Vinebrook Homes Trust 10-Q 2024 Q3 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________________________________________

FORM 10-Q

____________________________________________________________

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________to __________

Commission File Number 000-56274

____________________________________________________________

VINEBROOK HOMES TRUST, INC.

(Exact Name of Registrant as Specified in Its Charter)

____________________________________________________________

Maryland	83-1268857
(State or other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification Number)

300 Crescent Court, Suite 700, Dallas, Texas	75201
(Address of Principal Executive Offices)	(Zip Code)

(214) 276-6300

(Telephone Number, Including Area Code)

____________________________________________________________

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of each class	Trading Symbol	Name of each exchange on which registered
N/A	N/A	N/A

____________________________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	o	Accelerated Filer	o
Non-Accelerated Filer	x	Smaller reporting company	o
Emerging growth company	x

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. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of October 31, 2024, the registrant had 25,443,660 shares of its Class A Common Stock, par value $0.01 per share, and no shares of its Class I Common Stock, par value $0.01 per share, outstanding.

VineBrook Homes Trust, Inc.

Form 10-Q

Quarter Ended September 30, 2024

INDEX

	Page
Cautionary Note Regarding Forward-Looking Statements	ii
Part I
Item 1. Financial Statements
Consolidated Balance Sheets	1
Consolidated Unaudited Statements of Operations and Comprehensive Income (Loss)	2
Consolidated Unaudited Statements of Stockholders' Equity	3
Consolidated Unaudited Statements of Cash Flows	4
Notes to Consolidated Unaudited Financial Statements	5
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3. Quantitative and Qualitative Disclosures About Market Risk	36
Item 4. Controls and Procedures	37
Part II
Item 1. Legal Proceedings	38
Item 1A. Risk Factors	38
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities	38
Item 3. Defaults Upon Senior Securities	38
Item 4. Mine Safety Disclosures	38
Item 5. Other Information	38
Item 6. Exhibits	39
Signatures	40

i

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this Quarterly Report on Form 10-Q (this “Form 10-Q”) of VineBrook Homes Trust, Inc. (“VineBrook”, “we”, “us”, “our”, or the “Company”) other than historical facts may be considered forward-looking statements. In particular, statements relating to our business and investment strategies, plans or intentions, our liquidity and capital resources, our performance and results of operations, repayment of the Warehouse Facility (as defined below), and the JPM Facility (as defined below), contain forward-looking statements. Furthermore, all statements regarding future financial performance (including market conditions) are forward-looking statements. We caution investors that any forward-looking statements presented in this Form 10-Q are based on management’s beliefs and assumptions made by, and information currently available to, management. When used, the words “anticipate,” “believe,” “could,” “expect,” “intend,” “may,” “might,” “plan,” “estimate,” “project,” “should,” “will,” “would,” “result,” the negative version of these words and similar expressions that do not relate solely to historical matters are intended to identify forward-looking statements.

Forward-looking statements are subject to risks, uncertainties and assumptions and may be affected by known and unknown risks, trends, uncertainties and factors that are beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. We caution you against relying on any of these forward-looking statements.

Some of the risks and uncertainties that may cause our actual results, performance, liquidity or achievements to differ materially from those expressed or implied by forward-looking statements include, among others, the following:

•unfavorable changes in economic conditions and their effects on the real estate industry generally and our operations and financial condition, including our ability to access funding and generate returns for stockholders;

•risks associated with our limited operating history and the possibility that we may not replicate the historical results achieved by other entities managed or sponsored by affiliates of NexPoint Real Estate Advisors V, L.P. (our “Adviser”), members of our management team or their affiliates;

•our dependence on our Adviser and its affiliates and personnel to conduct our day-to-day operations and potential conflicts of interest with our Adviser and its affiliates and personnel;

•risks associated with the fluctuation in the net asset value (“NAV”) per share amounts;

•loss of key personnel of the Company and our Adviser;

•the risk we make significant changes to our strategies in a market downturn, or fail to do so;

•risks associated with ownership of real estate, including properties in transition, subjectivity of valuation, environmental matters and lack of liquidity in our assets;

•risks associated with acquisitions, including the risk of expanding our scale of operations and acquisitions, which could adversely impact anticipated yields;

•risks related to increasing property taxes, homeowner’s associations (“HOAs”) fees and insurance costs may negatively affect our financial results;

•risks associated with our ability to identify, lease to and retain quality residents;

•risks associated with leasing real estate, including the risks that rents do not increase sufficiently to keep pace with inflation and other rising costs of operations and loss of residents to competitive pressures from other types of properties or market conditions;

•risks related to governmental laws, executive orders, regulations and rules applicable to our properties or that may be passed in the future which may impact operations, costs, revenue or growth;

•risks relating to the timing and costs of the renovation of properties which has the potential to adversely affect our operating results and ability to make distributions;

•risks associated with pandemics, including the future outbreak of other highly infectious or contagious diseases;

•risks related to our ability to change our major policies, operations and targeted investments without stockholder consent;

•risks related to climate change and natural disasters;

•risks related to our use of leverage;

•risks associated with our substantial current indebtedness and indebtedness we may incur in the future, rising interest rates and the availability of sufficient financing;

•risks related to failure to maintain our status as a real estate investment trust (“REIT”);

•risks related to failure of our OP (defined below) to be taxable as a partnership for U.S. federal income tax purposes, possibly causing us to fail to qualify for or to maintain REIT status;

•risks related to compliance with REIT requirements, which may limit our ability to hedge our liabilities effectively and cause us to forgo otherwise attractive opportunities, liquidate certain of our investments or incur tax liabilities;

•the risk that the Internal Revenue Service (“IRS”) may consider certain sales of properties to be prohibited transactions, resulting in a 100% penalty tax on any taxable gain;

•the ineligibility of dividends payable by REITs for the reduced tax rates available for some dividends;

•risks associated with the stock ownership restrictions of the Internal Revenue Code of 1986, as amended (the “Code”) for REITs and the stock ownership limits imposed by our charter;

•recent and potential legislative or regulatory tax changes or other actions affecting REITs;

•failure to generate sufficient cash flows to service our outstanding indebtedness or pay distributions at expected levels;

•housing market conditions may discourage rental, which could adversely impact the number and quality of our residents;

•risks associated with the Highland Capital Management, L.P. (“Highland”) bankruptcy, including related litigation and potential conflicts of interest; and

•any of the other risks included under Item 1A, “Risk Factors” in our Form 10-K, filed with the U.S. Securities and Exchange Commission ("SEC") on April 1, 2024 (our "Annual Report").

While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. They are based on estimates and assumptions only as of the date of this Form 10-Q. We undertake no obligation to update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events or other changes, except as required by law.

ii

VINEBROOK HOMES TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

	September 30, 2024		December 31, 2023
	(unaudited)
ASSETS
Operating real estate investments
Land	$	540,592	$	560,047
Buildings and improvements	2,789,214		2,872,755
Intangible lease assets	3,662		14
Total gross operating real estate investments	3,333,468		3,432,816
Accumulated depreciation and amortization	(358,056)		(275,534)
Total net operating real estate investments	2,975,412		3,157,282
Real estate held for sale, net	39,715		54,615
Total net real estate investments	3,015,127		3,211,897
Investments, at fair value	2,500		2,500
Cash	54,903		27,917
Restricted cash	41,690		57,703
Accounts and other receivables, net	15,867		20,008
Prepaid and other assets	40,358		21,236
Interest rate derivatives, at fair value	22,203		48,416
Intangible assets, net	5,599		4,045
Asset-backed securitization certificates	78,964		39,096
Goodwill	20,522		20,522
TOTAL ASSETS	$	3,297,733	$	3,453,340
LIABILITIES AND EQUITY
Liabilities:
Notes payable, net	$	1,899,261	$	1,276,970
Credit facilities, net	558,433		1,156,704
Accounts payable and other accrued liabilities	45,589		52,696
Accrued real estate taxes payable	43,168		39,632
Accrued interest payable	28,734		23,122
Security deposit liability	28,211		25,909
Prepaid rents	2,693		3,348
Total Liabilities	2,606,089		2,578,381
Redeemable Series A preferred stock, $0.01 par value: 16,000,000 shares authorized; 4,996,000 and 5,000,000 shares issued and outstanding, respectively	122,308		122,225
Redeemable noncontrolling interests in the OP	260,859		251,503
Redeemable noncontrolling interests in consolidated VIEs	99,814		105,018
Stockholders' Equity:
Class A Common stock, $0.01 par value: 300,000,000 shares authorized; 25,339,388 and 25,006,237 shares issued and outstanding, respectively	255		252
Series B Preferred stock, $0.01 par value: 2,548,240 shares authorized; 2,548,240 and 2,548,240 shares issued and outstanding, respectively	25		25
Additional paid-in capital	754,463		776,755
Distributions in excess of retained earnings	(570,990)		(423,769)
Accumulated other comprehensive income	15,860		31,208
Total Stockholders' Equity	199,613		384,471
Noncontrolling interests in consolidated VIEs	9,050		11,742
TOTAL LIABILITIES AND EQUITY	$	3,297,733	$	3,453,340

See Accompanying Notes to Consolidated Financial Statements

1

VINEBROOK HOMES TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(in thousands, except per share amounts)

(Unaudited)

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2024		2023		2024		2023
Revenues
Rental income	$	88,556	$	87,210	$	268,115	$	259,121
Other income	2,100		1,525		4,571		4,362
Total revenues	90,656		88,735		272,686		263,483
Expenses
Property operating expenses	19,919		20,889		59,313		56,602
Real estate taxes and insurance	16,673		16,935		50,929		49,030
Property management fees	212		1,940		1,841		13,065
Advisory fees	5,218		5,637		15,664		16,285
General and administrative expenses	21,374		13,860		60,631		36,385
Depreciation and amortization	31,354		31,610		94,788		96,530
Interest expense	42,368		34,292		110,030		101,071
Total expenses	137,118		125,163		393,196		368,968
Loss on extinguishment of debt	(114)		(164)		(1,488)		(276)
Loss on sales and impairment of real estate, net	(10,652)		(34,654)		(19,773)		(65,108)
Investment income	882		101		2,973		265
Change in unrealized gain (loss) on investments	255		—		—		—
Loss on forfeited deposits	—		(292)		—		(42,202)
Internalization costs	—		(917)				(917)
Net loss	(56,091)		(72,354)		(138,798)		(213,723)
Dividends on and accretion to redemption value of Redeemable Series A Preferred stock	2,023		2,207		6,260		6,621
Net loss attributable to redeemable noncontrolling interests in the OP	(8,413)		(10,853)		(20,820)		(32,059)
Net loss attributable to redeemable noncontrolling interests in consolidated VIEs	(8,482)		(3,684)		(19,997)		(11,691)
Net loss attributable to noncontrolling interests in consolidated VIEs	(940)		(565)		(2,754)		(1,566)
Net loss attributable to stockholders	$	(40,279)	$	(59,459)	$	(101,487)	$	(175,028)
Other comprehensive (loss)/income
Unrealized (loss)/gain on interest rate hedges	(14,823)		163		(18,055)		6,297
Total comprehensive loss	(70,914)		(72,191)		(156,853)		(207,426)
Dividends on and accretion to redemption value of Redeemable Series A Preferred stock	2,023		2,207		6,260		6,621
Comprehensive loss attributable to redeemable noncontrolling interests in the OP	(10,636)		(10,830)		(23,527)		(31,116)
Comprehensive loss attributable to redeemable noncontrolling interests in consolidated VIEs	(8,482)		(3,684)		(19,997)		(11,691)
Comprehensive loss attributable to noncontrolling interests in consolidated VIEs	(940)		(565)		(2,754)		(1,566)
Comprehensive loss attributable to stockholders	$	(52,879)	$	(59,319)	$	(116,835)	$	(169,674)
Weighted average common shares outstanding - basic	25,329		24,894		25,221		24,673
Weighted average common shares outstanding - diluted	25,329		24,894		25,221		24,673
Loss per share - basic	$	(1.59)	$	(2.39)	$	(4.02)	$	(7.09)
Loss per share - diluted	$	(1.59)	$	(2.39)	$	(4.02)	$	(7.09)

See Accompanying Notes to Consolidated Financial Statements

2

VINEBROOK HOMES TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(dollars in thousands, except share and per share amounts)

(Unaudited)

	Series B Preferred Stock			Class A Common Stock
Three Months Ended September 30, 2024	Number of Shares	Par Value		Number of Shares	Par Value		Additional Paid-in Capital		Distributions in Excess of Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total
Balances, June 30, 2024	2,548,240	$	25	25,252,565	$	255	$	757,662	$	(515,420)	$	28,460	$	270,982
Net loss attributable to stockholders							—		(40,279)		—		(40,279)
Issuance of Class A common stock				104,007	1		5,866		—		—		5,867
Redemptions of Class A common stock				(17,184)	(1)		(989)		—		—		(990)
Equity-based compensation				—	—		1,486		—		—		1,486
Common stock dividends declared ($0.5301 per share)							—		(13,778)		—		(13,778)
Series B Preferred stock dividends declared ($0.59375 per share)							—		(1,513)		—		(1,513)
Other comprehensive loss attributable to stockholders							—		—		(12,600)		(12,600)
Adjustments to reflect redemption value of redeemable noncontrolling interests in the OP							288		—		—		288
Adjustments to reflect redemption value of redeemable noncontrolling interests in consolidated VIEs							(9,850)		—		—		(9,850)
Balances, September 30, 2024	2,548,240	$	25	25,339,388	$	255	$	754,463	$	(570,990)	$	15,860	$	199,613

	Series B Preferred Stock		Class A Common Stock
Nine Months Ended September 30, 2024		Number of Shares	Par Value		Number of Shares	Par Value		Additional Paid-in Capital		Distributions in Excess of Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total
Balances, December 31, 2023		2,548,240	$	25	25,006,237	$	252	$	776,755	$	(423,769)	$	31,208	$	384,471
Net loss attributable to stockholders								—		(101,487)		—		(101,487)
Issuance of Class A common stock					321,642	3		17,261		—		—		17,264
Redemptions of Class A common stock					(62,011)	(1)		(3,605)		—		—		(3,606)
Equity-based compensation					73,520	1		4,394		—		—		4,395
Common stock dividends declared ($1.5903 per share)								—		(41,195)		—		(41,195)
Series B Preferred stock dividends declared ($1.78125 per share)								—		(4,539)				(4,539)
Other comprehensive loss attributable to stockholders								—		—		(15,348)		(15,348)
Adjustments to reflect redemption value of redeemable noncontrolling interests in the OP								(25,549)		—		—		(25,549)
Adjustments to reflect redemption value of redeemable noncontrolling interests in consolidated VIEs								(14,793)		—		—		(14,793)
Balances, September 30, 2024		2,548,240	$	25	25,339,388	$	255	$	754,463	$	(570,990)	$	15,860	$	199,613

See Accompanying Notes to Consolidated Financial Statements

VINEBROOK HOMES TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(dollars in thousands, except share and per share amounts)

(Unaudited)

	Series B Preferred Stock			Class A Common Stock
Three Months Ended September 30, 2023	Number of Shares	Par Value		Number of Shares	Par Value		Additional Paid-in Capital		Distributions in Excess of Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total
Balances, June 30, 2023				24,894,319	$	250	$	731,937	$	(302,370)	$	49,213	$	479,030
Net loss attributable to stockholders							—		(59,459)		—		(59,459)
Issuance of Class A common stock				—	—		10		—		—		10
Redemptions of Class A common stock				(2,790)	—		(172)		—		—		(172)
Issuance of Series B Preferred stock, net of offering costs	2,548,240	25		—	—		60,804						60,829
Equity-based compensation				—	—		1,287		—		—		1,287
Common stock dividends declared ($0.5301 per share)							—		(8)		—		(8)
Series B Preferred stock dividends declared ($0.40243 per share)									(1,025)				(1,025)
Other comprehensive income attributable to stockholders							—		—		140		140
Adjustments to reflect redemption value of redeemable noncontrolling interests in the OP							(3,534)		—		—		(3,534)
Adjustments to reflect redemption value of redeemable noncontrolling interests in consolidated VIEs							(3,362)		—		—		(3,362)
Balances, September 30, 2023	2,548,240	$	25	24,891,529	$	250	$	786,970	$	(362,862)	$	49,353	$	473,736

	Series B Preferred Stock		Class A Common Stock
Nine Months Ended September 30, 2023		Number of Shares	Par Value		Number of Shares	Par Value		Additional Paid-in Capital		Distributions in Excess of Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total
Balances, December 31, 2022		—	$	—	24,615,364	$	248	$	737,129	$	(160,048)	$	43,999	$	621,328
Net loss attributable to stockholders								—		(175,028)		—		(175,028)
Issuance of Class A common stock					221,698	2		12,499		—		—		12,501
Redemptions of Class A common stock					(5,710)	—		(352)		—		—		(352)
Issuance of Series B Preferred stock, net of offering costs		2,548,240	25		—	—		60,804		—		—		60,829
Equity-based compensation					60,177	—		3,369		—		—		3,369
Common stock dividends declared ($1.0602 per share)								—		(26,761)		—		(26,761)
Series B Preferred stock dividends declared ($0.40243 per share)										(1,025)				(1,025)
Other comprehensive income attributable to stockholders								—		—		5,354		5,354
Adjustments to reflect redemption value of redeemable noncontrolling interests in the OP								(21,746)		—		—		(21,746)
Adjustments to reflect redemption value of redeemable noncontrolling interests in consolidated VIEs								(4,733)		—		—		(4,733)
Balances, September 30, 2023		2,548,240	$	25	24,891,529	$	250	$	786,970	$	(362,862)	$	49,353	$	473,736

See Accompanying Notes to Consolidated Financial Statements

3

VINEBROOK HOMES TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

(Unaudited)

	For the Nine Months Ended September 30,
	2024		2023
Cash flows from operating activities
Net loss	$	(138,798)	$	(213,723)
Adjustments to reconcile net (loss) to net cash provided by operating activities:
Loss on sales and impairment of real estate, net	19,773		65,108
Depreciation and amortization	94,788		96,530
Non-cash interest expense	23,755		9,139
Net cash received/(paid) on derivative settlements	—		2,419
Loss on extinguishment of debt	1,488		276
Equity-based compensation	15,542		8,751
Loss on forfeited deposits	—		42,202
Changes in operating assets and liabilities, net of effects of acquisitions:
Operating assets	(720)		(14,713)
Operating liabilities	(345)		21,004
Net cash provided by operating activities	15,483		16,993
Cash flows from investing activities
Internalization of the Manager	—		80
Net proceeds from sales of real estate	125,390		148,300
Prepaid deposits	76		474
Insurance proceeds received	1,095		7,937
Additions to real estate investments	(42,755)		(110,414)
Acquisition of preferred equity interests	(15,858)		—
Net cash provided by investing activities	67,948		46,377
Cash flows from financing activities
Notes payable proceeds received	650,185		19,826
Notes payable payments	(60,522)		(24,505)
Credit facilities proceeds received	2,758		13,750
Credit facilities principal payments	(605,743)		(82,799)
Bridge facilities proceeds received	—		25,000
Bridge facilities principal payments	—		(69,730)
Financing costs paid	(19,611)		(3,841)
Proceeds from issuance of Class A common stock	43		—
Redemptions of Class A common stock paid	(4,094)		(17,446)
Dividends paid to common stockholders	(21,666)		(12,825)
Series B Preferred stock dividends paid	(4,539)		(1,025)
Payments for taxes related to net share settlement of stock-based compensation	(1,187)		(873)
Proceeds from issuance of redeemable Series B preferred stock, net of offering costs	—		60,829
Redemptions of Series A Preferred stock paid	(86)		(140)
Series A Preferred stock dividends paid	(6,091)		(6,094)
Contributions from redeemable noncontrolling interests in the OP	1,445		1,595
Distributions to redeemable noncontrolling interests in the OP	(2,566)		(474)
Redemptions by redeemable noncontrolling interests in the OP	(457)		—
Distributions to redeemable noncontrolling interests in consolidated VIEs	—		(601)
Contributions from noncontrolling interests in consolidated VIEs	563		7,285
Distributions to noncontrolling interests in consolidated VIEs	(680)		(321)
Redemptions to noncontrolling interests in consolidated VIEs	(210)		(4)
Net cash used in financing activities	(72,458)		(92,393)
Change in cash and restricted cash	10,973		(29,023)
Cash and restricted cash, beginning of period	85,620		114,749
Cash and restricted cash, end of period	$	96,593	$	85,726
Supplemental Disclosure of Cash Flow Information
Interest paid, net of amount capitalized	$	89,660	$	107,387
Cash paid for income and franchise taxes	—		585
Supplemental Disclosure of Noncash Activities
Accrued insurance proceeds	—		1,270
Accrued dividends payable to common stockholders	1,118		562
Accrued distributions payable to redeemable noncontrolling interests in the OP	1,846		700
Accrued dividends payable to Series A preferred stockholders	6,091		2,031
Accrued redemptions payable to common stockholders	3,606		172
Accrued capital expenditures	—		106
Accretion to redemption value of Redeemable Series A preferred stock	169		527
Asset backed securitization certificates	39,868		—
Write off of fully amortized deferred financing costs	1,965		—
Issuance of Class A common stock related to DRIP dividends	18,412		13,374
DRIP dividends to common stockholders	(18,412)		(13,374)
Contributions from redeemable noncontrolling interests in the OP related to DRIP distributions	3,529		3,596
DRIP distributions to redeemable noncontrolling interests in the OP	(3,529)		(3,596)
Contributions from redeemable noncontrolling interests in consolidated VIEs related to DRIP distributions	3,987		1,949
DRIP distributions to redeemable noncontrolling interests in consolidated VIEs	(3,987)		(1,949)
Contributions from noncontrolling interests in consolidated VIEs related to DRIP distributions	277		139
DRIP distributions to noncontrolling interests in consolidated VIEs	(277)		(139)

See Accompanying Notes to Consolidated Financial Statements

4

VINEBROOK HOMES TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Description of Business

VineBrook Homes Trust, Inc. (the “Company”, “VineBrook”, “we”, “us”, “our”) was incorporated in Maryland on July 16, 2018 and has elected to be taxed as a real estate investment trust (“REIT”) and the Company believes the current organization and method of operation will enable it to maintain its status as a REIT. The Company is focused on acquiring, renovating, leasing, maintaining and otherwise managing single family rental (“SFR”) home investments primarily located in large to medium size cities and suburbs located in the midwestern, heartland and southeastern United States and providing our residents with affordable, safe and clean dwellings with a high level of service. Substantially all of the Company’s business is conducted through VineBrook Homes Operating Partnership, L.P. (the “OP”), the Company’s operating partnership, as the Company owns its properties indirectly through the OP. As of September 30, 2024, there were a combined 24,763,117 Class A, Class B and Class C units of the OP (collectively, “OP Units”), of which 20,058,716 Class A OP Units, or 81.0%, were owned by the Company, 2,814,063 Class B OP Units, or 11.3%, were owned by NexPoint Real Estate Opportunities, LLC (“NREO”), 94,790 Class C OP Units, or 0.4%, were owned by NRESF REIT Sub, LLC (“NRESF”), 149,588 Class C OP Units, or 0.6%, were owned by GAF REIT, LLC (“GAF REIT”) and 1,645,961 Class C OP Units, or 6.6%, were owned by limited partners that were sellers in the Formation Transaction (defined below) (the “VineBrook Contributors”) or other Company insiders. NREO, NRESF and GAF REIT are noncontrolling limited partners unaffiliated with the Company but are affiliates of the Adviser (defined below). The Third Amended and Restated Limited Partnership Agreement of the OP (the “OP LPA”) generally provides that Class A OP Units and Class B OP Units each have 50.0% of the voting power of the OP Units, including with respect to the election of directors to the board of directors of the OP whose sole responsibility is appointment and removal of the general partner of the OP, and the Class C OP Units have no voting power. Each Class A OP Unit, Class B OP Unit and Class C OP Unit otherwise represents substantially the same economic interest in the OP. VineBrook Homes OP GP, LLC (the “OP GP”), is the general partner of the OP with exclusive management powers over the business and affairs of the OP and as of August 3, 2023, a wholly owned subsidiary of the Company. The Company determined it must consolidate the OP under the VIE model as it was determined the Company both controls the direct activities of the OP and has the right to receive benefits that could potentially be significant to the OP. The Company has control to direct the activities of the OP because the OP GP is a wholly-owned subsidiary of the Company and the Company determined it was the party most closely associated with the OP.

The Company began operations on November 1, 2018 as a result of the acquisition of various partnerships and limited liability companies owned and operated by the VineBrook Contributors and other third parties, which owned 4,129 SFR assets located in Ohio, Kentucky and Indiana (the “Initial Portfolio”) for a total purchase price of approximately $330.2 million, including closing and financing costs of $6.0 million (the “Formation Transaction”). On November 1, 2018, the Company accepted subscriptions for 1,097,367 shares of its Class A common stock, par value $0.01 (“Common Stock”), for gross proceeds of approximately $27.4 million in connection with the Formation Transaction. The proceeds from the issuance of Common Stock were used to acquire OP Units. The OP used the capital contribution from the Company to fund a portion of the purchase price for the Initial Portfolio. The remaining purchase price and closing costs were funded by a capital contribution totaling $70.7 million from NREO, $8.6 million of equity rolled over from VineBrook Contributors, and $241.4 million from a Federal Home Loan Mortgage Corporation (“Freddie Mac”) mortgage (the “Initial Mortgage”) provided by KeyBank N.A. (“KeyBank”). On May 1, 2019 (the “Release Date”), approximately $1.4 million worth of OP Units were released to various VineBrook Contributors from an indemnity reserve escrow that was established at the time the Initial Portfolio was acquired. From the time the escrow reserve was established until the Release Date, no indemnity claims were made against said escrow.

Between November 1, 2018 and September 30, 2024, the Company, through the special purpose limited liability companies (“SPEs”) owned by the OP, purchased 20,750 additional homes and sold 3,925 homes within the VineBrook reportable segment (see Note 4), and through the OP’s consolidated investment in NexPoint Homes (as defined in Note 2) purchased 2,573 additional homes and sold 226 homes. Together with the Initial Portfolio, the Company, through the OP’s SPEs, indirectly owned an interest in 20,959 homes (the "VineBrook Portfolio") in 18 states, and with its consolidation of NexPoint Homes, indirectly owned an interest in an additional 2,343 homes (the “NexPoint Homes Portfolio”), for a total of 23,302 homes in 20 states as of September 30, 2024. We refer to the VineBrook Portfolio and the NexPoint Homes Portfolio collectively as our Portfolio. The acquisitions of the additional homes in the VineBrook reportable segment were funded by loans (see Note 5), proceeds from the sale of Common Stock and Preferred Stock (defined below) and excess cash generated from operations.

The Company is externally managed by NexPoint Real Estate Advisors V, L.P. (the “Adviser”), through an agreement dated November 1, 2018, subsequently amended and restated on May 4, 2020, and further amended on October 25, 2022 and February 27, 2024 (the “Advisory Agreement”). The Advisory Agreement will automatically renew on the anniversary of the renewal date for one-year terms hereafter, unless otherwise terminated. The Adviser provides asset management services to the Company. Prior to the OP acquiring all of the outstanding equity interests of VineBrook Homes, LLC (the “Manager”), which was completed on August 3, 2023 (the “Internalization”), the OP caused the SPEs to retain the Manager, an affiliate of certain VineBrook Contributors, to renovate, lease, maintain, and operate the VineBrook properties under management agreements (as amended, the “Management Agreements”) that generally have an initial three-year term with one-year automatic renewals, unless otherwise terminated. The Management Agreements were supplemented by a side letter (as amended and restated, the “Side Letter”) by and among the Company, the OP, the OP GP, the Manager and certain of its affiliates. Certain SPEs from time to time may have property management agreements with independent third parties. These are typically the result of maintaining legacy property managers after an acquisition to help transition the properties to the Company or, in the case of a future sale, to manage the properties until they are sold. All of the Company’s investment decisions are made by employees of the Company and Adviser, subject to general oversight by the OP’s investment committee and the Company’s board of directors (the “Board”). Because the equity holders of the Manager own OP Units, the Manager is considered an affiliate for financial reporting disclosure purposes for periods before August 3, 2023 (see Note 13).

The Company’s primary investment objectives are to provide our residents with affordable, safe, clean and functional dwellings with a high level of service through institutional management and a renovation program on the homes purchased, while enhancing the cash flow and value of properties owned. We intend to acquire properties with cash flow growth potential, provide quarterly cash distributions and achieve long-term capital appreciation for our stockholders.

On August 28, 2018, the Company commenced the offering of 40,000,000 shares of Common Stock through a continuous private placement (the “Private Offering”), under regulation D of the Securities Act of 1933, as amended (the “Securities Act”) (and various state securities law provisions) for a maximum of $1.0 billion of its Common Stock. The Private Offering closed on September 14, 2022. The initial offering price for shares of Common Stock sold through the Private Offering was $25.00 per share. The Company conducted periodic closings and sold Common Stock shares at the prior net asset value (“NAV”) per share as determined using the valuation methodology recommended by the Adviser and approved by the pricing committee (the “Pricing Committee”) of the Board (the “Valuation Methodology”), plus applicable fees and commissions. The NAV per share is calculated on a fully diluted basis and is unaudited. NAV may differ from the values of our real estate assets as calculated in accordance with accounting principles generally accepted in the United States (“GAAP”).

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2. Summary of Significant Accounting Policies

Basis of Accounting and Use of Estimates

Readers of this Form 10-Q should refer to the audited financial statements and notes to consolidated financial statements of the Company for the year ended December 31, 2023, which are included in our Annual Report, filed with the SEC on April 1, 2024, since we have omitted from this Quarterly Report certain footnote disclosures which would substantially duplicate those contained in such audited financial statements. You should also refer to Note 2, Summary of Significant Accounting Policies, in the notes to consolidated financial statements in our Annual Report for further discussion of our significant accounting policies and estimates.

The accompanying unaudited consolidated financial statements are presented in accordance with GAAP and the rules and regulations of the SEC. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the dates of the consolidated financial statements and the amounts of revenues and expenses during the reporting periods. Actual amounts realized or paid could differ from those estimates.

In the opinion of management, all adjustments and eliminations necessary for the fair presentation of the Company’s financial position as of September 30, 2024 and December 31, 2023 and results of operations for the three and nine months ended September 30, 2024 and 2023 have been included. The unaudited information included in these interim financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the years ended December 31, 2023 and 2022 included in our Annual Report. The results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2024, or any other future period.

Real Estate Investments

Real estate assets are reviewed for impairment quarterly or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Significant indicators of impairment may include, but are not limited to, declines in home values, rental rates, changes in hold periods or occupancy percentages, as well as significant changes in the economy. In such cases, the Company will evaluate the recoverability of the assets by comparing the estimated future cash flows expected to result from the use and eventual disposition of each asset to its carrying amount and provide for impairment if such undiscounted cash flows are insufficient to recover the carrying amount. If impaired, the real estate asset will be written down to its estimated fair value. The process whereby we assess our SFR homes for impairment requires significant judgment and assessment of factors that are, at times, subject to significant uncertainty. For the three and nine months ended September 30, 2024, the Company recorded approximately $3.8 million and $12.4 million of impairment charges on real estate assets, respectively, mostly related to assets that were held for sale, which are included in loss on sales and impairment of real estate, net on the consolidated statements of operations and comprehensive income (loss). For the three and nine months ended September 30, 2023, the Company recorded approximately $39.6 million and $66.9 million of impairment charges on real estate assets, respectively, mostly related to assets that were held for sale, which are included in loss on sales and impairment of real estate, net on the consolidated statements of operations and comprehensive income (loss). No significant impairments on operating properties were recorded during the three and nine months ended September 30, 2024 and 2023.

Intangible Assets

Intangible assets acquired related to the Internalization of the Manager are amortized on a straight-line basis over the estimated useful lives as described in the following table:

Developed technology	5 years
Goodwill	Not depreciated

Intangible assets subject to amortization are reviewed for impairment in accordance with ASC 360-10, wherein an impairment loss is recognized if the carrying amount of an intangible asset is not recoverable and its carrying amount exceeds its fair value. No impairment losses on intangible assets have been recognized for the three and nine months ended September 30, 2024.

Goodwill

Goodwill has an indefinite life and therefore is not amortized under the provisions of ASC 350, Intangibles – Goodwill and Other. Goodwill is tested at least annually for impairment to ensure that the carrying amount of goodwill exceeds its implied fair value. We assess goodwill for impairment annually on October 1st, or more frequently if there are indicators of impairment. We completed the annual impairment testing on October 1, 2023 and assessed no impairment of goodwill. No impairment losses on goodwill have been recognized for the three and nine months ended September 30, 2024. The goodwill did not exist before August 3, 2023, as the goodwill resulted from the Internalization of the Manager that closed on August 3, 2023.

Held to Maturity Investments

Investments in debt securities that we have a positive intent and ability to hold to maturity are classified as held to maturity and are presented within asset-backed securitization certificates on our consolidated balance sheets. These investments are recorded at amortized cost. Investments are reviewed at each reporting period for declines in fair value below the amortized cost basis that are other than temporary. Interest income, including amortization of any premium or discount, is classified as investment income in the consolidated statements of operations.

In connection with the Company’s asset backed securitization transactions (as discussed in Note 6), we have retained and purchased certificates totaling approximately $79.0 million. These investments in debt securities are classified as held to maturity investments. As of September 30, 2024, we have not recognized any credit losses with respect to these investments in debt securities, and our retained certificates are scheduled to mature over the next five years.

Cash and Restricted Cash

The following table provides a reconciliation of cash and restricted cash reported on the consolidated balance sheets that sum to the total of such amount shown in the consolidated statements of cash flows (in thousands):

	September 30,
	2024		2023		December 31, 2023
Cash	$	54,903	$	34,115	$	27,917
Restricted cash	41,690		51,611		57,703
Total cash and restricted cash	$	96,593	$	85,726	$	85,620

Revenue Recognition

The Company’s primary operations consist of rental income earned from its residents under lease agreements typically with terms of one year or less. In accordance with ASC 842, Leases, the Company classifies the SFR property leases as operating leases and elects to not separate the lease component, comprised of rents from SFR properties, from the associated non-lease component, comprised of fees from SFR properties and resident charge-backs. The combined component is accounted for under the lease accounting standard while certain resident reimbursements are accounted for as variable payments under the revenue accounting guidance. Rental income is recognized when earned. This policy effectively results in income recognition on a straight-line basis over the related terms of the leases. Resident reimbursements and other income consist of charges billed to residents for utilities, resident-caused damages, pets, and administrative, application and other fees and are recognized when earned. Historically, the Company has used a direct write-off method for uncollectible rents; wherein uncollectible rents are netted against rental income. For the three months ended September 30, 2024 and 2023, rental income includes $4.0 million and $3.4 million of variable lease payments, respectively. For the nine months ended September 30, 2024 and 2023, rental income includes $11.8 million and $9.5 million of variable lease payments, respectively.

Gains on sales of properties are recognized pursuant to the provisions included in ASC 610-20, Other Income. We recognize a full gain on sale when the derecognition criteria under ASC 610-20 have been met, which is included in loss on sales and impairment of real estate on the consolidated statements of operations and comprehensive income (loss).

Earnings (Loss) Per Share

Basic earnings (loss) per share is computed by dividing net income (loss) attributable to stockholders by the weighted average number of shares of the Company’s Common Stock outstanding, which excludes any unvested restricted stock units (“RSUs”) and profit interest units in the OP (“PI Units”) issued pursuant to the 2018 Long-Term Incentive Plan (the “2018 LTIP”) or the 2023 Long-Term Incentive Plan (the “2023 LTIP”). Diluted earnings (loss) per share is computed by adjusting basic earnings (loss) per share for the dilutive effects of the assumed vesting of RSUs, earned performance shares and PI Units and the conversion of OP Units and vested PI Units to Common Stock. During periods of net loss, the assumed vesting of RSUs and PI Units and the conversion of OP Units and vested PI Units to Common Stock is anti-dilutive and is not included in the calculation of diluted earnings (loss) per share. The following table sets forth the computation of basic and diluted earnings (loss) per share for the periods presented (in thousands, except per share amounts):

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2024		2023		2024		2023
Numerator for loss per share:
Net loss	$	(56,091)	$	(72,354)	$	(138,798)	$	(213,723)
Adjustments:
Dividends on and accretion to redemption value of Redeemable Series A Preferred stock	2,023		2,207		6,260		6,621
Net loss attributable to redeemable noncontrolling interests in the OP	(8,413)		(10,853)		(20,820)		(32,059)
Net loss attributable to redeemable noncontrolling interests in consolidated VIEs	(8,482)		(3,684)		(19,997)		(11,691)
Net loss attributable to noncontrolling interests in consolidated VIEs	(940)		(565)		(2,754)		(1,566)
Net loss attributable to stockholders	$	(40,279)	$	(59,459)	$	(101,487)	$	(175,028)
Denominator for earnings (loss) per share:
Weighted average common shares outstanding - basic	25,329		24,894		25,221		24,673
Weighted average unvested RSUs, PI Units, Earned Performance Shares and OP Units (1)	—		—		—		—
Weighted average common shares outstanding - diluted	25,329		24,894		25,221		24,673
Earnings (loss) per weighted average common share:
Basic	$	(1.59)	$	(2.39)	$	(4.02)	$	(7.09)
Diluted	$	(1.59)	$	(2.39)	$	(4.02)	$	(7.09)

(1) For the three months ended September 30, 2024 and 2023, excludes approximately 5,525,053 shares and 5,108,000 shares, respectively, related to the assumed vesting of RSUs, earned performance shares and PI Units and the conversion of OP Units and vested PI Units to Common Stock, as the effect would have been anti-dilutive. For the nine months ended September 30, 2024 and 2023, excludes approximately 5,493,581 shares and 4,808,000 shares, respectively, related to the assumed vesting of RSUs, earned performance shares and PI Units and the conversion of OP Units and vested PI Units to Common Stock, as the effect would have been anti-dilutive.

Recent Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting – Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires a public entity to disclose significant segment expenses and other segment items in interim and annual periods and expands the ASC 280 disclosure requirements for interim periods. The ASU also explicitly requires public entities with a single reportable segment to provide all segment disclosures under ASC 280, including the new disclosures under ASU 2023-07. The amendments are effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. Management is currently evaluating ASU 2023-07 to determine its impact on the Company's disclosures.

In March 2024, the FASB issued ASU 2024-01, Compensation-Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards (“ASU 2024-01”), to clarify the scope application of profits interest and similar awards by adding illustrative guidance in ASC 718, Compensation-Stock Compensation ("ASC 718"). ASU 2024-01 clarifies how to determine whether profits interest and similar awards should be accounted for as a share-based payment arrangement (ASC 718) or as a cash bonus or profit-sharing arrangement (ASC 710, Compensation-General, or other

guidance) and applies to all reporting entities that account for profits interest awards as compensation to employees or non-employees. In addition to adding the illustrative guidance, ASU 2024-01 modified the language in paragraph 718-10-15-3 to improve its clarity and operability without changing the guidance. ASU 2024-01 is effective for fiscal years beginning after December 15, 2024, including interim periods within those annual periods. Early adoption is permitted. The amendments should be applied either retrospectively to all prior periods presented in the financial statements, or prospectively to profits interests and similar awards granted or modified on or after the adoption date. The Company is currently assessing the impacts of adopting ASU 2024-01 on its consolidated financial statements and disclosures.

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3. Investments in Subsidiaries

As of September 30, 2024, the Company, through the OP and its SPE subsidiaries, owned the Portfolio, which consisted of 20,959 properties in the VineBrook reportable segment and 2,343 properties in the NexPoint Homes reportable segment, through 15 SPEs and their various subsidiaries and through the consolidated investment in NexPoint Homes. The following table presents the ownership structure of each SPE group that directly or indirectly owns the title to each real estate asset as of September 30, 2024, the number of assets held, the cost of those assets, the resulting debt allocated to each SPE and whether the debt is a mortgage loan. The table presents the debt allocations to each SPE that collateralize the related debt per the loan agreements. The mortgage loan may be settled from the assets of the below entity or entities to which the loan is made. Loans from the Warehouse Facility (as defined in Note 5) can only be settled from the assets owned by VB One, LLC (dollars in thousands):

VIE Name	Homes	Cost Basis		OP Beneficial Ownership %		Encumbered by Mortgage (1)	Debt Allocated
NREA VB I, LLC	60	$	5,682	100	%	Yes	$	4,746
NREA VB II, LLC	160	16,303		100	%	Yes	10,127
NREA VB III, LLC	1,289	120,877		100	%	Yes	66,872
NREA VB IV, LLC	378	37,937		100	%	Yes	22,814
NREA VB V, LLC	1,822	131,031		100	%	Yes	101,815
NREA VB VI, LLC	251	25,188		100	%	Yes	17,545
NREA VB VII, LLC	29	2,416		100	%	Yes	2,809
True FM2017-1, LLC	184	17,973		100	%	Yes	8,248
VB One, LLC	5,777	776,811		100	%	No	462,222
VB Two, LLC	1,618	160,363		100	%	No	105,925
VB Three, LLC	1,334	198,658		100	%	No	97,567
VB Five, LLC	117	14,124		100	%	Yes	4,991
VB Eight, LLC	111	16,622		100	%	No	—
VB Nine, LLC	1,305	190,666		100	%	Yes	171,637
VB Ten, LLC	1,302	190,219		100	%	Yes	171,567
VineBrook Homes Borrower 1, LLC	2,763	404,623		100	%	Yes	390,248
VineBrook Homes Borrower 2, LLC	2,459	363,551		100	%	Yes	402,593
NexPoint Homes	2,343	700,139		80	%	No	428,701
	23,302	$	3,373,183				$	2,470,427	(2)

(1)

Assets held, directly or indirectly, by VB One, LLC, VB Two, LLC, VB Three, LLC, VB Eight, LLC and NexPoint Homes and its subsidiaries are not encumbered by a mortgage. Instead, the applicable lender has an equity pledge in certain assets of the respective SPEs and an equity pledge in the equity of the respective SPEs.

(2)

In addition to the debt allocated to the SPEs noted above, as of September 30, 2024, NexPoint Homes had approximately $103.6 million of debt (excluding amounts owed to the OP from NexPoint Homes, as these are eliminated in consolidation) not collateralized directly by homes which reflects the amount outstanding on the SFR OP Convertible Notes, the SFR OP Note Payable I and the SFR OP Note Payable II (as defined in Note 5) as of September 30, 2024.

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4. Real Estate Assets

As of September 30, 2024, the Company, through the OP and its SPE subsidiaries, owned 23,302 homes, including 20,959 homes in the VineBrook reportable segment and 2,343 homes in the NexPoint Homes reportable segment. As of December 31, 2023, the Company through the OP and its SPE subsidiaries, owned 24,412 homes, including 21,843 homes in the VineBrook reportable segment and 2,569 homes in the NexPoint Homes reportable segment. The components of the Company’s real estate investments in homes were as follows (in thousands):

	Land		Buildings and improvements (1)			Intangible lease assets		Real estate held for sale, net		Total gross real estate		Accumulated depreciation and amortization
Real Estate Balances, December 31, 2023	$	560,047	$	2,872,755		$	14	$	54,615	$	3,487,431	$	(275,534)
Additions	45		47,244		(2)	3,648		2,462		53,399		(96,368)		(3)
Transfers to held for sale	(14,945)		(98,487)			—		101,445		(11,987)		11,987
Reclasses	19		(1,561)			—		(108)		(1,650)		(11)
Dispositions	(4,574)		(30,514)			—		(103,805)		(138,893)		1,870
Impairment	—		(223)			—		(14,894)		(15,117)		—
Real Estate Balances, September 30, 2024	$	540,592	$	2,789,214		$	3,662	$	39,715	$	3,373,183	$	(358,056)

(1)	Includes capitalized interest, real estate taxes, insurance and other costs incurred during rehabilitation of the properties.
(2)	Includes capitalized interest of approximately $0.8 million and other capitalizable costs outlined in (1) above of approximately $0.3 million.
(3)	Accumulated depreciation and amortization activity excludes approximately $0.5 million of depreciation and amortization related to assets not classified as real estate investments.

During the three months ended September 30, 2024 and 2023, the Company recognized depreciation expense of approximately $30.9 million and $31.5 million, respectively. During the nine months ended September 30, 2024 and 2023, the Company recognized depreciation expense of approximately $93.6 million and $95.1 million, respectively.

Real estate acquisitions and dispositions

During the nine months ended September 30, 2024, the Company acquired no additional homes within the VineBrook and NexPoint Homes reportable segments.

During the nine months ended September 30, 2024, the Company, through the OP, disposed of 884 homes within the VineBrook reportable segment. During the nine months ended September 30, 2024, the Company, through its consolidated investment in NexPoint Homes, disposed of 226 homes. The Company strategically identified those homes for disposal and expects the disposal of these properties to be accretive to the Portfolio's results of operations and overall performance.

On August 3, 2022, VB Five, LLC, an indirect subsidiary of the Company, entered into a purchase agreement under which the VB Five, LLC agreed to acquire a portfolio of approximately 1,610 SFR homes located in Arizona, Florida, Georgia, Ohio and Texas (the “Tusk Portfolio”). Also on August 3, 2022, VB Five, LLC entered into a purchase agreement under which VB Five, LLC agreed to acquire a portfolio of approximately 1,289 SFR homes located in Arizona, Florida, Georgia, North Carolina, Ohio and Texas (the “Siete Portfolio”). On January 17, 2023, the Company, through its indirect subsidiary, VB Seven, LLC, entered into an agreement under which the acquisition of the Tusk Portfolio was terminated by the seller and VB Seven, LLC forfeited its initial deposit of approximately $23.3 million. Additionally, on January 17, 2023, the Company, through its indirect subsidiary, VB Seven, LLC, entered into an agreement under which the acquisition of the Siete Portfolio was terminated by the seller and VB Seven, LLC forfeited its initial deposit of approximately $17.7 million. The total initial deposit forfeitures of $41.0 million from the Tusk Portfolio and the Siete Portfolio are included in loss on forfeited deposits on the consolidated statement of operations and comprehensive income (loss) for the nine months ended September 30, 2023.

Held for sale properties

The Company periodically classifies real estate assets as held for sale when the held for sale criteria is met in accordance with GAAP. At that time, the Company presents the net real estate assets separately in its consolidated balance sheet, and the Company ceases recording depreciation and amortization expense related to that property. Real estate held for sale is reported at the lower of its carrying amount or its estimated fair value less estimated costs to sell. For the three and nine months ended September 30, 2024, the Company recorded approximately $3.8 million and $12.4 million of impairment charges on real estate assets held for sale, respectively. As of September 30, 2024, there are 271 homes that are classified as held for sale. These held for sale properties have a carrying amount of approximately $39.7 million.

Hurricane Helene

During September 2024, Hurricane Helene hit the southeastern seaboard of the United States generally affecting Florida, Georgia, South Carolina, North Carolina, Virginia and Tennessee. Approximately 780 homes in the VineBrook Portfolio were affected directly and indirectly by Hurricane Helene within the following markets: Augusta, Cincinnati, Columbia, Atlanta, Triad, Huntsville, Indianapolis, Greenville, Dayton and Montgomery. Due to the recency of this event, the Company is currently assessing the impact of the damage to the VineBrook Portfolio. The Company has not recognized a loss for the damage as the amount of the loss, or a range of possible losses, cannot be reasonably estimated at this time. The Company will recognize a loss when it has sufficient information to make a reasonable estimate of the loss or range of the loss. The Company has windstorm, flood and other casualty insurance coverage that management believes will materially cover the cost of the damage. Additionally, the Company has business interruption insurance that management believes will cover lost rents on the homes affected by this event. The insurance coverage is subject to certain deductibles and the Company is currently working with the insurance carrier to determine the amount of the deductible. The amount of the deductible is not expected to exceed $0.5 million and any damage is expected to be within the limits of the insurance policy.

The NexPoint Homes reportable segment saw minimal damage related to Hurricane Helene as it only affected 12 homes in the NexPoint Homes Portfolio. Due to the recency of this event, the Company is still assessing the impact of Hurricane Helene on the NexPoint Homes Portfolio. The Company has casualty insurance coverage that management believes will materially cover the cost of the damage. The Company has not recognized a loss for the damage as the amount of the loss, or a range of possible losses, cannot be reasonably estimated at this time. The Company will recognize a loss when it has sufficient information to make a reasonable estimate of the loss or range of the loss.

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5. Debt

As of September 30, 2024, the VineBrook Homes reportable segment had approximately $2.0 billion of debt outstanding, and the NexPoint Homes reportable segment had $532.3 million of debt outstanding. The following table contains summary information of the Company’s debt as of September 30, 2024 and December 31, 2023 (dollars in thousands):

		Outstanding Principal as of
	Type	September 30, 2024		December 31, 2023		Interest Rate (1)		Maturity
Initial Mortgage	Floating	$	226,728	$	234,644	6.83	%	12/1/2025
Warehouse Facility	Floating	462,222		824,387		7.50	%	5/3/2025	(2)
JPM Facility	Floating	97,567		338,387		7.81	%	1/31/2025	(3)
ABS I Loan	Fixed	390,248		392,180		4.92	%	12/8/2028
ABS II Loan	Fixed	402,593		—		4.65	%	3/9/2029
MetLife Note	Fixed	105,925		110,157		3.25	%	1/31/2026
MetLife Term Loan I	Fixed	343,204		—		4.50	%	8/22/2029
TrueLane Mortgage	Fixed	8,248		9,323		5.35	%	2/1/2028
Crestcore II Note	Fixed	2,587		2,670		5.12	%	7/9/2029
Crestcore IV Note	Fixed	2,404		2,611		5.12	%	7/9/2029
PNC Loan I	Fixed	—		18		3.59	%	2/19/2024
PNC Loan II	Fixed	—		65		3.70	%	12/29/2024
PNC Loan III	Fixed	—		177		3.69	%	12/15/2025
Total VineBrook reportable segment debt		$	2,041,726	$	1,914,619
NexPoint Homes MetLife Note 1	Fixed	237,173		238,428		3.76	%	3/3/2027
NexPoint Homes MetLife Note 2	Fixed	174,590		174,590		5.44	%	8/12/2027
NexPoint Homes KeyBank Facility	Floating	16,938		60,500		7.55	%	12/31/2024
SFR OP Note Payable I	Fixed	500		500		8.80	%	4/25/2025
SFR OP Note Payable II	Fixed	500		—		12.50	%	3/31/2025
SFR OP Convertible Notes (4)	Fixed	102,557		102,557		7.50	%	6/30/2027
Total debt		2,573,984		2,491,194
Debt premium, net (5)		252		305
Debt discount, net (6)		(87,308)		(39,115)
Deferred financing costs, net of accumulated amortization of $29,918 and $22,796, respectively		(29,234)		(18,710)
		2,457,694		2,433,674

(1)	Represents the interest rate as of September 30, 2024. Except for fixed rate debt, the interest rate is 30-day average SOFR, daily SOFR or one-month term SOFR, plus an applicable margin. The 30-day average SOFR as of September 30, 2024 was 5.1633%, daily SOFR as of September 30, 2024 was 4.9600% and one-month term SOFR as of September 30, 2024 was 4.8457%.
(2)	The initial maturity for the Warehouse Facility (as defined below) prior to extension options being exercised was November 3, 2024. To extend the Warehouse Facility, the Company cannot be in default, must meet certain financial covenants and needs to pay a fee of 0.1% of the maximum revolving commitment at that time. The Company exercised its first extension option to extend the Warehouse Facility maturity date to May 3, 2025 on November 1, 2024. The maturity date after the second extension is November 3, 2025.
(3)	This is the initial maturity date for the JPM Facility (as defined below). The JPM Facility has a 12-month extension option subject to approval from the lender.
(4)	The SFR OP Convertible Notes exclude the amounts owed to NexPoint Homes by the SFR OP, as these are eliminated in consolidation.
(5)	The Company reflected valuation adjustments on its assumed fixed rate debt to adjust it to fair market value on the dates of acquisition for the difference between the fair value and the assumed principal amount of debt. The difference is amortized into interest expense over the remaining terms of the debt.
(6)	The Company reflected a discount on ABS I Loan and ABS II Loan (as defined below), which is amortized into interest expense over the remaining term of the debt.

Additionally, we have included a summary of debt agreements and significant changes to the agreements during the nine months ended September 30, 2024 below.

JPM Facility

On March 1, 2021, the Company entered into a non-recourse carveout guaranty and certain wholly owned subsidiaries of VB Three, LLC (as borrowers) entered into a $500.0 million credit agreement with JP Morgan (the “JPM Facility”). The JPM Facility is secured by equity pledges in VB Three, LLC and its wholly owned subsidiaries and bore interest at a variable rate equal to one-month London Interbank Offered Rate (“LIBOR”) plus 2.75%. The JPM Facility is interest-only and was due in full on March 1, 2023. On March 10, 2022, the Company entered into Amendment No. 1 to the JPM Facility, wherein each advance under the JPM Facility will bear interest at the daily Secured Overnight Financing Rate (“SOFR”) plus 2.85%. On January 31, 2023, the Company entered into Amendment No. 2 to the JPM Facility, wherein the total facility amount was updated to $350.0 million, and the maturity date was extended to January 31, 2025, which may be extended for 12 months upon submission of an extension request, subject to approval. On March 15, 2023, the Company entered into Amendment No. 3 to the JPM Facility to give the Company credit for pledging an interest rate cap by reducing the interest reserve requirements under the JPM Facility based on the capped rate. On December 21, 2023, the Company drew an additional $21.4 million on the JPM Facility of which the draw proceeds, along with cash on hand, were used to pay off the Bridge Facility III (as defined below) in full. During the nine months ended September 30, 2024, the Company drew an additional $2.8 million on the JPM Facility. During the nine months ended September 30, 2024, the Company paid down approximately $243.6 million on the JPM Facility. As of September 30, 2024, the JPM Facility had $252.4 million in available capacity. The outstanding balance on the JPM Facility as of September 30, 2024, is approximately $97.6 million. The balance of the JPM Facility, net of unamortized deferred financing costs, is included in credit facilities on the consolidated balance sheets.

Asset Backed Securitization I

On December 6, 2023, the OP completed a securitization transaction, in connection with which VineBrook Homes Borrower 1, LLC, an indirect special purpose subsidiary of the OP (the “ABS I Borrower”) entered into a loan agreement (the “ABS I Loan Agreement”) with Bank of America, National Association, as lender (the “ABS I Lender”), providing for a 5-year, fixed-rate, interest-only loan with a total principal balance of $392.2 million (the “ABS I Loan”).

Concurrent with the execution of the ABS I Loan Agreement, the ABS I Lender sold the ABS I Loan to VineBrook Homes Depositor A, LLC (the “Depositor”), an indirect subsidiary of the OP, which, in turn, transferred the ABS I Loan to a trust in exchange for (i) $178.4 million principal amount of Class A pass-through certificates (the “Class A Certificates”), (ii) $38.6 million principal amount of Class B pass-through certificates (the “Class B Certificates”), (iii) $30.8 million principal amount of Class C pass-through certificates (the “Class C Certificates”), (iv) $43.0 million principal amount of Class D pass-through certificates (the “Class D Certificates”), (v) $50.1 million principal amount of Class E pass-through certificates (the “Class E1 Certificates”), (vi) $12.2 million principal amount of Class E pass-through certificates (the “Class E2 Certificates,” and collectively with the Class A Certificates, Class B Certificates, Class C Certificates, Class D Certificates and Class E1 Certificates, the “Regular Certificates”), and (vii) Class R pass-through certificates (the “Class R Certificates,” and together with the Regular Certificates, the “Certificates”). The Certificates represent beneficial ownership interests in the trust and its assets, including the ABS I Loan.

The Depositor sold the Certificates, acquired by the Depositor in the manner described above, to placement agents who resold the Certificates to investors in a private offering. The Regular Certificates are exempt from registration under the Securities Act and are “exempted securities” under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). To satisfy applicable risk retention rules, the OP completed a securitization transaction, VINE 2023-SFR1, providing for a 5-year, fixed-rate, interest-only loan of Class F certificates (“Class F Certificates”) with a total principal amount of $39.1 million. The Company evaluated the purchased Class F Certificates as a variable interest in the trust and concluded that the Class F Certificates do not provide the Company with an ability to direct activities that could impact the trust’s economic performance. The Company does not consolidate the trust and the $39.1 million of purchased Class F Certificates are reflected as asset-backed securitization certificates in the Company’s consolidated balance sheets. The Depositor used the proceeds from the sale of the Certificates to purchase the ABS I Loan from the ABS I Lender, as described above. The Regular Certificates were sold to investors at a discount and the OP retained the Class F Certificate (as described above), with the result that the proceeds, before closing costs, from the ABS I Loan to the ABS I Borrower were approximately $314.0 million. The net proceeds of $300.6 million were used to partially pay down the Warehouse Facility.

The balance of the ABS I Loan, net of unamortized deferred financing costs and debt discount, is included in notes payable on the consolidated balance sheets. The ABS I Loan is collateralized by 2,763 SFR homes, and as of September 30, 2024, approximately 11.86% of the Portfolio served as collateral for outstanding borrowings under the ABS

I Loan. The ABS I Loan, is segregated into six tranches, all of which accrue interest at 4.9235% and have a maturity date of December 8, 2028.

Asset Backed Securitization II

On February 29, 2024, the OP, via its indirect special purpose subsidiary, VineBrook Homes Borrower 2, LLC (the “ABS II Borrower”), completed an asset backed securitization (“ABS II”) and entered into a loan agreement (the “ABS II Loan Agreement”) with BofA Securities, Inc., as sole structuring agent, joint bookrunner and co-lead manager, Mizuho Securities USA LLC, as joint bookrunner and co-lead manager and Citizens JMP Securities, LLC, J.P. Morgan Securities LLC, Raymond James & Associates, Inc. ("Raymond James"), and Truist Securities, Inc., as co-managers (the “ABS II Loan”).

Concurrent with the execution of the ABS II Loan Agreement, the lender sold the ABS II Loan to the Depositor, an indirect subsidiary of the OP, which, in turn, transferred the loan to a trust in exchange for (i) $176.9 million principal amount of Class A pass-through certificates (the “ABS II Class A Certificates”), (ii) $38.6 million principal amount of Class B pass-through certificates (the “ABS II Class B Certificates”), (iii) $30.6 million principal amount of Class C pass-through certificates (the “ABS II Class C Certificates”), (iv) $42.9 million principal amount of Class D pass-through certificates (the “ABS II Class D Certificates”), (v) $63.5 million principal amount of Class E pass-through certificates (the “ABS II Class E1 Certificates”), (vi) $11.2 million principal amount of Class E pass-through certificates (the “ABS II Class E2 Certificates,” and collectively with the ABS II Class A Certificates, ABS II Class B Certificates, ABS II Class C Certificates, ABS II Class D Certificates and ABS II Class E1 Certificates, the “ABS II Regular Certificates”), and (vii) ABS II Class R pass-through certificates (the “ABS II Class R Certificates,” and together with the ABS II Regular Certificates, the “ABS II Certificates”). Initially, the OP also retained $19.5 million of the ABS II Class A Certificates, $10.5 million of the ABS II Class B Certificates, and $2.0 million of the ABS II Class C Certificates. On July 11, 2024, the OP sold $10.5 million of the ABS II Class B Certificates. On July 24, 2024, the OP sold $19.5 million of the ABS II Class A Certificates. On September 25, 2024, the OP sold $2.0 million of the ABS II Class C Certificates. The ABS II Certificates represented beneficial ownership interests in the trust and its assets, including the ABS II Loan, and these ABS II Certificates were all sold during the three months ended September 30, 2024.

The Depositor sold the ABS II Certificates, acquired by the Depositor in the manner described above, to placement agents who resold the Certificates to investors in a private offering. The ABS II Regular Certificates are exempt from registration under the Securities Act and are “exempted securities” under the Exchange Act. To satisfy applicable risk retention rules, the OP purchased and retained the ABS II Class F component, totaling $39.9 million. Additionally, the OP purchased and retained a portion of the ABS II Class A, Class B and Class C components, totaling $19.5 million, $10.5 million and $2.0 million, respectively. The Company evaluated the purchased ABS II Class A, Class B, Class C and Class F certificates as a variable interest in the trust and concluded that the ABS II Class A, Class B, Class C and Class F certificates do not provide the Company with an ability to direct activities that could impact the trust’s economic performance. The Company does not consolidate the trust and $71.9 million of the ABS II Certificates are reflected as asset-backed securitization certificates on the Company’s consolidated balance sheets. For the ABS II Class A, Class B and Class C certificates, the Company elected the fair value option in accordance with ASC 825, Financial Instruments, and measures the change in fair value as change in unrealized gain/(loss) on asset-backed securitization certificates in the Company's consolidated statements of operations and comprehensive income (loss). The Depositor used the proceeds from the sale of the ABS II Certificates to purchase the ABS II Loan from the lender, as described above. The ABS II Regular Certificates were sold to investors at a discount and the OP retained the entire Class F certificate (as described above), with the result that the proceeds, before closing costs, from the ABS II Loan to the ABS II Borrower were approximately $331.8 million. A portion of the net proceeds from the ABS II were used to pay down $242.4 million on the JPM Facility and fund reserves per the credit agreement.

The balance of the ABS II Loan, net of unamortized deferred financing costs and debt discount, is included in notes payable on the consolidated balance sheets. The ABS II Loan is collateralized by 2,459 SFR homes, and as of September 30, 2024, approximately 10.55% of the Portfolio served as collateral for outstanding borrowings under the ABS II Loan. The ABS II Loan, is segregated into seven tranches, Components A through F, providing for a 5-year, fixed-rate, interest-only loan with a total principal balance of $403.7 million. The weighted average interest rate of the ABS II Regular Certificates (Class A through E2) is 4.6495% and have a maturity date of March 9, 2029.

The following table contains summary information regarding the ABS II Loan (excluding Tranche F, which the OP acquired and including the portions of Tranche A, B and C retained by the OP, as described above) as of September 30, 2024 (dollars in thousands):

Tranche	Principal		Par Value		Price		Tranche Discount		Net Proceeds		Interest Rate		Maturity
Tranche A	$	176,912	$	100.00	$	94.73552	$	8,287	$	149,125	4.6495	%	3/9/2029
Tranche B	38,622		100.00		92.68290		2,058		26,064		4.6495	%	3/9/2029
Tranche C	30,648		100.00		91.87665		2,327		26,321		4.6495	%	3/9/2029
Tranche D	42,858		100.00		90.28899		4,162		38,696		4.6495	%	3/9/2029
Tranche E1	63,539		100.00		85.71807		9,075		54,464		4.6495	%	3/9/2029
Tranche E2	11,213		100.00		79.70586		2,276		8,938		4.6495	%	3/9/2029
Total ABS II Loan	$	363,792					$	28,185	$	303,608	4.6495	%

Warehouse Facility

On September 20, 2019, the OP (as guarantor) and VB One, LLC (as borrower) entered into a credit facility (the “Warehouse Facility”) with KeyBank. On August 14, 2024, the OP entered into a Seventh Amendment to the Warehouse Facility (the “Warehouse Seventh Amendment”) with KeyBank, as administrative agent, and the lenders party thereto. The Warehouse Seventh Amendment, among other things, provided for (1) a reduction in the maximum commitment of the Warehouse Facility; (2) reduced unused facility fees; (3) modifications and additions of certain covenants, including adjusting the minimum fixed charge coverage ratio to not less than 1.40 to 1.0, effective as of January 1, 2024; (4) in connection with sales of assets to unaffiliated third parties, the prepayment of the commitment amount with 100% of such proceeds until the commitment under the Warehouse Facility is reduced to $475.0 million and with 75% of such proceeds thereafter; provided that certain additional amounts may be required to be prepaid if the outstanding principal balance would exceed the value of the assets in the borrowing base following such sale; (5) the reduction of the outstanding principal balance to be no more than $475.0 million by October 31, 2024 (the “Commitment Reduction”). During the nine months ended September 30, 2024, the Company paid down approximately $362.2 million on the Warehouse Facility. All repayments under the Warehouse Facility will permanently reduce the commitment amount under the Warehouse Facility and may not be reborrowed. As of September 30, 2024, the outstanding balance of the Warehouse Facility was approximately $462.2 million, which is below the required Commitment Reduction.

PNC Loans

In connection with the Internalization of the Manager, the Company, through the OP, assumed three PNC equipment loans (“PNC Loan I”, “PNC Loan II” and “PNC Loan III”), which bear interest at fixed rates of 3.59%, 3.70% and 3.69%, respectively. PNC Loan I, PNC Loan II and PNC Loan III matured on February 19, 2024 and will mature on December 29, 2024 and December 15, 2025, respectively, and require monthly principal and interest payments. The PNC Loan I was paid off in full in February 2024. The PNC Loan II and PNC Loan III were paid off in full in April 2024. The balances of these loans are included in notes payable on the consolidated balance sheet as of December 31, 2023.

MetLife Term Loan I Facilities

On August 22, 2024, VB Nine, LLC (“VB Nine”) and VB Ten, LLC (“VB Ten”), indirect subsidiaries of the Company, as borrowers, entered into credit agreements for term loan credit facilities (collectively, the “MetLife Term Loan I Facilities”) with Metropolitan Life Insurance Company and Metropolitan Tower Life Insurance Company, and the lenders party thereto from time to time, which provided a total commitment of $343.2 million. Borrowings under the MetLife Term Loan I Facilities are secured by an equity pledge by VB Nine Equity and VB Ten Equity of their equity interests in VB Nine and VB Ten, respectively, and the property and assets held by VB Nine and VB Ten, respectively, and bear interest at a fixed rate equal to 4.5%. The MetLife Term Loan I Facilities are full-term, interest-only facilities that mature on August 22, 2029. The Company used $282.0 million of the proceeds to pay down a portion of the outstanding amounts under the Warehouse Facility. As of September 30, 2024, the outstanding balance of the MetLife Term Loan I Facilities was approximately $343.2 million.

NexPoint Homes

In addition to the debt agreements discussed above for the VineBrook reportable segment, as of September 30, 2024, the NexPoint Homes reportable segment had $532.3 million of debt outstanding included in notes payable on the consolidated balance sheets, which is comprised of two consolidated notes with Metropolitan Life Insurance Company (the “NexPoint Homes MetLife Note 1” and “NexPoint Homes MetLife Note 2”), NexPoint Homes KeyBank Facility (as defined below), the SFR OP Note Payable I (as defined below), the SFR OP Note Payable II (as defined below) and the SFR OP Convertible Notes (as defined in Note 10). See the summary table above for further information on the debt of the NexPoint Homes reportable segment.

NexPoint Homes KeyBank Facility

On August 12, 2022, a subsidiary of the SFR OP as borrower closed a $75.0 million revolver facility with KeyBank, as lender (the “NexPoint Homes KeyBank Facility”). On December 30, 2022, a subsidiary of SFR OP as borrower closed on an additional $10.0 million on the NexPoint Homes KeyBank Facility, bringing the total commitment to $85.0 million as of December 31, 2022. The NexPoint Homes KeyBank Facility initially matured on August 12, 2025 and bore interest at a floating rate of 185 to 270 basis points, depending on the borrower’s leverage ratio, over SOFR. After amendments to the NexPoint Homes Key Bank Facility loan agreement, the NexPoint Homes Key Bank Facility bears interest at a floating rate of 195 to 270 basis points, depending on the borrower’s leverage ratio, over SOFR and matures on December 31, 2024 with a maximum commitment of $60.5 million. The outstanding balance on the NexPoint Homes KeyBank Facility as of September 30, 2024 was approximately $16.9 million.

SFR OP Note Payable I

On October 25, 2023, the SFR OP as borrower entered into a promissory note with NexPoint Diversified Real Estate Trust Operating Partnership, L.P. as lender (the “SFR OP Note Payable I”) for $0.5 million. The SFR OP Note Payable I bears interest at a fixed rate of 8.80% and had an original maturity date of April 25, 2024. On April 25, 2024, the SFR OP Note Payable I was amended to modify the maturity date to be April 25, 2025. As of September 30, 2024, the outstanding balance of the SFR OP Note Payable I is $0.5 million.

SFR OP Note Payable II

On March 31, 2024, the SFR OP as borrower entered into a promissory note with NexPoint Real Estate Finance, Inc. as lender (the “SFR OP Note Payable II”) for $0.5 million. The SFR OP Note Payable II matures on March 31, 2025 and bears interest at a fixed rate of 12.50%. As of September 30, 2024, the outstanding balance of the SFR OP Note Payable II is $0.5 million.

Weighted Average Interest

The weighted average interest rate of the Company’s debt was 5.5473% as of September 30, 2024 and 6.6245% as of December 31, 2023. As of September 30, 2024 and December 31, 2023, the adjusted weighted average interest rate of the Company’s debt, including the effect of derivative financial instruments, was 4.0633% and 4.6860%, respectively. For purposes of calculating the adjusted weighted average interest rate of the Company’s debt as of September 30, 2024, including the effect of derivative financial instruments, the Company has included the weighted average fixed rate of 2.2637% on its combined $1.4 billion notional amount of interest rate swap and cap agreements, representing a weighted average fixed rate for daily SOFR and one-month term SOFR, which effectively fixes the interest rate on $1.4 billion of the Company’s floating rate indebtedness.

Schedule of Debt Maturities

The aggregate scheduled maturities, including amortizing principal payments, of total debt for the next five calendar years subsequent to September 30, 2024 are as follows (in thousands):

	Total
2024	$	17,614
2025	787,195		(1)
2026	106,230
2027	514,642
2028	398,013
Thereafter	750,290
Total	$	2,573,984

(1) Includes the maturity of the Warehouse Facility after extension options. To extend the Warehouse Facility, the Company cannot be in default, must meet certain financial covenants and needs to pay a fee of 0.1% of the maximum revolving commitment at that time. The initial maturity date was November 3, 2024 and was extended to May 3, 2025 on November 1, 2024. This also includes the maturity of the JPM Facility that has a 12-month extension option subject to approval from the lender.

Each reporting period, management evaluates the Company’s ability to continue as a going concern in accordance with ASC 205-40, Going Concern, by evaluating conditions and events, including assessing the liquidity needs to meet obligations as they become due within one year after the date the financial statements are issued. The Company has significant debt obligations of approximately $568.6 million coming due within 12 months of the financial statement issuance date, primarily related to the Warehouse Facility, JPM Facility and NexPoint Homes KeyBank Facility. As of the date of issuance, the Company does not have sufficient liquidity to satisfy these obligations. In order to satisfy obligations as they mature, management intends to evaluate its options and may seek to: (i) make partial loan pay downs, (ii) utilize extension options contractually available under existing debt instruments, and (iii) sell homes from its portfolio and pay down debt balances with the net sale proceeds. The Company’s ability to meet its debt obligations as they come due is dependent upon its ability to meet debt covenants, which it currently projects to do, in order to extend existing obligations, its ability to refinance debt and its ability to sell homes from its portfolio to pay down the balances. The sale of homes from the Portfolio could cause a decrease in net operating income but is expected to be offset by the interest savings from the pay downs. Management believes these plans by the Company will be sufficient to satisfy the obligations as they become due. These financial statements have been prepared by management in accordance with GAAP and this basis assumes that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. These financial statements do not include any adjustments that may result from the outcome of this uncertainty.

In addition, the Company has debt coming due beyond twelve months from the date of these financial statements, including the Warehouse Facility that the Company expects will be due on November 3, 2025 after exercising the remaining six-month extension option. On November 1, 2024, the Company utilized the first six-month extension option on the Warehouse Facility which extended the maturity date of the Warehouse Facility to May 3, 2025. The Company has a remaining contractual six-month extension option available under the Warehouse Facility which would extend the maturity of the Warehouse Facility to November 3, 2025. The Company does not currently have sufficient liquidity to pay down these obligations and intends to refinance these obligations primarily using debt or equity financing before they come due. Given its historical ability to refinance debt, the Company expects to be able to refinance the debt as necessary.

Deferred Financing Costs

The Company defers costs incurred in obtaining financing and amortizes the costs over the term of the related debt using the straight-line method, which approximates the effective interest method. Deferred financing costs, net of amortization, are recorded as a reduction from the related debt on the Company’s consolidated balance sheets. Upon repayment of, or in conjunction with, a material change in the terms of the underlying debt agreement, any unamortized costs are charged to loss on extinguishment of debt. For the three months ended September 30, 2024 and 2023, amortization of deferred financing costs of approximately $6.3 million and $2.8 million, respectively, and amortization of loan discounts of approximately $6.4 million and $0, respectively, are included in interest expense on the consolidated statements of operations and comprehensive income (loss). For the nine months ended September 30, 2024 and 2023, amortization of deferred financing costs of approximately $8.9 million and $7.8 million, respectively, and amortization of loan discounts of approximately $9.0 million and $0, respectively, are included in interest expense on the consolidated statements of operations and comprehensive income (loss).

9

6. Fair Value of Derivatives and Financial Instruments

Fair value measurements are determined based on the assumptions that market participants would use in pricing an asset or liability. As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy):

•Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access.

•Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates and yield curves that are observable at commonly quoted intervals.

•Level 3 inputs are the unobservable inputs for the asset or liability, which are typically based on an entity’s own assumption, as there is little, if any, related market activity.

In instances where the determination of the fair value measurement is based on input from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety.

The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. The Company utilizes independent third parties to perform the allocation of value analysis for each property acquisition and to perform the market valuations on its derivative financial instruments and has established policies, as described above, processes and procedures intended to ensure that the valuation methodologies for investments and derivative financial instruments are fair and consistent as of the measurement date.

Derivative Financial Instruments and Hedging Activities

In the normal course of business, our operations are exposed to market risks, including the effect of changes in interest rates. We may enter into derivative financial instruments to offset this underlying market risk. There have been no significant changes in our policy and strategy from what was disclosed in our Annual Report.

As of September 30, 2024, the Company had the following outstanding interest rate swaps (dollars in thousands):

Effective Date	Expiration Date	Counterparty	Index (1)		Notional		Fixed Rate
9/1/2019	12/21/2025	KeyBank	Daily SOFR	(2)	100,000		1.4180	%
9/1/2019	12/21/2025	KeyBank	Daily SOFR	(2)	50,000		1.4190	%
2/3/2020	2/1/2025	KeyBank	Daily SOFR	(2)	50,000		1.2790	%
3/2/2020	3/3/2025	KeyBank	Daily SOFR	(2)	20,000		0.9140	%
3/31/2022	11/1/2025	KeyBank	Daily SOFR		100,000		1.5110	%
3/31/2022	11/1/2025	KeyBank	Daily SOFR		100,000		1.9190	%
3/31/2022	11/1/2025	KeyBank	Daily SOFR		50,000		2.4410	%
6/1/2022	11/1/2025	Mizuho	Daily SOFR		100,000		2.6284	%
6/1/2022	11/1/2025	Mizuho	Daily SOFR		100,000		2.9413	%
6/1/2022	11/1/2025	Mizuho	Daily SOFR		100,000		2.7900	%
7/1/2022	11/1/2025	Mizuho	Daily SOFR		100,000		2.6860	%
4/3/2023	11/1/2025	Mizuho	Daily SOFR		250,000		3.5993	%
					$	1,120,000	2.4682	%	(3)

(1)	As of September 30, 2024, daily SOFR was 4.9600%.
(2)	These interest rate swaps previously referenced one-month LIBOR, which ceased publication on June 30, 2023. Beginning July 1, 2023, these interest rate swaps transitioned to daily SOFR plus 0.1145% for the floating rate.
(3)	Represents the weighted average fixed rate of the interest rate swaps which have a combined weighted average fixed rate of 2.4682%.

As of September 30, 2024, the Company had the following outstanding interest rate cap (dollars in thousands):

Derivative	Notional		Expiration Date	Index	Index as of September 30, 2024		Strike Rate
Interest Rate Cap	$	300,000	11/1/2025	One-Month Term SOFR	4.8457	%	1.50	%

The table below presents the fair value of the Company’s derivative financial instruments, which are presented on the consolidated balance sheets as of September 30, 2024 and December 31, 2023 (in thousands):

		Asset Derivatives				Liability Derivatives
	Balance Sheet Location	September 30, 2024		December 31, 2023		September 30, 2024		December 31, 2023
Derivatives designated as hedging instruments:
Interest rate swaps	Interest rate derivatives, at fair value	$	13,360	$	34,194	$	—	$	—
Derivatives not designated as hedging instruments:
Interest rate swaps	Interest rate derivatives, at fair value	1,570		—		—		—
Interest rate caps	Interest rate derivatives, at fair value	7,273		14,222		—		—
Total		$	22,203	$	48,416	$	—	$	—

Derivatives not designated as hedges are not speculative and are used to manage the Company’s exposure to interest rate movements but either do not meet the strict requirements to apply hedge accounting in accordance with FASB ASC 815, Derivatives and Hedging, or the Company has elected not to designate such derivatives as hedges. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in net income (loss) as interest expense. For the nine months ended September 30, 2024, $1.2 million of unrealized loss on interest rate hedges have been recorded directly as an increase to interest expense on the consolidated statements of operations and comprehensive income (loss). The table below presents the effect of the Company’s derivative financial instruments on the consolidated statements of operations and comprehensive income (loss) for the three and nine months ended September 30, 2024 and 2023 (in thousands):

		For the Three Months Ended,				For the Nine Months Ended,
	Location of gain/(loss) recognized on Statement of Operations and Comprehensive Income/(Loss)	September 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Derivatives designated as hedging instruments:
Interest rate swaps	Unrealized gain/(loss) on interest rate hedges	$	(14,823)	$	163	$	(18,055)	$	6,297
Derivatives not designated as hedging instruments:
Interest rate swaps	Interest expense	2,112		—		1,209		—
Interest rate caps	Interest expense	5,503		(639)		6,949		(1,386)
Total		$	(7,208)	$	(476)	$	(9,897)	$	4,911

The Class A, Class B and Class C ABS II Certificates that the Company purchased and retained were recorded at fair value on the consolidated balance sheets in previous reporting periods. Given these certificates were sold before September 30, 2024, the value of these assets is zero as of September 30, 2024.

ABS Class F Retention Certificates

The Class F Certificates that the Company purchased and retained as part of the ABS I transaction, are classified as held to maturity and are valued at amortized cost. As of September 30, 2024 and December 31, 2023, the carrying value of the ABS I Class F Certificate was $39.1 million and $39.1 million, respectively.

The Class F Certificates that the Company purchased and retained as part of the ABS II transaction, are classified as held to maturity and are valued at amortized cost. As of September 30, 2024, the carrying value of the ABS II Class F Certificate was $39.9 million.

The table below presents the carrying value (outstanding principal balance) and estimated fair value of our debt at September 30, 2024 and December 31, 2023 (in thousands):

	September 30, 2024				December 31, 2023
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Debt	$	2,573,984	$	2,502,753	$	2,491,194	$	2,365,209

The following table sets forth a summary of the Company’s held for sale assets and real estate assets that underwent a casualty related impairment that were accounted for at fair value on a nonrecurring basis as of their respective measurement date (in thousands):

			Fair Value Hierarchy Level
Description	Fair Value		Level 1		Level 2		Level 3
Assets held at September 30, 2024
Real estate assets - impaired at March 31, 2024	$	14,702	$	—	$	—	$	14,702
Real estate assets - impaired at June 30, 2024	$	13,287	$	—	$	—	$	13,287
Real estate assets - impaired at September 30, 2024	$	17,327	$	—	$	—	$	17,327

10

7. Stockholders’ Equity

The Company issued shares under the Company’s distribution reinvestment program (the “DRIP”) during the nine months ended September 30, 2024. Common Stock shares issued under the DRIP are issued at a 3% discount to the then-current NAV per share and the Company does not receive any cash for DRIP issuances as those dividends are instead reinvested into the Company. During the nine months ended September 30, 2024 and 2023, the Company issued 321,642 and 221,698 shares of Common Stock, respectively, for equity contributions of $17.3 million and $12.5 million, respectively, under the DRIP. During the three months ended September 30, 2024 and 2023, the Company issued approximately 104,007 shares and zero shares of Common Stock, respectively, for equity contributions of approximately $5.9 million and $0.0 million, respectively, under the DRIP.

2018 Long-Term Incentive Plan

The Company adopted the 2018 LTIP whereby the Board, or a committee thereof, granted awards of RSUs or PI Units to certain employees of the Company and the Adviser, or others at the discretion of the Board (including the directors and officers of the Company or other service providers of the Company or the OP). Under the terms of the 2018 LTIP, 426,307 shares of Common Stock were initially reserved, subject to automatic increase on January 1st of each year beginning with January 1, 2019 by a number equal to 10% of the total number of OP Units and vested PI Units outstanding on December 31st of the preceding year (the “2018 LTIP Share Reserve”), provided that the Board could act prior to each such January 1st to determine that there would be no increase for such year or that the increase would be less than the number of shares by which the 2018 LTIP Share Reserve would otherwise increase. In addition, the shares of Common Stock available under the 2018 LTIP could not exceed in the aggregate 10% of the number of OP Units and vested PI Units outstanding at the time of measurement. Grants could be made annually by the Board, or more or less frequently in the Board’s sole discretion. Vesting of grants made under the 2018 LTIP occur ratably over a period of time as determined by the Board and could include the achievement of performance metrics, also as determined by the Board in its sole discretion.

2023 Long-Term Incentive Plan

On July 11, 2023, the Company’s stockholders approved the 2023 LTIP to replace the 2018 LTIP and on July 20, 2023, the Company filed a registration statement on Form S-8 registering 1,000,000 shares of Common Stock which the Company may issue pursuant to the 2023 LTIP. Under the 2023 LTIP, the compensation committee of the Board may grant awards of option rights, stock appreciation rights, restricted stock, RSUs, performance shares, performance share units or cash incentive awards, or PI Units to directors and officers of the Company or other service providers of the Company and the OP, including employees of the Adviser. Under the terms of the 2023 LTIP, 1,000,000 shares of Common Stock were initially reserved, subject to automatic increase on January 1st of each year beginning with January 1, 2024 by a number equal to 10% of the total number of OP Units and vested PI Units outstanding on December 31st of the preceding year (the “Share Reserve”), provided that the Board may act prior to each such January 1st to determine that there will be no increase for such year or that the increase will be less than the number of shares by which the Share Reserve would otherwise increase. Vesting of grants made under the 2023 LTIP will occur over a period of time as determined by the compensation committee and may include the achievement of performance metrics, also as determined by the compensation committee in its sole discretion.

RSU Grants Under the 2018 LTIP and 2023 LTIP

On December 10, 2019, a total of 73,700 RSUs were granted to certain employees of the Adviser and officers of the Company. On May 11, 2020, a total of 179,858 RSUs were granted to certain employees of the Adviser, officers of the Company and independent Board members. On February 15, 2021, a total of 191,506 RSUs were granted to certain employees of the Adviser, officers of the Company and independent Board members. On February 17, 2022, a total of 185,111 RSUs were granted to certain employees of the Adviser, officers of the Company and independent Board members. On April 11, 2023, a total of 186,770 RSUs were granted to certain employees of the Adviser, officers of the Company, and independent Board members. On April 3, 2024, a total of 191,937 RSUs were granted to certain employees of the Adviser, officers of the Company, and independent Board members. The RSUs granted to certain employees of the Adviser and officers of the Company on April 11, 2023, February 17, 2022, February 15, 2021 and May 11, 2020 vest 50% ratably over four years and 50% at the successful completion of an initial public offering. The RSUs granted to certain employees of the Adviser and officers of the Company on April 3, 2024 vest 50% ratably over four years and 50% at the successful completion of an initial public offering or the listing of the Company's Common Stock on a national securities exchange. The RSUs granted to independent Board members fully vest on the first anniversary of the grant date. Any unvested RSU is forfeited, except in limited circumstances, as determined by the compensation committee of the Board, when the recipient is no longer employed by the Adviser. Forfeitures are recognized as they occur. RSUs are valued at fair value (which is the NAV per share in effect) on the date of grant, with compensation expense recorded in accordance with the applicable vesting schedule that approximates a straight-line basis. Beginning on the date of grant, RSUs accrue dividends that are payable in cash on the vesting date. Once vested, the RSUs convert on a one-for-one basis into Common Stock.

As of September 30, 2024, the number of RSUs granted that are outstanding was as follows (dollars in thousands):

Dates	Number of RSUs		Value (1)
Outstanding December 31, 2023	569,732		$	27,467
Granted	191,937		11,315
Vested	(93,353)	(2)	(4,464)
Forfeited	—		—
Outstanding September 30, 2024	668,316		$	34,318

(1)	Value is based on the number of RSUs granted multiplied by the most recent NAV per share on the date of grant, which was $58.95 for the April 3, 2024 grant, $63.04 for the April 11, 2023 grant, $54.14 for the February 17, 2022 grant, $36.56 for the February 15, 2021 grant, $30.82 for the May 11, 2020 grant, and $29.85 for the December 10, 2019 grant.
(2)	Certain grantees elected to net the taxes owed upon vesting against the shares of Common Stock issued resulting in 73,520 shares of Common Stock being issued as shown on the consolidated statements of stockholders' equity.

The vesting schedule for the outstanding RSUs is as follows:

Vest Date	RSUs Vesting
February 15, 2025	21,729
February 17, 2025	21,442
April 3, 2025	31,784
April 11, 2025	22,029
February 17, 2026	21,442
April 3, 2026	22,879
April 11, 2026	22,029
April 3, 2027	22,879
April 11, 2027	22,029
April 3, 2028	22,879
Upon successful completion of IPO*	437,195
	668,316

* Upon successful completion of an initial public offering of the Company (“IPO”), an additional 437,195 RSUs will vest immediately.

For the three months ended September 30, 2024 and 2023, the Company recognized approximately $1.5 million and $1.3 million, respectively, of non-cash compensation expense related to the RSUs, which is included in general and administrative expenses on the consolidated statements of operations and comprehensive income (loss). For the nine months ended September 30, 2024 and 2023, the Company recognized approximately $4.4 million and $3.4 million, respectively, of non-cash compensation expense related to the RSUs, which is included in corporate general and administrative expenses on the consolidated statements of operations and comprehensive income (loss). As of September 30, 2024, total unrecognized compensation expense on RSUs was approximately $11.6 million, and the expense is expected to be recognized over a weighted average vesting period of 1.4 years.

Performance Share Grants under the 2023 LTIP

In connection with the Internalization of the Manager and under the 2023 LTIP, on August 3, 2023, performance shares were granted to certain executives with a target of 63,452 performance shares. Vesting of the performance shares is based on the achievement of annual Portfolio growth, annual growth of rehabilitations of properties in the Portfolio, net operating income growth from 2023 to 2025 and core funds from operations per share growth from 2023 to 2025, the achievement of which may increase or decrease the number of shares which the grantee earns and therefore receives upon vesting. If the performance metrics are achieved, the performance shares based on the achievement of annual Portfolio growth and annual growth of rehabilitations of properties in the Portfolio vest 25% ratably over four years and the performance shares based on the achievement of net operating income growth over the next three years and core funds from operations per share growth over the next three years vest 50% ratably over two years. As of September 30, 2024, it was determined that 23,794 performance shares were earned by executives of the Manager based on annual Portfolio growth and annual growth of rehabilitations of properties in the Portfolio. Any unvested performance share granted to an employee is forfeited, except in limited circumstances, as determined by the compensation committee of the Board, when the recipient is no longer employed by the Company. Forfeitures are recognized as they occur. Beginning on the date of grant, performance shares accrue dividends that are payable in cash on the vesting date. Once vested, the performance shares convert on a one-for-one basis into Common Stock.

As of September 30, 2024, the number of performance shares earned was as follows (dollars in thousands):

Dates	Number of performance shares	Value (1)
Outstanding December 31, 2023	23,794	$	1,433
Earned	—	—
Vested	—	—
Forfeited	—	—
Outstanding September 30, 2024	23,794	$	1,433

(1) Value is based on the number of performance shares granted multiplied by the most recent NAV per share on the date the share is earned, which was $60.23 for the shares earned during the year ended December 31, 2023.

The vesting schedule for the outstanding performance shares is as follows:

Vest Date	Performance shares Vesting
January 1, 2025	5,949
January 1, 2026	5,948
January 1, 2027	5,949
January 1, 2028	5,948
	23,794

Series B Preferred Stock

On July 31, 2023, the Company issued 2,548,240 shares of 9.50% Series B Cumulative Redeemable Preferred Stock, par value $0.01 per share (the “Series B Preferred Stock” and collectively with the 6.50% Series A Cumulative Redeemable Preferred Stock (the “Series A Preferred Stock”), the “Preferred Stock”), of the Company in a private offering for gross proceeds of approximately $63.7 million (the “Series B Preferred Offering”). Beginning on the day after the fourth anniversary of the original issuance date, the Series B Preferred Stock dividend rate will increase to 10.00% per annum; beginning on the day after the fifth anniversary of the original issuance date, the Series B Preferred Stock dividend

rate will increase to 11.00% per annum; and beginning on the day after the sixth anniversary of the original issuance date and each anniversary thereafter, the Series B Preferred Stock dividend rate will increase an additional 2.00% per annum, with a maximum Series B Preferred Stock dividend rate of 17.00% per annum. The dividend rate will also increase upon the occurrence of certain default circumstances, as defined in the Articles Supplementary setting forth the terms of the Series B Preferred Stock. The Company has the option to redeem, in whole or in part, the Series B Preferred Stock at any time, from time to time, subject to certain redemption premiums if redeemed prior to the second anniversary of the original issuance date. The Company currently intends to exercise its option to redeem all of the outstanding Series B Preferred Stock on or prior to the fourth anniversary of the original issuance date. With respect to priority of payment of dividends, the Series B Preferred Stock ranks senior to all classes of Common Stock, and the Series B Preferred Stock and Series A Preferred Stock rank on parity with each other. Upon any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company, the Series B Preferred stockholders are entitled to be paid out, at a price equal to $25.00 per share plus any accrued and unpaid distributions (whether or not declared), after payment of the Company's debts and other liabilities. An aggregate of approximately $2.9 million in selling commissions and fees were paid in connection therewith. The Ohio State Life Insurance Company, an entity that may be deemed an affiliate of the Adviser through common beneficial ownership, purchased shares of Series B Preferred Stock in the Series B Preferred Offering. A majority of net proceeds were used to partially pay down the Warehouse Facility and Bridge Facility III and fund a $20.0 million reserve with KeyBank.

11

8. Noncontrolling Interests

Redeemable Noncontrolling Interests in the OP

The following table presents the capital contributions, distributions, and profits and losses allocated to PI Units and OP Units not held by the Company (the “noncontrolling interests”) in the OP (in thousands):

	Balances
Redeemable noncontrolling interests in the OP, December 31, 2023	$	251,503
Net loss attributable to redeemable noncontrolling interests in the OP	(20,820)
Contributions by redeemable noncontrolling interests in the OP	4,975
Distributions to redeemable noncontrolling interests in the OP	(7,942)
Redemptions by redeemable noncontrolling interests in the OP	(457)
Equity-based compensation	10,758
Other comprehensive loss attributable to redeemable noncontrolling interests in the OP	(2,707)
Adjustment to reflect redemption value of redeemable noncontrolling interests in the OP	25,549
Redeemable noncontrolling interests in the OP, September 30, 2024	$	260,859

As of September 30, 2024, the Company held 20,058,716 Class A OP Units, NREO held 2,814,063 Class B OP Units, NRESF held 94,790 Class C OP Units, GAF REIT held 149,588 Class C OP Units and the VineBrook Contributors and other Company insiders held 1,645,961 Class C OP Units. As of September 30, 2024, the Company held all outstanding 6.50% Series A Cumulative Redeemable Preferred Units and 9.50% Series B Cumulative Redeemable Preferred Units of the OP.

PI Unit Grants Under the 2018 LTIP

In connection with the 2018 LTIP, PI Units have been issued to key personnel and senior management. On April 19, 2019, a total of 40,000 PI Units were granted; on November 21, 2019, a total of 80,399 PI Units were granted; on May 11, 2020, a total of 219,826 PI Units were granted; on November 30, 2020, a total of 11,764 PI Units were granted; on May 31, 2021, a total of 246,169 PI Units were granted; on August 10, 2022, a total of 27,849 PI Units were granted; and on February 22, 2023, a total of 79,304 PI Units were granted. The PI Units are a special class of partnership interests in the OP with certain restrictions, which are convertible into Class C OP Units, subject to satisfying vesting and other conditions. PI Unit holders are entitled to receive the same distributions as holders of our OP Units (only if we declare and pay such distributions). The PI Units granted in 2019 generally fully vest over a period of two to four years. The PI Units granted on May 11, 2020 and May 31, 2021 vest 50% ratably over four years and 50% at the successful completion of an initial public offering and the PI Units granted on November 30, 2020 vest 100% ratably over four years or alternatively 100% on the successful completion of an initial public offering. The PI Units granted on August 10, 2022 and February 22, 2023 generally vest ratably over five years. Once vested and converted into Class C OP Units in accordance with the OP LPA, the PI Units will then be fully recognized as Class C OP Units, which are subject to a one year lock up period before they can be converted to Common Stock. Any unvested PI Unit granted to an employee is forfeited, except in limited circumstances, as determined by the compensation committee of the Board, when the recipient is no longer employed by the Company. Forfeitures are recognized as they occur. PI Units are valued at fair value on the date of grant, with compensation expense recorded in accordance with the applicable vesting schedule over the periods in which the restrictions lapse, that approximates a straight-line basis. We valued the PI Units at a per-unit value equivalent to the per-share offering price of our OP Units less discounts estimated by a third-party consultant. Beginning on the date of grant, PI Units accrue dividends that are payable in cash quarterly (if we declare and pay distributions to holders of our OP Units).

PI Unit Grants Under the 2023 LTIP

In connection with the Internalization of the Manager and under the 2023 LTIP, PI Units have been issued to executives of the Manager. On August 3, 2023, a total of 475,888 PI Units were granted. The PI Units are a special class of partnership interests in the OP with certain restrictions, which are convertible into Class C OP Units, subject to satisfying vesting and other conditions. PI Unit holders are entitled to receive the same distributions as holders of our OP Units (only if we declare and pay such distributions). The PI Units granted on August 3, 2023 vest 100% on February 28, 2026. Once vested and converted into Class C OP Units in accordance with the OP LPA, the PI Units will then be fully recognized as Class C OP Units, which are subject to a one year lock up period before they can be converted to Common Stock. Any unvested PI Unit granted to an employee is forfeited, except in limited circumstances, as determined by the compensation committee of the Board, when the recipient is no longer employed by the Company. Forfeitures are recognized as they occur. PI Units are valued at fair value on the date of grant, with compensation expense recorded in accordance with the applicable vesting schedule over the periods in which the restrictions lapse, that approximates a straight-line basis. We valued the PI Units at a per-unit value equivalent to the per-share offering price of our OP Units less a discount for lack of marketability and other discounts estimated by a third-party consultant. Beginning on the date of grant, PI Units accrue dividends that are payable in cash quarterly (if we declare and pay distributions to holders of our OP Units).

As of September 30, 2024, the number of PI Units granted that are outstanding and unvested was as follows (dollars in thousands):

Dates	Number of PI Units	Value (1)
Outstanding December 31, 2023	893,733	$	47,438
Granted	—	—
Vested	(78,423)	(3,295)
Forfeited	—	—
Outstanding September 30, 2024	815,310	$	44,143

(1) Value is based on the number of PI Units granted multiplied by the estimated per unit fair value on the date of grant, which was $27.88 for the April 19, 2019 grant, $29.12 for the November 21, 2019 grant, $30.16 for the May 11, 2020 grant, $33.45 for the November 30, 2020 grant, $38.29 for the May 31, 2021 grant, $61.74 for the August 10, 2022 grant, $63.04 for the February 22, 2023 grant and $61.63 for the August 3, 2023 grant.

The vesting schedule for the PI Units is as follows:

Vest Date	PI Units Vesting
November 30, 2024	1,470
February 22, 2025	15,544
April 25, 2025	5,171
May 27, 2025	398
May 31, 2025	29,831
February 22, 2026	15,544
February 28, 2026	475,888
April 25, 2026	5,171
May 27, 2026	398
February 22, 2027	15,544
April 25, 2027	5,171
May 27, 2027	398
February 22, 2028	15,544
Upon successful completion of IPO or change in control*	229,238
	815,310

*Upon successful completion of an IPO, or an earlier change in control with respect to awards held by certain key executives, an additional 229,238 PI Units will vest immediately instead of vesting ratably according to the schedule above.

For the nine months ended September 30, 2024 and 2023, the OP recognized approximately $10.8 million and $4.9 million, respectively, of non-cash compensation expense related to the PI Units, which is included in general and administrative expenses on the Company’s consolidated statements of operations and comprehensive income (loss). As of September 30, 2024, total unrecognized compensation expense on PI Units was approximately $20.9 million, and the expense is expected to be recognized over a weighted average vesting period of 1.7 years.

The table below presents the consolidated Common Stock and OP Units outstanding held by the noncontrolling interests (“NCI”), as the OP Units held by the Company are eliminated in consolidation.

Year End	Common Stock Shares Outstanding	OP Units Held by NCI	Consolidated Common Stock Shares and NCI OP Units Outstanding
March 31, 2024	25,132,484	4,559,801	29,692,285
June 30, 2024	25,252,565	4,689,964	29,942,529
September 30, 2024	25,339,388	4,704,401	30,043,789

Redeemable Noncontrolling Interests in Consolidated VIEs

As of September 30, 2024, approximately 4,850,048 limited partnership units of SFR OP (“SFR OP Units”) were held by affiliates of the Company. The following table presents the capital contributions, distributions, and profits and losses allocated to SFR OP Units not held by the Company (the “redeemable noncontrolling interests in consolidated VIEs”) (in thousands):

	Balances
Redeemable noncontrolling interests in consolidated VIEs, December 31, 2023	$	105,018
Net loss attributable to redeemable noncontrolling interests in consolidated VIEs	(19,997)
Contributions by redeemable noncontrolling interests in consolidated VIEs	3,987
Distributions to redeemable noncontrolling interests in consolidated VIEs	(3,987)
Adjustment to reflect redemption value of redeemable noncontrolling interests in consolidated VIEs	14,793
Redeemable noncontrolling interests in consolidated VIEs, September 30, 2024	$	99,814

Noncontrolling Interests in Consolidated VIEs

The following table presents the capital contributions, distributions, and profits and losses allocated to Class A common stock, par value $0.01 per share of NexPoint Homes (the “NexPoint Homes Class A Shares”) and NexPoint Homes Class I common stock, par value $0.01 (the “NexPoint Homes Class I shares,” collectively with the NexPoint Homes Class A Shares, the “NexPoint Homes Shares”) not held by the Company (the “noncontrolling interests in consolidated VIEs”) (in thousands):

	Balances
Noncontrolling interests in consolidated VIEs, December 31, 2023	$	11,742
Net loss attributable to noncontrolling interests in consolidated VIEs	(2,754)
Contributions by noncontrolling interests in consolidated VIEs	952
Distributions to noncontrolling interests in consolidated VIEs	(680)
Redemptions by noncontrolling interests in consolidated VIEs	(210)
Noncontrolling interests in consolidated VIEs, September 30, 2024	$	9,050

12

9. Redeemable Series A Preferred Stock

The Company has issued 5,000,000 shares of Series A Preferred Stock as of September 30, 2024. The Series A Preferred Stock has a redemption value of $25.00 per share and will be redeemed on October 7, 2027 unless a Listing Event is effectuated as defined in the Articles of Amendment and Restatement. With respect to priority of payment of dividends, the Series A Preferred Stock ranks senior to all classes of Common Stock, and the Series A Preferred Stock and Series B Preferred Stock rank on parity with each other. Upon any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company, the Series A Preferred stockholders are entitled to be paid out, at a price equal to $25.00 per share, plus an amount equal to any accrued and unpaid dividends (whether or not earned, authorized or declared), after payment of the Company's debts and other liabilities.

The following table presents the redeemable Series A Preferred Stock (dollars in thousands):

	Series A Preferred Stock shares	Balances
Redeemable Series A Preferred stock, December 31, 2023	5,000,000	$	122,225
Repurchase of Redeemable Series A Preferred stock	(4,000)	(61)
Issuance costs related to Redeemable Series A Preferred stock	—	(25)
Net income attributable to Redeemable Series A Preferred stockholders	—	6,091
Dividends declared to Redeemable Series A Preferred stockholders	—	(6,091)
Accretion to redemption value	—	169
Redeemable Series A Preferred stock, September 30, 2024	4,996,000	$	122,308

13

10. Related Party Transactions

VineBrook Advisory Fee

Pursuant to the Advisory Agreement, the Company will pay the Adviser, on a monthly basis in arrears, an advisory fee at an annualized rate of 0.75% of the gross asset value of the Company (as calculated pursuant to the terms of the Advisory Agreement). The Adviser will manage the Company’s business including, among other duties, advising the Board to issue distributions, preparing our quarterly and annual consolidated financial statements prepared under GAAP, development and maintenance of internal accounting controls, management and conduct of maintaining our REIT status, calculation of our NAV and recommending the appropriate NAV to be set by the Board, reporting to holders of Common Stock, our tax filings, and other responsibilities customary for an external advisor to a business similar to ours. With certain specified exceptions, the advisory fee together with reimbursement of operating and offering expenses may not exceed 1.5% of average total assets of the Company and the OP, as determined in accordance with GAAP on a consolidated basis, at the end of each month (or partial month) (i) for which any advisory fee is calculated or (ii) during the year for which any expense reimbursement is calculated.

For the three months ended September 30, 2024 and 2023, the Company incurred advisory fees of approximately $4.4 million and $5.6 million, respectively, in the VineBrook reportable segment which is included in advisory fees on the consolidated statements of operations and comprehensive income (loss). For the nine months ended September 30, 2024 and 2023, the Company incurred advisory fees of approximately $13.0 million and $16.3 million, respectively, in the VineBrook reportable segment which are included in advisory fees on the consolidated statements of operations and comprehensive income (loss).

Management Fee

Prior to the Internalization, the equity holders of the Manager were holders of noncontrolling interests in the OP and comprised a portion of the VineBrook Contributors. Through this noncontrolling ownership, the Manager was deemed to be a related party prior to the Internalization. Prior to the Internalization, pursuant to the Management Agreements, the OP paid the Manager (i) an acquisition fee equal to 1.0% of the purchase price paid for any new property acquired during the month, (ii) a construction fee monthly in arrears that shall not exceed the greater of 10% of construction costs or $1,000, whichever is higher, in connection with the repair, renovation, improvement or development of any newly acquired property, and (iii) a property management fee monthly in arrears equal to a percentage of collected rental revenues for all properties during the month as follows:

•8.0% of collected rental revenue up to and including $45.0 million on an annualized basis;

•7.0% of the incremental collected rental revenue above $45.0 million but below and including $65.0 million on an annualized basis;

•6.0% of the incremental collected rental revenue above $65.0 million but below and including $85.0 million on an annualized basis; and

•5.0% of the incremental collected rental revenue above $85.0 million on an annualized basis.

Under the Management Agreements and the Side Letter, the aggregate fees that the Manager could earn in any fiscal year were capped such that the Manager’s EBITDA (as defined in the Management Agreements) derived from these fees could not exceed the greater of $1.0 million or 0.5% of the combined equity value of the Company and the OP on a consolidated basis, calculated on the first day of each fiscal year based on the aggregate NAV of the outstanding Common Stock and OP Units held other than by the Company on the last business day of the prior fiscal year (the “Manager Cap”). The aggregate fees up to the Manager Cap were payable (1) in cash in an amount equal to the tax obligations of the Manager’s equity holders resulting from the aggregate management fees earned in such fiscal year up to a maximum rate of 25% (the “Manager Cash Cap”) and (2) with respect to the remaining portion of the aggregate fees, in Class C OP Units, at a price per OP Unit equal to the Cash Amount (as defined in the OP LPA). The aggregate fees paid in cash that exceeded the Manager Cash Cap were rebated back to the OP. No Manager Cash Cap rebate was recorded for the nine months ended September 30, 2024 and 2023.

Prior to and following the Internalization, the Manager is responsible for the day-to-day management of the properties, acquisition of new properties, disposition of existing properties (with acquisition and disposition decisions made under the approval of the investment committee and the Board), leasing the properties, managing resident issues and requests, collecting rents, paying operating expenses, managing maintenance issues, accounting for each property using GAAP, and other responsibilities customary for the management of SFR properties. On August 3, 2023, we completed the Internalization of our Manager following which the VineBrook Portfolio is internally managed, and our employees are responsible for the day-to-day management of the VineBrook Portfolio. See Note 13 and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—The Internalization” for additional information on the Internalization.

Property management fees are included in property management fees on the consolidated statements of operations and comprehensive income (loss) and acquisition and construction fees are capitalized into each home and are included in buildings and improvements on the consolidated balance sheet and are depreciated over the useful life of each property. Following the Internalization, property management fees are eliminated in consolidation of the Manager’s operations for the VineBrook reportable segment. Additionally, following the Internalization, acquisition fees and construction fees are no longer applicable for the VineBrook reportable segment.

As of the date of the Internalization, approximately $2.1 million was due to the Manager, net of receivables due from the Manager, which was settled as an intercompany transaction following the consolidation of the Manager on August 3, 2023. The following table is a summary of fees that the OP incurred to the Manager and its affiliates, as well as reimbursements paid to the Manager and its affiliates for various operating expenses the Manager paid on the OP’s behalf, under the terms of Management Agreements and Side Letter, for the nine months ended September 30, 2024 and 2023 (dollars in thousands):

		For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	Location on Financial Statements	2024 (1)		2023		2024 (1)		2023
Fees Incurred
Property management fees	Statement of Operations	$	—	$	1,182	$	—	$	10,326
Acquisition fees	Balance Sheet	—		—		—		4
Construction supervision fees	Balance Sheet	—		311		—		7,590
Reimbursements
Payroll and benefits	Balance Sheet and Statement of Operations	—		2,908		—		23,339
Other reimbursements	Balance Sheet and Statement of Operations	—		210		—		1,600
Totals		$	—	$	4,611	$	—	$	42,859

(1) Following the Internalization of the Manager on August 3, 2023, the Manager became a consolidated entity and as such activity following that date is excluded from the table above.

Internalization of the Adviser

The Company may acquire all of the outstanding equity interests of the Adviser (an “Adviser Internalization”) under certain provisions (a “Purchase Provision”) of the Advisory Agreement to effect an Adviser Internalization upon the payment of a certain fee (an “Adviser Internalization Fee”). If the Company determines to acquire the equity interests of the Adviser, the applicable Purchase Provision of the Advisory Agreement provides that the Adviser must first agree to such acquisition and that the Company will pay the Adviser an Adviser Internalization Fee equal to three times the total of the prior 12 months’ advisory fee, payable only in capital stock of the Company.

Internalization of the Manager

On June 28, 2022, the OP notified the Manager that it elected to exercise its purchase provision of the Manager under the Side Letter. On August 3, 2023, the OP, VineBrook Management, LLC, VineBrook Development Corporation, VineBrook Homes Property Management Company, Inc., VineBrook Homes Realty Company, Inc., VineBrook Homes Services Company, Inc. and certain individuals set forth therein (each a “Contributor” and collectively, the “Contributors”) and Dana Sprong, solely in his capacity as the representative of the Contributors (the “Contributors Representative”) entered into a contribution agreement (the “Contribution Agreement”) pursuant to which, among other things, the OP acquired all of the outstanding equity interests in the Manager (the “Internalization”). As a result of the Internalization, the Manager became a wholly owned subsidiary of the OP and the VineBrook Portfolio is now internally managed. See Note 13 and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—The Internalization” for additional information on the Internalization.

Series B Preferred Offering

The Ohio State Life Insurance Company, an entity that may be deemed an affiliate of the Company's Adviser through common beneficial ownership, purchased shares of Series B Preferred Stock in the Series B Preferred Offering (See Note 7).

Termination Fees Payable to the Adviser

If the Advisory Agreement is terminated without cause by the Company or the SPE, as applicable, or is otherwise terminated under certain conditions, the Adviser, will be entitled to a termination fee (an “Adviser Termination Fee”) in the amount of three times the prior 12 months’ advisory fee, in the case of termination of the Advisory Agreement. In addition to termination by the Company without cause, the Adviser will be entitled to the Adviser Termination Fee if the Adviser terminates the Advisory Agreement without cause or terminates the agreement due to the occurrence of certain specified breaches of the Advisory Agreement by the Company. The Advisory Agreement may be terminated without cause by the Company or the Adviser with 180 days’ notice prior to the expiration of the then-current term.

NexBank

The Company and the OP maintain bank accounts with NexBank. NexBank charges no recurring maintenance fees on the accounts. As of September 30, 2024, in the VineBrook reportable segment, the Company and OP had approximately less than $0.1 million and less than $0.1 million, respectively, in cash at NexBank. As of September 30, 2024, in the NexPoint Homes reportable segment, NexPoint Homes and the SFR OP had approximately $0.1 million and $0.6 million, respectively, in cash at NexBank. As of December 31, 2023, in the VineBrook reportable segment, the Company and OP had approximately $0.1 million and less than $0.1 million, respectively, in cash at NexBank. As of December 31, 2023, in the NexPoint Homes reportable segment, NexPoint Homes and the SFR OP had approximately $0.1 million and $0.1 million, respectively, in cash at NexBank.

A director of the Company, who controls the Adviser, which externally manages the Company, also (i) is the beneficiary of a trust that indirectly owns 100% of the limited partnership interests in the parent of Adviser and directly owns 100% of the general partnership interests in the parent of the Adviser and (ii) is a director of the holding company of NexBank, directly owns a minority of the common stock of NexBank, and is the beneficiary of a trust that directly owns a substantial portion of the common stock of NexBank.

NexPoint Homes Transactions

In connection with the Company’s consolidated investment in NexPoint Homes, the Company consolidated non-controlling interests in NexPoint Homes that were contributed by affiliates of the Adviser. As of September 30, 2024, these affiliates had contributed approximately $120.1 million of equity to NexPoint Homes. Additionally, the Company has consolidated five SFR OP convertible notes that are loans from affiliates of the Adviser to the SFR OP that bear interest at 7.50% and mature on June 30, 2027 (the “SFR OP Convertible Notes”). The holders of the SFR OP Convertible Notes may elect to convert all or part of the outstanding principal and accrued but unpaid interest into SFR OP Units, as calculated based on the current NAV at time of conversion. The SFR OP may prohibit conversion if certain conditions exist, including if the conversion would result in a negative impact to the REIT status of NexPoint Homes. As of September 30, 2024, the total principal outstanding on the SFR OP Convertible Notes was approximately $102.6 million (which exclude amounts owed to NexPoint Homes by the SFR OP, as these are eliminated in consolidation) which is included in notes payable on the consolidated balance sheets. For the nine months ended September 30, 2024, the SFR OP recorded approximately $5.8 million of interest expense related to the SFR OP Convertible Notes. As of September 30, 2024, all interest expense related to the SFR OP Convertible Notes remained accrued within accrued interest payable on the consolidated balance sheets.

The Company consolidates an approximately $4.8 million loan from the SFR OP to the NexPoint Homes Manager (defined below) (the “HomeSource Note”). The HomeSource Note bears interest at daily SOFR plus 2.00% and matures on February 1, 2027. In connection with the HomeSource Note, the SFR OP received a 9.99% non-voting interest in the HomeSource Operations LLC (the “HomeSource Investment”). The HomeSource Note and the HomeSource Investment are included in prepaid and other assets on the consolidated balance sheet, in addition to approximately $1.0 million of amounts due from HomeSource for interest on the HomeSource Note and routine funding is included in accounts and other receivables on the consolidated balance sheet.

On June 8, 2022, NexPoint Homes entered into an advisory agreement (the “NexPoint Homes Advisory Agreement”) with NexPoint Real Estate Advisors XI, LP (the “NexPoint Homes Adviser”), an affiliate of the Adviser. Under the terms of the NexPoint Homes Advisory Agreement, the NexPoint Homes Adviser manages the day-to-day affairs of NexPoint Homes for a fee equal to 0.75% of the consolidated enterprise value of NexPoint Homes. Additionally, the NexPoint Homes Adviser charges a fee equal to 0.25% of each transaction in connection with the procurement of debt or equity capital for NexPoint Homes. For the three and nine months ended September 30, 2024, NexPoint Homes incurred advisory fees of approximately $0.9 million and $2.7 million, respectively, in connection with the NexPoint Homes Advisory Agreement, which is included in advisory fees on the consolidated statements of operations and comprehensive income (loss). As of September 30, 2024, NexPoint Homes has $5.5 million of accrued advisory fees payable, which are included in accounts payable and other accrued liabilities on the consolidated balance sheets.

Prior to September 19, 2024, the NexPoint Homes Portfolio was generally managed by HomeSource Operations, LLC, a Delaware limited liability company (the “NexPoint Homes Manager”), pursuant to the terms of a management agreement between the SFR OP and the NexPoint Homes Manager dated June 8, 2022 (the “NexPoint Homes Management Agreement”). In July 2024, the NexPoint Homes Manager notified the SFR OP that the NexPoint Homes Manager intended to cease business operations. On August 8, 2024, the SFR OP provided notice to the NexPoint Homes Manager of breaches by the NexPoint Homes Manager, which the NexPoint Homes Manager failed to cure since it ceased business operations, that entitled the SFR OP to terminate the NexPoint Homes Management Agreement. On September 19, 2024, certain subsidiaries of the SFR OP entered into property management agreements with Mynd Management, Inc. (“Mynd”) to manage the NexPoint Homes Portfolio (the “Mynd Management Agreements”). Mynd is now responsible for the day-to-day management of the NexPoint Homes Portfolio, paying operating expenses, managing maintenance issues, accounting for each property using GAAP, overseeing third-party property managers and other responsibilities customary for the management of SFR properties. Under the Mynd Management Agreements, Mynd is entitled to a property management fee, an asset management services fee, a disposition fee and a construction management fee, in addition to leasing, onboarding and certain inspection fees. The fees are generally paid monthly in arrears.

During the three and nine months ended September 30, 2024, approximately $0.7 million and $3.1 million in fees were earned by the NexPoint Homes Manager in connection with the NexPoint Homes Management Agreement during the three and nine months ended September 30, 2024, respectively. Related to the fees earned by the NexPoint Homes Manager, approximately $0.7 million and $2.9 million were expensed for the three and nine months ended September 30, 2024, respectively, and less than $0.1 million and $0.2 million were capitalized to the property basis based on the nature of the fee for the three and nine months ended September 30, 2024, respectively.

During the three and nine months ended September 30, 2024, less than $0.1 million and less than $0.1 million in fees were earned, respectively, by Mynd in connection with the Mynd Management Agreements. Related to the fees earned by Mynd, less than $0.1 million and less than $0.1 million were expensed for the three and nine months ended September 30, 2024, respectively, and $0 and $0 were capitalized to the property basis based on the nature of the fee for the three and nine months ended September 30, 2024, respectively.

Preferred Equity Investments

During the three months ended September 30, 2024, the OP purchased preferred equity units in Resmark Forney Gateway Holdings, LLC (“RFGH”) and Resmark The Brook Holdings, LLC (“RTB”) from NexPoint Real Estate Finance, Inc. (“NREF”). The parent of the NREF external manager is the parent of the Adviser. On July 18, 2024, July 29, 2024, and September 4, 2024, the OP purchased preferred equity units of RFGH from NREF for approximately $2.8 million, $3.0 million and $2.0 million, respectively. On July 18, 2024, July 29, 2024 and September 4, 2024, the OP purchased preferred equity units of RTB from NREF for $2.8 million, $3.0 million and $2.0 million, respectively. These preferred equity investments yield 11% interest paid in-kind. The total cost basis and accrued interest of $15.9 million of these preferred equity investments as of September 30, 2024 are included in prepaid and other assets on the Company’s consolidated balance sheets.

SFR OP Note Payable III

On July 10, 2024, the SFR OP as borrower entered into a promissory note with NREF as lender (the “SFR OP Note Payable III”) with a total commitment of $5.0 million. The SFR OP Note Payable III matures on July 10, 2025 and bears interest at a fixed rate of 15%. As of September 30, 2024, there was no amount drawn on the SFR OP Note Payable III. The SFR OP drew on the note subsequent to September 30, 2024 (see Note 14).

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11. Commitments and Contingencies

Commitments

In the normal course of business, the Company enters into various construction related purchase commitments with parties that provide these goods and services. In the event the Company were to terminate construction services prior to the completion of projects, the Company could potentially be committed to satisfy outstanding or uncompleted purchase orders with such parties. As of September 30, 2024, management does not anticipate any material deviations from schedule or budget related to rehabilitation projects currently in process.

Contingencies

In the normal course of business, the Company is subject to claims, lawsuits, and legal proceedings. While it is not possible to ascertain the ultimate outcome of all such matters, management believes that the aggregate amount of such liabilities, if any, in excess of amounts provided or covered by insurance, will not have a material adverse effect on the consolidated balance sheets or consolidated statements of operations and comprehensive income (loss) of the Company. The Company is not involved in any material litigation nor, to management’s knowledge, is any material litigation currently threatened against the Company or its properties or subsidiaries.

Whelan Advisory Capital Markets, LLC and Whelan Advisory, LLC (collectively, “Whelan”) entered into an agreement with HomeSource Operations, LLC (“HomeSource”) in which HomeSource agreed to compensate Whelan a percentage of capital invested, contributed, committed or otherwise made available to HomeSource (the “HomeSource Letter Agreement”). Whelan alleges that it is entitled to compensation as a result of the formation of NexPoint Homes. On October 12, 2022, NexPoint Real Estate Advisors, L.P. (“NREA”) received notice that Whelan had filed an arbitration proceeding against HomeSource and NREA before a FINRA arbitration panel. FINRA notified NREA that it was not subject to the arbitration provision contained in the HomeSource Letter Agreement, and NREA declined to voluntarily submit to the jurisdiction of the FINRA tribunal. On November 30, 2023, the tribunal issued an award in favor of Whelan and against HomeSource in the amount of approximately $16.0 million, inclusive of costs and pre-judgment interest. On January 10, 2024, Whelan initiated proceedings in the Southern District of New York to confirm the award in the form of a judgment against HomeSource. On September 11, 2024, the Southern District of New York issued its judgment confirming the Award. On September 8, 2023, Whelan commenced a separate lawsuit in Texas state court against NREA asserting a claim for tortious interference with the HomeSource Letter Agreement and seeking to recover the same fees awarded to Whelan against HomeSource in the arbitration (“Texas Litigation”). The Company is not a defendant in the Texas Litigation, and neither it, nor the Adviser, nor NREA is party to the HomeSource Letter Agreement. On September 30, 2024, Whelan filed a motion to add NexPoint Homes Trust, Inc., NexPoint SFR Operating Partnership, LP, and NexPoint SFR OP GP, LLC as parties to the Texas Litigation. As of this filing, the Texas state court has not ruled on the request to add those parties. Given the ongoing nature of the Texas Litigation, the Company is unable to assess a likely outcome or potential liability at the time. During the three months ended September 30, 2024, the NexPoint Homes Manager notified the SFR OP that the NexPoint Homes Manager would cease business operations in September 2024. The SFR OP has transitioned property management of the NexPoint Homes Portfolio to Mynd, as discussed in Note 10.

The Company is not aware of any environmental liability with respect to the properties it owns that could have a material adverse effect on the Company’s business, assets, or results of operations. However, there can be no assurance that such a material environmental liability does not exist. The existence of any such material environmental liability could have an adverse effect on the Company’s results of operations and cash flows.

15

12. Segment Information

Reportable Segments

Following the formation of NexPoint Homes, the Company has two reportable segments. For the three and nine months ended September 30, 2024 and 2023, all corporate related costs are included in the VineBrook segment to align with how financial information is presented to the chief operating decision maker. The following presents select operational results for the reportable segments (in thousands):

	For the Three Months Ended September 30,
	2024								2023
	Revenues		Expenses		Other income and expenses		Net loss		Revenues		Expenses		Other income and expenses		Net loss
VineBrook	$	80,130	$	115,650	$	(683)	$	(36,203)	$	76,357	$	104,392	$	(35,711)	$	(63,746)
NexPoint Homes	10,526		21,468		(8,946)		(19,888)		12,378		20,771		(215)		(8,608)
Total Company	$	90,656	$	137,118	$	(9,629)	$	(56,091)	$	88,735	$	125,163	$	(35,926)	$	(72,354)

	For the Nine Months Ended September 30,
	2024								2023
	Revenues		Expenses		Other income and expenses		Net loss		Revenues		Expenses		Other income and expenses		Net loss
VineBrook	$	238,412	$	327,032	$	(3,331)	$	(91,951)	$	226,742	$	305,671	$	(107,964)	$	(186,893)
NexPoint Homes	34,274		66,164		(14,957)		(46,847)		36,741		63,297		(274)		(26,830)
Total Company	$	272,686	$	393,196	$	(18,288)	$	(138,798)	$	263,483	$	368,968	$	(108,238)	$	(213,723)

The following presents select balance sheet data for the reportable segments (in thousands):

	As of September 30, 2024						As of December 31, 2023
	VineBrook		NexPoint Homes		Total Company		VineBrook		NexPoint Homes		Total Company
Assets
Gross operating real estate investments	$	2,657,783	$	675,685	$	3,333,468	$	2,671,621	$	761,195	$	3,432,816
Accumulated depreciation and amortization	(299,078)		(58,978)		(358,056)		(233,694)		(41,840)		(275,534)
Net operating real estate investments	2,358,705		616,707		2,975,412		2,437,927		719,355		3,157,282
Real estate held for sale, net	15,261		24,454		39,715		54,615		—		54,615
Net real estate investments	2,373,966		641,161		3,015,127		2,492,542		719,355		3,211,897
Other assets	251,160		31,446		282,606		211,512		29,931		241,443
Total assets	$	2,625,126	$	672,607	$	3,297,733	$	2,704,054	$	749,286	$	3,453,340
Liabilities
Debt payable, net	$	1,926,997	$	530,697	$	2,457,694	$	1,858,946	$	574,728	$	2,433,674
Other liabilities	107,672		40,723		148,395		115,330		29,377		144,707
Total liabilities	$	2,034,669	$	571,420	$	2,606,089	$	1,974,276	$	604,105	$	2,578,381

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13. Internalization of the Manager

On August 3, 2023, the OP, the Contributors and the Contributors Representative entered into the Contribution Agreement pursuant to which, among other things, the OP acquired all of the outstanding equity interests in the Manager. As a result of sending the notice (“Call Right Notice”) to the Manager notifying the Manager of its intention to exercise its right to purchase all of the equity interests of the Manager, the fee in connection with the Internalization (the “Internalization Fee”) the Company paid to acquire the Manager was $21.9 million, prior to closing adjustments, which was fixed based on May 31, 2022 data. The Internalization Fee was paid in a combination of cash and OP Units. As a result of the Internalization, the Manager became a wholly owned subsidiary of the OP and the VineBrook Portfolio is now internally managed.

The Internalization of the Manager was considered to be a business combination in accordance with FASB ASC 805, Business Combinations. The purchase price and related acquisition costs (“Internalization Consideration”) were allocated to the assets acquired and liabilities assumed based on the estimated fair value of the Internalization Consideration transferred at the date of acquisition. The excess of the Internalization Consideration over the fair value of the net assets acquired was allocated to goodwill. Certain assets acquired in connection with the Internalization of the Manager, including intangible assets and goodwill, were calculated using unobservable inputs classified within Level 3 of the fair value hierarchy.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as a part of the Internalization of the Manager as of the date of the acquisition (in thousands). The fair values of the assets acquired and liabilities assumed, which are presented in the table below, and the related acquisition accounting are based on management's estimates and assumptions, as well as information compiled by management.

Cash	$	2,632
Restricted cash	98
Other assets	8,041
Intangible assets	3,500
Goodwill	20,522
Accounts payable and other liabilities	(12,508)
Fair value of acquired net assets	$	22,285	(1)

(1) In addition to the Internalization Fee of $21.9 million, approximately $0.4 million of closing adjustments were included in the purchase price allocation.

17

14. Subsequent Events

The Company evaluated subsequent events through the date the consolidated financial statements were issued, to determine if any significant events occurred subsequent to the balance sheet date that would have a material impact on these consolidated financial statements and determined the following events were material:

Debt Paydowns

Subsequent to September 30, 2024, NexPoint Homes paid down approximately $7.0 million on the NexPoint Homes KeyBank Facility. Approximately $10.0 million remained outstanding on the NexPoint Homes KeyBank Facility as of October 31, 2024.

Common and Preferred Dividends

On October 21, 2024, the Company approved a Common Stock dividend of $0.5301 per share for shareholders of record as of October 21, 2024 that was paid as of October 23, 2024.

On October 28, 2024, the Company approved a Series A Preferred Stock dividend of $0.40625 per share for shareholders of record as of December 24, 2024 that is to be paid on January 10, 2025.

On October 28, 2024, the Company approved a Series B Preferred Stock dividend of $0.59375 per share for shareholders of record as of December 26, 2024 that is to be paid on January 10, 2025.

Dispositions

Subsequent to September 30, 2024, the Company disposed of 23 homes in the VineBrook reportable segment that were classified as held for sale as of September 30, 2024 for net proceeds of approximately $2.6 million.

Homes Classified as Held For Sale Subsequent to September 30, 2024

Subsequent to September 30, 2024, the Company moved 81 homes in the VineBrook reportable segment to held for sale and as of October 31, 2024, 224 homes in total were classified as held for sale.

SFR OP Note Payable III Draw

Subsequent to September 30, 2024, the SFR OP drew $2.0 million on the SFR OP Note Payable III. As of September 30, 2024, the outstanding balance of the SFR OP Note Payable III is $2.0 million.

Hurricane Milton

During October 2024, Hurricane Milton hit Florida. The VineBrook Portfolio saw minimal damage related to Hurricane Milton in its only Florida market, Pensacola. The NexPoint Homes Portfolio only has one home affected with minimal damage to the roof by Hurricane Milton. Given the recency of this event, the Company is still assessing the impact of Hurricane Milton on its Portfolio. The Company has not recognized a loss for the damage as the amount of the loss, or a range of possible losses, cannot be reasonably estimated at this time. The Company will recognize a loss when it has sufficient information to make a reasonable estimate of the loss or range of the loss.

NAV Determination

On November 1, 2024, in accordance with the Valuation Methodology, the Pricing Committee determined that the Company’s NAV per share calculated on a fully diluted basis was $55.45 as of September 30, 2024. Common Stock and OP Units issued under the respective DRIPs will be issued a 3.0% discount to the NAV per share in effect.

18

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following is a discussion and analysis of our financial condition and our historical results of operations. The following should be read in conjunction with our financial statements and accompanying notes included herein and with our annual report on Form 10-K (our “Annual Report”), filed with the Securities and Exchange Commission (the “SEC”) on April 1, 2024. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those projected, forecasted, or expected in these forward-looking statements as a result of various factors, including, but not limited to, those discussed below and elsewhere in this Form 10-Q. See “Cautionary Note Regarding Forward-Looking Statements” in this report and the information under the heading “Risk Factors” in Part I, Item IA, “Risk Factors” of our Annual Report. Our management believes the assumptions underlying the Company’s financial statements and accompanying notes are reasonable. However, the Company’s financial statements and accompanying notes may not be an indication of our financial condition and results of operations in the future.

Overview

The Company is an owner and operator of SFR homes for lease. The Company’s primary investment objectives are to provide our residents with affordable, safe, clean and functional dwellings with a high level of service through institutional management and a renovation program on the homes purchased, while enhancing the cash flow and value of properties owned. We intend to acquire properties with cash flow growth potential, provide quarterly cash distributions and achieve long-term capital appreciation for our stockholders. The Company has two reportable segments, VineBrook and NexPoint Homes. The VineBrook reportable segment is the Company’s primary reportable segment comprised of 20,959 homes as of September 30, 2024 which represents a significant majority of the Company’s consolidated portfolio and operations. The VineBrook reportable segment is the legacy reportable segment and generally purchases homes to implement a value-add strategy. The NexPoint Homes reportable segment is a reportable segment added during 2022 comprised of 2,343 homes as of September 30, 2024 and represents a minority of the Company’s consolidated portfolio and operations. The NexPoint Homes reportable segment is a consolidated and supplemental reportable segment that generally purchases newer homes that require less rehabilitation compared to the VineBrook reportable segment. As of September 30, 2024, we, through our OP and its consolidated subsidiaries, owned and operated 23,302 SFR homes located in 20 states.

As of September 30, 2024, our VineBrook Portfolio consisted of 20,959 SFR homes primarily located in the midwestern, heartland and southeastern United States. As of September 30, 2024, the VineBrook Portfolio had occupancy of approximately 95.4% with a weighted average monthly effective rent of $1,279 per occupied home. As of September 30, 2024, the VineBrook Portfolio had a stabilized occupancy of approximately 94.9% with a weighted average monthly stabilized effective rent of $1,293 per occupied home and 25.9% of homes in our VineBrook Portfolio were excluded from being stabilized either because the homes were in rehabilitation, purchased with residents in place or were classified as held for sale. Substantially all of the Company’s business is conducted through the OP, as the Company owns its homes indirectly through the OP. VineBrook Homes OP GP, LLC, is the OP GP. As of September 30, 2024, there were 24,763,117 OP Units outstanding, of which 20,058,716 Class A OP Units, or 81.0% of the OP Units outstanding, were owned by the Company. Please see Note 8 to the consolidated financial statements for the breakdown of the non-controlling ownership of our OP.

As of December 31, 2023, our VineBrook Portfolio consisted of 21,843 SFR homes primarily located in the midwestern, heartland and southeastern United States. As of December 31, 2023, the VineBrook Portfolio had occupancy of approximately 95.2% with a weighted average monthly effective rent of $1,220 per occupied home. As of December 31, 2023, the VineBrook Portfolio had a stabilized occupancy of approximately 95.1% with a weighted average monthly effective rent of $1,239 per occupied stabilized home and 32.3% of homes in our VineBrook Portfolio were excluded from being stabilized either because the homes were in rehabilitation, purchased with residents in place or were classified as held for sale. As of December 31, 2023, there were 24,567,309 OP Units outstanding, of which 20,300,927 Class A OP Units, or 82.6% of the OP Units outstanding, were owned by the Company.

We are primarily focused on acquiring, renovating, leasing, maintaining and otherwise managing SFR home investments primarily located in large to medium size cities and suburbs located in the midwestern, heartland and southeastern United States. We intend to employ targeted management and a value-add program at a majority of our homes in an attempt to improve rental rates and the net operating income (“NOI”) at our homes, enhance cash flow, provide quarterly cash distributions and achieve long-term capital appreciation for our stockholders as well as provide our residents with affordable, safe and clean dwellings with a high quality of service. We are externally managed by the Adviser through the Advisory Agreement, which will automatically renew on the anniversary of the renewal date for one-year terms thereafter, unless otherwise terminated.

We began operations on November 1, 2018 as a result of the acquisition of various partnerships and limited liability companies owned and operated by the VineBrook Contributors and other third parties, which owned the Initial Portfolio of approximately 4,129 SFR assets located in Ohio, Kentucky and Indiana for a total purchase price of approximately $330.2 million, including closing and financing costs of approximately $6.0 million. On November 1, 2018, the Company accepted subscriptions for 1,097,367 shares of Common Stock for gross proceeds of approximately $27.4 million in connection with the Formation Transaction. The proceeds from the issuance of such Common Stock were used to acquire OP Units. The OP used the capital contribution from the Company to fund a portion of the purchase price for the Initial Portfolio. The remaining purchase price and closing costs were funded by a capital contribution totaling $70.7 million from NREO, $8.6 million of equity rolled over from VineBrook Contributors, and $241.4 million from the Initial Mortgage.

On August 28, 2018, the Company commenced the offering of 40,000,000 shares of Common Stock through the Private Offering under Regulation D of the Securities Act (and various state securities law provisions) for a maximum of $1.0 billion of its Common Stock. The Private Offering closed on September 14, 2022. The initial offering price for Common Stock sold through the Private Offering was $25.00 per share. The Company sold Common Stock in periodic closings at a purchase price generally equal to the NAV per share as determined using the Valuation Methodology and as recommended by the Adviser and approved by the Pricing Committee, plus applicable fees and commissions. The NAV per share is calculated on a fully diluted basis. For sales through Raymond James, the purchaser subscribed for a gross amount based on NAV per share and separately paid the applicable fees upfront from the purchaser’s account with Raymond James. For sales through a broker-dealer other than Raymond James, the purchaser subscribed for a gross amount based on a public offering price, which included the applicable upfront fees and commissions. NAV may differ from the values of our real estate assets as calculated in accordance with GAAP.

On October 16, 2019, Highland, a former affiliate of our Sponsor, filed for Chapter 11 bankruptcy protection with the United States Bankruptcy Court for the District of Delaware (the “Highland Bankruptcy”). On October 15, 2021, a lawsuit was filed by a litigation subtrust formed in connection with the Highland Bankruptcy in the United States Bankruptcy Court for the Northern District of Texas against various persons and entities, including NexPoint Advisors, L.P. (“NexPoint”), the parent of our Adviser, and James Dondero (the “Bankruptcy Trust Lawsuit”). On March 24, 2023, the litigation trustee filed a motion for leave to stay the Bankruptcy Trust Lawsuit, which was granted by the bankruptcy court on April 4, 2023. Per the court’s order, the Bankruptcy Trust Lawsuit is stayed until any party provides 30 days’ notice of the intent to resume the adversary proceeding, with all pending deadlines extended for a period of time commensurate with the length of stay. As of the date of this filing, the Bankruptcy Trust Lawsuit continues to be stayed. In addition, on February 8, 2023, UBS Securities LLC and its affiliate (collectively, “UBS”) filed a lawsuit in the Supreme Court of the State of New York, County of New York against Mr. Dondero and a number of other persons and entities, seeking to collect on $1.3 billion in judgments UBS obtained against entities that were managed indirectly by Highland (the “UBS Lawsuit”). Neither the Bankruptcy Trust Lawsuit nor the UBS Lawsuit include claims related to our business or our assets. Our Adviser and Mr. Dondero have informed us they believe the Bankruptcy Trust Lawsuit has no merit, and Mr. Dondero has informed us he believes the UBS Lawsuit has no merit; we have been advised that the defendants named in each of the lawsuits intend to vigorously defend against the claims. We do not expect the Bankruptcy Trust Lawsuit or the UBS Lawsuit will have a material effect on our business, results of operations or financial condition.

Whelan and HomeSource entered into the HomeSource Letter Agreement in which HomeSource agreed to compensate Whelan a percentage of capital invested, contributed, committed or otherwise made available to HomeSource. Whelan alleges that it is entitled to compensation as a result of the formation of NexPoint Homes. On October 12, 2022, NREA received notice that Whelan had filed an arbitration proceeding against HomeSource and NREA before a FINRA arbitration panel. FINRA notified NREA that it was not subject to the arbitration provision contained in the HomeSource Letter Agreement, and NREA declined to voluntarily submit to the jurisdiction of the FINRA tribunal. On November 30, 2023, the tribunal issued an award in favor of Whelan and against HomeSource in the amount of $16.0 million, inclusive of costs and pre-judgment interest. On January 10, 2024, Whelan initiated proceedings in the Southern District of New York to confirm the award in the form of a judgment against HomeSource. On September 11, 2024, the Southern District of New York issued its judgment confirming the Award. On September 8, 2023, Whelan commenced a separate lawsuit in Texas state court against NREA asserting a claim for tortious interference with the HomeSource Letter Agreement and seeking to recover the same fees awarded to Whelan against HomeSource in the arbitration. The Company is not a defendant in the Texas Litigation, and neither it, nor the Adviser, nor NREA is party to the HomeSource Letter Agreement. On September 30, 2024, Whelan filed a motion to add NexPoint Homes Trust, Inc., NexPoint SFR Operating Partnership, LP, and NexPoint SFR OP GP, LLC as parties to the Texas Litigation. As of this filing, the Texas state court has not ruled on the request to add those parties. Given the ongoing nature of the Texas Litigation, the Company is unable to assess a likely outcome or potential liability at the time. During the three months ended September 30, 2024, the NexPoint Homes Manager notified the SFR OP that the NexPoint Homes Manager would cease business operations in September 2024. The SFR OP has transitioned property management to Mynd, as discussed in Note 10.

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The Internalization

Prior to the Internalization of the Manager on August 3, 2023, the Manager, although an affiliate because the owners of the Manager were significant holders of OP Units, was independent from the Company and NexPoint, and most of the VineBrook Portfolio was managed by the Manager pursuant to the terms of the Management Agreements.

The Management Agreements were supplemented by the Side Letter, under the terms of which the Company and the OP had the right and option (but not the obligation) to purchase all of the equity interests of the Manager at a price calculated by a formula specified in the Side Letter (the “Call Right”). The purpose of the Call Right was to provide the Company and the OP with the ability to internally perform the responsibilities and obligations of the Manager under the Management Agreements. On June 28, 2022, the Company sent a notice (the “Call Right Notice”) to the Manager notifying the Manager of its intention to exercise its Call Right and internalize the Manager.

On August 3, 2023, the OP, the Contributors and the Contributors Representative entered into the Contribution Agreement pursuant to which, among other things, the OP acquired all of the outstanding equity interests in the Manager. As a result of sending the Call Right Notice, the Internalization Fee the Company paid to acquire the Manager was $20.3 million, prior to closing adjustments, which was fixed based on May 31, 2022 data. The Internalization Fee was paid in a combination of cash and OP Units. As a result of the Internalization, the Manager became a wholly owned subsidiary of the OP and the VineBrook Portfolio is now internally managed.

The Internalization process was overseen by an independent special committee of the Board, comprised solely of all of the disinterested directors. The Company also made equity grants under the Company's 2023 LTIP to certain employees who the Company hired in connection with the Internalization.

Following the Internalization, the Manager’s internalized employees continue to be responsible for the day-to-day management of the properties, leasing the properties, managing resident situations, collecting rents, paying operating expenses, managing maintenance issues, accounting for each property using GAAP, the identification of potential SFR properties and the acquisition and disposition of SFR properties approved by the investment committee of the OP or pursuant to authority delegated to the Manager by the investment committee of the OP. The Adviser’s duties did not change as a result of the Internalization. Certain SPEs from time to time may have property management agreements with independent third parties. These are typically the result of maintaining legacy property managers after an acquisition to help transition the properties to us or, in the case of a future sale, to manage the properties until they are sold.

Tusk and Siete Portfolio Acquisitions

On August 3, 2022, VB Five, LLC (“Buyer”), an indirect subsidiary of the Company, entered into a purchase agreement under which the Buyer agreed to acquire a portfolio of approximately 1,610 SFR homes located in Arizona, Florida, Georgia, Ohio and Texas (the “Tusk Portfolio”). Also on August 3, 2022, the Buyer entered into a purchase agreement under which the Buyer agreed to acquire a portfolio of approximately 1,289 SFR homes located in Arizona, Florida, Georgia, North Carolina, Ohio and Texas (the “Siete Portfolio”). On January 17, 2023, the Company, through its indirect subsidiary, VB Seven, LLC, entered into an agreement under which the acquisition of the Tusk Portfolio was terminated by the seller and the Buyer forfeited its initial deposit of approximately $23.3 million. Additionally, on January 17, 2023, the Company, through its indirect subsidiary, VB Seven, LLC, entered into an agreement under which the acquisition of the Siete Portfolio was terminated by the seller and the Buyer forfeited its initial deposit of approximately $17.7 million. The initial deposit forfeitures of the Tusk Portfolio and the Siete Portfolio are included in loss on forfeited deposits on the consolidated statement of operations and comprehensive income (loss) for the nine months ended September 30, 2023.

Series B Preferred Stock Offering

On July 31, 2023, the Company closed an offering of the Series B Preferred Stock of the Company. The Company issued 2,548,240 shares of the Series B Preferred Stock in the offering for gross proceeds of approximately $63.7 million. An aggregate of approximately $1.8 million in selling commissions and fees were paid in connection therewith.

Asset Backed Securitization I

On December 6, 2023, the OP completed a securitization transaction, VINE 2023-SFR1, providing for a 5-year, fixed-rate, interest-only loan with a total principal balance of $392.2 million. The OP purchased and retained the Class F Certificates for risk-retention purposes, totaling $39.1 million. The weighted average interest rate of the Regular Certificates (as defined below) is 4.7500%. At closing, 2,776 homes were included in the VINE 2023-SFR1 securitization’s collateral pool and as of September 30, 2024, the ABS I Loan is collateralized by 2,763 SFR homes (see Note 5 to our consolidated financial statements).

Asset Backed Securitization II

On February 29, 2024, the OP completed ABS II, comprised of seven components (Components A through F), providing for a 5-year, fixed-rate, interest-only loan with a total principal balance of $403.7 million. For risk retention purposes, the OP purchased and retained the Class F Component, totaling $39.9 million. The weighted average interest rate of the regular certificates (Class A through E2) is 4.5000%. The ABS II Loan is collateralized by 2,459 SFR homes, and as of September 30, 2024, approximately 10.55% of the Portfolio served as collateral for outstanding borrowings under the ABS II Loan. The ABS II Loan, is segregated into six tranches, all of which accrue interest at 4.6495% and have a maturity date of March 9, 2029.

Pathway to Homeownership Program

In 2024, the Company began a new “Pathway to Homeownership” program, providing qualified residents with opportunities for home ownership. This new initiative empowers individuals and families residing in a VineBrook-leased single-family rental home to purchase their home outright by securing a conventional mortgage, enabling them to build equity in an affordable property. Residents of VineBrook homes also have access to nationally recognized financial counseling and literacy resources at no additional cost to them through VineBrook’s partnership with Operation Hope. These services include workshops that focus on topics such as money management, credit and homeownership, all geared to help residents attain financial freedom. VineBrook is one of the only large single-family rental companies dedicated to providing affordable housing. With the addition of its owner-occupant sales, the Company has added yet another option for affordable, accessible single-family living that otherwise might not be available in a supply-challenged market.

20

Our VineBrook Portfolio

Since our formation, we have significantly grown our VineBrook Portfolio, which only includes homes in the VineBrook reportable segment. When the Company began operations on November 1, 2018, the Initial Portfolio consisted of 4,129 homes located in Ohio, Kentucky and Indiana. As of September 30, 2024 and 2023, the VineBrook Portfolio consisted of 20,959 and 23,147 homes, respectively, in 18 states. As of September 30, 2024 and 2023, the VineBrook Portfolio had an occupancy of 95.4% and 95.2%, respectively, and a weighted average monthly effective rent of $1,279 and $1,230, respectively, per occupied home. As of September 30, 2024 and 2023, the occupancy of stabilized homes in our VineBrook Portfolio was 94.9% and 95.0%, respectively, and the weighted average monthly effective rent of occupied stabilized homes was $1,293 and $1,250, respectively. As of September 30, 2024 and 2023, 25.9% and 36.9%, respectively, of homes in our VineBrook Portfolio were excluded from being stabilized either because the homes were in rehabilitation or were purchased with residents in place or were classified as held for sale. The table below provides summary information regarding our VineBrook Portfolio as of September 30, 2024.

Market	State	# of Homes	Portfolio Occupancy		Average Effective Rent		# of Stabilized Homes	Stabilized Occupancy		Stabilized Average Monthly Rent
Cincinnati	OH, KY	2,908	96.7	%	$	1,324	2,386	96.4	%	$	1,346
Dayton	OH	2,719	95.7	%	1,254		2,551	95.7	%	1,249
Columbus	OH	1,635	95.0	%	1,301		1,492	94.8	%	1,303
St. Louis	MO	1,807	94.1	%	1,180		1,134	92.9	%	1,201
Indianapolis	IN	1,404	94.1	%	1,290		1,072	93.4	%	1,311
Birmingham	AL	1,044	95.5	%	1,273		627	93.8	%	1,275
Columbia	SC	957	94.1	%	1,396		566	91.3	%	1,428
Kansas City	MO, KS	1,094	95.2	%	1,316		806	94.4	%	1,320
Jackson	MS	812	95.7	%	1,243		652	95.1	%	1,250
Memphis	TN, MS	1,336	94.4	%	1,072		878	93.5	%	1,094
Augusta	GA, SC	654	96.0	%	1,212		437	95.4	%	1,274
Milwaukee	WI	772	96.4	%	1,308		550	95.3	%	1,369
Atlanta	GA	686	95.3	%	1,618		269	92.6	%	1,691
Pittsburgh	PA	351	96.9	%	1,150		268	96.6	%	1,180
Pensacola	FL	300	97.0	%	1,463		197	95.9	%	1,485
Greenville	SC	383	95.3	%	1,337		264	95.1	%	1,392
Little Rock	AR	260	96.5	%	1,062		243	96.3	%	1,066
Huntsville	AL	274	94.9	%	1,389		191	94.2	%	1,417
Raeford	NC	250	95.2	%	1,257		145	94.5	%	1,304
Portales	NM	350	94.6	%	1,180		137	96.4	%	1,220
Omaha	NE, IA	275	98.9	%	1,318		255	98.8	%	1,329
Triad	NC	221	96.8	%	1,440		172	97.1	%	1,469
Montgomery	AL	300	93.7	%	1,259		244	92.6	%	1,275
Charleston	SC	1	100.0	%	1,745		—	n/a		n/a
Sub-Total/Average		20,793	95.4	%	$	1,279	15,536	94.9	%	$	1,293
Held for Sale		166	n/a		n/a		n/a	n/a		n/a
Total/Average		20,959	95.4	%	$	1,279	15,536	94.9	%	$	1,293

As of December 31, 2023, the VineBrook Portfolio consisted of 21,843 homes in 18 states. As of December 31, 2023, the VineBrook Portfolio had an occupancy of 95.2% and a weighted average monthly effective rent of $1,220 per occupied home. As of December 31, 2023, the occupancy of stabilized homes in our VineBrook Portfolio was 95.1% and the weighted average monthly effective rent of occupied stabilized homes was $1,239. As of December 31, 2023, 32.3% of homes in our VineBrook Portfolio were excluded from being stabilized either because the homes were in rehabilitation or were purchased with residents in place. The table below provides summary information regarding our VineBrook Portfolio as of December 31, 2023:

Market	State	# of Homes	Portfolio Occupancy		Average Effective Rent		# of Stabilized Homes	Stabilized Occupancy		Stabilized Average Monthly Rent
Cincinnati	OH, KY	3,046	96.2	%	$	1,260	2,431	96.1	%	$	1,283
Dayton	OH	2,736	96.4	%	1,209		2,522	96.6	%	1,202
Columbus	OH	1,652	97.1	%	1,247		1,475	97.2	%	1,251
St. Louis	MO	1,867	94.4	%	1,128		1,071	93.7	%	1,150
Indianapolis	IN	1,407	94.1	%	1,222		993	93.6	%	1,253
Birmingham	AL	1,063	94.2	%	1,230		535	91.8	%	1,240
Columbia	SC	960	93.6	%	1,324		478	92.9	%	1,378
Kansas City	MO, KS	1,106	95.9	%	1,263		747	95.6	%	1,261
Jackson	MS	847	93.4	%	1,177		636	93.1	%	1,194
Memphis	TN, MS	1,360	93.1	%	1,000		807	93.4	%	1,038
Augusta	GA, SC	671	94.2	%	1,172		391	92.6	%	1,256
Milwaukee	WI	786	95.2	%	1,215		506	94.9	%	1,283
Atlanta	GA	705	93.6	%	1,523		186	89.2	%	1,728
Pittsburgh	PA	377	96.8	%	1,097		268	96.6	%	1,141
Pensacola	FL	300	96.0	%	1,427		163	96.9	%	1,470
Greenville	SC	386	95.6	%	1,281		244	93.9	%	1,367
Little Rock	AR	269	93.7	%	1,024		250	93.2	%	1,029
Huntsville	AL	278	97.8	%	1,315		174	97.1	%	1,343
Raeford	NC	250	97.2	%	1,203		111	98.2	%	1,295
Portales	NM	350	96.3	%	1,146		136	95.6	%	1,198
Omaha	NE, IA	292	96.9	%	1,255		270	96.7	%	1,263
Triad	NC	221	94.6	%	1,368		162	95.1	%	1,388
Montgomery	AL	310	94.2	%	1,219		235	94.0	%	1,250
Charleston	SC	9	100.0	%	1,722		—	n/a		n/a
Sub-Total/Average		21,248	95.2	%	$	1,220	14,791	95.1	%	$	1,239
Held for Sale		595	n/a		n/a		n/a	n/a		n/a
Total/Average		21,843	95.2	%	$	1,220	14,791	95.1	%	$	1,239

NexPoint Homes Portfolio

NexPoint Homes is an owner and operator of SFR homes for lease. As of September 30, 2024, the NexPoint Homes Portfolio consisted of 2,343 SFR homes primarily located in the midwestern and southeastern United States. As of September 30, 2024, NexPoint Homes had occupancy of approximately 92.4% with a weighted average monthly effective rent of $1,713 per occupied home. NexPoint Homes’ activities include acquiring, renovating, developing, leasing and operating SFR homes as rental properties. For the NexPoint Homes reportable segment, a home is classified as stabilized once it has been rented or has been rehabilitated by the Company and available for rent for a period of greater than 30 days. As of September 30, 2024, the number of stabilized homes in the NexPoint Homes Portfolio was 2,158, the occupancy of stabilized homes was 97.8%, and the weighted average monthly effective rent of stabilized occupied homes was $1,713.

The table below provides summary information regarding the NexPoint Homes Portfolio as of September 30, 2024:

Market	State	# of Homes	Portfolio Occupancy		Average Effective Rent		# of Stabilized Homes	Stabilized Occupancy		Stabilized Average Monthly Rent
Atlanta	GA	205	90.2	%	$	2,017	197	93.9	%	$	2,005
Birmingham	AL	126	97.6	%	1,598		124	99.2	%	1,561
Charlotte	NC	63	95.2	%	1,927		61	98.4	%	1,932
Dallas/Ft Worth	TX	51	98.0	%	2,286		50	100.0	%	2,286
Fayetteville	AR	363	92.3	%	1,637		352	95.2	%	1,632
Huntsville	AL	71	93.0	%	1,878		69	95.7	%	1,878
Kansas City	MO, KS	146	89.7	%	1,902		138	94.9	%	1,902
Little Rock	AR	210	94.3	%	1,430		206	96.1	%	1,430
Memphis	TN, MS	95	92.6	%	1,618		90	97.8	%	1,506
Oklahoma City	OK	370	94.1	%	1,695		363	95.9	%	1,681
San Antonio	TX	199	87.4	%	1,725		184	94.6	%	1,725
Tulsa	OK	162	92.0	%	1,652		155	96.1	%	1,630
Other (1)	AL,FL,KS,TX	177	91.0	%	1,805		169	95.3	%	1,805
Sub-Total/Average		2,238	92.4	%	$	1,713	2,158	97.8	%	$	1,713
Held for Sale		105	n/a		n/a		n/a	n/a		n/a
Total/Average		2,343	92.4	%	$	1,713	2,158	97.8	%	$	1,713

(1) Contains markets that have less than 50 homes which include Mobile, Jacksonville, Orlando, Tampa, Wichita, Austin, and Houston.

The table below provides summary information regarding the NexPoint Homes Portfolio as of December 31, 2023:

Market	State	# of Homes	Portfolio Occupancy		Average Effective Rent		# of Stabilized Homes	Stabilized Occupancy		Stabilized Average Monthly Rent
Atlanta	GA	211	89.6	%	$	1,997	192	98.4	%	$	2,025
Birmingham	AL	133	93.2	%	1,590		125	99.2	%	1,601
Charlotte	NC	68	62.6	%	1,940		63	100.0	%	1,940
Dallas/Ft Worth	TX	51	92.2	%	2,268		47	100.0	%	2,268
Fayetteville	AR	440	88.9	%	1,630		403	97.0	%	1,682
Huntsville	AL	71	90.1	%	1,894		64	100.0	%	1,894
Kansas City	MO, KS	146	96.6	%	1,862		141	100.0	%	1,892
Little Rock	AR	210	91.0	%	1,421		192	99.5	%	1,429
Memphis	TN, MS	158	93.0	%	1,513		152	96.7	%	1,562
Oklahoma City	OK	514	88.3	%	1,676		461	98.5	%	1,703
San Antonio	TX	199	88.9	%	1,742		181	97.8	%	1,781
Triad	NC	50	88.0	%	1,767		45	97.8	%	1,803
Tulsa	OK	176	91.5	%	1,632		161	100.0	%	1,632
Other (1)	AL,FL,KS,TX	142	80.3	%	1,851		114	100.0	%	1,851
Sub-Total/Average		2,569	89.8	%	$	1,709	2,341	98.5	%	$	1,734
Held for Sale		—	n/a		n/a		n/a	n/a		n/a
Total/Average		2,569	89.8	%	$	1,709	2,341	98.5	%	$	1,734

(1) Contains markets that have less than 50 homes which include Mobile, Jacksonville, Orlando, Tampa, Wichita, Austin, and Houston.

The following table sets forth a summary of operating results for the NexPoint Homes reportable segment for the three and nine months ended September 30, 2024 (in thousands):

	For the Three Months Ended September 30, 2024		For the Nine Months Ended September 30, 2024
Total revenues	$	10,526	$	34,274
Total expenses	21,468		66,164
Net loss	(19,888)		(46,847)

The NexPoint Homes reportable segment began operations on June 8, 2022. The Company will continue to evaluate whether the entity is a variable interest entity (a “VIE”) and if the Company is the primary beneficiary of the VIE and should consolidate the entity.

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Components of Revenues and Expenses

The following is a description of the components of our revenues and expenses.

Revenues

Rental Income. Our revenues are derived primarily from rental revenue, net of any concessions and uncollectible amounts, collected from residents of our SFR homes under lease agreements which typically have a term of one year. Also included are utility reimbursements, late fees, pet fees, and other rental fees charged to residents.

Other income. Other income includes ancillary income earned from residents such as non-refundable fees, application fees, move-out fees, and other miscellaneous fees charged to residents.

Expenses

Property operating expenses. Property operating expenses include property maintenance costs, turn costs (costs incurred in making a home ready for the next resident after the prior resident vacates the home), leasing costs and the associated salary and employee benefit costs, utilities, vehicle leases and HOA fees. Certain property operating costs are capitalized in accordance with our capitalization policy. Certain turn costs are capitalized to buildings and improvements if they improve the condition of the home or return it to its original condition and exceed $1,500 in cost. Upon being occupied, expenditures up to $1,500 for ordinary repairs and maintenance thereafter are expensed as incurred, and we capitalize expenditures that improve the condition of the home in excess of $1,500.

Real estate taxes and insurance. Real estate taxes include the property taxes assessed by local and state authorities depending on the location of each home. Insurance includes the cost of property, general liability, and other needed insurance for each property. Certain real estate taxes and insurance costs are capitalized in accordance with our capitalization policy.

Property management fees. Property management fees include fees paid to the Manager for managing each property, presented net of fee rebates related to the Manager Cap (see Note 10 to our consolidated financial statements). Following the Internalization of the Manager in 2023, property management fees are eliminated in consolidation for the VineBrook reportable segment.

Advisory fees. Advisory fees include the fees paid to our Adviser pursuant to the Advisory Agreement (see Note 10 to our consolidated financial statements).

General and administrative expenses. General and administrative expenses include, but are not limited to, audit fees, legal fees, tax preparation fees, corporate taxes, Board fees, equity-based compensation expense, corporate payroll and personnel costs, costs of marketing, professional fees, general office supplies, centralized technology support and other expenses associated with our corporate and administrative functions.

Depreciation and amortization. Depreciation and amortization costs primarily include depreciation of our homes and amortization of acquired in-place leases, recognized over their respective useful lives.

Interest expense. Interest expense primarily includes the cost of interest expense on debt, payments and receipts related to our interest rate derivatives, the change in fair value of interest rate derivatives not designated as hedges and the amortization of deferred financing costs. Certain interest costs are capitalized in accordance with our capitalization policy.

Loss on extinguishment of debt. Loss on extinguishment of debt includes prepayment penalties and defeasance costs, the write-off of unamortized deferred financing costs and fair market value adjustments of assumed debt related to the early repayment of debt and other costs incurred in a debt extinguishment.

Gain/(loss) on sales and impairment of real estate, net. Gain/(loss) on sales and impairment of real estate, net, includes the gain or loss recognized upon sales of homes and impairment charges recorded on real estate assets, including casualty gains or losses incurred on homes. Gain/(loss) on sales of real estate is calculated by deducting the carrying value of the real estate and costs incurred to sell the properties from the sales prices of the homes. Impairment of real estate assets is calculated by calculating the lower of the carrying amount or estimated fair value less estimated costs to sell for held for sale properties. Casualty gains and losses include gains or losses incurred on homes, net of insurance proceeds received, that experience an infrequent and unusual event such as a natural disaster or fire.

Investment income. Investment income includes income from the loan from the SFR OP to HomeSource Operations, LLC (the “HomeSource Note”), interest income from the retained ABS II certificates and interest income from preferred equity investments. See Notes 5, 6 and 10 to our consolidated financial statements.

Loss on forfeited deposits. Loss on forfeited deposits includes forfeitures of deposits related to the termination of acquisition agreements, which primarily includes forfeitures of deposits related to the termination of the Tusk Portfolio and Siete Portfolio acquisition agreements.

Internalization Costs. Internalization costs relate to the Internalization of the Manager on August 3, 2023, when the OP acquired all of the outstanding equity interests in the Manager. As a result of the Internalization, the Manager became a wholly owned subsidiary of the OP and the VineBrook Portfolio is now internally managed. See Note 13 to our consolidated financial statements.

22

Consolidated Results of Operations for the Three Months Ended September 30, 2024 and 2023

The three months ended September 30, 2024 compared to the three months ended September 30, 2023

The following table sets forth a summary of our consolidated operating results for the three months ended September 30, 2024 and 2023 (in thousands):

	For the Three Months Ended September 30,
	2024		2023		$ Change
Total revenues	$	90,656	$	88,735	$	1,921
Total expenses	(137,118)		(125,163)		(11,955)
Loss on extinguishment of debt	(114)		(164)		50
Loss on sales and impairment of real estate, net	(10,652)		(34,654)		24,002
Investment income	882		101		781
Change in unrealized gain (loss) on investments	255		—		255
Loss on forfeited deposits	—		(292)		292
Internalization costs	—		(917)		917
Net loss	(56,091)		(72,354)		16,263
Dividends on and accretion to redemption value of Redeemable Series A Preferred stock	2,023		2,207		(184)
Net loss attributable to redeemable noncontrolling interests in the OP	(8,413)		(10,853)		2,440
Net loss attributable to redeemable noncontrolling interests in consolidated VIEs	(8,482)		(3,684)		(4,798)
Net loss attributable to noncontrolling interests in consolidated VIEs	(940)		(565)		(375)
Net loss attributable to stockholders	$	(40,279)	$	(59,459)	$	19,180

The change in our net loss between the periods primarily relates to an increase in rental income and investment income and decreases in property management fees, common area maintenance costs and loss on sales and impairment of real estate, partially offset by an increase in property operating expenses, interest expenses and general and administrative expenses.

Revenues

Rental income. Rental income was $88.6 million for the three months ended September 30, 2024 compared to $87.2 million for the three months ended September 30, 2023, which was an increase of $1.4 million. The increase between the periods was primarily due to an increase in stabilized homes and an increase in rental rates over the past year.

Other income. Other income was $2.1 million for the three months ended September 30, 2024 compared to $1.5 million for the three months ended September 30, 2023, which was an increase of $0.6 million. The increase between the periods was primarily due to an increase in the reserve allocated to move out charges in the current year.

Expenses

Property operating expenses. Property operating expenses were $19.9 million for the three months ended September 30, 2024 compared to $20.9 million for the three months ended September 30, 2023, which was a decrease of $1.0 million. The decrease between the periods was primarily due to a decrease in turnover, utilities, and maintenance costs in the three months ended September 30, 2024 associated with the growth in stabilized homes. For the three months ended September 30, 2024 and 2023, turn costs represented approximately 22% and 15%, respectively, of our property operating expenses.

Real estate taxes and insurance. Real estate taxes and insurance were $16.7 million for the three months ended September 30, 2024 compared to $16.9 million for the three months ended September 30, 2023, which was a decrease of $0.2 million. The decrease between the periods was primarily due to dispositions in the VineBrook Portfolio and NexPoint Homes Portfolio, partially offset by increases in real estate tax assessments as a result of increases in property valuations.

Property management fees. Property management fees were $0.2 million for the three months ended September 30, 2024 compared to $1.9 million for the three months ended September 30, 2023, which was a decrease of $1.7 million. The decrease between the periods was primarily due to the Internalization which occurred on August 3, 2023, after which property management fees were eliminated in consolidation for the VineBrook reportable segment.

Advisory fees. Advisory fees were $5.2 million for the three months ended September 30, 2024 compared to $5.6 million for the three months ended September 30, 2023, which was a decrease of $0.4 million. The decrease between the periods was primarily due to the decrease in assets under management for the VineBrook reportable segment.

General and administrative expenses. General and administrative expenses were $21.4 million for the three months ended September 30, 2024 compared to $13.9 million for the three months ended September 30, 2023, which was an increase of $7.5 million. The increase between the periods was primarily due to increases in equity-based compensation costs, legal fees and payroll costs once we internalized the Manager in August 2023.

Depreciation and amortization. Depreciation and amortization costs were $31.4 million for the three months ended September 30, 2024 compared to $31.6 million for the three months ended September 30, 2023, which was a decrease of $0.2 million. The decrease between the periods was primarily due to the disposition of homes over the past year partially offset by the increase in depreciation on capitalized costs.

Interest expense. Interest expense was $42.4 million for the three months ended September 30, 2024 compared to $34.3 million for the three months ended September 30, 2023, which was an increase of $8.1 million. The increase between the periods was primarily due to an increase in non-cash discount amortization and an increase in non-cash interest expense related to derivatives not designated as hedging instrument, partially offset by a decrease in interest on debt as we made pay downs on debt outstanding over the past year. The following table details the various costs included in interest expense for the three months ended September 30, 2024 and 2023 (in thousands):

	For the Three Months Ended September 30,
	2024		2023		$ Change
Gross interest cost	$	42,972	$	35,212	$	7,760
Capitalized interest	(604)		(920)		316
Total	$	42,368	$	34,292	$	8,076

Loss on extinguishment of debt. Loss on extinguishment of debt was $0.1 million for the three months ended September 30, 2024 compared to $0.2 million for the three months ended September 30, 2023, which was a decrease of $0.1 million. The decrease between the periods was primarily due to a decrease in debt extinguishment activity for the three months ended September 30, 2024.

Gain/(loss) on sales and impairment of real estate, net. Loss on sales and impairment of real estate was $10.7 million for the three months ended September 30, 2024 compared to $34.7 million for the three months ended September 30, 2023, which was a decrease of $23.9 million. The decrease between the periods was primarily due to a decrease in impairment charges on held for sale assets and a decrease in disposition activity in the three months ended September 30, 2024. The Company strategically identifies homes for disposal and expects the disposal of these properties to be accretive to the Portfolio’s results of operation and overall performance.

Investment income. Investment income was $0.9 million for the three months ended September 30, 2024 compared to $0.1 million for the three months ended September 30, 2023, which was an increase of $0.8 million. The increase between the periods was primarily due to interest income from the HomeSource Note and interest income from and tax refunds related to the asset-backed securitization certificates and preferred equity investments.

Loss on forfeited deposits. Loss on forfeited deposits was less than $0.1 million for the three months ended September 30, 2024 compared to $0.3 million for the three months ended September 30, 2023, which was a decrease of $0.3 million. The decrease between the periods was primarily due to a decrease in the termination of acquisition agreements during the three months ended September 30, 2024.

Internalization costs. Internalization costs were $0.0 for the three months ended September 30, 2024 compared to $0.9 million for the three months ended September 30, 2023, which was a decrease of $0.9 million. The decrease between the periods was primarily due to the Internalization which occurred on August 3, 2023.

Consolidated Results of Operations for the Nine Months Ended September 30, 2024 and 2023

The nine months ended September 30, 2024 compared to the nine months ended September 30, 2023

The following table sets forth a summary of our consolidated operating results for the nine months ended September 30, 2024 and 2023 (in thousands):

	For the Nine Months Ended September 30,
	2024		2023		$ Change
Total revenues	$	272,686	$	263,483	$	9,203
Total expenses	(393,196)		(368,968)		(24,228)
Loss on extinguishment of debt	(1,488)		(276)		(1,212)
Loss on sales and impairment of real estate, net	(19,773)		(65,108)		45,335
Investment income	2,973		265		2,708
Change in unrealized gain (loss) on investments	—		—		—
Loss on forfeited deposits	—		(42,202)		42,202
Internalization costs	—		(917)		917
Net loss	(138,798)		(213,723)		74,925
Dividends on and accretion to redemption value of Redeemable Series A Preferred stock	6,260		6,621		(361)
Net loss attributable to redeemable noncontrolling interests in the OP	(20,820)		(32,059)		11,239
Net loss attributable to redeemable noncontrolling interests in consolidated VIEs	(19,997)		(11,691)		(8,306)
Net loss attributable to noncontrolling interests in consolidated VIEs	(2,754)		(1,566)		(1,188)
Net loss attributable to stockholders	$	(101,487)	$	(175,028)	$	73,541

The change in our net loss between the periods primarily relates to an increase in rental income and investment income and decreases in property management fees, common area maintenance, loss on sales and impairment of real estate and loss on forfeited deposits, partially offset by an increase in property operating expenses, real estate taxes and insurance costs, general and administrative expenses and loss on extinguishment of debt.

Revenues

Rental income. Rental income was $268.1 million for the nine months ended September 30, 2024 compared to $259.1 million for the nine months ended September 30, 2023, which was an increase of $9.0 million. The increase between the periods was primarily due to an increase in stabilized homes and an increase in rental rates over the past year.

Other income. Other income was $4.6 million for the nine months ended September 30, 2024 compared to $4.4 million for the nine months ended September 30, 2023, which was an increase of $0.2 million. The increase between the periods was primarily due to an increase in the reserve allocated to move out charges in the current year.

Expenses

Property operating expenses. Property operating expenses were $59.3 million for the nine months ended September 30, 2024 compared to $56.6 million for the nine months ended September 30, 2023, which was an increase of $2.7 million. The increase between the periods was primarily due to an increase in turnover and utilities, partially offset by a decrease in common area maintenance costs in the nine months ended September 30, 2024, associated with the growth in stabilized homes. For the nine months ended September 30, 2024 and 2023, turn costs represented approximately 21% and 15%, respectively, of our property operating expenses.

Real estate taxes and insurance. Real estate taxes and insurance were $50.9 million for the nine months ended September 30, 2024 compared to $49.0 million for the nine months ended September 30, 2023, which was an increase of $1.9 million. The increase between the periods was primarily due to increases in our real estate tax assessments as a result of increases in property valuations and property flood insurance.

Property management fees. Property management fees were $1.8 million for the nine months ended September 30, 2024 compared to $13.1 million for the nine months ended September 30, 2023, which was a decrease of $11.3 million. The decrease between the periods was primarily due to the Internalization which occurred on August 3, 2023, after which property management fees were eliminated in consolidation for the VineBrook reportable segment.

Advisory fees. Advisory fees were $15.7 million for the nine months ended September 30, 2024 compared to $16.3 million for the nine months ended September 30, 2023, which was a decrease of $0.6 million. The decrease between the periods was primarily due to the decrease in assets under management for the VineBrook reportable segment, partially offset by the accrual of advisory fees at the NexPoint Homes reportable segment in 2024, which had previously been partially waived for the nine months ended September 30, 2023.

General and administrative expenses. General and administrative expenses were $60.6 million for the nine months ended September 30, 2024 compared to $36.4 million for the nine months ended September 30, 2023, which was an increase of $24.2 million. The increase between the periods was primarily due to increases in equity-based compensation costs, legal fees and payroll costs once we internalized the Manager in August 2023.

Depreciation and amortization. Depreciation and amortization costs were $94.8 million for the nine months ended September 30, 2024 compared to $96.5 million for the nine months ended September 30, 2023, which was a decrease of $1.7 million. The decrease between the periods was primarily due to the disposition of homes over the past year partially offset by the increase in depreciation on capitalized costs.

Interest expense. Interest expense was $110.0 million for the nine months ended September 30, 2024 compared to $101.1 million for the nine months ended September 30, 2023, which was an increase of $8.9 million. The increase between the periods was primarily due to an increase in non-cash discount amortization, partially offset by an increase in interest rate derivative proceeds and a decrease in interest on debt as we made pay downs on debt outstanding over the past year. The following table details the various costs included in interest expense for the nine months ended September 30, 2024 and 2023 (in thousands):

	For the Nine Months Ended September 30,
	2024		2023		$ Change
Gross interest cost	$	110,867	$	108,423	$	2,444
Capitalized interest	(837)		(7,352)		6,515
Total	$	110,030	$	101,071	$	8,959

Loss on extinguishment of debt. Loss on extinguishment of debt was $1.5 million for the nine months ended September 30, 2024 compared to $0.3 million for the nine months ended September 30, 2023, which was an increase of $1.2 million. The increase between the periods was primarily due to an increase in prepayment fees from debt extinguishment related to pay downs on existing debt for the nine months ended September 30, 2024.

Gain/(loss) on sales and impairment of real estate, net. Loss on sales and impairment of real estate was $19.8 million for the nine months ended September 30, 2024 compared to $65.1 million for the nine months ended September 30, 2023, which was a decrease of $45.3 million. The decrease between the periods was primarily due to a decrease in impairment charges on held for sale assets and a decrease in disposition activity in the nine months ended September 30, 2024. The Company strategically identifies homes for disposal and expects the disposal of these properties to be accretive to the Portfolio’s results of operation and overall performance.

Investment income. Investment income was $3.0 million for the nine months ended September 30, 2024 compared to $0.3 million for the nine months ended September 30, 2023, which was an increase of $2.7 million. The increase between the periods was primarily due to interest income from the HomeSource Note and interest income from and tax refunds related to the asset-backed securitization certificates.

Loss on forfeited deposits. Loss on forfeited deposits was less than $0.1 million for the nine months ended September 30, 2024 compared to $42.2 million loss on forfeited deposits for the nine months ended September 30, 2023, which was a decrease of $42.2 million. The decrease between the periods was primarily due to a decrease in the termination of acquisition agreements during the nine months ended September 30, 2024.

Internalization costs. Internalization costs were $0.0 for the nine months ended September 30, 2024 compared to $0.9 million for the nine months ended September 30, 2023, which was a decrease of $0.9 million. The decrease between the periods was primarily due to the Internalization which occurred on August 3, 2023.

23

Non-GAAP Measurements

Net Operating Income

NOI is a non-GAAP financial measure of performance. NOI is used by our management to evaluate and compare the performance of our properties to other comparable properties, to determine trends in earnings and to compute the fair value of our properties as NOI is not affected by (1) interest expense, (2) advisory fees, (3) the impact of depreciation and amortization expenses, (4) gains or losses from the sale of operating real estate assets that are included in net income computed in accordance with GAAP or impairment charges, including casualty gains or losses (5) general and administrative expenses, (6) investment income, (7) changes in unrealized gains or losses on investments, (8) loss on forfeited deposits, (9) Internalization costs and (10) other gains and losses that are specific to us, including loss on extinguishment of debt. The cost of funds is eliminated from net income (loss) because it is specific to our particular financing capabilities and constraints. The cost of funds is also eliminated because it is dependent on historical interest rates and other costs of capital as well as past decisions made by us regarding the appropriate mix of capital, or in the case of assumed debt, decisions made by others, which may have changed or may change in the future. Advisory fees are eliminated because they do not reflect continuing operating costs of the property owner. Depreciation and amortization expenses, gains or losses from the sale of operating real estate assets and impairment charges are eliminated because they may not accurately represent the actual change in value in our homes that result from use of the properties or changes in market conditions. While certain aspects of real property do decline in value over time in a manner that is reasonably captured by depreciation and amortization, the value of the properties as a whole have historically increased or decreased as a result of changes in overall economic conditions instead of from actual use of the property or the passage of time. Gains and losses from the sale of real property vary from property to property and are affected by market conditions at the time of sale, which will usually change from period to period. Casualty gains or losses, included within impairment charges, do not reflect continuing operating costs of the property owner and typically the economic impact, aside from deductible or risk retention, is covered by insurance. General and administrative expenses are eliminated because they do not reflect the ongoing operating activity performed at the properties and represent expenses such as legal, professional, centralized technology support and accounting functions and other expenses associated with our corporate and administrative functions. Investment income and changes in unrealized gains or losses on investments are eliminated because they do not reflect the ongoing operating activity performed at the properties. Losses on forfeited deposits and Internalization costs are excluded because of the infrequent and unusual nature of this activity. Gains or losses on extinguished debt are excluded because they do not reflect continuing operating costs of the property owner. These gains and losses can create distortions when comparing one period to another or when comparing our operating results to the operating results of other real estate companies that have not made similarly timed purchases or sales or sustained damage at similar times. We believe that eliminating these items from net income is useful because the resulting measure captures the actual ongoing revenue generated and actual expenses incurred in operating our properties as well as trends in occupancy rates, rental rates and operating costs.

However, the usefulness of NOI is limited because it excludes general and administrative expenses, interest expense, Internalization costs, miscellaneous gains or losses, which include casualty gains or losses and other nonrecurring items, advisory fees, depreciation and amortization expense, gains or losses from the sale of properties, investment income, and other gains and losses, including loss on extinguishment of debt as determined under GAAP, and the level of capital expenditures and leasing costs necessary to maintain the operating performance of our properties, all of which are significant economic costs. NOI may fail to capture significant trends in these components of net income, which further limits its usefulness.

NOI is a measure of the operating performance of our properties but does not measure our performance as a whole. NOI is therefore not a substitute for net income (loss) as computed in accordance with GAAP. This measure should be analyzed in conjunction with net income (loss) computed in accordance with GAAP and discussions elsewhere regarding the components of net income (loss) that are eliminated in the calculation of NOI. Other companies may use different methods for calculating NOI or similarly entitled measures and, accordingly, our NOI may not be comparable to similarly entitled measures reported by other companies that do not define the measure exactly as we do.

The following table, which has not been adjusted for the effects of noncontrolling interests (“NCI”), reconciles our consolidated NOI for the three and nine months ended September 30, 2024 and 2023 to net (loss)/income, the most directly comparable GAAP financial measure on a consolidated basis (in thousands):

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2024		2023		2024		2023
Net loss	$	(56,091)	$	(72,354)	$	(138,798)	$	(213,723)
Adjustments to reconcile net loss to NOI:
Advisory fees	5,218		5,637		15,664		16,285
General and administrative expenses	21,374		13,860		60,631		36,385
Depreciation and amortization	31,354		31,610		94,788		96,530
Interest expense	42,368		34,292		110,030		101,071
Loss on extinguishment of debt	114		164		1,488		276
Loss on sales and impairment of real estate, net	10,652		34,654		19,773		65,108
Investment income	(882)		(101)		(2,973)		(265)
Loss on forfeited deposits	—		292		—		42,202
Change in unrealized gain (loss) on investments	(255)		—		—		—
Internalization costs	—		917		—		917
NOI	$	53,852	$	48,971	$	160,603	$	144,786

The following tables, which have not been adjusted for the effects of NCI, reconcile our NOI for each of our segments for the three and nine months ended September 30, 2024 and 2023 to net loss, the most directly comparable GAAP financial measure by reportable segment (in thousands):

	For the Three Months Ended September 30, 2024						For the Nine Months Ended September 30, 2024
	VineBrook		NexPoint Homes		Total		VineBrook		NexPoint Homes		Total
Net loss	$	(36,203)	$	(19,888)	$	(56,091)	$	(91,951)	$	(46,847)	$	(138,798)
Adjustments to reconcile net loss to NOI:
Advisory fees	4,355		863		5,218		12,988		2,676		15,664
General and administrative expenses	18,582		2,792		21,374		57,135		3,495		60,630
Depreciation and amortization	24,013		7,341		31,354		72,029		22,759		94,788
Interest expense	34,287		8,081		42,368		85,699		24,332		110,031
Loss on extinguishment of debt	114		—		114		1,488		—		1,488
Loss on sales and impairment of real estate, net	1,616		9,036		10,652		4,547		15,226		19,773
Investment income	(792)		(90)		(882)		(2,704)		(269)		(2,973)
Loss on forfeited deposits	—		—		—		—		—		—
Change in unrealized gain (loss) on investments	(255)		—		(255)		—		—		—
Internalization costs	—		—		—		—		—		—
NOI	$	45,717	$	8,135	$	53,852	$	139,231	$	21,372	$	160,603

	For the Three Months Ended September 30, 2023						For the Nine Months Ended September 30, 2023
	VineBrook		NexPoint Homes		Total		VineBrook		NexPoint Homes		Total
Net loss	$	(63,746)	$	(8,608)	$	(72,354)	$	(186,893)	$	(26,830)	$	(213,723)
Adjustments to reconcile net loss to NOI:
Advisory fees	4,711		926		5,637		14,445		1,840		16,285
General and administrative expenses	14,834		(974)		13,860		34,115		2,270		36,385
Depreciation and amortization	24,208		7,402		31,610		74,405		22,125		96,530
Interest expense	25,761		8,531		34,292		76,899		24,172		101,071
Loss on extinguishment of debt	164		—		164		276		—		276
Loss on sales and impairment of real estate, net	34,642		12		34,654		64,873		235		65,108
Investment income	(12)		(89)		(101)		(12)		(253)		(265)
Loss on forfeited deposits	—		292		292		41,910		292		42,202
Change in unrealized gain (loss) on investments	—		—		—		—		—		—
Internalization costs	$	917	$	—	$	917	$	917	$	—	$	917
NOI	$	41,479	$	7,492	$	48,971	$	120,935	$	23,851	$	144,786

Net Operating Income for Our Same Home and Non-Same Home Properties for the Three Months Ended September 30, 2024 and 2023

There are 11,919 homes in our 2024 same home pool (our “Same Home” properties). To be included as a “Same Home,” homes must be in the VineBrook reportable segment and must have been stabilized for at least 90 days in advance of the first day of the previous fiscal year and be held through the current reporting period-end. Same Home properties for the period ended September 30, 2024 and September 30, 2023 were stabilized by October 1, 2022 and held through September 30, 2024. Same Home properties do not include homes held for sale. Homes that are stabilized are included as Same Home properties, whether occupied or vacant. See Item 1 “Business—Our Portfolio” in our Annual Report for a discussion of the definition of stabilized. We view Same Home NOI as an important measure of the operating performance of our homes because it allows us to compare operating results of homes owned for the entirety of the current and comparable periods and therefore eliminate variations caused by acquisitions or dispositions during the periods.

The following table reflects the revenues, property operating expenses and NOI for the three months ended September 30, 2024 and 2023 for our Same Home and Non-Same Home properties (dollars in thousands):

	For the Three Months Ended September 30,
	2024		2023		$ Change		% Change
Revenues
Same Home
Rental income (1)	$	42,960	$	40,168	$	2,792	7.0	%
Other income (1)	576		504		72		14.3	%
Same Home revenues	43,536		40,672		2,864		7.0	%
Non-Same Home
Rental income (1)	42,279		44,581		(2,302)		-5.2	%
Other income (1)	1,093		219		874		399.1	%
Non-Same Home revenues	43,372		44,800		(1,428)		-3.2	%
Total revenues	86,908		85,472		1,436		1.7	%
Operating expenses
Same Home
Property operating expenses (1)	9,588		9,526		62		0.7	%
Real estate taxes and insurance	8,103		7,771		332		4.3	%
Property management fees (2)	—		655		(655)		-100.0	%
Same Home operating expenses	17,691		17,952		(261)		-1.5	%
Non-Same Home
Property operating expenses (1)	6,583		8,100		(1,517)		-18.7	%
Real estate taxes and insurance	8,570		9,164		(594)		-6.5	%
Property management fees (2)	212		1,285		(1,073)		-83.5	%
Non-Same Home operating expenses	15,365		18,549		(3,184)		-17.2	%
Total operating expenses	33,056		36,501		(3,445)		-9.4	%
NOI
Same Home	25,845		22,720		3,125		13.8	%
Non-Same Home	28,007		26,251		1,756		6.7	%
Total NOI	$	53,852	$	48,971	$	4,881	10.0	%

(1)	Presented net of resident chargebacks.
(2)	Fees incurred to the Manager; following the Internalization, property management fees are eliminated in consolidation for the VineBrook reportable segment.

See reconciliation of net income (loss) to NOI above under “—Net Operating Income.”

Same Home Results of Operations for the Three Months Ended September 30, 2024 and 2023

As of September 30, 2024, our Same Home properties were approximately 95.0% occupied with a weighted average monthly effective rent per occupied home of $1,293. As of September 30, 2023, our Same Home properties were approximately 94.7% occupied with a weighted average monthly effective rent per occupied home of $1,215. For our Same Home properties, we recorded the following operating results for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023:

Revenues

Rental income. Rental income was $43.0 million for the three months ended September 30, 2024 compared to $40.2 million for the three months ended September 30, 2023, which was an increase of approximately $2.9 million, or 7.0%. The increase is related to a 6.4% increase in the weighted average monthly effective rent per occupied home, a 42% increase in total chargebacks to residents and a 0.3% increase in occupancy.

Other income. Other income was approximately $0.6 million for the three months ended September 30, 2024 compared to approximately $0.5 million for the three months ended September 30, 2023, which was an increase of approximately $0.1 million. This increase was primarily due to the increase in overall fees charged to single family properties, which was $1.7 million in the three months ended September 30, 2024 compared to $1.6 million in the three months ended September 30, 2023.

Expenses

Property operating expenses. Property operating expenses were $9.6 million for the three months ended September 30, 2024 compared to $9.5 million for the three months ended September 30, 2023, which was an increase of approximately $0.1 million, or 0.7%. The increase is primarily related to a decrease in turnover costs of $0.1 million and an increase in utilities of $0.2 million.

Real estate taxes and insurance. Real estate taxes and insurance costs were $8.1 million for the three months ended September 30, 2024 compared to $7.8 million for the three months ended September 30, 2023, which was an increase of approximately $0.3 million, or 4.3%. The increase is primarily related to an increase in property insurance costs of $0.3 million.

Property management fees. There were no property management fees for the three months ended September 30, 2024 compared to $0.7 million for the three months ended September 30, 2023, which was a decrease of approximately $0.7 million, or 100.0%. The decrease is due to the Internalization, which occurred on August 3, 2023, after which property management fees were eliminated in consolidation for the VineBrook reportable segment. See Note 10 to our consolidated financial statements for further discussion of the management fee structure.

The following table reflects a reconciliation of Same Home and Non-Same Home revenues and operating expenses to total revenues and operating expenses, including resident chargebacks, for the three months ended September 30, 2024 and 2023 (dollars in thousands):

	For the Three Months Ended September 30,
	2024		2023
Same Home revenues	$	43,536	$	40,672
Non-Same Home revenues	43,372		44,800
Chargebacks	3,748		3,263
Total revenues	90,656		88,735
Same Home operating expenses	17,691		17,952
Non-Same Home operating expenses	15,365		18,549
Chargebacks	3,748		3,263
Total operating expenses	$	36,804	$	39,764

Net Operating Income for Our Same Home and Non-Same Home Properties for the Nine Months Ended September 30, 2024 and 2023

There are 11,919 homes in our 2024 same home pool (our “Same Home” properties). To be included as a “Same Home,” homes must be in the VineBrook reportable segment and must have been stabilized for at least 90 days in advance

of the first day of the previous fiscal year and be held through the current reporting period-end. Same Home properties for the period ended September 30, 2024 and September 30, 2023 were stabilized by October 1, 2022 and held through September 30, 2024. Same Home properties do not include homes held for sale. Homes that are stabilized are included as Same Home properties, whether occupied or vacant. See Item 1 “Business—Our Portfolio” in our Annual Report for a discussion of the definition of stabilized. We view Same Home NOI as an important measure of the operating performance of our homes because it allows us to compare operating results of homes owned for the entirety of the current and comparable periods and therefore eliminate variations caused by acquisitions or dispositions during the periods.

The following table reflects the revenues, property operating expenses and NOI for the nine months ended September 30, 2024 and 2023 for our Same Home and Non-Same Home properties (dollars in thousands):

	For the Nine Months Ended September 30,
	2024		2023		$ Change		% Change
Revenues
Same Home
Rental income (1)	$	127,975	$	119,372	$	8,603	7.2	%
Other income (1)	1,785		1,075		710		66.0	%
Same Home revenues	129,760		120,447		9,313		7.7	%
Non-Same Home
Rental income (1)	135,094		136,844		(1,750)		-1.3	%
Other income (1)	2,115		1,782		333		18.7	%
Non-Same Home revenues	137,209		138,626		(1,417)		-1.0	%
Total revenues	266,969		259,073		7,896		3.0	%
Operating expenses
Same Home
Property operating expenses (1)	26,580		23,042		3,538		15.4	%
Real estate taxes and insurance	23,925		22,460		1,465		6.5	%
Property management fees (2)	—		5,731		(5,731)		-100.0	%
Same Home operating expenses	50,505		51,233		(728)		-1.4	%
Non-Same Home
Property operating expenses (1)	27,016		29,150		(2,134)		-7.3	%
Real estate taxes and insurance	27,004		26,570		434		1.6	%
Property management fees (2)	1,841		7,334		(5,493)		-74.9	%
Non-Same Home operating expenses	55,861		63,054		(7,193)		-11.4	%
Total operating expenses	106,366		114,287		(7,921)		-6.9	%
NOI
Same Home	79,255		69,214		10,041		14.5	%
Non-Same Home	81,348		75,572		5,776		7.6	%
Total NOI	$	160,603	$	144,786	$	15,817	10.9	%

(1)	Presented net of resident chargebacks.
(2)	Fees incurred to the Manager; following the Internalization, property management fees are eliminated in consolidation for the VineBrook reportable segment.

See reconciliation of net income (loss) to NOI above under “—Net Operating Income.”

Same Home Results of Operations for the Nine Months Ended September 30, 2024 and 2023

As of September 30, 2024, our Same Home properties were approximately 95.0% occupied with a weighted average monthly effective rent per occupied home of $1,293. As of September 30, 2023, our Same Home properties were approximately 94.7% occupied with a weighted average monthly effective rent per occupied home of $1,215. For our Same

Home properties, we recorded the following operating results for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023:

Revenues

Rental income. Rental income was $128.0 million for the nine months ended September 30, 2024 compared to $119.4 million for the nine months ended September 30, 2023, which was an increase of approximately $8.7 million, or 7.2%. The increase is related to a 6.4% increase in the weighted average monthly effective rent per occupied home, a 45% increase in total chargebacks to residents and a 0.3% increase in occupancy.

Other income. Other income was approximately $1.8 million for the nine months ended September 30, 2024 compared to approximately $1.1 million for the nine months ended September 30, 2023, which was an increase of approximately $0.7 million. This increase was primarily due to the increase in property administrative fees charged to residents, which was a $0.7 million increase in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.

Expenses

Property operating expenses. Property operating expenses were $26.6 million for the nine months ended September 30, 2024 compared to $23.0 million for the nine months ended September 30, 2023, which was an increase of approximately $3.6 million, or 15.4%. The increase is primarily related to an increase in turnover costs of $1.7 million and an increase in utilities of $1.3 million.

Real estate taxes and insurance. Real estate taxes and insurance costs were $23.9 million for the nine months ended September 30, 2024 compared to $22.5 million for the nine months ended September 30, 2023, which was an increase of approximately $1.4 million, or 6.5%. The increase is primarily related to an increase in property insurance costs of $1.4 million.

Property management fees. There were no property management fees for the nine months ended September 30, 2024 compared to $5.7 million for the nine months ended September 30, 2023, which was a decrease of approximately $5.7 million, or 100.0%. The decrease is due to the Internalization, which occurred on August 3, 2023, after which property management fees were eliminated in consolidation for the VineBrook reportable segment. See Note 10 to our consolidated financial statements for further discussion of the management fee structure.

The following table reflects a reconciliation of Same Home and Non-Same Home revenues and operating expenses to total revenues and operating expenses, including resident chargebacks, for the nine months ended September 30, 2024 and 2023 (dollars in thousands):

	For the Nine Months Ended September 30,
	2024		2023
Same Home revenues	$	129,760	$	120,447
Non-Same Home revenues	137,209		138,626
Chargebacks	5,717		4,410
Total revenues	272,686		263,483
Same Home operating expenses	50,505		51,233
Non-Same Home operating expenses	55,861		63,054
Chargebacks	5,717		4,410
Total operating expenses	$	112,083	$	118,697

24

Consolidated FFO, Core FFO and AFFO

We believe that net income (loss), as defined by GAAP, is the most appropriate earnings measure. We also believe that funds from operations attributable to stockholders, NCI of the OP, redeemable NCI in consolidated VIEs, and NCI in consolidated VIEs (“FFO”) as defined by the National Association of Real Estate Investments Trusts (“NAREIT”), core funds from operations attributable to stockholders, NCI of the OP, redeemable NCI in consolidated VIEs, and NCI in consolidated VIEs (“Core FFO”) and adjusted funds from operations attributable to stockholders, NCI of the OP, redeemable NCI in consolidated VIEs, and NCI in consolidated VIEs (“AFFO”) are important non-GAAP supplemental measures of operating performance for a REIT.

Since the historical cost accounting convention used for real estate assets requires depreciation except on land, such accounting presentation implies that the value of real estate assets diminishes predictably over time. However, since real estate values have historically risen or fallen with market and other conditions, presentations of operating results for a REIT that use historical cost accounting for depreciation could be less informative. Thus, NAREIT created FFO as a supplemental measure of operating performance for REITs that excludes historical cost depreciation and amortization, among other items, from net income (loss), as defined by GAAP. FFO is defined by NAREIT as net income (loss) computed in accordance with GAAP, excluding gains or losses from real estate dispositions and impairment of real estate assets, plus real estate depreciation and amortization. We compute FFO in accordance with NAREIT’s definition. Our presentation differs slightly from NAREIT’s in that we begin with net income (loss) attributable to stockholders and add net income (loss) attributable to NCI in the OP, net income (loss) attributable to redeemable NCI in consolidated VIEs and net income (loss) attributable to NCI in consolidated VIEs and then make the adjustments to arrive at FFO.

Core FFO makes certain adjustments to FFO, which are not representative of the ongoing operating performance of our Portfolio. Core FFO adjusts FFO to remove items such as (1) losses on forfeited deposits, (2) gains or losses on extinguishment of debt (3) non-cash interest expenses, (4) changes in unrealized gains or losses on investments, (5) Internalization costs, (6) transaction costs incurred in connection with acquisitions, dispositions and issuance of debt and other costs not related to core real estate operations and (7) equity-based compensation expense. We believe Core FFO is useful as a supplemental gauge of our operating performance and is useful in comparing our operating performance with other REITs.

AFFO makes certain adjustments to Core FFO in order to arrive at a more refined measure of the operating performance of our Portfolio. There is no industry standard definition of AFFO and the method of calculating AFFO is divergent across the industry. AFFO adjusts Core FFO to remove recurring capital expenditures, which are costs necessary to help preserve the value and maintain functionality of our homes. We believe AFFO is useful as a supplemental gauge of the operating performance of our Company and is useful in comparing our operating performance with other REITs.

Basic and diluted weighted average shares in our FFO/Core FFO/AFFO table includes both our Common Stock and OP Units.

We believe that the use of FFO, Core FFO and AFFO, combined with the required GAAP presentations, improves the understanding of operating results of REITs and makes comparisons of operating results among such companies more meaningful. While FFO, Core FFO and AFFO are relevant and widely used measures of operating performance of REITs, they do not represent cash flows from operations or net income (loss) as defined by GAAP and should not be considered as an alternative or substitute to those measures in evaluating our liquidity or operating performance. FFO, Core FFO and AFFO do not purport to be indicative of cash available to fund our future cash requirements.

The following table reconciles our calculations of FFO, Core FFO and AFFO to net loss attributable to stockholders for the three and nine months ended September 30, 2024 and 2023 (in thousands, except per share amounts):

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,				Nine Months ended September 30, 2024 to 2023
	2024		2023		2024		2023		% Change
Net loss attributable to stockholders	$	(40,279)	$	(59,459)	$	(101,487)	$	(175,028)	-42.0	%
Net loss attributable to NCI in the OP	(8,413)		(10,853)		(20,820)		(32,059)		-35.1	%
Net loss attributable to redeemable noncontrolling interest in consolidated VIEs	(8,482)		(3,684)		(19,997)		(11,691)		71.0	%
Net loss attributable to noncontrolling interest in consolidated VIEs	(940)		(565)		(2,754)		(1,566)		75.9	%
Depreciation and amortization	31,354		31,610		94,788		96,530		-1.8	%
Loss on sales and impairment of real estate, net	10,652		34,654		19,773		65,108		-69.6	%
FFO attributable to stockholders, NCI in the OP, redeemable noncontrolling interests in consolidated VIEs, and noncontrolling interests in consolidated VIEs	(16,108)		(8,297)		(30,497)		(58,706)		-48.1	%
FFO per share - basic	$	(0.54)	$	(0.28)	$	(1.02)	$	(2.03)	-49.8	%
FFO per share - diluted	$	(0.54)	$	(0.28)	$	(1.02)	$	(2.03)	-49.8	%
Loss on forfeited deposits	—		292		—		42,202		-100.0	%
Investment income	488		—		980		—		N/M
Loss on extinguishment of debt	114		164		1,488		276		N/M
Non-cash interest expense	15,112		3,427		26,045		9,189		N/M
Change in unrealized (gain) loss on investments	(255)		—		—		—		N/M
Internalization costs	—		917		—		917		-100.0	%
Transaction and other costs	3,671		521		7,236		521		N/M
Equity-based compensation expense	5,114		2,878		15,614		8,755		78.3	%
Core FFO attributable to stockholders, NCI in the OP, redeemable noncontrolling interests in consolidated VIEs, and noncontrolling interests in consolidated VIEs	8,136		(98)		20,866		3,154		N/M
Core FFO per share - basic	$	0.27	$	—	$	0.70	$	0.11	N/M
Core FFO per share - diluted	$	0.26	$	—	$	0.68	$	0.11	N/M
Recurring capital expenditures	(6,370)		(6,159)		(18,234)		(15,150)		20.4	%
AFFO attributable to stockholders, NCI in the OP, redeemable noncontrolling interests in consolidated VIEs, and noncontrolling interests in consolidated VIEs	1,766		(6,257)		2,632		(11,996)		N/M
AFFO per share - basic	$	0.06	$	(0.21)	$	0.09	$	(0.41)	N/M
AFFO per share - diluted	$	0.06	$	(0.21)	$	0.09	$	(0.41)	N/M
Weighted average shares outstanding - basic	30,012		29,231		29,843		28,917
Weighted average shares outstanding - diluted (1)	30,854		30,002		30,715		29,481
Dividends declared per share	$	0.5301	$	—	$	1.5903	$	1.0602
Net loss attributable to stockholders per share/unit - diluted	$	(1.59)	$	(2.39)	$	(4.02)	$	(7.09)
Net loss attributable to stockholders Coverage - diluted (2)	-3x		N/A		-2.53x		-6.69x
FFO Coverage - diluted (3)	-1.02x		N/A		-0.64x		-1.91x
Core FFO Coverage - diluted (3)	0.49x		N/A		0.43x		0.1x
AFFO Coverage - diluted (3)	0.11x		N/A		0.06x		-0.39x

(1)	For the three months ended September 30, 2024 and 2023, includes approximately 841,000 shares and 471,000 shares, respectively, related to the assumed vesting of restricted stock units of the Company (“RSUs”), earned performance shares of the Company (“Performance Shares”) and profits interest units in the OP (“PI Units”) not contingent upon an IPO, change in control or listing of the Company's Common Stock on a national securities exchange.
(2)	Indicates coverage ratio of net loss attributable to stockholders per share (diluted) over dividends declared per common share during the period.
(3)	Indicates coverage ratio of FFO/Core FFO/AFFO per common share (diluted) over dividends declared per common share during the period.

VineBrook FFO, Core FFO and AFFO

In addition to FFO, Core FFO and AFFO, we present FFO, Core FFO and AFFO for the VineBrook reportable segment (“VineBrook FFO,” “VineBrook Core FFO,” and “VineBrook AFFO,” respectively) as we view the VineBrook segment as the Company’s primary reportable segment and believe it is useful to consider the VineBrook FFO, VineBrook Core FFO and VineBrook AFFO as supplemental gauges of our operating performance. We also use VineBrook Core FFO as a performance metric for certain key executives, including under grants of performance shares made in the Internalization.

FFO is defined by NAREIT as net income (loss) computed in accordance with GAAP, excluding gains or losses from real estate dispositions and impairment of real estate assets, plus real estate depreciation and amortization. We compute VineBrook FFO in accordance with NAREIT’s definition. Our presentation differs slightly from NAREIT’s in that we begin with VineBrook net income (loss) attributable to stockholders and add VineBrook net income (loss) attributable to NCI in the OP and then make the adjustments to arrive at VineBrook FFO.

VineBrook Core FFO makes certain adjustments to VineBrook FFO, which are not representative of the ongoing operating performance of our Portfolio. VineBrook Core FFO adjusts VineBrook FFO to remove or add items such as (1) losses on forfeited deposits, (2) reportable segment-specific investment income, (3) gains or losses on extinguishment of debt, (4) non-cash interest expenses, (5) changes in unrealized gains or losses on investments, (6) Internalization costs, (7) transaction costs incurred in connection with acquisitions, dispositions and issuance of debt and other costs not related to core real estate operations and (8) equity-based compensation expense. We believe VineBrook Core FFO is useful as a supplemental gauge of our operating performance and is useful in comparing our operating performance with other REITs.

VineBrook AFFO makes certain adjustments to VineBrook Core FFO in order to arrive at a more refined measure of the operating performance of our VineBrook Portfolio. There is no industry standard definition of AFFO and the method of calculating AFFO is divergent across the industry. VineBrook AFFO adjusts VineBrook Core FFO to remove recurring capital expenditures, which are costs necessary to help preserve the value and maintain functionality of our homes. We believe VineBrook AFFO is useful as a supplemental gauge of the operating performance of our VineBrook reportable segment and is useful in comparing our operating performance with other REITs.

Basic and diluted weighted average shares in our VineBrook FFO/VineBrook Core FFO/VineBrook AFFO table includes both our Common Stock and OP Units.

We believe that the use of VineBrook FFO, VineBrook Core FFO and VineBrook AFFO, combined with the required GAAP presentations, improves the understanding of operating results of REITs and makes comparisons of operating results among such companies more meaningful. While FFO, Core FFO and AFFO are relevant and widely used measures of operating performance of REITs, they do not represent cash flows from operations or net income (loss) as defined by GAAP and should not be considered as an alternative or substitute to those measures in evaluating our liquidity or operating performance. VineBrook FFO, VineBrook Core FFO and VineBrook AFFO do not purport to be indicative of cash available to fund our future cash requirements. Further, our computation of VineBrook FFO, VineBrook Core FFO and VineBrook AFFO may not be comparable to FFO, Core FFO and AFFO reported by other REITs.

The FFO, Core FFO and AFFO results discussed further below are for the VineBrook reportable segment, and reconcile to net loss for the VineBrook reportable segment for the three and nine months ended September 30, 2024 and

2023. See below for a reconciliation of VineBrook net loss to consolidated net loss for the three and nine months ended September 30, 2024:

	For the Three Months Ended September 30, 2024						For the Nine Months Ended September 30, 2024
	VineBrook		NexPoint Homes		Total		VineBrook		NexPoint Homes		Total
Net loss attributable to stockholders	$	(30,385)	$	(9,894)	$	(40,279)	$	(79,091)	$	(22,393)	$	(101,484)
Net loss attributable to redeemable NCI in the OP	(7,841)		(572)		(8,413)		(19,117)		(1,703)		(20,820)
Net loss attributable to redeemable NCI in consolidated VIEs	—		(8,482)		(8,482)		—		(19,997)		(19,997)
Net loss attributable to NCI in consolidated VIEs	—		(940)		(940)		—		(2,754)		(2,754)
Dividends on and accretion to redemption value of Redeemable Series A preferred stock	2,023		—		2,023		6,260		—		6,260
Net Loss	(36,203)		(19,888)		(56,091)		(91,948)		(46,847)		(138,795)

	For the Three Months Ended September 30, 2023						For the Nine Months Ended September 30, 2023
	VineBrook		NexPoint Homes		Total		VineBrook		NexPoint Homes		Total
Net loss attributable to stockholders	$	(55,462)	$	(3,997)	$	(59,459)	$	(162,564)	$	(12,464)	$	(175,028)
Net loss attributable to redeemable NCI in the OP	(10,491)		(362)		(10,853)		(30,950)		(1,109)		(32,059)
Net loss attributable to redeemable NCI in consolidated VIEs	—		(3,684)		(3,684)		—		(11,691)		(11,691)
Net loss attributable to NCI in consolidated VIEs	—		(565)		(565)		—		(1,566)		(1,566)
Dividends on and accretion to redemption value of Redeemable Series A preferred stock	2,207		—		2,207		6,621		—		6,621
Net Loss	(63,746)		(8,608)		(72,354)		(186,893)		(26,830)		(213,723)

The following table reconciles our calculations of VineBrook FFO, VineBrook Core FFO and VineBrook AFFO to the VineBrook reportable segment's net loss attributable to stockholders for the three and nine months ended September 30,

2024 and 2023, which is reconciled to consolidated net loss above, the most directly comparable GAAP financial measure (in thousands, except per share amounts):

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,				Nine Months ended September 30, 2024 to 2023
	2024		2023		2024		2023		% Change
Net loss attributable to stockholders	$	(30,385)	$	(55,462)	$	(79,094)	$	(162,564)	-51.3	%
Net loss attributable to NCI in the OP	(7,841)		(10,491)		(19,117)		(30,950)		-38.2	%
Depreciation and amortization	24,013		24,208		72,029		74,405		-3.2	%
Loss on sales and impairment of real estate, net	1,616		34,642		4,547		64,873		-93.0	%
VineBrook FFO attributable to stockholders and NCI in the OP	(12,597)		(7,103)		(21,635)		(54,236)		-60.1	%
VineBrook FFO per share - basic	$	(0.42)	$	(0.24)	$	(0.72)	$	(1.88)	-61.7	%
VineBrook FFO per share - diluted	$	(0.42)	$	(0.24)	$	(0.72)	$	(1.88)	-61.7	%
Loss on forfeited deposits	—		—		—		41,910		-100.0	%
Investment income (1)	1,321		374		3,790		2,920		29.8	%
Loss on extinguishment of debt	114		164		1,488		276		N/M
Non-cash interest expense	14,864		3,217		25,796		8,584		N/M
Change in unrealized (gain) loss on investments	(255)		—		—		—		N/M
Internalization costs	—		917		—		917		-100.0	%
Transaction and other costs	3,224		521		6,789		521		N/M
Equity-based compensation expense	4,985		4,241		15,225		8,268		84.1	%
VineBrook Core FFO attributable to stockholders and NCI in the OP	11,656		2,331		31,453		9,160		N/M
VineBrook Core FFO per share - basic	$	0.39	$	0.08	$	1.05	$	0.32	N/M
VineBrook Core FFO per share - diluted	$	0.38	$	0.08	$	1.02	$	0.31	N/M
Recurring capital expenditures	(6,369)		(6,159)		(18,234)		(15,150)		20.4	%
VineBrook AFFO attributable to stockholders and NCI in the OP	5,287		(3,828)		13,219		(5,990)		N/M
VineBrook AFFO per share - basic	$	0.18	$	(0.13)	$	0.44	$	(0.21)	N/M
VineBrook AFFO per share - diluted	$	0.17	$	(0.13)	$	0.43	$	(0.21)	N/M
Weighted average shares outstanding - basic	30,012		29,231		29,843		28,917
Weighted average shares outstanding - diluted (2)	30,854		30,002		30,715		29,481
Dividends declared per share	$	0.5301	$	—	$	1.5903	$	1.0602
Net loss attributable to stockholders per share/unit - diluted (3)	$	(1.59)	$	(2.39)	$	(4.02)	$	(7.09)
Net loss attributable to stockholders Coverage - diluted (4)	-3x		N/A		-2.53x		-6.69x
VineBrook FFO Coverage - diluted (5)	-0.79x		N/A		-0.45x		-1.77x
VineBrook Core FFO Coverage - diluted (5)	0.72x		N/A		0.64x		0.29x
VineBrook AFFO Coverage - diluted (5)	0.32x		N/A		0.27x		-0.2x

(1)	Investment income in the table above includes approximately $0.4 million and $0.4 million of interest income from the 7.50% convertible notes of NexPoint Homes (the “NexPoint Homes Convertible Notes”) and approximately $0.9 million and $0.8 million of dividend income from the investment in NexPoint Homes for the three months ended September 30, 2024 and 2023, respectively. Additionally, investment income in the table above includes approximately $1.1 million and $1.3 million of interest income from the NexPoint Homes Convertible Notes and approximately $2.6 million and $1.7 million of dividend income from the investment in NexPoint Homes for the nine months ended September 30, 2024 and 2023, respectively. The VineBrook reportable segment interest and dividend income related to NexPoint Homes are eliminated on the consolidated statements of operations and comprehensive income (loss) but are added back to VineBrook Core FFO since these funds are attributable to the standalone VineBrook reportable segment.
(2)	For the three and nine months ended September 30, 2024 and 2023, includes approximately 841,000 shares and 471,000 shares respectively, related to the assumed vesting of RSUs, Performance Shares and profits interest units in the OP (“PI Units”) not contingent upon an IPO, change in control, or listing of the Company's Common Stock on a national securities exchange.
(3)	For the nine months ended September 30, 2024 and 2023, the net loss attributable to stockholders per share/unit (diluted) includes $(0.16) per common share and $(0.51) per common share, respectively, related to the allocated loss per common share attributable to the NexPoint Homes reportable segment.
(4)	Indicates coverage ratio of net loss attributable to stockholders for the VineBrook reportable segment per share (diluted) over dividends declared per common share during the period.
(5)	Indicates coverage ratio of VineBrook FFO/VineBrook Core FFO/VineBrook AFFO per common share (diluted) over dividends declared per common share during the period.

The nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023

VineBrook FFO was $(21.6) million for the nine months ended September 30, 2024 compared to $(54.2) million for the nine months ended September 30, 2023, which was an increase of approximately $32.6 million. The change in VineBrook FFO between the periods primarily relates to decreases in the VineBrook reportable segment’s loss on forfeited deposits of $41.9 million, the VineBrook reportable segment's total property operating expenses of $6.6 million, the VineBrook reportable segment’s interest expense of $8.8 million and the increase in the VineBrook reportable segment’s rental income of $10.5 million, partially offset by an increase in the VineBrook reportable segment’s general and administrative expenses of $23.0 million.

VineBrook Core FFO was $31.5 million for the nine months ended September 30, 2024 compared to $9.2 million for the nine months ended September 30, 2023, which was an increase of approximately $22.3 million. The change in VineBrook Core FFO between the periods primarily relates to increases in VineBrook FFO of $32.6 million, the VineBrook reportable segment's equity-based compensation expense of $7.0 million and the VineBrook reportable segment's non-cash interest expense $17.2 million, which are all added back to arrive at VineBrook Core FFO.

VineBrook AFFO was $13.2 million for the nine months ended September 30, 2024 compared to $(6.0) million for the nine months ended September 30, 2023, which was an increase of approximately $19.2 million. The change in VineBrook AFFO between the periods primarily relates to an increase to VineBrook Core FFO, partially offset by an increase in the VineBrook reportable segment’s recurring capital expenditures of $3.1 million.

The changes in diluted VineBrook FFO per share, VineBrook Core FFO per share and VineBrook AFFO per share were primarily related to an increase of 11.4% in VineBrook interest expense (or 8.4% on a per share basis). The weighted average interest rate of debt decreased from 7.6059% as of September 30, 2023 to 5.6454% as of September 30, 2024 for the VineBrook reportable segment, which has contributed to the increase in our VineBrook FFO and VineBrook Core FFO per share results. The Company has entered into 13 interest rate derivative agreements with a combined notional amount of approximately $1.4 billion in order to partially offset the impact of interest rates.

25

Net Asset Value

The purchase price at which Common Stock may be repurchased in accordance with the terms of the Amended Share Repurchase Plan is generally based on the most recent NAV per share in effect at the time of repurchase, and Common Stock or OP Units issued under the applicable DRIP generally reflect a 3% discount to the then-current NAV per share.

Effective for valuations beginning on July 31, 2021, the Company implemented an amended and restated Valuation Methodology as approved by our Board. Under the Valuation Methodology, Green Street calculates a preliminary NAV by valuing the portfolio in accordance with the Valuation Methodology. Green Street then recommends the preliminary NAV to the Adviser. Based on this recommendation, the Adviser then calculates transaction costs and makes any other adjustments, including costs of internalization, determined necessary to finalize NAV. The finalized NAV is then approved by the Pricing Committee.

On and before March 31, 2020, NAV was determined as of the end of each quarter. Beginning April 30, 2020, NAV was determined as of the end of each month. Effective for NAV determined on and after December 31, 2021, NAV has been determined as of the end of each quarter. NAV per share is calculated on a fully diluted basis. The table below illustrates the changes in NAV since inception:

Date	NAV per share
November 1, 2018	$	25.00
December 31, 2018	28.27
March 31, 2019	28.75
June 30, 2019	28.88
September 30, 2019	29.85
December 31, 2019	30.58
March 31, 2020	30.59
April 30, 2020	30.82
May 31, 2020	31.08
June 30, 2020	31.24
July 31, 2020	31.47
August 31, 2020	32.91
September 30, 2020	34.00
October 31, 2020	34.18
November 30, 2020	34.38
December 31, 2020	36.56
January 31, 2021	36.56
February 28, 2021	36.68
March 31, 2021	36.82
April 30, 2021	37.85
May 31, 2021	38.68
June 30, 2021	40.82
July 31, 2021	43.76
August 31, 2021	46.19
September 30, 2021	47.90
October 31, 2021	49.09
November 30, 2021	51.38
December 31, 2021	54.14
March 31, 2022	59.85
June 30, 2022	62.75
September 30, 2022	62.97
December 31, 2022	63.04
March 31, 2023	61.32
June 30, 3023	61.63
September 30, 2023	60.23
December 31, 2023	58.95
March 31, 2024	57.99
June 30, 2024	57.57
September 30, 2024	55.45

26

Liquidity and Capital Resources

Our short-term liquidity requirements consist primarily of funds necessary to pay for debt maturities, operating expenses and other expenditures directly associated with our homes, including:

•recurring maintenance necessary to maintain our homes;

•interest expense and scheduled principal payments on outstanding indebtedness;

•distributions necessary to qualify for taxation as a REIT;

•advisory fees payable to our Adviser;

•general and administrative expenses;

•capital expenditures related to upcoming acquisitions and rehabilitation of owned homes; and

•offering expenses related to raising equity.

We expect to meet our short-term liquidity requirements generally through net cash provided by operations, existing cash balances and debt financing. Our JPM Facility has an additional $252.4 million of capacity as of September 30, 2024.

Our long-term liquidity requirements consist primarily of funds necessary to pay for the scheduled debt payments and distributions, to fund renovations and fund other capital expenditures to improve our homes. Each reporting period, management evaluates the Company’s ability to continue as a going concern in accordance with ASC 205-40, Going Concern, by evaluating conditions and events, including assessing the liquidity needs to meet obligations as they become due within one year after the date the financial statements are issued. The Company has significant debt obligations coming due on the Warehouse Facility, JPM Facility and NexPoint Homes KeyBank Facility within 12 months of the issuance of the financial statements and does not have sufficient liquidity as of the issuance date to satisfy these obligations. In order to satisfy obligations as they mature, management intends to evaluate its options and may seek to: (i) make partial loan pay downs, (ii) utilize extension options contractually available under existing debt instruments, (iii) refinance certain debt instruments, (iv) obtain additional capital through equity and/or debt financings, (v) sell homes from its portfolio and pay down debt balances with the net sale proceeds, (vi) modify operations, (vii) may negotiate a turnover of secured properties back to the related lender and (viii) employ some combination of (i) - (vii). Additionally, the Company closed on an asset backed securitization (“ABS”) on February 29, 2024 (“ABS II”) that provided for a 5-year, fixed-rate, interest-only loan with a total principal balance of $403.7 million. The Company used the net proceeds from the ABS II to pay down $242.4 million on the JPM Facility and fund reserves in accordance with the credit agreement. Additionally, the Company closed on the MetLife Term Loan I Facilities on August 22, 2024, that provided for a 5-year, fixed rate interest loan with a total principal balance of $343.2 million. The Company used $282.0 million of proceeds from to pay down a portion of the outstanding amounts under the Warehouse Facility. Subsequent to September 30, 2024, the Company sold 23 homes for net proceeds of approximately $2.6 million in the VineBrook Portfolio. Subsequent to September 30, 2024, the Company sold 19 homes for net proceeds of approximately $4.4 million in the NexPoint Homes Portfolio. Additionally, the Company intends to continue to dispose of homes to generate proceeds for debt pay downs and other uses. The Company plans to sell approximately 200 to 400 homes over the next twelve months to generate proceeds of approximately $20.0 million to $40.0 million in the VineBrook reportable segment. The Company plans to sell approximately 300 to 400 homes over the next twelve months to generate proceeds of approximately $72.5 million to $100.0 million in the NexPoint Homes reportable segment. If rates remain at a level that would be accretive to the Company, management plans to use ABS transactions, term loans and other refinancings of debt in the future to generate proceeds that would most likely be used to further pay down the Warehouse Facility and other debt. The Company’s ability to meet its debt obligations as they come due is dependent upon its ability to meet debt covenants, which it currently projects to do, in order to extend existing obligations, its ability to refinance debt and its ability to sell homes from its portfolio to pay down the balances. The sale of homes from the Portfolio could cause a decrease in net operating income but is expected to be offset by the interest savings from the pay downs. The Company notes that debt markets remain robust and liquid as evidenced by recent debt issuances. Given the Company’s historical ability to refinance debt, as well as the previously noted robust debt market, the Company expects to be able to refinance debt as necessary to meet its debt obligations going forward.

In addition, the Company has debt coming due beyond twelve months from the date of these financial statements, including the Warehouse Facility that the Company expects will be due on November 3, 2025 after exercising the remaining six-month extension option. On November 1, 2024, the Company utilized the first six-month extension option on the Warehouse Facility which extended the maturity date of the Warehouse Facility to May 3, 2025. If the Warehouse

Facility is not paid off by May 2025, the Company plans to utilize the remaining contractual six-month extension option available under the Warehouse Facility. To extend, there can be no default or event of default, the Company must be in compliance with all covenant requirements and needs to pay an extension fee of 0.1% of the maximum outstanding commitment at that time. The Company is currently in compliance with the requirements under the Warehouse Facility and management expects to be in compliance with financial covenants at the time of extension after implementing the plans noted above and therefore plans to be able to extend the Warehouse Facility in May 2025 to November 2025 if necessary. The Company does not currently have sufficient liquidity to pay down the obligations on the Warehouse Facility and intends to refinance the Warehouse Facility primarily using debt or equity financing before it comes due. Given its historical ability to refinance debt, the Company expects to be able to refinance the debt as necessary. Management believes these plans by the Company will be sufficient to satisfy the obligations as they become due. The financial statements included in this Form 10-Q have been prepared by management in accordance with GAAP and this basis assumes that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The financial statements included in this Form 10-Q do not include any adjustments that may result from the outcome of this uncertainty.

There are a number of factors that may have a material adverse effect on our ability to access these capital sources, including the state of overall equity and credit markets, our degree of leverage, our unencumbered asset base and borrowing restrictions imposed by lenders (including as a result of any failure to comply with financial covenants in our existing and future indebtedness), general market conditions for REITs, our operating performance and liquidity, market perceptions about us and restrictions on sales of properties under the Code. The success of our business strategy will depend, in part, on our ability to access these various capital sources.

Our homes will require periodic capital expenditures and renovation to remain competitive. Also, acquisitions of new homes will require significant capital outlays. Long-term, we may not be able to fund such capital improvements solely from net cash provided by operations because we must distribute annually at least 90% of our REIT taxable income, determined without regard to the deductions for dividends paid and excluding net capital gains, to qualify and maintain our qualification as a REIT, and we are subject to tax on any retained income and gains. As a result, our ability to fund capital expenditures and acquisitions through retained earnings long-term is limited. Consequently, we expect to rely heavily upon the availability of debt or equity capital for these purposes. If we are unable to obtain the necessary capital on favorable terms, or at all, our financial condition, liquidity, results of operations, and prospects could be materially and adversely affected.

We believe that our available cash, expected operating cash flows, net proceeds from the sale of homes and potential debt or equity financings will provide sufficient funds for our operations, anticipated scheduled debt service payments and dividend requirements for the twelve-month period following the issuance of these financials, except as would not be expected to have a material adverse effect. We believe that the various sources of long-term capital, which may include public or private issuances of common equity, preferred equity or debt, draws on our revolving credit facilities, existing working capital, net cash provided by operations, long-term mortgage indebtedness and other secured and unsecured borrowings will provide sufficient funds for our operations, anticipated scheduled debt service payments and dividend requirements in the long-term, except as would not be expected to have a material adverse effect.

Cash Flows

The nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023

The following table presents selected data from our consolidated statements of cash flows for the nine months ended September 30, 2024 and 2023 (in thousands):

	For the Nine Months Ended September 30,
	2024		2023		$ Change
Net cash provided by operating activities	$	15,483	$	16,993	$	(1,510)
Net cash provided by investing activities	67,948		46,377		21,571
Net cash used in financing activities	(72,458)		(92,393)		19,935
Change in cash and restricted cash	10,973		(29,023)		39,996
Cash and restricted cash, beginning of period	85,620		114,749		(29,129)
Cash and restricted cash, end of period	$	96,593	$	85,726	$	10,867

Cash flows from operating activities. During the nine months ended September 30, 2024, net cash provided by operating activities was $15.5 million compared to net cash provided by operating activities of $17.0 million for the nine months ended September 30, 2023. The change in cash flows from operating activities was mainly due to a decrease in loss on sales and impairment of real estate and a decrease in loss on forfeited deposits, partially offset by an increase non-cash interest expense and an increase in net operating income during the period.

Cash flows from investing activities. During the nine months ended September 30, 2024, net cash provided by investing activities was $67.9 million compared to net cash provided by investing activities of $46.4 million for the nine months ended September 30, 2023. The change in cash flows from investing activities was mainly due to decreases in acquisitions of real estate investments and additions to real estate investments and an increase in net proceeds from sales of real estate.

Cash flows from financing activities. During the nine months ended September 30, 2024, net cash used in financing activities was $72.5 million compared to net cash used in financing activities of $92.4 million for the nine months ended September 30, 2023. The change in cash flows from financing activities was mainly due to a decrease in credit facilities proceeds received and an increase in credit facilities principal payments made, partially offset by the decrease in redemptions paid on Common Stock and the issuance of the ABS II Loan.

27

Debt, Derivatives and Hedging Activity

Debt

As of September 30, 2024, the VineBrook reportable segment had aggregate debt outstanding to third parties of approximately $2.0 billion at a weighted average interest rate of 5.6454% and an adjusted weighted average interest rate of 3.7761%. For purposes of calculating the adjusted weighted average interest rate of our debt outstanding, we have included the weighted average fixed rate of 2.2637%, representing a weighted average fixed rate for Secured Overnight Financing Rate (“SOFR”), which replaced one-month London Interbank Offered Rate (“LIBOR”) on July 1, 2023, for the applicable interest period (“one-month term SOFR”), daily SOFR and daily SOFR plus 0.1145%, on our combined $1.4 billion notional amount of interest rate swap agreements and interest rate cap agreement, which effectively fixes the interest rate on $1.4 billion of our floating rate debt. See Notes 5 and 6 to our consolidated financial statements for additional information.

The following table sets forth a summary of our mortgage loan indebtedness for the VineBrook reportable segment as of September 30, 2024:

	Type	Outstanding Principal as of September 30, 2024		Interest Rate (1)	Maturity
Initial Mortgage	Floating	$	226,728	6.83%	12/1/2025
Warehouse Facility	Floating	462,222		7.50%	5/3/2025	(2)
JPM Facility	Floating	97,567		7.81%	1/31/2025	(3)
ABS I Loan	Fixed	390,248		4.92%	12/8/2028
ABS II Loan	Fixed	402,593		4.65%	3/9/2029
MetLife Note	Fixed	105,925		3.25%	1/31/2026
TrueLane Mortgage	Fixed	8,248		5.35%	2/1/2028
Crestcore II Note	Fixed	2,587		5.12%	7/9/2029
Crestcore IV Note	Fixed	2,404		5.12%	7/9/2029
PNC Loan I	Fixed	—		3.59%	2/19/2024	(4)
PNC Loan II	Fixed	—		3.70%	12/29/2024	(4)
PNC Loan III	Fixed	—		3.69%	12/15/2025	(4)
Total Outstanding Principal		$	2,041,726

(1)	Represents the interest rate as of September 30, 2024. Except for fixed rate debt, the interest rate is 30-day average SOFR, daily SOFR or one-month term SOFR, plus an applicable margin. The 30-day average SOFR as of September 30, 2024 was 5.1633%, daily SOFR as of September 30, 2024 was 4.9600% and one-month term SOFR as of September 30, 2024 was 4.8457%.
(2)	The initial maturity for the Warehouse Facility prior to extension options was November 3, 2024. To extend the Warehouse Facility, the Company cannot be in default, must meet certain financial covenants and needs to pay a fee of 0.1% of the maximum revolving commitment at that time. The Company exercised its first extension option to extend the Warehouse Facility maturity date to May 3, 2025 on November 1, 2024. The maturity date after the second extension is November 3, 2025.
(3)	This is the initial maturity date for the JPM Facility. The JPM Facility has a 12-month extension option subject to approval from the lender.
(4)	The PNC Loan I was paid off in full in February 2024. The PNC Loan II and PNC Loan III were paid off in full in April 2024.

In addition to the mortgage loan indebtedness for the VineBrook reportable segment presented above and described below, the NexPoint Homes reportable segment had $532.3 million of debt outstanding at September 30, 2024 (excluding amounts owed to the OP by NexPoint Homes, as these are eliminated in consolidation). See Notes 5 and 10 to the consolidated financial statements.

Warehouse Facility

On September 20, 2019, the OP (as guarantor) and VB One, LLC (as borrower) entered into a credit facility (the “Warehouse Facility”) with KeyBank, N.A. (“KeyBank”). The Warehouse Facility is secured by an equity pledge in certain assets of VB One, LLC and an equity pledge in the equity of VB One, LLC. On November 3, 2021, the Company (as guarantor), the OP (as parent borrower), and each of (i) VB OP Holdings, LLC and (ii) VB One, LLC and certain of its subsidiaries (as subsidiary borrowers), entered into an amended and restated credit agreement to recast the Warehouse Facility, which was subsequently amended on December 9, 2021, April 8, 2022, May 20, 2022, September 13, 2022 and October 25, 2022, July 31, 2023 and August 14, 2024. On August 14, 2024, the Company entered into a Consent and Seventh Amendment to the Warehouse Facility (the “Warehouse Seventh Amendment”) with KeyBank, as administrative agent, and the other lenders party thereto. The Warehouse Seventh Amendment, among other things, provided for (1) a reduction in the maximum commitment of the Warehouse Facility; (2) reduced unused facility fees; (3) modifications and additions of certain covenants, including adjusting the minimum fixed charge coverage ratio to not less than 1.40 to 1.0, effective as of January 1, 2024; (4) in connection with sales of assets to unaffiliated third parties, the prepayment of the commitment amount with 100% of such proceeds until the commitment under the Warehouse Facility is reduced to $475.0 million and with 75% of such proceeds thereafter; provided that certain additional amounts may be required to be prepaid if the outstanding principal balance would exceed the value of the assets in the borrowing base following such sale; (5) the reduction of the outstanding principal balance to be no more than $475.0 million by October 31, 2024 (the “Commitment Reduction”). During the nine months ended September 30, 2024, the Company paid down approximately $362.2 million on the Warehouse Facility. All repayments under the Warehouse Facility will permanently reduce the commitment amount under the Warehouse Facility and may not be reborrowed. The outstanding balance on the Warehouse Facility as of September 30, 2024 was approximately $462.2 million, which is below the required Commitment Reduction.

JPM Facility

On March 1, 2021, the Company entered into a non-recourse carveout guaranty and certain wholly owned subsidiaries of VB Three, LLC (as borrowers) entered into a $500.0 million credit agreement with JP Morgan (the “JPM Facility”). The JPM Facility is secured by equity pledges in VB Three, LLC and its wholly owned subsidiaries and bears interest at a variable rate equal to one-month LIBOR plus 2.75%. The JPM Facility is interest-only and originally matured and was due in full on March 1, 2023. On March 10, 2022, the Company entered into Amendment No. 1 to the JPM Facility, wherein each advance under the JPM Facility will bear interest at daily SOFR plus 2.85%. The balance of the JPM Facility, net of unamortized deferred financing costs, is included in credit facilities on the consolidated balance sheets. On January 31, 2023, the Company entered into Amendment No. 2 to the JPM Facility, wherein the total facility amount was updated to $350.0 million, and the maturity date was extended to January 31, 2025, which may be extended for 12 months upon submission of an extension request, subject to approval. On March 15, 2023, the Company entered into Amendment No. 3 to the JPM Facility to give the Company credit for pledging an interest rate cap by reducing the interest reserve requirements under the JPM Facility based on the capped rate. On December 21, 2023, the Company drew an additional $21.4 million on the JPM Facility of which the draw proceeds, along with cash on hand, were used to pay off the Bridge Facility III in full. As of September 30, 2024, the JPM Facility had $252.4 million in available capacity. The balance of the JPM Facility, net of unamortized deferred financing costs, is included in credit facilities on the consolidated balance sheets.

Bridge Facility III

On December 28, 2022, the Company entered into a bridge credit agreement through the OP with Raymond James Bank, and subsequently borrowed $75.0 million (the “Bridge Facility III”). The Bridge Facility III accrued interest at one-month term SOFR plus a margin of 3.0%. On December 21, 2023 the Company repaid the outstanding principal balance of the Bridge Facility III in full, which extinguished the Bridge Facility III.

Asset Backed Securitization I

On December 6, 2023, the OP completed a securitization transaction, in connection with which VineBrook Homes Borrower 1, LLC, an indirect special purpose subsidiary of the OP (the “ABS I Borrower”) entered into a loan agreement (the “ABS I Loan Agreement”) with Bank of America, National Association, as lender (the “ABS I Lender”), providing for a 5-year, fixed-rate, interest-only loan with a total principal balance of approximately $392.2 million (the “ABS I Loan”). Concurrent with the execution of the ABS I Loan Agreement, the ABS I Lender sold the ABS I Loan to VineBrook Homes Depositor A, LLC (the “Depositor”), an indirect subsidiary of the OP, which, in turn, transferred the ABS I Loan to a trust in exchange for (i) $178.4 million principal amount of Class A pass-through certificates (the “Class A Certificates”), (ii) $38.6 million principal amount of Class B pass-through certificates (the “Class B Certificates”), (iii) $30.8 million principal amount of Class C pass-through certificates (the “Class C Certificates”), (iv) $43.0 million principal amount of Class D pass-through certificates (the “Class D Certificates”), (v) $50.1 million principal amount of Class E pass-through certificates (the “Class E1 Certificates”), (vi) $12.2 million principal amount of Class E pass-through certificates (the “Class E2 Certificates,” and collectively with the Class A Certificates, Class B Certificates, Class C Certificates, Class D Certificates and Class E1 Certificates, the “Regular Certificates”), and (vii) Class R pass-through certificates (the “Class R Certificates,” and together with the Regular Certificates, the “Certificates”). The Certificates represent beneficial ownership interests in the trust and its assets, including the ABS I Loan. The Depositor sold the Certificates, acquired by the Depositor in the manner described above, to placement agents who resold the Certificates to investors in a private offering. The Regular Certificates are exempt from registration under the Securities Act of 1933, as amended, and are “exempted securities” under the Securities Exchange Act of 1934, as amended. To satisfy applicable risk retention rules, the OP purchased and retained the Class F Certificates totaling $39.1 million. The Depositor used the proceeds from the sale of the Certificates to purchase the ABS I Loan from the ABS I Lender, as described above. The Regular Certificates were sold to investors at a discount and the OP retained the Class F Certificate (as described above), with the result that the proceeds, before closing costs, from the ABS I Loan to the ABS I Borrower were approximately $314.0 million. The net proceeds of $300.6 million were used to partially pay down the Warehouse Facility. The balance of the ABS I Loan, net of unamortized deferred financing costs and debt discount, is included in notes payable on the consolidated balance sheets. The ABS I Loan is collateralized by 2,776 SFR homes, and as of September 30, 2024, approximately 11.86% of the Portfolio served as collateral for outstanding borrowings under the ABS I Loan. The ABS I Loan, is segregated into six tranches, all of which accrue interest at 4.9235% and have a maturity date of December 8, 2028.

Asset Backed Securitization II

On February 29, 2024, the OP, via its indirect special purpose subsidiary, VineBrook Homes Borrower 2, LLC (the “ABS II Borrower”), completed an asset backed securitization (“ABS II”) and entered into a loan agreement (the “ABS II Loan Agreement”) with BofA Securities, Inc., as sole structuring agent, joint bookrunner and co-lead manager, Mizuho Securities USA LLC, as joint bookrunner and co-lead manager and Citizens JMP Securities, LLC, J.P. Morgan Securities LLC, Raymond James & Associates, Inc., and Truist Securities, Inc., as co-managers (the “ABS II Loan”).

Concurrent with the execution of the ABS II Loan Agreement, the lender sold the ABS II Loan to the Depositor, an indirect subsidiary of the OP, which, in turn, transferred the loan to a trust in exchange for (i) $176.9 million principal amount of Class A pass-through certificates (the “ABS II Class A Certificates”), (ii) $38.6 million principal amount of Class B pass-through certificates (the “ABS II Class B Certificates”), (iii) $30.6 million principal amount of Class C pass-through certificates (the “ABS II Class C Certificates”), (iv) $42.9 million principal amount of Class D pass-through certificates (the “ABS II Class D Certificates”), (v) $63.5 million principal amount of Class E pass-through certificates (the “ABS II Class E1 Certificates”), (vi) $11.2 million principal amount of Class E pass-through certificates (the “ABS II Class E2 Certificates,” and collectively with the ABS II Class A Certificates, ABS II Class B Certificates, ABS II Class C Certificates, ABS II Class D Certificates and ABS II Class E1 Certificates, the “ABS II Regular Certificates”), and (vii) Class R pass-through certificates (the “ABS II Class R Certificates,” and together with the ABS II Regular Certificates, the “ABS II Certificates”). The Company also retained $19.5 million notional amount of the ABS II Class A, $10.5 million notional amount of the ABS II Class B, and $2.0 million notional amount of the ABS II Class C certificates. The ABS II Certificates represent beneficial ownership interests in the trust and its assets, including the ABS II Loan.

The Depositor sold the ABS II Certificates, acquired by the Depositor in the manner described above, to placement agents who resold the Certificates to investors in a private offering. The ABS II Regular Certificates are exempt from registration under the Securities Act of 1933, as amended, and are “exempted securities” under the Securities Exchange Act of 1934, as amended. To satisfy applicable risk retention rules, the OP purchased and retained the Class F component, totaling $39.9 million. Additionally, the OP purchased and retained a portion of the ABS II Class A, Class B and Class C components, totaling $19.5 million, $10.5 million and $2.0 million, respectively. The Company evaluated the purchased ABS II Class A, Class B, Class C and Class F certificates as a variable interest in the trust and concluded that the ABS II Class A, Class B, Class C, and Class F certificates will not absorb a majority of the trust’s expected losses or receive a majority of the trust’s expected residual returns. The Company also concluded that the ABS II Class A, Class B, Class C and Class F certificates do not provide the Company with an ability to direct activities that could impact the trust’s economic performance. The Company does not consolidate the trust and the $71.9 million of the ABS II Certificates are reflected as asset-backed securitization certificates on the Company’s consolidated balance sheets. The Depositor used the proceeds from the sale of the ABS II Certificates to purchase the ABS II Loan from the lender, as described above. The ABS II Regular Certificates were sold to investors at a discount and the OP retained the entire Class F certificate (as described above), with the result that the proceeds, before closing costs, from the ABS II Loan to the ABS II Borrower were approximately $331.8 million. A portion of the net proceeds from the ABS II were used to pay down $242.4 million on the JPM Facility and fund reserves per the credit agreement.

The balance of the ABS II Loan, net of unamortized deferred financing costs and debt discount, is included in notes payable on the consolidated balance sheets. The ABS II Loan is collateralized by 2,459 SFR homes, and as of September 30, 2024, approximately 10.55% of the Portfolio served as collateral for outstanding borrowings under the ABS II Loan. The ABS II Loan, is segregated into seven tranches, (Components A through F), providing for a 5-year, fixed-rate, interest-only loan with a total principal balance of $403.7 million. The weighted average interest rate of the ABS II Regular Certificates (Class A through E2) is 4.6495% and have a maturity date of March 9, 2029.

PNC Loans

Following the Internalization of the Manager, the Company, through the OP, assumed three PNC equipment loans (“PNC Loan I”, “PNC Loan II” and “PNC Loan III”), which bear interest at fixed rates of 3.59%, 3.70% and 3.69%, respectively. PNC Loan I, PNC Loan II and PNC Loan III matured on February 19, 2024, and will mature on December 29, 2024 and December 15, 2025, respectively, and require monthly principal and interest payments. The PNC Loan I was paid off in full in February 2024. The PNC Loan II and PNC Loan III were paid off in full in April 2024. The balances of these loans are included in notes payable on the consolidated balance sheet as of December 31, 2023.

Refinancing of Capital

We intend to invest in additional homes as suitable opportunities arise and adequate sources of equity and debt financing are available. We expect that future investments in properties, including any improvements or renovations of current or newly acquired properties, will depend on and will be financed by, in whole or in part, our existing cash, future borrowings and the proceeds from additional issuances of shares of Common Stock, Preferred Stock or other securities or property dispositions.

Although we expect to be subject to restrictions on our ability to incur indebtedness, we expect that we will be able to refinance existing indebtedness or incur additional indebtedness for acquisitions or other purposes, if needed. However, there can be no assurance that we will be able to refinance our indebtedness, incur additional indebtedness or access additional sources of capital, such as by issuing Common Stock, Preferred Stock or other debt or equity securities, on terms that are acceptable to us or at all.

Furthermore, following the completion of our renovations and depending on the interest rate environment at the applicable time, we may seek to refinance our floating rate debt into longer-term fixed rate debt at lower leverage levels.

Interest Rate Derivative Agreements

We have entered into and expect to continue to enter into interest rate swap and cap agreements with various third parties to fix or cap the floating interest rates on a majority of our floating rate mortgage debt outstanding. The interest rate swap agreements generally have a term of approximately three to six years and effectively establish a fixed interest rate on debt on the underlying notional amounts. In order to fix a portion of, and mitigate the risk associated with, our floating rate indebtedness (without incurring substantial prepayment penalties or defeasance costs typically associated with fixed rate indebtedness when repaid early or refinanced), we, through the OP, have entered into 12 interest rate swap transactions with KeyBank and Mizuho Capital Markets LLC (“Mizuho”) with a combined notional amount of $1.1 billion. As of September 30, 2024, the interest rate swaps we have entered into effectively replace the floating interest rate (daily SOFR) with respect to $1.1 billion of our floating rate mortgage debt outstanding with a weighted average fixed rate of 2.4682%. As of September 30, 2024, interest rate swap agreements effectively covered $1.1 billion, or 180.5%, of our $0.8 billion of floating rate debt outstanding for the VineBrook reportable segment. During the term of these interest rate swap agreements, we are required to make monthly fixed rate payments of 2.4682%, on a weighted average basis, on the notional amounts, while KeyBank and Mizuho are obligated to make monthly floating rate payments based on daily SOFR to us referencing the same notional amounts. For purposes of hedge accounting under ASC 815, Derivatives and Hedging, we have designated some of these interest rate swaps as cash flow hedges of interest rate risk. See Notes 5 and 6 to our consolidated financial statements for additional information.

On April 13, 2022, we paid a premium of approximately $12.7 million and entered into an interest rate cap transaction with Goldman Sachs Bank USA with a notional amount of $300.0 million. The interest rate cap effectively caps one-month term SOFR on $300.0 million of our floating rate debt at 1.50%. The interest rate cap expires on November 1, 2025.

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REIT Tax Election and Income Taxes

We have elected to be taxed as a REIT under Sections 856 through 860 of the Code and expect to continue to qualify as a REIT. To qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement that we distribute at least 90% of our “REIT taxable income,” as defined by the Code, to our stockholders. Taxable income from certain non-REIT activities is managed through a TRS and is subject to applicable U.S. federal, state, and local income and margin taxes. We had no significant taxes associated with our TRS for the three and nine months ended September 30, 2024 and 2023. We believe we qualify for taxation as a REIT under the Code, and we intend to continue to operate in such a manner, but no assurance can be given that we will operate in a manner so as to qualify as a REIT. NexPoint Homes elected to be taxed as a REIT under Sections 856 through 860 of the Code, beginning with the year ended December 31, 2022.

We anticipate that we will continue to qualify to be taxed as a REIT for U.S. federal income tax purposes, and we intend to continue to be organized and to operate in a manner that will permit us to qualify as a REIT. To qualify as a REIT, we must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of our annual REIT taxable income to stockholders. As a REIT, we will be subject to U.S. federal income tax on our undistributed REIT taxable income and net capital gain and to a 4% nondeductible excise tax on any amount by which distributions we pay with respect to any calendar year are less than the sum of (1) 85% of our ordinary income, (2) 95% of our capital gain net income and (3) 100% of our undistributed income from prior years.

If we fail to qualify as a REIT in any taxable year, we will be subject to U.S. federal income tax on our taxable income at regular corporate income tax rates, and dividends paid to our stockholders would not be deductible by us in computing taxable income. Any resulting corporate liability could be substantial and could materially and adversely affect our net income and net cash available for distribution to stockholders. Unless we were entitled to relief under certain Code provisions, we also would be disqualified from re-electing to be taxed as a REIT for the four taxable years following the year in which we failed to qualify to be taxed as a REIT.

We evaluate the accounting and disclosure of tax positions taken or expected to be taken in the course of preparing our tax returns to determine whether the tax positions are “more-likely-than-not” (greater than 50%) of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the current year. Our management is required to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions, which include federal and certain states. We have no examinations in progress and none are expected at this time.

We recognize our tax positions and evaluate them using a two-step process. First, we determine whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Second, we will determine the amount of benefit to recognize and record the amount that is more likely than not to be realized upon ultimate settlement.

We had no material unrecognized tax benefit or expense, accrued interest or penalties as of September 30, 2024. We and our subsidiaries are subject to U.S. federal income tax as well as income tax of various state and local jurisdictions. The 2023, 2022 and 2021 tax years remain open to examination by tax jurisdictions to which our subsidiaries and we are subject. When applicable, we recognize interest and/or penalties related to uncertain tax positions on our consolidated statements of operations and comprehensive income (loss).

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Dividends

We intend to make regular quarterly dividend payments to holders of our Common Stock. U.S. federal income tax law generally requires that a REIT distribute annually at least 90% of its REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains. As a REIT, we will be subject to U.S. federal income tax on our undistributed REIT taxable income and net capital gain and to a 4% nondeductible excise tax on any amount by which distributions we pay with respect to any calendar year are less than the sum of (1) 85% of our ordinary income, (2) 95% of our capital gain net income and (3) 100% of our undistributed income from prior years. We intend to make regular quarterly dividend payments of all or substantially all of our taxable income to holders of our Common Stock out of assets legally available for this purpose, if and to the extent authorized by our Board. Before we make any dividend payments, whether for U.S. federal income tax purposes or otherwise, we must first meet both our operating requirements and debt service on our debt payable. If our cash available for distribution is less than our taxable income, we could be required to sell assets, borrow funds or raise additional capital to make cash dividends or we may make a portion of the required dividend in the form of a taxable distribution of stock or debt securities.

We will make dividend payments based on our estimate of taxable earnings per share of Common Stock, but not earnings calculated pursuant to GAAP. Our dividends and taxable income and GAAP earnings will typically differ due to items such as depreciation and amortization, fair value adjustments, differences in premium amortization and discount accretion, and non-deductible general and administrative expenses. Our dividends per share may be substantially different than our taxable earnings and GAAP earnings per share.

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Inflation

The real estate market has not been affected significantly by inflation in the past several years due to increases in rents nationwide. The majority of our lease terms are for a period of one year or less and reset to market if renewed. The majority of our leases also contain protection provisions applicable to reimbursement billings for utilities. Due to the short-term nature of our leases, we do not believe our results will be materially affected.

Inflation may also affect the overall cost of debt, as the implied cost of capital increases. The Federal Reserve, in response to or in anticipation of continued inflation concerns, could continue to raise interest rates. We intend to mitigate these risks through long-term fixed interest rate loans and interest rate derivatives, which to date have included interest rate cap and interest rate swap agreements.

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Seasonality

We believe that our business and related operating results will be impacted by seasonal factors throughout the year. We experience higher levels of resident move-outs and move-ins during the late spring and summer months, which impacts both our rental revenues and related turnover costs. Furthermore, our property operating costs are seasonally impacted in certain markets for expenses such as repairs to heating, ventilation and air conditioning systems, turn costs and landscaping expenses during the summer season. Additionally, our SFR properties are at greater risk in certain markets for adverse weather conditions such as extreme cold weather in winter months and hurricanes in late summer months.

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Off-Balance Sheet Arrangements

As of September 30, 2024 and December 31, 2023 we had no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

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Critical Accounting Policies and Estimates

Management’s discussion and analysis of financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires our management to make judgments, assumptions and estimates that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We evaluate these judgments, assumptions and estimates for changes that would affect the reported amounts. These estimates are based on management’s historical industry experience and on various other judgments and assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these judgments, assumptions and estimates. Below is a discussion of the accounting policies that we consider critical to understanding our financial condition or results of operations where there is uncertainty or where significant judgment is required. A discussion of recently issued accounting pronouncements and our significant accounting policies, including further discussion of the accounting policies described below, can be found in Note 2 “Summary of Significant Accounting Policies” to our consolidated financial statements included in this report.

Real Estate Investments

Upon acquisition, we evaluate our acquired SFR properties for purposes of determining whether a transaction should be accounted for as an asset acquisition or business combination. Since substantially all of the fair value of our acquired properties is concentrated in a single identifiable asset or group of similar identifiable assets and the acquisitions do not include a substantive process, our purchases of homes or portfolios of homes qualify as asset acquisitions. Accordingly, upon acquisition of a property, the purchase price and related acquisition costs (the “Total Consideration”) are allocated to land, buildings, improvements, fixtures, and intangible lease assets based upon their relative fair values.

The allocation of Total Consideration, which is determined using inputs that are classified within Level 3 of the fair value hierarchy established by FASB ASC 820, Fair Value Measurement (“ASC 820”) (see Note 6 to our consolidated financial statements), is based on an independent third-party valuation firm’s estimate of the fair value of the tangible and intangible assets and liabilities acquired, or management's internal analysis based on market knowledge obtained from historical transactions. The valuation methodology utilizes market comparable information, depreciated replacement cost and other estimates in allocating value to the tangible assets. The allocation of the Total Consideration to intangible lease assets represents the value associated with the in-place leases, as one month’s worth of effective gross income (rental revenue, less credit loss allowance, plus other income) as the average downtime of the assets in the portfolio is approximately one month and the assets in the portfolio are leased on a gross rental structure. If any debt is assumed in an acquisition, the difference between the fair value, which is estimated using inputs that are classified within Level 2 of the fair value hierarchy, and the face value of debt is recorded as a premium or discount and amortized or accreted as interest expense over the life of the debt assumed.

The allocation of Total Consideration to the various components of properties acquired during the year can have an effect on our net income/(loss) due to the useful depreciable and amortizable lives applicable to each component and the recognition of the related depreciation and amortization expense. For example, if a greater portion of the Total Consideration is allocated to land, which does not depreciate, our net income would be higher. Typically, we allocate between 10% to 30% of the Total Consideration to land.

Real estate assets, including land, buildings, improvements, fixtures, and intangible lease assets are stated at historical cost less accumulated depreciation and amortization. Costs incurred in making repairs and maintaining real estate assets are expensed as incurred. Expenditures for improvements, renovations, and replacements are capitalized at cost. The Company also incurs costs to prepare acquired properties for rental. These costs are capitalized to the cost of the property during the period the property is undergoing activities to prepare it for its intended use. We capitalize interest costs as a cost of the property only during the period for which activities necessary to prepare an asset for its intended use are ongoing, provided that expenditures for the asset have been made and interest costs have been incurred. Upon completion of the renovation of our properties, all costs of operations, including repairs and maintenance, are expensed as incurred, unless the renovation meets the Company’s capitalization criteria.

Impairment

Real estate assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Significant indicators of impairment may include, but are not limited to, declines in home values, rental rates or occupancy percentages, as well as significant changes in the economy. In such cases, the Company will evaluate the recoverability of the assets by comparing the estimated future cash flows expected to result from the use and eventual disposition of each asset to its carrying amount and provide for impairment if such undiscounted cash flows are insufficient to recover the carrying amount. If impaired, the real estate asset will be written down to its estimated fair value. The process whereby we assess our SFR homes for impairment requires significant judgment and assessment of factors that are, at times, subject to significant uncertainty. No significant impairments on operating properties were recorded during the years ended December 31, 2023 and 2022 or the three and nine months ended September 30, 2024.

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Implications of being an Emerging Growth Company

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act (the “ JOBS Act”) and we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

The JOBS Act permits an emerging growth company such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We have elected to take advantage of this extended transition period. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates for such new or revised standards. We may elect to comply with public company effective dates at any time, and such election would be irrevocable pursuant to Section 107(b) of the JOBS Act.

We could remain an “emerging growth company” until the earliest of (1) the end of the fiscal year following the fifth anniversary of the date of the first sale of shares of our Common Stock pursuant to an effective registration statement, (2) the last day of the fiscal year in which our annual gross revenues exceed $1.235 billion, (3) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which would occur if the market value of our Common Stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (4) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our future income, cash flows, and fair values relevant to financial instruments are dependent upon prevalent market interest rates. Market risk refers to the adverse effect on the value of assets and liabilities from changes in interest rates, market prices, commodity prices, and inflation. The primary market risk to which we are exposed is interest rate risk. We may in the future use derivative financial instruments to manage, or hedge, interest rate risks related to any borrowings we may have. We may enter into such contracts only with major financial institutions based on their credit ratings and other factors.

Interest Rate Risk

A primary market risk to which we believe we are exposed is interest rate risk, which may result from many factors, including government monetary and tax policies, unfavorable global and United States economic conditions (including inflation and interest rates), geopolitical tensions, and other factors that are beyond our control. We may incur additional variable rate debt in the future, including additional amounts that we may borrow under the JPM Facility. In addition, decreases in interest rates may lead to additional competition for the acquisition of single-family homes, which may lead to future acquisitions being more costly and resulting in lower yields on single-family homes targeted for acquisition. Significant increases in interest rates may also have an adverse impact on our earnings if we are unable to increase rents on expired leases or acquire single-family homes with rental rates high enough to offset the increase in interest rates on our borrowings.

As of September 30, 2024, we had total indebtedness of $2.6 billion which was comprised of $0.8 billion of outstanding variable-rate debt. Our variable-rate debt was comprised of borrowings on our mortgage loans of $226.7 million and term loan facilities of $576.7 million. As of September 30, 2024, we had effectively converted 176.7% of these borrowings to a fixed rate through interest rate swap and interest rate cap agreements. Our variable-rate borrowings bear interest at the 30-day average SOFR, daily SOFR or one-month term SOFR plus the applicable spread. Assuming no change in the outstanding balance of our existing debt, the projected effect of a 100 bps increase or decrease in the 30-day average SOFR, daily SOFR or one-month term SOFR, collectively, on our annual interest expense would be an estimated increase or decrease of less than $0.1 million. This estimate considers the impact of our interest rate swap agreements and interest rate cap agreements

This analysis does not consider the effects of the reduced level of overall economic activity that could exist in such an environment. Further, in the event of a change of such magnitude, we may consider taking actions to further mitigate our exposure to the change. However, because of the uncertainty of the specific actions that would be taken and their possible effects, the sensitivity analysis assumes no changes in our capital structure.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) and Rule 15d-15(b) under the Exchange Act, our management, including our President and our Chief Financial Officer, evaluated, as of September 30, 2024, the effectiveness of our disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e) and Rule 15d-15(e). Based on that evaluation, our President and our Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2024, to provide reasonable assurance that information required to be disclosed by us in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the rules and forms of the Exchange Act and is accumulated and communicated to management, including the President and the Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

We believe, however, that a controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls systems are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud or error, if any, within a company have been detected.

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended September 30, 2024, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we are party to legal proceedings that arise in the ordinary course of our business. Management is not aware of any legal proceedings of which the outcome is reasonably likely to have a material adverse effect on our results of operations or financial condition, nor are we aware of any such legal proceedings contemplated by government agencies. (see Note 11).

Item 1A. Risk Factors

There have been no material changes to the risk factors previously disclosed under Item 1A, “Risk Factors,” of our Annual Report.

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities

Sales of Common Stock

The following table presents information regarding the DRIP that have not been previously disclosed in Current Reports on Form 8-K (dollars in thousands, except per share amounts).

	Common Stock DRIP
Date	Shares Reinvested	Sale Price (1)		Gross Contribution (2)
July 25, 2024	103,472	$	56.25	5,820

(1)	Shares of Common Stock issued under DRIP are generally issued at a 3% discount to the Company’s then-current NAV.
(2)	For Common Stock issued under the DRIP, we do not receive any cash proceeds from the transaction as the shareholder receives shares in lieu of the cash dividend. Refer to Note 7 for further discussion.

No underwriting discount or commission is applicable to sales pursuant to the DRIP.

The Company issued the Common Stock noted above to accredited investors in reliance upon the exemptions from registration under the Securities Act Securities Act provided by Rule 506(b) under Regulation D promulgated under the Securities Act and Section 4(a)(2) of the Securities Act.

Amended and Restated Share Repurchase Plan

On April 27, 2023 the Company publicly announced an amended and restated share repurchase plan (the “Amended Share Repurchase Plan”). The Amended Share Repurchase Plan superseded and replaced the Company’s share repurchase plan that began on November 1, 2019 (the “Prior Share Repurchase Plan”). The Amended Share Repurchase Plan is substantially similar to the Prior Share Repurchase Plan, but (i) clarifies that to have Common Stock repurchased, the repurchase request and required documentation must be received by the last business day of the first month of such quarter, (ii) clarifies that repurchase requests not delivered timely on the last business day of the first month of a quarter will not be executed and must be resubmitted after the start of the next quarter and (iii) removes references to the Private Offering that was terminated on September 14, 2022 and a fee on early repurchases that fell away on November 1, 2020.

Under the Amended Share Repurchase Plan, investors may request on a quarterly basis that the Company repurchase all or a portion of their Common Stock. Under the Amended Share Repurchase Plan, Shares will be repurchased at the then-current NAV per share in effect. The total amount of aggregate repurchases of Shares is limited to no more than 5% of the Company’s aggregate NAV per calendar quarter. The Company is not obligated to repurchase any Common Stock under the Amended Share Repurchase Plan and may choose to repurchase only some, or even none, of the Common Stock that have been asked to be repurchased in any particular quarter, in the sole discretion of the Board. The Board determined to suspend share repurchases from July 1, 2023 to September 30, 2024. Notwithstanding any suspension of the Amended Share Repurchase Plan, the Board may permit the repurchase of Common Stock held by a stockholder who has died, is deemed to have a qualified disability (as such term is defined in Section 72(m)(7) of the Internal Revenue Code) or similar extenuating hardship circumstances, subject to the conditions and limitations in the Amended Share Repurchase Plan.

Under the Amended Share Repurchase Plan, investors may request that the Company repurchase all or a portion of their Common Stock by submitting a repurchase request and required documentation to our transfer agent by 4:00 p.m. (Eastern time) on the last business day of the first month of any quarter. Settlements of share repurchases will be made in cash within three business days of the last calendar day of such quarter (a “repurchase date”). An investor may withdraw his or her repurchase request by notifying the Company’s transfer agent, directly or through his or her financial intermediary, on the Company’s toll-free automated telephone customer service number by 4:00 p.m. (Eastern time) on the applicable repurchase date (or, if such repurchase date is not a business day, the prior business day). If a repurchase order is received after 4:00 p.m. (Eastern time) on the last business day of the first month of a quarter, the purchase order will not be executed and must be resubmitted after the start of the next quarter.

The table below contains information regarding the repurchases of Common Stock by the Company pursuant to the Share Repurchase Plan during the three months ended September 30, 2024:

Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that may yet be Purchased under the Plans or Programs (in thousands)
July 1 - July 31	—	$	—	—	$	—
August 1 - August 31	—	—		—	—
September 1 - September 30	17,183	57.57		17,183	71,949
Total	17,183	$	57.57	17,183	$	71,949

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits

EXHIBIT INDEX

Exhibit Number	Description
10.1	Seventh Amendment to Credit Agreement, dated August 14, 2024, by and among VineBrook Homes Operating Partnership, L.P. and certain subsidiaries, as borrowers, KeyBank National Association, as administrative agent, and the lenders party thereto, joined by VineBrook Homes Trust, Inc. as guarantor (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 20, 2024).
10.2*	Credit Agreement, dated August 22, 2024, by and among VB Nine, LLC, Metropolitan Life Insurance Company and Metropolitan Tower Life Insurance Company, and the lenders party thereto, joined by VineBrook Homes Trust, Inc. as guarantor.
10.3*	Credit Agreement, dated August 22, 2024, by and among VB Ten, LLC, Metropolitan Life Insurance Company and Metropolitan Tower Life Insurance Company, and the lenders party thereto, joined by VineBrook Homes Trust, Inc. as guarantor.
31.1*	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1+	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act.
101.INS*	Inline XBRL Instance Document (The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document)
101.SCH*	Inline XBRL Taxonomy Extension Schema
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase
101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase
104*	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

*    Filed herewith.

+    Furnished herewith.

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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 thereunto duly authorized.

VINEBROOK HOMES TRUST, INC.

Signature	Title	Date
/s/ John Good		November 1, 2024
John Good	Chief Executive Officer
	(Principal Executive Officer)
/s/ Paul Richards		November 1, 2024
Paul Richards	Chief Financial Officer, Treasurer and Assistant Secretary
	(Principal Financial Officer and Principal Accounting Officer)

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