WWW.NEXPOINTLIVING.COM

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NXRT¹ reported Net Loss, FFO², Core FFO² and AFFO² of $(9.3)M, $12.0M, $14.5M and $16.1M, respectively, attributable to common stockholders for the quarter ended June 30, 2020, compared to Net Loss, FFO, Core FFO, and AFFO of $(2.0)M, $11.0M, $11.0M and $12.9M, respectively, attributable to common stockholders for the quarter ended June 30, 2019.

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NXRT reported Net Income, FFO, Core FFO and AFFO of $18.7M, $24.4M, $28.1M and $31.4M, respectively, attributable to common stockholders for the six months ended June 30, 2020, compared to Net Loss, FFO, Core FFO, and AFFO of $(6.3)M, $22.0M, $22.0M and $25.6M, respectively, attributable to common stockholders for the six months ended June 30, 2019.

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For the three months ended June 30, 2020, Q2 Same Store properties³ average effective rent, total revenue and NOI² increased 2.1%, 4.0% and 5.8%, respectively, and occupancy increased 120 bps over the prior year period.

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For the six months ended June 30, 2020, YTD Same Store properties³ average effective rent, total revenue and NOI² increased 1.9%, 4.7% and 5.3%, respectively, and occupancy increased 100 bps over the prior year period.

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The weighted average effective monthly rent per unit across all 37 properties held as of June 30, 2020 (the “Portfolio”), consisting of 14,104 units, was $1,109, while physical occupancy was 95.3%.

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NXRT paid a second quarter dividend of $0.3125 per share of common stock on June 30, 2020.

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During the second quarter, for the properties in our Portfolio, we completed 411 full and partial upgrades and leased 392 upgraded units, achieving an average monthly rent premium of $113 and a 23.4% ROI⁴. Since inception, for the properties currently in our Portfolio, we have completed 7,325 full and partial upgrades and achieved an average monthly rental increase per unit of $95, equating to a 25.0% ROI on all units leased as of June 30, 2020.

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During the six months ended June 30, 2020, through its at-the-market offering (“ATM program”), NXRT issued approximately 0.6 million shares for approximately $28.0 million in gross proceeds. On March 4, 2020, NXRT entered into a new ATM program for $225.0 million.

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 28 properties encompassing 10,177 units of apartment space in our Same Store pool for the three months ended June 30, 2020 (our “Q2 Same Store” properties) and 25 properties encompassing 9,521 units of apartment space in our Same Store pool for the six months ended June 30, 2020 (our “YTD Same Store” properties).

4)

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

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During the six months ended June 30, 2020, NXRT repurchased 1,644,697 shares at a weighted average price of $27.07 per share. Since inception, NXRT has repurchased 2,382,155 shares at a weighted average price of $25.70 per share.

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On July 27, 2020, NXRT appointed Catherine Wood as an independent director to the Company’s board of directors (the “Board”). Ms. Wood brings a wealth of knowledge, extensive leadership experience, and a fresh perspective that complements the Company’s mission to diversify NXRT’s Board and management team. Both management and the Board believe the Company will benefit from diversification of viewpoints and experiences. Ms. Wood is Chief Executive Officer and Chief Investment Officer of ARK Investment Management LLC, an investment manager she founded in 2014.

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On July 28, 2020 the Company, through the OP, entered into a purchase and sale agreement with a third party real estate investment firm for the sale of the Eagle Crest property, located in Irving, TX for approximately $55.5 million. The sale is expected to close on or before September 30, 2020.

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Total revenues were $50.7 million for the second quarter of 2020, compared to $43.1 million for the second quarter of 2019.

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Net loss for the second quarter of 2020 totaled $(9.3) million, or loss of $(0.38) per diluted share, which included $21.4 million of depreciation and amortization expense. This compared to a net loss of $(2.0) million, or a loss of $(0.08) per diluted share, for the second quarter of 2019, which included $13.1 million of depreciation and amortization expense.

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The change in our net loss of $(9.3) million for the three months ended June 30, 2020 as compared to our net loss of $(2.0) million for the three months ended June 30, 2019 primarily relates to an increase in total expenses and an increase in interest expense partially offset by an increase in total revenues.

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For the second quarter of 2020, NOI was $29.2 million on 37 properties, compared to $24.6 million for the second quarter of 2019 on 39 properties.

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For the second quarter of 2020, Q2 Same Store NOI increased 5.8% to $20.2 million, compared to $19.1 million for the second quarter of 2019.

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For the second quarter of 2020, FFO totaled $12.0 million, or $0.50 per diluted share, compared to $11.0 million, or $0.46 per diluted share, for the second quarter of 2019.

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For the second quarter of 2020, Core FFO totaled $14.5 million, or $0.59 per diluted share, compared to $11.0 million, or $0.45 per diluted share, for the second quarter of 2019.

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For the second quarter of 2020, AFFO totaled $16.1 million, or $0.66 per diluted share, compared to $12.9 million, or $0.53 per diluted share, for the second quarter of 2019.

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Total revenues were $103.3 million for the six months ended June 30, 2020, compared to $84.6 million for the six months ended June 30, 2019.

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Net income for the six months ended June 30, 2020 totaled $18.7 million, or income of $0.74 per diluted share, which included a gain on sales of real estate of $39.0 million and $44.8 million of depreciation and amortization expense. This compared to net loss of $(6.4) million, or a loss of $(0.27) per diluted share, six months ended June 30, 2019, which included $28.5 million of depreciation and amortization expense.

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The change in our net income of $18.7 million for the six months ended June 30, 2020 as compared to our net loss of $(6.4) million for the six months ended June 30, 2019 primarily relates to increases in gains on sales of real estate and total revenues, partially offset by increases in depreciation and total property operating expenses.

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For the six months ended June 30, 2020, NOI was $59.2 million on 37 properties, compared to $48.2 million for the six months ended June 30, 2019 on 39 properties.

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For the six months ended June 30, 2020, Same Store NOI increased 5.3% to $36.0 million, compared to $34.2 million for the six months ended June 30, 2019.

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For the six months ended June 30, 2020, FFO totaled $24.4 million, or $0.96 per diluted share, compared to $22.0 million, or $0.91 per diluted share, for the six months ended June 30, 2019.

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For the six months ended June 30, 2020, Core FFO totaled $28.1 million, or $1.11 per diluted share, compared to $22.0 million, or $0.91 per diluted share, for the six months ended June 30, 2019.

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For the six months ended June 30, 2020, AFFO totaled $31.4 million, or $1.24 per diluted share, compared to $25.6 million, or $1.06 per diluted share, for the six months ended June 30, 2019.

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The Company is providing a summary of select July operating metrics in response to economic challenges and related government actions and regulations as a result of the ongoing novel Coronavirus (“COVID-19”) pandemic:

o

Through July’s accounting month end, combined, rent cash collections and payment plans under lease amendments signed by residents financially impacted by COVID-19 represented 99.1% of billed rent for July 2020. This compares to 99.8% average cash collections in 2019. Rent cash collections represented 97.9% of billed July 2020 rent and promises to pay by financially impacted residents under lease amendments represented 1.2% of billed July 2020 rent.

o

Average Physical Occupancy for the Same Store Portfolio was strong at 95.0% for July 2020, while resident retention was 53.7% for the month.

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COVID-19 has resulted in cessation, severe curtailment, or impairment of business activities in most sectors of the economy in all markets we operate in, due to governmental “stay at home” orders, risk mitigation procedures, closure of businesses not considered to be “essential,” as well as other direct and indirect impacts, including those that may not yet be identified. This has resulted in a rapid and dramatic increase in unemployment in the U.S. We cannot estimate the extent of COVID-19’s future negative impacts or how long the negative impacts of COVID-19 will persist. In addition, it is possible that, even after the initial restrictions due to COVID-19 ease, they could be reinstituted in case of future waves of infection or if additional pandemics occur. As a result of these uncertainties related to COVID-19, the Company continues to withhold its full-year 2020 guidance outlook.

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(share counts in thousands)

Exchange/Ticker

NYSE: NXRT

Share Price (1)

$37.92

Insider Ownership

13.43%

2020 Q3 Dividend Per Share

$0.3125

Dividend Yield (1)

3.30%

Shares Outstanding - basic (Wtd Avg. 3 mo. ended 06/30/2020)

24,307

Shares Outstanding - diluted (Wtd Avg. 3 mo. ended 06/30/2020)

24,307

(1)

As of the close of market trading on August 3, 2020.

(2)

Full Year 2020 Adjusted NOI estimate is presented for the existing portfolio (37 properties as of June 30, 2020).

(3)

Based on Green Street Advisors’ “Residential Sectors” Report dated April 19, 2020. FY 2020 Adjusted NOI estimate does not consider any additional acquisition or disposition activity for the remainder of the year.

(4)

Includes approximately $10.8 million that is held for value-add upgrades; reduced by $10.8 million for estimated 2020 rehab expenditures.

(5)

Includes approximately $0.8 million in forward 12-month principal payments.

(6)

Includes outstanding balance of June 30, 2020.

(7)

Includes the 196 units at the Cutter’s Point property that are not currently operating.

June 30, 2020

December 31, 2019

(Unaudited)

ASSETS

Operating Real Estate Investments

Land

$

317,886

$

317,886

Buildings and improvements

1,480,386

1,472,319

Intangible lease assets

—

12,414

Construction in progress

13,867

4,375

Furniture, fixtures, and equipment

88,843

81,038

Total Gross Operating Real Estate Investments

1,900,982

1,888,032

Accumulated depreciation and amortization

(184,741

)

(152,552

)

Total Net Operating Real Estate Investments

1,716,241

1,735,480

Real estate held for sale, net of accumulated depreciation of $0 and $7,859, respectively

—

46,330

Total Net Real Estate Investments

1,716,241

1,781,810

Cash and cash equivalents

53,171

25,671

Restricted cash

31,848

45,511

Accounts receivable

4,953

6,285

Prepaid and other assets

10,740

2,336

Fair market value of interest rate swaps

—

4,376

TOTAL ASSETS

$

1,816,953

$

1,865,989

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:

Mortgages payable, net

$

1,145,646

$

1,145,371

Mortgages payable held for sale, net

—

41,176

Credit facility, net

224,195

216,501

Accounts payable and other accrued liabilities

15,111

11,971

Accrued real estate taxes payable

13,248

12,206

Accrued interest payable

2,228

3,691

Security deposit liability

2,802

2,977

Prepaid rents

1,585

1,658

Fair market value of interest rate swaps

55,134

902

Total Liabilities

1,459,949

1,436,453

Redeemable noncontrolling interests in the Operating Partnership

2,589

3,295

Stockholders' Equity:

Preferred stock, $0.01 par value: 100,000,000 shares authorized; 0 shares issued

—

—

Common stock, $0.01 par value: 500,000,000 shares authorized; 24,298,651 and 25,245,740 shares issued and outstanding, respectively

242

251

Additional paid-in capital

343,257

359,748

Accumulated earnings less dividends

66,860

63,776

Accumulated other comprehensive income (loss)

(55,944

)

2,466

Total Stockholders' Equity

354,415

426,241

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

1,816,953

$

1,865,989

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For the Three Months Ended June 30,

For the Six Months Ended June 30,

2020

2019

2020

2019

Revenues

Rental income

$

49,253

$

41,966

$

100,367

$

82,416

Other income

1,428

1,100

2,895

2,141

Total revenues

50,681

43,066

103,262

84,557

Expenses

Property operating expenses

11,964

10,161

23,685

19,800

Real estate taxes and insurance

7,777

5,564

15,799

11,322

Property management fees (1)

1,465

1,291

3,015

2,531

Advisory and administrative fees (2)

1,936

1,872

3,801

3,722

Corporate general and administrative expenses

2,932

2,741

5,633

4,974

Property general and administrative expenses

1,533

1,768

3,365

3,426

Depreciation and amortization

21,418

13,066

44,756

28,464

Total expenses

49,025

36,463

100,054

74,239

Operating income before gain on sales of real estate

1,656

6,603

3,208

10,318

Gain on sales of real estate

19

—

38,991

—

Operating income

1,675

6,603

42,199

10,318

Interest expense

(10,993

)

(8,590

)

(22,655

)

(16,678

)

Loss on extinguishment of debt and modification costs

—

—

(874

)

—

Casualty loss

(1,079

)

—

(1,028

)

—

Miscellaneous income

1,079

—

1,079

—

Net income (loss)

(9,318

)

(1,987

)

18,721

(6,360

)

Net income (loss) attributable to redeemable noncontrolling interests in the Operating Partnership

(28

)

(6

)

56

(19

)

Net income (loss) attributable to common stockholders

$

(9,290

)

$

(1,981

)

$

18,665

$

(6,341

)

Other comprehensive loss

Unrealized losses on interest rate derivatives

(8,046

)

(10,946

)

(58,586

)

(16,611

)

Total comprehensive loss

(17,364

)

(12,933

)

(39,865

)

(22,971

)

Comprehensive loss attributable to redeemable noncontrolling interests in the Operating Partnership

(52

)

(39

)

(120

)

(69

)

Comprehensive loss attributable to common stockholders

$

(17,312

)

$

(12,894

)

$

(39,745

)

$

(22,902

)

Weighted average common shares outstanding - basic

24,307

23,736

24,847

23,643

Weighted average common shares outstanding - diluted

24,307

24,233

25,330

24,139

Earnings (loss) per share - basic

$

(0.38

)

$

(0.08

)

$

0.75

$

(0.27

)

Earnings (loss) per share - diluted

$

(0.38

)

$

(0.08

)

$

0.74

$

(0.27

)

(1)

Fees incurred to an unaffiliated third party that is an affiliate of the noncontrolling limited partner of the Operating Partnership (the “OP”).

(2)

Fees incurred to the Company’s adviser.

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For the Three Months Ended June 30,

2020

2019

$ Change

% Change

Revenues