NexPoint Residential Trust 8K Reports Fourth Quarter and Full Year 2018 Results | NXRT 19 Feb 19

Exhibit 99.1

LOGO

FOR IMMEDIATE RELEASE

Contact:

Investor Relations

Jackie Graham

972-419-6213

NEXPOINT RESIDENTIAL TRUST, INC. REPORTS FOURTH QUARTER AND FULL YEAR 2018 RESULTS

NXRT Recaps Recent Accretive Acquisitions,Value-Add Results and Issues 2019 Full Year Guidance

Dallas, TX, February 19, 2019 – NexPoint Residential Trust, Inc. (NYSE:NXRT) reported financial results for the fourth quarter and year ended December 31, 2018.

Highlights

•

NXRT¹ reported Net Loss, FFO², Core FFO² and AFFO² of $(1.6)M, $32.0M, $35.1M and $40.8M, respectively, attributable to common stockholders for the year ended December 31, 2018, compared to Net Income, FFO, Core FFO, and AFFO of $53.4M, $25.1M, $30.1M and $34.8M, respectively, attributable to common stockholders for the year ended December 31, 2017.

•

For the year ended December 31, 2018, 2017-2018 Same Store properties³ average effective rent, occupancy, total revenue and NOI² increased 4.1%, 0.6%, 4.3% and 7.4%, respectively, over the prior year period.

•

For the year ended December 31, 2018, 2017-2018 Same Store properties expenses increased 0.8% over the prior year period, primarily due to increases in real estate taxes and insurance of 3.7%, partially offset by decreases in property operating expenses of 1.0%.

•

On November 14, 2018, NXRT issued 2,702,500 shares of its common stock, par value $0.01 per share, at a public offering price of $33.00 per share, for net proceeds (after underwriters’ discounts and offering costs) of approximately $84.8 million (the “2018 Offering”). NXRT used a majority of the net proceeds to repay the $50.0 million outstanding under a credit facility (the “$60 Million Credit Facility”) and the $30.0 million outstanding under a bridge facility (the “$30 Million Bridge Facility”).

•

The weighted average effective monthly rent per unit across all 35 properties held as of December 31, 2018 (the “Portfolio”), consisting of 12,555 units, was $985, while physical occupancy was 94.6%.

•

NXRT paid a fourth quarter dividend of $0.275 per share of common stock on December 31, 2018; this cash dividend represented a $0.025 per share, or 10.0% increase, over the prior quarter’s dividend.

•

During 2018, for the properties in our Portfolio, we completed 1,432 full and partial upgrades and leased 1,221 upgraded units, achieving $99 average monthly rent premiums and a 25.0% ROI⁴. Since inception, for the properties in our Portfolio, we have completed 5,661 full and partial upgrades and achieved a $93 average monthly rental increase per unit, equating to a 22.7% ROI on all units leased as of December 31, 2018.

(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 arenon-GAAP measures. For a discussion of why we consider thesenon-GAAP measures useful and reconciliations of FFO, Core FFO, AFFO and NOI to net income (loss), see the “Definitions and Reconciliations ofNon-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 29 properties encompassing 10,123 units of apartment space in our 2017-2018 Same Store pool for the year ended December 31, 2018 (our “2017-2018 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.


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“We continued to experience robust demand for our well-locatedvalue-add communities in the fourth quarter, evidenced by 7.4% year-over-year same store NOI growth. We also completed our first equity raise since listing in April 2015, with the proceeds being used to pay down the outstanding balances under our credit and bridge facilities, which helped capitalize the purchases of two well-locatedvalue-add properties exhibiting significant upside potential in our core markets. As we move into 2019, we continue to see healthy demand, from both renters and investors, for well-located work force housing withvalue-add potential,” stated NXRT Chairman and President, Jim Dondero.

Full Year 2018 Financial Results

•

Total revenues were $146.6 million for the full year 2018, compared to $144.2 million for the full year 2017.

•

Net loss for the full year 2018 totaled $(1.6) million, or a loss of $(0.08) per diluted share, which included $13.7 million of gain on sale of real estate, $47.5 million of depreciation and amortization expense and $3.6 million of loss on extinguishment of debt and modification costs. This compared to net income of $56.4 million, or earnings of $2.49 per diluted share, for the full year 2017, which included $78.4 million of gain on sales of real estate, $48.8 million of depreciation and amortization expense and $5.7 million of loss on extinguishment of debt and modification costs.

•

The change in our net income (loss) between the periods primarily relates to a decrease in gain on sales of real estate, and was partially offset by an increase in total revenues and decreases in total property operating expenses, depreciation and amortization expense and loss on extinguishment of debt and modification costs.

•

For the full year 2018, NOI was $80.2 million on 35 properties, compared to $76.6 million for the full year 2017 on 33 properties.

•

For the full year 2018, 2017-2018 Same Store NOI increased 7.4% to $67.9 million, compared to $63.2 million for the full year 2017.

•

For the full year 2018, FFO totaled $32.0 million, or $1.48 per diluted share, compared to $25.1 million, or $1.17 per diluted share, for the full year 2017.

•

For the full year 2018, Core FFO totaled $35.1 million, or $1.62 per diluted share, compared to $30.1 million, or $1.41 per diluted share, for the full year 2017.

•

For the full year 2018, AFFO totaled $40.8 million, or $1.88 per diluted share, compared to $34.8 million, or $1.62 per diluted share, for the full year 2017.

Fourth Quarter 2018 Financial Results

•

Total revenues were $39.4 million for the fourth quarter of 2018, compared to $34.9 million for the fourth quarter of 2017.

•

Net loss for the fourth quarter of 2018 totaled $(4.8) million, or a loss of $(0.21) per diluted share, which included $13.8 million of depreciation and amortization expense and $7.8 million of interest expense. This compared to net loss of $(4.3) million, or a loss of $(0.21) per diluted share, for the fourth quarter of 2017, which included $12.9 million of depreciation and amortization expense and $7.1 million of interest expense.

•

The change in our net loss between the periods primarily relates to increases in total property operating expenses and interest expense, partially offset by an increase in total revenues.

•

For the fourth quarter of 2018, NOI was $21.3 million on 35 properties, compared to $19.3 million for the fourth quarter of 2017 on 33 properties.

•

For the fourth quarter of 2018, Q4 Same Store NOI¹ increased 1.2% to $18.7 million, compared to $18.4 million for the fourth quarter of 2017, which was impacted by a 46% increase in real estate taxes in the fourth quarter of 2018.

•

For the fourth quarter of 2018, FFO totaled $9.0 million, or $0.40 per diluted share, compared to $8.5 million, or $0.40 per diluted share, for the fourth quarter of 2017.

•

For the fourth quarter of 2018, Core FFO totaled $9.2 million, or $0.41 per diluted share, compared to $8.5 million, or $0.40 per diluted share, for the fourth quarter of 2017.

•

For the fourth quarter of 2018, AFFO totaled $10.7 million, or $0.47 per diluted share, compared to $9.5 million, or $0.45 per diluted share, for the fourth quarter of 2017.

(1)	There are 31 properties encompassing 11,091 units of apartment space in our Q4 Same Store pool for the three months ended December 31, 2018 (our “Q4 Same Store” properties).


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Subsequent Events

Acquisition of Multifamily Properties

We acquired the following properties, structured as a reverse 1031 Exchange, as a portfolio (the “Phoenix Portfolio”) subsequent to December 31, 2018 (dollars in thousands):


Property Name	Location		Date of Acquisition		Purchase Price				Mortgage Debt				# Units		Effective Ownership
Bella Vista Apartment Homes		Phoenix, Arizona		January 28, 2019	$	48,400			$	29,040				248		100	%
The Enclave Apartment Homes		Tempe, Arizona		January 28, 2019		41,800				25,322				204		100	%
The Heritage Apartment Homes		Phoenix, Arizona		January 28, 2019		41,900				24,625				204		100	%

					$	132,100	(1	)	$	78,987	(2	)		656

(1)	We used approximately $52.5 million of proceeds drawn under a credit facility (see “$75 Million Credit Facility” below) to fund a portion of the purchase price of the Phoenix Portfolio and plannedvalue-add improvements to the Phoenix Portfolio.

(2)	Each of the first mortgages on the properties has an84-month term and bears interest at a rate ofone-month LIBOR plus 1.32%.

$75 Million Credit Facility

On January 28, 2019, we, through NexPoint Residential Trust Operating Partnership, L.P. (the “OP”), our operating partnership, entered into a $75.0 million credit facility (the “$75 Million Credit Facility”) with SunTrust Bank, as administrative agent and the lenders party thereto, and immediately drew $52.5 million to fund a portion of the purchase price of the Phoenix Portfolio. The $75 Million Credit Facility is a full-term, interest-only facility with an initial24-month term, has one12-month extension option, bears interest at a rate ofone-month LIBOR plus a range from 2.00% to 2.50%, depending on our leverage level as determined under the credit facility agreement, and is guaranteed by us.


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Fourth Quarter Earnings Conference Call

NXRT will host a call on Tuesday, February 19, 2019 at 11:00 a.m. ET to discuss its fourth quarter and full year financial results. The conference call can be accessed live over the phone by dialing (877)260-1479 or, for international callers, (334)323-0522, and entering passcode 6973716. A live audio webcast of the call will be available online at NXRT’s website,http://www.nexpointliving.com (under “Investor Relations”). An online replay will be available shortly after the call on NXRT’s website and continue to be available for 60 days.

A replay of the conference call will also be available through Tuesday, February 26, 2019, by dialing (888)203-1112 or, for international callers, (719)457-0820 and entering passcode 6973716.

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 anSEC-registered investment adviser. Our filings with the Securities and Exchange Commission (the “SEC”) are available on our website, www.nexpointliving.com, under the “Investor Relations” 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,” “intend” 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, NXRT’s guidance for financial results for the full year 2019, expected acquisitions and dispositions, demand for well-located work force housing withvalue-add potential, the expected redevelopment of units, the projected average rent, the projected rent change and the projected return on investment after redevelopment and the planned green improvements. 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. Readers should not place undue reliance on any forward-looking statements and are encouraged to review the Company’s most recent Annual Report on Form10-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.


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NEXPOINT RESIDENTIAL TRUST, INC: FOURTH QUARTER & FULL YEAR 2018 OVERVIEW

Company Profile


(share counts in thousands)
Exchange/Ticker		NYSE: NXRT
Share Price (1)	$	38.37
Insider Ownership		20.42	%
2019 Q1 Dividend Per Share	$	0.275
Dividend Yield (1)		2.87	%
Shares Outstanding - basic (Wtd Avg. 12 mo. ended 12/31/2018)		21,189
Shares Outstanding - diluted (Wtd Avg. 12 mo. ended 12/31/2018)		21,667

(1)	As of the close of market trading on February 15, 2019.

Portfolio Composition by Market


Market			% of Units
Dallas/Fort Worth				26.4	%
Atlanta				16.8	%
Nashville				14.2	%
Phoenix (+656)	(1	)		14.0	%
Houston				9.0	%
Orlando				6.3	%
Charlotte				4.4	%
Tampa				4.4	%
West Palm Beach				3.3	%
D.C. Metro				1.2	%

Total				100.0	%

(1)	The acquisition of the Phoenix Portfolio on January 28, 2019, as described in “Subsequent Events” above, increases our presence in the Phoenix market by 656 units.

LOGO

Revenue & Average Rent Per Unit

Stock Price Performance (Since Inception; 4/1/2015)


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Highlights of Fourth Quarter and Full Year 2018 Activity

EQUITY RAISE

The following table contains summary information regarding our sale of 2,702,500 shares of common stock that closed on November 16, 2018 (the “2018 Offering”):


Gross proceeds	$	89,182,500
Common shares sold		2,702,500

Public offering price per share	$	33.00

ACQUISITIONS

(dollar amounts in thousands)


Property Name	Location		Date of Acquisition		Purchase Price		Mortgage Debt		# Units
Cedar Pointe		Antioch, Tennessee		August 24, 2018	$	26,500	$	17,300		210
Crestmont Reserve		Dallas, Texas		September 26, 2018		24,680		12,061		242
Brandywine I & II		Nashville, Tennessee		September 26, 2018		79,800		43,835		632

					$	130,980	$	73,196		1,084

REFINANCINGS

(dollar amounts in thousands)


Property Name	Occurred		Former Outstanding Principal		New Outstanding Principal		Reduction in Spread (in bps) (1)
Belmont at Duck Creek		Q2	$	10,853	$	17,760		79	(2)
Sabal Palm at Lake Buena Vista		Q3		37,166		42,100		51
Abbington Heights		Q3		9,868		16,920		4	(2)
Beechwood Terrace		Q3		20,150		23,365		24
Timber Creek		Q3		19,137		24,100		56
Radbourne Lake		Q3		18,881		20,000		52
Hollister Place		Q3		13,475		14,811		90

			$	129,530	$	159,056		50	(3)

(1)

For previous floating rate mortgages, represents the reduction in the borrowing spread from the previous mortgage to the current mortgage. For previous fixed-rate mortgages, represents the reduction in the borrowing rate from the previous mortgage to the current mortgage (usingone-month LIBOR as of December 31, 2018).

(2)	Previous mortgage was an assumed fixed-rate loan.

(3)	Represents the weighted average reduction in the borrowing spreads.


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SECTOR LEADING

FY 2018 SAME STORE NOI GROWTH


Metric	NXRT			MF Sector Peers ⁽¹⁾
Total Revenues		4.3	%		3.0	%
Total Expenses		0.8	%		3.2	%
NOI		7.4	%		3.0	%

(1)

We define our Multifamily Sector Peer Group as all NYSE-listed equity REITs focused primarily on U.S. multifamily real estate investment. This group includes AIV, APTS, AVB, BRG, BRT, CPT, EQR, ESS, IRT, MAA and UDR. Comparison made to the average of our peers’ full year 2018 same store operating results as announced. FY 2018 results not yet available for APTS and IRT as of February 19, 2018; BRT fiscal year end 2018 results don’t reflect same-store metrics.

GREEN IMPROVEMENTS

33% AVERAGE MONTHLY SAVINGS

(WATER UTILITY COST)

•

Replacement of showerheads, plumbing fixtures and toilets with modern energy efficient upgrades

•

As of December 31, 2018, NXRT has completed 17 of the planned 28 green improvement projects

•

Savings analysis has been completed on the 17 completed properties with results shown below:


Metric		Amount
# of Units		6,930
Annual Gallons Saved		~170,000,000
Annual Cost Savings		~$1,400,000
Monthly Savings per unit		$17
Average Monthly Cost Savings		33%

2019 Full Year Guidance Summary

NXRT is providing initial 2019 guidance ranges for Loss per diluted share, Core FFO per diluted share, Same Store Rental Income, Same Store Total Revenue, Same Store Total Expenses, and Same Store NOI as follows:


	Guidance Range (1)
	Low-End			Mid-Point			High-End
Loss per diluted share (2)	$	(0.76	)	$	(0.71	)	$	(0.66	)
Core FFO per diluted share (2) (3)	$	1.82		$	1.87		$	1.91

Same Store Growth: (4)
Rental Income		4.0	%		4.5	%		5.0	%
Total Revenue		4.5	%		5.0	%		5.5	%
Total Expenses		3.3	%		3.8	%		4.3	%
Same Store NOI (3)		5.0	%		6.0	%		7.0	%

Other Considerations:
Acquisitions (5)	$	150.0		$	200.0		$	250.0
Dispositions	$	75.0		$	162.5		$	250.0

(1)	Full Year 2019 guidance forecast includes Same Store growth projections presented above, taking into effect the acquisition of the Phoenix Portfolio, and assumes no further acquisition or disposition activity for the remainder of the year.

(2)	Weighted average diluted share count estimate for full year 2019 is approximately 24.1 million.

(3)

Same Store NOI and Core FFO arenon-GAAP measures. For reconciliations of Full Year 2019 Same Store NOI and Core FFO guidance to net loss guidance, and a discussion of why we consider thesenon-GAAP measures useful, see the “Definitions and Reconciliations ofNon-GAAP Measures” section of this release.

(4)	Year-over-year growth for 2019 pro forma Same Store pool (32 properties).

(5)	Includes the $132.1 million acquisition of the Phoenix Portfolio.

Additional information on fourth quarter and full year 2018 results and 2019 financial and earnings guidance is included in the following sections of this release.


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Financial Summary


	FY 2018			FY 2017			FY 2016			Q4 2018			Q4 2017
(in thousands, except for per share and unit data)
Company Profile
Market Capitalization	$	824,000		$	588,000		$	470,000
Share Price (as of the last day of the period)	$	35.05		$	27.94		$	22.34
Weighted average common shares outstanding - basic		21,189			21,057			21,232			22,207			21,055
Weighted average common shares outstanding - diluted		21,667			21,399			21,314			22,672			21,375
Earnings Profile
Total revenues	$	146,597		$	144,235		$	132,848		$	39,390		$	34,913
Net income (loss) attributable to common stockholders		(1,609	)		53,374			21,882			(4,767	)		(4,330	)
NOI (1)		80,175			76,578			69,720			21,251			19,261
Same Store NOI (2)		67,907			63,246						18,673			18,449
Same Store NOI Growth (%) (2)		7.4	%								1.2	%
Earnings Metrics Per Common Share (diluted basis) (3)
Earnings (loss)	$	(0.08	)	$	2.49		$	1.03		$	(0.21	)	$	(0.21	)
FFO (1)	$	1.48		$	1.17		$	1.46		$	0.40		$	0.40
Core FFO (1)	$	1.62		$	1.41		$	1.48		$	0.41		$	0.40
AFFO (1)	$	1.88		$	1.62		$	1.58		$	0.47		$	0.45
Dividends declared per common share	$	1.025		$	0.910		$	0.838		$	0.275		$	0.250
FFO Coverage		1.44x			1.29x			1.74x			1.45x			1.60x
Core FFO Coverage		1.58x			1.55x			1.76x			1.48x			1.59x
AFFO Coverage		1.84x			1.79x			1.88x			1.72x			1.78x
Portfolio
Total Properties		35			33			39
Total Units		12,555			11,775			12,965
Occupancy		94.6	%		93.8	%		93.4	%
Average Effective Monthly Rent per Unit	$	985		$	948		$	880
Same Store Portfolio Metrics (2)
Total Same Store Properties		29			29						31			31
Total Same Store Units		10,123			10,123						11,091			11,091
Occupancy		94.5	%		93.9	%					94.5	%		93.9	%
Average Effective Monthly Rent per Unit	$	963		$	925					$	978		$	940
Value-Add Program
Completed Rehab Units		1,432			1,588			1,812			316			335
Cumulative Completed Rehab Units (4)		5,661
Average Increase to Effective Monthly Rent per Unit (Post-Rehab)	$	93
ROI on Post-Rehab Units		22.7	%
Outstanding Debt Summary
Total Mortgage Debt	$	845,713		$	762,404		$	425,426
Credit Facilities		—			30,000			315,000
Bridge Facility		—			8,597			30,000

Total Debt Outstanding	$	845,713		$	801,001		$	770,426

Leverage Ratio (Net Debt to Enterprise Value) (5)		50	%		57	%		61	%

(1)	For more information and reconciliations of NOI, FFO, Core FFO and AFFO, see the “FFO, Core FFO and AFFO” and “Definitions and Reconciliations ofNon-GAAP Measures” sections of this release.

(2)

We define “Same Store” properties as properties that were in our portfolio for the periods being compared. Full year results shown for the 2017-2018 Same Store properties; Q4 results shown for the Q4 Same Store properties. For additional information regarding our 2017-2018 and Q4 Same Store properties, see the “2017-2018 Same Store Results” and “Q4 Same Store Results” sections of this release.

(3)	Indicates coverage ratio of FFO/Core FFO/AFFO per common share (diluted) over dividends declared per common share during the period.

(4)	Inclusive of all full and partial interior upgrades completed through December 31, 2018. Cumulative results exclude rehabs completed for properties sold through December 31, 2018.

(5)	For more information and a reconciliation of debt to net debt, see the “Definitions and Reconciliations ofNon-GAAP Measures” section of this release.


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Components of Net Asset Value

(dollar and share amounts in thousands, except per share and per unit data)

REAL ESTATE VALUE BY MARKET


Property Market	NOI Contribution			Cap Rate Range (1)						Value Range (2)
Property Market	NOI Contribution			Min			Max			Min		Max
Texas
Dallas/Fort Worth		23.1	%		5.3	%		5.8	%	$	389,654	$	435,563
Houston		8.8	%		5.5	%		5.9	%		145,645		158,108

North Carolina
Charlotte		4.3	%		5.2	%		5.7	%		73,933		83,516

Georgia
Atlanta		16.8	%		5.2	%		5.7	%		285,510		322,517

Tennessee
Nashville		14.5	%		5.4	%		5.8	%		244,389		268,077

Florida
Orlando		7.4	%		5.4	%		5.7	%		127,843		137,796
Tampa		3.7	%		5.5	%		5.8	%		62,093		66,862
West Palm Beach		3.6	%		5.4	%		5.8	%		60,957		66,865

Washington D.C.
Other		1.3	%		5.5	%		5.8	%		22,050		23,743

Arizona
Phoenix		16.5	%		5.2	%		5.7	%		281,617		316,445

Total / Ave		100.0	%		5.3	%		5.7	%	$	1,693,691	$	1,879,492

NAV SUMMARY


Component	Min		Max
Tangible Assets
Real Estate (2)	$	1,693,691	$	1,879,492
Cash		19,864
Restricted Cash - Renovation & Green Reserves (4)		5,209
Renovation & Green Capital Expenditures (4)		(5,209)
Cash Adjustments (5)		(923)
Fair Market Value of Interest Rate Swaps		18,141
Other Assets (6)		22,801

Value of Assets	$	1,753,574	$	1,939,375

Tangible Liabilities
Credit Facility (6)		$52,500
Mortgage Debt		924,700

Total Outstanding Debt		977,200
Forward12-month Principal Payments (5)		(923)

Total Outstanding Debt (FY 2019 Est.)		976,277
Other Tangible Liabilities (at Book)		24,595

Value of Liabilities		$1,000,872

Net Leverage(mid-point)		54%

Net Asset Value	$	752,702	$	938,503

Shares outstanding - diluted (FY 2019 Est.)		24,100

Est. NAV / Share	$	31.23	$	38.94

NAV / Share(mid-point)		$35.09

NOI ESTIMATE


4Q 2018 NOI Actual		21,251
FY 2018 NOI Actual		80,175
	Low		High
Estimated 1Q 2019 NOI Guidance (3)		22,500		23,500

FY 2019 NOI Guidance (3)	$	97,000	$	99,000

IMPLIED VALUATION METRICS


	Min		Max
Implied Real Estate Value	$	1,693,691	$	1,879,492

No. of Units (December 31, 2019 E.) (2)		13,211

Implied Value/Apartment Unit	$	128.2	$	142.3

Implied Value/Apartment Unit(mid-point)		$135.2

(1)	Management estimates based on independent third party review of our properties.

(2)	Estimated value ranges, based on Full Year 2019 NOI guidance, are presented for the existing portfolio (35 properties at December 31, 2018) with adjustments made to consider the acquisition of the Phoenix Portfolio on January 28, 2019.

(3)

We anticipate net loss will be between $16.0 million and $18.0 million for the full year 2019 and between $4.5 million and $6.5 million for the first quarter of 2019. FY 2019 NOI Guidance does not consider any additional acquisition or disposition activity for the remainder of the year, other than the acquisition of the Phoenix Portfolio.

(4)	Includes approximately $2.0 million that is held forvalue-add upgrades and approximately $3.2 million that is escrowed to finance green property improvements; reduced by $5.2 million for estimated forward12-month rehab and green capital expenditures.

(5)	Includes approximately $0.9 million in forward12-month principal payments.

(6)

On January 28, 2019, we, through the OP, entered into the $75 Million Credit Facility with SunTrust Bank and immediately drew $52.5 million to fund a portion of the purchase price of the Phoenix Portfolio. Other Assets is reduced by the approximately $7.7 million of earnest money, recorded in prepaid and other assets on our consolidated balance sheet as of December 31, 2018 related to the Phoenix Portfolio.


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NEXPOINT RESIDENTIAL TRUST, INC. [NYSE:NXRT]

NEXPOINT RESIDENTIAL TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)


	December 31, 2018			December 31, 2017
ASSETS
Operating Real Estate Investments
Land	$	202,347		$	189,615
Buildings and improvements		935,604			806,981
Intangible lease assets		3,049			1,340
Construction in progress		1,881			3,786
Furniture, fixtures, and equipment		61,456			44,725

Total Gross Operating Real Estate Investments		1,204,337			1,046,447
Accumulated depreciation and amortization		(134,124	)		(88,252	)

Total Net Operating Real Estate Investments		1,070,213			958,195
Real estate held for sale, net of accumulated depreciation of $897 and $3,397, respectively		17,329			32,961

Total Net Real Estate Investments		1,087,542			991,156
Cash and cash equivalents		19,864			16,036
Restricted cash		23,265			27,212
Accounts receivable		3,340			2,932
Prepaid and other assets		9,058			1,559
Fair market value of interest rate swaps		18,141			16,480

TOTAL ASSETS	$	1,161,210		$	1,055,375

LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Mortgages payable, net	$	824,702		$	724,057
Mortgages payable held for sale, net		13,318			30,348
Credit facility, net		—			29,843
Bridge facility, net		—			8,576
Accounts payable and other accrued liabilities		5,765			6,226
Accrued real estate taxes payable		12,607			9,684
Accrued interest payable		2,852			2,074
Security deposit liability		1,889			1,518
Prepaid rents		1,482			1,470

Total Liabilities		862,615			813,796

Redeemable noncontrolling interests in the Operating Partnership		2,567			2,135

Stockholders’ Equity:
Preferred stock, $0.01 par value: 100,000,000 shares authorized; 0 shares issued		—			—
Common stock, $0.01 par value: 500,000,000 shares authorized; 23,499,635 and 21,049,565 shares issued and outstanding, respectively		234			210
Additionalpaid-in capital		285,511			206,227
Accumulated earnings less dividends		(6,764	)		19,288
Accumulated other comprehensive income		17,047			13,719

Total Stockholders’ Equity		296,028			239,444

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,161,210		$	1,055,375


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NEXPOINT RESIDENTIAL TRUST, INC. [NYSE:NXRT]

NEXPOINT RESIDENTIAL TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME

(in thousands, except per share amounts)


	For the Year Ended December 31,
	2018			2017			2016
Revenues
Rental income	$	127,964		$	125,023		$	115,419
Other income		18,633			19,212			17,429

Total revenues		146,597			144,235			132,848

Expenses
Property operating expenses		35,824			38,850			38,236
Acquisition costs		—			—			386
Real estate taxes and insurance		20,713			19,161			16,062
Property management fees (1)		4,382			4,330			3,983
Advisory and administrative fees (2)		7,474			7,419			6,802
Corporate general and administrative expenses		7,808			6,275			4,014
Property general and administrative expenses		6,134			6,159			5,877
Depreciation and amortization		47,470			48,752			35,643

Total expenses		129,805			130,946			111,003

Operating income		16,792			13,289			21,845
Interest expense		(28,572	)		(29,576	)		(20,167	)
Loss on extinguishment of debt and modification costs		(3,576	)		(5,719	)		(1,722	)
Gain on sales of real estate		13,742			78,365			25,932

Net income (loss)		(1,614	)		56,359			25,888
Net income attributable to noncontrolling interests		—			2,836			4,006
Net income (loss) attributable to redeemable noncontrolling interests in the Operating Partnership		(5	)		149			—

Net income (loss) attributable to common stockholders	$	(1,609	)	$	53,374		$	21,882

Other comprehensive income
Unrealized gains on interest rate derivatives		1,931			4,568			10,833

Total comprehensive income		317			60,927			36,721
Comprehensive income attributable to noncontrolling interests		—			2,720			5,090
Comprehensive income attributable to redeemable noncontrolling interests in the Operating Partnership		1			166			—

Comprehensive income attributable to common stockholders	$	316		$	58,041		$	31,631

Weighted average common shares outstanding - basic		21,189			21,057			21,232

Weighted average common shares outstanding - diluted		21,667			21,399			21,314

Earnings (loss) per share - basic	$	(0.08	)	$	2.53		$	1.03

Earnings (loss) per share - diluted	$	(0.08	)	$	2.49		$	1.03

Dividends declared per common share	$	1.025		$	0.910		$	0.838

(1)	Fees incurred to an unaffiliated third party that is an affiliate of the noncontrolling limited partner of the OP.

(2)	Fees incurred to the Company’s adviser.


www.NexPointLiving.com		Page 11		AN AFFILIATE OF

NEXPOINT RESIDENTIAL TRUST, INC. [NYSE:NXRT]

2017-2018 Same Store Results of Operations for the Years Ended December 31, 2018 and 2017

There are 29 properties encompassing 10,123 units of apartment space, or approximately 81% of our Portfolio, in our same store pool for the years ended December 31, 2018 and 2017 (our “2017-2018 Same Store” properties). Our 2017-2018 Same Store properties exclude the following six properties in our Portfolio as of December 31, 2018: Hollister Place, Rockledge Apartments, Atera Apartments, Cedar Pointe, Crestmont Reserve and Brandywine I & II.

As of December 31, 2018, our 2017-2018 Same Store properties were approximately 94.5% leased with a weighted average monthly effective rent per occupied apartment unit of $963, a year-over-year increase of 60 bps and $38, respectively.

The following table reflects the revenues, property operating expenses and NOI for the years ended December 31, 2018 and 2017 for our 2017-2018 Same Store andNon-Same Store properties (dollars in thousands):


	For the Year Ended December 31,
	2018		2017		$ Change			% Change
Revenues
Same Store
Rental income	$	107,312	$	102,643	$	4,669			4.5	%
Other income		16,273		15,827		446			2.8	%

Same Store revenues		123,585		118,470		5,115			4.3	%
Non-Same Store
Rental income		20,652		22,380		(1,728	)		-7.7	%
Other income		2,360		3,385		(1,025	)		-30.3	%

Non-Same Store revenues		23,012		25,765		(2,753	)		-10.7	%

Total revenues		146,597		144,235		2,362			1.6	%

Operating expenses
Same Store
Property operating expenses (1)		31,479		31,792		(313	)		-1.0	%
Real estate taxes and insurance		16,318		15,735		583			3.7	%
Property management fees (2)		3,715		3,562		153			4.3	%
Property general and administrative expenses (3)		4,166		4,135		31			0.7	%

Same Store operating expenses		55,678		55,224		454			0.8	%
Non-Same Store
Property operating expenses (4)		5,008		7,345		(2,337	)		-31.8	%
Real estate taxes and insurance		4,395		3,426		969			28.3	%
Property management fees (2)		667		768		(101	)		-13.2	%
Property general and administrative expenses (5)		674		894		(220	)		-24.6	%

Non-Same Store operating expenses		10,744		12,433		(1,689	)		-13.6	%

Total operating expenses		66,422		67,657		(1,235	)		-1.8	%

NOI
Same Store		67,907		63,246		4,661			7.4	%
Non-Same Store		12,268		13,332		(1,064	)		-8.0	%

Total NOI (6)	$	80,175	$	76,578	$	3,597			4.7	%

(1)	For the years ended December 31, 2018 and 2017, excludes approximately $656,000 and $305,000, respectively, of casualty-related recoveries.

(2)	Fees incurred to an unaffiliated third party that is an affiliate of the noncontrolling limited partner of the OP.

(3)

For the years ended December 31, 2018 and 2017, excludes approximately $1,013,000 and $939,000, respectively, of expenses that are not reflective of the continuing operations of the properties or are incurred on our behalf at the property for expenses such as legal, professional and franchise tax fees.

(4)	For the years ended December 31, 2018 and 2017, excludes approximately $(7,000) and $18,000, respectively of casualty-related expenses/(recoveries).

(5)

For the years ended December 31, 2018 and 2017, excludes approximately $281,000 and $191,000, respectively, of expenses that are not reflective of the continuing operations of the properties or are incurred on our behalf at the property for expenses such as legal, professional and franchise tax fees.

(6)	For additional information regarding NOI, see the “Definitions and Reconciliations ofNon-GAAP Measures” section of this release.


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NEXPOINT RESIDENTIAL TRUST, INC. [NYSE:NXRT]

The following table contains additional information about our 2017-2018 Same Store properties rent and occupancy metrics, revenues, operating expenses and NOI for the years ended December 31, 2018 and 2017 (dollars in thousands, except for per unit data):


	FY 2018			FY 2017			% Change
Same Store Total Units		10,123			10,123
Same Store Occupied Units		9,569			9,507
Same Store Ending Occupancy		94.5	%		93.9	%		0.6	%
Same Store Average Rent per Unit	$	963		$	925			4.1	%

Same Store Revenues
Same Store Rental Income	$	107,312		$	102,643			4.5	%
Same Store Other Income		16,273			15,827			2.8	%

Total Same Store Revenues		123,585			118,470			4.3	%
Same Store Operating Expenses
Payroll		12,934			12,623			2.5	%
Repairs & Maintenance		10,503			10,353			1.4	%
Utilities		8,042			8,816			-8.8	%
Real Estate Taxes		13,827			13,396			3.2	%
Insurance		2,491			2,339			6.5	%
Property Management Fees		3,715			3,562			4.3	%
Office Operations		2,670			2,638			1.2	%
Marketing		1,496			1,497			-0.1	%

Total Same Store Operating Expenses		55,678			55,224			0.8	%

2017-2018 Same Store NOI	$	67,907		$	63,246			7.4	%


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NEXPOINT RESIDENTIAL TRUST, INC. [NYSE:NXRT]

2017-2018 Same Store Properties Operating Metrics

(dollars in thousands, except for per unit data)


Properties by Market (1)	Unit Count		Average Effective Rent							Occupancy								Total Rental Income
	Total		2018		2017		% Change			2018			2017			bps D		2018		2017		% Change
Texas
Dallas		2,872	$	901	$	866		4.0	%		94.6	%		94.2	%		40	$	28,626	$	27,310		4.8	%
Houston		924		1,175		1,179		-0.3	%		93.7	%		93.1	%		60		11,925		11,835		0.8	%

Average/Total		3,796		968		942		2.8	%		94.4	%		93.9	%		50		40,551		39,145		3.6	%

North Carolina
Charlotte		577		940		912		3.1	%		93.9	%		93.8	%		10		5,989		5,834		2.7	%

Average/Total		577		940		912		3.1	%		93.9	%		93.8	%		10		5,989		5,834		2.7	%

Georgia
Atlanta		1,512		936		898		4.2	%		94.4	%		93.5	%		90		15,447		14,669		5.3	%

Average/Total		1,512		936		898		4.2	%		94.4	%		93.5	%		90		15,447		14,669		5.3	%

Tennessee
Nashville		1,038		948		921		2.9	%		93.6	%		94.4	%		-80		10,904		10,522		3.6	%

Average/Total		1,038		948		921		2.9	%		93.6	%		94.4	%		-80		10,904		10,522		3.6	%

Florida
Orlando		830		1,128		1,044		8.0	%		95.3	%		95.5	%		-20		10,353		9,591		7.9	%
Tampa		576		921		870		5.9	%		95.1	%		93.8	%		130		5,832		5,462		6.8	%
West Palm Beach		439		1,191		1,127		5.7	%		95.9	%		95.7	%		20		5,769		5,388		7.1	%

Average/Total		1,845		1,078		1,009		6.8	%		95.4	%		95.0	%		40		21,954		20,441		7.4	%

Washington D.C.
D.C. Metro		156		1,093		1,067		2.4	%		98.1	%		93.6	%		450		1,900		1,845		3.0	%

Average/Total		156		1,093		1,067		2.4	%		98.1	%		93.6	%		450		1,900		1,845		3.0	%

Arizona
Phoenix		1,199		813		767		6.0	%		94.3	%		92.4	%		190		10,567		10,187		3.7	%

Average/Total		1,199		813		767		6.0	%		94.3	%		92.4	%		190		10,567		10,187		3.7	%

Average/Total		10,123	$	963	$	925		4.1	%		94.5	%		93.9	%		60	$	107,312	$	102,643		4.5	%

(1)	This table only includes the 29 properties in our 2017-2018 Same Store pool.


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NEXPOINT RESIDENTIAL TRUST, INC. [NYSE:NXRT]

2016-2018 Same Store Results of Operations for the Years Ended December 31, 2018, 2017 and 2016

There are 25 properties encompassing 8,567 units of apartment space, or approximately 68% of our Portfolio, in our same store pool for the years ended December 31, 2018, 2017 and 2016 (our “2016-2018 Same Store” properties). Our 2016-2018 Same Store properties exclude the following 10 properties in our portfolio as of December 31, 2018: Parc500, The Colonnade, Old Farm, Stone Creek at Old Farm, Hollister Place, Rockledge Apartments, Atera Apartments, Cedar Pointe, Crestmont Reserve and Brandywine I & II.

As of December 31, 2018, our 2016-2018 Same Store properties were approximately 94.7% leased with a weighted average monthly effective rent per occupied apartment unit of $945. As of December 31, 2017, our 2016-2018 Same Store properties were approximately 94.0% leased with a weighted average monthly effective rent per occupied apartment unit of $904. As of December 31, 2016, our 2016-2018 Same Store properties were approximately 93.7% leased with a weighted average monthly effective rent per occupied apartment unit of $865.

The following table reflects the revenues, property operating expenses and NOI for the years ended December 31, 2018, 2017 and 2016 for our 2016-2018 Same Store andNon-Same Store properties (dollars in thousands):


	For the Year Ended December 31,						2018 compared to 2017						2017 compared to 2016
	2018		2017		2016		$ Change			% Change			$ Change			% Change
Revenues
Same Store
Rental income	$	89,216	$	84,871	$	79,900	$	4,345			5.1	%	$	4,971			6.2	%
Other income		13,403		13,270		11,947		133			1.0	%		1,323			11.1	%

Same Store revenues		102,619		98,141		91,847		4,478			4.6	%		6,294			6.9	%
Non-Same Store
Rental income		38,748		40,152		35,519		(1,404	)		-3.5	%		4,633			13.0	%
Other income		5,230		5,942		5,482		(712	)		-12.0	%		460			8.4	%

Non-Same Store revenues		43,978		46,094		41,001		(2,116	)		-4.6	%		5,093			12.4	%

Total revenues		146,597		144,235		132,848		2,362			1.6	%		11,387			8.6	%

Operating expenses
Same Store
Property operating expenses (1)		26,312		26,668		25,578		(356	)		-1.3	%		1,090			4.3	%
Real estate taxes and insurance		12,635		11,828		11,058		807			6.8	%		770			7.0	%
Property management fees (2)		3,089		2,949		2,759		140			4.7	%		190			6.9	%
Property general and administrative expenses (3)		3,447		3,451		3,359		(4	)		-0.1	%		92			2.7	%

Same Store operating expenses		45,483		44,896		42,754		587			1.3	%		2,142			5.0	%
Non-Same Store
Property operating expenses (4)		10,175		12,469		12,507		(2,294	)		-18.4	%		(38	)		-0.3	%
Real estate taxes and insurance		8,078		7,333		5,004		745			10.2	%		2,329			46.5	%
Property management fees (2)		1,293		1,381		1,224		(88	)		-6.4	%		157			12.8	%
Property general and administrative expenses (5)		1,393		1,578		1,639		(185	)		-11.7	%		(61	)		-3.7	%

Non-Same Store operating expenses		20,939		22,761		20,374		(1,822	)		-8.0	%		2,387			11.7	%

Total operating expenses		66,422		67,657		63,128		(1,235	)		-1.8	%		4,529			7.2	%

NOI
Same Store		57,136		53,245		49,093		3,891			7.3	%		4,152			8.5	%
Non-Same Store		23,039		23,333		20,627		(294	)		-1.3	%		2,706			13.1	%

Total NOI (6)	$	80,175	$	76,578	$	69,720	$	3,597			4.7	%	$	6,858			9.8	%

(1)	For the years ended December 31, 2018, 2017 and 2016, excludes approximately $(664,000), $(318,000) and $56,000, respectively, of casualty-related expenses/(recoveries).

(2)	Fees incurred to an unaffiliated third party that is an affiliate of the noncontrolling limited partner of the OP.


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(3)

For the years ended December 31, 2018, 2017 and 2016, excludes approximately $853,000, $760,000 and $596,000, respectively, of expenses that are not reflective of the continuing operations of the properties or are incurred on our behalf at the property for expenses such as legal, professional and franchise tax fees.

(4)	For the years ended December 31, 2018, 2017 and 2016, excludes approximately $1,000, $31,000 and $95,000, respectively, of casualty-related expenses.

(5)

For the years ended December 31, 2018, 2017 and 2016, excludes approximately $441,000, $370,000 and $283,000, respectively, of expenses that are not reflective of the continuing operations of the properties or are incurred on our behalf at the property for expenses such as legal, professional and franchise tax fees.

(6)	For additional information regarding NOI, see the “Definitions and Reconciliations ofNon-GAAP Measures” section of this release.

The following table contains additional information about our 2016-2018 Same Store properties rent and occupancy metrics, revenues, operating expenses and NOI for the years ended December 31, 2018, 2017 and 2016 (dollars in thousands, except for per unit data):


										2018 vs 2017			2017 vs 2016
	FY 2018			FY 2017			FY 2016			% Change			% Change
Same Store Total Units		8,567			8,567			8,567
Same Store Occupied Units		8,110			8,051			8,023
Same Store Ending Occupancy		94.7	%		94.0	%		93.7	%		0.7	%		0.3	%
Same Store Average Rent per Unit	$	945		$	904		$	865			4.5	%		4.5	%
Same Store Revenues
Same Store Rental Income	$	89,216		$	84,871		$	79,900			5.1	%		6.2	%
Same Store Other Income		13,403			13,270			11,947			1.0	%		11.1	%

Total Same Store Revenues		102,619			98,141			91,847			4.6	%		6.9	%
Same Store Operating Expenses
Payroll		11,006			10,747			10,681			2.4	%		0.6	%
Repairs & Maintenance		8,736			8,600			7,705			1.6	%		11.6	%
Utilities		6,570			7,321			7,192			-10.3	%		1.8	%
Real Estate Taxes		10,732			10,048			9,354			6.8	%		7.4	%
Insurance		1,903			1,780			1,704			6.9	%		4.5	%
Property Management Fees		3,089			2,949			2,759			4.7	%		6.9	%
Office Operations		2,265			2,258			2,277			0.3	%		-0.8	%
Marketing		1,182			1,193			1,082			-0.9	%		10.3	%

Total Same Store Operating Expenses		45,483			44,896			42,754			1.3	%		5.0	%

2016-2018 Same Store NOI	$	57,136		$	53,245		$	49,093			7.3	%		8.5	%


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NEXPOINT RESIDENTIAL TRUST, INC. [NYSE:NXRT]

Q4 Same Store Results of Operations for the Three Months Ended December 31, 2018 and 2017

There are 31 properties encompassing 11,091 units of apartment space, or approximately 88% of our Portfolio, in our same store pool for the three months ended December 31, 2018 and 2017 (our “Q4 Same Store” properties). Our Q4 Same Store properties exclude the following four properties in our Portfolio as of December 31, 2018: Atera Apartments, Cedar Pointe, Crestmont Reserve and Brandywine I & II.

As of December 31, 2018, our Q4 Same Store properties were approximately 94.5% leased with a weighted average monthly effective rent per occupied apartment unit of $978, a year over year increase of 60 bps and $38, respectively.

The following table reflects the revenues, property operating expenses and NOI for the three months ended December 31, 2018 and 2017 for our Q4 Same Store andNon-Same Store properties (dollars in thousands):


	For the Three Months Ended December 31,
	2018		2017		$ Change			% Change
Revenues
Same Store
Rental income	$	30,213	$	28,913	$	1,300			4.5	%
Other income		4,361		4,135		226			5.5	%

Same Store revenues		34,574		33,048		1,526			4.6	%
Non-Same Store
Rental income		4,385		1,546		2,839			183.6	%
Other income		431		319		112			35.1	%

Non-Same Store revenues		4,816		1,865		2,951			158.2	%

Total revenues		39,390		34,913		4,477			12.8	%

Operating expenses
Same Store
Property operating expenses (1)		8,503		8,741		(238	)		-2.7	%
Real estate taxes and insurance		5,195		3,748		1,447			38.6	%
Property management fees (2)		1,037		992		45			4.5	%
Property general and administrative expenses (3)		1,166		1,118		48			4.3	%

Same Store operating expenses		15,901		14,599		1,302			8.9	%
Non-Same Store
Property operating expenses		943		434		509			117.3	%
Real estate taxes and insurance		1,026		502		524			104.4	%
Property management fees (2)		140		58		82			141.4	%
Property general and administrative expenses (4)		129		59		70			118.6	%

Non-Same Store operating expenses		2,238		1,053		1,185			112.5	%

Total operating expenses		18,139		15,652		2,487			15.9	%

NOI
Same Store		18,673		18,449		224			1.2	%
Non-Same Store		2,578		812		1,766			217.5	%

Total NOI (5)	$	21,251	$	19,261	$	1,990			10.3	%

1)	For the three months ended December 31, 2018 and 2017, excludes approximately $39,000 and $64,000, respectively, of casualty-related expenses.

2)	Fees incurred to an unaffiliated third party that is an affiliate of the noncontrolling limited partner of the OP.

For the three months ended December 31, 2018 and 2017, excludes approximately $234,000 and $209,000, respectively, of expenses that are not reflective of the continuing operations of the properties or are incurred on our behalf at the property for expenses such as legal, professional and franchise tax fees.

For the three months ended December 31, 2018 and 2017, excludes approximately $130,000 and $17,000, respectively, of expenses that are not reflective of the continuing operations of the properties or are incurred on our behalf at the property for expenses such as legal, professional and franchise tax fees.

5)	For additional information regarding NOI, see the “Definitions and Reconciliations” section of this release.


www.NexPointLiving.com		Page 17		AN AFFILIATE OF

NEXPOINT RESIDENTIAL TRUST, INC. [NYSE:NXRT]

The following table contains additional information about our Q4 Same Store properties rent and occupancy metrics, revenues, operating expenses and NOI for the three months ended December 31, 2018 and 2017 (dollars in thousands, except for per unit data):


	Q4 2018			Q4 2017			% Change
Same Store Total Units		11,091			11,091
Same Store Occupied Units		10,482			10,412
Same Store Ending Occupancy		94.5	%		93.9	%		0.6	%
Same Store Average Rent per Unit	$	978		$	940			4.0	%
Same Store Revenues
Same Store Rental Income	$	30,213		$	28,913			4.5	%
Same Store Other Income		4,361			4,135			5.5	%

Total Same Store Revenues		34,574			33,048			4.6	%
Same Store Operating Expenses
Payroll		3,581			3,474			3.1	%
Repairs & Maintenance		2,878			2,873			0.2	%
Utilities		2,044			2,394			-14.6	%
Real Estate Taxes		4,515			3,102			45.6	%
Insurance		680			646			5.3	%
Property Management Fees		1,037			992			4.5	%
Office Operations		748			697			7.3	%
Marketing		418			421			-0.7	%

Total Same Store Operating Expenses		15,901			14,599			8.9	%

Q4 Same Store NOI	$	18,673		$	18,449			1.2	%


www.NexPointLiving.com		Page 18		AN AFFILIATE OF

NEXPOINT RESIDENTIAL TRUST, INC. [NYSE:NXRT]

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 years ended December 31, 2018, 2017 and 2016 and for the three months ended December 31, 2018 and 2017 (in thousands, except per share amounts):


			For the Year Ended December 31,									For the Three Months Ended December 31,
			2018			2017			2016			2018			2017
Net income (loss)			$	(1,614	)	$	56,359		$	25,888		$	(4,782	)	$	(4,343	)
Depreciation and amortization				47,470			48,752			35,643			13,832			12,886
Gain on sales of real estate				(13,742	)		(78,365	)		(25,932	)		—			21
Adjustment for noncontrolling interests				(96	)		(1,695	)		(4,583	)		(26	)		(25	)

FFO attributable to common stockholders				32,018			25,051			31,016			9,024			8,539

FFO per share - basic			$	1.51		$	1.19		$	1.46		$	0.41		$	0.41

FFO per share - diluted			$	1.48		$	1.17		$	1.46		$	0.40		$	0.40

Acquisition costs				—			—			386			—			—
Loss on extinguishment of debt and modification costs				3,576			5,719			1,722			—			2
Casualty-related expenses/(recoveries)				(663	)		(287	)		151			39			64
Change in fair value on derivative instruments - ineffective portion				—			(309	)		(1,683	)		—			(212	)
Amortization of deferred financing costs - acquisition term notes				159			403			—			138			80
Adjustment for noncontrolling interests				(9	)		(430	)		(107	)		—			1

Core FFO attributable to common stockholders				35,081			30,147			31,485			9,201			8,474

Core FFO per share - basic			$	1.66		$	1.43		$	1.48		$	0.41		$	0.40

Core FFO per share - diluted			$	1.62		$	1.41		$	1.48		$	0.41		$	0.40

Amortization of deferred financing costs - long term debt				1,491			1,592			1,423			430			367
Equity-based compensation expense				4,198			3,109			825			1,095			694
Adjustment for noncontrolling interests				(17	)		(76	)		(140	)		(5	)		(4	)

AFFO attributable to common stockholders				40,753			34,772			33,593			10,721			9,531

AFFO per share - basic			$	1.92		$	1.65		$	1.58		$	0.48		$	0.45

AFFO per share - diluted			$	1.88		$	1.62		$	1.58		$	0.47		$	0.45

Weighted average common shares outstanding - basic				21,189			21,057			21,232			22,207			21,055

Weighted average common shares outstanding - diluted				21,667			21,399			21,314			22,672			21,375

Dividends declared per common share			$	1.025		$	0.910		$	0.838		$	0.275		$	0.250

FFO Coverage - diluted	(1	)		1.44x			1.29x			1.74x			1.45x			1.60x
Core FFO Coverage - diluted	(1	)		1.58x			1.55x			1.76x			1.48x			1.59x
AFFO Coverage - diluted	(1	)		1.84x			1.79x			1.88x			1.72x			1.78x

(1)	Indicates coverage ratio of FFO/Core FFO/AFFO per common share (diluted) over dividends declared per common share during the period.


www.NexPointLiving.com		Page 19		AN AFFILIATE OF

NEXPOINT RESIDENTIAL TRUST, INC. [NYSE:NXRT]

The year ended December 31, 2018 as compared to the year ended December 31, 2017

The change in our net loss of $1.6 million for the year ended December 31, 2018 as compared to our net income of $56.4 million for the year ended December 31, 2017 primarily relates to a decrease in gain on sales of real estate of $64.7 million, and was partially offset by an increase in total revenues of $2.4 million and decreases in total property operating expenses of $1.4 million, depreciation and amortization expense of $1.3 million and loss on extinguishment of debt and modification costs of $2.1 million. The change in our net income (loss) between the periods was also due to our acquisition and disposition activity in 2017 and 2018 and the timing of the transactions (we acquired one property in the first quarter of 2017, one property in the second quarter of 2017, one property in the fourth quarter of 2017 and three properties in the third quarter of 2018; we sold four properties in the second quarter of 2017, five properties in the third quarter of 2017 and one property in the first quarter of 2018).

FFO was $32.0 million for the year ended December 31, 2018 compared to $25.1 million for the year ended December 31, 2017, which was an increase of approximately $6.9 million. The change in our FFO between the periods primarily relates to increases in total revenues of $2.4 million and decreases in total property operating expenses of $1.4 million, interest expense of $1.0 million and loss on extinguishment of debt and modification costs of $2.1 million, partially offset by an increase in corporate general and administrative expenses of $1.5 million and adjustments for amounts attributable to noncontrolling interests.

Core FFO was $35.1 million for the year ended December 31, 2018 compared to $30.1 million for the year ended December 31, 2017, which was an increase of approximately $5.0 million. The change in our Core FFO between the periods primarily relates to an increase in FFO, partially offset by a decrease in loss on extinguishment of debt and modification costs of $2.1 million and adjustments for amounts attributable to noncontrolling interests.

AFFO was $40.8 million for the year ended December 31, 2018 compared to $34.8 million for the year ended December 31, 2017, which was an increase of approximately $6.0 million. The change in our AFFO between the periods primarily relates to increases in Core FFO and equity-based compensation expense of $1.1 million.

The year ended December 31, 2017 as compared to the year ended December 31, 2016

The change in our net income of $56.4 for the year ended December 31, 2017 as compared to our net income of $25.9 for the year ended December 31, 2016 primarily relates to increases in total revenues of $11.4 million and gain on sales of real estate of $52.5 million, and was partially offset by increases in total property operating expenses of $4.0 million, depreciation and amortization expense of $13.2 million, interest expense of $9.4 million and loss on extinguishment of debt and modification costs of $4.0 million. The change in our net income between the periods was also due to our acquisition and disposition activity in 2016 and 2017 and the timing of the transactions (we acquired one property in the third quarter of 2016, three properties in the fourth quarter of 2016, one property in the first quarter of 2017, one property in the second quarter of 2017 and one property in the fourth quarter of 2017; we sold three properties in the second quarter of 2016, four properties in the third quarter of 2016, four properties in the second quarter of 2017 and five properties in the third quarter of 2017).

FFO was $25.1 million for the year ended December 31, 2017 compared to $31.0 million for the year ended December 31, 2016, which was a decrease of approximately $5.9 million. The change in our FFO between the periods primarily relates to increases in total property operating expenses of $4.0 million, interest expense of $9.4 million, loss on extinguishment of debt and modification costs of $4.0 million and corporate general and administrative expenses of $2.3 million, partially offset by an increase in total revenues of $11.4 million and adjustments for amounts attributable to noncontrolling interests.

Core FFO was $30.1 million for the year ended December 31, 2017 compared to $31.5 million for the year ended December 31, 2016, which was a decrease of approximately $1.4 million. The change in our Core FFO between the periods primarily relates to a decrease in FFO and a decrease in gain recognized related to the ineffective portion of changes in fair value of our interest rate swap derivatives designated as cash flow hedges of $1.4 million, partially offset by an increase in loss on extinguishment of debt and modification costs of $4.0 million and adjustments for amounts attributable to noncontrolling interests.

AFFO was $34.8 million for the year ended December 31, 2017 compared to $33.6 million for the year ended December 31, 2016, which was an increase of approximately $1.2 million. The change in our AFFO between the periods primarily relates to an increase in equity-based compensation expense of $2.3 million, partially offset by a decrease in Core FFO.


www.NexPointLiving.com		Page 20		AN AFFILIATE OF

NEXPOINT RESIDENTIAL TRUST, INC. [NYSE:NXRT]

The three months ended December 31, 2018 as compared to the three months ended December 31, 2017

The change in our net loss of $4.8 million for the three months ended December 31, 2018 as compared to our net loss of $4.3 million for the three months ended December 31, 2017 primarily relates to increases in total property operating expenses of $2.6 million, corporate general and administrative expenses of $0.6 million, depreciation and amortization expense of $0.9 million and interest expense of $0.7 million, partially offset by an increase in total revenues of $4.5 million.

FFO was $9.0 million for the three months ended December 31, 2018 compared to $8.5 million for the three months ended December 31, 2017, which was an increase of approximately $0.5 million. The change in our FFO between the periods primarily relates to an increase in total revenues of $4.5 million, partially offset by increases in total property operating expenses of $2.6 million, interest expense of $0.7 million and adjustments for amounts attributable to noncontrolling interests.

Core FFO was $9.2 million for the three months ended December 31, 2018 compared to $8.5 million for the three months ended December 31, 2017, which was an increase of approximately $0.7 million. The change in our Core FFO between the periods primarily relates to an increase in FFO and a decrease in gain recognized related to the ineffective portion of the changes in fair values of our interest rate swap derivatives designated as cash flow hedges of $0.2 million.

AFFO was $10.7 million for the three months ended December 31, 2018 compared to $9.5 million for the three months ended December 31, 2017, which was an increase of approximately $1.2 million. The change in our AFFO between the periods primarily relates to increases in Core FFO and equity-based compensation expense of $0.4 million.


www.NexPointLiving.com		Page 21		AN AFFILIATE OF

NEXPOINT RESIDENTIAL TRUST, INC. [NYSE:NXRT]

Historical Capital Expenditures


	FY 2018		FY 2017		% Change			Q4 2018		Q4 2017		% Change
($ in thousands)
Capital Expenditures
Acquisition Capital Expenditures	$	130,980	$	197,200		-33.6	%	$	—	$	59,200		-100.0	%

Capitalized Rehab Expenditures
Interior		8,559		8,393		2.0	%		2,421		1,747		38.6	%
Exterior and common area		9,133		7,621		19.8	%		1,819		2,554		-28.8	%

Capitalized Maintenance Expenditures
Recurring		4,954		4,723		4.9	%		1,172		1,076		8.9	%
Non-Recurring		5,805		3,782		53.5	%		2,540		1,190		113.4	%

Total Capital Expenditures	$	159,431	$	221,719		-28.1	%	$	7,952	$	65,767		-87.9	%

LOGO


www.NexPointLiving.com		Page 22		AN AFFILIATE OF

NEXPOINT RESIDENTIAL TRUST, INC. [NYSE:NXRT]

Value-Add Program Details


Property Name (1)	Units		Rehab Units Completed (2)		Average Rent Pre-Rehab		Average Rent Post-Rehab		Avg. Rehab Cost Per Unit (3)		Post-Rehab Rent Change %			ROI (3)
CompletedValue-Add Programs
Southpoint Reserve at Stoney Creek (4)		156		55	$	990	$	1,096	$	7,428		10.7	%		17.1	%

Total/Weighted Average		156		55	$	990	$	1,096	$	7,428		10.7	%		17.1	%

Value-Add Programs In Progress
Abbington Heights		274		183	$	801	$	900	$	4,632		12.4	%		25.6	%
Arbors on Forest Ridge		210		190		806		882		3,027		9.4	%		30.0	%
Atera Apartments		380		71		1,181		1,332		3,318		12.8	%		54.6	%
Beechwood Terrace		300		226		884		972		4,663		9.9	%		22.4	%
Belmont at Duck Creek		240		193		928		1,020		3,670		9.9	%		30.0	%
Cornerstone		430		219		930		1,010		5,411		8.7	%		17.9	%
Courtney Cove		324		129		805		907		4,738		12.7	%		25.9	%
Cutter’s Point		196		165		1,007		1,101		4,185		9.4	%		27.0	%
Eagle Crest		447		118		782		864		2,623		10.4	%		37.3	%
Edgewater at Sandy Springs		760		401		880		987		7,503		12.2	%		17.1	%
Heatherstone		152		157		806		884		4,227		9.6	%		21.9	%
Hollister Place		260		118		919		1,068		7,349		16.1	%		24.2	%
Madera Point		256		143		809		901		3,998		11.5	%		27.8	%
Parc500		217		106		1,169		1,345		13,936		15.0	%		15.1	%
Radbourne Lake		225		267		994		1,042		906		4.8	%		63.5	%
Rockledge Apartments		708		87		1,056		1,274		11,571		20.7	%		22.7	%
Sabal Palm at Lake Buena Vista		400		200		1,122		1,202		646		7.1	%		147.3	%
Seasons 704 Apartments		222		134		1,054		1,127		5,885		6.9	%		14.7	%
Silverbrook		642		449		789		855		3,022		8.4	%		26.2	%
The Ashlar		264		296		829		898		3,732		8.3	%		22.1	%
The Colonnade		415		74		648		912		10,674		40.7	%		29.7	%
The Pointe at the Foothills		528		63		909		944		1,867		3.9	%		22.5	%
The Preserve at Terrell Mill		752		407		769		904		8,600		17.6	%		18.9	%
The Summit at Sabal Park		252		184		885		968		4,485		9.4	%		22.2	%
Timber Creek		352		72		848		957		5,664		12.7	%		22.9	%
Venue at 8651		333		277		836		913		4,238		9.2	%		21.8	%
Versailles		388		446		826		899		3,761		8.8	%		23.3	%
Willow Grove		244		136		830		932		5,337		12.3	%		23.0	%
Woodbridge		220		95		952		1,040		5,231		9.3	%		20.2	%

Total/Weighted Average		10,391		5,606	$	876	$	969	$	4,887		10.6	%		22.7	%

Total/Weighted Average Completed		10,547		5,661	$	877	$	970	$	4,909		10.6	%		22.7	%


PlannedValue-Add Programs					Projected Avg. Rent						Rent Change & ROI (Projections)
Old Farm		734		—	$	1,226	$	1,316		TBD		7.3	%		TBD
Stone Creek at Old Farm		190		—		1,261		1,305		TBD		3.5	%		TBD
Cedar Pointe		210		—		1,058		1,188		TBD		12.3	%		TBD
Crestmont Reserve		242		—		910		1,010		TBD		11.0	%		TBD
Brandywine I & II		632		—		959		1,079		TBD		12.5	%		TBD

Total/Weighted Average Planned		2,008		—	$	1,090	$	1,190		TBD		9.2	%		TBD

(1)	We do not plan to upgrade 100% of the units at each of our properties.

(2)	Inclusive of all full and partial interior upgrades completed through December 31, 2018.

(3)	Inclusive of all full and partial interior upgrades completed and leased through December 31, 2018.

(4)	Property was classified as held for sale as of December 31, 2018.


www.NexPointLiving.com		Page 23		AN AFFILIATE OF

NEXPOINT RESIDENTIAL TRUST, INC. [NYSE:NXRT]

Outstanding Debt Details

Mortgage Debt

The following table contains summary information concerning the mortgage debt of the Company as of December 31, 2018 (dollars in thousands):


Operating Properties			Type		Term (months)		Outstanding Principal (1)			Interest Rate (2)			Maturity Date
Arbors on Forest Ridge				Floating		84	$	13,130			4.18	%		7/1/2024
Cutter’s Point				Floating		84		16,640			4.18	%		7/1/2024
Eagle Crest				Floating		84		29,510			4.18	%		7/1/2024
Silverbrook				Floating		84		30,590			4.18	%		7/1/2024
Edgewater at Sandy Springs				Floating		84		52,000			4.18	%		7/1/2024
Beechwood Terrace	(3	)		Floating		84		23,365			3.94	%		9/1/2025
Willow Grove				Floating		84		14,818			4.28	%		7/1/2024
Woodbridge				Floating		84		13,677			4.28	%		7/1/2024
The Summit at Sabal Park				Floating		84		13,560			4.12	%		7/1/2024
Courtney Cove				Floating		84		13,680			4.12	%		7/1/2024
The Preserve at Terrell Mill				Floating		84		42,480			4.12	%		7/1/2024
The Ashlar				Floating		84		14,520			4.12	%		7/1/2024
Heatherstone				Floating		84		8,880			4.12	%		7/1/2024
Versailles				Floating		84		23,880			4.12	%		7/1/2024
Seasons 704 Apartments				Floating		84		17,460			4.12	%		7/1/2024
Madera Point				Floating		84		15,150			4.12	%		7/1/2024
The Pointe at the Foothills				Floating		84		34,800			4.12	%		7/1/2024
Venue at 8651				Floating		84		13,734			4.28	%		7/1/2024
The Colonnade				Floating		84		28,093			4.18	%		7/1/2024
Old Farm				Floating		84		52,886			4.18	%		7/1/2024
Stone Creek at Old Farm				Floating		84		15,274			4.18	%		7/1/2024
Timber Creek	(4	)		Floating		84		24,100			3.76	%		10/1/2025
Radbourne Lake	(5	)		Floating		84		20,000			3.79	%		10/1/2025
Sabal Palm at Lake Buena Vista	(6	)		Floating		84		42,100			3.80	%		9/1/2025
Abbington Heights	(7	)		Floating		84		16,920			3.75	%		9/1/2025
Belmont at Duck Creek				Floating		84		17,760			3.89	%		6/1/2025
Cornerstone				Fixed		120		22,227			4.24	%		3/1/2023
Parc500				Fixed		120		15,483			4.49	%		8/1/2025
Hollister Place	(8	)		Floating		84		14,811			3.84	%		10/1/2025
Rockledge Apartments				Floating		84		68,100			4.07	%		7/1/2024
Atera Apartments				Floating		84		29,500			3.98	%		11/1/2024
Cedar Pointe				Floating		84		17,300			3.85	%		9/1/2025
Crestmont Reserve				Floating		84		12,061			3.68	%		10/1/2025
Brandywine I & II				Floating		84		43,835			3.68	%		10/1/2025

							$	832,324
Fair market value adjustment								632
Deferred financing costs, net of accumulated amortization of $1,781								(8,254	)

							$	824,702

Held For Sale Property
Southpoint Reserve at Stoney Creek				Floating		84		13,389			4.61	%		1/1/2022
Deferred financing costs, net of accumulated amortization of $94								(71	)
							$	13,318

(1)	Mortgage debt that isnon-recourse to the Company and encumbers the multifamily properties.


www.NexPointLiving.com		Page 24		AN AFFILIATE OF

NEXPOINT RESIDENTIAL TRUST, INC. [NYSE:NXRT]

(2)	Interest rate is based onone-month LIBOR plus an applicable margin, except for fixed rate mortgage debt.One-month LIBOR as of December 31, 2018 was 2.5027%.

(3)	On August 31, 2018, the Company refinanced the existing floating rate mortgage of approximately $20.2 million.

(4)	On September 28, 2018, the Company refinanced the existing floating rate mortgage of approximately $19.1 million.

(5)	On September 28, 2018, the Company refinanced the existing floating rate mortgage of approximately $18.9 million.

(6)	On August 20, 2018, the Company refinanced the existing floating rate mortgage of approximately $37.2 million.

(7)	On August 21, 2018, the Company refinanced the existing fixed rate mortgage of approximately $9.9 million, which was assumed upon acquisition of this property, into a floating rate mortgage.

(8)	On September 28, 2018, the Company refinanced the existing floating rate mortgage of approximately $13.5 million.

Credit and Bridge Facilities

In November 2018, the Company, through the OP, used net proceeds from the 2018 Offering to repay the $50.0 million outstanding under the $60 Million Credit Facility and the $30.0 million outstanding under the $30 Million Bridge Facility, which retired both facilities. The Company had no credit or bridge facility debt outstanding as of December 31, 2018.

Interest Rate Swap Agreements

As of December 31, 2018, the Company had the following outstanding interest rate swaps that were designated as cash flow hedges of interest rate risk (dollars in thousands):


Effective Date	Termination Date		Notional		Fixed Rate (1)
July 1, 2016		June 1, 2021	$	100,000		1.1055	%
July 1, 2016		June 1, 2021		100,000		1.0210	%
July 1, 2016		June 1, 2021		100,000		0.9000	%
September 1, 2016		June 1, 2021		100,000		0.9560	%
April 1, 2017		April 1, 2022		100,000		1.9570	%
May 1, 2017		April 1, 2022		50,000		1.9610	%
July 1, 2017		July 1, 2022		100,000		1.7820	%

			$	650,000		1.3388	%(2)

(1)	The floating rate option for the interest rate swaps inone-month LIBOR. As of December 31, 2018,one-month LIBOR was 2.5027%.

(2)	Represents the weighted average fixed rate of the interest rate swaps.


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NEXPOINT RESIDENTIAL TRUST, INC. [NYSE:NXRT]

Debt Maturity Schedule

The following table summarizes our contractual obligations and commitments as of December 31, 2018 for the next five calendar years subsequent to December 31, 2018 and thereafter. We usedone-month LIBOR as of December 31, 2018 to calculate interest expense due by period on our floating rate debt and net interest expense due by period on our interest rate swaps.


			Payments Due by Period (in thousands)
			Total		2019		2020		2021		2022		2023		Thereafter
Operating Properties Mortgage Debt
Principal payments			$	832,324	$	716	$	744	$	782	$	817	$	20,598	$	808,667
Interest expense	(1	)		178,398		26,546		26,608		30,064		33,550		33,360		28,270

Total			$	1,010,722	$	27,262	$	27,352	$	30,846	$	34,367	$	53,958	$	836,937
Held For Sale Property Mortgage Debt
Principal payments			$	13,389	$	207	$	205	$	219	$	12,758	$	—	$	—
Interest expense				1,832		621		612		599		—		—		—

Total			$	15,221	$	828	$	817	$	818	$	12,758	$	—	$	—


Total contractual obligations and commitments			$	1,025,943	$	28,090	$	28,169	$	31,664	$	47,125	$	53,958	$	836,937

(1)

Interest expense obligations includes the impact of expected settlements on interest rate swaps which have been entered into in order to fix the interest rate on the hedged portion of our floating rate debt obligations. As of December 31, 2018, we had entered into seven interest rate swap transactions with a combined notional amount of $650.0 million. We have allocated the total impact of expected settlements on the $650.0 million notional amount of interest rate swaps to ‘Operating Properties Mortgage Debt.’ We usedone-month LIBOR as of December 31, 2018 to determine our expected settlements through the terms of the interest rate swaps.

LOGO

(1)

As of December 31, 2018, we had total indebtedness of $845.7 million at a weighted average interest rate of 4.07%, of which $808.0 million was debt with a floating rate. The interest rate swap agreements we have entered into effectively fix the rate on $650.0 million, or 80%, of our $808.0 million of floating rate mortgage debt outstanding. As of December 31, 2018, the adjusted weighted average interest rate of our total indebtedness was 3.13%. For purposes of calculating the adjusted weighted average interest rate of the total indebtedness, we have included the weighted average fixed rate of 1.3388% forone-month LIBOR on the $650.0 million notional amount of interest rate swap agreements that we have entered into as of December 31, 2018, which effectively fix the interest rate on $650.0 million of our floating rate mortgage debt outstanding.


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Historical Acquisition Details


(in thousands, except for unit and per unit amounts)
Property Name (1)	Location	Units	Transaction Date		Purchase Price		Rehab Budget (2)		Total Investment		Per Unit
Arbors on Forest Ridge	Bedford, TX	210		1/31/2014	$	12,805	$	1,449	$	14,254	$	67,876
Cutter’s Point	Richardson, TX	196		1/31/2014		15,845		1,357		17,202		87,765
Eagle Crest	Irving, TX	447		1/31/2014		27,325		1,120		28,445		63,635
Silverbrook	Grand Prairie, TX	642		1/31/2014		30,400		1,661		32,061		49,939
Edgewater at Sandy Springs	Atlanta, GA	760		7/18/2014		58,000		5,281		63,281		83,264
Beechwood Terrace	Antioch, TN	300		7/21/2014		21,400		1,815		23,215		77,383
Willow Grove	Nashville, TN	244		7/21/2014		13,750		2,116		15,866		65,025
Woodbridge	Nashville, TN	220		7/21/2014		16,000		1,641		17,641		80,186
Abbington Heights	Antioch, TN	274		8/1/2014		17,900		1,617		19,517		71,230
The Summit at Sabal Park	Tampa, FL	252		8/20/2014		19,050		1,656		20,706		82,167
Courtney Cove	Tampa, FL	324		8/20/2014		18,950		1,691		20,641		63,707
Radbourne Lake	Charlotte, NC	225		9/30/2014		24,250		1,438		25,688		114,169
Timber Creek	Charlotte, NC	352		9/30/2014		22,750		4,334		27,084		76,943
Belmont at Duck Creek	Garland, TX	240		9/30/2014		18,525		1,174		19,699		82,079
Sabal Palm at Lake Buena Vista	Orlando, FL	400		11/5/2014		49,500		1,346		50,846		127,115
Southpoint Reserve at Stoney Creek (3)	Fredericksburg, VA	156		12/18/2014		17,000		1,737		18,737		120,109
Cornerstone	Orlando, FL	430		1/15/2015		31,550		2,662		34,212		79,563
The Preserve at Terrell Mill	Marietta, GA	752		2/6/2015		58,000		6,688		64,688		86,021
The Ashlar	Dallas, TX	264		2/26/2015		16,235		2,165		18,400		69,697
Heatherstone	Dallas, TX	152		2/26/2015		9,450		1,648		11,098		73,013
Versailles	Dallas, TX	388		2/26/2015		26,165		3,917		30,082		77,531
Seasons 704 Apartments	West Palm Beach, FL	222		4/15/2015		21,000		1,900		22,900		103,153
Madera Point	Mesa, AZ	256		8/5/2015		22,525		1,808		24,333		95,051
The Pointe at the Foothills	Mesa, AZ	528		8/5/2015		52,275		1,372		53,647		101,604
Venue at 8651	Fort Worth, TX	333		10/30/2015		19,250		4,592		23,842		71,598
Parc500	West Palm Beach, FL	217		7/27/2016		22,421		5,082		27,503		126,742
The Colonnade	Phoenix, AZ	415		10/11/2016		44,600		6,018		50,618		121,971
Old Farm	Houston, TX	734		12/29/2016		84,721		1,135		85,856		116,970
Stone Creek at Old Farm	Houston, TX	190		12/29/2016		23,332		456		23,788		125,200
Hollister Place	Houston, TX	260		2/1/2017		24,500		2,952		27,452		105,585
Rockledge Apartments	Marietta, GA	708		6/30/2017		113,500		7,685		121,185		171,165
Atera Apartments	Dallas, TX	380		10/25/2017		59,200		3,721		62,921		165,582
Cedar Pointe	Antioch, TN	210		8/24/2018		26,500		2,252		28,752		136,914
Crestmont Reserve	Dallas, TX	242		9/26/2018		24,680		2,797		27,477		113,541
Brandywine I & II	Nashville, TN	632		9/26/2018		79,800		7,762		87,562		138,547

Total/Weighted Average		12,555			$	1,143,154	$	98,045	$	1,241,199	$	98,861

(1)	Only includes properties owned as of December 31, 2018.

(2)	Includes interior and exterior rehab.

(3)	Property was classified as held for sale as of December 31, 2018.


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NEXPOINT RESIDENTIAL TRUST, INC. [NYSE:NXRT]

Historical Disposition Details


(in thousands, except unit and per unit amounts)
Property Name	Location	Units		Purchase Price		Sale Price		Per Unit		Sale Date		Net Cash Proceeds (1)		Gain on Sale
Meridian	Austin, TX		200	$	12,300	$	17,250	$	86,250		5/10/2016	$	16,981	$	4,786
Park at Regency and Mandarin Reserve	Jacksonville, FL		679		34,500		47,000		69,219		6/6/2016		46,239		11,584
Park at Blanding and Colonial Forest	Jacksonville, FL		291		12,000		14,500		49,828		8/31/2016		14,259		2,007
Willowdale Crossings	Frederick, MD		432		41,000		45,200		104,630		9/15/2016		44,439		5,576
Jade Park	Dayton Beach, FL		144		7,800		10,000		69,444		9/30/2016		9,868		1,979
The Miramar Apartments	Dallas, TX		314		8,875		16,550		52,707		4/3/2017		16,326		6,368
Toscana	Dallas, TX		192		8,875		13,250		69,010		4/3/2017		13,040		4,283
The Grove at Alban	Frederick, MD		290		23,050		27,500		94,828		4/3/2017		27,021		4,514
Twelve 6 Ten at the Park	Dallas, TX		402		20,984		26,600		66,169		4/27/2017		26,349		4,731
Regatta Bay	Seabrook, TX		240		18,200		28,200		117,500		7/14/2017		27,670		10,423
NAVA Portfolio (2)	Atlanta, GA		1,100		66,200		116,000		105,455		9/27/2017		114,010		48,046
Timberglen	Dallas, TX		304		16,950		30,000		98,684		1/31/2018		29,553		13,742

Total/Weighted Average			4,588	$	270,734	$	392,050	$	85,451			$	385,755	$	118,039

(1)	Represents sales price, net of closing costs.

(2)	The NAVA Portfolio consists of The Arbors, The Crossings, The Crossings at Holcomb Bridge and The Knolls.


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NEXPOINT RESIDENTIAL TRUST, INC. [NYSE:NXRT]

Definitions and Reconciliations ofNon-GAAP Measures

Definitions

This presentation containsnon-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. Thenon-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) the cost of funds, (2) acquisition costs, (3) advisory and administrative fees, (4) 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, (5) corporate general and administrative expenses, (6) other gains and losses that are specific to us, (7) casualty-related expenses/(recoveries), 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 and impairment charges. 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 (1) noncontrolling interests in consolidated joint ventures and (2) 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 and thewrite-off of unamortized deferred financing costs and fair market value adjustments of assumed debt related to the retirement of debt and costs incurred in connection with a debt modification that are expensed), casualty-related expenses and recoveries, the amortization of deferred financing costs incurred in connection with obtaining short-term debt financing, the ineffective portion of fair value adjustments on our interest rate derivatives designated as cash flow hedges, and the noncontrolling interests 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 related to these items.

Net debt is calculated by subtracting cash and cash equivalents and restricted cash held forvalue-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 Form10-K and our other filings with the SEC.


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NEXPOINT RESIDENTIAL TRUST, INC. [NYSE:NXRT]

Reconciliations

NOI and 2017-2018 Same Store NOI for the Years Ended December 31, 2018 and 2017

The following table, which has not been adjusted for the effects of noncontrolling interests, reconciles our NOI and our 2017-2018 Same Store NOI for the years ended December 31, 2018 and 2017 to net income (loss), the most directly comparable GAAP financial measure (in thousands):


	For the Year Ended December 31,
	2018			2017
Net income (loss)	$	(1,614	)	$	56,359
Adjustments to reconcile net income (loss) to NOI:
Advisory and administrative fees		7,474			7,419
Corporate general and administrative expenses		7,808			6,275
Casualty-related recoveries (1)		(663	)		(287	)
Property general and administrative expenses (2)		1,294			1,130
Depreciation and amortization		47,470			48,752
Interest expense		28,572			29,576
Loss on extinguishment of debt and modification costs		3,576			5,719
Gain on sales of real estate		(13,742	)		(78,365	)

NOI	$	80,175		$	76,578

LessNon-Same Store
Revenues		(23,012	)		(25,765	)
Operating expenses		10,744			12,433

Same Store NOI	$	67,907		$	63,246

(1)	Adjustment to net income (loss) to exclude certain property operating expenses that are casualty-related recoveries.

(2)	Adjustment to net income (loss) to exclude certain property general and administrative expenses that are not reflective of the continuing operations of the properties or are incurred on our behalf at the property for expenses such as legal, professional and franchise tax fees.

NOI and 2016-2018 Same Store NOI for the Years Ended December 31, 2018, 2017 and 2016

The following table, which has not been adjusted for the effects of noncontrolling interests, reconciles our NOI and our 2016-2018 Same Store NOI for the years ended December 31, 2018, 2017 and 2016 to net income (loss), the most directly comparable GAAP financial measure (in thousands):


	For the Year Ended December 31,
	2018			2017			2016
Net income (loss)	$	(1,614	)	$	56,359		$	25,888
Adjustments to reconcile net income (loss) to NOI:
Advisory and administrative fees		7,474			7,419			6,802
Corporate general and administrative expenses		7,808			6,275			4,014
Casualty-related expenses/(recoveries) (1)		(663	)		(287	)		151
Property general and administrative expenses (2)		1,294			1,130			879
Depreciation and amortization		47,470			48,752			35,643
Interest expense		28,572			29,576			20,167
Loss on extinguishment of debt and modification costs		3,576			5,719			1,722
Gain on sales of real estate		(13,742	)		(78,365	)		(25,932	)
Acquisition costs		—			—			386

NOI	$	80,175		$	76,578		$	69,720

LessNon-Same Store
Revenues		(43,978	)		(46,094	)		(41,001	)
Operating expenses		20,939			22,761			20,374

Same Store NOI	$	57,136		$	53,245		$	49,093

(1)	Adjustment to net income (loss) to exclude certain property operating expenses that are casualty-related expenses/(recoveries).

(2)	Adjustment to net income (loss) to exclude certain property general and administrative expenses that are not reflective of the continuing operations of the properties or are incurred on our behalf at the property for expenses such as legal, professional and franchise tax fees.


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NEXPOINT RESIDENTIAL TRUST, INC. [NYSE:NXRT]

NOI and Q4 Same Store NOI for the Three Months Ended December 31, 2018 and 2017

The following table, which has not been adjusted for the effects of noncontrolling interests, reconciles our NOI and our Q4 Same Store NOI for the three months ended December 31, 2018 and 2017 to net loss, the most directly comparable GAAP financial measure (in thousands):


	For the Three Months Ended December 31,
	2018			2017
Net loss	$	(4,782	)	$	(4,343	)
Adjustments to reconcile net loss to NOI:
Advisory and administrative fees		1,888			1,875
Corporate general and administrative expenses		2,077			1,433
Casualty-related expenses (1)		39			64
Property general and administrative expenses (2)		364			226
Depreciation and amortization		13,832			12,886
Interest expense		7,833			7,097
Loss on extinguishment of debt and modification costs		—			2
Gain on sales of real estate		—			21

NOI	$	21,251		$	19,261

LessNon-Same Store
Revenues		(4,816	)		(1,865	)
Operating expenses		2,238			1,053

Same Store NOI	$	18,673		$	18,449

(1)	Adjustment to net loss to exclude certain property operating expenses that are casualty-related expenses.

(2)	Adjustment to net loss to exclude certain property general and administrative expenses that are not reflective of the continuing operations of the properties or are incurred on our behalf at the property for expenses such as legal, professional and franchise tax fees.

Reconciliation of Debt to Net Debt


(dollar amounts in thousands)	FY 2018			FY 2017			FY 2016
Total mortgage debt	$	845,713		$	762,404		$	425,426
Credit facilities		—			30,000			315,000
Bridge facility		—			8,597			30,000
Adjustments to arrive at net debt:
Cash and cash equivalents		(19,864	)		(16,036	)		(22,705	)
Restricted cash held forvalue-add upgrades and green improvements		(5,209	)		(9,052	)		(13,448	)

Net Debt	$	820,640		$	775,913		$	734,273

Enterprise Value (1)	$	1,644,640		$	1,363,913		$	1,204,273
Leverage Ratio		50	%		57	%		61	%

(1)	Enterprise Value is calculated as Market Capitalization plus Net Debt.


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NEXPOINT RESIDENTIAL TRUST, INC. [NYSE:NXRT]

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 our NOI guidance to our net loss (the most directly comparable GAAP financial measure) guidance for the year ended December 31, 2019 and for the three months ended March 31, 2019 (in thousands):


	For the Year Ended December 31, 2019			For the Three Months Ended March 31, 2019
	Mid-Point (1)			Mid-Point (1)
Net loss	$	(17,040	)	$	(5,550	)
Adjustments to reconcile net loss to NOI:
Advisory and administrative fees		7,500			1,850
Corporate general and administrative expenses		9,000			2,190
Property general and administrative expenses (2)		1,295			320
Depreciation and amortization		62,225			15,900
Interest expense		34,170			8,040

NOI	$	97,150		$	22,750

LessNon-Same Store
Revenues (3)		(23,350	)		(5,050	)
Operating expenses (3)		8,650			1,900

Same Store NOI (3)	$	82,450		$	19,600

(1)

Mid-point estimates shown for full year and first quarter 2019 guidance. Assumptions made for full year and first quarter 2019 NOI guidance include the Same Store operating growth projections included in the “2019 Full Year Guidance Summary” section of this release, the effect of the acquisition of the Phoenix Portfolio, and assumes no further acquisition or disposition activity for the remainder of the year.

(2)	Adjustment to net loss to exclude certain property general and administrative expenses that are not reflective of the continuing operations of the properties or are incurred on our behalf at the property for expenses such as legal, professional and franchise tax fees.

(3)	Amounts are derived from the results of operations of our pro forma Full Year 2019 Same Store properties andNon-Same Store properties. There are 32 properties in our pro forma Full Year 2019 Same Store pool.


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The following table reconciles our FFO, Core FFO and AFFO guidance to our net loss (the most directly comparable GAAP financial measure) guidance for the year ended December 31, 2019 (in thousands, except per share data):


	For the Year Ended December 31, 2019
	Mid-Point
Net loss	$	(17,040	)
Depreciation and amortization		62,225
Adjustment for noncontrolling interests		(136	)

FFO attributable to common stockholders		45,049

FFO per share - diluted (1)	$	1.87

Core FFO attributable to common stockholders		45,049

Core FFO per share - diluted (1)	$	1.87

Amortization of deferred financing costs - long term debt		1,815
Equity-based compensation expense		5,165
Adjustment for noncontrolling interests		(21	)

AFFO attributable to common stockholders		52,008

AFFO per share - diluted (1)	$	2.16

Weighted average common shares outstanding - diluted		24,100

(1)	For purposes of calculating per share data, we assume a weighted average diluted share count of approximately 24.1 million for the full year 2019.


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NexPoint Residential Trust (NXRT) 8-KNexpoint Residential Trust, Inc. Reports Fourth Quarter and Full Year 2018 Results