NexPoint Real Estate Finance(NREF) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Results Overview 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 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 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] - The company maintains a disciplined, opportunistic, and strategic investment approach amidst ongoing credit challenges faced by traditional lenders[3] - Effective capital deployment in the current complex credit landscape is expected to capture compelling opportunities and generate long-term value for shareholders[3] Second Quarter 2025 Highlights 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] Third Quarter 2025 Guidance NREF provides Q3 2025 guidance for EAD and CAD per diluted common share, including projected dividend coverage ratios Earnings Available for Distribution (EAD) Guidance 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 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 Information regarding the conference call held to discuss NREF's Q2 2025 financial results, including access and replay options Conference Call Information 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] - 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] - 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][16] Non-GAAP Financial Measures Reconciliation 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 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] About NexPoint Real Estate Finance, Inc. NREF is a publicly traded REIT specializing in diverse real estate-related debt and equity investments across various property types Company Overview 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] - The company primarily focuses on originating, structuring, and investing in a diverse range of real estate finance instruments[18] - 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] Legal & Non-GAAP Disclosures This section provides important disclaimers regarding forward-looking statements and detailed definitions of non-GAAP financial measures used in the report Forward-Looking Statements 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] - 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] - 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] Non-GAAP Financial Measures Definitions 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] - 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] - 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] - 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] - 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][23][25]