At the Market Offering
On February 20, 2019, NexPoint Residential Trust, Inc. (the “Company”), its operating partnership, NexPoint Residential Trust Operating Partnership, L.P., and its adviser, NexPoint Real Estate Advisors, L.P., entered into separate equity distribution agreements (the “Equity Distribution Agreements”) with each of Jefferies LLC (“Jefferies”), Raymond James & Associates, Inc. (“Raymond James”) and SunTrust Robinson Humphrey, Inc., pursuant to which the Company may issue and sell from time to time shares of the Company’s common stock, par value $0.01 per share, having an aggregate sales price of up to $100,000,000. The Company refers to these entities, when acting in their capacity as sales agents, individually as a “sales agent” and collectively as “sales agents.” The Equity Distribution Agreements with Jefferies and Raymond James provide that, in addition to the issuance and sale of common stock by the Company through a sales agent acting as a sales agent or directly to the sales agent acting as principal for its own account at a price agreed upon at the time of sale, the Company may enter into forward sale agreements with each of Jefferies and Raymond James, or their respective affiliates. The Company refers to Jefferies and Raymond James, when acting as agents for forward purchasers, individually as a “forward seller” and collectively as “forward sellers.”
Sales of shares of common stock, if any, may be made in transactions that are deemed to be “at the market” offerings, as defined in Rule 415 under the Securities Act of 1933, as amended, including, without limitation, sales made by means of ordinary brokers’ transactions on the New York Stock Exchange, to or through a market maker at market prices prevailing at the time of sale, at prices related to prevailing market prices or at negotiated prices based on prevailing market prices.
In addition to the issuance and sale of shares of common stock through the sales agents, the Equity Distribution Agreements with Jefferies and Raymond James provide that the Company also may enter into forward sale agreements under separate master forward sale agreements and related supplemental confirmations between the Company and a forward seller or its affiliate. The Company refers to these entities, when acting in this capacity, individually as a “forward purchaser” and collectively as “forward purchasers.” In connection with each particular forward sale agreement, the applicable forward purchaser will borrow from third parties and, through the applicable forward seller, sell a number of shares of common stock equal to the number of shares of common stock underlying the particular forward sale agreement.
The Company will not initially receive any proceeds from the sale of borrowed shares of common stock by a forward seller. The Company expects to fully physically settle each particular forward sale agreement with the applicable forward purchaser on one or more dates specified by the Company on or prior to the maturity date of that particular forward sale agreement, in which case the Company will expect to receive aggregate net cash proceeds at settlement equal to the number of shares underlying the particular forward sale agreement multiplied by the applicable forward sale price. However, the Company may also elect to cash settle or net share settle a particular forward sale agreement, in which case the Company may not receive any proceeds from the issuance of shares, and the Company will instead receive or pay cash (in the case of cash settlement) or receive or deliver shares of its common stock (in the case of net share settlement).
Each sales agent will be entitled to compensation that will not exceed, but may be lower than, 2.0% of the gross sales price per share for any shares of common stock sold through it as sales agent from time to time under the applicable Equity Distribution Agreement. In connection with each forward sale, the Company will pay the applicable forward seller, in the form of a reduced initial forward sale price under the related forward sale agreement with the related forward purchaser, commissions at a mutually agreed rate that shall not be more than 2.0% of the gross sales price of all borrowed shares of common stock sold by it as a forward seller.
The shares of common stock will be offered and sold pursuant to a prospectus supplement, dated February 20, 2019, and a base prospectus, dated April 24, 2017, relating to the Company’s shelf registration statement on FormS-3 (FileNo. 333-216697). This Current Report on Form8-K does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of shares of common stock in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state. Forms of the Equity Distribution Agreement and master forward sale agreement are filed herewith as Exhibits 1.1 and 1.2 to this Current Report on Form8-K and are incorporated herein by reference. The summary of the Equity Distribution Agreements and master forward sale agreements set forth above is qualified in its entirety by reference to Exhibits 1.1 and 1.2.
