NEXPOINT RESIDENTIAL TRUST, INC. REPORTS SECOND QUARTER 2023 RESULTS

NXRT Generates Strong Returns on Rehab Program and Tames Controllable Expense Growth

DALLAS, July 25, 2023 /PRNewswire/ -- NexPoint Residential Trust, Inc. (NYSE:NXRT, Financial) reported financial results for the second quarter ended June 30, 2023.

Highlights

• NXRT¹ reported Net Loss, FFO², Core FFO² and AFFO² of $(4.0)M, $19.8M, $20.4M and $23.2M, respectively, attributable to common stockholders for the quarter ended June 30, 2023, compared to Net Loss, FFO, Core FFO, and AFFO of $(7.8)M, $17.6M, $20.3M and $22.7M, respectively, attributable to common stockholders for the quarter ended June 30, 2022.
• NXRT reported Net Loss, FFO, Core FFO and AFFO of $(7.8)M, $39.1M, $39.0M and $44.2M, respectively, attributable to common stockholders for the six months ended June 30, 2023, compared to Net Loss, FFO, Core FFO, and AFFO of $(12.5)M, $36.6M, $40.4M and $45.1M, respectively, attributable to common stockholders for the six months ended June 30, 2022.
• For the three months ended June 30, 2023, Q2 Same Store properties³ average effective rent, total revenue and NOI² increased 7.9%, 7.4% and 7.6%, respectively, and occupancy decreased 60 bps over the prior year period.
• For the six months ended June 30, 2023, YTD Same Store properties³ average effective rent, total revenue and NOI² increased 8.0%, 9.2% and 8.5%, respectively, and occupancy decreased 70 bps over the prior year period.
• NXRT paid a second quarter dividend of $0.42 per share of common stock on June 30, 2023.
• The weighted average effective monthly rent per unit across all 40 properties held as of June 30, 2023 (the "Portfolio"), consisting of 15,127⁴ units, was $1,497, while physical occupancy was 93.9%.
• During the second quarter 2023, for the properties in our Portfolio, we completed 505 full and partial upgrades and leased 517 upgraded units, achieving an average monthly rent premium of $224 and a 20.9% ROI⁵.
• Since inception, for the properties currently in our Portfolio, we have completed 8,736 full and partial upgrades, 5,091 kitchen and laundry appliances, and 10,753 technology packages, resulting in a $161, $49, and $45 average monthly rental increase per unit and a 21.0%, 66.8%, and 35.3% 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 loss, see the "Definitions and Reconciliations of Non-GAAP Measures," "FFO, Core FFO and AFFO" and "NOI and Same Store NOI" 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 38 properties encompassing 14,112 units of apartment space in our Same Store pool for the three months ended June 30, 2023 (our "Q2 Same Store" properties) and 36 properties encompassing 13,550 units of apartment space in our Same Store pool for the six months ended June 30, 2023 (our "YTD Same Store" properties). The same store unit count excludes 91 units that are currently down due to casualty events (Rockledge: 20 units, Silverbrook: 16 units, Arbors of Brentwood: 16 units, Six Forks: 14 units, Versailles: 8 units, Bella Solara: 8 units, Versailles II: 7 units, and Parc500: 2 units).
4. Total units owned in our Portfolio is 15,127, however 91 units are currently down due to casualty events (Rockledge: 20 units, Silverbrook: 16 units, Arbors of Brentwood: 16 units, Six Forks: 14 units, Versailles: 8 units, Bella Solara: 8 units, Versailles II: 7 units, and Parc500: 2 units).
5. We define Return on Investment ("ROI") as the sum of the actual rent premium divided by the sum of the total cost.

Second Quarter 2023 Financial Results

• Total revenues were $69.6 million for the second quarter of 2023, compared to $65.8 million for the second quarter of 2022.
• Net loss for the second quarter of 2023 totaled $(4.0) million, or loss of $(0.15) per diluted share, which included $23.9 million of depreciation and amortization expense. This compared to a net loss of $(7.8) million, or loss of $(0.30) per diluted share, for the second quarter of 2022, which included $25.5 million of depreciation and amortization expense.
• The change in our net loss of $(4.0) million for the three months ended June 30, 2023 as compared to our net loss of $(7.8) million for the three months ended June 30, 2022 primarily relates to an increase in total revenues, partially offset by an increase in interest expense.
• For the second quarter of 2023, NOI was $42.0 million on 40 properties, compared to $39.0 million for the second quarter of 2022 on 41 properties.
• For the second quarter of 2023, Q2 Same Store NOI increased 7.6% to $39.7 million, compared to $36.9 million for the second quarter of 2022.
• For the second quarter of 2023, FFO totaled $19.8 million, or $0.75 per diluted share, compared to $17.6 million, or $0.67 per diluted share, for the second quarter of 2022.
• For the second quarter of 2023, Core FFO totaled $20.4 million, or $0.77 per diluted share, compared to $20.3 million, or $0.78 per diluted share, for the second quarter of 2022.
• For the second quarter of 2023, AFFO totaled $23.2 million, or $0.88 per diluted share, compared to $22.7 million, or $0.87 per diluted share, for the second quarter of 2022.

2023 Year to Date Financial Results

• Total revenues were $138.8 million for the six months ended June 30, 2023, compared to $126.6 million for the six months ended June 30, 2022.
• Net loss for the six months ended June 30, 2023 totaled $(7.8) million, or loss of $(0.31) per diluted share, which included $47.1 million of depreciation and amortization expense. This compared to net loss of $(12.5) million, or loss of $(0.49) per diluted share, for the six months ended June 30, 2022, which included $49.3 million of depreciation and amortization expense.
• The change in our net loss of $(7.8) million for the six months ended June 30, 2023 as compared to our net loss of $(12.5) million for the six months ended June 30, 2022 primarily relates to an increase in total revenues, partially offset by an increase in interest expense.
• For the six months ended June 30, 2023, NOI was $83.1 million on 40 properties, compared to $75.6 million for the six months ended June 30, 2022 on 41 properties.
• For the six months ended June 30, 2023, Same Store NOI increased 8.5% to $75.5 million, compared to $69.5 million for the six months ended June 30, 2022.
• For the six months ended June 30, 2023, FFO totaled $39.1 million, or $1.49 per diluted share, compared to $36.6 million, or $1.40 per diluted share, for the six months ended June 30, 2022.
• For the six months ended June 30, 2023, Core FFO totaled $39.0 million, or $1.49 per diluted share, compared to $40.4 million, or $1.54 per diluted share, for the six months ended June 30, 2022.
• For the six months ended June 30, 2023, AFFO totaled $44.2 million, or $1.69 per diluted share, compared to $45.1 million, or $1.72 per diluted share, for the six months ended June 30, 2022.

Second Quarter Earnings Conference Call

NXRT will host a conference call on Tuesday, July 25, 2023, at 11:00 a.m. ET (10:00 am CT), to discuss second quarter financial results. The conference call can be accessed live over the phone by dialing 888-660-4430 or, for international callers, +1 646-960-0537 and using passcode Conference ID: 5001576. A live audio webcast of the call will be available online at the Company's website, https://nxrt.nexpoint.com (under "Resources"). 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, August 8, 2023, by dialing 800-770-2030 or, for international callers, +1 647-362-9199 and entering passcode 5001576.

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," "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 guidance for financial results for the full year 2023, including earnings per diluted share, Core FFO per diluted share, same store rental income, same store total revenue, same store total expenses and same store NOI, interest expense, and the related components and assumptions, including expected acquisitions and dispositions, expected same store pool, shares outstanding and same store growth projections, NXRT's net asset value and the related components and assumptions, including estimated value-add expenditures, debt payments, outstanding debt and shares outstanding, net income and NOI guidance for the third quarter and full year 2023 and the related assumptions, planned value-add programs, including projected rent change and return on investment, expected settlement of interest rate swaps and the effect on the debt maturity schedule, rehab budgets and expected acquisitions and dispositions and related timing. 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 those described in greater detail in our filings with the Securities and Exchange Commission, particularly those 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 loss, the most directly comparable GAAP financial measure, for the three and six months ended June 30, 2023 and 2022 (in thousands, except per share amounts):