Form 8-K - Current report

 

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

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FORM 8-K 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

Date of report (Date of earliest event reported): October 31, 2024

 

NEXPOINT REAL ESTATE FINANCE, INC.

(Exact Name Of Registrant As Specified In Charter)

 

Maryland	001-39210	84-2178264
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

 

300 Crescent Court, Suite 700

Dallas, Texas 75201

(Address of Principal Executive Offices) (Zip Code)

 

Registrant’s telephone number, including area code: [phone]

 

 

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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.01 per share 8.50% Series A Cumulative Redeemable Preferred Stock, par value $0.01 per share		NREF NREF-PRA		New York Stock Exchange New York Stock Exchange

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ☒

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

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Item 2.02. Results of Operations and Financial Condition.

 

The following information is intended to be furnished under Item 2.02 of Form 8-K, “Results of Operations and Financial Condition.” This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date of this report, regardless of any general incorporation language in the filing. On October 31, 2024, NexPoint Real Estate Finance, Inc. (the “Company”) issued a press release and detailed presentation announcing its financial results for the Company’s third quarter ended September 30, 2024. The full text of the press release and detailed presentation are furnished herewith as Exhibit 99.1 and Exhibit 99.2, respectively, to this report.

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit Number		Exhibit Description
99.1		Press Release of NexPoint Real Estate Finance, Inc. dated October 31, 2024
99.2		Presentation of NexPoint Real Estate Finance, Inc. dated October 31, 2024
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

	NEXPOINT REAL ESTATE FINANCE, INC.
	By:	/s/ Brian Mitts
	Name: Title:	Brian Mitts Chief Financial Officer, Executive VP-Finance, Secretary and Treasurer

 

Date: October 31, 2024

 

 

 

Exhibit 99.1

 

 

 

Contact:

Kristen Griffith

Investor Relations

[e-mail]

Media: [e-mail]

 

 

NREF Announces Third Quarter 2024 Results, Provides Fourth Quarter 2024 Guidance

 

Dallas, TX, October 31, 2024 – NexPoint Real Estate Finance, Inc. ("NREF" or the "Company") (NYSE: NREF) today reported its financial results for the quarter ended September 30, 2024.

 

NREF reported net income attributable to common stockholders of $16.1 million, or $0.75 per diluted share¹, for the three months ended September 30, 2024.

 

NREF reported cash available for distribution² of $15.8 million, or $0.67 per diluted common share², for the three months ended September 30, 2024.

 

“NREF is pleased to report another strong quarter, showcasing consistent and resilient earnings across our core property types. Amidst a landscape where banks and traditional lenders are often sidelined or preoccupied with credit issues, we remain active and focused. Our readiness to deploy capital in this challenging credit market allows us to capitalize on market dislocations and create long-term value for our shareholders,” commented Chief Investment Officer Matthew McGraner.

 

Third Quarter 2024 Highlights

•	Outstanding total portfolio of $1.1 billion, composed of 83 investments3

•	Single-family rental (“SFR”), multifamily, life sciences and specialty manufacturing, self-storage and marinas represent 17.0%, 52.3%, 26.7%, 1.5% and 0.6% of the Company’s investment portfolio, respectively

•	Weighted-average loan to value (“LTV”)4 and debt service coverage ratio (“DSCR”) on our SFR, CMBS, CMBS I/O strips, preferred equity, mezzanine, credit risk transfer and mortgage-backed security investments are 60.2% and 1.36x3, respectively

•	As of October 31, 2024, there are no loans currently in forbearance in our portfolio

•	During 3Q 2024, NREF sold a CMBS B-Piece with an outstanding principal balance of $82.0MM with bond equivalent yield of 9.20%

•	During the quarter, the Company funded $28.8MM on a loan that pays a monthly coupon of SOFR + 900 bps.

 

¹ Weighted-average shares outstanding - diluted assumes vesting of all outstanding unvested restricted stock units and the conversion of all redeemable non-controlling interests.

² Earnings available for distribution (“EAD”) and cash available for distribution (“CAD”) are non-GAAP measures. Beginning in the second quarter of 2024, EAD per diluted common share and CAD per diluted common share are based on adjusted weighted average common shares outstanding - diluted. Adjusted weighted average common shares outstanding - diluted is a non-GAAP measure. For a discussion of why we consider these non-GAAP measures useful and reconciliations of these non-GAAP measures, see the “Reconciliations of Non-GAAP Financial Measures” and “Non-GAAP Financial Measures” sections of this release.

³ As of September 30, 2024; and excluding the common stock investments, preferred stock investment, the Hudson Montford and Alexander at the District multifamily properties. CMBS B-Pieces reflected on an unconsolidated basis.

⁴ Loan to value is generally based on the initial loan amount divided by the as-is appraised value as of the date the loan was originated or by the current principal amount as of the date of the most recent as-is appraised value. For our CMBS B-Pieces, LTV is based on the weighted-average LTV of the underlying loan pool.

⁵ Net income attributable to common stockholders in 4Q 2024 is estimated to be between $16.1MM and $18.4MM. See reconciliations below.

 

 

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Looking Ahead: Fourth Quarter 2024 Guidance

 

Earnings Available for Distribution²

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4Q 2024 EAD per diluted common share guidance is $0.795 at the midpoint

 

		Low				Mid				High
		Dec. 31, 2024				Dec. 31, 2024				Dec. 31, 2024
Net income		$	20,074			$	21,131			$	22,399
Net (income) loss attributable to Series A Preferred stockholders			(874	)			(874	)			(874	)
Net (income) loss attributable to Series B Preferred stockholders			(3,106	)			(3,106	)			(3,106	)
Net income attributable to common stockholders		$	16,094			$	17,151			$	18,419
Adjustments
Amortization of stock-based compensation			1,411				1,411				1,411
EAD		$	17,505			$	18,562			$	19,830
Weighted average common shares outstanding - basic			17,461				17,461				17,461
Weighted average common shares outstanding - diluted			31,317				31,317				31,317
Shares attributable to potential redemption of Series B Preferred			(7,897	)			(7,897	)			(7,897	)
Adjusted weighted average common shares outstanding - diluted			23,420				23,420				23,420
EPS per Weighted Average Share - diluted		$	0.61			$	0.65			$	0.69
EAD per diluted common share		$	0.75			$	0.79			$	0.85
EPS Dividend Coverage Ratio			1.22	x			1.30	x			1.38	x
EAD Dividend Coverage Raito			1.50	x			1.58	x			1.70	x

 

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Cash Available for Distribution²

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4Q 2024 CAD per diluted common share guidance is $0.505 at the midpoint

 

		Low				Mid				High
		Dec. 31, 2024				Dec. 31, 2024				Dec. 31, 2024
EAD		$	17,505				18,562			$	19,830
Adjustments
Amortization of premiums			2,071				2,071				2,071
Accretion of discounts			(10,041	)			(10,041	)			(10,041	)
Amortization and depreciation			1,079				1,079				1,079
CAD		$	10,614			$	11,671			$	12,939
Weighted average common shares outstanding - basic			17,461				17,461				17,461
Weighted average common shares outstanding - diluted			31,317				31,317				31,317
Shares attributable to potential redemption of Series B Preferred			(7,897	)			(7,897	)			(7,897	)
Adjusted weighted average common shares outstanding - diluted			23,420				23,420				23,420
EPS per Weighted Average Share - diluted		$	0.61			$	0.65			$	0.69
CAD per diluted common share		$	0.45			$	0.50			$	0.55
EPS Dividend Coverage Ratio			1.22	x			1.30	x			1.38	x
CAD Dividend Coverage Raito			0.90	x			1.00	x			1.10	x

 

Conference Call Details

The Company is scheduled to host a conference call on Thursday, October 31, 2024, at 11:00 a.m. ET (10:00 a.m. CT), to discuss third quarter 2024 financial results.

 

The conference call can be accessed live over the phone by dialing 888-660-4430 or [phone] and entering Conference ID 6891136. A live audio webcast of the call will be available online at the Company's website, https://nref.nexpoint.com (under "Resources"). An online replay will be available shortly after the call on the Company's website and continue to be available for 60 days.

 

A replay of the conference call will also be available through Thursday, November 14, 2024, by dialing 1 800- 770- 2030 or, for international callers, [phone] and entering passcode 6891136.

 

For additional commentary and portfolio information, please view NREF’s earning supplement, which was posted on the Company’s website, http://nref.nexpoint.com.

 

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Reconciliations of Non-GAAP Financial Measures

The following table provides a reconciliation of Earnings Available for Distribution² and Cash Available for Distribution² to GAAP net income attributable to common stockholders and Adjusted Weighted Average Common Shares Outstanding – diluted to Weighted Average Common Shares Outstanding - diluted (in thousands, except per share amounts):

 

		For the Three Months Ended September 30,
		2024				2023
Net income (loss) attributable to common stockholders		$	16,116				(15,550	)
Net income attributable to redeemable noncontrolling interests			3,940				(2,374	)
Adjustments
Amortization of stock-based compensation			1,411				1,285
Provision for (reversal of) credit losses			(298	)			6,276
Equity in (income) losses of equity method investments (1)			1,105				1,675
Unrealized (gains) or losses (2)			(4,660	)			18,508
EAD		$	17,614			$	9,820
EAD per diluted common share (3)		$	0.75			$	0.43
Adjustments
Amortization of premiums		$	4,093				3,530
Accretion of discounts			(7,071	)			(3,038	)
Depreciation and amortization of real estate investments			1,099				476
Amortization of deferred financing costs			12				(26	)
CAD		$	15,747			$	10,762
CAD per diluted common share		$	0.67			$	0.47
Weighted-average common shares outstanding - basic			17,461				17,232
Weighted-average common shares outstanding - diluted			30,468				23,086
Shares attributable to potential redemption of Series B Preferred			7,048				—
Adjusted weighted-average common shares outstanding - diluted			23,420				23,086

 

 

(1)

Starting in the third quarter of 2023, the Company has adjusted EAD to remove the (income) / loss from equity method investments as it does not represent distributable earnings. We will include income from equity method investments to the extent that we receive cash distributions and upon realizing gains and/or losses.

(2)

Unrealized gains represent the net change in unrealized gains on investments held at fair value.

(3)

Beginning in the second quarter of 2024, EAD per diluted common share and CAD per diluted common share are based on adjusted weighted average common shares outstanding – diluted.

 

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About NexPoint Real Estate Finance, Inc.

 

NexPoint Real Estate Finance, Inc., is a publicly traded REIT, with its common stock and 8.50% Series A Cumulative Redeemable Preferred Stock listed on the New York Stock Exchange, primarily focused on originating, structuring and investing in first-lien mortgage loans, mezzanine loans, preferred equity, convertible notes, multifamily properties and common equity investments, as well as multifamily and single-family commercial mortgage-backed securities securitizations, promissory notes and mortgage-backed securities. More information about the Company is available at http://nref.nexpoint.com.

 

Forward-Looking Statements

 

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on management's current expectations, assumptions and beliefs. Forward-looking statements can often be identified by words such as "anticipate", “believe,” "estimate", "expect," "intend," "may", "should" and similar expressions, and variations or negatives of these words. These forward-looking statements include, but are not limited to, statements regarding the Company’s business, strategy and industry in general, fourth quarter 2024 guidance, including net income, net income attributable to common stockholders, EAD, CAD, EAD and CAD per diluted common share and related coverage ratios, assumptions and estimates and the Company's intent to not settle Series B Preferred redemptions in shares of common stock when the Company's common stock price is below book value. They are not guarantees of future results and forward-looking statements are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed in any forward-looking statement, including those described in greater detail in our filings with the Securities and Exchange Commission (the “SEC”), particularly those described in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Readers should not place undue reliance on any forward-looking statements and are encouraged to review the Company’s Annual Report on Form 10-K and the Company's other filings with the SEC for a more complete discussion of risks and other factors that could affect any forward-looking statement. The statements made herein speak only as of the date of this press release and except as required by law, the Company does not undertake any obligation to publicly update or revise any forward-looking statements.

 

Non-GAAP Financial Measures

 

This press release contains non-GAAP financial measures. A “non-GAAP financial measure” is defined as a numerical measure of a company’s financial performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with GAAP in the statements of income, balance sheets or statements of cash flows of the Company. The non-GAAP financial measures used within this press release are EAD, CAD, EAD and CAD per diluted common share and adjusted weighted average common shares outstanding - diluted.

 

EAD is defined as net income (loss) attributable to our common stockholders computed in accordance with GAAP, including realized gains and losses not otherwise included in net income (loss), excluding any unrealized gains or losses or other similar non-cash items that are included in net income (loss) for the applicable reporting period, regardless of whether such items are included in other comprehensive income (loss), or in net income (loss) and adding back amortization of stock-based compensation. Net income (loss) attributable to common stockholders may also be adjusted for the effects of certain GAAP adjustments and transactions that may not be indicative of our current operations. In addition, EAD in this press release includes the dilutive effect of non-controlling interests. We use EAD to evaluate our performance and to assess our long-term ability to pay distributions. We believe providing EAD as a supplement to GAAP net income (loss) to our investors is helpful to their assessment of our performance and our long-term ability to pay distributions. We also use EAD as a component of the management fee paid to our external manager. EAD does not represent net income or cash flows from operating activities and should not be considered as an alternative to GAAP net income, an indication of our GAAP cash flows from operating activities, a measure of our liquidity or an indication of funds available for our cash needs. Our computation of EAD may not be comparable to EAD reported by other REITs. Starting in the third quarter of 2023, the Company has adjusted EAD to remove the income/(losses) from equity method investments as they represent changes in the equity value of our investment rather than distributable earnings. The Company will include income from equity method investments to the extent that we receive cash distributions and upon realizing gains and/or losses.

 

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We calculate CAD 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. We use CAD to evaluate our performance and our current ability to pay distributions. We also believe that providing CAD as a supplement to GAAP net income (loss) to our investors is helpful to their assessment of our performance and our current ability to pay distributions. CAD does not represent net income or cash flows from operating activities and should not be considered as an alternative to GAAP net income, an indication of our GAAP cash flows from operating activities, a measure of our liquidity or an indication of funds available for our cash needs. Our computation of CAD may not be comparable to CAD reported by other REITs.

 

Adjusted weighted average common shares outstanding - diluted is calculating by subtracting the dilutive effect of potential redemptions of Series B Preferred shares for shares of our common stock from weighted average common shares outstanding - diluted. We believe providing adjusted weighted average common shares outstanding - diluted to our investors is helpful in their assessment of our performance without the potential dilutive effective of the Series B Preferred shares. We have the right to redeem the Series B Preferred shares for cash or shares of our common stock. Additionally, Series B Preferred redemptions are capped at 2% of the outstanding Series B Preferred shares per month, 5% per quarter and 20% per year. The Company maintains sufficient liquidity to pay cash to cover any redemptions up to the quarterly redemption cap. Further, it is the Company's intent to not settle Series B Preferred redemptions in shares of common stock when the Company's common stock price is below book value.

 

Adjusted weighted average common shares outstanding – diluted should not be considered as an alternative to the GAAP measure. Our computation of adjusted weighted average common shares outstanding – diluted may not be comparable to adjusted weighted average common shares outstanding - diluted reported by other companies.

 

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Exhibit 99.2

 

 

 

 

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Document And Entity Information	Oct. 31, 2024
Document Information [Line Items]
Entity, Registrant Name	NEXPOINT REAL ESTATE FINANCE, INC.
Document, Type	8-K
Document, Period End Date	Oct. 31, 2024
Entity, Incorporation, State or Country Code	MD
Entity, File Number	001-39210
Entity, Tax Identification Number	84-2178264
Entity, Address, Address Line One	300 Crescent Court
Entity, Address, Address Line Two	Suite 700
Entity, Address, City or Town	Dallas
Entity, Address, State or Province	TX
Entity, Address, Postal Zip Code	75201
City Area Code	214
Local Phone Number	276-6300
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity, Emerging Growth Company	true
Entity, Ex Transition Period	false
Amendment Flag	false
Entity, Central Index Key	0001786248
CommonStockParValue001PerShare Custom [Member]
Document Information [Line Items]
Title of 12(b) Security	Common Stock, par value $0.01 per share
Trading Symbol	NREF
Security Exchange Name	NYSE
SeriesACumulativeRedeemablePreferredStockParValue001PerShare850 Custom [Member]
Document Information [Line Items]
Title of 12(b) Security	8.50% Series A Cumulative Redeemable Preferred Stock, par value $0.01 per share
Trading Symbol	NREF-PRA
Security Exchange Name	NYSE

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