Vinebrook Homes Trust Inc

11/07/2025 | Press release | Distributed by Public on 11/07/2025 14:21

Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
The following is a discussion and analysis of our financial condition and our historical results of operations. The following should be read in conjunction with our financial statements and accompanying notes included herein and with our Annual Report on Form 10-K, filed with the SEC on March 28, 2025. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those projected, forecasted, or expected in these forward-looking statements as a result of various factors, including, but not limited to, those discussed below and elsewhere in this Form 10-Q. See "Cautionary Note Regarding Forward-Looking Statements" in this report and the information under the heading "Risk Factors" in Part I, Item IA, "Risk Factors" of our Annual Report. Our management believes the assumptions underlying the Company's financial statements and accompanying notes are reasonable. However, the Company's financial statements and accompanying notes may not be an indication of our financial condition and results of operations in the future.
Overview
The Company is an owner and operator of single-family rental homes that are rented to residents under leases with typical durations of one year. The Company's mission is to provide our residents with affordable, safe, clean and functional homes with a high level of service through institutional, quality management. Our investment objective is to acquire properties with cash flow growth potential, renovate (when appropriate) and maintain our homes to deliver a high-quality resident experience, while providing quarterly cash distributions and seeking long-term capital appreciation for our stockholders. Our investment focus has historically been on the affordable and workforce segments of the housing industry, but we are not precluded from investing in homes in the higher-cost segments of the housing industry.
The Company has two reportable segments, the VineBrook Portfolio and the NexPoint Homes Portfolio. The VineBrook Portfolio is the Company's primary reportable segment comprised of 20,365 homes as of September 30, 2025 which represents a significant majority of the Company's consolidated portfolio and operations. The VineBrook Portfolio generally purchases homes to implement a value-add strategy where we acquire, renovate (when appropriate), lease, maintain and otherwise manage single family rental homes primarily located in large to medium size cities and suburbs located in the midwestern, heartland and southeastern United States. Through this strategy, we seek to improve rental rates and net operating income ("NOI") at our homes. In addition to our value-add strategy, Company management has begun to underwrite acquisitions of, and the Company has begun to acquire, newer homes in "built-to-rent" ("BTR") communities in higher growth submarkets within or complementary to our existing geographic footprint. The NexPoint Homes Portfolio is a reportable segment comprised of 2,076 homes as of September 30, 2025 and represents a minority of the Company's consolidated portfolio and operations. The NexPoint Homes Portfolio is a reportable segment that generally purchases newer homes that require less rehabilitation compared to the VineBrook Portfolio. As of September 30, 2025, we, through our OP and its consolidated subsidiaries, owned and operated 22,441 single family rental homes located in 20 states. We are externally advised by the Adviser through the Advisory Agreement, which will automatically renew on the anniversary of the renewal date for one-year terms thereafter, unless otherwise terminated.
On June 10, 2025, the OP entered into the Externalization Agreements with the Evergreen Manager. Pursuant to the Externalization Agreements, the Evergreen Manager will provide property management services to and generally operate the VineBrook Portfolio as well as provide certain asset management, acquisition, disposition and other services previously provided by a subsidiary of the OP. On July 18, 2025, the initial group of properties within the VineBrook Portfolio was transitioned to the Evergreen Manager platform, a second group of properties was transitioned on September 17, 2025 and the final group was transitioned after quarter-end on October 22, 2025. On the Transition Effective Date, all of the Legacy VineBrook Management Agreements will have terminated. As a result of the Management Agreements, on the Transition Effective Date the VineBrook Portfolio will be externally managed by the Evergreen Manager.
The NexPoint Homes Portfolio has transitioned property management to Mynd, as discussed in Note 4 of our consolidated financial statements.
On October 16, 2019, Highland Capital Management, L.P. ("Highland"), a former affiliate of our Adviser, filed for Chapter 11 bankruptcy protection with the United States Bankruptcy Court for the District of Delaware (the "Highland Bankruptcy"), which was subsequently transferred to the United States Bankruptcy Court for the Northern District of Texas (the "Bankruptcy Court"). On October 15, 2021, Marc S. Kirschner, as litigation trustee of a litigation subtrust formed pursuant to the plan of reorganization and disclosure statement which became effective on August 11, 2021, filed a lawsuit (the "Bankruptcy Trust Lawsuit") against various persons and entities, including NexPoint Advisors, L.P. ("NexPoint") and James Dondero. On March 24, 2023, the litigation trustee filed a motion for leave to stay the Bankruptcy Trust Lawsuit, which was granted by the Bankruptcy Court on April 4, 2023. On June 30, 2025, the bankruptcy court approved a
settlement agreement between Highland and Hunter Mountain Investment Trust ("HMIT") pursuant to which the claims asserted in the Bankruptcy Trust Lawsuit were assigned to HMIT. HMIT subsequently filed a motion to lift the stay of the Bankruptcy Trust Lawsuit, which was granted and became effective on October 3, 2025. As of the date of this filing, the Bankruptcy Trust Lawsuit bankruptcy court has requested briefing from the parties regarding whether the court continues to have jurisdiction over the Bankruptcy Trust Lawsuit given the assignment of claims from Highland to HMIT. Briefs on this matter are due on November 18, 2025. On February 8, 2023, UBS Securities LLC and UBS AG London (collectively, "UBS") filed a lawsuit in the Supreme Court of the State of New York, County of New York related to a default that occurred in 2009 on a warehouse facility between UBS and funds affiliated with Highland. The lawsuit makes claims against several persons and entities, including Mr. Dondero, the President of the Adviser, seeking to collect on $1.3 billion in judgments UBS obtained against entities that were managed indirectly by Highland (the "UBS Lawsuit"). On March 7, 2023, the matter was removed to the United States District Court for the Southern District of New York. On April 6, 2023, UBS moved to have the case remanded to New York state court. The federal court remanded the state-law causes of action and retained and stayed the federal cause of action. On February 26, 2024, several of the respondents, including Mr. Dondero, filed motions in state court to dismiss the UBS Lawsuit on various grounds. A hearing was held on July 8, 2024. The court dismissed the claims against one respondent, CLO HoldCo, Ltd., for lack of personal jurisdiction in a July 12, 2024 order. On March 26, 2025, the court entered an order denying the remaining motions to dismiss and directed the respondents to file an answer to the UBS Lawsuit within 20 days, which they did. Mr. Dondero is appealing the denial of the motion to dismiss to the Appellate Division of the Supreme Court of the State of New York. Neither the Bankruptcy Trust Lawsuit nor the UBS Lawsuit include claims related to our business or our assets. Our Adviser and Mr. Dondero have informed us they believe the Bankruptcy Trust Lawsuit has no merit, and Mr. Dondero has informed us he believes the UBS Lawsuit has no merit; we have been advised that the defendants named in each of the lawsuits intend to vigorously defend against the claims. We do not expect the Bankruptcy Trust Lawsuit or the UBS Lawsuit will have a material effect on our business, results of operations or financial condition.
The United States government announced a comprehensive set of tariffs in the second quarter of 2025. Following the pause of certain of these tariffs, the majority of the previously announced tariffs have been implemented. The United States government has indicated that it could impose additional tariffs on particular countries and impose global tariffs on certain goods. Such tariffs could impact our results of operations by increasing the costs of various goods, including construction materials. Management is actively engaged with vendors and business partners to reduce financial risks of tariffs; however, the impact of such tariffs is subject to uncertainties regarding the timing of their implementation, the magnitude of such tariffs and possible exemptions for certain goods, among other uncertainties.
Our website is located at www.vinebrookhomes.com. From time to time, we may use our website as a distribution channel for material Company information.
Pathway to Homeownership Program
In 2024, we began our "Pathway to Homeownership" program, providing qualified residents with opportunities for home ownership. This initiative empowers individuals and families residing in a VineBrook Portfolio home to purchase their home outright by securing a conventional mortgage, enabling them to build equity in an affordable property. Residents of VineBrook Portfolio homes also have access to nationally recognized financial counseling and literacy resources at no additional cost to them through VineBrook's partnership with Operation Hope. These services include workshops that focus on topics such as money management, credit and homeownership, all geared to help residents attain financial freedom. VineBrook is one of the only large single-family rental companies dedicated to providing affordable and workforce housing. Through the Pathway to Homeownership, we have added yet another option for affordable, accessible single-family living that otherwise might not be available in a supply-challenged market.
Our VineBrook Portfolio
Since our formation, we have significantly grown our VineBrook Portfolio. When the Company began operations on November 1, 2018, the Initial Portfolio consisted of 4,129 homes located in Ohio, Kentucky and Indiana. As of September 30, 2025 and 2024, the VineBrook Portfolio consisted of 20,365 and 20,959 homes, respectively, in 18 states. As of September 30, 2025 and 2024, the VineBrook Portfolio had an occupancy of 94.7% and 95.4%, respectively, and a weighted average monthly effective rent of $1,339 and $1,279, respectively, per occupied home. As of September 30, 2025 and 2024, the occupancy of stabilized homes in our VineBrook Portfolio was 94.6% and 94.9%, respectively, and the weighted average monthly effective rent of occupied stabilized homes was $1,357 and $1,293, respectively. As of September 30, 2025 and 2024, 23.4% and 25.9%, respectively, of homes in our VineBrook Portfolio were excluded from being stabilized either because the homes were in rehabilitation or were purchased with residents in place or were classified as held for sale. The table below provides summary information regarding our VineBrook Portfolio as of September 30, 2025.
Market State # of Homes Portfolio Occupancy Average Effective Rent # of Stabilized Homes Stabilized Occupancy Stabilized Average Monthly Rent
Cincinnati OH, KY 2,722 95.4 % $ 1,450 2,310 94.8 % $ 1,471
Dayton OH 2,694 96.1 % 1,344 2,557 96.1 % 1,338
St. Louis MO 1,683 96.1 % 1,282 1,138 95.4 % 1,308
Columbus OH 1,597 95.5 % 1,404 1,469 95.1 % 1,408
Indianapolis IN 1,396 92.4 % 1,268 1,099 93.4 % 1,295
Memphis TN, MS 1,272 92.0 % 1,060 913 91.1 % 1,063
Kansas City MO, KS 1,069 95.0 % 1,342 832 94.8 % 1,351
Birmingham AL 1,016 95.9 % 1,294 668 96.0 % 1,306
Columbia SC 932 90.9 % 1,354 611 90.3 % 1,372
Jackson MS 762 96.3 % 1,356 630 95.7 % 1,365
Milwaukee WI 744 96.8 % 1,423 572 96.0 % 1,465
Augusta GA, SC 618 95.5 % 1,312 446 94.8 % 1,366
Pensacola FL 377 91.8 % 1,474 215 93.0 % 1,424
Greenville SC 360 96.7 % 1,441 265 96.2 % 1,503
Portales NM 350 94.6 % 1,230 137 93.4 % 1,239
Pittsburgh PA 318 95.9 % 1,237 259 95.0 % 1,269
Atlanta GA 309 90.0 % 1,488 117 88.9 % 1,541
Montgomery AL 285 94.4 % 1,337 243 93.8 % 1,346
Huntsville AL 272 93.4 % 1,339 202 92.6 % 1,348
Little Rock AR 254 91.7 % 1,019 240 91.3 % 1,018
Omaha NE, IA 252 96.4 % 1,414 235 96.2 % 1,421
Raeford NC 250 94.4 % 1,339 167 93.4 % 1,367
Triad NC 216 93.1 % 1,402 175 92.0 % 1,404
Myrtle Beach SC 97 93.8 % 2,111 91 100.0 % 2,250
Sub-Total/Average 19,845 94.7 % $ 1,339 15,591 94.6 % $ 1,357
Held for Sale 520 n/a n/a n/a n/a n/a
Total/Average 20,365 94.7 % $ 1,339 15,591 94.6 % $ 1,357
As of December 31, 2024, the VineBrook Portfolio consisted of 20,804 homes in 18 states with an occupancy of 96.3% and a weighted average monthly effective rent of $1,296 per occupied home. As of December 31, 2024, the occupancy of stabilized homes in our VineBrook Portfolio was 95.7% and the weighted average monthly effective rent of occupied stabilized homes was $1,309. As of December 31, 2024, 22.7% of homes in our VineBrook Portfolio were excluded from being stabilized either because the homes were in rehabilitation or were purchased with residents in place. The table below provides summary information regarding our VineBrook Portfolio as of December 31, 2024:
Market State # of Homes Portfolio Occupancy Average Effective Rent # of Stabilized Homes Stabilized Occupancy Stabilized Average Monthly Rent
Cincinnati OH, KY 2,866 96.2 % $ 1,360 2,367 95.8 % $ 1,376
Dayton OH 2,717 97.1 % 1,268 2,559 97.1 % 1,264
St. Louis MO 1,773 94.9 % 1,195 1,134 93.5 % 1,217
Columbus OH 1,626 96.0 % 1,317 1,488 95.6 % 1,319
Indianapolis IN 1,403 96.7 % 1,302 1,087 96.2 % 1,318
Memphis TN, MS 1,331 94.4 % 1,080 897 92.9 % 1,093
Kansas City MO, KS 1,086 96.9 % 1,338 813 96.4 % 1,350
Birmingham AL 1,035 96.3 % 1,290 635 95.3 % 1,301
Columbia SC 949 95.9 % 1,418 581 94.7 % 1,453
Jackson MS 802 96.5 % 1,255 646 96.1 % 1,259
Milwaukee WI 770 96.4 % 1,332 557 95.5 % 1,387
Atlanta GA 655 96.5 % 1,631 265 92.8 % 1,681
Augusta GA, SC 635 97.5 % 1,237 433 97.0 % 1,308
Greenville SC 376 96.8 % 1,356 266 95.9 % 1,418
Portales NM 350 96.0 % 1,171 137 91.2 % 1,185
Pittsburgh PA 340 97.4 % 1,159 267 97.4 % 1,187
Pensacola FL 300 95.0 % 1,461 200 92.5 % 1,479
Montgomery AL 295 94.9 % 1,272 242 94.6 % 1,290
Huntsville AL 274 98.5 % 1,416 195 97.9 % 1,430
Omaha NE, IA 272 98.9 % 1,322 252 99.2 % 1,334
Little Rock AR 260 96.9 % 1,072 243 97.1 % 1,076
Raeford NC 250 98.0 % 1,272 151 97.4 % 1,318
Triad NC 219 96.8 % 1,432 174 96.0 % 1,461
Sub-Total/Average 20,584 96.3 % $ 1,296 15,589 95.7 % $ 1,309
Held for Sale 220 n/a n/a n/a n/a n/a
Total/Average 20,804 96.3 % $ 1,296 15,589 95.7 % $ 1,309
NexPoint Homes Portfolio
NexPoint Homes is an owner and operator of single-family rental homes. As of September 30, 2025 and 2024, the NexPoint Homes Portfolio consisted of 2,076 and 2,343 single-family rental homes, respectively, primarily located in the midwestern and southeastern United States. As of September 30, 2025 and 2024, the NexPoint Homes Portfolio had an occupancy of approximately 94.7% and 92.4%, respectively, and a weighted average monthly effective rent of $1,797 and $1,713, respectively, per occupied home. Lease durations are typically one year. NexPoint Homes' activities include acquiring, renovating, developing, leasing and operating single-family rental homes. For the NexPoint Homes Portfolio, a home is classified as stabilized once it has been rented or has been rehabilitated by the Company and available for rent for a period of greater than 30 days. Additionally, because stabilized homes are expected to be held for at least one year, stabilized homes also exclude any assets held for sale. As of September 30, 2025 and 2024, the number of stabilized homes in the NexPoint Homes Portfolio was 1,992 and 2,158, respectively, the occupancy of stabilized homes was 95.3% and 97.8%, and the weighted average monthly effective rent of stabilized occupied homes was $1,797 and $1,713, respectively. As of September 30, 2025 and 2024, 4.0% and 6.9% of homes in our NexPoint Homes Portfolio were excluded from being stabilized, respectively, because the homes were classified as held for sale.
The table below provides summary information regarding the NexPoint Homes Portfolio as of September 30, 2025:
Market State # of Homes Portfolio Occupancy Average Effective Rent # of Stabilized Homes Stabilized Occupancy Stabilized Average Monthly Rent
Oklahoma City OK 325 95.4 % $ 1,748 325 95.4 % $ 1,748
Fayetteville AR 301 92.7 % 1,748 301 92.7 % 1,748
Little Rock AR 210 95.2 % $ 1,497 210 95.2 % $ 1,497
Atlanta GA 201 94.5 % 2,079 201 94.5 % 2,079
San Antonio TX 190 94.7 % $ 1,714 190 94.7 % $ 1,714
Tulsa OK 153 96.7 % 1,717 153 96.7 % 1,717
Kansas City MO, KS 130 97.7 % $ 2,008 130 97.7 % $ 2,007
Birmingham AL 119 94.1 % 1,649 119 94.1 % 1,649
Huntsville AL 68 94.1 % $ 1,914 68 94.1 % $ 1,914
Charlotte NC 52 100.0 % 1,992 52 100.0 % 1,992
Other (1) AL,FL,KS,TX 243 77.0 % $ 1,858 243 77.0 % $ 1,858
Sub-Total/Average 1,992 94.7 % $ 1,797 1,992 95.3 % $ 1,797
Held for Sale 84 n/a n/a n/a n/a n/a
Total/Average 2,076 94.7 % $ 1,797 1,992 95.3 % $ 1,797
(1) Contains markets that have less than 50 homes which include Dallas/Fort Worth, Mobile, Jacksonville, Orlando, Tampa, Wichita, Austin and Houston.
The table below provides summary information regarding the NexPoint Homes Portfolio as of December 31, 2024:
Market State # of Homes Portfolio Occupancy Average Effective Rent # of Stabilized Homes Stabilized Occupancy Stabilized Average Monthly Rent
Oklahoma City OK 341 90.9 % $ 1,677 341 90.9 % $ 1,677
Fayetteville AR 317 91.5 % 1,688 317 91.5 % 1,688
Little Rock AR 210 91.4 % 1,433 210 91.4 % 1,433
San Antonio TX 199 91.5 % 1,709 199 91.5 % 1,709
Atlanta GA 198 88.9 % 2,027 198 88.9 % 2,027
Tulsa OK 158 92.4 % 1,652 158 92.4 % 1,652
Kansas City MO, KS 146 96.6 % 1,928 146 96.6 % 1,928
Birmingham AL 120 89.2 % 1,576 120 89.2 % 1,576
Huntsville AL 70 88.6 % 1,828 70 88.6 % 1,828
Charlotte NC 56 98.2 % 1,934 56 98.2 % 1,934
Memphis TN, MS 56 92.9 % 1,792 56 92.9 % 1,792
Dallas/Ft Worth TX 51 90.2 % 2,328 51 90.2 % 2,328
Other (1) AL,FL,KS,TX 169 89.9 % 1,804 169 89.9 % 1,804
Sub-Total/Average 2,091 91.4 % $ 1,741 2,091 91.4 % $ 1,741
Held for Sale 156 n/a n/a n/a n/a n/a
Total/Average 2,247 91.4 % $ 1,741 2,091 91.4 % $ 1,741
(1) Contains markets that have less than 50 homes which include Mobile, Jacksonville, Orlando, Tampa, Wichita, Austin and Houston.
Components of Revenues and Expenses
The following is a description of the components of our revenues and expenses.
Revenues
Rental Income.Our revenues are derived primarily from rental revenue, net of any concessions and uncollectible amounts, collected from residents of our single-family rental homes under lease agreements which typically have a term of one year. Also included are utility reimbursements, late fees, pet fees, and other rental fees charged to residents.
Other income. Other income includes ancillary income earned from residents such as non-refundable fees, application fees, move-out fees, and other miscellaneous fees charged to residents.
Expenses
Property operating expenses.Property operating expenses include property maintenance costs, turn costs (costs incurred in making a home ready for the next resident after the prior resident vacates the home), leasing costs and the associated salary and employee benefit costs, utilities, vehicle leases and HOA fees. Certain property operating costs are capitalized in accordance with our capitalization policy. Certain turn costs are capitalized to buildings and improvements if they improve the condition of the home or return it to its original condition and exceed $1,500 in cost. Upon being occupied, expenditures up to $1,500 for ordinary repairs and maintenance thereafter are expensed as incurred, and we capitalize expenditures that improve the condition of the home in excess of $1,500.
Real estate taxes and insurance.Real estate taxes include the property taxes assessed by local and state authorities depending on the location of each home. Insurance includes the cost of property, general liability, and other needed insurance for each property. Certain real estate taxes and insurance costs are capitalized in accordance with our capitalization policy.
Property management fees.Property management fees include fees paid to Mynd for managing each property in the NexPoint Homes Portfolio. Following the Internalization of the Legacy VineBrook Manager in 2023, property management fees were eliminated in consolidation for the VineBrook Portfolio until the Externalization occurred in June 2025. Going forward, property management fees will include fees paid to Evergreen Manager for managing each property in the VineBrook Portfolio.
Advisory fees.Advisory fees include the fees paid to our Adviser pursuant to the Advisory Agreement and the NexPoint Homes Adviser pursuant to the NexPoint Homes Advisory Agreement (see Note 10 to our consolidated financial statements).
General and administrative expenses.General and administrative expenses include, but are not limited to, equity-based compensation expense, legal fees, corporate payroll and personnel costs, tax preparation fees, corporate taxes, Board fees, costs of marketing, professional fees, audit fees, general office supplies, centralized technology support and other expenses associated with our corporate and administrative functions. After the Externalization, shared-services fees will also be included in general and administrative expenses.
Depreciation and amortization.Depreciation and amortization costs primarily include depreciation of our homes and amortization of right of use assets, recognized over their respective useful lives.
Interest expense.Interest expense primarily includes the cost of interest expense on debt, payments and receipts related to our interest rate derivatives, the change (which may be positive or negative) in fair value of interest rate derivatives not designated as hedges, the amortization of deferred financing costs and the amortization of bond discounts. Certain interest costs are capitalized in accordance with our capitalization policy.
Loss on extinguishment of debt.Loss on extinguishment of debt includes prepayment penalties and defeasance costs, the write-off of unamortized deferred financing costs and fair market value adjustments of assumed debt related to the early repayment of debt and other costs incurred in a debt extinguishment.
Gain/(loss) on sales and impairment of real estate, net. Gain/(loss) on sales and impairment of real estate, net, includes the gain or loss recognized upon sales of homes and impairment charges recorded on real estate assets, including casualty gains or losses incurred on homes. Gain/(loss) on sales of real estate is calculated by deducting the carrying value of the real estate and costs incurred to sell the properties from the sales prices of the homes. Impairment of real estate assets is calculated by calculating the lower of the carrying amount or estimated fair value less estimated costs to sell for held for sale properties. Casualty gains and losses include gains or losses incurred on homes, net of insurance proceeds received, that experience an event such as a natural disaster or fire.
Investment income.Investment income includes interest income from the retained ABS I and ABS II certificates, interest income from money market accounts and interest income from preferred equity investments. See Notes 5, 6 and 10 to our consolidated financial statements.
Loss on forfeited deposits. Loss on forfeited deposits includes forfeitures of deposits related to the termination of acquisition agreements in the NexPoint Homes Portfolio.
Consolidated Results of Operations for the Three Months Ended September 30, 2025 and 2024
The following table sets forth a summary of our consolidated operating results for the three months ended September 30, 2025 and 2024 (in thousands):
For the Three Months Ended September 30,
2025 2024 $ Change
Total revenues $ 94,029 $ 90,656 $ 3,373
Total expenses (135,106) (137,118) 2,012
Loss on extinguishment of debt (533) (114) (419)
Gain/(loss) on sales and impairment of real estate, net 582 (10,652) 11,234
Investment income 695 882 (187)
Change in unrealized loss on investments - 255 (255)
Loss on forfeited deposits (31) - (31)
Net loss (40,364) (56,091) 15,727
Dividends on and accretion to redemption value of Redeemable Series A Preferred stock 2,198 2,023 175
Net income attributable to redeemable Series B Preferred stock 1,513 - 1,513
Net loss attributable to redeemable noncontrolling interests in the OP (6,057) (8,413) 2,356
Net loss attributable to redeemable noncontrolling interests in consolidated VIEs (3,657) (8,482) 4,825
Net loss attributable to noncontrolling interests in consolidated VIEs (482) (940) 458
Net loss attributable to stockholders $ (33,879) $ (40,279) $ 6,400
The change in our net loss between the periods primarily relates to an increase in rental income and decreases in general and administrative expenses, advisory fees, interest expense, depreciation and amortization and gain on sales and impairment of real estate, partially offset by increases in property operating expenses, real estate taxes and insurance and property management fees.
Revenues
Rental income. Rental income was $89.4 million for the three months ended September 30, 2025 compared to $88.6 million for the three months ended September 30, 2024, which was an increase of $0.8 million. The increase between the periods was primarily due to an increase in stabilized homes and an increase in rental rates over the past year.
Other income. Other income was $4.6 million for the three months ended September 30, 2025 compared to $2.1 million for the three months ended September 30, 2024, which was an increase of $2.5 million. The increase between the periods was primarily due to the increased adoption of Conservice, a third party utility billing and management company, providing more consistent and better collection of utility fees in the current year.
Expenses
Property operating expenses. Property operating expenses were $22.9 million for the three months ended September 30, 2025 compared to $19.9 million for the three months ended September 30, 2024, which was an increase of $3.0 million. The increase between the periods was primarily due to an increase in utilities and maintenance costs in the three months ended September 30, 2025 associated with the growth in stabilized homes and transition to Conservice for utilities. For the three months ended September 30, 2025 and 2024, turn costs represented approximately 17% and 22%, respectively, of our property operating expenses.
Real estate taxes and insurance. Real estate taxes and insurance were $16.9 million for the three months ended September 30, 2025 compared to $16.7 million for the three months ended September 30, 2024, which was an increase of $0.2 million. The increase between the periods was primarily due to increases in real estate tax assessments as a result of increases in property valuations, partially offset by dispositions in the VineBrook Portfolio and NexPoint Homes Portfolio.
Property management fees. Property management fees were $0.7 million for the three months ended September 30, 2025 compared to $0.2 million for the three months ended September 30, 2024, which was an increase of $0.5 million. The increase between the periods was primarily due to the Externalization of the Legacy VineBrook Manager to the Evergreen Manager on June 10, 2025, and the transition of property management of the NexPoint Homes Portfolio to Mynd on September 19, 2024.
Advisory fees. Advisory fees were $5.0 million for the three months ended September 30, 2025 compared to $5.2 million for the three months ended September 30, 2024, which was a decrease of $0.2 million. The decrease between the
periods was primarily due to the decrease in fee earning assets under management for the VineBrook Portfolio and NexPoint Homes Portfolio.
General and administrative expenses. General and administrative expenses were $20.9 million for the three months ended September 30, 2025 compared to $21.4 million for the three months ended September 30, 2024, which was a decrease of $0.5 million. The decrease between the periods was primarily due to decreased salary and payroll related expenses in connection with the reduction in force from the Externalization, partially offset by one-time Externalization transition fees, shared service fees and severance costs. The decrease was also due to a decrease in equity-based compensation costs after the acceleration of PIU vestings, partially offset by increases in equity-based compensation costs related to RSU award grants.
Depreciation and amortization. Depreciation and amortization costs were $31.2 million for the three months ended September 30, 2025 compared to $31.4 million for the three months ended September 30, 2024, which was a decrease of $0.2 million. The decrease between the periods was primarily due to the disposition of homes and movement of homes to be classified as held for sale over the past year, partially offset by the acquisition of homes within the VineBrook Portfolio.
Interest expense. Interest expense was $37.5 million for the three months ended September 30, 2025 compared to $42.4 million for the three months ended September 30, 2024, which was a decrease of $4.9 million. The decrease between the periods was primarily due to decreases in interest on debt as we made pay downs on debt outstanding over the past year and non-cash interest expense related to the change in fair value of derivatives not designated as hedging instruments, partially offset by an increase in non-cash discount amortization. The following table details the various costs included in interest expense for the three months ended September 30, 2025 and 2024 (in thousands):
For the Three Months Ended September 30,
2025 2024 $ Change
Gross interest cost $ 37,775 $ 42,972 $ (5,197)
Capitalized interest (231) (604) 373
Total $ 37,544 $ 42,368 $ (4,824)
Loss on extinguishment of debt.Loss on extinguishment of debt was $0.5 million for the three months ended September 30, 2025 compared to $0.1 million for the three months ended September 30, 2024, which was an increase of $0.4 million. The increase between the periods was primarily due to an increase in debt extinguishment activity for the three months ended September 30, 2025.
Gain/(loss) on sales and impairment of real estate, net.Gain on sales and impairment of real estate was $0.6 million for the three months ended September 30, 2025 compared to a loss of $10.7 million for the three months ended September 30, 2024, which was an increase of $11.3 million. The increase between the periods was primarily due to a decrease in the homes sold for a loss within the NexPoint Homes Portfolio, an increase in proceeds from homes sold within the VineBrook Portfolio, specifically within the Atlanta market, and a decrease in the number of homes classified as held for sale that had impairment charges booked. The Company strategically identifies homes for disposal and expects the disposal of these properties to be accretive to the Portfolio's results of operation and overall performance.
Investment income.Investment income was $0.7 million for the three months ended September 30, 2025 compared to $0.9 million for the three months ended September 30, 2024, which was a decrease of $0.2 million. The decrease between the periods was primarily due to a decrease in interest income from money market accounts, partially offset by the increase in interest income from preferred equity investments.
Loss on forfeited deposits. Loss on forfeited deposits was less than $0.1 million for the three months ended September 30, 2025 compared to no loss on forfeited deposits for the three months ended September 30, 2024, which was an increase of less than $0.1 million. The increase between the periods was primarily due to legal fees and other transaction costs associated with the termination of an acquisition agreement within the VineBrook Portfolio during the three months ended September 30, 2025.
Consolidated Results of Operations for the Nine Months Ended September 30, 2025 and 2024
The nine months ended September 30, 2025 compared to the nine months ended September 30, 2024
The following table sets forth a summary of our consolidated operating results for the nine months ended September 30, 2025 and 2024 (in thousands):
For the Nine Months Ended September 30,
2025 2024 $ Change
Total revenues $ 280,994 $ 272,686 $ 8,308
Total expenses (433,577) (393,196) (40,381)
Loss on extinguishment of debt (886) (1,488) 602
Gain/(loss) on sales and impairment of real estate, net 2,963 (19,773) 22,736
Investment income 1,966 2,973 (1,007)
Reversal of (provision for) loan losses 500 - 500
Loss on forfeited deposits (1,440) - (1,440)
Net loss (149,480) (138,798) (10,682)
Dividends on and accretion to redemption value of Redeemable Series A Preferred stock 6,595 6,260 335
Net income attributable to Redeemable Series B Preferred stock 4,539 - 4,539
Net loss attributable to redeemable noncontrolling interests in the OP (22,426) (20,820) (1,606)
Net loss attributable to redeemable noncontrolling interests in consolidated VIEs (13,328) (19,997) 6,669
Net loss attributable to noncontrolling interests in consolidated VIEs (1,825) (2,754) 929
Net loss attributable to stockholders $ (123,035) $ (101,487) $ (21,548)
The change in our net loss between the periods primarily relates to increases in property operating expenses, real estate taxes and insurance, property management fees, loss on forfeited deposits, general and administrative expenses and investment income, partially offset by increases in rental income and gains on sales and impairment of real estate, as well as decreases in interest expense, depreciation and amortization, advisory fees, and investment income.
Revenues
Rental income. Rental income was $270.6 million for the nine months ended September 30, 2025 compared to $268.1 million for the nine months ended September 30, 2024, which was an increase of $2.5 million. The increase between the periods was primarily due to an increase in stabilized homes and an increase in rental rates over the past year, partially offset by property dispositions.
Other income. Other income was $10.3 million for the nine months ended September 30, 2025 compared to $4.6 million for the nine months ended September 30, 2024, which was an increase of $5.7 million. The increase between the periods was primarily due to the adoption of Conservice, a third party utility billing and management company, providing more consistent and better collection of utility fees in the current year.
Expenses
Property operating expenses. Property operating expenses were $66.0 million for the nine months ended September 30, 2025 compared to $59.3 million for the nine months ended September 30, 2024, which was an increase of $6.7 million. The increase between the periods was primarily due to an increase in turnover, utilities and maintenance costs in the nine months ended September 30, 2025, associated with the growth in stabilized homes and transition to Conservice for utilities. For the nine months ended September 30, 2025 and 2024, turn costs represented approximately 18% and 21%, respectively, of our property operating expenses.
Real estate taxes and insurance. Real estate taxes and insurance were $52.0 million for the nine months ended September 30, 2025 compared to $50.9 million for the nine months ended September 30, 2024, which was an increase of $1.1 million. The increase between the periods was primarily due to increases in real estate tax assessments as a result of increases in property valuations, partially offset by dispositions in the VineBrook Portfolio and NexPoint Homes Portfolio.
Property management fees. Property management fees were $1.9 million for the nine months ended September 30, 2025 compared to $1.8 million for the nine months ended September 30, 2024, which was an increase of $0.1 million. The increase between the periods was primarily due to the Externalization and transition of the VineBrook Portfolio property management to the Evergreen Manager on June 10, 2025, and the transition of property management of the NexPoint Homes Portfolio to Mynd on September 19, 2024.
Advisory fees. Advisory fees were $15.0 million for the nine months ended September 30, 2025 compared to $15.7 million for the nine months ended September 30, 2024, which was a decrease of $0.7 million. The decrease between the periods was primarily due to the decrease in fee earning assets under management for the VineBrook Portfolio and the NexPoint Homes Portfolio.
General and administrative expenses. General and administrative expenses were $97.3 million for the nine months ended September 30, 2025 compared to $60.6 million for the nine months ended September 30, 2024, which was an increase of $36.7 million. The increase between the periods was primarily due to increases in equity-based compensation costs related to the acceleration of RSU and PIU vestings, and an increase in legal fees following the Externalization and transition of the VineBrook Portfolio property management to the Evergreen Manager on June 10, 2025. Of the $97.3 million of general and administrative expenses, $17.2 million is related to the Externalization and $13.8 million is related to accelerated RSU award vestings.
Depreciation and amortization. Depreciation and amortization costs were $93.4 million for the nine months ended September 30, 2025 compared to $94.8 million for the nine months ended September 30, 2024, which was a decrease of $1.4 million. The decrease between the periods was primarily due to the disposition of homes and movement of homes to held for sale over the past year, partially offset by the acquisition of homes within the VineBrook Portfolio.
Interest expense. Interest expense was $108.0 million for the nine months ended September 30, 2025 compared to $110.0 million for the nine months ended September 30, 2024, which was a decrease of $2.0 million. The decrease between the periods was primarily due to a decrease in interest on debt as we made pay downs on debt outstanding over the past year, partially offset by an increase in non-cash discount amortization and a decrease in interest rate derivative proceeds. The following table details the various costs included in interest expense for the nine months ended September 30, 2025 and 2024 (in thousands):
For the Nine Months Ended September 30,
2025 2024 $ Change
Gross interest cost $ 108,576 $ 110,867 $ (2,291)
Capitalized interest (573) (837) 264
Total $ 108,003 $ 110,030 $ (2,027)
Loss on extinguishment of debt.Loss on extinguishment of debt was $0.9 million for the nine months ended September 30, 2025 compared to $1.5 million for the nine months ended September 30, 2024, which was a decrease of $0.6 million. The decrease between the periods was primarily due to a decrease in debt extinguishment activity for the nine months ended September 30, 2025.
Gain/(loss) on sales and impairment of real estate, net.Gain on sales and impairment of real estate was $3.0 million for the nine months ended September 30, 2025 compared to a loss of $19.8 million for the nine months ended September 30, 2024, which was an increase of $22.8 million. The increase between the periods was primarily due to a decrease in the homes sold for a loss within the NexPoint Homes Portfolio, an increase in proceeds from homes sold within the VineBrook Portfolio, specifically within the Atlanta market, a decrease in the number of homes classified as held for sale that had impairment charges booked and an increase in gain on insurance repairs. The Company strategically identifies homes for disposal and expects the disposal of these properties to be accretive to the Portfolio's results of operation and overall performance.
Investment income.Investment income was $2.0 million for the nine months ended September 30, 2025 compared to $3.0 million for the nine months ended September 30, 2024, which was a decrease of $1.0 million. The decrease between the periods was primarily due to a decrease in interest income from money market accounts, partially offset by the increase in interest income from preferred equity investments.
Loss on forfeited deposits. Loss on forfeited deposits was $1.4 million for the nine months ended September 30, 2025 compared to no loss on forfeited deposits for the nine months ended September 30, 2024, which was an increase of $1.4 million. The increase between the periods was primarily due to legal fees and other transaction costs associated with the termination of an acquisition agreement within the VineBrook Portfolio and writing off earnest money deposits within the NexPoint Homes Portfolio during the nine months ended September 30, 2025.
Non-GAAP Measurements
Net Operating Income
NOI is a non-GAAP financial measure of performance. NOI is used by our management to evaluate and compare the performance of our properties to other comparable properties, to determine trends in earnings and to compute the fair value of our properties as NOI is not affected by (1) interest expense, (2) advisory fees, (3) the impact of depreciation and amortization expenses, (4) gains or losses from the sale of operating real estate assets that are included in net income computed in accordance with GAAP or impairment charges, including casualty gains or losses (5) general and administrative expenses, (6) investment income, (7) change in unrealized loss on investments, (8) reversal of loan losses, (9) loss on forfeited deposits and (10) other gains and losses that are specific to us, including loss on extinguishment of debt. The cost of funds is eliminated from net income (loss) because it is specific to our particular financing capabilities and constraints. We believe that eliminating these items from net income is useful because the resulting measure captures the actual ongoing revenue generated and actual expenses incurred in operating our properties as well as trends in occupancy rates, rental rates and operating costs.
However, the usefulness of NOI is limited because it excludes the items discussed above. NOI may fail to capture significant trends in these components of net income, which further limits its usefulness.
NOI is a measure of the operating performance of our properties but does not measure our performance as a whole. NOI is therefore not a substitute for net income (loss) as computed in accordance with GAAP. This measure should be analyzed in conjunction with net income (loss) computed in accordance with GAAP and discussions elsewhere regarding the components of net income (loss) that are eliminated in the calculation of NOI. Other companies may use different methods for calculating NOI or similarly entitled measures and, accordingly, our NOI may not be comparable to similarly entitled measures reported by other companies that do not define the measure exactly as we do.
The following table, which has not been adjusted for the effects of NCI, reconciles our consolidated NOI for the three and nine months ended September 30, 2025 and 2024 to net loss, the most directly comparable GAAP financial measure on a consolidated basis (in thousands):
For the Three Months Ended September 30, For the Nine Months Ended September 30,
2025 2024 2025 2024
Net loss $ (40,364) $ (56,091) $ (149,480) $ (138,798)
Adjustments to reconcile net loss to NOI:
Advisory fees 5,011 5,218 14,965 15,664
General and administrative expenses 20,904 21,374 97,256 60,631
Depreciation and amortization 31,199 31,354 93,396 94,788
Interest expense 37,544 42,368 108,003 110,030
Loss on extinguishment of debt 533 114 886 1,488
(Gain)/loss on sales and impairment of real estate, net (582) 10,652 (2,963) 19,773
Investment income (695) (882) (1,966) (2,973)
Change in unrealized loss on investments - (255) - -
Reversal of loan losses - - (500) -
Loss on forfeited deposits 31 - 1,440 -
NOI $ 53,581 $ 53,852 $ 161,037 $ 160,603
The following table, which has not been adjusted for the effects of NCI, reconciles our NOI for each of our segments for the three and nine months ended September 30, 2025 and 2024 to net loss, the most directly comparable GAAP financial measure by Portfolio (in thousands):
For the Three Months Ended September 30, 2025 For the Three Months Ended September 30, 2024
VineBrook Portfolio NexPoint Homes Portfolio Total VineBrook Portfolio NexPoint Homes Portfolio Total
Net loss $ (31,257) $ (9,107) $ (40,364) $ (36,203) $ (19,888) $ (56,091)
Adjustments to reconcile net loss to NOI:
Advisory fees 4,217 794 5,011 4,355 863 5,218
General and administrative expenses 19,974 930 20,904 18,582 2,792 21,374
Depreciation and amortization 25,685 5,514 31,199 24,013 7,341 31,354
Interest expense 30,445 7,099 37,544 34,287 8,081 42,368
Loss on extinguishment of debt 445 88 533 114 - 114
(Gain)/loss on sales and impairment of real estate, net (1,955) 1,373 (582) 1,616 9,036 10,652
Investment income (582) (113) (695) (792) (90) (882)
Change in unrealized loss on investments - - - (255) - (255)
Loss on forfeited deposits 31 - 31 - - -
NOI $ 47,003 $ 6,578 $ 53,581 $ 45,717 $ 8,135 $ 53,852
For the Nine Months Ended September 30, 2025 For the Nine Months Ended September 30, 2024
VineBrook Portfolio NexPoint Homes Portfolio Total VineBrook NexPoint Homes Total
Net loss $ (117,917) $ (31,563) $ (149,480) $ (91,951) $ (46,847) $ (138,798)
Adjustments to reconcile net loss to NOI:
Advisory fees 12,600 2,365 14,965 12,988 2,676 15,664
General and administrative expenses 90,083 7,173 97,256 57,136 3,495 60,631
Depreciation and amortization 76,858 16,538 93,396 72,029 22,759 94,788
Interest expense 87,294 20,709 108,003 85,698 24,332 110,030
Loss on extinguishment of debt 798 88 886 1,488 - 1,488
(Gain)/loss on sales and impairment of real estate, net (4,062) 1,099 (2,963) 4,547 15,226 19,773
Investment income (1,756) (210) (1,966) (2,704) (269) (2,973)
Reversal of loan losses - (500) (500) - - -
Loss on forfeited deposits 37 1,403 1,440 - - -
NOI $ 143,935 $ 17,102 $ 161,037 $ 139,231 $ 21,372 $ 160,603
Net Operating Income for Our 2024-2025 Same Home and Non-Same Home Properties for the Three Months Ended September 30, 2025 and 2024
There are 17,390 homes in our 2024-2025 same home pool (our "2024-2025 Same Home" properties). To be included as a "2024-2025 Same Home," homes must be in the VineBrook Portfolio and must have been stabilized for at least 90 days in advance of the first day of the previous fiscal year and be held through the current reporting period-end. Same Home properties for the quarter and nine months ended September 30, 2025 and September 30, 2024 were stabilized by October 1, 2023 and held through September 30, 2025. 2024-2025 Same Home properties do not include homes held for sale. Homes that are stabilized are included as 2024-2025 Same Home properties, whether occupied or vacant. See Item 1 "Business-Our Portfolio" in our Annual Report for a discussion of the definition of stabilized. We view 2024-2025 Same Home NOI as an important measure of the operating performance of our homes because it allows us to compare operating results of homes owned for the entirety of the current and comparable periods and therefore eliminate variations caused by acquisitions or dispositions during the periods.
The following table reflects the revenues, property operating expenses and NOI for the three months ended September 30, 2025 and 2024 for our 2024-2025 Same Home and Non-Same Home properties (dollars in thousands):
For the Three Months Ended September 30,
2025 2024 $ Change % Change
Revenues
Same Home
Rental income (1) $ 67,006 $ 63,602 $ 3,404 5.4 %
Other income (1) 550 820 (270) -32.9 %
Same Home revenues 67,556 64,422 3,134 4.9 %
Non-Same Home
Rental income (1) 22,700 21,637 1,063 4.9 %
Other income (1) 3,727 849 2,878 N/M
Non-Same Home revenues 26,427 22,486 3,941 17.5 %
Total revenues 93,983 86,908 7,075 8.1 %
Operating expenses
Same Home
Property operating expenses (1) 12,076 12,866 (790) -6.1 %
Real estate taxes and insurance 12,864 12,018 846 7.0 %
Property management fees (2) 163 - 163 N/M
Same Home operating expenses 25,103 24,884 219 0.9 %
Non-Same Home
Property operating expenses (1) 10,771 3,305 7,466 N/M
Real estate taxes and insurance 4,002 4,655 (653) -14.0 %
Property management fees (2) 526 212 314 N/M
Non-Same Home operating expenses 15,299 8,172 7,127 87.2 %
Total operating expenses 40,402 33,056 7,346 22.2 %
NOI
Same Home 42,453 39,538 2,915 7.4 %
Non-Same Home 11,128 14,314 (3,186) -22.3 %
Total NOI $ 53,581 $ 53,852 $ (271) -0.5 %
(1)Presented net of resident chargebacks.
(2)Fees incurred to the Manager; following the Internalization, property management fees were eliminated in consolidation for the VineBrook Portfolio until the Externalization, which occurred in June 2025.
See reconciliation of net income (loss) to NOI above under "-Net Operating Income."
2024-2025 Same Home Results of Operations for the Three Months Ended September 30, 2025 and 2024
As of September 30, 2025, our 2024-2025 Same Home properties were approximately 94.9% occupied with a weighted average monthly effective rent per occupied home of $1,382. As of September 30, 2024, our 2024-2025 Same Home properties were approximately 95.0% occupied with a weighted average monthly effective rent per occupied home of $1,293. For our 2024-2025 Same Home properties, we recorded the following operating results for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024:
Revenues
Rental income. Rental income was $67.0 million for the three months ended September 30, 2025 compared to $63.6 million for the three months ended September 30, 2024, which was an increase of approximately $3.4 million, or 5.4%. The increase is related to a 6.9% increase in the weighted average monthly effective rent per occupied home.
Other income.Other income was approximately $0.6 million for the three months ended September 30, 2025 compared to approximately $0.8 million for the three months ended September 30, 2024, which was a decrease of approximately $0.2 million, or 32.9%. This decrease was primarily due to the decrease in overall fees charged to single family properties of $0.3 million, partially offset by an increase in overall move out charges of $0.1 million.
Expenses
Property operating expenses.Property operating expenses were $12.1 million for the three months ended September 30, 2025 compared to $12.9 million for the three months ended September 30, 2024, which was a decrease of approximately $0.8 million, or 6.1%. The decrease is primarily related to an increase in resident chargebacks of $2.3 million and decreases in repair and maintenance expense of $0.4 million, in-house turn staff of $0.3 million and payroll expense of $0.3 million, partially offset by an increase in utility expense of $2.5 million.
Real estate taxes and insurance.Real estate taxes and insurance costs were $12.9 million for the three months ended September 30, 2025 compared to $12.0 million for the three months ended September 30, 2024, which was an increase of approximately $0.9 million, or 7.0%. The increase is primarily related to an increase in property insurance costs of $0.2 million and an increase in real estate taxes of $0.7 million.
Property management fees. Property management fees were $0.2 million for the three months ended September 30, 2025 compared to no fees for the three months ended September 30, 2024, which was an increase of approximately $0.2 million. The increase is primarily related to an increase in property management fees of $0.2 million related to the Externalization.
The following table reflects a reconciliation of Same Home and Non-Same Home revenues and operating expenses to total revenues and operating expenses, including resident chargebacks, for the three months ended September 30, 2025 and 2024 (dollars in thousands):
For the Three Months Ended September 30,
2025 2024
Same Home revenues $ 67,556 $ 64,422
Non-Same Home revenues 26,427 22,486
Chargebacks 46 3,748
Total revenues 94,029 90,656
Same Home operating expenses 25,103 24,884
Non-Same Home operating expenses 15,299 8,172
Chargebacks 46 3,748
Total operating expenses $ 40,448 $ 36,804
Net Operating Income for Our Same Home and Non-Same Home Properties for the Nine Months Ended September 30, 2025 and 2024
The following table reflects the revenues, property operating expenses and NOI for the nine months ended September 30, 2025 and 2024 for our Same Home and Non-Same Home properties (dollars in thousands):
For the Nine Months Ended September 30,
2025 2024 $ Change % Change
Revenues
Same Home
Rental income (1) $ 199,842 $ 188,919 $ 10,923 5.8 %
Other income (1) 1,996 2,527 (531) -21.0 %
Same Home revenues 201,838 191,446 10,392 5.4 %
Non-Same Home
Rental income (1) 71,129 74,150 (3,021) -4.1 %
Other income (1) 7,560 1,373 6,187 N/M
Non-Same Home revenues 78,689 75,523 3,166 4.2 %
Total revenues 280,527 266,969 13,558 5.1 %
Operating expenses
Same Home
Property operating expenses (1) 36,265 35,537 728 2.0 %
Real estate taxes and insurance 38,672 35,499 3,173 8.9 %
Property management fees (2) 163 - 163 N/M
Same Home operating expenses 75,100 71,036 4,064 5.7 %
Non-Same Home
Property operating expenses (1) 29,316 18,059 11,257 62.3 %
Real estate taxes and insurance 13,305 15,430 (2,125) -13.8 %
Property management fees (2) 1,769 1,841 (72) -3.9 %
Non-Same Home operating expenses 44,390 35,330 9,060 25.6 %
Total operating expenses 119,490 106,366 13,124 12.3 %
NOI
Same Home 126,738 120,410 6,328 5.3 %
Non-Same Home 34,299 40,193 (5,894) -14.7 %
Total NOI $ 161,037 $ 160,603 $ 434 0.3 %
(1)Presented net of resident chargebacks.
(2)Fees incurred to the Manager; following the Internalization, property management fees were eliminated in consolidation for the VineBrook Portfolio until the Externalization, which occurred in June 2025.
See reconciliation of net income (loss) to NOI above under "-Net Operating Income."
Same Home Results of Operations for the Nine Months Ended September 30, 2025 and 2024
For our Same Home properties, we recorded the following operating results for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024:
Revenues
Rental income. Rental income was $199.8 million for the nine months ended September 30, 2025 compared to $188.9 million for the nine months ended September 30, 2024, which was an increase of approximately $10.9 million, or 5.8%. The increase is related to a 6.9% increase in the weighted average monthly effective rent per occupied home, partially offset by a 57% increase in total chargebacks to residents and a 0.1% decrease in occupancy.
Other income.Other income was approximately $2.0 million for the nine months ended September 30, 2025 compared to approximately $2.5 million for the nine months ended September 30, 2024, which was a decrease of
approximately $0.5 million. This decrease was primarily due to the decrease in overall fees charged to single family properties of $0.6 million, partially offset by an increase in overall move out charges of $0.1 million.
Expenses
Property operating expenses.Property operating expenses were $36.3 million for the nine months ended September 30, 2025 compared to $35.5 million for the nine months ended September 30, 2024, which was an increase of approximately $0.8 million, or 2.0%. The increase is primarily related to an increase in repair and maintenance expense of $0.3 million, an increase in utility expense of $5.6 million, an increase in in-house turn staff of $0.1 million, and an increase in other miscellaneous expense of $0.3 million, partially offset by an increase in resident chargebacks of $5.5 million.
Real estate taxes and insurance.Real estate taxes and insurance costs were $38.7 million for the nine months ended September 30, 2025 compared to $35.5 million for the nine months ended September 30, 2024, which was an increase of approximately $3.2 million, or 8.9%. The increase is primarily related to an increase in property insurance costs of $0.7 million and an increase in real estate taxes of $2.5 million.
Property management fees. Property management fees were $0.2 million for the nine months ended September 30, 2025 compared to no fees for the nine months ended September 30, 2024, which was an increase of approximately $0.2 million. The increase is primarily related to an increase in property management fee of $0.2 million related to the Externalization.
The following table reflects a reconciliation of Same Home and Non-Same Home revenues and operating expenses to total revenues and operating expenses, including resident chargebacks, for the nine months ended September 30, 2025 and 2024 (dollars in thousands):
For the Nine Months Ended September 30,
2025 2024
Same Home revenues $ 201,838 $ 191,446
Non-Same Home revenues 78,689 75,523
Chargebacks 467 5,717
Total revenues 280,994 272,686
Same Home operating expenses 75,100 71,036
Non-Same Home operating expenses 44,390 35,330
Chargebacks 467 5,717
Total operating expenses $ 119,957 $ 112,083
Consolidated FFO, Core FFO and AFFO
We believe that net income (loss), as defined by GAAP, is the most appropriate earnings measure. We also believe that funds from operations attributable to stockholders, NCI of the OP, redeemable NCI in consolidated VIEs, and NCI in consolidated VIEs ("FFO") as defined by the National Association of Real Estate Investments Trusts ("NAREIT"), core funds from operations attributable to stockholders, NCI of the OP, redeemable NCI in consolidated VIEs, and NCI in consolidated VIEs ("Core FFO") and adjusted funds from operations attributable to stockholders, NCI of the OP, redeemable NCI in consolidated VIEs, and NCI in consolidated VIEs ("AFFO") are important non-GAAP supplemental measures of operating performance for a REIT.
Since the historical cost accounting convention used for real estate assets requires depreciation except on land, such accounting presentation implies that the value of real estate assets diminishes predictably over time. However, since real estate values have historically risen or fallen with market and other conditions, presentations of operating results for a REIT that use historical cost accounting for depreciation could be less informative. Thus, NAREIT created FFO as a supplemental measure of operating performance for REITs that excludes historical cost depreciation and amortization, among other items, from net income (loss), as defined by GAAP. FFO is defined by NAREIT as net income (loss) computed in accordance with GAAP, excluding gains or losses from real estate dispositions and impairment of real estate assets, plus real estate depreciation and amortization. We compute FFO in accordance with NAREIT's definition. Our presentation differs slightly from NAREIT's in that we begin with net income (loss) attributable to stockholders and add net income (loss) attributable to NCI in the OP, net income (loss) attributable to redeemable NCI in consolidated VIEs and net income (loss) attributable to NCI in consolidated VIEs and then make the adjustments to arrive at FFO.
Core FFO makes certain adjustments to FFO, which are not representative of the ongoing operating performance of our Portfolio. Core FFO adjusts FFO to remove items such as (1) losses on forfeited deposits, (2) investment income, (3) gains or losses on extinguishment of debt, (4) non-cash interest expenses, (5) changes in unrealized gains or losses on investments, (6) reversal of (provision for) loan losses, (7) transaction costs incurred in connection with acquisitions, dispositions and issuance of debt and other costs not related to core real estate operations and (8) equity-based compensation expense. We believe Core FFO is useful as a supplemental gauge of our operating performance and is useful in comparing our operating performance with other REITs.
AFFO makes certain adjustments to Core FFO in order to arrive at a more refined measure of the operating performance of our Portfolio. There is no industry standard definition of AFFO and the method of calculating AFFO is divergent across the industry. AFFO adjusts Core FFO to remove recurring capital expenditures, which are costs necessary to help preserve the value and maintain functionality of our homes. We believe AFFO is useful as a supplemental gauge of the operating performance of our Company and is useful in comparing our operating performance with other REITs.
Basic and diluted weighted average shares in our FFO/Core FFO/AFFO table includes both our Common Stock and OP Units.
We believe that the use of FFO, Core FFO and AFFO, combined with the required GAAP presentations, improves the understanding of operating results of REITs and makes comparisons of operating results among such companies more meaningful. While FFO, Core FFO and AFFO are relevant and widely used measures of operating performance of REITs, they do not represent cash flows from operations or net income (loss) as defined by GAAP and should not be considered as an alternative or substitute to those measures in evaluating our liquidity or operating performance. FFO, Core FFO and AFFO do not purport to be indicative of cash available to fund our future cash requirements.
The following table reconciles our calculations of FFO, Core FFO and AFFO to net loss attributable to stockholders for the three and nine months ended September 30, 2025 and 2024 (in thousands, except per share amounts):
For the Three Months Ended September 30, For the Nine Months Ended September 30, Nine Months Ended September 30, 2025 to 2024
2025 2024 2025 2024 % Change
Net loss attributable to stockholders $ (33,879) $ (40,279) $ (123,035) $ (101,487) 21.2 %
Net loss attributable to NCI in the OP (6,057) (8,413) (22,426) (20,820) 7.7 %
Net loss attributable to redeemable noncontrolling interest in consolidated VIEs (3,657) (8,482) (13,328) (19,997) -33.4 %
Net loss attributable to noncontrolling interest in consolidated VIEs (482) (940) (1,825) (2,754) -33.7 %
Depreciation and amortization 31,199 31,354 93,396 94,788 -1.5 %
Loss/(Gain) on sales and impairment of real estate, net (582) 10,652 (2,963) 19,773 N/M
FFO attributable to stockholders, NCI in the OP, redeemable noncontrolling interests in consolidated VIEs, and noncontrolling interests in consolidated VIEs (13,458) (16,108) (70,181) (30,497) N/M
FFO per share - basic $ (0.43) $ (0.54) $ (2.27) $ (1.02) N/M
FFO per share - diluted $ (0.43) $ (0.54) $ (2.27) $ (1.02) N/M
Loss on forfeited deposits 31 - 1,440 - N/M
Investment income - 488 - 980 N/M
Loss on extinguishment of debt 533 114 886 1,488 -40.5 %
Non-cash interest expense 9,737 15,112 27,202 26,045 4.4 %
Change in unrealized (gain) loss on investments - (255) - - N/M
Reversal of (provision for) loan losses - - (500) - N/M
Transaction and other costs 5,039 3,671 12,908 7,236 78.4 %
Equity-based compensation expense 4,656 5,114 48,545 15,614 N/M
Core FFO attributable to stockholders, NCI in the OP, redeemable noncontrolling interests in consolidated VIEs, and noncontrolling interests in consolidated VIEs 6,538 8,136 20,300 20,866 -2.7 %
Core FFO per share - basic $ 0.21 $ 0.27 $ 0.66 $ 0.70 -5.7 %
Core FFO per share - diluted $ 0.20 $ 0.26 $ 0.64 $ 0.68 -5.9 %
Recurring capital expenditures (7,511) (6,370) (18,767) (18,234) 2.9 %
AFFO attributable to stockholders, NCI in the OP, redeemable noncontrolling interests in consolidated VIEs, and noncontrolling interests in consolidated VIEs (973) 1,766 1,533 2,632 -41.8 %
AFFO per share - basic $ (0.03) $ 0.06 $ 0.05 $ 0.09 -44.4 %
AFFO per share - diluted $ (0.03) $ 0.06 $ 0.05 $ 0.09 -44.4 %
Weighted average shares outstanding - basic 31,453 30,012 30,873 29,843
Weighted average shares outstanding - diluted (1) 32,321 30,854 31,850 30,715
Dividends declared per share $ 0.5301 $ 0.5301 $ 1.5903 $ 1.5903
Net loss attributable to stockholders per share/unit - diluted $ (1.31) $ (1.59) $ (4.79) $ (4.02)
Net loss attributable to stockholders Coverage - diluted (2) -2.47x -3.00x -3.01x -2.53x
FFO Coverage - diluted (3) -0.81x -1.02x -1.43x -0.64x
Core FFO Coverage - diluted (3) 0.38x 0.49x 0.40x 0.43x
AFFO Coverage - diluted (3) -0.06x 0.11x 0.03x 0.06x
(1)For the three and nine months ended September 30, 2025 and 2024, includes approximately 649,000 shares and 841,000 shares, respectively, related to the assumed vesting of RSUs, earned performance shares of the Company and
PI Units not contingent upon an IPO, change in control or listing of the Company's Common Stock on a national securities exchange.
(2)Indicates coverage ratio of net loss attributable to stockholders per share (diluted) over dividends declared per common share during the period.
(3)Indicates coverage ratio of FFO/Core FFO/AFFO per common share (diluted) over dividends declared per common share during the period.
VineBrook FFO, Core FFO and AFFO
In addition to FFO, Core FFO and AFFO, we present FFO, Core FFO and AFFO for the VineBrook Portfolio ("VineBrook FFO," "VineBrook Core FFO," and "VineBrook AFFO," respectively) as we view the VineBrook Portfolio as the Company's primary reportable segment and believe it is useful to consider the VineBrook FFO, VineBrook Core FFO and VineBrook AFFO as supplemental gauges of our operating performance. We also use VineBrook Core FFO as a performance metric for certain key executives, including under grants of performance shares made in the Internalization.
FFO is defined by NAREIT as net income (loss) computed in accordance with GAAP, excluding gains or losses from real estate dispositions and impairment of real estate assets, plus real estate depreciation and amortization. We compute VineBrook FFO in accordance with NAREIT's definition. Our presentation differs slightly from NAREIT's in that we begin with VineBrook net income (loss) attributable to stockholders and add VineBrook net income (loss) attributable to NCI in the OP and then make the adjustments to arrive at VineBrook FFO.
VineBrook Core FFO makes certain adjustments to VineBrook FFO, which are not representative of the ongoing operating performance of our Portfolio. VineBrook Core FFO adjusts VineBrook FFO to remove or add items such as (1) reportable segment-specific investment income, (2) gains or losses on extinguishment of debt, (3) non-cash interest expenses, (4) changes in unrealized gains or losses on investments, (5) transaction costs incurred in connection with acquisitions, dispositions and issuance of debt and other costs not related to core real estate operations and (6) equity-based compensation expense. We believe VineBrook Core FFO is useful as a supplemental gauge of our operating performance and is useful in comparing our operating performance with other REITs.
VineBrook AFFO makes certain adjustments to VineBrook Core FFO in order to arrive at a more refined measure of the operating performance of our VineBrook Portfolio. There is no industry standard definition of AFFO and the method of calculating AFFO is divergent across the industry. VineBrook AFFO adjusts VineBrook Core FFO to remove recurring capital expenditures, which are costs necessary to help preserve the value and maintain functionality of our homes. We believe VineBrook AFFO is useful as a supplemental gauge of the operating performance of our VineBrook Portfolio and is useful in comparing our operating performance with other REITs.
Basic and diluted weighted average shares in our VineBrook FFO/VineBrook Core FFO/VineBrook AFFO table includes both our Common Stock and OP Units.
We believe that the use of VineBrook FFO, VineBrook Core FFO and VineBrook AFFO, combined with the required GAAP presentations, improves the understanding of operating results of REITs and makes comparisons of operating results among such companies more meaningful. While FFO, Core FFO and AFFO are relevant and widely used measures of operating performance of REITs, they do not represent cash flows from operations or net income (loss) as defined by GAAP and should not be considered as an alternative or substitute to those measures in evaluating our liquidity or operating performance. VineBrook FFO, VineBrook Core FFO and VineBrook AFFO do not purport to be indicative of cash available to fund our future cash requirements. Further, our computation of VineBrook FFO, VineBrook Core FFO and VineBrook AFFO may not be comparable to FFO, Core FFO and AFFO reported by other REITs.
The FFO, Core FFO and AFFO results discussed further below are for the VineBrook Portfolio, and reconcile to net loss for the VineBrook Portfolio for the three and nine months ended September 30, 2025 and 2024. See below for a reconciliation of VineBrook net loss to consolidated net loss for the three and nine months ended September 30, 2025 and 2024:
For the Three Months Ended September 30, 2025 For the Three Months Ended September 30, 2024
VineBrook Portfolio NexPoint Homes Portfolio Total VineBrook Portfolio NexPoint Homes Portfolio Total
Net loss attributable to stockholders $ (29,271) $ (4,608) $ (33,879) $ (30,385) $ (9,894) $ (40,279)
Net loss attributable to redeemable NCI in the OP (5,697) (360) (6,057) (7,841) (572) (8,413)
Net loss attributable to redeemable NCI in consolidated VIEs - (3,657) (3,657) - (8,482) (8,482)
Net loss attributable to NCI in consolidated VIEs - (482) (482) - (940) (940)
Dividends on and accretion to redemption value of Redeemable Series A preferred stock 2,198 - 2,198 2,023 - 2,023
Net income attributable to Redeemable Series B Preferred stock 1,513 - 1,513 - - -
Net Loss $ (31,257) $ (9,107) $ (40,364) $ (36,203) $ (19,888) $ (56,091)
For the Nine Months Ended September 30, 2025 For the Nine Months Ended September 30, 2024
VineBrook NexPoint Homes Total VineBrook NexPoint Homes Total
Net loss attributable to stockholders $ (107,934) $ (15,101) $ (123,035) $ (79,094) $ (22,393) $ (101,487)
Net loss attributable to redeemable NCI in the OP (21,117) (1,309) (22,426) (19,117) (1,703) (20,820)
Net loss attributable to redeemable NCI in consolidated VIEs - (13,328) (13,328) - (19,997) (19,997)
Net loss attributable to NCI in consolidated VIEs - (1,825) (1,825) - (2,754) (2,754)
Dividends on and accretion to redemption value of Redeemable Series A preferred stock 6,595 - 6,595 6,260 - 6,260
Net income attributable to Redeemable Series B Preferred stock 4,539 - 4,539 - - -
Net Loss $ (117,917) $ (31,563) $ (149,480) $ (91,951) $ (46,847) $ (138,798)
The following table reconciles our calculations of VineBrook FFO, VineBrook Core FFO and VineBrook AFFO to the VineBrook Portfolio's net loss attributable to stockholders for the three and nine months ended September 30, 2025 and 2024, which is reconciled to consolidated net loss above, the most directly comparable GAAP financial measure (in thousands, except per share amounts):
For the Three Months Ended September 30, For the Nine Months Ended September 30,
Nine Months Ended September 30, 2025 to 2024
2025 2024 2025 2024 % Change
Net loss attributable to stockholders $ (29,271) $ (30,385) $ (107,934) $ (79,094) 36.5 %
Net loss attributable to NCI in the OP (5,697) (7,841) (21,117) (19,117) 10.5 %
Depreciation and amortization 25,685 24,013 76,858 72,029 6.7 %
Loss/(gain) on sales and impairment of real estate, net (1,955) 1,616 (4,062) 4,547 N/M
VineBrook FFO attributable to stockholders and NCI in the OP
(11,238) (12,597) (56,255) (21,635) N/M
VineBrook FFO per share - basic $ (0.36) $ (0.42) $ (1.82) $ (0.72) N/M
VineBrook FFO per share - diluted $ (0.36) $ (0.42) $ (1.82) $ (0.72) N/M
Loss on forfeited deposits 31 - 37 - N/M
Investment income (1) 1,124 1,321 3,718 3,790 -1.9 %
Loss on extinguishment of debt 445 114 798 1,488 -46.4 %
Non-cash interest expense 9,587 14,864 26,847 25,796 4.1 %
Change in unrealized (gain) loss on investments - (255) - - N/M
Transaction and other costs 5,039 3,224 8,779 6,789 29.3 %
Equity-based compensation expense 4,547 4,985 48,178 15,225 N/M
VineBrook Core FFO attributable to stockholders and NCI in the OP
9,535 11,656 32,102 31,453 2.1 %
VineBrook Core FFO per share - basic $ 0.30 $ 0.39 $ 1.04 $ 1.05 -1.0 %
VineBrook Core FFO per share - diluted $ 0.30 $ 0.38 $ 1.01 $ 1.02 -1.0 %
Recurring capital expenditures (7,511) (6,369) (18,767) (18,234) 2.9 %
VineBrook AFFO attributable to stockholders and NCI in the OP
2,024 5,287 13,335 13,219 0.9 %
VineBrook AFFO per share - basic $ 0.06 $ 0.18 $ 0.43 $ 0.44 -2.3 %
VineBrook AFFO per share - diluted $ 0.06 $ 0.17 $ 0.42 $ 0.43 -2.3 %
Weighted average shares outstanding - basic 31,453 30,012 30,873 29,843
Weighted average shares outstanding - diluted (2) 32,321 30,854 31,850 30,715
Dividends declared per share $ 0.5301 $ 0.5301 $ 1.5903 $ 1.5903
Net loss attributable to stockholders per share/unit - diluted (3) $ (1.31) $ (1.59) $ (4.79) $ (4.02)
Net loss attributable to stockholders Coverage - diluted (4) -2.47x -3.00x -3.01x -2.53x
VineBrook FFO Coverage - diluted (5)
-0.68x -0.79x -1.14x -0.45x
VineBrook Core FFO Coverage - diluted (5)
0.60x 0.72x 0.64x 0.64x
VineBrook AFFO Coverage - diluted (5)
0.11x 0.32x 0.26x 0.27x
(1)Investment income in the table above includes approximately $0.2 million and $0.4 million of interest income from the convertible and promissory notes with NexPoint Homes and the SFR OP, and approximately $0.9 million and $0.9 million of dividend income from the investment in NexPoint Homes for the three months ended September 30, 2025 and 2024, respectively. Additionally, investment income in the table above includes approximately $0.7 million and $1.1 million of interest income from the NexPoint Homes Convertible Notes and approximately $2.8 million and $2.6 million of dividend income from the investment in NexPoint Homes for the nine months ended September 30, 2025 and 2024, respectively. The VineBrook Portfolio interest and dividend income related to NexPoint Homes are eliminated on the consolidated statements of operations and comprehensive income (loss) but are added back to VineBrook Core FFO since these funds are attributable to the standalone VineBrook Portfolio.
(2)For the three and nine months ended September 30, 2025 and 2024, includes approximately 649,000 shares and 841,000 shares respectively, related to the assumed vesting of RSUs, performance shares of the Company and PI Units
not contingent upon an IPO, change in control, or listing of the Company's Common Stock on a national securities exchange.
(3)For the nine months ended September 30, 2025 and 2024, the net loss attributable to stockholders per share/unit (diluted) includes $(0.59) per common share and $(0.16) per common share, respectively, related to the allocated loss per common share attributable to the NexPoint Homes Portfolio.
(4)Indicates coverage ratio of net loss attributable to stockholders for the VineBrook Portfolio per share (diluted) over dividends declared per common share during the period.
(5)Indicates coverage ratio of VineBrook FFO/VineBrook Core FFO/VineBrook AFFO per common share (diluted) over dividends declared per common share during the period.
The nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024
VineBrook FFO was negative $56.3 million for the nine months ended September 30, 2025 compared to negative $21.6 million for the nine months ended September 30, 2024, which was a decrease of approximately $34.7 million. The change in VineBrook FFO between the periods primarily relates to increases in the VineBrook Portfolio's general and administrative expenses of $32.9 million, the VineBrook Portfolio's depreciation and amortization expense of $4.8 million, VineBrook Portfolio's total property operating expenses of $4.0 million and VineBrook Portfolio's interest expense of $1.6 million, partially offset by an increase in the VineBrook Portfolio's rental income of $5.0 million and an increase in the VineBrook Portfolio's other income of $5.1 million.
VineBrook Core FFO was $32.1 million for the nine months ended September 30, 2025 compared to $31.5 million for the nine months ended September 30, 2024, which was an increase of approximately $0.6 million. The change in VineBrook Core FFO between the periods primarily relates to decreases in VineBrook FFO of $34.7 million, loss on extinguishment of debt of $0.7 million and VineBrook Portfolio's transaction and other costs of $2.0 million, partially offset by increases in VineBrook Portfolio's non-cash interest expense of $1.1 million and VineBrook Portfolio's equity based compensation expense of $33.0 million, which are all added back to arrive at VineBrook Core FFO.
VineBrook AFFO was $13.3 million for the nine months ended September 30, 2025 compared to $13.2 million for the nine months ended September 30, 2024, which was an increase of approximately $0.1 million. The change in VineBrook AFFO between the periods primarily relates to an increase to VineBrook Core FFO, partially offset by an increase in the VineBrook Portfolio's recurring capital expenditures of $0.5 million.
The changes in diluted VineBrook FFO per share, VineBrook Core FFO per share and VineBrook AFFO per share were primarily related to an increase of 1.9% in VineBrook interest expense (or 1.8% on a per share basis). The weighted average interest rate of debt decreased from 5.6454% as of September 30, 2024 to 5.1174% as of September 30, 2025 for the VineBrook Portfolio, which has contributed to the increase in our VineBrook FFO and VineBrook Core FFO per share results. The Company has entered into seven interest rate derivative agreements with a combined notional amount of approximately $0.7 billion in order to partially offset the impact of interest rates.
Net Asset Value
The purchase price at which Common Stock may be repurchased in accordance with the terms of the Amended Share Repurchase Plan is generally based on the most recent NAV per share in effect at the time of repurchase, and Common Stock or OP Units issued under the applicable DRIP generally reflect a 3% discount to the then-current NAV per share.
NAV is calculated in accordance with the Valuation Methodology approved by our Board. Effective for valuations beginning on September 30, 2025, the Adviser calculates a preliminary NAV range by applying capitalization rates ("cap rates") - low, mid and high - provided by Green Street Advisors, LLC ("Green Street") for each metropolitan statistical area ("MSA") in which the VineBrook Portfolio owns properties. The Adviser will apply these cap rates to each property's projected net operating income over the next twelve months, adjusted for property dispositions and acquisitions ("Forward NOI"), unless the property is a new acquisition (generally acquired within twelve months of the valuation date), in which case the Adviser will apply a discounted cash flow ("DCF") model. Then the Adviser will layer in other assets and liabilities and make any other adjustments deemed necessary to arrive at a preliminary NAV range that it will recommend to the Pricing Committee. Based on this recommendation, the Pricing Committee will then determine NAV based on the midpoint of the range.
Effective for NAV determined on and after December 31, 2021, NAV has been determined as of the end of each quarter. NAV per share is calculated on a fully diluted basis under the treasury stock method. For a description of the previous valuation methodology used to calculate NAV prior to September 30, 2025, see the Company's Annual Report. The table below illustrates the changes in NAV since September 30, 2024:
Date NAV per share
September 30, 2024 55.45
December 31, 2024 54.54
March 31, 2025 54.56
June 30, 2025 54.25
September 30, 2025 54.84
Liquidity and Capital Resources
Our short-term liquidity requirements consist primarily of funds necessary to pay for debt maturities, operating expenses and other expenditures directly associated with our homes, including:
•recurring maintenance necessary to maintain our homes;
•interest expense and scheduled principal payments on outstanding indebtedness;
•distributions necessary to qualify for taxation as a REIT;
•advisory fees payable to our Adviser;
•property management fees payable to the Evergreen Manager;
•general and administrative expenses; and
•capital expenditures related to upcoming acquisitions and rehabilitation of owned homes.
We expect to meet our short-term liquidity requirements generally through net cash provided by operations, existing cash balances, sales of homes and debt financing. On October 17, 2025, in connection with the execution of the Barings Loan, we fully paid off the JPM Facility and the MetLife Note, see Notes 5 and 14.
Subsequent to September 30, 2025, the Company paid off $198.0 million of the debt obligations coming due, including the full repayment of the JPM Facility, which had a maturity of October 31, 2025, and the MetLife Note, which had a maturity of January 31, 2026 (see Note 14). The Company has sufficient liquidity to satisfy the remaining $50.0 million of the obligations coming due within 12 months of the financial statement issuance date.
We believe that our available cash, expected operating cash flows, net proceeds from the sale of homes and potential debt or equity financings will provide sufficient funds for our operations, anticipated scheduled debt service payments and dividend requirements for the twelve-month period following the issuance of these financials. We believe that the various sources of long-term capital, which may include public or private issuances of common equity, preferred equity or debt, draws on our revolving credit facilities, existing working capital, net cash provided by operations, long-term mortgage indebtedness and other secured and unsecured borrowings will provide sufficient funds for our operations, anticipated scheduled debt service payments and dividend requirements in the long-term.
There are a number of factors that may have a material adverse effect on our ability to access capital sources, including the state of overall equity and credit markets, our degree of leverage, our unencumbered asset base and borrowing restrictions imposed by lenders (including as a result of any failure to comply with financial covenants in our existing and future indebtedness), general market conditions for REITs, our operating performance and liquidity, market perceptions about us and restrictions on sales of properties under the Code. The success of our business strategy will depend, in part, on our ability to access these various capital sources.
Our homes will require periodic capital expenditures and renovation to remain competitive. Also, acquisitions of new homes will require significant capital outlays. Long-term, we may not be able to fund such capital improvements solely from net cash provided by operations because we must distribute annually at least 90% of our REIT taxable income, determined without regard to the deductions for dividends paid and excluding net capital gains, to qualify and maintain our qualification as a REIT, and we are subject to tax on any retained income and gains. As a result, our ability to fund capital expenditures and acquisitions through retained earnings long-term is limited. Consequently, we expect to rely heavily upon the availability of debt or equity capital for these purposes. If we are unable to obtain the necessary capital on favorable terms, or at all, our financial condition, liquidity, results of operations, and prospects could be materially and adversely affected.
Cash Flows
The nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024
The following table presents selected data from our consolidated statements of cash flows for the nine months ended September 30, 2025 and 2024 (in thousands):
For the Nine Months Ended September 30,
2025 2024
Net cash provided by operating activities $ 14,511 $ 15,483
Net cash provided by investing activities 32,527 67,948
Net cash used in financing activities (33,562) (72,458)
Change in cash and restricted cash 13,476 10,973
Cash and restricted cash, beginning of period 84,632 85,620
Cash and restricted cash, end of period $ 98,108 $ 96,593
Cash flows from operating activities.During the nine months ended September 30, 2025, net cash provided by operating activities was $14.5 million compared to net cash provided by operating activities of $15.5 million for the nine months ended September 30, 2024. The change in cash flows from operating activities was primarily due to a decrease in accrued interest payable of $6.9 million, partially offset by an increase in real estate taxes payable of $5.7 million.
Cash flows from investing activities.During the nine months ended September 30, 2025, net cash provided by investing activities was $32.5 million compared to net cash provided by investing activities of $67.9 million for the nine months ended September 30, 2024. The change in cash flows from investing activities was mainly due to decreases in disposition activity within the VineBrook Portfolio, a decrease in net proceeds from sales and an increase in acquisitions, partially offset by an increase in insurance proceeds received and increases in additions to real estate investments.
Cash flows from financing activities.During the nine months ended September 30, 2025, net cash used in financing activities was $33.6 million compared to net cash used in financing activities of $72.5 million for the nine months ended September 30, 2024. The change in cash flows from financing activities was mainly due to a decrease in notes payable proceeds received and an increase in notes payable principal payments made, partially offset by an increase in credit facilities proceeds received and a decrease in credit facilities principal payments made.
Debt, Derivatives and Hedging Activity
Debt
As of September 30, 2025, the VineBrook Portfolio had aggregate debt outstanding to third parties of approximately $2.1 billion at a weighted average interest rate of 5.1174% and an adjusted weighted average interest rate of 4.2420%. For purposes of calculating the adjusted weighted average interest rate of our debt outstanding, we have included the weighted average fixed rate of 1.7397%, representing a weighted average fixed rate for Secured Overnight Financing Rate ("SOFR"), which replaced one-month London Interbank Offered Rate ("LIBOR") on July 1, 2023, for the applicable interest period ("one-month term SOFR"), daily SOFR and daily SOFR plus 0.1145%, on our combined $0.7 billion notional amount of interest rate swap agreements and interest rate cap agreement, which effectively fixes the interest rate on $0.7 billion of our floating rate debt. See Notes 5 and 6 to our consolidated financial statements for additional information.
The following table sets forth a summary of our mortgage loan indebtedness for the VineBrook Portfolio as of September 30, 2025:
Type Outstanding Principal as of September 30, 2025 Interest Rate (1) Maturity
Warehouse Facility Floating - 7.13% 11/3/2025
JPM Facility Floating 94,433 7.09% 10/31/2025 (2)
JPM Acquisition Facility Floating 35,654 6.48% 7/9/2027
JPM Term Loan Floating 484,080 6.03% 9/10/2027
ABS I Loan Fixed 373,771 4.92% 12/8/2028
ABS II Loan Fixed 398,775 4.65% 3/9/2029
MetLife Note Fixed 100,328 3.25% 1/31/2026 (2)
MetLife Term Loan I Fixed 322,531 4.50% 8/22/2029
MetLife Term Loan II Fixed 246,843 4.75% 11/4/2029
OSL Loan Fixed 15,000 9.00% 2/25/2027
TrueLane Mortgage Fixed 7,688 5.35% 2/1/2028
Crestcore II Note Fixed 2,408 5.12% 7/9/2029
Crestcore IV Note Fixed 2,240 5.12% 7/9/2029
Total Outstanding Principal $ 2,083,751
(1)Represents the interest rate as of September 30, 2025. Except for fixed rate debt, the interest rate is 30-day average SOFR, daily SOFR or one-month term SOFR, plus an applicable margin. The 30-day average SOFR as of September 30, 2025 was 4.3076%, daily SOFR as of September 30, 2025 was 4.2400% and one-month term SOFR as of September 30, 2025 was 4.1292%.
(2)Subsequent to September 30, 2025, the JPM Facility and the MetLife Note were paid off in full on October 17, 2025.
In addition to the mortgage loan indebtedness for the VineBrook Portfolio presented above and described below, the NexPoint Homes Portfolio had $522.5 million of debt outstanding at September 30, 2025 (excluding amounts owed to the OP by NexPoint Homes, as these are eliminated in consolidation). See Notes 5 and 10 to the consolidated financial statements.
Warehouse Facility
On September 20, 2019, the OP (as guarantor) and VB One, LLC (as borrower) entered into the Warehouse Facility with KeyBank. The Warehouse Facility is secured by an equity pledge in certain assets of VB One, LLC and an equity pledge in the equity of VB One, LLC. On November 3, 2021, the Company (as guarantor), the OP (as parent borrower), and each of (i) VB OP Holdings, LLC and (ii) VB One, LLC and certain of its subsidiaries (as subsidiary borrowers), entered into an amended and restated credit agreement to recast the Warehouse Facility, which was subsequently amended on December 9, 2021, April 8, 2022, May 20, 2022, September 13, 2022 and October 25, 2022, July 31, 2023 and August 14, 2024.
On September 11, 2025, the Company fully paid off the outstanding principal balance and interest on the Warehouse Facility.
JPM Facility
On March 1, 2021, the Company entered into a non-recourse carveout guaranty and certain wholly owned subsidiaries of VB Three, LLC (as borrowers) entered into the $500.0 million JPM Facility. The JPM Facility was secured by equity pledges in VB Three, LLC and its wholly owned subsidiaries and bears interest at a variable rate equal to one-month LIBOR plus 2.75%. The JPM Facility was interest-only and originally matured and was due in full on March 1, 2023. On March 10, 2022, the Company entered into Amendment No. 1 to the JPM Facility, wherein each advance under the JPM Facility will bear interest at daily SOFR plus 2.85%. The balance of the JPM Facility, net of unamortized deferred financing costs, is included in credit facilities on the consolidated balance sheets. On January 31, 2023, the Company entered into Amendment No. 2 to the JPM Facility, wherein the total facility amount was updated to $350.0 million, and the maturity date was extended to January 31, 2025, which may be extended for 12 months upon submission of an extension request, subject to approval. On March 15, 2023, the Company entered into Amendment No. 3 to the JPM Facility to give the Company credit for pledging an interest rate cap by reducing the interest reserve requirements under the JPM Facility based on the capped rate. On December 26, 2024, the Company entered into Amendment No. 4 to the JPM Facility, wherein the maturity date was extended to April 30, 2025. On April 24, 2025, the Company entered into Amendment No. 5 to the JPM Facility, wherein the maturity date was extended to July 31, 2025. On July 28, 2025, the Company entered into Amendment No. 6 to the JPM Facility, wherein the maturity date was extended to October 31, 2025, and the commitment was reduced to the amount equal to the advances outstanding as of the Amendment No. 6 effective date and all repayments will permanently reduce the commitment.
The outstanding balance on the JPM Facility as of September 30, 2025, was approximately $94.4 million. The balance of the JPM Facility, net of unamortized deferred financing costs, is included in credit facilities on the consolidated balance sheets. Subsequent to September 30, 2025, the JPM Facility was paid off in full on October 17, 2025.
JPM Acquisition Facility
On June 25, 2025, VB Twelve, LLC, an indirect subsidiary of the Company, entered into the JPM Acquisition Facility for up to $500.0 million. The JPM Acquisition Facility bears interest at the greater of (i) one-month term SOFR or (ii) 3.00% plus 2.35% per annum. The JPM Acquisition Facility is interest-only and matures on July 9, 2027 with a one-year extension option subject to meeting certain criteria, payment of an extension fee and increases in the interest rate spread. The outstanding balance on the JPM Acquisition Facility as of September 30, 2025 is approximately $35.7 million. The JPM Acquisition Facility, net of unamortized deferred financing costs, is included in notes payable on the consolidated balance sheets.
Asset Backed Securitization I
On December 6, 2023, the OP completed a securitization transaction, in connection with which the ABS I Borrower entered into the ABS I Loan Agreement with the ABS I Lender, providing for the ABS I Loan with a total principal balance of approximately $392.2 million. Concurrent with the execution of the ABS I Loan Agreement, the ABS I Lender sold the ABS I Loan to the Depositor, an indirect subsidiary of the OP, which, in turn, transferred the ABS I Loan to a trust in exchange for (i) $178.4 million principal amount of Class A Certificates, (ii) $38.6 million principal amount of Class B Certificates, (iii) $30.8 million principal amount of Class C Certificates, (iv) $43.0 million principal amount of Class D Certificates, (v) $50.1 million principal amount of Class E1 Certificates, (vi) $12.2 million principal amount of Class E2 Certificates, and (vii) $39.1 million Class R Certificates. The Certificates represent beneficial ownership interests in the trust and its assets, including the ABS I Loan. The Depositor sold the Certificates, acquired by the Depositor in the manner described above, to placement agents who resold the Certificates to investors in a private offering. The Regular Certificates are exempt from registration under the Securities Act of 1933, as amended, and are "exempted securities" under the Exchange Act. To satisfy applicable risk retention rules, the OP purchased and retained the Class F Certificates totaling $39.1 million. The Depositor used the proceeds from the sale of the Certificates to purchase the ABS I Loan from the ABS I Lender, as described above. The Regular Certificates were sold to investors at a discount and the OP retained the Class F Certificate (as described above), with the result that the proceeds, before closing costs, from the ABS I Loan to the ABS I Borrower were approximately $314.0 million. The net proceeds of $300.6 million were used to partially pay down the Warehouse Facility. The balance of the ABS I Loan, net of unamortized deferred financing costs and debt discount, is included in notes payable on the consolidated balance sheets. The ABS I Loan is collateralized by 2,682 SFR homes, and as of September 30, 2025, approximately 11.95% of the Portfolio served as collateral for outstanding borrowings under the ABS I Loan. The ABS I Loan, is segregated into six tranches, all of which accrue interest at 4.9235% and have a maturity date of December 8, 2028.
Asset Backed Securitization II
On February 29, 2024, the ABS II Borrower, completed the ABS II and entered into the ABS II Loan Agreement with BofA Securities, Inc., as sole structuring agent, joint bookrunner and co-lead manager, Mizuho Securities USA LLC, as joint bookrunner and co-lead manager and Citizens JMP Securities, LLC, J.P. Morgan Securities LLC, Raymond James & Associates, Inc., and Truist Securities, Inc., as co-managers.
Concurrent with the execution of the ABS II Loan Agreement, the lender sold the ABS II Loan to the Depositor, an indirect subsidiary of the OP, which, in turn, transferred the loan to a trust in exchange for (i) $176.9 million principal amount of ABS II Class A Certificates, (ii) $38.6 million principal amount of ABS II Class B Certificates, (iii) $30.6 million principal amount of ABS II Class C Certificates, (iv) $42.9 million principal amount of ABS II Class D Certificates, (v) $63.5 million principal amount of ABS II Class E1 Certificates, (vi) $11.2 million principal amount of ABS II Class E2 Certificates, and (vii) $39.9 million ABS II Class R Certificates. The Company also retained $19.5 million notional amount of the ABS II Class A, $10.5 million notional amount of the ABS II Class B, and $2.0 million notional amount of the ABS II Class C certificates. The ABS II Certificates represent beneficial ownership interests in the trust and its assets, including the ABS II Loan.
The Depositor sold the ABS II Certificates, acquired by the Depositor in the manner described above, to placement agents who resold the Certificates to investors in a private offering. The ABS II Regular Certificates are exempt from registration under the Securities Act of 1933, as amended, and are "exempted securities" under the Exchange Act. To satisfy applicable risk retention rules, the OP purchased and retained the Class F component, totaling $39.9 million. Additionally, the OP purchased and retained a portion of the ABS II Class A, Class B and Class C components, totaling $19.5 million, $10.5 million and $2.0 million, respectively. The Company evaluated the purchased ABS II Class A, Class B, Class C and Class F certificates as a variable interest in the trust and concluded that the ABS II Class A, Class B, Class C, and Class F certificates will not absorb a majority of the trust's expected losses or receive a majority of the trust's expected residual returns. The Company also concluded that the ABS II Class A, Class B, Class C and Class F certificates do not provide the Company with an ability to direct activities that could impact the trust's economic performance. The Company does not consolidate the trust and the $71.9 million of the ABS II Certificates are reflected as asset-backed securitization certificates on the Company's consolidated balance sheets. The Depositor used the proceeds from the sale of the ABS II Certificates to purchase the ABS II Loan from the lender, as described above. The ABS II Regular Certificates were sold to investors at a discount and the OP retained the entire Class F certificate (as described above), with the result that the proceeds, before closing costs, from the ABS II Loan to the ABS II Borrower were approximately $331.8 million. A portion of the net proceeds from the ABS II were used to pay down $242.4 million on the JPM Facility and fund reserves per the credit agreement.
The balance of the ABS II Loan, net of unamortized deferred financing costs and debt discount, is included in notes payable on the consolidated balance sheets. The ABS II Loan is collateralized by 2,433 SFR homes, and as of September 30, 2025, approximately 10.84% of the Portfolio served as collateral for outstanding borrowings under the ABS II Loan. The ABS II Loan, is segregated into seven tranches, (Components A through F), providing for a 5-year, fixed-rate, interest-only loan with a total principal balance of $403.7 million. The weighted average interest rate of the ABS II Regular Certificates (Class A through E2) is 4.6495% and have a maturity date of March 9, 2029.
MetLife Note
On January 26, 2021, the Company as guarantor and VB Two as borrower entered into a $125.0 million note with Metropolitan Life Insurance. The MetLife Note was secured by equity pledges in VB Two and its wholly owned subsidiaries and bore interest at a fixed rate of 3.25%. The MetLife Note was interest-only and matured and was due in full on January 31, 2026. As of September 30, 2025, the outstanding balance of the MetLife Note was approximately $100.3 million. The MetLife Note, net of unamortized deferred financing costs, is included in notes payable on the consolidated balance sheets. Subsequent to September 30, 2025, the MetLife Note was paid off in full on October 17, 2025.
MetLife Term Loan I Facilities
On August 22, 2024, VB Nine and VB Ten as borrowers, entered into the MetLife Term Loan I Facilities with Metropolitan Life Insurance Company and Metropolitan Tower Life Insurance Company, and the lenders party thereto from time to time, which provided a total commitment of $343.2 million. Borrowings under the MetLife Term Loan I Facilities are secured by an equity pledge by VB Nine Equity and VB Ten Equity of their equity interests in VB Nine and VB Ten, respectively, and the property and assets held by VB Nine and VB Ten, respectively, and bear interest at a fixed rate equal to 4.5%. The MetLife Term Loan I Facilities are full-term, interest-only facilities that mature on August 22, 2029. The Company used $282.0 million of the proceeds to pay down a portion of the outstanding amounts under the
Warehouse Facility. As of September 30, 2025, the outstanding balance of the MetLife Term Loan I Facilities was approximately $322.5 million.
MetLife Term Loan II Facility
On November 4, 2024, VB Eleven, LLC as borrower, entered into MetLife Term Loan II Facility with Metropolitan Life Insurance Company and Metropolitan Tower Life Insurance Company, and the lenders party thereto from time to time. Borrowings under the MetLife Term Loan II Facility are secured by an equity pledge by VB Eleven Equity of its equity interests in VB Eleven and the property and assets held by VB Eleven, and bear interest at a fixed rate equal to 4.75%. The MetLife Term Loan II Facility is a full-term, interest-only facility that matures on November 4, 2029. The Company used $226.8 million of the proceeds to pay down the remaining outstanding amount under the Initial Mortgage. As of September 30, 2025, the outstanding balance of the MetLife Term Loan II Facility was approximately $246.8 million.
The OSL Loan
On February 25, 2025, the OP, as borrower, entered into a $10.0 million credit agreement with OSL. The OSL Loan provides for a 2-year, interest-only loan with a total principal balance of $10.0 million at a 9.0% fixed interest rate and is guaranteed by the Company. On May 5, 2025, the OP used its option to draw an additional $5.0 million on the OSL Loan. As of September 30, 2025, the outstanding balance of the OSL Loan was approximately $15.0 million.
Subsequent to September 30, 2025, the OSL Loan was paid off in full on October 30, 2025.
JPM Term Loan
On September 11, 2025, the OP, as borrower, entered into a credit agreement with JPM, and the lenders party thereto from time to time, including OSL. The JPM Term Loan provides for term loans of $485.0 million, all of which were drawn on September 11, 2025. Borrowings under the JPM Term Loan will generally bear interest at Term SOFR for the interest period plus 1.90%, provided that the Company may elect for the JPM Term Loan to bear interest at (i) the greater of the prime rate, the federal funds effective rate plus 0.5%, and one-month Term SOFR plus 1.0%, in each case, plus 0.90% or (ii) adjusted daily effective SOFR plus 1.90%. The JPM Term Loan is interest-only and matures on September 10, 2027. The Company used the proceeds from the JPM Term Loan to fully repay the outstanding balances of the Warehouse Facility and the OSL Loan II. As of September 30, 2025, the outstanding balance was approximately $484.1 million. The JPM Term Loan, net of unamortized deferred financing costs, is included in notes payable on the consolidated balance sheets.
Refinancing of Capital
We intend to invest in additional homes as suitable opportunities arise and adequate sources of equity and debt financing are available. In the future, while we may continue to buy older homes and renovate them to add value and increase rental rates, we also intend to invest in newer homes in BTR communities in higher growth markets within our geographic footprint. We expect that future investments in properties, including any improvements or renovations of current or newly acquired properties, will depend on and will be financed by, in whole or in part, our existing cash, future borrowings and the proceeds from additional issuances of shares of Common Stock, Preferred Stock or other securities or property dispositions.
Although we expect to be subject to restrictions on our ability to incur indebtedness, we expect that we will be able to refinance existing indebtedness or incur additional indebtedness for acquisitions or other purposes, if needed. However, there can be no assurance that we will be able to refinance our indebtedness, incur additional indebtedness or access additional sources of capital, such as by issuing Common Stock, preferred stock or other debt or equity securities, on terms that are acceptable to us or at all.
Furthermore, following the completion of our renovations and depending on the interest rate environment at the applicable time, we may seek to refinance our floating rate debt into longer-term fixed rate debt at lower leverage levels.
Interest Rate Derivative Agreements
We have entered into and expect to continue to enter into interest rate swap and cap agreements with various third parties to fix or cap the floating interest rates on a majority of our floating rate mortgage debt outstanding. The interest rate swap agreements generally have a term of approximately three to six years and effectively establish a fixed interest rate on debt on the underlying notional amounts. In order to fix a portion of, and mitigate the risk associated with, our floating rate indebtedness (without incurring substantial prepayment penalties or defeasance costs typically associated with fixed rate indebtedness when repaid early or refinanced), we, through the OP, have entered into five interest rate swap transactions with KeyBank with a combined notional amount of $0.4 billion. As of September 30, 2025, the interest rate swaps we have entered into effectively replace the floating interest rate (daily SOFR) with respect to $0.4 billion of our floating rate mortgage debt outstanding with a weighted average fixed rate of 1.6945%. As of September 30, 2025, interest rate swap agreements effectively covered $0.4 billion, or 119.8%, of our $0.6 billion of floating rate debt outstanding for the VineBrook Portfolio. During the term of these interest rate swap agreements, we are required to make monthly fixed rate payments of 1.6945%, on a weighted average basis, on the notional amounts, while KeyBank is obligated to make monthly floating rate payments based on daily SOFR to us referencing the same notional amounts. For purposes of hedge accounting under ASC 815, Derivatives and Hedging,we have designated some of these interest rate swaps as cash flow hedges of interest rate risk. See Notes 5 and 6 to our consolidated financial statements for additional information.
On April 13, 2022, we paid a premium of approximately $12.7 million and entered into an interest rate cap transaction with Goldman Sachs Bank USA with a notional amount of $300.0 million. The interest rate cap effectively caps one-month term SOFR on $300.0 million of our floating rate debt at 1.50%. The interest rate cap expires on November 1, 2025. On June 27, 2025, we paid a premium of approximately $0.1 million and entered into an interest rate cap transaction with Royal Bank of Canada with a notional amount of $31.9 million (the "RBC Cap"). On September 29, 2025, the Company, through the OP, paid a premium of less than $0.1 million and modified the RBC Cap, wherein the notional amount was increased to $35.9 million. The RBC Cap effectively caps one-month term SOFR on $35.9 million of our floating rate debt at 4.25%. The interest rate caps expire on November 1, 2025 and July 9, 2027, respectively.
Investments in Subsidiaries
As of September 30, 2025, the Company, through the OP and its SPE subsidiaries, owned the Portfolio, which consisted of 20,365 properties in the VineBrook Portfolio and 2,076 properties in the NexPoint Homes Portfolio, through 15 SPEs and their various subsidiaries and through the consolidated investment in NexPoint Homes. The following table presents the ownership structure of each SPE group that directly or indirectly owns the title to each real estate asset as of September 30, 2025, the number of assets held, the cost of those assets, the resulting debt allocated to each SPE and whether the debt is a mortgage loan. The table presents the debt allocations to each SPE that collateralize the related debt per the loan agreements. The mortgage loans may be settled from the assets of the below entity or entities to which the loan is made (dollars in thousands):
VIE Name Homes Cost Basis OP Beneficial Ownership % Encumbered by Mortgage Debt Allocated
NREA VB I, LLC 34 $ 3,400 100 % Yes $ 2,226
NREA VB II, LLC 46 4,656 100 % Yes 3,011
NREA VB III, LLC 437 41,713 100 % Yes 28,606
NREA VB IV, LLC 125 12,609 100 % Yes 8,183
NREA VB V, LLC 1,085 70,999 100 % Yes 71,025
NREA VB VI, LLC 103 10,630 100 % Yes 6,742
NREA VB VII, LLC 21 1,987 100 % Yes 1,375
True FM2017-1, LLC 171 17,045 100 % Yes 7,688
VB One, LLC 5,441 743,248 100 % Yes 356,170
VB Two, LLC 1,546 156,057 100 % No (1) 100,328
VB Three, LLC 1,303 196,149 100 % No (1) 94,433
VB Five, LLC 113 13,874 100 % Yes 4,648
VB Eight, LLC 103 15,853 100 % Yes 6,742
VB Nine, LLC 1,253 184,627 100 % Yes 162,056
VB Ten, LLC 1,246 183,019 100 % Yes 160,475
VB Eleven, LLC 2,027 188,909 100 % Yes 246,843
VB Twelve, LLC 196 51,878 100 % Yes 35,654
VineBrook Homes Borrower 1, LLC 2,682 393,163 100 % Yes 373,771
VineBrook Homes Borrower 2, LLC 2,433 364,265 100 % Yes 398,775
NexPoint Homes 2,076 621,522 83 % No 410,443
22,441 $ 3,275,603 $ 2,479,194 (2)
(1)Assets held, directly or indirectly, by VB Two, LLC, VB Three, LLC and NexPoint Homes and its subsidiaries are not encumbered by a mortgage. Instead, the applicable lender has an equity pledge in certain assets of the respective SPEs and an equity pledge in the equity of the respective SPEs.
(2)In addition to the debt allocated to the SPEs noted above, as of September 30, 2025, the OP had approximately $15.0 million of debt not collateralized directly by homes which reflect the amount outstanding on the OSL Loan and NexPoint Homes had approximately $112.1 million of debt not collateralized directly by homes which reflects the amount outstanding on the SFR OP Convertible Notes, the SFR OP Note Payable III and the NexPoint Homes OSL Note as of September 30, 2025.
REIT Tax Election and Income Taxes
We have elected to be taxed as a REIT under Sections 856 through 860 of the Code commencing with our taxable year ended December 31, 2018 and expect to continue to qualify as a REIT. To qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement that we distribute at least 90% of our "REIT taxable income," as defined by the Code, to our stockholders. Taxable income from certain non-REIT activities is managed through TRSs and is subject to applicable U.S. federal, state, and local income and margin taxes. We had no significant taxes associated with our TRSs for the three and nine months ended September 30, 2025 and 2024. We believe we qualify for taxation as a REIT under the Code, and we intend to continue to operate in such a manner, but no assurance can be given that we will operate in a manner so as to qualify as a REIT. NexPoint Homes elected to be taxed as a REIT under Sections 856 through 860 of the Code, beginning with the year ended December 31, 2022.
We anticipate that we will continue to qualify to be taxed as a REIT for U.S. federal income tax purposes, and we intend to continue to be organized and to operate in a manner that will permit us to qualify as a REIT. To qualify as a REIT, we must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of our annual REIT taxable income to stockholders. As a REIT, we will be subject to U.S. federal income tax on our undistributed REIT taxable income and net capital gain and to a 4% nondeductible excise tax on any amount by which distributions we pay with respect to any calendar year are less than the sum of (1) 85% of our ordinary income, (2) 95% of our capital gain net income and (3) 100% of our undistributed income from prior years.
If we fail to qualify as a REIT in any taxable year, we will be subject to U.S. federal income tax on our taxable income at regular corporate income tax rates, and dividends paid to our stockholders would not be deductible by us in computing taxable income. Any resulting corporate liability could be substantial and could materially and adversely affect our net income and net cash available for distribution to stockholders. Unless we were entitled to relief under certain Code provisions, we also would be disqualified from re-electing to be taxed as a REIT for the four taxable years following the year in which we failed to qualify to be taxed as a REIT.
We evaluate the accounting and disclosure of tax positions taken or expected to be taken in the course of preparing our tax returns to determine whether the tax positions are "more-likely-than-not" (greater than 50%) of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the current year. Our management is required to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions, which include federal and certain states. We have no examinations in progress and none are expected at this time.
We recognize our tax positions and evaluate them using a two-step process. First, we determine whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Second, we will determine the amount of benefit to recognize and record the amount that is more likely than not to be realized upon ultimate settlement.
We had no material unrecognized tax benefit or expense, accrued interest or penalties as of September 30, 2025. We and our subsidiaries are subject to U.S. federal income tax as well as income tax of various state and local jurisdictions. The 2024, 2023 and 2022 tax years remain open to examination by tax jurisdictions to which our subsidiaries and we are subject. When applicable, we recognize interest and/or penalties related to uncertain tax positions on our consolidated statements of operations and comprehensive income (loss).
Dividends
We intend to make regular quarterly dividend payments to holders of our Common Stock. We also intend to make the accrued dividend payments on the Series A Preferred Stock, which are payable quarterly in arrears as provided in the articles supplementary setting forth the terms of the Series A Preferred Stock, and the accrued dividend payments on the Series B Preferred Stock, which are payable quarterly in arrears as provided in the articles supplementary setting forth the terms of the Series B Preferred Stock. U.S. federal income tax law generally requires that a REIT distribute annually at least 90% of its REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains. As a REIT, we will be subject to U.S. federal income tax on our undistributed REIT taxable income and net capital gains and to a 4% nondeductible excise tax on any amount by which distributions we pay with respect to any calendar year are less than the sum of (1) 85% of our ordinary income, (2) 95% of our capital gain net income and (3) 100% of our undistributed income from prior years. We intend to make regular quarterly dividend payments of all or substantially all of our taxable income, which is not used to pay dividends on the Series A Preferred Stock and Series B Preferred Stock, to holders of our Common Stock out of assets legally available for this purpose, if and to the extent authorized by our Board. Before we make any dividend payments, whether for U.S. federal income tax purposes or otherwise, we must first meet both our operating requirements and debt service on our debt payable. If our cash available for distribution is less than our taxable income, we could be required to sell assets, borrow funds or raise additional capital to make cash dividends or we may make a portion of the required dividend in the form of a taxable distribution of stock or debt securities.
We will make dividend payments based on our estimate of taxable earnings per share of Common Stock, but not earnings calculated pursuant to GAAP. Our dividends and taxable income and GAAP earnings will typically differ due to items such as depreciation and amortization, fair value adjustments, differences in premium amortization and discount accretion, and non-deductible general and administrative expenses. Our dividends per share may be substantially different than our taxable earnings and GAAP earnings per share.
Inflation
The real estate market has not been affected significantly by inflation in the past several years due to increases in rents nationwide. The majority of our lease terms are for a period of one year or less and reset to market if renewed. The majority of our leases also contain protection provisions applicable to reimbursement billings for utilities. Due to the short-term nature of our leases, we do not believe our results will be materially affected.
Inflation may also affect the overall cost of debt, as the implied cost of capital increases. The Federal Reserve, in response to or in anticipation of continued inflation concerns, could raise interest rates. We intend to mitigate these risks through long-term fixed interest rate loans and interest rate derivatives, which to date have included interest rate cap and interest rate swap agreements.
Seasonality
We believe that our business and related operating results will be impacted by seasonal factors throughout the year. We experience higher levels of resident move-outs and move-ins during the late spring and summer months, which impacts both our rental revenues and related turnover costs. Furthermore, our property operating costs are seasonally impacted in certain markets for expenses such as repairs to heating, ventilation and air conditioning systems, turn costs and landscaping expenses during the summer season. Additionally, our SFR properties are at greater risk in certain markets for adverse weather conditions such as extreme cold weather in winter months and hurricanes in late summer months.
Off-Balance Sheet Arrangements
As of September 30, 2025 and December 31, 2024, we had no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
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, assumptions and estimates that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We evaluate these judgments, assumptions and estimates for changes that would affect the reported amounts. These estimates are based on management's historical industry experience and on various other judgments and assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these judgments, assumptions and estimates. Below is a discussion of the accounting policies that we consider critical to understanding our financial condition or results of operations where there is uncertainty or where significant judgment is required. A discussion of recently issued accounting pronouncements and our significant accounting policies, including further discussion of the accounting policies described below, can be found in Note 2 "Summary of Significant Accounting Policies" to our consolidated financial statements included in this report.
Real Estate Investments
Upon acquisition, we evaluate our acquired SFR properties for purposes of determining whether a transaction should be accounted for as an asset acquisition or business combination. Since substantially all of the fair value of our acquired properties is concentrated in a single identifiable asset or group of similar identifiable assets and the acquisitions do not include a substantive process, our purchases of homes or portfolios of homes qualify as asset acquisitions. Accordingly, upon acquisition of a property, the Total Consideration is allocated to land, buildings, improvements, fixtures, and intangible lease assets based upon their relative fair values.
The allocation of Total Consideration, which is determined using inputs that are classified within Level 3 of the fair value hierarchy established by ASC 820 (see Note 2 to our consolidated financial statements), is based on an independent third-party valuation firm's estimate of the fair value of the tangible and intangible assets and liabilities acquired, or management's internal analysis based on market knowledge obtained from historical transactions. The valuation methodology utilizes market comparable information, depreciated replacement cost and other estimates in allocating value to the tangible assets. The allocation of the Total Consideration to intangible lease assets represents the value associated with the in-place leases, as one month's worth of effective gross income (rental revenue, less credit loss allowance, plus other income) as the average downtime of the assets in the portfolio is approximately one month and the assets in the portfolio are leased on a gross rental structure. If any debt is assumed in an acquisition, the difference between the fair value, which is estimated using inputs that are classified within Level 2 of the fair value hierarchy, and the face value of debt is recorded as a premium or discount and amortized or accreted as interest expense over the life of the debt assumed.
The allocation of Total Consideration to the various components of properties acquired during the year can have an effect on our net income/(loss) due to the useful depreciable and amortizable lives applicable to each component and the recognition of the related depreciation and amortization expense. For example, if a greater portion of the Total Consideration is allocated to land, which does not depreciate, our net income would be higher. Typically, we allocate between 10% to 30% of the Total Consideration to land.
Real estate assets, including land, buildings, improvements, fixtures, and intangible lease assets are stated at historical cost less accumulated depreciation and amortization. Costs incurred in making repairs and maintaining real estate assets are expensed as incurred. Expenditures for improvements, renovations, and replacements are capitalized at cost. The Company also incurs costs to prepare acquired properties for rental. These costs are capitalized to the cost of the property during the period the property is undergoing activities to prepare it for its intended use. We capitalize interest costs as a cost of the property only during the period for which activities necessary to prepare an asset for its intended use are ongoing, provided that expenditures for the asset have been made and interest costs have been incurred. Upon completion of the renovation of our properties, all costs of operations, including repairs and maintenance, are expensed as incurred, unless the renovation meets the Company's capitalization criteria.
Impairment
Real estate assets are reviewed for impairment quarterly or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Significant indicators of impairment may include, but are not limited to, declines in home values, changes in hold periods, rental rates or occupancy percentages, as well as significant changes in the economy. In such cases, the Company will evaluate the recoverability of the assets by comparing the estimated future cash flows expected to result from the use and eventual disposition of each asset to its carrying amount and provide for impairment if such undiscounted cash flows are insufficient to recover the carrying amount. If impaired, the real estate asset will be written down to its estimated fair value. The process whereby we assess our single-family rental homes for impairment requires significant judgment and assessment of factors that are, at times, subject to significant uncertainty. During the three and nine months ended September 30, 2025, $1.5 million and $2.5 million of impairments on operating properties not held for sale were recorded, respectively, which are included in loss on sales and impairment of real estate, net on the consolidated statements of operations and comprehensive income (loss), and no significant impairments on operating properties were recorded during the three and nine months ended September 30, 2024.
Implications of being an Emerging Growth Company
We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act (the " JOBS Act") and we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies" including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
The JOBS Act permits an emerging growth company such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We have elected to take advantage of this extended transition period. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates for such new or revised standards. We may elect to comply with public company effective dates at any time, and such election would be irrevocable pursuant to Section 107(b) of the JOBS Act.
We could remain an "emerging growth company" until the earliest of (1) the end of the fiscal year following the fifth anniversary of the date of the first sale of shares of our Common Stock pursuant to an effective registration statement, (2) the last day of the fiscal year in which our annual gross revenues exceed $1.235 billion, (3) the date that we become a "large accelerated filer" as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our Common Stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (4) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.
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