Real Estate Assets

9 Months Ended

Sep. 30, 2023

As of September 30, 2023, the Company, through the OP and its SPE subsidiaries, owned 25,716 homes, including 23,147 homes in the VineBrook reportable segment and 2,569 homes in the NexPoint Homes reportable segment. As of December 31, 2022, the Company, through the OP and its SPE subsidiaries, owned 27,211 homes, including 24,657 homes in the VineBrook reportable segment and 2,554 homes in the NexPoint Homes reportable segment. The components of the Company’s real estate investments in homes were as follows (in thousands):


	Land		Buildings and improvements (1)			Intangible lease assets		Real estate held for sale, net		Total gross real estate		Accumulated depreciation and amortization
Real Estate Balances, December 31, 2022	$	632,278	$	3,098,258		$	6,319	$	3,360	$	3,740,215	$	(171,648)
Additions	433		108,600		(2)	—		—		109,033		(96,379)		(3)
Transfers to held for sale	(70,203)		(325,382)			(40)		379,849		(15,776)		15,776
Write-offs	—		—			(6,265)		—		(6,265)		6,265
Dispositions	—		(1,812)			—		(143,787)		(145,599)		(75)
Impairment	—		(7,656)		(4)	—		(68,075)		(75,731)		—
Real Estate Balances, September 30, 2023	$	562,508	$	2,872,008		$	14	$	171,347	$	3,605,877	$	(246,061)

(1)Includes capitalized interest, real estate taxes, insurance, improvements, and other costs incurred during rehabilitation of the properties.

(2)Includes capitalized interest of approximately $7.4 million and other capitalizable costs outlined in (1) above of approximately $10.7 million.

(3)Accumulated depreciation and amortization activity excludes approximately $0.2 million of depreciation and amortization related to assets not classified as real estate investments.

(4)During the nine months ended September 30, 2023, there was a casualty event in the Portales market resulting in casualty impairments of $7.5 million on assets held for use which is included in the impairment activity above, partially offset by $7.4 million of insurance recoveries.

During the three months ended September 30, 2023 and 2022, the Company recognized depreciation expense of approximately $31.5 million and $27.0 million, respectively. During the nine months ended September 30, 2023 and 2022, the Company recognized depreciation expense of approximately $95.1 million and $64.2 million, respectively.

Real estate acquisitions and dispositions

During the nine months ended September 30, 2023, the Company, through the OP, acquired two homes within the VineBrook reportable segment. During the nine months ended September 30, 2023, the Company, through its consolidated investment in NexPoint Homes, acquired 19 homes. See Note 5 for additional information about NexPoint Homes.

During the nine months ended September 30, 2023, the Company, through the OP, disposed of 1,512 homes within the VineBrook reportable segment. During the nine months ended September 30, 2023, the Company, through its consolidated investment in NexPoint Homes, disposed of four homes. The Company strategically identified these homes for disposal and expects the disposal of these properties to be accretive to the Portfolio’s results of operations and overall performance.

On August 3, 2022, VB Five, LLC (“Buyer”), an indirect subsidiary of the Company, entered into a purchase agreement under which the Buyer agreed to acquire a portfolio of approximately 1,610 SFR homes located in Arizona, Florida, Georgia, Ohio and Texas (the “Tusk Portfolio”). Also on August 3, 2022, the Buyer entered into a purchase agreement under which the Buyer agreed to acquire a portfolio of approximately 1,289 SFR homes located in Arizona, Florida, Georgia, North Carolina, Ohio and Texas (the “Siete Portfolio”). On January 17, 2023, the Company, through its indirect subsidiary, VB Seven, LLC, entered into an agreement under which the acquisition of the Tusk Portfolio was terminated by the seller and the Buyer forfeited its initial deposit of approximately $23.3 million. Additionally, on January 17, 2023, the Company, through its indirect subsidiary, VB Seven, LLC, entered into an agreement under which the acquisition of the Siete Portfolio was terminated by the seller and the Buyer forfeited its initial deposit of approximately $17.7 million. The total initial deposit forfeitures of $41.0 million from the Tusk Portfolio and the Siete Portfolio are included in loss on forfeited deposits on the consolidated statement of operations and comprehensive income (loss) for the nine months ended September 30, 2023.

Held for sale properties

The Company periodically classifies real estate assets as held for sale when certain criteria are met in accordance with GAAP. At that time, the Company presents the net real estate assets separately in its consolidated balance sheet, and the Company ceases recording depreciation and amortization expense related to that property. Real estate held for sale is reported at the lower of its carrying amount or its estimated fair value less estimated costs to sell. For the three and nine months ended September 30, 2023, the Company recorded approximately $39.6 million and $66.9 million of impairment charges on real estate assets held for sale, respectively. The impairment charges recorded include approximately $0.3 million and $3.9 million of casualty related impairment for the three and nine months ended September 30, 2023, respectively, and are included in loss on sales and impairment of real estate, net on the consolidated statements of operations and comprehensive income (loss). As of September 30, 2023, there are 1,739 properties that are classified as held for sale. These held for sale properties have a carrying amount of approximately $171.3 million.