NREF earnings call transcript, November 5, 2026

Good morning and welcome to NextPoint Real Estate Finances conference call to review the company's results for the third quarter ended September 30th, 2026. Today are Paul Richards, Executive Vice President and Chief Financial Officer, and Matt McGriner, Executive Vice President and Chief Investment Officer. As a reminder, this call is being webcast through the company's website at nres.net. 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. 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 SEC for a more complete discussion of risks and other factors that could affect the forward-looking statement. 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 up date 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 Paul Richards. Please go ahead, Paul.

commitments in the quarter. During the quarter, we upsized our 375 million term loan facility and total return swap with Mizuho capital markets to 450 million, which we use to fund existing commitments, primarily an 80.5 million bridge. loan yielding 40% that paid off at the end of the quarter. In accordance with the payoff, we paid down 52.2 million on the secured facility, lowering total outstanding balance at 397.8 million. Combined with the 27. million be raised and are seriously preferred. We head into the last quarter of 2026 with what we believe to be one of the cleanest, most flexible capital structures in the commercial mortgage sector. Our portfolio is comprised of 83 investments with a total outstanding balance of one. Billion dollars. Our investments are allocated across sectors as follows. 40.7% life sciences, 38.3% multifamily, 14% single family rental, 4.6% storage, 2.2% industrial, and 0.2% marina. Our fixed income portfolios. Allocated across investments as follows. 28.4% preferred equity investments, 22.8% mezzanine loans, 18.2% revolving credit facilities, 17.9% CNBSB pieces, 6. 3.4% senior loans, 3.9% IO strips, and 2.3% promissory notes. The assets collateralizing our investments are allocated geographically as follows. 31.1% Massachusetts, 15. 18% Texas, 7% North Carolina, 6.5% Florida, and 5.5% California, with the remainder across states with less than 5% exposure, reflecting our heavy preference for sunbelt markets with Massachusetts and California exposure heavily weighted towards life science.

The collateral on our portfolio is 78.3% stabilized with 64.7% loan-to-value and a weighted average DSDR of 1.39 times. We have $913.1 million of data outstanding with a weighted average cost of 5.8% and has a weighted average maturity of 2.5 years. Our secured debt is collateralized by $1.5 billion of collateral with a weighted average maturity of 2.6 years and a debt-to-equity ratio of 0.97 times. Moving to guidance for the fourth quarter. Earnings available for distribution. $0.42 per deluded share of the Bitcoin with a range of $0.36. $0.37 on the low end and $0.47 on the high end. Cash available for distribution. $0.55 per deluded share at the midpoint with a range of $0.50 on the low end and $0.60 on the high end. With that, I'd like to turn it over to Matt for a detailed discussion of the portfolio and the current market environment. Matt. Thank you, Paul. This quarter was a solid, consistent.

Execution, both EAD and CAAD came in ahead of our guidance and given our positive credit profile and the improving but still challenging macro backdrop, we continue to play offense in this environment and expect opportunities for our solution-oriented capital to grow over the near term. Matt. The Fed has. held its target rate at 3.75% to 4% in late October and the 10-year Treasury moved back above 5% higher for longer pressures borrowers who need to refinance or meet extension tests. And this, and that is exactly where discipline. Solution capital earns its pricing power. Our new investments are priced at double digit coupons at reset basis, and therefore we believe we are well positioned for this type of environment. Now turning to our verticals residential between multi and. Single family rental remain remains our largest exposure. Our multifamily credits. It's predominantly behind agency underwritten senior debt, which has historically been some of the most resilient collateral in real estate. Freddie Mac's aggregate losses have averaged. About seven basis points per year since 2009 with 432.6 million of cumulative losses on 645.8 billion of issuance through August of 2026. That's not to say there's not stress in the system, though. Trev has Freddie's multifamily delinquency at 80 basis points of UPB in August, up from 48 basis points in August of 2024. We see this as an opportunity.

Which I'll elaborate on in a minute. On the supply side, multifamily construction starts fell more than 40% between 2023 and 2025, and new deliveries are forecasted to bottom near 327,000 units in 2027. Well below the roughly 600,000 unit peak in 2024. Supply is what broke pricing power the last two years, and the falling supply pipeline is what we expect to restore it. That said, the recovery is not linear, and in the third quarter, for blended lease rates across our portfolios remain flat to slightly positive, and concessions, while abating, are still prevalent in the market for Class A and Class B multifamily in our geographical geographical footprint. The good news is we are underwriting and deploying our capital into new residential investments on today's rents, again on a reset basis and not on a recovery pro forma. Our single family rental book continues to perform really well with significant equity cushion. Overall, we view the sector's building. Profile is slightly more favorable than multifamily with rents already in positive territory and less pockets of distress. The number of households renting single family homes continue to rise and higher for longer should keep demand high for our affordable. SFR in our markets. Now on to life science. At Alewife, the sponsors recap process is underway and we continue to expect a substantial, if not all, of our return of capital in the next quarter or two.

When the capital comes back, our plan is to redeploy most of it into residential, residential collateral and move into move life science back toward roughly the one third of the portfolio over time. Across the rest of our life science exposure. Fundamentals continue to improve sequentially, particularly in Boston and San Francisco, with 220,000 square feet of new leases signed during the year today, the remaining industry industry wide speculative pipelines is expected to deliver. Through 2026, after which new supply will be limited largely to fully fully preleased build the suit projects. Demand is broadening beyond traditional lab users to biomanufacturing on shoring and AI driven users that need. Power density, floor loads, and lab grade infrastructure. Importantly, and again, most of this book was originated in 2025 through 2026 at a reset basis. In self-storage fundamentals troughed in 2025. And with new construction pipelines well below historical averages, we expect conditions to keep strengthening. During the quarter, we continued to add small mezzanine positions on newly stabilized storage assets at double-digit coupons. The sector has already largely reported better than expected results during the quarter, and our NSP-owned portfolio continues to perform very well. With occupancy as of 9.30 at 93.5% and rents up 600 basis points year-over-year. On the pipeline in April, we outlined more than $190 million of NREF investments and more than $225 million of structured product opportunities. Year-to-date, I'm pleased to see you next time.

Let's say we have closed $280 million of that $415 million pipeline and have another $160 million committed over the next 12 months with an active pipeline backlog building. We were deliberately selected in the third quarter, and with the additional Mizuho capacity and expected repayments, we have the dry power. to lean in at attractive spreads in the fourth quarter and into 2027, and I'm glad we waited on some of the resi opportunities because more will appear. One critical need for the market will be will be to provide solution and special situation capital for the rest. And this is a great opportunity for NREF over the next couple of years, but the caveat that it might not fully materialize if the capital markets rapidly improve, which we wouldn't hate either. The stress in agency multifamily is concentrated. Floating rate loans originated in 2020 through 2023 when SOFR was near zero. Those loans need replacement rate caps, cap escrows, and in many cases, a pay down to meet their refi and extension tests, and a meaningful number of sponsors do not have the equity to do it. In agency rate, in agency floating rate securitizations alone, that vintage is more than $32 billion across roughly 1,000 loans, and about a quarter of that balance is already on special service or watch list. We have demonstrated time and time again that we can be a creative partner with the agencies, particularly FREDDIE, to provide solution-oriented capital on a bespoke basis. We're already developing a program where NREF would provide coterminous supplemental capital behind the existing first lien so that sponsors can buy the cap, fund reserves, and pass their tests rather than

hand back the keys. This is exactly the kind of solution capital we have built a platform around. It sits behind conservatively underwritten agency senior debt and asset class in the markets we know as operators and as price-like rescue cap. We would also expect it to be financed on a match term basis, similar to how our original SFR portfolio was financed. The program is not final, but we do believe there's a strong need for it, and we're excited about it. To close and summarize, we're pleased with where we are, particularly in this year. Earnings came in ahead of guidance. The dividends covered. Credit continues to hold well, and our balance sheet has more capacity than it did a year ago. As always, I want to thank this team for their hard work and focus, and with that, we'd like to turn the call over to the operator and take your questions.

Your first question comes from the line of Jade Rahmani with KBW. Your line is open.

Please go ahead.

Of Gabe Poggi with Raymond James. Your line is open. Please go ahead.

There are no further questions at this time.

This concludes today's call.