NexPoint Real Estate Finance, Inc.

Good morning, my name is Dee and I will be your conference operator today. At this time, I would like to welcome everyone to the NextPoint Real Estate Finance first quarter 2024 earnings 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 start and the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. I would now like to turn the call over to Kristen Thomas, Investor Relations. 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 first quarter ended March 31st, 2024. On the call today are Brian Mintz, Executive Vice President and Chief Financial Officer, Matt McGrainer, Executive Vice President and Chief Investment Officer, and Paul Richards, Vice President of Originations and Investments. As a reminder, this call is being webcast through the company's website at nrf.nextpoint.com. Before we begin, I would like to remind everyone that this conference call contains forward-looking statements with the meanings 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 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 any 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 Mitz. Please go ahead, Brian.

Thanks, Preston. Appreciate everyone joining us today. It's Brian Mitz here. I'm going to start by briefly going through our quarterly results and then provide guidance for the next quarter. And then I will turn it over to Matt and Paul to give commentary on the portfolio and the macro lending environment. So, to start it off, Q1 results are as follows. For the first quarter, we reported a net loss of $0.83 per diluted share compared to net income of $0.37 per diluted share for the first quarter of 2023. The decrease in that income is largely driven by accelerated premium amortization on $508.7 million of SFR loan that was prepaid on January 25th. That interest income decreased to negative $12.8 million in the first quarter of 2024 from a positive $3.9 million in the first quarter of 2023. The decrease was driven primarily by the $25 million of premium that was amortized in Q1 due to the SFR loan prepayment I just mentioned. Earnings available for distribution was negative $0.46 per diluted share in Q1 compared to a positive $0.52 per diluted share in the same period of 2023 and positive $0.44 per diluted share in Q4 of 2023. Again, the negative result was due to the acceleration of premium on the prepaid SFR loan. Cash available for distribution was $0.60 per diluted share in Q1 compared to $0.55 per diluted share in the same period of 2023. The increase in cash available for distribution from the prior year was partially driven by the prepayment penalties from the SFR loan pay down. We paid a regular dividend of $0.50 per share in the first quarter, and the Board has declared a dividend of $0.50 per share payable for the second quarter of 2024. Our regular dividend in the first quarter was 1.2 times covered by cash available for distribution. Book value per share decreased 14.8% from the first quarter of 2023 and decreased 6.9% from the fourth quarter of 2023 to $16.69 per diluted share, with the decrease being primarily due to the SFR loan prepayment. During the quarter, we contributed to six preferred equity investments with $11.5 million of outstanding principal and a weighted average yield of 10.8% and originated one loan, $44.6 million of outstanding principal and a rate of 900 basis points over SOFR. And we sold 1.2 million shares of our Series B cumulative redeemable preferred stock for net proceeds of $27.7 million. We had one senior loan redeemed for $508.7 million of outstanding principal and received $8.9 million in prepayment penalties. Our portfolio is comprised of 90 investments with total outstanding balance of $1.2 billion. Our investments are allocated across sectors as follows. 47.2% multifamily, 46% single family rental, 5.2% life sciences, and 1.5% storage. Our portfolio is allocated across the following investments. 43.3% CMBSB pieces, 18.3% preferred equity investments, 15.2% mezzanine loans, 11.6% senior loans, 6.3% mortgage-backed securities, 4.4% IO strips, and 0.9 percent MSCR notes. The assets collateralized in our investments are allocated geographically as follows. Nineteen percent Texas, nine percent Florida, eight percent California, six percent Georgia, five percent Maryland, four percent Washington, and three percent Colorado, with a remainder across states with less than 2.5 percent exposure, this reflecting our heavy preference for Sunbelt investments. The collateral on our portfolio is 86.6% statewide, with a 68.5% loan-to-value and a weighted average DSCR of 1.72 times. We have $843 million of debt outstanding. Of this, $342 million, or 41%, is short-term debt. Our weighted average cost of debt is 5.9%, and has a weighted average maturity of 1.7 years. Our debt is collateralized by $1.2 billion of collateral with a weighted average maturity of 5.3 years. And our debt to equity ratio is 2.04 times. Moving to guidance, earnings available for distribution of 45 cents per diluted share at the midpoint for the range of 40 cents per share on the low end and 50 cents per share on the high end. Cash available for distribution of $0.40 per diluted share at the midpoint with a range of $0.35 per share on the low end and $0.45 per share on the high end. So with that, I'll turn it over to the team for detailed discussion.