Highland Opportunities and Income Fund · NYSE:HFRO
Highland Opportunities and Income Fund — Q3 2024 Earnings Presentation
27 slides from Highland Opportunities and Income Fund's earnings presentation, December 2024
Slide 1: Q3 2024 Investor Presentation: Highland Opportunities and Income Fund
Q3 2024 INV ESTOR PRESENTAT ION Highland Opportunities and Income Fund December 2024
Slide 2: HFRO Snapshot
HIG HLAND OPPORTUNIT IES AN D IN COM E F UND 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 INVE
Slide 3: HFRO Investment Merits
HIG HLAND OPPORTUNIT IES AN D IN COM E F UND 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 c
Slide 4: Closing NAV Discount: Other Initiatives
HIG HLAND OPPORTUNIT IES AN D IN COM E F UND Closing NAV Discount: Other Initiatives ➢ Board Engagement OVERVIEW: ▪ 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 op
Slide 5: Closing NAV Discount: Other Initiatives (cont'd)
HIG HLAND OPPORTUNIT IES AN D IN COM E F UND Closing NAV Discount: Other Initiatives (cont’d) ➢ Share Repurchases OVERVIEW: ▪ Continued to repurchase shares subject to volume limitations and other 10b-18 restrictions ▪ Ongoing analysis of best capital allocation including potential for share repurch
Slide 6: Closing NAV Discount: Tender Offer
HIG HLAND OPPORTUNIT IES AN D IN COM E F UND Closing NAV Discount: Tender Offer The recently announced Tender Offer is part of the ongoing, targeted strategy from NexPoint and the Board to address the discount to NAV. The Tender Offer expands on current initiatives while providing an additional solu
Slide 7: Portfolio Composition
HIG HLAND OPPORTUNIT IES AN D INCOM E FUN D Portfolio Composition • As of September 30, 2024, the Fund’s assets totaled $991 million. • The Fund’s long assets were approximately 74.0% commercial real estate (debt & equity) and 26.0% non-real estate related assets invested across debt securities, pub
Slide 8: Three Core Themes in Current Portfolio
HIG HLAND OPPORTUNIT IES AN D IN COM E F UND 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 –
Slide 9: Top Holdings Snapshot
HIGHLAND OPPORTUNITIES AND INCOME FUND Top 10 Holdings Snapshot 9
Slide 10: Top Holdings (as of 9/30)
HIG HLAND OPPORTUNIT IES AN D IN COM E F UND Top 10 Holdings (as of 9/30) INVESTMENT % PORTFOLIO THESIS KEY HIGHLIGHTS NexPoint 12.5% Core SFR fund with potential upside from Executing on opportunity to optimize portfolio, Homes Trust NOI growth and home price appreciation, including upgrading prope
Slide 11: Top Holdings (as of 9/30) (cont'd)
HIG HLAND OPPORTUNIT IES AN D IN COM E F UND Top 10 Holdings (as of 9/30) (cont’d) INVESTMENT % PORTFOLIO THESIS KEY HIGHLIGHTS IQHQ 5.6% Address the demand dynamics for life Marked down post-9/30 but positioned to benefit science in these markets; capture high- from recent industry tailwinds, such
Slide 12: Top Holdings
HIGHLAND OPPORTUNITIES AND INCOME FUND Top Holdings 12
Slide 13: NexPoint Homes Trust
TOP H OLD ING S D ETAIL 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 s
Slide 14: EDS Legacy Partners
TOP H OLD ING S D ETAIL 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 RATIONAL
Slide 15: NexPoint Storage Partners
TOP H OLD ING S D ETAIL 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 portfo
Slide 16: NexPoint Real Estate Finance
TOP H OLD ING S D ETAIL 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 R
Slide 17: ResMark Venture
TOP H OLD ING S D ETAIL 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
Slide 18: IQHQ
TOP H OLD ING S D ETAIL 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 wi
Slide 19: CCS Medical
TOP H OLD ING S D ETAIL 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 gl
Slide 20: NexPoint Hospitality Trust
TOP H OLD ING S D ETAIL 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
Slide 21: Sapience Therapeutics
TOP H OLD ING S D ETAIL Sapience Therapeutics A privately held, clinical-stage biotechnology company focused on discovering and developing peptide therapeutics to address oncogenic and immune dysregulation that drive cancer. INVESTMENT RATIONALE & OBJECTIVE • With two platforms that are purpose-buil
Slide 22: Appendix
HIGHLAND OPPORTUNITIES AND INCOME FUND Appendix 22
Slide 23: Selected Financial Highlights
APPEN DIX Selected Financial Highlights Quarter Ended September 30, 2024 Balance Sheet Highlights 3Q2024 2Q2024 1Q 2024 4Q 2023 3Q 2023 2Q 2023 1Q 2023 4Q 2022 3Q 2022 Investment Portfolio at Fair Value $963 $965 $988 $1,008 $1,046 $1,035 $1,070 $1,067 $1,067 Total Debt Outstanding $140 $140 $140 $1
Slide 24: NexPoint's Leading Alternative Investment Platform
APPEN DIX NexPoint’s Leading Alternative Investment Platform Firm Overview AUM $17.2 billion1 Focus Alternative investments Employees 104 total employees; 27 investment professionals2 Offices Headquartered in Dallas Texas, with employees across the US DELAW AR E F IXED IN COM E DIVERS IFIED P UBL IC
Slide 25: Fund Management
APPEN DIX Fund Management Jim Dondero, CFA Co-Founder & President • Has over 30 years of experience investing across the alternative landscape. Founded NexPoint in 2012 to bring alternative strategies to retail channels. • Established a number of integrated businesses to manage investments in credit
Slide 26: Disclosures
APPEN DIX Disclosures The performance data quoted here represents past performance and is no guarantee of future results. Investment returns and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be
Slide 27: 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 — Q3 2024 Earnings Presentation on 6ix