Q3 2025 NexPoint Diversified Real Estate Trust Earnings Call and Business Update

Speaker #1: Thank you for standing by.

Speaker #1: My name you. is Tina, and I will be your conference operator today. At this time, I would like to welcome everyone to the NEXPOINT DIVERSIFIED REAL ESTATE TRUST 3rd QUARTER 2025 INVESTOR UPDATE CALL.

Speaker #1: All lines have been placed on mute to prevent any background noise. Thank you. It is now my pleasure to turn the call over to Kristen Griffith, Investor Relations.

Speaker #1: Please go

Speaker #1: ahead. Good day, everyone, and

Kristen Griffith: Good day, everyone, and welcome to NexPoint Diversified Real Estate Trust Investor Update Call. On the call today are Paul Richards, Executive Vice President and Chief Financial Officer; Matt McGraner, Executive Vice President and Chief Investment Officer; and John Goodes, Chief Executive Officer of NexPoint Storage Partners and Chief Executive Officer of Vinebrook Homes Trust, Inc.

Speaker #2: welcome to NEXPOINT DIVERSIFIED REAL ESTATE TRUST INVESTOR UPDATE CALL. On the call today are Paul Richards, Executive Vice President and Chief Financial Officer; and John Good, Chief Executive Partners and Chief Executive Officer Officer of NEXPOINT Storage Officer; Matt McGrainer, Executive Vice of Weinberg Homes Trust, President and Chief Investment Inc. Before we begin, I would like to remind everyone that this update call and accompanying presentation contains forward-looking statements within the meeting of the private securities litigation reform act of 1995 that are based on management's current expectations, assumptions, and beliefs.

Rachel Smith: Before we begin, I would like to remind everyone that this update call and accompanying presentation 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, except as required by law, NXDT does not undertake any obligation to publicly update or revise any forward-looking statements. I would now like to turn the call over to Matt. Please go ahead, Matt.

Before we begin, I would like to remind everyone that this update call and accompanying presentation 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, except as required by law, NXDT does not undertake any obligation to publicly update or revise any forward-looking statements. I would now like to turn the call over to Matt. Please go ahead, Matt.

Speaker #2: 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.

Speaker #2: The statements made during this conference call speak only as of today's date and accept as required by law and execute does not undertake any obligation to publicly update or revise any forward-looking statements.

Speaker #2: I would now like to turn the call over to Matt. Please go ahead,

Speaker #2: Matt. Thanks, Kristen, and thank you to

Rachel Smith: Thanks, Kristen, and thank you to everyone for joining the call this morning for updates on NXPT's progress. As Kristen said, I'm joined today by Paul Richards, CFO of NXPT, and John Goodes, CEO of our storage and single-family rental businesses. Today, we'd like to discuss NXPT's real estate markets and provide updates on our top holdings. First, I'd like to spend a few minutes discussing the residential market, the supply picture, and continuing progress of our Cityplace office to Resi conversion. I'll then turn the call over to John and Paul, and we'll close with some updates on our efforts to monetize assets and repurchase stock, our key near-term focus. Turning to our updated view on the multifamily supply picture, we're close to the end of a record national new multifamily supply cycle.

Matt McGraner: Thanks, Kristen, and thank you to everyone for joining the call this morning for updates on NXPT's progress. As Kristen said, I'm joined today by Paul Richards, CFO of NXPT, and John Goodes, CEO of our storage and single-family rental businesses. Today, we'd like to discuss NXPT's real estate markets and provide updates on our top holdings. First, I'd like to spend a few minutes discussing the residential market, the supply picture, and continuing progress of our Cityplace office to Resi conversion. I'll then turn the call over to John and Paul, and we'll close with some updates on our efforts to monetize assets and repurchase stock, our key near-term focus. Turning to our updated view on the multifamily supply picture, we're close to the end of a record national new multifamily supply cycle.

Speaker #3: everyone for joining the call this morning for updates on NXDT's progress. As Kristen said, I'm joined today by Paul Richards, CFO of NXDT, and John Good, CEO of our storage and single-family rental businesses.

Speaker #3: Today, we'd like to discuss NXDT's real estate markets and provide updates on our top holdings. First, I'd like to spend a few minutes discussing the residential market, the supply picture, and continuing progress of our City Place office to RESI conversion.

Speaker #3: I'll then turn the call over to John and Paul, and we'll close with some updates on our efforts to monetize assets and repurchase stock, our key near-term focus.

Speaker #3: Turning to our updated view on a multi-family supply picture, we're close to the end of a record national new multi-family supply cycle. CoStar sees annual net deliveries having peaked at 695,000 units or 3.5% of inventory in the trailing 12-month period.

Rachel Smith: CoStar sees annual net deliveries having peaked at 695,000 units, or 3.5% of inventory, in the trailing 12-month period. This compares to annual net delivered units of 351,000 units, or 2% of inventory, on average in the prior five years from Q3 of 2014 to Q3 of 2019, and just 282,000 units, which is 1.6% of inventory on average since 2001. CoStar forecasts net deliveries to be 508,000 units in 2025, a 27% year-over-year decrease, before falling significantly year-over-year again in 2026, which is a 49% decrease, and then further 20% decrease year-over-year into 2027. Q3 2025 deliveries are down 17% quarter over quarter, and it's the last quarter with more than 100,000 units delivered per quarter. This ushers in the start of a lengthy period where deliveries are expected to be below the long-term average. 2027 and 2028 delivery forecasts have also fallen.

CoStar sees annual net deliveries having peaked at 695,000 units, or 3.5% of inventory, in the trailing 12-month period. This compares to annual net delivered units of 351,000 units, or 2% of inventory, on average in the prior five years from Q3 of 2014 to Q3 of 2019, and just 282,000 units, which is 1.6% of inventory on average since 2001. CoStar forecasts net deliveries to be 508,000 units in 2025, a 27% year-over-year decrease, before falling significantly year-over-year again in 2026, which is a 49% decrease, and then further 20% decrease year-over-year into 2027. Q3 2025 deliveries are down 17% quarter over quarter, and it's the last quarter with more than 100,000 units delivered per quarter. This ushers in the start of a lengthy period where deliveries are expected to be below the long-term average. 2027 and 2028 delivery forecasts have also fallen.

Speaker #3: This compares to annual net delivered units of 351,000 units, or 2% of inventory on average, in the prior five years from Q3 2014 to Q3 2019, and just 282,000 units, which is 1.6% of inventory on average since 2001.

Speaker #3: CoStar forecasts net deliveries to be 508,000 units in 2025, a 27% year-over-year decrease, before falling significantly year-over-year again in 2026, which is a 49% decrease, and then further a 20% decrease year-over-year into 2027.

Speaker #3: Q3 2025 deliveries are down 17% quarter-over-quarter, and it's the last quarter with more than just with more than 100,000 units delivered per quarter. This ushers in the start of a lengthy period where deliveries are expected to be below the long-term average.

Speaker #3: 2027 and 2028 delivery forecasts have also fallen. CoStar now expects 2027 deliveries of just 234,000 units compared to a forecast from December of last year of 283,000 deliveries.

Rachel Smith: CoStar now expects 2027 deliveries of just 234,000 units, compared to a forecast from December of last year of 283,000 deliveries. That's a 17% decrease. For 2028, just 231,000 units. That compares to a prior forecast of 308,000 units. That's a 27% decrease. With respect to Cityplace submarket, the supply picture is even more appealing. We are at the tail end of the last supply wave in Uptown Dallas and final product delivering in 2026. We expect a competitive lease-up environment until that supply runs off in mid-2026, and then we're entering into a period of rent growth. In fact, amazingly, just 232 units will deliver in the Cityplace submarket in 2027, and then there's literally nothing. Obviously, this dynamic is encouraging as we continue to make real progress on Cityplace redevelopment. We have a couple of updates to share here.

CoStar now expects 2027 deliveries of just 234,000 units, compared to a forecast from December of last year of 283,000 deliveries. That's a 17% decrease. For 2028, just 231,000 units. That compares to a prior forecast of 308,000 units. That's a 27% decrease. With respect to Cityplace submarket, the supply picture is even more appealing. We are at the tail end of the last supply wave in Uptown Dallas and final product delivering in 2026. We expect a competitive lease-up environment until that supply runs off in mid-2026, and then we're entering into a period of rent growth. In fact, amazingly, just 232 units will deliver in the Cityplace submarket in 2027, and then there's literally nothing. Obviously, this dynamic is encouraging as we continue to make real progress on Cityplace redevelopment. We have a couple of updates to share here.

Speaker #3: That's a 17% decrease. And for 2028, just 231,000 units. That compares to a prior forecast of 308,000 units. That's a 27% decrease. With respect to City Place submarket, the supply picture is even more appealing.

Speaker #3: We are at the tail end of the last supply wave in Uptown Dallas, with final product delivering in 2026. We expect a competitive lease-up environment until that supply runs off in mid-2026, and then we'll enter a period of rent growth.

Speaker #3: In fact, amazingly, just 232 units will deliver in the City Place submarket in 2027, and then there's literally nothing. Obviously, this dynamic is encouraging as we continue to make real progress on City Place development, redevelopment.

Speaker #3: We have a couple of updates to share here. For one, we have received a creative financing proposal from lenders for the apron portion of the project and expect to choose a lender in the next 30 to 60 days.

Rachel Smith: For one, we have received a creative financing proposal from lenders for the apron portion of the project and expect to choose a lender in the next 30 to 60 days. Meanwhile, we continue to finalize and progress the tower architecture and engineering plans and expect those plans to be finalized in the next six to nine months, right about the time when we plan to break ground on the apron. On the hotel front, we're pleased that Marriott has come to the table with two lifestyle flags that better complement an upscale residential environment versus the prior plan to bring a more transient business travel-focused flag to the asset. They've selected Tribute and Le Méridien, so again, a lot of good work happening here, and we're pleased with this progress. Now, I'd like to turn the call over to John. Thanks, Matt, and welcome, everybody.

For one, we have received a creative financing proposal from lenders for the apron portion of the project and expect to choose a lender in the next 30 to 60 days. Meanwhile, we continue to finalize and progress the tower architecture and engineering plans and expect those plans to be finalized in the next six to nine months, right about the time when we plan to break ground on the apron. On the hotel front, we're pleased that Marriott has come to the table with two lifestyle flags that better complement an upscale residential environment versus the prior plan to bring a more transient business travel-focused flag to the asset. They've selected Tribute and Le Méridien, so again, a lot of good work happening here, and we're pleased with this progress. Now, I'd like to turn the call over to John.

Speaker #3: Meanwhile, we continue to finalize and progress the tower architecture and engineering plans and expect those plans to be finalized in the next six to nine months right about the time when we plan to break ground on the apron.

Speaker #3: On the hotel front, we're pleased that Marriott has come to the table with two lifestyle flags that better complement an upscale residential environment versus the prior plan to bring a more transient business travel-focused flag to the asset.

Speaker #3: They've selected Tribute and La Meridian, so again, a lot of good work happening here, and we're pleased with this progress. Now, I'd like to turn the call over to

Speaker #3: John. Thanks,

John Good: Thanks, Matt, and welcome, everybody.

Speaker #4: Matt, and welcome, everybody. Talking first about NEXPOINT Storage Partners, and I'll start with occupancy trends. Our summer rental season typically runs from the end of March until the end of July, which is when our occupancy for each year usually peaks.

Rachel Smith: Talking first about NexPoint Storage Partners, and I'll start with occupancy trends. Our summer rental season typically runs from the end of March until the end of July, which is when our occupancy for each year usually peaks. Demand generally weakens during the fall and winter, picking up again in the spring. In that regard, we saw occupancy drop from 94.4% at 30 June 2025 to 93.9% at 30 September 2025. We view this as a very modest 50 basis point decline. However, our 30 September 2025 occupancy was 160 basis points higher than the 92.3% occupancy that we reported at 30 September 2024. At 30 September 2025, our occupancy continued to rank among the highest in the self-storage industry as our dense urban submarkets continued to produce a consistent need for storage space.

Talking first about NexPoint Storage Partners, and I'll start with occupancy trends. Our summer rental season typically runs from the end of March until the end of July, which is when our occupancy for each year usually peaks. Demand generally weakens during the fall and winter, picking up again in the spring. In that regard, we saw occupancy drop from 94.4% at 30 June 2025 to 93.9% at 30 September 2025. We view this as a very modest 50 basis point decline. However, our 30 September 2025 occupancy was 160 basis points higher than the 92.3% occupancy that we reported at 30 September 2024. At 30 September 2025, our occupancy continued to rank among the highest in the self-storage industry as our dense urban submarkets continued to produce a consistent need for storage space.

Speaker #4: Demand generally weakens during the fall and winter, picking up again in the spring. In that regard, we saw occupancy drop from 94.4% at June 30, 2025, to 93.9% at September 30, 2025.

Speaker #4: We view this as a very modest 50 basis point decline. However, our September 30th, 2025, occupancy was 160 basis points higher than the 92.3% occupancy that we reported at June at September 30th, 2024.

Speaker #4: At September 30, 2025, our occupancy continued to rank among the highest in the self-storage industry. As our dense urban submarkets continued to produce a consistent need for storage space, our occupancy at September 30th outperformed Q Smart by 490 basis points.

Rachel Smith: Our occupancy at 30 September outperformed CubeSmart by 490 basis points, Public Storage by 170 basis points, SmartStop Self Storage by 130 basis points, and National Storage Affiliates by 940 basis points, and was right on top of Extra Space's quarter-end occupancy, with us beating their occupancy by 20 basis points. We're really pleased with this occupancy stickiness and look forward to that continuing through the fall and winter months. Turning to rental rates, sector-wide rental rates continued to slowly increase during the Q3 of 2025, continuing a trend after bottoming near the end of 2024. Our portfolio's in-place rate on 30 September 2025 was $19.82 per foot, which is up 5.3% from $18.83 at the beginning of this year.

Our occupancy at 30 September outperformed CubeSmart by 490 basis points, Public Storage by 170 basis points, SmartStop Self Storage by 130 basis points, and National Storage Affiliates by 940 basis points, and was right on top of Extra Space's quarter-end occupancy, with us beating their occupancy by 20 basis points. We're really pleased with this occupancy stickiness and look forward to that continuing through the fall and winter months. Turning to rental rates, sector-wide rental rates continued to slowly increase during the Q3 of 2025, continuing a trend after bottoming near the end of 2024. Our portfolio's in-place rate on 30 September 2025 was $19.82 per foot, which is up 5.3% from $18.83 at the beginning of this year.

Speaker #4: Public storage by 170 basis points. Smart Stop self-storage by 130 basis points. And national storage affiliates by 940 basis points. And was right on top of extra spaces quarter-end occupancy, with us beating their occupancy by 20 basis points.

Speaker #4: We're really pleased with this occupancy stickiness and look forward to that continuing through the fall and winter months. Turning to rental rates, sector-wide rental rates continued to slowly increase during the third quarter of 2025, continuing a trend after bottoming near the end of 2024.

Speaker #4: Our portfolios in place rate on September 30th, 2025, was $19.82 per foot, which is up 5.3% from $18.83 at the beginning of this year.

Speaker #4: It was up 6.7% from the $18.58 that we reported at June 30, 2024, and up 2.5% quarter to quarter from the $19.33 that we reported at June 30th of this year.

Rachel Smith: It was up 6.7% from the $18.58 that we reported at 30 June 2024, and up 2.5% quarter to quarter from the $19.33 that we reported at 30 June of this year. Even more positively, our asking rates have increased 7% from $18.79 at 30 September 2024, to $20.10 at 30 September 2025. At an asking rate north of $20 a foot on an annual basis, we are right there with the leading self-storage REITs in terms of our asking rates. Growth in our average web rate, which is the rate we charge to customers who find units and rent via the internet, and this comprises a majority of our customers, was consistent with this theme of overall increasing rates, with the average web rate increasing 5.5% from 30 September 2024, and we expect these rate increases to continue to follow this trend.

It was up 6.7% from the $18.58 that we reported at 30 June 2024, and up 2.5% quarter to quarter from the $19.33 that we reported at 30 June of this year. Even more positively, our asking rates have increased 7% from $18.79 at 30 September 2024, to $20.10 at 30 September 2025. At an asking rate north of $20 a foot on an annual basis, we are right there with the leading self-storage REITs in terms of our asking rates. Growth in our average web rate, which is the rate we charge to customers who find units and rent via the internet, and this comprises a majority of our customers, was consistent with this theme of overall increasing rates, with the average web rate increasing 5.5% from 30 September 2024, and we expect these rate increases to continue to follow this trend.

Speaker #4: Even more positively, our asking rates have increased 7%, from $18.79 on September 30, 2024, to $20.10 on September 30, 2025. At an asking rate north of $20 a foot on an annual basis, we are right there with the leading self-storage REITs in terms of our asking rates.

Speaker #4: Growth in our average web rate, which is the rate we charge to customers who find units and rent via the internet, and this comprises a majority of our customers, was consistent with this theme of overall increasing rates.

Speaker #4: With the average web rate increasing 5.5% from September 30, 2024, and we expect these rate increases to continue to follow this trend. Along with our stable occupancy, these rate increases support an estimate of a 5% to 6% increase in same-store revenue for 2026.

Rachel Smith: Along with our stable occupancy, these rate increases support an estimate of a 5% to 6% increase in same-store revenue for 2026. Turning to our NOI picture, based on results through 30 September 2025, we anticipate net operating income for the full year of 2025 to be in the range of $53.2 million to 53.7 million, or approximately $53.5 million at the midpoint. This constitutes a 7.9% increase over 2024 net operating income. By contrast, the publicly listed self-storage REITs in their Q3 updated guidance have generally projected flat to negative year-over-year NOI growth. Our portfolio's young average age, which is around 60 months, dense urban core locations, and pricing power as our youngest properties have stabilized are driving outsized NOI growth relative to the rest of the industry.

Along with our stable occupancy, these rate increases support an estimate of a 5% to 6% increase in same-store revenue for 2026. Turning to our NOI picture, based on results through 30 September 2025, we anticipate net operating income for the full year of 2025 to be in the range of $53.2 million to 53.7 million, or approximately $53.5 million at the midpoint. This constitutes a 7.9% increase over 2024 net operating income. By contrast, the publicly listed self-storage REITs in their Q3 updated guidance have generally projected flat to negative year-over-year NOI growth. Our portfolio's young average age, which is around 60 months, dense urban core locations, and pricing power as our youngest properties have stabilized are driving outsized NOI growth relative to the rest of the industry.

Speaker #4: Turning to our NOI picture, based on results through September 30, 2025, we anticipate net operating income for the full year of 2025 to be in the range of $53.2 million to $53.7 million, or approximately $53.5 million at the midpoint.

Speaker #4: This constitutes a 7.9% increase over 2024 net operating income. By contrast, the publicly listed self-storage REITs, in their Q3 updated guidance, have generally projected flat to negative year-over-year NOI growth.

Speaker #4: Our portfolios' young average age—which is around 60 months—dense urban core locations, and pricing power as our youngest properties have stabilized are driving outsized NOI growth relative to the rest of the industry.

Speaker #4: Turning for a second to new supply, development remains limited due to high borrowing costs, land scarcity, significant inflation in material costs, and permitting challenges.

Rachel Smith: Turning for a second to new supply, development remains limited due to high borrowing costs, land scarcity, significant inflation in material costs, and permitting challenges, as well as a continued weak housing market that has weighed on self-storage demand. The expected new supply for 2025-2026 is below the 3% threshold needed for equilibrium, likely supporting continued rental rate growth through the balance of 2025 and into 2026. We continue to believe that we have the preeminent urban storage portfolio in the United States, and we believe this should be valued at a premium valuation and is of great interest to institutional investors. Now, turning to Vinebrook, we're very pleased with the performance of Vinebrook Homes through the first nine months of 2025. Our 20,000-plus home portfolio is producing operating results that we believe are near the top of the single-family rental industry. Our occupancy is holding steady near 95%.

Turning for a second to new supply, development remains limited due to high borrowing costs, land scarcity, significant inflation in material costs, and permitting challenges, as well as a continued weak housing market that has weighed on self-storage demand. The expected new supply for 2025-2026 is below the 3% threshold needed for equilibrium, likely supporting continued rental rate growth through the balance of 2025 and into 2026. We continue to believe that we have the preeminent urban storage portfolio in the United States, and we believe this should be valued at a premium valuation and is of great interest to institutional investors. Now, turning to Vinebrook, we're very pleased with the performance of Vinebrook Homes through the first nine months of 2025. Our 20,000-plus home portfolio is producing operating results that we believe are near the top of the single-family rental industry. Our occupancy is holding steady near 95%.

Speaker #4: As well as a continued weak housing market that has weighed on self-storage demand. The expected new supply for 2025-2026 is below the 3% threshold needed for equilibrium.

Speaker #4: Likely supporting continued rental rate growth through the balance of '25 and into 2026. We continue to believe that we have the preeminent urban storage portfolio in the United States, and we believe this should be valued at a premium valuation and is of great interest to institutional investors.

Speaker #4: Now, turning to VineBrook. We're very pleased with the performance of VineBrook Homes through the first nine months of 2025. Our 20,000-plus home portfolio has producing operating results that we believe are near the top of the single-family rental industry.

Speaker #4: Our occupancy is holding steady near 95%. Approximately 82.4% of our residents are renewing their leases. Our net operating income margin on our same home portfolio is running at 62.8%, which is 140 basis point improvement over the same period of 2024 and consistent with our peers.

Rachel Smith: Approximately 82.4% of our residents are renewing their leases. Our net operating income margin on our same home portfolio is running at 62.8%, which is a 140 basis point improvement over the same period of 2024 and consistent with our peers. For the quarter-end in 30 September 2024, revenue for the Vinebrook Homes portfolio was $82.4 million, which was a 2.9% increase over Q3 2024. This was despite our selling over 800 homes since 30 September 2024. The revenue increase has been driven by strong rent increases. Rents on our renewal leases increased 5.5% in the third quarter. Rents on our new leases increased 3.8% for a blended increase in rents of 5.1%. Our 5.1% rent growth leads our larger publicly traded peers by over 100 basis points.

Approximately 82.4% of our residents are renewing their leases. Our net operating income margin on our same home portfolio is running at 62.8%, which is a 140 basis point improvement over the same period of 2024 and consistent with our peers. For the quarter-end in 30 September 2024, revenue for the Vinebrook Homes portfolio was $82.4 million, which was a 2.9% increase over Q3 2024. This was despite our selling over 800 homes since 30 September 2024. The revenue increase has been driven by strong rent increases. Rents on our renewal leases increased 5.5% in the third quarter. Rents on our new leases increased 3.8% for a blended increase in rents of 5.1%. Our 5.1% rent growth leads our larger publicly traded peers by over 100 basis points.

Speaker #4: For the quarter-ended September 30, revenue for the VineBrook Homes portfolio was $82.4 million, which was a 2.9% increase over Q3 2024. This was despite our selling over 800 homes since September 30, 2024.

Speaker #4: The revenue increase has been driven by strong rent increases. Rents on our renewal leases increased 5.5% in the third quarter. Rents on our new leases increased 3.8% for a blended increase in rents of 5.1%.

Speaker #4: Our 5.1% rent growth leads our larger publicly traded peers by over 100 basis points. Moreover, during the third quarter, we beat budget on operating expenses by $2 million, and our combination of strong rent growth and controlled operating expenses produced a 7.4% increase in same-home net operating income over Q3 2024.

Rachel Smith: Moreover, during the third quarter, we beat budget on operating expenses by $2 million, and our combination of strong rent growth and controlled operating expenses produced a 7.4% increase in same-home net operating income over Q3 2024. By way of an operational update, as of 23 October, we have transitioned all 20,365 Vinebrook Homes to the Evergreen Residential Property Management Platform. The transition was accomplished in three phases. We conducted a test phase of one smaller market that was completed in mid-July, used that small phase to work out all the bugs that inherently come up in a transition of any size, and then we completed a 7,000-home phase and a 13,000-home phase in late September and late October, respectively. We're pleased to report that the transition went as well as we could have possibly hoped. Data was seamlessly transferred. We're now getting good property-level reporting from Evergreen.

Moreover, during the third quarter, we beat budget on operating expenses by $2 million, and our combination of strong rent growth and controlled operating expenses produced a 7.4% increase in same-home net operating income over Q3 2024. By way of an operational update, as of 23 October, we have transitioned all 20,365 Vinebrook Homes to the Evergreen Residential Property Management Platform. The transition was accomplished in three phases. We conducted a test phase of one smaller market that was completed in mid-July, used that small phase to work out all the bugs that inherently come up in a transition of any size, and then we completed a 7,000-home phase and a 13,000-home phase in late September and late October, respectively. We're pleased to report that the transition went as well as we could have possibly hoped. Data was seamlessly transferred. We're now getting good property-level reporting from Evergreen.

Speaker #4: By way of an operational update, as of October 23rd, we have transitioned all 20,365 VineBrook Homes to the Evergreen Residential Property Management Platform. The transition was accomplished in three phases.

Speaker #4: We conducted a test phase of one smaller market that was completed in mid-July, used that small phase to work out all the bugs that inherently come up in a transition of any size, and then we completed a 7,000-home phase and a 13,000-home phase in late September and late October respectively.

Speaker #4: We're pleased to report that the transition went as well as we could have possibly hoped. Data was seamlessly transferred. We're now getting good property-level reporting from Evergreen.

Speaker #4: Residents experienced no loss of service, and are now connected with Evergreen via a portal on the website, and Evergreen is processing all service tickets and handling all turnover.

Rachel Smith: Residents experienced no loss of service and are now connected with Evergreen via a portal on the website, and Evergreen is processing all service tickets and handling all turnover. The vast majority of historical Vinebrook employees have either gone to work for Evergreen or have moved to other jobs outside of Vinebrook. We expect transition to be fully completed, including the transfer or elimination of IT and vendor contracts, and the satisfaction of all legacy vendor payables, and termination of employment of all legacy Vinebrook employees by the end of the year. We fully expect the operating margins of the Vinebrook portfolio to stay materially the same in the 63% to 64% range after transition. However, we expect a material reduction in the $15 to 20 million range in our G&A expenses going into 2026.

Residents experienced no loss of service and are now connected with Evergreen via a portal on the website, and Evergreen is processing all service tickets and handling all turnover. The vast majority of historical Vinebrook employees have either gone to work for Evergreen or have moved to other jobs outside of Vinebrook. We expect transition to be fully completed, including the transfer or elimination of IT and vendor contracts, and the satisfaction of all legacy vendor payables, and termination of employment of all legacy Vinebrook employees by the end of the year. We fully expect the operating margins of the Vinebrook portfolio to stay materially the same in the 63% to 64% range after transition. However, we expect a material reduction in the $15 to 20 million range in our G&A expenses going into 2026.

Speaker #4: The vast majority of historical VineBrook employees have either gone to work for Evergreen or have moved to other jobs outside of VineBrook. We expect transition to be fully completed including the transfer or elimination of IT and vendor contracts, and the satisfaction of all legacy vendor payables and termination of employment of all legacy VineBrook employees by the end of the year.

Speaker #4: We fully expect the operating margins of the VineBrook portfolio to stay materially the same in the 63 to 64% range after transition. However, we expect a material reduction in the 15 to 20 million dollar range in our G&A expenses going into 2026.

Speaker #4: We've achieved approximately $5 million in savings on technology costs through various initiatives and the transition to Evergreen. We'll achieve more technology savings as certain expensive IT contracts expire at or shortly after year-end, and Evergreen absorbs the cost of that technology.

Rachel Smith: We've achieved approximately $5 million of savings on technology costs through various initiatives and through the transition to Evergreen, and we'll achieve more technology savings as certain expensive IT contracts expire at or shortly after year-end, and Evergreen absorbs the cost of that technology. Finally, turning to transaction volume and portfolio activity, in addition to the homes we've already sold in 2025, we have identified additional homes comprising about 15% to 20% of the Vinebrook portfolio to be sold in an orderly manner over the next 18 to 24 months. This constitutes the bottom tier of homes within the Vinebrook portfolio and those homes where we believe we can materially increase the yields on our investment.

We've achieved approximately $5 million of savings on technology costs through various initiatives and through the transition to Evergreen, and we'll achieve more technology savings as certain expensive IT contracts expire at or shortly after year-end, and Evergreen absorbs the cost of that technology. Finally, turning to transaction volume and portfolio activity, in addition to the homes we've already sold in 2025, we have identified additional homes comprising about 15% to 20% of the Vinebrook portfolio to be sold in an orderly manner over the next 18 to 24 months. This constitutes the bottom tier of homes within the Vinebrook portfolio and those homes where we believe we can materially increase the yields on our investment.

Speaker #4: Finally, turning to transaction volume, and portfolio activity, in addition to the homes we've already sold in 2025, we have identified additional homes comprising about 15 to 20% of the VineBrook portfolio to be sold in an orderly manner over the next 18 to 24 months.

Speaker #4: This constitutes the bottom tier of homes within the VineBrook portfolio, and those homes where we believe we can materially increase the yields on our investment.

Speaker #4: We intend to replace these homes with newer built-to-rent homes and higher-growth Sunbelt markets, at yields on cost of $150 to $200 basis points, higher than the yields we've been receiving from the to-be-sold homes.

Rachel Smith: We intend to replace these homes with newer built-to-rent homes and higher-growth Sunbelt markets at yields on cost of 150 to 200 basis points higher than the yields we've been receiving from the to-be-sold homes based on their internal valuations. Since we began our relationship with Evergreen, they have already provided a solid pipeline of built-to-rent transactions at projected yields on costs that are significantly higher than the current yields on the homes Vinebrook has listed for sale. We believe pruning the bottom tier of homes in the Vinebrook portfolio and replacing them with higher-yielding newer homes that are easier to manage will create meaningful additions to cash flow into the value of Vinebrook shares. With that, I'll turn it over to Paul for comments on NREF. Thanks, John.

We intend to replace these homes with newer built-to-rent homes and higher-growth Sunbelt markets at yields on cost of 150 to 200 basis points higher than the yields we've been receiving from the to-be-sold homes based on their internal valuations. Since we began our relationship with Evergreen, they have already provided a solid pipeline of built-to-rent transactions at projected yields on costs that are significantly higher than the current yields on the homes Vinebrook has listed for sale. We believe pruning the bottom tier of homes in the Vinebrook portfolio and replacing them with higher-yielding newer homes that are easier to manage will create meaningful additions to cash flow into the value of Vinebrook shares. With that, I'll turn it over to Paul for comments on NREF.

Speaker #4: Based on their internal valuations, since we began our relationship with Evergreen, they have already provided a solid pipeline of built-to-rent transactions at projected yields on cost that are significantly higher than the current yields on the homes VineBrook has listed for sale.

Speaker #4: We believe pruning the bottom tier of homes in the VineBrook portfolio and replacing them with higher-yielding, newer homes that are easier to manage will create meaningful additions to cash flow and to the value of VineBrook shares.

Speaker #4: With that, I'll turn it over to Paul for comments on NREF.

Paul Richards: Thanks, John.

Speaker #2: Thanks, John. As of today, NXPT holds shares in OP units of NXPOINT Real Estate Finance, worth approximately $103 million, of net asset value, or approximately $2.20 per NXPT share on a standalone basis.

Rachel Smith: As of today, NXDT holds shares in OP units of NexPoint Real Estate Finance worth approximately $103 million of net asset value, or approximately $2.20 per NXDT share on a standalone basis. As a reminder, NREF is our publicly traded mortgage REIT focused on originating and/or purchasing credit investments in our key operating verticals of residential, which include both SFR and multifamily, self-storage, and life sciences. NREF reported its Q3 net income to common shareholders of $35 million, or $1.14 per share. Cash available for distribution was $12.1 million, or $0.53 per share, and earnings available for distribution came in at $0.51 per share. Moving to the portfolio and book value. Book value per share rose to $18.79, reflecting continued strong performance in our underlying assets. The portfolio now totals approximately $1.1 billion across 88 investments diversified across multifamily, single-family rental, and life sciences.

As of today, NXDT holds shares in OP units of NexPoint Real Estate Finance worth approximately $103 million of net asset value, or approximately $2.20 per NXDT share on a standalone basis. As a reminder, NREF is our publicly traded mortgage REIT focused on originating and/or purchasing credit investments in our key operating verticals of residential, which include both SFR and multifamily, self-storage, and life sciences. NREF reported its Q3 net income to common shareholders of $35 million, or $1.14 per share. Cash available for distribution was $12.1 million, or $0.53 per share, and earnings available for distribution came in at $0.51 per share. Moving to the portfolio and book value. Book value per share rose to $18.79, reflecting continued strong performance in our underlying assets. The portfolio now totals approximately $1.1 billion across 88 investments diversified across multifamily, single-family rental, and life sciences.

Speaker #2: As a reminder, NREF is our publicly traded mortgage REIT focused on originating and/or purchasing credit investments in our key operating verticals of residential, which include both SFR and multifamily, self-storage, and life science.

Speaker #2: NREF reports third-quarter net income to common shareholders of $35 million, or $1.14 per share. Cash available for distribution was $12.1 million, or $53 per share, and earnings available for distribution came in at $0.51 per share.

Speaker #2: Moving to the portfolio and book value, book value per share rose to $18.79, reflecting continued strong performance in our underlying assets. The portfolio now totals approximately $1.1 billion across 88 investments, diversified across multifamily, single-family rental, and life sciences.

Speaker #2: Importantly, NREF remains one of the lowest leveraged mortgage REITs in the space, at just about 0.93 times debt-to-equity, which provides flexibility for downside protection.

Rachel Smith: Importantly, NREF remains one of the lowest leveraged mortgage REITs in the space at just about 0.93x debt to equity, which provides flexibility and downside protection. The stock is trading at a 22% discount to book value, creating an attractive entry point relative to intrinsic value. Next, a few comments on capital allocation and activity. After the quarter, we paid off our $36.5 million senior unsecured notes with a new unsecured note offering of $45 million. The coupon on the new notes is 7.875%, which is a slight increase from the 7.5% notes we issued in October of 2020 when interest rates were near 0%. The new notes carry a term of two years with prepayment options, providing flexibility in this declining rate environment. We're pleased with this execution and look forward to turning out our remaining unsecured notes in H1 2026.

Importantly, NREF remains one of the lowest leveraged mortgage REITs in the space at just about 0.93x debt to equity, which provides flexibility and downside protection. The stock is trading at a 22% discount to book value, creating an attractive entry point relative to intrinsic value. Next, a few comments on capital allocation and activity. After the quarter, we paid off our $36.5 million senior unsecured notes with a new unsecured note offering of $45 million. The coupon on the new notes is 7.875%, which is a slight increase from the 7.5% notes we issued in October of 2020 when interest rates were near 0%. The new notes carry a term of two years with prepayment options, providing flexibility in this declining rate environment. We're pleased with this execution and look forward to turning out our remaining unsecured notes in H1 2026.

Speaker #2: The stock is trading at a 22% discount to book value, creating an attractive entry point relative to intrinsic value. Next, a few comments on capital allocation and activity.

Speaker #2: After the quarter, we paid off our $36.5 million senior unsecured notes with a new unsecured note offering of $45 million. The coupon on the new notes is 7.875%, which is a slight increase from the 7.5% notes we issued in October of 2020, when interest rates were near 0%.

Speaker #2: The new notes carry a term of two years, with prepayment options providing flexibility in this declining rate environment. We're pleased with this execution and look forward to turning out our remaining unsecured notes in the first half of '26.

Speaker #2: Lastly, we have been making great strides in our Series B preferred raise, which has almost hit the $400 million offering limit. Given the heightened demand, we are now in the process of launching a Series C preferred, which will be a $200 million offering at an 8% coupon, where we will continue to deploy the capital at 400 basis points plus spreads to the cost of capital.

Rachel Smith: Lastly, we have been making great strides in our Series B preferred raise, which has almost hit the $400 million offering limit. Given the heightened demand, we are now in the process of launching a Series C preferred, which will be a $200 million offering at an 8% coupon, where we will continue to deploy the capital at 400 basis points plus spreads to the cost of capital. Lastly, our future outlook and guidance. Looking forward, we expect earnings available for distribution of $0.43 to $0.53 per share in Q4, with CAD at roughly $0.50 per share. With our conservative leverage profile and attractive valuation, we believe NREF is well-positioned to sustain its dividend and drive meaningful long-term value creation. Additionally, our affiliates and legacy investors maintain a significant ownership stake alongside shareholders, reinforcing alignment of interests. Now, I'd like to pass it back to Matt. Thank you, Paul.

Lastly, we have been making great strides in our Series B preferred raise, which has almost hit the $400 million offering limit. Given the heightened demand, we are now in the process of launching a Series C preferred, which will be a $200 million offering at an 8% coupon, where we will continue to deploy the capital at 400 basis points plus spreads to the cost of capital. Lastly, our future outlook and guidance. Looking forward, we expect earnings available for distribution of $0.43 to $0.53 per share in Q4, with CAD at roughly $0.50 per share. With our conservative leverage profile and attractive valuation, we believe NREF is well-positioned to sustain its dividend and drive meaningful long-term value creation. Additionally, our affiliates and legacy investors maintain a significant ownership stake alongside shareholders, reinforcing alignment of interests. Now, I'd like to pass it back to Matt.

Speaker #2: And lastly, our future outlook and guidance. Looking forward, we expect earnings available for distribution of $0.43 to $0.53 per share in Q4, with CAT at roughly $0.50 per share.

Speaker #2: With our conservative leverage profile and attractive valuation, we believe NREF is well positioned to sustain its dividend and drive a meaningful long-term value creation.

Speaker #2: Additionally, our affiliates and legacy investors maintain a significant ownership stake alongside shareholders, reinforcing alignment of interests. Now, I'd like to pass it back to Matt.

Matt McGraner: Thank you, Paul.

Speaker #3: Thank you, Paul. And so, as you can tell, we're making operational progress across all of our platforms as we look forward to a more liquid transaction market and waning supply in 2026.

Rachel Smith: And so, as you can tell, we're making operational progress across all of our platforms as we look forward to a more liquid transaction market and waning supply in 2026. We're also running a variety of processes to monetize any assets that we can at a premium or at a fair market value in this environment. To that end, I'm pleased to announce that we've made incremental progress on monetizing the approximately $75 million of preferred stock held by NXDT. The agreement provides for monthly amortization paydowns of up to $750,000 per month. We have been and will continue to use these proceeds to aggressively repurchase shares, especially at these levels. Indeed, we are maxing out our average daily limit each day. Through the close of business yesterday, we have repurchased 489,354 shares at an average price of $3.40 per share.

And so, as you can tell, we're making operational progress across all of our platforms as we look forward to a more liquid transaction market and waning supply in 2026. We're also running a variety of processes to monetize any assets that we can at a premium or at a fair market value in this environment. To that end, I'm pleased to announce that we've made incremental progress on monetizing the approximately $75 million of preferred stock held by NXDT. The agreement provides for monthly amortization paydowns of up to $750,000 per month. We have been and will continue to use these proceeds to aggressively repurchase shares, especially at these levels. Indeed, we are maxing out our average daily limit each day. Through the close of business yesterday, we have repurchased 489,354 shares at an average price of $3.40 per share.

Speaker #3: We're also running a variety of processes to monetize any assets that we can at a premium or at a fair market value in this environment.

Speaker #3: To that end, I'm pleased to announce that we've made incremental progress on monetizing the approximately $75 million of preferred stock held by NXPT. The agreement provides for monthly amortization paydowns of up to $750,000 per month.

Speaker #3: We have been and will continue to use these proceeds to aggressively repurchase shares especially at these levels. Indeed, we are maxing out our average daily limit each day.

Speaker #3: Through the close of business yesterday, we have repurchased 489,354 shares at an average price of $3.40 per share. We expect to stack other monetizations on top of this accretive agreement in the first half of next year that could reach an incremental $25 million of proceeds, again, to be used predominantly for stock buybacks.

Rachel Smith: We expect to stack other monetizations on top of this accretive agreement in the first half of next year that could reach an incremental $25 million of proceeds, again, to be used predominantly for stock buybacks. We, indeed, are doing everything we can to ramp this activity. In closing, we continue to enhance the operations of each of our platforms while we opportunistically monetize assets and repurchase stock. We're keenly focused on closing the discount to NAV and look forward to providing further updates entering 2026. Thank you again for everyone's participation today, and I'd like to end the call and look forward to speaking next quarter. Thank you.

We expect to stack other monetizations on top of this accretive agreement in the first half of next year that could reach an incremental $25 million of proceeds, again, to be used predominantly for stock buybacks. We, indeed, are doing everything we can to ramp this activity. In closing, we continue to enhance the operations of each of our platforms while we opportunistically monetize assets and repurchase stock. We're keenly focused on closing the discount to NAV and look forward to providing further updates entering 2026. Thank you again for everyone's participation today, and I'd like to end the call and look forward to speaking next quarter. Thank you.

Speaker #3: We indeed are doing everything we can to ramp this activity. In closing, we continue to enhance the operations of each of our platforms while we opportunistically monetize assets and repurchase stock.

Speaker #3: We're keenly focused on closing the discounted NAV and look forward to providing further updates as we enter 2026. Thank you again for everyone's participation today. I would like to conclude the call and look forward to speaking next quarter.