NexPoint Residential Trust: Moving Beyond Survival To Thrive In 2025

Core Viewpoint - NexPoint Residential Trust (NXRT) has shown significant upside potential, with a 30% upside identified in its discounted market valuation, despite challenges such as external management and high floating-rate debt [2][3]. Company Performance - NXRT's performance has ranked near the top of the multifamily REIT sector over the past year, attributed to management's successful execution of strategic initiatives, including profitable property sales and debt reduction [3][5]. - The company has effectively recycled capital through property sales, resulting in a total portfolio return of approximately 37.85% [4]. Debt Management - NXRT has refinanced and paid down debt, reducing costs and extending maturities, with total debt amounting to approximately $1.46 billion at a weighted average interest rate of 5.58$510 per month, which may drive increased demand for NXRT's Class B+ portfolio [12][13]. - As new supply is absorbed in these markets, both occupancy and rents are expected to rise, benefiting NXRT's operational performance [14]. Valuation Metrics - Despite a nearly 30% increase in share price, NXRT remains significantly discounted compared to its multifamily peers, with a P/AFFO ratio of 13.2, below the sector mean of 17.9 [16][17]. - NXRT's shares are priced at 77% of consensus Net Asset Value (NAV), indicating a valuation advantage compared to the sector average [18][19]. Dividend Growth - NXRT has raised its dividend for the ninth time since its IPO in 2015, indicating a strong commitment to returning value to shareholders [20][21].