NexPoint Residential Trust Inc. (NXRT)

[Enterprising Investor]

NexPoint Residential Trust, Inc. Reports Second Quarter Financial Results (8/11/15)

DALLAS--(BUSINESS WIRE)--NexPoint Residential Trust, Inc. (NYSE:NXRT) reported financial results for the second quarter ended June 30, 2015.

Second Quarter 2015 Highlights

• NXRT paid a first quarter dividend of $0.206 per share of NXRT common stock on June 30, 2015. Subsequent to the second quarter 2015, NXRT’s Board approved a quarterly dividend of $0.206 for each share of NXRT common stock (or $4.4 million in the aggregate), payable on September 30, 2015 for holders of record on September 15, 2015

• AFFO¹ totaled $7.1 million, or $0.34 per common share, compared to $7.0 million in first quarter of 2015

• FFO¹ of $6.7 million, $0.32 per common share, compared to $5.0 million for the first quarter of 2015

• NOI¹ of $14.85 million, including partial months for one property acquired during the quarter, and $28.0 million for the first six months of 2015

• Rental income increased to $25.5 million for the quarter, compared to $22.7 million for the first quarter of 2015

• Net loss of $2.3 million, $(0.11) per common share; includes depreciation and amortization of $10.1 million

• Average effective rent per unit across all 39 properties, consisting of 12,038 units was $784 while physical occupancy was 93.4%

• NXRT completed upgrades on 411 units for the quarter, for an average per unit rental increase of $90 correlating to a 24.76% ROI

• Same store rental income, NOI and occupancy increased 4.6%, 7.3%, and 104 basis points to 93.6%, respectively, as compared to the same period last year

• During the quarter, NXRT acquired one multifamily community, totaling 222 units, for a purchase price of $21 million; in the first six months of 2015, NXRT acquired 7 multifamily communities for a combined purchase price of $183.4 million

• Subsequent to the second quarter of 2015, NXRT acquired two suburban apartment communities in Phoenix, Arizona for $74.8 million

¹AFFO, FFO and NOI are Non-GAAP measures. For reconciliations of AFFO, FFO and NOI to net income and a discussion of why we consider these Non-GAAP measures useful, see the “Definitions and Reconciliations” section of this release.

Jim Dondero, Chairman and President of NXRT, said, "Healthy organic rent growth and execution of our value-add program led to a strong financial performance for the quarter. Additionally, we continue to be opportunistic acquirers of accretive deals. For the quarter, we are pleased to have delivered 7.3% same store NOI growth while adding a great asset in the West Palm Beach submarket."

Second Quarter Financial Results

For the quarter ended June 30, 2015, AFFO attributable to common shareholders was $7.1 million, or $0.34 per common share, and FFO was $6.7 million, or $0.32 per common share. For the six months ended June 30, 2015, AFFO attributable to common shareholders was $14.1 million, or $0.66 per common share, and FFO was $11.7 million or $0.55 per common share.

The Company recorded a net loss in the second quarter of 2015 of $(2.3) million, which included depreciation and amortization of $10.1 million. This compared to a net loss of $(2.3) million for the second quarter of 2014, which included depreciation and amortization of $3.6 million. For the first six months of 2015, the Company had a net loss of $(8.2) million, which included $21.7 million of depreciation and amortization. This compared to a net loss of $(5.0) million for the first six months of 2014, which included depreciation and amortization of $5.6 million.

The changes in the Company’s net loss, AFFO and FFO for the three and six months periods ended June 30, 2014 primarily relate to NXRT acquiring, owning and operating an additional 29 properties for a total of 39 properties as of June 30, 2015, compared to 10 properties at June 30, 2014, as well as same-store NOI growth of 7.3%.

Same Store Properties Operating Results

The Company's same-store properties at June 30, 2015 included 9 properties totaling approximately 2,795 units, or approximately 23% of the Company's 12,038 units. These same-store properties represented approximately 23% of NexPoint’s NOI for the quarter ended June 30, 2015.

Same store rental revenue, same-store NOI and same-store occupancy increased 4.6%, 7.3%, and 104 basis points to 93.6%, respectively, in the second quarter, compared to the same period last year.

Multifamily Acquisitions

As previously announced, during the second quarter of 2015, NexPoint acquired Bayberry Apartments, a 222 unit Class B multifamily community built in 1986/87 and located in West Palm Beach, Florida for a purchase price of $21 million.

During the first six months of this year, NXRT acquired seven multifamily properties for a total purchase price of $183.4 million. The Company has budgeted and reserved approximately $22.0 million in capex to implement its value-add programs at these properties.

Value-Add Programs

In the second quarter rehab capital expenditures, which includes interior, exterior and common area improvements, totaled $8.1 million.

Total rehab capital expenditures for the first six months of 2015 were $15.5 million.

Subsequent Events

On August 5, 2015, NexPoint acquired two properties: Madera Point, a 256 unit Class B multifamily community built in 1985, located in Mesa, Arizona and The Pointe at the Foothills, a 528 unit Class B multifamily community built in 1986, located in Phoenix, Arizona.

Madera Point was purchased for $22.5 million and financed in part through a $13.5 million floating rate interest only mortgage with an interest rate of 1.90% over 30-day LIBOR, that matures on September 1, 2020. The balance of the purchase price was funded using NXRT’s available unrestricted cash and its credit facility.

The Pointe at the Foothills was purchased for $52.3 million in part through a $31.4 million floating rate interest only mortgage with an interest rate of 1.90% over 30-day LIBOR, that matures on September 1, 2020. The balance of the purchase price was funded using NXRT’s available unrestricted cash and its credit facility.

The Company has budgeted and reserved approximately $3.2 million in capex to implement its value-add programs at these two properties.

2015 Per Share FFO & AFFO Guidance

The Company is reaffirming its prior FFO guidance and expects full year 2015 FFO to be in a range of $1.22 to $1.29 per common share. See “Definitions and Reconciliations” for a reconciliation of our 2015 FFO guidance.

The Company is expecting full year 2015 AFFO to be in the range of $1.38 to $1.45 per common share. See “Definitions and Reconciliations” for a reconciliation of our 2015 AFFO guidance.

Additional information on the second quarter results and 2015 financial and earnings guidance is included in supplemental data that can be found in the Investor Relations section of the Company’s website at www.nexpointliving.com.

Third Quarter 2015 Dividend

On August 11, 2015 the Company declared a quarterly dividend of $0.206 per share of NXRT common stock, payable on September 30, 2015 to stockholders of record on September 15, 2015.

Supplemental Information

Supplemental information to this press release can be found in the Investor Relations section of the Company’s website at www.nexpointliving.com. Our filings with the Securities and Exchange Commission are filed under the registrant name of NexPoint Residential Trust, Inc.

Second Quarter Earnings Conference Call

NexPoint will host a call to discuss its second quarter results on Tuesday, August 11, 2015 at 11:00 a.m. ET. The number to call for this interactive teleconference is [phone] or for international callers, [phone], in each case using passcode 5609909. A live audio webcast of the call will be available online at the Company's website, http://www.nexpointliving.com (under “Investor Relations”).

A replay of the call will be available approximately two hours after the call through Monday, August 17, 2015, by dialing [phone] or, for international callers, [phone] and entering the confirmation number, 5609909.

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 Highland Capital Management, L.P., a leading global alternative asset manager and an SEC-registered investment adviser. More information about NXRT is available at http://www.NexPointLiving.com.

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