Nexpoint Diversified Real Estate T Stock

Hello, everyone. Thank you for joining us and welcome to the NexPoint Diversified Real Estate Trust Second Quarter 2026 Investor Update Call. I will now hand the conference over to Kristen Griffith, Investor Relations. Kristen, please go ahead.

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

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 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 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.

Thank you, Kristen. And thank you to everyone for joining the call this morning for an update on NXDT's progress in the second quarter. I am joined today by Paul Richards, CFO, and John Good, CEO of our storage and single-family rental businesses. This morning we will discuss NXDT's real estate markets, provide updates on our top holdings, and as always, focus on the steps we are taking to close the gap between our share price and the underlying value of the portfolio. First, I'd like to spend a few minutes on the residential market and the supply picture, and then update you on the continuing progress for our Cityplace office to residential conversion. I'll then turn the call over to John and Paul to cover storage, SFR, and our credit vehicles. I'll close with our efforts to monetize assets, repurchase stock, and narrow our discounts to NAV, remains our key near-term focus.

Turning to the multifamily supply picture. The inflection we described on prior calls is now beginning to show up in the data. Nationally, trailing 12-month absorption has overtaken new deliveries for the first time since early 2022.

It posted its first meaningful decline in over a year, and asking rents have begun to grind positive. We continue to expect our Sunbelt markets to lag the national turn, given the supply still to be absorbed, but the direction is now unmistakable, and it is underpinned by the same four factors we have highlighted. Persistent structural demand, the cost to own a home remains roughly 3 times the cost to rent an apartment in our markets. A steep decline in new deliveries. National completions have fallen from a 2024 peak of roughly 696,000 units to an estimated 421,000 units this year and continue to trend lower. Construction starts running well below their 2022 peak, locking in a multi-year supply trough and finally concession burn off with roughly 40% of units nationally still advertising a discount. The normalization of concessions flows directly through to gross potential rent.

Our Cityplace Uptown submarket specifically the supply picture is almost non-existent with just 232 units delivering in the submarket in 2027 and 0 currently slated for 2028 and beyond. Our redevelopment of the Cityplace apron is now fully defined approximately 460 multifamily units across the roughly 6-acre apron surrounding the tower with a curated ground floor retail program anchored by a boutique grocer and a rooftop amenity oriented to the downtown Dallas skyline.

On the tower itself, residential design and programming continue, phased intentionally behind the apron, and now in the second half of the year, we've turned our attention to tower financing, and we remain bullish on commencing this residential project as submarket supply falls off of a cliff. I would like to turn the call over to John. John?

Thanks, Matt. Welcome, everyone. First, going to occupancy of our self-storage portfolio. At June 30, 2026, our physical occupancy was 94.1%, which was up 240 basis points from December 31, 2025, where occupancy was at 91.7% and was 30 basis points less than the 94.4% occupancy at June 30, 2025.

Our occupancy levels have performed to normal seasonal expectations and our physical occupancy continues to rank among the highest in the self-storage industry. As for rental rates, sector-wide rental rates inched forward as we completed the 2026 rental season, generally outperformed the sector.

Our portfolio's in-place rate on June 30th was $20.54 per foot, up 6.3% from the $19.33 per foot at June 30, 2025, and up 183 basis points from the $20.17 per foot at the beginning of the year. Our average street rate increased 230 basis points from $21.88 at June 30, 2025, to $22.38 at June 30, 2026. Growth in our average web rate, which is the rate charged to customers who find units and rent via the internet, comprising the majority of our customers, was up 330 basis points year over year from $15.73 at June 30, 2025, to $16.25 at June 30, 2026.

We view these rates to be indicative of a return to steady, if slow, rent growth for the entire self-storage sector. Moreover, we expect these rate increases, along with stable occupancy, to support a 5% to 6% increase in our same store revenue for 2026, which is significantly ahead of what the public REITs are forecasting.

As for revenue and net operating income, same store revenue for the quarter ended June 30, 2026, was $23.7 million, or 6.1% higher than the $22.4 million recognized in the second quarter of 2025. Net operating income for the second quarter 2026 was $14.9 million or 15.2% higher than the Q2 2025 NOI of $12.9 million.

These results were driven by strong occupancy, good rate growth and strong expense control. Our results continue to lead the publicly traded storage REITs by a large margin as those REITs are forecasting for the year approximately flat NOI growth and 1% to 2% top line growth. Demand in the self-storage sector has typically been led by housing mobility and life events.

The housing market has remained very weak, which has continued to suppress self-storage demand in some areas. However, our portfolio is the youngest portfolio of size in the storage sector, and our facilities are located in large dense urban submarkets where demand is driven more by need and less by mobility.

We believe our exceptional locations and strong demographic profile insulate us to a large degree from the continued slow housing market that is burdening the rest of the sector and has allowed us to substantially outperform our peers. Turning to the supply picture, development remains limited nationwide due to high borrowing costs, land scarcity, significant inflation in materials costs, and permitting challenges, as well as a continued weak housing market that has weighed on self-storage demand.

In other words, anyone who's underwriting a storage development now has a really hard time determining what future rents will be. Most experts in the sector believe this dynamic will continue for the next several quarters, providing a potential tailwind to the storage sector in 2027 and 2028. We continue to believe we have the preeminent urban storage portfolio in the U.S. that will continue to outperform our peers and command a premium valuation upon any liquidity event.

We continue to evaluate strategic alternatives for our storage platform. Now turning to VineBrook Homes. Over the past 2 years, VineBrook's management team has focused on fortifying our balance sheet to reduce our capital cost and effectively eliminate threats from short-term debt maturities, right-sizing our G&A structure with a goal of $15 million of G&A annual savings and beginning a very significant and impactful portfolio repositioning involving exiting underperforming scattered-site homes and markets and redirecting invested capital to newer, better located and easier to manage BTR homes in more dynamic markets.

Our second quarter performance reflects the fruits of our efforts, including some pain mixed with gain. On the positive side, physical occupancy within our stabilized same home set continues to track over 95%, with June 30, 2026, occupancy at 95.2%, up from 94.9% at the beginning of the year. Our stabilized home count was relatively flat during Q2 2026 compared to Q2 2025, with the count being 15,611 for the 2026 quarter versus 15,588 homes for Q1 2025, a 23 home increase. Also, our blended rent growth continues to lead our larger publicly traded peers, second quarter growth of 5.1% on renewal leases and 1% on new leases for a blended 4.2% growth rate.

On the negative side, our net operating income margin dropped 340 basis points for the second quarter compared to the same quarter in 2025 on account of an Intentional focus on improving the quality of homes that turn over to new residents, a strategic decision that has resulted in longer turn times and higher turn costs and repair and maintenance expense, which has negatively impacted margins. We believe this short-term drop in NOI margin was necessary to accomplish a sustainable long-term enhancement of earnings and corporate value.

Over the past 2 and 1/2 years, we have reduced leverage, decreased our interest rate, and extended debt maturities. Our work on the balance sheet has produced a $500 million acquisition line of credit from J.P. Morgan, which we have continued to utilize to fund BTR acquisitions. Moreover, after quarter end on August 14th, VineBrook closed on a $545 million 5-year fixed rate term loan with Barings, a subsidiary of MassMutual. Proceeds were used to repay in full our floating rate syndicated credit facility with J.P. Morgan and other short term debt. In addition, the refinancing resulted in a meaningful net capital inflow for BTR acquisitions and other corporate purposes. We completed this transaction at a 160 basis point spread to the 5-year Treasury note, which is a tightening relative to other similar fixed rate executions that we've completed in the past.

With this transaction, VineBrook's debt maturities are largely extended to the end of the decade with limited near-term maturities. We believe our improvements in the balance sheet have placed us in a strong position to trim underperforming assets and reinvest capital into BTR homes in our core markets where we see the most promising long-term growth.

With respect to the portfolio repositioning, during the quarter ended June 30, we sold an additional 638 homes for approximately $101 million of net proceeds. The proceeds were used to pay down debt and fund new built-to-rent acquisitions. During the quarter, we acquired over 150 units across 3 BTR communities pursuant to forward purchase contracts that we have with developers. We have another $100 million of BTR home purchases under contract and a robust pipeline of potential additional BTR acquisitions. With the adoption of the federal 21st Century ROAD to Housing Act, which allowed for continued institutional investment in built-to-rent new housing, we expect to have significant additional opportunities to add high-quality built-to-rent homes to our portfolio over the coming quarters.

To replace the lower yielding housing inventory that we have disposed of or intend to dispose of. Our net asset value at June 30, 2026, was $52.68 compared to $54.25 at June 30, 2025, a 289 basis point decline. The range of cap rates provided by Green Street Advisors, our third-party valuation firm, expanded.

During the quarter, long-term mortgage rates rose again, contributing to the continuation of the worst housing market in 2 decades. And such rates have continued to rise since the end of the quarter. The shares of our publicly traded peers continue to trade at substantial discounts to their net asset values, reflecting these higher cap rates.

Finally, we remain committed to providing liquidity to VineBrook Common shareholders. Management and the board continue to monitor the macro outlook as well as the performance of our peers. A listing sometime in 2027 is still on the table, but our publicly traded peers continue to trade significantly below NAV, and we are mindful of conducting such listing in a manner where shareholder value is maximized.

Moreover, with capital flowing back into the sector, an exemption now for investor-to-investor transactions under the new Housing Act, there is the possibility of consolidation in the industry, which could provide liquidity opportunities for us after we complete our portfolio transformation.

Management, the board, and NexPoint entities, including NXDT, remain the largest shareholders in the company and we continue to be absolutely aligned with all shareholders in terms of seeking to maximize value. With that, I'll turn it over to Paul to discuss NREF.

Thanks, John. I'll quickly hit on NREF Q2 results and further guidance. As of today, NXDT holds shares and OP Units of NREF worth approximately $108 million of net asset value or approximately $1.71 per NXDT share on a standalone basis. As a reminder, NREF is a publicly traded mortgage REIT focused on originating and/or purchasing credit investments in our key operating verticals of residential, both SFR multi, life science, self-storage, industrial and marina.

NREF reported second quarter net income to common shareholders of $5.4 million or $0.29 per diluted share. Earnings available for distribution were $11.2 million or $0.46 per diluted share, which is up 7% from the first quarter and ahead of our guidance we gave in April. Cash available for distribution was $13.9 million or $0.58 per diluted share.

Moving to the portfolio and book value, book value per diluted share was $18.60, down roughly 2% from $18.96 at the end of the first quarter, driven primarily by small unrealized loss on our stock. The portfolio totals $1.1 billion across 85 investments, 39.4% life science, 37.6% multi and 15.1% single family rental with self-storage industrial and marina.

Credit quality continues to sit at the top of our commercial mortgage REIT peer group, a weighted average LTV of 63.4%, a weighted average DSCR of 1.39 times and 80.3% of our collateral stabilized. Of our collateral stabilized. NREF remains conservatively levered at 0.88 times debt to equity with $836.6 million of debt outstanding at a weighted average cost of 6.3% and a weighted average maturity of 2.6 years, which gives us flexibility and downside protection.

The stock closed at $15.81 on September 23rd, roughly a 15% discount to book value and an implied dividend yield north of 12%, an attractive entry point relative to intrinsic value. Next, a few comments on capital allocation and activity. On the most significant transaction of the year-to date, we closed $375 million drawable term loan facility with Mizuho Capital Markets LLC and used it to repay our $180 million of 5.75% senior unsecured notes at the May 1 maturity.

Concurrently, we entered into a total return swap Mizuho that reduced our net effective interest costs. As of the August earnings call, $362.2 million was outstanding on the facility. The transaction removed the largest near-term liability overhang on our balance sheet, replaced fixed rate unsecured debt with floating rate asset-based financing that better matches our preference for the facility for prepayment flexibility and provides a back-leveraged solution that enhances returns on new investments. On capital structure positioning, combined with $22.6 million we raised in a series C preferred during the quarter, we head into the back half of 2026 with what we believe is one of the cleanest, most flexible capital structures in the commercial mortgage REIT sector. On to new investments.

We funded $42.6 million mezzanine loans secured by a life science property at a 14% coupon, a $20.2 million preferred equity investment in a multifamily property at a 14% coupon, $7.3 million on a loan paying SOFR plus 900 basis points and an additional $31.9 million on existing commitments, more than $70 million of the pipeline we outlined in April at double digit coupons on Alewife.

Our Alewife Life Science Campus is now tracking to 85% lease up from 71% anchored by a long-term lease with Lila Sciences for 245,000 square feet. The sponsor is running a recapitalization process and we would expect a substantial amount of capital back. Essentially in the fourth quarter to redeploy primarily into residential assets. On dividend coverage, we paid a regular dividend of $0.50 per share in the quarter, which was 1.16 times covered by cash available for distribution. The board declared another $0.50 per share for the third quarter payable September 30th. And lastly, our future outlook and guidance.

Looking forward, third quarter guidance Earnings available for distribution of $0.43 per diluted share at the midpoint with CAD at $0.55 per diluted share at the midpoint. Debt to equity ratio 0.88 times. A dividend covered in the second quarter and guided at 1.1 times for the third and residential and life science fundamentals inflecting in our favor.

We believe NREF is well positioned to sustain distribution and create durable shareholder value. Affiliates and long-term investors maintain significant skin in the game alongside our shareholders, a structure we view as a meaningful differentiator. Now I'd like to pass it back to Matt.

Thank you, Paul. Again, we are making operational progress across all of our platforms as we look forward to a more liquid transaction market and waning supply in 2026 and 2027. We also continue running a variety of processes to monetize assets at fair market values in this environment.

One example is MidWave Wireless, formerly TerreStar Corporation, which remains one of the largest independent wireless spectrum license holders in the U.S. MidWave holds the entire 1.4 gigahertz band, making it the largest contiguous wide area band not controlled by a national carrier. It also holds an indirect interest in 18 AWS-3 licenses spanning many of the largest U.S.

metropolitan markets. The company continues to explore strategic options to monetize this position, and we are encouraged both by the regulatory and standards work completed over the past 2 years by way of large cap demand that has materially repriced the asset class. Emerging use cases such as direct to device and supplemental coverage from space only deepen that demand.

We believe this backdrop is a positive indicator for value realization over the next 12 months and would note that NXDT's current valuation ascribes very little of this embedded value to the position.

The accretion and our monetization efforts, coupled with the ongoing amortization of our preferred holdings continues to fund our repurchase program and our pace has accelerated meaningfully. During the second quarter, we repurchased approximately 109,000 shares of common stock. Subsequent to quarter end from the beginning of July through late September, we repurchased an additional 1,009,000 shares at an average price of approximately $5.33 by a wide margin, our most aggressive stretch of buying since the program began.

In total, we have now repurchased approximately 2.28 million shares under the program for roughly $10.4 million at a blended average price of about $4.58 per share. We intend to keep repurchasing common for as long as that discount persists and to make real measurable progress on closing it over the balance of 2026.

While we continue the operational work within our key operating verticals. To summarize the near-term catalysts we are focused on, completing the capitalization of the Cityplace apron and advancing tower financing, continuing to progress the monetization processes underway across the portfolio, pursuing value realization on our MidWave spectrum position over the coming year, continuing to repurchase common stock at a discount to NAV, all in service of the demonstrable progress in narrowing our discount.

That's all we have today for our prepared remarks. I'd like to thank everyone again for joining today's call and look forward to providing further updates on our progress next quarter. Thank you and have a good day.

This concludes today's call. Thank you for attending. You may now disconnect.

Hello and Welcome to the next point. Diversified Real Estate Trust Q1 2026 investor update call. All lines have been placed on mute to prevent any background noise. now like to turn the conference over to Kristen Griffith, Investor Relations. You may begin.

Good day everyone and welcome to NextPoint Diversified Real Estate. investor update call. On the call today are Matt McGrainer, Executive Vice President, Chief Investment Officer, Paul Richards, Executive Vice President and Chief Financial Officer, and John Good, Chief Executive Officer of NextPoint Storage Partners and Chief Executive Officer of Vineburg Homes Trust, Inc. Before we begin, I would like to everyone that this update call in 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 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 board-looking statement. The statements made during this conference will speak only as of today's date and accept as required by law. NFVT does not undertake any obligation to publicly update or revise any forward looking statements.

We're now going to turn the call over to Matt. Please go ahead, Matt. Thank you, Kristen, and thank you to everyone for joining the call this morning for updates on NXDT's progress. As Kristen said, I'm joined today by Paul Richards, our CFO of NXCT and John Good, CEO of our storage and single family rental businesses. This morning we will discuss NXCT's real estate markets and provide updates on our top holdings. We'll begin by spending a few minutes discussing the residential market, the supply picture, and progress with our CityPlace project in Uptown Dallas. I'll then turn the call over to John and Paul to discuss our storage, SFR, and credit vehicles. Finally, I'll close with progress on efforts to monetize assets and repurchase stock.

On the residential front, we are now firmly in the supply trough that I've been describing on these calls for several quarters. how this is playing out. We were coming off a record national multifamily cycle deliveries peaked at approximately 695 000 units in in the trailing 12 months ending q4 of 2024. for context that compares to roughly 282 000 units of average annual deliveries since 2001. costar now forecasts 2026 deliveries to fall approximately 49 percent from 2025 levels with another 20% decline forecasted for 2027. 2027 and 2028 forecasts have been revised down meaningfully from prior estimates as well. On the supply side, multifamily construction starts are running approximately 70% below their 2022 peak. That is locking in a multi-year supply drop, particularly in uptown Dallas. Thank you. On the demand side, the structural backstop has not changed. The cost to own a home in our markets remains roughly three times the cost to rent. There is no reasonable mortgage rate scenario that closes that gap quickly.

Our on the ground leasing data is consistent with the inflection thesis. Putting it all together, we believe the second half of 2026 and 2027 will be meaningfully better than 2025 for residential assets. WHILE THE LONGER-TERM EFFECT OF AI ON WHITE-COLLAR EMPLOYMENT REMAINS AN OPEN DEBATE, OUR DEMAND THESIS DOES NOT DEPEND ON THE LABOR MIX. WITH THE COST TO OWN A HOME RUNNING AGAIN THREE TIMES THE COST TO RENT IN OUR MARKETS AND NEW SUPPLY COLLAPSING, THE STRUCTURAL CASE FOR RENTAL DEMAND HOLDS ACROSS A WIDE RANGE OF EMPLOYMENT OUTCOMES. WE WOULD ALSO NOTE A SUPPORT OF of longer-term demographic tailwind as continued gains in health and longevity extend the renter age band and broaden the demand base over time. And again, with respect to the city place, uptown sub market, the supply picture is almost non-existent with just 232 units delivering in the city place sub market in 2027, and then nothing thereafter. We are nearing completion of design and capitalization of the apron project as reflected in the recent state filings.

In addition, we have executed construction financing term sheets at accretive levels and our underwriting remains intact with pro forma yield on costs remaining in the mid 6% range. Integrating new housing on the apron with existing office space, building amenities, and future retail and hospitality offerings will be a significant step in advancing the broader city place redevelopment. And on that front, progress on the tower residential design and programming continues to remain on schedule with an intentional lag behind the apron as we phase the development. We expect to turn our attention to financing the tower in the second half of the year and remain overall bullish on starting this residential project this year as the sub market literally falls off of a cliff. Now I'd like to turn the call over to John.

Thanks, Matt. Welcome, everyone. I'll start out by talking about results at NextPoint Storage Partners and then move on to Vinebrook and then turn the call over to Paul. With respect to NextPoint Storage Partners occupancy trends, at March 31, our fiscal occupancy was 92.3%, which was up 60 basis points from December 31, 2025, which had an occupancy at that date of 91.7%. is identical to the 92.3% that we reflected at March 31 of 2025. Our occupancy levels are performing to normal seasonal expectations, and our physical occupancy continues to rank among the highest in the self storage industry. As of yesterday, our physical occupancy was 93.9%, 160 basis point. gained since march 31 and roughly the same as our occupancy the same time last year As for rental rates, sector-wide rental rates continue to inch forward as we move through rental season. Our portfolios in place rate on March 31, 26 was $20.23 per foot, up 6.7% from the $18.96 that we reflected at March 31 of 2025, and at 30 basis points from the $20.17 that we at the beginning of the year. Our average asking rate remained relatively flat year over year. rising two pennies from nineteen dollars and forty eight at march 31.25 to 19.50 at march 31 26. growth in our average web rate which is the rate charged to customers who find units and rent via the internet which comprises the majority of our customers was up 2.6% year over year from $13.30 at March 31, 25 to $13.64 at March 31, 26. Our properties continue to be subject to aggressive rate increase programs to existing with those rate increases generally kicking in four months after a new customer comes into the facility and those rent increases have been running north of 30% for the last several months.

We expect these rate increases, along with stable occupancy, to support a 5 to 6% increase in same store revenue for 2026. Moving to revenue and net operating income, same store revenue for the quarter ended March 31, 2026 was $23.1 million, or 6.4% higher than the $21.7 million recognized in the first quarter of 2025. net operating income for the first quarter of 26 was $14 million or 10.2% higher than Q1 2025 NOI of $12.7 million. These results continue to lead the publicly traded self-storage REITs by a large margin. margin as they reported first quarter same store revenue growth of an average of less than 2% and negative same store NOI growth. demand in the self-storage sector has typically been led by housing mobility and life events and the historically weak housing market experienced over the past three years has softened self-storage demand Our publicly listed self storage repairs continue to operate a large portion of their respective portfolios, subject to the slowness in demand. resulting in flat to negative revenue growth and negative NOI growth. However, our portfolio is the youngest portfolio of size in the storage sector and our location in large dense urban sub markets provides a consistent demand funnel made up of people who have to rent storage because they don't have of space. This makes us somewhat immune from the continued slow housing market that is burdening the rest of the sector and has allowed us to substantially outperform our peers. Moving to supply, development remains limited in self-storage due to high borrowing costs, land scarcity, significant inflation in materials costs, permitting challenges, and the continued weakness in the demand for self-storage. caused by the weak housing market. The expected new supply for 2026 and 2027 is well below the 3% threshold needed for equilibrium and projected to fall even lower into 2027, likely renewing pricing power in the sector and allowing for stronger rate growth over the next couple of years.

We We continue to believe we have the preeminent urban storage portfolio in the United States that will continue to outperform our peers and command a premium valuation upon any liquidity event. Now moving to Vinebrook. We began a transformation of Vinebrook homes beginning in the second half of 2025 when we partnered with Evergreen Residential to manage our over 20,000 home portfolio and began to aggressively sell approximately 4,000 homes that comprise our lowest performing 20% and redeploy proceeds in the higher yielding built around communities. The externalization of management to evergreen is expected to save us over $15 million per year in GNA expense, And the repositioning of the bottom tier of our portfolio is expected to produce yields of 50 to 100 basis points ahead of our average yield for the entire portfolio, and 75 to 150 basis points ahead of the yields on the disposed of homes. The enhanced yields from replacing older high maintenance housing stock with new lower maintenance, easier to manage, and higher yielding built-to-rent homes should over time be highly accretive to Vinebrook's net operating income and share value as those built-to-rent communities stabilize. To execute this strategy during the first quarter, we removed 1,670 homes from the rented pool in order to make those homes ready for disposition. We sold 289 homes during the first quarter and we acquired 181 built to rent homes during the quarter. As we execute this repositioning of our company, revenue will lag for a few quarters as existing homes are pulled out of the rental pool and sold.

And as we acquire and lease up our built-to-rent homes. Once we complete this repositioning during 2027, revenue grows should be strong and the value of our company should be significantly enhanced. Our first quarter performance was solid. Physical occupancy within our stabilized same home set actually ticked up to 95.3% from 94.9% at year end 2025. Our stabilized home count was relatively flat during the first quarter compared to to the first quarter of 2025 with count being 15,765 homes for Q1 26 versus 15,747 homes for Q1 25 and 18 home increase or about one 10th of 1%. Our net operating income margin on our same home portfolio was 63.9% for the quarter, a 60 basis point improvement over the same quarter in 2025 and consistent with our peers. In the first quarter, our rental rates on renewal leases increased 5.5% and rental rates on new leases were essentially flat, resulting in a blended rental rate increase of 4.5% for the first quarter, more than double the blended growth rates reported by our larger publicly traded peers.

Same home net operating income for Q1 increased 1.3% over Q1 2025. Over the past two and a half years, we have fortified the Vinebrook balance sheet, reducing leverage, decreasing our interest rate, and extending maturities until the end of the decade. As part of that fortification, we were able to procure a $500 million acquisition line of credit from J.P. Morgan to fund built-to-rent acquisitions. The intent is to pay down the acquisition line through the sale of homes to which I just referred, making our BTR strategy leverage neutral to leverage positive. positive. Today we have purchased three stabilized BTR communities and have funded a portion of two forward sale BTR communities, investing approximately $100 million in these built-to-rent communities. Built-to-rent homes are higher yielding assets in higher growth markets that are easier to manage. We have invested in built-to-rent communities in two of our better performing legacy markets, Indianapolis and Kansas City, as well as in new markets such as Nashville and Raleigh.

As many of you are probably aware just from watching the news or reading the press, in early January of this year, the President challenged Congress to adopt legislation to make housing more affordable. Included in his challenge was a call for Congress to curb growth of what he called corporate ownership of single family rental housing through a ban on additional purchases by institutional investors. After months of competing bills and negotiation between the House and the Senate, as of last night, both houses had passed the 21st Century Road to Housing Act. We were deeply involved over the past six months lobbying for a bill that would not restrict capital flows into our sector and would allow us to do business as usual. While most of the bill is designed to provide incentives to the private sector and states and cities to increase supply and make home loans more available in smaller communities. Title 10, Section 1001 of the bill imposes on large institutional investors, which are defined as any entity or group of related entities that own more than 350 homes, a ban on future acquisitions of single-family homes for rent. are a number of important exceptions to the ban newly constructed homes purpose built to rent homes homes purchased and renovated to meet local occupancy codes, homes placed in a rent-to-own program, and purchases from institutional investors. We believe the bill allows us to continue operating in our current manner and in accordance with our current business plan, and experts believe that the bill as passed will renew capital flow. into the sector over the past two years we have fortified vinebrook's balance sheet created capital to allocate to build torrent opportunities we have an active pipeline and ability to move very quickly to close on good opportunities and now the legislation allows us to continue to do so Finally, a few comments about net asset value and liquidity.

Our net asset value at March 31, 26 was $54.24 compared to $54.56 at March 31, 2025, a 60 basis point decline as the range of cap rates Street Advisors, our third party valuation firm, expanded. This is the worst housing market in two decades, characterized by low inventory, low construction starts, and high mortgage tax and insurance rates, as well as political headwinds in Washington, DC. The shares of our publicly traded peers continued to trade at substantial discounts to their net asset values reflecting these higher cap rates. Our NAV continues to be supported by our home sales, and we are pleased that the NAV has remained in a tight range over the past two years, despite a stubbornly weak housing market, rising costs, and volatility in the SFR REIT sector. We remain committed to providing some limited liquidity sometime in the second half of the year, the amount of which continues to be discussed by management and the Board, as we continue to monitor the macro outlook and execute on our portfolio reposition. A listing during the next four quarters is still still on the table, but our publicly traded peers continue to trade significantly below NAB, and we are mindful of conducting such listing in a manner where shareholder value is maximized to the extent possible. The board and NextPoint entities remain the largest shareholders in the company, and we continue to be absolutely aligned with all shareholders in terms of seeking to maximize value.

With those remarks, I'll turn it over to Paul to comment on NREF.

Thanks, John. As of today, NXCT holds shares of the OP units of NextPoint Real Estate Finance worth approximately $94 million of net asset value, or approximately $1.59 per NXCT 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 vertical. of residential, both SFR multifamily, self-storage and life science. NRF reported first quarter net income to common shareholders of 10 million or 42 cents per share. Cash available for distribution, plus 13.5 million or 58 cents per share. Moving to our portfolio and book value. Book value shares, book value per share fell slightly to $18 and 96 cents, reflecting sustained strong performance on our underlying assets. The portfolio totals approximately 1.1 billion across 90 investments, diversified across multi single family rentals and life sciences.

Importantly, NREF remains one of the lowest levered mortgage rates in the space at just about 0.7 times debt to equity, which provides us flexibility and downside protection. The stock is trading at 30% discounted book value, creating an attractive entry point relative to intrinsic value. Next, Just a few comments on capital activity. On the most significant transaction of the quarter, we have successfully we successfully refinanced 180 million of our senior unsecured notes that were maturing May 1st. We replaced those with 5.75% fixed rate notes with a new $242.5 million total return swap facility priced at SOFR plus 375 basis points with three year term and a one year extension option. Next, on the capital structuring positioning. Combined with the $21.1 million we raised and are seriously preferred in the re-REMIC execution, we head back into the back half of 26 with one of the cleanest, most flexible capital structures in the commercial mortgage rate sector.

On to the re-REMIC execution. We sold our BPs to Mizuho at 92.7, having purchased the at 68.69 uh 68.69 in 2021 we and reinvested into an hrr tranche of the new structure at an 18.5 yield that single transaction generated 46 percent uh share per book value appreciation reduced repo financing by 75 million and is expected to drive approximately 34 cents per share of annual CAD accretion going forward. Next, the dividend coverage. We paid a regular dividend of 50 cents per share in the first quarter, which was 1.16 times covered by cash available for distribution. And lastly, our future outlook and guidance. Looking forward, we expect earnings available for distribution of 43 cents per share in Q2 with CAD at 54 cents per share with a debt to equity ratio of 0.7 to 0.7. AND A DIVIDEND COVERAGE OF 1.16 BY CAD, AND A DIVIDEND COVERAGE OF 1.16 BY CAD, WE BELIEVE NREF IS WELL-POSITIONED WE BELIEVE NREF IS WELL-POSITIONED TO SUSTAINED sustain its distribution and create durable shareholder value. Our affiliates and long-term investors maintain significant skin in the game alongside our shareholders. A structured review is a meaningful differentiator.

Now I'd like to pass it back to Matt.

All right, thanks, Paul. As you can tell by John and Paul's updates, we continue to make operational progress across all of our platforms in spite of broader geopolitical and capital market noise. As I stated last quarter, certain monetization efforts continue to progress on several fronts. One example is MidWave Wireless, formerly TerraStar Corporation, which remains one of the largest independent wireless spectrum license holders in the United States. The company continues to explore strategic options as it seeks to monetize its investment. We continue to see activity in the sector with Spectrum licenses actively trading in the market, which we believe is a positive indicator for potential value realization over the next 12 months. By way of reference, recent public transactions underscore the depth of this market. AT&T agreed to acquire roughly 50 megahertz of Echo Star Spectrum for approximately $23 an implied value of about $1.40 per megahertz pop, while SpaceX acquired Echo Star's spectrum across two transactions, totaling nearly 20 billion, with Verizon and T-Mobile both reporting to be evaluating the remaining licenses.

We view this level of large cap buyer demand as SUPPORTIVE OF THE VALUE EMBEDDED IN OUR HOLDINGS. THIS ACTIVITY COUPLED WITH OUR ONGOING IMMUNIZATION OF PREFERRED STOCK HOLDINGS WILL CONTINUE TO FUEL AGGRESSIVE STOCK BUYBACKS OVER THE NEAR TERM. AS OF THE CLOSE OF BUSINESS YESTERDAY WE HAD REPURCHASED OVER 1.1 MILLION SHARES OF COMMON STOCK AT AN AVERAGE STOCK PRICE OF $3.83 PER SHARE. YOU SHOULD EXPECT We expect this buyback activity will continue over the near term. In addition to stock buybacks, management and the board are keenly focused on improving disclosure and evaluating share issuances while we continue to make operational progress within our key operating verticals. That's all we have today for our prepared remarks. I'd like to thank everyone for joining today's call and look forward to providing further updates on our next progress next quarter.

Thank you very much and good day. This concludes today's conference call. Thank you for joining. You may now disconnect.

[Call has ended.]