NexPoint Diversified Real Estate Trust 5.50% Series A Cumulative Preferred Shares ($25.00 liquidation preference per share) Status update

Kristen, please go ahead. Good day, everyone, and welcome to NexPoint Diversified Real Estate Investor update call.

On the call today are Matt McGraner, Executive Vice President, Chief Investment Officer, Paul Richards, Executive Vice President and Chief Financial Officer, and John Good, Chief Executive Officer of NexPoint Storage Partners and Chief Executive Officer of VineBrook Homes Trust Inc. Before we begin, I would like to remind everyone that this update call and accompanying presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on management's current expectations, assumptions, and beliefs. Listeners should not place undue reliance on any forward-looking statements and are encouraged to review the company's annual report on Form 10-K and the company's other filings with the SEC for a more complete discussion of risks and other factors that could affect the forward-looking statements.

The statements made during this conference call speak only as of today's date, and except as required by law, NXDT does not undertake any obligation to publicly update or revise any forward-looking statements. I would now like to turn the call over to Matt. Please go ahead, Matt. Thank you, Kristen.

Thank you to everyone for joining the call this morning for an update on NXDT's progress in the second quarter. I am joined today by Paul Richards, CFO, and John Good, CEO of our storage and single-family rental businesses. This morning, we will discuss NXDT's real estate markets, provide updates on our top holdings, and as always, focus on the steps we are taking to close the gap between our share price and the underlying value of the portfolio. First, I would like to spend a few minutes on the residential market and the supply picture, and then update you on the continuing progress of our Cityplace office to residential conversion. I will then turn the call over to John and Paul to cover storage, SFR, and our credit vehicles.

I'll close with our efforts to monetize assets, repurchase stock, and narrow our discount to NAV, which remains our key near-term focus. Turning to the multifamily supply picture. The inflection we described on prior calls is now beginning to show up in the data. Nationally, trailing 12-month absorption has overtaken new deliveries for the first time since early 2022. Vacancy posted its first meaningful decline in over a year, and asking rents have begun to grind positive. We continue to expect our Sun Belt markets to lag the national turn, given the supply still to be absorbed, but the direction is now unmistakable, and it is underpinned by the same four factors we have highlighted. Persistent structural demand. The cost to own a home remains roughly three times the cost to rent an apartment in our markets. A steep decline in new deliveries.

National completions have fallen from a 2024 peak of roughly 696,000 units to an estimated 421,000 units this year and continue to trend lower. Construction starts running well below their 2022 peak, locking in a multiyear supply trough. Finally, concession burn-off. With roughly 40% of units nationally still advertising a discount, the normalization of concessions flows directly through to gross potential rent. On our Cityplace Uptown submarket specifically, the supply picture is almost nonexistent, with just 232 units delivering in the submarket in 2027 and zero currently slated for 2028 and beyond. Our redevelopment of the Cityplace apron is now fully defined. Approximately 460 multifamily units across the roughly six-acre apron surrounding the tower, with a curated ground floor retail program anchored by a boutique grocer and a rooftop amenity oriented to the downtown Dallas skyline.

On the tower itself, residential design and programming continue, phased intentionally behind the apron. Now, in the second half of the year, we've turned our attention to tower financing, and we remain bullish on commencing this residential project as submarket supply falls off of a cliff. Now I'd like to turn the call over to John.

John? Thanks, Matt. Welcome, everyone.

First, going to occupancy of our self-storage portfolio. At June 30, 2026, our physical occupancy was 94.1%, which was up 240 basis points from December 31, 2025, where occupancy was at 91.7%, and we're 30 basis points less than the 94.4% occupancy at June 30, 2025. Our occupancy levels have performed to normal seasonal expectations, and our physical occupancy continues to rank among the highest in the self-storage industry. As for rental rates, sector-wide rental rates inched forward as we completed the 2026 rental season. We generally outperformed the sector. Our portfolio's in-place rate on June 30 was $20.54 per foot, up 6.3% from the $19.33 per foot at June 30, 2025, and up 183 basis points from the $20.17 per foot at the beginning of the year.

Our average street rate increased 230 basis points from $21.88 at June 30, 2025, to $22.38 at June 30, 2026. Growth in our average web rate, which is the rate charged to customers who find units and rent via the internet, comprising the majority of our customers was up 330 basis points year-over-year from $15.73 at June 30, 2025, to $16.25 at June 30, 2026. We view these rates to be indicative of a return to steady, if slow, rent growth for the entire self-storage sector. Moreover, we expect these rate increases, along with stable occupancy, to support a 5%-6% increase in our same-store revenue for 2026, which is significantly ahead of what the public REITs are forecasting.

As for revenue and net operating income, same-store revenue for the quarter ended June 30, 2026, was $23.7 million, or 6.1% higher than the $22.4 million recognized in the second quarter of 2025. Net operating income for the second quarter 2026 was $14.9 million, or 15.2% higher than the Q2 2025 NOI of $12.9 million. These results were driven by strong occupancy, good rate growth, and strong expense control. Our results continue to lead the publicly traded storage REITs by a large margin, as those REITs are forecasting for the year approximately flat NOI growth and 1%-2% top-line growth. Demand in the self-storage sector has typically been led by housing mobility and life events. The housing market has remained very weak, which has continued to suppress self-storage demand in some areas.

However, our portfolio is the youngest portfolio of size in the storage sector, and our facilities are located in large, dense urban submarkets where demand is driven more by need and less by mobility. We believe our exceptional locations and strong demographic profile insulate us to a large degree from the continued slow housing market that is burdening the rest of the sector and has allowed us to substantially outperform our peers. Turning to the supply picture. Development remains limited nationwide due to high borrowing costs, land scarcity, significant inflation in materials costs, and permitting challenges, as well as a continued weak housing market that has weighed on self-storage demand. In other words, anyone who is underwriting a storage development now has a really hard time determining what future rents will be.

Most experts in the sector believe this dynamic will continue for the next several quarters, providing a potential tailwind to the storage sector in 2027 and 2028. We continue to believe we have the preeminent urban storage portfolio in the United States that will continue to outperform our peers and command a premium valuation upon any liquidity event. We continue to evaluate strategic alternatives for our storage platform. Turning to VineBrook Homes. Over the past two years, VineBrook's management team has focused on fortifying our balance sheet to reduce our capital cost and effectively eliminate threats from short-term debt maturities; right-sizing our G&A structure with a goal of $15 million of G&A annual savings; and beginning a very significant and impactful portfolio repositioning involving exiting underperforming scattered-site homes and markets and redirecting invested capital to newer, better located, and easier-to-manage built-to-rent homes in more dynamic markets and submarkets.