NexPoint Posts Q2 EPS Beat Dividend Up

Core Viewpoint - NexPoint Residential Trust reported a mixed second quarter for 2025, with GAAP earnings per diluted share of ($0.28), beating estimates, but revenue of $63.1 million slightly missed expectations, indicating operational challenges in rents and occupancy despite dividend growth [1][2]. Financial Performance - GAAP earnings per diluted share were ($0.28), exceeding estimates by $0.06, while revenue was $63.1 million, falling short of the $63.19 million forecast [1][2]. - Year-over-year changes included a 170% decline in EPS from $0.40 in Q2 2024, and a 1.7% decrease in revenue from $64.2 million [2]. - Funds from operations (FFO) increased to $16.9 million ($0.67 per diluted share), up from $16.3 million ($0.62 per share) [7]. Operational Highlights - The company upgraded 555 units in Q2 2025, significantly up from 113 in the same quarter last year, achieving an average monthly rent premium of $73 and a 26.0% return on investment for upgraded units [5]. - Same-store average effective rent decreased by 1.3% year-over-year to $1,500, and same-store occupancy fell by 80 basis points to 93.3% [6]. Business Strategy - NexPoint focuses on value-add investments, renovating Class B multifamily properties to enhance value and attract tenants [3][4]. - The company is externally managed and relies on floating-rate debt, with a portion hedged through interest rate swaps to manage risk [4]. Capital Allocation - The company repurchased 223,109 shares at an average price of $34.29, totaling $7.65 million, representing a significant discount to the net asset value per share of $50.31 [9]. - No property acquisitions or dispositions occurred in the quarter, but management remains focused on share buybacks and potential future disposals [9]. Dividend and Guidance - A quarterly dividend of $0.51 per share was paid, resulting in a dividend yield of 6.18%, with AFFO coverage at 1.57 times the current payout [10]. - Management affirmed guidance for core FFO per share at $2.75 and same-store NOI growth at (1.5)% for FY2025, with a revised EPS midpoint guidance of ($1.31) [11].