NexPoint Real Estate Finance, Inc.

Good day, and welcome to the Next Point Real Estate Finance fourth quarter conference call. Today's conference is being recorded. At this time, I would like to turn the presentation over to Ms. Jackie Graham. Please go ahead, ma'am.

Thank you. Good day, everyone, and welcome to Next Point Real Estate Finance's conference call to review the company's results for the fourth quarter ended December 31st. On the call today are Brian Miss, Executive Vice President and Chief Financial Officer, and Matt McGrainer, Executive Vice President and Chief Investment Officer, Matt Guest, Senior Vice President, Investment and Asset Management, and Paul Richards, Vice President for Donations and Investments. As a reminder, this call is being webcast through the company's website at nref.nextpoint.com. Before we begin, I would like to remind everyone that this conference call contains forward-looking statements within the meaning of the private security litigation or format of 1995 that are based on management's current expectations, assumptions, and beliefs. Forward-looking statements can often be identified by words such as expect, anticipate, intend, 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, investment activity, estimated IRRs, guidance for financial results for the first quarter of 2021, including the company's estimated net income, core earnings, dividends for common share, cash available for distribution, and dividend coverage ratios for the first quarter of 2021. They are not guarantees of future results and are subject to risks, uncertainties, assumptions that could cause actual results to differ materially from those expressed in any forward-looking statement. Listeners should not place undue reliance on any forward-looking statements and are encouraged to review the company's registration statement on form as selected in the company's other filings with the FDC for a more complete discussion of risks and other factors that could affect the forward-looking statement. Acceptance is required by law, and REF does not undertake any obligation to publicly update or revise any forward-looking statements. This conference call also includes analysis of core earnings and CAD, which are non-GAAP financial measures. These non-GAAP measures should be used as a supplement to and not a substitute for net income loss computed in accordance with GAAP. For a more complete discussion of core earnings and CAD, see the company's presentation that was filed earlier today. I'd like to turn this call over to Brian. Please go ahead, Brian.

Thank you, Jackie. Welcome to everyone joining us for the fourth quarter 2020 Next Point Real Estate Finance Earnings Call. I'll give some quick highlights of our financial performance, capitalization, activity during the year, and guidance for T1 2021. And then turn the call over to Matt Gadsden and Paul Richards to discuss the portfolio and opportunities we see. We'll conclude our prepared remarks with some closing comments from Matt McGregor. Let me start with highlights for 2020. In February, we completed our IPO at $19 per share, raising approximately $102 million in gross proceeds. We used the net proceeds to pay down 100% of our repo financing. In mid-March, as a result of the pandemic, credit markets froze up, creating panic selling through margin calls on repo lines. This had an adverse effect on more degree stocks, including NREF, which dropped to a low of $6.34 per share. although Interop had no repo financing at the time. Book value dropped from $19.30 for shared IPO to a low of $17.72 at the end of the second quarter. In May, as markets began to recover, we drew on our repo lines to make attractive and highly accrued investments in Freddie Mac B pieces. In July, we launched a preferred equity offering, raising 46 million gross proceeds, using the net proceeds to acquire two more Freddie Mac B pieces. Ford Stock Trade, and then the ticker NREFPA. In October, we launched a private unsecured notes offering, raising gross proceeds of $36.5 million. And that proceeds were used to purchase a pool of multifamily mezzanine loans for Freddie Mac. As of December 31st, our capital stack consisted of a $781 million facility on the SFR loans, a $60 million facility on the mezzanine pool, $161 million of repo financing, $36.5 million of unsecured notes, $37.5 million of preferred equity, $90.7 million of common equity, and $276 million of redeemable non-controlling interests. The $781 million credit facility is collateralized by $854 million of SFR mortgages, and its max construction duration in the underlying SFR portfolio is both fixed rates, and each has a weighted average remaining term of 7.4 years. The rate on the facility at December 31st is fixed at a weighted average of 2.44% against the yield on underlying assets of a weighted average 4.9% or a tiered 46 basis points spreader in cost of debt. The $60 million facility is collateralized by $98 million of multifamily mezzanine loans. As of December 31st, the rate on the facility is fixed at a weighted average of 30 basis points against the yield on underlying assets of a weighted average 7.46% or 716 basis points spread over the cost of the debt. Both have a weighted average remaining term of 8.8 years. The $160 million repurchase or repo balance is finalized by $317 million CMDS securitizations for a 51% LTV and bears interest at L plus 2.9 annually. As of December 31st, only 15% of our financing is subject to market-to-market. We're low lever at 2.57 times debt-to-equity. The rate of average cost for our debt is 2.49%. The rate of average term is 6.4 years. The example equated to 30 million in unrestricted cash as of December 31st. For 2020, which was a short year since we went public in early February, we had net income attributable common shareholders of $2.6 million, or $0.47 per share, core earnings of $2.9 million, or $0.54 per share. We recorded a loan loss provision for the year of $320,000. As of December 31st, we repurchased 327,422 shares, an average price of $14.61 per share, representing a discount for our current book value of 25%. We paid a dividend of 40 cents per share in the fourth quarter. Monday, the board declared a dividend of 47.5 cents per share. Paid on March 31st, the shareholder's record as of March 15th. And this represents an 18.5% increase in dividends. For the first quarter, we are issuing quartering guidance of $2.9 million at the midpoint, $2.8 million on the low end, and $3 million on the high end. That equates to 54 cents per current alluded share at the midpoint, 52 cents per alluded share at the low, and 56 cents per share on the high end. And at the midpoint, that would give us a dividend coverage on 47.5 cents of 1.14 times coverage. With that, we'll turn it over to Matt Goetz and Paul Richards to discuss the portfolio.