Earnings call transcript Q2 2023

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the NexPoint Residential Trust Q2 2023 Conference Call.

I would now like to turn the call over to Kristen Thomas. Please go ahead.

Kristen Thomas

Thank you. Good day, everyone, and welcome to NexPoint Residential Trust conference call to review the company's results for the second quarter ended June 30, 2023.

Vice are Matt Executive and McGraner, Officer; Bonner today Chief President Chief call Investment and Officer; and Financial Executive McDermett, the Brian Vice Mitts, and Investment Management. On Asset President, Vice President

As the website a at to company's reminder, is webcast call this being nxrt.nexpoint.com.

factors expectations, this of on meaning Before review Private of forward-looking I that company's Form Securities statements. to forward-looking reliance and and other for XXXX risks on any that forward-looking based contains statements the other assumptions complete Litigation remind like and begin, call should current recent are filings statements undue on Act could encouraged that report affect Listeners more the to the management's are we SEC of a everyone the any annual Reform not with would company's conference most beliefs. discussion within the place XX-K and

call as does today's during conference of speak call statements. this as statements This any undertake also revise not by The required update any obligation to forward-looking an financial of conference measures. made non-GAAP or only analysis publicly except law includes and date NXRT

see complete filed more a financial earnings the measures of was this release that For earlier company's non-GAAP today. discussion

turn I go ahead, Brian would Brian. now to to over the like call Mitts. Please

Brian Mitts

NAV of and detail. guidance updated Thanks, to discuss our our QX Matt us. everyone and going results. our turn then Appreciate call talk it joining results forward off before Kristen. I about the cover to to to and Welcome you revise some participating. in kick over I'm I'll guidance year-to-date and

to is million share $X.X $X.XX second follows. of total period that's that as a the diluted loss or which per on a of share as quarter total $XX.X are loss a was quarter was loss Net second compared per on million revenue share for XXXX. of for net in revenue. in loss -- per $XX.X results revenue same per diluted million, loss on $X.XX and -- X% That's increase the or $X million in Our total

The second in XX on quarter on million second is increase X% compared for XXXX the million XX quarter NOI to properties, an was NOI. $XX which $XX of properties,

same-store to quarter, XX in X.X% same-store This an occupancy increase coupled increased same-store increase same-store of was QX X.X% an the down X.X% compared basis For led and as XXXX. XX.X%. rent in to expenses of points to NOI with

of $X.XX second portfolio As second the quarter-over-quarter. share quarter We compared up per $XX.X share XXXX. million compared diluted to XXXX, FFO same-store $X.XX were to QX rents reported of X.X% in for the or quarter quarter the core on diluted second per

premium and rent prior XXX which average the is quarter, in the monthly long-term full quarter units, of an and achieving and of renovations. increase investment renovated with the XX.X% a partial line an ROI $XXX we For return on average X.X% and which is our completed XXX leased during from renovations, year,

respectively, $X.XX of $XXX, this technology about package total portfolio, Inception we've kitchen upgrades, quarter second June XXth per a common XX,XXX an of units, XX%, on XX.X%, installments $XX dryer of monthly of X,XXX the washer and X,XXX XX% and installations or NXRT current $XX, partial upgrades paid and to premium date, of rent XX.X% the and full and achieving dividend an average share respectively. ROI year. completed

$XX.X loss $X.X period per XX a period $XXX.X to in loss the $X.XX the XX% XX million prior XXXX loss million revenue NOI year-to-date properties compared on was $XX.X is $X.XX diluted over are or revenue an a which diluted or of increase for net in million, follows. $XXX.X to or on for XXXX as the of was an million of million share a revenue total of Year-to-date, XX%. loss same On as in of same year. on XXXX. increase $XX.X total year-to-date per million as compared Results Net in share properties

to Year-to-date coupled XX.X%, and X.X% to same-store same-store down XXXX. reported months an the rent XXXX. increased $XX same-store $X.XX the diluted X.X% This, year-to-date with of to diluted million as core to same-store compared in June of led expenses in FFO an same increase or increase points share occupancy NOI in XX period XX, was in basis per of XX.X%. per compared share six We $X.XX ended

cap share end, based low forward we’re rates cap per our For X.X of our on follows; and high are estimate to the reporting end, midpoint. $XX.XX high on $X in which quarter. NOI X% from markets current range end last at rates $XX.XX These NAV as the the from on unchanged X.X% on remains and NAV on an average the the ranging end based the on low per

low a year expenses, on X% low my midpoint. we're $X.XX up NOI is on of per same-store XX% at midpoint the a end; X.X% end, end and with the the wrap from Same-store I'll follows; X.X% XX%. end, the end, X.X% To low $X.XX. of the revenue, and the X.X% revising FFO end, for which Same-store on guidance, on high end XXXX the midpoint midpoint high the X% high with on comments, low the X.X% diluted share, through go $X.XX of full core on high on as end,

primarily core the more it guidance got is from that thought would. But asset, we other in and quarter on prior second not FFO as based details on guidance. Our quarter Matt's which sell decrease the the Houston did

that, with So turn it over to him. I'll

Matt McGraner

Thanks, Brian.

the effective up same-store X out month year-over-year, per with operational at least start unit, X.X% second Same-store rents me markets of per averaging our XX Let by growth. X.X% going our $X,XXX over ended quarter at quarter results.

the XX.X% with led at way at XX.X%, markets Florida our XX.X%. at Florida While Orlando South Tampa and

registering Our quarter. national assets missed X.X% over prior growth, the XX% just year

growth X.X% periods. earn-in with healthy from revenue for benefit X.X% the rental Same-store period was a prior

Florida, for markets least Tampa again and period. achieved rental respectively, Orlando. prior at Florida X.X% the field our growth XX.X%, over at of South out XX.X%, Our Again, XX.X% paced X XX markets the and

were is X.X%, Raleigh X.X%, conversions X.X%, at renewal of and growth our Worth X.X% for was was with quarter, rate executing X at Renewal least Tampa Atlanta XX X.XX%. Orlando the X.X%. XX% out of at markets, Dallas-Fort

We're expense moderating report quarter. some growth pleased the for to also

Second reduction growth in a X.X% to higher X.X% quarter than from growth from XX% growth the year prior only from well quarter over to and operating taxes Payroll after down X% year-over-year, expense XX.X% X.X% QX After renewal, our down XX.X% some XX.X%. were same-store relief realizing in to saw QX. significant X expense the was estate insurance that, R&M April real this XX.X% half from expenses period. as QX. reported was more were growth down in

XX.X%. X growth markets setting or greater, of our while achieved same-store out of XX Florida tone year-over-year at South the NOI X.X%

margin Our QX while rent-to-income steady healthy registered ratios XX% to same-store X.X% hold continue at a NOI a household income. of healthy

the group. be year, by categories, think guide we than half revenue faster will including as due utilities second top anticipated, the largely savings and expense in believe REIT and should of peer will NOI full XX%, offset Brian taxes, labor, moderate which the be this debt of mentioned, to mostly several a That to we bad multifamily vacancy. the moderation leading year X% of said, increased at we to For same-store higher

markets capital to activities. Turning

refinanced spreads another maturity while seven November wall in lowered pushing know, rate and we to properties floating of you out years. plus our XXXX, average our As XX weighted

corporate the of down and cost was $XXX The highest of million. current we total, is million of In which facility is our paid our $XX facility, capital. still balance credit

some the our exit two as market developed and As dispose been to Houston due time has high assets you assets to our markets of pressures. continued also for know, inventory, remaining non-controllable we've one expense to of been growth working it newly lowest

got money some on forfeited uncertainty Houston Our for cannot Housing approval Authority, the it us for earnest was they to the month. with buyer some sale. caught Farm which Stone obtain Old in earlier and relying subsidies $XXX,XXX this to tax of Ultimately, regulatory complete between Creek

The In in closing Stone good Old which repeat Creek, the day have $XXX $XX now counterparty with approximately we $XXX,XXX outside sale re-launched of with with were Stone we is more a at smaller, and negotiating buyer. an expect earnest this of and liquid date with last approximately two are Farm, fourth in right we of nonrefundable line our meantime, at one million money October million, X. the news to the asset the on where the collectively Creek transact the to quarter

X These on Also assets in of Charlotte are due have recently years two times in Lake. X.X and in held we capital. the Creek or to returns healthy the meantime a premium and market, scarcity been of launched for times XX% marketing invested to Radbourne more and expected and provide excess Timber multiples nine IRRs portfolio the assets, to in the legacy

paying as highest of Hudson on retiring plan facility we multiple mortgage off the million these on first credit the cost planned outside remaining sale corporate as corporate our as House, of Between processes, facility. the the of $XX well debt High

Following to these million these dispositions or additional back generate paydowns, proceeds $XX buy of excess XXXX approximately complete will exchanges. stock

our these resume core double-digit in range to up updated guidance growth in and believe well dispositions reflected are XXXX. FFO We us set in extremely

NexPoint That's all I'd turn I have questions. for like BH. our it to appreciate to work I And over here operator team's the remarks. at for prepared

Operator

go The line Scott. comes Instructions] ahead. first Janney of open Please the questions. [Operator question now Stevenson floor from is from Rob for your Our Montgomery

Unidentified Analyst

for Good morning, guys. It's on Kyle today. [indiscernible] Rob

saw you value-add uses the proceeds reduce from reduced disposition But repurchase forward? acquisition $XX guidance of stock about common I thinking million. you debt, are your be program how going going So any it's today? So more to to by the

Matt McGraner

to the Yes. as on on proceeds and It's in. I with mentioned the second, facility then roughly Matt, focused retiring that mid- primarily high-X first million the We're House. it's debt And Kyle. to retire, or think, of get we $XX the Hudson first foremost I credit high-Xs disposition

will proceeds. So primary uses be any first of those two uses two disposition the

which these I To probably million the where early stock sell Charlotte depending to buy at latter today. at some that half the the XXXX trades, are would extent assets in looked we mentioned potentially Dallas of we any next year. on $XX that year well. our of as the about in assets, And the over from after we levels to extent We've look thinking where then buyback maybe the left we're assets, those there's more half

Unidentified Analyst

move-outs the for due guys in residents Okay. much you meaningful sensitivity are then uptick any that. And increases how are seeing you portfolio? to Thank with across price price today, -- you

Matt McGraner

I wouldn't and quarter normal. fourth the and quarter than hitting amount after in any year, a massive There say second of supply it's this deliveries in meaningful third are the more getting kind which -- we're it or not pushback. Everything -- just of a cliff is moderate much feels from really fine. say it's -- significantly. But I'd that falls off it

where our in -- bit from concessions other pretty new there's from traffic But rent-to-income competition feel from about are residents Just than Phoenix. little of we seeing. a a supply we're ratios good that, the and like

Unidentified Analyst

That's all me. for you. Thank

Operator

Our Please from next of question line Securities. comes go ahead. the Truist Lewis from Michael

Michael Lewis

Great. Thank you.

of So in you growth the your same-store is guidance guys X.X% year half did and full the year X.X%. first revenue

So of nobody the else back you we've expect to acceleration this is? That talked kind seems growth in guide about to gives revenue year-over-year in just year. still aggressive little to same-store curious of confidence bit to that what before. to me a knowledge, half I'm of the my

Matt McGraner

quarter, a notwithstanding uptick comp second mean, I see earn-in pretty and that third quarter, quarter side. the think X.X%. compelling have and really, an third quarter in going lot growth the good the the revenue in fact -- in is benefit the was the Yes. of to half A the a that we'll then the quarter The comp hit revenue in fourth fourth year, on latter also there. pretty and then we of we

for seeing year. the we're more for the our third a quarter second starting the think assets. half we of hit from lead I'd in first, that And of to second place that will we're moderation the say, of So inventories then and demand strength,

Michael Lewis

Okay. in kind I on this follow-up quarter had units a same-store versus of you the then first And noticed that. XX,XXX XX,XXX quarter.

for be an static to unless same-store back disposition. -- the I there's model. is related you think going year REITs pool keep properties to the out uplift me the just of coming a of in generally Are calendar the and for might that apartment that's pool difficult kind same-store to half there other in be the maybe

Matt McGraner

pool. will the of Charlotte inclusion same-store tick some Yes, the in probably upward attribute

difference. So, yes, that's the probably

Michael Lewis

then just me, for you the kind the about following proceeds. on first question Okay. Got asked And disposition were up of you. lastly

there can working for will leverage on comes. the uses three a off in listed at near know us future, is because far kind know of too You before a rates be But deal look those. could be I like this kind that those kind start sort term of is on of to those maybe of get of those. look look be to does it. kind hedges down keep off, I thought None maybe and what that XXXX the it of out burning a I take harping have to when you at to significant time headwind. with early it never now it

and over next should we the dispositions couple to So expect attack more of years? that try

Matt McGraner

thought. pretty not indecisive the a time. yes, good policymakers is we're think, that's again, And as the decision-making, I Yes, as -- at well curve our

from As we of one work mentioned, lead will of mortgages to our we our assets, take -- retire which first I unencumbered. on that Charlotte as the proceeds will one asset

located we I up to net if to for single-digits XXXX generate, the Dallas. plan from assets today. really core year $XXX be to to of the the a either the And it of EBITDA is additional alluded That the FFO debt -- look in even year, year then somewhere think, prepared set range. half as in down where then strong there did the we in would three million second And that, in in call the will next on get early dispose is growth our high to and remarks, a

well. while do we both be will that then can advantage deleveraging year out we earnings. as that we'll of focus. that extent can delever extended to also the swaps, we'll take look think while achieve So to out also And a rolling increasing And obviously, we

Michael Lewis

Great. Thank you.

Operator

question the from Our Please Buck line of Raymond Horne James. go from ahead. comes final

Buck Horne

Good guys. Hey. morning,

and of a in can bad little bad debt the you of seeing to part as things of in back year revenue the as as expense what pressure. just play of the terms expect I color mentioned guidance trends you You the wondering reduction, like you're well terms debt occupancy if out? add half how was

Matt McGraner

unique debt, of kind some Yeah. think, I million loss Due of $X just of revision buffer debt, the bad is reduction rents couple $X.X of bad and Atlanta. just little then and bucks to we the flood couple caught experience, of million Atlanta, of quarter. guard. a evictions us re-tenant most and and was markets, we'll a move Vegas million, and a of the a in income from notably saw of courts, assets. in a rental But GPR of off market kind second of Buck kind reopened moderating their It out a skips vacancy the kind largely nonetheless, function of them of

driver, two So I primary that that's those -- was would say markets. the are

Buck Horne

Okay.

pulling sense, the were average That Okay. new And just feeling that part below supply. terms new there. that bit you be you specifically? a surprising supply further, little thesis assets a are may of markets your it's against occupancy hear systems concessions makes Can the how new bit of supply, points seeing was from maybe the from offering you a level guys. here your pressure are or of guess kind you comment in that guys little court new some to little your away price compete are the so characterize that of that given far of that you in there's properties the I incoming demand

Matt McGraner

of kind Yeah. was $XXX, effective $X,XXX I board, right seeing $X,XXX, now of compete. across we're the couple some $XXX. I that So rents where to deliveries headroom isolating more right? not are markets the with in of average mean markets some massive it's it

XX But new B that nicer Phoenix rent an tide in our that asset. in Otherwise, seeing. our good of feel I would we would on lease-up have assets market So and a point -- should $X,XXX, rent, at in you feel our to have that that example, deal for assets for example the relative group our we're average time continued big at assets and effective fear spot plus at one than we're pretty and we away $X,XXX going peer effective this to that's that to the push X thesis. I'm $X,XXX free, months new $X,XXX, $X,XXX more put $X,XXX, like mean they're suggest giving the other our about to down company, other, That's to on of didn't are. which will price a rent a pressure effective, particular. of effect, with I $X,XXX not a bit was a but little yes, expect

Buck Horne

helpful. That's can Okay. And of the sneak the expense one one, I if equation. in last on side

insurance that. But assessments guess as guess, I maybe renewal about, got up taxes? curious your how seeing in But for looking particularly Just those And well of Texas on the just, taxes, congrats you this the of at Texas curious locked XXXX at you kind the and I the more think of X But coming I'm counties assessments? what the there. year property expectations any on what kind seeing through point -- places for April also with initial and up of you're renewal. as rest you're other markets shapes terms

Matt McGraner

to on guiding to seeing? I do anything and you Brian, growth. think you're X% take we're want where Texas

Brian Mitts

Yes.

we So taxes down. took

were the I year teens to conservatism we some start in with budgeting. low think

Given what midpoint we XX. number the know at today, is that

litigation had seeing basis about 'XX. we're long-standing, on for over Houston those 'XX some $XXX,XXX outstanding We We little recognized saw settlements. from assets and a We XXX So points. litigations. a

a little that's bit So pickup of a there.

there. review what we're seeing for year. is we're Texas of like fight a In boards into specifically, for the it terms market the protest appraisal It's of every

up the expand us. everything don't were. and for seen to favorable we end little be to the a year we're think of rates year. going have started I Obviously, that pretty bit fight shaping cap with we the we've will But expectation, to by budget where they it that know settled continue more from think conservative I is that. a I

XXXX, January that year-over-year and our really is down as to values X, are realize we're of use So the that with release. trying to that pretty compelling, consultants argument

Buck Horne

guys. Thanks Okay. All the time color. the right. Appreciate for

Operator

call turn the I to to remarks. for like would over closing the now management team

Brian Mitts

think and I and we be have don't quarter. touch time, next Thank to everyone's you. additional talk remarks. we'll in any appreciate I you

Operator

gentlemen. and This does call. ladies you, you participation. today's Thank Thank conclude your for

You may disconnect. now

NexPoint Residential Trust (NXRT) 25 Jul 232023 Q2 Earnings call transcript