NexPoint Residential Trust, Inc. Reports Third Quarter 2020 Results


  • NXRT1 reported Net Income, FFO2, Core FFO2 and AFFO2 of $29.6M$17.2M$13.3M and $15.1M, respectively, attributable to common stockholders for the quarter ended September 30, 2020, compared to Net Income, FFO, Core FFO, and AFFO of $119.1M$8.6M$11.5M and $13.3M, respectively, attributable to common stockholders for the quarter ended September 30, 2019.
  • NXRT reported Net Income, FFO, Core FFO and AFFO of $48.2M$41.6M$41.3M and $46.5M, respectively, attributable to common stockholders for the nine months ended September 30, 2020, compared to Net Income, FFO, Core FFO, and AFFO of $112.4M$30.6M$33.5M and $38.9M, respectively, attributable to common stockholders for the nine months ended September 30, 2019.
  • For the three months ended September 30, 2020, Q3 Same Store properties3 average effective rent, total revenue and NOI2 increased 1.8%, 3.3% and 4.5%, respectively, and occupancy increased 170 bps over the prior year period.
  • For the nine months ended September 30, 2020, YTD Same Store properties3 average effective rent, total revenue and NOI2 increased 1.6%, 4.1% and 4.7%, respectively, and occupancy increased 160 bps over the prior year period.
  • The weighted average effective monthly rent per unit across all 36 properties held as of September 30, 2020 (the “Portfolio”), consisting of 13,657 units, was $1,122, while physical occupancy was 95.0%.
  • On September 30, 2020, NXRT disposed of Eagle Crest for a sales price of $55.5 million and net cash proceeds of $25.0 million after repayment of debt and closing costs.
  • NXRT paid a third quarter dividend of $0.3125 per share of common stock on September 30, 2020.
  • On October 26, 2020, the Company’s board declared a quarterly dividend of $0.34125 per share, a 9.2% increase from the previous dividend per share. Since inception, NXRT has increased the dividend per share by 65.7%.
  • During the third quarter, for the properties in our Portfolio, we completed 425 full and partial upgrades and leased 276 upgraded units, achieving an average monthly rent premium of $141 and a 22.5% ROI4. Since inception, for the properties currently in our Portfolio, we have completed 7,584 full and partial upgrades and achieved an average monthly rental increase per unit of $97, equating to a 24.4% ROI on all units leased as of September 30, 2020.
  • During the nine months ended September 30, 2020, through its at-the-market offering (“ATM program”), NXRT issued approximately 0.8 million shares for approximately $38.1 million in gross proceeds.
  • During the nine months ended September 30, 2020, NXRT repurchased 1,644,697 shares at a weighted average price of $27.07 per share. Since inception, NXRT has repurchased 2,382,155 shares at a weighted average price of $25.70 per share.
  • On July 27, 2020, NXRT appointed Catherine Wood as an independent director to the Company’s board of directors (the “Board”). Ms. Wood brings a wealth of knowledge, extensive leadership experience, and a fresh perspective that complements the Company’s mission to diversify NXRT’s Board and management team. Both management and the Board believe the Company will benefit from diversification of viewpoints and experiences. Ms. Wood is Chief Executive Officer and Chief Investment Officer of ARK Investment Management LLC, an investment manager she founded in 2014.

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 income (loss), see the “Definitions and Reconciliations of Non-GAAP Measures” and “FFO, Core FFO and AFFO” 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 28 properties encompassing 9,926 units of apartment space in our Same Store pool for the three months ended September 30, 2020 (our “Q3 Same Store” properties) and 24 properties encompassing 9,074 units of apartment space in our Same Store pool for the nine months ended September 30, 2020 (our “YTD Same Store” properties).

4)

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

Third Quarter 2020 Financial Results

  • Total revenues were $51.0 million for the third quarter of 2020, compared to $46.8 million for the third quarter of 2019.
  • Net income for the third quarter of 2020 totaled $29.6 million, or income of $1.19 per diluted share, which included $17.7 million of depreciation and amortization expense. This compared to a net income of $119.1 million, or a income of $4.84 per diluted share, for the third quarter of 2019, which included $17.2 million of depreciation and amortization expense.
  • The change in our net income of $29.6 million for the three months ended September 30, 2020 as compared to our net income of $119.1 million for the three months ended September 30, 2019 primarily relates to a decrease in gain on sales of real estate, partially offset by an increase in total revenues.
  • For the third quarter of 2020, NOI was $28.8 million on 36 properties, compared to $26.1 million for the third quarter of 2019 on 37 properties.
  • For the third quarter of 2020, Q3 Same Store NOI increased 4.5% to $19.4 million, compared to $18.6 million for the third quarter of 2019.
  • For the third quarter of 2020, FFO totaled $17.2 million, or $0.69 per diluted share, compared to $8.6 million, or $0.35 per diluted share, for the third quarter of 2019.
  • For the third quarter of 2020, Core FFO totaled $13.3 million, or $0.53 per diluted share, compared to $11.5 million, or $0.47 per diluted share, for the third quarter of 2019.
  • For the third quarter of 2020, AFFO totaled $15.1 million, or $0.60 per diluted share, compared to $13.3 million, or $0.54 per diluted share, for the third quarter of 2019.

2020 Year to Date Financial Results

  • Total revenues were $154.3 million for the nine months ended September 30, 2020, compared to $131.4 million for the nine months ended September 30, 2019.
  • Net income for the nine months ended September 30, 2020 totaled $48.4 million, or income of $1.91 per diluted share, which included a gain on sales of real estate of $69.2 million and $62.5 million of depreciation and amortization expense. This compared to net income of $112.7 million, or income of $4.63 per diluted share, nine months ended September 30, 2019, which included a gain on sales of real estate of $127.7 and $45.7 million of depreciation and amortization expense.
  • The change in our net income of $48.4 million for the nine months ended September 30, 2020 as compared to our net income of $112.7 million for the nine months ended September 30, 2019 primarily relates to a decrease in gains on sales of real estate and increases in depreciation and total property operating expenses, partially offset by an increase in total revenue.
  • For the nine months ended September 30, 2020, NOI was $88.0 million on 36 properties, compared to $74.3 million for the nine months ended September 30, 2019 on 37 properties.
  • For the nine months ended September 30, 2020, Same Store NOI increased 4.7% to $51.5 million, compared to $49.2 million for the nine months ended September 30, 2019.
  • For the nine months ended September 30, 2020, FFO totaled $41.6 million, or $1.65 per diluted share, compared to $30.6 million, or $1.26 per diluted share, for the nine months ended September 30, 2019.
  • For the nine months ended September 30, 2020, Core FFO totaled $41.3 million, or $1.64 per diluted share, compared to $33.5 million, or $1.38 per diluted share, for the nine months ended September 30, 2019.
  • For the nine months ended September 30, 2020, AFFO totaled $46.5 million, or $1.85 per diluted share, compared to $38.9 million, or $1.60 per diluted share, for the nine months ended September 30, 2019.

Subsequent Events & Operational Trends

  • The Company is providing a summary of select October operating metrics in response to economic challenges and related government actions and regulations as a result of the ongoing novel Coronavirus (“COVID-19”) pandemic:
    • As of October 25, 2020, combined, rent cash collections and payment plans under lease amendments signed by residents financially impacted by COVID-19 represented 97.1% of billed rent for October 2020. This compares to 99.5% average cash collections in 2019. Rent cash collections represented 95.0% of billed October 2020 rent and promises to pay by financially impacted residents under lease amendments represented 2.1% of billed October 2020 rent.
    • Average Physical Occupancy for the Same Store Portfolio was strong at 94.8% as of October 26, 2020, while resident retention was 52.5%.
  • COVID-19 has resulted in cessation, severe curtailment, or impairment of business activities in most sectors of the economy in all markets we operate in, due to governmental “stay at home” orders, risk mitigation procedures, closure of businesses not considered to be “essential,” as well as other direct and indirect impacts, including those that may not yet be identified. This has resulted in a rapid and dramatic increase in unemployment in the U.S. We cannot estimate the extent of COVID-19’s future negative impacts or how long the negative impacts of COVID-19 will persist. In addition, it is possible that, even after the initial restrictions due to COVID-19 ease, they could be reinstituted in case of future waves of infection or if additional pandemics occur. As a result of these uncertainties related to COVID-19, the Company continues to withhold its full-year 2020 guidance outlook.
  • On October 13, 2020, the Company extended the maturity date of the Corporate Credit Facility from January 28, 2021 to January 28, 2022. Upon exercising the option to extend the Corporate Credit Facility, the Company incurred an extension fee of $0.6 million.

Third Quarter Earnings Conference Call

NexPoint Residential Trust, Inc. announced that the Company is scheduled to host a conference call on Tuesday, October 27, 2020 at 11:00 a.m. ET (10:00 am CT), to discuss third quarter financial results. The conference call can be accessed live over the phone by dialing 800-367-2403 or, for international callers, +1 334-777-6978 and using passcode Conference ID: 9147899.  A live audio webcast of the call will be available online at the Company’s website, http://www.nexpointliving.com (under “Investor Relations”).  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 3, 2020 by dialing 888-203-1112 or, for international callers, +1 719-457-0820 and entering passcode 9147899.

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, www.nexpointliving.com, under the “Investor Relations” tab.