NEXPOINT RESIDENTIAL TRUST, INC. REPORTS THIRD QUARTER 2024 RESULTS

NXRT Boosts Quarterly Dividend by 10.3%; Announces Completed Refinancings of 17 Properties and $24.5 million of Disposition Activity

DALLAS, Oct. 29, 2024 /PRNewswire/ -- NexPoint Residential Trust, Inc. (NYSE:NXRT) reported financial results for the third quarter ended September 30, 2024.

Highlights

NXRT1 reported Net Loss, FFO2, Core FFO2 and AFFO2 of $(8.9)M, $15.7M, $17.9M and $20.6M, respectively, attributable to common stockholders for the quarter ended September 30, 2024, compared to Net Income, FFO, Core FFO, and AFFO of $33.7M, $14.5M, $18.1M and $20.6M, respectively, attributable to common stockholders for the quarter ended September 30, 2023.

NXRT reported Net Income, FFO, Core FFO and AFFO of $28.0M, $50.9M, $55.5M and $63.3M, respectively, attributable to common stockholders for the nine months ended September 30, 2024, compared to Net Income, FFO, Core FFO, and AFFO of $25.9M, $53.7M, $56.8M and $63.8M, respectively, attributable to common stockholders for the nine months ended September 30, 2023.

For the three months ended September 30, 2024, Q3 Same Store properties3, occupancy increased 100 bps, total revenue increased 1.7%, and average effective rent and NOI2 decreased 1.8% and 2.4% over the prior year period.

For the nine months ended September 30, 2024, YTD Same Store properties3, occupancy increased 100 bps, total revenue and NOI2 increased 2.5% and 1.3%, respectively, and average effective rent decreased 1.8% over the prior year period.

NXRT paid a third quarter dividend of $0.46242 per share of common stock on September 30, 2024.

The weighted average effective monthly rent per unit across all 36 properties held as of September 30, 2024 (the "Portfolio"), consisting of 13,1744 units, was $1,500, while physical occupancy was 94.8%.

During the third quarter 2024, for the properties in our Portfolio, we completed 45 full and partial upgrades and leased 39 upgraded units, achieving an average monthly rent premium of $233 and a 22.1% ROI5.

Since inception, for the properties currently in our Portfolio, we have completed 8,316 full and partial upgrades, 4,704 kitchen and laundry appliances, and 11,389 technology packages, resulting in a $176, $48, and $43 average monthly rental increase per unit and a 20.8%, 61.9%, and 37.2% ROI, respectively.

 

1)

In this release, "we," "us," "our," the "Company," "NexPoint Residential Trust," and "NXRT" each refer to NexPoint Residential Trust, Inc., a Maryland corporation.

2)

FFO, Core FFO, AFFO and NOI are non-GAAP measures. For a discussion of why we consider these non-GAAP measures useful and reconciliations of FFO, Core FFO, AFFO and NOI to net loss, see the "Definitions and Reconciliations of Non-GAAP Measures," "FFO, Core FFO and AFFO" and "NOI and Same Store NOI" sections of this release.

3)

We define "Same Store" properties as properties that were in our Portfolio for the entirety of the periods being compared. There are 35 properties encompassing 12,948 units of apartment space in our Same Store pool for the three months ended September 30, 2024 (our "Q3 Same Store" properties) and 35 properties encompassing 12,948 units of apartment space in our Same Store pool for the nine months ended September 30, 2024 (our "YTD Same Store" properties). The same store unit count excludes 36 units that are currently down due to casualty events (Rockledge: 20 units, Bella Solara: 16 units).

4)

Total units owned in our Portfolio is 13,174, however 36 units are currently down due to casualty events (Rockledge: 20 units, Bella Solara: 16 units).

5)

We define Return on Investment ("ROI") as the sum of the actual rent premium divided by the sum of the total cost.

 

Third Quarter 2024 Financial Results

Total revenues were $64.1 million for the third quarter of 2024, compared to $69.8 million for the third quarter of 2023.

Net loss for the third quarter of 2024 totaled $8.9 million, or loss of $(0.35) per diluted share, which included $24.6 million of depreciation and amortization expense. This compared to net income of $33.7 million, or income of $1.28 per diluted share, for the third quarter of 2023, which included $23.8 million of depreciation and amortization expense.

The change in our net loss of $(8.9) million for the three months ended September 30, 2024 as compared to our net income of $33.9 million for the three months ended September 30, 2023 primarily relates to a decrease in gain on sales of real estate of $43.1 million.

For the third quarter of 2024, NOI was $38.1 million on 36 properties, compared to $42.1 million for the third quarter of 2023 on 39 properties.

For the third quarter of 2024, Q3 Same Store NOI decreased 2.4% to $37.5 million, compared to $38.4 million for the third quarter of 2023.

For the third quarter of 2024, FFO totaled $15.7 million, or $0.60 per diluted share, compared to $14.5 million, or $0.55 per diluted share, for the third quarter of 2023.

For the third quarter of 2024, Core FFO totaled $17.9 million, or $0.69 per diluted share, compared to $18.1 million, or $0.69 per diluted share, for the third quarter of 2023.

For the third quarter of 2024, AFFO totaled $20.6 million, or $0.79 per diluted share, compared to $20.6 million, or $0.78 per diluted share, for the third quarter of 2023.

2024 Year to Date Financial Results

Total revenues were $195.9 million for the nine months ended September 30, 2024, compared to $208.6 million for the nine months ended September 30, 2023.

Net income for the nine months ended September 30, 2024 totaled $28.0 million, or income of $1.07 per diluted share, which included $73.4 million of depreciation and amortization expense. This compared to net income of $25.9 million, or income of $0.99 per diluted share, for the nine months ended September 30, 2023, which included $70.9 million of depreciation and amortization expense.

The change in our net income of $28.2 million for the nine months ended September 30, 2024 as compared to our net income of $26.0 million for the nine months ended September 30, 2023 primarily relates to an increase in gain on sales of real estate of $7.3 million partially offset by a decrease in operating income of $4.4 million.

For the nine months ended September 30, 2024, NOI was $118.1 million on 36 properties, compared to $125.2 million for the nine months ended September 30, 2023 on 39 properties.

For the nine months ended September 30, 2024, Same Store NOI increased 1.3% to $115.2 million, compared to $113.7 million for the nine months ended September 30, 2023.

For the nine months ended September 30, 2024, FFO totaled $50.9 million, or $1.94 per diluted share, compared to $53.7 million, or $2.05 per diluted share, for the nine months ended September 30, 2023.

For the nine months ended September 30, 2024, Core FFO totaled $55.5 million, or $2.11 per diluted share, compared to $56.8 million, or $2.17 per diluted share, for the nine months ended September 30, 2023.

For the nine months ended September 30, 2024, AFFO totaled $63.3 million, or $2.41 per diluted share, compared to $63.8 million, or $2.44 per diluted share, for the nine months ended September 30, 2023.

Subsequent Events

On October 1, 2024, the Company refinanced 17 properties for a total of $813.5 million with a spread of 1.09% maturing on September 30, 2031.

On October 1, 2024, NXRT completed the sale of Stone Creek at Old Farm for a sales price of $24.5 million.

On October 28, 2024, the board of directors of the Company (the "Board") approved a quarterly dividend of $0.51 per share, a 10.3% increase from the previous dividend per share. Since inception, NXRT has increased the dividend per share by 147.6%.

On October 28, 2024, the Board authorized the Company to repurchase $100 million of its common stock. This authorization will expire on October 28, 2026. This authorization replaces the Company's previous share repurchase authorization that expired on October 24, 2024

Third Quarter Earnings Conference Call

NXRT is scheduled to host a conference call on Tuesday, October 29, 2024, at 11:00 a.m. ET (10:00 a.m. CT), to discuss third quarter 2024 financial results. The conference call can be accessed live over the phone by dialing 888-660-4430 or, for international callers, +1 646-960-0537 and using passcode Conference ID: 5001576. A live audio webcast of the call will be available online at the Company's website, https://nxrt.nexpoint.com (under "Resources"). An online replay will be available shortly after the call on the Company's website and continue to be available for 60 days.

A replay of the conference call will also be available through Tuesday, November 12, 2024, by dialing 800-770- 2030 or, for international callers, +1 609-800-9909 and entering passcode 5001576.

About NXRT

NexPoint Residential Trust is a publicly traded REIT, with its shares listed on the New York Stock Exchange under the symbol "NXRT," primarily focused on acquiring, owning and operating well-located, middle-income multifamily properties with "value-add" potential in large cities and suburban submarkets of large cities, primarily in the Southeastern and Southwestern United States. NXRT is externally advised by NexPoint Real Estate Advisors, L.P., an affiliate of NexPoint Advisors, L.P., an SEC-registered investment advisor, which has extensive real estate experience. Our filings with the Securities and Exchange Commission (the "SEC") are available on our website, nxrt.nexpoint.com, under the "Financials" tab.

Cautionary Statement Regarding Forward-Looking Statements

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on management's current expectations, assumptions and beliefs. Forward-looking statements can often be identified by words such as "expect," "anticipate," "estimate," "may," "should," "plan" and similar expressions and variations or negatives of these words. These forward-looking statements include, but are not limited to, statements regarding NXRT's business and industry in general, the expected refinancing of portfolio-level debt, the effects, terms and timing of the refinancing, forecasted submarket deliveries, NXRT's guidance for financial results for the full year 2024, including earnings per diluted share, Core FFO per diluted share, same store rental income, same store total revenue, same store expense, same store NOI, and the related components and assumptions, including expected acquisitions and dispositions, expected same store pool, shares outstanding and same store growth projections, NXRT's net asset value and the related components and assumptions, including estimated value-add expenditures, debt payments and outstanding debt, net income and NOI guidance for the fourth quarter and full year 2024 and the related assumptions, planned value-add programs, including rehab costs, rent change and return on investment, expected settlement of interest rate swaps and the effect on the debt maturity schedule, rehab budgets and acquisitions and dispositions. They are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed in any forward-looking statement, including those described in greater detail in our filings with the Securities and Exchange Commission, particularly those described in our Annual Report on Form 10-K. Readers should not place undue reliance on any forward-looking statements and are encouraged to review the Company's most recent Annual Report on Form 10-K and other filings with the SEC for a more complete discussion of the risks and other factors that could affect any forward-looking statements. The statements made herein speak only as of the date of this release and except as required by law, NXRT does not undertake any obligation to publicly update or revise any forward-looking statements.

FFO, Core FFO and AFFO

The following table reconciles our calculations of FFO, Core FFO and AFFO to net income (loss), the most directly comparable GAAP financial measure, for the three and nine months ended September 30, 2024 and 2023 (in thousands, except per share amounts):

For the Three Months EndedSeptember 30,

For the Nine Months EndedSeptember 30,

2024

2023

2024

2023

% Change

Net income (loss)

$

(8,888)

$

33,878

$

28,152

$

26,012

8.2

%

Depreciation and amortization

24,608

23,797

73,373

70,935

3.4

%

Gain on sales of real estate

(1)

—

(43,090)

(50,395)

(43,090)

17.0

%

Adjustment for noncontrolling interests

(62)

(55)

(202)

(205)

-1.5

%

FFO attributable to common stockholders

15,658

14,530

50,928

53,652

-5.1

%

FFO per share - basic

$

0.62

$

0.57

$

1.99

$

2.09

-4.8

%

FFO per share - diluted

$

0.60

$

0.55

$

1.94

$

2.05

-5.4

%

Loss on extinguishment of debt and modification costs

—

2,215

801

2,093

N/M

Casualty-related expenses/(recoveries)

1,373

(24)

1,640

(1,332)

N/M

Casualty loss

—

100

538

980

-45.1

%

Gain on forfeited deposits

—

—

—

(250)

N/M

Amortization of deferred financing costs

632

738

2,051

2,213

-7.3

%

Mark-to-market adjustments of interest rate caps

273

554

(469)

(496)

-5.4

%

Adjustment for noncontrolling interests

(8)

(14)

(17)