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NexPoint Residential Trust, Inc. Reports First Quarter 2021 Results

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NXRT Increases 2021 Full Year Guidance; Continues to Execute Value-Add Strategy

DALLAS, April 27, 2021 /PRNewswire/ -- NexPoint Residential Trust, Inc. (NYSE:NXRT) reported financial results for the first quarter ended March 31, 2021.

Highlights

  • NXRT1 reported Net Loss, FFO2, Core FFO2 and AFFO2 of $(6.9)M, $13.8M, $14.1M and $16.0M, respectively, attributable to common stockholders for the quarter ended March 31, 2021, compared to Net Income, FFO, Core FFO, and AFFO of $28.0M, $12.4M, $13.6M and $15.3M, respectively, attributable to common stockholders for the quarter ended March 31, 2020.

  • For the three months ended March 31, 2021, Q1 Same Store properties3 average effective rent, total revenue and occupancy increased 1.2%, 2.1% and 110 bps, respectively, and NOI2 decreased (0.3)%4 from the prior year period.

  • The weighted average effective monthly rent per unit across all 37 properties held as of March 31, 2021 (the "Portfolio"), consisting of 13,976 units5, was $1,130, while physical occupancy was 95.3%.

  • NXRT paid a first quarter dividend of $0.34125 per share of common stock on March 31, 2021.

  • During the first quarter, for the properties in our Portfolio, we completed 285 full and partial upgrades and leased 421 upgraded units, achieving an average monthly rent premium of $163 and a 20.7% ROI6.

  • Since inception, for the properties currently in our Portfolio, we have completed 5,543 full & partial, 4,364 kitchen and laundry appliances, and 9,422 technology packages, resulting in a $129, $48, and $44 average monthly rental increase per unit and a 21.5%, 74.1%, and 33.3% ROI, respectively.

(1) In this release, "we," "us," "our," the "Company," "NexPoint Residential Trust," and "NXRT" each refer to NexPoint Residential Trust, Inc.,
a Maryland corporation.

(2) FFO, Core FFO, AFFO and NOI are non-GAAP measures. For a discussion of why we consider these non-GAAP measures useful and
reconciliations of FFO, Core FFO, AFFO and NOI to net income (loss), see the "Definitions and Reconciliations of Non-GAAP Measures"
and "FFO, Core FFO and AFFO" sections of this release.

(3) We define "Same Store" properties as properties that were in our Portfolio for the entirety of the periods being compared. There are 35
properties encompassing 13,564 units of apartment space in our Same Store pool for the three months ended March 31, 2021 (our "Q1 Same
Store" properties). The same store unit count excludes 93 units that are currently down due to fires and winter storm Uri in February 2021
(Atera: 26 units, Hollister Place: 25 units, Venue at 8651: 21 units, Timber Creek: 15 units, Stone Creek: 5 units and Preserve at Terrell Mill:
1 unit).

(4) After excluding revenue and expenses for the units down due to casualty events from the Q1 Same Store pool, SS NOI increased 0.38%
quarter over quarter. However, the SS NOI calculation presented herein includes the down units in the prior period calculation.

(5) Total units owned in our Portfolio is 14,205, however 229 units are currently down due to fires, a tornado, and winter storm Uri (Cutter's
Point: 136 units, Atera: 26 units, Hollister Place: 25 units, Venue at 8651: 21 units, Timber Creek: 15 units, Stone Creek: 5 units and Preserve
at Terrell Mill: 1 unit).

(6) We define Return on Investment ("ROI") as the sum of the actual rent premium divided by the sum of the total cost.

First Quarter 2021 Financial Results

  • Total revenues were $51.8 million for the first quarter of 2021, compared to $52.6 million for the first quarter of 2020.

  • Net loss for the first quarter of 2021 totaled $(6.9) million, or loss of $(0.27) per diluted share, which included $20.8 million of depreciation and amortization expense. This compared to net income of $28.0 million, or income of $1.08 per diluted share, for the first quarter of 2020, which included $23.3 million of depreciation and amortization expense.

  • The change in our net loss of $(6.9) million for the three months ended March 31, 2021 as compared to our net income of $28.0 million for the three months ended March 31, 2020 primarily relates to decreases in gains on sales of real estate and total revenues, partially offset by decreases in depreciation, interest, and property operating expenses.

  • For the first quarter of 2021, NOI was $29.6 million on 37 properties, compared to $30.0 million for the first quarter of 2020 on 37 properties.

  • For the first quarter of 2021, Q1 Same Store NOI decreased (0.3)% to $28.3 million, compared to $28.4 million for the first quarter of 2020.

  • For the first quarter of 2021, FFO totaled $13.8 million, or $0.55 per diluted share, compared to $12.4 million, or $0.48 per diluted share, for the first quarter of 2020.

  • For the first quarter of 2021, Core FFO totaled $14.1 million, or $0.56 per diluted share, compared to $13.6 million, or $0.53 per diluted share, for the first quarter of 2020.

  • For the first quarter of 2021, AFFO totaled $16.0 million, or $0.64 per diluted share, compared to $15.3 million, or $0.59 per diluted share, for the first quarter of 2020.

First Quarter Earnings Conference Call

NXRT will host a call on Tuesday, April 27, 2021 at 11:00 a.m. ET to discuss its first quarter financial results. The conference call can be accessed live over the phone by dialing 800-367-2403 or, for international callers, +1 334-777-6978 and using passcode Conference ID: 5369761. A live audio webcast of the call will be available online at the Company's website, nxrt.nexpoint.com. An online replay will be available shortly after the call on the Company's website and continue to be available for 60 days.

A replay of the conference call will also be available through Tuesday, May 4, 2021 by dialing 888-203-1112 or, for international callers, +1 719-457-0820 and entering passcode 5369761.

About NXRT

NexPoint Residential Trust is a publicly traded REIT, with its shares listed on the New York Stock Exchange under the symbol "NXRT," primarily focused on acquiring, owning and operating well-located middle-income multifamily properties with "value-add" potential in large cities and suburban submarkets of large cities, primarily in the Southeastern and Southwestern United States. NXRT is externally advised by NexPoint Real Estate Advisors, L.P., an affiliate of NexPoint Advisors, L.P., an SEC-registered investment advisor, which has extensive real estate experience. Our filings with the Securities and Exchange Commission (the "SEC") are available on our website, nxrt.nexpoint.com, under the "Financials" tab.

Cautionary Statement Regarding Forward-Looking Statements

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on management's current expectations, assumptions and beliefs. Forward-looking statements can often be identified by words such as "expect," "anticipate," "estimate," "may," "should," "intend," "plan" and similar expressions, and variations or negatives of these words. These forward-looking statements include, but are not limited to, statements regarding NXRT's business and industry in general, NXRT's updated guidance for financial results for the full year 2021 and the related assumptions, including the effects of tornado damage at Cutter's Point, expected acquisitions and dispositions, shares outstanding and real estate taxes, NXRT's net asset value and the related components and assumptions, including estimated value-add expenditures, debt payments, outstanding debt and shares outstanding, guidance for the second quarter 2021 and the related assumptions, planned value-add programs, including projected average rent, rent change and return on investment, expected return to service of units at Cutter's Point damaged by the tornado, expected return to service of units at Timber Creek and Venue 8651 damaged by fires, expected return to service of units at properties impacted by Winter Storm Uri, and expected acquisitions and dispositions. They are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed in any forward-looking statement, including the ultimate geographic spread, duration and severity of the COVID-19 pandemic, and the effectiveness of actions taken, or actions that may be taken, by governmental authorities to contain the outbreak or treat its impact, as well as those described in greater detail in our filings with the Securities and Exchange Commission, particularly those specifically described in our Annual Report on Form 10-K. Readers should not place undue reliance on any forward-looking statements and are encouraged to review the Company's most recent Annual Report on Form 10-K and other filings with the SEC for a more complete discussion of the risks and other factors that could affect any forward-looking statements. The statements made herein speak only as of the date of this release and except as required by law, NXRT does not undertake any obligation to publicly update or revise any forward-looking statements.

FFO, Core FFO and AFFO


The following table reconciles our calculations of FFO, Core FFO and AFFO to net income (loss), the most directly comparable GAAP
financial measure, for the three months ended March 31, 2021 and 2020 (in thousands, except per share amounts):




For the Three Months Ended March 31,








2021



2020



% Change


Net income (loss)


$

(6,900)



$

28,039



N/M


Depreciation and amortization



20,758




23,338




(11.1)

%

Gain on sales of real estate






(38,972)



N/M


Adjustment for noncontrolling interests



(41)




(37)




10.8

%

FFO attributable to common stockholders



13,817




12,368




11.7

%














FFO per share - basic


$

0.55



$

0.49




13.1

%

FFO per share - diluted


$

0.55



$

0.48




15.2

%














Loss on extinguishment of debt and modification costs






874



N/M


Casualty-related expenses



42




60




(29.6)

%

Casualty gains






(51)



N/M


Pandemic expense

(1)


24







0.0

%

Amortization of deferred financing costs - acquisition term notes



209




349




(40.1)

%

Adjustment for noncontrolling interests



(1)




(4)



N/M


Core FFO attributable to common stockholders



14,091




13,596




3.6

%














Core FFO per share - basic


$

0.56



$

0.54




5.0

%

Core FFO per share - diluted


$

0.56



$

0.53




6.9

%














Amortization of deferred financing costs - long term debt



352




386




(8.9)

%

Equity-based compensation expense



1,608




1,300




23.7

%

Adjustment for noncontrolling interests



(6)




(5)




20.0

%

AFFO attributable to common stockholders



16,045




15,277




5.0

%














AFFO per share - basic


$

0.64



$

0.60




6.4

%

AFFO per share - diluted


$

0.64



$

0.59




8.3

%














Weighted average common shares outstanding - basic



25,068




25,388




(1.3)

%

Weighted average common shares outstanding - diluted



25,068




25,851




(3.0)

%














Dividends declared per common share


$

0.341



$

0.313




9.2

%














FFO Coverage - diluted

(2)

1.62x



1.53x




5.5

%

Core FFO Coverage - diluted

(2)

1.65x



1.68x




(2.1)

%

AFFO Coverage - diluted

(2)

1.88x



1.89x




(0.8)

%












(1) Represents additional cleaning, disinfecting, personal protection equipment ("PPE") and other costs incurred at the properties related to COVID-
19 that are not reflective of the continuing operations of the properties.

(2) Indicates coverage ratio of FFO/Core FFO/AFFO per common share (diluted) over dividends declared per common share during the period.

Definitions and Reconciliations of Non-GAAP Measures

Definitions

This presentation contains non-GAAP financial measures. A "non-GAAP financial measure" is defined as a numerical measure of a company's financial performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with GAAP in the statements of income, balance sheets or statements of cash flows of the Company. The non-GAAP financial measures used within this presentation are net operating income ("NOI"), funds from operations attributable to common stockholders ("FFO"), FFO per diluted share, Core FFO, Core FFO per diluted share, adjusted FFO ("AFFO"), AFFO per diluted share and net debt.

NOI is used by investors and our management to evaluate and compare the performance of our properties to other comparable properties, to determine trends in earnings and to compute the fair value of our properties. NOI is calculated by adjusting net income (loss) to add back (1) interest expense (2) advisory and administrative fees, (3) the impact of depreciation and amortization expenses as well as gains or losses from the sale of operating real estate assets that are included in net income computed in accordance with GAAP, (4) corporate general and administrative expenses, (5) other gains and losses that are specific to us including loss on extinguishment of debt and modification costs, (6) casualty-related expenses/(recoveries) and casualty gains (losses), (7) pandemic expenses that are not reflective of continuing operations of the properties and (8) property general and administrative expenses that are not reflective of the continuing operations of the properties or are incurred on behalf of the Company at the property for expenses such as legal, professional and franchise tax fees. We define "Same Store NOI" as NOI for our properties that are comparable between periods. We view Same Store NOI as an important measure of the operating performance of our properties because it allows us to compare operating results of properties owned for the entirety of the current and comparable periods and therefore eliminates variations caused by acquisitions or dispositions during the periods.

FFO is defined by the National Association of Real Estate Investment Trusts ("NAREIT"), as net income (loss) computed in accordance with GAAP, excluding gains or losses from real estate dispositions, plus real estate depreciation and amortization. We compute FFO in accordance with NAREIT's definition. Our presentation differs slightly in that we begin with net income (loss) before adjusting for amounts attributable to redeemable noncontrolling interests in the OP and we show the combined amounts attributable to such noncontrolling interests as an adjustment to arrive at FFO attributable to common stockholders.

Core FFO makes certain adjustments to FFO, which are either not likely to occur on a regular basis or are otherwise not representative of the ongoing operating performance of our Portfolio. Core FFO adjusts FFO to remove items such as losses on extinguishment of debt and modification costs (includes prepayment penalties and defeasance costs incurred on the early payment of debt, the write-off of unamortized deferred financing costs and fair market value adjustments of assumed debt related to the retirement of debt, costs incurred in connection with a debt modification that are not capitalized as deferred financing costs and other costs incurred in a debt extinguishment that are expensed), casualty-related expenses/and recoveries and gains or losses, pandemic expenses, the amortization of deferred financing costs incurred in connection with obtaining short-term debt financing, and the noncontrolling interests (as described above) related to these items.

AFFO makes certain adjustments to Core FFO. There is no industry standard definition of AFFO and practice is divergent across the industry. AFFO adjusts Core FFO to remove items such as equity-based compensation expense and the amortization of deferred financing costs incurred in connection with obtaining long-term debt financing, and the noncontrolling interests (as described above) related to these items.

Net debt is calculated by subtracting cash and cash equivalents and restricted cash held for value-add upgrades and green improvements from total debt outstanding.

We believe that the use of NOI, FFO, Core FFO, AFFO and net debt, combined with the required GAAP presentations, improves the understanding of operating results and debt levels of real estate investment trusts ("REITs") among investors and makes comparisons of operating results and debt levels among such companies more meaningful. While NOI, FFO, Core FFO, AFFO and net debt are relevant and widely used measures of operating performance and debt levels of REITs, they do not represent cash flows from operations, net income (loss) or total debt as defined by GAAP and should not be considered an alternative to those measures in evaluating our liquidity, operating performance and debt levels. NOI, FFO, Core FFO and AFFO do not purport to be indicative of cash available to fund our future cash requirements. We present net debt because we believe it provides our investors a better understanding of our leverage ratio. Net debt should not be considered an alternative to total debt, as we may not always be able to use our available cash to repay debt. Our computation of NOI, FFO, Core FFO, AFFO and net debt may not be comparable to NOI, FFO, Core FFO, AFFO and net debt reported by other REITs. For a more complete discussion of NOI, FFO, Core FFO and AFFO, see our most recent Annual Report on Form 10-K and our other filings with the SEC.

Reconciliations


NOI and Same Store NOI for the Three Months Ended March 31, 2021 and 2020


The following table, which has not been adjusted for the effects of noncontrolling interests, reconciles NOI and our Q1 Same Store NOI
for the three months ended March 31, 2021 and 2020 to net income (loss), the most directly comparable GAAP financial measure (in
thousands):




For the Three Months Ended March 31,





2021



2020



Net income (loss)


$

(6,900)



$

28,039



Adjustments to reconcile net income (loss) to NOI:










Advisory and administrative fees



1,868




1,865



Corporate general and administrative expenses



2,940




2,701



Casualty-related expenses

(1)


42




60



Casualty gains






(51)



Pandemic expense

(2)


24






Property general and administrative expenses

(3)


233




469



Depreciation and amortization



20,758




23,338



Interest expense



10,616




11,662



Loss on extinguishment of debt and modification costs






874



Gain on sales of real estate






(38,972)



NOI


$

29,581



$

29,985



Less Non-Same Store










Revenues



(1,544)




(3,374)



Operating expenses



571




1,748



Operating income



(341)






Same Store NOI


$

28,267



$

28,359




(1) Adjustment to net income (loss) to exclude certain property operating expenses that are casualty-related expenses.

(2) Represents additional cleaning, disinfecting, PPE and other costs incurred at the properties related to COVID-19.

(3) Adjustment to net income (loss) to exclude certain property general and administrative expenses that are not reflective of the continuing
operations of the properties or are incurred on our behalf at the property for expenses such as legal, professional and franchise tax fees.

NOI for the years ended December 31, 2020, and 2019 and the three months ended December 31, 2020


The following table, which has not been adjusted for the effects of noncontrolling interests, reconciles NOI for the years ended December
31, 2020, and 2019 and the three months ended December 31, 2020 to net income (loss), the most directly comparable GAAP financial
measure (in thousands):




For the Year Ended December 31,



For the Three Months
Ended December 31,





2020



2019



2020



Net income


$

44,150



$

99,438



$

(4,212)



Adjustments to reconcile net income to NOI:














Advisory and administrative fees



7,670




7,500




1,893



Corporate general and administrative expenses



10,035




9,613




1,595



Casualty-related expenses/(recoveries)

(1)


790




(34)




64



Casualty losses (gains)



(5,886)




3,488




(1,954)



Pandemic expense

(2)


510







35



Property general and administrative expenses

(3)


1,112




1,517




15



Depreciation and amortization



82,411




69,086




19,932



Interest expense



44,753




37,385




11,049



Loss on extinguishment of debt and modification
costs



1,470




2,869






Gain on sales of real estate



(69,151)




(127,684)






NOI


$

117,864



$

103,178



$

28,417




(1) Adjustment to net income (loss) to exclude certain property operating expenses that are casualty-related expenses.

(2) Represents additional cleaning, disinfecting, PPE and other costs incurred at the properties related to COVID-19.

(3) Adjustment to net income (loss) to exclude certain property general and administrative expenses that are not reflective of the continuing
operations of the properties or are incurred on our behalf at the property for expenses such as legal, professional and franchise tax fees.

Reconciliation of Debt to Net Debt


(dollar amounts in thousands)


Q1 2021



Q1 2020


Total mortgage debt


$

1,167,880



$

1,151,683


Credit facilities



183,000




225,000


Total Debt



1,350,880




1,376,683


Adjustments to arrive at net debt:









Cash and cash equivalents



(22,706)




(69,540)


Restricted cash held for value-add upgrades and green improvements



(9,139)




(15,356)


Net Debt


$

1,319,035



$

1,291,787


Enterprise Value (1)


$

2,477,035



$

1,918,787


Leverage Ratio



53

%



67

%


(1) Enterprise Value is calculated as Market Capitalization plus Net Debt.

Guidance Reconciliations of NOI, Same Store NOI, NOI, FFO, Core FFO and AFFO


The following table, which has not been adjusted for the effects of noncontrolling interests, reconciles NOI to net income (loss) (the
most directly comparable GAAP financial measure) for the periods presented below (in thousands):




For the Year Ended

December 31, 2021



For the Three Months Ended
June 30, 2021





Mid-Point (1)



Mid-Point (1)



Net loss


$

(25,599)



$

(8,548)



Adjustments to reconcile net loss to NOI:










Advisory and administrative fees



7,564




1,885



Corporate general and administrative expenses



12,641




3,247



Property general and administrative expenses

(2)


299






Depreciation and amortization



83,894




22,428



Interest expense



42,557




10,613



Casualty-related recoveries








Loss on extinguishment of debt and modification costs








Gain on sales of real estate








NOI


$

121,356



$

29,625



Less Non-Same Store










Revenues

(3)


(5,557)







Operating expenses

(3)


1,728







Miscellaneous income

(3)


(948)







Same Store NOI

(3)

$

116,579








(1) Mid-Point estimates shown for full year and second quarter 2021 guidance. Assumptions made for full year and second quarter 2021 NOI guidance
include the Same Store operating growth projections included in the "2021 Full Year Guidance Summary" section of this release and the effect of
the acquisition and dispositions throughout the fiscal year.

(2) Adjustment to net income to exclude certain property general and administrative expenses that are not reflective of the continuing operations of
the properties or are incurred on our behalf at the property for expenses such as legal, professional and franchise tax fees.

(3) Amounts are derived from the results of operations of our pro forma Full Year 2021 Same Store properties and Non-Same Store properties.
There are 35 properties in our pro forma Full Year 2021 Same Store pool.

The following table reconciles our FFO, Core FFO and AFFO guidance to our net loss (the most directly comparable GAAP financial
measure) guidance for the year ended December 31, 2021 (in thousands, except per share data):




For the Year Ended December 31, 2021




Mid-Point


Net loss


$

(25,599)


Depreciation and amortization



83,894


Gain on sales of real estate




Adjustment for noncontrolling interests



(166)


FFO attributable to common stockholders



58,129


FFO per share - diluted (1)


$

2.26







Loss on extinguishment of debt and modification costs




Casualty-related expenses



177


Pandemic expense



24


Amortization of deferred financing costs - acquisition term notes



631


Adjustment for noncontrolling interests



(1)


Core FFO attributable to common stockholders



58,960


Core FFO per share - diluted (1)


$

2.29







Amortization of deferred financing costs - long term debt



1,426


Equity-based compensation expense



6,962


Adjustment for noncontrolling interests



(27)


AFFO attributable to common stockholders



67,321


AFFO per share - diluted (1)


$

2.62







Weighted average common shares outstanding - diluted



25,732



(1) For purposes of calculating per share data, we assume a weighted average diluted share count of approximately 25.7 million for the full year 2021.

The following table reconciles our calculations of FFO, Core FFO and AFFO to net income, the most directly comparable GAAP financial measure,
for the years ended December 31, 2020 and 2019 (in thousands, except per share amounts):




For the Year Ended December 31,





2020



2019



Net income (loss)


$

44,150



$

99,438



Depreciation and amortization



82,411




69,086



Gain on sales of real estate



(69,151)




(127,684)



Adjustment for noncontrolling interests



(172)




(122)



FFO attributable to common stockholders



57,238




40,718













FFO per share - basic


$

2.32



$

1.69



FFO per share - diluted


$

2.27



$

1.66













Loss on extinguishment of debt and modification costs



1,470




2,869



Casualty-related expenses/(recoveries)



790




(34)



Casualty losses (gains)



(5,886)




3,488



Pandemic expense

(1)


510






Amortization of deferred financing costs - acquisition term notes



1,384




553



Adjustment for noncontrolling interests



6




(21)



Core FFO attributable to common stockholders



55,512




47,573













Core FFO per share - basic


$

2.25



$

1.97



Core FFO per share - diluted


$

2.20



$

1.93













Amortization of deferred financing costs - long term debt



1,453




1,530



Equity-based compensation expense



5,504




5,130



Adjustment for noncontrolling interests



(21)




(20)



AFFO attributable to common stockholders



62,448




54,213













AFFO per share - basic


$

2.53



$

2.25



AFFO per share - diluted


$

2.47



$

2.20













Weighted average common shares outstanding - basic



24,715




24,116



Weighted average common shares outstanding - diluted



25,234




24,593




(1) Represents additional cleaning, disinfecting, PPE and other costs incurred at the properties related to COVID-19 that are not reflective of the
continuing operations of the properties.

Contact:
Investor Relations
Jackie Graham
JGraham@nexpoint.com
833-463-6697
Media inquiries: JGraham@nexpoint.com

Cision
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SOURCE NexPoint Residential Trust, Inc.