NexPoint Real Estate Finance(US:NREF)2023-02-23 21:19Financial Data and Key Metrics Changes - The company reported a net loss of $0.16 per diluted share for Q4 2022, compared to net income of $0.92 per diluted share for Q4 2021, indicating a significant decline in profitability [45] - Earnings available for distribution decreased to $0.49 per diluted share in Q4 2022 from $0.54 per diluted share in Q4 2021, while cash available for distribution fell to $0.52 per diluted share from $0.63 per diluted share in the same period [46] - Book value per share decreased by 6.5% year-over-year to $20.11 per diluted share, primarily due to mark-to-market adjustments [54] Business Line Data and Key Metrics Changes - The loan portfolio is composed of 85 individual assets with approximately $1.7 billion of total outstanding principal, with 96% of the portfolio being residential [66][70] - The portfolio's average remaining term is 5.9 years, with a weighted average loan-to-value of 68.6% and an average debt service coverage ratio of 1.78x [70] Market Data and Key Metrics Changes - Year-over-year market rent growth in the Sunbelt region is approximately 4% to 6%, with total rent growth for the year expected to be around 10% to 12% [21] - Single-family rents are experiencing a year-over-year growth of 6% to 8%, while multi-family rents finished the year in low single digits [22] Company Strategy and Development Direction - The company continues to focus on credit investments and stabilized assets, emphasizing conservative underwriting at low leverage [6] - The investment strategy includes targeting opportunities in the life sciences sector, with approximately $400 million of preferred equity and mezzanine opportunities being underwritten [37] Management's Comments on Operating Environment and Future Outlook - Management noted that the transaction market is somewhat muted, with deal volume down 70% to 80% from a year ago, leading to lower demand for borrowings [38] - Despite the challenges, the company remains optimistic about the performance of the SFR and multi-family sectors, with high-single-digit same-store NOI growth being reported [34] Other Important Information - The company declared a special dividend of $0.185 per share for the first quarter, with intentions to continue this for the remainder of 2023 [53] - The company is guiding for earnings available for distribution of $0.47 per diluted share for Q1 2023, with a range of $0.42 to $0.52 [47] Q&A Session Summary Question: What were prepays in the quarter versus last quarter? - Management expects prepayments to be less prevalent in Q1 and Q2 of 2023 as rates stabilize [32] Question: Can you speak to your views on both multifamily and SFR right now? - Management remains bullish on SFR, noting strong performance despite rising debt costs and inflation pressures [34] Question: What are your thoughts about the market's ability to absorb the current supply? - Management indicated that there may be some softness in the market, particularly in higher-end products, but overall demand remains strong [18]