses on originating, structuring, and investing in a **diverse range of real estate finance instruments**[18](index=18&type=chunk) - Investment types include **first-lien mortgage loans, mezzanine loans, preferred equity, convertible notes, multifamily properties, common equity, CMBS securitizations (multifamily and single-family), promissory notes, revolving credit facilities, and stock warrants**[18](index=18&type=chunk) [Legal & Non-GAAP Disclosures](index=5&type=section&id=Legal%20%26%20Non-GAAP%20Disclosures) This section provides important disclaimers regarding forward-looking statements and detailed definitions of non-GAAP financial measures used in the report [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) This section outlines that the press release contains forward-looking statements based on management's current expectations, which are subject to risks and uncertainties detailed in SEC filings. Readers are cautioned not to place undue reliance on these statements, and the company does not undertake to update them - The press release includes forward-looking statements regarding business, strategy, industry, Q3 2025 guidance, and capital deployment, identifiable by words like "anticipate," "believe," "estimate," "expect," etc[19](index=19&type=chunk) - These statements are not guarantees of future results and are subject to **risks, uncertainties, and assumptions** detailed in SEC filings (**10-K, 10-Q**)[19](index=19&type=chunk) - Readers should not place undue reliance on forward-looking statements, and the company disclaims any obligation to publicly update or revise them, except as required by law[19](index=19&type=chunk) [Non-GAAP Financial Measures Definitions](index=5&type=section&id=Non-GAAP%20Financial%20Measures) This section defines the non-GAAP financial measures used in the press release: Earnings Available for Distribution (EAD), Cash Available for Distribution (CAD), EAD and CAD per diluted common share, and adjusted weighted average common shares outstanding - diluted. It explains their calculation, purpose for management and investors, and clarifies that they should not be considered alternatives to GAAP measures - Non-GAAP measures used are **EAD, CAD, EAD/CAD per diluted common share, and adjusted weighted average common shares outstanding - diluted**[20](index=20&type=chunk) - EAD is defined as GAAP net income (loss) attributable to common stockholders, adjusted for realized gains/losses, excluding unrealized gains/losses or other non-cash items, adding back stock-based compensation amortization, and removing income/(losses) from equity method investments (until cash distributions are received)[21](index=21&type=chunk) - CAD is calculated by adjusting EAD by adding back amortization of premiums, depreciation and amortization of real estate investment, and amortization of deferred financing costs, and by removing accretion of discounts[23](index=23&type=chunk) - Adjusted weighted average common shares outstanding - diluted is calculated by subtracting the dilutive effect of potential Series B Preferred share redemptions from weighted average common shares outstanding - diluted. The company intends not to settle Series B Preferred redemptions in common stock when the price is below book value[24](index=24&type=chunk) - These non-GAAP measures are used to evaluate performance and assess the ability to pay distributions but are not substitutes for GAAP net income or cash flows from operating activities and may not be comparable to those reported by other REITs[21](index=21&type=chunk)[23](index=23&type=chunk)[25](index=25&type=chunk)

Core Points - NexPoint Real Estate Finance, Inc. is scheduled to host a conference call on July 31, 2025, at 11:00 a.m. ET to discuss its second quarter 2025 financial results [1] - The conference call will be accessible via phone and online, with a replay available for 60 days after the call [2][3] - The company is a publicly traded REIT focused on various real estate finance activities, including mortgage loans and equity investments [4]

Investment Strategy - The company acquired or originated investments totaling $83,484,103 during the three months ended March 31, 2025, with a focus on life sciences, self-storage, and multifamily properties [196]. - The company aims to generate attractive, risk-adjusted returns for stockholders over the long term through a flexible investment strategy [189]. - The company has a target focus on investments in the top 50 MSAs, particularly in stabilized properties or those with light-transitional business plans [188]. - The company’s investment strategy includes reallocating capital periodically among target investment classes to manage risk effectively [189]. - The company is focused on expanding its portfolio through various types of loans and investments, including multifamily properties and preferred equity investments [230]. Financial Performance - Net interest income for Q1 2025 was $11.5 million, a significant increase of approximately $24.3 million compared to a net interest loss of $12.8 million in Q1 2024, representing a change of (189.8)% [211][212]. - Other income rose to $22.7 million in Q1 2025 from $9.2 million in Q1 2024, marking an increase of approximately $13.5 million or 147.2% [213]. - Operating expenses decreased to $8.3 million in Q1 2025 from $11.0 million in Q1 2024, a reduction of approximately $2.7 million or (24.9)% [211]. - Net income attributable to common stockholders for Q1 2025 was $16.5 million, compared to a net loss of $14.3 million in Q1 2024, reflecting a change of 215.6% [219]. - Earnings Available for Distribution (EAD) for Q1 2025 was $9.7 million, a significant improvement from a loss of $11.5 million in Q1 2024, representing a change of 184.5% [228]. - Cash Available for Distribution (CAD) decreased to $10.5 million in Q1 2025 from $14.9 million in Q1 2024, a decline of (29.5)% [228]. - Net income per share, basic, was $0.94 in Q1 2025 compared to a loss of $0.83 in Q1 2024, indicating a change of 213.0% [219]. - The weighted-average number of diluted common shares outstanding increased to 36,049 in Q1 2025 from 24,862 in Q1 2024, a rise of 45.0% [219]. Expenses and Management Fees - The company’s management fees and G&A expenses are capped at 2.5% of equity book value, ensuring cost control [207]. - Management fees increased to $1.4 million in Q1 2025 from $0.8 million in Q1 2024, primarily due to an increase in Equity as defined by the Management Agreement [216]. - Expenses from consolidated real estate owned decreased to $4.0 million in Q1 2025 from $5.4 million in Q1 2024, a reduction of approximately $1.4 million or (25.9)% [217]. Liquidity and Capital Resources - The company expects to meet its short-term liquidity requirements through available cash, expected operating cash flows, and potential debt or equity financings [235]. - Long-term liquidity requirements will be met through various capital sources, including future debt or equity issuances and net cash from operations [236]. - The company has a total of $788.8 million borrowed under the Freddie Mac Credit Facility, with an outstanding balance of $109.7 million as of March 31, 2025 [239]. Shareholder Returns - The company intends to make regular quarterly dividend payments to holders of common stock and has declared a quarterly dividend of $0.50 per share on February 24, 2025 [254]. - As of March 31, 2025, the company has sold 531,728 shares of common stock for total gross sales of $12.6 million under its ATM Program [244]. - The company launched a continuous public offering of up to 16,000,000 shares of Series B Preferred Stock at a price of $25.00 per share, aiming for gross proceeds of $400.0 million [245]. - As of March 31, 2025, the company has sold 8,485,120 shares of Series B Preferred Stock for total gross proceeds of $207.3 million [247]. Market Conditions and Risks - The company has experienced uncertainties regarding the impact of recently announced tariffs on construction materials, which could affect operational costs [192]. - The macroeconomic environment remains challenging due to high interest rates and limited credit availability, impacting commercial real estate financing [285]. Legal and Regulatory Matters - The company is currently involved in ongoing litigation, including the Bankruptcy Trust Lawsuit and the UBS Lawsuit, but does not expect these to materially affect its business [193]. - The company intends to maintain its REIT status for U.S. federal income tax purposes, which commenced with the taxable year ended December 31, 2020 [191]. - The Company elected to be treated as a REIT for U.S. federal income tax purposes, requiring it to distribute at least 90% of its REIT taxable income to stockholders [286]. Investment Portfolio - The company's portfolio consists of assets with a combined unpaid principal balance of $1.5 billion as of March 31, 2025 [230]. - The current yield on senior loans in the portfolio averages 10.16% with a remaining term of 2.15 years [230]. - The highest coupon rate for a senior loan in the portfolio is 14.00% for a loan amount of $151.263 million [230]. - The total net equity for senior loans in the portfolio is $164.874 million [230]. - The company holds CMBS B-Pieces with a total investment of $108.303 million, with a current yield of 9.08% [230]. - The average coupon rate for CMBS B-Pieces is 10.57% with a remaining term of 5.91 years [230]. Commitments and Off-Balance Sheet Arrangements - The Company has one off-balance sheet arrangement that may affect its financial condition as of March 31, 2025 [256]. - The Company committed to fund $24.0 million of preferred equity for a construction project in Phoenix, Arizona, with $6.5 million remaining unfunded as of March 31, 2025 [259]. - The Company fully funded $30.3 million of preferred units for a multifamily property development in Forney, Texas, and committed an additional $4.3 million in common equity, of which $1.3 million was unfunded as of March 31, 2025 [259]. - The Company has an unfunded commitment balance of $105.0 million under the IQHQ Subscription Agreement as of March 31, 2025, having funded $55.0 million [273]. Credit Losses and Valuation - The cumulative effect of adopting ASU 2016-13 as of January 1, 2023, resulted in a $1.6 million reduction in retained earnings [278]. - The beginning allowance for credit loss as of January 1, 2025, was $1.4 million, with a provision for credit losses of $3.6 million for the three months ended March 31, 2025, leading to an ending allowance for credit loss of $5.0 million [278]. - The unrealized loss related to the change in fair value estimate for NSP was $1.2 million for the three months ended March 31, 2025 [281]. - The unrealized loss related to the change in fair value estimate for the Private REIT was $0.2 million for the three months ended March 31, 2025 [282]. - Significant judgment is required in determining impairment and estimating the resulting loss allowance, with actual losses potentially differing from estimates [279].

Financial Data and Key Metrics Changes - For Q1 2025, the company reported net income of $0.70 per diluted share, a significant improvement from a net loss of $0.83 per diluted share in Q1 2024 [5] - Interest income increased by $23.6 million to $22 million in Q1 2025, compared to a net loss of $1.6 million in Q1 2024, driven by higher rates [6] - Earnings available for distribution rose to $0.41 per diluted common share in Q1 2025 from negative $0.46 per diluted share in the same period of 2024 [6] - Cash available for distribution was $0.45 per diluted common share in Q1 2025, down from $0.60 per diluted common share in Q1 2024 [6] - Book value per share increased by 1.47% from Q4 2024 to $17.22 per diluted common share [7] Business Line Data and Key Metrics Changes - The portfolio consists of 85 investments with a total outstanding balance of $1.2 billion, allocated as follows: 49.4% multifamily, 31.9% life sciences, 15.6% single-family rental, 1.6% storage, 0.9% specialty manufacturing, and 0.6% marina [9] - The investment allocation includes 28.4% CMBS BPs, 24.7% mezzanine loans, 19% preferred equity investments, 12.9% revolving credit facilities, 10.4% senior loans, 4.2% IO strips, and 0.3% promissory notes [9] Market Data and Key Metrics Changes - The company reported strong demand in the residential sector, with over 138,000 units absorbed in Q1 2025, marking a record first quarter performance [14] - Sunbelt markets captured a majority of the top 10 markets for absorption in Q1 2025, indicating robust demand in these regions [14] - The life sciences sector is experiencing challenges due to tariff and NIH funding uncertainties, but there are positive developments in specific projects, such as the Alewife project [12][13] Company Strategy and Development Direction - The company remains focused on the residential sector, anticipating increased rental growth and transaction volume in the coming quarters [15] - There is an emphasis on self-storage development opportunities, with expected yields ranging from 8.1% to 8.5% [15][16] - The company plans to actively market several equity investments to generate approximately $75 million of new equity for reinvestment into income-producing assets [16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the residential sector, believing it has bottomed out and is poised for growth [14][22] - The life sciences sector is expected to see a resolution of current uncertainties by mid-2025, which could lead to increased capital allocation decisions [12][21] - Overall, the company is confident in its portfolio's performance and sees opportunities in the multifamily and self-storage sectors [16] Other Important Information - The company paid a regular dividend of $0.50 per share in Q1 2025 and has declared a similar dividend for Q2 2025 [7] - The debt to equity ratio stands at 1.33 times, with a weighted average cost of debt at 6% [10] Q&A Session Summary Question: Can you comment on the credit side and notable credit loss provision? - Management indicated that a weighted average base case and downside scenario for CECL reserve was implemented, contributing to the credit loss provision [19] - A proactive reserve was applied to a private preferred asset, leading to the uptick in credit loss provision [20] Question: What is the leasing momentum for the life science project? - The project is expected to be two-thirds leased, resulting in a debt yield of almost 11% from two tenants [25] Question: What are the future investment plans? - The company plans to focus on residential space, preferreds, and ramping up CMBS B pieces, with a particular interest in short-term stretch senior opportunities [31]

Financial Data and Key Metrics Changes - For Q1 2025, the company reported net income of $0.70 per diluted share, a significant improvement from a net loss of $0.83 per diluted share in Q1 2024 [4] - Interest income increased by $23.6 million to $22 million in Q1 2025, compared to a net loss of $1.6 million in Q1 2024, driven by higher rates [5] - Earnings available for distribution rose to $0.41 per diluted common share in Q1 2025 from negative $0.46 per diluted share in the same period of 2024 [5] - Cash available for distribution was $0.45 per diluted common share in Q1 2025, down from $0.60 per diluted common share in Q1 2024 [5] - Book value per share increased by 1.47% from Q4 2024 to $17.22 per diluted common share, primarily due to unrealized gains on preferred stock investments [6] Business Line Data and Key Metrics Changes - The portfolio consists of 85 investments with a total outstanding balance of $1.2 billion, allocated as follows: 49.4% multifamily, 31.9% life sciences, 15.6% single-family rental, 1.6% storage, 0.9% specialty manufacturing, and 0.6% marina [8] - The assets collateralizing investments are 75.2% stabilized with a loan-to-value ratio of 58.7% and a weighted average debt service coverage ratio (DSCR) of 1.46 times [8] Market Data and Key Metrics Changes - In the life sciences sector, lab leasing remains challenging due to tariff and NIH funding uncertainties, but there are signs of recovery with positive leasing momentum in specific projects [11][12] - The residential sector saw strong demand with over 138,000 units absorbed in Q1 2025, indicating a robust rental market [13] - The company has observed positive new lease growth across 40% of its rental portfolio, up from just 5% in Q4 2024 [14] Company Strategy and Development Direction - The company aims to focus on the residential sector and is actively pursuing opportunities in self-storage development, with expected yields between 8.1% to 8.5% [14][15] - The strategy includes underwriting shorter-term senior loans to stabilize assets and facilitate lease-up in the residential front [30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for the residential sector over the next two to three years, despite temporary challenges in the life sciences sector [21] - The company remains active in the market and anticipates continued growth in key verticals [16] Other Important Information - The company paid a regular dividend of $0.50 per share in Q1 2025 and has declared the same for Q2 2025, with a coverage ratio of 0.9 times based on cash available for distribution [6] Q&A Session Summary Question: Can you comment on the credit side and notable credit loss provision? - Management indicated that a weighted average base case and downside scenario for CECL reserve was implemented, contributing to the uptick in credit loss provision [18] Question: What is the leasing momentum for the life science project? - The project is expected to be two-thirds leased, resulting in a debt yield of nearly 11% across two tenants [23] Question: What are the future investment plans? - The company plans to focus on residential space, participating in K deals with Freddie, and underwriting opportunities in the multifamily sector [30]

Financial Data and Key Metrics Changes - For Q1 2025, the company reported net income of $0.70 per diluted share, a significant improvement from a net loss of $0.83 per diluted share in Q1 2024 [5] - Interest income increased by $23.6 million to $22 million in Q1 2025, compared to a net loss of $1.6 million in Q1 2024, driven by higher rates [6] - Earnings available for distribution rose to $0.41 per diluted common share in Q1 2025 from negative $0.46 per diluted share in the same period of 2024 [6] - Cash available for distribution was $0.45 per diluted common share in Q1 2025, down from $0.60 per diluted common share in Q1 2024 [6] - Book value per share increased by 1.47% from Q4 2024 to $17.22 per diluted common share, primarily due to unrealized gains on preferred stock investments [7] Business Line Data and Key Metrics Changes - The portfolio consists of 85 investments with a total outstanding balance of $1.2 billion, allocated as follows: 49.4% multifamily, 31.9% life sciences, 15.6% single-family rental, 1.6% storage, 0.9% specialty manufacturing, and 0.6% marina [8] - The assets collateralizing investments are 75.2% stabilized with a loan-to-value ratio of 58.7% and a weighted average debt service coverage ratio (DSCR) of 1.46 times [9] Market Data and Key Metrics Changes - In the life sciences sector, lab leasing remains challenging due to tariff and NIH funding uncertainties, but there are positive developments in specific projects like the Alewife project, which is negotiating leases for two-thirds of the space [12][13] - The residential sector saw strong demand with over 138,000 units absorbed in Q1 2025, indicating a robust rental market despite affordability challenges [14] - The company has observed positive new lease growth across 40% of its rental portfolio, up from just 5% in Q4 2024 [15] Company Strategy and Development Direction - The company aims to focus on the residential sector and is actively pursuing self-storage development opportunities, expecting yields between 8.1% to 8.5% [15][16] - There is a strategic emphasis on underwriting shorter-term senior opportunities to stabilize assets and facilitate lease-up in the residential front [31] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the residential sector's performance over the next two to three years, despite short-term macroeconomic uncertainties [22] - The company remains active in its key verticals and anticipates continued growth in the coming quarters [17] Other Important Information - The company paid a regular dividend of $0.50 per share in Q1 2025 and has declared the same for Q2 2025, with the dividend being 0.9 times covered by cash available for distribution [7] Q&A Session Summary Question: Can you comment on the credit side and notable credit loss provision? - Management indicated that a weighted average base case and downside scenario for CECL reserve was implemented, along with a proactive reserve for a private preferred asset [19][20] Question: What percentage leased will the Alewife project be? - The project is expected to be two-thirds leased, resulting in a debt yield of nearly 11% from those leases [24] Question: What are the interesting opportunities in the current environment? - Management plans to focus on residential space, preferreds, and ramping up CMBS B pieces, particularly in shorter-term stretch senior opportunities [31]

Core Viewpoint - NexPoint (NREF) reported quarterly earnings of $0.41 per share, missing the Zacks Consensus Estimate of $0.46 per share, compared to a loss of $0.46 per share a year ago, indicating an earnings surprise of -10.87% [1] Group 1: Earnings Performance - Over the last four quarters, NexPoint has surpassed consensus EPS estimates three times [2] - The company posted revenues of $11.51 million for the quarter ended March 2025, exceeding the Zacks Consensus Estimate by 19.39%, compared to year-ago revenues of -$12.81 million [2] - The current consensus EPS estimate for the coming quarter is $0.50 on revenues of $10.17 million, and for the current fiscal year, it is $2 on revenues of $40.55 million [7] Group 2: Stock Performance and Outlook - NexPoint shares have declined approximately 6.8% since the beginning of the year, while the S&P 500 has decreased by 5.3% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] - The estimate revisions trend for NexPoint is mixed, and changes in earnings expectations may occur following the recent earnings report [6] Group 3: Industry Context - The REIT and Equity Trust industry, to which NexPoint belongs, is currently in the top 33% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Highlights - Net income attributable to common stockholders in 1Q 2025 was $165 million, or $070 per diluted common share[14] - Cash Available for Distribution (CAD) in 1Q 2025 was $045 per diluted common share[15] - Book Value per diluted common share increased by 15% to $1722[24] - A dividend of $050 per common share was paid for 1Q 2025[13] Portfolio Composition - The total portfolio principal was $12 billion[15] - The portfolio is composed of 85 investments[15] - The weighted average Loan-to-Value (LTV) of the portfolio is 587%[40] - The weighted average Debt Service Coverage Ratio (DSCR) of the portfolio is 146x[40] Capitalization - The debt to equity ratio was 133x as of March 31, 2025[17] - $447 million of Series B Preferred stock was raised by selling 18 million shares[17] - Outstanding Repo Financing equates to 754% advance rate on CMBS B-Piece and IO Strips Portfolio[18]

[Financial Performance and Outlook](index=1&type=section&id=Financial%20Performance%20and%20Outlook) This section details NexPoint Real Estate Finance's Q1 2025 financial performance, provides Q2 2025 guidance, and reconciles non-GAAP financial measures [First Quarter 2025 Financial Results](index=1&type=section&id=First%20Quarter%202025%20Financial%20Results) For the first quarter of 2025, NexPoint Real Estate Finance, Inc. (NREF) reported strong and resilient earnings, with a net income of $16.5 million ($0.70 per diluted share) and cash available for distribution (CAD) of $10.5 million ($0.45 per diluted common share). The company maintained a total portfolio of $1.2 billion and actively allocated capital through new investments, including a $55.0 million preferred stock purchase Q1 2025 Key Financial Metrics | Metric | Value | Per Diluted Share | | :--- | :--- | :--- | | Net Income Attributable to Common Stockholders | $16.5 million | $0.70 | | Cash Available for Distribution (CAD) | $10.5 million | $0.45 | - Management commented on the company's proactive stance in a challenging credit market, capitalizing on opportunities as traditional lenders face credit challenges[3](index=3&type=chunk) Portfolio Overview as of March 31, 2025 | Metric | Value | | :--- | :--- | | Total Portfolio Size | $1.2 billion | | Number of Investments | 85 | | Weighted-Average Loan to Value (LTV) | 58.7% | | Weighted-Average Debt Service Coverage Ratio (DSCR) | 1.46x | - The investment portfolio is primarily concentrated in multifamily (**49.4%**) and life sciences (**31.9%**), with a smaller allocation to single-family rental (**15.6%**)[7](index=7&type=chunk) - During the first quarter, NREF purchased **$55.0 million** of Preferred Stock and funded **$20.8 million** on a loan with a coupon of SOFR + 900 bps[7](index=7&type=chunk) [Second Quarter 2025 Guidance](index=2&type=section&id=Second%20Quarter%202025%20Guidance) NREF provided guidance for the second quarter of 2025, projecting Earnings Available for Distribution (EAD) of $0.43 per diluted common share and Cash Available for Distribution (CAD) of $0.48 per diluted common share at the midpoint. This guidance anticipates net income attributable to common stockholders to be between $7.6 million and $9.8 million Q2 2025 Guidance per Diluted Common Share (Midpoint) | Metric | Midpoint Value | | :--- | :--- | | Earnings Available for Distribution (EAD) | $0.43 | | Cash Available for Distribution (CAD) | $0.48 | Q2 2025 Earnings Available for Distribution (EAD) Guidance (in thousands, except per share amounts) | Metric | Low | Mid | High | | :--- | :--- | :--- | :--- | | Net income attributable to common stockholders | $7,557 | $8,771 | $9,833 | | EAD | $9,109 | $10,323 | $11,385 | | EAD per diluted common share | $0.38 | $0.43 | $0.48 | Q2 2025 Cash Available for Distribution (CAD) Guidance (in thousands, except per share amounts) | Metric | Low | Mid | High | | :--- | :--- | :--- | :--- | | CAD | $10,364 | $11,578 | $12,640 | | CAD per diluted common share | $0.43 | $0.48 | $0.53 | [Reconciliations of Non-GAAP Financial Measures](index=4&type=section&id=Reconciliations%20of%20Non-GAAP%20Financial%20Measures) The company provides a detailed reconciliation of its non-GAAP metrics, EAD and CAD, to the nearest GAAP measure, net income. For Q1 2025, GAAP net income of $16.5 million was adjusted for items like unrealized gains and stock-based compensation to arrive at an EAD of $9.7 million and a CAD of $10.5 million. This contrasts sharply with Q1 2024, which saw a GAAP net loss of $14.3 million Reconciliation of Net Income to EAD and CAD (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Net income (loss) attributable to common stockholders** | **$16,518** | **($14,286)** | | Adjustments (Unrealized gains/losses, etc.) | ($6,844) | $3,729 | | **EAD** | **$9,674** | **($11,451)** | | Adjustments (Amortization, Depreciation, etc.) | $813 | $26,324 | | **CAD** | **$10,487** | **$14,873** | Per Share Metrics Comparison | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | EAD per diluted common share | $0.41 | ($0.46) | | CAD per diluted common share | $0.45 | $0.60 | - Beginning in Q2 2024, EAD and CAD per share calculations are based on an adjusted weighted average share count that excludes the potential dilutive effect of Series B Preferred Stock redemptions[14](index=14&type=chunk) [Corporate Information and Disclosures](index=3&type=section&id=Corporate%20Information%20and%20Disclosures) This section provides details on the Q1 2025 earnings conference call, company overview, and definitions of non-GAAP financial measures [Conference Call Information](index=3&type=section&id=Conference%20Call%20Information) The company scheduled a conference call for Thursday, May 01, 2025, at 11:00 a.m. ET to discuss the first quarter 2025 financial results. Access details were provided for live participation via phone and webcast, as well as for a replay available until May 15, 2025 - A conference call to discuss Q1 2025 results was scheduled for May 01, 2025, at 11:00 a.m. ET[10](index=10&type=chunk) - The call can be accessed live by dialing **888-660-4430** (Conference ID **6891136**) or via webcast on the company's website. A replay is also available[11](index=11&type=chunk)[12](index=12&type=chunk) [About the Company and Disclosures](index=5&type=section&id=About%20the%20Company%20and%20Disclosures) NexPoint Real Estate Finance, Inc. is a publicly traded REIT focused on originating and investing in various real estate debt and equity instruments. The report includes standard forward-looking statement disclaimers and provides detailed definitions for its non-GAAP financial measures, including Earnings Available for Distribution (EAD), Cash Available for Distribution (CAD), and adjusted weighted average common shares, explaining their calculation and utility for investors - NREF is a publicly traded REIT (NYSE: **NREF**) that primarily originates, structures, and invests in first-lien mortgage loans, mezzanine loans, preferred equity, and various CMBS securities[15](index=15&type=chunk) - The press release contains forward-looking statements regarding Q2 2025 guidance and business strategy, which are subject to risks and uncertainties detailed in SEC filings[16](index=16&type=chunk) - **EAD** is a non-GAAP measure used to evaluate performance and long-term ability to pay distributions. It adjusts GAAP net income for non-cash items like unrealized gains/losses and stock-based compensation[18](index=18&type=chunk) - **CAD** is calculated by adjusting EAD for certain non-cash items like amortization of premiums and depreciation to better reflect the current ability to pay distributions[19](index=19&type=chunk)

Core Viewpoint - NexPoint Real Estate Finance, Inc. (NREF) reported strong financial results for Q1 2025, demonstrating resilience in earnings amid challenging credit market conditions [1][2]. Financial Performance - NREF reported net income attributable to common stockholders of $16.5 million, or $0.70 per diluted share, for the three months ended March 31, 2025 [1]. - Cash available for distribution was $10.5 million, or $0.45 per diluted common share, for the same period [1]. - The company anticipates second quarter 2025 earnings available for distribution (EAD) per diluted common share guidance at $0.435 at the midpoint [8]. Investment Portfolio - NREF's total portfolio is valued at $1.2 billion, consisting of 85 investments across various sectors including single-family rental (15.6%), multifamily (49.4%), and life sciences (31.9%) [9]. - The weighted-average loan to value (LTV) ratio is 58.7%, with a debt service coverage ratio (DSCR) of 1.46x [9]. Future Outlook - The company remains proactive in capital allocation, aiming to capitalize on market opportunities despite traditional lenders facing credit challenges [2]. - NREF has provided guidance for Q2 2025, estimating net income attributable to common stockholders to be between $7.6 million and $9.8 million [7].