Company: NREF
Filing Date: 2025-08-07
Form Type: 10-Q
Source: 0001786248-25-000016
Chunk: 106

Company: NexPoint Real Estate Finance, Inc.
Filing Date: 2025-08-07
Form: 10-Q
Item: Item 8
Chunk 106
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, L.P.; however, the Company has no controlling financial interest nor significant influence in IQHQ, L.P.

The loan participation was considered a transfer of the IQHQ Promissory Note and the IQHQ Bridge Warrant and is considered a transfer of the Series E of IQHQ and the IQHQ Series E Warrant qualified as a sale under ASC 860, Transfers and Servicing, as (1) the transfer legally isolated the transferred assets from the transferor, (2) the transferee has the right to pledge or exchange the transferred assets and no condition both constrains the transferee’s right to pledge or exchange the 

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assets and provides more than a trivial benefit to the transferor, and (3) the transferor does not maintain effective control over the transferred assets. The IQHQ Promissory Note was classified as Loans, held-for-investment, net, the Series E of IQHQ is classified as preferred stock and the IQHQ Bridge Warrant is classified as Stock warrant investments. The IQHQ Bridge Warrants are accounted for as investments in equity securities under ASC 321, Investments – Equity Securities, and the Company elected to use the fair value option. As a result, the IQHQ Bridge Warrants are being fair valued using an option pricing model that considers both short and long-term exit scenario. The model incorporates economic and control rights, marketability of the Units, and other market-derived metrics, applying discounts for lack of marketability and control due to the minority stake and absence of public trading options.

As of June 30, 2025, the Company has funded $94.5 million of IQHQ Subscription Agreement, with an unfunded commitment balance of $65.5 million.

The table below shows the Company's unfunded commitments by investment type as of June 30, 2025 and December 31, 2024 (in thousands):

Investment TypeJune 30, 2025December 31, 2024Unfunded Commitments Unfunded CommitmentsLoans$39,035 $64,217 Preferred Equity4,214 7,874 Common Equity1,536 2,536 Preferred Stock65,500 150,000 $110,285 $224,627 

Critical Accounting Policies and Estimates

Management’s discussion and analysis of financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires our management to make judgments,