NREF - Earnings call transcript Q3 2024 | NexPoint Real Estate Finance, Inc.

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Operator

Hello, at this time, I would like to welcome everyone to the NexPoint Real Estate Finance, Inc. Q3 2024 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Kristen Thomas, Investor Relations.

You may begin.

Kristen Thomas

Thank you. welcome the Real third company's September XXXX. and call Finance quarter everyone, XX, review to results day, to Estate NexPoint conference ended Good for the

and are President Vice Chief and Investment Richards, Executive On Investments. McGraner, Paul and Brian and President, call Officer; Matt today Vice the President Vice Chief Officer; Financial Executive Mitts, Originations

As at nref.nexpoint.com. website through the a company's reminder, this call is webcast being

SEC annual of statements current the based on everyone this company's more update date of Before Securities speak that we that remind not publicly could today's statements. on or within statements are begin, the other a the law, and report to of and should contains The the revise call on and any to Act undertake statements. conference meaning as I and Reform during forward-looking and does reliance Form Listeners any except with filings this encouraged forward-looking Private are statements other Litigation place obligation company's of for risks expectations, would forward-looking conference that and made any review undue call to not forward-looking affect factors beliefs. required like XXXX assumptions discussion management's by complete as the XX-K only the

also non-GAAP This financial measures. includes of call an analysis conference

was earlier today. For a more company's complete discussion of these filed the presentation non-GAAP financial measures, that see

go ahead, like turn to to Mitts. the Brian. now would Please over I call Brian

Brian Mitts

then and turn the stats in to our and through appreciate Matt the it conference going the I next balance the over quarterly and everybody's morning. quarter. our to Brian by then I'm through portfolio Matt McGraner briefly Kristen. Thanks, Richards. today this sheet results, going guidance by some I'm detail. Paul go portfolio I'm Mitts. team to time for and I'll joined And start give

per diluted net we on third investments was the $X.XX The share quarter income in million unrealized net XXXX. for by diluted of quarter interest occurred by third per third interest well driven quarter as The in due were million to higher Our increase third this to driven compared $XX a from the the our quarter QX interest For increase $XX.X income. deleveraging as the Interest in by follows: loss to reported the year. the that our of share stock results well quarter, net an increase as in as of $X.X income common of is $X.XX of net for in from expense first million income, increased XXXX. income rates quarter as lower was which in increase gains

Earnings quarter Cash year. for year. of per per QX the a common diluted Board available The distribution the available income share share 'XX. the $X.XX diluted increase in increase in payable in per to third in compared third same the last the distribution to was driven $X.XX in share fourth common quarter by was same for $X.XX for quarter [Audio has the share diluted Gap] [ in for compared per of share period distribution earnings ] available per net and dividend $X.XX declared the the period $X.XX $X.XX quarter, for in last

third distribution. in cash for quarter X.XXx covered available is the Our dividend by regular

unrealized again, common X.X% diluted increased increase, Book value due stocks. the to primarily with our per being gains share in on quarter $XX.XX the per share, second to

sold loans Science $XX.X yield CMBS million a million funded property, Life $X.X million of B-piece $X.X with an sorry, bond development which X.X%. senior on we and quarter, redeemed -- a million $XX we redeemed the equivalent or During of Cambridge,

shares B for redeemable of million preferred of X.X Series cumulative shares During $XX the third quarter, proceeds we net sold our million.

sheet. portfolio balance the to and Moving

billion. $X.X with comprised outstanding XX Our of a total of balance is investments, portfolio

multifamily, X.X% XX.X% XX.X% investments Our storage, and marina. XX% specialty manufacturing X.X% are across Life allocated X.X% follows, Sciences, SFR, sectors as

Our equity CMBS loans, preferred B-pieces, XX.X% follows: XX.X% as X.X% XX.X% mezzanine across loans, XX% fixed promissory investments income MBS investments, and senior is X.X% I/O notes. portfolio allocated strips, X%

collateralizing follows: California, investments, X% exposed as XX% portfolio the heavily Sunbelt they allocated our Massachusetts, the of heavily Georgia Maryland geographically all X% remainder across XX% as other are Texas, As Florida, X% and and assets -- markets, is X% but to far with markets. X% our

XX.X% in average loan-to-value of weighted -- and of our and DSCR collateral X.XXx. portfolio XX.X% with The stabilized,

$XXX this debt. have We million short-term outstanding. of of debt $XXX million XX.X% Of or

weighted of weighted has average debt maturity X.X and cost average a is Our of X.X% years.

of debt maturity X.X collateral weighted with years. is $X.X a collateralized of billion average Our by

Our is X.XXx. debt-to-equity ratio

end. for for of guiding midpoint range $X.XX of cash We guidance fourth diluted [Technical the -- per $X.XX to to Moving distribution were range on high at share a $X.XX quarter. diluted guiding on for We're with distribution Difficulty] the share per a available $X.XX the of the to and low midpoint $X.XX earnings end available with at the

go that, to Matt, let with turn ahead. it over me Matt. So

Paul Richards

performance expertise returns. sectors. This Brian. we with I to The quarter Richards. remain uncovered is goal superior achieving capital our information Paul Matt, but [Technical evaluate entire We I'll of throughout value focused effectively going demonstrated the harness go to of structure it. all third risk-adjusted investment Thanks, on Difficulty] can the areas the in strong -- before appreciate for results I'm where

are XXX of first successfully been deploying million into portfolio in for markets. and recycle emphasis the geographically our the the either remains interest the new an estate assets plus with conditions bps. that strong continues deployed leverage investments nearing somewhat preference and real the debt is into to bond remain loan, additional shareholders. In company consistent underwriting, although lending bids ensure to sponsors for seasoned reputable market an meticulous to capital underwriting and Nonetheless, conservative third stable accretive bonds investments funded SOFR they prioritize quarter, investment senior improve, quarter, on Life The opportunities. strong secondary Since a An has to of market carries was We with $XX.X the capital. strategy commercial beginning value challenging. diverse a actively Science which we in on structure. stabilization low rate or the centered Our Sunbelt and on credit leverage

On repayment loan and -- bond original originated of acquired secondary the front, redeployed gain, selling depths at price. robust the capitalized into XXX bitter basis deals. purchase seasoned strong during the market, in the roughly pool capital tighter This the COVID B-piece a disposition a we which accretive was a on generated than newly points and

to we the from approximately XX% repo LTV $XX X-point quarter, X.XXx lines value over to ratio At repo by a the cautious reduced within in debt lowering our first We times quarter. the close financing, a leverage our million, of stance maintained on keeping the range. book overall

CMBS our portfolio. continue lending market We to the our conditions discussing actively repo communicate of performance partners with and finance

continue remain resilience shareholder identify at residential target especially confident across In classes the value. to our summary, sector, to and attract opportunities the in asset enhancing markets with We rate a investment of we evaluation aimed thorough in commitment the environment. interest current

multifamily and positioned, the performance own in historical rent are segments by and versus the long-term favorable investments supported well dynamic sector. a single-family momentum provides Our for that

we CDMO Life investment in the highly pipeline Additionally, optimistic our sector. Sciences and are about

to remarks, prepared Matt I'd questions, turn finalize To over to before to it turn like our it McGraner. over we

Matthew McGraner

which stable, continue quality Thank you, Absorption pleased the increase the supply is Credit great a to picking quarter. of LMA the with Sciences exceed in for transaction sector Kendall multifamily and Leasing which QX record our Paul. attractive pleased business. loan. up. value for the our Yes, is positive we're a activity remains in submarkets, with of increasing and levels also very and strength particular quarter-over-quarter, A sign expectations with we're and ] is in also is also life [ Life the a in book

year-over-year Our the and portfolio. the across percent portfolio The portfolio occupancy. A nice entirety it into during the in had XX% quarter of an stabilized exposure recently storage also achieved operations significant quarter. milestone business XX-plus the as moves a had and the occupancy has for increase

closed highly interest on at all SASB execution strong the accretive a financing fixed a in that of also than rate outstanding stack and recapitalize pricing anticipated. from early company's tighter October with debt the market We

be in monetizing So we XXXX, in in could a instead position our assets XXXX. monetize to of perhaps them storage

forward, $XXX sector. we're the quarters sector loans, Going financing likely for bridge construction senior us multifamily see of in the approximately opportunities couple even as be within the you'll of more and in active million CMBS underwriting to next

Finally, the balance capital where growth with options raise. is sheet the we fund pleased available with we're the we're this to having success us Series and as B the with

have multiple avenues even We accretive warehouses growth, A-rated A-note deal. including and bond to fund

the the quarters. in coming To about with opportunity pleased the continued I'm on these offense to close, stability company's go this and opportunities environment. we're in excited

want their always, the As to work. I for team hard thank

like we'd now for call operator to turn the over And to questions. the

Operator

question of first Our Crispin from Love Piper line from [Operator the Instructions] Sandler. comes

Unknown Analyst

] Crispin Buzzi Break on [ This is Love. for

makes Just Life up this exposure on you in with And decrease shifts of current portfolio to expect exposure Sciences? expect increases would again now you Life more continued X/X multifamily than portfolio. stability the while the progress? or continuing, exposures How do Sciences

Matthew McGraner

Yes.

residential of I capital think last quarter we has coming the or is over sector. paybacks both that's number the Life opportunities also the us -- X, a back Science deployed the from because or exposure come but to the

quarters. see remarks, pie exposure But of over the -- the it today, levered the I we'd said on as X.Xx like would But kind to Life shrinking I be fully bit. in to a where skews couple in like that portfolio Sciences the and sit overall ultimately, multifamily it's a to we portfolio residential, size about little like levered next probably of prepared here see increasing X/X of X/X So my is. it basis. in

Unknown Analyst

service see key the On decrease do screen then others you still service and me. quarter? ratio just question Appreciate dig debt that you quality, the into a And were Can debt the ratios but just to the in industry, little it. and the coverage what drivers LTVs last deeper in for attractive there? coverage credit

Paul Richards

of Yes, course.

do a as in, XXX the now life few It's That, multi plus the And future. main you minimally of we One are opportunities slippage but decrease over provide [ DSCR. even to that better right senior drop-off course, that the in in because the A those it's coverage little that SFR, with but of that's being some twofold. to SOFR you've ] don't just kind doesn't of repositioning bit expect So Matt's even DSCRs discussed. leased seen the of much, in I've seen But not we the DSCR we loan the up has the the seen -- right a maintain the why hold such past future, #X quarters. now. also, of loan the have components of are some or in X

Matthew McGraner

front the this CMBS to see even shifts Matt. of deals down, starting curve in we're rate add escrow the own is less to portfolio caps stabilizing the Paul's including caps And mandating been and as sweeps The and just throughout on multifamily, K to the end comments, sheets replace balance that floating cash property and other the agencies have side. you And servicers expensive. know, as the get the to and hedges especially our flow for

liquidity mandates and the expect coverage and estate we within this the broader So to credit of as ratios. to as continues become and those more sector kind improve ease, available real escrow shift commercial multifamily Fed the only

Operator

next Our from line comes Rahmani the from of KBW. question Jade

Jade Rahmani

Do as given value how in intra-quarter, the is an you rates? have book update trending to spike

Paul Richards

current sticking I Sure, now We're it's at QX. book, positive. mute in flat wasn't pretty value to It's growth where say, right would CMBS terms of we been movement. Jade. our of somewhat end the Yes, a our is, much which to discussed there decline. book or in

Jade Rahmani

to Good hear.

not of then In Everyone lot a that. rates capturing of seeing bond market surprise. by lowers interest and it's the cooperates, rate thought that we're and dynamics, terms people

see hiccups and starting multifamily some to fact, In there. here

it sizable For they example, housing. an And the loans. the seniors large increase They to attribute delinquencies, XX-Q a a fact. related quite really noted X/X all in reserve, of rate of booked uptick, did Mae floating in Fannie to in uptick

how thoughts issues outlook? So see about just to multifamily, you're if any the up creep your wanted seeing and as to in are thinking what you're credit performance

Matthew McGraner

we we've quarter, At a or the better over Yes, And into a about recent of coaster retrades in transaction life then as quarter about on seen treasuries, the roller so. everyone -- start yields a run-up pause and good of election. the some bit was it's market last life. feeling with pretty the in head it's the or been

and continues speak that's business. clear up -- multifamily that's the we're obviously, But it. I dynamics not underlying a to our multifamily, can't within we're think going absorption housing units overall, really to promising. some that because you But the owner I XX,XXX seniors can tell within of be an part sector, to of of not really

our stated, the as storm the then we're positive, here increasing I be XXXX held we've to NOIs in the market both level up QX, in extent people increasingly just really gets but think on But and lack have pricing again, of great power and demand residential the XXXX. the over in special given that just multifamily capital year wave. landlords supply rents, also the QX time, way supply think. As is when due times, outlook challenging past for It's have XXXX better is eye going these even of deliveries the side on and I the sitting occupancy really in in listened overall pretty the to side today the a to during

Jade Rahmani

dearth good lots the activity market would of but space? now, like ton muted. on but the be you many It debt right deals, how deals sidelines competition terms competition? characterize play the of looking those active, In refi of you at state have looking of of a of in and a being would seems really characterize How capital problems, quite there's that acquisition to you're and the

Matthew McGraner

XXX a And a up been we Yes, multifamily a have SOFR But on there are to, has raised ton alluding out I'd bunch of number seeing players raised the say debt lot on of competition funds. lot capital groups of I XXX. sector, debt stabilized of you're A been -- you're there's side. tons think particularly for capital around even fund the in of deals. seeing to plus

getting and And and so relationships, based the just differentiate by sponsor think, for and issues we we're plan obviously, Freddie relationship in flow of sponsors side, we differentiating with ourselves our underwrite. mostly the deal HRR the relationship. banks on way the that platform be kind that's years through increasingly have we're being hitting are and repeat a owner, to and on perspective and CMBS I And an as that with The tough select guys deals. that that we're able opportunities past on continue also few to ourselves there enjoy business these from winning to a understand equity is throughout working a And bigger Mac the involved underwriters. we're

us, do like be is So we like And to opportunities we our don't selective. have to the news good anything. for

selective dividend quality, we a coverage, credit book can be have to good that's stable a now. great in have We and value, a and we that's outearning place and right opportunistic our be

Operator

Stephen [Operator Instructions] Our from next question comes from the Raymond line Laws of James.

Stephen Laws

really I think growth on raising there's for about guys if portion quarter idea unfunded Congrats to it? about too get get you Matt, that was matching And Series on guess going I is How in through appreciate B is strong of how any do you is how long-winded. million that details your how down? $XX the guess, the shown in first, unfunded I just to it funded guidance off -- the are about you is to think that's funding But much the unfunded start, How the commitments issuance? last these you do Want to do and the fund that provide. that base, QX. talk you commitments? what an not Kind can supplement, And touch commitments? number, capital Or that? a up? capital side? of that And handle of

Matthew McGraner

to terms funded activity. accretive $XX $XX draw life schedule of have us both fund. The was is and timing the that or Yes. [ million increasingly million $XXX that's being A million call to in and another it, The ] $XX or commitment we a million

somewhat matching able see the dollar we So with meetings and Series great multifamily an facility are margin. working To have hit note these of even into for dollar A asset. we could residential on loans that a and extent that that banks on interest Sciences slices AB throw your number great with that's a the of and into note really side couple question, a on go that particularly to on Life are other the the an To had B side we net structure opportunities.

to as B. And with then the bond we as on well. agencies, have of discussions rating high-yield could second have a deal we Moody's, kind that balance that option any up, like we S&P, Fitch, the how where forward, we the been kind recently of underlevered with if pair company's So of a going take other deals given Series then in we is advantage we and are, sheet think pop

in to And think, now So accretive can right able that to number sector is I of unique, that. this we there's a the fund of kind growth. ways do be

Stephen Laws

Yes. Series that B? on coupon the What is

Matthew McGraner

Stephen Laws

XXX Okay. pretty capital of Pretty deploy good good. plus... there you raise bps Clipping and a spread SOFR as

Matthew McGraner

Yes, exactly.

Stephen Laws

a is the raise? is on there that's Series can accretive. how the B So much there? What cap? I mean, really is what limit Or authorization

Matthew McGraner

Yes.

think and -- I $XXX million we $XXX So that. we're raised we've of SOFR about million -- the total, is

Stephen Laws

you're Are on investments? to a a curious a seeing equity you could pipeline get seeing looking Switching it out of Are little opportunities of But everything? talk Are you maybe this kind more in pipeline? little the best side, bit pipeline? investments. bit, looking kind B preferred little at you on gears investment resi the looking you you of you deals? at bit. loans? resi and multifamily pieces Is Can at or touch kind about of the in what's an that you increase Great. active as mezz of Just look on mentioned where

Matthew McGraner

bet. you Yes,

then Georgia. in portfolio K. the Freddie we're Difficulty] with looking of on it'd purchase, a at B, of existing a And remainder of refinancing half is on sponsor [Technical the million -- Southwest Freddie And repeat So side, half a -- and garden-style we're then about be working kind portfolio the and million. $XXX financing $XX-ish there. construction the Arizona Texas That's and

] it's [ senior of of kind loans, and construction. So XXX-XX CMBS

Operator

we in queue. the all That is the questions have that

turn like over remarks. would back for to I it closing So to management

Brian Mitts

Paul, if guys everything you Matt, else, go -- sorry, Yes. have ahead. but

Matthew McGraner

and next this quarter. forward everyone's No. talking again I to appreciate look time to you morning

Operator

conference. today's a everyone. Have concludes That pleasant day,

NexPoint Real Estate Finance (NREF) 31 Oct 242024 Q3 Earnings call transcript