NexPoint Residential Trust Inc. (NXRT)

[Enterprising Investor]

NexPoint Residential Trust, Inc. Reports Second Quarter Results (8/09/16)

DALLAS, Aug. 9, 2016 /PRNewswire/ -- NexPoint Residential Trust, Inc. (NYSE: NXRT) reported financial results for the quarter ended June 30, 2016.

Second Quarter 2016 Highlights

•NXRT paid a second quarter dividend of $0.206 per share of NXRT common stock on June 30, 2016. On August 8, 2016, NXRT's board of directors approved a quarterly dividend of $0.206 per share of NXRT common stock, payable on September 30, 2016 to stockholders of record on September 15, 2016

•Net income totaled $16.6 million, or earnings of $0.69 per common share; includes gain on sales of three properties, Meridian, Mandarin Reserve and Park at Regency, or $16.4 million, and depreciation and amortization of $8.1 million, compared to net income of $0.3 million, or loss of less than $(0.01) per common share, for the first quarter of 2016

•AFFO¹ totaled $22.5 million, or $1.06 per common share; includes the Company's share of gain on sales of three properties. This compared to $8.9 million, or $0.42 per common share, for the first quarter of 2016

•FFO,¹ which excludes the gain on sales, totaled $7.2 million, or $0.34 per common share, compared to $8.6 million, or $0.41 per common share, for the first quarter of 2016
•NOI¹ was $17.4 million for the second quarter of 2016, compared to $17.7 million for the first quarter of 2016

•Total revenues were $33.7 million for the quarter, compared to $33.5 million for the first quarter
•The weighted average effective monthly rent per unit across all 39 properties held as of June 30, 2016, consisting of 12,276 units, was $830, while physical occupancy was 93.7%

•NXRT completed upgrades on 550 units during the second quarter of 2016. Since inception, we have completed 3,580 upgrades and achieved a $96 average monthly rental increase per unit, equating to 21.0% ROI on all units leased through June 30, 2016

•Same Store total revenues, NOI and occupancy increased 10.2%, 11.0%, and 87 basis points to 93.9%, respectively, as compared to the second quarter of 2015

•In the second quarter, NXRT's Board of Directors authorized the repurchase of up to $30.0 million of its common stock. This authorization expires on June 15, 2018

•As mentioned above, the Company completed the disposition of three properties during the quarter: Mandarin Reserve and Park at Regency in Jacksonville, Florida for approximately $47.0 million and Meridian in Austin, Texas for approximately $17.25 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.

"NXRT delivered sector-leading operating performance in the second quarter 2016, further substantiating the merits of our growth model and broader business strategy," according to NXRT Chairman and President, Jim Dondero. "We accelerated the execution of value-add programs in the second quarter of 2016, completing 550 unit upgrades during the period while decreasing average cost per unit by 80 bps. This performance, coupled with the completion of exterior, common area and amenity improvements, drove an 11.6% increase to effective rent premiums on upgraded units, up $10 to $96 per month on average over the prior tenant.

We were also pleased with our capital allocation execution during the quarter, in which we retired more than $70 million of mortgage and bridge debt, swapped $300 million of notional floating rate debt (effective July 1, 2016) at an average fixed rate of 1.0088%, and completed the acquisition of a lower risk, higher growth opportunity (City View) through a like-kind exchange."

Second Quarter Financial Results

The Company recorded net income in the second quarter of 2016 of $16.6 million, which included depreciation and amortization of $8.1 million. This compared to a net loss of $(2.3) million for the second quarter of 2015, which included depreciation and amortization of $10.1 million. For the first six months of 2016, NexPoint had a net income of $16.9 million, which included $17.7 million of depreciation and amortization. This compared to a net loss of $(8.2) million for the first six months of 2015, which included depreciation and amortization of $21.7 million.

For the quarter ended June 30, 2016, AFFO attributable to common shareholders was $22.5 million, or $1.06 per common share, and FFO was $7.2 million, or $0.34 per common share. For the six months ended June 30, 2016, AFFO attributable to shareholders was $31.5 million, or $1.48 per common share, and FFO was $15.8 million, or $0.74 per common share.

The changes in the Company's net income, AFFO and FFO for the quarter ended June 30, 2016 as compared to the quarter ended June 30, 2015, primarily relate to strong year-over-year performance of our same store portfolio and the disposition of 3 properties during the second quarter of 2016, as compared to no dispositions during the second quarter of 2015.

Same Store Properties Operating Results

The Company's Same Store property pool at June 30, 2016 included 35 properties totaling 10,937 units, or approximately 89% of the Company's 12,276 units. These Same Store properties represented approximately 87% of NXRT's NOI for the quarter ended June 30, 2016.

Same Store total revenues, NOI, and occupancy increased 10.2%, 11.0%, and 87 basis points to 93.9%, respectively, in the second quarter of 2016, compared to the second quarter of 2015.

Disposition of Assets

During the second quarter, the Company completed the sales of the Mandarin Reserve and Park at Regency in Jacksonville, Florida as well as the sale of the Meridian in Austin Texas for $64.25 million gross sale proceeds. Net proceeds from dispositions were used to retire existing debt and to partially fund (through a like-kind exchange) the Company's acquisition of CityView apartments subsequent to quarter end.

Value-Add Programs

In the second quarter, rehab capital expenditures, which includes interior, exterior and common area improvements, totaled $4.6 million.

Subsequent Events

On July 27, 2016, NXRT used the net proceeds from the sale of Meridian through a like-kind exchange, to acquire CityView, a 217-unit property in West Palm Beach, FL, for $22.4M. This was the Company's second acquisition in West Palm Beach in the last 18 months, bringing NXRT's total portfolio to 40 properties consisting of 12,493 units in 11 markets.

Second Quarter 2016 Dividend

On May 9, 2016, the Company declared their fifth consecutive quarterly dividend of $0.206 per share of NXRT common stock, which was paid on June 30, 2016 to stockholders of record on June 15, 2016.

Share Buy Back Program

During the second quarter, NXRT announced that the Company's Board of Directors authorized the repurchase of up to $30.0 million of its common stock. This authorization expires on June 15, 2018.

2016 Full Year Guidance

At this time, the Company reaffirms updated full year 2016 guidance for NOI, FFO and AFFO as disclosed in the Company's June 2016 Investor Presentation. AFFO guidance excludes gain on sales.
•NOI: $68.0 million - $70.0 million
•FFO: $1.38 - $1.47 per share
•AFFO: $1.46 – $1.55 per share

Additional information on second quarter results and 2016 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.

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

NXRT will host a call to discuss its second quarter results on Tuesday, August 9, 2016 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 9512554. 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 Tuesday, August 16, 2016, by dialing [phone], or for international callers, [phone] and entering the confirmation number, 9512554.

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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