Company: NXDT
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001356115-25-000003
Chunk: 874

Company: NEXPOINT DIVERSIFIED REAL ESTATE TRUST
Filing Date: 2025-03-31
Form: 10-K
Item: Item 9B
Chunk 874
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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 $0.2 million as of December 31, 2024, and is recorded as interest rate caps in the Consolidated Balance Sheets. 

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As of December 31, 2024, 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%March 5, 2025

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 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 $0.7 million in dividend income for the year ended December 31, 2024, and no dividend income for the year ended December 31, 2023.As of December 31, 2024, the Company held the following investments (dollars in thousands):Balances, as of December 31, 2024Number of SharesCarrying AmountNexPoint Life Sciences II DST1,044,040$9,600 NexPoint Semiconductor DST2,296,85120,959 Total$30,559 

11. Life Settlement Portfolio

Prior to September 1, 2023, the Company, through one of its TRSs, owned 100% of the outstanding equity and debt of Specialty Financial Products, Ltd. ("SFP"), an Ireland domiciled private company with limited liability and a Designated Activity Company. At the proposal of NexAnnuity Asset Management, L.P. ("NexAnnuity"), an affiliate of the Adviser, SFP was formed for the purpose of entering into acquisitions of U.S. life settlement policies approved by NexAnnuity and funded by the issuance of debt securities, or the Structured Note purchased