Yahoo Finance

• Net Income: $0.34 per diluted share, compared to a net loss of $0.90 per diluted share in Q3 2023.

• Interest Income: Increased by $5.6 million to $23.6 million from $18 million in Q3 2023.

• Earnings Available for Distribution: $0.75 per diluted common share, up from $0.43 per diluted share in Q3 2023.

• Cash Available for Distribution: $0.67 per diluted common share, compared to $0.47 in the same period last year.

• Dividend: $0.50 per share declared for Q4 2024.

• Book Value per Share: Increased 2.6% to $16.95 per diluted share.

• Portfolio Investments: 83 investments with a total outstanding balance of $1.1 billion.

• Debt Outstanding: $816 million, with a debt-to-equity ratio of 1.5252 times.

• Guidance for Q4: Earnings available for distribution of $0.79 per diluted share at the midpoint.

• Warning! GuruFocus has detected 2 Warning Sign with NREF.

Release Date: October 31, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• NexPoint Real Estate Finance Inc (NYSE:NREF) reported a significant increase in net income to $0.34 per diluted share for Q3 2024, compared to a net loss of $0.90 per diluted share in Q3 2023.

• Interest income increased by $5.6 million to $23.6 million in Q3 2024, driven by higher rates and lower interest expenses from deleveraging.

• Earnings available for distribution rose to $0.75 per diluted common share in Q3 2024, up from $0.43 in the same period last year.

• The company declared a $0.50 dividend per share for the fourth quarter of 2024, with the dividend being 1.34 times covered by cash available for distribution.

• Book value per share increased by 2.6% to $16.95 per diluted share, primarily due to unrealized gains on common stocks.

Negative Points

• The commercial real estate market conditions remain challenging despite some improvements.

• Debt service coverage ratios (DSCR) have decreased slightly, attributed to repositioning of certain loans and some slippage in the multi-family and single-family residential sectors.

• The company has a high debt-to-equity ratio of 1.5252 times, with 39.7% of its debt being short-term.

• The weighted average cost of debt is relatively high at 6.1%, with a weighted average maturity of only 1.4 years.

• The company is cautious about repo financing, maintaining leverage within a 63% loan-to-value (LTV) range, which may limit flexibility.

Q & A Highlights

Q: On the portfolio exposure shifts, multifamily exposure decreased while life sciences now make up more than a quarter of the portfolio. How do you expect this to progress? A: Matthew Mcgraner, Executive Vice President and Chief Investment Officer, explained that the life sciences exposure increased due to recent deployments and capital returns from the residential sector. He expects the multifamily exposure to increase over the next few quarters, aiming for life sciences to comprise about a quarter to a third of the portfolio on a fully levered basis.