PR Newswire | Apr 27, 2021 08:02AM EDT

04/27 07:00 CDT

NexPoint Residential Trust, Inc. Reports First Quarter 2021 ResultsNXRT Increases 2021 Full Year Guidance; Continues to Execute Value-Add Strategy DALLAS, April 27, 2021

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," "NexPointResidential 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 ofwhy 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 ourPortfolio for the entirety of the periods being compared. There are 35 properties encompassing 13,564 units of apartment space in our SameStore pool for the three months ended March 31, 2021 (our "Q1 Same Store" properties). The same store unit count excludes 93 units thatare 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 casualtyevents from the Q1 Same Store pool, SS NOI increased 0.38% quarter over quarter. However, the SS NOI calculation presentedherein includes the down units in the prior period calculation.

(5) Total units owned in our Portfolio is 14,205, however 229 units arecurrently down due to fires, a tornado, and winter storm Uri (Cutter's Point: 136 units, Atera: 26 units, Hollister Place: 25 units, Venueat 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 rentpremium 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 QuarterEarnings 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 tonet income (loss), the most directly comparable GAAPfinancial measure, for the three months ended March 31, 2021 and 2020 (inthousands, 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 protectionequipment ("PPE") and other costs incurred at the properties related to COVID- 19 that are not reflective of the continuing operations of theproperties.

(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 ofnoncontrolling interests, reconciles NOI and our Q1 Same Store NOIfor the three months ended March 31, 2021 and 2020 to net income (loss), themost directly comparable GAAP financial measure (inthousands):

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 operatingexpenses that are casualty-related expenses.

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

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



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

The following table, which has not been adjusted for the effects ofnoncontrolling interests, reconciles NOI for the years ended December31, 2020, and 2019 and the three months ended December 31, 2020 to net income(loss), the most directly comparable GAAP financialmeasure (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 1,470 2,869 -costs

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 operatingexpenses that are casualty-related expenses.

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

(3) Adjustment to net income (loss) to exclude certain property general andadministrative expenses that are not reflective of the continuing operations of the properties or are incurred on our behalf at theproperty 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 ofnoncontrolling interests, reconciles NOI to net income (loss) (themost directly comparable GAAP financial measure) for the periods presentedbelow (in thousands):

For the Year Ended For the Three Months Ended June 30, 2021 December 31, 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 2021guidance. 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 andadministrative expenses that are not reflective of the continuing operationsof the properties or are incurred on our behalf at the property forexpenses such as legal, professional and franchise tax fees.

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

The following table reconciles our FFO, Core FFO and AFFO guidance to our netloss (the most directly comparable GAAP financialmeasure) guidance for the year ended December 31, 2021 (in thousands, exceptper 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 weightedaverage diluted share count of approximately 25.7 million for the full year2021.

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

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 costsincurred at the properties related to COVID-19 that are not reflective of the continuing operations of the properties.

Contact:Investor RelationsJackie GrahamJGraham@nexpoint.com833-463-6697Media inquiries: JGraham@nexpoint.com

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SOURCE NexPoint Residential Trust, Inc.