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NREF Announces Third Quarter 2021 Results

11/04/2021

DALLAS, Nov. 4, 2021 /PRNewswire/ -- NexPoint Real Estate Finance, Inc. ("NREF" or the "Company") (NYSE: NREF) today reported its financial results for the quarter ended September 30, 2021.

NREF reported net income of $25.2 million, or $1.17 per diluted common share, for the three months ended September 30, 2021, compared to $11.5 million, or $0.52 per diluted common share, for the three months ended September 30, 2020.

NREF reported earnings available for distribution1 of $5.2 million, or $0.71 per diluted common share2, for the three months ended September 30, 2021, compared to $2.3 million, or $0.42 per diluted common share2, for the three months ended September 30, 2020.

"We are pleased with the team's continued success in sourcing accretive opportunities, growing our portfolio to 68 investments.  Multifamily, single-family rental, and self-storage have continued to thrive as the pandemic subsides." said Matt McGraner, Chief Investment Officer.

Third Quarter 2021 Highlights

  • Outstanding total portfolio of $1.6 billion, comprised of 68 investments3
  • Single-family rental ("SFR") and multifamily represent 100% of the Company's debt portfolio
  • Weighted average loan to value ("LTV")4 and debt service coverage ratio ("DSCR") on NREF's SFR, CMBS, CMBS IO strips, preferred and mezz investments are 66.8% and 2.01x3, respectively
  • As of November 3, 2021, there are no loans currently in forbearance in our portfolio, unchanged from the end of the first quarter 2021
  • In the third quarter, NREF issued 2,059,700 shares of its common stock through a secondary public offering at a price of $21.00 per share, for approximately $41.0 million of net cash proceeds
  • In the third quarter, NREF issued 124,284 shares of its common stock through the Company's at-the-market (ATM) offering at an average gross price of $22.92 per share, for approximately $2.7 million of net cash proceeds
  • For the third quarter of 2021, net income of $25.2 million, compared to $11.5 million for the third quarter of 2020, an increase of 118.3%
  • Year-over-year increase of earnings available for distribution per common share, cash available for distribution1 per common share and book value per combined share (common shares and noncontrolling interests) of 69.0%, 55.6% and 13.9%, respectively
  • During 3Q 2021, NREF purchased six CMBS IO strips with an aggregate notional amount of $115.1 million for $13.1 million in net cash proceeds
  • On September 17, 2021, NREF originated a bridge loan with a principal value of $32.8 million and yield of 450 bps plus one-month LIBOR. This loan was paid off on November 1, 2021.
  • On September 29, 2021, NREF purchased $3.0 million of a preferred equity investment with a current yield of 10.0%
  • Mark-to-market gains of $1.4 million on the Company's investment in NexPoint Storage Partners, Inc., and $12.8 million on the Company's CMBS and IO strip portfolio. Mark-to-market gains are a component of net income and EPS but are excluded from the Company's reported earnings available for distribution

Reconciliations of Non-GAAP Financial Measures
The following table provides a reconciliation of Earnings Available for Distribution and Cash Available for Distribution to GAAP net income attributable to common stockholders (in thousands, except per share amounts):



For the Three   Months   Ended   September 30,




2021



2020


Net income attributable to common stockholders


$

13,233



$

2,862


Adjustments









Amortization of stock-based compensation



538




252


Loan loss (benefit) provision (1)






(12)


Unrealized (gains) or losses (2)



(8,612)




(777)


EAD attributable to common stockholders


$

5,159



$

2,325











EAD per Diluted Weighted-Average Share


$

0.71



$

0.42











Adjustments









Amortization of premiums


$

1,844



$

630


Accretion of discounts



(1,858)




(294)


Stock dividends received






(174)


CAD attributable to common stockholders


$

5,145



$

2,487











CAD per Diluted Weighted-Average Share


$

0.70



$

0.45











Weighted-average common shares outstanding - basic



6,863




5,261


Weighted-average common shares outstanding - diluted (3)



7,303




5,550




(1)

We have modified our calculation of Earnings Available for Distribution to exclude any add back of loan loss provision, net.

(2)

Unrealized gains represent the net change in unrealized gains on investments held at fair value applicable to common shareholders.

(3)

Weighted-average diluted shares outstanding assumes vesting of all outstanding unvested restricted stock units but not the conversion of all redeemable non-controlling interests.

Conference Call Details
The Company is scheduled to host a conference call on Thursday, November 4, 2021 at 11:00 a.m. ET (10:00 a.m. CT), to discuss third quarter 2021 financial results.

The conference call can be accessed live over the phone by dialing 800-437-2398 or, for international callers, +1 929-477-0591 and using passcode Conference ID: 1130902.  A live audio webcast of the call will be available online at the Company's website, http://nref.nexpoint.com.  An online replay will be available shortly after the call on the Company's website and continue to be available for 60 days.

A replay of the conference call will also be available through Thursday, November 11, 2021 by dialing 888-203-1112 or, for international callers, +1 719-457-0820 and entering passcode 1130902.

The Company plans to issue a presentation with third quarter financial results before market open on Thursday, November 4, 2021.

Supplemental Information
For additional commentary and portfolio information, please view NREF's earning supplement, which was posted on the Company's website, http://nref.nexpoint.com.

About NexPoint Real Estate Finance, Inc.

NexPoint Real Estate Finance, Inc., is a publicly traded REIT, with its shares listed on the New York Stock Exchange under the symbol "NREF" primarily focused on originating, structuring and investing in first mortgage loans, mezzanine loans, preferred equity and alternative structured financings in commercial real estate properties, as well as multifamily commercial mortgage-backed securities.  More information about NREF is available at http://nref.nexpoint.com.

Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on management's current expectations, assumptions and beliefs. Forward-looking statements can often be identified by words such as "anticipate", "estimate", "expect," "intend," "may", "should" and similar expressions, and variations or negatives of these words. These forward-looking statements include, but are not limited to, statements regarding the Company's business and industry in general. They are not guarantees of future results and forward-looking statements are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed in any forward-looking statement, including the ultimate geographic spread, duration and severity of the COVID-19 pandemic, and the effectiveness of actions taken, or actions that may be taken, by governmental authorities to contain the outbreak or treat its impact, as well as those described in greater detail in our filings with the Securities and Exchange Commission, particularly those described in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Readers should not place undue reliance on any forward-looking statements and are encouraged to review the Company's Annual Report on Form 10-K and the Company's other filings with the SEC for a more complete discussion of risks and other factors that could affect any forward-looking statement. The statements made herein speak only as of the date of this press release and except as required by law, the Company does not undertake any obligation to publicly update or revise any forward-looking statements.

Non-GAAP Financial Measures

This press release contains non-GAAP financial measures. A "non-GAAP financial measure" is defined as a numerical measure of a company's financial performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with GAAP in the statements of income, balance sheets or statements of cash flows of the Company. The non-GAAP financial measures used within this press release are earnings available for distribution ("EAD") and cash available for distribution ("CAD"). EAD has replaced our prior presentation of Core Earnings. In addition, Core Earnings results from prior reporting periods have been relabeled EAD. In line with evolving industry practices, we believe EAD more accurately reflects the principal purpose of the measure than the term Core Earnings and will serve as a useful indicator for investors in evaluating our performance and our long-term ability to pay distributions.

EAD is defined as the net income (loss) attributable to our common stockholders computed in accordance with GAAP, including realized gains and losses not otherwise included in net income (loss), excluding any unrealized gains or losses or other similar non-cash items that are included in net income (loss) for the applicable reporting period, regardless of whether such items are included in other comprehensive income (loss), or in net income (loss) and adding back amortization of stock-based compensation. We use EAD to evaluate our performance which excludes the effects of certain GAAP adjustments and transactions that we believe are not indicative of our current operations and to assess our long-term ability to pay distributions. We believe providing EAD as a supplement to GAAP net income (loss) to our investors is helpful to their assessment of our performance and our long-term ability to pay distributions. We also use EAD as a component of the management fee paid to our manager. EAD does not represent net income or cash flows from operating activities and should not be considered as an alternative to GAAP net income, an indication of our GAAP cash flows from operating activities, a measure of our liquidity or an indication of funds available for our cash needs. Our computation of EAD may not be comparable to EAD reported by other REITs.

We calculate CAD by adjusting EAD by adding back amortization of premiums and by removing accretion of discounts and non-cash items, such as stock dividends. We use CAD to evaluate our performance and our current ability to pay distributions. We also believe that providing CAD as a supplement to GAAP net income (loss) to our investors is helpful to their assessment of our performance and our current ability to pay distributions. CAD does not represent net income or cash flows from operating activities and should not be considered as an alternative to GAAP net income, an indication of our GAAP cash flows from operating activities, a measure of our liquidity or an indication of funds available for our cash needs. Our computation of CAD may not be comparable to CAD reported by other REITs.

1 Earnings available for distribution and cash available for distribution are non-GAAP measures. For a discussion of why we consider these non-GAAP measures useful and reconciliations of earnings available for distribution and cash available for distribution to net income (loss), see the "Reconciliations of Non-GAAP Financial Measures" and Non-GAAP Financial Measures" sections of this release.
2 Weighted-average diluted shares outstanding assumes vesting of all outstanding unvested restricted stock units but not the conversion of all redeemable non-controlling interests
3 As of November 3, 2021 and CMBS B-Pieces are reflected on an unconsolidated basis.
4 LTV is generally based on the initial loan amount divided by the as-is appraised value as of the date the loan was originated or by the current principal amount as of the date of the most recent as-is appraised value for our CMBS B-Pieces.  For NREF's CMBS B-Pieces, LTV is based on the weighted averaged LTV of the underlying loan pool.

Contact: 
Jackie Graham
Director, Investor Relations
JGraham@nexpoint.com

 

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SOURCE NexPoint Real Estate Finance, Inc.

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