Nexpoint Diversified Turns to Profit After Mark-to-Market Reversal
The REIT posted $2.0 million of net income in the three months ended June 30, 2026, after a $21.3 million net loss in the prior quarter.
Nexpoint Diversified Real Estate Trust (NXDT) swung to $2.0 million in net income for the three months ended June 30, 2026, from a $21.3 million net loss in the three months ended March 31, 2026, as mark-to-market results on fair-value investments reversed.
Net income primarily related to mark-to-market gains on investments accounted for at fair value and an increase in operating income. Change in unrealized gains was $6.5 million in the June quarter, versus a $15.3 million unrealized loss in the March quarter.
The $6.5 million unrealized gain was largely driven by mark-to-market gains on NREF OP common units of $8.2 million and NREF common stock of $6.0 million, offset by mark-to-market losses on MidWave Wireless common stock of $2.8 million, VineBrook Homes Operating Partnership common units of $2.6 million and NexPoint SFR Operating Partnership units of $3.3 million. Realized gains were $0.1 million.
Net income attributable to common shareholders was $61 thousand, versus a net loss attributable to common shareholders of $23.0 million in the prior quarter.
Operating income was $2.1 million in the June quarter, down from $3.5 million in the March quarter. Total revenues were $19.3 million, down from $22.9 million.
Interest and dividends totaled $10.7 million, down from $11.1 million in the prior quarter. The year-over-year increase in that line reflected higher dividends from preferred stock investments and higher interest income from debt investments. Other income was approximately $0.8 million, including a co-development fee of approximately $0.5 million.
Rental income was $2.9 million, primarily due to a decrease in occupancy at Cityplace. Room revenue was $4.4 million and food and beverage revenue was $0.6 million, both down from the prior quarter after 2025 dispositions of Hospitality properties.
Interest expense was $5.3 million, down from $5.7 million in the March quarter. The year-over-year decline was primarily attributable to the extinguishment of the PC & B Loan in February 2026, repayment of the OSL Loan portion allocated to the Bradenton Hampton Inn & Suites in connection with that property’s March 2026 sale, paydowns on other mortgage and note payable balances, and a decrease in SOFR. Loss on extinguishment of debt and modification costs was $0.2 million, tied to extinguishment of the previous note due to OSL on White Rock Center.
Equity in losses of unconsolidated ventures was $0.9 million, versus a $0.0 million loss in the March quarter, primarily due to an increase in net loss on equity interests in Perilune Aero Equity Holdings One, LLC. Income tax expense was $0.4 million, versus $0.9 million of tax expense in the prior quarter.
As of June 30, 2026, the Diversified segment held two retail properties and one office, multifamily and hospitality property, excluding undeveloped land. Cityplace, a 1.36 million-square-foot trophy office building under redevelopment with a hotel conversion still under construction, was 41.2% occupied with average effective monthly occupied rent of $2.05 a square foot, unchanged from March 31, 2026. White Rock Center was 81.4% occupied at $1.62 a square foot. 5916 W Loop 289 remained 0.0% occupied.
The Hospitality segment consisted of three hotel properties totaling 571 rooms after the Bradenton Hampton Inn & Suites sale, versus four properties and 690 rooms at year-end 2025.
The Bankruptcy Trust Lawsuit or the UBS Lawsuit is not expected to have a material effect on the company’s business, results of operations or financial condition. A stay of the Bankruptcy Trust Lawsuit was lifted effective July 15, 2026.
The 21st Century ROAD to Housing Act, enacted July 11, 2026 and effective January 7, 2027, generally restricts large institutional investors from purchasing single-family homes, subject to exemptions. The ROAD Act and the prospect of similar laws may adversely impact the value of certain of the company’s investments.
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