NXRT Raises Full Year 2024 Guidance, Reports Net Income of $10.6 million, $39.25 million of Disposition Activity and $14.6 million of Share Repurchase Activity DALLAS, July 30, 2024 /PRNewswire/ -- NexPoint Residential Trust, Inc. (NYSE:NXRT) reported financial results for the second quarter ended June 30, 2024. Highlights NXRT1 reported Net Income, FFO2, Core FFO2 and AFFO2 of $10.6M, $16.3M, $17.9M and $20.9M, respectively, attributable to common stockholders for the quarter ended June 30, 2024, compared to Net Loss, FFO, Core FFO, and AFFO of $(4.0)M, $19.8M, $20.4M and $23.2M, respectively, attributable to common stockholders for the quarter ended June 30, 2023. NXRT reported Net Income, FFO, Core FFO and AFFO of $36.9M, $35.3M, $37.5M and $43.5M, respectively, attributable to common stockholders for the six months ended June 30, 2024, compared to 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. For the three months ended June 30, 2024, Q2 Same Store properties3, occupancy was flat, total revenue and NOI2 increased  2.3% and 2.4%, respectively, and average effective rent decreased 1.0% over the prior year period. For the six months ended June 30, 2024, YTD Same Store properties3, occupancy was flat, total revenue and NOI2 increased 2.9% and 3.2%, respectively, and average effective rent decreased 1.0% over the prior year period. During the second quarter 2024, the Company completed the sale of Radbourne Lake for a sales price of approximately $39.3 million, resulting in a gain on sale of real estate of $18.8 million. During the second quarter 2024, the Company paid off the mortgage on Stone Creek at Old Farm of $15.3 million. During the second quarter 2024, the Company repurchased and subsequently retired 438,678 shares at an average price of $33.19 per share, totaling approximately $14.6 million of its common stock. NXRT paid a second quarter dividend of $0.46242 per share of common stock on June 28, 2024. The weighted average effective monthly rent per unit across all 36 properties held as of June 30, 2024 (the "Portfolio"), consisting of 13,1744 units, was $1,517, while physical occupancy was 94.1%. During the second quarter 2024, for the properties in our Portfolio, we completed 59 full and partial upgrades and leased 56 upgraded units, achieving an average monthly rent premium of $240 and a 20.1% ROI5. Since inception, for the properties currently in our Portfolio, we have completed 8,271 full and partial upgrades, 4,659 kitchen and laundry appliances, and 11,389 technology packages, resulting in a $175, $48, and $43 average monthly rental increase per unit and a 20.8%, 62.0%, and 37.2% 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 35 properties encompassing 12,963 units of apartment space in our Same Store pool for the three months ended June 30, 2024 (our "Q2 Same Store" properties) and 35 properties encompassing 12,963 units of apartment space in our Same Store pool for the six months ended June 30, 2024 (our "YTD Same Store" properties). The same store unit count excludes 21 units that are currently down due to casualty events (Rockledge: 20 units, Bella Solara: 1 unit). 4) Total units owned in our Portfolio is 13,174, however 21 units are currently down due to casualty events (Rockledge: 20 units, Bella Solara: 1 unit). 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 2024 Financial Results Total revenues were $64.2 million for the second quarter of 2024, compared to $69.6 million for the second quarter of 2023. Net income for the second quarter of 2024 totaled $10.6 million, or income of $0.40 per diluted share, which included $24.4 million of depreciation and amortization expense. This compared to a net loss of $(4.0) million, or loss of $(0.15) per diluted share, for the second quarter of 2023, which included $23.9 million of depreciation and amortization expense. The change in our net income of $10.6 million for the three months ended June 30, 2024 as compared to our net loss of $(4.0) million for the three months ended June 30, 2023 primarily relates to an increase in gain on sales of real estate of $18.7 million. For the second quarter of 2024, NOI was $38.9 million on 36 properties, compared to $42.0 million for the second quarter of 2023 on 40 properties. For the second quarter of 2024, Q2 Same Store NOI increased 2.4% to $38.4 million, compared to $37.5 million for the second quarter of 2023. For the second quarter of 2024, FFO totaled $16.3 million, or $0.62 per diluted share, compared to $19.8 million, or $0.75 per diluted share, for the second quarter of 2023. For the second quarter of 2024, Core FFO totaled $17.9 million, or $0.68 per diluted share, compared to $20.4 million, or $0.77 per diluted share, for the second quarter of 2023. For the second quarter of 2024, AFFO totaled $20.9 million, or $0.80 per diluted share, compared to $23.2 million, or $0.88 per diluted share, for the second quarter of 2023. 2024 Year to Date Financial Results Total revenues were $131.8 million for the six months ended June 30, 2024, compared to $138.8 million for the six months ended June 30, 2023. Net income for the six months ended June 30, 2024 totaled $36.9 million, or income of $1.40 per diluted share, which included $48.8 million of depreciation and amortization expense. This compared to net loss of $(7.8) million, or loss of $(0.31) per diluted share, for the six months ended June 30, 2023, which included $47.1 million of depreciation and amortization expense. The change in our net income of $37.0 million for the six months ended June 30, 2024 as compared to our net loss of $(7.9) million for the six months ended June 30, 2023 primarily relates to an increase in gain on sales of real estate of $50.4 million. For the six months ended June 30, 2024, NOI was $80.0 million on 36 properties, compared to $83.1 million for the six months ended June 30, 2023 on 40 properties. For the six months ended June 30, 2024, Same Store NOI increased 3.2% to $77.7 million, compared to $75.2 million for the six months ended June 30, 2023. For the six months ended June 30, 2024, FFO totaled $35.3 million, or $1.34 per diluted share, compared to $39.1 million, or $1.49 per diluted share, for the six months ended June 30, 2023. For the six months ended June 30, 2024, Core FFO totaled $37.5 million, or $1.43 per diluted share, compared to $39.0 million, or $1.49 per diluted share, for the six months ended June 30, 2023. For the six months ended June 30, 2024, AFFO totaled $43.5 million, or $1.65 per diluted share, compared to $44.2 million, or $1.69 per diluted share, for the six months ended June 30, 2023. NXRT Path to Growth: 2025-2027 The Company expects to refinance portfolio-level debt to current floating rate spreads, aiming to reduce the average SOFR spread from 158 bps to 100-110 bps. This reduction is estimated to provide a $0.15-$0.20 per share benefit annually through 2027, assuming all other factors remain constant. One significant added benefit to this refinancing initiative, beyond tightening credit spreads and extending maturities out another seven years, is to offset the expected impact of our interest rate swaps maturing over the next three years. Second Quarter Earnings Conference Call NXRT will host a conference call on Tuesday, July 30, 2024, 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 13, 2024, 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, the NXRT Path to Growth: 2025-2027, expected refinancing of portfolio-level debt, the effects of the refinancing, forecasted submarket deliveries, NXRT's guidance for financial results for the full year 2024, including net loss per diluted share, Core FFO per diluted share, same store rental income, same store total revenue, same store expense, same store NOI, 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, estimated value-add expenditures, debt payments and outstanding debt, net loss and NOI guidance for the third quarter and full year 2024 and the related assumptions, planned value-add programs, including rehab costs, rent change and return on investment, expected settlement of interest rate swaps and the effect on the debt maturity schedule, rehab budgets and 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 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 income (loss), the most directly comparable GAAP financial measure, for the three and six months ended June 30, 2024 and 2023 (in thousands, except per share amounts): For the Three Months EndedJune 30, For the Six Months EndedJune 30, 2024 2023 2024 2023 % Change Net income (loss) $ 10,638 $ (3,968) $ 37,040 $ (7,866) N/M Depreciation and amortization 24,442 23,872 48,765 47,138 3.5 % Gain on sales of real estate (1) (18,686) — (50,395) — 0.0 % Adjustment for noncontrolling interests (64) (76) (139) (149) -6.7 % FFO attributable to common stockholders 16,330 19,828 35,271 39,123 -9.8 % FFO per share - basic $ 0.64 $ 0.77 $ 1.38 $ 1.53 -9.8 % FFO per share - diluted $ 0.62 $ 0.75 $ 1.34 $ 1.49 -10.1 % Loss (gain) on extinguishment of debt and modification costs 255 — 801 (122) N/M Casualty-related expenses/(recoveries) 232 398 267 (1,308) N/M Casualty loss 737 66 538 880 -38.9 % Gain on forfeited deposits — (250) — (250) N/M Amortization of deferred financing costs - acquisition term notes 331 331 661 661 0.0 % Adjustment for noncontrolling interests (6) (3) (9) (1) N/M Core FFO attributable to common stockholders 17,879 20,370 37,529