NexPoint Residential Trust, Inc. (NYSE:NXRT) Q3 2019 Earnings Conference Call October 29, 2019 11:00 PM ET Company Participants Jackie Graham – Investor Relations Brian Mitts – Executive Vice President and Chief Financial Officer Matt McGraner – Executive Vice President and Chief Investment Officer Conference Call Participants Buck Horne – Raymond James Tayo Okusanya – Mizuho Drew Babin – Baird John Massocca – Ladenburg Thalmann Barry Oxford – D.A. Davidson Craig Kucera – B. Riley FBR Rob Stevenson – Janney ...

Financial Performance - Net income attributable to common stockholders for Q3 2019 was $118747 thousand, compared to a net loss of $(5245) thousand in Q3 2018[6, 28] - For the nine months ended September 30, 2019, net income attributable to common stockholders was $112406 thousand, compared to $3158 thousand for the same period in 2018[6, 28] - Q3 Same Store NOI increased by 44% to $16898 thousand, compared to $16185 thousand for the third quarter of 2018[6, 28] - YTD Same Store NOI increased 51% to $50370 thousand, compared to $47936 thousand for the nine months ended September 30, 2018[6, 28] - NXRT increased the quarterly dividend by 136% to $03125 per share[5] Portfolio and Operations - NXRT acquired properties worth $4843 million in Nashville, TN, Orlando, FL, and Pembroke Pines, FL during Q3 2019[5, 6] - The portfolio consisted of 37 properties with 13757 units, with an average effective monthly rent of $1095 and 936% physical occupancy as of September 30, 2019[6, 28] - The company completed the sale of six properties for approximately $2899 million, netting $1402 million after debt repayment and closing costs[6] - For properties in the Portfolio, 5842 full and partial upgrades have been completed since inception, achieving an average monthly rental increase of $98 per unit, equating to a 242% ROI[6] Guidance - The company is tightening its 2019 guidance for earnings per diluted share to a midpoint of $442 and reaffirming Core FFO per diluted share guidance to a midpoint of $192[31]

PART I—FINANCIAL INFORMATION [Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents NexPoint Residential Trust, Inc.'s unaudited consolidated financial statements for periods ending June 30, 2019, detailing financial position, operations, and cash flows [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2019, total assets increased to $1.277 billion from $1.161 billion at year-end 2018, primarily driven by a significant increase in real estate held for sale, while total liabilities also grew to $1.003 billion from $862.6 million Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2019 (Unaudited) | December 31, 2018 | | :--- | :--- | :--- | | **Total Net Real Estate Investments** | **$1,228,497** | **$1,087,542** | | Real estate held for sale, net | $175,968 | $17,329 | | Cash and cash equivalents | $16,892 | $19,864 | | **Total Assets** | **$1,276,921** | **$1,161,210** | | Mortgages payable, net | $769,973 | $824,702 | | Mortgages payable held for sale, net | $156,636 | $13,318 | | Credit facility, net | $51,536 | $— | | **Total Liabilities** | **$1,002,541** | **$862,615** | | **Total Stockholders' Equity** | **$271,348** | **$296,028** | [Consolidated Statements of Operations and Comprehensive Income (Loss)](index=6&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20%28Loss%29) For Q2 2019, the company reported a net loss of $2.0 million, compared to a $1.7 million loss in Q2 2018, while the six-month period ended June 30, 2019, saw a net loss of $6.4 million, a significant shift from the $8.4 million net income in the prior year Financial Performance (in thousands, except per share amounts) | Metric | Q2 2019 | Q2 2018 | YTD 2019 | YTD 2018 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $43,066 | $35,655 | $84,557 | $70,712 | | Total expenses | $36,463 | $30,420 | $74,239 | $61,777 | | Operating income | $6,603 | $5,235 | $10,318 | $22,677 | | Net income (loss) | $(1,987) | $(1,666) | $(6,360) | $8,428 | | Net income (loss) attributable to common stockholders | $(1,981) | $(1,661) | $(6,341) | $8,403 | | Earnings (loss) per share - diluted | $(0.08) | $(0.08) | $(0.27) | $0.39 | - The increase in net loss for Q2 2019 was primarily due to a **$2.0 million** rise in property operating expenses and a **$1.8 million** increase in interest expense, which offset revenue growth[147](index=147&type=chunk)[150](index=150&type=chunk)[157](index=157&type=chunk) - The shift from net income to net loss for the six-month period was mainly attributable to the absence of a **$13.7 million** gain on sale of real estate that was present in 2018[159](index=159&type=chunk) [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2019, net cash from operating activities increased to $23.6 million, while investing activities used $152.3 million, and financing activities provided $125.1 million Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Activity | 2019 | 2018 | | :--- | :--- | :--- | | Net cash provided by operating activities | $23,620 | $17,333 | | Net cash provided by (used in) investing activities | $(152,321) | $14,449 | | Net cash provided by (used in) financing activities | $125,140 | $(35,811) | | **Net decrease in cash, cash equivalents and restricted cash** | **$(3,561)** | **$(4,029)** | [Notes to Consolidated Unaudited Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Unaudited%20Financial%20Statements) These notes detail the company's REIT structure, accounting policies, real estate portfolio, debt, and equity transactions, highlighting key acquisitions, credit facility changes, and subsequent events - The Company is a **REIT** focused on 'value-add' multifamily investments primarily in the Southeastern and Southwestern U.S., externally managed by NexPoint Real Estate Advisors, L.P[28](index=28&type=chunk)[29](index=29&type=chunk) - During the first six months of 2019, the company acquired **four properties** for a total purchase price of **$151.5 million**, with no dispositions during this period[64](index=64&type=chunk)[65](index=65&type=chunk)[66](index=66&type=chunk) - On January 28, 2019, the company entered into a **$75.0 million** corporate credit facility, which was later increased to **$125 million** on June 29, 2019, with **$52.5 million** outstanding as of June 30, 2019[74](index=74&type=chunk) - Subsequent to the quarter end, the company declared a quarterly dividend of **$0.275 per share**, acquired **two properties** for **$100 million**, and entered an agreement to sell **six properties** for approximately **$290 million**[127](index=127&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance, including revenue and expense drivers, non-GAAP measures, liquidity, debt strategies, and progress on value-add programs [Results of Operations](index=37&type=section&id=Results%20of%20Operations) For Q2 2019, total revenues increased by $7.4 million to $43.1 million, but a net loss of $2.0 million was recorded due to higher operating and interest expenses, while the six-month period reported a net loss of $6.4 million, primarily due to the absence of a prior year gain on real estate sales Comparison of Operating Results (in thousands) | Metric | Q2 2019 | Q2 2018 | YTD 2019 | YTD 2018 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $43,066 | $35,655 | $84,557 | $70,712 | | Total expenses | $(36,463) | $(30,420) | $(74,239) | $(61,777) | | Interest expense | $(8,590) | $(6,823) | $(16,678) | $(13,620) | | Gain on sales of real estate | $— | $— | $— | $13,742 | | **Net income (loss)** | **$(1,987)** | **$(1,666)** | **$(6,360)** | **$8,428** | - The increase in net loss for Q2 2019 was primarily due to a **$2.0 million** rise in property operating expenses and a **$1.8 million** increase in interest expense, which offset revenue growth[147](index=147&type=chunk)[150](index=150&type=chunk)[157](index=157&type=chunk) - The shift from net income to net loss for the six-month period was mainly attributable to the absence of a **$13.7 million** gain on sale of real estate that was present in 2018[159](index=159&type=chunk) [Non-GAAP Financial Measures](index=41&type=section&id=Non-GAAP%20Financial%20Measures) The company reported strong growth in non-GAAP operating metrics, with Q2 Same Store NOI increasing **5.4%** and FFO and AFFO per diluted share growing **14.4%** and **14.6%** respectively for the six months ended June 30, 2019 Same Store NOI Performance (Q2 2019 vs Q2 2018) | Metric | Q2 2019 ($ thousands) | Q2 2018 ($ thousands) | % Change | | :--- | :--- | :--- | :--- | | Same Store revenues | $37,062 | $35,642 | 4.0% | | Same Store operating expenses | $16,225 | $15,868 | 2.2% | | **Same Store NOI** | **$20,837** | **$19,774** | **5.4%** | FFO and AFFO per Diluted Share (Six Months Ended June 30) | Metric | 2019 | 2018 | % Change | | :--- | :--- | :--- | :--- | | FFO per share - diluted | $0.91 | $0.80 | 14.4% | | Core FFO per share - diluted | $0.91 | $0.80 | 14.5% | | AFFO per share - diluted | $1.06 | $0.92 | 14.6% | [Liquidity and Capital Resources](index=49&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is supported by cash from operations, existing cash balances, and a corporate credit facility with **$72.5 million** of unused capacity, while it relies on debt and equity markets for long-term needs and raised **$9.4 million** through its ATM stock offering in Q2 2019 - Short-term liquidity is met through net cash from operations, existing cash, and an available **$72.5 million** on the Corporate Credit Facility as of June 30, 2019[213](index=213&type=chunk) - The company utilized its At-The-Market (ATM) program, issuing **252,165 shares** for net proceeds of approximately **$9.4 million** during the three months ended June 30, 2019[216](index=216&type=chunk) - The company spent **$10.6 million** on its value-add rehab program in the first six months of 2019, completing interior rehabs on **720 units**[232](index=232&type=chunk) - The Freddie Mac Green Program has been effective, contributing to a **15.5%** decrease in utility costs for YTD Same Store properties compared to the prior year[233](index=233&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=57&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk on its **$986.8 million** of total indebtedness, actively managed through interest rate swaps and caps, with a **0.25%** change in LIBOR estimated to increase annual interest expense by approximately **$500,000** - The primary market risk is interest rate risk associated with its debt, of which **$949.5 million** was floating rate as of June 30, 2019[253](index=253&type=chunk) - The company uses interest rate swaps to mitigate risk, effectively fixing the rate on **$750.0 million** of its floating rate mortgage debt with a weighted average fixed rate of **1.4272%**[255](index=255&type=chunk) Interest Rate Sensitivity Analysis | Change in Interest Rates | Annual Increase to Interest Expense | | :--- | :--- | | 0.25% | $500,000 | | 0.50% | $1,000,000 | | 1.00% | $2,000,000 | - The company is monitoring the planned transition from LIBOR to alternative reference rates like SOFR, as it has material contracts indexed to LIBOR[258](index=258&type=chunk) [Controls and Procedures](index=58&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2019, with no material changes in internal control over financial reporting during the second quarter - Based on an evaluation as of June 30, 2019, the President and CFO concluded that the company's disclosure controls and procedures were **effective**[259](index=259&type=chunk) - No changes occurred in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, these controls[261](index=261&type=chunk) PART II—OTHER INFORMATION [Legal Proceedings](index=59&type=section&id=Item%201.%20Legal%20Proceedings) The company is not aware of any legal proceedings that are reasonably likely to have a material adverse effect on its financial condition or results of operations - The company is party to legal proceedings arising in the ordinary course of business, but management does not believe any will have a material adverse effect[264](index=264&type=chunk) [Risk Factors](index=59&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2018 - No material changes have occurred from the risk factors disclosed in the Annual Report filed on February 19, 2019[265](index=265&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=59&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase any shares of its common stock during the six months ended June 30, 2019, under its authorized **$40 million** share repurchase program, which is effective until June 15, 2020 - The company has a share repurchase program authorized up to **$40 million**, extending to June 15, 2020. No shares were repurchased during the six months ended June 30, 2019[266](index=266&type=chunk) [Defaults Upon Senior Securities](index=59&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) None - No defaults upon senior securities were reported[267](index=267&type=chunk) [Mine Safety Disclosures](index=59&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not applicable - This item is not applicable to the company[268](index=268&type=chunk) [Other Information](index=59&type=section&id=Item%205.%20Other%20Information) None - No other information was reported under this item[269](index=269&type=chunk) [Exhibits](index=60&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including a Purchase and Sale Agreement, CEO and CFO certifications, and XBRL data files - Exhibits filed include a Purchase and Sale Agreement dated June 25, 2019, Sarbanes-Oxley Act certifications (Sections 302 and 906), and XBRL interactive data files[272](index=272&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-36663 NexPoint Residential Trust, Inc. If an emerging growth company, indicate by check mark if the registrant has elected not to ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2018 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-36663 NexPoint Residential Trust, Inc. (Exact Name of Registrant as Specified in Its Charter) (State or other Jurisdiction of Incorpor ...