Nexpoint Diversified Real Estate Trust's Third-Quarter Loss Widens

The Tip Desk · November 14, 2026 · 4 min read

Unrealized losses on fair-value investments reached $40.8 million in the three months ended September 30, 2026, as the net loss widened to $52.7 million.

Nexpoint Diversified Real Estate Trust (NXDT), a diversified REIT focused on debt and equity investments across commercial real estate, reported a net loss of $52.7 million for the three months ended September 30, 2026, compared with a $12.3 million net loss a year earlier. Net loss attributable to common shareholders widened to $55.5 million from $13.7 million.

The company said the increase in net loss related primarily to higher unrealized losses and higher equity in losses of unconsolidated ventures, partially offset by an increase in operating income and a decrease in interest expense.

Unrealized losses on investments accounted for at fair value were $40.8 million, versus $2.5 million in the year-ago quarter. The company said the 2026 losses were largely driven by mark-to-market losses on VineBrook Homes Operating Partnership common units of $15.3 million, MidWave Wireless common stock of $9.0 million, NexPoint SFR Operating Partnership units of $4.7 million, IQHQ LP interests of $3.3 million and NSP common stock of $3.2 million.

Equity in losses of unconsolidated ventures rose to $8.0 million from $0.6 million a year earlier. The company attributed the increase primarily to a $7.0 million loss on its investment in Perilune following the sale of both of Perilune’s aircraft and a liquidating distribution received in September 2026.

Total revenues were $18.2 million, up $0.7 million from $17.5 million a year earlier. Operating income swung to a $0.4 million profit from a $3.3 million operating loss. Interest expense fell to $5.2 million from $6.9 million. The company said the interest-expense decrease was attributable to the extinguishment of the PC & B Loan in February 2026, repayment of the portion of the OSL Loan allocated to the Bradenton Hampton Inn & Suites property in connection with its March 2026 sale, other mortgage and note paydowns, and a decrease in SOFR.

Rental income was $2.9 million, up from $1.6 million a year earlier. The company said the increase was primarily due to an adjustment recorded in the third quarter of 2025 for uncollectible lease income. Interest and dividends totaled $10.8 million, compared with $10.2 million a year earlier, which the company attributed to higher preferred-stock dividends and interest from debt investments.

Room revenue fell to $3.8 million from $4.8 million a year earlier. The company said the decrease was primarily due to decreased occupancy at Dallas Hilton Garden Inn and the disposition of Hospitality properties in 2026 that were held in 2025. Food and beverage revenue fell to $0.3 million from $0.6 million, which the company attributed to lower Dallas Hilton Garden Inn occupancy and renovations at St. Petersburg Marriott.

Property operating expenses were $4.7 million, down from $5.6 million a year earlier, primarily due to the Bradenton sale. Corporate general and administrative expenses were $3.0 million, down from $5.2 million, due to lower professional fees and corporate insurance. Advisory and administrative fees were $3.0 million.

As of September 30, 2026, the Diversified segment held two retail properties and one office, multifamily and hospitality property, excluding undeveloped land. Cityplace, a 1.37 million-square-foot building acquired in 2018, was 39.7% occupied, with average effective occupied rent of $2.10 per square foot. The Hospitality segment consisted of three hotels with 571 rooms.

Cityplace occupancy was 39.7% as of September 30, 2026, down from 41.2% as of June 30, 2026, with average effective occupied rent of $2.10 per square foot versus $2.05. The company said Cityplace is under redevelopment, converting part of the property into a hotel and part into multifamily units, both still under construction as of September 30, 2026. The June 30 disclosure had described only the hotel conversion.

On September 23, 2026, the trial court entered judgment in favor of James Dondero, disposing of all claims UBS asserted against him in the UBS Lawsuit. The company said neither the Bankruptcy Trust Lawsuit nor the UBS Lawsuit include claims related to its business or assets, and it does not expect the Bankruptcy Trust Lawsuit to have a material effect on its business, results of operations or financial condition.