NEXPOINT DIVERSIFIED REAL ESTATE TRUST

8. Equity Method Investments

Below is a summary of the Company’s equity method investments as of June 30, 2025 (dollars in thousands):

Below is a summary of the Company's investments as of June 30, 2025 that qualify for equity method accounting for which the Company has elected to account for using the fair value option. Amounts are included in "Investments, at fair value" on the Consolidated Balance Sheets.

Below is a summary of the Company’s equity method investments as of December 31, 2024 (dollars in thousands):

Below is a summary of the Company's investments as of December 31, 2024 that qualify for equity method accounting for which the Company has elected to account for using the fair value option. Amounts are included in "Investments, at fair value" on the Consolidated Balance Sheets.

(1)Represents the Company’s percentage share of net assets of the investee per the investee’s books and records.

(2)Represents the difference between the basis at which the investments in unconsolidated ventures are carried by the Company and the Company's proportionate share of the equity method investee's net assets. To the extent that the Company’s cost basis is different from the basis reflected at the joint venture level, the basis difference is generally amortized over the lives of the related assets and liabilities, and such amortization is included in the Company’s share of equity in earnings of the joint venture.

(3)The Company owns greater than 50% of the outstanding common equity but is not deemed to be the primary beneficiary or have a controlling financial interest of the investee and as such, accounts for the investee using the equity method.

(4)The Company owns 100% of Las Vegas Land Owner, LLC which owns 77% of a joint venture that owns an 8.5 acre tract of land (the "Tivoli North Property"). Through a tenants in common arrangement, the Company shares control and as such accounts for this investment using the equity method.

(5)The Company has a 50% non-controlling interest in Claymore Holdings, LLC (“Claymore”) and Allenby, LLC, (“Allenby”). The Company has determined it is not the primary beneficiary and does not consolidate these entities.

(6)The Company owns less than 20% of the investee but has significant influence due to members of the management team serving on the board of the investee or its parent and as such, accounts for the investee using the equity method.

(7)The Company has a 31% non-controlling interest in Haygood, LLC, (“Haygood”). The Company has determined it is not the primary beneficiary and does not consolidate this entity.

(8)The Company owns less than 20% of the investee but has significant influence due to the legal nature of a partnership that implies an inherent right to influence the operating and financial policies of the partnership.

(9)The Company owns 100% of the preferred units in AMS C-Store JV, LLC but is not deemed to be the primary beneficiary or have a controlling financial interest of the investee and as such, accounts for the investee using the equity method.

Marriott Uptown Basis

As of June 30, 2025, the Company held an equity method investment in AM Uptown, LLC (“Marriott Uptown”). The Company accounts for this investment under the equity method of accounting, as it has the ability to exercise significant influence over operating and financial policies.

During the three months ended June 30, 2025, the Company received cash distributions of $2.2 million from Marriott Uptown. These distributions exceeded the Company’s equity method investment balance, which was $0.8 million as of March 31, 2025. Because the Company has continuing obligations to Marriott Uptown, including a guarantee of certain recourse debt, the excess of distributions over the carrying value of the investment was not recognized as a gain. Instead, the Company recorded a liability of $1.4 million, which is presented within “Accounts payable and other accrued liabilities” on the Consolidated Balance Sheets.

For the three months ended June 30, 2025, the Company also recognized its share of net income from Marriott Uptown, of approximately $0.1 million, reducing the liability to $1.3 million as of June 30, 2025.

The Company will continue to evaluate the investment for indications of other-than-temporary impairment and will assess whether its obligations under the guarantee require recognition of additional liabilities.

Significant Equity Method Investments

For its interim reporting, the Company assesses and presents summarized financial information for its significant equity method investments in accordance with Rule 10-01(b)(1) of Regulation S-X. The Company reports the financial information on a three-month lag to align with the availability of investee financials. NexPoint Real Estate Finance, Inc. ("NREF"), VineBrook Homes Trust, Inc. ("VineBrook") and NexPoint Storage Partners, Inc. (“NSP”) do not prepare standalone financials for their operating companies as all operations and investments are owned through their operating companies and are consolidated by the corporate entities.

The table below presents summarized statement of operations for the three months ended March 31, 2025 for the Company’s equity method investments (dollars in thousands):

The table below presents the summarized statement of operations for the three months ended March 31, 2024 for the Company’s significant equity method investments (dollars in thousands):

9. Fair Value of Financial Instruments

The table below summarizes the Company’s assets within the valuation hierarchy carried at fair value on a recurring basis as of June 30, 2025 (in thousands):

The table below summarizes the Company’s assets within the valuation hierarchy carried at fair value on a recurring basis as of December 31, 2024 (in thousands):

The table below sets forth a summary of changes in the Company’s Level 3 assets (assets measured at fair value using significant unobservable inputs) for the six months ended June 30, 2025 (in thousands):

The table below sets forth a summary of changes in the Company’s Level 3 assets (assets measured at fair value using significant unobservable inputs) for the six months ended June 30, 2024 (in thousands):

(1) As a result of the NHT consolidation, certain investments were eliminated or acquired.