NexPoint Real Estate Finance, Inc.

This 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 Quarter 1, 2023 conference call. 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 star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star 1 on your telephone keypad. Thank you. Kristen Thomas, you may begin your conference.

Thank you. Good day, everyone, and welcome to NextPoint Real Estate Finance Conference Call to review the company's results for the first quarter ended March 31, 2023. On the call today are Brian Miss, Executive Vice President and Chief Financial Officer, Matt McGrainer, Executive Vice President and Chief Investment 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 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 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 this conference call speak only as of today's date and, except 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 Brian Metz. Please go ahead, Brian.

Thank you for that, Kristen. Thank you for everyone joining us today. I'll get started by briefly going through our results for the quarter, and then I will go into guidance for Q2, and then turn it over to the team and talk about some of the things we did this quarter, some of the things we're seeing in the world today, and what we see in the lending environment. So starting with Q1 results, for the first quarter, we reported net income of $0.37 per diluted share compared to net income of $0.78 per diluted share for the first quarter of 2022. Decrease in net income year over year was the result of lower prepayments in Q1 23. If you recall, we had quite a few prepayments last year, particularly in the first quarter. Earnings available for distribution was $0.52 per diluted share in the first quarter compared to $1.20 per diluted share in the same period of 2022. Cash available for distribution was $0.55 per diluted share in Q1 compared to $1.55 per diluted share in the same period of 2022. Again, as with net income, earnings available for distribution and cash available for distribution We're lower year over year as a result of lower prepayments in the first quarter of this year. We paid a dividend of 50 cents per share in the first quarter, and the Board has declared a dividend of 50 cents per share payable for the second quarter. The Board has also declared, again, a special dividend of 18.5 cents per share for the second quarter, and we intend to declare special dividends of 18.5 cents for the remainder of each quarter for this year. Our dividend in the first quarter is 1.04 times covered by earnings available for distribution and 1.1 times covered by cash available for distribution. Book value per share decreased 2.2% quarter-over-quarter to $19.59 per diluted share, primarily due to the special dividend and mark-to-market adjustments on our common stock investments. During the quarter, we originated six investments with $34.8 million of outstanding principal with a combined current yield of 11.4%. During the quarter, we had one investment that partially redeemed for $11.5 million of outstanding principal and another investment that fully redeemed for $24.7 million. So let me then now move to guidance for the next quarter. for earnings available for distribution and cash available for distribution. Earnings available for distribution regarding to 46 cents per diluted share at the midpoint with a range of 41 cents on the low end and 51 cents on the high end. Cash available for distribution of regarding to 50 cents per diluted share at the midpoint with a range of 45 cents on the low end and 55 cents on the high end. decrease in cash available for distribution and earnings available for distribution from the first quarter, again, is driven by primarily the one-time gain on the deep consolidation of the multifamily property that we consolidated for 2022. So with that, I'll turn it over to the team for additional commentary.