NexPoint Real Estate Finance : 1Q 2024 Financial Supplement

NYSE:NREF

1Q 2024 Financial Supplement

May 2, 2024

CONTACT

NEXPOINT REAL ESTATE FINANCE	INVESTOR RELATIONS
(NYSE:NREF)	Kristen Thomas
300 Crescent Court, Suite 700	(p) 214.908.1854
Dallas, Texas 75201	(e) [e-mail]
(w) nref.nexpoint.com

Cautionary Statements

FORWARD LOOKING STATEMENTS

This presentation 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", "believe", "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, guidance for financial results for the second quarter of 2024, including the Company's estimated net income, earnings available for distribution ("EAD"), cash available for distribution ("CAD"), dividend coverage ratios and related assumptions and estimates, and portfolio commentary, including the resiliency of SFR and life science demand. 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 those described in greater detail in our filings with the Securities and Exchange Commission (the "SEC"), particularly those described in our Annual Reports 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 Reports 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 presentation 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 presentation 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 presentation are EAD and CAD.

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. Net income (loss) attributable to common stockholders may also be adjusted for the effects of certain GAAP adjustments and transactions that may not be indicative of our current operations. In addition, EAD in this presentation includes the dilutive effect of non-controlling interests. We use EAD to evaluate our performance 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 NREA, 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. Starting in Q3 2023, the Company adjusted EAD to remove the (Income)/Losses from equity method investments as they represent changes in the equity value of our investments rather than distributable earnings. The Company will include income from equity method investments to the extent that we receive cash distributions and upon realizing gains and/or losses.

We calculate CAD by adjusting EAD by adding back amortization of premiums, depreciation and amortization of real estate investment and amortization of deferred financing costs and by removing accretion of discounts. 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.

ADDITIONAL INFORMATION

For additional information, see our filings with the SEC. Our filings with the SEC are available on our website, nref.nexpoint.com, under the "Financials" tab. Fourth quarter 2023, dividend coverage amounts exclude special dividend amounts.

2

NexPoint Real Estate Finance

Company Overview

NexPoint Real Estate Finance, Inc. ("NREF" or the "Company") is a publicly traded mortgage REIT, with its shares of common stock and 8.50% Series A Cumulative Redeemable Preferred Stock listed on the New York Stock Exchange. The Company concentrates on investments in real estate sectors where senior management has operating expertise, including multifamily, single-family rental ("SFR"), self-storage, life science, and hospitality sectors in the top 50 metropolitan statistical areas. The Company targets lending or investing in stabilized properties or properties with "light-transitional" business plans.

NREF is externally managed by NexPoint Real Estate Advisors VII, L.P. ("NREA"), an affiliate of NexPoint Advisors, L.P., an SEC-registered investment advisor with extensive real estate and fixed income experience.

22.4%

D I S C O U N T T O B O O K 1

NREF Total Return vs Peers4

15.4%

I M P L I E D D I V I D E N D

Y I E L D 2

12.0%

I N S I D E R

O W N E R S H I P 3

1. BASED ON MAY 1, 2024, BOOK VALUE INCLUDING REDEEMABLE NON-CONTROLLING INTERESTS IN THE OPERATING PARTNERSHIP AS REPORTED BY THE COMPANY IN THIS PRESENTATION AND THE SHARE PRICE AS OF CLOSE OF TRADING MAY 1, 2024
2. IMPLIED DIVIDEND YIELD IS CALCULATED USING THE 1Q DIVIDEND OF $0.50 PER COMMON SHARE, ANNUALIZED, DIVIDED BY THE SHARE PRICE AS OF CLOSE OF TRADING ON MAY 1, 2024
3. INCLUDES NON-CONTROLLING INTERESTS. EXCLUDES OWNERSHIP BY FUNDS ADVISED OR MANAGED BY AFFILIATES OF OUR ADVISER EXCEPT TO THE EXTENT OF OUR MANAGEMENT'S PECUNIARY INTEREST THEREIN AS OF THE CLOSE OF TRADING MAY 1, 2024
4. BLOOMBERG. TOTAL RETURN, INCLUDING DIVIDENDS, AS OF CLOSE OF TRADING MAY 1, 2024

3

1Q 2024 Highlights

	$372.8MM	1Q 2024 Dividend	$(14.6)MM	$14.9MM
	B O O K V A L U E
	$16.69 per common share, including	P A I D O N M A R C H 2 8 ,	N E T L O S S 1	1 Q 2 0 2 4 C A S H
FINANCIAL	2 0 2 4	I N 1 Q 2 0 2 4	A V A I L A B L E F O R
redeemable non-controlling interests in
Paid a 1Q 2024 dividend of $0.50 per	Net loss attributable to common	D I S T R I B U T I O N
	the Operating Partnership and excluding	common share on March 28, 2024	stockholders of $(14.3)MM	$0.60 per diluted
	Series A and Series B Preferred Stock
		or $(0.83) per diluted	common share2

common share

$1.2B

O U T S T A N D I N G

PORTFOLIOT O T A L

P O R T F O L I O

Composed of 90 investments3

$508.7MM

S E N I O R L O A N R E D E M P T I O N S

Redeemed $508.7MM of

senior loans and recognized

$8.9MM in aggregate prepayment penalties

$208.0MM	$30.9MM
M E Z Z A N I N E L O A N	P U R C H A S E D F R E D D I E M A C K -
C O M M I T M E N T	S E R I E S B - P I E C E
Originated a $208.0MM	Purchased a $30.9MM Freddie Mac K-Series B-
mezzanine loan and funded	Piece with bond equivalent yield of 9.75%
$44.5MM. The loan pays a
monthly coupon of SOFR+900bps

	2.04X	5.3 Years	$341.7MM
	O U T S T A N D I N G R E P O
	F I N A N C I N G
CAPITALIZATION	D E B T T O B O O K	W E I G H T E D A V E R A G E
Equates to 65.1% advance rate on
V A L U E R A T I O	R E M A I N I N G T E R M 5
	our CMBS B-Piece, IO Strips,
	As of March 31, 2024
		MSCR Notes and mortgage-

backed security Portfolio4

1. NET (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS INCLUDES $25.0 MILLION IN LOSSES RELATED TO ACCELERATED AMORTIZATION OF LOAN PREMIUM ASSOCIATED WITH PREPAYMENT ON A SENIOR LOAN DURING THE QUARTER
2. CASH AVAILABLE FOR DISTRIBUTION PER DILUTED SHARE ASSUMES VESTING OF ALL OUTSTANDING UNVESTED RESTRICTED STOCK UNITS AND CONVERSION OF ALL REDEEMABLE NON-CONTROLLING INTERESTS. SEE "RECONCILIATIONS" SLIDE
3. AS OF MARCH 31, 2024, AND CMBS B-PIECES REFLECTED ON AN UNCONSOLIDATED BASIS
4. BASED ON ACTUAL COLLATERAL POSTED
5. AS OF MARCH 31, 2024, AND EXCLUDING THE COMMON STOCK INVESTMENTS, PREFERRED STOCK INVESTMENT AND THE HUDSON MONTFORD AND ALEXANDER AT THE DISTRICT MULTIFAMILY PROPERTIES

4

1Q 2024 Earnings And Book Value

						Earnings and Book Value
(4.2)%	(3.1)%	(2.2)%	(1.8)%		•	Net Income (Loss) attributable to common stockholders, EPS, and EAD include
			$25.0 million in losses related to accelerated amortization of the premium
			(7.4)%	0.7%
				associated with the prepayment on a senior loan during the quarter.
				(6.9)%
					•	Net interest income (loss) of $(12.8)MM, a decrease of $29.6MM compared to 4Q
						2023
					•	Net loss of $(14.6)MM, with net loss attributable to common stockholders of
						$(14.3)MM, or $(0.83) per diluted common share; compared to a net income of
						$17.9MM, with net income attributable to common stockholders of $13.6MM, or
						$0.74 per diluted common share in 4Q 2023
					•	Earnings available for distribution of $(11.5)MM, or $(0.46) per diluted common
						share; compared to $0.44 per diluted common share in 4Q 2023
					•	BV per diluted common share including redeemable NCI in the Operating
						Partnership decreased 6.9% to $16.69/share, compared to $17.93/share at the
						end of 4Q 2023

5

Net Income (Loss), EAD and CAD

		182.2%
	(3.8)%			197.8%
(10.8)%	(14.0)%	2.3%	150.6%

NET INCOME, EAD, CAD

AND GUIDANCE

N E T I N C O M E / E A D / C A D

(204.5)%

(372.7)%

(212.2)%

• Net income (loss) per diluted common share for 1Q 2024 is $(0.83), compared to net income of $0.74 per diluted common share reported in 4Q 2023
• 1Q 2024 EAD per diluted common share is $(0.46), a decrease of 204.5% compared to 4Q 2023 reported EAD per diluted common share
• 1Q 2024 CAD per diluted common share is $0.60, a decrease of 17.6% compared to 4Q 2023 reported CAD per diluted common share

(3.6)%	(11.3)%	8.5%	17.6%	(16.7)%	G U I D A N C E
				•	2Q 2024 EAD per diluted common share
					guidance is $0.451 at the mid-point
				•	2Q 2024 CAD per diluted common share
					guidance is $0.401 at the mid-point

1. NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS IN 2Q 2024 IS ESTIMATED TO BE BETWEEN $7.4MM AND $9.8MM. SEE "RECONCILIATIONS" SLIDES. Q2 DECREASE FROM PRIOR 2023 RUN RATE ATTRIBUTABLE TO $508.7MM SFR

LOAN REPAYMENT AND TIMING ADJUSTMENTS FOR CAPITAL REDEPLOYMENT.	6

Dividend and Coverage

Dividend and Net Income/EAD/CAD

Coverage

1 Q 2 0 2 4 D I V I D E N D :

• 1Q dividend of $0.50 per common share was paid on March 28, 2024

• 1Q 2024 Net Income dividend coverage is (1.66)x

• 1Q 2024 EAD dividend coverage is (0.92)x

• 1Q 2024 CAD dividend coverage is 1.20x

0.93x

2 Q 2 0 2 4 D I V I D E N D :

• 2Q 2024 dividend of $0.50 per common share declared by the Board of Directors to be paid on June 28, 2024
• 2Q 2024 estimated Net Income dividend coverage of 0.78x1
• 2Q 2024 estimated EAD dividend coverage of 0.90x1
• 2Q 2024 estimated CAD dividend coverage of 0.80x1

Dividend and Net Income/EAD/CAD Coverage

		1Q 2023		2Q 2023		3Q 2023		4Q 2023		1Q 2024		2Q 2024 Est.
Dividend/Share	$	0.50	$	0.50	$	0.50	$	0.50	$	0.50	$	0.50
Net Income (Loss)/Share	$	0.37	$	0.33	$	(0.90)	$	0.74	$	(0.83)	$	0.39
Net Income Coverage		0.74x		0.66x		(1.80x)		1.48x		(1.66x)		0.78x
EAD/Share	$	0.52	$	0.50	$	0.43	$	0.44	$	(0.46)	$	0.45
EAD Coverage		1.04x		1.00x		0.86x		0.88x		(0.92x)		0.90x
CAD/Share	$	0.55	$	0.53	$	0.47	$	0.51	$	0.60	$	0.40
CAD Coverage		1.10x		1.06x		0.94x		1.02x		1.20x		0.80x

1. NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS IN 2Q 2024 IS ESTIMATED TO BE BETWEEN

$7.4MM AND $9.8MM. SEE "RECONCILIATIONS" SLIDES.	7

Portfolio Commentary

Defensive Portfolio Characteristics

The current portfolio consists of senior loans, CMBS B-Pieces, CMBS I/O Strips, mezzanine debt, preferred equity, MSCR notes, mortgage backed securities, multifamily properties and common stock investments in short-durationlease-term assets (multifamily, SFR, self-storage, life sciences) that are geographically diverse in the United States. The portfolio has minimal exposure to construction loans, no heavy transitional loans, and no for-sale loans. As of May 1, 2024, there are no loans currently in forbearance in our portfolio.

5.3

Y E A R S A V E R A G E R E M A I N I N G T E R M 4

MULTIFAMILY

SINGLE-FAMILY

RENTAL

SELF-STORAGE

LIFE SCIENCES

• Historically low losses for Freddie Mac debt issuances secured by multifamily assets, including periods of market stress
• Aggregate losses in Freddie Mac's origination history have averaged 2 bps per year dating back to 20091
• Since 2009 and through February 2024, there have been $54.9MM in aggregate losses on $560.6B of combined issuance2
• Although this is a relatively new asset class that was institutionalized in the wake of the global financial crisis, we believe SFR will exhibit resiliency akin to multifamily
• Current portfolio of SFR loans is capitalized by a secured credit facility with Freddie Mac, is matched in both duration and structure of the underlying loans, has 4.0 years of average weighted term to maturity, and a 245 bps interest rate spread3
• Subject to Freddie Mac forbearance program to help mitigate cash flow interruptions to the bondholders
• Storage fundamentals have weakened as rates have increased causing slowdown in the housing market, which is traditionally a large demand driver for storage. However, historically, self-storage has outperformed other real estate asset types during economic downturns
• Secular demand growth can be reliably estimated by looking into past performance over the last 10-15 years
• Increases in technology, spending and medical talent have created strong demand for real estate that meets unique and specific requirements

86.6%

O F P O R T F O L I O

S T A B I L I Z E D 4

68.5%

W E I G H T E D A V G L O A N

T O V A L U E 4

1.74x

W E I G H T E D A V G D S C R 4

1.	FREDDIE MAC; 4Q 2023	4.	AS OF MARCH 31, 2024, AND EXCLUDING THE COMMON STOCK INVESTMENTS, PREFERRED STOCK INVESTMENT AND THE HUDSON
2.	FREDDIE MAC; FEBRUARY 2023		MONTFORD AND ALEXANDER AT THE DISTRICT MULITFAMILY PROPERTIES
3.	AS OF MARCH 31, 2024		8

Portfolio Commentary1

WA 4%

CO 4%

CA 8%

TX

19%

LESS THAN 4.0% OF TOTAL OUTSTANDING PRINCIPAL BALANCE

MD

5%

GA 6%

FL 9%

Geographic and Asset Type Exposure1

$1.2B

CURRENT

PRINCIPAL1

68.5%

WEIGHTED AVG

LTV1

1. AS OF MARCH 31, 2024, AND EXCLUDING COMMON STOCK INVESTMENTS, PREFERRED STOCK INVESTMENT AND THE HUDSON MONTFORD AND ALEXANDER AT THE DISTRICT MULTIFAMILY PROPERTIES

9

P O R T F O L I O

10