NexPoint Real Estate Finance, Inc.

Previous wording

The following is a discussion and analysis of our financial condition and results of operations. The following should be read in conjunction with our financial statements and accompanying notes included herein and in our Annual Report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those projected, forecasted, or expected in these forward-looking statements as a result of various factors, including, but not limited to, those discussed below and elsewhere in this Quarterly Report. See“Cautionary Statement Regarding Forward-Looking Statements” in Part I, Item 1A, and“Risk Factors” in 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.

Current wording

The following is a discussion and analysis of our financial condition and results of operations. The following should be read in conjunction with our financial statements and accompanying notes included herein and in our Annual Report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those projected, forecasted, or expected in these forward-looking statements as a result of various factors, including, but not limited to, those discussed in our Annual Report and below and elsewhere in this Quarterly Report. See“Cautionary Statement Regarding Forward-Looking Statements” in Part I, Item 1A, and“Risk Factors” in 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.

Previous wording

On October 16, 2019, Highland, a former affiliate of our Sponsor, filed for Chapter 11 bankruptcy protection with the United States Bankruptcy Court for the District of Delaware (the “Highland Bankruptcy”), which was subsequently transferred to the United States Bankruptcy Court for the Northern District of Texas (the “Bankruptcy Court”). On October 15, 2021, Marc S. Kirschner, as litigation trustee of a litigation subtrust formed pursuant to Highland’s plan of reorganization and disclosure statement which became effective on August 11, 2021 and was subsequently amended, filed a lawsuit (the “Bankruptcy Trust Lawsuit”) against various persons and entities, including our Sponsor and James Dondero. The Bankruptcy Trust Lawsuit does not include claims related to our business or our assets or operations. On March 24, 2023, the litigation trustee filed a motion seeking to voluntarily stay the Bankruptcy Trust Lawsuit, which was granted by the Bankruptcy Court on April 4, 2023. On June 30, 2025, the Bankruptcy Court approved a settlement agreement between Highland and Hunter Mountain Investment Trust (“HMIT”) pursuant to which the claims asserted in the Bankruptcy Trust Lawsuit were assigned to HMIT. HMIT subsequently filed a motion to lift the stay of the Bankruptcy Trust Lawsuit, which was granted and became effective on July 15, 2026.

Current wording

On October 16, 2019, Highland, a former affiliate of our Sponsor, filed for Chapter 11 bankruptcy protection with the United States Bankruptcy Court for the District of Delaware (the “Highland Bankruptcy”), which was subsequently transferred to the United States Bankruptcy Court for the Northern District of Texas (the “Bankruptcy Court”). On October 15, 2021, Marc S. Kirschner, as litigation trustee of a litigation subtrust formed pursuant to Highland’s plan of reorganization and disclosure statement which became effective on August 11, 2021 and was subsequently amended, filed a lawsuit (the “Bankruptcy Trust Lawsuit”) against various persons and entities, including our Sponsor and James Dondero. The Bankruptcy Trust Lawsuit does not include claims related to our business or our assets or operations. On March 24, 2023, the litigation trustee filed a motion seeking to voluntarily stay the Bankruptcy Trust Lawsuit, which was granted by the Bankruptcy Court on April 4, 2023. On June 30, 2025, the Bankruptcy Court approved a settlement agreement between Highland and Hunter Mountain Investment Trust (“HMIT”) pursuant to which the claims asserted in the Bankruptcy Trust Lawsuit were assigned to HMIT. HMIT subsequently filed a motion to lift the stay of the Bankruptcy Trust Lawsuit, which was granted and became effective on July 15, 2026. The defendants have filed motions to dismiss the Bankruptcy Trust Lawsuit, which are pending before the trial court.

Previous wording

In addition, on February 8, 2023, UBS Securities LLC and its affiliate (collectively, “UBS”) filed a lawsuit in the Supreme Court of the State of New York, County of New York against Mr. Dondero and a number of other persons and entities seeking to collect on $1.3 billion in judgments UBS obtained against entities that were managed indirectly by Highland (the “UBS Lawsuit”). On February 26, 2024, the respondents, including Mr. Dondero, filed motions to dismiss the UBS Lawsuit. A hearing was held on July 8, 2024. The court dismissed the claims against one respondent, CLO HoldCo, Ltd., for lack of personal jurisdiction in a July 12, 2024 order. On August 24, 2024, UBS filed a notice of appeal for that dismissal order, but withdrew its appeal on December 31, 2025. On March 26, 2025, the court entered an order denying the remaining motions to dismiss and directed the respondents to file an answer to the UBS Lawsuit within 20 days, which they did. Mr. Dondero and the other remaining respondents are appealing the denial of the motion to dismiss to the Appellate Division of the Supreme Court of the State of New York. The appeal was argued on April 8, 2026. The Supreme Court rescheduled a status conference in the UBS Lawsuit previously set for July 14, 2026 to September 15, 2026. Neither the Bankruptcy Trust Lawsuit nor the UBS Lawsuit include claims related to our business or our assets or operations. Our Sponsor and Mr. Dondero have informed us they believe the Bankruptcy Trust Lawsuit has no merit, and Mr. Dondero has informed us he believes the UBS Lawsuit has no merit; we have been advised that the defendants named in each of the lawsuits intend to vigorously defend against the claims. We do not expect the Bankruptcy Trust Lawsuit or the UBS Lawsuit will have a material effect on our business, results of operations or financial condition.

Current wording

In addition, on February 8, 2023, UBS Securities LLC and its affiliate (collectively, “UBS”) filed a lawsuit in the Supreme Court of the State of New York, County of New York against Mr. Dondero and a number of other persons and entities seeking to collect on $1.3 billion in judgments UBS obtained against entities that were managed indirectly by Highland (the “UBS Lawsuit”). On September 23, 2026, the trial court entered judgment in favor of Mr. Dondero, disposing of all of the claims UBS asserted against him. Neither the Bankruptcy Trust Lawsuit nor the UBS Lawsuit include claims related to our business or our assets or operations. Our Sponsor and Mr. Dondero have informed us they believe the Bankruptcy Trust Lawsuit has no merit, and we have been advised that the defendants named in the Bankruptcy Trust Lawsuit intend to vigorously defend against the claims. We do not expect the Bankruptcy Trust Lawsuit will have a material effect on our business, results of operations or financial condition.

Previous wording

Equity in Income (Losses) of Equity Method Investments. Equity in earnings (losses) of unconsolidated ventures represents the change in our basis in equity method investments resulting from our share of the investments’ income and expenses. Profit and loss from equity method investments for which we’ve elected the fair value option are classified in divided income, change in unrealized gains and realized gains as applicable.

Current wording

Equity in Income (Losses) of Equity Method Investments. Equity in earnings (losses) of unconsolidated ventures represents the change in our basis in equity method investments resulting from our share of the investments’ income and expenses. Profit and loss from equity method investments for which we’ve elected the fair value option are classified in dividend income, change in unrealized gains and realized gains as applicable.

Previous wording

Results of Operations for the Three and Six Months Ended June 30, 2026 and 2025

Current wording

Results of Operations for the Three and Nine Months Ended September 30, 2026 and 2025

Previous wording

The change in our net income for the three months ended June 30, 2026 as compared to the net income for the three months ended June 30, 2025 primarily relates to an increase in other income including changes in net assets related to consolidated CMBS VIEs, preferred stock and warrants, and a lower unrealized loss on common stock investments. Our net income attributable to common stockholders for the three months ended June 30, 2026 was approximately $5.4 million. We earned approximately $16.5 million in net interest income, generated income of $10.8 million in other income, incurred operating expenses of $10.0 million, allocated $0.9 million of income to Series A Preferred stockholders, allocated $9.0 million of income to Series B Preferred stockholders, allocated $0.7 million of income to Series C Preferred stockholders and allocated $1.3 million of income to redeemable non-controlling interests for the three months ended June 30, 2026.

Current wording

The change in our net income (loss) for the three months ended September 30, 2026 as compared to the net income for the three months ended September 30, 2025 primarily relates to a decrease in other income, driven by lower unrealized gains on preferred stock and stock warrant investments and an unrealized loss on common stock investments compared to an unrealized gain in the prior period as well as higher operating expenses, partially offset by increases in revenue from consolidated real estate owned and dividend income. Our net loss attributable to common stockholders for the three months ended September 30, 2026 was approximately $12.2 million. We earned approximately $17.3 million in net interest income, incurred unrealized losses resulting in of $7.4 million in other loss, incurred operating expenses of $10.8 million, allocated $0.9 million of income to Series A Preferred stockholders, allocated $8.9 million of income to Series B Preferred stockholders, allocated $1.3 million of income to Series C Preferred stockholders and allocated $0.2 million of income to redeemable non-controlling interests for the three months ended September 30, 2026.

Previous wording

Net interest income. Net interest income was $16.5 million for the three months ended June 30, 2026 compared to $12.1 million for the three months ended June 30, 2025 which was an increase of approximately $4.5 million. The increase between the periods is primarily due to additional investments in preferred equity, revolving credit facilities, senior loans and mezzanine loans in the portfolio compared to the prior period. As of June 30, 2026 we own 85 discrete investments compared to 86 as of June 30, 2025.

Current wording

Net interest income. Net interest income was $17.3 million for the three months ended September 30, 2026 compared to $12.5 million for the three months ended September 30, 2025 which was an increase of approximately $4.8 million. The increase between the periods is primarily due to higher yield on investments including our promissory notes, CMBS B-Pieces, mezzanine loans, and preferred investments in the portfolio compared to the prior period.

Previous wording

Other income. Other income was $10.8 million for the three months ended June 30, 2026 compared to $19.5 million for the three months ended June 30, 2025 which was a decrease of approximately $8.7 million. This was primarily due to unrealized losses related to preferred stock and stock warrant investments as well as an increase in dividend income.

Current wording

Other income. Other loss was $7.4 million for the three months ended September 30, 2026 compared to $46.7 million in other income for the three months ended September 30, 2025 which was a decrease of approximately $54.1 million. This was primarily due to unrealized losses related to preferred stock and stock warrant investments.

Previous wording

G&A expenses. G&A expenses were $6.1 million for the six months ended June 30, 2026 compared to $6.3 million for the six months ended June 30, 2025 which was a decrease of approximately $0.2 million. The decrease between the periods was primarily due to a $0.2 million decrease in tax fees compared to the prior period.

Current wording

G&A expenses. G&A expenses were $3.3 million for the three months ended September 30, 2026 compared to $3.4 million for the three months ended September 30, 2025 which was a decrease of less than $0.1 million. The decrease between the periods was primarily due to an approximately $0.1 million decrease in other fees compared to the prior period.

Previous wording

Management fees. Management fees were $2.3 million for the three months ended June 30, 2026 compared to $1.6 million for the three months ended June 30, 2025 which was an increase of approximately $0.7 million. The increase between the periods was primarily due to an increase in Equity as defined by the Management Agreement.

Current wording

Management fees. Management fees were $2.3 million for the three months ended September 30, 2026 compared to $1.8 million for the three months ended September 30, 2025 which was an increase of approximately $0.5 million. The increase between the periods was primarily due to an increase in Equity as defined by the Management Agreement.

Previous wording

Expenses from consolidated real estate owned. Expenses from consolidated real estate owned were $4.7 million for the three months ended June 30, 2026 compared to $3.6 million for the three months ended June 30, 2025 which was an increase of approximately $1.1 million. The increase between the periods is due to increased expenses related to the Mag & May and Alexander at the District properties.

Current wording

Expenses from consolidated real estate owned. Expenses from consolidated real estate owned were $4.9 million for the three months ended September 30, 2026 compared to $2.8 million for the three months ended September 30, 2025 which was an increase of approximately $2.1 million. The increase between the periods is due to the consolidation of Ridgeview Place in May 2026 and increased expenses related to the Mag & May and Alexander at the District properties.

Previous wording

Results of Operations for the Six Months Ended June 30, 2026 and 2025

Current wording

Results of Operations for the Nine Months Ended September 30, 2026 and 2025

Previous wording

The following table sets forth a summary of our operating results for the six months ended June 30, 2026 and 2025 (in thousands):

Current wording

The following table sets forth a summary of our operating results for the nine months ended September 30, 2026 and 2025 (in thousands):

Previous wording

The change in our net income for the six months ended June 30, 2026 as compared to the net income for the six months ended June 30, 2025 primarily relates to a decrease in other income including changes in net assets related to preferred stock and warrants, offset by an increase in dividend income. Our net income attributable to common stockholders for the six months ended June 30, 2026 was approximately $15.5 million. We earned approximately $31.8 million in net interest income, generated income of $28.1 million in other income, incurred operating expenses of $20.0 million, allocated $1.7 million of income to Series A Preferred stockholders, allocated $18.1 million of income to Series B Preferred stockholders, allocated $1.0 million of income to Series C Preferred stockholders and allocated $3.6 million of income to redeemable non-controlling interests for the six months ended June 30, 2026.

Current wording

The change in our net income for the nine months ended September 30, 2026 as compared to the net income for the nine months ended September 30, 2025 primarily relates to a decrease in other income including changes in net assets related to preferred stock and warrants, offset by an increase in dividend income. Our net income attributable to common stockholders for the nine months ended September 30, 2026 was approximately $3.3 million. We earned approximately $49.1 million in net interest income, generated $20.8 million in other income, incurred operating expenses of $30.9 million, allocated $2.6 million of income to Series A Preferred stockholders, allocated $27.0 million of income to Series B Preferred stockholders, allocated $2.3 million of income to Series C Preferred stockholders and allocated $3.8 million of income to redeemable non-controlling interests for the nine months ended September 30, 2026.

Previous wording

Net interest income. Net interest income was $31.8 million for the six months ended June 30, 2026 compared to $23.6 million for the six months ended June 30, 2025 which was an increase of approximately $8.3 million. The increase between the periods is primarily due to additional investments in preferred equity, revolving credit facilities, senior loans and mezzanine loans in the portfolio compared to the prior period. As of June 30, 2026 we own 85 discrete investments compared to 86 as of June 30, 2025.

Current wording

Net interest income. Net interest income was $49.1 million for the nine months ended September 30, 2026 compared to $36.1 million for the nine months ended September 30, 2025 which was an increase of approximately $13.0 million. The increase between the periods is primarily due to higher yield on investments including our promissory notes, CMBS B-Pieces, mezzanine loans, and preferred investments in the portfolio compared to the prior period.

Previous wording

Other income. Other income was $28.1 million for the six months ended June 30, 2026 compared to $42.2 million for the six months ended June 30, 2025 which was a decrease of approximately $14.1 million. This was primarily due to a decrease in unrealized gains related to preferred stock and stock warrant investments as well as an increase in dividend income.

Current wording

Other income. Other income was $20.8 million for the nine months ended September 30, 2026 compared to $88.9 million for the nine months ended September 30, 2025 which was a decrease of approximately $68.1 million. This was primarily due to a decrease in unrealized gains related to preferred stock and stock warrant investments, partially offset by an increase in dividend income.

Previous wording

Loan servicing fees. Loan servicing fees were $0.6 million for the six months ended June 30, 2026 compared to $0.7 million for the six months ended June 30, 2025, which was a decrease of approximately $0.1 million. The decrease between the periods was primarily due to a decrease in servicing fees related to less loans in the portfolio.

Current wording

Loan servicing fees. Loan servicing fees were $0.8 million for the nine months ended September 30, 2026 compared to $1.1 million for the nine months ended September 30, 2025, which was a decrease of approximately $0.3 million. The decrease between the periods was primarily due to repayments, paydowns and portfolio runoff which reduced the average outstanding balance of loans requiring servicing during the current period.

Previous wording

Management fees. Management fees were $4.5 million for the six months ended June 30, 2026 compared to $3.0 million for the six months ended June 30, 2025 which was an increase of approximately $1.5 million. The increase between the periods was primarily due to an increase in Equity as defined by the Management Agreement.

Current wording

Management fees. Management fees were $6.8 million for the nine months ended September 30, 2026 compared to $4.8 million for the nine months ended September 30, 2025 which was an increase of approximately $2.0 million. The increase between the periods was primarily due to an increase in Equity as defined by the Management Agreement.

Previous wording

Expenses from consolidated real estate owned. Expenses from consolidated real estate owned were $8.9 million for the six months ended June 30, 2026, compared to $7.6 million for the six months ended June 30, 2025, which was an increase of approximately $1.3 million. The increase between the periods is due to increased expenses related to the Mag & May and Alexander at the District properties.

Current wording

Expenses from consolidated real estate owned. Expenses from consolidated real estate owned were $13.8 million for the nine months ended September 30, 2026, compared to $10.4 million for the nine months ended September 30, 2025, which was an increase of approximately $3.4 million. The increase between the periods is due to the consolidation of Ridgeview Place in May 2026 and increased expenses related to the Mag & May and Alexander at the District properties.

Previous wording

The following table provides a reconciliation of EAD and CAD to GAAP net income including the dilutive effect of noncontrolling interests and adjusted weighted average common shares outstanding - diluted to weighted average common shares outstanding - diluted for the three and six months ended June 30, 2026 and 2025 (in thousands, except per share amounts):

Current wording

The following table provides a reconciliation of EAD and CAD to GAAP net income including the dilutive effect of noncontrolling interests and adjusted weighted average common shares outstanding - diluted to weighted average common shares outstanding - diluted for the three and nine months ended September 30, 2026 and 2025 (in thousands, except per share amounts):

Previous wording

Unrealized gains are the net change in unrealized loss on investments held at fair value applicable to common stockholders.

Current wording

Unrealized (gains) losses are the net change in unrealized (gains) loss on investments and derivatives held at fair value applicable to common stockholders.

Previous wording

Effective April 1, 2024, the Company reclassified this investment from a mezzanine loan to senior loan because there was no senior mortgage on the property collateralized by the loan. Effective September 30, 2025, the Company reclassified this investment back to a mezzanine loan because as of September 30, 2025 there is a senior mortgage on the property collateralized by the loan.

Current wording

Effective April 1, 2024, the Company reclassified this investment from a mezzanine loan to senior loan because there was no senior mortgage on the property collateralized by the loan. Effective September 30, 2025, the Company reclassified this investment back to a mezzanine loan because as of September 30, 2025 there is a senior mortgage on the property collateralized by the loan, which remains as of September 30, 2026.

Previous wording

Real Estate is a 280-unit multifamily property. As of June 30, 2026, the property was 90.0% occupied with effective rent per occupied unit of $1,465 per month.

Current wording

Real Estate is a 280-unit multifamily property. As of September 30, 2026, the property was 97.1% occupied with effective rent per occupied unit of $1,490 per month.

Previous wording

Real Estate is a 240-unit multifamily property. As of June 30, 2026, the property was 79.6% occupied with effective rent per occupied unit of $1,518 per month.

Current wording

Real Estate is a 240-unit multifamily property. As of September 30, 2026, the property was 79.2% occupied with effective rent per occupied unit of $1,424 per month.

Previous wording

Real Estate is a 390-unit multifamily property. As of June 30, 2026, the property was 89.5% occupied with effective rent per occupied unit of $1,347 per month.

Current wording

Real Estate is a 390-unit multifamily property. As of September 30, 2026, the property was 91.0% occupied with effective rent per occupied unit of $1,172 per month.

Previous wording

Prior to the Formation Transaction, two of our subsidiaries entered into the Credit Facility. Under the Credit Facility, these entities borrowed approximately $788.8 million in connection with their acquisition of the Underlying Loans. No additional borrowings can be made under the Credit Facility, and our obligations will be secured by the Underlying Loans. The Credit Facility was assumed by the Company as part of the Formation Transaction. As such, the remaining outstanding balance of $788.8 million was contributed to the Company on February 11, 2020. Our borrowings under the Credit Facility will mature on July 12, 2029; however, if an Underlying Loan matures prior to July 12, 2029, we will be required to repay the portion of the Credit Facility that is allocated to that loan. As of June 30, 2026, the outstanding balance on the Credit Facility was $61.2 million.

Current wording

Prior to the Formation Transaction, two of our subsidiaries entered into the Credit Facility. Under the Credit Facility, these entities borrowed approximately $788.8 million in connection with their acquisition of the Underlying Loans. No additional borrowings can be made under the Credit Facility, and our obligations will be secured by the Underlying Loans. The Credit Facility was assumed by the Company as part of the Formation Transaction. As such, the remaining outstanding balance of $788.8 million was contributed to the Company on February 11, 2020. Our borrowings under the Credit Facility will mature on July 12, 2029; however, if an Underlying Loan matures prior to July 12, 2029, we will be required to repay the portion of the Credit Facility that is allocated to that loan. As of September 30, 2026, the outstanding balance on the Credit Facility was $60.8 million.

Previous wording

As discussed in Note 9 to our consolidated financial statements, in connection with our CMBS acquisitions, we, through the OP and the Subsidiary OPs, have borrowed approximately $152.2 million under our repurchase agreements and posted approximately $583.2 million par value of our CMBS B-Piece and CMBS I/O Strip investments as collateral. The

Current wording

As discussed in Note 9 to our consolidated financial statements, in connection with our CMBS acquisitions, we, through the OP and the Subsidiary OPs, have borrowed approximately $141.2 million under our repurchase agreements and posted approximately $584.6 million par value of our CMBS B-Piece and CMBS I/O Strip investments as collateral. The CMBS B-Pieces and CMBS I/O Strips held as collateral are illiquid and irreplaceable in nature. These assets are restricted solely to satisfy the interest and principal balances owed to the lender.

Previous wording

On November 2, 2023, the Company announced the launch of a continuous public offering of up to 16,000,000 shares of its Series B Preferred Stock at a price to the public of $25.00 per share, for gross proceeds of $400.0 million. On October 1, 2025, the Company increased the size of its Series B Preferred Stock offering to 17,200,000 shares for gross proceeds of $430.0 million. Beginning on the first day of the calendar month following the date of original issuance, the Series B Preferred Stock are redeemable at the option of the holder at a redemption price per share equal to the liquidation preference of $25.00 per share, plus all accrued but unpaid cash dividends and less certain redemption fees. After the first day of the calendar month following the second anniversary of the original issue date, the Company also has the option to redeem, in whole or in part, subject to certain restrictions in the Company's charter and the articles supplementary setting forth the terms of the Series B Preferred Stock, at a redemption price per share equal to the liquidation preference of $25.00 per share, plus any accrued but unpaid cash dividends. In all optional redemptions, the Company has the right, in its sole discretion, to pay the redemption in cash or in equal value of shares of the Company’s common stock for so long as the common stock is listed or admitted to trading on the NYSE or another national securities exchange or automated quotation system. The Dealer Manager served as the Company’s dealer manager in connection with the offering. The Dealer Manager used its reasonable best efforts to sell the shares of Series B Preferred Stock offered in the offering, and the Company paid the Dealer Manager, subject to the discounts and other special circumstances described or referenced therein, (i) the Series B Selling Commissions and (ii) the Series B Dealer Manager Fee. The Company completed the last close on December 5, 2025 and terminated the Series B Preferred offering. As of June 30, 2026, the Company had sold 16,186,525 shares of Series B Preferred Stock for total gross proceeds of $395.6 million.

Current wording

On November 2, 2023, the Company announced the launch of a continuous public offering of up to 16,000,000 shares of its Series B Preferred Stock at a price to the public of $25.00 per share, for gross proceeds of $400.0 million. On October 1, 2025, the Company increased the size of its Series B Preferred Offering to 17,200,000 shares for gross proceeds of $430.0 million. Beginning on the first day of the calendar month following the date of original issuance, the Series B Preferred Stock are redeemable at the option of the holder at a redemption price per share equal to the liquidation preference of $25.00 per share, plus all accrued but unpaid cash dividends and less certain redemption fees. After the first day of the calendar month following the second anniversary of the original issue date, the Company also has the option to redeem, in whole or in part, subject to certain restrictions in the Company's charter and the articles supplementary setting forth the terms of the Series B Preferred Stock, at a redemption price per share equal to the liquidation preference of $25.00 per share, plus any accrued but unpaid cash dividends. In all optional redemptions, the Company has the right, in its sole discretion, to pay the redemption in cash or in equal value of shares of the Company’s common stock for so long as the common stock is listed or admitted to trading on the NYSE or another national securities exchange or automated quotation system. The Dealer Manager served as the Company’s dealer manager in connection with the offering. The Dealer Manager used its reasonable best efforts to sell the shares of Series B Preferred Stock offered in the offering, and the Company paid the Dealer Manager, subject to the discounts and other special circumstances described or referenced therein, (i) the Series B Selling Commissions and (ii) the Series B Dealer Manager Fee. The Company completed the last close on December 5, 2025 and terminated the Series B Preferred offering. As of September 30, 2026, the Company had sold 16,186,525 shares of Series B Preferred Stock for total gross proceeds of $395.6 million.

Previous wording

On November 4, 2025, the Company announced the launch of a continuous public offering of up to 8,000,000 shares of its Series C Preferred Stock at a price to the public of $25.00 per share, for gross proceeds of $200.0 million. Beginning on the first day of the calendar month following the date of original issuance, the Series C Preferred Stock are redeemable at the option of the holder at a redemption price per share equal to the liquidation preference of $25.00 per share, plus all accrued but unpaid cash dividends and less certain redemption fees. After the first day of the calendar month following the second anniversary of the original issue date, the Company also has the option to redeem, in whole or in part, subject to certain restrictions in the Company's charter and the articles supplementary setting forth the terms of the Series C Preferred Stock, at a redemption price per share equal to the liquidation preference of $25.00 per share, plus any accrued but unpaid cash dividends. In all optional redemptions, the Company has the right, in its sole discretion, to pay the redemption in cash or in equal value of shares of the Company’s common stock for so long as the common stock is listed or admitted to trading on the NYSE, NYSE Texas or another national securities exchange or automated quotation system. The Dealer Manager serves as the Company’s dealer manager in connection with the offering. The Dealer Manager uses its reasonable best efforts to sell the shares of Series C Preferred Stock offered in the offering, and the Company pays the Dealer Manager, subject to the discounts and other special circumstances described or referenced therein, (i) the Series C Selling Commissions and (ii) the Series C Dealer Manager Fee. The Dealer Manager, subject to federal and state securities laws, will reallow all or any portion of the Series C Selling Commissions and may reallow a portion of the Series C Dealer Manager Fee to other securities dealers that the Dealer Manager may retain who sold the shares of Series C Preferred Stock as is described more fully in the agreements between such dealers and the Dealer Manager. The Company expects that the offering will terminate on the earlier of the date the Company sells all 8,000,000 shares of the Series C Preferred Stock in the offering or December 29, 2026 (which is the third anniversary of the effective date of the Company’s registration statement), which may be extended by the Board in its sole discretion. The Board may elect to terminate this offering at any time. For the three months ended June 30, 2026, the Company has sold 904,978 shares of Series C Preferred Stock for total gross proceeds of $22.6 million.

Current wording

On November 4, 2025, the Company announced the launch of a continuous public offering of up to 8,000,000 shares of its Series C Preferred Stock at a price to the public of $25.00 per share, for gross proceeds of $200.0 million. Beginning on the first day of the calendar month following the date of original issuance, the Series C Preferred Stock are redeemable at the option of the holder at a redemption price per share equal to the liquidation preference of $25.00 per share, plus all accrued but unpaid cash dividends and less certain redemption fees. After the first day of the calendar month following the second anniversary of the original issue date, the Company also has the option to redeem, in whole or in part, subject to certain restrictions in the Company's charter and the articles supplementary setting forth the terms of the Series C Preferred Stock, at a redemption price per share equal to the liquidation preference of $25.00 per share, plus any accrued but unpaid cash dividends. In all optional redemptions, the Company has the right, in its sole discretion, to pay the redemption in cash or in equal value of shares of the Company’s common stock for so long as the common stock is listed or admitted to trading on the NYSE, NYSE Texas or another national securities exchange or automated quotation system. The Dealer Manager serves as the Company’s dealer manager in connection with the offering. The Dealer Manager uses its reasonable best efforts to sell the shares of Series C Preferred Stock offered in the offering, and the Company pays the Dealer Manager, subject to the discounts and other special circumstances described or referenced therein, (i) the Series C Selling Commissions and (ii) the Series C Dealer Manager Fee. The Dealer Manager, subject to federal and state securities laws, will reallow all or any portion of the Series C Selling Commissions and may reallow a portion of the Series C Dealer Manager Fee to other securities dealers that the Dealer Manager may retain who sold the shares of Series C Preferred Stock as is described more fully in the agreements between such dealers and the Dealer Manager. The Company expects that the offering will terminate on the earlier of the date the Company sells all 8,000,000 shares of the Series C Preferred Stock in the offering or December 29, 2026 (which is the third anniversary of the effective date of the Company’s registration statement), which may be extended by the Board in its sole discretion. The Board may elect to terminate this offering at any time. For the three months ended September 30, 2026, the Company has sold 1,114,155 shares of Series C Preferred Stock for total gross proceeds of $27.9 million.

Previous wording

On April 29, 2026, the Company entered into a $375.0 million term loan with Mizuho, and borrowed an initial amount of $310.0 million aggregate principal amount for net proceeds of approximately $304.8 million, which were used to repay the 5.75% Notes at maturity. Concurrently, the Company entered into a Total Return Swap Confirmation with Mizuho, pursuant to which, among other things, the Company transferred and pledged to Mizuho $108.5 million of cash collateral, which is presented as restricted cash on the Company's consolidated balance sheets.

Current wording

On April 29, 2026, the Company entered into a $375.0 million term loan with Mizuho, and borrowed an initial amount of $310.0 million aggregate principal amount for net proceeds of approximately $304.8 million, which were used to repay the 5.75% Notes at maturity. Concurrently, the Company entered into a Total Return Swap Confirmation with Mizuho, pursuant to which, among other things, the Company transferred and pledged to Mizuho $108.5 million of cash collateral, which is presented as restricted cash on the Company's consolidated balance sheets. On August 17, 2026, the Company upsized the Mizuho loan to $450.0 million aggregate principal amount, which has been fully funded, and pledged cash collateral of $157.5 million as of September 30, 2026.

Previous wording

We may seek additional sources of liquidity from further repurchase facilities, other borrowings and future offerings of common and preferred equity and debt securities and contributions from existing holders of the OP or Subsidiary OPs. In addition, we may apply our existing cash and cash equivalents and cash flows from operations to any liquidity needs. As of June 30, 2026, our cash and cash equivalents was $6.4 million.

Current wording

We may seek additional sources of liquidity from further repurchase facilities, other borrowings and future offerings of common and preferred equity and debt securities and contributions from existing holders of the OP or Subsidiary OPs. In addition, we may apply our existing cash and cash equivalents and cash flows from operations to any liquidity needs. As of September 30, 2026, our cash and cash equivalents was $74.9 million.

Previous wording

The following table presents selected data from our Consolidated Statements of Cash Flows for the six months ended June 30, 2026 and 2025 (in thousands):

Current wording

The following table presents selected data from our Consolidated Statements of Cash Flows for the nine months ended September 30, 2026 and 2025 (in thousands):

Previous wording

Cash flows from operating activities. During the six months ended June 30, 2026, net cash provided by operating activities was $3.4 million, compared to net cash provided by operating activities of $19.4 million for the six months ended June 30, 2025. This decrease primarily relates to the changes in provision for credit loss and paid in kind income.

Current wording

Cash flows from operating activities. During the nine months ended September 30, 2026, net cash provided by operating activities was $6.5 million, compared to net cash provided by operating activities of $27.5 million for the nine months ended September 30, 2025. This decrease primarily relates to the changes in provision for credit loss and paid in kind income compared to the prior period.

Previous wording

Cash flows from investing activities. During the six months ended June 30, 2026, net cash provided by investing activities was $108.9 million, compared to net cash provided by investing activities of $89.6 million for the six months ended June 30, 2025. The increase primarily relates to an increase in proceeds from payments received on mortgage loans held for investment.

Current wording

Cash flows from investing activities. During the nine months ended September 30, 2026, net cash provided by investing activities was $388.3 million, compared to net cash provided by investing activities of $279.7 million for the nine months ended September 30, 2025. The increase primarily relates to an increase in proceeds from payments received on mortgage loans held in variable interest entities and mortgage loans held for investment.

Previous wording

Cash flows from financing activities. During the six months ended June 30, 2026, net cash used in financing activities was $8.3 million, compared to net cash used in financing activities of $102.3 million for the six months ended June 30, 2025. The decrease primarily relates to an increase in the borrowings under secured financing agreements, offset with principal repayments on unsecured notes, as well as the increase of the Re-REMIC of the CMBS held in variable interest entities.

Current wording

Cash flows from financing activities. During the nine months ended September 30, 2026, net cash used in financing activities was $191.8 million, compared to net cash used in financing activities of $292.6 million for the nine months ended September 30, 2025. The decrease in cash used in financing activities primarily relates to an increase in the borrowings under secured financing agreements, offset with principal repayments on unsecured notes, as well as the increase of the Re-REMIC of the CMBS held in variable interest entities.

Previous wording

On December 8, 2022 and in connection with a restructuring of NSP, the Company, through REIT Sub, together with NXDT, an entity that is advised by an affiliate of the Manager, the Co-Guarantors, as guarantors, entered into the NSP Sponsor Guaranty Agreement in favor of Extra Space pursuant to which REIT Sub and the Co-Guarantors guaranteed obligations of NSP with respect to accrued dividends on NSP’s newly created Series D preferred stock and two promissory notes in an aggregate principal amount of approximately $64.2 million issued to Extra Space. The guaranties by REIT Sub and the Co-Guarantors are capped at $97.6 million, and each of REIT Sub and the Co-Guarantors generally guaranteed the foregoing obligations of NSP up to the cap amount on a pro rata basis with respect to its percentage ownership of NSP’s common stock. On February 15, 2023, NSP paid down approximately $15.0 million of these promissory notes, resulting in an aggregate principal amount of approximately $49.2 million. On December 8, 2023, NSP paid down the remaining principal balance of $49.2 million. The NSP Series D preferred stock remains outstanding as of June 30, 2026. As of June 30, 2026, the outstanding NSP Series D Preferred Stock accrued dividends was $16.0 million and the Company and NexPoint Diversified Real Estate Trust are jointly and severally liable for 85.9% of the guaranteed amount equal to $13.7 million.

Current wording

On December 8, 2022 and in connection with a restructuring of NSP, the Company, through REIT Sub, together with NXDT, an entity that is advised by an affiliate of the Manager, the Co-Guarantors, as guarantors, entered into the NSP Sponsor Guaranty Agreement in favor of Extra Space pursuant to which REIT Sub and the Co-Guarantors guaranteed obligations of NSP with respect to accrued dividends on NSP’s newly created Series D preferred stock and two promissory notes in an aggregate principal amount of approximately $64.2 million issued to Extra Space. The guaranties by REIT Sub and the Co-Guarantors are capped at $97.6 million, and each of REIT Sub and the Co-Guarantors generally guaranteed the foregoing obligations of NSP up to the cap amount on a pro rata basis with respect to its percentage ownership of NSP’s common stock. On February 15, 2023, NSP paid down approximately $15.0 million of these promissory notes, resulting in an aggregate principal amount of approximately $49.2 million. On December 8, 2023, NSP paid down the remaining principal balance of $49.2 million. The NSP Series D preferred stock remains outstanding as of September 30, 2026. As of September 30, 2026, the outstanding NSP Series D Preferred Stock accrued dividends were $16.8 million and the Company and NXDT are jointly and severally liable for 85.9% of the guaranteed amount equal to $14.5 million.

Previous wording

On March 14, 2023, the Company, through one of the Subsidiary OPs, committed to fund $24.0 million of preferred equity with respect to a ground up construction horizontal single-family property located in Phoenix, Arizona, of which $0.6 million was unfunded as of June 30, 2026. The preferred equity investment provides a floating annual return that is the greater of prime rate plus 5.0% or 11.25%, compounded monthly with a MOIC of 1.30x and 1.0% placement fee. The Company was also issued a common interest at the time of its first funding of preferred equity on May 16, 2023. The common interest allows the Company to receive a 10% profit share once aggregate distributions exceed the 20% IRR hurdle as shown below. There was no value ascribed to the common interest as of June 30, 2026. Further, once the Company's preferred equity and accrued return has been repaid, any additional cash flow and net sale proceeds shall be distributed as follows:

Current wording

On March 14, 2023, the Company, through one of the Subsidiary OPs, committed to fund $24.0 million of preferred equity with respect to a ground up construction horizontal single-family property located in Phoenix, Arizona, of which $0.2 million was unfunded as of September 30, 2026. The preferred equity investment provides a floating annual return that is the greater of prime rate plus 5.0% or 11.25%, compounded monthly with a MOIC of 1.30x and 1.0% placement fee. The Company was also issued a common interest at the time of its first funding of preferred equity on May 16, 2023. The common interest allows the Company to receive a 10% profit share once aggregate distributions exceed the 20% IRR hurdle as shown below. There was no value ascribed to the common interest as of September 30, 2026. Further, once the Company's preferred equity and accrued return has been repaid, any additional cash flow and net sale proceeds shall be distributed as follows:

Previous wording

0% to the Company and 100% to issuer up to a 20.0% IRR; and

Current wording

0% to the Company and 100% to issuer up to a 20% IRR; and

Previous wording

On January 16, 2026, the Company loaned $16.7 million to NSP OC and certain subsidiaries of NSP OC and of our Sponsor, as co-borrowers. In connection with the loan, NSP OC issued the NSP Note pursuant to which NSP OC may borrow up to a maximum commitment of $40.0 million. The NSP Note bears interest at 14.0% per annum, which is payable in kind, is interest only during the term of the NSP Note and matures on January 16, 2031. Borrowings under the NSP Note are secured by a first-priority lien on certain income streams and related deposit accounts of the co-borrowers and are subordinated in right and time of payment to NSP’s outstanding Series D Preferred Stock. On March 25, 2026, OSL purchased $7.5 million aggregate principal amount of the NSP Note and obtained the right, but not the obligation, to participate in any future advances up to its then-current pro rata share. Effective on March 30, 2026, HFRO, HGLB, NXDT, and NRES purchased aggregate principal amounts of $2.5 million, $1.0 million, $1.3 million and $0.1 million, respectively, and each has the right, but not the obligation to participate in any future advances up to its then-current pro rata share. The Company also funded an additional $1.3 million and the NSP Note has $16.8 million unfunded as of June 30, 2026.

Current wording

On January 16, 2026, the Company loaned $16.7 million to NSP OC and certain subsidiaries of NSP OC and of our Sponsor, as co-borrowers. In connection with the loan, NSP OC issued the NSP Note pursuant to which NSP OC may borrow up to a maximum commitment of $40.0 million. The NSP Note bears interest at 14.0% per annum, which is payable in kind, is interest only during the term of the NSP Note and matures on January 16, 2031. Borrowings under the NSP Note are secured by a first-priority lien on certain income streams and related deposit accounts of the co-borrowers and are subordinated in right and time of payment to NSP’s outstanding Series D Preferred Stock. On March 25, 2026, OSL purchased $7.5 million aggregate principal amount of the NSP Note and obtained the right, but not the obligation, to participate in any future advances up to its then-current pro rata share. Effective on March 30, 2026, HFRO, NXDT, HGLB, and NRES purchased aggregate principal amounts of $2.5 million, $1.0 million, $1.3 million and less than $0.1 million, respectively, and each has the right, but not the obligation to participate in any future advances up to its then-current pro rata share. The Company also funded an additional $1.3 million and the NSP Note has $16.0 million unfunded as of September 30, 2026.

Previous wording

On August 1, 2025, the Company, through one of the Subsidiary OPs, committed to fund $10.0 million for a storage facility in Wappinger, NY pursuant to a mezzanine loan agreement. The loan bears interest at 9.0%, which is payable in kind, with a maturity date of August 1, 2026. As of June 30, 2026, the Company has an unfunded commitment balance of $6.1 million.

Current wording

On August 1, 2025, the Company, through one of the Subsidiary OPs, committed to fund $10.0 million for a storage facility in Wappinger, NY pursuant to a mezzanine loan agreement. The loan bears interest at 9.0%, which is payable in kind. On September 8, 2026 the Company amended the mezzanine loan agreement, replacing the initial maturity date of August 1, 2026 with a new maturity date of August 1, 2030. As of September 30, 2026, the Company has an unfunded commitment balance of $6.0 million.