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NREF NexPoint Real Estate Finance

Participants
Jackie Graham Director, IR
Brian Mitts EVP and CFO
Matt McGraner EVP and CIO
Matt Goetz SVP, Investments & Asset Management
Paul Richards VP, Originations & Investments
Jade Rahmani KBW
Amanda Sweitzer Baird
Call transcript
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Operator

Good day and welcome to the NexPoint Real Estate Finance First Quarter Conference Call. Today’s conference is being recorded. At this time, I’d like to turn the conference over to Jackie Graham, Director of Investor Relations. Please go ahead.

Jackie Graham

Thank you. welcome the Real first Company’s March and call Finance’s quarter everyone, XXst. review to results day, to Estate NexPoint conference ended Good for the

Chief Mitts, call Originations and President & Vice Asset Officer; Vice Vice are Management; the Senior Investment Matt Brian Investments. Goetz, Investments On President Executive today Chief and President, President, Financial Matt Vice and Officer; McGraner, Richards, Executive & Paul

nref.nexpoint.com. is being webcast the As reminder, at this call a Company’s through website

remind everyone and for the we SEC publicly does other forward-looking this I review to revise XX-K also Reform forward-looking statements begin, law, assumptions required like with to Listeners not Form risks a financial any update within Annual based that by of Company’s Before more contains the the and call meaning contains statements. can call Act Company’s are should forward-looking statements and This filings and expectations, place obligation measures. Private that are forward-looking management’s that would discussion statements. Report of to affect conference Litigation undertake current undue the encouraged non-GAAP on beliefs. any analysis of any as of factors other reliance the the XXXX Securities an conference or on Except not complete on NREF

to was over For a call today. earlier filed I that Mitts. see more turn would ahead, presentation the Brian. complete discussion like Company’s of measures, these Please non-GAAP the now to go financial Brian

Brian Mitts

of conditions. and discuss results we’ll before then cover going NREF. Goetz begin discuss Richards of for and to And prepared Welcome everyone closing I’ll up to comments the Matt quarter, turn our McGraner portfolio, general pipeline the to Today, joining our Q&A. overview Matt with first commentary an Jackie. us quarter guidance it Paul then, from we’ll and wrap over Thanks, today. and with XXXX the market

in one was and We for as quarter the XX loan. X.X% share separate the two increased unlevered share we value diluted approximate quarter. to quarter. investment unlevered for income diluted quarter-over-quarter mezzanine share ended -- quiet million billion. Net loans to $X.XX to Matt which for earnings an It mid-teens. So, the per $X.XX was deal, pretty to Goetz with income compared per $X.XX of We added QX property share cover $XX.XX. the in compared per Mac originated actually XX $X.XX per detail with starting their overview diluted in in diluted million IRR another $XX of are per quarter redevelopment totaling net Paul of same quarter. share B-Piece It with IRR QX. prior a with Freddie subsequent was will approximately multifamily X.X% the quarter-end, And loans, B-Piece $X.XX investments Core for Book commentary.

repurchase of multifamily As million redeemable of facility senior million million million unsecured secured unsecured we equity $XXX of $XX interests. on $XXX of to issued the notes, maturing non-controlling million pool, preferred equity, notes in the million XXXX. XXst, on and mezzanine $XX.X common $XX our March capital million $XX of loans, in secured million Subsequent $XXX facility stack quarter-end, senior agreements, of SFR $XX.X consisted X.XX%

remaining average has debt a X.XX%. Our weighted and weighted six average of a rate term of years

at mark-to-market. XX.X% only debt XXst, And low continued March times of to equity. financing to of X.XX our levered As the is we subject

on of balance unrestricted We have XXst. as $XX March million of the cash sheet

of we of a had book stock, shares yield XXX,XXX trading of our and of As average of $X.X were per of April issued ATM our premium as April value an XXst million. March we’ve common share the price to proceeds at through $XX.XX for implied and X.X% XXth, XXth, gross Also, X.X%.

$X.XX quarter, the a high the me common Let for million share, $X.X quickly compared was XXXX, to income first was of million diluted $X.XX per million, loss levels. share or or quarter of the as diluted attributable $X.XX a which XXXX. to quarter shareholders to loss of per or per $X.X the earnings Net to for and per $X.XX in $X.X Core get compared share million $X.X share. QX results this

a CAD diluted Our $X.XX was as $X.XX consolidated of for distribution last versus share $XX.XX this $XX.XX for value cash year, time or last or year. million to available was year. or million per this compared share, QX $X.X Book $X.X per on basis

of improved a of Board year First loan the quarter conditions, $XXX,XXX in of reflecting quarter plus paid per We’ve the recorded a that the first XXth and payable $X.XXX to provision first dividend loss provision record a now a the the June to credit XXXX, has in a compared as as quarter in $XXX,XXX of dividend we’re of XXth. COVID. $X.XX share shareholders on declared share June per

the to touch the our me team. here Let we rest turn before on it of over guidance

of or at the share end, quarter per as guidance XXXX diluted the core midpoint share. low diluted end issuing second diluted high per per $X.XX the on We’re for share $X.XX on $X.XX follows,

on of diluted on per $X.XX high CAD coverage dividend per share $X.XX times. low Our per a the At share $X.XX X.XX that’s the per end, ratio for midpoint share. share end, midpoint

discuss and over of Paul details. Goetz So, some with it then that, let to to Richards me Matt turn the

Matt Goetz

Brian. Thanks,

our continued results strong across to and investments quarter performance The of each XXXX classes. of asset first show

where investment commercial our advantage owning to continue We operating in verticals to and an due we estate. experience focus we real believe have on

value to stack, with information risk than allows leverage operator returns. adjusted as find an of estate average Our to and relative ability well owner to goal delivering lender higher capital the being both the a investments as real throughout from us commercial

residential XX%invested in debt markets, current. leverage by CMBS investment debt. thereafter. strategy Loan principal. sponsors loans, and comprised XX to portfolio investment preferred stable on diverse strongly credit is investments loan X.X portfolio’s family XX.X% were and an few residential, conservative ratio is in years at The a bias billion our average storage heeled and of of with towards collateralized XX% opportunities stabilized XX% geographically The consistent our to portfolios believe current XXX% and total individual to mezzanine service of a and agency we focusing The provide value term continue rental is weighted is Southwest and invested single with will has value coverage stabilized, average portfolio and average of first investments X.XX equity remaining well our via Southeast outstanding times. senior during in multifamily We shareholders. and low portfolio The are and XXX% and to assets, underwriting continues perform quarter investments to able on capitalize approximately $X.X the with immediately

in none As no the loans underlying forbearance, mentioned XXXX. of change our from of earnings, our in are quarter fourth currently

published metrics the Mac on billion X.X% by improving roughly report of For since referenced has as or March entered the total slightly Freddie forbearance, is balance $X.X principal Freddie XXth, fourth unpaid both Mac forbearance securitized quarter.

able quarter. the of opportunities we during advantage to Moving to after the were take first and immediately

representing of I’d remaining evaluate the goal times. has and a higher of underlying opportunities the XXth, loan of to value new are XXX of years average with throughout mentioned, Yield mezzanine and total attractive Brian with XX.X%. sponsorship. pool financing. summary, markets total redevelopment classes. CMBS of multifamily and what X.X $XX has the multifamily weighted with The we for and opportunities find asset $X X.X average Freddie was par SOFR-plus of we approximately purchased X.X million, made April is notional prime million debt cash like Richards bps. these price seeing principal purchase to of On approximately As The In in XX on and is to in of plan The value is of capitalized California the we with rate XX investment The target hand rate LTV XX%. service consist million. portfolio. Street SFR the with what on the for seeing pricing to great Los call million And investment up delivering our fixed repo billion, rate tomorrow a IO investment of mortgages than of term We properties with of are approximately Journal approximately and to investment strip B-Piece The yield close to balance Paul made our over we same the now X,XXX floating value XXth. continue is additional XX%. consists tranche. plus issue the The current $X.X underlying shareholders. Wall April portfolio occupied. yield ratio Angeles, a currently pay appraised $XX.X unpaid continue another collateral K-Series investment to discuss are to XX% we the financing Mac and a loans billion. investment value floating mezz $XX The The B-Piece’s the coverage the repo we’ll bond market, units

Paul Richards

Thanks, Matt.

the active IO floating first a to quarter, on rate During Freddie million Mac Company million not or issue discussed, secondary bond approximately on issue of CMBS Freddie and excellent new we previously QX. But market. the deployed as agency B-Piece market $X Mac in strip was $XX the in

near and bond pricing bonds agency past this near at pre-COVID issue pricing lost now COVID New on are levels. month, level --

benefited compression since value. increase Our yield healthy seen result a a and CMBS has as direct the greatly mid-XXXX, portfolio in have of experienced

B-Piece. end, on LTV and repo previous in XX% after portfolio even We earnings value levered it take Discussed on to LTV our the at at CMBS continue increases lower would a to downward current purchasing approximately be of latest movement prudently market before XX% XX%. quarter calls, roughly

highs. I’d All occupancies current continue as for fully McGraner. and we for over prepared rental the to in book. to turn this the wanted are family touch accelerate. trend our continued to to To like massive to tenant SFR it the all we on Matt and are finalize over We questions, expect briefly general time performing before remarks turn loans persist single performance it Lastly, retention loan as of tailwinds demand

Matt McGraner

briefly team’s as [indiscernible] Thanks, opportunities, as I’d ability to to closing, closed. we’re like say In portfolio, well investment excited our consistently existing as quality the about and generate Paul. credit that of the durability just such one attractive

of all by capital Great. to in offering as we cost storage That’s fuel remarks operator to for B-Piece pleased our will in generating $XX from the offering. million extremely core potential capital This turn questions. help to have like our we quarters coming to and growth prepared over proceeds in dramatically including the now, also And prior deploy today. of debt look we’d capital latest We’re our Thanks reducing the it notes self for verticals, team. news several sector. opportunities XXXX

Operator

first Jade from Rahmani Our [Operator question comes KBW. Instructions] with

Jade Rahmani

competitiveness and and the in Seems pace Thank slowdown debt what in of that Fannie Wondering to you with been production Mae loans slightly moderation higher terms like Freddie been rates seller have in from Mac. very some volume any acquiring there their from services? seeing you’re of much. from funds likely there’s Has volumes?

Matt McGraner

they’re Hey untapped obviously Jade, a affordable phone Matt. seeing loans in have They’re do rate on that that seeing quoting and metrics. caps housing, plenty But them I is the amount with that right that can hits floating Obviously, was with now. They’re still lowered. the been loans actually purchasing certain of the it’s yesterday. they to actually pickup via AMI that.

why any can’t So, years. been same levels in few reason at they we doing the they’ve that the don’t past securitize see

Jade Rahmani

Thanks Okay. that. for

for give EPS color any CAD? the and driving is growth the strong Secondly, could core second in on quarter really you what

Brian Mitts

units, Because from the notes cash we’re OP offering. raised the purchasing unsecured additional with

Matt McGraner

share. will of -- fund’s in Jade, which company, a basically question that’s per existing the high earnings investment the

Jade Rahmani

that’s So, to reduction buying and count? in that equivalent stock a share

Matt McGraner

slightly. Yes,

Jade Rahmani

-- could apologize quantify And quantify, Could the if of if I missed you I I this. that? Okay. forgot you amount

Brian Mitts

Quantify the what? of amount

Jade Rahmani

many cash? Of with how purchased units OP

Brian Mitts

$XX book the the value million. we $XX.XX issued, that that just divided It’s by

Jade Rahmani

being million units? to all $XX used repurchase the Still is OP

Matt McGraner

which make B-Piece. Essentially, closing million be used this yes, $XX will which then is morning, that to investment or

Jade Rahmani

confused So, I’m getting now.

investments it new million to OP You you’re of issued it of how units? debt. of $XX and how much using purchase much additional And to fund

Brian Mitts

will The REIT units, purchase be the then to proceeds is used OP using fund... which to

Jade Rahmani

it. questions. taking Thank the you Got for very much Okay.

Operator

Amanda Sweitzer with next from Instructions] comes [Operator Our Baird. question

Amanda Sweitzer

volume could improved reasonably any today, you you deal your see the on acquisition have capital set this do cost opportunity take of year, of update given the With today? equity do you where

Brian Mitts

Yes.

think I today, it still It’s is it’s not as big. Amanda. the same

it extent to the is can is. I use think the But issue the investments. -- it volume we continue ATM we’ll stock of still the what fund we premiums and new to the

probably a we the growth higher storage self mentioned, sector. have I in little As bit

$XX to I do there. additional $XX think, new can we anywhere investments million from million in

So, looking I million B-Pieces, coupled from $XXX we anywhere with X now, to probably a $XXX think to few which XXX. prior were million

Amanda Sweitzer

year, which in to increase space in just that the SFR space the any meaningful mentioned. Are Makes sense. opportunities your And finding is specifically? then, some increase institutional of with this investors, investment increase you

Paul Richards

or Yes. either demand We’ve it’s of is difficult the little this searching for in the definitely is for SFR. investments and portion high. Amanda, mezz stack a been actively It Paul. Hey the is B-Piece

So, in the deals. There’s we are and we’ve we’ve hopper. definitely but source pulled nothing that’s trigger on searching the underwritten that yet,

Amanda Sweitzer

Okay. OP of vote OP And to for kind equity, units on the the then, plan of finally, acquisition at passes just that exchange you’ve if following mentioned. that units meetings no or up that amount changing to you the the Is that annual plan? change of

Brian Mitts

vote, to totally we’ll separate. much when. convert and assess we assuming how it’s Amanda, of do, the that sort Yes. we we want Once get that of

Operator

There questions are time. no additional at this

Brian Mitts

Thank you. appreciate great. Okay, time. I everyone’s

Operator

this Ladies and presentation. today’s gentlemen, you. Thank concludes

You may now disconnect.