NexPoint Real Estate Finance, Inc.

Good day, everyone, and welcome to the NextPoint Real Estate Finance Q3 2022 conference call. Today's call is being recorded. And now at this time, I'd like to turn the call over to Kristen Thomas. Please go ahead. Thank you.

Good day, everyone, and welcome to NextPoint Real Estate Finance conference call to review the company's results for the third quarter ended September 30th, 2022. On the call today are Matt McGrainer, Executive Vice President and Chief Investment Officer of Brian Mitts, Executive Vice President and Chief Financial Officer, Matt Guest, Senior Vice President, Investments and Asset Management, and Paul Richards, Vice President, Originations and Investments. As a reminder, this call is being webcast through the company's website at inref.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 Securities Litigation Reform Act of 1995 that are based on management's current expectations, assumptions, and beliefs. Listeners 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 risk and other factors that could affect the forward-looking statements. The statements made during this conference call speak only as of today's date and accept as required by law. NREF does not undertake any obligation to publicly update or revise any forward-looking statements. This conference call also includes an analysis of non-GAAP financial measures. For a more complete discussion of these non-GAAP financial measures, see the company's presentation that was filed earlier today. I would now like to turn the call over to Matt McGranor. Please go ahead, Matt.

Actually, it'll be Brian. Thanks, Kristen, and appreciate everyone joining today. I'm going to kick things off going through our Q3 and year-to-date results, and then I'll touch on guidance for the fourth quarter and then turn it over to the team for some detailed commentary. Q3 results are as follows. Third quarter, we reported net loss of $0.54 per diluted share compared to net income of $1.17 per diluted share for the third quarter of 2021. Decrease in net income as a result of lower prepayments in Q3 and mark-to-market adjustments on the CMBS portfolio. Interest income increased 14% over Q3 2021, driven by a 76 basis point increase in average yield on investments. Interest expense increased 37% driven by 102 million of additional borrowings and a 98 basis point increase in average rate. Earnings available for distribution was 48 cents per diluted share in Q3 compared to 51 cents per diluted share in the same period of 2021. Cash available for distribution was 50 cents per diluted share in Q3 compared to 62 cents per diluted share in the same period of 2021. The decrease in earnings available for distribution and cash available for distribution was the result of lower prepayments in Q3. We paid a dividend of 50 cents per share in the third quarter, and the Board has declared a dividend of 50 cents per share for the fourth quarter. Our dividend in the third quarter was 0.96 times covered by earnings available for distribution and one times covered by cash available for distribution. Book value per share decreased 4.2% quarter over quarter to $20.68 per diluted share, partially as a result of the mark-to-market adjustments to the CMBS portfolio. During the quarter, we originated or purchased nine investments with $113 million of outstanding principal with a combined current yield of 8.3%. Four investments were redeemed or sold with $27.5 million of outstanding principal for a total net loss of $731,000. Year-to-date results are as follows. The nine months into September 30, 2022, we reported net income attributable to common shareholders at $0.71 per diluted share compared to net income of $3.02 per diluted share for the same period, 2021. This decrease was largely driven by mark-to-market adjustments in our CMDS portfolios. Already available for distribution was $2.25 per diluted share year-to-date compared to $1.35 per cents per share, per diluted share in the same period of 2021, an increase of 67.5%. Cash available for distribution was $2.69 per diluted share year to date compared to $1.57 per diluted share in the same period of 2021, an increase of 72.1%. Higher year over year earnings available for distribution and cash available for distribution for the year We're driven by higher prepayments and requisite prepayment penalties in the first and second quarters. Our dividend for the year was 1.5 times covered by earnings available for distribution and 1.8 times covered by cash available for distribution. Now let's move to guidance for the fourth quarter. The fourth quarter, we're guiding to earnings available for distribution and cash available for distribution as follows. Earnings available for distribution, 53 cents per diluted share at the midpoint. with a range of 48 cents on the low end and 58 cents on the high end. Cash available for distribution, 52 cents per diluted share at the midpoint, with a range of 47 cents on the low end and 57 cents on the high end. The increase in cash available for distribution and earnings available for distribution from the third quarter is driven primarily by new investments in the portfolio. So with that, let me turn it over to the team for the detailed commentary.