NexPoint Real Estate Finance Swings to Q3 Loss on Unrealized Losses
NexPoint Real Estate Finance lost $12.2 million in Q3 on $21.9 million of unrealized losses, while cash available for distribution rose to $0.60 a share.
Why it matters
- NexPoint Real Estate Finance lost $12.2 million, or $0.65 a share, in the third quarter, against net income of $35.0 million a year earlier, after $21.9 million of unrealized losses.
- Cash available for distribution, a non-GAAP measure, rose to $14.0 million, or $0.60 a share, from $0.53, above the $0.50 fourth-quarter dividend.
- New money went out at high rates. NexPoint funded $8.4 million on a loan paying SOFR plus 9 points and $6.2 million of preferred equity at 13% and 14%.
NexPoint Real Estate Finance lost $12.2 million, or $0.65 a diluted share, in the third quarter, the Dallas-based lender said before the market opened on Thursday, Nov. 5. A year earlier it earned $35.0 million. The swing came mostly from $21.9 million of unrealized losses on investments and derivatives held at fair value, against $48.3 million of unrealized gains a year earlier, according to the results it furnished to the SEC with a Form 8-K.
NexPoint (NYSE: NREF) makes first-lien and mezzanine loans, preferred equity investments and other real estate credit bets, and holds commercial mortgage-backed securities. Its two non-GAAP measures rose. Earnings available for distribution were $12.2 million, or $0.52 a share, against $0.51. Cash available for distribution was $14.0 million, or $0.60 a share, against $0.53.
Did NexPoint cover its dividend?
On its cash measure, yes. Third-quarter cash available for distribution of $0.60 a share was above the $0.50 fourth-quarter dividend NexPoint announced on Oct. 26. "Our third quarter results reflect the consistency of the strategy we've outlined for investors: earnings that covered our dividend and a portfolio focused on sectors with durable demand," Chief Investment Officer Matthew McGraner said in the release.
Its fourth-quarter guidance points lower. At the midpoint, NexPoint expects earnings available for distribution of $0.42 a share and cash available for distribution of $0.55. That works out to dividend coverage of 0.84 times and 1.10 times, by the company's figures. It expects net income to common shareholders of $6.8 million to $9.2 million.
| Measure | Q3 2026 | Q3 2025 |
|---|---|---|
| Net income (loss) to common shareholders | $(12.2) million | $35.0 million |
| Unrealized gains (losses) | $(21.9) million | $48.3 million |
| Provision for credit losses | $0.5 million | $15.7 million |
| Earnings available for distribution per share | $0.52 | $0.51 |
| Cash available for distribution per share | $0.60 | $0.53 |
Source: NexPoint Real Estate Finance third-quarter 2026 results release, Exhibit 99.1 to Form 8-K.
What is NexPoint earning on new deals?
Double-digit returns. In the quarter, it funded $8.4 million on a loan that pays a monthly coupon of SOFR plus 900 basis points. It also put $4.0 million into a preferred equity investment with a 14.0% preferred monthly return and $2.2 million into one at 13.0%. With SOFR at 3.94% on Nov. 4, according to the New York Fed, that loan's coupon works out to about 12.9%. For how that compares with what hard money lenders charge, see hard money and private lending rates today.
The portfolio totaled $1.0 billion across 83 investments at Sept. 30. Life sciences made up 40.7% and multifamily 38.3%, followed by single-family rental at 14.0%. Weighted average loan-to-value was 64.7% and debt service coverage was 1.39 times on its loans, CMBS, preferred equity and mezzanine investments, the company said. It raised $27.9 million of gross proceeds from its Series C preferred stock offering in the quarter. Our warehouse line of credit guide covers the other ways lenders fund themselves.
NexPoint scheduled its earnings call for 11 a.m. ET on Nov. 5. Commercial mortgage REIT Granite Point reported a wider loss the day before.
Sources
- NexPoint Real Estate Finance, Inc., Third-quarter 2026 results release, Exhibit 99.1 to Form 8-K (Nov. 5, 2026)
- SEC EDGAR, NexPoint Real Estate Finance Form 8-K filing index (Nov. 5, 2026)
- Federal Reserve Bank of New York, SOFR data (SOFR for Nov. 4, 2026)
