NexPoint Diversified Real Estate Trust (NXDT) Q2 2024 earnings summary

Executive summary

• Completed corporate transition to REIT structure, now included in Russell 2000 and 3000 indexes.

• Portfolio now includes both NXDT and NHT segments, with NXDT as the primary segment and NHT (hospitality) consolidated as of April 19, 2024.

• The company operates as a diversified REIT, focusing on income and capital appreciation across commercial real estate types and capital structures.

• Facing a challenging macroeconomic environment with higher interest rates reducing REIT equity issuances, transaction liquidity, and impacting capital markets and financing.

• Initiated a strategic portfolio repositioning to focus on residential, self-storage, and life sciences sectors.

Financial highlights

• For Q2 2024, total revenues were $22.3M, up from $13.9M in Q2 2023, driven by NHT consolidation.

• Net loss attributable to common shareholders was $(9.8)M for Q2 2024, compared to $(15.0)M in Q2 2023.

• Implied NAV per share is $14.29 using stabilized values for top holdings, while the current share price reflects a 70% discount to NAV.

• Top holdings include VineBrook Homes Trust ($163.6M NAV), NexPoint Storage Partners ($108.9M NAV), CityPlace Tower, NexPoint Real Estate Finance ($101.5M NAV), and MidWave Wireless ($75.4M NAV).

• FFO for Q2 2024 was $(5.2)M, up from $(9.4)M in Q2 2023; AFFO was $(2.1)M, down from $(0.5)M.

Outlook and guidance

• Management expects to meet short-term liquidity needs through investment income, cash, and potential debt/equity issuances.

• Portfolio repositioning expected to attract more analyst coverage and reduce NAV discount.

• Stabilization of NexPoint Storage Partners portfolio expected by early 2025.

• Long-term liquidity will depend on access to capital markets, refinancing, and asset sales; $190–$210M in capital expenditures expected for Cityplace renovation.

• Anticipates yield curve compression (~110bps) in the next year, which should improve transaction market liquidity and capital raising opportunities.