News Details

DALLAS, Nov. 2, 2021 NexPoint Residential Trust, Inc. (NYSE:NXRT) reported financial results for the third quarter ended September 30, 2021.

Highlights

• NXRT¹ reported Net Loss, FFO², Core FFO² and AFFO² of $(5.4)M, $16.1M, $16.4M and $18.6M, respectively, attributable to common stockholders for the quarter ended September 30, 2021, compared to Net Income, FFO, Core FFO, and AFFO of $29.6M, $17.2M, $13.3M and $15.1M, respectively, attributable to common stockholders for the quarter ended September 30, 2020.
• NXRT reported Net Loss, FFO, Core FFO and AFFO of $(15.7)M, $46.5M, $44.7M and $51.0M, respectively, attributable to common stockholders for the nine months ended September 30, 2021, compared to 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.
• For the three months ended September 30, 2021, Q3 Same Store properties³ average effective rent, total revenue and NOI² increased 6.8%, 5.3% and 6.6%, respectively, and occupancy increased 40 bps over the prior year period.
• For the nine months ended September 30, 2021, YTD Same Store properties³ average effective rent, total revenue and NOI² increased 6.8%, 3.6% and 2.4%, respectively, and occupancy increased 40 bps over the prior year period.
• The weighted average effective monthly rent per unit across all 40 properties held as of September 30, 2021 (the "Portfolio"), consisting of 15,032⁴ units, was $1,204, while physical occupancy was 95.3%.
• On September 10, 2021, NXRT acquired Six Forks Station located in Raleigh, North Carolina for a gross purchase price of $74.76 million.
• NXRT paid a third quarter dividend of $0.34125 per share of common stock on September 30, 2021.
• On October 29, 2021, the Company's board approved a quarterly dividend of $0.38 per share, an 11.4% increase from the previous dividend per share. Since inception, NXRT has increased the dividend per share by 84.5%.
• During the three months ended September 30, 2021, through its at-the-market offering ("ATM program"), NXRT issued 101,587 shares for approximately $6.7 million in gross proceeds.
• During the third quarter, for the properties in our Portfolio, we completed 290 full and partial upgrades and leased 349 upgraded units, achieving an average monthly rent premium of $172 and a 21.2% ROI⁵.
• Since inception, for the properties currently in our Portfolio, we have completed 5,979 full and partial upgrades, 4,554 kitchen and laundry appliances, and 10,134 technology packages, resulting in a $134, $47, and $43 average monthly rental increase per unit and a 21.5%, 72.7%, and 35.0% ROI, respectively.

Third Quarter 2021 Financial Results

• Total revenues were $56.4 million for the third quarter of 2021, compared to $51.0 million for the third quarter of 2020.
• Net loss for the third quarter of 2021 totaled $(5.4) million, or loss of $(0.21) per diluted share, which included $21.6 million of depreciation and amortization expense. This compared to a net income of $29.6 million, or earnings of $1.19 per diluted share, for the third quarter of 2020, which included $17.7 million of depreciation and amortization expense.
• The change in our net loss of $(5.4) million for the three months ended September 30, 2021 as compared to our net income of $29.6 million for the three months ended September 30, 2020 primarily relates to decreases in gain on sales of real estate and casualty gains, partially offset by an increase in total revenues.
• For the third quarter of 2021, NOI was $33.6 million on 40 properties, compared to $29.3 million for the third quarter of 2020 on 36 properties.
• For the third quarter of 2021, Q3 Same Store NOI increased 6.6% to $30.3 million, compared to $28.4 million for the third quarter of 2020.
• For the third quarter of 2021, FFO totaled $16.1 million, or $0.64 per diluted share, compared to $17.2 million, or $0.69 per diluted share, for the third quarter of 2020.
• For the third quarter of 2021, Core FFO totaled $16.4 million, or $0.65 per diluted share, compared to $13.3 million, or $0.53 per diluted share, for the third quarter of 2020.
• For the third quarter of 2021, AFFO totaled $18.6 million, or $0.74 per diluted share, compared to $15.1 million, or $0.60 per diluted share, for the third quarter of 2020.

2021  Year to Date Financial Results

• Total revenues were $160.7 million for the nine months ended September 30, 2021, compared to $154.3 million for the nine months ended September 30, 2020.
• Net loss for the nine months ended September 30, 2021 totaled $(15.7) million, or loss of $(0.62) per diluted share, which included $62.3 million of depreciation and amortization expense. This compared to net income of $48.2 million, or earnings of $1.91 per diluted share, for the nine months ended September 30, 2020, which included a gain on sales of real estate of $69.2 million and $62.5 million of depreciation and amortization expense.
• The change in our net loss of $(15.7) million for the nine months ended September 30, 2021 as compared to our net income of $48.4 million for the nine months ended September 30, 2020 primarily relates to decreases in gains on sales of real estate and casualty gains, partially offset by an increase in total revenues.
• For the nine months ended September 30, 2021, NOI was $93.6 million on 40 properties, compared to $89.9 million for the nine months ended September 30, 2020 on 36 properties.
• For the nine months ended September 30, 2021, Same Store NOI increased 2.4% to $87.5 million, compared to $85.5 million for the nine months ended September 30, 2020.
• For the nine months ended September 30, 2021, FFO totaled $46.5 million, or $1.85 per diluted share, compared to $41.6 million, or $1.65 per diluted share, for the nine months ended September 30, 2020.
• For the nine months ended September 30, 2021, Core FFO totaled $44.7 million, or $1.78 per diluted share, compared to $41.3 million, or $1.64 per diluted share, for the nine months ended September 30, 2020.
• For the nine months ended September 30, 2021, AFFO totaled $51.0 million, or $2.03 per diluted share, compared to $46.5 million, or $1.85 per diluted share, for the nine months ended September 30, 2020.

Third Quarter  Earnings Conference Call

NXRT will host a conference call on Tuesday, November 2, 2021 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 800-353-6461 or, for international callers, +1 334-323-0501 and using passcode Conference ID: 8698173. A live audio webcast of the call will be available online at the Company's website, http://nxrt.nexpoint.com. 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 9, 2021 by dialing 888-203-1112 or, for international callers, +1 719-457-0820 and entering passcode 8698173.

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, 2021 full year guidance and the related components and assumptions, including the effects of tornado damage, fires and winter storm Uri, acquisitions and dispositions, shares outstanding and operating expenses, including real estate taxes, the expectation that NXRT will meet or exceed its preliminary budgeted expectations for real estate tax expense in 2021, NXRT's net asset value and the related components and assumptions, including pro forma adjustments for acquisitions and dispositions, estimated value-add expenditures, debt payments, outstanding debt and shares outstanding, guidance for the fourth quarter 2021 and the related assumptions, the repayment of $50.0 million of term loans, planned value-add programs, including projected average rent, rent change and return on investment, expected settlement of interest rate swaps and the effect on the debt maturity schedule, rehab budgets, and expected 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 the ultimate geographic spread, duration and severity of the COVID-19 pandemic, and the effectiveness of actions taken, or actions that may be taken, by governmental authorities to contain the outbreak or treat its impact, as well as those described in greater detail in our filings with the Securities and Exchange Commission, particularly those specifically 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, 2021 and 2020 (in thousands, except per share amounts):

 

Definitions and Reconciliations of Non-GAAP Measures

Definitions

This presentation contains non-GAAP financial measures. A "non-GAAP financial measure" is defined as a numerical measure of a company's financial performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with GAAP in the statements of income, balance sheets or statements of cash flows of the Company. The non-GAAP financial measures used within this presentation are net operating income ("NOI"), funds from operations attributable to common stockholders ("FFO"), FFO per diluted share, Core FFO, Core FFO per diluted share, adjusted FFO ("AFFO"), AFFO per diluted share and net debt.

NOI is used by investors and our management to evaluate and compare the performance of our properties to other comparable properties, to determine trends in earnings and to compute the fair value of our properties. NOI is calculated by adjusting net income (loss) to add back (1) interest expense (2) advisory and administrative fees, (3) the impact of depreciation and amortization expenses as well as gains or losses from the sale of operating real estate assets that are included in net income computed in accordance with GAAP, (4) corporate general and administrative expenses, (5) other gains and losses that are specific to us including loss on extinguishment of debt and modification costs, (6) casualty-related expenses/(recoveries) and casualty gains (losses), (7) pandemic expenses that are not reflective of continuing operations of the properties and (8) property general and administrative expenses that are not reflective of the continuing operations of the properties or are incurred on behalf of the Company at the property for expenses such as legal, professional and franchise tax fees. We define "Same Store NOI" as NOI for our properties that are comparable between periods. We view Same Store NOI as an important measure of the operating performance of our properties because it allows us to compare operating results of properties owned for the entirety of the current and comparable periods and therefore eliminates variations caused by acquisitions or dispositions during the periods.

FFO is defined by the National Association of Real Estate Investment Trusts ("NAREIT"), as net income (loss) computed in accordance with GAAP, excluding gains or losses from real estate dispositions, plus real estate depreciation and amortization. We compute FFO in accordance with NAREIT's definition. Our presentation differs slightly in that we begin with net income (loss) before adjusting for amounts attributable to redeemable noncontrolling interests in the OP and we show the combined amounts attributable to such noncontrolling interests as an adjustment to arrive at FFO attributable to common stockholders.

Core FFO makes certain adjustments to FFO, which are either not likely to occur on a regular basis or are otherwise not representative of the ongoing operating performance of our Portfolio. Core FFO adjusts FFO to remove items such as losses on extinguishment of debt and modification costs (includes prepayment penalties and defeasance costs incurred on the early payment of debt, the write-off of unamortized deferred financing costs and fair market value adjustments of assumed debt related to the retirement of debt, costs incurred in connection with a debt modification that are not capitalized as deferred financing costs and other costs incurred in a debt extinguishment that are expensed), casualty-related expenses/and recoveries and gains (losses), pandemic expenses, the amortization of deferred financing costs incurred in connection with obtaining short-term debt financing, and the noncontrolling interests (as described above) related to these items.

AFFO makes certain adjustments to Core FFO. There is no industry standard definition of AFFO and practice is divergent across the industry. AFFO adjusts Core FFO to remove items such as equity-based compensation expense and the amortization of deferred financing costs incurred in connection with obtaining long-term debt financing, and the noncontrolling interests (as described above) related to these items.

Net debt is calculated by subtracting cash and cash equivalents and restricted cash held for value-add upgrades and green improvements from total debt outstanding.

We believe that the use of NOI, FFO, Core FFO, AFFO and net debt, combined with the required GAAP presentations, improves the understanding of operating results and debt levels of real estate investment trusts ("REITs") among investors and makes comparisons of operating results and debt levels among such companies more meaningful. While NOI, FFO, Core FFO, AFFO and net debt are relevant and widely used measures of operating performance and debt levels of REITs, they do not represent cash flows from operations, net income (loss) or total debt as defined by GAAP and should not be considered an alternative to those measures in evaluating our liquidity, operating performance and debt levels. NOI, FFO, Core FFO and AFFO do not purport to be indicative of cash available to fund our future cash requirements. We present net debt because we believe it provides our investors a better understanding of our leverage ratio. Net debt should not be considered an alternative to total debt, as we may not always be able to use our available cash to repay debt. Our computation of NOI, FFO, Core FFO, AFFO and net debt may not be comparable to NOI, FFO, Core FFO, AFFO and net debt reported by other REITs. For a more complete discussion of NOI, FFO, Core FFO and AFFO, see our most recent Annual Report on Form 10-K and our other filings with the SEC.

Reconciliations

NOI and Same Store NOI for the three months ended June 30, 2021

The following table, which has not been adjusted for the effects of noncontrolling interests, reconciles our NOI and our Q2 Same Store NOI for the three months ended June 30, 2021 to net loss, the most directly comparable GAAP financial measure (in thousands):

 

NOI and Same Store NOI for the year ended December 31, 2020

The following table, which has not been adjusted for the effects of noncontrolling interests, reconciles our NOI and our YTD Same Store NOI for the year ended December 31, 2020 to net income, the most directly comparable GAAP financial measure (in thousands):

 

Reconciliation of Debt to Net Debt

 

Guidance Reconciliations of NOI, Same Store NOI, FFO, Core FFO and AFFO

The following table, which has not been adjusted for the effects of noncontrolling interests, reconciles NOI to net income (the most directly comparable GAAP financial measure) for the periods presented below (in thousands):

 

The following table reconciles our FFO, Core FFO and AFFO guidance to our net income (the most directly comparable GAAP financial measure) guidance for the year ended December 31, 2021 (in thousands, except per share data):

 

Contact:
Investor Relations
Jackie Graham
JGraham@nexpoint.com
(214) 276-6300
Media inquiries: JGraham@nexpoint.com 

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SOURCE NexPoint Residential Trust, Inc.