NexPoint Real Estate Finance : April 2021 Investor Presentation

APRIL 2021 NYSE:NREF

Investor Presentation

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", "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 specifically 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 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 core earnings, cash available for distribution ("CAD"), debt-service coverage ratio and return on equity. Core earnings 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 core earnings 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 loan performance. We believe providing core earnings as a supplement to GAAP net income (loss) to our investors is helpful to their assessment of our performance. We also use core earnings as a component of the management fee paid to our Manager. Core earnings should not be considered as an alternative or substitute to net income (loss). Our computation of core earnings may not be comparable to core earnings reported by other REITs. We calculate CAD by adjusting GAAP net income (loss), including realized gains and losses not otherwise included in GAAP net income (loss), and excluding non-cash equity compensation, amortization and accretion of purchase premiums and discounts, unrealized gains and losses and certain non-cash items including adjustments to our allowance for loan losses. We believe CAD provides meaningful information to consider in addition to our net income and cash flow from operating activities determined in accordance with GAAP. We believe CAD provides meaningful information that is used by investors, analysts and our management to evaluate our operating performance. We also use CAD when determining our dividend and the long-term viability of our dividend. 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. Debt-service coverage ratio is calculated as annualized core earnings, plus interest expense and preferred dividends divided by interest expense. Return on equity is calculated as core earnings per share divided by book value per share.

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 "Investor Relations" tab.

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PRESENTERS

MATT

MATTHEW

PAUL

BRIAN

MCGRANER

GOETZ

RICHARDS

MITTS

Chief		SVP of		VP of		Chief Financial
Investment		Investments &		Originations &
			Officer
Officer		Asset Mgmt.		Investments

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COMPANY OVERVIEW

Company Overview

NexPoint Real Estate Finance is a publicly traded mortgage REIT ("mREIT"), with its shares listed on the New York Stock Exchange under the symbol "NREF." The Company primarily concentrates on investments in real estate sectors where its senior management team has operating expertise, including in single-familyrental ("SFR"), multifamily and self-storage, predominantly in the top 50 metropolitan statistical areas. The Company focuses on lending or investing in properties that are stabilized or have a "light-transitional" business plan.

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

Current Portfolio

0%	0%
LAND	HEAVY TRANSITIONAL
<2%	0%
CONSTRUCTION	FOR SALE

Target Investment Criteria

Attractive Risk-Adjusted Returns

Stabilized or Light Transitional Business Plan with Positive DSCRs

Desirable and Resilient Property Types: Single-

Family Rental, Multifamily and Self-Storage

Top 50 MSAs

High-Quality Borrowers / Operators

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BUSINESS MODEL / STRATEGY

Defensive Portfolio Characteristics

The current portfolio consists of senior loans, mezzanine debt, preferred equity and common stock investments in short-durationlease-term assets (multifamily, SFR, self-storage) that are geographically diverse in the United States. The portfolio has minimal exposure to construction loans, no heavy transitional loans, no land loans and no for-sale loans. As of January 25, 2021, there are no loans currently in forbearance in our portfolio, unchanged from the end of the third quarter 2020.

MULTIFAMILY

SINGLE-FAMILY

RENTAL

SELF-STORAGE

• Historically low losses for Freddie Mac debt issuances secured by multifamily assets, including periods of market stress
• Annual defaults have breached 1.0% of loans outstanding only three times since 19941
• Aggregate losses in Freddie Mac's origination history have averaged <5 bps per year dating back to 19942
• Since 2009 and through February 2021, there have been $18.9MM in losses on $424B of combined issuance2
• As of February 25, 2021, $7.5B of outstanding UPB, representing 2.2% of total securitized UPB, have entered into forbearance2
• Although this is a relatively new asset class that was institutionalized in the wake of the global financial crisis, SFR has already exhibited resiliency which has only been further pronounced due to effects from COVID-19
• 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 7.4 years of average weighted term to maturity and a 250 bps interest rate spread3
• Subject to Freddie Mac forbearance program to help mitigate cash flow interruptions to the bondholders, however, no SFR loans are currently in forbearance
• Limited human interaction and low costs should help the self-storage sector during current unprecedented times
• Historically, self-storage has outperformed other real estate asset types during economic downturns

7.6	96.1%	68.3%	2.04x
YEARS AVERAGE REMAINING TERM4	OF PORTFOLIO STABILIZED4	WEIGHTED AVERAGE LOAN TO VALUE4	WEIGHTED AVERAGE DSCR4

1. FREDDIE MAC; DECEMBER 2020
2. FREDDIE MAC; February 2021

5	(3)	AS OF DECEMBER 31,	2020
	(4)	AS OF DECEMBER 31,	2020, INCLUDING THE $26.4MM MEZZANINE INVESTMENT CLOSED ON JANUARY 21, 2021 AND EXCLUDING THE NEXPOINT STORAGE PARTNERS, INC COMMON STOCK (FORMERLY, JCAP SERIES A PREFERRED)