Highland Opportunities and Income Fund · NYSE:HFRO
Highland Opportunities and Income Fund — Q2 2024 Earnings Presentation
25 slides from Highland Opportunities and Income Fund's earnings presentation, September 2024
Slide 1: Q2 2024 Investor Presentation
Q2 2024 INVESTOR PRESENTATION Highland Opportunities and Income Fund September 2024
Slide 2: HFRO Snapshot
HIGHLAND OPPORTUNITIES AND INCOME FUND HFRO Snapshot Highland Opportunities and Income Fund (HFRO) is a Overview closed-end, non-diversified management investment company focused on delivering attractive returns Ticker HFRO through interest income and capital appreciation. CUSIP 43010E404 INVESTMENT
Slide 3: HFRO Investment Merits
HIGHLAND OPPORTUNITIES AND INCOME FUND HFRO Investment Merits Attractive real estate portfolio Core real estate holdings poised Permanent capital and a solid comprised of debt and equity to unlock value as interest rates balance sheet with no leverage or positions with capital decline in the coming
Slide 4: Closing NAV Discount
HIGHLAND OPPORTUNITIES AND INCOME FUND Closing NAV Discount Board Engagement • Discount to NAV has continuously been key focus of Board and remains a top priority • Board engagement with Adviser is ongoing to review existing initiatives and evaluate additional opportunities to reduce the discount
Slide 5: Closing NAV Discount Continued
HIGHLAND OPPORTUNITIES AND INCOME FUND Closing NAV Discount Continued Investment Performance Maximizing Fund performance by executing on the HFRO value proposition to deliver current income and capital appreciation Transparency & Communication • Improve investors’ understanding of Fund and inves
Slide 6: Portfolio Composition
HIGHLAND OPPORTUNITIES AND INCOME FUND Asset Class (% of Long Assets) Portfolio Composition 100.00% 80.00% • As of June 30, 2024, the Fund’s assets totaled 60.00% $989 million. • The Fund’s long assets were approximately 40.00% 74.3% commercial real estate (debt & equity) and 25.7% non-real estate r
Slide 7: Three Core Themes in Current Portfolio
HIGHLAND OPPORTUNITIES AND INCOME FUND Three Core Themes in Current Portfolio Thesis One: Opportunity in RESIDENTIAL RENTAL MARKET (Single Family Rentals (SFR) and multifamily) in face of housing affordability challenges and migration out of large coastal metros • Investments: NexPoint Homes – ResMa
Slide 8: Top Holdings Snapshot
HIGHLAND OPPORTUNITIES AND INCOME FUND Top Holdings Snapshot 8
Slide 9: Top Holdings
HIGHLAND OPPORTUNITIES AND INCOME FUND Top Holdings INVESTMENT % PORTFOLIO THESIS KEY HIGHLIGHTS NexPoint 12.8% Core SFR fund with potential upside from Expect stable NOI growth with highly occupied Homes Trust NOI growth and home price appreciation. portfolio, targeting 4 to 5% dividend yield. THES
Slide 10: Top Holdings (cont'd)
HIGHLAND OPPORTUNITIES AND INCOME FUND Top Holdings (cont’d) INVESTMENT % PORTFOLIO THESIS KEY HIGHLIGHTS ResMark 5.4% Invested in a joint venture with a Developing five separate build-to-rent residential Venture developer who has deep expertise in the developments in California and Texas, with indu
Slide 11: Top Holdings
HIGHLAND OPPORTUNITIES AND INCOME FUND Top 10 Holdings 11
Slide 12: NexPoint Homes Trust
TOP TEN HOLDINGS NexPoint Homes Trust A private REIT focused on acquiring, building, and operating single-family rental homes mostly in the Sunbelt states. INVESTMENT RATIONALE & OBJECTIVE • Fills a significant growing need for expanded access to affordable SFR properties due to the lack of supply a
Slide 13: EDS Legacy Partners
TOP TEN HOLDINGS EDS Legacy Partners Owns the former Electronic Data Systems (EDS) campus located at 5400 Legacy Drive in Plano, Texas, which is situated on 91 acres and includes ~1.6 million square feet of space, being redeveloped into a life sciences and medical complex. INVESTMENT RATIONALE & OBJ
Slide 14: NexPoint Storage Partners
TOP TEN HOLDINGS NexPoint Storage Partners Invests in newly built, multi-story, climate-controlled, Class-A self-storage facilities located in dense and growing markets. All assets are managed by Extra Space Storage (NYSE: EXR) INVESTMENT RATIONALE & OBJECTIVE • A best-in-class storage portfolio tha
Slide 15: NexPoint Real Estate Finance
TOP TEN HOLDINGS NexPoint Real Estate Finance An externally managed commercial mortgage REIT listed on NYSE with a primary focus on investments in real estate, including in the multifamily, single-family rental, self-storage, life science, hospitality, office, and marina sectors. INVESTMENT RATIONAL
Slide 16: IQHQ
TOP TEN HOLDINGS IQHQ A private real estate investment trust (REIT) that acquires, develops, redevelops, and manages life-sciences real estate across several core-markets. INVESTMENT RATIONALE & OBJECTIVE • Pursues large format, iconic development and selective re-development opportunities within li
Slide 17: ResMark Venture
TOP TEN HOLDINGS ResMark Venture A JV with a multibillion-dollar international pension fund managed by an affiliate of The Resmark Companies. It invests in mostly residential development projects and is focused on making single-family build-to-rent investments in suburban markets. INVESTMENT RATIONA
Slide 18: CCS Medical
TOP TEN HOLDINGS CCS Medical A leading national distributor of home medical equipment and supplies for patients with chronic conditions, with a focus on diabetes management. INVESTMENT RATIONALE & OBJECTIVE • CCS is at the forefront of the rapidly growing distribution market for continuous glucose m
Slide 19: NexPoint Hospitality Trust
TOP TEN HOLDINGS NexPoint Hospitality Trust A publicly traded REIT listed on the TSX Venture Exchange under the ticker NHT.U. focused on acquiring, owning, and operating well-located hospitality properties in the United States that offer a high current yield. INVESTMENT RATIONALE & OBJECTIVE • HFRO
Slide 20: Easton Village
TOP TEN HOLDINGS Easton Village Owns 88% of the Easton Village apartment complex in Boise, Idaho. Consists of 144 market rate, multifamily units within six garden style buildings on 7.47 acres of land with robust amenities. INVESTMENT RATIONALE & OBJECTIVE • An attractive investment in a multifamily
Slide 21: WMG Space Coast Partners
TOP TEN HOLDINGS WMG Space Coast Partners Consists of 6 multi-tenant small bay industrial assets near the Space Coast in Melbourne, FL. The Portfolio is owned by a programmatic joint venture between affiliates of NexPoint Advisors, L.P. and BASIS Industrial. INVESTMENT RATIONALE & OBJECTIVE • Formed
Slide 22: Appendix
HIGHLAND OPPORTUNITIES AND INCOME FUND Appendix 22
Slide 23: Selected Financial Highlights
APPENDIX Selected Financial Highlights Quarter Ended June 30, 2024 Balance Sheet Highlights 2Q2024 1Q 2024 4Q 2023 3Q 2023 2Q 2023 1Q 2023 4Q 2022 3Q 2022 2Q 2022 Investment Portfolio at Fair Value $965 $988 $1,008 $1,046 $1,035 $1,070 $1,067 $1,067 $1,180 Total Debt Outstanding $140 $140 $160 $159
Slide 24: Fund Management and NexPoint Platform
APPENDIX Fund Management and NexPoint Platform Jim Dondero, CFA A Leading Alternative Co-Founder & President Investment Platform • Has over 30 years of experience investing NexPoint provides differentiated access to alternatives through across the alternative landscape. a range of investment offerin
Slide 25: Visit Our Website / Contact
ADDRESS VISIT OUR WEBSITE 300 Crescent Court www.nexpointassetmgmt.com Suite 700 Dallas, TX 75201 CONTACT SALES (833) 697-7253 NVESTOR SUPPORT IR@nexpoint.com
Highland Opportunities and Income Fund — Q2 2024 Earnings Presentation on 6ix