NREF's Q3 2025: Contradictions Emerge on Life Sciences Demand, Multifamily Market Strategies

Date of Call: October 30, 2025

Financials Results

• EPS: $1.12 per diluted share, compared to $0.74 per diluted share in Q3 2024

Guidance:

• Earnings available for distribution guidance: $0.48 per diluted share midpoint (range $0.43–$0.53).
• Cash available for distribution guidance: $0.50 per diluted share midpoint (range $0.45–$0.55).
• Board declared Q4 dividend of $0.50 per common share.
• Plan to term out remaining senior unsecured notes in H1 2026 and launching Series C preferred ($200M at 8%).
• Will opportunistically repurchase shares while deploying capital into a $350M+ pipeline.

Business Commentary:

• Dividend Payout and Coverage:
• NexPoint Real Estate Finance reported a $0.50 per share regular dividend in the third quarter and declared a similar dividend for the fourth quarter.

• The dividend was 1.06x covered by cash available for distribution, indicating a healthy payout ratio.

• Life Science Sector and Leasing Activity:

• The Alewife life science project stabilized with a long-term lease to Lila Sciences, taking 245,000 square feet.

• This lease created additional capital market optionality and was one of the first green shoots in their opportunistic life science investments.

• Investment Allocation and Portfolio Diversification:

• The portfolio is composed of 88 investments with a total outstanding balance of $1.1 billion, diversified across sectors like multifamily (47.3%), life sciences (33.9%), and single-family rental (15.9%).

• The fixed income portfolio is allocated across investments such as CMBS B-Pieces (27%) and mezz loans (26.5%), showing a balanced exposure to different asset classes.

• Debt Management and Refinancing:

• NexPoint successfully refinanced its $36.5 million senior unsecured notes with a new offering of $45 million, at a slightly higher interest rate of 7.875%.

• This refinancing provided flexibility in a declining rate environment and is part of a strategy to term out senior unsecured notes in the first half of 2026.

• Guidance for Cash and Earnings Distribution:

• For the fourth quarter, NexPoint guided cash available for distribution to be $0.50 per diluted share with a range of $0.45 to $0.55.
• The guidance for earnings available for distribution was $0.48 per diluted share, with a range of $0.43 to $0.53.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted an 8% increase in book value from Q2, dividend coverage of 1.06x, a $350M+ pipeline, Alewife stabilization with a flagship lease, near completion of a Series B raise and launch of Series C, and a stated 'cautiously optimistic' outlook while pursuing accretive growth (buybacks and deployment options).

Q&A:

• Question from Jason Sabshon (Keefe, Bruyette, & Woods, Inc., Research Division): It would be helpful to hear just your updated view on the life science sector. We're seeing soft tenant demand and oversupply in some markets. And then specifically, as it relates to NREF's exposure, just your thoughts there. And if there's any color you can provide on leasing at the asset, that would be helpful.
  Response: NREF's life-science exposure is concentrated in gateway markets and structured as first-to-fill, low LTV deals; the Alewife flagship lease to Lila stabilizes the project, creating liquidity and multiple exit options (refi, A-note, sale) and validates the strategy.

• Question from Jason Sabshon (Keefe, Bruyette, & Woods, Inc., Research Division): Great. And then just to shift to multifamily. Now pretty clear from your remarks that you see the supply backdrop as improving. So -- but at the same time, we have seen some pressure in the bridge lending space. So I guess as it turns -- as it relates to deployment, where would you preference deploying capital into senior loans versus mezzanine or preferred versus equity ownership? And kind of just your view on some of the softness that we've seen in the bridge space?
  Response: Softness is mainly from floating-rate bridge loans issued in 2021–22 that can’t be refinanced today; management expects lease-growth to inflect in 2026 and favors patience—holding/extending bridge positions to capture recovery rather than immediate distressed redeployment.

Contradiction Point 1

Life Science Sector Demand and Supply Dynamics

It involves differing perspectives on the demand and supply dynamics within the life science sector, which could impact investment strategies and market outlook.

Can you update your outlook on the life science sector due to reports of soft tenant demand and oversupply in certain markets? - Jason Sabshon(KBW)

2025Q3: NREF's life sciences book began in 2024, avoiding distress from COVID-era liquidity. Exposure is focused on gateway markets with strong demand, like San Diego, San Francisco, and Boston. - Matthew McGraner(CIO)

Considering the multifamily supply situation, how do you assess capital allocation across senior loans, mezzanine/preferred, or equity? - Jade Rahmani(KBW)

2025Q2: We're really encouraged by the liquidity and the capital that's available in the multifamily sector. And as we highlight some of our data points, you see that the multifamily sector is benefiting from the intentionality, 10 years of undersupply, record fund flows and a lot of interest for bridge loans. - Matthew McGraner(CIO)

Contradiction Point 2

Multifamily Market Conditions and Capital Deployment

It presents differing views on the multifamily market and the strategic deployment of capital, which could impact investment decisions and financial performance.

How do you evaluate allocating capital to senior loans vs. mezzanine/preferred equity given current multifamily supply conditions? What's your view on bridge lending market softness? - Jason Sabshon(KBW)

2025Q3: The softness in bridge spaces is primarily due to floating rate loans from '21 and '22. There's light at the end of the tunnel; multifamily demand is strong, especially in Sunbelt markets. New lease growth is inflecting, particularly in constrained markets like San Francisco and New York. - Matthew McGraner(CIO)

Given current multifamily supply conditions, how do you prioritize capital deployment across senior loans, mezzanine/preferred equity, or direct equity ownership? - Jade Rahmani(KBW)

2025Q2: We're really encouraged by the liquidity and the capital that's available in the multifamily sector. And as we highlight some of our data points, you see that the multifamily sector is benefiting from the intentionality, 10 years of undersupply, record fund flows and a lot of interest for bridge loans. - Matthew McGraner(CIO)

Contradiction Point 3

Life Science Sector Demand and Exposure

It involves differing perspectives on the demand and exposure in the life science sector, which impacts strategic decisions and investment focus.

What is the current outlook for the life science sector considering weaker tenant demand and excess supply in some markets? How is this impacting NREF's exposure, and what is the current leasing activity at the asset? - Jason Sabshon (KBW)

2025Q3: NREF's life sciences book began in 2024, avoiding distress from COVID-era liquidity. Exposure is focused on gateway markets with strong demand, like San Diego, San Francisco, and Boston. - Matthew McGraner(CIO)

Life sciences: What percentage of the project will be leased or pre-leased post-leasing momentum? Will it be multi-tenant or single tenant? Can you provide more details? - Jade Rahmani (KBW)

2025Q1: We're seeing a lot of interest in San Francisco, in San Diego, very strong interest in Boston. - Matthew McGraner(CIO)

Contradiction Point 4

Multifamily Supply and Demand Dynamics

It highlights distinct views on the supply and demand dynamics in the multifamily sector, influencing investment strategies and expectations.

Given the current multifamily supply situation, how do you prioritize capital deployment across senior loans, mezzanine/preferred equity, and direct equity ownership? What’s your view on the recent softness in bridge lending? - Jason Sabshon (KBW)

2025Q3: The softness in bridge spaces is primarily due to floating rate loans from '21 and '22. There's light at the end of the tunnel; multifamily demand is strong, especially in Sunbelt markets. - Matthew McGraner(CIO)

What opportunities are you seeing? Are you focusing on residential preferreds or increasing CMBS B-Pieces? What’s the plan moving forward? - Jade Rahmani (KBW)

2025Q1: There's a very strong liquidity backdrop; I think we saw a couple of new issues that maybe were oversubscribed a little bit this week. - Matthew McGraner(CIO)

Contradiction Point 5

Life Sciences Market Conditions and Leasing Activity

It involves differing views on the overall health of the life sciences market and specifically, the leasing activity at a key project, impacting investor understanding of the company's strategy and performance.

What's the outlook for the life science sector considering soft tenant demand and oversupply in some markets? How does this affect NREF's exposure, and can you share leasing updates for the asset? - Jason Sabshon(KBW)

2025Q3: NREF's life sciences book began in 2024, avoiding distress from COVID-era liquidity. Exposure is focused on gateway markets with strong demand, like San Diego, San Francisco, and Boston. The Alewife project's lease with Lila Sciences stabilizes the project and creates a cluster. - Matthew McGraner(CIO)

Could you discuss the key metrics and performance of your life sciences investments, which have shown significant growth in the portfolio mix over the past year? How should we monitor these through your public filings? - Stephen Laws(Raymond James)

2024Q4: It's chunky in terms of the two main life science investments. Let me start with the Massachusetts loan in Alewife. It's a $220 million commitment of which we funded roughly $175 million. The detachment point on a loan to cost basis for that asset is roughly 25% loan to cost, stabilized debt yield for rents in just the 80s – for that deal would be 30-plus-percent. - Matt McGraner(CIO)