NXRT.NEXPOINT.COM

•

NXRT¹ reported net income, FFO², Core FFO² and AFFO² of $44.0M, $57.2M, $55.5M and $62.4M, respectively, attributable to common stockholders for the year ended December 31, 2020, compared to net income, FFO, Core FFO, and AFFO of $99.1M, $40.7M, $47.6M and $54.2M, respectively, attributable to common stockholders for the year ended December 31, 2019.

•

For the year ended December 31, 2020, 2019-2020 Same Store properties³ average effective rent, total revenue and NOI² increased 1.4%, 3.6% and 3.2%, respectively, and occupancy decreased 10 bps over the prior year period.

•

During the three months ended December 31, 2020, NXRT acquired the Fairways at San Marcos, a 352-unit garden style apartment community in Chandler, Arizona, for a purchase price of approximately $84.5 million.

•

The weighted average effective monthly rent per unit across all 37 properties held as of December 31, 2020 (the “Portfolio”), consisting of 14,069 units⁴, was $1,128, while physical occupancy was 94.1%.

•

NXRT paid a fourth quarter dividend of $0.34125 per share of common stock on December 31, 2020; this cash dividend represented a $0.0288 per share, or 9.2% increase, over the prior quarter’s dividend.

•

During 2020, for the properties in the Portfolio, NXRT completed 1,679 full and partial upgrades, achieving an average monthly rent premium of $131 and a 21.7% ROI⁵.

•

Since inception, NXRT has completed installation of 5,355 full & partial upgrades, 4,286 kitchen and laundry appliances and 8,880 technology packages, resulting in $126, $48 and $44 average monthly rental increase per unit and 21.5%, 74.2% and 33.8% ROI, respectively.

•

During the full year 2020, through its at-the-market offering (“ATM program”), NXRT issued approximately 1.3 million shares of common stock for approximately $59.5 million in gross proceeds.

(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 are non-GAAP measures. For a discussion of why we consider these non-GAAP measures useful and reconciliations of FFO, Core FFO, AFFO and NOI to net income (loss), see the “Definitions and Reconciliations of Non-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 24 properties encompassing 9,074 units of apartment space in our Same Store pool for the year ended December 31, 2020  (our “2019-2020” Same Store” properties). There are 32 properties encompassing 12,494 units of apartment space in our Q4 Same Store pool for the three months ended December 31, 2020 (our “Q4 Same Store” properties).

(4)

Total number of units owned as of December 31, 2020 is 14,205. Cutter’s Point suffered damage from a tornado on October 20, 2019 and 60 of the 196 units were rebuilt and returned to operation as of December 31, 2020.

(5)

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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•

Total revenues were $204.8 million for the full year 2020, compared to $181.1 million for the full year 2019.

•

Net income for the full year 2020 totaled $44.0 million, or income of $1.74 per diluted share, which included a gain on sales of real estate of $69.2 million and $82.4 million of depreciation and amortization expense. This compared to net income of $99.1 million, or income of $4.03 per diluted share, which included a gain on sales of real estate of $127.7 million and $69.1 million of depreciation and amortization expense for the full year 2019.

•

The change in our net income of $44.2 million for the year ended December 31, 2020 as compared to our net income of $99.4 million for the year ended December 31, 2019 primarily relates to decreases in gains on sales of real estate and increases in depreciation and total property operating expenses, partially offset by an increase in total revenues.

•

For the full year 2020, NOI was $116.1 million on 37 properties, compared to $102.6 million for the full year 2019 on 40 properties.

•

For the full year 2020, Same Store NOI increased 3.2% to $68.2 million, compared to $66.1 million for the full year 2019.

•

For the full year 2020, FFO totaled $57.2 million, or $2.27 per diluted share, compared to $40.7 million, or $1.66 per diluted share, for the full year 2019. For the full year 2020, Core FFO totaled $55.5 million, or $2.20 per diluted share, compared to $47.6 million, or $1.93 per diluted share, for the full year 2019. For the full year 2020, AFFO totaled $62.4 million, or $2.47 per diluted share, compared to $54.2 million, or $2.20 per diluted share, for the full year 2019.

•

Total revenues were $50.5 million for the fourth quarter of 2020, compared to $49.7 million for the fourth quarter of 2019.

•

Net loss for the fourth quarter of 2020 totaled $(4.2) million, or a loss of $(0.17) per diluted share, which included $19.9 million of depreciation and amortization expense and $11.0 million of interest expense. This compared to net loss of $(13.3) million, or a loss of $(0.53) per diluted share, for the fourth quarter of 2019, which included $23.4 million of depreciation and amortization expense and $10.7 million of interest expense.

•

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

•

For the fourth quarter of 2020, NOI was $28.0 million on 37 properties, compared to $28.3 million for the fourth quarter of 2019 on 40 properties.

•

For the fourth quarter of 2020, Q4 Same Store NOI decreased 1.8% to $24.6 million, compared to $25.1 million for the fourth quarter of 2019, which was impacted by a 21.0% increase in real estate tax accruals.

•

For the fourth quarter of 2020, FFO totaled $15.7 million, or $0.62 per diluted share, compared to $10.1 million, or $0.39 per diluted share, for the fourth quarter of 2019. For the fourth quarter of 2020, Core FFO totaled $14.2 million, or $0.56 per diluted share, compared to $13.8 million, or $0.54 per diluted share, for the fourth quarter of 2019. For the fourth quarter of 2020, AFFO totaled $15.9 million, or $0.63 per diluted share, compared to $15.0 million, or $0.59 per diluted share, for the fourth quarter of 2019.

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(share counts in thousands)

Exchange/Ticker

NYSE: NXRT

Share Price (1)

$42.54

Insider Ownership

12.32%

2021 Q1 Dividend Per Share

$0.3413

Dividend Yield (1)

3.21%

Shares outstanding - basic (2)

24,715

Shares outstanding - diluted (2)

25,234

(1)

As of the close of market trading on February 12, 2021.

(2)

Weighted average for the year ended December 31, 2020.

Revenue & Average Rent Per Unit

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

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Property Name

Location

Date of Sale

Sales Price

Multiple on

Invested Capital

Net Cash Proceeds (1)

Gain on Sale

of Real Estate

Southpoint Reserve at Stoney Creek

Fredericksburg, Virginia

March 20, 2020

$

23,500

2.20x

$

9,944

$

5,469

Willow Grove

Nashville, Tennessee

March 26, 2020

31,300

4.92x

16,039

17,513

Woodbridge

Nashville, Tennessee

March 26, 2020

31,700

4.33x

17,423

15,990

Eagle Crest

Irving, Texas

September 30, 2020

55,500

5.96x

24,974

30,160

$

142,000

4.42x

$

68,380

$

69,132

(1)

Represents sales price, net of debt repayment and prepayment penalties.

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

98.9%

99.5%

99.4%

93.9%

98.4%

100.8%

99.1%

101.2%

100.2%

97.0%

99.0%

98.7%

LEASED REHABS

DIVIDEND GROWTH

CORE FFO GROWTH*

NOI GROWTH*

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FY 2020

FY 2019

FY 2018

Q4 2020

Q4 2019

(in thousands, except for per share and unit data)

Company Profile

Market Capitalization

$

1,058,000

$

1,136,000

$

824,000

Share Price (as of the last day of the period)

$

42.31

$

45.00

$

35.05

Weighted average common shares outstanding - basic

24,715

24,116

21,189

24,797

25,073

Weighted average common shares outstanding - diluted

25,234

24,593

21,667

25,350

25,520

Earnings Profile

Total revenues

$

204,800

$

181,066

$

146,597

$

50,548

$

49,676

Net income (loss) attributable to common stockholders

44,018

99,140

(1,609

)

(4,199

)

(13,266

)

NOI (1)

116,092

102,591

80,175

28,046

28,327

Same Store NOI (2)

68,150

66,054

24,627

25,078

Same Store NOI Growth (%) (2)

3.2

%

-1.8

%

Earnings Metrics Per Common Share (diluted basis)

Earnings (loss)

$

1.74

$

4.03

$

(0.08

)

$

(0.17

)

$

(0.53

)

FFO (1)

$

2.27

$

1.66

$

1.48

$

0.62

$

0.39

Core FFO (1)

$

2.20

$

1.93

$

1.62

$

0.56

$

0.54

AFFO (1)

$

2.47

$

2.20

$

1.88

$

0.63

$

0.59

Dividends declared per common share

$

1.279

$

1.138

$

1.025

$

0.341

$

0.313

     FFO Coverage (3)

1.77x

1.46x

1.44x

1.81x

1.26x

     Core FFO Coverage (3)

1.72x

1.70x

1.58x

1.64x

1.73x

     AFFO Coverage (3)

1.94x

1.94x

1.84x

1.84x

1.88x

Portfolio

Total Properties

37

40

35

Total Units

14,205

14,724

12,555

     Occupancy

94.1

%

94.2

%

94.6

%

     Average Effective Monthly Rent per Unit

$

1,128

$

1,103

$

985

Same Store Portfolio Metrics (2)

Total Same Store Properties

24

24

32

32

Total Same Store Units

9,074

9,074

12,494

12,494

     Occupancy

94.2

%

94.3

%

94.1

%

94.3

%

     Average Effective Monthly Rent per Unit

$

1,047

$

1,033

$

1,124

$

1,108

Value-Add Program

Completed Full/Partial Interior Rehab Units

1,679

2,516

1,432

311

533

Cumulative Completed Rehab Units (4)

5,355

     Average Increase to Effective Monthly Rent

     per Unit (Post-Rehab)

$

126

     ROI on Post-Rehab Units

21.5

%

Outstanding Debt Summary

Total Mortgage Debt

$

1,168,078

$

1,193,528

$

845,713

Credit Facilities

183,000

218,000

Total Debt Outstanding

$

1,351,078

$

1,411,528

$

845,713

     Leverage Ratio (Net Debt to Enterprise Value) (5)

55

%

55

%

50

%

(1)

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

(2)

We define “Same Store” properties as properties that were in our Portfolio for the entirety of the periods being compared. Full year results are shown for the 2019-2020 Same Store properties; Q4 results are shown for the Q4 Same Store properties. For additional information regarding our Q4 and 2019-2020 Same Store properties, see the “Q4 Same Store Results” and “2019-2020 Same Store Results” section 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, 2020. Cumulative results exclude rehabs completed for properties sold through December 31, 2020.

(5)

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

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Guidance Range (1)

Low-End

Mid-Point

High-End

Earnings (loss) per diluted share (2)

$

(0.97

)

$

(0.88

)

$

(0.79

)

Core FFO per diluted share (2) (3)

$

2.16

$

2.25

$

2.35

Same Store Growth: (4)

Rental Income

4.1

%

4.7

%

5.4

%

Total Revenue

3.9

%

4.5

%

5.2

%

Total Operating Expenses (5)

7.9

%

6.6

%

5.3

%

Same Store NOI (3)

0.9

%

3.0

%

5.1

%

Other Considerations: (6)

Acquisitions

$

100.0

$

150.0

$

200.0

Dispositions (7)

$

75.0

$

112.5

$

150.0

(1)

Full Year 2021 guidance forecast includes Same Store growth projections presented above, which takes into effect the tornado damage at Cutter’s Point and the forecast dispositions of Beechwood Terrace and Cedar Point, and assumes no further acquisition or disposition activity for the remainder of the year.

(2)

Weighted average diluted share count estimate for full year 2021 is approximately 25.7 million.

(3)

Same Store NOI and Core FFO are non-GAAP measures. For reconciliations of Full Year 2021 Same Store NOI and Core FFO guidance to net loss guidance, and a discussion of why we consider these non-GAAP measures useful, see the “Definitions and Reconciliations of Non-GAAP Measures” section of this release.

(4)

Year-over-year growth for the Full Year 2021 pro forma Same Store pool (35 properties).

(5)

The largest component to our same store operating expense forecast, real estate tax expense, is largely outside of our ability to control and while we do everything in our power to effectuate reasonable outcomes, we come into the 2021 forecast year amidst the backdrop of a COVID-19 recession that has accentuated state and local municipal budget shortfalls. One expected area of opportunity for such state and local municipalities to make up for any anticipated or actual budget shortfalls is through increased taxation. There is significant uncertainty surrounding potential property value and millage rate increases for 2021, and our forecast reflects a similar variance in potential results. Furthermore, both Davidson and Williamson County, Tennessee operate on a four-year reappraisal cycle, which is set to occur in 2021. As a result, we expect to see significant assessed value inflation across our Nashville portfolio in 2021. Initial indications of value will be available by early May 2021 but our initial guidance assumes revaluation at a rate of purchase price plus 8% annual inflation. Across all assets, we expect to take all available action to control real estate tax expense inflation but we do see this as a significant component of full year performance and we highlight it here as such.

(6)

We continue to evaluate our Portfolio for capital recycling opportunities. Transaction volumes presented are not incorporated into the EPS and CFFO guidance above. Actual acquisitions and dispositions could vary significantly from our projections. We undertake no duty to update these assumptions, except as required by law.

(7)

Includes the forecast dispositions of Beechwood Terrace and Cedar Pointe.

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(1)

Management estimates based on independent third-party review of our properties.

(2)

Estimated value ranges are presented for the existing portfolio (37 properties at December 31, 2020).

(3)

The Company anticipates net loss will be in the range between approximately ($20.2) million and ($25.0) million for the full year 2021 and between ($8.1) million and ($9.2) million for the first quarter of 2021. FY 2021 NOI Guidance does not consider any additional acquisition or disposition activity for the remainder of the year.

(4)

Includes approximately $10.6 million that is held for value-add upgrades; reduced by $10.6 million for estimated 2021 rehab expenditures.

(5)

Includes approximately $0.9 million in forward 12-month principal payments.

(6)

Includes outstanding balance as of December 31, 2020.

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December 31, 2020

December 31, 2019

ASSETS

Operating Real Estate Investments

Land

$

323,429

$

317,886

Buildings and improvements

1,544,115

1,472,319

Intangible lease assets

1,675

12,414

Construction in progress

10,796

4,375

Furniture, fixtures, and equipment

96,228

81,038

Total Gross Operating Real Estate Investments

1,976,243

1,888,032

Accumulated depreciation and amortization

(215,494

)

(152,552

)

Total Net Operating Real Estate Investments

1,760,749

1,735,480

Real estate held for sale, net of accumulated depreciation of $0 and $7,859, respectively

—

46,330

Total Net Real Estate Investments

1,760,749

1,781,810

Cash and cash equivalents

24,457

25,671

Restricted cash

32,558

45,511

Accounts receivable

9,045

6,285

Prepaid and other assets

2,405

2,336

Fair market value of interest rate swaps

—

4,376

TOTAL ASSETS

$

1,829,214

$

1,865,989

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:

Mortgages payable, net

$

1,162,855

$

1,145,371

Mortgages payable held for sale, net

—

41,176

Credit facility, net

182,323

216,501

Accounts payable and other accrued liabilities

10,058

11,971

Accrued real estate taxes payable

12,822

12,206

Accrued interest payable

2,274

3,691

Security deposit liability

2,688

2,977

Prepaid rents

1,639

1,658

Fair market value of interest rate swaps

43,530

902

Total Liabilities

1,418,189

1,436,453

Redeemable noncontrolling interests in the Operating Partnership

3,098

3,295

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; 25,016,957 and 25,245,740 shares issued and outstanding, respectively

250

251

Additional paid-in capital

376,710

359,748

Accumulated earnings less dividends

75,321

63,776

Accumulated other comprehensive income (loss)

(44,354

)

2,466

Total Stockholders' Equity

407,927

426,241

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

1,829,214

$

1,865,989

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For the Year Ended December 31,

2020

2019

2018

Revenues

Rental income

$

199,237

$

177,162

$

143,158

Other income

5,563

3,904

3,439

Total revenues

204,800

181,066

146,597

Expenses

Property operating expenses

47,201

42,692

35,824

Real estate taxes and insurance

31,709

25,113

20,713

Property management fees (1)

5,971

5,388

4,382

Advisory and administrative fees (2)

7,670

7,500

7,474

Corporate general and administrative expenses

10,035

9,613

7,808

Property general and administrative expenses

6,239

6,765

6,134

Depreciation and amortization

82,411

69,086

47,470

Total expenses

191,236

166,157

129,805

Operating income before gain on sales of real estate

13,564

14,909

16,792

Gain on sales of real estate

69,151

127,684

13,742

Operating income

82,715

142,593

30,534

Interest expense

(44,753

)

(37,385

)

(28,572

)

Loss on extinguishment of debt and modification costs

(1,470

)

(2,869

)

(3,576

)

Casualty gains (losses)

5,886

(3,488

)

—

Miscellaneous income

1,772

587

—

Net income (loss)

44,150

99,438

(1,614

)

Net income (loss) attributable to redeemable noncontrolling interests in the Operating Partnership

132

298

(5

)

Net income (loss) attributable to common stockholders

$

44,018

$

99,140

$

(1,609

)

Other comprehensive income (loss)

Unrealized gains (losses) on interest rate derivatives

(46,961

)

(14,625

)

1,931

Total comprehensive income (loss)

(2,811

)

84,813

317

Comprehensive income (loss) attributable to redeemable noncontrolling interests in the Operating Partnership

(9

)

254

1

Comprehensive income (loss) attributable to common stockholders

$

(2,802

)

$

84,559

$

316

Weighted average common shares outstanding - basic

24,715

24,116

21,189

Weighted average common shares outstanding - diluted

25,234

24,593

21,667

Earnings (loss) per share - basic

$

1.78

$

4.11

$

(0.08

)

Earnings (loss) per share - diluted

$

1.74

$

4.03

$

(0.08

)

(1)

Fees incurred to an unaffiliated third party that is an affiliate of the noncontrolling limited partner of the Operating Partnership (the “OP”).

(2)

Fees incurred to the Company’s adviser.

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For the Year Ended December 31,

2020

2019

$ Change

% Change

Revenues

Same Store

Rental income

$

120,109

$

115,588

$

4,521

3.9

%

Other income

2,106

2,331

(225

)

-9.7

%

Same Store revenues

122,215

117,919

4,296

3.6

%

Non-Same Store

Rental income

79,128

61,574

17,554

28.5

%

Other income

3,457

1,573

1,884

119.8

%

Non-Same Store revenues

82,585

63,147

19,438

30.8

%

Total revenues

204,800

181,066

23,734

13.1

%

Operating expenses