Company: NXDT
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001356115-25-000014
Chunk: 24

Company: NEXPOINT DIVERSIFIED REAL ESTATE TRUST
Filing Date: 2025-05-15
Form: 10-Q
Item: Item 1
Chunk 24
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 each individual contract, was not significant to the overall valuation. Additionally, in the case of interest rate caps, the NHT segment has no performance obligation, so no credit valuation adjustment is necessary. As a result, all of the NHT segment’s derivatives held as of March 31, 2025 were classified as Level 2 of the fair value hierarchy. Changes in fair value of the interest rate caps are recorded directly as interest expense on the Consolidated Statement of Operations and Comprehensive Income (Loss). For the three months ended March 31, 2025, NHT recorded $41.5 thousand in interest expense related to changes in the fair value of interest rate caps. The combined fair value of the interest rate caps is $0.7 million as of March 31, 2025, and is recorded as interest rate caps in the Consolidated Balance Sheets. As of March 31, 2025, the NHT segment had the following outstanding interest rate caps:Type of DerivativeHedged Financial InstrumentNotionalStrike RateReference RateTermination DateInterest rate capNote payable$39,3002.00%One-month SOFR2.00%February 5, 2026

10. Investments in DSTs

The Company invested in the Class 1 Beneficial Interests (“Class 1”) in two Delaware Statutory Trusts (DSTs). The Class 1 are accounted for as investments in equity securities without readily determinable fair values under the measurement alternative, which measures the investment at cost minus impairment, if any, plus or minus changes in fair 

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value when observable prices are identified. As the Class 1 are still being actively issued, the investments are held at cost with no upward or downward fair value adjustment nor impairment losses to date. Therefore, the fair value of the Investment in DSTs utilizing Level 3 inputs approximate their carrying amount. The Company recognized $0.4 million in dividend income for the three months ended March 31, 2025, and no dividend income for the three months ended March 31, 2024.As of March 31, 2025, the Company held the following investments (dollars in thousands):Balances, as of March 31, 2025Number of SharesCarrying AmountNexPoint Life Sciences II DST1,044,040$9,600 NexPoint Semiconductor DST2,625,61823,959 Total$33,559 As of December 31, 202