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- NexPoint Diversified Real Estate Trust common equity is down 27% since our previous coverage and more pain may be ahead due to its structure and complexity.
- Two key assets, VineBrook Homes and Citiyplace Tower, make up 30% of NXDT’s NAV and are at high risk of being wiped out.
- Investors should avoid long positions and limit exposure to NXDT due to the potential for asset disposals at a loss and pressure on common equity.
We already analyzed NexPoint Diversified Real Estate Trust (NYSE:NXDT) when we looked at their preferred shares, and we liked the risk/return profile of that particular asset class. However, not the same can be said about the common equity. Since that article, the stock is down some 27%, but we believe there could be more pain ahead. We reached this conclusion after an in-depth analysis of some of their largest assets and their capital structure.
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