NexPoint Residential Trust Inc. (NXRT)

[Enterprising Investor]

NexPoint Residential Trust, Inc. Reports First Quarter 2018 Results (5/01/18)

$10.1 million net income, 5.9% same-store NOI growth;

$5.1 million of shares repurchased in the first quarter, $9.4 million year-to-date through April 30, 2018;

NXRT Board authorized $10 million increase and two-year extension of the Share Repurchase Program

DALLAS, May 1, 2018 /PRNewswire/ -- NexPoint Residential Trust, Inc. (NYSE: NXRT) reported financial results for the first quarter ended March 31, 2018.

Highlights

•NXRT reported Net Income, FFO1, Core FFO1 and AFFO1 of $10.1M, $7.7M, $8.3M and $9.5M, respectively, attributable to common stockholders for the quarter ended March 31, 2018.

•For the three months ended March 31, 2018, Same Store properties average effective rent, total revenue and NOI1 increased 3.9%, 3.6% and 5.9%, respectively, over the prior year period.

•The weighted average effective monthly rent per unit across all 32 properties held as of March 31, 2018 (the "Portfolio"), consisting of 11,471 units, was $958, while physical occupancy was 94.0%.

•NXRT paid a first quarter dividend of $0.25 per share of common stock on March 29, 2018.

•During the first quarter, NXRT completed the disposition of Timberglen for gross sales proceeds of $30.0 million.

•In February 2018, NXRT used $8.6 million of proceeds from the Timberglen sale to pay the remaining outstanding balance on the bridge facility with KeyBank National Association (the "2017 Bridge Facility"), which retired the bridge facility.

•During the first quarter, for the properties in our Portfolio, NXRT completed 298 full and partial upgrades and leased 167 upgraded units, achieving $95 average monthly rent premiums and a 21.2% ROI2. Since inception, for the properties in our Portfolio, we have completed 4,527 full and partial upgrades and achieved a $90 average monthly rental increase per unit, equating to a 21.2% ROI on all units leased as of March 31, 2018.

•During the first quarter of 2018, NXRT repurchased 203,953 shares of its common stock at a total cost of approximately $5,058,000, or $24.80 per share. As of March 31, 2018, NXRT had repurchased a total of 558,470 shares of its common stock at a total cost of approximately $12,079,000, or $21.63 per share.

•On February 12, 2018, NXRT's board of directors, including its independent directors, unanimously approved a renewal of the Advisory Agreement with NexPoint Real Estate Advisors, L.P. (the "Adviser") for a one-year term that expires on March 16, 2019.

"We achieved a strong start for the year in the first quarter, maintaining a steady pace of revenue growth while limiting controllable operating expense inflation. The Company strategically disposed of Timberglen for gross sale proceeds of $30.0 million, retired the 2017 Bridge Facility, and bought back over 200,000 shares at appreciable discounts to our internal Net Asset Value projection," according to NXRT's Chairman and President, Jim Dondero. "Management remains bullish on the fundamentals for well-located workforce housing in the Southeast and Southwest and we will keep working methodically to produce strong financial performance."

First Quarter 2018 Financial Results

•Total revenues were $35.1 million for the first quarter of 2018, compared to $37.0 million for the first quarter of 2017.

•Net income for the first quarter of 2018 totaled $10.1 million, or earnings of $0.47 per diluted share, which included $13.7 million of gain on sale of real estate and $11.4 million of depreciation and amortization expense. This compared to a net loss of $(3.6) million, or $(0.17) per diluted share, for the first quarter of 2017, which included $12.4 million of depreciation and amortization expense.

•The change in our net income (loss) between the periods primarily relates to increases in gain on sale of real estate and same store operating results, and was partially offset by increases in corporate general and administrative expenses and loss on extinguishment of debt and modification costs.

•For the first quarter of 2018, NOI¹ was $19.1 million on 32 properties, compared to $19.7 million for the first quarter of 2017 on 40 properties.

•For the first quarter of 2018, Same Store NOI¹ increased 5.9% to $16.5 million, compared to $15.6 million for the first quarter of 2017.

•For the first quarter of 2018, FFO¹ totaled $7.7 million, or $0.36 per diluted share, compared to $8.0 million, or $0.38 per diluted share, for the first quarter of 2017.

•For the first quarter of 2018, Core FFO¹ totaled $8.3 million, or $0.39 per diluted share, compared to $8.1 million, or $0.38 per diluted share, for the first quarter of 2017.

•For the first quarter of 2018, AFFO¹ totaled $9.5 million, or $0.45 per diluted share, compared to $9.1 million, or $0.43 per diluted share, for the first quarter of 2017.

1. FFO, Core FFO, AFFO and NOI are non-GAAP measures. For reconciliations of FFO, Core FFO, AFFO 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.

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

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Same Store Results of Operations

There are 29 properties encompassing 10,123 units of apartment space in our same store pool for the three months ended March 31, 2018 (our "Same Store" properties). As of March 31, 2018, our Same Store properties were approximately 94.1% leased with a weighted average monthly effective rent per occupied apartment unit of $933. As of March 31, 2017, our Same Store properties were approximately 94.6% leased with a weighted average monthly effective rent per occupied apartment unit of $899.

Disposition of Property

As previously reported, we sold Timberglen on January 31, 2018 for a gross sales price of $30.0 million, achieving a 44.77% IRR and 3.78x multiple on invested capital1. We used $8.6 million of the proceeds from the sale to pay the remaining $8.6 million outstanding on our 2017 Bridge Facility, which retired the bridge facility.
Value-Add Programs

For the properties in our Portfolio as of March 31, 2018, we completed full and partial renovations on 298 units in the first quarter of 2018 at an average cost of $5,409 per renovated unit. Since inception, for the properties in our Portfolio, we have completed full and partial renovations on 4,527 units at an average cost of $5,002 per renovated unit that has been leased as of March 31, 2018. We have achieved average rent growth of 10.8%, or a $90 average monthly rental increase per unit, on all units renovated and leased as of March 31, 2018, resulting in a 21.2% ROI.

Second Quarter 2018 Dividend

On April 30, 2018, NXRT's board of directors declared a quarterly dividend of $0.25 per share of common stock. The dividend will be paid on June 29, 2018 to stockholders of record on June 15, 2018.

Share Repurchase Program

As noted above, during the first quarter, NXRT repurchased 203,953 shares of its common stock at a total cost of approximately $5,058,000, or $24.80 per share. As of March 31, 2018, NXRT had repurchased a total of 558,470 shares of its common stock at a total cost of approximately $12,079,000, or $21.63 per share. As of March 31, 2018, NXRT had 20,926,355 shares of its common stock issued and outstanding.

Subsequent Events

Share Repurchase Program

Subsequent to March 31, 2018 and through April 30, 2018, NXRT repurchased 167,267 shares of its common stock at a total cost of approximately $4,307,000 or $25.75 per share. As of April 30, 2018, NXRT had repurchased a total of 725,737 shares of its common stock at a total cost of approximately $16,386,000, or $22.58 per share. On April 30, 2018, the Board authorized increasing the Share Repurchase Program to up to $40.0 million, and extending it by an additional two years to June 15, 2020.

Additional information on first quarter 2018 results and 2018 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.

First Quarter Earnings Conference Call

NXRT will host a call on Tuesday, May 1, 2018 at 11:00 a.m. ET to discuss its first quarter financial results. The conference call can be accessed live over the phone by dialing [phone] or, for international callers, [phone], and using passcode Conference ID: 6756596. 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, May 8, 2018, by dialing [phone] or, for international callers, [phone] and entering passcode 6756596.

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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