NexPoint Residential Trust(US:NXRT)2021-07-27 19:43Financial Data and Key Metrics Changes - The net loss for Q2 2021 was $3.4 million, or $0.14 per diluted share, compared to a loss of $9.3 million, or $0.38 per diluted share in Q2 2020 [10] - Core FFO for Q2 2021 was $14.2 million, or $0.56 per diluted share, compared to $0.59 per diluted share in Q2 2020 [10] - Total revenues for Q2 2021 were $52.6 million, a 3.7% increase from $50.7 million in Q2 2020 [17] - Year-to-date core FFO was $28.3 million, or $1.13 per diluted share, compared to $1.11 per diluted share in the same period of 2020 [19] Business Line Data and Key Metrics Changes - Same store NOI for Q2 2021 increased by $179,000, or 0.6%, compared to Q2 2020 [10] - The company completed 336 renovations in Q2 2021, achieving an average monthly rent premium of $170 and a 20.5% return on investment [11] - Year-to-date same store NOI increased by $86,000, or 0.2%, compared to the same period in 2020 [12] Market Data and Key Metrics Changes - Same store rent increased by 3.6% in Q2 2021, with average occupancy at 96% compared to 95.3% in Q2 2020 [18] - The company reported a 35% increase in out-of-state applications quarter-over-quarter and a 29% increase year-to-date [24] - New leases in July 2021 were up 24.4%, with renewals at 8.2%, resulting in a blended increase of 15.8% [27] Company Strategy and Development Direction - The company is focused on organic growth through its rehab program rather than relying solely on acquisitions [8] - The ongoing shortage of affordable housing in the U.S. is seen as an opportunity for the company to implement its value-add strategy [16] - The company plans to continue acquiring properties in core markets while maintaining a strong operational performance [15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about maintaining high occupancy levels despite the eviction moratorium ending, with only 123 units identified for potential eviction [51] - The company anticipates that the strong leasing performance will translate into meaningful revenue growth in the second half of the year [27] - Management noted that the economic activity in the Sunbelt markets is robust, which may mitigate risks associated with the Delta variant of COVID-19 [65] Other Important Information - The company declared a dividend of $0.34125 per share, which is covered 1.65 times by core FFO, indicating a payout ratio of approximately 61% [13] - The revised NAV per share is reported to range from $55.66 to $66.62, with a midpoint of $61.14 based on current cap rates [12] Q&A Session Summary Question: On same store rental income guidance - Management indicated that the decrease in guidance was due to revisions related to bad debt write-offs rather than forward-looking changes [42][43] Question: On blended lease rates and renewal rates - Management expects renewal rates to converge with new lease rates, indicating a healthy leasing market [45][46] Question: On maintaining occupancy levels post-eviction moratorium - Management is optimistic about holding occupancy levels at 96% despite the eviction moratorium ending, with a plan to address units identified for eviction [51] Question: On total expense expectations - Management noted that savings in R&M categories and payroll contributed to a decrease in total same store expense expectations [52] Question: On the impact of the eviction moratorium on market fundamentals - Management believes that evicted tenants may not qualify for new leases, which could mitigate flooding the market with new inventory [63] Question: On the potential impact of the Delta variant - Management feels insulated from risks associated with the Delta variant due to the progressive reopening in their markets [65]