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NexPoint Diversified Real Estate Trust
NXDT
#8292
Rank
$0.25 B
Marketcap
๐Ÿ‡บ๐Ÿ‡ธ United States
Country
$5.16
Share price
2.58%
Change (1 day)
55.89%
Change (1 year)
๐Ÿ  Real estate๐Ÿ’ฐ Investment ๐Ÿ˜๏ธ REITs
Categories
  1. NexPoint Diversified Real Estate Trust
  2. Quarterly Reports (10-Q)
  3. Financial Year FY2025 Q3

NexPoint Diversified Real Estate Trust - 10-Q quarterly report FY2025 Q3


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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________________________________________________________
FORM 10-Q
_____________________________________________________________________________________
(Mark One)
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2025
OR
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                  to                 
Commission File Number 001-32921
_____________________________________________________________________________________
NexPoint Diversified Real Estate Trust
(Exact Name of Registrant as Specified in Its Charter)
_____________________________________________________________________________________
Delaware80-0139099
(State or other Jurisdiction of
Incorporation or Organization)		(I.R.S. Employer
Identification No.)
300 Crescent Court, Suite 700, Dallas, Texas
(Address of Principal Executive Offices)
75201
(Zip Code)
(214) 276-6300
(Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Shares, par value $0.001 per shareNXDT
New York Stock Exchange; NYSE Texas, Inc.
5.50% Series A Cumulative Preferred Shares, par value
$0.001 per share ($25.00 liquidation preference per share)		NXDT-PANew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated FileroAccelerated Filero
Non-Accelerated Filer☒Smaller reporting company☒
Emerging growth companyo 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of November 13, 2025, the registrant had 49,020,409.06 common shares, par value $0.001 per share, outstanding.

NEXPOINT DIVERSIFIED REAL ESTATE TRUST
Form 10-Q
Quarter Ended September 30, 2025
INDEX
Page
ii
PART I — FINANCIAL INFORMATION
1
2
3
9
10
52
83
83
PART II — OTHER INFORMATION
Item 1.
84
84
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85
85
86
i
Cautionary Statement Regarding Forward-Looking Statements
This quarterly report (this "Quarterly Report") contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties. In particular, statements relating to our business and investment strategies, plans or intentions, our liquidity and capital resources, our performance and results of operations, expectations on our ability to refinance debt as necessary and repositioning of the portfolio of the Hospitality segment contain forward-looking statements. Furthermore, all of the statements regarding future financial performance (including market conditions and demographics) are forward-looking statements. We caution investors that any forward-looking statements presented in this Quarterly Report are based on management’s current beliefs and assumptions made by, and information currently available to, management. When used, the words “anticipate,” “believe,” “expect,” “intend,” “may,” “might,” "plan," "potential," “estimate,” “project,” "target," “should,” “will,” “would,” “result,” "goal," "could," "future," "continue," "if," the negative version of these words and similar expressions that do not relate solely to historical matters are intended to identify forward-looking statements. You can also identify forward-looking statements by discussions of strategy, plans or intentions.
Forward-looking statements are subject to risks, uncertainties and assumptions and may be affected by known and unknown risks, trends, uncertainties and factors that are beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. We caution you therefore against relying on any of these forward-looking statements.
Some of the risks and uncertainties that may cause our actual results, performance, liquidity or achievements to differ materially from those expressed or implied by forward-looking statements include, among others, the following:
•Unfavorable changes in economic conditions and their effects on the real estate industry generally and our operations and financial condition, including inflation, rising or high interest rates, new or increased tariffs, tightening monetary policy or recession, which may limit our ability to access funding and generate returns for shareholders;
•Our loans and investments expose us to risks similar to and associated with real estate investments generally;
•Commercial real estate-related investments that are secured, directly or indirectly, by real property are subject to delinquency, foreclosure and loss, which could result in losses to us;
•Risks associated with the ownership of real estate, including dependence on tenants and compliance with laws and regulations related to ownership of real property;
•Risks associated with our investment in diverse issuers, industries and investment forms and classes, both in real estate and in non-real estate sectors, including common equity, preferred equity, options or other derivatives, short sale contracts, secured loans of securities, reverse repurchase agreements, structured finance securities, below investment grade senior loans, bonds, convertible instruments, joint ventures, and emerging markets;
•Fluctuations in interest rate and credit spreads, could reduce our ability to generate income on our loans and other investments, which could lead to a significant decrease in our results of operations, cash flows and the market value of our investments;
•The use of leverage to finance our investments;
•Risks associated with our loans and investments in debt instruments including, senior loans, mezzanine loans, collateralized loan obligations ("CLOs"), and structured finance securities;
•Our loans and investments are concentrated in terms of type of interest, geography, asset types, industry and sponsors and may continue to be so in the future;
•We have a substantial amount of indebtedness which may limit our financial and operating activities and may adversely affect our ability to incur additional debt to fund future needs;
•We have limited operating history as a standalone company and may not be able to operate our business successfully, find suitable investments, or generate sufficient revenue to make or sustain distributions to our shareholders;
ii
•We may not replicate the historical results achieved by other entities managed or sponsored by affiliates of NexPoint Advisors, L.P. (“NexPoint” or our “Sponsor”), members of the NexPoint Real Estate Advisors X, L.P. (our “Adviser”) management team or their affiliates;
•We are dependent upon our Adviser and its affiliates to conduct our day-to-day operations; thus, adverse changes in their financial health or our relationship with them could cause our operations to suffer;
•Our Adviser and its affiliates face conflicts of interest, including significant conflicts created by our Adviser’s compensation arrangements with us, including compensation which may be required to be paid to our Adviser if our advisory agreement is terminated, which could result in decisions that are not in the best interests of our shareholders;
•We pay substantial fees and expenses to our Adviser and its affiliates, which payments increase the risk that shareholders will not earn a profit on their investment;
•If we fail to qualify as a real estate investment trust (“REIT”) for U.S. federal income tax purposes, cash available for distributions to be paid to our shareholders could decrease materially, which would limit our ability to make distributions to our shareholders; and
•Any other risks included under Part I, Item 1A, “Risk Factors,” of our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 31, 2025.

While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. They are based on estimates and assumptions only as of the date of this Quarterly Report. We undertake no obligation to update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events or other changes, except as required by law.
iii
NEXPOINT DIVERSIFIED REAL ESTATE TRUST AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and par value amounts)
September 30, 2025 (Unaudited)
December 31, 2024
ASSETS 
Consolidated Real Estate Investments
Land$62,227 $62,227 
Buildings and improvements313,500 312,200 
Intangible lease assets10,979 10,979 
Construction in progress24,781 24,689 
Furniture, fixtures, and equipment10,400 10,124 
Right-of-use assets ($579 and $712 with related parties, respectively)
2,044 2,176 
Total Gross Consolidated Real Estate Investments423,931 422,395 
Accumulated depreciation and amortization(46,236)(35,002)
Total Net Consolidated Real Estate Investments377,695 387,393 
Real estate held for sale— 29,890 
Total Net Real Estate Investments377,695 417,283 
Investments, at fair value ($438,714 and $493,909 with related parties, respectively)
593,110 643,432 
Equity method investments ($633 and $407 with related parties, respectively)
34,605 54,429 
Investments in DSTs ($33,559 and $30,559, with related parties, respectively)
33,559 30,559 
Cash and cash equivalents5,310 8,791 
Restricted cash44,850 40,110 
Accounts receivable, net3,196 4,463 
Prepaid and other assets ($0 and $7,315 with related parties, respectively)
10,294 17,500 
Accrued interest and dividends1,185 5,495 
Interest rate caps259 159 
Deferred tax asset, net2,606 2,618 
Total Assets$1,106,669 $1,224,839 
LIABILITIES AND EQUITY
Liabilities: 
Mortgages payable, net ($10,000 and $10,000 with related parties, respectively)
$228,002 $261,945 
Notes payable, net ($65,787 and $66,731 with related parties, respectively)
80,222 90,888 
Prime brokerage borrowing5,952 1,222 
Accounts payable and other accrued liabilities24,110 22,739 
Income tax payable84 255 
Accrued real estate taxes payable3,942 226 
Accrued interest payable10,503 8,724 
Security deposit liability375 389 
Prepaid rents427 1,053 
Intangible lease liabilities, net2,334 3,139 
Lease liability ($591 and $721 with related parties, respectively)
591 721 
Total Liabilities356,542 391,301 
Redeemable Series B Preferred shares, $0.001 par value: 16,000,000 authorized: 485,608 and 0 shares issued and outstanding, respectively
10,834 — 
Redeemable noncontrolling interests in the OP328 — 
Equity:
Shareholders' Equity 
Series A Preferred shares, $0.001 par value: 4,800,000 shares authorized; 3,359,593 shares issued and outstanding
3 3 
Common shares, $0.001 par value: unlimited shares authorized; 49,020,409 and 42,679,569 shares issued and outstanding, respectively
49 43 
Additional paid-in capital1,056,240 1,039,280 
Accumulated earnings (loss)(317,327)(202,818)
Total Shareholders' Equity738,965 836,508 
Noncontrolling interests— (2,970)
Total Equity738,965 833,538 
TOTAL LIABILITIES AND EQUITY$1,106,669 $1,224,839 
See Notes to Consolidated Financial Statements
1
NEXPOINT DIVERSIFIED REAL ESTATE TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
(in thousands, except per share amounts)
(Unaudited)
For the Three Months Ended September 30,For the Nine Months Ended September 30
2025202420252024
Revenues 
Rental income ($69, $68, $207 and $203 with related parties, respectively)
$1,616 $4,447 $8,974 $12,479 
Rooms4,758 7,280 21,389 15,480 
Food and beverage553 533 2,192 1,345 
Interest income ($303, $553, $1,223 and $1,619 with related parties, respectively)
2,443 1,653 6,840 5,043 
Dividend income ($7,630, $7,227, $22,743 and $21,080 with related parties, respectively)
7,723 7,397 27,215 21,642 
Other income366 906 957 1,306 
Total revenues17,459 22,216 67,567 57,295 
Expenses 
Property operating expenses ($52, $0, $165 and $0 with related parties, respectively)
5,589 6,339 18,073 14,672 
Property management fees ($131, $193, $494 and $554 with related parties, respectively)
303 664 1,209 1,025 
Real estate taxes and insurance1,314 1,639 4,728 4,653 
Advisory and administrative fees3,218 3,976 13,880 10,665 
Property general and administrative expenses ($69, $68, $207 and $203 with related parties, respectively)
1,308 2,057 4,915 4,949 
Corporate general and administrative expenses5,198 2,843 9,145 8,873 
Depreciation and amortization3,858 4,510 11,795 11,408 
Impairment loss— 6,134 1,752 6,134 
Total expenses20,788 28,162 65,497 62,379 
Operating income (loss)(3,329)(5,946)2,070 (5,084)
Interest expense ($(540), $(620), $(1,673) and $(1,513) with related parties, respectively)
(6,903)(8,288)(20,816)(20,670)
Equity in income (losses) of unconsolidated equity method ventures ($20, $233, $226 and $603 with related parties, respectively)
(581)400 (748)(558)
Change in unrealized gains (losses) ($(2,647), $17,142, $(59,358) and $4,761 with related parties, respectively)
(2,505)(885)(77,464)2,251 
Realized gains (losses) ($0, $0, $3,462 and $0 with related parties, respectively)
6(1)4,987(21,876)
Gain on sales of real estate— — 37 — 
Net income (loss) before income taxes(13,312)(14,720)(91,934)(45,937)
Income tax expense995 (700)423 (1,553)
Net loss(12,317)(15,420)(91,511)(47,490)
Net (income) loss attributable to Series A preferred shareholders(1,155)(1,155)(3,465)(3,465)
Net (income) loss attributable to Series B preferred shareholders(220)— (250)— 
Net (income) loss attributable to noncontrolling interests— 6,538 1,945 8,432 
Net (income) loss attributable to redeemable noncontrolling interests in the OP5 — 25 — 
Net loss attributable to common shareholders$(13,687)$(10,037)$(93,256)$(42,523)
Weighted average common shares outstanding - basic47,436 40,786 45,324 39,662 
Weighted average common shares outstanding - diluted47,436 40,786 45,324 39,662 
Loss per share - basic$(0.29)$(0.25)$(2.06)$(1.07)
Loss per share - diluted$(0.29)$(0.25)$(2.06)$(1.07)
See Notes to Consolidated Financial Statements
2
NEXPOINT DIVERSIFIED REAL ESTATE TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
(in thousands, except share and per share amounts)
(Unaudited)
 Series A Preferred SharesCommon SharesAdditional
Paid-in
Capital		Accumulated
Earnings (Loss)		Common Stock Held in Treasury at CostTotal
Three Months Ended September 30, 2025Number of
Shares		AmountNumber of
Shares		Amount
Balances, June 30, 20253,359,5933 47,421,92947 $1,048,828 $(296,170)$— $752,708 
Stock-based compensation expense—— —— 1,107 — —1,107 
Shares issued to Adviser for admin and advisory fees—— 380,591— 1,426 — —1,426 
Net loss attributable to common shareholders—— —— — (13,687)—(13,687)
Net income attributable to Series A preferred shareholders—— —— — 1,155 —1,155 
Repurchases of common stock—— —— — —(800)(800)
Retirement of common stock held in
treasury		—— (185,477)— (800)—800— 
Common share distributions declared ($0.15 per share)
—— 1,403,3662 5,679 (7,470)—(1,789)
3
Series A preferred share distributions declared ($0.34375 per share)
—— —— — (1,155)— (1,155)
Balances, September 30, 20253,359,5933 49,020,40949 $1,056,240 $(317,327)$— $738,965 

See Notes to Consolidated Financial Statements
4
NEXPOINT DIVERSIFIED REAL ESTATE TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
(in thousands, except share and per share amounts)
 Series A Preferred SharesCommon SharesAdditional
Paid-in
Capital		Accumulated
Earnings (Loss)		Noncontrolling InterestsCommon Stock Held in Treasury at CostTotal
Nine Months Ended September 30, 2025Number of
Shares		AmountNumber of
Shares		Amount
Balances, December 31, 20243,359,593$3 42,679,569$43 $1,039,280 $(202,818)$(2,970)$— $833,538 
Stock-based compensation expense—— 358,173— 3,260 — — — 3,260 
Shares issued to Adviser for admin and advisory fees—— 937,0261 4,319 — — — 4,320 
Net loss attributable to common shareholders—— —— — (93,256)— — (93,256)
Net loss attributable to noncontrolling interests—— —— — — (1,945)— (1,945)
Net income attributable to Series A preferred shareholders—— —— — 3,465 — — 3,465 
Repurchases of common stock—— —— — — — (800)(800)
Retirement of common stock held in
treasury		—— (185,477)— (800)— — 800 — 
Common share distributions declared ($0.45 per share)
—— 4,146,5254 16,315 (21,253)— — (4,934)
5
Series A preferred share distributions declared ($1.03125 per share)
—— —— — (3,465)— — (3,465)
Acquisition of noncontrolling interests in NHT—— 1,084,5931 (6,134)— 4,915 — (1,218)
Balances, September 30, 20253,359,5933 49,020,40949 1,056,240 (317,327)$— $— $738,965 
    
See Notes to Consolidated Financial Statements
6
NEXPOINT DIVERSIFIED REAL ESTATE TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
(in thousands, except share and per share amounts)
Series A Preferred SharesCommon SharesAdditional
Paid-in
Capital		Accumulated
Earnings (Loss)		Noncontrolling InterestTotal
Three Months Ended September 30, 2024Number of
Shares		AmountNumber of
Shares		Amount
Balances, June 30, 20243,359,593$3 40,650,118$41 $1,025,144 $(171,101)$4,979 $859,066 
Stock-based compensation expense—— —— 544 — — 544 
Shares issued to Adviser for admin and advisory fees—— 239,235— 1,322 — — 1,322 
Net loss attributable to common shareholders—— —— — (10,037)— (10,037)
Net income attributable to noncontrolling interests—— —— — — (6,538)(6,538)
Net income attributable to preferred shareholders—— —— — 1,155 — 1,155 
Common share distributions declared ($0.15 per share)
—— 785,1751 4,905 (6,349)— (1,443)
Series A preferred shares distributions declared ($0.34375 per share)
—— —— — (1,155)— (1,155)
Balances, September 30, 20243,359,5933 41,674,52842 1,031,915 (187,487)(1,559)842,914 
See Notes to Consolidated Financial Statements
7
NEXPOINT DIVERSIFIED REAL ESTATE TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
(in thousands, except share and per share amounts)
(Unaudited)
Series A Preferred SharesCommon SharesAdditional
Paid-in
Capital		Accumulated
Earnings (Loss)		Noncontrolling InterestTotal
Nine Months Ended September 30, 2024Number of
Shares		AmountNumber of
Shares		Amount
Balances, December 31, 20233,359,593$3 38,389,600$38 $1,011,613 $(126,580)$— $885,074 
Noncontrolling interests from NHT Acquisition— — —— — — 6,873 6,873 
Stock-based compensation expense— — 145,433— 1,991 — — 1,991 
Shares issued to Adviser for admin and advisory fees— — 617,2731 4,026 — — 4,027 
Net loss attributable to common shareholders— — —— — (42,523)— (42,523)
Net loss attributable to noncontrolling interests— — —— — — (8,432)(8,432)
Net income attributable to preferred shareholders— — —— — 3,465 — 3,465 
Common share distributions declared ($0.45 per share)
— — 2,522,2223 14,285 (18,384)— (4,096)
Series A preferred share distributions declared ($1.03125 per share)
— — —— — (3,465)— (3,465)
Balances, September 30, 20243,359,5933 41,674,52842 1,031,915 (187,487)(1,559)842,914 
See Notes to Consolidated Financial Statements
8
NEXPOINT DIVERSIFIED REAL ESTATE TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
For the Nine Months Ended September 30,
20252024
Cash flows from operating activities
Net loss$(91,511)$(47,490)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
Depreciation and amortization11,795 11,408 
Amortization of intangible lease assets and liabilities(744)(1,061)
Amortization of deferred financing costs914 580 
Amortization of fair value adjustment of assumed debt1,296 731 
Paid-in-kind interest and dividends ($(4,278) and $(3,956) with related parties, respectively)
(9,535)(7,173)
Net cash (paid) received on derivative settlements(77)660 
Proceeds from paid-in-kind interest ($518 and $0 with related parties, respectively)
528 2,271 
Realized (gain) loss ($(3,462) and $0 with related parties, respectively)
(4,987)21,876 
Net change in unrealized (gain) loss on investments held at fair value ($59,358 and $4,761 with related parties, respectively)
77,464 (2,251)
(Gain) on sales of real estate(37)— 
Unrealized (gain) loss on interest rate derivatives(23)7 
Impairment loss1,752 6,134 
Equity in (income) losses of unconsolidated ventures ($(226) and $(603) with related parties, respectively)
748 558 
Distributions of earnings from unconsolidated ventures ($0 and $761 with related parties, respectively)
5,443 3,955 
Stock-based compensation expense
3,605 2,193 
Equity security dividends reinvested ($(1,979) and $(4,817) with related parties, respectively)
(1,979)(4,833)
Deferred tax expense12 218 
Changes in operating assets and liabilities, net of effects of acquisitions:
Income tax payable(171)(356)
Real estate taxes payable3,716 3,637 
Operating assets4,968 (1,815)
Operating liabilities4,809 3,201 
Net cash provided by (used in) operating activities7,986 (7,550)
Cash flows from investing activities
Proceeds from asset redemptions ($21,368 and $1,700 with related parties, respectively)
21,415 16,209 
Distributions from CLO investments— 1,266 
Sale of consolidated real estate investment28,306 — 
Proceeds from return of investment15,054 — 
Net cash acquired in acquisition of NexPoint Hospitality Trust— 42,749 
Purchases of investments ($(12,108) and $(6,835) with related parties, respectively)
(28,344)(34,685)
Additions to consolidated real estate investments(1,814)(7,079)
Net cash provided by investing activities34,617 18,460 
Cash flows from financing activities
Mortgage proceeds received ($0 and $10,000 with related parties, respectively)
705 10,000 
Mortgage payments(34,543)(4,452)
Prime brokerage borrowing5,476 262 
Credit facilities payments(12,774)(8,103)
Prime brokerage payments(746)(633)
Deferred financing costs paid(992)(563)
Payments for taxes related to net share settlement of stock-based compensation(345)(202)
Proceeds from issuance of Series B preferred shares through public offering, net of offering costs10,834 — 
Repurchase of common shares(800)— 
Distributions paid to Series A preferred shareholders(3,465)(3,465)
Distributions paid to Series B preferred shareholders(250)— 
Distributions paid to common shareholders(4,438)(3,683)
Distributions to redeemable noncontrolling interests in the OP (6)— 
Net cash used in financing activities(41,344)(10,839)
Net increase in cash, cash equivalents and restricted cash1,259 71 
Cash, cash equivalents and restricted cash, beginning of period48,901 53,169 
Cash, cash equivalents and restricted cash, end of period$50,160 $53,240 
Supplemental Disclosure of Cash Flow Information
Interest paid$17,741 $13,911 
Income tax paid$1,300 $— 
Supplemental Disclosure of Noncash Activities
Non-cash distribution payment$16,319 $14,285 
Non-cash advisory fee payment$4,320 $4,026 
Increase (decrease) in dividends payable upon vesting of restricted stock units$496 $412 
Real estate investments assumed in acquisition of NexPoint Hospitality Trust$— $(167,624)
DST investments assumed in acquisition of NexPoint Hospitality Trust$— $(5,000)
Interest rate caps assumed in acquisition of NexPoint Hospitality Trust$— $(1,064)
Notes payable assumed in acquisition of NexPoint Hospitality Trust$— $50,694 
Notes payable assumed in merger of NexPoint Hospitality Trust$784 $— 
Mortgages payable assumed in acquisition of NexPoint Hospitality Trust$— $114,640 
APIC assumed in merger of NexPoint Hospitality Trust$(6,058)$— 
Right of use assets assumed in acquisition of NexPoint Hospitality Trust$— $(1,465)
Accrued interest payable assumed in acquisition of NexPoint Hospitality Trust$— $6,353 
Noncontrolling interests extinguished in merger of NexPoint Hospitality Trust$4,915 $— 
Noncontrolling interests assumed in acquisition of NexPoint Hospitality Trust$— $6,873 
Redeemable noncontrolling interest in the OP from the acquisition of NexPoint Hospitality Trust$359 $— 
Deconsolidated investments at fair value from the acquisition of NexPoint Hospitality Trust$— $24,981 
Accounts receivable and other assets assumed in acquisition of NexPoint Hospitality Trust$— $(1,305)
Prepaid assets and other assets assumed in acquisition of NexPoint Hospitality Trust$— $(1,492)
Accounts payable and other liabilities assumed in acquisition of NexPoint Hospitality Trust$— $14,276 
Real estate taxes payable assumed in acquisition of NexPoint Hospitality Trust$— $1,233 
Change in capitalized construction costs included in accounts payable and other accrued liabilities$25 $(627)
See Notes to Consolidated Financial Statements
9
NEXPOINT DIVERSIFIED REAL ESTATE TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization and Description of Business
NexPoint Diversified Real Estate Trust (the "Company", "we", "us", or "our") was formed in Delaware and has elected to be taxed as a real estate investment trust (a “REIT”). Substantially all of the Company’s business is conducted through NexPoint Diversified Real Estate Trust Operating Partnership, L.P. (the "OP"), the Company’s operating partnership. The Company conducts its business (the "Portfolio") through the OP and its wholly owned taxable REIT subsidiaries ("TRSs"). The Company's wholly owned subsidiary, NexPoint Diversified Real Estate Trust OP GP, LLC (the "OP GP"), is the sole general partner of the OP. As of September 30, 2025, there were 44,536,894.47 common units of the OP outstanding, of which 99.96% were owned by the Company, 3,359,593 Series A Preferred Units of the OP outstanding, of which 100.0% were owned by the Company, and 485,608 Series B Preferred Units of the OP, of which 100.0% were owned by the Company.
The Company is externally managed by NexPoint Real Estate Advisors X, L.P. (the “Adviser”), through an agreement dated July 1, 2022, amended on October 25, 2022, April 11, 2023, July 22, 2024 and September 19, 2025 (the “Advisory Agreement”), by and among the Company and the Adviser for a term that will expire on July 1, 2026 and successive one-year terms thereafter unless earlier terminated. The Adviser manages the day-to-day operations of the Company and provides investment management services. The Company had no employees as of September 30, 2025. All of the Company’s investment decisions are made by the Adviser, subject to general oversight by the Adviser’s investment committee and our board of trustees (the “Board”). The Adviser is wholly owned by NexPoint Advisors, L.P. (the “Sponsor” or “NexPoint”).
As a diversified REIT, the Company’s primary investment objective is to provide both current income and capital appreciation. Target underlying property types primarily include, but are not limited to, single-family rentals, multifamily, self-storage, life science, office, industrial, hospitality, net lease, retail and small-bay industrial. The Company may, to a limited extent, hold, acquire or transact in certain non-real estate securities.
2. Asset Acquisition
NHT Acquisition
On April 10, 2024, NexPoint Real Estate Partners, LLC (“NREP”), an entity advised by an affiliate of the Adviser, and Highland Capital Management, L.P. (“Highland”), a third party, entered into a Purchase Agreement ("Purchase Agreement") whereby Highland agreed to sell, among other things, 2,176,257 units (the “NHT Units”) of NexPoint Hospitality Trust (“NHT”) to NREP. The Purchase Agreement was funded in part by cash of $0.8 million provided to NREP by the Company that was allocated for the sale of the NHT Units. Then on April 19, 2024, the Company, NexPoint Real Estate Opportunities, LLC ("NREO"), a wholly owned subsidiary of the Company, and NREP entered into an Assignment of Interests Agreement whereby NREP distributed, assigned, conveyed, transferred, set over, and delivered to NREO its right to purchase the NHT Units under the Purchase Agreement and all of its rights, title and interest in, to and under the NHT Units, including all voting, consent and financial rights, free and clear of all liens and encumbrances (the “NHT Acquisition”). As a result, the Company owned 53.65% of the outstanding NHT Units and was determined to hold the controlling financial interest in NHT and as a result consolidated NHT. The NHT Acquisition was accounted for as an asset acquisition under Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 805, Business Combinations.
Because the Company did not wholly own NHT following the NHT Acquisition, the Company recognized a noncontrolling interest (“NCI”) of $6.9 million, which was recorded at fair value when the controlling financial interest was acquired. The Company also recorded an unrealized gain on its previously held interest in NHT of $3.9 million.
On November 22, 2024, the Company announced that it had entered into an Agreement and Plan of Merger (the “NHT Merger Agreement”) pursuant to which it would acquire the remaining outstanding NHT Units in a merger transaction (the “NHT Merger”). On February 21, 2025, NHT’s unitholders voted to approve the NHT Merger. On April 17, 2025, the Company consummated the NHT Merger in accordance with the NHT Merger Agreement.
As consideration for the NHT Merger, the Company issued 1,084,593 common shares to the former unitholders of NHT and caused the OP to issue 227,728.5 profits interest units to certain individuals employed by an affiliate of the Adviser as replacement awards for profits interest units they were previously granted by NHT and 19,881.2299 limited
10
partnership units to one of the members of NHT’s operating company. Additionally, the Company issued promissory notes to certain unitholders of NHT that may be deemed affiliates of the Company in an aggregate principal amount of approximately $0.8 million in lieu of common shares they otherwise would have been entitled to receive in consideration for the NHT Merger. Unitholders of NHT who elected to receive a cash payment for the redemption of their units received aggregate payments of approximately $76.0 thousand from NHT in a reorganization transaction consummated prior to the consummation of the NHT Merger. NHT also paid an aggregate of approximately $0.9 million to redeem certain deferred units held by its trustees prior to the consummation of the NHT Merger.
The accumulated cost of the NHT Acquisition was allocated to the acquired assets and liabilities based on their relative fair values as of April 10, 2024, as follows (in thousands):
Description
Land$22,673 
Buildings and improvements128,616 
Construction in progress3,613 
Furniture, fixtures, and equipment12,722 
Investments, at fair value5,000 
Cash and cash equivalents38,467 
Restricted cash5,065 
Prepaid and other assets4,001 
Right-of-use asset1,465 
Interest-rate cap1,064 
Mortgages payable(114,640)
Notes payable(70,529)
Accounts payable and other accrued liabilities(21,826)
Accrued real estate taxes(1,233)
Identifiable Net Assets Acquired$14,458 
3. Summary of Significant Accounting Policies
Basis of Accounting
Readers of this Quarterly Report on Form 10-Q ("Quarterly Report") should refer to the audited financial statements and notes to consolidated financial statements of the Company for the year ended December 31, 2024, which are included in our 2024 Annual Report on Form 10-K ("2024 Annual Report"), filed with the SEC and also available on our website (nxdt.nexpoint.com), since we have omitted from this Quarterly Report certain footnote disclosures which would substantially duplicate those contained in such audited financial statements. You should also refer to Note 3, Summary of Significant Accounting Policies, in the notes to consolidated financial statements in our 2024 Annual Report for further discussion of our significant accounting policies and estimates. Information contained on, or accessible through, our website is not incorporated by reference into and does not constitute a part of this Quarterly Report or any other report or documents we file or furnish with the SEC.
Reclassification of Prior Year Activity on the Consolidated Statement of Cash Flows
Certain reclassifications have been made within the consolidated statements of cash flows to proceeds from asset redemptions, proceeds from sale of investments, and proceeds from paydowns of investments for the nine months ended September 30, 2024 to be comparative to the consolidated statement of cash flows for the nine months ended September 30, 2025.
11
Income Taxes
I.U.S. REIT Status
The Company elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code"), and expects to continue to qualify as a REIT. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement to distribute annually at least 90% of its “REIT taxable income,” as defined by the Code, to its shareholders. As a REIT, the Company will be subject to federal income tax on its undistributed REIT taxable income and net capital gain and to a 4% nondeductible excise tax on any amount by which distributions it pays with respect to any calendar year are less than the sum of (1) 85% of its ordinary income, (2) 95% of its capital gain net income and (3) 100% of its undistributed income from prior years. The Company intends to operate in such a manner so as to qualify as a REIT, but no assurance can be given that the Company will operate in a manner so as to qualify as a REIT. Taxable income from certain non-REIT activities is managed through a TRS and is subject to applicable federal, state, and local income and margin taxes.
If the Company fails to meet these requirements, it could be subject to federal income tax on all of the Company’s taxable income at regular corporate rates for that year. The Company would not be able to deduct distributions paid to shareholders in any year in which it fails to qualify as a REIT. Additionally, the Company will also be disqualified from electing to be taxed as a REIT for the four taxable years following the year during which qualification was lost unless the Company is entitled to relief under specific statutory provisions. As of September 30, 2025, the Company believes it is in compliance with all applicable REIT requirements.
As a REIT for U.S. federal income tax purposes, the Company may deduct earnings distributed to shareholders against the income generated by our REIT operations. The Company continues to be subject to income taxes on the income of its taxable REIT subsidiaries. A reconciliation of the deferred tax asset (liability) for the periods indicated is as follows (in thousands):

As of September 30,
As of December 31,
20252024
NHF TRSNREO TRSNHT TRSsCombinedNHF TRSNREO TRSNHT TRSsCombined
Deferred Tax Assets$13,762 $565 $984 $15,311 $14,942 $290 $6,561 $21,793 
Valuation Allowance(9,449)— (984)(10,433)(10,487)— (6,535)(17,022)
Deferred Tax Liability— (2,272)— (2,272)— (2,127)(26)(2,153)
Deferred Tax Asset (Liability), net of Valuation Allowance$4,313 $(1,707)$— $2,606 $4,455 $(1,837)$— $2,618 
The Company’s tax provision for interim periods is determined using an estimate of its annual current and deferred effective tax rates, adjusted for discrete items. Our effective tax rates for the three and nine months ended September 30, 2025 and 2024 were 7.5%, (4.8)%, 0.5% and (3.4)%, respectively. Our effective tax rate differs from the U.S. federal statutory corporate tax rate of 21.0% primarily due to our REIT operations generally not being subject to federal income taxes.
The Company recognizes its tax positions and evaluates them using a two-step process. First, the Company determines whether a tax position is more-likely-than-not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Second, the Company will determine the amount of benefit to recognize and record the amount that is more likely than not to be realized upon ultimate settlement.
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The Company had no material unrecognized tax benefit or expense, accrued interest or penalties as of September 30, 2025 and 2024. The Company and its subsidiaries are subject to federal income tax as well as income tax of various state and local jurisdictions. The 2024, 2023, 2022 and 2021 tax years remain open to examination by tax jurisdictions to which the Company and its subsidiaries are subject. When applicable, the Company recognizes interest and/or penalties related to uncertain tax positions on its Consolidated Statements of Operations and Comprehensive Income (Loss). The Company has not recorded any uncertain tax positions for the nine months ended September 30, 2025 and 2024.
A reconciliation of the statutory income tax provisions to the effective income tax provisions for the periods indicated is as follows (in thousands):
For the Three Months Ended September 30,For the Nine Months Ended September 30,
202520242025
2024
Expected tax at statutory rate$(2,796)21.0 %$(3,091)21.0 %$(19,306)21.0 %$(9,647)21.0 %
Non-taxable REIT income2,222 -16.7 %4,776 -32.4 %25,472 -27.7 %16,047 -34.9 %
Change in valuation allowance(422)3.2 %(985)6.7 %(6,589)7.2 %(4,847)10.6 %
Total provision$(995)7.5 %$700 -4.8 %$(423)0.5 %$1,553 -3.4 %
II.Canadian mutual fund status
Through April 17, 2025, NHT was a mutual fund trust pursuant to the Income Tax Act (Canada) (the “Tax Act”). Under the-then current tax legislation, a mutual fund trust that was not a specified investment flow-through trust (“SIFT”) pursuant to the Tax Act generally was entitled to deduct distributions of taxable income such that it was not liable to pay Canadian income taxes provided that its taxable income was fully distributed to unitholders. On April 17, 2025, in connection with the merger of NHT into NXDT, NHT ceased to exist as a separate entity and no longer qualified for mutual fund trust status. Accordingly, the mutual fund trust provisions described above are no longer applicable subsequent to the merger date.
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4. Investments in Real Estate Subsidiaries
The Company conducts its operations through the OP which owns several real estate properties through single asset limited liability companies that are special purpose entities (“SPEs”). The Company consolidates the SPEs that it controls as well as any VIEs where it is the primary beneficiary. All of the properties the SPEs own are consolidated in the Company’s consolidated financial statements. The assets of each entity can only be used to settle obligations of that particular entity, and the creditors of each entity have no recourse to the assets of other entities or the Company.
As of September 30, 2025, the Company, through the OP, owned eight properties through SPEs, including four in the Diversified segment, and four in the Hospitality segment. The following table represents the Company’s ownership in each property by virtue of its consolidation of the SPEs that directly own the title to each property as of September 30, 2025 and December 31, 2024:
Effective Ownership Percentage at
Property NameLocationYear AcquiredSeptember 30, 2025December 31, 2024
White Rock CenterDallas, Texas2013100 %100 %
5916 W Loop 289Lubbock, Texas2013100 %100 %
Cityplace TowerDallas, Texas2018100 %100 %
NexPoint Dominion Land, LLC(1)Plano, Texas2022100 %100 %
Dallas Hilton Garden InnDallas, Texas2014(2)100 %54 %
St. Petersburg MarriottSt. Petersburg, Florida2018(2)100 %54 %
Hyatt Place Park CityPark City, Utah2022(2)100 %54 %
Bradenton Hampton Inn & SuitesBradenton, Florida2022(2)100 %54 %
(1)NexPoint Dominion Land, LLC owns 100% of 21.5 acres of undeveloped land in Plano, Texas.
(2) Reflects the date NHT or its predecessor acquired the property.
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5. Consolidated Real Estate Investments
As of September 30, 2025, the major components of the Company’s investments in real estate held by SPEs the Company consolidates, which are included in "Consolidated Real Estate Investments" on the Consolidated Balance Sheets, were as follows (in thousands):
Operating PropertiesLandBuildings and
Improvements		Intangible Lease AssetsIntangible Lease
Liabilities		Right of use assetsConstruction in ProgressFurniture, Fixtures, and
Equipment		Totals
White Rock Center$1,315 $10,597 $1,921 $(101)$— $— $13 $13,745 
5916 W Loop 2891,081 2,938 — — — — — 4,019 
Cityplace Tower18,813 195,416 9,058 (6,669)— 19,437 356 236,411 
NexPoint Dominion Land, LLC26,500 — — — — — — 26,500 
Dallas Hilton Garden Inn4,115 24,818 — — — 81 1,548 30,562 
St. Petersburg Marriott5,829 33,798 — — — 4,106 2,389 46,122 
Hyatt Place Park City3,737 20,296 — — — 876 3,166 28,075 
Bradenton Hampton Inn & Suites837 25,637 — — 1,465 281 2,928 31,148 
HUB Research Triangle Park— — — — 579 — — 579 
Accumulated depreciation and amortization— (34,636)(9,014)4,436 (58)— (2,528)(41,800)
Total Operating Properties$62,227 $278,864 $1,965 $(2,334)$1,986 $24,781 $7,872 $375,361 
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As of December 31, 2024, the major components of the Company’s investments in real estate held by SPEs the Company consolidates, which are included in "Consolidated Real Estate Investments" on the Consolidated Balance Sheets, were as follows (in thousands):
Operating PropertiesLandBuildings and
Improvements		Intangible Lease AssetsIntangible Lease
Liabilities		Right of use assetsConstruction in ProgressFurniture, Fixtures, and
Equipment		Totals
White Rock Center$1,315 $10,568 $1,921 $(101)$— $— $13 $13,716 
5916 W Loop 2891,081 2,938 — — — — — 4,019 
Cityplace Tower18,812 195,408 9,058 (6,669)— 19,053 356 236,018 
NexPoint Dominion Land, LLC26,500 — — — — — — 26,500 
Dallas Hilton Garden Inn4,116 24,631 — — — 96 1,475 30,318 
St. Petersburg Marriott5,829 33,715 — — — 3,951 2,301 45,796 
Hyatt Place Park City3,737 19,876 — — — 877 3,146 27,636 
Bradenton Hampton Inn & Suites837 25,064 — — 1,465 712 2,833 30,911 
HUB Research Triangle Park— — — — 711 — — 711 
Accumulated depreciation and amortization— (25,230)(8,353)3,631 (29)— (1,390)(31,371)
Total Operating Properties$62,227 $286,970 $2,626 $(3,139)$2,147 $24,689 $8,734 $384,254 
Held for Sale Properties
Plano Homewood Suites$2,106 $5,394 $— $— $— $28 $738 $8,266 
Las Colinas Homewood Suites2,292 10,153 — — — 313 1,004 13,762 
Addison Property2,351 4,577 — — — 518 804 8,250 
Accumulated depreciation and amortization— (218)— — — — (170)(388)
Total Held for Sale Properties$6,749 $19,906 $— $— $— $859 $2,376 $29,890 
Depreciation expense was $3.5 million and $10.5 million for the three and nine months ended September 30, 2025 and $3.9 million and $9.9 million for the three and nine months ended September 30, 2024. Amortization expense related to the Company’s intangible lease assets was $0.2 million and $0.7 million for the three and nine months ended September 30, 2025 and $0.4 million and $1.0 million for the three and nine months ended September 30, 2024. Amortization expense related to the Company's intangible lease liabilities was $0.3 million and $0.8 million for the three and nine months ended September 30, 2025 and $0.6 million and $1.2 million for the three and nine months ended September 30, 2024. The net amount amortized as an increase to rental revenue for capitalized above and below-market lease intangibles was $0.2 million and $0.7 million for the three and nine months ended September 30, 2025 and $0.6 million and $1.1 million for the three and nine months ended September 30, 2024. Impairment loss consists of $0 million and $1.8 million on real estate held for sale, respectively, for the three and nine months ended September 30, 2025. Fair value was determined based on a signed purchase and sale agreement with an unrelated third-party in an arm’s-length transaction. Because the agreement represents observable market inputs, the resulting valuation was classified within Level 2 of the fair-value hierarchy. Impairment loss consists of $5.1 million
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relating to Las Colinas Homewood Suites and $1.0 million relating to Plano Homewood Suites, which was classified as held for sale, for the three and nine months ended September 30, 2024.
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Acquisitions
There were no acquisitions by the Company for the nine months ended September 30, 2025. During the nine months ended September 30, 2024, as a result of the NHT Acquisition, the Company consolidated the following properties: Dallas Hilton Garden Inn, Addison Property, Plano Homewood Suites, Las Colinas Homewood Suites, St. Petersburg Marriott, Hyatt Place Park City, Bradenton Hampton Inn & Suites.
Dispositions
The Company sold three properties during the nine months ended September 30, 2025 as detailed in the table below (in thousands). The Company did not sell any properties during the nine months ended September 30, 2024.
Property NameLocationDate of SaleSales PriceNet Cash ProceedsGain (Loss) on Sales of Real Estate
Plano Homewood SuitesPlano, TexasJanuary 24, 2025$8,300 $8,154 $11 
Addison PropertyAddison, TexasApril 18, 2025$6,400 $6,308 $(88)
Las Colinas HomeWood SuitesLas Colinas, TexasApril 8, 2025$14,000 $13,844 $114 
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6. Debt
The following table contains summary information of the Company’s debt as of September 30, 2025 and December 31, 2024 (dollars in thousands):
Outstanding principal as of
DescriptionTypeSeptember 30, 2025December 31, 2024Interest RateMaturity Date
Mortgages Payable
Cityplace Note A-1 (1)Floating$98,175 $99,435 6.59 %3/8/2026
Cityplace Note A-2 (1)Floating12,359 12,517 6.59 %3/8/2026
Cityplace Note B-1 (1)Floating21,476 21,751 10.59 %3/8/2026
Cityplace Note B-2 (1)Floating2,703 2,738 10.59 %3/8/2026
Cityplace Mezz Note-1 (1)Floating3,068 3,107 10.59 %3/8/2026
Cityplace Mezz Note-2 (1)Floating386 391 10.59 %3/8/2026
NHT - Note A Loan (2)Floating28,068 50,188 6.15 %2/8/2026 (7)
NHT - Note B Loan (2)Floating13,515 24,165 10.61 %2/8/2026 (7)
NHT - PC & B Loan (3)Floating38,579 37,875 8.85 %2/5/2026
White Rock Center (4)Fixed10,000 10,000 10.00 %8/2/2029
Notes Payable
Dominion NoteFloating13,250 13,250 7.25 %8/8/2026
Raymond James LoanFloating1,250 11,000 8.53 %10/6/2025 (8)
NexBank Revolver (5)Floating13,470 16,485 7.75 %11/21/2025
Convertible Notes Due to AffiliatesFixed57,986 57,986 
2.25% - 7.50%
2/14/2027 - 9/30/2042
Promissory Notes Due to AffiliatesFixed775 — 7.33 %4/17/2027
Prime Brokerage Borrowing
Jefferies Line of CreditFloating5,952 1,222 4.59 %N/A (9)
Total Debt$321,012 $362,110 
Fair market value adjustment, net of accumulated amortization (6)(6,444)(7,740)
Deferred financing costs(392)(315)
$314,176 $354,055 
(1)This debt is secured by the following property: Cityplace Tower.
(2)This debt is secured by the following properties: HGI Property and the St. Pete Property.
(3)This debt is secured by the following properties: Park City and Bradenton.
(4)This debt is secured by the following property: White Rock Center.
(5)This debt is secured by the following property and investments: 5916 W Loop 289 and IQHQ, LP (“IQHQ LP”).
(6)The Company recorded a valuation adjustment of the Convertible Notes Due to Affiliates upon the consolidation of NHT to adjust for the difference between the fair value and the outstanding principal amount of the debt. The difference is amortized into interest expense.
(7)Subsequent to September 30, 2025, the Company extended the maturity date of the debt to February 8, 2026.
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(8)
On October 6, 2025, the Company repaid the remaining $1.3 million principal balance and fully extinguished the debt.
(9)
This debt balance has no stated maturity date.
Cityplace Tower Debt
The Company has debt on the Cityplace Tower pursuant to a Loan Agreement, originally dated August 15, 2018 and subsequently amended (the “Loan Agreement”). The debt is limited recourse to the Company and encumbers the property. On April 15, 2025, the lender agreed to defer the maturity of the Cityplace Tower debt by twelve months to March 8, 2026. The debt restructuring per the terms of the Fourteenth Omnibus Amendment Agreement was considered a debt modification. The purpose of the deferral was to allow for continued discussions around refinancing the debt. Management recognizes that finding an alternative source of funding is necessary to repay the debt by the maturity date. Management is evaluating multiple options to fund the repayment of the $138.2 million principal balance outstanding as of September 30, 2025, including refinancing the debt, securing additional equity or debt financing, selling a portion of the portfolio, or any combination thereof. Management believes that there is sufficient time before the maturity date and that the Company has sufficient access to capital to ensure the Company is able to meet its obligations as they become due.
The weighted average interest rate of the Company’s debt related to its Cityplace Tower investment was 7.39% as of September 30, 2025 and 7.65% as of December 31, 2024. The one-month secured overnight financing rate (“SOFR”) was 4.31% as of September 30, 2025 and 4.33% as of December 31, 2024.
The Loan Agreement contains customary events of default, including defaults in the payment of principal or interest, defaults in compliance with the covenants contained in the documents evidencing the loan, defaults in payments under any other security instrument covering any part of the property, whether junior or senior to the loan, and bankruptcy or other insolvency events.
White Rock Center Debt
On August 2, 2024, the Company, through Freedom LHV, LLC (“Freedom LHV”), an indirect subsidiary of the Company, borrowed approximately $10.0 million from The Ohio State Life Insurance Company (“OSL”). The note bears interest at an annual fixed rate of 10.0% and matures on August 2, 2029. The debt is secured by certain real property held by Freedom LHV and is guaranteed by the Company.
Dominion Note
On August 9, 2022, the Company borrowed approximately $13.3 million from the seller, Gabriel Legacy, LLC to finance its acquisition of 21.5 acres of land in Plano, Texas held through NexPoint Dominion Land, LLC, a wholly owned subsidiary of the OP. The note (the “Dominion Note”) bears interest at an annual rate equal to the WSJ Prime Rate and initially matured on August 8, 2025, with two one-year extension options. On August 8, 2025, the Company elected to use one of the one-year extensions under the Dominion Note to extend the maturity date to August 8, 2026. One additional one-year extension option remains available under the terms of the Dominion Note.
Mortgages Payable, Hospitality
On February 28, 2019, a subsidiary of the Company, entered into a borrowing arrangement for a $59.4 million Note A loan (the “Note A Loan”) and a $28.6 million Note B loan (the “Note B Loan”) with ACORE Capital Mortgage, LP ("ACORE"). The Note A Loan and Note B Loan are secured by the HGI Property and the St. Pete Property. The Note A Loan bears interest at a variable rate equal to the 30-day SOFR plus 2.00% and matures on November 8, 2025. The Note B Loan bears interest at a variable rate equal to the 30-day SOFR plus 6.46% and matures on November 8, 2025. The Note A Loan and Note B Loan principal amounts reflected their fair values on the date of the NHT Acquisition. As of September 30, 2025, the Note A Loan and the Note B Loan had an outstanding balance of $28.1 million and $13.5 million and effective interest rates of 6.15% and 10.61%, respectively. For the nine months ended September 30, 2025, our subsidiary paid $1.7 million and $1.4 million in interest on the Note A Loan and the Note B Loan, respectively. Subsequent to September 30, 2025, on November 7, 2025, the Company executed a loan modification agreement related to the Note A Loan and Note B Loan extending the maturity date of each to February 8, 2026. See Note 18.
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On February 15, 2022, in connection with the acquisition of the Park City and Bradenton properties, the Company, through its subsidiaries entered into a borrowing arrangement for a $39.3 million loan (the “PC & B Loan”) with AREEIF Lender, LLC. The PC & B Loan principal amount reflected its fair value on the date of the NHT Acquisition. The outstanding balance on the PC & B Loan as of September 30, 2025 was $38.6 million, with $0.7 million available to draw on for renovation purposes as of September 30, 2025. In connection with the NHT Merger, a subsidiary of the Company assumed the obligations under the debt.
The loan documents, including the guaranty, for the PC & B Loan and the Note A Loan and Note B Loan contain customary representations, warranties, and events of default, which require a subsidiary of the Company to comply with affirmative and negative covenants. As of September 30, 2025, the Company is in compliance with all debt covenants.
Notes Payable, Hospitality
NHT and certain of its subsidiaries also entered into several convertible notes with affiliates of NexPoint Real Estate Advisors VI, L.P. (the “NHT Adviser”) since January 8, 2019. On April 17, 2025, the notes were amended and restated in connection with the closing of the NHT Merger and the obligations thereunder were assumed by a NXDT Hospitality Holdco, LLC (“Hospitality Holdco”), a wholly-owned subsidiary of the Company. The fixed rate notes have rates ranging from 2.25% to 7.50% (which were market interest rates at the time of their issuance) while outstanding and mature between February 14, 2027 and September 30, 2042. For $0.1 million of the notes, the principal and interest is convertible into membership interest units of Hospitality Holdco (the “Hospitality Holdco Units”) at the fair market price of the Hospitality Holdco Units at the time of conversion any time during the term of the note. For $44.2 million of the notes, the principal of the notes is convertible into Hospitality Holdco Units, at prices ranging from $1.44 to $2.50 for a period of five years from its date of issuance (with the expiration of conversion rights ranging from June 25, 2026 to September 30, 2027). One note issued to Highland Global Allocation Fund in the amount of $8.5 million, and two notes issued to Highland Opportunities and Income Fund in the aggregate amount of $5.2 million are not convertible into Hospitality Holdco Units. The relative fair value of the convertible notes did not reflect the outstanding principal on the date of the NHT Acquisition. The difference between the fair value and the principal amount of debt is amortized into interest expense over the remaining term. As of September 30, 2025, the net carrying amount of the convertible notes due to affiliates of the NHT Adviser was $51.5 million.
Promissory Notes Payable to Affiliates
In connection with the NHT Merger, on April 17, 2025, several promissory notes were issued to certain affiliates of the Company due to a limitation on common shares issued to affiliates of the issuer by the New York Stock Exchange. The aggregate principal amount of such promissory notes was $0.8 million, each with an interest rate of 7.334% and maturing on April 17, 2027, with two one-year extension options. As of September 30, 2025, the carrying amount of the promissory notes due to affiliates under the notes was $0.8 million.
Credit Facility
On January 8, 2021, the Company entered into a $30.0 million credit facility (the "Credit Facility") with Raymond James Bank, N.A. and drew the full balance. Prior to October 20, 2023, the Company paid down the outstanding amount under the Credit Facility to $1.0 million. Amounts repaid by the Company under the Credit Facility could not be reborrowed. On October 20, 2023, Raymond James Bank, N.A. agreed to amend the terms of the Credit Facility, which, among other things, extended the maturity date to October 6, 2025 and amended the credit limit to $20.0 million. During the nine months ended September 30, 2025, the Company paid down $9.8 million on the Credit Facility. As of September 30, 2025, the Credit Facility had an outstanding balance of $1.3 million and bore interest at the one-month SOFR plus 4.25%. Subsequent to September 30, 2025, on October 6, 2025, the Company repaid the remaining $1.3 million principal balance and fully extinguished the debt under the Credit Facility. See Note 18.
Revolving Credit Facility
On May 22, 2023, the Company entered into a $20.0 million revolving credit facility (the "NexBank Revolver") with NexBank, in the initial principal balance of $20.0 million, with the option for the Company to receive additional disbursements thereunder up to a maximum of $50.0 million, a maturity date of May 21, 2024 and the option to extend the maturity two times by six months. On May 21, 2024, the Company elected to extend the maturity by six months to November 21, 2024. On November 21, 2024, the Company elected to extend the maturity by six months to May 21, 2025. On May 15, 2025, the Company amended the NexBank Revolver agreement to extend the maturity date to November 21,
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2025, and to provide for three additional six-month extension options. As of September 30, 2025, the NexBank Revolver bears interest at one-month SOFR plus 3.50% and matures on November 21, 2025. Management expects to elect one of the extension options to extend the maturity date of the debt to May 21, 2026. As of September 30, 2025, the NexBank Revolver had an outstanding balance of $13.5 million.
Deferred Financing Costs
The Company defers costs incurred in obtaining financing and amortizes the costs over the terms of the related loans using the straight-line method, which approximates the effective interest method. Deferred financing costs, net of amortization, are recorded as a reduction from the related debt on the Company’s Consolidated Balance Sheets. Upon repayment of or in conjunction with a material change in the terms of the underlying debt agreement, any unamortized costs are charged to loss on extinguishment of debt and modification costs.
Prime Brokerage Borrowing
Effective July 2, 2022, the Company entered a prime brokerage account with Jefferies to hold securities owned by the Company (the "Prime Brokerage"). The Company from time to time borrows against the value of these securities. As of September 30, 2025, the Company had a margin balance of approximately $6.0 million outstanding with Jefferies bearing interest at the Overnight Bank Funding Rate plus 0.50%. Securities with a fair value of approximately $12.4 million are pledged as collateral against this margin balance. This arrangement has no stated maturity date. Due to the short-term nature of the debt, the fair value of the debt is approximately the outstanding balance.
Schedule of Debt Maturities
The aggregate scheduled maturities, including amortizing principal payments, of total debt for the next five calendar years subsequent to September 30, 2025 are as follows (in thousands):
Mortgages PayableCredit FacilitiesNotes PayablePrime Brokerage BorrowingTotal
2025$41,583 $14,720 $— $— $56,303 
2026176,746 — 13,250 — 189,996 
2027— — 21,275 — 21,275 
2028— — — — — 
202910,000 — — — 10,000 
Thereafter— — 37,486 5,952 43,438 
Total$228,329 $14,720 $72,011 $5,952 $321,012 

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7. Variable Interest Entities
As of September 30, 2025, and December 31, 2024, the Company does not consolidate the investments below as it does not have a controlling financial interest in these investments:
EntitiesInstrumentAsset TypePercentage Ownership as of September 30, 2025Percentage Ownership as of December 31, 2024Relationship as of September 30, 2025Relationship as of December 31, 2024
Unconsolidated Entities:
NexPoint Storage Partners, Inc.Common stockSelf-storage52.7 %52.8 %VIEVIE
NexPoint Storage Partners Operating Company, LLCLLC interestSelf-storage33.8 %29.5 %VIEVIE
Perilune Aero Equity Holdings One, LLCLLC interestAircraft16.4 %16.4 %VIEVIE
Sandstone Pasadena Apartments, LLCLLC InterestMultifamily50.0 %50.0 %VIEVOE
Life Sciences II DSTDST investmentLife science25.8 %25.8 %VIEVIE
Semiconductor DSTDST investmentIndustrial19.2 %16.8 %VIEVIE
Capital Acquisitions Partners, LLCLLC interestMultifamily20.9 %20.9 %VIEVIE
IQHQ Holdings, LPLP interestLife science1.1 %1.2 %VIEVIE
NexPoint Real Estate Finance Operating Partnership, L.P.LP interestMortgage15.6 %15.6 %VIEVIE
VineBrook Homes Operating Partnership, L.P.LP interestSingle-family rental11.7 %11.4 %VIEVIE
NexPoint SFR Operating Partnership, L.P.LP interestSingle-family rental27.7 %30.8 %VIEVIE
NexAnnuity Holdings, Inc.Preferred SharesAnnuities100.0 %(1)100.0 %VIEVIE
AMS C-Store JV, LLCPreferred SharesRetail100.0 %(2)N/AVIEN/A
(1) The Company owns 100% of the preferred stock of NexAnnuity Holdings, Inc. ("NHI"), but it does not own any of the outstanding common stock of NHI.
(2) The Company owns 100% of the preferred units of AMS C-Store JV, LLC, but it does not own any of the outstanding common units of AMS C-Store JV, LLC.
The maximum exposure to loss of value for the VIE investments includes both the carrying value of each investment, as presented in the tables in Note 8 and 10, and the Company’s exposure through additional arrangements. The Company has provided guarantees on certain debt obligations of some of the VIEs, see Note 14 for further details.
Consolidated VIEs
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The Company did not have any consolidated VIEs as of September 30, 2025 and December 31, 2024.
8. Equity Method Investments
Below is a summary of the Company’s equity method investments as of September 30, 2025 (dollars in thousands):
Investee NameInstrumentAsset TypeNXDT Percentage OwnershipInvestment BasisShare of Investee's Net Assets (1)Basis Difference (2)Share of Earnings (Loss)
Sandstone Pasadena Apartments, LLCLLC interestMultifamily50.0 %$9,023 $(9,590)$18,613 $166 
AM Uptown Hotel, LLCLLC interestHospitality60.0 %(3)(1,421)387 (1,808)91 
Las Vegas Land Owner, LLCLLC interestLand77.0 %(4)12,323 12,324 (1)2 
Perilune Aero Equity Holdings One, LLCLLC interestAircraft16.4 %(8)12,625 11,756 869 153 
Capital Acquisitions Partners, LLCLLC interestMultifamily20.9 %633 1,717 (1,084)226 
$33,183 $16,594 $16,589 $638 
Below is a summary of the Company's investments as of September 30, 2025 that qualify for equity method accounting for which the Company has elected to account for using the fair value option. Amounts are included in "Investments, at fair value" on the Consolidated Balance Sheets.
Investee NameInstrumentAsset TypeNXDT Percentage OwnershipFair Value
NexPoint Real Estate Finance Operating Partnership, L.P.LP interestMortgage15.6 %(6)$69,044
NexPoint Real Estate Finance, Inc.Common stockMortgage11.8 %(6)29,778
Claymore Holdings, LLCLLC interestN/A50.0 %(5)— 
LLV Holdco, LLCLLC interestLand26.8 %2,997 
NexPoint Storage Partners, Inc.Common stockSelf-storage52.7 %(3)53,536
NexPoint Storage Partners Operating Company, LLCLLC interestSelf-storage33.8 %36,952 
VineBrook Homes Operating Partnership, L.P.LP interestSingle-family rental11.7 %(6)128,800 
NexPoint SFR Operating Partnership, L.P.LP interestSingle-family rental27.7 %29,384 
AMS C-Store JV, LLCPreferred stockRetail100.0 %(9)17,620 
$368,111 
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Below is a summary of the Company’s equity method investments as of December 31, 2024 (dollars in thousands):
Investee NameInstrumentAsset TypeNXDT Percentage OwnershipInvestment BasisShare of Investee's Net Assets (1)Basis Difference (2)Share of Earnings (Loss)
Sandstone Pasadena Apartments, LLCLLC interestMultifamily50.0 %$10,055 $(9,590)$19,645 $70 
AM Uptown Hotel, LLCLLC interestHospitality60.0 %(3)18,081 14,970 3,111 (155)
Las Vegas Land Owner, LLCLLC interestLand77.0 %(4)12,321 12,321 — 10 
Perilune Aero Equity Holdings One, LLCLLC interestAircraft16.4 %(8)13,565 10,488 3,077 1,414 
Capital Acquisitions Partners, LLCLLC interestMultifamily20.9 %407 1,717 (1,310)126 
$54,429 $29,906 $24,523 $1,465 
Below is a summary of the Company's investments as of December 31, 2024 that qualify for equity method accounting for which the Company has elected to account for using the fair value option. Amounts are included in "Investments, at fair value" on the Consolidated Balance Sheets.
Investee NameInstrumentAsset TypeNXDT Percentage OwnershipFair Value
NexPoint Real Estate Finance Operating Partnership, L.P.LP interestMortgage15.6 %(6)$76,396
NexPoint Real Estate Finance, Inc.Common stockMortgage12.0 %(6)32,949
Claymore Holdings, LLCLLC interestN/A50.0 %(5)— 
Allenby, LLCLLC interestN/A50.0 %(5)— 
Haygood, LLCLLC interestN/A31.0 %(7)— 
LLV Holdco, LLCLLC interestLand26.8 %2,606 
NexPoint Storage Partners, Inc.Common stockSelf-storage52.8 %(3)62,709
NexPoint Storage Partners Operating Company, LLCLLC interestSelf-storage29.5 %34,172 
VineBrook Homes Operating Partnership, L.P.LP interestSingle-family rental11.4 %(6)151,706 
NexPoint SFR Operating Partnership, L.P.LP interestSingle-family rental30.8 %37,953 
$398,491 
(1)Represents the Company’s percentage share of net assets of the investee per the investee’s books and records.
(2)Represents the difference between the basis at which the investments in unconsolidated ventures are carried by the Company and the Company's proportionate share of the equity method investee's net assets. To the extent that the Company’s cost basis is different from the basis reflected at the joint venture level, the basis difference is generally amortized over the lives of the related assets and liabilities, and such amortization is included in the Company’s share of equity in earnings of the joint venture.
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(3)The Company owns greater than 50% of the outstanding common equity but is not deemed to be the primary beneficiary or have a controlling financial interest of the investee and as such, accounts for the investee using the equity method.
(4)The Company owns 100% of Las Vegas Land Owner, LLC which owns 77% of a joint venture that owns an 8.5 acre tract of land (the "Tivoli North Property"). Through a tenants in common arrangement, the Company shares control and as such accounts for this investment using the equity method.
(5)The Company has a 50% non-controlling interest in Claymore Holdings, LLC (“Claymore”) and Allenby, LLC, (“Allenby”). The Company has determined it is not the primary beneficiary and does not consolidate these entities.
(6)The Company owns less than 20% of the investee but has significant influence due to members of the management team serving on the board of the investee or its parent and as such, accounts for the investee using the equity method.
(7)The Company has a 31% non-controlling interest in Haygood, LLC, (“Haygood”). The Company has determined it is not the primary beneficiary and does not consolidate this entity.
(8)The Company owns less than 20% of the investee but has significant influence due to the legal nature of a partnership that implies an inherent right to influence the operating and financial policies of the partnership.
(9)The Company owns 100% of the preferred units in AMS C-Store JV, LLC but is not deemed to be the primary beneficiary or have a controlling financial interest of the investee and as such, accounts for the investee using the equity method.
Marriott Uptown Basis
As of September 30, 2025, the Company held an equity method investment in AM Uptown, LLC (“Marriott Uptown”). The Company accounts for this investment under the equity method of accounting, as it has the ability to exercise significant influence over operating and financial policies.
During the three months ended June 30, 2025, the Company received cash distributions of $2.2 million from Marriott Uptown. These distributions exceeded the Company’s equity method investment balance, which was $0.8 million as of March 31, 2025. Because the Company has continuing obligations to Marriott Uptown, including a guarantee of certain recourse carve-outs, commonly referred to as “bad boy” guarantees, the excess of distributions over the carrying value of the investment was not recognized as a gain. Instead, the Company recorded a liability of $1.4 million, which is presented within “Accounts payable and other accrued liabilities” on the Consolidated Balance Sheets.
The Company will continue to evaluate the investment for indications of other-than-temporary impairment and will assess whether its obligations under the guarantee require recognition of additional liabilities.
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Significant Equity Method Investments
For its interim reporting, the Company assesses and presents summarized financial information for its significant equity method investments in accordance with Rule 10-01(b)(1) of Regulation S-X. The Company reports the financial information on a three-month lag to align with the availability of investee financials. VineBrook Homes Trust, Inc. ("VineBrook") and NexPoint Storage Partners, Inc. (“NSP”) do not prepare standalone financials for their operating companies as all operations and investments are owned through their operating companies and are consolidated by the corporate entities.
The table below presents summarized statement of operations for the six months ended June 30, 2025 for the Company’s equity method investments (dollars in thousands):
VineBrookNSP
Revenues
Rental income$181,224 $60,026 
Net interest income— 650 
Other income5,741 2,661 
Total revenues186,965 63,337 
Expenses
Total expenses298,470 53,608 
Gain (loss) on sales of real estate2,381 — 
Other income (expense)9 (36,965)
Unrealized gain (loss) on derivatives— — 
Total comprehensive income (loss)$(109,115)$(27,236)
There were no significant equity method investments for the nine months ended September 30, 2024.
9. Fair Value of Financial Instruments
The table below summarizes the Company’s assets within the valuation hierarchy carried at fair value on a recurring basis as of September 30, 2025 (in thousands):
Fair Value
Level 1Level 2Level 3Total
Assets
Bond$— $44 $— $44 
Common stock42,579 — 131,299 173,878 
Convertible notes— — 11,963 11,963 
LLC interest— — 57,569 57,569 
LP interest— 69,045 158,184 227,229 
Preferred Shares— — 74,173 74,173 
Rights and warrants— 1,788 — 1,788 
Senior loan— 50 46,416 46,466 
$42,579 $70,927 $479,604 $593,110 
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The table below summarizes the Company’s assets within the valuation hierarchy carried at fair value on a recurring basis as of December 31, 2024 (in thousands):
Fair Value
Level 1Level 2Level 3Total
Assets
Bond$— $62 $— $62 
Common stock46,436 — 157,828 204,264 
Convertible notes— — 20,846 20,846 
LLC interest— — 36,777 36,777 
LP interest— 76,396 189,659 266,055 
Preferred Shares— — 69,895 69,895 
Rights and warrants— 1,788 — 1,788 
Senior loan— 52 43,693 43,745 
$46,436 $78,298 $518,698 $643,432 
    
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The table below sets forth a summary of changes in the Company’s Level 3 assets (assets measured at fair value using significant unobservable inputs) for the nine months ended September 30, 2025 (in thousands):
December 31, 2024Contributions/
Purchases		Paid in-
kind
dividends		Transfer Into (Out of) Level 3Redemptions/
conversions		Return of capitalRealized
gain/(loss)		Unrealized gain/(loss)September 30, 2025
Common stock$157,828 $— $— $— $(3,688)$— $1,511 $(24,352)$131,299 
Convertible notes20,846 — — — (9,194)— — 311 11,963 
LLC interest36,777 25,120 1,384 — (3,996)— 3,462 (5,178)57,569 
LP interest189,659 1,979 — — — — — (33,454)158,184 
Preferred Shares69,895 — 4,278 — — — — — 74,173 
Senior loan43,693 — 3,847 — (1,422)— 2 296 46,416 
Total$518,698 $27,099 $9,509 $— $(18,300)$— $4,975 $(62,377)$479,604 
The table below sets forth a summary of changes in the Company’s Level 3 assets (assets measured at fair value using significant unobservable inputs) for the nine months ended September 30, 2024 (in thousands):
December 31, 2023Contributions/
Purchases		Paid in-
kind
dividends		Transfer Into (Out of) Level 3Investments (Eliminated) Acquired Through Consolidation¹Redemptions/
conversions		Return of capitalRealized
gain/(loss)		Unrealized gain/(loss)September 30, 2024
CLO$1,215 $— $— $— $— $— $(1,266)$(22,735)$22,786 $— 
Common stock176,256 904 — — (7,757)— — — (18,330)151,073 
Convertible notes42,251 — — — (21,129)— — — (62)21,060 
LLC interest39,399 564 — — — — — — 2,935 42,898 
LP interest195,898 4,818 — — — — — — (4,881)195,835 
Preferred Shares66,268 — 3,956 — — (1,700)— — — 68,524 
Senior loan46,353 6,596 3,217 — — (14,343)— 574 (174)42,223 
Total$567,640 $12,882 $7,173 $— $(28,886)$(16,043)$(1,266)$(22,161)$2,274 $521,613 
(1)    As a result of the NHT consolidation, certain investments were eliminated or acquired.
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The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following is a summary of the significant unobservable inputs used in the fair valuation of assets categorized within Level 3 of the fair value hierarchy as of September 30, 2025.
CategoryValuation TechniqueSignificant Unobservable InputsInput Value(s)
(Arithmetic Mean)		Fair Value
Common StockMarket ApproachUnadjusted Price/MHz-PoP$0.10—$1.25$(0.64)$131,299 
Discounted Cash FlowDiscount Rate7.00%—14.00%(9.50)%
Market Rent (per sqft)$13.00—$42.50$(27.75)
NAV ApproachDiscount Rate10.00%
NAV per Share$5.85
Multiple of EBITDA
3.00x
—
4.25x
(3.63)x
Recent TransactionImplied Enterprise Value from Transaction Price ($mm)$1,258.50
Convertible NotesDiscounted Cash FlowDiscount Rate6.08%—8.08%(7.08)%11,963 
LLC InterestDiscounted Cash FlowDiscount Rate7.00%—26.00%(12.5)%57,569 
Market Rent (per sqft)$13.00—$42.50$(27.75)
Capitalization Rate5.25%
LP InterestMarket ApproachCapitalization Rate5.25%—5.50%(5.375)%158,184 
Direct Capitalization ApproachDiscount Rate(8.04)%
Terminal Capitalization Rate6.03%
NAV ApproachDiscount Rate5.00%—10.00%(7.50)%
NAV per Share4.50%—5.00%(4.75 %)
Preferred SharesLiquidation AnalysisPar$1,00074,173 
Senior LoanDiscounted Cash FlowDiscount Rate13.25%—15.00%(14.13)%46,416 
Total$479,604 
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The following is a summary of the significant unobservable inputs used in the fair valuation of assets categorized within Level 3 of the fair value hierarchy as of December 31, 2024.
CategoryValuation TechniqueSignificant Unobservable InputsInput Value(s)
(Arithmetic Mean)		Fair Value
Common StockMarket ApproachUnadjusted Price/MHz-PoP$0.10—$0.90$(0.48)$157,828 
Discounted Cash FlowDiscount Rate7.00%—14.50%(9.63)%
Market Rent (per sqft)$13.00—$42.50$(27.75)
NAV ApproachDiscount Rate10.00%
NAV per Share12.75
Multiple of EBITDA
3.00x
—
4.25x
(3.63)x
Recent TransactionImplied Enterprise Value from Transaction Price ($mm)$1,149.00
N/A$25.31—$28.00$(26.66)
Discount to NAV(30.00)%—(20.00)%(25.00)%
Offer Price per Share$4.27
Convertible NotesDiscounted Cash FlowDiscount Rate6.08%—(8.08)%(7.08)%20,846 
LLC InterestDiscounted Cash FlowDiscount Rate7.00%—26.00%(12.5)%36,777 
Market Rent (per sqft)$13.00—$42.50$(27.75)
Capitalization Rate5.13%
LP InterestDirect Capitalization ApproachCapitalization Rate5.25%—5.50%(5.38)%189,659 
Market ApproachDiscount to NAV(7.5)%
Recent TransactionPrice per Share$16.41
Preferred SharesLiquidation AnalysisPar$1,00069,895 
Senior LoanDiscounted Cash FlowDiscount Rate13.30%—26.00%(19.65)%43,693 
Total$518,698 
Financial Instruments Not Carried at Fair Value
At September 30, 2025 and December 31, 2024, the fair values of cash and cash equivalents, restricted cash, accounts receivable, prepaid and other assets, accrued interest and dividends, accounts payable and other accrued liabilities, accrued real estate taxes payable, accrued interest payable, income tax payable, security deposits and prepaid rent approximated their carrying values because of the short-term nature of these instruments. The estimated fair values of other financial instruments were determined by the Company using available market information and appropriate valuation methodologies. Considerable judgment is necessary to interpret market data and develop estimated fair values.
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Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company would realize on the disposition of the financial instruments. The use of different market assumptions or estimation methodologies may have a material effect on the estimated fair value amounts.
In calculating the fair value of its long-term indebtedness, the Company used interest rate and spread assumptions that reflect current credit worthiness and market conditions available for the issuance of long-term debt with similar terms and remaining maturities. These financial instruments utilize Level 2 inputs. Long-term indebtedness is carried at amounts that reasonably approximate their fair value at September 30, 2025 and December 31, 2024, except for the following debt (in thousands):
September 30, 2025December 31, 2024
Outstanding Principal BalanceEstimated Fair ValueOutstanding Principal BalanceEstimated Fair Value
Notes payable$86,731 $71,415 $98,721 $78,607 
Other Financial Instruments Carried at Fair Value
Redeemable noncontrolling interests in the OP and the 9.00% Series B Cumulative Redeemable Preferred Shares, par value $0.001 per share, liquidation preference $25.00 per share (the "Series B Preferred Shares"), have redemption features and are marked to their redemption value if such value exceeds the carrying value. The redemption values are based on the liquidation preference of the Series B Preferred Shares, and less certain redemption fees. Since the valuation is based on observable inputs such as quoted prices for similar instruments in active markets, the redeemable noncontrolling interests in the OP and the Series B Preferred Shares are classified as Level 2 if they are adjusted to their redemption value. As of September 30, 2025, the redeemable noncontrolling interests in the OP and the Series B Preferred Shares are valued at their carrying value on the Consolidated Balance Sheets.
Derivative Financial Instruments
The NHT segment manages interest rate risks primarily by managing the amount, sources, and duration of its debt funding and the use of derivative financial instruments.
The NHT segment performs market valuations on its derivative financial instruments. The valuation of these instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The fair values of interest rate caps are determined using the market standard methodology of discounting the future expected cash receipts that would occur if variable interest rates rise above the strike rate of the caps. The variable interest rates used in the calculation of projected receipts on the cap are based on an expectation of future interest rates derived from observable market interest rate curves and volatilities.
Interest rate caps involve the receipt of variable-rate amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium. The NHT segment has an interest rate cap agreement related to the notes payable on the Park City and Bradenton properties. As of September 30, 2025, the interest rate cap agreements effectively cap one-month SOFR on $38.6 million of the NHT segment's floating rate mortgage and mezzanine indebtedness at a weighted average rate of 6.70%.
To comply with the provisions of ASC 820, Fair Value Measurement, the NHT segment incorporates credit valuation adjustments to appropriately reflect both the NHT segment’s own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with the NHT segment’s derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by the NHT segment and its counterparties. The Company has determined that the significance of the impact of the credit valuation adjustments made to the NHT segment's derivative contracts, which determination was based on the fair value of each individual contract, was not significant to the overall valuation. Additionally, in the case of interest rate caps, the NHT segment has no performance obligation, so no credit valuation adjustment is necessary. As a result, all of the Hospitality segment’s derivatives held as of September 30, 2025 were classified as Level 2 of the fair value hierarchy.
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Changes in fair value of the interest rate caps are recorded directly as interest expense on the Consolidated Statements of Operations and Comprehensive Income (Loss). For the three months ended September 30, 2025 and 2024, NHT recorded $(11.7) thousand and $(0.1) million, respectively, in interest expense related to changes in the fair value of interest rate caps. For the nine months ended September 30, 2025 and 2024, NHT recorded $(23.2) thousand, and $0.1 million, respectively in interest expense related to changes in the fair value of interest rate caps. The combined fair value of the interest rate caps is $0.3 million as of September 30, 2025, and is recorded as interest rate caps in the Consolidated Balance Sheets.
As of September 30, 2025, the Hospitality segment had the following outstanding interest rate caps:
Type of DerivativeHedged Financial InstrumentNotionalStrike RateReference RateTermination Date
Interest rate capNote payable$39,3002.00%One-month SOFR2.00%February 5, 2026
10. Investments in DSTs
The Company invested in the Class 1 Beneficial Interests (“Class 1”) in two Delaware Statutory Trusts (DSTs). The Class 1 are accounted for as investments in equity securities without readily determinable fair values under the measurement alternative, which measures the investment at cost minus impairment, if any, plus or minus changes in fair value when observable prices are identified. As the Class 1 are still being actively issued, the investments are held at cost with no upward or downward fair value adjustment nor impairment losses to date. Therefore, the fair value of the Investment in DSTs utilizing Level 3 inputs approximate their carrying amount. The Company recognized $0.5 million and $1.4 million in dividend income for the three and nine months ended September 30, 2025, respectively, and $0.2 million and $0.3 million, respectively, in dividend income for the three and nine months ended September 30, 2024, respectively.
As of September 30, 2025, the Company held the following investments (dollars in thousands):
Balances, as of September 30, 2025Number of SharesCarrying Amount
NexPoint Life Sciences II DST1,044,040$9,600 
NexPoint Semiconductor DST2,625,61823,959 
Total$33,559 
As of December 31, 2024, the Company held the following investments (dollars in thousands):
Balances, as of December 31, 2024Number of SharesCarrying Amount
NexPoint Life Sciences II DST1,044,040$9,600 
NexPoint Semiconductor DST2,296,85120,959 
Total$30,559 
11. Shareholders’ Equity
Common Shares
During the nine months ended September 30, 2025 and 2024, the Company issued 6,340,840 and 3,284,928 common shares, respectively.
During the nine months ended September 30, 2025, the Company paid three distributions on its common shares in the amount of $0.15 per share each, which were paid on March 31, 2025 to shareholders of record on February 28, 2025, on June 30, 2025 to shareholders of record on May 9, 2025, and on September 30, 2025 to shareholders of record on August 14, 2025. During the nine months ended September 30, 2024, the Company paid a distribution of $0.15 per share on its common shares on March 28, 2024 to shareholders of record on February 16, 2024, June 28, 2024 to shareholders of record on May 15, 2024 and September 30, 2024 to shareholders of record on August 15, 2024. The distributions paid on September 30, 2025, June 30, 2025, March 31, 2025, September 30, 2024, June 28, 2024 and March 28, 2024 consisted of
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a combination of cash and shares, with the cash component of each distribution (other than cash paid in lieu of fractional shares) comprising 20% of the distribution, with the balance being paid in the Company’s common shares.
As of September 30, 2025, and December 31, 2024, the Company had 49,020,409 and 42,679,569 common shares, issued and outstanding, respectively.
Series A Preferred Shares
On January 8, 2021, the Company issued 3,359,593 5.50% Series A Cumulative Preferred Shares, par value $0.001 per share, liquidation preference $25.00 per share ("Series A Preferred Shares") with an aggregate liquidation preference of approximately $84.0 million. The Series A Preferred Shares were issued as part of the consideration for an exchange offer for a portion of the Company’s common shares. The Series A Preferred Shares are callable beginning on December 15, 2023 at a price of $25 per share. The Company may exercise its call option at the Company's discretion. As a result, these are included in permanent equity.
During the nine months ended September 30, 2025, the Company declared three distributions on its Series A Preferred Shares, in the amount of $0.34375 per share each, which were paid on March 31, 2025, to shareholders of record on March 24, 2025, June 30, 2025 to shareholders of record on June 23, 2025 and September 30, 2025 to shareholders of record on September 23, 2025.
During the nine months ended September 30, 2024, the Company declared distributions on its Series A Preferred Shares, in the amount of $0.34375 per share each, which were paid on April 1, 2024 to shareholders of record on March 25, 2024, July 1, 2024, to shareholders of record on June 24, 2024 and September 30, 2024 to shareholders of record on September 23, 2024. The Company sent funding to the transfer agent for the dividend paid on July 1, 2024 prior to June 30, 2024, which was then paid to shareholders on July 1, 2024.
Distributions on the Series A Preferred Shares are cumulative from their original issue date at the annual rate of 5.5% of the $25 per share liquidation preference and are payable quarterly on March 31, June 30, September 30, and December 31 of each year, or in each case on the next succeeding business day.
Series B Preferred Shares
On January 30, 2025, the Company announced the launch of a continuous public offering (the “Series B Preferred Offering”) of up to 16,000,000 shares of its newly designated Series B Preferred Shares at a price to the public of $25.00 per share, for gross proceeds of $400.0 million. As of September 30, 2025, the Company has issued 485,608 Series B Preferred Shares for gross proceeds of $12.1 million before deducting selling commissions and dealer manager fees of approximately $1.0 million, and organization and offering costs of approximately $0.3 million. The Company expects that the offering will terminate on the earlier of the date the Company sells all 16,000,000 Series B Preferred Shares in the offering or August 1, 2027 (which is the third anniversary of the effective date of the Company’s registration statement), which may be extended by the Board in its sole discretion. The Board may elect to terminate the Series B Preferred Offering at any time.
During the nine months ended September 30, 2025, the Company declared eleven distributions on the Series B Preferred Shares, each in the amount of $0.1875 per share, two of which will be paid to holders of Series B Preferred Shares on December 5, 2025 and January 5, 2026 to holders of record on November 25, 2025 and December 24, 2025, respectively, and the remaining which were paid to holders of Series B Preferred Shares on November 5, 2025, October 6, 2025, September 5, 2025, August 5, 2025, July 7, 2025, June 5, 2025, May 5, 2025, April 7, 2025 and March 5, 2025 to holders of record of Series B Preferred Shares on October 24, 2025, September 25, 2025, August 25, 2025, July 25, 2025, June 25, 2025, May 23, 2025, April 25, 2025, March 25, 2025 and February 25, 2025, respectively.
Distributions on the Series B Preferred Shares are cumulative from their original issue date at the annual rate of 9% of the $25 per share initial stated value and are payable monthly on the fifth day of each calendar month or, if such date is not a business day, on the next succeeding business day.
Long Term Incentive Plan, NXDT
On January 30, 2023, the Company’s shareholders approved a long-term incentive plan (the “2023 LTIP” as amended by the A&R 2023 LTIP (as defined below), the “LTIP”) and the Company subsequently filed a registration statement on
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Form S-8 registering 2,545,000 common shares, which the Company may issue pursuant to the 2023 LTIP. On June 10, 2025, the Company’s shareholders approved an amendment and restatement of the 2023 LTIP (the “A&R” 2023 LTIP”) and the Company subsequently filed a registration statement on Form S-8 registering an additional 1,007,258 common shares, which the Company may issue pursuant to the A&R 2023 LTIP. The LTIP authorizes the compensation committee of the Board to provide equity-based compensation in the form of share options, appreciation rights, restricted shares, restricted share units, performance shares, performance units and certain other awards denominated or payable in, or otherwise based on, the Company’s common shares or factors that may influence the value of the Company’s common shares, plus cash incentive awards, for the purpose of providing the Company’s trustees, officers and other key employees (and those of the Adviser and the Company’s subsidiaries), and potentially certain nonemployees who perform employee-type functions, incentives and rewards for performance (the "participants").
Restricted Share Units. Under the LTIP, restricted share units may be granted to the participants and typically vest over a three to five-year period for officers, employees and certain key employees of the Adviser and annually for trustees. The most recent grant of restricted share units to officers, employees and certain key employees of the Adviser will vest over a four-year period. Beginning on the date of grant, restricted share units earn distributions that are payable in cash on the vesting date. Compensation expense is recognized on a straight-line basis over the total requisite service period for the entire award. Forfeitures are recognized as they occur. The following table includes the number of restricted share units granted to its trustees, officers, employees and certain key employees of the Adviser under the LTIP:
Summary of Grants
MarchAprilJuneTotal
2023— 603,482 — 603,482 
20241,033,787 — — 1,033,787 
2025— 937,643 572,592 1,510,235 
Total1,033,787 1,541,125 572,592 3,147,504 
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As of September 30, 2025 and December 31, 2024, the Company had 2,463,802 and 1,438,049 unvested units under the LTIP, respectively.
The following table includes the number of restricted share units granted, vested, forfeited and outstanding as of and for the nine months ended September 30, 2025:
2025
Number of UnitsWeighted Average
Grant Date Fair Value
Outstanding January 1, 20251,438,049 $7.35 
Granted1,510,235 3.73 
Vested (449,024)(1)3.76 
Forfeited(35,458)5.90 
Outstanding September 30, 20252,463,802 $5.81 
(1)Certain key employees of the Adviser elected to net the taxes owed upon the vesting against the shares issued resulting in 358,173 shares being issued as shown on the Consolidated Statement of Equity.
The following table contains information regarding the vesting of restricted share units under the LTIP as of September 30, 2025:
Shares Vesting
FebruaryMarchAprilJuneTotal
2025— — — — — 
2026— 234,527 397,608 164,797 796,932 
2027355,614 234,527 130,974 — 721,115 
2028355,614 234,527 — — 590,141 
2029355,614 — — — 355,614 
Total1,066,842 703,581 528,582 164,797 2,463,802 
For the three months ended September 30, 2025 and 2024, the Company recognized approximately $1.1 million and $0.8 million, respectively of equity-based compensation expense related to grants of restricted share units. For the nine months ended September 30, 2025 and 2024, the Company recognized approximately $2.9 million and $2.2 million, respectively, of equity-based compensation expense related to grants of restricted share units. As of September 30, 2025, the Company had recognized a liability of approximately $1.4 million related to distributions earned on restricted share units that are payable in cash upon vesting. As of September 30, 2025, total unrecognized compensation expense on restricted share units was approximately $10.5 million, and the expense is expected to be recognized over a weighted average vesting period of 1.7 years. As of December 31, 2024, total unrecognized compensation expense on restricted share units was approximately $8.0 million, and the expense is expected to be recognized over a weighted average vesting period of 1.5 years.
12. Earnings (Loss) Per Share
Basic earnings (loss) per share is computed by dividing net income (loss) attributable to common shareholders by the weighted average number of the Company’s common shares outstanding and excludes any unvested restricted share units issued pursuant to the LTIP.
Diluted earnings (loss) per share is computed by adjusting basic earnings per share for the dilutive effect of the assumed vesting of restricted share units. During periods of net loss, the assumed vesting of restricted share units is anti-dilutive and is not included in the calculation of earnings (loss) per share.
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The following table sets forth the computation of basic and diluted earnings (loss) per share (in thousands, except per share amounts):
Three Months Ended September 30,Nine Months Ended September 30,
2025202420252024
Numerator for loss per share:
Net income (loss) attributable to common shareholders$(13,687)$(10,037)$(93,256)$(42,523)
Denominator for loss per share:
Weighted average common shares outstanding47,43640,78645,32439,662
Denominator for basic loss per share47,43640,78645,32439,662
Weighted average unvested restricted share units2,4641,4351,9501,210
Weighted average number of common shares from assumed conversion of Series B Preferred Shares1,480—129—
Denominator for diluted loss per share(1)47,43640,78645,32439,662
Loss per weighted average common share:
Basic$(0.29)$(0.25)$(2.06)$(1.07)
Diluted$(0.29)$(0.25)$(2.06)$(1.07)
(1)    If the Company sustains a net loss for the period presented, unvested restricted share units and convertible Series B Preferred Shares are not included in the diluted earnings per share calculation.
13. Related Party Transactions
Advisory and Administrative Fees, NXDT
Pursuant to the Advisory Agreement, subject to the overall supervision of our Board, the Adviser manages the day-to-day operations of the Company and provides investment management services.
As of September 30, 2025 and 2024, as consideration for the Adviser’s services under the Advisory Agreement, we pay our Adviser an annual fee (the "Advisory Fee") of 1.00% of Managed Assets (defined below) and an annual fee (the "Administrative Fee" and, together with the Advisory Fee, the "Fees") of 0.20% of the Company’s Managed Assets.
On July 22, 2024, we entered into an amendment to the Advisory Agreement whereby the monthly installment of the Administrative Fee shall be paid in cash and the monthly installment of the Advisory Fee shall be paid in one-half in cash and one-half in common shares of the Company, subject to certain restrictions including that in no event shall the common shares issued to the Adviser under the Advisory Agreement exceed five percent of the number of common shares or five percent of the voting power of the Company outstanding prior to the first such issuance (the “Share Cap”) and that in no event shall the common shares issued to the Adviser under the Advisory Agreement exceed 6,000,000 common shares; provided, however, that the Share Cap will not apply if the Company’s shareholders have approved issuances in excess of the Share Cap. At the Company’s 2025 annual meeting of shareholders, the Company’s shareholders approved issuances in excess of the Share Cap. During the nine months ended September 30, 2025, we issued 937,026.44 common shares to the Adviser in payment of the Fees in an amount of $4.32 million.
On September 19, 2025, we entered into an amendment to the Advisory Agreement whereby the monthly installments of the Fees accruing after September 19, 2025, will be paid entirely in cash unless the Adviser elects, in its sole discretion, to receive all or a portion of the monthly installment of the Fees in common shares of the Company, subject to certain
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restrictions, including that in no event shall the number of common shares issued to the Adviser under the Advisory Agreement exceed 6,000,000 common shares.
Under the Advisory Agreement, “Managed Assets” means an amount equal to the total assets of the Company, including any form of leverage, minus all accrued expenses incurred in the normal course of operations, but not excluding any liabilities or obligations attributable to leverage obtained through (i) indebtedness of any type (including, without limitation, borrowing to purchase or develop real estate or other investments, borrowing through a credit facility, or the issuance of debt securities), (ii) the issuance of preferred shares or other preference securities, (iii) the reinvestment of collateral received for securities loaned in accordance with the Company’s investment objectives and policies, and/or (iv) any other means. In the event the Company holds collateralized mortgage-backed securities ("CMBS") where the Company holds the controlling tranche of the securitization and is required to consolidate under U.S. generally accepted accounting principles (“GAAP”) all assets and liabilities of a specific CMBS trust, the consolidated assets and liabilities of the consolidated trust will be netted to calculate the allowable amount to be included as Managed Assets. In addition, in the event the Company consolidates another entity it does not wholly own as a result of owning a controlling interest in such entity or otherwise, Managed Assets will be calculated without giving effect to such consolidation and instead such entity’s assets, leverage, expenses, liabilities and obligations will, on a pro rata basis consistent with the Company’s percentage ownership, be considered those of the Company for purposes of calculation of Managed Assets. The Adviser computes Managed Assets as of the end of each fiscal quarter and then computes each installment of the Fees as promptly as possible after the end of the month with respect to which such installment is payable.
Advisory Fees, NHT
Prior to the closing of the NHT Merger on April 17, 2025, NHT was externally managed by the NHT Adviser. In accordance with the agreement entered into with the NHT Adviser (the “NHT Advisory Agreement”), the Company paid the NHT Adviser an advisory fee equal to 1.00% of the REIT Asset Value (as defined below). Under the direct supervision of the REIT, the duties performed by NHT’s Adviser under the terms of the NHT Advisory Agreement include, but are not limited to: providing daily management for NHT, selecting and working with third party service providers, overseeing the third party manager, formulating an investment strategy for NHT and selecting suitable properties and investments, managing NHT’s outstanding debt and its interest rate exposure through derivative instruments, determining when to sell assets, and managing the renovation program or overseeing a third party vendor that implements the renovation program. REIT Asset Value means the value of NHT’s total assets, as determined in accordance with International Financial Reporting Standards (IFRS) except that such value shall only consolidate NHT’s and NHT Holdings, LLC assets plus NHT’s pro rata share of leverage at NHT OP. Pursuant to the terms of the NHT Advisory Agreement, NHT will reimburse the NHT Adviser for all documented Operating Expenses and offering expenses it incurs on behalf of NHT. “Operating Expenses” include legal, accounting, financial and due diligence services performed by the NHT Adviser that outside professionals or outside consultants would otherwise perform and NHT’s pro rata share of rent, telephone, utilities, office furniture, equipment, machinery and other office, internal and overhead expenses of the NHT Adviser required for NHT’s operations. Operating Expenses do not include expenses for the advisory services described in the NHT Advisory Agreement. Certain Operating Expenses, such as NHT’s ratable share of rent, telephone, utilities, office furniture, equipment, machinery and other office, internal and overhead expenses incurred by the NHT Adviser or its affiliates that relate to the operations of NHT, may be billed monthly to NHT under a shared services agreement.
As of April 19, 2024, the date of the NHT Acquisition, NHT had a payable balance of advisory fees of $6.5 million. As of September 30, 2025 there is a remaining payable of advisory fees of $11.3 million. The NHT Advisory Agreement was terminated in connection with the closing of the NHT Merger on April 17, 2025, and the Company assumed the remaining outstanding advisory fees under the NHT Advisory Agreement, and the termination of the NHT Advisory Agreement incurred a termination fee of $3.5 million.
Reimbursement of Expenses
We also generally reimburse our Adviser for operating or offering expenses it incurs on our behalf or in connection with the services it performs for us. The Adviser may, at its discretion and at any time, waive its right to reimbursement for eligible out-of-pocket expenses paid on the Company’s behalf. Once waived, those expenses are considered permanently waived and become non-recoupable.
The Advisory Agreement has a term that will expire on July 1, 2026, and successive additional one-year terms thereafter unless earlier terminated. We have the right to terminate the Advisory Agreement on 30 days’ written notice upon the occurrence of a cause event (as defined in the Advisory Agreement). The Advisory Agreement can be terminated
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by us or the Adviser without cause upon the expiration of the then-current term with at least 180 days’ written notice to the other party prior to the expiration of such term. The Adviser may also terminate the agreement with 30 days’ written notice if we have materially breached the agreement and such breach has continued for 30 days before we are given such notice. In addition, the Advisory Agreement will automatically terminate in the event of an Advisers Act Assignment (as defined in the Advisory Agreement) unless we provide written consent. A termination fee will be payable to the Adviser by us upon termination of the Advisory Agreement for any reason, including non-renewal, other than a termination by us upon the occurrence of a cause event or due to an Advisers Act Assignment. The termination fee will be equal to three times the Fees earned by the Adviser during the twelve month period immediately preceding the most recently completed calendar quarter prior to the effective termination date.
For the three months ended September 30, 2025 and 2024, the Company incurred Administrative Fees and Advisory Fees of $3.2 million and $3.6 million, respectively. For the nine months ended September 30, 2025 and 2024, the Company incurred Administrative Fees and Advisory Fees of $10.0 million and $10.1 million, respectively.
Expense Cap, NHT
Prior to the closing of the NHT Merger on April 17, 2025, the terms of the NHT Advisory Agreement, expenses paid or incurred by NHT for advisory fees payable to the NHT Adviser, Operating Expenses incurred by the NHT Adviser or its affiliates in connection with the services it provides to NHT and its subsidiaries and compensation expenses relating to equity awards granted under a long-term incentive plan of NHT will not exceed 1.5% of REIT Asset Value for the calendar year (or part thereof) that the NHT Advisory Agreement is in effect (the “NHT Expense Cap”). The NHT Expense Cap does not apply to legal, accounting, financial, due diligence and other service fees incurred in connection with mergers and acquisitions, extraordinary litigation, or other events outside NHT’s ordinary course of business or any out-of-pocket acquisition or due diligence expenses incurred in connection with the acquisition or disposition of real estate assets. From the date of the NHT Acquisition to the period ended September 30, 2025, NHT incurred expenses subject to the NHT Expense Cap of $3.2 million. The NHT Advisory Agreement was terminated in connection with the closing of the NHT Merger on April 17, 2025, and the Company assumed the remaining expense reimbursement obligations under the NHT Advisory Agreement.
Loans from Affiliates
As of September 30, 2025, a subsidiary of the Company assumed several convertible notes issued by NHT to certain affiliates of the NHT Adviser in connection with the NHT Merger totaling $51.5 million (see Note 6 to our consolidated financial statements). The proceeds of the notes were primarily used for general corporate and working capital purposes and have been consolidated into one account on the Consolidated Balance Sheets.
Revolving Credit Facility, NXDT
On May 22, 2023, the Company entered into the NexBank Revolver in the initial principal amount of $20.0 million, with the option for the Company to receive additional disbursements thereunder up to a maximum amount of $50.0 million and bears interest at one-month SOFR plus 3.50%. On May 21, 2024, the Company elected to extend the maturity by six months to November 21, 2024. On November 21, 2024, the Company elected to extend the maturity by six months to May 21, 2025. On May 15, 2025, the Company amended the NexBank Revolver agreement to extend the maturity date to November 21, 2025, and to provide for three additional six-month extension options. As of September 30, 2025, the NexBank Revolver had an outstanding balance of $13.5 million.
Guaranties of NexPoint Storage Partners, Inc. Debt.
On October 4, 2024, the Company entered into a Guaranty Agreement (Recourse Obligations), dated October 4, 2024 (the “Citi Guaranty”) for the benefit of JPM and Citi Real Estate Funding, Inc. (collectively, the “Citi Lender”) under a loan agreement (the "Citi Loan Agreement"), by and among the borrowers thereunder (collectively, “Citi Borrower”) and the Citi Lender. The Company is the owner of an indirect interest in Citi Borrower and entered into the Citi Guaranty as a condition of the Citi Lender lending to Citi Borrower under the Citi Loan Agreement. Pursuant to the Citi Guaranty, the Company guarantees the Guaranteed Obligations (as defined in the Citi Loan Agreement). The Guaranteed Obligations consist of liability for losses suffered by the Citi Lender arising out of certain bad acts, such as if the Citi Borrower takes actions that are fraudulent or improper or upon certain violations of the Citi Loan Agreement. The Guaranteed Obligations also include the full payment of the debt upon the occurrence of certain events including borrower voluntarily filing for bankruptcy or similar liquidation or reorganization action or upon certain other violations of the Citi Loan Agreement. The
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Citi Loan Agreement provides for a loan of $750.0 million to Citi Borrower. The Citi Loan Agreement is set to mature on November 1, 2029. Borrowings outstanding under the Citi Loan Agreement are secured by mortgages on real property owned by one or more of the borrowers comprising Citi Borrower.
On December 8, 2022 and in connection with a restructuring of NSP, the Company, together with NexPoint Real Estate Finance, Inc. (“NREF”), Highland Opportunities and Income Fund and NexPoint Real Estate Strategies Fund (collectively, the "NSP Co-Guarantors"), as guarantors, entered into a Sponsor Guaranty Agreement in favor of Extra Space Storage, LP ("Extra Space") pursuant to which the Company and the NSP Co-Guarantors guaranteed obligations of NSP with respect to accrued dividends on NSP’s newly created Series D Preferred Stock and two promissory notes in an aggregate principal amount of approximately $64.2 million issued to Extra Space. The guaranties by the Company and the NSP Co-Guarantors were capped at $97.6 million, and each of the Company and the NSP Co-Guarantors generally guaranteed the foregoing obligations of NSP up to the cap amount on a pro rata basis with respect to its percentage ownership of NSP’s common stock. On February 15, 2023, NSP paid down approximately $15.0 million of these promissory notes, resulting in an aggregate principal amount of approximately $49.2 million. On December 8, 2023, NSP paid down the remaining principal balance of $49.2 million. The Series D Preferred Stock remains outstanding as of September 30, 2025. As of September 30, 2025, the outstanding NSP Series D Preferred Stock accrued dividends were $14.1 million, and the Company and NREF OP IV REIT Sub, LLC are jointly and severally liable for 85.90% of the guaranteed amount.

NexBank Guaranty
The Company is a guarantor and an indemnitor on the NexBank Revolver. As of September 30, 2025, the NexBank Revolver had an outstanding balance of $13.5 million. The Company guarantees the borrowers’ obligations under the loan agreement and the guaranty is a guaranty of payment and performance, not of collection, which is generally applicable without the need for the lender to make any demand upon or pursue any rights or remedies against the borrower or any other loan party. The guarantor’s liability is immediate and not contingent on prior actions taken by the lender against other parties. As an indemnitor, the Company is responsible for indemnifying the lender against losses, claims, damages, and costs (including attorneys' fees) arising from the borrowers’ or any other loan party’s breach of its warranties, representations, and agreements under the loan agreement. The Company has not recorded a contingent liability with respect to this guaranty as the borrowers are current on all debt payments and in compliance with all debt compliance provisions.

NREF OP Promissory Note
On April 19, 2024, the Company, through the OP, loaned $6.5 million to NREF OP IV, L.P. ("NREF OP IV"). In connection with the loan, NREF OP IV issued a promissory note to the OP in the principal amount of $6.5 million bearing interest at 7.535%, which is payable in kind, interest only during the term and matures on April 19, 2029. NREF OP IV is a subsidiary of NREF, which is managed by an affiliate of the Adviser. On September 11, 2024, NREF OP IV extinguished the note and paid down the remaining principal balance and accrued interest.

NFRO SFR REIT Promissory Notes
On December 14, 2023, the Company, through the OP, loaned approximately $3.6 million to NFRO SFR REIT, LLC (“NFRO SFR REIT”). In connection with the loan, NFRO SFR REIT issued a promissory note to the OP in the principal amount of approximately $3.6 million bearing interest at 7.535% per annum, which is payable in kind, interest only during the term and was to mature on June 14, 2025. On April 9, 2025, NFRO SFR REIT extinguished the note and paid down the remaining principal balance and accrued interest.
On February 15, 2024, the Company, through the OP, loaned approximately $3.2 million to NFRO SFR REIT. In connection with the loan, NFRO SFR REIT issued a promissory note to the OP in the principal amount of approximately $3.2 million bearing interest at 7.535% per annum, which is payable in kind, interest only during the term and was to mature on August 15, 2025. NFRO SFR REIT is a subsidiary of an entity that is advised by an affiliate of the Adviser. On May 16, 2025, NFRO SFR REIT extinguished the note and paid down the remaining principal balance and accrued interest.

Investments in DSTs
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On July 26, 2024, the Company, through NREO, acquired $4.6 million worth of Class 1 in NexPoint Life Sciences II DST ("Life Sciences DST"), a Delaware statutory trust. Life Sciences DST is managed by an affiliate of the Adviser. Life Sciences DST owns a manufacturing and production facility in Philadelphia, PA that is under a triple net lease.
On July 26, 2024, the Company, through NREO, acquired $14.9 million worth of Class 1 in NexPoint Semiconductor DST ("Semiconductor DST"), a Delaware statutory trust. Semiconductor DST is managed by an affiliate of the Adviser. Semiconductor DST owns a semiconductor manufacturing property in Temecula, CA that is under a triple net lease. On September 11, 2024, the Company acquired an additional $6.1 million worth of Class 1 in Semiconductor DST. On January 2, 2025, the Company acquired an additional $3.0 million worth of Class 1 in Semiconductor DST.
Capital Acquisitions Partners, LLC
The Company owns approximately 20.9% of the total outstanding membership interests of Capital Acquisitions Partners, LLC, an entity that invests in multifamily housing. The remaining membership interests are held by NexPoint Real Estate Finance Operating Partnership, L.P. (“NREF OP”). See Notes 7 and 8 for additional information.
IQHQ Transactions
On December 31, 2024, the Company, through certain subsidiaries, along with certain entities advised by affiliates of our Adviser or that may be deemed an affiliate of the Adviser through common beneficial ownership, entered into a participation rights agreement with NexPoint Bridge Investor I, LLC (“Bridge Investor I”) pursuant to which the Company has a right to fund up to specified amounts of a Subscription Agreement (the “IQHQ Subscription Agreement”) entered into by Bridge Investor I, whereby Bridge Investor I committed to purchase $160.1 million of Series E preferred stock of IQHQ, Inc. (“IQHQ”) and the corresponding warrant to purchase Class A-3 Units of IQHQ Holdings, LP (“IQHQ Holdings”) issued to Bridge Investor I (as amended, the “IQHQ Series E Warrant”).
Series B Preferred Shares Offering
On January 30, 2025, the Company announced the launch of the Series B Preferred Offering. NexPoint Securities, Inc., an affiliate of the Adviser, serves as the Company’s dealer manager (the "Dealer Manager") in connection with the Series B Preferred Offering. The Dealer Manager uses its reasonable best efforts to sell the Series B Preferred Shares offered in the Series B Preferred Offering, and the Company pays the Dealer Manager, subject to the discounts and other special circumstances described or referenced therein, (i) selling commissions of 7.0% of the aggregate gross proceeds from sales of Series B Preferred Shares in the offering (“Selling Commissions”) and (ii) a dealer manager fee of 3.0% of the gross proceeds from sales of Series B Preferred Shares in the offering (the “Dealer Manager Fee”). The Dealer Manager, subject to federal and state securities laws, will reallow all or any portion of the Selling Commissions and may reallow a portion of the Dealer Manager Fee to other securities dealers that the Dealer Manager may retain who sold the Series B Preferred Shares as is described more fully in the agreements between such dealers and the Dealer Manager. The Company expects that the offering will terminate on the earlier of the date the Company sells all 16,000,000 Series B Preferred Shares in the offering or August 1, 2027 (which is the third anniversary of the effective date of the Company’s registration statement), which may be extended by the Board in its sole discretion. The Board may elect to terminate this offering at any time. As of September 30, 2025, the Company has sold 485,608 shares of the Series B Preferred Shares for total gross proceeds of $12.1 million.
Ground Lease
The Company has a ground lease situated in Durham County, North Carolina, with a subsidiary of OSL, an entity that may be deemed an affiliate of the Adviser through common beneficial ownership. See Note 15 for additional information.
Other Related Party Transactions
The Company has in the past, and may in the future, utilize the services of affiliated parties. The Company holds multiple operating accounts at NexBank. The Company’s operating properties, other than undeveloped land, are managed by NexVest Realty Advisors, LLC ("NexVest"), an affiliate of the Adviser. For the nine months ended September 30, 2025 and 2024 the Company through its subsidiaries has paid approximately $0.5 million and $0.6 million, respectively, in property management fees to NexVest. The property management agreement with NexVest for the retail property in Lubbock, Texas is dated January 1, 2014 and had a fixed fee of $750 per month. Effective January 1, 2023, the property management agreement was amended and the property management fee was increased to $1,200 per month. The property
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management agreement with NexVest for the White Rock Center is dated June 1, 2013, and the management fee is calculated on 4% of gross receipts, payable monthly. The property management agreement with NexVest for the undeveloped property in Plano, Texas is dated September 1, 2024, and the management fee is calculated on 3% of gross receipts, with a minimum fee of $750 per month. The property management agreement with NexVest for Cityplace Tower is dated August 15, 2018, and the management fee is calculated on 3% of gross revenues, with a minimum fee of $20,000 per month. The property management agreement with NexVest for Cityplace Tower also allows for the manager, as the agent of CP Tower Owner, LLC (“Owner”), to draw on the operating account when required in connection with the operation or maintenance of the property, the payment of certain expenses defined in the agreement, or as expressly approved in writing by Owner. For the three and nine months ended September 30, 2025, the SPE holding Cityplace Tower reimbursed $0.3 million and $1.1 million, respectively, to NexVest for these expenses. For the three and nine months ended September 30, 2024, the SPE holding Cityplace Tower reimbursed $0.4 million and $1.3 million, respectively, to NexVest for these expenses.
A trustee and officer of the Company also (i) is the beneficiary of a trust that indirectly owns 100% of the limited partnership interests in the parent of the Adviser and directly owns 100% of the general partnership interests in the parent of the Adviser and (ii) is a director of NexBank Capital, the holding company of NexBank, directly owns a minority of the common stock of NexBank, and is the beneficiary of a trust that directly owns a substantial portion of the common stock of NexBank.
The Company is a guarantor and an indemnitor on a loan from OSL, an entity that may be deemed an affiliate of the Adviser through common beneficial ownership, taken by Freedom LHV which owns White Rock Center, with an aggregate principal amount of $10.0 million as of September 30, 2025. The obligations include a continuing guarantee, which is generally applicable to all current and future liabilities or obligations of the borrower, whether directly or indirectly incurred, including through an agreement with an affiliate, joint venture partner or other third party. This guarantee remains in effect until all such obligations have been satisfied in full, unless terminated in accordance with the terms of the guarantee agreement. The loan is secured by certain real property held by Freedom LHV.
On March 14, 2025, the Company purchased 2,754.59 shares of NexPoint Storage Partners Operating Company, LLC (the “NSP OC Common Units”) for an aggregate amount of $2.0 million, 4,638.07 shares for an aggregate amount of $3.2 million on April 29, 2025, and 5,157.67 shares for an aggregate amount of $3.6 million on June 16, 2025. As of September 30, 2025, the Company owns approximately 59,615 Class B Units, or 33.8%, of the outstanding NSP OC Common Units.
On September 1, 2023, the Company, through one of its wholly owned TRSs, entered into a contribution agreement to transfer the Structured Note in SFP and all its rights, title and interests to related party NHI and its wholly owned subsidiaries. The Company also transferred all of its ordinary shares in SFP to a separate share trustee. In exchange, the Company was issued 68,500 shares of Class A Preferred Stock in NHI and owns 74,173 and 68,254 shares, respectively, as of September 30, 2025 and 2024.
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Related Party Investments
The Company, from time to time, may invest in entities managed by affiliates of the Adviser. For the nine months ended and as of September 30, 2025, the Company had the following investments in entities managed or advised by, or directly or indirectly owned by entities managed or advised by, affiliates of the Adviser (in thousands).
Related PartyInvestmentFair
Value/Carrying Value		Change in Unrealized
Gain/(Loss)		Realized
Gain/(Loss)		Equity in income (loss)Interest and
Dividends		Total Income
NexPoint Real Estate Finance, Inc.Common Stock$29,778 $(3,171)$— $— $3,150 $(21)
NexPoint Storage Partners, Inc.Common Stock53,536 (9,172)— — — (9,172)
NexPoint Residential Trust, Inc.Common Stock3,226 (941)— — 151 (790)
NexPoint SFR Operating Partnership, L.P.Convertible Notes11,963 311 — — 946 1,257 
NexPoint Storage Partners Operating Company, LLCLLC Units36,952 (6,057)— — — (6,057)
Claymore Holdings, LLCLLC Units— — — — — — 
Allenby, LLCLLC Units— 456 3,493 — — 3,949 
Haygood, LLC.LLC Units— 31 (31)— — — 
VineBrook Homes Operating Partnership, L.P.Partnership Units128,800 (22,907)— — 4,476 (18,431)
NexPoint Real Estate Finance Operating Partnership, L.P.Partnership Units69,044 (7,352)— — 7,304 (48)
NexPoint SFR Operating Partnership, L.P.Partnership Units29,384 (10,548)— — 1,979 (8,569)
NexAnnuity Holdings, Inc.Preferred Shares74,173 — — — 4,278 4,278 
NexPoint Storage Partners Operating Company, LLCPromissory Note1,858 (8)— — 100 92 
NexPoint SFR Operating Partnership, L.P.Promissory Note— — — — 7 7 
NFRO SFR REIT, LLCPromissory Note— — — — 88 88 
NFRO SFR REIT, LLCPromissory Note— — — — 82 82 
Semiconductor DSTLLC Units23,959 — — — 1,048 1,048 
Life Science II DSTLLC Units9,600 — — — 357 357 
Capital Acquisitions Partners, LLCLLC Units633 — — 226 — 226 
Total$472,906 $(59,358)$3,462 $226 $23,966$(31,704)
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For the nine months ended and as of September 30, 2024, the Company had the following investments in entities managed or advised by, or directly or indirectly owned by entities managed or advised by, affiliates of the Adviser (in thousands).
Related PartyInvestmentFair
Value/Carrying Value		Change in Unrealized
Gain/(Loss)		Equity in income (loss)Interest and
Dividends		Total Income
NexPoint Real Estate Finance, Inc.Common Stock$32,823 $(252)$— $3,150 $2,898 
NexPoint Storage Partners, Inc.Common Stock73,442 5,256 — — 5,256 
NexPoint Residential Trust, Inc.Common Stock4,192 909 — 130 1,039 
NexPoint SFR Operating Partnership, L.P.Convertible Notes21,060 247 — 1,225 1,472 
NexPoint Hospitality TrustCommon Stock— 2,088 (1)— — 2,088 
NexPoint Storage Partners Operating Company, LLCLLC Units40,021 2,864 — — 2,864 
SFR WLIF III, LLCLLC Units6,842 — 523 — 523 
Claymore Holdings, LLCLLC Units— (454)— — (454)
Allenby, LLCLLC Units— (110)— — (110)
Haygood, LLC.LLC Units— — — — — 
VineBrook Homes Operating Partnership, L.P.Partnership Units148,892 (567)— 4,434 3,867 
NexPoint Real Estate Finance Operating Partnership, L.P.Partnership Units76,104 (584)— 7,304 6,720 
NexPoint SFR Operating Partnership, L.P.Partnership Units46,943 (4,315)— 1,875 (2,440)
NexAnnuity Holdings, Inc.Preferred Shares68,524 — — 3,956 3,956 
NexPoint Hospitality TrustPromissory Note— (308)(1)— — (308)
NexPoint Storage Partners Operating Company, LLCPromissory Note2,763 (13)— 174 161 
NexPoint SFR Operating Partnership, L.P.Promissory Note500 — — 33 33 
NREF OP IV, L.P.Promissory Note— — — 188 188 
Semiconductor DSTLLC Units20,959 — — 86 86 
Life Science II DSTLLC Units9,600 — — 144 144 
Capital Acquisitions Partners, LLCLLC Units1,797 — 80 — 80 
Total$554,462 $4,761 $603 $22,699$28,063 
(1)    Reflects the change in unrealized gain/(loss) prior to the NHT consolidation.
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14. Commitments and Contingencies
Commitments
On December 8, 2022 and in connection with a restructuring of NSP, the Company, together with the NSP Co-Guarantors, as guarantors, entered into a Sponsor Guaranty Agreement in favor of Extra Space pursuant to which the Company and the NSP Co-Guarantors guaranteed obligations of NSP with respect to accrued dividends on NSP’s newly created Series D Preferred Stock and two promissory notes in an aggregate principal amount of approximately $64.2 million issued to Extra Space, which were paid in full on December 8, 2023. The NSP Series D Preferred Stock remains outstanding as of September 30, 2025. As of September 30, 2025, the outstanding NSP Series D Preferred Stock accrued dividends were $14.1 million. See Note 13 to our consolidated financial statements for additional information.
On October 4, 2024, the Company entered into the Citi Guaranty for the benefit of the Citi Lender under the Citi Loan Agreement, by and among Citi Borrower and the Citi Lender. Pursuant to the Citi Guaranty, the Company guarantees the Guaranteed Obligations (as defined in the Citi Loan Agreement). See Note 13 to our consolidated financial statements for additional information.
The Company is a limited guarantor and an indemnitor on one of the subsidiaries of the Company’s loans with an aggregate principal amount of $41.6 million outstanding, as of September 30, 2025. The obligations include a customary environmental indemnity and a so-called "bad boy" guarantee, which is generally only applicable if and when the borrower directly, or indirectly through an agreement with an affiliate, joint venture partner or other third party, voluntarily files a bankruptcy or similar liquidation or reorganization action or takes other actions that are fraudulent or improper.
The Company is a limited guarantor and an indemnitor for a loan made to one of the subsidiaries of the Company, with an aggregate outstanding principal amount, as of September 30, 2025, of $38.6 million. The obligations include a guaranty of completion, which does not extend to the full repayment of the loan, a customary environmental indemnity, and a so-called "bad boy" guarantee, which is generally only applicable if and when the borrower directly, or indirectly through an agreement with an affiliate, joint venture partner or other third party, voluntarily files a bankruptcy or similar liquidation or reorganization action or takes other actions that are fraudulent or improper.
The Company is a guarantor and an indemnitor on a loan taken by the SPE which owns Cityplace Tower with an aggregate principal amount of $138.2 million as of September 30, 2025. The obligations include guarantees, which are generally only applicable if and when the borrower, which is a subsidiary of the Company, directly, or indirectly through an agreement with an affiliate, joint venture partner or other third party, voluntarily terminates construction services prior to the completion of the project, files a bankruptcy or similar liquidation or reorganization action or takes other actions that are fraudulent or improper. As of September 30, 2025, management does not anticipate any material deviations from schedule or budget related to construction projects current in process, and Cityplace Tower is current on all debt payments and in compliance with all debt compliance provisions.
The Company is a guarantor and an indemnitor on a loan from OSL, an entity that may be deemed an affiliate of the Adviser through common beneficial ownership, taken by Freedom LHV which owns White Rock Center. See Note 13 to our consolidated financial statements for additional information.
The Company, together with Calida Holdings III, LP, is a guarantor and an indemnitor on a loan taken by the SPE that owns Tivoli. As of September 30, 2025, the loan had an outstanding balance of $10.9 million. As a guarantor, it owes the obligations including a guaranty of payment, which is generally applicable without the need for the lender to make any demand upon or pursue any rights or remedies against the borrower or any other loan party. The guarantor’s liability is immediate and not contingent on prior actions taken by the lender against other parties. As an indemnitor, it owes customary environmental indemnifications. The Company has not recorded a contingent liability as Tivoli is current on all debt payments and in compliance with all debt compliance provisions.
The Company is a guarantor and an indemnitor on a revolving credit facility entered into by the Company, and two wholly owned subsidiaries with NexBank. See Note 13 to our consolidated financial statements for additional information.
The Company is a limited guarantor and indemnitor of a loan held by the SPE that owns Marriott Uptown. As of September 30, 2025, the loan had an outstanding principal balance of $87.5 million. The obligations include a customary environmental indemnity and a so-called "bad boy" guarantee, which is generally only applicable if and when the borrower
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directly, or indirectly through an agreement with an affiliate, joint venture partner or other third party, voluntarily files a bankruptcy or similar liquidation or reorganization action or takes other actions that are fraudulent or improper.
AMS C-Store JV, LLC
On January 30, 2025, the Company, through one of its subsidiaries, committed to fund $18.4 million of the preferred units of AMS C-Store JV, LLC with respect to convenience store property developments across Texas. The Company funded $9.2 million on January 30, 2025, $1.8 million on February 28, 2025, $1.0 million on May 1, 2025, $1.5 million on May 15, 2025, $1.9 million on July 2, 2025 and $0.9 million on September 18, 2025. The Company’s expected maximum commitment under AMS C-Store JV, LLC is $18.4 million, of which $2.1 million was unfunded as of September 30, 2025.
The table below shows the Company's unfunded commitments by investment type as of September 30, 2025 and December 31, 2024 (in thousands):
September 30, 2025December 31, 2024
Investment TypeUnfunded CommitmentsUnfunded Commitments
Preferred Equity$2,121 $— 
Total$2,121 $— 
Contingencies
In the normal course of business, the Company is subject to claims, lawsuits, and legal proceedings. While it is not possible to ascertain the ultimate outcome of all such matters, management believes that the aggregate amount of such liabilities, if any, in excess of amounts provided or covered by insurance, will not have a material adverse effect on the Consolidated Balance Sheets or Consolidated Statements of Operations and Comprehensive Income (Loss) of the Company. The Company is not involved in any material litigation nor, to management’s knowledge, is any material litigation currently threatened against the Company or its properties or subsidiaries.
Environmental liabilities could have a material adverse effect on the Company’s business, assets, cash flows or results of operations. As of September 30, 2025, the Company was not aware of any environmental liabilities. There can be no assurance that material environmental liabilities do not exist.
Claymore is engaged in ongoing litigation that could result in a possible gain contingency to the Company. The probability, timing, and potential amount of recovery, if any, are unknown.
15. Leases
There are no tenants that make up greater than 10% of net rental income during the nine months ended September 30, 2025.
The following table lists the tenants where the rental revenue from the tenants represented 10% or more of total rental income in the Company’s Consolidated Statements of Operations and Comprehensive Income (in thousands) for the nine months ended September 30, 2024:
For the Nine Months Ended September 30, 2024
TenantRental Income
Neiman Marcus Group, LLC$1,579 

Ground Lease
The Company has a ground lease situated in Durham County, North Carolina, with a subsidiary of OSL, an entity that may be deemed an affiliate of the Adviser through common beneficial ownership. The lease has a remaining term of 4 years and a discount rate of 4.6% and contains five one-year extension options. As of September 30, 2025, the carrying amount of the right-of-use asset is $0.6 million, and the lease liability is $(0.6) million.
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For the nine months ended September 30, 2025, the Company recognized lease expense of $0.2 million recorded on a straight-line basis over the lease term.
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16. Segment Reporting
The Company has two reportable segments: Diversified and Hospitality. For a description of the types of products and services from which these reportable segments derive their revenues, see Notes 1, 2 and 3. The accounting policies of both segments are the same as those described in the Summary of Significant Accounting Policies. The chief operating decision maker primarily assesses performance for the segments and decides how to allocate resources based on segment net income (loss). The measures of segment assets are based on each segment’s total assets. The chief operating decision maker uses segment net income (loss) to evaluate profitability in deciding whether to reinvest profits into new or existing investments or into other parts of the entity, such as for dividend amounts. The Company’s two reportable segments serve different strategic purposes. The Diversified segment primarily consists of activities focused on investing in various commercial real estate property types and across the capital structure, including but not limited to equity, mortgage debt, mezzanine debt and preferred equity. The majority of NXDT’s revenue is comprised of Rental income, Dividend income, and Interest income. The Hospitality segment is focused on operating and renovating its U.S. located hospitality assets that meet its investment objective and criteria. The majority of NHT’s revenue is comprised of revenue from renting rooms and selling food and beverages (“F&B”). Therefore, the Company has identified Diversified and Hospitality as the two operating segments and the two reportable segments. The Company’s chief operating decision maker is the president of the Company.
The following table presents measures of the reportable segment measures of profitability, along with significant segment expenses (in thousands):
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For the Nine Months Ended September 30, 2025For the Nine Months Ended September 30, 2024
DiversifiedHospitalityTotalDiversifiedHospitalityTotal
Total Revenues$42,947 $24,620 $67,567 $39,171 $18,124 $57,295 
Less:
Property operating expense4,99613,07718,0734,9289,74414,672
Real estate taxes and insurance3,2221,5064,7283,4791,1744,653
Advisory and administrative fees9,9823,89813,88010,14052510,665
Property general and administrative expenses1,7033,2124,9152,0462,9034,949
Corporate general and administrative expenses8,4227239,1456,6822,1918,873
Depreciation and amortization8,5073,28811,7958,6942,71411,408
Impairment loss—1,7521,752—6,1346,134
Interest expense11,2269,59020,81613,3127,35820,670
Equity in (income) losses of unconsolidated equity method ventures748—748558—558
Change in unrealized (gains) losses from non-real estate investments77,464—77,464(2,251)—(2,251)
Realized (gains) losses from non-real estate investments(4,987)—(4,987)21,876—21,876
Gain on sales of real estate—(37)(37)———
Income tax expense (benefit)331(754)(423)1,583(30)1,553
Other segment items (1)4937161,2095544711,025
Net loss$(79,160)$(12,351)$(91,511)$(32,430)$(15,060)$(47,490)
The following table presents total assets for the reportable segments (in thousands):
As of September 30, 2025As of December 31, 2024
DiversifiedHospitalityTotalDiversifiedHospitalityTotal
Total assets$957,081 $149,588 $1,106,669 $1,039,392 $185,447 $1,224,839 
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(1)Other segment items includes: Property management fees.
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17. Noncontrolling Interests
Redeemable Noncontrolling Interests in the OP
The following table sets forth the redeemable noncontrolling interests in the OP for the nine months ended September 30, 2025 and 2024 (in thousands):
Nine Months Ended September 30,
20252024
Redeemable noncontrolling interest in the OP, January 1,$— $— 
Redeemable noncontrolling interests from NHT Merger359 — 
Net loss attributable to redeemable noncontrolling interests in the OP(25)— 
Distributions to redeemable noncontrolling interests in the OP(6)— 
Redeemable noncontrolling interest in the OP, September 30,$328 $— 
18. Subsequent Events
Distributions Declared
On October 27, 2025, the Board approved a quarterly distribution of $0.15 per common share, payable on December 31, 2025 to shareholders of record on November 21, 2025. The distribution on the Company’s common shares consists of a combination of cash and shares, with the cash component of the distribution (other than cash paid in lieu of fractional shares) not to exceed 20% in the aggregate, with the balance being paid in the Company’s common shares. Also on October 27, 2025, the Board approved a quarterly distribution of $0.34375 per Series A Preferred Share, payable on December 31, 2025 to shareholders of record on December 23, 2025.
Mortgages Paydown, Hospitality
On November 7, 2025, a subsidiary of the Company paid down approximately $1.7 million and $0.8 million on the Note A Loan and the Note B Loan, respectively.
Hospitality Debt Extension
On November 7, 2025, the Company executed a loan modification agreement related to the Note A Loan and the Note B Loan extending the maturity date of each to February 8, 2026.
Raymond James Credit Facility
On October 6, 2025, the Company repaid the remaining $1.3 million principal balance and fully extinguished the debt under the Credit Facility.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following is a discussion and analysis of our financial condition and our historical results of operations. The following should be read in conjunction with our financial statements and accompanying notes included herein and with our 2024 Annual Report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those projected, forecasted, or expected in these forward-looking statements as a result of various factors, including, but not limited to, those discussed below and elsewhere in this Quarterly Report. See “Cautionary Statement Regarding Forward-Looking Statements” in this Quarterly Report and “Risk Factors” in Part I, Item 1A, “Risk Factors” of our 2024 Annual Report.
Overview
As of September 30, 2025, our Portfolio consisted primarily of debt and equity investments in the single-family rental, self-storage, office, hospitality, life science and multifamily sectors. The Company has two reportable segments, Diversified and Hospitality. Diversified represents the Company's primary reportable segment and represents a significant majority of the Company's consolidated portfolio. The Diversified reportable segment is the legacy reportable segment and is focused on investing in various commercial real estate property types and across the capital structure, including but not limited to, equity, mortgage, debt, mezzanine debt and preferred equity. The Hospitality segment is focused on operating and renovating its U.S. located hospitality assets that meet its investment objective and criteria. Substantially all of our business is conducted through the OP. The OP GP is the sole general partner of the OP and is owned 100% by the Company. As of September 30, 2025, there were 44,536,894.47 common units of the OP outstanding, of which 99.96% were owned by the Company, 3,359,593 Series A Preferred Units of the OP outstanding, of which 100.0% were owned by the Company, and 485,608 Series B Preferred Units of the OP, of which 100.0% were owned by the Company.
As a diversified REIT, the Company’s primary investment objective is to provide both current income and capital appreciation. Target underlying property types primarily include, but are not limited to, single-family rentals, multifamily, self-storage, life science, office, industrial, hospitality, net lease, retail and small-bay industrial. The Company may, to a limited extent, hold, acquire or transact in certain non-real estate securities. We are externally managed by the Adviser through the Advisory Agreement, by and among the Company and the Adviser. The Advisory Agreement was dated July 1, 2022, and amended on October 25, 2022, April 11, 2023, July 22, 2024 and September 19, 2025, for a term that will expire on July 1, 2026 and successive one-year terms thereafter unless earlier terminated. The Adviser is wholly owned by our Sponsor.
We have elected to be taxed as a REIT under Sections 856 through 860 of the Code commencing with our taxable year ended December 31, 2021. To qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement that we distribute at least 90% of our REIT taxable income to our shareholders. As a REIT, we will be subject to federal income tax on our undistributed REIT taxable income and net capital gain and to a 4% nondeductible excise tax on any amount by which distributions we pay with respect to any calendar year are less than the sum of (1) 85% of our ordinary income, (2) 95% of our capital gain net income and (3) 100% of our undistributed income from prior years. We believe we qualify for taxation as a REIT under the Code, and we intend to continue to operate in such a manner, but no assurance can be given that we will operate in a manner so as to qualify as a REIT. Taxable income from certain non-REIT activities is managed through one or more TRS entities and is subject to applicable U.S. federal, state, and local income and margin taxes.
On October 16, 2019, Highland, a former affiliate of our Sponsor, filed for Chapter 11 bankruptcy protection with the United States Bankruptcy Court for the District of Delaware. On October 15, 2021, Marc S. Kirschner, as litigation trustee of a litigation subtrust formed pursuant to Highland’s plan of reorganization and disclosure statement which became effective on August 11, 2021, filed a lawsuit (the "Bankruptcy Trust Lawsuit") against various persons and entities, including our Sponsor and James Dondero. On March 24, 2023, the litigation trustee filed a motion for leave to stay the Bankruptcy Trust Lawsuit, which was granted by the bankruptcy court on April 4, 2023. On June 30, 2025, the bankruptcy court approved a settlement agreement between Highland and Hunter Mountain Investment Trust (“HMIT”) pursuant to which the claims asserted in the Bankruptcy Trust Lawsuit were assigned to HMIT. HMIT subsequently filed a motion to lift the stay of the Bankruptcy Trust Lawsuit, which was granted and became effective on October 3, 2025. As of the date of this filing, the bankruptcy court has requested briefing from the parties regarding whether the court continues to have jurisdiction over the Bankruptcy Trust Lawsuit given the assignment of claims from Highland to HMIT. Briefs on this matter are due on November 18, 2025. In addition, on February 8, 2023, UBS Securities LLC and UBS AG London (collectively “UBS”) filed a lawsuit in the Supreme Court of the State of New York, County of New York related to a default that occurred in 2009 on a warehouse facility between UBS and funds affiliated with Highland. The lawsuit makes
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claims against several persons and entities, seeking to collect on $1.3 billion in judgments UBS obtained against entities that were managed indirectly by Highland (the "UBS Lawsuit"). On March 7, 2023, the matter was removed to the United States District Court for the Southern District of New York. On April 6, 2023, UBS moved to have the case remanded to New York state court. The federal court remanded the state law causes of action and retained and stayed the federal cause of action. On February 26, 2024, several of the respondents, including Mr. Dondero, filed motions in state court to dismiss the UBS Lawsuit on various grounds. A hearing was held on July 8, 2024. The court dismissed the claims against one respondent, CLO HoldCo, Ltd., for lack of personal jurisdiction in a July 12, 2024 order. On March 26, 2025, the court entered an order denying the remaining motions to dismiss and directed the respondents to file an answer to the UBS Lawsuit within 20 days, which they did. Mr. Dondero is appealing the denial of the motion to dismiss to the Appellate Division of the Supreme Court of the State of New York. Neither the Bankruptcy Trust Lawsuit nor the UBS Lawsuit include claims related to our business or our assets. Our Sponsor and Mr. Dondero have informed us they believe the Bankruptcy Trust Lawsuit has no merit and Mr. Dondero has informed us he believes the UBS Lawsuit has no merit; we have been advised that the defendants named in each of the lawsuits intend to vigorously defend against the claims. We do not expect the Bankruptcy Trust Lawsuit or the UBS Lawsuit will have a material effect on our business, results of operations or financial condition.
Macroeconomic trends, including increases in or high inflation and rising or high interest rates, may adversely impact our business, financial condition and results of operations. Inflation could have an adverse impact on our operating expenses, as these costs could increase at a rate higher than our rental and other revenue. The high rate environment and ongoing economic uncertainty has limited credit availability to commercial real estate. Less available and more expensive debt capital has had pronounced effects on the capital markets, making property acquisitions and other investments harder to finance. Similar factors also impact the timing of and proceeds generated from asset sales and our ability to obtain debt capital. There is no guarantee we will be able to mitigate the impact of rising or high inflation. To the extent our exposure to increases in or high interest rates on any of our debt is not eliminated through interest rate swaps and interest rate protection agreements, such increases or elevated rates will result in higher debt service costs which will adversely affect our cash flows. We cannot make assurances that our access to capital and other sources of funding will not become constrained, which could adversely affect the availability and terms of future borrowings, renewals or refinancings. Such future constraints could increase our borrowing costs, which would make it more difficult or expensive to obtain additional financing or refinance existing obligations and commitments, which could slow or deter future growth.
The U.S. government announced a comprehensive set of tariffs in the second quarter of 2025. Following the pause of certain of these tariffs, the majority of the previously announced tariffs have been implemented. The U.S. government has indicated that it could impose additional tariffs on particular countries and could impose additional tariffs on certain goods. Such tariffs could impact our results of operations by increasing the costs of various goods, including construction materials. However, the impact of such tariffs is subject to uncertainties regarding the timing of their implementation, whether the U.S. government ultimately imposes additional tariffs, the magnitude of such tariffs and possible exemption for certain goods, among other unknowns.
Our website is located at nxdt.nexpoint.com. From time to time, we may use our website as a distribution channel for material company information.
Components of Our Revenues and Expenses
Revenues
Rental income. Our rental income is primarily attributable to the rental revenue from our investment in Cityplace Tower, a 42-story, 1.36 million-square-foot, trophy office building acquired in 2018 as well as rental income from two retail properties. Our rental income also includes utility reimbursements, late fees, common area maintenance reimbursements, and other rental fees charged to tenants.
Food and beverage revenue. F&B revenue includes revenue generated from the sale of food and/or beverage offerings. All F&B revenue is derived from the Hospitality segment.
Room revenue. Room revenue includes revenue from renting out rooms to customers. All rooms revenue is derived from the Hospitality segment.
Interest income. Interest income includes interest earned from our debt investments.
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Dividend income. Dividend income includes dividends from our equity investments.
Other income. Other income includes ancillary income earned from tenants such as non-refundable fees, parking fees, and other miscellaneous fees charged to tenants and other income items.
Expenses
Property operating expenses. Property operating expenses include property maintenance costs, salary and employee benefit costs, utilities, casualty-related expenses and recoveries and other property operating costs of property owned directly or indirectly by us.
Property management fees. Property management fees include fees paid to NexVest, our property manager, for managing each property directly or indirectly owned by us (see Note 13 to our consolidated financial statements) and other property managers for managing the day-to-day operations of our hotels.
Real estate taxes and insurance. Real estate taxes include the property taxes assessed by local and state authorities depending on the location of each property owned directly or indirectly by us. Insurance includes the cost of commercial, general liability, and other needed insurance for each property owned directly or indirectly by us.
Advisory and administrative fees. Advisory and administrative fees include the fees paid to our Adviser pursuant to the Advisory Agreement and fees previously paid to NexPoint Real Estate Advisors VI, L.P. (the “NHT Adviser”) pursuant to the NHT Advisory Agreement (see Note 13 to our consolidated financial statements).
Property general and administrative expenses. Property general and administrative expenses include the costs of marketing, professional fees, general office supplies, and other administrative related costs of each property owned directly or indirectly by us.
Corporate general and administrative expenses. Corporate general and administrative expenses include, but are not limited to, audit fees, legal fees, listing fees, board of trustee fees, investor relations costs and payments of reimbursements to our Adviser for operating expenses.
Depreciation and amortization. Depreciation and amortization costs primarily include depreciation of our real properties and amortization of acquired in-place leases on property owned directly or indirectly by us.
Impairment loss. Impairment loss includes impairment charges recognized on real estate assets held and used and the loss recognized for real estate held for sale, which is reported at the lower of its carrying amount or its estimated fair value less estimated costs to sell.
Other Income and Expense
Interest Expense. Interest expense primarily includes the cost of interest expense on debt, the amortization of deferred financing costs, if any, and the related impact of interest rate derivatives, if any, used to manage our interest rate risk.
Equity in Earnings (Losses) of Unconsolidated Ventures. Equity in earnings (losses) of unconsolidated ventures represents the change in our basis in equity method investments resulting from our share of the investments’ income and expenses. Profit and loss from equity method investments for which we’ve elected the fair value option are classified in divided income, change in unrealized gains and realized gains as applicable.
Income Tax Expense. Income tax expense is primarily derived from taxable gains from asset sales and other income earned from investments held in NXDT's TRSs and former NHT's TRSs.
Unrealized Gain (Loss) on Investments. Unrealized gains and losses represent changes in fair value for equity method investments, CLO equity investments, bonds, common stock, convertible notes, LLC interests, LP interests, rights and warrants, and senior loans for which the fair value option has been elected.
Realized Gain (Loss) on Investments. The Company recognizes the excess, or deficiency, of net proceeds received, less the carrying value of such investments, as realized gains or losses, respectively. The Company reverses cumulative,
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unrealized gains or losses previously reported in its Consolidated Statements of Operations and Comprehensive Income (Loss) with respect to the investment sold at the time of the sale.
Real Estate Investments Statistics
As of September 30, 2025, the Diversified segment was invested in two retail properties, and one office, multifamily and hospitality property (excluding investments in undeveloped land), and the Hospitality segment consisted of four hotel properties as listed below:
Diversified Segment:
Average Effective Monthly
Occupied Rent Per Square Foot
(1) as of		% Occupied (2) as of
Property NameRentable Square
Footage
(in thousands)		Property TypeDate
Acquired		September 30,
2025		September 30,
2025
White Rock Center82,793 Retail6/13/2013$1.60 81.4 %
5916 W Loop 28930,140 Retail7/23/2013$— — %(4)
Cityplace Tower1,365,711 Office, Multifamily & Hospitality(3)8/15/2018$2.15 46.6 %
1,478,644 
Hospitality Segment:
BrandLocationNameChain ScaleService ScaleYear Built/Last RenovationRooms
Hilton Garden InnDallas, TexasHGI PropertyUpscaleSelect-Service1995/2016240
HyattPark City, UtahPark CityUpscaleFull-Service2016122
Hampton Inn & SuitesBradenton, FloridaBradentonUpscaleSelect-Service1926/2016119
MarriottSt. Petersburg, FloridaSt. Pete PropertyUpper UpscaleFull-Service2001/2021209
Total Rooms:690
(1)Average effective monthly occupied rent per square foot is equal to the average of the contractual rent for commenced leases as of September 30, 2025, minus any tenant concessions over the term of the lease, divided by the occupied square footage of commenced leases as of September 30, 2025.
(2)Percent occupied is calculated as the rentable square footage occupied as of September 30, 2025, divided by the total rentable square footage, expressed as a percentage.
(3)Cityplace is currently under development and the Company is converting part of the property into a hotel, which was still under construction as of September 30, 2025.
(4)The property's tenant vacated in the fourth quarter of 2023. The Company is currently looking into leasing out the property.
Consolidated Results of Operations for the Three and Nine Months Ended September 30, 2025 and 2024
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The three months ended September 30, 2025 as compared to the three months ended September 30, 2024
The following tables set forth a summary of our operating results for the three months ended September 30, 2025 and 2024 (in thousands):
For the Three Months Ended September 30,
20252024$ Change
Total revenues$17,459 $22,216 $(4,757)
Total expenses(20,788)(28,162)7,374
Operating income(3,329)(5,946)2,617
Interest expense(6,903)(8,288)1,385
Equity in income (losses) of unconsolidated ventures(581)400(981)
Income tax (expense) benefit995(700)1,695
Change in unrealized gains (losses)(2,505)(885)(1,620)
Realized gains (losses)6(1)7
Gains on sales of real estate———
Net income (loss)(12,317)(15,420)3,103
Net (income) attributable to Series A preferred shareholders(1,155)(1,155)—
Net (income) attributable to Series B preferred shareholders(220)— (220)
Net loss attributable to noncontrolling interests— 6,538 (6,538)
Net loss attributable to redeemable noncontrolling interests in the OP5 — 5 
Net income (loss) attributable to common shareholders$(13,687)$(10,037)$(3,650)
The net loss for the three months ended September 30, 2025 decreased by $3.1 million as compared to the three months ended September 30, 2024. The decrease between periods primarily relates to a decrease in expenses.
Revenues
Rental income. Rental income was $1.6 million for the three months ended September 30, 2025, compared to $4.4 million for the three months ended September 30, 2024, which was a decrease of approximately $2.8 million. Rental income decreased between the periods due to an increase in the allowance for bad debt related to certain tenants.
Rooms. Rooms revenue was $4.8 million for the three months ended September 30, 2025, compared to $7.3 million for the three months ended September 30, 2024, which was a decrease of approximately $2.5 million. Rooms revenue decreased between the periods due to the disposition of Hospitality properties in 2025.
Food and beverage. F&B revenue was $0.6 million for the three months ended September 30, 2025, compared to $0.5 million for the three months ended September 30, 2024, which was an increase of approximately $0.1 million. The increase between the periods was due to increased food sales.
Interest and dividends. Interest and dividends totaled $10.2 million for the three months ended September 30, 2025, compared to $9.1 million for the three months ended September 30, 2024, which was an increase of approximately $1.1 million. The increase between the periods was primarily due to an increase in dividend income.
Other income. Other income was approximately $0.4 million for the three months ended September 30, 2025, compared to $0.9 million for the three months ended September 30, 2024, which was a decrease of approximately $0.5 million. The decrease between the periods due to a decrease in resort charges, due to the disposition of Hospitality properties in 2025.
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Expenses
Property operating expenses. Property operating expenses were $5.6 million for the three months ended September 30, 2025, compared to $6.3 million for the three months ended September 30, 2024, which was a decrease of approximately $0.7 million. The decrease between the periods was primarily due to the disposition of Hospitality properties in 2025.
Property management fees. Property management fees were $0.3 million for the three months ended September 30, 2025, compared to $0.7 million for the three months ended September 30, 2024, which was a decrease of approximately $0.4 million. The decrease between the periods was primarily due to the disposition of Hospitality properties in 2025.
Real estate taxes and insurance. Real estate taxes and insurance costs were $1.3 million for the three months ended September 30, 2025, compared to $1.6 million for the three months ended September 30, 2024, which was a decrease of approximately $0.3 million. Real estate taxes and insurance expenses consist primarily of expenses from our investment in Cityplace Tower and our Hospitality properties. The decrease between the periods was primarily due to the disposition of Hospitality properties in 2025.
Advisory and administrative fees. For the three months ended September 30, 2025, the Company incurred administrative fees and advisory fees of $3.2 million, compared to $4.0 million for the three months ended September 30, 2024, which was a decrease of approximately $0.8 million. The decrease between the periods is primarily attributed to a decrease in fees paid to the NHT Adviser.
Property general and administrative expenses. Property general and administrative expenses were $1.3 million for the three months ended September 30, 2025, compared to $2.1 million for the three months ended September 30, 2024, which was a decrease of approximately $0.8 million. The decrease between the periods was primarily due to the disposition of Hospitality properties in 2025.
Corporate general and administrative expenses. Corporate general and administrative expenses were $5.2 million for the three months ended September 30, 2025, compared to $2.8 million for the three months ended September 30, 2024, which was an increase of approximately $2.4 million. The increase between the periods was primarily due to an increase in professional fees.
Depreciation and amortization. Depreciation and amortization costs were $3.9 million for the three months ended September 30, 2025, compared to $4.5 million for the three months ended September 30, 2024, which was a decrease of approximately $0.6 million. The decrease between the periods was primarily due to the disposition of Hospitality properties in 2025.
Impairment loss. Impairment loss was $0.0 million for three months ended September 30, 2025, compared to $6.1 million for the three months ended September 30, 2024, which was a decrease of approximately $6.1 million. The decrease between the periods was due to a decrease in impairment charges recorded in 2025.
Other Income and Expense
Interest expense. Interest expense was $6.9 million for the three months ended September 30, 2025, compared to $8.3 million for the three months ended September 30, 2024, which was a decrease of approximately $1.4 million. The decrease between the periods was primarily due a decrease in debt related to paydowns.
Equity in income (losses) of unconsolidated ventures. Equity in income (losses) of unconsolidated ventures was $(0.6) million for the three months ended September 30, 2025, compared to $0.4 million for the three months ended September 30, 2024, which was a decrease of approximately $1.0 million. The decrease between the periods was primarily due to a decrease in net income at Marriott Uptown.
Income tax (expense) benefit. The Company has recorded income tax (expense) benefit of $1.0 million associated with the TRSs for the three months ended September 30, 2025, and $0.7 million associated with the TRSs for the three months ended September 30, 2024. The tax expense (benefit) for the three months ended September 30, 2025 is partially decreased by the annual change in valuation allowance on a deferred tax asset of $0.2 million, an increase in income tax expense of $0.3 million, offset by a return-to-provision adjustment of $0.5 million and decrease of income tax estimate of $1.0 million for a net benefit of $1.0 million for the three months ended September 30, 2025, that is recorded on the
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Consolidated Statements of Operations and Comprehensive Income (Loss). The tax expense for the three months ended September 30, 2024 is partially offset by the annual change in valuation allowance on a deferred tax asset of $0.4 million for a net expense of $0.7 million for the three months ended September 30, 2024, that is recorded on the Consolidated Statements of Operations and Comprehensive Income.
Change in unrealized gains (losses). Unrealized gains (losses) from our investments accounted for at fair value was $(2.5) million for the three months ended September 30, 2025, compared to $(0.9) million for the three months ended September 30, 2024, which was a decrease of approximately $1.6 million. The losses for the three months ended September 30, 2025 were largely driven by mark-to-market losses on VineBrook Homes Operating Partnership, L.P. common units ("VB OP Units") of $5.3 million and NexPoint SFR Operating Partnership, L.P. (“NexPoint SFR OP”) partnership units of $4.6 million, and offset by mark-to-market gains on MidWave Wireless Inc. common stock of $6.2 million. The losses for the three months ended September 30, 2024 were largely driven by mark-to-market losses on VB OP Units of $7.8 million, IQHQ LP interests of $16.1 million, and offset by mark-to-market gains on common units of NREF OP (“NREF OP Units”) of $9.3 million, and NREF common stock of $4.0 million.
The nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024
The following table sets forth a summary of our operating results for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024 (in thousands):
For the Nine Months Ended September 30,
20252024$ Change
Total revenues$67,567 $57,295 $10,272 
Total expenses(65,497)(62,379)(3,118)
Operating income2,070(5,084)7,154
Interest expense(20,816)(20,670)(146)
Equity in income (losses) of unconsolidated ventures(748)(558)(190)
Income tax (expense) benefit423(1,553)1,976
Change in unrealized gains (losses)(77,464)2,251(79,715)
Realized gains (losses)4,987(21,876)26,863
Gains on sales of real estate37—37
Net loss(91,511)(47,490)(44,021)
Net (income) attributable to Series A preferred shareholders(3,465)(3,465)—
Net (income) attributable to Series B preferred shareholders(250)— (250)
Net loss attributable to noncontrolling interests1,945 8,432 (6,487)
Net loss attributable to redeemable noncontrolling interests in the OP25 — 25 
Net income (loss) attributable to common shareholders$(93,256)$(42,523)$(50,733)
The net loss for the nine months ended September 30, 2025 increased by $44.0 million as compared to the nine months ended September 30, 2024. The increase between periods primarily relates to mark-to-market losses on our investments accounted for at fair value.
Revenues
Rental income. Rental income was $9.0 million for the nine months ended September 30, 2025, compared to $12.5 million for the nine months ended September 30, 2024, which was a decrease of approximately $3.5 million. Rental income decreased between the periods due to an increase in the allowance for bad debt related to certain tenants.
Rooms revenue. Rooms revenue was $21.4 million for the nine months ended September 30, 2025, compared to $15.5 million for the nine months ended September 30, 2024, which was an increase of approximately $5.9 million. The increase between the periods is due to the Hospitality segment not being consolidated prior to April 19, 2024.
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Food and beverage revenue. F&B revenue was $2.2 million for the nine months ended September 30, 2025, compared to $1.3 million for the nine months ended September 30, 2024, which was an increase of approximately $0.9 million. The increase between the periods is due to the Hospitality segment not being consolidated prior to April 19, 2024.
Interest and dividends. Interest and dividends totaled $34.1 million for the nine months ended September 30, 2025, compared to $26.7 million for the nine months ended September 30, 2024, which was an increase of approximately $7.4 million. The increase between the periods was attributed to an increase in dividends from equity investments.
Other income. Other income was approximately $1.0 million for the nine months ended September 30, 2025, compared to $1.3 million for the nine months ended September 30, 2024, which was a decrease of approximately $0.3 million. The decrease between the periods was primarily due to a decrease in resort charges, associated with a decrease in Hospitality assets.
Expenses
Property operating expenses. Property operating expenses were $18.1 million for the nine months ended September 30, 2025, compared to $14.7 million for the nine months ended September 30, 2024, which was an increase of approximately $3.4 million. The increase between the periods was primarily due to the NHT consolidation.
Property management fees. Property management fees were $1.2 million for the nine months ended September 30, 2025, compared to $1.0 million for the nine months ended September 30, 2024, which was an increase of approximately $0.2 million. The increase between the periods was primarily due to the NHT consolidation.
Real estate taxes and insurance. Real estate taxes and insurance costs were $4.7 million for the nine months ended September 30, 2025, compared to $4.7 million for the nine months ended September 30, 2024, which was flat. Real estate taxes and insurance expenses consist primarily of expenses from our investment in Cityplace Tower and our Hospitality properties.
Advisory and administrative fees. For the nine months ended September 30, 2025, the Company incurred administrative fees and advisory fees of $13.9 million. For the nine months ended September 30, 2024, the Company incurred administrative fees and advisory fees of $10.7 million. The increase between the nine months ended September 30, 2025 and the nine months ended September 30, 2024, is primarily attributed to a one-time termination fee paid to the former NHT Adviser in connection with the termination of the NHT Advisory Agreement following the NHT Merger.
Property general and administrative expenses. Property general and administrative expenses were $4.9 million for the nine months ended September 30, 2025, compared to $4.9 million for the nine months ended September 30, 2024, which was flat.
Corporate general and administrative expenses. Corporate general and administrative expenses were $9.1 million for the nine months ended September 30, 2025, compared to $8.9 million for the nine months ended September 30, 2024, which was an increase of approximately $0.2 million. The increase between periods was primarily due to an increase in professional fees.
Depreciation and amortization. Depreciation and amortization costs were $11.8 million for the nine months ended September 30, 2025, compared to $11.4 million for the nine months ended September 30, 2024, which was an increase of approximately $0.4 million. The increase between the periods was primarily due to the NHT consolidation.
Impairment loss. Impairment loss was $1.8 million for nine months ended September 30, 2025, compared to $6.1 million for the nine months ended September 30, 2024, which was a decrease of approximately $4.3 million. The decrease between the periods was due to a decrease in impairment charges recorded in 2025.
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Other Income and Expense
Interest expense. Interest expense was $20.8 million for the nine months ended September 30, 2025, compared to $20.7 million for the nine months ended September 30, 2024, which was an increase of approximately $0.1 million. The increase between the periods was primarily due to the NHT consolidation.
Equity in income (losses) of unconsolidated ventures. Equity in losses of unconsolidated ventures was $(0.7) million for the nine months ended September 30, 2025, compared to $(0.6) million for the nine months ended September 30, 2024, which was a decrease of approximately $0.1 million. The decrease between periods was primarily due to a decrease in net loss at Marriott Uptown.
Income tax (expense) benefit. The Company has recorded income tax (expense) benefit of $0.4 million associated with the TRSs for the nine months ended September 30, 2025 and $(1.6) million associated with the TRSs for the nine months ended September 30, 2024. The tax expense for the nine months ended September 30, 2025 is comprised of an income tax expense of $1.1 million, offset with a return-to-tax provision of $0.5 million and a decrease of income tax estimate of $1.0 million for a net benefit of $0.4 million for the nine months ended September 30, 2025 that is recorded on the Consolidated Statements of Operations and Comprehensive Income (Loss). The tax expense for the nine months ended September 30, 2024 is partially offset by the annual change in valuation allowance on a deferred tax asset of $0.2 million for a net expense of $1.6 million for the nine months ended September 30, 2024, that is recorded on the Consolidated Statements of Operations and Comprehensive Income.
Change in unrealized gains (losses). Unrealized gains (losses) from our investments accounted for at fair value was $(77.5) million for the nine months ended September 30, 2025, compared to $2.3 million for the nine months ended September 30, 2024, which was a decrease of approximately $(79.8) million. The losses for the nine months ended September 30, 2025 were largely driven by mark-to-market losses on VB OP Units of $22.9 million, NexPoint SFR OP partnership units of $13.4 million, IQHQ LP interests of $15.1 million and NREF OP Units of $7.4 million. The gains for the nine months ended September 30, 2024 were largely driven by redemptions of the legacy CLO positions, which generated realized losses and a positive change in unrealized, mark-to-market gains on VB OP Units of $7.8 million, offset by NREF OP Units of $9.3 million, and NREF common stock of $4.0 million.
Realized gains (losses). Realized gains (losses) were $5.0 million for the nine months ended September 30, 2025, compared to $(21.9) million for the nine months ended September 30, 2024, which was an increase of approximately $26.9 million. The gains for the nine months ended September 30, 2025 were primarily driven by realized gains on United Development Funding IV common equity. The losses for the nine months ended September 30, 2024 were primarily driven by realized losses on the legacy CLOs of $22.8 million.
Non-GAAP Measurements
Consolidated Net Operating Income and Same Store Net Operating Income
Net Operating Income ("NOI") is a non-GAAP financial measure of performance. NOI is used by investors and our management to evaluate and compare the performance of our properties between segments and to other comparable properties, to determine trends in earnings and to compute the fair value of our properties as NOI is calculated by adjusting net income (loss) to add back (1) interest expense, (2) advisory fees and administrative fees, (3) the impact of depreciation and amortization, (4) corporate general and administrative expenses, (5) income tax expenses, (6) non-operating property investment revenue, (7) realized and change in unrealized gains (losses) generated from non-real estate investments, (8) equity in income (losses) of unconsolidated equity method ventures, and (9) impairment loss.
We believe that eliminating these items from net income (loss) is useful because the resulting measure captures the actual ongoing revenue generated and actual expenses incurred in operating our properties as well as trends in occupancy rates, rental rates and operating costs. However, the usefulness of NOI is limited because it excludes these items, all of which may be material values. NOI may fail to capture significant trends in these components of net income, which further limits its usefulness.
NOI is a measure of the operating performance of our properties but does not measure our performance as a whole. NOI is therefore not a substitute for net income (loss) as computed in accordance with GAAP. This measure should be analyzed in conjunction with net income (loss) computed in accordance with GAAP and discussions elsewhere in “—
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Consolidated Results of Operations” regarding the components of net income (loss) that are eliminated in the calculation of NOI.
Other companies may use different methods for calculating NOI or similarly entitled measures and, accordingly, our NOI may not be comparable to similarly entitled measures reported by other companies that do not define the measure exactly as we do.
We define “Same Store NOI” as NOI for our properties that are comparable between periods, are stabilized and are not expected to cease being stabilized in the near future due to planned construction, renovation or similar activity that would materially impact operations. Please see below for a discussion of properties included as Same Store. We view Same Store NOI as an important measure of the operating performance of our properties because it allows us to compare operating results of properties owned for the entirety of the current and comparable periods and therefore eliminates variations caused by acquisitions or dispositions from the beginning of the compared period to the end of the current period.
There are three properties, White Rock Center, 5916 W Loop 289 and Park City, in our same store pool for the three months ended September 30, 2025 and 2024. Our Same Store properties exclude Cityplace Tower as of September 30, 2025 and 2024, because it was not yet stabilized, meaning construction or renovation was not completed. Our Same Store properties for the three months ended September 30, 2025 and 2024 also exclude the HGI Property, Bradenton and St. Pete Property, as the properties have planned renovation activity expected to commence in the near future that is anticipated to materially impact operations. Non-Same Store properties for the three months ended September 30, 2025 and 2024 include properties not yet stabilized and certain properties that have planned construction, renovation or similar activity expected to commence in the near future that will result in such properties not being stabilized. Non-Same Store properties for the nine months ended September 30, 2025 and 2024 include properties not yet stabilized or that were not held for the full comparable period.
There are two properties, White Rock Center and 5916 W Loop 289, that were considered our Same Store properties for the nine months ended September 30, 2025, and 2024. Our Same Store properties exclude Cityplace Tower as of September 30, 2025 and 2024, because it was not yet stabilized, meaning construction or renovation was not completed. For the nine months ended September 30, 2025, and 2024, our Same Store properties also exclude the Hospitality segment, as the properties in that segment were not held in the full comparable period. Non-Same Store properties for the nine months ended September 30, 2025, and 2024 include properties not yet stabilized or that were not held for the full comparable period.
Consolidated NOI and Same Store NOI for the Three and Nine Months Ended September 30, 2025 and 2024
The following table, which has not been adjusted for the effects of NCI, reconciles our consolidated NOI for the three and nine months ended September 30, 2025 and 2024 to net income (loss), the most directly comparable GAAP financial measure (in thousands):
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For the Three Months Ended September 30For the Nine Months Ended September 30
2025202420252024
Net loss$(12,317)$(15,420)$(91,511)$(47,490)
Adjustments to reconcile net loss to NOI:
Advisory and administrative fees3,218 3,976 13,880 10,665 
Corporate general and administrative expenses5,198 2,843 9,145 8,873 
Income tax expense(995)700 (423)1,553 
Depreciation and amortization3,858 4,510 11,795 11,408 
Interest expense6,903 8,288 20,816 20,670 
Non-operating property investment revenue (1)(10,166)(9,050)(34,129)(26,685)
Realized (gains) losses from non-real estate investments(6)1 (4,987)21,876 
Change in unrealized (gains) losses from non-real estate investments2,505 885 77,464 (2,251)
Equity in (income) losses of unconsolidated equity method ventures581 (400)748 558 
Impairment loss— 6,134 1,752 6,134 
NOI$(1,221)$2,467 $4,550 $5,311 
Less Non-Same Store
Revenues$(5,491)$(11,497)$(32,145)$(29,540)
Operating expenses7,357 9,540 28,435 24,849 
Operating income— — (37)— 
Same Store NOI$645 $510 $803 $620 
(1)Non-operating property investment revenue is defined as revenue included in the consolidated financial statements that are from non-operating properties such as dividend income and interest income.
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The following table, which has not been adjusted for the effects of NCI, reconciles our NOI for each of our segments for the three and nine months ended September 30, 2025 to net income (loss), the most directly comparable GAAP financial measure by reportable segment (in thousands):

For the Three Months Ended September 30,
For the Nine Months Ended September 30,
20252025
DiversifiedHospitalityTotalDiversifiedHospitalityTotal
Net loss$(7,173)$(5,144)$(12,317)$(78,569)$(12,942)$(91,511)
Adjustments to reconcile net loss to NOI:
Non-operating property investment revenue (1)(9,772)(394)(10,166)(33,089)(1,040)(34,129)
Advisory and administrative fees3,218—3,2189,9823,89813,880
Corporate general and administrative expenses2,8452,3535,1988,4227239,145
Depreciation and amortization2,7861,0723,8588,5073,28811,795
Impairment loss————1,7521,752
Interest expense3,7133,1906,90311,2269,59020,816
Equity in (income) losses of unconsolidated equity method ventures581—581748—748
Change in unrealized (gains) losses from non-real estate investments2,505—2,50577,464—77,464
Realized (gains) losses from non-real estate investments(6)—(6)(4,987)—(4,987)
Income tax expense(153)(842)(995)331(754)(423)
NOI$(1,456)$235 $(1,221)$35 $4,515 $4,550 
Less Non-Same Store
Revenues$(516)$(4,975)$(5,491)$(8,564)$(23,581)$(32,145)
Operating expenses2,2825,0757,3579,33219,10328,435
Operating income————(37)(37)
Same Store NOI$310 $335 $645 $803 $— $803 
(1)Non-operating property investment revenue is defined as revenue included in the consolidated financial statements that are from non-operating properties such as dividend income and interest income.
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Consolidated NOI for Our Same Store and Non-Same Store Properties for the Three Months Ended September 30, 2025 and 2024
The following table reflects the revenues, property operating expenses and NOI for the three months ended September 30, 2025 and 2024 for our Same Store and Non-Same Store properties (dollars in thousands):
For the Three Months Ended September 30
20252024$ Change% Change
Revenues
Same Store
Rental income$484 $364 $120 33.0 %
Rooms1,013 1,034 (21)-2.0 %
Food and beverage112 98 14 13.8 %
Other income168 172 (4)-2.2 %
Same Store revenues1,777 1,668 99 6.5 %
Non-Same Store
Rental income1,132 4,083 (2,951)N/M
Rooms3,745 6,246 (2,501)-40.0 %
Food and beverage441 435 6 1.4 %
Other income173 733 (560)N/M
Non-Same Store revenues5,491 11,497 (6,006)N/M
Total revenues7,268 13,165 (5,897)-44.8 %
Operating expenses
Same Store
Property operating expenses766 748 18 2.4 %
Real estate taxes and insurance131 119 12 10.1 %
Property management fees56 52 4 7.7 %
Property general and administrative expenses179 240 (61)-25.4 %
Same Store operating expenses1,132 1,159 (27)-2.3 %
Non-Same Store
Property operating expenses4,799 5,591 (792)-14.2 %
Real estate taxes and insurance1,183 1,520 (337)-22.2 %
Property management fees246 613 (367)N/M
Property general and administrative expenses1,129 1,817 (688)-37.9 %
Non-Same Store operating expenses7,357 9,541 (2,184)-22.9 %
Total operating expenses8,489 10,700 (2,211)-20.7 %
NOI
Same Store645 510 135 26.5 %
Non-Same Store(1,866)1,956 (3,822)N/M
Total NOI$(1,221)$2,466 $(3,687)N/M
Consolidated Same Store Results of Operations for the Three Months Ended September 30, 2025 and 2024
As of September 30, 2025, the properties in our Same Store pool for the three months ended September 30, 2025 and 2024 were approximately 59.7% leased with a weighted average monthly effective occupied rent per square foot of $1.18, compared to 55.2% leased with a weighted average monthly effective occupied rent per square foot of $1.16 as of September 30, 2024. As of September 30, 2025, the properties in our Same Store pool for the three months ended
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September 30, 2025 and 2024 had an occupancy of 69.4%, compared to 65.3% as of September 30, 2024. As of September 30, 2025, the properties in our Same Store pool for the three months ended September 30, 2025 and 2024 had an Average Daily Rate (“ADR”) of $129.56, compared to $138.53 as of September 30, 2024. As of September 30, 2025, properties in our Same Store pool for the three months ended September 30, 2025 and 2024 had a Revenue per Available Room (“RevPAR”) of $89.87, compared to $90.52 as of September 30, 2024. For the properties in our Same Store pool for the three months ended September 30, 2025 and 2024, we recorded the following operating results for the three months ended September 30, 2025 and 2024.
Revenues
Rental Income. Rental income was $484.0 thousand for the three months ended September 30, 2025, compared to $364.1 thousand for the three months ended September 30, 2024, which was an increase of approximately $120.0 thousand or 33.0%. The majority of the increase between the three months ended September 30, 2025 and the three months ended September 30, 2024 is related to an increase in occupancy at White Rock Center.
Rooms. Rooms income was $1,013.3 thousand for the three months ended September 30, 2025, compared to $1,034.4 thousand for the three months ended September 30, 2024, which was a decrease of approximately $21.0 thousand or 2.0%. The majority of the decrease between the three months ended September 30, 2025 and the three months ended September 30, 2024 is related to a lower ADR and RevPAR.
Food and Beverage. Food and Beverage income was $111.5 thousand for the three months ended September 30, 2025, compared to $98.1 thousand for the three months ended September 30, 2024, which was an increase of approximately $14.0 thousand or 13.8%. The majority of the increase between the three months ended September 30, 2025 and the three months ended September 30, 2024 is related to an increase in occupancy at Park City.
Other Income. Other income was $168.2 thousand for the three months ended September 30, 2025, compared to $172.2 thousand for the three months ended September 30, 2024, which was a decrease of approximately $4.0 thousand or 2.2%. The majority of the decrease between the three months ended September 30, 2025 and the three months ended September 30, 2024 is related to a decrease in room damage revenue.
Expenses
Property operating expenses. Property operating expenses were $766.0 thousand for the three months ended September 30, 2025, compared to $747.6 thousand for the three months ended September 30, 2024, which was an increase of approximately $18.0 thousand or 2.4%. The majority of the increase between the three months ended September 30, 2025 and the three months ended September 30, 2024 is related to an increase in repair and maintenance fees.
Real estate taxes and insurance. Real estate taxes and insurance costs were $131.0 thousand for the three months ended September 30, 2025, compared to $118.7 thousand for the three months ended September 30, 2024, which was an increase of approximately $12.0 thousand or 10.1%. The majority of the increase between the three months ended September 30, 2025 and the three months ended September 30, 2024 is related to an increase in the property tax budget.
Property management fees. Property management fees were $56.0 thousand for the three months ended September 30, 2025, compared to $52.3 thousand for the three months ended September 30, 2024, which was an increase of approximately $4.0 thousand, or 7.7%. The increase between the three months ended September 30, 2025 and the three months ended September 30, 2024 is related to an increase in rental revenue, which the management fee is calculated off of.
Property general and administrative expenses. Property general and administrative expenses were $179.0 thousand for the three months ended September 30, 2025, compared to $239.5 thousand for the three months ended September 30, 2024, which was a decrease of approximately $61.0 thousand. The decrease between the three months ended September 30, 2025 and the three months ended September 30, 2024 is related to a decrease in professional fees.
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Consolidated NOI for Our Same Store and Non-Same Store Properties for the Nine Months Ended September 30, 2025 and 2024
The following table reflects the revenues, property operating expenses and NOI for the nine months ended September 30, 2025 and 2024 for our Same Store and Non-Same Store properties (dollars in thousands):
For the Nine Months Ended September 30
20252024$ Change% Change
Revenues
Same Store
Rental income$1,292 $1,071 $221 20.6 %
Same Store revenues1,292 1,071 221 20.6 %
Non-Same Store
Rental income7,682 11,408 (3,726)-32.7 %
Other income882 1,307 (425)-32.5 %(1)
Rooms21,389 15,480 5,909 38.2 %
Food and beverage2,192 1,345 847 N/M
Non-Same Store revenues32,145 29,540 2,605 8.8 %(1)
Total revenues33,437 30,611 2,826 9.2 %(1)
Operating expenses
Same Store
Property operating expenses189 126 63 50.0 %
Real estate taxes and insurance216 211 5 2.4 %
Property management fees65 58 7 12.1 %
Property general and administrative expenses19 55 (36)N/M
Same Store operating expenses489 450 39 8.7 %
Non-Same Store
Property operating expenses17,884 14,546 3,338 22.9 %(1)
Real estate taxes and insurance4,512 4,441 71 1.6 %(1)
Property management fees1,143 969 174 18.0 %(1)
Property general and administrative expenses4,896 4,893 3 0.1 %(1)
Non-Same Store operating expenses28,435 24,849 3,586 14.4 %(1)
Total operating expenses28,924 25,300 3,625 14.3 %(1)
Operating income
Non-Same Store
Realized gains (losses)37 — 37 — %
Total operating income37 — 37 — %
NOI
Same Store803 621 182 29.3 %
Non-Same Store3,747 4,691 (944)-20.1 %(1)
Total NOI$4,550 $5,311 $(762)-14.3 %(1)
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(1)Denotes that the significant percentage change in the current period comparison is primarily attributed to the consolidation of NHT.
See reconciliation of net income (loss) to NOI above under “Consolidated NOI and Same Store NOI for the Nine Months Ended September 30, 2025 and 2024.”
Consolidated Same Store Results of Operations for the Nine Months Ended September 30, 2025 and 2024
As of September 30, 2025, the properties in our Same Store pool for the nine months ended September 30, 2025 and 2024 were approximately 59.7% leased with a weighted average monthly effective occupied rent per square foot of $1.18, compared to 55.2% leased with a weighted average monthly effective occupied rent per square foot of $1.16 as of September 30, 2024. For the properties in our Same Store pool for the nine months ended September 30, 2025 and 2024, we recorded the following operating results for the nine months ended September 30, 2025 and 2024.
Revenues
Rental Income. Rental income was $1,292.0 thousand for the nine months ended September 30, 2025, compared to $1,071.5 thousand for the nine months ended September 30, 2024, which is an increase of approximately $221.0 thousand or 20.6%. The majority of the increase between the nine months ended September 30, 2025 and the nine months ended September 30, 2024 is due to an increase in occupancy at White Rock Center.
Expenses
Property operating expenses. Property operating expenses were $189.0 thousand for the nine months ended September 30, 2025, compared to $126.2 thousand for the nine months ended September 30, 2024, which was an increase of approximately $63.0 thousand or 50.0%. The majority of the increase between the nine months ended September 30, 2025 and the nine months ended September 30, 2024 is related to an increase in repair and maintenance fees.
Real estate taxes and insurance. Real estate taxes and insurance costs were $216.0 thousand for the nine months ended September 30, 2025, compared to $211.3 thousand for the nine months ended September 30, 2024, which was an increase of approximately $5.0 thousand or 2.4%. The majority of the increase between the nine months ended September 30, 2025 and the nine months ended September 30, 2024 is related to an increase in the property tax budget.
Property management fees. Property management fees were $65.0 thousand for the nine months ended September 30, 2025, compared to $57.8 thousand for the nine months ended September 30, 2024, which was an increase of approximately $7.0 thousand, or 12.1%. The increase between the nine months ended September 30, 2025 and the nine months ended September 30, 2024 is related to an increase in rental revenue, which the management fee is calculated off of.
Property general and administrative expenses. Property general and administrative expenses were $19.0 thousand for the nine months ended September 30, 2025, compared to $55.0 thousand for the nine months ended September 30, 2024, which was a decrease of approximately $36.0 thousand, which was not a material change. The majority of the decrease between the nine months ended September 30, 2025 and the nine months ended September 30, 2024 is related to a decrease in professional fees.
Consolidated FFO and AFFO
We believe that net income (loss), as defined by GAAP, is the most appropriate earnings measure. We also believe that funds from operations (“FFO”), as defined by the National Association of Real Estate Investment Trusts (“NAREIT”) and adjusted funds from operations (“AFFO”) are important non-GAAP supplemental measures of operating performance for a REIT.
Since the historical cost accounting convention used for real estate assets requires depreciation except on land, such accounting presentation implies that the value of real estate assets diminishes predictably over time. However, since real estate values have historically risen or fallen with market and other conditions, presentations of operating results for a REIT that use historical cost accounting for depreciation could be less informative. Thus, NAREIT created FFO as a supplemental measure of operating performance for REITs that excludes historical cost depreciation and amortization, among other items, from net income (loss), as defined by GAAP. We compute FFO attributable to common shareholders as net income (loss), excluding gains or losses from real estate dispositions, plus real estate depreciation and amortization,
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plus impairment losses and realized gains (losses). Our calculation of FFO differs slightly from NAREIT's definition of FFO because we exclude realized gains (losses). We believe the exclusion of realized gains (losses) is appropriate because these realized gains (losses) are not related to our real estate properties. Our presentation differs slightly in that we begin with net income (loss) before adjusting for amounts attributable to redeemable non-controlling interests in NHT and redeemable non-controlling interests in the OP and we show the combined amounts attributable to such non-controlling interests as an adjustment to arrive at FFO attributable to common shareholders.
AFFO makes certain adjustments to FFO in order to arrive at a more refined measure of the operating performance of our Portfolio. There is no industry standard definition of AFFO and practice is divergent across the industry. AFFO adjusts FFO to remove items such as equity based compensation expense and the amortization of deferred financing costs incurred in connection with obtaining long-term debt financing, non-controlling interests (as described above) related to these items, change in unrealized gains (losses) and a one-time termination fee paid to the former NHT Adviser in connection with the termination of the NHT Advisory Agreement following the NHT Merger. We believe AFFO is useful to investors as a supplemental gauge of our operating performance and is useful in comparing our operating performance with other REITs that are not as involved in the aforementioned activities.
We believe that the use of FFO and AFFO, combined with the required GAAP presentations, improves the understanding of operating results of REITs among investors and makes comparisons of operating results among such companies more meaningful. While FFO and AFFO are relevant and widely used measures of operating performance of REITs, they do not represent cash flows from operations or net income (loss) as defined by GAAP and should not be considered as an alternative or substitute to those measures in evaluating our liquidity or operating performance. FFO and AFFO do not purport to be indicative of cash available to fund our future cash requirements. Further, our computation of FFO and AFFO may not be comparable to FFO and AFFO reported by other REITs that do not define FFO in accordance with the current NAREIT definition or that interpret the current NAREIT definition or define AFFO differently than we do.
The following table reconciles our calculations of FFO and AFFO to net income (loss), the most directly comparable GAAP financial measure, for the nine months ended September 30, 2025 and 2024 (in thousands, except per share amounts):
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For the Three Months Ended September 30,For the Three Months Ended September 30,For the Nine Months Ended September 30For the Nine Months Ended September 30
2025202420252024% Change (1)
Net income (loss)$(12,317)$(15,420)$(91,511)$(47,490)N/M
Depreciation and amortization3,858 4,510 11,795 11,408 3.4 %
Realized (gains) losses(6)1 (4,987)21,876 N/M
Gain on sales of real estate— — (37)— — %
Impairment loss— 6,134 1,752 6,134 N/M
Adjustment for noncontrolling interests— 3,065 615 4,331 N/M
Adjustment for redeemable noncontrolling interests in the OP5 — 25 — — %
FFO(8,460)(1,710)(82,348)(3,741)N/M
Distributions to Series A preferred shareholders(1,155)(1,155)(3,465)(3,465)— %
Distributions to Series B preferred shareholders(220)— (250)— — %
FFO attributable to common shareholders(9,835)(2,865)(86,063)(7,206)N/M
FFO per share - basic$(0.21)$(0.07)$(1.90)$(0.18)N/M
FFO per share - diluted$(0.21)$(0.07)$(1.90)$(0.18)N/M
Equity-based compensation expense 1,138 414 3,605 2,193 N/M
Amortization of deferred financing costs - long term debt575 (133)914 (580)N/M
Change in unrealized (gains) losses2,505 885 77,464 (2,251)N/M
Termination fee expense(2)— — 3,539 — — %
AFFO attributable to common shareholders(5,617)(1,699)(541)(7,844)N/M
AFFO per share - basic$(0.12)$(0.04)$(0.01)$(0.20)N/M
AFFO per share - diluted$(0.11)$(0.04)$(0.01)$(0.19)N/M
Weighted average common shares outstanding - basic47,436 40,786 45,324 39,662 14.3 %
Weighted average common shares outstanding - diluted(3)48,916 42,221 45,479 40,872 11.3 %
Distributions declared per common share$0.15 $0.15 $0.45 $0.45 — %
Net income (loss) coverage(4)-1.73x-2.52x-4.49x-2.66xN/M
FFO Coverage - diluted(4)-1.4x-0.44x-4.22x-0.40xN/M
AFFO Coverage - diluted(4)-0.77x-0.27x-0.02x-0.43xN/M
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(1)Represents the percentage change for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.
(2)Represents one-time termination fee paid to the former NHT Adviser in connection with the termination of the NHT Advisory Agreement following the NHT Merger. Management considers this not indicative of ongoing operating performance.
(3)The Company uses actual diluted weighted average common shares outstanding when in a dilutive position for FFO and AFFO.
(4)Indicates coverage ratio of net income (loss)/FFO/AFFO per common share (diluted) over distributions declared per common share during the period.
The three months ended September 30, 2025 as compared to the three months ended September 30, 2024
FFO was $(8.5) million for the three months ended September 30, 2025, compared to $(1.7) million for the three months ended September 30, 2024, which was a decrease of approximately $6.7 million. The change in our FFO between the three months ended September 30, 2025 and the three months ended September 30, 2024 primarily relates to an increase in unrealized losses, primarily attributed to decreases in mark-to-market values of our investments at fair value.
AFFO was $(5.6) million for the three months ended September 30, 2025, compared to $(1.7) million for the three months ended September 30, 2024, which was a decrease of approximately $3.9 million. The change in our AFFO between the three months ended September 30, 2025 and the three months ended September 30, 2024 primarily relates to a decrease in expenses.
The nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024
FFO was $(82.3) million for the nine months ended September 30, 2025, compared to $(3.7) million for the nine months ended September 30, 2024, which was a decrease of approximately $78.6 million. The change in our FFO between the nine months ended September 30, 2025 and the nine months ended September 30, 2024 primarily relates to an increase in unrealized losses, primarily attributed to decreases in mark-to-market values of our investments at fair value.
AFFO was $(0.5) million for the nine months ended September 30, 2025, compared to $(7.8) million for the nine months ended September 30, 2024, which was an increase of approximately $7.3 million. The change in our AFFO between the nine months ended September 30, 2025 and the nine months ended September 30, 2024 primarily relates to an increase in total revenues, primarily attributed to an increase in rooms revenue.
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Net Asset Value
The SEC does not provide rules on the methodology we must use to determine our NAV or NAV per common share. The determination of NAV involves a number of subjective assumptions, estimates and judgments that may not be accurate or complete. We believe there is no established practice among REITs for calculating NAV. Different firms using different property-specific, general real estate, capital markets, economic and other assumptions, estimates and judgments could derive a NAV that could be significantly different from our NAV. Thus, other public REITs methodologies used to calculate NAV may differ materially from ours. Additionally, our NAV differs from the values of our real estate assets as calculated in accordance with GAAP, in that we calculate NAV based on the Consolidated Balance Sheets as total assets minus total liabilities, less any equity attributable to preferred shareholders (such as the Series A Preferred Shares and the Series B Preferred Shares) and noncontrolling interests. Our NAV per common share is calculated by dividing our NAV by our diluted common shares outstanding, which represents the aggregate of our common shares outstanding plus any unvested restricted share units as of the last day of the reporting period, and common shares assumed to be issued upon redemption of any outstanding and applicable Series B Preferred Shares. We calculate NAV per common share on a quarterly basis beginning with the quarter ended December 31, 2024.
The presentation of NAV and NAV per common share below is intended to be the Applicable NAV (as defined in the statement of preferences of the Series B Preferred Shares) for purposes of the offering of the Series B Preferred Shares. The below table presents the NAV calculation (in thousands, except per common share amounts):
As OfTotal AssetsTotal LiabilitiesSeries A Preferred Shares (1)Series B Preferred Shares (2)NCINAVDiluted Common Shares OutstandingNAV Per Common Share
September 30, 20251,106,669 (356,542)(83,252)(10,834)(328)655,713 53,863 $12.17 
(1)Represents the liquidation preference, net of approximately $0.7 million issuance costs, from the issuance of the Company’s Series A Preferred Shares.
(2)Represents the liquidation preference, net of approximately $1.1 million issuance costs, from the issuance of the Company’s Series B Preferred Shares.
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Liquidity and Capital Resources
Our short-term liquidity requirements consist primarily of funds necessary to pay for debt maturities, operating expenses and other expenditures including:
•capital expenditures to continue the ongoing development of Cityplace Tower;
•capital expenditures necessary to maintain the Hospitality hotel properties;
•interest expense and scheduled principal payments on outstanding indebtedness (see “—Obligations and Commitments” below);
•recurring maintenance necessary to maintain our properties;
•distributions necessary to qualify for taxation as a REIT;
•income taxes for taxable income generated by TRS entities;
•acquisition of additional properties or investments;
•advisory and administrative fees payable to our Adviser;
•general and administrative expenses;
•reimbursements to our Adviser; and
•property management fees.
We expect to meet our short-term liquidity requirements generally through our investment income, existing cash balance, the Series B Preferred Offering and, if necessary, future debt or equity issuances. As of September 30, 2025, we had $5.3 million of cash available to meet our short-term liquidity requirements. As of September 30, 2025, we also had $32.5 million of restricted cash held in reserve by the lender on the Cityplace Tower debt. These reserves include escrows for property taxes and insurance, reserves for tenant improvements as well as required excess collateral. As of September 30, 2025, we also had $0.6 million of restricted cash held in reserve by the lender on the NexBank Revolver. These reserves are to be used for future interest payments on the debt facility. As of September 30, 2025, we also had $11.8 million of restricted cash reserves associated with the Hospitality segment for brand-mandated performance improvement plans and furniture, fixtures and equipment upgrades arising from the execution of the Company’s franchise agreement and future insurance and property tax expenses.
Our long-term liquidity requirements consist primarily of funds necessary to pay for the costs of acquiring additional properties, make additional accretive investments pursuant to our investment strategy, renovations and other capital expenditures to improve our properties and scheduled debt payments and distributions. We expect to meet our long-term liquidity requirements through various sources of capital, including the Series B Preferred Offering, and which may also include a revolving credit facility and future debt or equity issuances, existing working capital, net cash provided by operations, long-term mortgage indebtedness and other secured and unsecured borrowings, and property and non-real estate asset dispositions. However, there are a number of factors that may have a material adverse effect on our ability to access these capital sources, including the state of overall equity and credit markets, our degree of leverage, our unencumbered asset base and borrowing restrictions imposed by lenders (including as a result of any failure to comply with financial covenants in our existing and future indebtedness), general market conditions for REITs, our operating performance and liquidity, market perceptions about us and restrictions on sales of properties under the Code. The success of our business strategy will depend, in part, on our ability to access these various capital sources.
In addition to our ongoing renovation of Cityplace Tower, our other properties will require periodic capital expenditures and renovation to remain competitive. We estimate an additional $250 million to $270 million of capital expenditures to complete the Cityplace Tower renovation. Also, acquisitions, redevelopments, or expansions of our properties will require significant capital outlays. Long-term, we may not be able to fund such capital improvements solely from net cash provided by operations because we must distribute annually at least 90% of our REIT taxable income, determined without regard to the deductions for distributions paid and excluding net capital gains, to qualify and maintain our qualification as a REIT, and we are subject to tax on any retained income and gains. As a result, our ability to fund capital expenditures, acquisitions, or redevelopment through retained earnings long-term is limited. Consequently, we expect to rely heavily upon the availability of debt or equity capital for these purposes. If we are unable to obtain the
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necessary capital on favorable terms, or at all, our financial condition, liquidity, results of operations, and prospects could be materially and adversely affected.
NXDT is focused on reallocating its asset allocation across sectors in which our Sponsor has extensive experience and expertise. This re-focusing will involve selling legacy assets that do not fall within our core investment strategy or recycling assets at attractive prices. A more favorable capital market environment, with lower interest rates and increased liquidity, is expected to facilitate this process. The Company’s objective is to opportunistically sell $100 million to $150 million in assets to free up capital for reinvestment (through debt or equity) in target asset classes such as residential, hospitality, self-storage, and life sciences, or to repurchase NXDT’s common stock. As part of this process, NXDT remains in contact with entities in which it is invested and has received information about ongoing discussions that could result in the monetization, in either or both of the first and second quarters of 2026, of one or more of NXDT’s investments.
We believe that our available cash, expected operating cash flows, and potential debt or equity financings will provide sufficient funds for our operations, anticipated scheduled debt service payments and distribution requirements for the twelve-month period following September 30, 2025. See “—Debt” for additional details regarding our indebtedness and related liquidity requirements.
Recent Tax Law Update
On July 4, 2025, President Trump signed into law the legislation known as the One Big Beautiful Bill Act (“the OBBBA”). The OBBBA made significant changes to the U.S. federal income tax laws in various areas. Among the notable changes, the OBBBA permanently extended certain provisions that were enacted in the Tax Cuts and Jobs Act of 2017, most of which were set to expire after December 31, 2025. These include the permanent extension of (i) the reduced marginal U.S. federal income tax rates and (ii) the 20% deduction on “qualified REIT dividends” for individuals and other non-corporate taxpayers and (iii) the limitation on non-corporate taxpayers using “excess business losses” to offset other income. The OBBBA also increased the percentage limit under the REIT asset test applicable to TRSs from 20% to 25% for taxable years beginning after December 31, 2025. As a result, for taxable years beginning after December 31, 2025, the aggregate value of all securities of TRSs held by a REIT may not exceed 25% of the value of its gross assets.
Series B Preferred Shares Offering
On January 30, 2025, the Company announced the launch of a continuous public offering of up to 16,000,000 shares of its newly designated Series B Preferred Shares at a price to the public of $25.00 per share, for gross proceeds of up to $400.0 million. The Series B Preferred Shares are convertible at the option of the holder thereof into our common shares beginning on the first day of the month following the third anniversary of the date of original issuance of the shares to be converted if the 5-day volume weighted average price of our common shares on the NYSE ending on the trading day immediately preceding the date the holder delivers a duly completed conversion notice to the Company (such 5-day VWAP, the “Market Price”) represents a 15.0% premium to the estimated fair market NAV of the Company per common share as most recently published by the Company at the time of issuance of the applicable Series B Preferred Share (the “Minimum Market Price Trigger”). If the Minimum Market Price Trigger is satisfied, the Series B Preferred Shares will be convertible at a 6%, 10% or 12% discount to the Market Price beginning on the first day of the month following the third, fourth and fifth anniversary of the date of original issuance of the shares to be converted, respectively. Beginning on the first day of the calendar month following the date of original issuance, the Series B Preferred Shares are redeemable at the option of the holder at a redemption price per share equal to the stated value of $25.00 per share, plus all accrued but unpaid cash distributions and less certain redemption fees. After the first day of the first quarter following the second anniversary of the date of original issuance, the Company also has the option to redeem, in whole or in part, subject to certain restrictions in the Company’s agreement and declaration of trust and the statement of preferences setting forth the terms of the Series B Preferred Shares, at a redemption price per share equal to the stated value of $25.00 per share, plus any accrued but unpaid cash distributions. In all optional redemptions, the Company has the right, in its sole discretion, to pay the redemption in cash or in equal value of the Company’s common shares for so long as the common shares are listed or admitted to trading on the NYSE or another national securities exchange or automated quotation system. NexPoint Securities, Inc., an affiliate of the Adviser, serves as the Company’s dealer manager (the "Dealer Manager") in connection with the offering. The Dealer Manager uses its reasonable best efforts to sell the Series B Preferred Shares offered in the offering, and the Company pays the Dealer Manager, subject to the discounts and other special circumstances described or referenced therein, (i) selling commissions of 7.0% of the aggregate gross proceeds from sales of Series B Preferred Shares in the offering (“Selling Commissions”) and (ii) a dealer manager fee of 3.0% of the gross proceeds from sales of Series B Preferred Shares in the offering (the “Dealer Manager Fee”). The Dealer Manager, subject to federal and state securities laws, will reallow all or any portion of the Selling Commissions and may reallow a portion of the Dealer Manager Fee to other securities dealers that the Dealer Manager may retain who sold the Series B Preferred Shares as is described more
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fully in the agreements between such dealers and the Dealer Manager. The Company expects that the offering will terminate on the earlier of the date the Company sells all 16,000,000 Series B Preferred Shares in the offering or August 1, 2027 (which is the third anniversary of the effective date of the Company’s registration statement), which may be extended by the Board in its sole discretion. The Board may elect to terminate this offering at any time. As of September 30, 2025, the Company has sold 485,608 shares of the Series B Preferred Shares for total gross proceeds of $12.1 million.
Cash Flows
The following table presents selected data from our consolidated statements of cash flows for the nine months ended September 30, 2025 and 2024 (in thousands):
For the Nine Months Ended September 30
20252024
Net cash provided by (used in) operating activities$7,986$(7,550)
Net cash provided by investing activities34,617 18,460 
Net cash used in financing activities(41,344)(10,839)
Net decrease in cash, cash equivalents and restricted cash1,259 71 
Cash, cash equivalents and restricted cash, beginning of period48,901 53,169 
Cash, cash equivalents and restricted cash, end of period$50,160$53,240
Cash flows from operating activities. During the nine months ended September 30, 2025, net cash provided by (used in) operating activities was $8.0 million, compared to net cash provided by (used in) operating activities of $(7.6) million for the nine months ended September 30, 2024. The change in cash flows from operating activities was mainly due to an increase in dividend income from equity securities and rooms revenue.
Cash flows from investing activities. During the nine months ended September 30, 2025, net cash provided by investing activities was $34.6 million, compared to net cash provided by investing activities of $18.5 million for the nine months ended September 30, 2024. The change in cash flows from investing activities was attributed to proceeds of properties sold of $8.3 million and a return of capital from the Marriott Uptown equity method investment of $15.1 million.
Cash flows from financing activities. During the nine months ended September 30, 2025, net cash used in financing activities was $41.3 million, compared to net cash used in financing activities of $10.8 million for the nine months ended September 30, 2024. The change in cash flows from financing activities was due to paydowns on the mortgage debt with proceeds from the properties sold.
Debt
Mortgage Debt
As of September 30, 2025, our consolidated subsidiaries had aggregate mortgage debt outstanding to third parties of approximately $218.3 million at a weighted average interest rate of 7.90%. See Note 6 to our consolidated financial statements for additional information.
We intend to invest in additional real estate investments as suitable opportunities arise and adequate sources of equity and debt financing are available. We expect that future investments in properties, including any improvements or renovations of current or newly acquired properties, will depend on and will be financed by, in whole or in part, our existing cash, future borrowings and the proceeds from additional issuances of common shares, Series B Preferred Shares or other securities or investment and property dispositions.
Although we expect to be subject to restrictions on our ability to incur indebtedness, we expect that we will be able to refinance existing indebtedness or incur additional indebtedness for acquisitions or other purposes, if needed. However, there can be no assurance that we will be able to refinance our indebtedness, incur additional indebtedness or access additional sources of capital, such as by issuing common shares or other debt or equity securities, on terms that are acceptable to us or at all.
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Furthermore, following the completion of our renovation and development programs and depending on the interest rate environment at the applicable time, we may seek to refinance our floating rate debt into longer-term fixed rate debt at lower leverage levels.
Cityplace Tower Debt
Effective March 8, 2025, the lender agreed to defer the maturity of the Cityplace Tower debt by twelve months to March 8, 2026. The purpose of the deferral was to allow for continued discussions around refinancing the debt. Management recognizes that finding an alternative source of funding is necessary to repay the debt by the maturity date. Management believes that there is sufficient time before the maturity date and that the Company has sufficient access to capital to ensure the Company is able to meet its obligations as they become due.
Credit Facility
On January 8, 2021, the Company entered into a $30.0 million credit facility ("Credit Facility") with Raymond James Bank, N.A. and drew the full balance. Prior to October 20, 2023, the Company paid down the outstanding amount under the Credit Facility to $1.0 million. Amounts repaid by the Company under the Credit Facility could not be reborrowed. On October 20, 2023, Raymond James Bank, N.A. agreed to amend the terms of the Credit Facility, which, among other things, extended the maturity date to October 6, 2025 and increased the credit limit to $20 million. On October 23, 2023, the Company drew $6.0 million of the available balance. On November 20, 2023, the Company drew the remaining $13.0 million of the available balance. As of September 30, 2025, the Credit Facility bore interest at the one-month SOFR plus 4.25%. During the nine months ended September 30, 2025, the Company paid down $9.8 million on the Credit Facility. As of September 30, 2025, the Credit Facility had an outstanding balance of $1.3 million. For additional information regarding our Credit Facility, see Note 6 to our consolidated financial statements.
The Credit Facility was paid off on October 6, 2025.
Revolving Credit Facility
On May 22, 2023, the Company entered into a revolving credit facility with NexBank (the "NexBank Revolver"), with the option for the Company to receive additional disbursements thereunder up to a maximum amount of $50.0 million, and with the option to extend the maturity two times by six months. The NexBank Revolver bears interest at one-month SOFR plus 3.50% and had an initial maturity date of May 21, 2024. On May 21, 2024, the Company elected to use one of the two extension options to extend the maturity by six months to November 21, 2024. On October 22, 2024, the Company amended the NexBank Revolver agreement to allow for the Lubbock property to be used as collateral for the debt. On November 21, 2024, the Company elected to use the second extension option to extend the maturity by six months to May 21, 2025. On May 15, 2025, the Company amended the NexBank Revolver agreement to extend the maturity date to November 21, 2025, and to provide for three additional six-month extension options. As of September 30, 2025, the NexBank Revolver had an outstanding balance of $13.5 million. As of September 30, 2025, the Company held $0.6 million in restricted cash in the interest reserve account.
Notes Payable, Freedom LHV
On August 2, 2024, the Company, through Freedom LHV, LLC (“Freedom LHV”), an indirect subsidiary of the Company, borrowed approximately $10.0 million from The Ohio State Life Insurance Company (“OSL”), an entity that may be deemed an affiliate of the Adviser through common beneficial ownership. Due to the recently transacted nature of the note, the fair value of the note is approximately the outstanding balance. The note bears interest at an annual fixed rate of 10.0% and matures on August 2, 2029. The debt is secured by certain real property held by Freedom LHV and is guaranteed by the Company.
Mortgages Payable, Hospitality
On February 28, 2019, NHT entered into a borrowing arrangement for a $59.4 million Note A loan (the “Note A Loan”) and a $28.6 million Note B loan (the “Note B Loan”) with ACORE. The Note A Loan bears interest at a variable rate equal to the 30-day SOFR plus 2.00% and matures on November 8, 2025. The Note B Loan bears interest at a variable rate equal to the 30-day SOFR plus 6.46% and matures on November 8, 2025. On September 8, 2025, the lender agreed to defer the maturity date to October 8, 2025. On October 8, 2025, the lender agreed to defer the maturity date to November 8, 2025. As of September 30, 2025, the Note A Loan and Note B Loan had an outstanding balance of $28.1 million and $13.5 million and effective interest rates of 6.32% and 10.79%, respectively.
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Subsequent to September 30, 2025, on November 7, 2025, the Company executed a loan modification agreement related to the Note A Loan and Note B Loan extending the maturity date of each to February 8, 2026.
On February 15, 2022, in connection with the acquisition of the Park City and Bradenton properties, NHT entered into the PC & B Loan with an original maturity date of February 5, 2025. See Note 14 for a discussion of the extension of the maturity date of the PC & B Loan. The outstanding balance on the PC & B Loan at September 30, 2025 was $38.6 million, with $0.7 million available to draw on for renovation purposes as of September 30, 2025.
The loan documents, including the guaranty, for the PC & B Loan and the Note A Loan and Note B Loan contain customary representations, warranties, and events of default, which require a subsidiary of the Company to comply with affirmative and negative covenants.
Convertible Notes, NHT
A subsidiary of the Company also entered into several convertible notes with affiliates of the NHT Adviser prior to the closing of the NHT Merger since January 8, 2019. The fixed rate notes have rates ranging from 2.25% to 7.50% (which were market interest rates at the time of their issuance) while outstanding and mature in 20 years from their date of issuance. As of September 30, 2025, the net carrying amount of the convertible notes due to affiliates of the former NHT Adviser was $51.5 million.
Promissory Notes Due to Affiliates
In connection with the NHT Merger, on April 17, 2025, several promissory notes with affiliates of the Company were issued due to a limitation on common shares issued to affiliates of the issuer by the New York Stock Exchange. The aggregate principal amount of such promissory notes was $0.8 million, each with an interest rate of 7.334% and maturing on April 15, 2027, with two one-year extension options. As of September 30, 2025, the carrying amount of the promissory notes due to affiliates was $0.8 million.
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Obligations, Commitments and Investment Opportunities
The following table summarizes our contractual obligations and commitments as of September 30, 2025 for the next five calendar years subsequent to September 30, 2025.
Payments Due by Period (in thousands)
Total20252026202720282029Thereafter
Property Level Debt
Principal payments$241,579 $41,583 $189,996 $— $— $10,000 $— 
Interest expense10,661 4,230 3,842 1,000 1,000 589 — 
Total$252,240 $45,813 $193,838 $1,000 $1,000 $10,589 $— 
Prime Brokerage Borrowing
Principal payments$5,952 $— $— $— $— $— $5,952 (1)
Interest expense1,161 68 273 273 273 273 — (1)
Total$7,113 $68 $273 $273 $273 $273 $5,952 
Series A Preferred Shares
Distribution paymentsN/A(2)$1,155 $4,620 $4,620 $4,620 $4,620 N/A(2)
Series B Preferred Shares
Distribution paymentsN/A(2)$273 $1,093 $1,093 $1,093 $1,093 N/A(2)
Credit Facility
Principal payments$73,481 $14,720 $— $21,275 $— $— $37,486 
Interest expense24,856 799 2,597 1,591 1,413 1,413 17,043 
Total$98,337 $15,519 $2,597 $22,866 $1,413 $1,413 $54,529 
Total contractual obligations and commitments$381,970 $62,828 $202,421 $29,852 $8,399 $17,988 $60,481 
(1)Assumes no additional borrowings or repayments. The Prime Brokerage (as defined below) balance has no stated maturity date.
(2)The Series A & B Preferred Shares are perpetual.
NXDT Advisory Agreement
As consideration for the Adviser’s services under the Advisory Agreement, we pay our Adviser the Fees, which includes the Advisory Fee equal to 1.00% of Managed Assets and the Administrative Fee equal to 0.20% of the Company’s Managed Assets. The Advisory Agreement provides that, for the Fees that accrued prior to September 19, 2025, the Administrative Fees shall be paid in cash and the monthly installment of the Advisory Fees shall be paid one-half in cash and one-half in common shares of the Company, subject to certain restrictions, and that for the Fees accruing after September 19, 2025, the Fees shall be paid entirely in cash unless the Adviser elects, in its sole discretion, to receive a portion of the Fees in common shares of the Company, subject to certain restrictions. For additional information, see Note 13 to our consolidated financial statements.
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We also generally reimburse our Adviser for operating or offering expenses it incurs on our behalf or in connection with the services it performs for us. The Adviser may, at its discretion and at any time, waive its right to reimbursement for eligible out-of-pocket expenses paid on the Company’s behalf. Once waived, those expenses are considered permanently waived and became non-recoupable.
For the three and nine months ended September 30, 2025, the Company expensed $3.2 million and $10.0 million, respectively, related to the Fees. Of this $3.2 million for the three months ended September 30, 2025, $1.4 million is related to shares that were issued in lieu of cash. Of the $10.0 million for the nine months ended September 30, 2025, $4.3 million is related to shares that were issued in lieu of cash.
NHT Advisory Agreement
Prior to the closing of the NHT Merger on April 17, 2025, as consideration for the NHT Adviser’s services under the NHT Advisory Agreement, we paid the NHT Adviser an advisory fee equal to 1.00% of the REIT Asset Value. Pursuant to the terms of the NHT Advisory Agreement, NHT reimbursed the NHT Adviser for all documented Operating Expenses and offering expenses it incurred on behalf of NHT. Expenses paid or incurred by NHT for advisory fees payable to the NHT Adviser, Operating Expenses incurred by the NHT Adviser or its affiliates in connection with the services it provides to NHT and its subsidiaries and compensation expenses relating to equity awards granted under a long-term incentive plan of NHT will not exceed 1.5% of the REIT Asset Value for the calendar year (or part thereof). The NHT Expense Cap did not apply to legal, accounting, financial, due diligence and other service fees incurred in connection with extraordinary litigation and mergers and acquisitions and other events outside NHT’s ordinary course of business or any out-of-pocket acquisition or due diligence expenses incurred in connection with the acquisition or disposition of real estate assets. From April 19, 2024 to September 30, 2025, NHT incurred expenses subject to the NHT Expense Cap of $4.1 million. The NHT Advisory Agreement was terminated in connection with the closing of the NHT Merger on April 17, 2025, and the Company assumed the remaining expense reimbursement obligations under the NHT Advisory Agreement.
Alewife Holdings Loan
On May 10, 2024, the Company, through the OP, NREF OP IV, a subsidiary of NREF, an entity that is managed by an affiliate of the Adviser, and OSL, an entity that may be deemed an affiliate of the Adviser through common beneficial ownership, entered into an Assignment and Assumption and Co-Lender Agreement, pursuant to which NREF OP IV assigned the right to fund up to 9% of a loan (the “Alewife Loan”) to be made to IQHQ-Alewife Holdings, LLC (“Alewife Holdings”) to the OP and allocated the right to fund up to 9% of the Alewife Loan to OSL. Effective January 2, 2025, NREF OP IV and OSL entered into an Assignment and Assumption and Co-Lender Agreement, pursuant to which NREF OP IV assigned $7.5 million of interest in the Alewife Loan to OSL for cash and increased OSL’s allocation of the right to fund up to 10.32% of the Alewife Loan. In addition, at any time and from time to time, NREF may purchase up to all of the amounts funded by OSL in the Alewife Loan from OSL. Upon receipt of a draw request, the OP and OSL have the right to elect to fund an amount equal or greater than zero and up to (i) 9% or 10.32%, respectively, of the total amount of all advances previously made under the Alewife Loan plus the amount of the then current borrowing, (ii) less the total amount of advances previously made by the OP and OSL, respectively. NREF OP IV is required to fund any amounts not funded by OSL and the OP. At any time that the OP and OSL have funded less than their respective percentages of all advances made under the Alewife Loan, the OP and OSL have the option upon notice to NREF OP IV to pay to NREF OP IV any amount of such unfunded amount. Upon such payment, the OP or OSL would become entitled to all interest and fees accrued on the amount paid to NREF OP IV on and after the date of such payment.
IQHQ Subscription Agreement and Warrant
On December 31, 2024, Bridge Investor I entered into a Subscription Agreement (“IQHQ Subscription Agreement”) whereby Bridge Investor I committed to purchase $160.1 million of Series E preferred stock of IQHQ, Inc. In connection with the IQHQ Subscription Agreement, on December 31, 2024, Bridge Investor I also entered into a Warrant Purchase Agreement (the “IQHQ Warrant Purchase Agreement”) whereby IQHQ Holdings issued and sold a corresponding warrant to Bridge Investor I to purchase Class A-3 Units of IQHQ Holdings (as amended, the “IQHQ Series E Warrant”). The IQHQ Series E Warrant entitles the holder to purchase, at an exercise price of $0.01, Class A-3 Units of IQHQ Holdings initially intended to represent up to 10.25% of the fully diluted and outstanding common equity of IQHQ Holdings. The IQHQ Series E Warrant is exercisable, in whole or in part, at any time for ten years unless there is an earlier change of control, initial public offering or liquidation.
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In connection with the IQHQ Subscription Agreement and IQHQ Warrant Purchase Agreement, the OP, along with NREF, through certain subsidiaries, and certain entities advised by affiliates of our Adviser (the “IQHQ Participating Purchasers”) entered into a participation rights agreement with Bridge Investor I pursuant to which the OP and the IQHQ Participating Purchasers have a right to fund up to specified amounts of the IQHQ Subscription Agreement and the IQHQ Series E Warrant. Upon receipt of a draw request, each IQHQ Participating Purchaser has the right to elect to fund an amount equal or greater than zero up to their respective preemptive right under the IQHQ Holdings or IQHQ, L.P. organizational documents less the total amount of advances previously made by such IQHQ Participating Purchaser. Upon receipt of a draw request, the OP will also have the right to elect to fund an amount equal or greater than zero up to 50% of the total requested amount that is not funded by the IQHQ Participating Purchasers. NREF would be required to fund any amounts not funded by the IQHQ Participating Purchasers and the OP. At any time that the IQHQ Participating Purchasers have funded less than their respective participation amounts, the IQHQ Participating Purchasers have the option to pay NREF or the OP (to the extent it has funded) any amount of such unfunded amount. Upon such payment, the IQHQ Participating Purchaser would become entitled to all interest accrued on the amounts paid to NREF or the OP, if applicable, on and after the date of such payment. Bridge Investor I can allocate all or any portion of the IQHQ Bridge Warrant to any parties to the participation rights agreement.
As of September 30, 2025, the OP has not funded any amounts.
Income Taxes
I.U.S REIT Status
We anticipate that we will continue to qualify to be taxed as a REIT for U.S. federal income tax purposes, and we intend to continue to be organized and to operate in a manner that will permit us to qualify as a REIT. However, we can give no assurance that we will maintain REIT qualification. To qualify as a REIT, we must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of our annual “REIT taxable income”, as defined by the Code, to shareholders. As a REIT, we will be subject to federal income tax on our undistributed REIT taxable income and net capital gain and to a 4% nondeductible excise tax on any amount by which distributions we pay with respect to any calendar year are less than the sum of (1) 85% of our ordinary income, (2) 95% of our capital gain net income and (3) 100% of our undistributed income from prior years. Taxable income from certain non-REIT activities is managed through a TRS and is subject to applicable federal, state, and local income and margin taxes. The Company has recorded a current income tax expense of $0.6 million associated with the TRSs for the nine months ended September 30, 2025, which is largely driven by income from the Company’s preferred stock investments and investments in debt instruments not secured by mortgages on real property. The tax expense is increased by income tax expense of $1.1 million, offset by a return-to-provision adjustment of $0.5 million for a net expense of $0.6 million for the nine months ended September 30, 2025, that is recorded on the Consolidated Statements of Operations and Comprehensive Income (Loss).
If we fail to qualify as a REIT in any taxable year, we could be subject to U.S. federal income tax on our taxable income at regular corporate income tax rates, and distributions paid to our shareholders would not be deductible by us in computing taxable income. Any resulting corporate liability could be substantial and could materially and adversely affect our net income (loss) and net cash available for distribution to shareholders. Unless we were entitled to relief under certain Code provisions, we also would be disqualified from re-electing to be taxed as a REIT for the four taxable years following the year in which we failed to qualify to be taxed as a REIT. As of September 30, 2025, we believe we are in compliance with all applicable REIT requirements.
We evaluate the accounting and disclosure of tax positions taken or expected to be taken in the course of preparing our tax returns to determine whether the tax positions are “more-likely-than-not” (greater than 50% probability) of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the current year. Our management is required to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions, which include federal and certain states. As of September 30, 2025 and to our knowledge, we have no examinations in progress and none are expected at this time.
We recognize our tax positions and evaluate them using a two-step process. First, we determine whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Second, we will determine the amount of benefit to recognize and record the amount that is more likely than not to be realized upon ultimate settlement.
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We had no material unrecognized tax benefit or expense, accrued interest or penalties as of September 30, 2025. We and our subsidiaries are subject to federal income tax as well as income tax of various state and local jurisdictions. The 2024, 2023, 2022 and 2021 tax years remain open to examination by tax jurisdictions to which our subsidiaries and we are subject. When applicable, we recognize interest and/or penalties related to uncertain tax positions on our Consolidated Statements of Operations and Comprehensive Income (Loss).
II.Canadian mutual fund status
Prior to the closing of the NHT Merger, NHT was a mutual fund trust pursuant to the Tax Act. Under the then-current tax legislation, a mutual fund trust that was not a SIFT pursuant to the Tax Act is entitled to deduct distributions of taxable income such that it was not liable to pay Canadian income taxes provided that its taxable income was fully distributed to unitholders.
Distributions
We intend to make regular quarterly distribution payments to holders of our common shares. U.S. federal income tax law generally requires that a REIT distribute annually at least 90% of its REIT taxable income, without regard to the deduction for distributions paid and excluding net capital gains. As a REIT, we will be subject to federal income tax on our undistributed REIT taxable income and net capital gain and to a 4% nondeductible excise tax on any amount by which distributions we pay with respect to any calendar year are less than the sum of (1) 85% of our ordinary income, (2) 95% of our capital gain net income and (3) 100% of our undistributed income from prior years. We intend to make regular quarterly distribution payments of all or substantially all of our taxable income to holders of our common shares out of assets legally available for this purpose, if and to the extent authorized by our Board. Before we make any distribution payments, whether for U.S. federal income tax purposes or otherwise, we must first meet both our operating requirements and debt service on our debt payable. If our cash available for distribution is less than our taxable income, we could be required to sell assets, borrow funds or raise additional capital to make cash distributions or we may make a portion of the required distribution in the form of a taxable distribution of shares or debt securities.
We will make distribution payments based on our estimate of taxable earnings per common share, but not earnings calculated pursuant to GAAP. Our distributions and taxable income and GAAP earnings will typically differ due to items such as depreciation and amortization, fair value adjustments, differences in premium amortization and discount accretion, investments held through our TRSs, book/tax differences on income derived from partnerships, and non-deductible general and administrative expenses. Our quarterly dividends per share may be substantially different than our quarterly taxable earnings and GAAP earnings per share. Our Board declared a distribution on our common shares of $0.15 per share which was paid on September 30, 2025 to shareholders of record on August 14, 2025. The distribution on the Company’s common shares consists of a combination of cash and shares, with the cash component of the distribution (other than cash paid in lieu of fractional shares) not to exceed 20% in the aggregate, with the balance being paid in the Company’s common shares. Our Board declared a distribution on our Series A Preferred Shares of $0.34375 per share which was paid on September 30, 2025, to shareholders of record on September 23, 2025. Our Board declared three distributions on our Series B Preferred Shares of $0.1875 per share, one of which was paid to holders of Series B Preferred Shares on July 7, 2025 to holders of record on June 25, 2025 and two of which will be paid to holders of Series B Preferred Shares on October 6, 2025 and September 5, 2025 to holders of record on September 25, 2025 and August 25, 2025, respectively. We expect that distributions on our common shares, when, if and as declared by our Board, will be declared on a quarterly basis.
The purpose of paying the elective share distribution partially in shares and partially in cash is to conserve cash for additional investments at the Company. The Company may revert to paying the distribution solely in cash at some point in the future when cash flow from operations supports such a cash distribution. However, there can be no assurance that cash flow from operations will be able to support a cash distribution in the future.
Off-Balance Sheet Arrangements
As of September 30, 2025, we had the following off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
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Commitments
The Company is a guarantor on dividend payments with respect to Series D Preferred Stock of NSP, an affiliate of the Adviser. As of September 30, 2025, the outstanding NSP Series D Preferred Stock accrued dividends were $14.1 million, and the Company and NREF OP IV REIT Sub, LLC are jointly and severally liable for 85.90% of the guaranteed amount. See Note 13 to our consolidated financial statements for additional information.
The Company is a guarantor on one of NSP’s loans, with an aggregate principal amount of $750.0 million outstanding as of September 30, 2025. The obligations consist of liability for losses suffered by the lender arising out of certain bad acts, such as if the borrower takes actions that are fraudulent or improper or upon certain violations of the related loan agreement. See Note 13 to our consolidated financial statements for additional information.
The Company is a limited guarantor and an indemnitor on one of our subsidiary's loans with an aggregate principal amount of $41.6 million as of September 30, 2025. The obligations include a customary environmental indemnity and a so-called "bad boy" guarantee, which is generally only applicable if and when the borrower directly, or indirectly through an agreement with an affiliate, joint venture partner or other third party, voluntarily files a bankruptcy or similar liquidation or reorganization action or takes other actions that are fraudulent or improper. The Company is current on all debt payments and in compliance with all debt compliance provisions.
The Company is a guarantor and an indemnitor on one of Cityplace Tower’s loans with an aggregate principal amount of $138.2 million as of September 30, 2025. The obligations include guarantees, which are generally only applicable if and when the borrower, which is a subsidiary of the Company, directly, or indirectly through an agreement with an affiliate, joint venture partner or other third party, voluntarily terminates construction services prior to the completion of the project, files a bankruptcy or similar liquidation or reorganization action or takes other actions that are fraudulent or improper. As of September 30, 2025, management does not anticipate any material deviations from schedule or budget related to construction projects current in process, and Cityplace Tower is current on all debt payments and in compliance with all debt compliance provisions.
Critical Accounting Policies and Estimates
Management’s discussion and analysis of financial condition and results of operations is based upon our unaudited consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires our management to make judgments, assumptions and estimates that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We evaluate these judgments, assumptions and estimates for changes that would affect the reported amounts. These estimates are based on management’s historical industry experience and on various other judgments and assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these judgments, assumptions and estimates. Below is a discussion of the accounting policies that we consider critical to understanding our financial condition or results of operations where there is uncertainty or where significant judgment is required.
See Note 3 to our consolidated financial statements, “Summary of Significant Accounting Policies”, for further discussion of our accounting estimates and policies.
Valuation of Level 3 Fair Valued Investments
As of September 30, 2025, approximately 43.3% of the total assets owned by the Company are comprised of fair valued level 3 investments. The Company elected the fair-value option in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 825-10-10. On an annual basis, the Company hires independent third-party valuation firms to provide updated fair values for subsequent measurement absent a readily available market price. The valuation is determined using widely accepted valuation techniques. See Note 9 to our consolidated financial statements, “Fair Value Financial Instruments”, for further discussion of our valuation techniques of level 3 investments. The necessary inputs for these valuations includes a variety of valuation techniques and unobservable inputs. These inputs are subject to assumptions and estimates. As a result, the determination of fair value is uncertain because it involves subjective judgments and estimates that are unobservable. For the nine months ended September 30, 2025, the unrealized gains (loss) related to the change in fair value of level 3 investments is $(62.4) million. See Note 9 to our consolidated financial statements for additional disclosures regarding the valuation of level 3 fair valued investments.
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Purchase Price Allocation
Upon acquisition of a property considered to be an asset acquisition, the purchase price and related acquisition costs (“total consideration”) are allocated to land, buildings, improvements, furniture, fixtures, and equipment, and intangible lease assets based on relative fair value in accordance with FASB ASC 805, Business Combinations. Acquisition costs related to asset acquisitions are capitalized in accordance with FASB ASC 805.
The allocation of total consideration, which is determined using inputs that are classified within Level 3 of the fair value hierarchy established by FASB ASC 820 (see Note 9 to our consolidated financial statements), is based on management’s estimate of the property’s “as-if” vacant fair value and is calculated by using all available information such as the replacement cost of such asset, appraisals, property condition reports, market data and other related information. If any debt is assumed in an acquisition, the difference between the fair value, which is estimated using inputs that are classified within Level 2 of the fair value hierarchy, and the face value of debt is recorded as a premium or discount and amortized as interest expense over the life of the debt assumed.
Impairment
Real estate assets held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The key inputs into our impairment analysis include, but are not limited to, the holding period, net operating income, and capitalization rates. In such cases, we will evaluate the recoverability of such real estate assets based on estimated future cash flows and the estimated liquidation value of such real estate assets, and provide for impairment if such undiscounted cash flows are insufficient to recover the carrying amount of the real estate asset. If impaired, the real estate asset will be written down to its estimated fair value. The Company’s impairment analysis identifies and evaluates events or changes in circumstances that indicate the carrying amount of a real estate investment may not be recoverable, including determining the period the Company will hold the rental property, net operating income, and the estimated capitalization rate for each respective real estate investment. The Company did not record any impairment charges for the three and nine months ended September 30, 2025. For the three and nine months ended September 30, 2024, the Company recorded approximately $1.0 million of impairment charges on real estate assets held and used, which are included in Impairment loss on the Consolidated Statements of Operations and Comprehensive Income (Loss).
Held for Sale
The Company periodically classifies real estate assets as held for sale when certain criteria are met in accordance with U.S. GAAP. At that time, the Company presents the net real estate assets and the liabilities associated with the real estate held for sale separately in its Consolidated Balance Sheets, and the Company ceases recording depreciation and amortization expense related to that property. Real estate held for sale is reported at the lower of its carrying amount or its estimated fair value less estimated costs to sell. As of September 30, 2025 and December 31, 2024, there were zero and one properties classified as held for sale, respectively. In addition to the net real estate assets, the Consolidated Balance Sheets also includes approximately $0.0 million and $0.1 million of accounts receivable and prepaid and other assets, and approximately $0.0 million and $0.8 million of accounts payable, real estate taxes payable, security deposits, prepaid rents, and other accrued liabilities related to assets held for sale as of September 30, 2025 and December 31, 2024, respectively. For the three and nine months ended September 30, 2025 the Company recorded approximately $0.0 million and $1.8 million of losses on real estate held for sale, respectively, which are included in impairment loss on the Consolidated Statements of Operations and Comprehensive Income (Loss). For the three and nine months ended September 30, 2024, the Company recorded approximately $5.1 million of losses on real estate held for sale, which are included in Impairment loss on the Consolidated Statements of Operations and Comprehensive Income (Loss).
Inflation
The real estate market has not been directly affected by inflation in the past several years due to increases in rents nationwide. Our lease terms are generally for a period of one year or more and rental rates reset to market if renewed. The majority of our leases also contain protection provisions applicable to reimbursement billings for utilities.
Inflation may also affect the overall cost of debt, as the implied cost of capital increases. We intend to mitigate these risks through long-term fixed interest rate loans and interest rate hedges.
82
Inflation has had a significant impact in the regions in which the Hospitality segment holds properties, causing a decrease in the willingness of the general population to travel and reduced occupancy, the effect of which may continue to impact NHT’s operations.
Implications of being a Smaller Reporting Company
We are a "smaller reporting company" as defined in the Exchange Act and may elect to take advantage of certain of the scaled disclosures available to smaller reporting companies.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not required.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As required by Rule 13a-15(b) and Rule 15d-15(b) under the Exchange Act, our management, including our President and Chief Financial Officer, evaluated, as of September 30, 2025, the effectiveness of our disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e) and Rule 15d-15(e). Based on that evaluation, our President and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2025, to provide reasonable assurance that information required to be disclosed by us in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the rules and forms of the Exchange Act and is accumulated and communicated to management, including the President and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.
We believe, however, that a controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls systems are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud or error, if any, within a company have been detected.
Changes in Internal Control over Financial Reporting
There has been no change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended September 30, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II — OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we are party to legal proceedings that arise in the ordinary course of our business. Management is not aware of any legal proceedings of which the outcome is reasonably likely to have a material adverse effect on our results of operations or financial condition, nor are we aware of any such legal proceedings contemplated by government agencies.
Item 1A. Risk Factors
There have been no material changes to the risk factors previously disclosed under Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K filed with the SEC on March 31, 2025.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Repurchase of Shares
On October 28, 2024, the Board authorized a share repurchase program (the “Share Repurchase Program”) through which the Company may repurchase an indeterminate number of common shares and Series A Preferred Shares, at an aggregate market value of up to $20.0 million during a two-year period that is set to expire on October 28, 2026. We may utilize various methods to affect the repurchases, and the timing and extent of the repurchases will depend upon several factors, including market and business conditions, regulatory requirements and other corporate considerations, including whether our common shares or Series A Preferred Shares are trading at a significant discount to net asset value ("NAV") per share. Repurchases under this program may be discontinued at any time. During the nine months ended September 30, 2025, the company repurchased 185,477 of its common shares, par value of $0.01 per share, at a total cost of approximately $0.8 million. Since the inception of the Share Repurchase Program through September 30, 2025, the Company had repurchased 185,477 of its common shares, par value $0.01 per share, at a total cost of approximately $0.8 million, or $4.28 per share.
PeriodTotal Number of Shares PurchasedAverage Price Paid Per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsApproximate Dollar Value of Shares that may yet be Purchased under the Plans or Programs (in millions)
Beginning Total— $— — $20.0 
July 1 – July 3172,988 4.68 72,988 19.7 
August 1 – August 31112,489 4.03 112,489 19.2 
September 1 – September 30— — — 19.2 
Total as of September 30, 2025185,477 $4.28 185,477 $19.2 
On September 2, 2025, the Company issued a total of 380,590.54 common shares of the Company to the Adviser as payment of a portion of the monthly Advisory Fees pursuant to the Advisory Agreement. These shares were issued in a private placement and the proceeds were used to support the ongoing operations of the Company. The Company issued the common shares to the Adviser in reliance upon Section 4(a)(2) of the Securities Act.
Item 3. Defaults Upon Senior Securities
Not required for smaller reporting companies.
Item 4. Mine Safety Disclosures
Not applicable.
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Table of Contents
Item 5. Other Information
None.
Item 6. Exhibits
EXHIBIT INDEX
Exhibit
Number		Description
10.1


10.2*
10.3*
10.4*
31.1*
31.2*
32.1+
101.INS*Inline XBRL Instance Document (The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document)
101.SCH*Inline XBRL Taxonomy Extension Schema
101.CAL*Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF*Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB*Inline XBRL Taxonomy Extension Label Linkbase
101.PRE*Inline XBRL Taxonomy Extension Presentation Linkbase
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
_______________________
*Filed herewith.
+    Furnished herewith.
85
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

NEXPOINT DIVERSIFIED REAL ESTATE TRUST

SignatureTitleDate
/s/ Jim DonderoPresidentNovember 13, 2025
Jim Dondero(Principal Executive Officer)
/s/ Paul RichardsChief Financial Officer, Executive VP-Finance,
Treasurer, and Assistant Secretary		November 13, 2025
Paul Richards(Principal Financial Officer and Principal
Accounting Officer)
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