NEXPOINT DIVERSIFIED REAL ESTATE TRUST

The nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024

The following table sets forth a summary of our operating results for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024 (in thousands):

The net loss for the nine months ended September 30, 2025 increased by $44.0 million as compared to the nine months ended September 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 $9.0 million for the nine months ended September 30, 2025, compared to $12.5 million for the nine months ended September 30, 2024, which was a decrease of approximately $3.5 million. Rental income decreased between the periods due to an increase in the allowance for bad debt related to certain tenants.

Rooms revenue. Rooms revenue was $21.4 million for the nine months ended September 30, 2025, compared to $15.5 million for the nine months ended September 30, 2024, which was an increase of approximately $5.9 million. The increase between the periods is due to the Hospitality segment not being consolidated prior to April 19, 2024.

Food and beverage revenue. F&B revenue was $2.2 million for the nine months ended September 30, 2025, compared to $1.3 million for the nine months ended September 30, 2024, which was an increase of approximately $0.9 million. The increase between the periods is due to the Hospitality segment not being consolidated prior to April 19, 2024.

Interest and dividends. Interest and dividends totaled $34.1 million for the nine months ended September 30, 2025, compared to $26.7 million for the nine months ended September 30, 2024, which was an increase of approximately $7.4 million. The increase between the periods was attributed to an increase in dividends from equity investments.

Other income. Other income was approximately $1.0 million for the nine months ended September 30, 2025, compared to $1.3 million for the nine months ended September 30, 2024, which was a decrease of approximately $0.3 million. The decrease between the periods was primarily due to a decrease in resort charges, associated with a decrease in Hospitality assets.

Property operating expenses. Property operating expenses were $18.1 million for the nine months ended September 30, 2025, compared to $14.7 million for the nine months ended September 30, 2024, which was an increase of approximately $3.4 million. The increase between the periods was primarily due to the NHT consolidation.

Property management fees. Property management fees were $1.2 million for the nine months ended September 30, 2025, compared to $1.0 million for the nine months ended September 30, 2024, which was an increase of approximately $0.2 million. The increase between the periods was primarily due to the NHT consolidation.

Real estate taxes and insurance. Real estate taxes and insurance costs were $4.7 million for the nine months ended September 30, 2025, compared to $4.7 million for the nine months ended September 30, 2024, which was flat. Real estate taxes and insurance expenses consist primarily of expenses from our investment in Cityplace Tower and our Hospitality properties.

Advisory and administrative fees. For the nine months ended September 30, 2025, the Company incurred administrative fees and advisory fees of $13.9 million. For the nine months ended September 30, 2024, the Company incurred administrative fees and advisory fees of $10.7 million. The increase between the nine months ended September 30, 2025 and the nine months ended September 30, 2024, is primarily attributed to a one-time termination fee paid to the former NHT Adviser in connection with the termination of the NHT Advisory Agreement following the NHT Merger.

Property general and administrative expenses. Property general and administrative expenses were $4.9 million for the nine months ended September 30, 2025, compared to $4.9 million for the nine months ended September 30, 2024, which was flat.

Corporate general and administrative expenses. Corporate general and administrative expenses were $9.1 million for the nine months ended September 30, 2025, compared to $8.9 million for the nine months ended September 30, 2024, which was an increase of approximately $0.2 million. The increase between periods was primarily due to an increase in professional fees.

Depreciation and amortization. Depreciation and amortization costs were $11.8 million for the nine months ended September 30, 2025, compared to $11.4 million for the nine months ended September 30, 2024, which was an increase of approximately $0.4 million. The increase between the periods was primarily due to the NHT consolidation.

Impairment loss. Impairment loss was $1.8 million for nine months ended September 30, 2025, compared to $6.1 million for the nine months ended September 30, 2024, which was a decrease of approximately $4.3 million. The decrease between the periods was due to a decrease in impairment charges recorded in 2025.

Interest expense. Interest expense was $20.8 million for the nine months ended September 30, 2025, compared to $20.7 million for the nine months ended September 30, 2024, which was an increase of approximately $0.1 million. The increase between the periods was primarily due to the NHT consolidation.

Equity in income (losses) of unconsolidated ventures. Equity in losses of unconsolidated ventures was $(0.7) million for the nine months ended September 30, 2025, compared to $(0.6) million for the nine months ended September 30, 2024, which was a decrease of approximately $0.1 million. The decrease between periods was primarily due to a decrease in net loss at Marriott Uptown.

Income tax (expense) benefit. The Company has recorded income tax (expense) benefit of $0.4 million associated with the TRSs for the nine months ended September 30, 2025 and $(1.6) million associated with the TRSs for the nine months ended September 30, 2024. The tax expense for the nine months ended September 30, 2025 is comprised of an income tax expense of $1.1 million, offset with a return-to-tax provision of $0.5 million and a decrease of income tax estimate of $1.0 million for a net benefit of $0.4 million for the nine months ended September 30, 2025 that is recorded on the Consolidated Statements of Operations and Comprehensive Income (Loss). The tax expense for the nine months ended September 30, 2024 is partially offset by the annual change in valuation allowance on a deferred tax asset of $0.2 million for a net expense of $1.6 million for the nine months ended September 30, 2024, that is recorded on the Consolidated Statements of Operations and Comprehensive Income.

Change in unrealized gains (losses). Unrealized gains (losses) from our investments accounted for at fair value was $(77.5) million for the nine months ended September 30, 2025, compared to $2.3 million for the nine months ended September 30, 2024, which was a decrease of approximately $(79.8) million. The losses for the nine months ended September 30, 2025 were largely driven by mark-to-market losses on VB OP Units of $22.9 million, NexPoint SFR OP partnership units of $13.4 million, IQHQ LP interests of $15.1 million and NREF OP Units of $7.4 million. The gains for the nine months ended September 30, 2024 were largely driven by redemptions of the legacy CLO positions, which generated realized losses and a positive change in unrealized, mark-to-market gains on VB OP Units of $7.8 million, offset by NREF OP Units of $9.3 million, and NREF common stock of $4.0 million.

Realized gains (losses). Realized gains (losses) were $5.0 million for the nine months ended September 30, 2025, compared to $(21.9) million for the nine months ended September 30, 2024, which was an increase of approximately $26.9 million. The gains for the nine months ended September 30, 2025 were primarily driven by realized gains on United Development Funding IV common equity. The losses for the nine months ended September 30, 2024 were primarily driven by realized losses on the legacy CLOs of $22.8 million.