Transcript • Feb. 26, 2026 4:00 PM • NexPoint Real Estate Finance, Inc. (NREF)
Transcript
Feb. 26, 2026 4:00 PM
NexPoint Real Estate Finance, Inc. (NREF)
Gabe Pogge: Awesome. Thank you so much for taking my questions.
Operator: You bet. Your next question comes from the line of Jade Romani from KBW. Your line is live.
Jade Romani: Thank you very much. Can you touch on the provision for credit loss that took place in the quarter, around $12 million, and what you expect on that going forward?
Paul: Absolutely, Jade. Hey, this is Paul. I would say that one-third of it was just our general reserve. We updated our calculation to be, again, more conservative. It now includes a severe downside component to the CECL provision to align with our peer group. And the other – call it 66% – were on deals that we've already taken a seasonal reserve on, which were on a few of the prep deals that we spoke about last quarter. On the go-forward expectations, again, I think you're kind of at that trough, and there shouldn't be really – there aren't any really more problem areas on the press book or in the portfolio. So I think this would probably level off in 26th.
Jade Romani: Thank you very much. And just on the life science project, which has bucked the trend in the industry of a downdraft in leasing activity, could you give your thoughts as to, you know, what the project specific characteristics are that drove, you know, the positive performance? And if you're seeing, you know, outside of this project, any uptick in life science leasing activity that might make you, you know, look at other deals in that sector?
Shane: Yeah, you bet. I'd say the ALY Park project is one of the very few purpose-filled life science, slab on grade, all the qualities that you need. And more importantly, in West Cambridge on mass transit lines. And I think when When this project opened and CO'd, it was probably into the worst, you know, I would say some of the worst, you know, market dynamics that we face, you know, historically in life science. You know, I think part of it is the, again, the infrastructure that Lila Sciences needed. You know, we were the only building that could, you know, at that time, house their needs and their infrastructure. And then, you know, it's kind of a cluster effect. Once you get a good tenant such as Lila, backed by a very well-heeled investor base, you know, those tenants can continue to drive more leasing activity and people want to be around them. So I think You know, we might have gotten lucky, but I'll take it, I would say. More broadly, I think across the portfolio, I think activity is in the last, you know, 30, 60 days coming out of JP Morgan in San Francisco. There's been a, you know, I would say a lot of optimism. We're seeing, you know, more capital. The CFOs, you know, folks in charge of capital allocation decisions start making those decisions. Um, finally, and then I do think, you know, some of the, um, some of the biggest demands and widening of the funnel will come from AI and whether or not it's, it's life sciences, uh, you know, AI design to life sciences. I don't think we really care. I think the, um, you know, again, these buildings or these companies, these AI companies with this compute infrastructure, they, they have to go in to purpose build new buildings. Um, you know, with all the, the air quality, the infrastructure. I think that's helped our leasing activity a lot, and I don't see that waning anytime soon.
Jade Romani: Thank you.
Paul: Thanks, Shane.
Operator: Your final question comes from the line of Gabe Pogge from Raymond James. Your line is live.
Gabe Pogge: Hey, good morning, guys. Thanks for taking the time. Can you give a little more details around the loans you made in the quarter, you know, specifically the $22.5 million loan, you know, 11%. I assume the SOFA 9 is at Alewife. But just any kind of incremental color around those loans would be helpful.
Paul: Sure. Yeah, as you mentioned, there was the one loan, which was our continued commitment on the Alewife project. The other Two loans, which were roughly, I think it was around $10 million plus on the preferred side for two marinas that we really believe in the cash flow, et cetera. And the last one was a self-storage deal in Hialeah. And again, very sound, very great detachment point, covered 13%. you know, again, we expect to find these types of deals using more of a rifle shot approach, as Matt mentioned, in our sales or in our pipeline funnel. So, you know, you can expect to see more of the multifamily in these types of deals in the future.
Gabe Pogge: Got it. And then, Matt, you talked about, you know, obviously the potential regulation out of D.C., but the opportunity set just to go direct on build to rent, right, whether you're that solution capital, so to speak, press, etc. Can you talk about how big that sandbox could be for you guys as you just think about the whole, what next point holistically looks at, what NREF has touched, and how you think about how big that bucket could be over time.
Shane: Yeah, you bet. That's a great question. You know, for our single family equity business, they have, you know, roughly $550 million of VTR under contract or reviewing, you know, at any given month about, uh you know about 200 million of of new build to rent construction and product and um you know we're seeing all of that obviously uh in terms of deal flow and look at both the debt and the equity and so um it's been a it's been a steady pipeline and it's been an origination funnel for us uh and one that we're we're really trying to you know get the word out um you know with the walker and dunlops and the jll cbs and Say, hey, we're open for business on build to rent, new construction, CFO financing. We can take over at CFO, you know, play up and down the cap stack wherever the opportunity is. And, again, like you got to be smart about the asset selection. I mean, we're not going to go, you know, finance a company. You know, a green field, a new greenfield project next to a cow pasture. We're looking mainly to on the smaller side, 50 to 125, 150 units that just feel more like an extension of a community versus, you know, like I said, like, you know, random housing project in the middle of nowhere. So like like the like the backdrop for it, you know, and certainly, you know, certainly think there's there's plenty, plenty to do there in 2026 and beyond. Thanks, guys. Thanks, guys.
Operator: There are no further questions. I'd like to turn it back over to the management team for closing remarks.
Shane: Yeah, thank you very much this morning for all your interest and participation in NREPP, and we look forward to speaking to you next quarter. Thanks again.
Operator: This concludes today's meeting. You may now disconnect.
