NexPoint Residential Trust(NXRT) - 2025 Q2 - Quarterly Results

Earnings Release Highlights NexPoint Residential Trust reported a Q2 2025 net loss of $7.0 million, a decline from the prior year's net income, despite slight FFO and AFFO increases, alongside decreased Same Store performance and ongoing value-add and share repurchase activities Q2 2025 Key Financial Metrics (vs. Q2 2024) | Metric | Q2 2025 (M) | Q2 2024 (M) | | :--- | :--- | :--- | | Net Income (Loss) | $(7.0) | $10.6 | | FFO | $16.9 | $16.3 | | Core FFO | $18.0 | $18.1 | | AFFO | $20.3 | $20.8 | * Q2 Same Store properties experienced a year-over-year decline: occupancy decreased by 80 bps, total revenue by 0.2%, average effective rent by 1.3%, and NOI by 1.1%[5] * The company paid a Q2 dividend of $0.51 per share and repurchased 223,109 shares for approximately $7.6 million at an average price of $34.29 per share[5] * During Q2 2025, the value-add program completed 555 full and partial upgrades, achieving an average monthly rent premium of $73 and a 26.0% ROI on leased upgraded units[5] Second Quarter 2025 Financial Results For Q2 2025, total revenues decreased to $63.1 million, resulting in a net loss of $7.0 million primarily due to an $18.7 million decrease in real estate sales gains, while Same Store NOI declined by 1.1% and per-share FFO metrics remained stable Q2 2025 Financial Performance | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total Revenues | $63.1M | $64.2M | | Net Income (Loss) | $(7.0)M | $10.6M | | Net (Loss) Income per Share | $(0.28) | $0.40 | | Same Store NOI | $38.0M | $38.4M (-1.1%) | * The primary reason for the shift from net income to net loss was a decrease in gain on sales of real estate of $18.7 million compared to the same period in 2024[8] 2025 Year to Date Financial Results Year-to-date 2025 revenues decreased to $126.4 million, leading to a net loss of $13.9 million, largely driven by a $50.4 million reduction in real estate sales gains, with Same Store NOI down 2.4% but Core FFO and AFFO per share slightly increasing YTD 2025 Financial Performance | Metric | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | | Total Revenues | $126.4M | $131.8M | | Net Income (Loss) | $(13.9)M | $36.9M | | Same Store NOI | $75.8M | $77.7M (-2.4%) | | Core FFO per Share | $1.45 | $1.43 | | AFFO per Share | $1.64 | $1.62 | * The significant decline in net income year-to-date is primarily attributed to a $50.4 million decrease in gains from real estate sales compared to the first six months of 2024[8] Subsequent Events Subsequent to Q2, the Board approved a $0.51 per share Q3 dividend, and NXRT secured a new $200.0 million revolving credit facility maturing in June 2028 with an expansion option * A quarterly dividend of $0.51 per share was approved, payable on September 30, 2025[8] * The company secured a new $200.0 million revolving credit facility with an option to expand it to $400.0 million. The facility matures on June 30, 2028[8] Company and Portfolio Overview Company Profile and Portfolio Composition As of July 2025, NXRT's stock traded at $33.01 with a 6.18% dividend yield and nearly 16% insider ownership, while its Sun Belt-focused portfolio has Phoenix, South Florida, and Dallas/Fort Worth as its top three markets Company Profile (as of July 2025) | Metric | Value | | :--- | :--- | | Exchange/Ticker | NYSE: NXRT | | Share Price (Jul 28, 2025) | $33.01 | | Insider Ownership (Jun 30, 2025) | 15.97% | | Q3 2025 Dividend Per Share | $0.51 | | Dividend Yield | 6.18% | Top 5 Markets by Unit Percentage | Market | % of Units | | :--- | :--- | | Phoenix | 15.5% | | South Florida | 15.1% | | Dallas/Fort Worth | 15.0% | | Atlanta | 13.0% | | Nashville | 10.3% | Highlights of Recent Activity Capital Markets and Leasing Activity During Q2, NXRT executed a new $100 million SOFR swap and a $200 million revolving credit facility, with leasing activity showing new lease rate decreases and renewal rate increases, alongside continued share repurchases * Entered into a new $100 million SOFR swap effective April 2025, fixing the rate at 3.489% until April 2030[21][22] * Secured a new $200 million revolving credit facility maturing in June 2028, enhancing financial flexibility[23][26] Q2 2025 Leasing Spreads | Lease Type | Count | Average % Increase | | :--- | :--- | :--- | | New Leases | 1,219 | -1.52% | | Renewals | 1,732 | 2.61% | * Repurchased 223,109 shares at a weighted average cost of $34.29 per share, representing a 32% discount to the Q2 2025 Net Asset Value (NAV)[25][26] Forecasted Submarket Deliveries The company's portfolio faces a forecasted 4.5% 3-year new supply growth across its submarkets, with specific areas like Huntersville/Cornelius and Southwest Las Vegas expecting significant new deliveries that could impact future rental and occupancy trends * The total portfolio is exposed to a forecasted 3-year new supply growth of 4.5%, with 26,179 units expected to be delivered across its submarkets between 2025 and 2027[27] Submarkets with Highest Forecasted 3-Year Supply Growth | Market | Submarket | Property | 3-Year % Growth | | :--- | :--- | :--- | :--- | | CHA | Huntersville/Cornelius | The Verandas at Lake Norman | 31.6% | | LSV | Southwest Las Vegas | Torreyana | 12.0% | | CHA | Matthews/SE Charlotte | Creekside at Matthews | 9.2% | | ORL | South Orange County | Sabal Palm at Lake Buena Vista | 9.2% | Financials and Guidance Financial Summary Q2 2025 financial summary highlights a year-over-year decline in Same Store NOI, occupancy, and average effective rent, resulting in a net loss per share, despite slight increases in Core FFO and AFFO per share, and an increased leverage ratio Q2 2025 vs. Q2 2024 Financial & Operational Metrics | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net (Loss) Income per Share | $(0.28) | $0.40 | | Core FFO per Share | $0.71 | $0.69 | | AFFO per Share | $0.80 | $0.79 | | Same Store NOI Growth | -1.1% | N/A | | Portfolio Occupancy | 93.3% | 94.1% | | Avg. Effective Monthly Rent | $1,500 | $1,517 | | Leverage Ratio (Net Debt to EV) | 64% | 59% | * The value-add program accelerated, with 555 rehab units completed in Q2 2025 compared to 113 in Q2 2024. Cumulatively, 9,113 units have been upgraded, yielding an average monthly rent increase of $165 and a 20.8% ROI[31] 2025 Full Year Guidance NXRT reaffirmed its 2025 mid-point guidance for Core FFO per diluted share and Same Store NOI, while revising earnings per diluted share guidance to a loss and maintaining acquisition and disposition targets 2025 Full Year Guidance (Mid-Point) | Metric | Mid-Point Guidance | Prior Mid-Point | | :--- | :--- | :--- | | Earnings (loss) per diluted share | $(1.31) | $(1.22) | | Core FFO per diluted share | $2.75 | Affirmed | | Same Store NOI Growth | -1.5% | Affirmed | | Same Store Total Revenue Growth | 0.1% | 0.5% | | Acquisitions | $100.0M | Affirmed | | Dispositions | $100.0M | Affirmed | * The guidance is based on an estimated weighted average diluted share count of approximately 25.6 million for the full year 2025[35] Components of Net Asset Value The company estimates its NAV per share at a mid-point of $50.31, derived from an estimated real estate value between $2.6 billion and $2.9 billion, reflecting a significant premium to the current share price after accounting for liabilities NAV Summary (Mid-Point) | Component | Value (in thousands) | | :--- | :--- | | Real Estate Value (mid-point) | $2,767,022 | | Value of Assets (mid-point) | $2,857,648 | | Total Outstanding Debt | $1,503,242 | | Other Liabilities | $37,617 | | Value of Liabilities | $1,540,859 | | Net Asset Value (mid-point) | $1,316,789 | * The estimated NAV per share ranges from $43.90 to $56.73, with a mid-point of $50.31, based on a diluted share count of 26.171 million[40] * The implied value per apartment unit is estimated to be between $200,200 and $226,000[40] Consolidated Balance Sheets As of June 30, 2025, NXRT's balance sheet showed total assets of $1.86 billion, a slight decrease from year-end 2024, with total liabilities increasing to $1.504 billion, leading to a decline in total stockholders' equity Selected Balance Sheet Items (in thousands) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Net Operating Real Estate | $1,763,255 | $1,793,223 | | TOTAL ASSETS | $1,857,201 | $1,907,420 | | Mortgages payable, net | $1,466,530 | $1,463,650 | | TOTAL LIABILITIES | $1,504,147 | $1,491,270 | | TOTAL STOCKHOLDERS' EQUITY | $347,890 | $410,368 | Consolidated Statements of Operations For Q2 2025, NXRT reported total revenues of $63.1 million and a net loss of $7.1 million, a shift from Q2 2024's net income primarily due to the absence of real estate sales gains and increased interest expense Q2 Statement of Operations Summary (in thousands) | Account | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total revenues | $63,149 | $64,238 | | Total expenses | $55,246 | $57,442 | | Gain on sales of real estate | $— | $18,686 | | Interest expense | $(15,162) | $(13,971) | | Net income (loss) | $(7,061) | $10,638 | NOI and Same Store Results NOI and Same Store NOI Reconciliation Q2 2025 Net Operating Income (NOI) was $38.0 million, reconciled from a net loss by adding back non-property level expenses, with all properties classified as Same Store, resulting in a 1.1% decrease in Same Store NOI from Q2 2024 Reconciliation of Net Income (Loss) to NOI (in thousands) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net income (loss) | $(7,061) | $10,638 | | Adjustments (Depreciation, Interest, Corp G&A, etc.) | $45,097 | $28,229 | | NOI | $38,036 | $38,867 | | Less Non-Same Store NOI | $— | $(425) | | Same Store NOI | $38,036 | $38,442 | Q2 Same Store Results In Q2 2025, Same Store properties experienced a 0.2% revenue decrease and a 1.5% operating expense increase, leading to a 1.1% year-over-year decline in Same Store NOI to $38.0 million and an 80 basis point drop in occupancy Q2 Same Store Performance (YoY % Change) | Metric | % Change | | :--- | :--- | | Total Revenues | -0.2% | | Total Operating Expenses | +1.5% | | NOI | -1.1% | | Occupancy | -0.8% | | Average Rent per Unit | -1.3% | * Key expense drivers included a 7.7% increase in Real Estate Taxes and a 3.6% increase in Repairs & Maintenance, while Insurance costs decreased by 19.5%[54] * On a market level, Phoenix and Las Vegas experienced the largest declines in rental income, down 3.5% and 2.7% respectively, while Atlanta and South Florida saw modest increases[56] QoQ Same Store Properties Operating Metrics Sequentially from Q1 to Q2 2025, Same Store total rental income decreased by 0.3%, primarily due to a 120 basis point drop in average occupancy, despite a slight increase in average effective rent, with Phoenix and Las Vegas showing significant occupancy declines Q2 2025 vs. Q1 2025 Same Store Metrics | Metric | Q2 2025 | Q1 2025 | Change | | :--- | :--- | :--- | :--- | | Average Effective Rent | $1,500 | $1,495 | +0.3% | | Occupancy | 93.3% | 94.5% | -120 bps | | Total Rental Income | $61,230K | $61,436K | -0.3% | YTD Same Store Results For the first six months of 2025, Same Store properties saw a 0.6% revenue decline and a 2.6% operating expense increase, mainly from higher real estate taxes and repairs, resulting in a 2.4% decrease in year-to-date Same Store NOI to $75.8 million YTD Same Store Performance (YoY % Change) | Metric | % Change | | :--- | :--- | | Total Revenues | -0.6% | | Total Operating Expenses | +2.6% | | NOI | -2.4% | * The largest contributors to the 2.6% increase in operating expenses were a 5.2% rise in Real Estate Taxes and a 4.1% increase in Repairs & Maintenance costs[65] FFO, Core FFO and AFFO FFO, Core FFO and AFFO Reconciliation In Q2 2025, NXRT's FFO attributable to common stockholders increased to $16.9 million, or $0.67 per diluted share, while Core FFO remained flat and AFFO slightly decreased, with the dividend well-covered by both Core FFO and AFFO Q2 2025 Non-GAAP Metrics per Diluted Share (vs. Q2 2024) | Metric per Share | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | FFO | $0.67 | $0.62 | | Core FFO | $0.71 | $0.69 | | AFFO | $0.80 | $0.79 | Q2 2025 Dividend Coverage Ratios | Metric | Coverage Ratio | | :--- | :--- | | FFO | 1.31x | | Core FFO | 1.39x | | AFFO | 1.57x | Capital Expenditures and Value-Add Program Historical Capital Expenditures Total capital expenditures in Q2 2025 increased by 50% year-over-year to $9.2 million, driven by a significant rise in capitalized maintenance expenditures, while rehab spending showed mixed trends Capital Expenditures (in thousands) | Category | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Capitalized Rehab Expenditures | $1,420 | $1,952 | -27.3% | | Capitalized Maintenance Expenditures | $7,779 | $4,182 | +86.0% | | Total Capital Expenditures | $9,199 | $6,134 | +50.0% | Value-Add Program Details NXRT's value-add program continues to generate strong returns, with interior upgrades achieving a 20.8% ROI, kitchen and laundry appliances a 64.2% ROI, and smart home technology a 37.2% ROI across thousands of completed units Value-Add Program Summary (Cumulative) | Program | Units Completed | Avg. Monthly Rent Increase | ROI | | :--- | :--- | :--- | :--- | | Interiors (Full & Partials) | 9,113 | $165 | 20.8% | | Kitchen & Laundry Appliances | 4,870 | $50 | 64.2% | | Smart Home Technology | 11,199 | $43 | 37.2% | Debt and Capital Structure Outstanding Debt Details As of June 30, 2025, NXRT had $1.5 billion in total mortgage debt, predominantly floating-rate, with $917.5 million covered by interest rate swaps at a weighted average fixed rate of 1.361% to manage interest rate risk * Total outstanding mortgage principal as of June 30, 2025, was $1.503 billion[77] * The company has $917.5 million in notional interest rate swaps, effectively fixing the rate on a significant portion of its floating-rate debt. The weighted average fixed rate on these swaps is 1.361%[79][80] * As of June 30, 2025, interest rate swap agreements effectively covered 62% of the company's $1.5 billion of floating-rate mortgage debt[89] Debt Maturity Schedule NXRT maintains a well-staggered debt maturity profile with no significant principal payments until 2028, and the majority of its $1.47 billion mortgage debt matures after 2029, with an adjusted weighted average interest rate of 3.51% Principal Payments Due by Period (in thousands) | Period | Principal Payments | | :--- | :--- | | Remainder of 2025 | $— | | 2026 | $— | | 2027 | $— | | 2028 | $33,817 | | 2029 | $— | | Thereafter | $1,469,425 | * The adjusted weighted average interest rate on the total $1.5 billion of indebtedness is 3.51%, factoring in the effect of interest rate swap agreements[89] Historical Transactions Historical Acquisition Details The current portfolio of 12,984 units was acquired for approximately $2.03 billion, with an additional $162.8 million rehab budget, totaling nearly $2.2 billion in investment, or $169,117 per unit Total Portfolio Acquisition Summary | Metric | Value | | :--- | :--- | | Total Units | 12,984 | | Total Purchase Price | $2,032,977,000 | | Total Rehab Budget | $162,834,000 | | Total Investment | $2,195,811,000 | | Investment Per Unit | $169,117 | Historical Disposition Details Historically, the company disposed of 10,786 units for approximately $1.24 billion, generating a total gain on sale of $497.9 million and $1.22 billion in net cash proceeds, demonstrating successful capital recycling Total Portfolio Disposition Summary | Metric | Value | | :--- | :--- | | Total Units Sold | 10,786 | | Total Purchase Price | $775,047,000 | | Total Sale Price | $1,237,675,000 | | Total Gain on Sale | $497,939,000 | | Net Cash Proceeds | $1,222,887,000 | Definitions and Reconciliations of Non-GAAP Measures Definitions This section defines key non-GAAP financial measures including NOI, FFO, Core FFO, and AFFO, which are used to provide a clearer understanding of the company's operating performance by excluding certain non-cash or non-recurring items * NOI: Calculated by adjusting net income for items like interest expense, corporate G&A, depreciation, and casualty-related expenses to evaluate property-level performance[95] * FFO: Follows the NAREIT definition, starting with net income and excluding gains/losses from real estate sales while adding back real estate depreciation and amortization[96] * Core FFO: Adjusts FFO for items not representative of ongoing operations, such as casualty losses, debt extinguishment costs, and amortization of deferred financing costs[97] * AFFO: Further refines Core FFO by removing non-cash items like equity-based compensation expense to provide a more precise measure of operating performance[98] Reconciliations This section provides detailed reconciliations for key metrics, including total debt to net debt of $1.49 billion as of Q2 2025, and the 2025 guidance, bridging the projected net loss to Same Store NOI and Core FFO Reconciliation of Debt to Net Debt (Q2 2025, in thousands) | Line Item | Amount | | :--- | :--- | | Total mortgage debt | $1,503,242 | | Less: Cash and cash equivalents | $(13,623) | | Less: Restricted cash for upgrades | $(3,320) | | Net Debt | $1,486,299 | FY 2025 Guidance Reconciliation (Mid-Point, in thousands) | Line Item | Amount | | :--- | :--- | | Net loss | $(33,617) | | Depreciation and amortization | $98,259 | | Other adjustments | $(24,455) | | Core FFO attributable to common stockholders | $70,474 |