Company: NREF
Filing Date: 2025-11-13
Form Type: 10-Q
Source: 0001628280-25-052000
Chunk: 18

Company: NexPoint Real Estate Finance, Inc.
Filing Date: 2025-11-13
Form: 10-Q
Item: Item 8
Chunk 18
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 loan’s carrying value. We may instead elect to employ different methods to estimate credit losses that also conform to ASC 326 and related guidance.Nonaccrual and Past Due Loans We cease accruing interest on loans if we deem the interest to be uncollectible with any previously accrued uncollected interest on the loan charged to interest income in the same period. The amortized cost basis, net of specific CECL allowance, for loans on nonaccrual was $21.3 million as of September 30, 2025.Loan Modifications Pursuant to ASC 326 During the nine months ended September 30, 2025, the Company utilized term extensions as the primary modification type for financing receivables related to borrowers experiencing financial difficulty for the two loans that were placed on nonaccrual status. These modifications generally involved extending the contractual maturity dates to provide additional time for repayment without reducing the principal balance or interest rate. The extensions were granted after evaluating borrower-specific circumstances and were intended to improve collectability while maintaining the contractual cash flows.The following table summarizes our expected credit loss reserve for the nine months ended September 30, 2025 and 2024 (dollars in thousands):For the Nine Months Ended September 30,20252024Balances, January 1,$(1,377)$(2,100)(Provision for) reversal of credit losses(24,589)720 Balances, September 30,$(25,966)$(1,380)

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The following table summarizes our expected credit loss reserve as of September 30, 2025 and 2024 (dollars in thousands):20252024General Reserve$6,978 $1,380 Specific Reserve18,988 — Total Reserve$25,966 $1,380 Significant judgment is required in determining impairment and in estimating the resulting loss allowance, and actual losses, if any, could materially differ from those estimates.The Company performs a quarterly review of the portfolio. In conjunction with this review, the Company assesses the risk factors of each loan, including, without limitation, loan-to-value ratio, debt yield, property type, geographic and local market dynamics, physical condition, collateral, cash-flow volatility, leasing and tenant profile, loan structure, exit plan and project sponsorship. Based on a 5-point scale, our loans are rated “1” through “5,” from least risk to greatest risk, respectively, which ratings are defined as follows:1 – Outperform – Materially exceeds performance