NexPoint Real Estate Finance, Inc.

Ladies and gentlemen, good morning. My name is Abby and I will be your conference operator today. At this time, I would like to welcome everyone to the NextPoint Real Estate Finance fourth quarter 2022 conference call. Today's conference is being recorded and all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star key followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one once again. Thank you, and I will now turn the conference over to Kristen Thomas. You may begin. Thank you.

Good day, everyone, and welcome to NextPoint Real Estate Finance Conference Call to review the company's results for the fourth quarter ended December 31st, 2022. On the call today are Brian Mintz, Executive Vice President, and Chief Financial Officer Matt McGrainer, Executive Vice President, and Chief Investment Officer Matt Goetz, 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 inrep.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 risks and other factors that could affect the forward-looking statements. The statements made during the conference call speak only as of today's date and Except as required by law, NREF does not undertake any allocation to publicly update or revise any forward-looking statements. This conference call also includes 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 Brian. Please go ahead, Brian.

Thank you, Kristen. Appreciate everyone joining us today. I'm joined with our entire team here. So we'll be giving some commentary. I'm going to start, briefly discuss our results for the quarter of the year, provide guidance for the first quarter, and then turn it over to the team for some detailed commentary on the portfolio and the lending environment. We'll start with Q4 results, which are as follows. For the fourth quarter, reported net loss of $0.16 per diluted share, compared to net income of $0.92 per diluted share for the fourth quarter of 2021. The decrease in net income as a result of lower prepayments in Q4 2022 and marked market adjustments on our common stock and CMBS portfolios. Interest income increased 4.8% over Q4 2021, driven by a 166 basis point increase in average yield on investments, offset by lower prepayments in Q4 2022. Interest expense increased 47.5% driven by 116 basis point increase in average borrowing rate. Earnings available for distribution was 49 cents per diluted share in Q4 compared to 54 cents per diluted share in the same period of 2021. Cash available for distribution was 52 cents per diluted share in Q4 compared to 63 cents per diluted share in the same period of 2021. Decrease in earnings available for distribution and cash flow distribution is the result of lower prepayments on our SFR portfolio Q4. We paid a dividend of 50 cents per share in the fourth quarter, and the board has declared a dividend of 50 cents per share payable for the first quarter. The board also declared a special dividend of 18.5 cents per share for the first quarter, and we intend to pay additional special dividends of 18.5 cents per quarter for the remainder of 2023. Our dividend in the fourth quarter was 0.98 times covered by earnings available for distribution and 1.04 times covered by cash available for distribution. Book value per share decreased 2.76% quarter over quarter to $20.11 per deleted share as a result of the mark-to-mark adjustments in our common stock and CMBS portfolios. During the quarter, we originated two investments with $19 million of outstanding principal, with a combined current yield of 11%. One investment partially redeemed for $10.8 million of outstanding principal. Moving to the full year results now. For the full year of 2022, we reported net income attributable to common shareholders of $0.51 per diluted share, compared to net income of $3.93 per diluted share for the same period of 2021. Again, this is largely driven by lower prepayments on our SFR portfolio at the end of the period and marked market adjustments. Earnings available for distribution was $2.75 per deleted share year-to-date compared to $1.89 per deleted share in the same period of 2021, an increase of 45.5%. Cash available for distribution was $3.21 per deleted share year-to-date compared to $2.21 per diluted share in the same period of 2021, an increase of 45.2%. Higher year-over-year earnings available for distribution and cash available for distribution for the year were driven by higher prepayments and requisite prepaid penalties in the first and second quarter of 2022. As of today, the outstanding total portfolio stood at $1.7 billion, composed of 85 investments. Weighted average loan-to-value and debt service coverage ratios for our debt securities were 68.6% and 1.78 times respectively. As of today, the company's debt-to-book value ratio is 2.61 times. Our dividend for the year was 1.38 times covered by earnings available for distribution and 1.61 times covered by cash available for distribution. Book value for share decreased 6.5% year-over-year to $20.11 per completed share. Moving to guidance for the first quarter, we're guiding to earnings available for distribution and cash available for distribution as follows. Earnings available for distribution at 47 cents per diluted share at the midpoint with a range of 42 cents on the low end and 52 cents on the high end. Cash available for distribution at 50 cents per diluted share at the midpoint with a range of 45 cents per share on the low end and 55 cents per share on the high end. Decrease in cash fill for distribution earnings available for distribution in the fourth quarter is driven primarily by expected redemptions in the first quarter. So with that, let me turn it over to the team for a detailed discussion of the portfolio and credit markets. Matt, Kev? Thanks, Brian.