NEXPOINT DIVERSIFIED REAL ESTATE TRUST

The three months ended June 30, 2025 as compared to the three months ended June 30, 2024

The following tables set forth a summary of our operating results for the three months ended June 30, 2025 and 2024 (in thousands):

The net loss for the three months ended June 30, 2025 increased by $33.6 million as compared to the three months ended June 30, 2024. The increase between periods primarily relates to mark-to-market losses on our investments accounted for at fair value.

Rental income. Rental income was $3.7 million for the three months ended June 30, 2025, compared to $4.0 million for the three months ended June 30, 2024, which was a decrease of approximately $0.3 million. Rental income decreased between the periods due to a decrease in occupancy at Cityplace Tower.

Rooms. Rooms revenue was $6.3 million for the three months ended June 30, 2025, compared to $8.2 million for the three months ended June 30, 2024, which was a decrease of approximately $1.9 million. Rooms revenue decreased between the periods due to the disposition of Hospitality properties in 2025.

Food and beverage. F&B revenue was $0.8 million for the three months ended June 30, 2025, compared to $0.8 million for the three months ended June 30, 2024, which was flat.

Interest and dividends. Interest and dividends totaled $10.0 million for the three months ended June 30, 2025, compared to $8.9 million for the three months ended June 30, 2024, which was an increase of approximately $1.1 million. The increase between the periods was primarily due to an increase in dividend income.

Other income. Other income was approximately $313.0 thousand for the three months ended June 30, 2025, compared to $373.0 thousand for the three months ended June 30, 2024, which was a decrease of approximately $60.0 thousand. The decrease between the periods due to a decrease in resort charges, due to the disposition of Hospitality properties in 2025.

Property operating expenses. Property operating expenses were $5.5 million for the three months ended June 30, 2025, compared to $6.8 million for the three months ended June 30, 2024, which was a decrease of approximately $1.3 million. The decrease between the periods was primarily due to the disposition of Hospitality properties in 2025.

Property management fees. Property management fees were $0.4 million for the three months ended June 30, 2025, compared to $0.2 million for the three months ended June 30, 2024, which was an increase of approximately $0.2 million. The increase between the periods was primarily due to fees associated with onboarding new property managers at the Hospitality segment properties.

Real estate taxes and insurance. Real estate taxes and insurance costs were $1.6 million for the three months ended June 30, 2025, compared to $1.8 million for the three months ended June 30, 2024, which was a decrease of approximately $0.2 million. Real estate taxes and insurance expenses consist primarily of expenses from our investment in Cityplace Tower and our Hospitality properties. The decrease between the periods was primarily due to the disposition of Hospitality properties in 2025.

Advisory and administrative fees. For the three months ended June 30, 2025, the Company incurred administrative fees and advisory fees of $7.0 million, compared to $3.4 million for the three months ended June 30, 2024, which was an increase of approximately $3.6 million. The increase between the periods is primarily attributed to a one-time termination fee paid to the former NHT Adviser in connection with the termination of the advisory agreement following the NHT Merger.

Property general and administrative expenses. Property general and administrative expenses were $1.6 million for the three months ended June 30, 2025, compared to $2.2 million for the three months ended June 30, 2024, which was a decrease of approximately $0.6 million. The decrease between the periods was primarily due to the disposition of Hospitality properties in 2025.

Corporate general and administrative expenses. Corporate general and administrative expenses were $1.0 million for the three months ended June 30, 2025, compared to $3.2 million for the three months ended June 30, 2024, which was a decrease of approximately $2.2 million. The decrease between the periods was primarily due to a write off of accrued payables and expenses.

Depreciation and amortization. Depreciation and amortization costs were $4.0 million for the three months ended June 30, 2025, compared to $4.1 million for the three months ended June 30, 2024, which was a decrease of approximately $0.1 million. The decrease between the periods was primarily due to the disposition of Hospitality properties in 2025.

Interest expense. Interest expense was $6.6 million for the three months ended June 30, 2025, compared to $7.9 million for the three months ended June 30, 2024, which was a decrease of approximately $1.2 million. The decrease between the periods was primarily due a decrease in debt related to paydowns.

Equity in income (losses) of unconsolidated ventures. Equity in income (losses) of unconsolidated ventures was $0.2 million for the three months ended June 30, 2025, compared to $0.2 million for the three months ended June 30, 2024, which was flat.

Income tax expense (benefit). The Company has recorded income tax expense (benefit) of $0.1 million associated with the TRSs for the three months ended June 30, 2025, and $0.5 million associated with the TRSs for the three months ended June 30, 2024. The tax expense (benefit) for the three months ended June 30, 2025 is partially decreased by the annual change in valuation allowance on a deferred tax asset of $0.7 million for a net (benefit) of $(0.6) million for the three months ended June 30, 2025, that is recorded on the Consolidated Statement of Operations and Comprehensive Income.

Change in unrealized gains (losses). Unrealized gains (losses) from our investments accounted for at fair value was $(41.6) million for the three months ended June 30, 2025, compared to $(3.2) million for the three months ended June 30, 2024, which was a decrease of approximately $(38.4) million. The losses for the three months ended June 30, 2025 were largely driven by mark-to-market losses on NSP common equity of $16.0 million, NREF OP (“NREF OP Units”) of $7.3 million, IQHQ LP interests of $5.2 million and NREF common stock of $3.2 million. The losses for the three months ended June 30, 2024 were primarily driven by mark-to-market losses on NSP common equity of $54.9 million and

VineBrook Homes Operating Partnership, L.P. ("VB OP Units") of $20.9 million offset by mark-to-market gains on NREF OP Units of $3.7 million and mark-to-market gains on our legacy CLOs of $13.4 million.

Realized gains (losses). Realized gains (losses) were $3.5 million for the three months ended June 30, 2025, compared to $0.0 million for the three months ended June 30, 2024, which was an increase of approximately $3.5 million. The realized losses for the three months ended June 30, 2024 was primarily driven by a contingent gain on the Haygood and Allenby entities.