Company: NXDT
Filing Date: 2025-01-21
Form Type: 424B3
Source: 0001437749-25-001494
Chunk: 430

Company: NEXPOINT DIVERSIFIED REAL ESTATE TRUST
Filing Date: 2025-01-21
Form: 424B3
Chunk 430
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 reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The key inputs into our impairment analysis include, but are not limited to, the holding period, net operating income, and capitalization rates. In such cases, we will evaluate the recoverability of such real estate assets based on estimated future cash flows and the estimated liquidation value of such real estate assets, and provide for impairment if such undiscounted cash flows are insufficient to recover the carrying amount of the real estate asset. If impaired, the real estate asset will be written down to its estimated fair value. The Company’s impairment analysis identifies and evaluates events or changes in circumstances that indicate the carrying amount of a real estate investment may not be recoverable, including determining the period the Company will hold the rental property, net operating income, and the estimated capitalization rate for each respective real estate investment.

Inflation

The real estate market has not been directly affected by inflation in the past several years due to increases in rents nationwide. Our lease terms are generally for a period of one year or more and rental rates reset to market if renewed. The majority of our leases also contain protection provisions applicable to reimbursement billings for utilities.

Inflation may also affect the overall cost of debt, as the implied cost of capital increases. The Federal Reserve has raised interest rates to combat inflation and restore price stability. We intend to mitigate these risks through long-term fixed interest rate loans and interest rate hedges.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Not required.

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I-79</div>

Item 8. Financial Statements and Supplementary Data

Index to Consolidated Financial Statements

| Report of Independent Registered Public Accounting Firm                                                                                           
 Consolidated Balance Sheets as of December 31, 2023 and December 31, 2022                                                                         
 Consolidated Statements of Operations and Comprehensive Income (Loss) for the Year Ended December 31, 2023 and Six Months Ended December 31, 2022 |     | Page 
   76 
   81 
   83 |
|:--------------------------------------------------------------------------------------------------------------------------------------------------|:----|-----:|
| Consolidated Statement of Operations for the Six Months Ended June 30, 2022 (Predecessor Basis)                                                   |     |   84 |
| Consolidated Statement of Operations for the Year Ended December 31, 2021 (Predecessor Basis)                                                     |     |   85 |
| Consolidated Statements