NexPoint Residential Trust(US:NXRT)2024-02-21 03:05Financial Data and Key Metrics Changes - For Q4 2023, net income was $18.4 million or $0.70 per diluted share on total revenue of $68.9 million, compared to a net income of $3.8 million or $0.15 per diluted share on total revenue of $69.3 million in Q4 2022 [30][42] - Core FFO for Q4 2023 was $17.4 million or $0.66 per diluted share, down from $0.75 per diluted share in Q4 2022 [43] - Full year 2023 Core FFO was $73.5 million or $2.80 per diluted share, compared to $3.13 per diluted share for the full year 2022 [32] Business Line Data and Key Metrics Changes - Same-store NOI for Q4 2023 increased by 4.5%, driven by a 3.8% growth in rental revenue and a 2% increase in same-store expenses [66][47] - Full year same-store NOI registered an 8.2% growth year-over-year, with notable growth in South Florida, Orlando, Nashville, and Tampa, each growing NOI by 9% or more [49][32] - The company completed 113 full and partial renovations in Q4 2023, achieving an average monthly rent premium of $214 and a 19.9% return on investment [43] Market Data and Key Metrics Changes - Atlanta and Charlotte finished the year at 96.2% and 95.7% occupancy, respectively, while Phoenix, South Florida, and Tampa all finished over 95% occupied [47] - Same-store occupancy increased by 60 basis points to 94.7% for the full year 2023 [44] - The company expects 25,100 units to deliver in its submarkets in 2024, with a significant decrease to 10,832 units in 2025 [54] Company Strategy and Development Direction - The company plans to focus on occupancy and resident retention, with a defensive posture expected to continue into the first half of 2024 due to high supply [78][54] - Disposition activity could reach the higher end of the range if additional assets can be identified for tax-efficient capital recycling strategies [53] - The company is prioritizing balance sheet cleanup and share buybacks, given the current implied cap rate is above 7% [77] Management's Comments on Operating Environment and Future Outlook - Management noted that while the first half of 2024 may be challenging due to high supply, they are optimistic about growth prospects in the second half of the year [78][100] - The company is currently experiencing a downward trend in bad debt, finishing Q4 at 1.9%, down from 2.7% earlier in the year [36][61] - Management expects same-store NOI growth to be relatively flat for 2024 as they navigate peak supply [51] Other Important Information - The company reported a NAV per share range of $47.64 on the low end to $61.23 on the high end, with a midpoint of $54.43 [68] - The company has increased its dividend by 124.5% since inception, with a payout ratio of 61.6% of Core FFO for 2023 [68] Q&A Session Summary Question: Updates on fraudulent activity in Atlanta and bad debt expectations - Management indicated that bad debt has improved, with expectations for it to remain manageable moving forward [61] Question: Comparison of redevelopment activity in 2024 versus 2023 - Management noted a shift in focus to occupancy and a reduction in the number of full upgrades planned for 2024 [102] Question: New lease and renewal spreads during Q4 - New leases were down 7.8% for the quarter, while renewals were down 21 basis points, with January showing improvement [91][66] Question: Job growth forecast and demand side considerations - Management acknowledged that job growth forecasts are factored into their guidance, with expectations for absorption to be maintained despite high supply [120]