NexPoint Real Estate Finance (NYSE:NREF) reported a third-quarter net loss of $0.65 per diluted share as unrealized losses on investments weighed on book value, while earnings and cash available for distribution rose from a year earlier.
Management said both distribution measures exceeded its guidance and that cash available for distribution covered the company’s $0.50-per-share quarterly dividend. The commercial mortgage REIT also outlined plans to pursue financing opportunities for multifamily borrowers facing refinancing pressure, although a proposed program remains under development.
Results, dividend and outlook
Earnings available for distribution were $0.52 per diluted share, compared with $0.51 in the third quarter of 2025, Executive Vice President and Chief Financial Officer Paul Richards said. Cash available for distribution was $0.60 per share, up from $0.53 per diluted share a year earlier.
The third-quarter dividend was covered 1.2 times by cash available for distribution. On October 26, the board declared a $0.50-per-share dividend for the fourth quarter.
Book value fell 5.2% from the second quarter to $17.63 per diluted share. Richards attributed the decline primarily to unrealized losses on several fair-valued positions following a rapid rise in rates during the quarter. He said rates had subsequently retraced a substantial amount and that management believed the move could help book value rebound in the fourth quarter.
For the fourth quarter, NexPoint forecast earnings available for distribution of $0.37 to $0.47 per diluted share, with a midpoint of $0.42. It projected cash available for distribution of $0.50 to $0.60 per diluted share, with a midpoint of $0.55.
Portfolio and financing
The company’s portfolio comprised 83 investments with a total outstanding balance of $1 billion. Life sciences accounted for 40.7% of the portfolio, multifamily for 38.3% and single-family rental for 14%. Storage, industrial and marina investments made up the remainder.
Richards said 78.3% of the collateral was stabilized, with a 64.7% loan-to-value ratio and a weighted average debt-service coverage ratio of 1.39 times. NexPoint had $913.1 million of debt outstanding at a weighted average cost of 5.8% and a weighted average maturity of two and a half years.
During the quarter, the company funded a $4 million preferred equity investment in a multifamily property with a 14% coupon and a $2.2 million preferred equity investment in a marina with a 13% coupon. It also funded $91.7 million on existing commitments.
NexPoint increased its term loan facility and total return swap with Mizuho Capital Markets from $375 million to $450 million. After an $80.5 million bridge loan paid off at the end of the quarter, the company paid down $52.2 million on the secured facility, bringing its outstanding balance to $397.8 million. Richards said the company also raised $27.9 million through its Series C preferred offering.
Multifamily opportunities and credit
Executive Vice President and Chief Investment Officer Matt McGraner said higher interest rates were putting pressure on borrowers that need to refinance or meet loan-extension requirements. He said NexPoint was developing a program to provide supplemental capital behind existing agency first-lien loans, helping sponsors purchase rate caps, fund reserves and meet those tests.
McGraner cautioned that the program was not final. He said the company could underwrite such investments to high-single-digit returns and potentially reach mid-teens returns with financing. He also noted that the opportunity might not fully materialize if capital markets improved rapidly.
In response to an analyst’s question about multifamily preferred equity and mezzanine investments, McGraner said NexPoint had already taken back and consolidated several troubled properties. The Alexander project in Atlanta was 97% leased and 95% occupied, he said, while the remaining mezzanine and preferred positions were performing on schedule. He added that the company was watching an agency-related K deal with less than $10 million of exposure, but saw nothing alarming at that point.
Life sciences exposure
McGraner said the sponsor’s recapitalization process at LYFE was underway and that NexPoint expected a substantial portion, if not all, of its capital back within the next quarter or two. The company plans to redeploy most of the proceeds into residential collateral and gradually reduce life sciences exposure toward roughly one-third of the portfolio, he said.
Asked about IQHQ, McGraner estimated the company’s preferred equity and revolving credit facility exposure at approximately $350 million combined. He said a potential recapitalization, monetization or sale of the Alewife asset could free capital to reduce leverage and repay some of NexPoint’s investment. A refinancing could also produce excess cash, he said.
McGraner said NexPoint extended its Holly Springs position to give the sponsor more capital and time to pursue a biomanufacturing build-to-suit project. At Vacaville, he said the sponsor was working on converting a biomanufacturing facility to an edge-computing facility.
About NexPoint Real Estate Finance (NYSE:NREF)
NexPoint Real Estate Finance, Inc (NYSE:NREF) is a real estate finance company organized as a mortgage real estate investment trust. The company focuses on generating income through investments in commercial real estate debt and related credit instruments rather than directly operating properties.
Its investment activities have included transitional mortgage loans, senior and subordinate loans, mezzanine loans, preferred equity investments, and commercial mortgage-backed securities. NexPoint Real Estate Finance has emphasized lending and investment opportunities tied primarily to multifamily and other commercial real estate assets in the United States.
The company was formed in 2015 and became a publicly traded company in 2020.
