UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June~~September 30, 2022

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 000-56274

VineBrook Homes Trust, Inc.

(Exact name of registrant as specified in its charter)


Maryland		83-1268857
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification Number)

300 Crescent Court, Suite 700, Dallas, Texas		75201
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (214) 276-6300

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
N/A	N/A	N/A

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 ☒ No ☐

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 ☒ No ☐

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 Filer	☐	Accelerated Filer	☐
Non-Accelerated Filer	☒	Smaller reporting company	☒
Emerging growth company	☒

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~August 5,~~November 11, 2022, the registrant had ~~25,145,132~~24,761,177 shares of its Class A Common Stock, par value $0.01 per share, and no shares of its Class I Common Stock, par value $0.01 per share, outstanding.

Table of Contents

Certain statements contained in this Quarterly Report on Form 10-Q (this “Form 10-Q”) of VineBrook Homes Trust, Inc. (“we”, “us”, “our”, or the “Company”) other than historical facts may be considered forward-looking statements. In particular, statements relating to our business and investment strategies, plans or intentions, acquisitions, the Internalization (as defined below), including the expected timing of the transaction, our liquidity and capital resources, our performance and results of operations contain forward-looking statements. Furthermore, all statements regarding future financial performance (including market conditions) are forward-looking statements. We caution investors that any forward-looking statements presented in this Form 10-Q are based on management’s beliefs and assumptions made by, and information currently available to, management. When used, the words “anticipate,” “believe,” “expect,” “intend,” “may,” “might,” “plan,” “estimate,” “project,” “should,” “will,” “would,” “result,” the negative version of these words and similar expressions that do not relate solely to historical matters are intended to identify forward-looking statements.

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 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:

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 Form 10-Q. 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.

	*June 30, 2022*			*December 31, 2021*			*September 30, 2022*			*December 31, 2021*
	(unaudited)						(unaudited)
ASSETS
Operating real estate investments
Land	$	534,217		$	334,191		$	652,218		$	334,191
Buildings and improvements		2,383,412			1,391,786			2,946,479			1,391,786
Intangible lease assets		4,158			971			2,606			971
Total gross operating real estate investments		2,921,787			1,726,948			3,601,303			1,726,948
Accumulated depreciation and amortization		(116,002	)		(76,789	)		(141,109	)		(76,789	)
Total net operating real estate investments		2,805,785			1,650,159			3,460,194			1,650,159
Real estate held for sale, net		2,166			81			2,888			81
Total net real estate investments		2,807,951			1,650,240			3,463,082			1,650,240
Investments, at fair value		2,500			2,500			2,500			2,500
Cash		81,793			54,104			92,566			54,104
Restricted cash		21,560			20,893			30,681			20,893
Accounts and other receivables		13,760			8,327			18,896			8,327
Due from Manager (see Note 13)		663			2,909			1,076			2,909
Prepaid and other assets		54,261			19,352			68,925			19,352
Interest rate derivatives, at fair value		36,662			0			73,731			—
TOTAL ASSETS	$	3,019,150		$	1,758,325		$	3,751,457		$	1,758,325

LIABILITIES AND EQUITY
Liabilities:
Notes payable, net	$	711,498		$	376,842		$	948,220		$	376,842
Credit facilities, net		1,054,667			391,703			1,503,155			391,703
Accounts payable and other accrued liabilities		50,911			47,208			71,776			47,208
Accrued real estate taxes payable		24,985			19,450			36,070			19,450
Accrued interest payable		8,230			1,690			15,136			1,690
Security deposit liability		20,467			14,295			25,970			14,295
Prepaid rents		4,975			3,341			6,189			3,341
Interest rate derivatives, at fair value		0			3,590			—			3,590
Total Liabilities		1,875,733			858,119			2,606,516			858,119

Redeemable Series A preferred stock, $0.01 par value: 16,000,000 shares authorized; 5,000,000 and 5,000,000 shares issued and outstanding, respectively		121,261			120,896			121,456			120,896
Redeemable noncontrolling interests in the OP		234,713			196,362			239,541			196,362
Redeemable noncontrolling interests in consolidated VIEs		95,937			0			108,499			—
Stockholders' Equity:
Class A Common stock, $0.01 par value: 300,000,000 shares authorized; 24,960,485 and 21,814,248 shares issued and outstanding, respectively		250			219
Class A Common stock, $0.01 par value: 300,000,000 shares authorized; 24,761,177 and 21,814,248 shares issued and outstanding, respectively								248			219
Additional paid-in capital		780,111			651,531			761,691			651,531
Distributions in excess of retained earnings		(109,628	)		(68,011	)		(135,062	)		(68,011	)
Accumulated other comprehensive income/(loss)		20,773			(791	)		45,726			(791	)
Total Stockholders' Equity		691,506			582,948			672,603			582,948
Noncontrolling interests in consolidated VIEs								2,842			—
TOTAL LIABILITIES AND EQUITY	$	3,019,150		$	1,758,325		$	3,751,457		$	1,758,325

	*For the Three Months Ended June 30,*						*For the Six Months Ended June 30,*						*For the Three Months Ended September 30,*						*For the Nine Months Ended September 30,*
	*2022*			*2021*			*2022*			*2021*			*2022*			*2021*			*2022*			*2021*
Revenues
Rental income	$	59,442		$	39,112		$	110,422		$	69,248		$	71,594		$	40,823		$	182,016		$	110,071
Other income		2,862			709			4,199			1,201			2,044			1,064			6,243			2,265
Total revenues		62,304			39,821			114,621			70,449			73,638			41,887			188,259			112,336
Expenses
Property operating expenses		12,357			6,007			21,044			11,160			12,592			8,282			33,636			19,442
Real estate taxes and insurance		10,914			7,644			20,456			13,938			12,260			8,157			32,716			22,095
Property management fees		3,408			2,587			6,519			4,560			3,844			1,756			10,363			6,316
Advisory fees		3,844			2,010			6,930			3,301			4,313			2,337			11,243			5,638
Corporate general and administrative expenses		2,478			1,837			4,640			3,318			2,701			1,992			7,341			5,310
Property general and administrative expenses		4,625			1,332			7,498			2,655			4,373			1,505			11,871			4,160
Depreciation and amortization		24,207			12,507			40,163			20,551			28,693			14,881			68,856			35,432
Interest expense		11,155			7,688			20,775			12,814			16,875			7,752			37,650			20,566
Loss on extinguishment of debt		1,001			0			1,001			0			2,468			—			3,469			—
Total expenses		73,989			41,612			129,026			72,297			88,119			46,662			217,145			118,959
Gain/(loss) on sales of real estate		100			(123	)		216			(198	)
Casualty loss, net of insurance proceeds		(53	)		(93	)		(162	)		(102	)
Loss on sales of real estate														(224	)		(175	)		(8	)		(373	)
Casualty gain/(loss), net of insurance proceeds														84			151			(78	)		49
Net loss		(11,638	)		(2,007	)		(14,351	)		(2,148	)		(14,621	)		(4,799	)		(28,972	)		(6,947	)
Dividends on and accretion to redemption value of Redeemable Series A preferred stock		2,219			2,207			4,428			4,413			2,226			2,206			6,654			6,619
Net loss attributable to redeemable noncontrolling interests in the OP		(1,771	)		(466	)		(2,194	)		(501	)		(1,782	)		(823	)		(3,976	)		(1,324	)
Net loss attributable to redeemable noncontrolling interests in consolidated VIEs		(1,191	)		0			(1,191	)		0			(3,112	)		—			(4,303	)		—
Net loss attributable to noncontrolling interests in consolidated VIEs														(113	)		—			(113	)		—
Net loss attributable to common stockholders	$	(10,895	)	$	(3,748	)	$	(15,394	)	$	(6,060	)	$	(11,840	)	$	(6,182	)	$	(27,234	)	$	(12,242	)
Other comprehensive income/(loss)
Unrealized gain/(loss) on interest rate hedges		8,656			(65	)		25,510			6,306
Total comprehensive (loss)/income		(2,982	)		(2,072	)		11,159			4,158
Other comprehensive income
Unrealized gain on interest rate hedges														29,356			1,076			54,866			7,382
Total comprehensive income/(loss)														14,735			(3,723	)		25,894			435
Dividends on and accretion to redemption value of Redeemable Series A preferred stock		2,219			2,207			4,428			4,413			2,226			2,206			6,654			6,619
Comprehensive (loss)/income attributable to redeemable noncontrolling interests in the OP		(449	)		(482	)		1,752			1,064
Comprehensive income/(loss) attributable to redeemable noncontrolling interests in the OP														2,621			(639	)		4,373			425
Comprehensive loss attributable to redeemable noncontrolling interests in consolidated VIEs		(1,191	)		0			(1,191	)		0			(3,112	)		—			(4,303	)		—
Comprehensive (loss)/income attributable to common stockholders	$	(3,561	)	$	(3,797	)	$	6,170		$	(1,319	)
Comprehensive loss attributable to noncontrolling interests in consolidated VIEs														(113	)		—			(113	)		—
Comprehensive income/(loss) attributable to common stockholders													$	13,113		$	(5,290	)	$	19,283		$	(6,609	)

Weighted average common shares outstanding - basic		25,241			12,812			24,250			11,621			25,124			17,230			24,545			13,511
Weighted average common shares outstanding - diluted		25,241			12,812			24,250			11,621			25,124			17,230			24,545			13,511

Loss per share - basic	$	(0.43	)	$	(0.29	)	$	(0.63	)	$	(0.52	)	$	(0.47	)	$	(0.36	)	$	(1.11	)	$	(0.91	)
Loss per share - diluted	$	(0.43	)	$	(0.29	)	$	(0.63	)	$	(0.52	)	$	(0.47	)	$	(0.36	)	$	(1.11	)	$	(0.91	)

	*Class A Common Stock*																	*Class A Common Stock*
Three Months Ended June 30, 2022	*Number of Shares*			*Par Value*			*Additional Paid-in Capital*			*Distributions in Excess of Retained Earnings*			*Accumulated Other Comprehensive Income (Loss)*		*Total*
Balances, March 31, 2022		24,696,441		$	247		$	780,388		$	(85,075	)	$	13,439	$	708,999
Three Months Ended September 30, 2022																		*Number of Shares*			*Par Value*			*Additional Paid-in Capital*			*Distributions in Excess of Retained Earnings*			*Accumulated Other Comprehensive Income (Loss)*		*Total*
Balances, June 30, 2022																			24,960,485		$	250		$	780,111		$	(109,628	)	$	20,773	$	691,506
Net loss attributable to common stockholders					0			0			(10,895	)		0		(10,895	)								—			(11,840	)		—		(11,840	)
Issuance of Class A common stock		682,149			7			40,567			0			0		40,574			475,440			5			27,904			—			—		27,909
Redemptions of Class A common stock		(437,357	)		(4	)		(26,260	)		0			0		(26,264	)		(674,891	)		(7	)		(42,343	)		—			—		(42,350	)
Offering costs								(1,150	)		0			0		(1,150	)								(1,565	)		—			—		(1,565	)
Equity-based compensation		19,252			0			916			0			0		916			143			—			920			—			—		920
Common stock dividends declared ($0.5301 per share)								0			(13,658	)		0		(13,658	)								—			(13,594	)		—		(13,594	)
Other comprehensive income attributable to common stockholders								0			0			7,334		7,334									—			—			24,953		24,953
Adjustments to reflect redemption value of redeemable noncontrolling interests in the OP								(13,159	)		0			0		(13,159	)								(224	)		—			—		(224	)
Adjustment to reflect redemption value of redeemable noncontrolling interests in consolidated VIEs		0			0			(1,191	)		0			0		(1,191	)								(3,112	)		—			—		(3,112	)
Balances, June 30, 2022		24,960,485		$	250		$	780,111		$	(109,628	)	$	20,773	$	691,506
Balances, September 30, 2022																			24,761,177		$	248		$	761,691		$	(135,062	)	$	45,726	$	672,603

	*Class A Common Stock*																		*Class A Common Stock*
Six Months Ended June 30, 2022	*Number of Shares*			*Par Value*			*Additional Paid-in Capital*			*Distributions in Excess of Retained Earnings*			*Accumulated Other Comprehensive Income (Loss)*			*Total*
Nine Months Ended September 30, 2022																			*Number of Shares*			*Par Value*			*Additional Paid-in Capital*			*Distributions in Excess of Retained Earnings*			*Accumulated Other Comprehensive Income (Loss)*			*Total*
Balances, December 31, 2021		21,814,248		$	219		$	651,531		$	(68,011	)	$	(791	)	$	582,948			21,814,248		$	219		$	651,531		$	(68,011	)	$	(791	)	$	582,948
Net loss attributable to common stockholders					0			0			(15,394	)		0			(15,394	)								—			(27,234	)		—			(27,234	)
Issuance of Class A common stock		3,589,483			36			192,658			0			0			192,694			4,064,923			41			220,562			—			—			220,603
Redemptions of Class A common stock		(492,762	)		(5	)		(29,261	)		0			0			(29,266	)		(1,167,653	)		(12	)		(71,604	)		—			—			(71,616	)
Offering costs								(1,493	)		0			0			(1,493	)								(3,058	)		—			—			(3,058	)
Equity-based compensation		49,516			0			1,675			0			0			1,675			49,659			—			2,595			—			—			2,595
Common stock dividends declared ($1.0602 per share)								0			(26,223	)		0			(26,223	)
Common stock dividends declared ($1.5903 per share)																										—			(39,817	)		—			(39,817	)
Other comprehensive income attributable to common stockholders								0			0			21,564			21,564									—			—			46,517			46,517
Adjustments to reflect redemption value of redeemable noncontrolling interests in the OP								(33,808	)		0			0			(33,808	)								(34,032	)		—			—			(34,032	)
Adjustment to reflect redemption value of redeemable noncontrolling interests in consolidated VIEs								(1,191	)		0			0			(1,191	)								(4,303	)		—			—			(4,303	)
Balances, June 30, 2022		24,960,485		$	250		$	780,111		$	(109,628	)	$	20,773		$	691,506
Balances, September 30, 2022																				24,761,177		$	248		$	761,691		$	(135,062	)	$	45,726		$	672,603

	*Class A Common Stock*																		*Class A Common Stock*
Three Months Ended June 30, 2021	*Number of Shares*			*Par Value*			*Additional Paid-in Capital*			*Distributions in Excess of Retained Earnings*			*Accumulated Other Comprehensive Income (Loss)*			*Total*
Balances, March 31, 2021		11,499,045		$	115		$	291,305		$	(34,060	)	$	(5,360	)	$	252,000
Three Months Ended September 30, 2021																			*Number of Shares*			*Par Value*		*Additional Paid-in Capital*			*Distributions in Excess of Retained Earnings*			*Accumulated Other Comprehensive Income (Loss)*			*Total*
Balances, June 30, 2021																				13,891,715		$	139	$	362,165		$	(44,801	)	$	(5,409	)	$	312,094
Net loss attributable to common stockholders					0			0			(3,748	)		0			(3,748	)							—			(6,182	)		—			(6,182	)
Issuance of Class A common stock		2,499,331			25			93,290			0			0			93,315			5,574,829			56		228,495			—			—			228,551
Redemptions of Class A common stock		(133,303	)		(1	)		(5,155	)		0			0			(5,156	)		(23,920	)		—		(1,105	)		—			—			(1,105	)
Offering costs								(944	)		0			0			(944	)							(1,264	)		—			—			(1,264	)
Equity-based compensation		26,642			0			626			0			0			626			—			—		598			—			—			598
Common stock dividends declared ($0.5301 per share)								0			(6,993	)		0			(6,993	)
Other comprehensive loss attributable to common stockholders					0			0			0			(49	)		(49	)
Common stock dividends declared ($0.5301 per share)																									—			(9,362	)		—			(9,362	)
Other comprehensive income attributable to common stockholders																									—			—			892			892
Adjustment to reflect redemption value of redeemable noncontrolling interests in the OP					0			(16,957	)		0			0			(16,957	)							(26,940	)		—			—			(26,940	)
Balances, June 30, 2021		13,891,715		$	139		$	362,165		$	(44,801	)	$	(5,409	)	$	312,094
Balances, September 30, 2021																				19,442,624		$	195	$	561,949		$	(60,345	)	$	(4,517	)	$	497,282

	*Class A Common Stock*																		*Class A Common Stock*
Six Months Ended June 30, 2021	*Number of Shares*			*Par Value*			*Additional Paid-in Capital*			*Distributions in Excess of Retained Earnings*			*Accumulated Other Comprehensive Income (Loss)*			*Total*
Nine Months Ended September 30, 2021																			*Number of Shares*			*Par Value*			*Additional Paid-in Capital*			*Distributions in Excess of Retained Earnings*			*Accumulated Other Comprehensive Income (Loss)*			*Total*
Balances, December 31, 2020		9,260,795		$	93		$	210,381		$	(26,002	)	$	(10,150	)	$	174,322			9,260,795		$	93		$	210,381		$	(26,002	)	$	(10,150	)	$	174,322
Net loss attributable to common stockholders					0			0			(6,060	)		0			(6,060	)								—			(12,242	)		—			(12,242	)
Issuance of Class A common stock		4,741,008			47			174,119			0			0			174,166			10,315,837			103			402,614			—			—			402,717
Redemptions of Class A common stock		(136,730	)		(1	)		(5,281	)		0			0			(5,282	)		(160,650	)		(1	)		(6,386	)		—			—			(6,387	)
Offering costs								(1,240	)		0			0			(1,240	)								(2,504	)		—			—			(2,504	)
Equity-based compensation		26,642			0			1,140			0			0			1,140			26,642			—			1,738			—			—			1,738
Common stock dividends declared ($1.0602 per share)								0			(12,739	)		0			(12,739	)
Common stock dividends declared ($1.5903 per share)																										—			(22,101	)		—			(22,101	)
Other comprehensive income attributable to common stockholders								0			0			4,741			4,741									—			—			5,633			5,633
Adjustments to reflect redemption value of redeemable noncontrolling interests in the OP								(16,954	)		0			0			(16,954	)								(43,894	)		—			—			(43,894	)
Balances, June 30, 2021		13,891,715		$	139		$	362,165		$	(44,801	)	$	(5,409	)	$	312,094
Balances, September 30, 2021																				19,442,624		$	195		$	561,949		$	(60,345	)	$	(4,517	)	$	497,282

	*For the Six Months Ended June 30,*						*For the Nine Months Ended September 30,*
	*2022*			*2021*			*2022*			*2021*
Cash flows from operating activities
Net loss	$	(14,351	)	$	(2,148	)	$	(28,972	)	$	(6,947	)
Adjustments to reconcile net loss to net cash provided by operating activities
(Gain)/loss on sales of real estate		(216	)		198
Loss on sales of real estate								8			373
Depreciation and amortization		40,163			20,551			68,856			35,432
Non-cash interest amortization		3,330			1,612			5,577			2,666
Change in fair value on derivative instruments included in interest expense		(389	)		1,749
Change in fair value of interest rate derivatives included in interest expense								(9,765	)		2,843
Net cash paid on derivative settlements		(2,426	)		(2,109	)		(3,203	)		(3,202	)
Loss on extinguishment of debt		1,001			0			3,469			—
Equity-based compensation		3,072			2,073			4,704			3,384
Casualty loss, net of insurance proceeds		162			102
Casualty loss/(gain), net of insurance proceeds								78			(49	)
Changes in operating assets and liabilities, net of effects of acquisitions:
Operating assets		(1,026	)		(6,206	)		(6,992	)		(2,473	)
Operating liabilities		15,932			8,785			49,954			13,148
Net cash provided by operating activities		45,252			24,607			83,714			45,175

Cash flows from investing activities
Investment in unconsolidated entity		(100,819	)		0			(100,819	)		—
Redemption of investment in unconsolidated entity		100,819			0			100,819			—
Acquisition of NexPoint Homes through VIE consolidation, net of cash received		(47,022	)		0			(47,022	)		—
Net proceeds from sales of real estate		7,117			1,033			7,931			1,405
Prepaid acquisition deposits		(5,673	)		(1,020	)		(41,685	)		(1,336	)
Insurance proceeds received		255			319			707			496
Acquisitions of real estate investments		(763,563	)		(640,265	)		(1,360,466	)		(751,042	)
Additions to real estate investments		(84,038	)		(36,370	)		(147,095	)		(58,179	)
Net cash used in investing activities		(892,924	)		(676,303	)		(1,587,630	)		(808,656	)

Cash flows from financing activities
Notes payable proceeds received		42,746			125,049			288,512			125,000
Notes payable payments		(389	)		(148	)		(7,892	)		(9,562	)
Credit facilities proceeds received		665,000			405,001			1,115,000			405,000
Credit facilities principal payments		0			(35,000	)		—			(115,000	)
Bridge facility proceeds received		150,000			0
Bridge facility principal payments		(150,000	)		0
Bridge facilities proceeds received								350,000			—
Bridge facilities principal payments								(350,000	)		—
NREO Note repayment		0			(1,250	)		—			(1,250	)
Financing costs paid		(6,269	)		(7,811	)		(13,383	)		(7,902	)
Interest rate cap premium paid		(12,673	)		0			(12,673	)		—
Proceeds from issuance of Class A common stock		153,167			167,833			174,085			391,225
Redemptions of Class A common stock paid		(3,002	)		(126	)		(35,544	)		(5,282	)
Offering costs paid		(1,850	)		(1,276	)		(3,315	)		(2,325	)
Dividends paid to common stockholders		(12,201	)		(6,049	)		(18,537	)		(10,614	)
Payments for taxes related to net share settlement of stock-based compensation		(555	)		(46	)		(555	)		(46	)
Proceeds from issuance of redeemable Series A preferred stock, net of offering costs		0			35,213			—			35,167
Preferred stock dividends paid		(4,063	)		(2,031	)		(6,094	)		(4,988	)
Contributions from redeemable noncontrolling interests in the OP		4,974			2,640			8,789			5,014
Distributions to redeemable noncontrolling interests in the OP		(2,954	)		(2,983	)		(4,835	)		(4,774	)
Contributions from redeemable noncontrolling interests in consolidated VIEs		54,097			0			65,653			—
Contributions from noncontrolling interests in consolidated VIEs								2,955			—
Net cash provided by financing activities		876,028			679,016			1,552,166			799,663

Change in cash and restricted cash		28,356			27,320			48,250			36,182
Cash and restricted cash, beginning of period		74,997			37,096			74,997			37,096
Cash and restricted cash, end of period	$	103,353		$	64,416		$	123,247		$	73,278

Supplemental Disclosure of Cash Flow Information
Interest paid, net of amount capitalized	$	6,376		$	6,669		$	18,119		$	10,927
Cash paid for income and franchise taxes		259			101			262			167

Supplemental Disclosure of Noncash Activities
Assumed liabilities in asset acquisitions		2,420			4,898			3,829			5,027
Accrued dividends payable to common stockholders		481			357			748			567
Accrued distributions payable to redeemable noncontrolling interests in the OP		626			315			939			313
Accrued dividends payable to preferred stockholders		4,063			4,063			6,094			2,031
Accrued redemptions payable to common stockholders		26,264			5,156			42,350			1,105
Accrued capital expenditures		898			0			3,263			—
Accretion to redemption value of Redeemable Series A preferred stock		365			350			560			525
Fair market value adjustment on assumed debt		89			0			89			—
Assumed debt on acquisitions		13,582			0			13,582			—
Offering costs accrued		(16	)		69			84			284
Issuance of Class A common stock related to DRIP dividends		13,541			6,333			21,173			10,920
DRIP dividends to common stockholders		(13,541	)		(6,333	)		(21,173	)		(10,920	)
Contributions from redeemable noncontrolling interests in the OP related to DRIP distributions		968			765			1,487			1,191
DRIP distributions to redeemable noncontrolling interests in the OP		(968	)		(765	)		(1,487	)		(1,191	)
Real estate investments assumed in acquisition of NexPoint Homes through VIE consolidation		326,432			0			326,432			—
Earnest money deposits assumed in acquisition of NexPoint Homes through VIE consolidation		36,838			0			36,838			—
Other assets assumed in acquisition of NexPoint Homes through VIE consolidation		8,729			0			8,729			—
Notes payable assumed in acquisition of NexPoint Homes through VIE consolidation		278,530			0			278,530			—
Other liabilities assumed in acquisition of NexPoint Homes through VIE consolidation		4,607			0			4,607			—
Noncontrolling interests assumed in acquisition of NexPoint Homes through VIE consolidation		41,150			0			41,150			—

VineBrook Homes Trust, Inc. (the “Company”, “we”, “us,” “our”) was incorporated in Maryland on July 18, 2018 and has elected to be taxed as a real estate investment trust (“REIT”). The Company is focused on acquiring, renovating, leasing, maintaining and otherwise managing single family rental (“SFR”) home investments primarily located in large to medium size cities and suburbs located in the midwestern, heartland and southeastern United States. Substantially all of the Company’s business is conducted through VineBrook Homes Operating Partnership, L.P. (the “OP”), the Company’s operating partnership, as the Company owns its properties indirectly through the OP. VineBrook Homes OP GP, LLC (the “OP GP”), is the general partner of the OP. As of ~~June~~September 30, 2022, there were a combined ~~24,990,807~~25,346,922 Class A, Class B and Class C units of the OP (collectively, “OP Units”), of which ~~21,250,366~~21,542,876 Class A OP Units, or 85.0%, were owned by the Company, 2,691,330 Class B OP Units, or ~~10.8%~~10.6%, were owned by NexPoint Real Estate Opportunities, LLC (“NREO”), ~~88,268~~89,037 Class C OP Units, or 0.4%, were owned by NRESF REIT Sub, LLC (“NRESF”), ~~139,296~~140,509 Class C OP Units, or 0.6%, were owned by GAF REIT, LLC (“GAF REIT”) and ~~821,547~~883,170 Class C OP Units, or ~~3.2%~~3.4%, were owned by limited partners that were sellers in the Formation Transaction (defined below) (and in certain instances affiliated with the equity holders of the Manager) (the “VineBrook Contributors”) or other Company insiders. NREO, NRESF and GAF REIT are noncontrolling limited partners unaffiliated with the Company but are affiliates of the Adviser (defined below). The Second Amended and Restated Limited Partnership Agreement of the OP (the “OP LPA”) generally provides that Class A OP Units and Class B OP Units each have 50.0% of the voting power of the OP Units, including with respect to the election of directors to the Partnership Board (defined below in Note 10), and the Class C OP Units have no voting power. Each Class A OP Unit, Class B OP Unit and Class C OP Unit otherwise represents substantially the same economic interest in the OP.

The Company began operations on November 1, 2018 as a result of the acquisition of various partnerships and limited liability companies owned and operated by the VineBrook Contributors and other third parties, which owned 4,129 SFR assets located in Ohio, Kentucky and Indiana (the “Initial Portfolio”) for a total purchase price of approximately $330.2 million, including closing and financing costs of $6.0 million (the “Formation Transaction”). On November 1, 2018, the Company accepted subscriptions for 1,097,367 shares of its Class A common stock, par value $0.01 (“Shares”), for gross proceeds of approximately $27.4 million in connection with the Formation Transaction. The proceeds from the issuance of Shares were used to acquire OP Units. The OP used the capital contribution from the Company to fund a portion of the purchase price for the Initial Portfolio. The remaining purchase price and closing costs were funded by a capital contribution totaling $70.7 million from NREO, $8.6 million of equity rolled over from VineBrook Contributors, and $241.4 million from a Federal Home Loan Mortgage Corporation (“Freddie Mac”) mortgage (the “Initial Mortgage”) provided by KeyBank N.A. (“KeyBank”). On May 1, 2019 (the “Release Date”), approximately $1.4 million worth of OP Units were released to various VineBrook Contributors from an indemnity reserve escrow that was established at the time the Initial Portfolio was acquired. From the time the escrow reserve was established until the Release Date, no indemnity claims were made against said escrow.

Between November 1, 2018 and ~~June~~September 30, 2022, the Company, through the SPEs (as defined in Note 3) owned by the OP, purchased ~~17,998~~20,220 additional homes and sold ~~184~~196 homes within the VineBrook reportable segment (see Note 15), and through the OP’s consolidated investment in NexPoint Homes (as defined in Note 2), purchased ~~1,731~~2,544 additional ~~homes (see Note~~ 4).homes. Together with the Initial Portfolio, the Company, through the OP’s SPEs and its consolidation of NexPoint Homes, indirectly owned an interest in ~~23,674~~26,697 homes (the “Portfolio”) in 20 states as of ~~June~~September 30, 2022. The acquisitions of the additional homes in the VineBrook reportable segment were funded by loans (see Note 7), proceeds from the sale of Shares and Preferred Shares (defined below) and excess cash generated from operations.

The Company is externally managed by NexPoint Real Estate Advisors V, L.P. (the “Adviser”), through an agreement dated November 1, 2018, subsequently amended and restated on May 4, 2020, ~~and~~ renewed on November 1, 2021and amended on October 25, 2022 (the “Advisory Agreement”). The Advisory Agreement will automatically renew on the anniversary of the renewal date for one-year terms ~~thereafter,~~hereafter, unless otherwise terminated. The Adviser provides asset management services to the Company. The OP caused the SPEs to retain VineBrook Homes LLC (the “Manager”), an affiliate of certain VineBrook Contributors, to renovate, lease, maintain, and operate the VineBrook properties under management agreements (as amended, the “Management Agreements”) that generally have an initial three-year term with one-year automatic renewals, unless otherwise terminated. The Management Agreements are supplemented by a side letter (as amended and restated, the “Side Letter”) by and among the Company, the OP, the OP GP, the Manager and certain of its affiliates. Certain SPEs from time to time may have property management agreements with independent third parties that are not the Manager. These are typically the result of maintaining legacy property managers after an acquisition to help transition the properties to the Manager or, in the case of a future sale, to manage the properties until they are sold. All of the Company’s investment decisions are made by employees of the Adviser and the Manager, subject to general oversight by the OP’s investment committee and the Company’s board of directors (the “Board”). Because the equity holders of the Manager own OP Units, the Manager is considered an affiliate for financial reporting disclosure purposes.

The Company’s investment objectives are to maximize the cash flow and value of properties owned, acquire properties with cash flow growth potential, provide quarterly cash distributions and achieve long-term capital appreciation for its stockholders through targeted management and a renovation program for the homes acquired.

On August 28, 2018, the Company commenced the offering of 40,000,000 Shares through a continuous private placement (the “Private Offering”), under regulation D of the Securities Act of 1933, as amended (the “Securities Act”) (and various state securities law provisions) for a maximum of $1.0 billion of its Shares. The Private Offering ~~expires~~closed on ~~November 1, 2023~~ ~~and will close upon the completion of certain share issuances expected to be completed by~~ September ~~30,~~14, 2022. The initial offering price for Shares sold through the Private Offering was $25.00 per Share. The Company ~~conducts~~conducted periodic closings and ~~sells~~sold Shares at the prior net asset value (“NAV”) per share as determined using the valuation methodology recommended by the Adviser and approved by the pricing committee (the “Pricing Committee”) of the Board (the “Valuation Methodology”), plus applicable fees and commissions. The NAV per share is calculated on a fully diluted basis. NAV may differ from the values of our real estate assets as calculated in accordance with accounting principles generally accepted in the United States (“GAAP”).

NexPoint Securities, Inc. (the “Dealer Manager”), an entity under common ownership with the Adviser, served as the sole dealer manager for the Private Offering and Raymond James & Associates, Inc. (“Raymond James”) and other unaffiliated broker-dealers ~~serve~~served as placement agents (the “Placement Agents”) through selling agreements (“Selling Agreements”) between each Placement Agent and the Company.

The Company has adopted a Long-Term Incentive Plan (the “2018 LTIP”) whereby the Board, or a committee thereof, may grant awards of restricted stock units of the Company (“RSUs”) or profits interest units in the OP (“PI Units”) to certain employees of the Adviser and the Manager, or others at the discretion of the Board (including the directors and officers of the Company or other service providers of the Company or the OP). Under the terms of the 2018 LTIP, 426,307 Shares were initially reserved, subject to automatic increase on January 1st of each year beginning with January 1, 2019 by a number equal to 10% of the total number of OP Units and vested PI Units outstanding on December 31st of the preceding year, ~~of the number of outstanding OP Units and vested PI Units,~~ provided that the Board may act prior to each such January 1st to determine that there will be no increase for such year or that the increase will be less than the number of shares by which the Share Reserve would otherwise increase (the “Share Reserve”). In addition, the Shares available under the 2018 LTIP may not exceed in the aggregate 10% of the number of OP Units and vested PI Units outstanding at the time of measurement (the “Share Maximum”). Grants may be made annually by the Board, or more or less frequently in the Board’s sole discretion. Vesting of grants made under the 2018 LTIP will occur over a period of time as determined by the Board and may include the achievement of performance metrics, also as determined by the Board in its sole discretion.

The accompanying unaudited consolidated financial statements are presented in accordance with GAAP and the rules and regulations of the SEC. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the dates of the consolidated financial statements and the amounts of revenues and expenses during the reporting periods. Actual amounts realized or paid could differ from those estimates. There have been no significant changes to the Company’s significant accounting policies during the ~~six~~nine months ended ~~June~~September 30, 2022.

The accompanying unaudited consolidated financial statements have been prepared according to the rules and regulations of the SEC. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted according to such rules and regulations, although management believes that the disclosures are adequate to make the information presented not misleading. References to number of properties are unaudited.

In the opinion of management, all adjustments and eliminations necessary for the fair presentation of the Company’s financial position as of ~~June~~September 30, 2022 and December 31, 2021 and results of operations for the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021 have been included. The unaudited information included in these interim financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the years ended December 31, 2021 and 2020 included in our Annual Report. The results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2022, or any other future period.

The Company accounts for subsidiary partnerships, limited liability companies, joint ventures and other similar entities in which it holds an ownership interest in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810, Consolidation. The Company first evaluates whether each entity is a variable interest entity (“VIE”). Under the VIE model, the Company consolidates an entity when it has control to direct the activities of the VIE and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. If the Company determines the entity is not a VIE, it evaluates whether the entity should be consolidated under the voting model. The Company consolidates an entity when it controls the entity through ownership of a majority voting interest. As of ~~June~~September 30, 2022, the Company has determined it must consolidate the OP, its subsidiaries and the OP’s investment in NexPoint Homes Trust, Inc. (“NexPoint Homes”) (see Note 5) under the VIE model as it was determined the Company both controls the direct activities of the OP and its investments, including NexPoint Homes, and has the right to receive benefits that could potentially be significant to the OP, its subsidiaries and its investment in NexPoint Homes. The Company has control to direct the activities of the OP and its subsidiaries because the OP GP must generally receive approval of the Board to take any actions. The Company has control to direct the activities of NexPoint Homes because the OP owns ~~over 99%~~approximately 96% of the outstanding equity of NexPoint Homes and the parties that beneficially own over 99% of the operating partnership of NexPoint Homes are related parties to the Company as of ~~June~~September 30, ~~2022.~~ 2022. The consolidated financial statements include the accounts of the Company and its subsidiaries, including the OP, its subsidiaries and NexPoint Homes. All significant intercompany accounts and transactions have been eliminated in consolidation. OP Units and equity interests in consolidated VIEs that are not owned by the Company are presented as noncontrolling interests in the consolidated financial statements, and income or loss generated is allocated between the Company and the noncontrolling interests based upon their relative ownership percentages. In these consolidated financial statements, redeemable noncontrolling interests in the OP are exclusive of any interests in NexPoint Homes and its SFR OP (as defined in Note 5). Noncontrolling interests in consolidated VIEs are representative of interests in NexPoint Homes and redeemable noncontrolling interests in consolidated VIEs are representative of interests in the SFR OP (as defined in Note 5).

Upon acquisition, we evaluate our acquired SFR properties for purposes of determining whether a transaction should be accounted for as an asset acquisition or business combination. Since substantially all of the fair value of our acquired properties is concentrated in a single identifiable asset or group of similar identifiable assets and the acquisitions do not include a substantive process, our purchases of homes or portfolios of homes qualify as asset acquisitions. Accordingly, upon acquisition of a property, the purchase price and related acquisition costs (“Total Consideration”) are allocated to land, buildings, improvements, fixtures, and intangible lease assets based upon their relative fair values.

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, Fair Value Measurement (“ASC 820”) (see Note 8), is based on an independent third-party valuation firm’s estimate of the fair value of the tangible and intangible assets and liabilities acquired or management's internal analysis based on market knowledge obtained from historical transactions. The valuation methodology utilizes market comparable information, depreciated replacement cost and other estimates in allocating value to the tangible assets. The allocation of the Total Consideration to intangible lease assets represents the value associated with the in-place leases, as one month’s worth of effective gross income (rental revenue, less credit loss allowance, plus other income) as the average downtime of the assets in the portfolio is approximately one month and the assets in the portfolio are leased on a gross rental structure. 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 or accreted as interest expense over the life of the debt assumed.

Real estate assets, including land, buildings, improvements, fixtures, and intangible lease assets are stated at historical cost less accumulated depreciation and amortization. Costs incurred in making repairs and maintaining real estate assets are expensed as incurred. Expenditures for improvements, renovations, and replacements are capitalized at cost. The Company also incurs indirect costs to prepare acquired properties for rental. These costs are capitalized to the cost of the property during the period the property is undergoing activities to prepare it for its intended use. We capitalize interest, real estate taxes, insurance, utilities and other indirect costs as costs of the property only during the period for which activities necessary to prepare an asset for its intended use are ongoing, provided that expenditures for the asset have been made and the costs have been incurred. Upon completion of the renovation of our properties, all costs of operations, including repairs and maintenance, are expensed as incurred, unless the renovation meets the Company’s capitalization criteria. Real estate-related depreciation and amortization are computed on a straight-line basis over the estimated useful lives as described in the following table:

As of ~~June~~September 30, 2022, the gross balance and accumulated amortization related to the intangible lease assets was ~~$4.2~~$2.6 million and ~~$2.6~~$0.9 million, respectively. As of December 31, 2021, the gross balance and accumulated amortization related to the intangible lease assets was $1.0 million and $0.5 million, respectively. For the three months ended ~~June~~September 30, 2022 and 2021, the Company recognized approximately ~~$2.0~~$1.7 million and ~~$2.6~~$2.1 million, respectively, of amortization expense related to the intangible lease assets. For the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, the Company recognized approximately ~~$2.9~~$4.7 million and ~~$3.6~~$5.8 million, respectively, of amortization expense related to the intangible lease assets.

Real estate assets are reviewed for impairment quarterly or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Significant indicators of impairment may include, but are not limited to, declines in home values, rental rates or occupancy percentages, as well as significant changes in the economy. In such cases, the Company will evaluate the recoverability of the assets by comparing the estimated future cash flows expected to result from the use and eventual disposition of each asset to its carrying amount and provide for impairment if such undiscounted cash flows are insufficient to recover the carrying amount. If impaired, the real estate asset will be written down to its estimated fair value. The process whereby we assess our SFR homes for impairment requires significant judgment and assessment of factors that are, at times, subject to significant uncertainty. ~~NaN~~No significant impairments on operating properties were recorded during the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021.

The Company maintains cash at multiple financial institutions and, at times, these balances exceed federally insurable limits. As a result, there is a concentration of credit risk related to amounts on deposit. We believe any risks are mitigated through the size of the financial institutions at which our cash balances are held.

Restricted cash represents cash deposited in accounts related to security deposits, property taxes, insurance premiums and deductibles and other lender-required escrows. Amounts deposited in the reserve accounts associated with the loans can only be used as provided for in the respective loan agreements, and security deposits held pursuant to lease agreements are required to be segregated.

The following table provides a reconciliation of cash and restricted cash reported on the consolidated balance sheets that sum to the total of such amount shown in the consolidated statements of cash flows (in thousands):

	*June 30,*						*September 30,*
	*2022*		*2021*		*December 31, 2021*		*2022*		*2021*		*December 31, 2021*
Cash	$	81,793	$	43,901	$	54,104	$	92,566	$	54,786	$	54,104
Restricted cash		21,560		20,515		20,893		30,681		18,492		20,893
Total cash and restricted cash	$	103,353	$	64,416	$	74,997	$	123,247	$	73,278	$	74,997

The Company’s primary operations consist of rental income earned from its residents under lease agreements typically with terms of one year or less. As a result of the adoption of ASC 842, Leases, on January 1, 2019, the Company classifies the SFR property leases as operating leases and elects to not separate the lease component, comprised of rents from SFR properties, from the associated non-lease component, comprised of fees from SFR properties and tenant charge-backs. The combined component is accounted for under the new lease accounting standard while certain resident reimbursements are accounted for as variable payments under the revenue accounting guidance. Rental income is recognized when earned. This policy effectively results in income recognition on a straight-line basis over the related terms of the leases. Resident reimbursements and other income consist of charges billed to residents for utilities, resident-caused damages, pets, and administrative, application and other fees and are recognized when earned. Historically, the Company has used a direct write-off method for uncollectable rents; wherein uncollectible rents are netted against rental income. In response to the COVID-19 pandemic, the Company additionally has established a reserve for any accounts receivable that are not expected to be collectible, which are netted against rental income. For the three months ended ~~June~~September 30, 2022 and 2021, rental income includes ~~$2.5~~$3.0 million and ~~$1.3~~$2.1 million of variable lease payments, respectively. For the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, rental income includes ~~$4.7~~$7.6 million and ~~$2.4~~$4.5 million of variable lease payments, respectively.

Gains or losses on sales of properties are recognized pursuant to the provisions included in ASC 610-20, Other Income. We recognize a full gain or loss on sale, which is presented in ~~gain/(loss)~~loss on sales of real estate on the consolidated statements of operations and comprehensive income (loss), when the derecognition criteria under ASC 610-20 have been met.

In April 2020, the FASB issued a Staff Q&A on accounting for leases during the COVID-19 pandemic, focused on the application of lease guidance in ASC 842. The Q&A states that some lease contracts may contain explicit or implicit enforceable rights and obligations that require lease concessions if certain circumstances arise that are beyond the control of the parties to the contract. Therefore, entities would need to perform a lease-by-lease analysis to determine whether contractual provisions in an existing lease agreement provide enforceable rights and obligations related to lease concessions. The FASB determined it would be acceptable for entities to not perform a lease-by-lease analysis regarding rent concessions resulting from COVID-19, and to instead make a policy election regarding rent concessions, which would give entities the option to account or not to account for these rent concessions as lease modifications if the total payments required by the modified contract are substantially the same or less than the total payments required by the original contract. Entities making the election to account for these rent concessions as lease modifications would recognize the effects of rent abatements and rent deferrals on a prospective straight-line basis over the remainder of the modified contract. We have made the election to not perform a lease-by-lease analysis to determine whether contractual provisions in an existing lease agreement provide enforceable rights and obligations related to payment plans. By electing the FASB relief, we have also made an accounting policy election to not account for rent deferrals provided to lessees due to the COVID-19 pandemic as lease modifications. Lessees are required to pay the full outstanding balance of the rent deferred over the period of the payment plan.

Included in the Company’s consolidated balance sheets are redeemable noncontrolling interests in the OP, redeemable noncontrolling interests in consolidated VIEs and 6.50% Series A Cumulative Redeemable Preferred Stock (the “Preferred Shares”). These interests are presented in the “mezzanine” section of the consolidated balance sheets because they do not meet the functional definition of a liability or equity under current accounting literature. The Company accounts for these under the provisions of ASC Topic 480-10-S99-3A, paragraph 15(b).

In accordance with ASC Topic 480-10-S99, since the redeemable noncontrolling interests in the OP and redeemable noncontrolling interests in consolidated VIEs have a redemption feature, they are measured at their redemption value if such value exceeds the carrying value of interests. The redemption value is based on the NAV per unit at the measurement date. The offset to the adjustment to the carrying amount of the redeemable noncontrolling interests in the OP and redeemable noncontrolling interests in consolidated VIEs is reflected in the Company’s additional paid-in capital on the consolidated balance sheets. In accordance with ASC Topic 480-10-S99, the Preferred Shares are measured at their carrying value plus the accretion to their future redemption value on the balance sheet. The accretion is reflected in the Company’s dividends on and accretion to redemption value of Series A redeemable preferred stock on the consolidated statements of operations and comprehensive income (loss).

Basic earnings (loss) per share is computed by dividing net income (loss) attributable to common stockholders by the weighted average number of shares of the Company’s common stock outstanding, which excludes any unvested RSUs and PI Units issued pursuant to the 2018 LTIP. Diluted earnings (loss) per share is computed by adjusting basic earnings (loss) per share for the dilutive effects of the assumed vesting of RSUs and PI Units and the conversion of OP Units and vested PI Units to Shares. During periods of net loss, the assumed vesting of RSUs and PI Units and the conversion of OP Units and vested PI Units to Shares is anti-dilutive and is not included in the calculation of earnings (loss) per share. The following table sets forth the computation of basic and diluted earnings (loss) per share for the periods presented (in thousands, except per share amounts):

	*For the Three Months Ended June 30,*						*For the Six Months Ended June 30,*						*For the Three Months Ended September 30,*						*For the Nine Months Ended September 30,*
	*2022*			*2021*			*2022*			*2021*			*2022*			*2021*			*2022*			*2021*
Numerator for loss per share:
Net loss	$	(11,638	)	$	(2,007	)	$	(14,351	)	$	(2,148	)	$	(14,621	)	$	(4,799	)	$	(28,972	)	$	(6,947	)
Less:
Dividends on and accretion to redemption value of Redeemable Series A preferred stock		2,219			2,207			4,428			4,413			2,226			2,206			6,654			6,619
Net loss attributable to redeemable noncontrolling interests in the OP		(1,771	)		(466	)		(2,194	)		(501	)		(1,782	)		(823	)		(3,976	)		(1,324	)
Net loss attributable to redeemable noncontrolling interests in consolidated VIEs		(1,191	)		0			(1,191	)		0			(3,112	)		—			(4,303	)		—
Net loss attributable to noncontrolling interests in consolidated VIEs														(113	)		—			(113	)		—
Net loss attributable to common stockholders	$	(10,895	)	$	(3,748	)	$	(15,394	)	$	(6,060	)	$	(11,840	)	$	(6,182	)	$	(27,234	)	$	(12,242	)

Denominator for earnings (loss) per share:
Weighted average common shares outstanding - basic		25,241			12,812			24,250			11,621			25,124			17,230			24,545			13,511
Weighted average unvested RSUs, PI Units, and OP Units (1)		0			0			0			0			—			—			—			—
Weighted average common shares outstanding - diluted		25,241			12,812			24,250			11,621			25,124			17,230			24,545			13,511

Earnings (loss) per weighted average common share:
Basic	$	(0.43	)	$	(0.29	)	$	(0.63	)	$	(0.52	)	$	(0.47	)	$	(0.36	)	$	(1.11	)	$	(0.91	)
Diluted	$	(0.43	)	$	(0.29	)	$	(0.63	)	$	(0.52	)	$	(0.47	)	$	(0.36	)	$	(1.11	)	$	(0.91	)

Under the provision of ASC 280, Segment Reporting, the Company has determined that it has two reportable segments, VineBrook and NexPoint Homes. Both reportable segments involve activities related to acquiring, renovating, developing, leasing and operating SFR homes as rental properties. The Company’s management allocates resources and evaluates operating performance across the 2two segments. The VineBrook reportable segment is the legacy reportable segment and represents the majority of the Company’s operations and generally purchases homes to implement a value-add strategy. The NexPoint Homes reportable segment was formed June 8, 2022 and represents a supplemental reportable segment that generally purchases newer homes that require less rehabilitation compared to the VineBrook reportable segment. Within the VineBrook reportable segment, the Company had a geographic market ~~concentrations~~concentration in ~~two~~one ~~markets (Cincinnati and Dayton)~~market (Cincinnati) that ~~represent~~represents more than 10% of the total gross book value of SFR homes as of ~~June~~September 30, 2022.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) (“ASU 2020-04”). ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the ~~six~~nine months ended ~~June~~September 30, 2022, the Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company has elected practical expedients within FASB ASC 848 related to replacing the source of hedged transactions and continues evaluating the impact the adoption of this ASU will have on the Company's consolidated financial statements.

In connection with its indirect investments in real estate assets acquired, the Company, through its ownership of the OP, indirectly holds a proportional ownership interest in the Portfolio, through the OP’s beneficial ownership of all of the issued and outstanding membership interests in the special purpose limited liability companies (“SPEs”) that directly or indirectly own the Portfolio. All of the properties in the Portfolio 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, except as discussed below. Under the terms of the notes payable, except as discussed below, the lender has a mortgage interest in each real estate asset in the SPE to which the loan is made.

As of ~~June~~September 30, 2022, the Company, through the OP and its SPE subsidiaries, owned the Portfolio, which consisted of ~~21,943~~24,153 properties in the VineBrook reportable segment and 2,544 properties ~~and 1,731~~in the NexPoint Homes ~~properties,~~reportable segment, through 1412 SPEs and their various subsidiaries and through the consolidated investment in NexPoint Homes. The following table presents the ownership structure of each SPE group that directly or indirectly owns the title to each real estate asset as of ~~June~~September 30, 2022, the number of assets held, the cost of those assets, the resulting debt allocated to each SPE and whether the debt is a mortgage loan. The mortgage loan may be settled from the assets of the below entity or entities to which the loan is made. Loans from the Warehouse Facility (as defined in Note 7) can only be settled from the assets owned by VB One, LLC (dollars in thousands):

VIE Name	*Homes*		*Cost Basis*		*OP Beneficial Ownership %*			*Encumbered by Mortgage (1)*	*Debt Allocated*			*Homes*		*Cost Basis*		*OP Beneficial Ownership %*			*Encumbered by Mortgage (1)*	*Debt Allocated*
NREA VB I, LLC		66	$	6,026		100	%	Yes	$	5,048			66	$	6,048		100	%	Yes	$	5,048
NREA VB II, LLC		167		16,523		100	%	Yes		10,742			167		16,568		100	%	Yes		10,742
NREA VB III, LLC		1,322		121,252		100	%	Yes		71,115			1,322		121,675		100	%	Yes		71,115
NREA VB IV, LLC		385		37,345		100	%	Yes		24,283			385		37,438		100	%	Yes		24,283
NREA VB V, LLC		1,829		126,777		100	%	Yes		108,384			1,829		127,264		100	%	Yes		108,384
NREA VB VI, LLC		302		27,898		100	%	Yes		18,661			298		28,059		100	%	Yes		18,324
NREA VB VII, LLC		36		3,059		100	%	Yes		2,989			36		3,081		100	%	Yes		2,989
True FM2017-1, LLC		211		18,735		100	%	Yes		10,312			211		19,072		100	%	Yes		10,168
SMP Homes 3B, LLC		160		17,318		100	%	No		0
SMP Homes 5B, LLC		46		4,770		100	%	Yes		2,319
VB One, LLC		11,408		1,329,924		100	%	No		750,000			13,926		1,766,912		100	%	No		1,195,000
VB Two, LLC		1,853		167,544		100	%	No		124,554			1,853		170,377		100	%	No		124,462
VB Three, LLC		3,890		538,680		100	%	No		315,000			3,890		545,477		100	%	No		320,000
VB Five, LLC		268		25,825		100	%	Yes		13,470			170		18,348		100	%	Yes		8,824
NexPoint Homes		1,731		482,277		99	%	No		221,488			2,544		743,872		96	%	No		467,254
		23,674	$	2,923,953					$	1,678,365	(2)		26,697	$	3,604,191					$	2,366,593	(2)

As of ~~June~~September 30, 2022, the Company, through the OP and its SPE subsidiaries, owned ~~23,674 SFR~~26,697 homes, including ~~21,943~~24,153 homes in the VineBrook reportable segment and ~~1,731~~2,544 homes in the NexPoint Homes reportable segment. As of December 31, 2021, the Company only had 1one reportable segment, VineBrook, and through the OP and its SPE subsidiaries, owned 16,891 ~~SFR~~ homes. The components of the Company’s real estate investments in ~~SFR~~ homes were as follows (in thousands):

	*Land*		*Buildings and improvements (1)*				*Intangible lease assets*			*Real estate held for sale, net*			*Total*			*Land*		*Buildings and improvements (1)*				*Intangible lease assets*			*Real estate held for sale, net*			*Total*
Gross Real Estate, December 31, 2021	$	334,191	$	1,391,786			$	971		$	81		$	1,727,029		$	334,191	$	1,391,786			$	971		$	81		$	1,727,029
Additions		200,026		991,626		(2)		3,986			8,986			1,204,624			318,027		1,554,693		(2)		5,908			10,797			1,889,425
Write-offs		0		0				(799	)		0			(799	)		—		—				(4,273	)		—			(4,273	)
Dispositions		0		0				0			(6,901	)		(6,901	)		—		—				—			(7,990	)		(7,990	)
Gross Real Estate, June 30, 2022		534,217		2,383,412				4,158			2,166			2,923,953
Gross Real Estate, September 30, 2022																	652,218		2,946,479				2,606			2,888			3,604,191
Accumulated depreciation and amortization		0		(113,383	)			(2,619	)		0			(116,002	)		—		(140,250	)			(859	)		—			(141,109	)
Net Real Estate, June 30, 2022	$	534,217	$	2,270,029			$	1,539		$	2,166		$	2,807,951
Net Real Estate, September 30, 2022																$	652,218	$	2,806,229			$	1,747		$	2,888		$	3,463,082

During the three months ended ~~June~~September 30, 2022 and 2021, the Company recognized depreciation expense of approximately ~~$22.2~~$27.0 million and ~~$9.9~~$12.8 million, respectively. During the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, the Company recognized depreciation expense of approximately ~~$37.2~~$64.2 million and ~~$16.9~~$29.7 million, respectively.

During the ~~six~~nine months ended ~~June~~September 30, 2022, the Company, through the OP, acquired ~~5,126~~7,348 homes, including the homes in the portfolios discussed below, and disposed of 7486 homes within the VineBrook reportable segment. On June 8, 2022, the Company, through its consolidated investment in NexPoint Homes, assumed 1,242 homes, and NexPoint Homes subsequently acquired ~~489~~1,302 homes. As of ~~June~~September 30, 2022, NexPoint Homes owns ~~1,731~~2,544 homes. See Note 5 for additional information about NexPoint Homes.

On February 8, 2022, the Company, through the OP, purchased 2,842 homes, located across eight states, with the largest concentration in the southeastern United States (the “Prager Portfolio”). The gross purchase price was approximately $352.7 million, in addition to approximately $31.4 million in debt extinguishment costs and $3.7 million in other closing costs. See the table below for more information about the Prager Portfolio as of the acquisition date:

On March 18, 2022, the Company, through the OP, purchased 170 homes located in Memphis, Tennessee for approximately $17.1 million (the “CrestCore Portfolio”).

On August 25, 2022, the Company, through the OP, purchased a portfolio of approximately 1,030 homes located across 10 states, with the largest concentration in the midwestern and southern United States (the “Global Atlantic Portfolio”) for approximately $217.0 million. See the table below for more information about the Global Atlantic Portfolio as of the acquisition date:

The Company periodically classifies real estate assets as held for sale when certain criteria are met, in accordance with GAAP. Once the Company begins marketing an asset or determines that it will pursue marketing an asset, the asset becomes classified as held for sale. At that time, the Company presents the net real estate assets separately in its consolidated balance sheet, 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 ~~June~~September 30, 2022, there are 2835 properties that are classified as held for sale. These held for sale properties have a carrying amount of approximately ~~$2.2~~$2.9 million.

During the ~~six~~nine months ended ~~June~~September 30, 2022, the Company, through its taxable REIT subsidiary (“the TRS”), invested approximately $100.8 million in Ensign Peak Realty, LLC (“Ensign”), an owner and operator of SFR homes. This investment was redeemed in full on June 8, 2022 in connection with the formation of NexPoint Homes, described below.

On June 8, 2022, the Company, through the OP, entered into a contribution agreement (the “Contribution Agreement”) with NexPoint Homes, which is externally advised by an affiliate of our Adviser. In accordance with the Contribution Agreement, the OP contributed $50.0 million to NexPoint Homes in exchange for 2,000,000 shares of Class A common stock, par value $0.01 per share of NexPoint Homes (the “NexPoint Homes Class A Shares”). The NexPoint Homes Class A Shares were issued and valued at $25.00 per share.

Following the contribution by the OP to NexPoint Homes, NexPoint Homes entered into a contribution agreement (the “SFR OP Contribution Agreement”) with NexPoint SFR Operating Partnership, L.P. (the “SFR OP”), the operating partnership of NexPoint Homes, certain funds managed by affiliates of our Adviser and certain individuals (the “Principals”) affiliated with HomeSource Operations, LLC, the external manager of the SFR OP. In accordance with the SFR OP Contribution Agreement, NexPoint Homes contributed $50.0 million to the SFR OP in exchange for 2,000,000 limited partnership units of the Operating Partnership (“SFR OP Units”).

On June 8, 2022, the OP loaned $50.0 million to NexPoint Homes in exchange for $50.0 million of 7.50% convertible notes of NexPoint Homes (the “NexPoint Homes Convertible Notes”). The NexPoint Homes Convertible Notes bear interest at 7.50%, are interest only during the term of the NexPoint Homes Convertible Note and mature on June 30, 2027. From August 1, 2022 through March 31, 2027, the NexPoint Homes Convertible Notes are convertible into NexPoint Homes Class A Shares at the election of the OP at the then-current net asset value of NexPoint Homes, subject to certain limitations.

On June 8, 2022, in connection with the formation of NexPoint Homes, the Company ~~assumed~~consolidated a note with Metropolitan Life Insurance Company (the “NexPoint Homes MetLife Note 1”). The NexPoint Homes MetLife Note 1 is ~~secured~~guaranteed by the OP and bears interest at a fixed rate of 3.72% on the tranche collateralized by stabilized properties and 4.47% on the tranche collateralized by non-stabilized properties. The NexPoint Homes MetLife Note 1 is interest-only and matures and is due in full on March 3, 2027. As of ~~June~~September 30, 2022, the NexPoint Homes MetLife Note 1 had an outstanding principal balance of ~~$221.5~~$233.6 million which is included, net of unamortized deferred financing costs, in notes payable on the consolidated balance sheets. ~~The OP is~~

See Note 7 for more information on the ~~guarantor of the~~Company’s consolidated debt related to its investment in NexPoint ~~Homes MetLife Note~~ 1.Homes.

Under ASC 810, Consolidation, the Company has determined that NexPoint Homes represents a variable interest entity. Under the VIE model, the Company concluded that the Company both controls and directs the activities of NexPoint Homes and has the right to receive benefits that could potentially be significant to its investment in NexPoint Homes. The Company has control to direct the activities of NexPoint Homes as the OP owns ~~over 99%~~approximately 96% of the outstanding equity of NexPoint Homes as of September 30, 2022and the parties that beneficially own over 99% of the ~~operating partnership of NexPoint Homes~~SFR OP are related parties to the Company. As such, the Company determined it is appropriate to consolidate NexPoint Homes. All significant intercompany accounts and transactions have been eliminated in consolidation. As NexPoint Homes continues to raise additional capital, the Company will continue to evaluate whether the entity is a VIE and if the Company is the primary beneficiary of the VIE and should consolidate the entity. ~~As of~~ ~~June 30, 2022,~~ ~~the OP owns approximately 99.2% of the outstanding NexPoint Homes Shares.~~

On November 22, 2021, the Company, through the TRS, invested $2.5 million in Vesta Ventures Fund I, LP (the “Vesta Fund”). The Vesta Fund is a closed-end fund with an initial seven-year term beginning on February 24, 2021, subject to certain extension provisions, that invests in early and growth stage technology companies that provide solutions to the SFR real estate sector. Vesta Ventures GP, LLC (the “Vesta GP”) is the general partner and managing member of the Vesta Fund and accordingly has the exclusive right to manage and control the Vesta Fund. The TRS is a limited partner in the Vesta Fund with a minority interest and accordingly has no control or influence over the Vesta Fund.

Investments in privately held entities that report NAV, such as our privately held equity investments, are presented at fair value using NAV as a practical expedient, with changes in fair value recognized in net income. We use NAV reported by limited partnerships generally without adjustment, unless we are aware of information indicating that the NAV reported by a limited partnership does not accurately reflect the fair value of the investment at our reporting date. We disclose the timing of liquidation of an investee’s assets and the date when redemption restrictions will lapse (or indicate if this timing is unknown) if the investee has communicated this information to us or has announced it publicly. We recognize both realized and unrealized gains and losses in our consolidated statements of operations. Unrealized gains and losses represent changes in NAV as a practical expedient to estimate fair value for investments in privately held entities that report NAV. Realized gains and losses on our investments represent the difference between proceeds received upon disposition of investments and their historical or adjusted cost. At ~~June~~September 30, 2022, the Company had no material unrealized or realized gains or losses related to the investment.

On ~~November 1, 2018,~~ the OP (as guarantor) and some of the SPEs (as borrowers) entered into the $241.4 million Initial Mortgage with KeyBank. The Initial Mortgage is secured by certain properties in the Initial Portfolio and equity pledges of the SPEs and bears interest at a variable rate equal to the 30~~-day London InterBank Offered Rate (“one-month LIBOR”) plus 1.55%. The Initial Mortgage is interest-only for the~~ ~~first~~ ~~48 months of the term and principal amortizes at a rate of~~ 30 ~~years over the last 36 months of the term. The Initial Mortgage matures and is due in full on~~ ~~December 1, 2025.~~ ~~The balance of the Initial Mortgage, net of unamortized deferred financing costs, is included in notes payable on the consolidated balance sheets.~~

On September 20, 2019, the OP (as guarantor) and VB One, LLC (as borrower) entered into a credit facility (the “Warehouse Facility”) with KeyBank. The Warehouse Facility is secured by an equity pledge in certain assets of VB One, LLC and an equity pledge in the equity of VB One, LLC. On November 3, 2021, the Company (as guarantor), the OP (as parent borrower), and each of (i) VB OP Holdings, LLC and (ii) VB One, LLC and certain of its subsidiaries (as subsidiary borrowers), entered into an amended and restated credit agreement to recast the Warehouse Facility, which was subsequently amended on December 9, 2021, April 8, 2022 and May 20, 2022. The amended recast Warehouse Facility is a full-term, interest-only facility with an initial 36-month term ending November 3, 2024, has one 12-month extension option, and bears interest at a variable rate equal to the forward-looking term rate based on the Secured Overnight Financing Rate (“SOFR”) for the applicable interest period (“one-month term SOFR”), or daily SOFR for the applicable interest period, plus a margin of 0.1% plus an applicable rate ranging from 1.6% to 2.45% depending on the Company’s consolidated total leverage ratio. Under the amended recast Warehouse Facility, the OP has the right to increase the total commitments available for borrowing, which may take the form of an increase in revolving commitments or one or more tranches of term loan commitments, up to $1.2 billion.

On September 13, 2022, the Company received increased commitments of $200.0 million on the Warehouse Facility, incurring $3.3 million of deferred financing costs, and then drew $200.0 million on the Warehouse Facility. As of ~~June~~September 30, 2022, ~~$750.0 million~~approximately $1.2 billion was drawn on the Warehouse Facility. The balance of the Warehouse Facility, net of unamortized deferred financing costs, is included in credit facilities ~~on the consolidated balance sheets.~~

On ~~September 30, 2019,~~ in connection with the acquisition of a 954-home portfolio (the “TrueLane Portfolio”), the OP (as guarantor) assumed an approximately $10.8 million Freddie Mac mortgage loan (the “TrueLane Mortgage”) with Berkadia Commercial Mortgage LLC as a result of the OP’s acquisition of True FM ~~2017~~-1, ~~LLC. The TrueLane Mortgage is secured by some of our properties and an equity pledge in True FM~~ ~~2017~~-1, ~~LLC and bears interest at a fixed rate equal to 5.35%. The TrueLane Mortgage matures and is due in full on~~ ~~February 1, 2028~~ ~~and requires monthly principal and interest payments. The balance of the TrueLane Mortgage, net of unamortized deferred financing costs, is included in notes payable~~ on the consolidated balance sheets.

On December 28, 2020, in connection with the acquisition of a 45-home portfolio, the OP provided a non-recourse carveout guaranty related to an approximately $2.4 million mortgage loan assumed by a subsidiary of the OP (the “CoreVest Note”) with CoreVest American Finance Lender LLC as a result of the OP’s acquisition of SMP Homes 5B, LLC. The CoreVest Note is secured by the properties in SMP Homes 5B, LLC and an equity pledge in SMP Homes 5B, LLC and bears interest at a fixed rate equal to 6.12%. The CoreVest Note matures and is due in full on January 9, 2023 and requires monthly principal and interest payments. ~~The balance of the CoreVest Note, net of unamortized deferred financing costs, is included in notes payable on the consolidated balance sheets.~~ On July 11, 2022, the OP repaid the full balance of the CoreVest Note, which extinguished the CoreVest Note.

On ~~January 6, 2021,~~ the Company (as guarantor) and VB Two, LLC (as borrower) entered into a $125.0 million note with Metropolitan Life Insurance (the “MetLife Note”). The MetLife Note is secured by equity pledges in VB Two, LLC and its wholly owned subsidiaries and bears interest at a fixed rate of 3.25%. The MetLife Note is interest-only and matures and is due in full on ~~January 31, 2026.~~ ~~The MetLife Note, net of unamortized deferred financing costs, is included in notes payable on the consolidated balance sheets.~~

On March 1, 2021, the Company entered into a non-recourse carveout guaranty and certain wholly owned subsidiaries of VB Three, LLC (as borrowers) entered into a $500.0 million credit agreement with JP Morgan (the “JPM Facility”). The JPM Facility is secured by equity pledges in VB Three, LLC and its wholly owned subsidiaries and bears interest at a variable rate equal to one-month LIBOR plus 2.75%. The JPM Facility is interest-only and matures and is due in full on March 1, 2023. On March 10, 2022, the Company entered into Amendment No. 1 to the JPM Facility, wherein each advance under the JPM Facility will bear interest at a daily SOFR plus 2.85%. As of ~~June~~September 30, 2022, the JPM Facility has ~~$185.0~~$180.0 million of available capacity. The balance of the JPM Facility, net of unamortized deferred financing costs, is included in credit facilities on the consolidated balance sheets. The JPM Facility currently matures on March 1, 2023. Management is in the process of extending or refinancing the facility with the existing lender. If the Company is not able to complete an extension or refinancing with the existing lender, management believes it has sufficient access to other potential sources of capital, including through raising equity, securing new debt or selling a portion of the portfolio to repay the debt upon maturity.

On January 13, 2022, in connection with the acquisition of a 98-home portfolio, the OP (as guarantor) assumed an approximately $4.6 million Freddie Mac mortgage loan (the “Hatchway Broadmoor Mortgage”) with Arbor Agency Lending, LLC as a result of the OP’s acquisition of Hatchway Broadmoor, LLC. The Hatchway Broadmoor Mortgage is secured by properties in Hatchway Broadmoor, LLC and an equity pledge in Hatchway Broadmoor, LLC and bears interest at a fixed rate equal to 5.35%. The Hatchway Broadmoor Mortgage matures and is due in full on February 1, 2029 and requires monthly principal and interest payments. ~~The~~On August 19, 2022, the OP incurred a prepayment penalty of approximately $0.6 million and repaid the full balance of the Hatchway Broadmoor Mortgage ~~net of unamortized deferred financing costs, is included in notes payable on~~which extinguished the ~~consolidated balance sheets.~~Hatchway Broadmoor Mortgage.

On February 8, 2022, in connection with the acquisition of the Prager Portfolio, the Company entered into a bridge credit agreement through the OP with KeyBank National Association, and borrowed $150.0 million (the “Bridge Facility”). On April 8, 2022, the Company repaid the outstanding principal balance on the Bridge Facility, which extinguished the Bridge Facility. In connection with the extinguishment of the Bridge Facility, the Company incurred a loss on extinguishment of debt of approximately $1.0 million, which is presented on the consolidated statements of operations and comprehensive income (loss).

On March 18, 2022, in connection with the acquisition of an 88-home portfolio, the OP provided a non-recourse carveout guaranty related to an approximately $4.7 million mortgage loan assumed by a subsidiary of the OP (the “Crestcore II Note”) with CoreVest American Finance Lender LLC as a result of the OP’s acquisition of Crestcore II, LLC. The Crestcore II Note is secured by the properties in Crestcore II, LLC and an equity pledge in Crestcore II, LLC and bears interest at a fixed rate equal to 5.12%. The Crestcore II Note matures and is due in full on July 9, 2029 and requires monthly principal and interest payments. The balance of the Crestcore II Note, net of unamortized deferred financing costs, is included in notes payable on the consolidated balance sheets.

On March 18, 2022, in connection with the acquisition of an 82-home portfolio, the OP provided a non-recourse carveout guaranty related to an approximately $4.2 million mortgage loan assumed by a subsidiary of the OP (the “Crestcore IV Note”) with CoreVest American Finance Lender LLC as a result of the OP’s acquisition of Crestcore IV, LLC. The Crestcore IV Note is secured by the properties in Crestcore IV, LLC and an equity pledge in Crestcore IV, LLC and bears interest at a fixed rate equal to 5.12%. The Crestcore IV Note matures and is due in full on July 9, 2029 and requires monthly principal and interest payments. The balance of the Crestcore IV Note, net of unamortized deferred financing costs, is included in notes payable on the consolidated balance sheets.

On August 25, 2022, in connection with the acquisition of the Global Atlantic Portfolio, the Company entered into a bridge credit agreement through the OP with KeyBank National Association, and borrowed $165.0 million (the “Bridge Facility II”). The Bridge Facility II accrued interest at one-month term SOFR plus a margin of 2.6%. On September 2, 2022, the Company drew an additional $35.0 million on the Bridge Facility II. On September 13, 2022, the Company repaid the outstanding principal balance on the Bridge Facility II, which extinguished the Bridge Facility II. In connection with the extinguishment of the Bridge Facility II, the Company incurred a loss on extinguishment of debt of approximately $1.8 million, which is presented on the consolidated statements of operations and comprehensive income (loss).

In addition to the debt agreements discussed above for the VineBrook reportable segment, as of ~~June~~September 30, 2022, the NexPoint Homes reportable segment had ~~$321.6~~$567.4 million of debt outstanding included in notes payable on the consolidated balance sheets, of which ~~$221.5 million was~~is comprised of the NexPoint Homes MetLife Note 1, the NexPoint Homes Metlife Note 2 (as defined below), NexPoint Homes KeyBank Facility and ~~$100.1 million was~~the SFR OP Convertible Notes (as defined in Note 13). See the summary table below for further information on the debt of the NexPoint Homes Reportable Segment.

On August 12, 2022, a subsidiary of SFR OP as borrower closed a $200 million delayed draw facility with Metropolitan Life Insurance Company, as lender (the “NexPoint Homes MetLife Note 2”). The NexPoint Homes MetLife Note 2 matures on August 12, 2027 and bears interest at a fixed rate of 5.44%. As of September 30, 2022, approximately $171.2 million has been drawn on the NexPoint Homes MetLife Note 2.

On August 12, 2022, a subsidiary of SFR OP as borrower closed a $75 million revolver facility with KeyBank, as lender (the “NexPoint Homes KeyBank Facility”). The NexPoint Homes KeyBank Facility on August 12, 2025 and bears interest at a floating rate of 185 to 260 basis points depending on the borrower’s leverage ratio over the SOFR. As of September 30, 2022, approximately $62.5 million has been drawn on the NexPoint Homes KeyBank Facility.

As of ~~June~~September 30, 2022, the Company is in compliance with all debt covenants in all of its debt agreements.

The weighted average interest rate of the Company’s debt was ~~3.8895%~~4.9333% as of ~~June~~September 30, 2022 and 2.3707% as of December 31, 2021. As of ~~June~~September 30, 2022 and December 31, 2021, the adjusted weighted average interest rate of the Company’s debt, including the effect of derivative financial instruments, was ~~4.0931%~~4.3747% and 2.9171%, respectively. For purposes of calculating the adjusted weighted average interest rate of the Company’s debt as of September 30, 2022, including the effect of derivative financial instruments, the Company has included the weighted average fixed rate of ~~2.0217%~~1.9508% on its combined ~~$870.0 million~~$1.3 billion notional amount of interest rate swap and cap agreements, representing a weighted average fixed rate for one-month LIBOR, daily SOFR and ~~daily~~one-month term SOFR, which effectively fixes the interest rate on $~~870.0~~ ~~million~~$1.3 billion of the Company’s floating rate indebtedness (see Note 8).

For full descriptions of the debt arrangements not included in this Form 10-Q, please see Note 6 to the consolidated financial statements in our Annual Report.

The following table contains summary information concerning the Company’s debt as of ~~June~~September 30, 2022 and December 31, 2021 (dollars in thousands):

		*Outstanding Principal as of*												*Outstanding Principal as of*
	*Type*	*June 30, 2022*			*December 31, 2021*			*Interest Rate (1)*			*Maturity*		*Type*	*September 30, 2022*			*December 31, 2021*			*Interest Rate (1)*			*Maturity*
Initial Mortgage	Floating	$	241,222		$	241,269			3.34	%	12/1/2025		Floating	$	240,885		$	241,269			4.69	%	12/1/2025
Warehouse Facility	Floating		750,000			160,000			3.49	%	11/3/2024	(3)	Floating		1,195,000			160,000			4.84	%	11/3/2024	(2)
JPM Facility	Floating		315,000			240,000			4.35	%	3/1/2023		Floating		320,000			240,000			5.83	%	3/1/2023
MetLife Note	Fixed		124,554			124,689			3.25	%	1/31/2026		Fixed		124,462			124,689			3.25	%	1/31/2026
TrueLane Mortgage	Fixed		10,312			10,387			5.35	%	2/1/2028		Fixed		10,168			10,387			5.35	%	2/1/2028
CoreVest Note	Fixed		2,319			2,338			6.12	%	1/9/2023		Fixed		—			2,338			6.12	%	1/9/2023
Crestcore II Note	Fixed		4,691			0			5.12	%	7/9/2029		Fixed		4,671			—			5.12	%	7/9/2029
Crestcore IV Note	Fixed		4,170			0			5.12	%	7/9/2029		Fixed		4,153			—			5.12	%	7/9/2029
Hatchway Broadmoor Mortgage	Fixed		4,609			0			5.35	%	2/1/2029
NexPoint Homes MetLife Note 1	Fixed		221,488			0			3.76	%	3/3/2027		Fixed		233,545			—			3.76	%	3/3/2027
SFR OP Convertible Notes	Fixed		100,100			0			7.50	%	6/30/2027
NexPoint Homes MetLife Note 2													Fixed		171,209			—			5.44	%	8/12/2027
NexPoint Homes KeyBank Facility													Floating		62,500			—			5.24	%	8/12/2025
SFR OP Convertible Notes (3)													Fixed		100,100			—			7.50	%	6/30/2027
		$	1,778,465		$	778,683								$	2,466,693		$	778,683
Debt premium, net (2)			457			416
Deferred financing costs, net of accumulated amortization of $8,519 and $5,325, respectively			(12,757	)		(10,554	)
Debt premium, net (4)															396			416
Deferred financing costs, net of accumulated amortization of $12,651 and $5,325, respectively															(15,714	)		(10,554	)
		$	1,766,165		$	768,545								$	2,451,375		$	768,545

The aggregate scheduled maturities, including amortizing principal payments, of total debt for the next five calendar years subsequent to ~~June~~September 30, 2022 are as follows (in thousands):

	*Total*			*Total*
2022	$	927		$	586
2023		326,300			323,541
2024		8,617			3,699
2025		974,208	(1)		1,491,700	(1)
2026		125,052			124,867
Thereafter		343,361			522,300
Total	$	1,778,465		$	2,466,693

The Company defers costs incurred in obtaining financing and amortizes the costs over the term of the related debt 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 any prepayment penalty resulting from the early repayment of the debt is recorded as interest expense in the period incurred.~~debt. For the three months ended ~~June~~September 30, 2022 and 2021, amortization of deferred financing costs of approximately ~~$1.8~~$2.3 million and $1.1 million, respectively, are included in interest expense on the consolidated statements of operations and comprehensive income (loss). For the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, amortization of deferred financing costs of approximately ~~$3.3~~$5.6 million and ~~$1.6~~$2.7 million, respectively, are included in interest expense on the consolidated statements of operations and comprehensive income (loss).

Loss on extinguishment of debt includes prepayment penalties and defeasance costs incurred on the early repayment of debt and other costs incurred in a debt extinguishment. 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. For the ~~six~~nine months ended ~~June~~September 30, 2022and 2021, the Company wrote-off deferred financing costs of approximately ~~$1.0~~$3.5 million and $0.0 million, respectively, which is included in loss on extinguishment of debt on the consolidated statements of operations and comprehensive income (loss).

Fair value measurements are determined based on the assumptions that market participants would use in pricing an asset or liability. As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy):

The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. The Company utilizes independent third parties to perform the allocation of value analysis for each property acquisition and to perform the market valuations on its derivative financial instruments and has established policies, as described above, processes and procedures intended to ensure that the valuation methodologies for investments and derivative financial instruments are fair and consistent as of the measurement date.

The Company manages interest rate risk primarily by managing the amount, sources, and duration of its debt funding and the use of derivative financial instruments. Specifically, the Company has entered into an interest rate cap and interest rate swaps to manage exposures that arise from changes in interest rates. The Company’s derivative financial instruments are used to manage the Company’s risk of increased cash outflows from the floating rate loans that may result from rising interest rates, in particular the reference rate for the loans, which include one-month LIBOR, daily SOFR and one-month term SOFR. In order to minimize counterparty credit risk, the Company has entered into and expects to enter in the future into hedging arrangements and intends to only transact with major financial institutions that have high credit ratings.

The Company utilizes an independent third party to perform the 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 swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. The fair value of the interest rate cap is 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 cap. 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.

To comply with the provisions of ASC 820, the Company incorporates credit valuation adjustments to appropriately reflect both the Company’s own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of the Company’s derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees. 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 Company’s derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by the Company and its counterparties. The Company has determined that the significance of the impact of the credit valuation adjustments made to its derivative contracts, which determination was based on the fair value of each individual contract, was not significant to the overall valuation. As a result, all of the Company’s derivatives held as of ~~June~~September 30, 2022 and December 31, 2021 were classified as Level 2 of the fair value hierarchy.

The changes in the fair value of derivative financial instruments that are designated as cash flow hedges are recorded in other comprehensive income (loss) and are subsequently reclassified into net income (loss) in the period that the hedged forecasted transaction affects earnings. Amounts reported in other comprehensive income (loss) related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s floating rate debt. Derivatives not designated as hedges are not speculative and are used to manage the Company’s exposure to interest rate movements but either do not meet the strict requirements to apply hedge accounting in accordance with FASB ASC 815, Derivatives and Hedging, or the Company has elected not to designate such derivatives as hedges. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in net income (loss) as interest expense.

In order to fix a portion of, and mitigate the risk associated with, the Company’s floating rate indebtedness, the Company, through the OP, has entered into 1112 interest rate swap transactions with KeyBank and Mizuho Capital Markets LLC (“Mizuho”) with a combined notional amount of ~~$870.0~~$970.0 million. The interest rate swaps the Company has entered into effectively replace the floating interest rate (one-month LIBOR or daily SOFR) with respect to those amounts with a weighted average fixed rate of ~~2.0217%~~2.0902%. The Company has designated these interest rate swaps as cash flow hedges of interest rate risk.

As of ~~June~~September 30, 2022, the Company had the following outstanding interest rate swaps that were designated as cash flow hedges of interest rate risk (dollars in thousands):

Effective Date	Expiration Date	Counterparty	Index (1)	Notional		Fixed Rate				*Expiration Date*	*Counterparty*	*Index (1)*	*Notional*		*Fixed Rate*
3/31/2022	11/1/2025	KeyBank	Daily SOFR	$	100,000		1.5110	%		11/1/2025	KeyBank	Daily SOFR	$	100,000		1.5110	%
3/31/2022	11/1/2025	KeyBank	Daily SOFR		100,000		1.9190	%		11/1/2025	KeyBank	Daily SOFR		100,000		1.9190	%
3/31/2022	11/1/2025	KeyBank	Daily SOFR		50,000		2.4410	%		11/1/2025	KeyBank	Daily SOFR		50,000		2.4410	%
6/1/2022	11/1/2025	Mizuho	Daily SOFR		100,000		2.6284	%		11/1/2025	Mizuho	Daily SOFR		100,000		2.6284	%
6/1/2022	11/1/2025	Mizuho	Daily SOFR		100,000		2.9413	%		11/1/2025	Mizuho	Daily SOFR		100,000		2.9413	%
6/1/2022	11/1/2025	Mizuho	Daily SOFR		100,000		2.7900	%		11/1/2025	Mizuho	Daily SOFR		100,000		2.7900	%
7/1/2022										11/1/2025	Mizuho	Daily SOFR		100,000		2.6860	%
				$	550,000		2.3655	%	(2)				$	650,000		2.4148	%	(2)

For the three months ended ~~June~~September 30, 2022 and 2021, on the consolidated statements of operations and comprehensive income (loss), the Company recognized approximately ~~$8.7~~$29.4 million and $1.1 million of unrealized gain, ~~and $0.1 million of unrealized loss,~~ respectively, related to the change in fair value of the interest rate hedges. For the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, on the consolidated statements of operations and comprehensive income (loss), the Company recognized approximately ~~$25.5~~$54.9 million and ~~$6.3~~$7.4 million of unrealized gain, respectively, related to the change in fair value of the interest rate hedges.

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. On April 13, 2022, the Company, through the OP, paid a premium of approximately $12.7 million and entered into an interest rate cap transaction with Goldman Sachs Bank USA (“Goldman”) with a notional amount of $300.0 million. The interest rate cap effectively caps one-month term SOFR at 1.50% on $300.0 million of floating rate debt. The interest rate cap expires on November 1, 2025.

As of ~~June~~September 30, 2022, the Company had the following outstanding derivatives that were not designated as hedges in qualifying hedging relationships (dollars in thousands):

Derivative		*Notional*			*Hedged Floating Rate Debt*		*Index*		*Index as of June 30, 2022*				*Strike Rate*				*Notional*			*Hedged Floating Rate Debt*		*Index*		*Index as of September 30, 2022*				*Strike Rate*
Interest Rate Cap		$	300,000		Warehouse Facility		One-Month Term SOFR			1.6860	%			1.50	%		$	300,000		Warehouse Facility		One-Month Term SOFR			3.0421	%			1.50	%

For the three and ~~six~~nine months ended ~~June~~September 30, 2022, on the consolidated statements of operations and comprehensive income (loss), the Company recognized a ~~$2.1~~an $8.2 million and $10.3 million reduction in interest expense, respectively, related to the change in fair value of the interest rate cap.

The table below presents the fair value of the Company’s derivative financial instruments, which are presented ~~in a net position~~ on the consolidated balance sheets as of ~~June~~September 30, 2022 and December 31, 2021 (in thousands):

			*Asset Derivatives*				*Liability Derivatives*						*Asset Derivatives*				*Liability Derivatives*
		*Balance Sheet Location*	*June 30, 2022*		*December 31, 2021*		*June 30, 2022*		*December 31, 2021*			*Balance Sheet Location*	*September 30, 2022*		*December 31, 2021*		*September 30, 2022*		*December 31, 2021*
Derivatives designated as hedging instruments:
Interest rate swaps		Interest rate derivatives, at fair value	$	22,237	$	0	$	318	$	3,590		Interest rate derivatives, at fair value	$	51,277	$	—	$	—	$	3,590

Derivatives not designated as hedging instruments:
Interest rate caps		Interest rate derivatives, at fair value		14,743		0		0		0		Interest rate derivatives, at fair value		22,454		—		—		—
Total	Total		$	36,980	$	0	$	318	$	3,590	Total		$	73,731	$	—	$	—	$	3,590

Financial assets and liabilities for which the carrying values approximate their fair values include cash, restricted cash, accounts receivable, accounts payable, and security deposits. Generally, these assets and liabilities are short‑term in duration and are recorded at fair value on the consolidated balance sheets. The Company believes the carrying value of each outstanding loan approximates fair value based on the nature, term and interest rate of each loan.

The Company ~~issues~~issued Shares under the Private Offering ~~as well as~~and issues shares under the Company’s distribution reinvestment program (the “DRIP”). Shares issued under the DRIP are issued at a 3% discount to the then-current NAV per share. ~~The following table details all Share issuances~~During the nine months ended September 30, 2022, the Company issued approximately 4,065,000 Shares under the Private Offering and ~~the~~ DRIP for ~~the~~ ~~six~~ ~~months ended~~ ~~June 30, 2022~~ ~~(dollars in thousands):~~proceeds of approximately $220.1 million.

~~The following table provides detail on cash dividends declared on Shares as well as reinvested dividends as part of the Company’s DRIP for the~~ ~~six~~ ~~months ended~~ ~~June 30, 2022~~ ~~(dollars in thousands):~~

The Company adopted the 2018 LTIP whereby the Board, or a committee thereof, may grant RSUs or PI Units to certain employees of the Adviser and the Manager, or others at the discretion of the Board (including the directors and officers of the Company or other service providers of the Company or the OP). The 2018 LTIP provides for the Share Reserve and the Share Maximum for issuance of RSUs or PI Units. Grants may be made annually by the Board or more or less frequently in the Board’s sole discretion. Vesting of grants made under the 2018 LTIP will occur ratably over a period of time as determined by the Board and may include the achievement of performance metrics also as determined by the Board in its sole discretion.

On December 10, 2019, a total of 73,700 RSUs were granted to certain employees of the Adviser and officers of the Company. On May 11, 2020, a total of 179,858 RSUs were granted to certain employees of the Adviser, officers of the Company and independent Board members. On February 15, 2021, a total of 191,506 RSUs were granted to certain employees of the Adviser, officers of the Company and independent Board members. On February 17, 2022, a total of 185,111 RSUs were granted to certain employees of the Adviser, officers of the Company and independent Board members. The RSUs granted to certain employees of the Adviser and officers of the Company on December 10, 2019 and May 11, 2020 vest over a four-year period. The RSUs granted to certain employees of the Adviser and officers of the Company on February 17, 2022, February 15, 2021 and May 11, 2020 vest 50% ratably over four years and 50% at the successful completion of an initial public offering. The RSUs granted to independent Board members fully vest on the first anniversary of the grant date. Any unvested RSU is forfeited, except in limited circumstances, as determined by the compensation committee of the Board, when the recipient is no longer employed by the Adviser. RSUs are valued at fair value (which is the NAV per share in effect) on the date of grant, with compensation expense recorded in accordance with the applicable vesting schedule that approximates a straight-line basis. Beginning on the date of grant, RSUs accrue dividends that are payable in cash on the vesting date. Once vested, the RSUs convert on a one-for-one basis into Shares.

As of ~~June~~September 30, 2022, the number of RSUs granted that are outstanding was as follows (dollars in thousands):

Dates	*Number of RSUs*				*Value (1)*			*Number of RSUs*				*Value (1)*
Outstanding December 31, 2021		377,704			$	12,405			377,704			$	12,405
Granted		185,111				10,022			185,111				10,022
Vested		(53,821	)	(2)		(1,845	)		(54,028	)	(2)		(1,854	)
Forfeited		0				—			(2,036	)			(80	)
Outstanding June 30, 2022		508,994			$	20,582
Outstanding September 30, 2022									506,751			$	20,493

For the three months ended ~~June~~September 30, 2022 and 2021, the Company recognized approximately $0.9 million and $0.6 million, respectively, of non-cash compensation expense related to the RSUs, which is included in corporate general and administrative expenses on the consolidated statements of operations and comprehensive income (loss). For the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, the Company recognized approximately ~~$1.7~~$2.6 million and ~~$1.1~~$1.7 million, respectively, of non-cash compensation expense related to the RSUs, which is included in corporate general and administrative expenses on the consolidated statements of operations and comprehensive income (loss).

Other than PI Units and 6.50% Series A Cumulative Redeemable Preferred Units of the OP (“OP Preferred Units”), partnership interests in the OP are represented by OP Units. Net income (loss) is allocated pro rata to holders of OP Units and PI Units based upon net income (loss) attributable to the OP and the respective members’ OP Units and PI Units held during the period. Capital contributions, distributions, and profits and losses are allocated to PI Units and OP Units not held by the Company (the “noncontrolling interests”).

The following table presents the redeemable noncontrolling interests in the OP (in thousands):

~~The following table provides detail on distributions to noncontrolling interests in the OP for the~~ ~~six~~ ~~months ended~~ ~~June 30, 2022~~~~, including under the OP’s DRIP (dollars in thousands):~~

As of ~~June~~September 30, 2022, the Company held ~~21,250,366~~21,542,876 Class A OP Units, NREO held 2,691,330 Class B OP Units, NRESF held ~~88,268~~89,037 Class C OP Units, GAF REIT held ~~139,296~~140,509 Class C OP Units and the VineBrook Contributors and other Company insiders held ~~821,547~~883,170 Class C OP Units.

On September 7, 2021, the general partner of the OP executed the OP LPA for the purposes of creating a board of directors of the OP (the “Partnership Board”) and subdividing and reclassifying the outstanding common partnership units of the OP into Class A, Class B and Class C OP Units. The OP LPA generally provides that the newly created Class A OP Units and Class B OP Units each have 50.0% of the voting power of the OP Units, including with respect to the election of directors to and removal of directors from the Partnership Board, and that the Class C OP Units have no voting power. The reclassification of the OP Units did not have a material effect on the economic interests of the holders of OP Units. In connection with the OP LPA, the OP Units held by the Company were reclassified into Class A OP Units, the OP Units held by NREO were reclassified into Class B OP Units and the remaining OP Units were reclassified into Class C OP Units. In addition, the OP LPA provides that holders of PI Units will receive Class C OP Units upon conversion of vested PI Units into OP Units.

The Partnership Board of the OP has exclusive authority to select, remove and replace the general partner of the OP and no other authority. The Partnership Board may replace the general partner of the OP at any time. Pursuant to the terms of the OP LPA, the Company appointed Brian Mitts as the sole initial director of the Partnership Board. The number of directors on the Partnership Board is initially one but may be increased by following the affirmative vote or consent of the majority of the voting power of the OP Units (the “Requisite Approval”). The election of directors to and removal of directors from the Partnership Board also requires the Requisite Approval.

Upon execution of the OP LPA, the Company reconsidered whether it was still the primary beneficiary of the OP. Upon reconsideration, the Company determined that it is the member of the related party group most closely associated with the OP and has the power to direct the activities that are most significant to the OP as any actions taken by the OP GP are subject to the authority and approval of the Company’s Board. Accordingly, the Company determined that it should continue to consolidate the OP.

In connection with the 2018 LTIP, PI Units have been issued to key personnel, senior management and executives of the Manager. On April 19, 2019, a total of 40,000 PI Units were granted; on November 21, 2019, a total of 80,399 PI Units were granted; on May 11, 2020, a total of 219,826 PI Units were granted; on November 30, 2020, a total of 11,764 PI Units were granted; ~~and~~ on May 31, 2021, a total of 246,169 PI Units were granted; and on August 10, 2022, a total of 27,849 PI Units were granted. The PI Units are a special class of partnership interests in the OP with certain restrictions, which are convertible into Class C OP Units, subject to satisfying vesting and other conditions. PI Unit holders are entitled to receive the same distributions as holders of our OP Units (only if we declare and pay such distributions). The PI Units granted in 2019 generally fully vest over a period of two to four years. The PI Units granted on May 11, 2020 and May 31, 2021 vest 50% ratably over four years and 50% at the successful completion of an initial public offering and the PI Units granted on November 30, 2020 vest 100% ratably over four years or alternatively 100% on the successful completion of an initial public offering. The PIU Units granted on August 10, 2022 generally vest ratably over five years. Once vested and converted into Class C OP Units in accordance with the OP LPA, the PI Units will then be fully recognized as Class C OP Units, which are subject to a one year lock up period before they can be converted to Shares. Any unvested PI Unit granted to an employee of the Manager is forfeited, except in limited circumstances, as determined by the compensation committee of the Board, when the recipient is no longer employed by the Manager. PI Units are valued at fair value on the date of grant, with compensation expense recorded in accordance with the applicable vesting schedule over the periods in which the restrictions lapse, that approximates a straight-line basis. We valued the PI Units at a per-unit value equivalent to the per-share offering price of our OP Units less a discount for lack of marketability and other discounts estimated by a third-party consultant. Beginning on the date of grant, PI Units accrue dividends that are payable in cash quarterly (if we declare and pay distributions to holders of our OP Units).

As of ~~June~~September 30, 2022, the number of PI Units granted that are outstanding and unvested was as follows (dollars in thousands):

Dates	*Number of PI Units*			*Value (1)*		Number of PI Units			Value (1)
Outstanding December 31, 2021	498,590		$	16,965		498,590		$	16,965
Granted	0			0		27,849			1,719
Vested	(57,309	)		(1,964	)	(57,309	)		(1,964	)
Forfeited	(11,933	)		(434	)	(11,933	)		(434	)
Outstanding June 30, 2022	429,348		$	14,567
Outstanding September 30, 2022						457,197		$	16,286

*Upon successful completion of an IPO, an additional 11,764 PI Units will vest immediately instead of vesting ratably according to the schedule above on each of November 30, 2022, November 30, 2023 and November 30, 2024.

For the three months ended ~~June~~September 30, 2022 and 2021, the OP recognized approximately $0.7 million and ~~$0.5~~$0.7 million, respectively, of non-cash compensation expense related to the PI Units, which is included in corporate general and administrative expenses on the Company’s consolidated statements of operations and comprehensive income (loss). For the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, the OP recognized approximately ~~$1.4~~$2.1 million and ~~$0.9~~$1.7 million, respectively, of non-cash compensation expense related to the PI Units, which is included in corporate general and administrative expenses on the Company’s consolidated statements of operations and comprehensive income (loss).

The table below presents the consolidated Shares and OP Units outstanding held by the noncontrolling interests (“NCI”), as the OP Units held by the Company are eliminated in consolidation:

Period End	*Shares Outstanding*		*OP Units Held by NCI*		*Consolidated Shares and NCI OP Units Outstanding*		*Shares Outstanding*		*OP Units Held by NCI*		*Consolidated Shares and NCI OP Units Outstanding*
March 31, 2022		24,696,441		3,725,832		28,422,273		24,696,441		3,725,832		28,422,273
June 30, 2022		24,960,485		3,740,441		28,700,926		24,960,485		3,740,441		28,700,926
September 30, 2022								24,761,177		3,804,046		28,565,223

Partnership interests in the SFR OP are represented by SFR OP Units. Net income (loss) is allocated pro rata to holders of SFR OP Units and is based upon net income (loss) attributable to the SFR OP and the respective members’ SFR OP Units held during the period. Capital contributions, distributions, and profits and losses are allocated to SFR OP Units not held by the Company (the “redeemable noncontrolling interests in consolidated VIEs”). During the nine months ended September 30, 2022, redeemable noncontrolling interests in consolidated VIEs contributed approximately $108.5 million and had a net loss attributable to redeemable noncontrolling interests in consolidated VIEs of approximately $4.3 million. As of September 30, 2022, an adjustment to reflect the redemption value of the redeemable noncontrolling interests in consolidated VIEs of approximately $4.3 million was recognized. As of September 30, 2022, the redeemable noncontrolling interests in consolidated VIEs was approximately $108.5 million on the consolidated balance sheets.

NexPoint Homes has issued NexPoint Homes Class A Shares and NexPoint Homes Class I common stock, par value $0.01 (the “NexPoint Homes Class I Shares,” collectively with NexPoint Homes Class A Shares, the “NexPoint Homes Shares”). Interests in NexPoint Homes are represented by NexPoint Homes Shares. Both classes of NexPoint Homes Shares have the same rights and value.

Capital contributions, distributions, and profits and losses are allocated to NexPoint Homes Shares not held by the Company (the “noncontrolling interests in consolidated VIEs”). During the ~~six~~nine months ended ~~June~~September 30, 2022, noncontrolling interests in consolidated VIEs contributed approximately ~~$95.9~~$3.0 million and had a net loss attributable to noncontrolling interests in consolidated VIEs of approximately ~~$1.2~~$0.1 million. As of ~~June~~September 30, 2022, ~~an adjustment to reflect~~ the ~~redemption value of the noncontrolling interests in consolidated VIEs of approximately $1.2 million was recognized. As of~~ ~~June 30, 2022,~~ ~~the redeemable~~ noncontrolling interests in consolidated VIEs was approximately ~~$95.9~~$2.8 million on the consolidated balance sheets.

The Company has issued 5,000,000 Preferred Shares as of ~~June~~September 30, ~~2022.~~ 2022. The Preferred Shares have a redemption value of $25.00 per share and are mandatorily redeemable on October 7, 2027, subject to certain extensions. On ~~March 8, 2022,~~ ~~the Company declared a dividend of $0.40625 per share to the holders of record of Preferred Shares as of~~ ~~March 25, 2022~~, ~~which was paid on~~ ~~April 11, 2022~~. On ~~June 14, 2022,~~ ~~the Company declared a dividend of $0.40625 per share to the holders of record of Preferred Shares as of~~ ~~June 24, 2022~~, ~~which was paid on~~ ~~July 11, 2022~~.

The following table presents the redeemable Series A preferred stock (dollars in thousands):

	*Preferred Shares*		*Balances*			*Preferred Shares*		*Balances*
Redeemable Series A preferred stock, December 31, 2021		5,000,000	$	120,896			5,000,000	$	120,896
Issuance of Redeemable Series A preferred stock		0		0			—		—
Issuance costs related to Redeemable Series A preferred stock		—		0			—		—
Net income attributable to Redeemable Series A preferred stockholders		—		4,063			—		6,094
Dividends declared to Redeemable Series A preferred stockholders		—		(4,063	)
Dividends declared to Redeemable Series A preferred stockholders ($1.21875)							—		(6,094	)
Accretion to redemption value		—		365			—		560
Redeemable Series A preferred stock, June 30, 2022		5,000,000	$	121,261
Redeemable Series A preferred stock, September 30, 2022							5,000,000	$	121,456

The Company has made the election and intends to be taxed as a REIT under Sections 856 through 860 of 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 stockholders in order for its distributed earnings to not be subject to corporate income tax. Additionally, the Company will be subject to a 4% nondeductible excise tax on the amount, if any, 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. The Company had no significant taxes associated with its TRS for the ~~six~~nine months ended ~~June~~September 30, 2022 or 2021.

If the Company fails to meet these requirements, it could be subject to U.S. 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 stockholders 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 ~~June~~September 30, 2022, the Company believes it is in compliance with all applicable REIT requirements. The Company is still subject to state and local income taxes and to federal income and excise tax on its undistributed income, however those taxes are not material to the financial statements.

The Company evaluates the accounting and disclosure of tax positions taken or expected to be taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not” (greater than 50 percent 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. The Company’s 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. The Company has no examinations in progress and none are expected at this time. The tax years subject to examination are 2021, 2020 and 2019.

The Company had no material unrecognized federal or state tax benefit or expense, accrued interest or penalties as of ~~June~~September 30, 2022. When applicable, the Company recognizes interest and/or penalties related to uncertain tax positions on its consolidated statements of operations and comprehensive income (loss).

Pursuant to the Advisory Agreement, the Company will pay the Adviser, on a monthly basis in arrears, an advisory fee at an annualized rate of 0.75% of the gross asset value of the Company on a consolidated basis (excluding the value of the OP’s assets but inclusive of the Company’s pro rata share of the debt held at the OP and its SPEs). The Adviser will manage the Company’s business including, among other duties, advising the Board to issue distributions, preparing our quarterly and annual consolidated financial statements prepared under GAAP, development and maintenance of internal accounting controls, management and conduct of maintaining our REIT status, calculation of our NAV and recommending the appropriate NAV to be set by the Board, processing of sales of Shares through the Private Offering, reporting to holders of Shares, our tax filings, and other responsibilities customary for an external advisor to a business similar to ours. With certain specified exceptions, the advisory fee together with reimbursement of operating and offering expenses may not exceed 1.5% of average total assets of the Company and the OP, as determined in accordance with GAAP on a consolidated basis, at the end of each month (or partial month) (i) for which any advisory fee is calculated or (ii) during the year for which any expense reimbursement is calculated.

For the three months ended ~~June~~September 30, 2022 and 2021, the Company incurred advisory fees of approximately ~~$3.8~~$4.3 million and ~~$2.0~~$2.3 million, respectively, which is included in advisory fees on the consolidated statements of operations and comprehensive income (loss). For the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, the Company incurred advisory fees of approximately ~~$6.9~~$11.2 million and ~~$3.3~~$5.6 million, respectively, which is included in advisory fees on the consolidated statements of operations and comprehensive income (loss).

The equity holders of the Manager are holders of noncontrolling interests in the OP and comprise a portion of the VineBrook Contributors. Through this noncontrolling ownership, the Manager is deemed to be a related party. Pursuant to the Management Agreements, the OP will pay the Manager (i) an acquisition fee equal to 1.0% of the purchase price paid for any new property acquired during the month, (ii) a construction fee monthly in arrears that shall not exceed the greater of 10% of construction costs or $1,000, whichever is higher, in connection with the repair, renovation, improvement or development of any newly acquired property, and (iii) a property management fee monthly in arrears equal to a percentage of collected rental revenues for all properties during the month as follows:

Under the Management Agreements and the Side Letter, the aggregate fees that the Manager can earn in any fiscal year are capped such that the Manager’s EBITDA (as defined in the Management Agreements) derived from these fees may not exceed the greater of $1.0 million or 0.5% of the combined equity value of the Company and the OP on a consolidated basis, calculated on the first day of each fiscal year based on the aggregate NAV of the outstanding Shares and OP Units held other than by the Company on the last business day of the prior fiscal year (the “Manager Cap”). The aggregate fees up to the Manager Cap are payable (1) in cash in an amount equal to the tax obligations of the Manager’s equity holders resulting from the aggregate management fees earned in such fiscal year up to a maximum rate of 25% (the “Manager Cash Cap”) and (2) with respect to the remaining portion of the aggregate fees, in Class C OP Units, at a price per OP Unit equal to the Cash Amount (as defined in the OP LPA). The aggregate fees paid in cash that exceed the Manager Cash Cap are rebated back to the OP. ~~NaN Manager Cash Cap rebate was recorded for~~For the ~~three~~ ~~and~~ ~~six~~nine months ended ~~June~~September 30, 2022 and September 30, 2021., $0.4 million and $0.8 million, respectively, was recorded as a Manager Cap rebate as reductions to property management fees on the consolidated statements of operations.

The Manager is responsible for the day-to-day management of the properties, acquisition of new properties, disposition of existing properties (with acquisition and disposition decisions made under the approval of the investment committee and the Board), leasing the properties, managing tenant issues and requests, collecting rents, paying operating expenses, managing maintenance issues, accounting for each property using GAAP, and other responsibilities customary for the management of SFR properties.

Property management fees are included in property management fees on the consolidated statements of operations and comprehensive income (loss) and acquisition and construction fees are capitalized into each home and are included in buildings and improvements on the consolidated balance sheet and are depreciated over the useful life of each property.

The following table is a summary of fees that the OP incurred to the Manager and its affiliates, as well as reimbursements paid to the Manager and its affiliates for various operating expenses the Manager paid on the OP’s behalf, of which approximately ~~$4.3~~$6.2 million and ~~$2.7~~$2.6 million is due to the Manager and included in accounts payable and other accrued liabilities on the consolidated balance sheets as of ~~June~~September 30, 2022 and 2021, respectively, under the terms of Management Agreements and Side Letter, for the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021 (dollars in thousands):

		*For the Three Months Ended June 30,*				*For the Six Months Ended June 30,*					*For the Three Months Ended September 30,*				*For the Nine Months Ended September 30,*
	*Location on Financial Statements*	*2022*		*2021*		*2022*		*2021*		*Location on Financial Statements*	*2022*		*2021*		*2022*		*2021*
Fees Incurred
Property management fees	Statement of Operations	$	3,331	$	2,249	$	6,442	$	4,054	Statement of Operations	$	3,249	$	1,756	$	9,691	$	5,810
Acquisition fees	Balance Sheet		1,015		972		6,055		6,946	Balance Sheet		3,650		1,126		9,705		8,072
Construction supervision fees	Balance Sheet		4,446		1,692		7,620		3,014	Balance Sheet		4,562		1,667		12,182		4,681

Reimbursements
Payroll and benefits	Balance Sheet and Statement of Operations		6,573		3,709		12,468		6,788	Balance Sheet and Statement of Operations		6,997		4,165		19,465		10,953
Other reimbursements	Balance Sheet and Statement of Operations		457		182		767		337	Balance Sheet and Statement of Operations		515		229		1,282		566
*Totals*	*Totals*	$	15,822	$	8,804	$	33,352	$	21,139	*Totals*	$	18,973	$	8,943	$	52,325	$	30,082

The Company may acquire all of the outstanding equity interests of the Adviser, the Manager or both (an “Internalization”) under certain provisions (a “Purchase Provision”) of the Advisory Agreement or the Side Letter to effect an Internalization upon the payment of a certain fee (an “Internalization Fee”). If the Company determines to acquire the equity interests of the Adviser, the applicable Purchase Provision of the Advisory Agreement provides that the Adviser must first agree to such acquisition and that the Company will pay the Adviser an Internalization Fee equal to 3three times the total of the prior 12 months’ advisory fee, payable only in capital stock of the Company. If the Company determines to acquire the equity interests of Manager, the applicable Purchase Provision of the Side Letter provides the Company has a right to do so and that the Company will pay the Manager an Internalization Fee equal to $6.5 million plus 50% of the subtraction of $6.5 million from three times the total of the prior 12 months’ property management fee, payable in cash, Shares or Class C OP Units. The OP may also acquire the equity interests of the Manager on the same terms under the applicable Purchase Provision.

In accordance with the Side Letter, on June 28, 2022, the OP notified the Manager that it elected to exercise its Purchase Provision of the Manager. As of ~~June~~September 30, 2022, the Internalization of the Manager has not closed. The Company expects to close the Internalization of the Manager in the fourth quarter of 2022, following which the services previously provided by the Manager will be internally managed, although there can be no assurance that the transaction will close on this timeline or at all. Certain additional conditions and limitations apply to the Internalizations, including but not limited to caps on the Internalization Fees. The Company expects any equity issued in satisfaction of an Internalization Fee to be valued at the NAV per share in effect on May 31, 2022, the date used to calculate the Internalization ~~is consummated.~~Fee under the Purchase Provision.

If the Advisory Agreement or any one of the Management Agreements is terminated without cause by the Company or the SPE, as applicable, or is otherwise terminated under certain conditions, the Adviser or the Manager, as applicable, will be entitled to a termination fee (a “Termination Fee”) in the amount of three times the prior 12 months’ advisory fee, in the case of a termination of the Advisory Agreement, or three times the prior 12 months’ property management fee, in the case of the applicable Management Agreement. In addition to termination by the Company without cause, the Adviser will be entitled to the Termination Fee if the Adviser terminates the Advisory Agreement without cause or terminates the agreement due to the occurrence of certain specified breaches of the Advisory Agreement by the Company. The Advisory Agreement may be terminated without cause by the Company or the Adviser with 180 days’ notice prior to the expiration of the then-current term. In addition to termination by the SPE without cause, the Manager will be entitled to the Termination Fee if the SPE sells or otherwise disposes of all or substantially all of the properties subject to the applicable Management Agreement. The Management Agreements may be terminated by the SPE with 90 days’ notice without cause. Termination Fees are payable in cash.

Pursuant to the Side Letter, the Manager may request from the OP from time-to-time an advance on acquisition and construction fees (the “Fee Advances”) to fund the performance of its obligations under the Management Agreements. Each Fee Advance is repaid from future acquisition and construction fees earned by and owed to the Manager. Fee Advances are included in the line item due from Manager on the consolidated balance sheets. As of ~~June~~September 30, 2022 and December 31, 2021, the Company recorded no receivable for Fee Advances.

Pursuant to the Side Letter, in the event the Manager does not have sufficient cash flow from operations to meet its budgeted obligations under the Management Agreements, the Manager may from time to time request from the Company a temporary loan (the “Backstop Loan”) to satisfy the shortfall. Backstop Loans are interest free, may be prepaid at any time and may not exceed a principal amount that is in the aggregate equal to the lesser of the Internalization Fee or Termination Fee under the applicable Management Agreement. Unless otherwise repaid, each Backstop Loan is payable upon termination of the applicable Management Agreement. Backstop Loans are included in the line item due from Manager on the consolidated balance sheets. As of ~~June~~September 30, 2022 and December 31, 2021, the Company recorded a receivable for Backstop Loans made to the manager of approximately $0.7 million and approximately $0.7 million, respectively.

Investors may be charged a dealer manager fee of between 0.50% and 3.00% of gross investor equity by the Dealer Manager for sales of Shares pursuant to the Private Offering, subject to certain breakpoints and various terms of the Dealer Manager Agreements. At the sole discretion of the Dealer Manager, the dealer manager fee may be partially or fully waived. The dealer manager fee is paid to an affiliate of the Adviser.

Offering and organizational expenses (“O&O Expenses”) may be incurred in connection with sales in the Private Offering at the discretion of the Company and are borne by investors through a fee of up to 0.50% of gross investor equity for sales through Raymond James and up to 1.00% of gross investor equity for other sales. O&O Expenses are intended to reimburse the Company, Adviser and Placement Agents for the costs of maintaining the Private Offering and selling costs incurred in raising equity under the Private Offering. Payments for bona fide expenses and reimbursements are O&O Expenses which are recorded as a reduction to equity.

~~See below for detail related to the O&O Expenses as of~~ ~~June 30, 2022~~ ~~(dollars in thousands):~~

The Company and the OP maintain bank accounts with an affiliate of the Adviser, NexBank N.A. (“NexBank”). NexBank charges no recurring maintenance fees on the accounts. As of September 30, 2022, the REIT and OP have approximately $0.9 million and $42.4 million, respectively, in cash at NexBank.

In connection with the Company’s consolidated investment in NexPoint Homes, the Company consolidated non-controlling interests in NexPoint Homes that were contributed by affiliates of the Adviser. As of ~~June~~September 30, 2022, these affiliates had contributed approximately ~~$100.8 million.~~$109.8 million of equity to NexPoint Homes. Additionally, the Company consolidated 5five SFR OP convertible notes that are loans from affiliates of the Adviser to the SFR OP that bear interest at 7.50% and mature on June 30, 2027 (the “SFR OP Convertible Notes”). As of ~~June~~September 30, 2022, the total principal outstanding on the SFR OP Convertible Notes was approximately $100.1 million which is included in notes payable on the consolidated balance sheets.

The Company consolidates an approximately $4.8 million loan from the SFR OP to HomeSource Operations, LLC (the “HomeSource Note”). The HomeSource Note bears interest at daily SOFR plus 2.00% and matures on February 1, 2027. In connection with the HomeSource Note, the SFR OP received a 9.99% non-voting interest in the HomeSource Operations LLC (the “HomeSource Investment”). The HomeSource Note and the HomeSource Investment are included in prepaid and other assets on the consolidated balance sheet.

On June 8, 2022, NexPoint Homes entered into an advisory agreement (the “NexPoint Homes Advisory Agreement”) with NexPoint Real Estate Advisors XI, LP (the “NexPoint Homes Adviser”), an affiliate of the Adviser. Under the terms of the NexPoint Homes Advisory Agreement, the NexPoint Homes Adviser manages the day-to-day affairs of NexPoint Homes for a fee equal to 0.75% of the consolidated enterprise value of NexPoint Homes. ~~NaN~~No fees were ~~earned~~collected by the NexPoint Homes Adviser in connection with the NexPoint Homes Advisory Agreement during the ~~six~~nine months ended ~~June~~September 30, ~~2022.~~2022.

The NexPoint Homes portfolio is generally managed by HomeSource Operations, LLC, a Delaware limited liability company (the “NexPoint Homes Manager”), pursuant to the terms of a management agreement, dated June 8, 2022 (the “NexPoint Homes Management Agreement”), among the NexPoint Homes Manager and the SFR OP. The NexPoint Homes Manager is responsible for the day-to-day management of the NexPoint Homes portfolio, paying operating expenses, managing maintenance issues, accounting for each property using GAAP, overseeing third-party property managers and other responsibilities customary for the management of SFR properties. The NexPoint Homes Manager is entitled to an acquisition fee, a construction fee and an asset management fee. The acquisition fee is paid at closing of homes and the construction fee and asset management fee are paid monthly in arrears. ~~NaN~~Approximately $0.1 million in fees were earned by the NexPoint Homes Manager in connection with the NexPoint Homes Management Agreement during the ~~six~~nine months ended ~~June~~September 30, ~~2022.~~2022.

In the normal course of business, the Company enters into various construction related purchase commitments with parties that provide these goods and services. In the event the Company were to terminate construction services prior to the completion of projects, the Company could potentially be committed to satisfy outstanding or uncompleted purchase orders with such parties. As of ~~June~~September 30, 2022, management does not anticipate any material deviations from schedule or budget related to rehabilitation projects currently in process.

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.

The Company is not aware of any environmental liability with respect to the properties it owns that could have a material adverse effect on the Company’s business, assets, or results of operations. However, there can be no assurance that such a material environmental liability does not exist. The existence of any such material environmental liability could have an adverse effect on the Company’s results of operations and cash flows.

An entity purchased by the OP as a part of the Formation Transaction, the Huber Transaction Sub, LLC (“Huber”), had potential liability exposure to a legacy environmental issue related to a 1988 petroleum release from an underground storage tank located on a property subsequently not purchased by Huber. The owner of the property prior to Huber has assumed the defense of alleged environmental violations and is proceeding with the required regulatory investigation and remediation of the underground storage tank release clean up. Huber received an indemnification, and the Company and the OP in turn received an indemnification, which was evidenced by approximately $2.6 million of proceeds in an escrow account (the “Indemnification Escrow”) that is for the benefit of the Company and the OP in the event the prior owner fails to perform their obligations in regard to any required remediation of the issue. On January 27, 2021, the Indemnification Escrow was ~~released.~~released and this matter was fully resolved.

Following the formation of NexPoint Homes, the Company has 2two reportable segments. For the three and ~~six~~nine months ended ~~June~~September 30, 2022, the majority of the Company’s operations are included within the Company’s primary reportable segment, VineBrook, as the NexPoint Homes reportable segment was recently formed on June 8, 2022. For the three and ~~six~~nine months ended ~~June~~September 30, 2021, the Company had 1one reportable segment, VineBrook. All corporate related costs are included in the VineBrook segment to align with how financial information is presented to the chief operating decision maker. The following presents select operational results for the reportable segments (in thousands):

	*For the Three Months Ended June 30,*														*For the Three Months Ended September 30,*
	*2022*							*2021*							*2022*							*2021*
	*Revenues*		*Expenses*		*Net loss*			*Revenues*		*Expenses*		*Net loss*			*Revenues*		*Expenses*		*Net loss*			*Revenues*		*Expenses*		*Net loss*
VineBrook	$	61,058	$	69,749	$	(8,644	)	$	39,821	$	41,612	$	(2,007	)	$	64,587	$	74,900	$	(10,453	)	$	41,887	$	46,662	$	(4,799	)
NexPoint Homes		1,246		4,240		(2,994	)		0		0		0			9,051		13,219		(4,168	)		—		—		—
Total Company	$	62,304	$	73,989	$	(11,638	)	$	39,821	$	41,612	$	(2,007	)	$	73,638	$	88,119	$	(14,621	)	$	41,887	$	46,662	$	(4,799	)

	*For the Six Months Ended June 30,*														*For the Nine Months Ended September 30,*
	*2022*							*2021*							*2022*							*2021*
	*Revenues*		*Expenses*		*Net loss*			*Revenues*		*Expenses*		*Net loss*			*Revenues*		*Expenses*		*Net loss*			*Revenues*		*Expenses*		*Net loss*
VineBrook	$	113,375	$	124,786	$	(11,357	)	$	70,449	$	72,297	$	(2,148	)	$	177,962	$	199,686	$	(21,810	)	$	112,336	$	118,959	$	(6,947	)
NexPoint Homes		1,246		4,240		(2,994	)		0		0		0			10,297		17,459		(7,162	)		—		—		—
Total Company	$	114,621	$	129,026	$	(14,351	)	$	70,449	$	72,297	$	(2,148	)	$	188,259	$	217,145	$	(28,972	)	$	112,336	$	118,959	$	(6,947	)

The following presents select balance sheet data for the reportable segments (in thousands):

The Company evaluated subsequent events through the date the consolidated financial statements were issued, to determine if any significant events occurred subsequent to the balance sheet date that would have a material impact on these consolidated financial statements and determined the following events were material:

On ~~July 11, 2022,~~ ~~the OP repaid the full balance of the CoreVest Note, which was approximately $2.3 million as of that date. This extinguished the CoreVest Note.~~

Subsequent to ~~June~~September 30, 2022, the Company acquired ~~555~~432 homes in the VineBrook reportable segment for a purchase price of approximately ~~$71.2~~$52.9 million.

On ~~August 3, 2022,~~ ~~VB Five, LLC (“Buyer”), an indirect subsidiary of the Company, entered into a purchase agreement under which the Buyer agreed to acquire a portfolio of approximately~~ ~~1,610~~ ~~SFR homes located in Arizona, Florida, Georgia, Ohio and Texas (the “Tusk Portfolio”) for approximately $466.5 million. Also on~~ ~~August 3, 2022,~~ ~~the Buyer entered into a purchase agreement under which the Buyer agreed to acquire a portfolio of approximately~~ ~~1,289~~ SFR homes located in Arizona, Florida, Georgia, North Carolina, Ohio and Texas (the “Siete Portfolio”) for approximately $353.5 million. The Company expects to close the acquisition of the Tusk Portfolio and Siete Portfolio in the ~~fourth~~ ~~quarter of~~ ~~2022.~~ ~~The Company intends to use cash on hand, together with debt financing and assumption of certain of the sellers’ debt, to fund the purchase price of the Tusk Portfolio and the Siete Portfolio.~~

On ~~July 11,~~October 14, 2022, the Company approved a common stock dividend of $0.1767 per Share for shareholders of record as of ~~July 15,~~October 17, 2022 that will be paid on ~~September~~December 30, 2022. On ~~August 2,~~October 24, 2022, the Company approved a common stock dividend of $0.1767 per ~~share~~Share for shareholders of record as of ~~August~~November 15, 2022 that will be paid on ~~September~~December 30, 2022.On October 24, 2022, the Company approved a preferred stock dividend of $0.40625 per share for holder of record of Preferred Shares as of December 23,2022, which will be paid on January 10, 2023. On October 24, 2022, the Company approved a preferred stock dividend of $0.40625 per share for holder of record of Preferred Shares as of December 23,2022, which will be paid on January 10, 2023.

In accordance with the Valuation Methodology, on ~~July 26,~~October 31, 2022, the Company determined that its NAV per share calculated on a fully diluted basis was ~~$62.75~~$62.97 as of ~~June~~September 30, 2022. In accordance with provisions in the OP LPA, the value of the OP Units per OP Unit was also increased to ~~$62.75.~~$62.97. Shares and OP Units issued under the respective DRIPs will be issued a 3% discount to the NAV per share in effect.

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 annual report on Form 10-K (our “Annual Report”), filed with the Securities and Exchange Commission (the “SEC”) on February 23, 2022. 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 Form 10-Q. See “Cautionary Note Regarding Forward-Looking Statements” in this report and the information under the heading “Risk Factors” in Part I, Item IA, “Risk Factors” of our Annual Report. Our management believes the assumptions underlying the Company’s financial statements and accompanying notes are reasonable. However, the Company’s financial statements and accompanying notes may not be an indication of our financial condition and results of operations in the future.

The Company is an owner and operator of SFR homes for lease. The Company has two reportable segments, VineBrook and NexPoint Homes. VineBrook represents the Company’s primary reportable segment and represents a significant majority of the Company’s consolidated portfolio (the “VineBrook Portfolio”). The NexPoint Homes reportable segment represents a minority of the Company’s consolidated portfolio (the “NexPoint Homes Portfolio”) and operations.

As of ~~June~~September 30, 2022, our VineBrook Portfolio consisted of ~~21,943~~24,153 SFR homes primarily located in the midwestern, heartland and southeastern United States. As of ~~June~~September 30, 2022, the VineBrook Portfolio had occupancy of approximately ~~82.5%~~81.9% with a weighted average monthly effective rent of ~~$1,102~~$1,142 per occupied home. As of ~~June~~September 30, 2022, the VineBrook Portfolio had a stabilized occupancy of approximately ~~95.1%~~94.3% with a weighted average monthly stabilized effective rent of ~~$1,128~~$1,160 per occupied home and ~~52.1%~~51.5% of homes in our VineBrook Portfolio were excluded from being stabilized either because the homes were in rehabilitation or were purchased with tenants in place. Substantially all of the Company’s business is conducted through the OP, as the Company owns its homes indirectly through the OP. VineBrook Homes OP GP, LLC, is the OP GP. As of ~~June~~September 30, 2022, there were ~~24,990,807~~25,346,922 OP Units outstanding, of which ~~21,250,366~~21,542,876 Class A OP Units, or 85.0% of the OP Units outstanding, were owned by the Company. Please see the notes to the financial statements for the breakdown of the non-controlling ownership of our OP.

As of December 31, 2021, our VineBrook Portfolio consisted of 16,891 SFR homes primarily located in the midwestern, heartland and southeastern United States. As of December 31, 2021, the VineBrook Portfolio had occupancy of approximately 81.9% with a weighted average monthly effective rent of $1,067 per occupied home. As of December 31, 2021, the VineBrook Portfolio had a stabilized occupancy of approximately 95.2% with a weighted average monthly effective rent of $1,074 per occupied stabilized home and 49.7% of homes in our VineBrook Portfolio were excluded from being stabilized either because the homes were in rehabilitation or were purchased with tenants in place. As of December 31, 2021, there were 22,300,100 OP Units outstanding, of which 18,673,164, or 83.7%, were owned by the Company.

We are primarily focused on acquiring, renovating, leasing, maintaining and otherwise managing SFR home investments primarily located in large to medium size cities and suburbs located in the midwestern, heartland and southeastern United States. We intend to employ targeted management and a value-add program at a majority of our homes in an attempt to improve rental rates and the net operating income (“NOI”) at our homes, maximize cash flow, provide quarterly cash distributions and achieve long-term capital appreciation for our stockholders. We are externally managed by the Adviser through the Advisory Agreement, which was renewed on November 1, 2021 and will automatically renew on the anniversary of the renewal date for one-year terms thereafter, unless otherwise terminated.

We began operations on November 1, 2018 as a result of the acquisition of various partnerships and limited liability companies owned and operated by the VineBrook Contributors and other third parties, which owned the Initial Portfolio of approximately 4,129 SFR assets located in Ohio, Kentucky and Indiana for a total purchase price of approximately $330.2 million, including closing and financing costs of approximately $6.0 million. On November 1, 2018, the Company accepted subscriptions for 1,097,367 Shares for gross proceeds of approximately $27.4 million in connection with the Formation Transaction. The proceeds from the issuance of such Shares were used to acquire OP Units. The OP used the capital contribution from the Company to fund a portion of the purchase price for the Initial Portfolio. The remaining purchase price and closing costs were funded by a capital contribution totaling $70.7 million from NREO, $8.6 million of equity rolled over from VineBrook Contributors, and $241.4 million from the Initial Mortgage.

On August 28, 2018, the Company commenced the offering of 40,000,000 Shares through the Private Offering under Regulation D of the Securities Act (and various state securities law provisions) for a maximum of $1.0 billion of its Shares. The Private Offering ~~expires~~closed on ~~November 1, 2023 and will close upon the completion of certain share issuances expected to be completed by~~ September ~~30,~~14, 2022. The initial offering price for Shares sold through the Private Offering was $25.00 per share. The Company sold Shares in periodic closings at a purchase price generally equal to the NAV per share as determined using the Valuation Methodology and as recommended by the Adviser and approved by the Pricing Committee, plus applicable fees and commissions. The NAV per share is calculated on a fully diluted basis. For sales through Raymond James, the purchaser subscribed for a gross amount based on NAV per share and separately paid the applicable fees upfront from the purchaser’s account with Raymond James. For sales through a broker-dealer other than Raymond James, the purchaser subscribed for a gross amount based on a public offering price (“POP”), which includes the applicable upfront fees and commissions. NAV may differ from the values of our real estate assets as calculated in accordance with GAAP.

On October 15, 2021, a lawsuit (the “Bankruptcy Trust Lawsuit”) was filed by a trust formed in connection with the Highland bankruptcy (the “Highland Bankruptcy”) in the United States Bankruptcy Court for the Northern District of Texas (the “Bankruptcy Court”). The Bankruptcy Trust Lawsuit makes claims against a number of entities, including NexPoint Advisors, L.P. (“NexPoint”), the parent of our Adviser, and James Dondero, a director and former officer of the Company. The Bankruptcy Trust Lawsuit does not include claims related to our business or our assets or operations. NexPoint and Mr. Dondero have informed us that they believe the Bankruptcy Trust Lawsuit has no merit and they intend to vigorously defend against the claims. We do not expect that the Bankruptcy Trust Lawsuit will have a material effect on our business, results of operations or financial condition.

Most of the VineBrook Portfolio is managed by the Manager pursuant to the terms of the Management Agreements, the Manager and various wholly owned subsidiaries of the OP that own the SPEs. The Manager is responsible for the day-to-day management of the properties, leasing the properties, managing tenant situations, collecting rents, paying operating expenses, managing maintenance issues, accounting for each property using GAAP and other responsibilities customary for the management of SFR properties. In addition, the Manager is generally responsible for the identification of potential SFR properties and the acquisition and disposition of SFR properties approved by the Investment Committee or pursuant to authority delegated to the Manager by the Investment Committee.

The Management Agreements are supplemented by the Side Letter, under the terms of which the Company and the OP have the right and option (but not the obligation) to purchase all of the equity interests of the Manager (the “Internalization”) at a price calculated by a formula specified in the Side Letter (the “Call Right”). The purpose of the Call Right is to provide the Company and the OP with the ability to internally perform the responsibilities and obligations of the Manager under the Management Agreements. On June 28, 2022, the Company sent a notice (the “Call Right Notice”) to the Manager notifying the Manager of its intention to exercise its Call Right and internalize the Manager. As a result of sending the Call Right Notice, the price the Company will pay the Internalization Fee to acquire the Manager of $20.3 million which was fixed based on May 30, 2022 data. The Internalization Fee will be paid in a combination of common stock, OP Units and/or cash.

The Internalization process is being overseen by an independent special committee of the Board, comprised of all the members of the Board except Dana Sprong. The Company expects to close the Internalization in the fourth quarter of 2022, following which the services previously provided by the Manager will be internally managed, although there can be no assurance that the transaction will close on this timeline or at all. The Company also expects to make one-time equity grants under the LTIP to the employees who the Company hires in connection with the Internalization.

Following the Internalization, the Manager’s internalized employees will continue to be responsible for the day-to-day management of the properties, the identification of potential SFR properties and the acquisition and disposition of SFR properties. The Adviser’s duties will not change as a result of the Internalization. Certain SPEs from time to time may have property management agreements with independent third parties that are not the Manager. These are typically the result of maintaining legacy property managers after an acquisition to help transition the properties to the Manager or, in the case of a future sale, to manage the properties until they are sold. This may continue to be the case even after the Internalization is complete.

On August 3, 2022, VB Five, LLC (“Buyer”), an indirect subsidiary of the Company, entered into a purchase agreement under which the Buyer agreed to acquire a portfolio of approximately 1,610 SFR homes located in Arizona, Florida, Georgia, Ohio and Texas (the “Tusk Portfolio”). Also on August 3, 2022, the Buyer entered into a purchase agreement under which the Buyer agreed to acquire a portfolio of approximately 1,289 SFR homes located in Arizona, Florida, Georgia, North Carolina, Ohio and Texas (the “Siete Portfolio”). The Company does not expect to close the acquisitions of the Tusk Portfolio or the Siete Portfolio in 2022.

Since our formation, we have significantly grown our VineBrook Portfolio, which only includes homes in the VineBrook reportable segment. When the Company began operations on November 1, 2018, the Initial Portfolio consisted of 4,129 homes located in Ohio, Kentucky and Indiana. As of ~~June~~September 30, 2022 and 2021, the VineBrook Portfolio consisted of ~~21,943~~24,153 and ~~14,697~~15,787 homes, respectively, in 18 and 16 states, respectively. As of ~~June~~September 30, 2022 and 2021, the VineBrook Portfolio had an occupancy of ~~82.5%~~81.9% and ~~85.6%~~82.6%, respectively, and a weighted average monthly effective rent of ~~$1,102~~$1,142 and ~~$1,044,~~$1,059, respectively, per occupied home. As of ~~June~~September 30, 2022 and 2021, the occupancy of stabilized homes in our VineBrook Portfolio was ~~95.1%~~94.3% and ~~96.6%~~94.8%, respectively, and the weighted average monthly effective rent of occupied stabilized homes was ~~$1,128~~$1,160 and ~~$1,020,~~$1,051, respectively. As of ~~June~~September 30, 2022 and 2021, ~~52.1%~~51.5% and ~~52.3%~~51.1%, respectively, of homes in our VineBrook Portfolio were excluded from being stabilized either because the homes were in rehabilitation or were purchased with tenants in place. The table below provides summary information regarding our VineBrook Portfolio as of ~~June~~September 30, 2022.

Market	State	# of Homes		Portfolio Occupancy			Average Effective Rent		# of Stabilized Homes		Stabilized Occupancy			Stabilized Average Monthly Rent		State	# of Homes		Portfolio Occupancy			Average Effective Rent		# of Stabilized Homes		Stabilized Occupancy			Stabilized Average Monthly Rent
Cincinnati	OH, KY		3,164		91.2	%	$	1,167		2,254		96.5	%	$	1,187	OH, KY		3,326		90.9	%	$	1,199		2,374		95.5	%	$	1,217
Dayton	OH		2,839		89.0	%		1,066		2,345		96.5	%		1,058	OH		2,889		88.8	%		1,100		2,388		96.0	%		1,092
Columbus	OH		1,553		91.6	%		1,145		1,314		95.4	%		1,147	OH		1,644		92.2	%		1,170		1,357		96.8	%		1,173
St. Louis	MO		2,199		76.1	%		1,032		728		91.2	%		1,041	MO		2,419		72.2	%		1,066		812		87.1	%		1,072
Indianapolis	IN		1,382		87.6	%		1,117		724		91.2	%		1,153	IN		1,465		89.1	%		1,155		800		94.8	%		1,185
Birmingham	AL		927		85.1	%		1,140		234		89.3	%		1,174	AL		1,093		89.8	%		1,197		328		92.7	%		1,196
Columbia	SC		843		84.7	%		1,204		216		94.0	%		1,271	SC		1,046		85.2	%		1,252		289		94.8	%		1,293
Kansas City	MO, KS		1,004		89.3	%		1,112		504		96.6	%		1,112	MO, KS		1,175		90.0	%		1,172		574		95.3	%		1,152
Jackson	MS		1,073		58.6	%		1,068		333		96.7	%		1,167	MS		1,275		60.1	%		1,138		423		93.4	%		1,171
Memphis	TN, MS		1,691		75.3	%		953		510		95.1	%		978	TN, MS		1,778		70.9	%		967		605		92.4	%		999
Augusta	GA, SC		751		73.9	%		1,003		168		97.6	%		1,190	GA, SC		827		71.3	%		1,056		227		93.4	%		1,209
Milwaukee	WI		931		72.7	%		1,100		280		90.7	%		1,228	WI		1,008		68.6	%		1,129		333		89.8	%		1,255
Atlanta	GA		748		89.4	%		1,241		8		100.0	%		1,657	GA		784		86.6	%		1,282		29		79.3	%		1,705
Pittsburgh	PA		457		57.8	%		1,007		132		96.2	%		1,109	PA		490		60.2	%		1,037		171		94.2	%		1,133
Pensacola	FL		300		95.3	%		1,292		32		84.4	%		1,392	FL		300		96.3	%		1,324		63		90.5	%		1,426
Greenville	SC		340		87.6	%		1,188		110		98.2	%		1,356	SC		381		86.6	%		1,207		149		91.3	%		1,376
Little Rock	AR		374		45.5	%		943		141		89.4	%		982	AR		390		50.5	%		978		166		88.0	%		1,007
Huntsville	AL		228		74.6	%		1,172		71		94.4	%		1,271	AL		299		78.9	%		1,261		104		91.3	%		1,293
Raeford	NC		250		97.6	%		1,001		27		100.0	%		1,102	NC		250		97.2	%		1,014		45		97.8	%		1,156
Portales	NM		150		97.3	%		1,001		18		100.0	%		1,087	NM		350		95.7	%		1,066		36		100.0	%		1,093
Omaha	NE, IA		271		77.5	%		1,168		149		95.3	%		1,184	NE, IA		295		83.4	%		1,176		185		96.2	%		1,193
Triad	NC		210		82.9	%		1,129		94		94.7	%		1,213	NC		265		83.0	%		1,196		106		98.1	%		1,250
Montgomery	AL		230		79.6	%		1,068		125		96.8	%		1,134	AL		336		79.8	%		1,176		155		92.3	%		1,162
Charleston																SC		33		87.9	%		1,351		—		n/a			n/a
Sub-Total/Average			21,915		82.5	%	$	1,102		10,517		95.1	%	$	1,128			24,118		81.9	%	$	1,142		11,719		94.3	%	$	1,160
Held for Sale			28		n/a			n/a		n/a		n/a			n/a			35		n/a			n/a		n/a		n/a			n/a
Total/Average			21,943		82.5	%	$	1,102		10,517		95.1	%	$	1,128			24,153		81.9	%	$	1,142		11,719		94.3	%	$	1,160

As of December 31, 2021, the Company, through the OP’s SPEs, indirectly owned an interest in 16,891 homes in 16 states. As of December 31, 2021, the Portfolio had occupancy of 81.9%, and a weighted average monthly effective rent of $1,067 per occupied home. As of December 31, 2021, the occupancy of stabilized homes in our Portfolio was 95.2%, and the weighted average monthly effective rent of stabilized occupied homes was $1,074. As of December 31, 2021, 49.7% of homes in our Portfolio were excluded from being stabilized either because the homes were in rehabilitation or were purchased with tenants in place. The table below provides summary information regarding our Portfolio as of December 31, 2021:

NexPoint Homes is an owner and operator of SFR homes for lease. As of ~~June~~September 30, 2022, the NexPoint Homes portfolio consisted of ~~1,731~~2,544 SFR homes primarily located in the midwestern and southeastern United States. As of ~~June~~September 30, 2022, NexPoint Homes had occupancy of approximately ~~80.1%~~89.3% with a weighted average monthly effective rent of ~~$1,448~~$1,769 per occupied home. ~~As of June 30, 2022, the stabilized NexPoint Homes Portfolio was 90.0% occupied.~~ NexPoint Homes’ activities include acquiring, renovating, developing, leasing and operating SFR homes as rental properties. See Note 5, NexPoint Homes Investment, for additional details on the formation of NexPoint Homes.

The table below provides summary information regarding the NexPoint Homes portfolio as of ~~June~~September 30, 2022.

Market	State	# of Homes		Portfolio Occupancy			Average Effective Rent		State	# of Homes		Portfolio Occupancy			Average Effective Rent
Austin	TX		20		95.0	%	$	1,964
Birmingham	AL		82		67.1	%		1,317
Charlotte	NC		20		80.0	%		1,671
Fayetteville/Bentonville	AR		436		82.3	%		1,451
Atlanta	GA		164		63.4	%		1,852
Greensboro/Winston	NC		50		56.0	%		1,650
Houston	TX		20		50.0	%		2,045
Huntsville	AL		18		61.1	%		1,596
Jacksonville	FL		12		41.7	%		1,797
Fayetteville									AR		440		94.1	%	$	1,487
Little Rock	AR		329		97.9	%		1,273	AR		211		88.2	%		1,325
Oklahoma City	OK		444		80.4	%		1,458	OK		518		80.5	%		1,509
Orlando	FL		1		100.0	%		1,975
Tulsa									OK		172		89.0	%		1,522
Atlanta									GA		211		97.6	%		1,986
San Antonio	TX		10		60.0	%		1,877	TX		199		95.0	%		1,587
Tampa	FL		14		14.3	%		1,960
Tulsa	OK		95		78.9	%		1,232
Tuscaloosa	AL		16		100.0	%		1,445
Dallas/Fort Worth									TX		51		94.1	%		2,169
Memphis									TN, MS		158		93.7	%		1,399
Kansas City									MO, KS		146		95.9	%		1,780
Birmingham									AL		133		94.0	%		1,483
Huntsville									AL		71		90.1	%		1,875
Charlotte									NC		61		88.5	%		1,858
Triad									NC		50		82.0	%		1,660
Other (1)									KS, AL, FL, TX		123		68.2	%		1,778
Sub-Total/Average			1,731		80.1	%	$	1,448			2,544		89.3	%	$	1,769
Held for Sale			—		n/a			n/a			—		n/a			n/a
Total/Average			1,731		80.1	%	$	1,448			2,544		89.3	%	$	1,769

(1) Contains markets that have less than 50 homes which include Orlando, Tampa, Jacksonville, Austin, Houston, Mobile and Wichita.

The following table sets forth a summary of operating results for the NexPoint Homes reportable segment for the three and ~~six~~nine months ended ~~June~~September 30, 2022 (in thousands):

	For the Three Months Ended June 30, 2022			For the Six Months Ended June 30, 2022			For the Three Months Ended September 30, 2022			For the Nine Months Ended September 30, 2022
Total revenues	$	1,246		$	1,246		$	9,051		$	10,297
Total expenses		4,240			4,240			13,219			17,459
Net loss	$	(2,994	)	$	(2,994	)	$	(4,168	)	$	(7,162	)

The NexPoint Homes reportable segment began operations on June 8, 2022 and currently does not contribute significantly to the Company’s consolidated operations. The Company anticipates revenues from the NexPoint Homes reportable segment to increase as more homes become stabilized and the reportable segment’s operations begin to scale. As NexPoint Homes continues to raise additional capital, the Company’s direct ownership interest in NexPoint Homes will decrease which may eventually result in deconsolidation of NexPoint Homes. The Company will continue to evaluate whether the entity is a VIE and if the Company is the primary beneficiary of the VIE and should consolidate the entity.

Rental Income. Our revenues are derived primarily from rental revenue, net of any concessions and uncollectible amounts, collected from residents of our SFR homes under lease agreements which typically have a term of one year. Also included are utility reimbursements, late fees, pet fees, and other rental fees charged to tenants.

Other income. Other income includes ancillary income earned from tenants such as non-refundable fees, application fees, move-out fees, and other miscellaneous fees charged to tenants.

Property operating expenses. Property operating expenses include property maintenance costs, turn costs (costs incurred in making a home ready for the next resident after the prior resident vacates the home), leasing costs and the associated salary and employee benefit costs, utilities, vehicle leases and HOA fees. Certain property operating costs are capitalized in accordance with our capitalization policy. Certain turn costs are capitalized to buildings and improvements if they improve the condition of the home or return it to its original condition and exceed $1,500 in cost. Upon being occupied, expenditures up to $1,500 for ordinary repairs and maintenance thereafter are expensed as incurred, and we capitalize expenditures that improve the condition of the home in excess of $1,500.

Real estate taxes and insurance. Real estate taxes include the property taxes assessed by local and state authorities depending on the location of each home. Insurance includes the cost of property, general liability, and other needed insurance for each property. Certain real estate taxes and insurance costs are capitalized in accordance with our capitalization policy.

Property management fees. Property management fees include fees paid to the Manager for managing each property, presented net of fee rebates related to the Manager Cap (see Note 13 to our consolidated financial statements).

Advisory fees. Advisory fees include the fees paid to our Adviser pursuant to the Advisory Agreement (see Note 13 to our consolidated financial statements).

Corporate general and administrative expenses. Corporate general and administrative expenses include, but are not limited to, audit fees, legal fees, tax preparation fees, Board fees, equity-based compensation expense and corporate payroll.

Property general and administrative expenses. Property general and administrative expenses include the costs of marketing, professional fees, legal fees, general office supplies, and other administrative related costs incurred in operating the properties.

Depreciation and amortization. Depreciation and amortization costs primarily include depreciation of our homes and amortization of acquired in-place leases, recognized over their respective useful lives.

Interest expense. Interest expense primarily includes the cost of interest expense on debt, payments and receipts related to our interest rate ~~swap agreements~~derivatives, the change in fair value of interest rate derivatives not designated as hedges and the amortization of deferred financing costs. Certain interest costs are capitalized in accordance with our capitalization policy.

Loss on extinguishment of debt. Loss on extinguishment of debt includes prepayment penalties and defeasance costs, the write-off of unamortized deferred financing costs and fair market value adjustments of assumed debt related to the early repayment of debt and other costs incurred in a debt extinguishment.

Gain/(loss) on sales of real ~~estate~~estate.. Gain/(loss) on sales of real estate includes the ~~gain/(loss)~~gain or loss recognized upon sales of homes. Gain/(loss) on sales of real estate is calculated by deducting the carrying value of the real estate and costs incurred to sell the properties from the sales prices of the homes.

Casualty gain/(loss). Casualty gain/(loss) includes the gain or loss incurred on homes, net of insurance proceeds received, that experience an unexpected and unusual event such as a natural disaster or fire.

Consolidated Results of Operations for the Three Months Ended ~~June~~September 30, 2022 and 2021

The three months ended ~~June~~September 30, 2022 compared to the three months ended ~~June~~September 30, 2021

The following table sets forth a summary of our consolidated operating results for the three months ended ~~June~~September 30, 2022 and 2021 (in thousands):

	For the Three Months Ended June 30,									For the Three Months Ended September 30,
	2022			2021			$ Change			2022			2021			$ Change
Total revenues	$	62,304		$	39,821		$	22,483		$	73,638		$	41,887		$	31,751
Total expenses		(73,989	)		(41,612	)		(32,377	)		(88,119	)		(46,662	)		(41,457	)
Gain/(loss) on sales of real estate		100			(123	)		223
Casualty loss, net of insurance proceeds		(53	)		(93	)		40
Loss on sales of real estate											(224	)		(175	)		(49	)
Casualty gain, net of insurance proceeds											84			151			(67	)
Net loss		(11,638	)		(2,007	)		(9,631	)		(14,621	)		(4,799	)		(9,822	)
Dividends on and accretion to redemption value of Redeemable Series A preferred stock		2,219			2,207			12			2,226			2,206			20
Net loss attributable to redeemable noncontrolling interests in the OP		(1,771	)		(466	)		(1,305	)		(1,782	)		(823	)		(959	)
Net loss attributable to redeemable noncontrolling interests in consolidated VIEs		(1,191	)		—			(1,191	)		(3,112	)		—			(3,112	)
Net loss attributable to noncontrolling interests in consolidated VIEs											(113	)		—			(113	)
Net loss attributable to common stockholders	$	(10,895	)	$	(3,748	)	$	(7,147	)	$	(11,840	)	$	(6,182	)	$	(5,658	)

The change in our net loss between the periods primarily relates to increases in property operating expenses, real estate taxes and insurance costs, advisory fees, property general and administrative expenses, depreciation and amortization, ~~and~~ interest expense, and loss on extinguishment of debt, partially offset by an increase in rental income.

Rental income. Rental income was ~~$59.4~~$71.6 million for the three months ended ~~June~~September 30, 2022 compared to ~~$39.1~~$40.8 million for the three months ended ~~June~~September 30, 2021, which was an increase of ~~$20.3~~$30.8 million. The increase between the periods was primarily due to our acquisition activity and increases in rental rates over the past year.

Other income. Other income was ~~$2.9~~$2.0 million for the three months ended ~~June~~September 30, 2022 compared to ~~$0.7~~$1.1 million for the three months ended ~~June~~September 30, 2021, which was an increase of ~~$2.2~~$0.9 million. The increase between the periods was primarily due to ~~an increase in interest income from promissory notes with Ensign Peak Realty, LLC and~~ our acquisition activity over the past year.

Property operating expenses. Property operating expenses were ~~$12.4~~$12.6 million for the three months ended ~~June~~September 30, 2022 compared to ~~$6.0~~$8.3 million for the three months ended ~~June~~September 30, 2021, which was an increase of ~~$6.4~~$4.3 million. The increase between the periods was primarily due to our acquisition activity in 2022. For the three months ended ~~June~~September 30, 2022 and 2021, turn costs represented approximately ~~12%~~15% and ~~14%~~13%, respectively, of our property operating expenses.

Real estate taxes and insurance. Real estate taxes and insurance were ~~$10.9~~$12.3 million for the three months ended ~~June~~September 30, 2022 compared to ~~$7.6~~$8.2 million for the three months ended ~~June~~September 30, 2021, which was an increase of ~~$3.3~~$4.1 million. The increase between the periods was primarily due to our acquisition activity in 2022 as well as increases in our real estate taxes as a result of increases in property valuations.

Property management fees. Property management fees were ~~$3.4~~$3.8 million for the three months ended ~~June~~September 30, 2022 compared to ~~$2.6~~$1.8 million for the three months ended ~~June~~September 30, 2021, which was an increase of ~~$0.8~~$2.0 million. The increase between the periods was primarily due to our acquisition activity and increases in rental rates over the past year.

Advisory fees. Advisory fees were ~~$3.8~~$4.3 million for the three months ended ~~June~~September 30, 2022 compared to ~~$2.0~~$2.3 million for the three months ended ~~June~~September 30, 2021, which was an increase of ~~$1.8~~$2.0 million. The increase between the periods was primarily due to our equity raising activity in 2022 and increases in total debt principal outstanding.

Corporate general and administrative expenses. Corporate general and administrative expenses were ~~$2.5~~$2.7 million for the three months ended ~~June~~September 30, 2022 compared to ~~$1.8~~$2.0 million for the three months ended ~~June~~September 30, 2021, which was an increase of $0.7 million. The increase between the periods was primarily due to increases in equity-based compensation expense and other corporate expenses as our operations continued to gain scale.

Property general and administrative expenses. Property general and administrative expenses were ~~$4.6~~$4.4 million for the three months ended ~~June~~September 30, 2022 compared to ~~$1.3~~$1.5 million for the three months ended ~~June~~September 30, 2021, which was an increase of ~~$3.3~~$2.9 million. The increase between the periods was primarily due to our acquisition activity in 2022.

Depreciation and amortization. Depreciation and amortization costs were ~~$24.2~~$28.7 million for the three months ended ~~June~~September 30, 2022 compared to ~~$12.5~~$14.9 million for the three months ended ~~June~~September 30, 2021, which was an increase of ~~$11.7~~$13.8 million. The increase between the periods was primarily due to our acquisition activity in 2022.

Interest expense. Interest expense was ~~$11.2~~$16.9 million for the three months ended ~~June~~September 30, 2022 compared to ~~$7.7~~$7.8 million for the three months ended ~~June~~September 30, 2021, which was an increase of ~~$3.5~~$9.1 million. The increase between the periods was primarily due to an increase in interest on debt and amortization of deferred financing costs, as we increased our total debt principal outstanding and witnessed an increase in our weighted average interest rate during ~~2022.~~2022, partially offset by the change in fair value of interest rate derivatives included in interest expense. The following table details the various costs included in interest expense for the three months ended ~~June~~September 30, 2022 and 2021 (in thousands):

	For the Three Months Ended June 30,									For the Three Months Ended September 30,
	2022			2021			$ Change			2022			2021			$ Change
Gross interest cost	$	14,022		$	8,560		$	5,462		$	19,521		$	9,027		$	10,494
Capitalized interest		(2,867	)		(872	)		(1,995	)		(2,646	)		(1,275	)		(1,371	)
Total	$	11,155		$	7,688		$	3,467		$	16,875		$	7,752		$	9,123

Loss on extinguishment of debt. Loss on extinguishment of debt was ~~$1.0~~$2.5 million for the three months ended ~~June~~September 30, 2022 compared to no loss on extinguishment of debt for the three months ended ~~June~~September 30, 2021, which was an increase of ~~$1.0~~$2.5 million. The increase between the periods was due to the extinguishment of the Bridge Facility II and the Hatchway Broadmoor Mortgage which occurred during the three months ended ~~June~~September 30, 2022.

Gain/(loss) on sales of real estate. ~~Gain~~Loss on sales of real estate was ~~$0.1~~$0.2 million for the three months ended ~~June~~September 30, 2022 and loss on sales of real estate was $0.1 million for the three months ended June 30, 2021, which was an increase of $0.2 million. The majority of the homes sold during the three months ended June 30, 2022 related to a bulk disposition wherein the sales price exceeded the carrying value of the real estate and costs incurred to sell the properties. 2021.

Casualty gain/(loss), net of insurance proceeds. Casualty ~~loss,~~gain, net of insurance proceeds, was $0.1 million for the three months ended ~~June~~September 30, 2022 and ~~2021.~~$0.2 million for the three months ended September 30, 2021, which was a decrease of $0.1 million. The decrease between the periods was primarily due to a slight decrease in net insurance proceeds received in 2022.

Consolidated Results of Operations for the ~~Six~~Nine Months Ended ~~June~~September 30, 2022 and 2021

The ~~six~~nine months ended ~~June~~September 30, 2022 compared to the ~~six~~nine months ended ~~June~~September 30, 2021

The following table sets forth a summary of our consolidated operating results for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021 (in thousands):

	For the Six Months Ended June 30,									For the Nine Months Ended September 30,
	2022			2021			$ Change			2022			2021			$ Change
Total revenues	$	114,621		$	70,449		$	44,172		$	188,259		$	112,336		$	75,923
Total expenses		(129,026	)		(72,297	)		(56,729	)		(217,145	)		(118,959	)		(98,186	)
Gain/(loss) on sales of real estate		216			(198	)		414
Casualty loss, net of insurance proceeds		(162	)		(102	)		(60	)
Loss on sales of real estate											(8	)		(373	)		365
Casualty (loss)/gain, net of insurance proceeds											(78	)		49			(127	)
Net loss		(14,351	)		(2,148	)		(12,203	)		(28,972	)		(6,947	)		(22,025	)
Dividends on and accretion to redemption value of Redeemable Series A preferred stock		4,428			4,413			15			6,654			6,619			35
Net loss attributable to redeemable noncontrolling interests in the OP		(2,194	)		(501	)		(1,693	)		(3,976	)		(1,324	)		(2,652	)
Net loss attributable to redeemable noncontrolling interests in consolidated VIEs		(1,191	)		—			(1,191	)		(4,303	)		—			(4,303	)
Net loss attributable to noncontrolling interests in consolidated VIEs											(113	)		—			(113	)
Net loss attributable to common stockholders	$	(15,394	)	$	(6,060	)	$	(9,334	)	$	(27,234	)	$	(12,242	)	$	(14,992	)

The change in our net loss between the periods primarily relates to increases in property operating expenses, real estate taxes and insurance costs, property management fees, advisory fees, property general and administrative expenses, depreciation and amortization and interest expense, partially offset by an increase in rental income.

Rental income. Rental income was ~~$110.4~~$182.0 million for the ~~six~~nine months ended ~~June~~September 30, 2022 compared to ~~$69.2~~$110.1 million for the ~~six~~nine months ended ~~June~~September 30, 2021, which was an increase of ~~$41.2~~$71.9 million. The increase between the periods was primarily due to our acquisition activity and increases in rental rates over the past year.

Other income. Other income was ~~$4.2~~$6.2 million for the ~~six~~nine months ended ~~June~~September 30, 2022 compared to ~~$1.2~~$2.3 million for the ~~six~~nine months ended ~~June~~September 30, 2021, which was an increase of ~~$3.0~~$3.9 million. The increase between the periods was primarily due to ~~an increase in interest income from promissory notes with Ensign Peak Realty, LLC and~~ our acquisition activity over the past year.

Property operating expenses. Property operating expenses were ~~$21.0~~$33.6 million for the ~~six~~nine months ended ~~June~~September 30, 2022 compared to ~~$11.2~~$19.4 million for the ~~six~~nine months ended ~~June~~September 30, 2021, which was an increase of ~~$9.8~~$14.2 million. The increase between the periods was primarily due to our acquisition activity in 2022. For the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, turn costs represented approximately ~~13%~~14% and 14%, respectively, of our property operating expenses.

Real estate taxes and insurance. Real estate taxes and insurance were ~~$20.5~~$32.7 million for the ~~six~~nine months ended ~~June~~September 30, 2022 compared to ~~$13.9~~$22.1 million for the ~~six~~nine months ended ~~June~~September 30, 2021, which was an increase of ~~$6.6~~$10.6 million. The increase between the periods was primarily due to our acquisition activity in 2022 as well as increases in our real estate taxes as a result of increases in property valuations.

Property management fees. Property management fees were ~~$6.5~~$10.4 million for the ~~six~~nine months ended ~~June~~September 30, 2022 compared to ~~$4.6~~$6.3 million for the ~~six~~nine months ended ~~June~~September 30, 2021, which was an increase of ~~$1.9~~$4.1 million. The increase between the periods was primarily due to our acquisition activity and increases in rental rates over the past year.

Advisory fees. Advisory fees were ~~$6.9~~$11.2 million for the ~~six~~nine months ended ~~June~~September 30, 2022 compared to ~~$3.3~~$5.6 million for the ~~six~~nine months ended ~~June~~September 30, 2021, which was an increase of ~~$3.6~~$5.6 million. The increase between the periods was primarily due to our equity raising activity in 2022 and increases in total debt principal outstanding.

Corporate general and administrative expenses. Corporate general and administrative expenses were ~~$4.6~~$7.3 million for the ~~six~~nine months ended ~~June~~September 30, 2022 compared to ~~$3.3~~$5.3 million for the ~~six~~nine months ended ~~June~~September 30, 2021, which was an increase of ~~$1.3~~$2.0 million. The increase between the periods was primarily due to increases in equity-based compensation expense and other corporate expenses as our operations continued to gain scale.

Property general and administrative expenses. Property general and administrative expenses were ~~$7.5~~$11.9 million for the ~~six~~nine months ended ~~June~~September 30, 2022 compared to ~~$2.7~~$4.2 million for the ~~six~~nine months ended ~~June~~September 30, 2021, which was an increase of ~~$4.8~~$7.7 million. The increase between the periods was primarily due to our acquisition activity in 2022.

Depreciation and amortization. Depreciation and amortization costs were ~~$40.2~~$68.9 million for the ~~six~~nine months ended ~~June~~September 30, 2022 compared to ~~$20.6~~$35.4 million for the ~~six~~nine months ended ~~June~~September 30, 2021, which was an increase of ~~$19.6~~$33.5 million. The increase between the periods was primarily due to our acquisition activity in 2022.

Interest expense. Interest expense was ~~$20.8~~$37.7 million for the ~~six~~nine months ended ~~June~~September 30, 2022 compared to ~~$12.8~~$20.6 million for the ~~six~~nine months ended ~~June~~September 30, 2021, which was an increase of ~~$8.0~~$17.1 million. The increase between the periods was primarily due to an increase in interest on debt and amortization of deferred financing costs, as we increased our total debt principal outstanding and witnessed an increase in our weighted average interest rate during ~~2022.~~2022, partially offset by the change in fair value of interest rate derivatives included in interest expense. The following table details the various costs included in interest expense for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021 (in thousands):

	For the Six Months Ended June 30,									For the Nine Months Ended September 30,
	2022			2021			$ Change			2022			2021			$ Change
Gross interest cost	$	25,649		$	14,332		$	11,317		$	45,170		$	23,360		$	21,810
Capitalized interest		(4,874	)		(1,518	)		(3,356	)		(7,520	)		(2,794	)		(4,726	)
Total	$	20,775		$	12,814		$	7,961		$	37,650		$	20,566		$	17,084

Loss on extinguishment of debt. Loss on extinguishment of debt was ~~$1.0~~$3.5 million for the ~~six~~nine months ended ~~June~~September 30, 2022 compared to no loss on extinguishment of debt for the ~~six~~nine months ended ~~June~~September 30, 2021, which was an increase of ~~$1.0~~$3.5 million. The increase between the periods was due to the extinguishment of the Bridge Facility, the Bridge Facility II and the Hatchway Broadmoor Mortgage which occurred during the ~~six~~nine months ended ~~June~~September 30, 2022.

Gain/(loss) on sales of real estate. ~~Gain~~Loss on sales of real estate was ~~$0.2~~less than $0.1 million for the ~~six~~nine months ended ~~June~~September 30, 2022, and loss on sales of real estate was ~~$0.2~~$0.4 million for the ~~six~~nine months ended ~~June~~September 30, 2021, which was ~~an increase~~a decrease of approximately $0.4 million. ~~The majority~~There were more instances of bulk dispositions for the ~~homes sold~~nine months ended September 30, 2022 than there were during the ~~six~~nine months ended ~~June~~September 30, ~~2022 related to bulk dispositions wherein the~~2021, resulting in gains on sales ~~price exceeded the carrying value~~ of ~~the~~ real estate ~~and costs incurred to sell the properties.~~included in current period activity, which partially offset total loss on sales of real estate in 2022.

Casualty gain/(loss), net of insurance proceeds. Casualty loss, net of insurance proceeds, was ~~$0.2~~$0.1 million for the ~~six~~nine months ended ~~June~~September 30, 2022, and casualty ~~loss,~~gain, net of insurance proceeds, was less than $0.1 million for the ~~six~~nine months ended ~~June~~September 30, 2021, which was ~~an increase~~a decrease of approximately $0.1 million. The ~~increase~~decrease between the periods iswas primarily due to a slight increase in casualty events in 2022.

NOI is a non-GAAP financial measure of performance. NOI is used by our management to evaluate and compare the performance of our properties to other comparable properties, to determine trends in earnings and to compute the fair value of our properties as NOI is not affected by (1) interest expense, (2) advisory fees, (3) the impact of depreciation and amortization expenses, (4) gains or losses from the sale of operating real estate assets that are included in net income computed in accordance with GAAP, (5) corporate general and administrative expenses, (6) property general and administrative expenses, (7) casualty gains or losses and (8) other gains and losses that are specific to us, including loss on extinguishment of debt.

The cost of funds is eliminated from net income (loss) because it is specific to our particular financing capabilities and constraints. The cost of funds is also eliminated because it is dependent on historical interest rates and other costs of capital as well as past decisions made by us regarding the appropriate mix of capital, or in the case of assumed debt, decisions made by others, which may have changed or may change in the future. Advisory fees are eliminated because they do not reflect continuing operating costs of the property owner. Depreciation and amortization expenses as well as gains or losses from the sale of operating real estate assets are eliminated because they may not accurately represent the actual change in value in our homes that result from use of the properties or changes in market conditions. While certain aspects of real property do decline in value over time in a manner that is reasonably captured by depreciation and amortization, the value of the properties as a whole have historically increased or decreased as a result of changes in overall economic conditions instead of from actual use of the property or the passage of time. Gains and losses from the sale of real property vary from property to property and are affected by market conditions at the time of sale, which will usually change from period to period. Corporate general and administrative expenses are eliminated because they do not reflect the ongoing operating activity performed at the properties. Property general and administrative expenses are eliminated because they represent expenses such as legal, professional, centralized leasing, technology support, and accounting functions. Casualty gains or losses are excluded because of the infrequent and unusual nature of the sustained damages, they do not reflect continuing operating costs of the property owner and typically the economic impact, aside from deductible or risk retention, is covered by insurance. Losses on extinguished debt are excluded because they do not reflect continuing operating costs of the property owner. These gains and losses can create distortions when comparing one period to another or when comparing our operating results to the operating results of other real estate companies that have not made similarly timed purchases or sales or sustained damage at similar times. We believe that eliminating these items from net income 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 corporate general and administrative expenses, property general and administrative expense, interest expense, casualty gains or losses, advisory fees, depreciation and amortization expense, gains or losses from the sale of properties, and other gains and losses as determined under GAAP, and the level of capital expenditures and leasing costs necessary to maintain the operating performance of our properties, all of which are significant economic costs. 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 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.

The following table, which has not been adjusted for the effects of noncontrolling interests (“NCI”), reconciles our NOI for the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021 to net loss, the most directly comparable GAAP financial measure on a consolidated basis (in thousands):

	For the Three Months Ended June 30,						For the Six Months Ended June 30,						For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2022			2021			2022			2021			2022			2021			2022			2021
Net loss	$	(11,638	)	$	(2,007	)	$	(14,351	)	$	(2,148	)	$	(14,621	)	$	(4,799	)	$	(28,972	)	$	(6,947	)
Adjustments to reconcile net loss to NOI:
Advisory fees		3,844			2,010			6,930			3,301			4,313			2,337			11,243			5,638
Corporate general and administrative expenses		2,478			1,837			4,640			3,318			2,701			1,992			7,341			5,310
Property general and administrative expenses		4,625			1,332			7,498			2,655			4,373			1,505			11,871			4,160
Depreciation and amortization		24,207			12,507			40,163			20,551			28,693			14,881			68,856			35,432
Interest expense		11,155			7,688			20,775			12,814			16,875			7,752			37,650			20,566
Loss on extinguishment of debt		1,001			—			1,001			—			2,468			—			3,469			—
(Gain)/loss on sales of real estate		(100	)		123			(216	)		198
Casualty loss, net of insurance proceeds		53			93			162			102
Loss on sales of real estate														224			175			8			373
Casualty (gain)/loss, net of insurance proceeds														(84	)		(151	)		78			(49	)
NOI	$	35,625		$	23,583		$	66,602		$	40,791		$	44,942		$	23,692		$	111,544		$	64,483

The following table, which has not been adjusted for the effects of NCI, reconciles our NOI for the three and ~~six~~nine months ended ~~June~~September 30, 2022 to net loss, the most directly comparable GAAP financial measure by reportable segment (in thousands):

	For the Three Months Ended June 30, 2022									For the Six Months Ended June 30, 2022									For the Three Months Ended September 30, 2022									For the Nine Months Ended September 30, 2022
	VineBrook			NexPoint Homes			Total			VineBrook			NexPoint Homes			Total			VineBrook			NexPoint Homes			Total			VineBrook			NexPoint Homes			Total
Net loss	$	(8,644	)	$	(2,994	)	$	(11,638	)	$	(11,357	)	$	(2,994	)	$	(14,351	)	$	(10,453	)	$	(4,168	)	$	(14,621	)	$	(21,810	)	$	(7,162	)	$	(28,972	)
Adjustments to reconcile net loss to NOI:
Advisory fees		3,844			—			3,844			6,930			—			6,930			4,313			—			4,313			11,243			—			11,243
Corporate general and administrative expenses		2,474			4			2,478			4,636			4			4,640			2,526			175			2,701			7,162			179			7,341
Property general and administrative expenses		3,537			1,088			4,625			6,410			1,088			7,498			3,900			473			4,373			10,310			1,561			11,871
Depreciation and amortization		23,413			794			24,207			39,369			794			40,163			23,641			5,052			28,693			63,009			5,847			68,856
Interest expense		10,157			998			11,155			19,777			998			20,775			11,199			5,676			16,875			30,976			6,674			37,650
Loss on extinguishment of debt		1,001			—			1,001			1,001			—			1,001			2,468			—			2,468			3,469			—			3,469
Gain on sales of real estate		(100	)		—			(100	)		(216	)		—			(216	)
Casualty loss, net of insurance proceeds		53			—			53			162			—			162
Loss on sales of real estate																				224			—			224			8			—			8
Casualty (gain)/loss, net of insurance proceeds																				(84	)		—			(84	)		78			—			78
NOI	$	35,735		$	(110	)	$	35,625		$	66,712		$	(110	)	$	66,602		$	37,734		$	7,208		$	44,942		$	104,445		$	7,099		$	111,544

Net Operating Income for Our Same Home and Non-Same Home Properties for the Three Months Ended ~~June~~September 30, 2022 and 2021

There are ~~5,444~~5,442 homes in our 2022 same home pool (our “Same Home” properties). To be included as a “Same Home,” homes must be in the VineBrook reportable segment and must have been stabilized for at least 90 days in advance of the first day of the previous fiscal year and be held through the current reporting period-end. Same Home properties for the period ended ~~June~~September 30, 2022 and ~~June~~September 30, 2021 were stabilized by October 1, 2020 and held through ~~June~~September 30, 2022. Same Home properties do not include homes held for sale. Homes that are stabilized are included as Same Home properties, whether occupied or vacant. See Item 1. “Business—Our Portfolio” in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 23, 2022 for a discussion of the definition of stabilized. We view Same Home NOI as an important measure of the operating performance of our homes because it allows us to compare operating results of homes owned for the entirety of the current and comparable periods and therefore eliminate variations caused by acquisitions or dispositions during the periods.

The following table reflects the revenues, property operating expenses and NOI for the three months ended ~~June~~September 30, 2022 and 2021 for our Same Home and Non-Same Home properties (dollars in thousands):

	For the Three Months Ended June 30,										For the Three Months Ended September 30,
	2022		2021		$ Change			% Change			2022		2021		$ Change			% Change
Revenues
Same Home
Rental income ⁽¹⁾	$	17,126	$	16,407	$	719			4.4	%	$	17,325	$	16,409	$	916			5.6	%
Other income ⁽¹⁾		37		32		5			15.6	%		47		38		9			23.7	%
Same Home revenues		17,163		16,439		724			4.4	%		17,372		16,447		925			5.6	%
Non-Same Home
Rental income ⁽¹⁾		42,347		22,765		19,582			86.0	%		54,750		24,529		30,221			123.2	%
Other income ⁽¹⁾		1,479		80		1,399			1748.8	%		505		61		444			727.9	%
Non-Same Home revenues		43,826		22,845		20,981			91.8	%		55,255		24,590		30,665			124.7	%
Total revenues		60,989		39,284		21,705			55.3	%		72,627		41,037		31,590			77.0	%

Operating expenses
Same Home
Property operating expenses ⁽¹⁾		2,749		2,059		690			33.5	%		3,382		2,733		649			23.7	%
Real estate taxes and insurance		2,777		2,924		(147	)		-5.0	%		2,717		2,909		(192	)		-6.6	%
Property management fees ⁽²⁾		968		994		(26	)		-2.6	%		919		695		224			32.2	%
Same Home operating expenses		6,494		5,977		517			8.6	%		7,018		6,337		681			10.7	%
Non-Same Home
Property operating expenses ⁽¹⁾		8,293		3,411		4,882			143.1	%		8,199		4,699		3,500			74.5	%
Real estate taxes and insurance		8,137		4,720		3,417			72.4	%		9,543		5,248		4,295			81.8	%
Property management fees ⁽²⁾		2,440		1,593		847			53.2	%		2,925		1,061		1,864			175.7	%
Non-Same Home operating expenses		18,870		9,724		9,146			94.1	%		20,667		11,008		9,659			87.7	%
Total operating expenses		25,364		15,701		9,663			61.5	%		27,685		17,345		10,340			59.6	%

NOI
Same Home		10,669		10,462		207			2.0	%		10,354		10,110		244			2.4	%
Non-Same Home		24,956		13,121		11,835			90.2	%		34,588		13,582		21,006			154.7	%
Total NOI	$	35,625	$	23,583	$	12,042			51.1	%	$	44,942	$	23,692	$	21,250			89.7	%

See reconciliation of net income (loss) to NOI above under “—Net Operating Income.”

Same Home Results of Operations for the Three Months Ended ~~June~~September 30, 2022 and 2021

As of ~~June~~September 30, 2022, our Same Home properties were approximately ~~95.3%~~95.7% occupied with a weighted average monthly effective rent per occupied home of ~~$1,083.~~$1,110. As of ~~June~~September 30, 2021, our Same Home properties were approximately ~~96.8%~~95.4% occupied with a weighted average monthly effective rent per occupied home of ~~$1,010.~~$1,032. For our Same Home properties, we recorded the following operating results for the three months ended ~~June~~September 30, 2022 as compared to the three months ended ~~June~~September 30, 2021:

Rental income. Rental income was ~~$17.1~~$17.3 million for the three months ended ~~June~~September 30, 2022 compared to $16.4 million for the three months ended ~~June~~September 30, 2021, which was an increase of approximately ~~$0.7~~$0.9 million, or ~~4.4%~~5.6%. The increase is related to a ~~7.2%~~7.6% increase in the weighted average monthly effective rent per occupied home ~~partially offset~~and by a ~~1.5% decrease~~0.3% increase in occupancy.

Other income. Other income remained flat at less than $0.1 million for the three months ended ~~June~~September 30, 2022 and 2021.

Property operating expenses. Property operating expenses were $3.4 million for the three months ended September 30, 2022 compared to $2.7 million for the three months ended ~~June 30, 2022 compared to $2.1 million for the three months ended June~~September 30, 2021, which was an increase of approximately ~~$0.6~~$0.7 million, or ~~33.5%~~23.7%. The majority of the increase is related to an increase in general turnover costs of approximately ~~$0.3~~$0.2 million, an increase in ~~water~~repairs and ~~sewer~~maintenance supply costs of approximately $0.2 million, ~~and~~ an increase in third party maintenance costs of approximately $0.1 million and an increase in landscaping costs of approximately $0.1 million.

Real estate taxes and insurance. Real estate taxes and insurance costs were ~~$2.8~~$2.7 million for the three months ended ~~June~~September 30, 2022 compared to $2.9 million for the three months ended ~~June~~September 30, 2021, which was a decrease of approximately ~~$0.1~~$0.2 million, or ~~5.0%~~6.6%. The majority of the decrease is related to a decrease in property ~~and liability~~ insurance costs of approximately $0.3 million, partially offset by an increase in real estate taxes of approximately $0.1 million.

Property management fees. Property management fees ~~remained flat at approximately $1.0~~were $0.9 million for the three months ended ~~June~~September 30, 2022 ~~and 2021.~~compared to $0.7 million for the three months ended September 30, 2021, which was an increase of approximately $0.2 million or 32.2%. The majority of the increase is related to an approximately $0.2 million decrease in the fee rebate allocated to Same Home properties related to the Manager Cap.

Net Operating Income for Our Same Home and Non-Same Home Properties for the ~~Six~~Nine Months Ended ~~June~~September 30, 2022 and 2021

The following table reflects the revenues, property operating expenses and NOI for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021 for our Same Home and Non-Same Home properties (dollars in thousands):

	For the Six Months Ended June 30,										For the Nine Months Ended September 30,
	2022		2021		$ Change			% Change			2022		2021		$ Change			% Change
Revenues
Same Home
Rental income ⁽¹⁾	$	33,880	$	32,510	$	1,370			4.2	%	$	51,194	$	48,908	$	2,286			4.7	%
Other income ⁽¹⁾		75		64		11			17.2	%		122		102		20			19.6	%
Same Home revenues		33,955		32,574		1,381			4.2	%		51,316		49,010		2,306			4.7	%
Non-Same Home
Rental income ⁽¹⁾		76,780		36,825		39,955			108.5	%		131,541		61,365		70,176			114.4	%
Other income ⁽¹⁾		1,594		137		1,457			1063.5	%		2,099		198		1,901			960.1	%
Non-Same Home revenues		78,374		36,962		41,412			112.0	%		133,640		61,563		72,077			117.1	%
Total revenues		112,329		69,536		42,793			61.5	%		184,956		110,573		74,383			67.3	%

Operating expenses
Same Home
Property operating expenses ⁽¹⁾		5,062		3,988		1,074			26.9	%		8,445		6,721		1,724			25.7	%
Real estate taxes and insurance		5,674		6,009		(335	)		-5.6	%		8,389		8,916		(527	)		-5.9	%
Property management fees ⁽²⁾		1,971		2,024		(53	)		-2.6	%		2,890		2,718		172			6.3	%
Same Home operating expenses		12,707		12,021		686			5.7	%		19,724		18,355		1,369			7.5	%
Non-Same Home
Property operating expenses ⁽¹⁾		13,690		6,259		7,431			118.7	%		21,888		10,958		10,930			99.7	%
Real estate taxes and insurance		14,782		7,929		6,853			86.4	%		24,327		13,179		11,148			84.6	%
Property management fees ⁽²⁾		4,548		2,536		2,012			79.3	%		7,473		3,598		3,875			107.7	%
Non-Same Home operating expenses		33,020		16,724		16,296			97.4	%		53,688		27,735		25,953			93.6	%
Total operating expenses		45,727		28,745		16,982			59.1	%		73,412		46,090		27,322			59.3	%

NOI
Same Home		21,248		20,553		695			3.4	%		31,592		30,655		937			3.1	%
Non-Same Home		45,354		20,238		25,116			124.1	%		79,952		33,828		46,124			136.3	%
Total NOI	$	66,602	$	40,791	$	25,811			63.3	%	$	111,544	$	64,483	$	47,061			73.0	%

See reconciliation of net income (loss) to NOI above under “—Net Operating Income.”

Same Home Results of Operations for the ~~Six~~Nine Months Ended ~~June~~September 30, 2022 and 2021

As of ~~June~~September 30, 2022, our Same Home properties were approximately ~~95.3%~~95.7% occupied with a weighted average monthly effective rent per occupied home of ~~$1,083.~~$1,110. As of ~~June~~September 30, 2021, our Same Home properties were approximately ~~96.8%~~95.4% occupied with a weighted average monthly effective rent per occupied home of ~~$1,010.~~$1,032. For our Same Home properties, we recorded the following operating results for the ~~six~~nine months ended ~~June~~September 30, 2022 as compared to the ~~six~~nine months ended ~~June~~September 30, 2021:

Rental income. Rental income was ~~$33.9~~$51.2 million for the ~~six~~nine months ended ~~June~~September 30, 2022 compared to ~~$32.5~~$48.9 million for the ~~six~~nine months ended ~~June~~September 30, 2021, which was an increase of approximately ~~$1.4~~$2.3 million, or ~~4.2%~~4.7%. The increase is related to a ~~7.2%~~7.6% increase in the weighted average monthly effective rent per occupied home ~~partially offset~~and by a ~~1.5% decrease~~0.3% increase in occupancy.

Other income. Other income remained flat at $0.1 million for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021.

Property operating expenses. Property operating expenses were ~~$5.1~~$8.4 million for the ~~six~~nine months ended ~~June~~September 30, 2022 compared to ~~$4.0~~$6.7 million for the ~~six~~nine months ended ~~June~~September 30, 2021, which was an increase of approximately ~~$1.1~~$1.7 million, or ~~26.9%~~25.7%. The majority of the increase is related to an increase in general turnover costs of approximately ~~$0.5~~$0.8 million, an increase in repairs and maintenance supply costs of approximately $0.3 million, an increase in third party maintenance costs of approximately $0.3 million and an increase in water and sewer costs of approximately ~~$0.4 million and an increase in third party maintenance costs of approximately $0.1~~$0.2 million.

Real estate taxes and insurance. Real estate taxes and insurance costs were ~~$5.7~~$8.4 million for the ~~six~~nine months ended ~~June~~September 30, 2022 compared to ~~$6.0~~$8.9 million for the ~~six~~nine months ended ~~June~~September 30, 2021, which was a decrease of approximately ~~$0.3~~$0.5 million, or ~~5.6%~~5.9%. The majority of the decrease is related to a decrease in property insurance costs of approximately $0.4 million and a decrease in real estate taxes of approximately ~~$0.2~~$0.1 million.

Property management fees. Property management fees ~~remained flat at approximately $2.0~~were $2.9 million for the ~~six~~nine months ended ~~June~~September 30, 2022 ~~and 2021.~~compared to $2.7 million for the nine months ended September 30, 2021, which was an increase of approximately $0.2 million, or 6.3%. The majority of the increase is related to an approximately $0.2 million decrease in the fee rebate allocated to Same Home properties related to the Manager Cap.

The following table reflects a reconciliation of Same Home and Non-Same Home revenues and operating expenses to total revenues and operating expenses, including tenant chargebacks, for the three months ended September 30, 2022 and 2021 (dollars in thousands):

The following table reflects a reconciliation of Same Home and Non-Same Home revenues and operating expenses to total revenues and operating expenses, including tenant chargebacks, for the nine months ended September 30, 2022 and 2021 (dollars in thousands):

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 Investments Trusts (“NAREIT”), core funds from operations (“Core FFO”) 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. FFO is defined by NAREIT as net income (loss) computed in accordance with GAAP, excluding gains or losses from real estate dispositions, plus real estate depreciation and amortization. We compute FFO for the VineBrook reportable segment in accordance with NAREIT’s definition. We excluded the NexPoint Homes reportable segment operations from the FFO calculation due to the timing of the acquisition of the portfolio as it was not deemed meaningful to the calculation. Our presentation differs slightly in that we begin with net income (loss) attributable to common stockholders and add net income (loss) attributable to NCI in the OP and then make the adjustments to arrive at FFO.

Core FFO for the VineBrook reportable segment makes certain adjustments to FFO for the VineBrook reportable segment, which relate to items that are either not likely to occur on a regular basis or are otherwise not representative of the ongoing operating performance of our Portfolio. Core FFO adjusts FFO to remove items such as gains or losses on extinguishment of debt, casualty gains or losses, changes in fair value on interest rate derivatives included in interest expense, the amortization of deferred financing costs and equity-based compensation expense. We believe Core FFO is useful as a supplemental gauge of our operating performance and is useful in comparing our operating performance with other REITs.

AFFO for the VineBrook reportable segment makes certain adjustments to Core FFO for the VineBrook reportable segment 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 the method of calculating AFFO is divergent across the industry. AFFO adjusts Core FFO to remove recurring capital expenditures, which are costs necessary to help preserve the value and maintain functionality of our homes. We believe AFFO is useful as a supplemental gauge of our operating performance and is useful in comparing our operating performance with other REITs.

Basic and diluted weighted average shares in our FFO table includes both our Shares and OP Units. NexPoint Homes Shares and SFR OP Units are not part of this count as the metrics in the FFO table only pertain to the VineBrook reportable segment.

We believe that the use of FFO, Core FFO and AFFO, combined with the required GAAP presentations, improves the understanding of operating results of REITs and makes comparisons of operating results among such companies more meaningful. While FFO, Core 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, Core FFO and AFFO do not purport to be indicative of cash available to fund our future cash requirements. Further, our computation of FFO, Core FFO and AFFO may not be comparable to FFO, Core FFO and AFFO reported by other REITs.

The FFO, Core FFO and AFFO results discussed further below are for the VineBrook reportable segment, and reconcile to net loss for the VineBrook reportable segment. See below for a reconciliation of VineBrook net loss to consolidated net loss:

	For the Three Months Ended June 30, 2022									For the Six Months Ended June 30, 2022									For the Three Months Ended September 30, 2022									For the Nine Months Ended September 30, 2022
	VineBrook			NexPoint Homes			Total			VineBrook			NexPoint Homes			Total			VineBrook			NexPoint Homes			Total			VineBrook			NexPoint Homes			Total
Net loss attributable to common stockholders	$	(9,580	)	$	(1,315	)	$	(10,895	)	$	(14,079	)	$	(1,315	)	$	(15,394	)	$	(10,821	)	$	(1,019	)	$	(11,840	)	$	(24,900	)	$	(2,334	)	$	(27,234	)
Net loss attributable to NCI in the OP		(1,283	)		(488	)		(1,771	)		(1,706	)		(488	)		(2,194	)
Net (loss)/income attributable to redeemable NCI in the OP																				(1,858	)		76			(1,782	)		(3,564	)		(412	)		(3,976	)
Net loss attributable to redeemable NCI in consolidated VIEs																				—			(3,112	)		(3,112	)		—			(4,303	)		(4,303	)
Net loss attributable to NCI in consolidated VIEs		—			(1,191	)		(1,191	)		—			(1,191	)		(1,191	)		—			(113	)		(113	)		—			(113	)		(113	)

The three months ended ~~June~~September 30, 2022 as compared to the three months ended ~~June~~September 30, 2021

The following table reconciles our calculations of VineBrook FFO, Core FFO and AFFO to VineBrook net loss, which is reconciled to consolidated net loss above, the most directly comparable GAAP financial measure, for the three months ended ~~June~~September 30, 2022 and 2021 (in thousands, except per share amounts):

	For the Three Months Ended June 30,												For the Three Months Ended September 30,
	2022			2021			$ Change			% Change			2022			2021			$ Change			% Change
Net loss attributable to common stockholders	$	(9,580	)	$	(3,748	)	$	(5,832	)		155.6	%	$	(10,821	)	$	(6,182	)	$	(4,639	)		75.0	%
Net loss attributable to NCI in the OP		(1,283	)		(466	)		(817	)		175.3	%
Net loss attributable to redeemable NCI in the OP														(1,858	)		(823	)		(1,035	)		125.8	%
Depreciation and amortization		23,412			12,507			10,905			87.2	%		23,641			14,881			8,760			58.9	%
(Loss)/gain on sales of real estate		(100	)		123			(223	)		-181.3	%
Loss on sales of real estate														224			175			49			28.0	%
FFO		12,449			8,416			4,033			47.9	%		11,186			8,051			3,135			38.9	%

FFO per share - basic	$	0.43		$	0.51		$	(0.08	)		-15.7	%	$	0.39		$	0.39		$	—			0.0	%
FFO per share - diluted	$	0.42		$	0.50		$	(0.08	)		-16.0	%	$	0.38		$	0.38		$	—			0.0	%

Casualty loss, net of insurance proceeds		53			93			(40	)		-43.0	%
Casualty gain, net of insurance proceeds														(84	)		(151	)		67			-44.4	%
Amortization of deferred financing costs		1,793			1,083			710			65.6	%		2,136			1,077			1,059			98.3	%
Loss on extinguishment of debt		1,001			—			1,001			100.0	%		2,468			—			2,468			100.0	%
Change in fair value of interest rate derivatives included in interest expense														(7,694	)		—			(7,694	)		-100.0	%
Equity-based compensation expense		1,617			1,144			473			41.3	%		1,632			1,310			322			24.6	%
Core FFO		16,913			10,736			6,177			57.5	%		9,644			10,287			(643	)		-6.3	%

Core FFO per share - basic	$	0.58		$	0.65		$	(0.07	)		-10.8	%	$	0.33		$	0.49		$	(0.16	)		-32.7	%
Core FFO per share - diluted	$	0.57		$	0.64		$	(0.07	)		-10.9	%	$	0.33		$	0.48		$	(0.15	)		-31.3	%

Recurring capital expenditures		(2,777	)		(1,456	)		(1,321	)		90.7	%		(3,201	)		(1,682	)		(1,519	)		90.3	%
AFFO		14,136			9,280			4,856			52.3	%		6,443			8,605			(2,162	)		-25.1	%

AFFO per share - basic	$	0.49		$	0.57		$	(0.08	)		-14.0	%	$	0.22		$	0.41		$	(0.19	)		-46.3	%
AFFO per share - diluted	$	0.48		$	0.55		$	(0.07	)		-12.7	%	$	0.22		$	0.40		$	(0.18	)		-45.0	%

Weighted average shares outstanding - basic		29,092			16,401									29,039			20,849
Weighted average shares outstanding - diluted ⁽¹⁾		29,578			16,861									29,499			21,365

Dividends declared per share	$	0.5301		$	0.5301								$	0.5301		$	0.5301

FFO Coverage - diluted ⁽²⁾	0.79x			0.94x									0.72x			0.71x
Core FFO Coverage - diluted ⁽²⁾	1.08x			1.20x									0.62x			0.91x
AFFO Coverage - diluted ⁽²⁾	0.91x			1.04x									0.42x			0.76x

FFO was ~~$12.4~~$11.2 million for the three months ended ~~June~~September 30, 2022 compared to ~~$8.4~~$8.1 million for the three months ended ~~June~~September 30, 2021, which was an increase of approximately ~~$4.0~~$3.1 million. The change in our FFO between the periods primarily relates to an increase in VineBrook rental income of ~~$19.1~~$22.1 million, partially offset by increases in VineBrook total property operating expenses of ~~$11.3~~$8.7 million, VineBrook advisory fees of $2.0 million, VineBrook property general and administrative expenses of $2.4 million, VineBrook interest expense of $3.5 million and VineBrook ~~interest expense~~loss on extinguishment of debt of $2.5 million. The changes in diluted Core FFO per share ~~AFFO per share~~ and ~~Core FFO~~AFFO per share were primarily related to ~~an 75.4%~~a 38.0% increase in the diluted weighted average shares outstanding as of ~~June~~September 30, 2022 compared to ~~June~~September 30, 2021 as a result of significant equity raise activity. The entirety of the proceeds from these equity issuances have not been deployed immediately into the acquisition of cash flow yielding homes as a portion of the homes purchased during the period are currently in rehabilitation. The increase in the weighted average shares outstanding in the current period without a significant and immediate corresponding increase in Core FFO and AFFO resulted in the period over period decline. Also, the weighted average interest rate of debt increased from 2.4715% as of September 30, 2021 to 4.8865% as of September 30, 2022 for the VineBrook reportable segment, which has contributed to the decline in our Core FFO and AFFO per share results. On a longer time horizon, these irregularities are expected to diminish and we expect our results to normalize and comparatively improve on a per share basis as a larger amount of the acquired homes become stabilized, resulting in increases in diluted Core FFO per share and AFFO per share. Additionally, the Company has entered into eight additional interest rate derivative agreements in 2022 with a combined notional amount of $950.0 million in order to partially offset the impact of increasing interest rates.

Core FFO was $9.6 million for the three months ended September 30, 2022 compared to $10.3 million for the three months ended September 30, 2021, which was a decrease of approximately $0.7 million. The change in our Core FFO between the periods primarily relates to an increase in VineBrook interest expense and the change in fair value of interest rate derivatives included in VineBrook interest expense, which is subtracted to arrive at Core FFO given it is a non-cash item.

AFFO was $6.4 million for the three months ended September 30, 2022 compared to $8.6 million for the three months ended September 30, 2021, which was a decrease of approximately $2.2 million. The change in our AFFO between the periods primarily relates to a decrease in Core FFO and an increase in VineBrook recurring capital expenditures of $1.5 million.

The nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021

The following table reconciles our calculations of VineBrook FFO, Core FFO and AFFO to VineBrook net loss, which is reconciled to consolidated net loss above, the most directly comparable GAAP financial measure, for the nine months ended September 30, 2022 and 2021 (in thousands, except per share amounts):

FFO was $34.6 million for the nine months ended September 30, 2022 compared to $22.2 million for the nine months ended September 30, 2021, which was an increase of approximately $12.4 million. The change in our FFO between the periods primarily relates to an increase in VineBrook rental income of $62.0 million, partially offset by increases in VineBrook total property operating expenses of $25.7 million, VineBrook advisory fees of $5.6 million, VineBrook corporate general and administrative expenses of $1.9 million, VineBrook property general and administrative expenses of $6.2 million and VineBrook interest expense of $10.4 million. The changes in diluted FFO per share, Core FFO per share and AFFO per share were primarily related to an 64.6% increase in the diluted weighted average shares outstanding as of September 30, 2022 compared to September 30, 2021 as a result of significant equity raise activity. The entirety of the proceeds from these equity issuances have not been deployed immediately into the acquisition of cash flow yielding homes as a portion of the homes purchased during the period are currently in rehabilitation. This significant increase in the weighted average shares outstanding in the current period without a significant and immediate corresponding increase in FFO ~~results~~resulted in the period over period decline. Also, the ~~increased~~ weighted average interest rate of ~~our~~ debt increased from 2.4715% as of September 30, 2021 to 4.8865% as of September 30, 2022 for the VineBrook reportable segment, which has contributed to ~~this~~the decline in our FFO per share results. On a longer time horizon, these irregularities are expected to diminish and we expect our results to normalize and comparatively improve on a per share basis as a larger amount of the acquired homes become stabilized, resulting in increases in diluted FFO per share, Core FFO per share and AFFO per share. Additionally, the Company has entered into eight additional interest rate derivative agreements in 2022 with a combined notional amount of $950.0 million in order to partially offset the impact of increasing interest rates.

Core FFO was ~~$16.9~~$38.5 million for the ~~three~~nine months ended ~~June~~September 30, 2022 compared to ~~$10.7~~$28.3 million for the ~~three~~nine months ended ~~June~~September 30, 2021, which was an increase of approximately ~~$6.2~~$10.2 million. The change in our Core FFO between the periods primarily relates to an increase in FFO ~~and increases~~partially offset by the change in ~~VineBrook amortization of deferred financing costs of $0.7 million, VineBrook loss on extinguishment of debt of $1.0 million and VineBrook equity-based compensation~~fair value in interest rate derivatives included in interest expense, ~~of $0.5 million.~~which is subtracted to arrive at Core FFO given it is a non-cash item.

AFFO was ~~$14.1~~$30.1 million for the ~~three~~nine months ended ~~June~~September 30, 2022 compared to ~~$9.3~~$24.3 million for the ~~three~~nine months ended ~~June~~September 30, 2021, which was an increase of approximately ~~$4.8~~$5.8 million. The change in our AFFO between the periods primarily relates to an increase in Core FFO and an increase in VineBrook recurring capital expenditures of ~~$1.3 million.~~

~~The six months ended June 30, 2022 as compared to the six months ended June 30, 2021~~

The following table reconciles our calculations of VineBrook FFO, Core FFO and AFFO to VineBrook net loss, which is reconciled to consolidated net loss above, the most directly comparable GAAP financial measure, for the six months ended June 30, 2022 and 2021 (in thousands, except per share amounts):

FFO was $23.4 million for the six months ended June 30, 2022 compared to $14.2 million for the six months ended June 30, 2021, which was an increase of approximately $9.2 million. The change in our FFO between the periods primarily relates to an increase in VineBrook rental income of $39.9 million, partially offset by increases in VineBrook total property operating expenses of $20.8 million, VineBrook interest expense of $7.0 million and VineBrook advisory fees of $3.6 million. The changes in diluted FFO per share, AFFO per share and Core FFO per share were primarily related to an 83.0% increase in weighted average shares outstanding as of June 30, 2022 compared to June 30, 2021 as a result of significant equity raise activity. The entirety of the proceeds from these equity issuances have not been deployed immediately into the acquisition of cash flow yielding homes as a portion of the homes purchased during the period are currently in rehabilitation. This significant increase in the weighted average shares outstanding in the current period without a significant and immediate corresponding increase in FFO results in the period over period decline. Also, the increased weighted average interest rate of our debt has contributed to this decline in our FFO per share results. On a longer time horizon, these irregularities are expected to diminish and we expect our results to normalize and comparatively improve on a per share basis as a larger amount of the acquired homes become stabilized, resulting in increases in diluted FFO per share, Core FFO per share and AFFO per share.

Core FFO was $30.9 million for the six months ended June 30, 2022 compared to $18.0 million for the six months ended June 30, 2021, which was an increase of approximately $12.9 million. The change in our Core FFO between the periods primarily relates to an increase in FFO and increases in VineBrook amortization of deferred financing costs of $1.7 million, VineBrook loss on extinguishment of debt of $1.0 million and VineBrook equity-based compensation expense of $1.0 million.

AFFO was $25.7 million for the six months ended June 30, 2022 compared to $15.7 million for the six months ended June 30, 2021, which was an increase of approximately $10.0 million. The change in our AFFO between the periods primarily relates to an increase in Core FFO and an increase in VineBrook recurring capital expenditures of $2.9$4.5 million.

The sale price of the Shares sold in the Private Offering as well as the sale price of OP Units was equal to the most recent NAV per share in effect at the time a subscription agreement or funds ~~are~~were received, plus applicable fees and commissions. The purchase price at which Shares may be repurchased in accordance with the terms of the Share Repurchase Plan (defined below) is generally based on the most recent NAV per share in effect at the time of repurchase, and Shares or OP Units issued under the applicable DRIP generally reflect a 3% discount to the then-current NAV per share.

Effective for valuations beginning on July 31, 2021, the Company implemented an amended and restated Valuation Methodology as approved by our Board. Under the Valuation Methodology, Green Street Advisors (“Green Street”) calculates a preliminary NAV by valuing the portfolio in accordance with the Valuation Methodology. Green Street then recommends the preliminary NAV to the Adviser. Based on this recommendation, the Adviser then calculates transaction costs and makes any other adjustments, including costs of internalization, determined necessary to finalize NAV. The finalized NAV is then approved by the pricing committee of the Board.

On and before March 31, 2020, NAV was determined as of the end of each quarter. Beginning April 30, 2020, NAV was determined as of the end of each month. Effective for NAV determined on and after December 31, 2021, NAV has been determined as of the end of each quarter. NAV per share is calculated on a fully diluted basis. The table below illustrates the changes in NAV since inception:

Date	NAV per share		NAV per share
November 1, 2018	$	25.00	$	25.00
December 31, 2018		28.27		28.27
March 31, 2019		28.75		28.75
June 30, 2019		28.88		28.88
September 30, 2019		29.85		29.85
December 31, 2019		30.58		30.58
March 31, 2020		30.59		30.59
April 30, 2020		30.82		30.82
May 31, 2020		31.08		31.08
June 30, 2020		31.24		31.24
July 31, 2020		31.47		31.47
August 31, 2020		32.91		32.91
September 30, 2020		34.00		34.00
October 31, 2020		34.18		34.18
November 30, 2020		34.38		34.38
December 31, 2020		36.56		36.56
January 31, 2021		36.56		36.56
February 28, 2021		36.68		36.68
March 31, 2021		36.82		36.82
April 30, 2021		37.85		37.85
May 31, 2021		38.68		38.68
June 30, 2021		40.82		40.82
July 31, 2021		43.76		43.76
August 31, 2021		46.19		46.19
September 30, 2021		47.90		47.90
October 31, 2021		49.09		49.09
November 30, 2021		51.38		51.38
December 31, 2021		54.14		54.14
March 31, 2022		59.85		59.85
June 30, 2022		62.75		62.75
September 30, 2022				62.97

Subject to certain exceptions, investors that ~~purchase~~purchased Shares through the Private Offering generally paid the Placement Agents in the Private Offering placement fees or commissions, in addition to the NAV sales price. For sales through Placement Agents other than Raymond James, the placement fees or commissions were generally ~~equal~~ between 1% to 5.5% of gross investor equity, subject to certain breakpoints and various terms of each specific Selling Agreement. A placement fee equal to 3% and an advisory fee equal to 2% of gross proceeds invested, which is also in addition to the NAV sales price, was paid to Raymond James for all Shares sold by Raymond James on behalf of the Company in the Private Offering. With the consent of the applicable Placement Agent, some or all of the applicable fees and commissions may behave been waived. Other Selling Agreements may have had specific fees that differ from the Raymond James fees related to selling Shares to their clients. In addition, the Dealer Manager generally received a fee of 0.5% on sales in the Private Offering through Raymond James and 3% on sales through other Placement Agents, a portion of which may be reallowed to those Placement Agents. Placement Agent compensation was subject to a reasonable carve-out for sales of Shares directly by the Company or for sales to employees of our Adviser, Manager and affiliates thereof. For sales through registered investment advisors (“RIAs”), the Dealer Manager received a fee of up to 2% of gross investor equity. With respect to sales through RIAs or Placement Agents other than Raymond James who in each case were first introduced to the Company by Raymond James, Raymond James could receive a participating placement fee equal to 1% of gross investor equity. The Private Offering was terminated on September 14, 2022.

Our short-term liquidity requirements consist primarily of funds necessary to pay for debt maturities, operating expenses and other expenditures directly associated with our homes, including:

We expect to meet our short-term liquidity requirements generally through net cash provided by operations, ~~and~~ existing cash ~~balances.~~balances and debt financing. Additionally, as of ~~June~~September 30, 2022, we had ~~significant~~ access to credit through our credit facilities. The ~~JPM Facility has an additional $185.0 million of capacity and the~~ Warehouse Facility has an additional ~~$450.0~~$5.0 million of capacity.

Our long-term liquidity requirements consist primarily of funds necessary to pay for the costs of acquiring additional homes, renovations and other capital expenditures to improve our homes and scheduled debt payments and distributions. We expect to meet our long-term liquidity requirements through various sources of capital, which may include ~~equity issuances through the Private Offering, other~~ public or private issuances of common equity, preferred equity or debt, draws on our revolving credit facilities, existing working capital, net cash provided by operations, long-term mortgage indebtedness and may include other secured and unsecured borrowings. 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. Additionally, the Company continues to monitor the impact of COVID-19 and its impact on future rent collections, valuation of real estate investments, impact on cash flow and ability to refinance or repay debt. The success of our business strategy will depend, in part, on our ability to access these various capital sources.

As disclosed in Note 16 to our consolidated financial statements, so far in the ~~third~~fourth quarter of 2022 we have acquired ~~555~~432 homes for an aggregate purchase price of approximately ~~$71.2~~$52.9 million. ~~For the remainder of 2022, excluding the purchases disclosed previously,~~In addition, we expect to ~~purchase approximately 3,000 – 6,000 total homes for consideration~~complete the Internalization of ~~approximately $820 million – $1.3 billion. However, there can be no assurance that~~the Manager in the fourth quarter of 2022, which we expect will be ~~able to complete these acquisitions during the remainder~~paid in a mix of ~~the year on terms that are acceptable to us, or at all.~~cash and equity.

Our homes will require periodic capital expenditures and renovation to remain competitive. Also, acquisitions of new homes 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 dividends 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 and acquisitions 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 necessary capital on favorable terms, or at all, our financial condition, liquidity, results of operations, and prospects could be materially and adversely affected.

We believe that our available cash, expected operating cash flows, and potential debt or equity financings will provide sufficient funds for our operations, acquisitions, anticipated scheduled debt service payments and dividend requirements for the twelve-month period following ~~June~~September 30, ~~2022.~~2022, except as would not be expected to have a material adverse effect. We believe that the various sources of long-term capital, which may include ~~equity issuances through the Private Offering, other~~ public or private issuances of common equity, preferred equity or debt, draws on our revolving credit facilities, existing working capital, net cash provided by operations, long-term mortgage indebtedness and other secured and unsecured borrowings will provide sufficient funds for our operations, acquisitions, anticipated scheduled debt service payments and dividend requirements in the ~~long-term.~~long-term, except as would not be expected to have a material adverse effect.

The ~~six~~nine months ended ~~June~~September 30, 2022 as compared to the ~~six~~nine months ended ~~June~~September 30, 2021

The following table presents selected data from our consolidated statements of cash flows for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021 (in thousands):

	For the Six Months Ended June 30,									For the Nine Months Ended September 30,
	2022			2021			$ Change			2022			2021			$ Change
Net cash provided by operating activities	$	45,252		$	24,607		$	20,645		$	83,714		$	45,175		$	38,539
Net cash used in investing activities		(892,924	)		(676,303	)		(216,621	)		(1,587,630	)		(808,656	)		(778,974	)
Net cash provided by financing activities		876,028			679,016			197,012			1,552,166			799,663			752,503
Change in cash and restricted cash		28,356			27,320			1,036			48,250			36,182			12,068
Cash and restricted cash, beginning of period		74,997			37,096			37,901			74,997			37,096			37,901
Cash and restricted cash, end of period	$	103,353		$	64,416		$	38,937		$	123,247		$	73,278		$	49,969

Cash flows from operating activities. During the ~~six~~nine months ended ~~June~~September 30, 2022, net cash provided by operating activities was ~~$45.3~~$83.7 million compared to net cash provided by operating activities of ~~$24.6~~$45.2 million for the ~~six~~nine months ended ~~June~~September 30, 2021. The change in cash flows from operating activities was mainly due to an increase in net operating income during the period.

Cash flows from investing activities. During the ~~six~~nine months ended ~~June~~September 30, 2022, net cash used in investing activities was ~~$892.9 million~~$1.6 billion compared to net cash used in investing activities of ~~$676.3~~$808.7 million for the ~~six~~nine months ended ~~June~~September 30, 2021. The change in cash flows from investing activities was mainly due to the acquisition of NexPoint Homes through VIE consolidation, net of cash received, during the period, as well as an increase in acquisitions of real estate investments and an increase in additions to real estate investments during the period.

Cash flows from financing activities. During the ~~six~~nine months ended ~~June~~September 30, 2022, net cash provided by financing activities was ~~$876.0 million~~$1.6 billion compared to net cash provided by financing activities of ~~$679.0~~$799.7 million for the ~~six~~nine months ended ~~June~~September 30, 2021. The change in cash flows from financing activities was mainly due to an increase in proceeds received from notes payable, an increase in proceeds received from credit facilities and an increase in contributions from redeemable noncontrolling interests in consolidated VIEs, which was partially offset by a decrease in proceeds received from ~~notes payable and a decrease in proceeds received from~~ issuance of ~~redeemable Series~~Class A ~~preferred~~common stock during the period.

As of ~~June~~September 30, 2022, the VineBrook reportable segment had aggregate debt outstanding to third parties of approximately ~~$1.5~~$1.9 billion at a weighted average interest rate of ~~3.6611%~~4.8865% and an adjusted weighted average interest rate of ~~3.9097%~~4.1611%. For purposes of calculating the adjusted weighted average interest rate of our debt outstanding, we have included the weighted average fixed rate of ~~2.0217%~~1.9508%, representing a weighted average fixed rate for one-month LIBOR, daily SOFR and ~~daily~~one-month term SOFR, on our combined ~~$870.0 million~~$1.3 billion notional amount of interest rate swap agreements and interest rate cap agreement, which effectively fixes the interest rate on ~~$870.0 million~~$1.3 billion of our floating rate debt. See Notes 7 and 8 to our consolidated financial statements for additional information.

The following table sets forth a summary of our mortgage loan indebtedness for the VineBrook reportable segment as of ~~June~~September 30, 2022:

		Outstanding Principal as of								Outstanding Principal as of
	Type	June 30, 2022		Interest Rate (1)			Maturity		Type	September 30, 2022		Interest Rate (1)			Maturity
Initial Mortgage	Floating	$	241,222		3.34	%	12/1/2025		Floating	$	240,885		4.69	%	12/1/2025
Warehouse Facility	Floating		750,000		3.49	%	11/3/2024	(2)	Floating		1,195,000		4.84	%	11/3/2024	(2)
JPM Facility	Floating		315,000		4.35	%	3/1/2023		Floating		320,000		5.83	%	3/1/2023
MetLife Note	Fixed		124,554		3.25	%	1/31/2026		Fixed		124,462		3.25	%	1/31/2026
TrueLane Mortgage	Fixed		10,312		5.35	%	2/1/2028		Fixed		10,168		5.35	%	2/1/2028
CoreVest Note	Fixed		2,319		6.12	%	1/9/2023
Crestcore II Note	Fixed		4,691		5.12	%	7/9/2029		Fixed		4,671		5.12	%	7/9/2029
Crestcore IV Note	Fixed		4,170		5.12	%	7/9/2029		Fixed		4,153		5.12	%	7/9/2029
Hatchway Broadmoor Mortgage	Fixed		4,609		5.35	%	2/1/2029
Total Outstanding Principal	Total Outstanding Principal	$	1,456,877						Total Outstanding Principal	$	1,899,339

In addition to the mortgage loan indebtedness for the VineBrook reportable segment presented above and described below, the NexPoint Homes reportable segment had ~~$321.6~~$567.4 million of debt outstanding at ~~June~~September 30, ~~2022.~~2022 (excluding amounts owed to the OP by NexPoint Homes, as these are eliminated in consolidation). See Notes 5, 7 and 13 to the unaudited consolidated financial statements.

On November 1, 2018, the OP, as guarantor, and some of the SPEs, as borrowers, entered into the $241.4 million Initial Mortgage with KeyBank. The Initial Mortgage is secured by certain properties in the Initial Portfolio and equity pledges of the related SPEs that own those properties and bears interest at a variable rate equal to one-month LIBOR plus 1.55%. The Initial Mortgage is interest-only for the first 48 months of the term and principal amortizes at a rate of 30 years over the last 36 months of the term. The Initial Mortgage matures and is due in full on December 1, 2025.

On September 20, 2019, the OP, as guarantor, and VB One, LLC, as borrower, entered into a credit facility (the “Warehouse Facility”) with KeyBank. The Warehouse Facility is secured by an equity pledge in certain assets of VB One, LLC and an equity pledge in the equity of VB One, LLC. On November 3, 2021, the Company, as guarantor, the OP, as parent borrower, and each of (i) VB OP Holdings, LLC and (ii) VB One, LLC and certain of its subsidiaries, as subsidiary borrowers, entered into an amended and restated credit agreement to recast the Warehouse Facility, which was subsequently amended on December 9, 2021, April 8, 2022 and May 20, 2022. The amended recast Warehouse Facility is a full-term, interest-only facility with an initial 36-month term ending November 3, 2024, has one 12-month extension option, and bears interest at a variable rate equal to the forward-looking term rate based on SOFR for the applicable interest period (one-month term SOFR), or daily SOFR for the applicable interest period, plus a margin of 0.1% plus an applicable rate ranging from 1.6% to 2.45% depending on the Company’s consolidated total leverage ratio. Under the amended recast Warehouse Facility, the OP has the right to increase the total commitments available for borrowing, which may take the form of an increase in revolving commitments or one or more tranches of term loan commitments, up to $1.2 billion. On September 13, 2022, the Company received increased commitments of $200.0 million on the Warehouse Facility, incurring $3.3 million of deferred financing costs, and then drew $200.0 million on the Warehouse Facility. As of ~~June~~September 30, 2022, ~~$750.0 million~~$1.2 billion was drawn on the Warehouse Facility. The balance of the Warehouse Facility, net of unamortized deferred financing costs, is included in credit facilities on the consolidated balance sheets.

On September 30, 2019, in connection with the TrueLane Portfolio acquisition, the OP, as guarantor, assumed the approximately $10.8 million TrueLane Mortgage with Berkadia Commercial Mortgage LLC as a result of the OP’s acquisition of True FM 2017-1, LLC. The TrueLane Mortgage is secured by certain of our properties and equity pledges in the entity that owns those properties and bears interest at a fixed rate equal to 5.35%. The TrueLane Mortgage matures and is due in full on February 1, 2028 and requires monthly principal and interest payments.

On December 28, 2020, in connection with the acquisition of a 45-home portfolio, the OP provided a non-recourse carveout guaranty related to the approximately $2.4 million CoreVest Note assumed by a subsidiary of the OP as a result of the OP’s acquisition of SMP Homes 5B, LLC. The CoreVest Note is secured by the properties in SMP Homes 5B, LLC and an equity pledge in SMP Homes 5B, LLC and bears interest at a fixed rate equal to 6.12%. The CoreVest Note matures and is due in full on January 9, 2023 and requires monthly principal and interest payments. On July 11, 2022, the OP repaid the full balance of the CoreVest Note, which extinguished the CoreVest Note.

On January 6, 2021, the Company, as guarantor, and VB Two, LLC, as borrower, entered into a $125.0 million note with Metropolitan Life Insurance (the “MetLife Note”). The MetLife Note is secured by equity pledges in VB Two, LLC and its wholly owned subsidiaries and bears interest at a fixed rate of 3.25%. The MetLife Note is interest-only and matures and is due in full on January 31, 2026. The net proceeds received were used to fund a portion of the purchase price of the Conrex I Portfolio.

On March 1, 2021, the Company entered into a non-recourse carveout guaranty and certain wholly owned subsidiaries of VB Three, LLC, as borrowers, entered into a $500.0 million credit agreement with JP Morgan (the “JPM Facility”). The JPM Facility is secured by equity pledges in VB Three, LLC and its wholly owned subsidiaries and bears interest at a variable rate equal to one-month LIBOR plus 2.75%. The JPM Facility is interest-only and matures and is due in full on March 1, 2023. On March 10, 2022, the Company entered into Amendment No. 1 to the JPM Facility, wherein each advance under the JPM Facility will bear interest at a daily SOFR plus 2.85%. As of ~~June~~September 30, 2022, the outstanding balance of the JPM Facility was ~~$315.0~~$320.0 million and had ~~$185.0~~$180.0 million of available capacity. The balance of the JPM Facility, net of unamortized deferred financing costs, is included in credit facilities on the consolidated balance sheets. The JPM Facility currently matures on March 1, 2023. Management is in the process of extending or refinancing the facility with the existing lender. If the Company is not able to complete an extension or refinancing with the existing lender, management believes it has sufficient access to other potential sources of capital, including through raising equity, securing new debt or selling a portion of the portfolio to repay the debt upon maturity.

On January 13, 2022, in connection with the acquisition of a 98-home portfolio, the OP, ~~(as guarantor)~~as guarantor, assumed an approximately $4.6 million Freddie Mac mortgage loan (the “Hatchway Broadmoor Mortgage”) with Arbor Agency Lending, LLC as a result of the OP’s acquisition of Hatchway Broadmoor, LLC. The Hatchway Broadmoor Mortgage is secured by properties in Hatchway Broadmoor, LLC and an equity pledge in Hatchway Broadmoor, LLC and bears interest at a fixed rate equal to 5.35%. The Hatchway Broadmoor Mortgage matures and is due in full on February 1, 2029 and requires monthly principal and interest payments. ~~The~~On August 19, 2022, the OP repaid the full balance of the Hatchway Broadmoor Mortgage, ~~net~~which extinguished the Hatchway Broadmoor Mortgage.

On February 8, 2022, in connection with the acquisition of the Prager Portfolio, the Company entered into a bridge credit agreement through the OP with KeyBank National Association, and borrowed $150.0 million (the “Bridge Facility”). On April 8, 2022, the Company repaid the outstanding principal balance on the Bridge Facility, which extinguished the Bridge Facility. In connection with the extinguishment of the Bridge Facility, the Company incurred a loss on extinguishment of debt of approximately $1.0 million, which is presented on the consolidated statements of operations and comprehensive income (loss).

On March 18, 2022, in connection with the acquisition of an 88-home portfolio, the OP provided a non-recourse carveout guaranty related to an approximately $4.7 million mortgage loan assumed by a subsidiary of the OP (the “Crestcore II Note”) with CoreVest American Finance Lender LLC as a result of the OP’s acquisition of Crestcore II, LLC. The Crestcore II Note is secured by the properties in Crestcore II, LLC and an equity pledge in Crestcore II, LLC and bears interest at a fixed rate equal to 5.12%. The Crestcore II Note matures and is due in full on July 9, 2029 and requires monthly principal and interest payments. The balance of the Crestcore II Note, net of unamortized deferred financing costs, is included in notes payable on the consolidated balance sheets.

On March 18, 2022, in connection with the acquisition of an 82-home portfolio, the OP provided a non-recourse carveout guaranty related to an approximately $4.2 million mortgage loan assumed by a subsidiary of the OP (the “Crestcore IV Note”) with CoreVest American Finance Lender LLC as a result of the OP’s acquisition of Crestcore IV, LLC. The Crestcore IV Note is secured by the properties in Crestcore IV, LLC and an equity pledge in Crestcore IV, LLC and bears interest at a fixed rate equal to 5.12%. The Crestcore IV Note matures and is due in full on July 9, 2029 and requires monthly principal and interest payments. The balance of the Crestcore IV Note, net of unamortized deferred financing costs, is included in notes payable on the consolidated balance sheets.

On August 25, 2022, in connection with the acquisition of the Global Atlantic Portfolio, the Company entered into a bridge credit agreement through the OP with KeyBank National Association, and borrowed $165.0 million (the “Bridge Facility II”). The Bridge Facility II accrued interest at one-month term SOFR plus a margin of 2.6%. On September 2, 2022, the Company drew an additional $35.0 million on the Bridge Facility II. On September 13, 2022, the Company repaid the outstanding principal balance on the Bridge Facility II, which extinguished the Bridge Facility II. In connection with the extinguishment of the Bridge Facility II, the Company incurred a loss on extinguishment of debt of approximately $1.8 million, which is presented on the consolidated statements of operations and comprehensive income (loss).

As of ~~June~~September 30, 2022, the Company was in compliance with the debt covenants in each of its debt agreements.

We intend to invest in additional homes 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 Shares, Preferred Shares or other securities or 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 Shares, Preferred Shares or other debt or equity securities, on terms that are acceptable to us or at all.

Furthermore, following the completion of our renovations 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.

For full descriptions of the debt arrangements not included in this Form 10-Q, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Debt, Derivatives and Hedging Activity” in our Annual Report.

We have entered into and expect to continue to enter into interest rate swap and cap agreements with various third parties to fix or cap the floating interest rates on a majority of our floating rate mortgage debt outstanding. The interest rate swap agreements generally have a term of approximately three to six years and effectively establish a fixed interest rate on debt on the underlying notional amounts. In order to fix a portion of, and mitigate the risk associated with, our floating rate indebtedness (without incurring substantial prepayment penalties or defeasance costs typically associated with fixed rate indebtedness when repaid early or refinanced), we, through the OP, have entered into 1112 interest rate swap transactions with KeyBank and Mizuho with a combined notional amount of ~~$870.0~~$970.0 million. As of ~~June~~September 30, 2022, the interest rate swaps we have entered into effectively replace the floating interest rate (one-month LIBOR or daily SOFR) with respect to ~~$870.0~~$970.0 million of our floating rate mortgage debt outstanding with a weighted average fixed rate of ~~2.0217%~~2.0902%. As of ~~June~~September 30, 2022, interest rate swap agreements effectively covered ~~$870.0~~$970.0 million, or ~~66.6%~~55.2%, of our ~~$1.3~~$1.8 billion of floating rate debt ~~outstanding.~~outstanding for the VineBrook reportable segment. During the term of these interest rate swap agreements, we are required to make monthly fixed rate payments of ~~2.0217%~~2.0902%, on a weighted average basis, on the notional amounts, while KeyBank and Mizuho are obligated to make monthly floating rate payments based on one-month LIBOR or daily SOFR to us referencing the same notional amounts. For purposes of hedge accounting under ASC 815, Derivatives and Hedging, we have designated these interest rate swaps as cash flow hedges of interest rate risk. See Notes 7 and 8 to our consolidated financial statements for additional information.

On April 13, 2022, we paid of a premium of approximately $12.7 million and entered into an interest rate cap transaction with Goldman Sachs Bank USA with a notional amount of $300.0 million. The interest rate cap effectively caps one-month term SOFR on $300.0 million of our floating rate debt at 1.50%. The interest rate cap expires on November 1, 2025.

On March 5, 2021, the Financial Conduct Authority of the U.K. (the “FCA”) announced that one-month LIBOR will either cease to be provided by any administrator or no longer be representative immediately after June 30, 2023. This announcement has several implications, including setting the spread that may be used to convert the index rates in our debt and hedging contracts from LIBOR to an alternative rate, such as the Secured Overnight Financing Rate.

The Company anticipates that one-month LIBOR will continue to be available at least until June 30, 2023. Any changes adopted by the FCA or other governing bodies in the method used for determining one-month LIBOR may result in a sudden or prolonged increase or decrease in reported one-month LIBOR. If that were to occur, our interest payments could change. In addition, uncertainty about the extent and manner of future changes may result in interest rates and/or payments that are higher or lower than if one-month LIBOR were to remain available in its current form.

The Company has contracts that are indexed to one-month LIBOR and it is monitoring and evaluating the related risks, which include interest on loans and amounts received/paid on derivative instruments. These risks arise in connection with transitioning contracts to an alternative rate, including any resulting value transfer that may occur. Transitions and alternative rates are likely to vary by contract. The value of loans, securities, or derivative instruments tied to one-month LIBOR, as well as interest rates on our current or future indebtedness, may also be impacted if one-month LIBOR is unrepresentative or discontinued. For some instruments the method of transitioning to an alternative reference rate may be challenging, especially if we cannot agree with the respective counterparty about how to make the transition or upon which alternative rate is appropriate.

While we expect one-month LIBOR to be available in substantially its current form until at least June 30, 2023, it is possible that one-month LIBOR will become unavailable prior to that point. This could result, for example, if a sufficient number of banks decline to make submissions to the LIBOR administrator. In that case, the risks associated with the transition to an alternative reference rate will be accelerated and magnified.

Alternative rates and other market changes related to the replacement of one-month LIBOR, including the introduction of financial products and changes in market practices, may lead to risk modeling and valuation challenges, such as adjusting interest rate accrual calculations and building a term structure for an alternative rate.

The introduction of an alternative rate also may create additional basis risk and increased volatility as alternative rates are phased in and utilized in parallel with one-month LIBOR.

Adjustments to systems and mathematical models to properly process and account for alternative rates will be required, which may strain the model risk management and information technology functions and result in substantial incremental costs for the Company.

We have elected to be taxed as a REIT under Sections 856 through 860 of the Code and expect to continue to qualify as a REIT. 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,” as defined by the Code, to our stockholders. Taxable income from certain non-REIT activities is managed through a TRS and is subject to applicable U.S. federal, state, and local income and margin taxes. We had no significant taxes associated with our TRS for the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021. 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. NexPoint Homes has elected to be taxed as a REIT under Sections 856 through 860 of the Code and expects to continue to qualify as a REIT.

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. 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 to stockholders. As a REIT, we will be subject to U.S. 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.

If we fail to qualify as a REIT in any taxable year, we will be subject to U.S. federal income tax on our taxable income at regular corporate income tax rates, and dividends paid to our stockholders 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 and net cash available for distribution to stockholders. 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.

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 percent 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. 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.

We had no material unrecognized tax benefit or expense, accrued interest or penalties as of ~~June~~September 30, 2022. We and our subsidiaries are subject to U.S. federal income tax as well as income tax of various state and local jurisdictions. The 2021, 2020 and 2019 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).

We intend to make regular quarterly dividend payments to holders of our 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 dividends paid and excluding net capital gains. As a REIT, we will be subject to U.S. 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 dividend payments of all or substantially all of our taxable income to holders of our Shares out of assets legally available for this purpose, if and to the extent authorized by our Board. Before we make any dividend 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 dividends or we may make a portion of the required dividend in the form of a taxable distribution of stock or debt securities.

We will make dividend payments based on our estimate of taxable earnings per share of common stock, but not earnings calculated pursuant to GAAP. Our dividends 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, and non-deductible general and administrative expenses. Our dividends per share may be substantially different than our taxable earnings and GAAP earnings per share.

The real estate market has not been affected significantly by inflation in the past several years due to increases in rents nationwide. The majority of our lease terms are for a period of one year or less and reset to market if renewed. The majority of our leases also contain protection provisions applicable to reimbursement billings for utilities. Due to the short-term nature of our leases, we do not believe our results will be materially affected.

Inflation may also affect the overall cost of debt, as the implied cost of capital increases. The Federal Reserve, in response to or in anticipation of continued inflation concerns, could continue to raise interest rates. We intend to mitigate these risks through long-term fixed interest rate loans and interest rate ~~hedges,~~derivatives, which to date have included interest rate cap and interest rate swap agreements.

We believe that our business and related operating results will be impacted by seasonal factors throughout the year. We experience higher levels of tenant move-outs and move-ins during the late spring and summer months, which impacts both our rental revenues and related turnover costs. Furthermore, our property operating costs are seasonally impacted in certain markets for expenses such as repairs to heating, ventilation and air conditioning systems, turn costs and landscaping expenses during the summer season. Additionally, our SFR properties are at greater risk in certain markets for adverse weather conditions such as extreme cold weather in winter months and hurricanes in late summer months.

As of ~~June~~September 30, 2022 and December 31, 2021, we had no 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.

Management’s discussion and analysis of financial condition and results of operations is based upon our 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. A discussion of recently issued accounting pronouncements and our significant accounting policies, including further discussion of the accounting policies described below, can be found in Note 2 “Summary of Significant Accounting Policies” to our consolidated financial statements included in this report.

Upon acquisition, we evaluate our acquired SFR properties for purposes of determining whether a transaction should be accounted for as an asset acquisition or business combination. Since substantially all of the fair value of our acquired properties is concentrated in a single identifiable asset or group of similar identifiable assets and the acquisitions do not include a substantive process, our purchases of homes or portfolios of homes qualify as asset acquisitions. Accordingly, upon acquisition of a property, the purchase price and related acquisition costs (the “Total Consideration”) are allocated to land, buildings, improvements, fixtures, and intangible lease assets based upon their relative fair values.

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, Fair Value Measurement (“ASC 820”) (see Note 8 to our consolidated financial statements), is based on an independent third-party valuation firm’s estimate of the fair value of the tangible and intangible assets and liabilities acquired, or management's internal analysis based on market knowledge obtained from historical transactions. The valuation methodology utilizes market comparable information, depreciated replacement cost and other estimates in allocating value to the tangible assets. The allocation of the Total Consideration to intangible lease assets represents the value associated with the in-place leases, as one month’s worth of effective gross income (rental revenue, less credit loss allowance, plus other income) as the average downtime of the assets in the portfolio is approximately one month and the assets in the portfolio are leased on a gross rental structure. 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 or accreted as interest expense over the life of the debt assumed.

The allocation of Total Consideration to the various components of properties acquired during the year can have an effect on our net loss due to the useful depreciable and amortizable lives applicable to each component and the recognition of the related depreciation and amortization expense. For example, if a greater portion of the Total Consideration is allocated to land, which does not depreciate, our net income would be higher. Typically, we allocate between 10% to 30% of the Total Consideration to land.

Real estate assets, including land, buildings, improvements, fixtures, and intangible lease assets are stated at historical cost less accumulated depreciation and amortization. Costs incurred in making repairs and maintaining real estate assets are expensed as incurred. Expenditures for improvements, renovations, and replacements are capitalized at cost. The Company also incurs costs to prepare acquired properties for rental. These costs are capitalized to the cost of the property during the period the property is undergoing activities to prepare it for its intended use. We capitalize interest costs as a cost of the property only during the period for which activities necessary to prepare an asset for its intended use are ongoing, provided that expenditures for the asset have been made and interest costs have been incurred. Upon completion of the renovation of our properties, all costs of operations, including repairs and maintenance, are expensed as incurred, unless the renovation meets the Company’s capitalization criteria.

Real estate assets are reviewed for impairment quarterly or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Significant indicators of impairment may include, but are not limited to, declines in home values, rental rates or occupancy percentages, as well as significant changes in the economy. In such cases, the Company will evaluate the recoverability of the assets by comparing the estimated future cash flows expected to result from the use and eventual disposition of each asset to its carrying amount and provide for impairment if such undiscounted cash flows are insufficient to recover the carrying amount. If impaired, the real estate asset will be written down to its estimated fair value. The process whereby we assess our SFR homes for impairment requires significant judgment and assessment of factors that are, at times, subject to significant uncertainty. No significant impairments on operating properties were recorded during the years ended December 31, 2021 and 2020 or the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021.

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act (the “JOBS Act”) and we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

The JOBS Act permits an emerging growth company such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We have elected to take advantage of this extended transition period. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates for such new or revised standards. We may elect to comply with public company effective dates at any time, and such election would be irrevocable pursuant to Section 107(b) of the JOBS Act.

We could remain an “emerging growth company” until the earliest of (1) the end of the fiscal year following the fifth anniversary of the date of the first sale of shares of our common stock pursuant to an effective registration statement, (2) the last day of the fiscal year in which our annual gross revenues exceed $1.07 billion, (3) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (4) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.

We are also 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. We may be a smaller reporting company even after we are no longer an “emerging growth company.”

As required by Rule 13a-15(b) and Rule 15d-15(b) under the Exchange Act, our management, including our Interim President and Chief Financial Officer, evaluated, as of ~~June~~September 30, 2022, 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 Interim President and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of ~~June~~September 30, 2022, 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 Interim 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.

There has been no change in internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15-d-15(f) under the Exchange Act) that occurred during the quarter ended ~~June~~September 30, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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.

~~There~~Except as noted below, there have been no material changes to the risk factors previously disclosed under Item 1A, “Risk Factors,” of our Annual Report.

Macroeconomic trends including inflation and rising interest rates may adversely affect our financial condition and results of operations.

Macroeconomic trends, including increases in inflation and rising interest rates, may adversely impact our business, financial condition and results of operations. Inflation in the United States has recently accelerated and is currently expected to continue at an elevated level in the near-term. Rising inflation could have an adverse impact on our operating expenses and our floating rate mortgages and credit facilities, as these costs could increase at a rate higher than our rental and other revenue. There is no guarantee we will be able to mitigate the impact of rising inflation. The Federal Reserve has recently started raising interest rates to combat inflation and restore price stability and it is expected that rates will continue to rise throughout the remainder of 2022. In addition, to the extent our exposure to increases in interest rates on any of our debt is not eliminated through interest rate swaps and interest rate protection agreements, such increases will result in higher debt service costs which will adversely affect our cash flows. We cannot assure you 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 following table presents information regarding the sale of Shares in the Continuous Offering and the DRIP that have not been previously disclosed in Current Reports on Form 8-K.

An aggregate of approximately $0.8 million in selling commissions and fees were paid in connection with sales of Shares in the Continuous Offering in the above transactions. No underwriting discount or commission is applicable to sales pursuant to the DRIP.

The Company issued the Shares noted above to accredited investors in reliance upon the exemptions from registration under the Securities Act Securities Act provided by Rule 506(b) under Regulation D promulgated under the Securities Act and Section 4(a)(2) of the Securities Act.

The Company has adopted a share repurchase plan (the “Share Repurchase Plan”) pursuant to which investors may request on a quarterly basis that the Company repurchase all or a portion of their Shares, subject to certain terms and conditions. Under the Share Repurchase Plan, shares will be repurchased at the most recent NAV per share in effect, which will generally be equal to our prior quarter’s or month’s NAV per share. The Share Repurchase Plan began on November 1, 2019. The total amount of aggregate repurchases of Shares is limited to no more than 5% of the Company’s aggregate NAV per calendar quarter. For additional discussion and information, see “Exhibit 4.1. Description of Registrant’s Securities to be Registered—Share Repurchase Plan” in our Annual Report. The table below contains information regarding the repurchases of Shares by the Company pursuant to the Share Repurchase Plan during the three months ended ~~June~~September 30, 2022.

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.

	Page


Cautionary Note Regarding Forward-Looking Statements	ii
Part I
Item 1. Financial Statements
Consolidated Balance Sheets as of ~~June~~September 30, 2022 (unaudited) and December 31, 2021	1
Consolidated Unaudited Statements of Operations and Comprehensive Income (Loss)	2
Consolidated Unaudited Statements of Stockholders' Equity	3
Consolidated Unaudited Statements of Cash Flows	5
Notes to Consolidated Unaudited Financial Statements	6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3. Quantitative and Qualitative Disclosures About Market Risk	5859
Item 4. Controls and Procedures	5859
Part II
Item 1. Legal Proceedings	5960
Item 1A. Risk Factors	5960
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	5960
Item 3. Defaults Upon Senior Securities	5960
Item 4. Mine Safety Disclosures	5960
Item 5. Other Information	5960
Item 6. Exhibits	6061
Signatures	6162

Land	Not depreciated
Buildings		27.5 years
Improvements and other assets		3 - 15 years
Acquired improvements and fixtures		1 - 5 years
Intangible lease assets		6 months

Effective Date	Expiration Date	Counterparty	Index (1)	Notional		Fixed Rate
7/1/2019	7/1/2024	KeyBank	One-Month LIBOR	$	100,000		1.6290	%
9/1/2019	12/21/2025	KeyBank	One-Month LIBOR		100,000		1.4180	%
9/1/2019	12/21/2025	KeyBank	One-Month LIBOR		50,000		1.4190	%
2/3/2020	2/1/2025	KeyBank	One-Month LIBOR		50,000		1.2790	%
3/2/2020	3/3/2025	KeyBank	One-Month LIBOR		20,000		0.9140	%
				$	320,000		1.4309	%	(2)

Quarter Ended	*Shares issued*		*Proceeds*		*DRIP reinvestment*
March 31, 2022		2,907,334	$	149,369	$	6,495
June 30, 2022		682,149		32,079		7,046
Total		3,589,483	$	181,448	$	13,541

Quarter Ended		*DRIP Shares Issued*		*DRIP Dividend*		*Cash Dividend*		*Cash Dividend Accrued on RSUs (1)*		*Total Dividend*
March 31, 2022	��		123,665	$	6,495	$	5,816	$	219	$	12,530
June 30, 2022			120,496		7,046		6,385		262		13,693
Total			244,161	$	13,541	$	12,201	$	481	$	26,223

Market	*State*	*# of Homes*
Memphis	TN, MS		743
Atlanta	GA		741
Saint Louis	MO		308
Pensacola	FL		300
Raeford	NC		250
Kansas City	MO		230
Portales	NM		150
Augusta	GA, SC		67
Jacksonville	FL		53
Total			2,842

Vest Date	*RSUs Vesting*
December 10, 2022		18,425
February 15, 2023		~~22,717~~22,591
February 17, 2023		~~30,412~~30,331
May 11, 2023		~~21,335~~21,217
December 10, 2023		18,426
February 15, 2024		~~22,717~~22,591
February 17, 2024		~~22,100~~22,019
May 11, 2024		~~21,335~~21,217
February 14, 2025		~~22,717~~22,591
February 17, 2025		~~22,100~~22,019
February 17, 2026		~~22,100~~22,019
Upon successful completion of IPO		~~264,610~~263,305
		~~508,994~~506,751

Quarter Ended	*DRIP OP Units Issued*		*OP DRIP Distribution*		*OP Cash Distribution*		*OP Distribution on PI Units*		*Total OP Distribution*
March 31, 2022		8,896	$	467	$	1,477	$	313	$	2,257
June 30, 2022		8,639		501		1,477		313		2,291
Total		17,535	$	968	$	2,954	$	626	$	4,548

Vest Date	*PI Units Vesting*
November 1, 2022		7,200
November 21, 2022		18,425
November 30, 2022		1,470
March 30, 2023		29,831
May 11, 2023		27,478
August 10, 2023		5,570
November 1, 2023		7,200
November 21, 2023		18,425
November 30, 2023		1,470
March 30, 2024		29,831
April 25, 2024		5,171
May 11, 2024		27,478
May 27, 2024		398
November 30, 2024		1,470
March 30, 2025		29,831
April 25, 2025		5,171
May 27, 2025		398
April 25, 2026		5,171
May 27, 2026		398
April 25, 2027		5,171
May 27, 2027		398
Upon successful completion of IPO*		~~229,239~~229,242
		~~429,348~~457,197

	*Amount*
Gross investor equity raised subject to O&O	$	990,671

O&O collected and available for reimbursements	$	6,866
O&O Expenses reimbursed		(6,864	)
O&O available for future reimbursements	$	2

	*As of June 30, 2022*									*As of December 31, 2021*
	*VineBrook*			*NexPoint Homes*			*Total Company*			*VineBrook*			*NexPoint Homes*		*Total Company*
Assets
Gross operating real estate investments	$	2,439,510		$	482,277		$	2,921,787		$	1,726,948		$	0	$	1,726,948
Accumulated depreciation and amortization		(115,208	)		(794	)		(116,002	)		(76,789	)		0		(76,789	)
Net operating real estate investments		2,324,302			481,483			2,805,785			1,650,159			0		1,650,159
Real estate held for sale, net		2,166			0			2,166			81			0		81
Net real estate investments		2,326,468			481,483			2,807,951			1,650,240			0		1,650,240
Other assets		154,435			56,764			211,199			108,085			0		108,085
Total assets	$	2,480,903		$	538,247		$	3,019,150		$	1,758,325		$	0	$	1,758,325

Liabilities
Debt payable, net	$	1,445,007		$	321,158		$	1,766,165		$	768,545		$	0	$	768,545
Other liabilities		101,331			8,237			109,568			89,574			0		89,574
Total liabilities	$	1,546,338		$	329,395		$	1,875,733		$	858,119		$	0	$	858,119

	*As of September 30, 2022*									*As of December 31, 2021*
	*VineBrook*			*NexPoint Homes*			*Total Company*			*VineBrook*			*NexPoint Homes*		*Total Company*
Assets
Gross operating real estate investments	$	2,857,431		$	743,872		$	3,601,303		$	1,726,948		$	—	$	1,726,948
Accumulated depreciation and amortization		(135,262	)		(5,847	)		(141,109	)		(76,789	)		—		(76,789	)
Net operating real estate investments		2,722,169			738,025			3,460,194			1,650,159			—		1,650,159
Real estate held for sale, net		2,888			—			2,888			81			—		81
Net real estate investments		2,725,057			738,025			3,463,082			1,650,240			—		1,650,240
Other assets		220,816			67,559			288,375			108,085			—		108,085
Total assets	$	2,945,873		$	805,584		$	3,751,457		$	1,758,325		$	—	$	1,758,325

Liabilities
Debt payable, net	$	1,886,042		$	565,333		$	2,451,375		$	768,545		$	—	$	768,545
Other liabilities		139,904			15,237			155,141			89,574			—		89,574
Total liabilities	$	2,025,946		$	580,570		$	2,606,516		$	858,119		$	—	$	858,119

	(1)	Presented net of tenant chargebacks.
	(2)	Fees incurred to the Manager.

	Common Stock Private Offering						Common Stock DRIP
Date	Shares Sold		Sale Price (1)		Gross Proceeds		Shares Reinvested		Sale Price (2)		Gross Proceeds (3)		Total Gross Proceeds
May 13, 2022		2,615	$	58.81	$	154		—	$	—	$	—	$	154
June 30, 2022		—		—		—		120,496		58.05		7,046		7,046
July 26, 2022		185,298		58.32		10,807		—		—		—		10,807
		187,913			$	10,961		120,496			$	7,046	$	18,007

	Common Stock Private Offering						Common Stock DRIP
Date	Shares Sold		Sale Price (1)		Gross Proceeds		Shares Reinvested		Sale Price (2)		Gross Proceeds (3)		Total Gross Proceeds
September 14, 2022		176,274	$	59.85	$	10,550		—	$	—	$	—	$	10,550
September 30, 2022		—		—		—		114,288		60.87		6,991		6,991
		176,274			$	10,550		114,288			$	6,991	$	17,541

Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares that may yet be Purchased under the Plans or Programs (in thousands)
April 1 - April 30		—	$	—		—	$	—
May 1 - May 31		—		—		—		—
June 1 - June 30		437,357		59.85		437,357		72,064
Total		437,357	$	59.85		437,357	$	72,064

Exhibit Number	Description


~~10.1~~2.1*	~~Increase~~Interest Purchase Agreement ~~Joinder,~~dated August 3, 2022 by and ~~Second Amendment to~~among VB Five, LLC, SOF-XI Term Holdings, L.P. and SOF-XI Term Parent Holdings, L.P.

2.2*	Interest Purchase Agreement dated August 3, 2022 by and among VB Five, LLC, SOF-XI Term Holdings, L.P, O. F-XI RS Holdings, L.P. and SFR Master Holdings, L.P.

10.1*	Amended and Restated Revolving Credit Agreement, dated ~~as of April 8, 2022,~~November 3, 2021, by and among VineBrook Homes Operating Partnership, L.P., as parent borrower, certain of its subsidiaries, as subsidiary borrowers, the lenders party thereto, KeyBank National Association, as administrative agent, Citizens Bank, N.A., as documentation agent, BMO Capital Markets Corp., Raymond James Bank, Truist Securities, Inc., Wells Fargo Bank, National Association and Citizens Bank, N.A. as co-syndication agents, and KeyBanc Capital Markets Inc., BMO Capital Markets Corp., Raymond James Bank, Truist Securities, Inc., Wells Fargo Bank, National Association and Citizens Bank, N.A. as joint lead arrangers and joint bookrunners, ~~(incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the Company on April 13, 2022)~~.as amended.

10.2*	Increase Agreement, Joinder and Third Amendment to Credit Agreement, dated as of May 20, 2022, among VineBrook Homes Operating Partnership, L.P., as parent borrower, certain of its subsidiaries, as subsidiary borrowers, KeyBank National Association, as administrative agent, and Bank of America, N.A., as a new lender.

~~10.3~~	Contribution Agreement, dated as of June 8, 2022, between VineBrook Homes Operating Partnership, L.P. and NexPoint Homes Trust, Inc. (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the Company on June 14, 2022).

~~10.4~~	Contribution Agreement, dated as of June 8, 2022, between NexPoint Homes Trust, Inc., NexPoint SFR Operating Partnership, L.P., NexPoint Diversified Real Estate Trust, NRESF REIT Sub, LLC, NFRO REIT Sub, LLC, GAF REIT Sub, LLC, Randy Hagedorn, Adam Levinson and Richard Scola (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed by the Company on June 14, 2022).

~~10.5~~	~~Form of 7.50% Convertible Notes of NexPoint Homes, Inc., due June 30, 2027 (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed by the Company on June 14, 2022).~~

~~10.6~~	Form of 7.50% Convertible Notes of NexPoint SFR Operating Partnership, L.P., due June 30, 2027 (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed by the Company on June 14, 2022).

~~10.7~~	Amended and Restated Limited Partnership of NexPoint SFR Operating partnership, L.P., dated as of June 8, 2022 (incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K filed by the Company on June 14, 2022).

10.8*	~~Advisory Agreement, dated as of June 8, 2022, by and between NexPoint Homes Trust, Inc. and NexPoint Real Estate Advisors XI, L.P.~~

10.9*	~~Management Agreement, dated as of June 8, 2022, by and among NexPoint SFR Operating Partnership, L.P. and HomeSource Operations LLC.~~

31.1*	Certification of Interim President and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1+	Certification of Interim President and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*	Inline XBRL Instance Document

101.SCH*	Inline XBRL Taxonomy Extension Schema Document

101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document

104*	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

Signature	Title	Date

/s/ Brian Mitts		~~August 15,~~November 14, 2022
Brian Mitts	Interim President, Chief Financial Officer, Treasurer and Assistant Secretary
	(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)