- Net Income: $10.6 million or $0.40 per diluted share.
- Total Revenue: $64 million.
- Gain on Sale: $18.7 million from the sale of Radbourne Lake.
- NOI: $38.9 million on 36 properties.
- Same-Store Rent: Decreased 1%.
- Same-Store Occupancy: Stable at 94.1%.
- Same-Store Revenues: Increased 2.3% year-over-year.
- Same-Store NOI: Increased 2.4% year-over-year.
- Core FFO: $18 million or $0.68 per diluted share.
- Dividend: $0.46 per share, 1.48 times covered by core FFO.
- Stock Repurchase: $14.6 million of common stock at $33.19 per share.
- Cash on Hand: $21.3 million.
- Available Liquidity: $350 million on the corporate credit facility.
- NAV per Share: $49.77 (low end), $61.97 (high end), $55.87 (midpoint).
- 2024 Guidance - Core FFO per Share: $2.66 (low end), $2.79 (high end), $2.72 (midpoint).
- 2024 Guidance - Total Revenue: 1.3% increase (low end), 2.2% increase (high end), 1.7% increase (midpoint).
- 2024 Guidance - Total Expenses: 4.4% increase (low end), 3% increase (high end), 3.7% increase (midpoint).
- 2024 Guidance - Same-Store NOI: -0.6% decrease (low end), 1.6% increase (high end), 0.5% increase (midpoint).
- Same-Store Rental Revenue: 2.6% increase.
- Same-Store Operating Expenses: 1.2% increase.
- Same-Store NOI Margin: 61.1%, up 10 basis points year-over-year.
- Occupancy: 94.1% as of the close of the quarter.
- Refinancing: 17 properties at SOFR plus 109 basis points.
- Implied Cap Rate: 6.22%.
Release Date: July 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- NexPoint Residential Trust Inc (NXRT, Financial) reported a net income of $10.6 million for Q2 2024, a significant improvement from a net loss of $4 million in Q2 2023.
- The company completed the sale of Radbourne Lake, generating $18.6 million in net sales proceeds and achieving a 19.2% levered IRR.
- NXRT paid a second-quarter dividend of $0.46 per share, marking a 124.5% increase since inception.
- The company successfully completed 59 full and partial upgrades, achieving an average monthly rent premium of $240 and a 20.1% return on investment.
- NXRT has signed an application with JPMorgan and Freddie Mac to refinance 17 properties at favorable terms, potentially providing $0.15 to $0.20 of earnings annually.
Negative Points
- Total revenue for Q2 2024 was $64 million, down from $69.6 million in Q2 2023.
- Same-store rent decreased by 1% year-over-year, indicating challenges in rent growth.
- Core FFO per diluted share decreased to $0.68 in Q2 2024 from $0.77 in Q2 2023.
- The company faced higher property tax expenses in Raleigh due to a four-year reassessment, impacting overall expenses.
- Occupancy remained flat at 94.1%, showing no significant improvement in tenant retention.
Q & A Highlights
Q: You noted that Raleigh real estate taxes have accounted for 33% of your total expenses year to date due to the four-year reassessment. Did that come in materially higher than you initially estimated?
A: Yes. In Raleigh, the Six Forks asset came in ahead of our consultants' estimates, but the Mooresville asset is still being contested. We are accruing at a higher rate but believe there are savings to be had. We are actively protesting 14 assets, and the outcome of these appeals could significantly impact our expenses.
Q: Are there any other multi-year tax reassessments in larger markets coming up in the second half of 2024?
A: No, Raleigh is the primary focus. Charlotte and Nashville had their reassessments last year. We are optimistic about reducing the tax burden on the High House asset in Raleigh through ongoing appeals.
Q: Could you provide an update on the sales process with Stone Creek in Houston? Should we still expect it to close by year-end 2024?
A: Yes, we are still marketing Stone Creek and negotiating with potential buyers. We have received attractive offers and believe we can close the transaction before year-end.
Q: Regarding the refinancing of debt, could you talk about any fees involved and the process timeline?
A: The fees are negligible, around $10 million to $15 million, and can be amortized over seven years. We have signed applications with JPMorgan and Freddie Mac and expect to close the first tranche by the end of Q3, with the second tranche closing shortly after.
Q: The same-store revenue in Q2 showed some growth despite flat occupancy and slightly lower rents. What drove this growth?
A: The growth was primarily driven by a reduction in bad debt and higher financial occupancy. Our bad debt is down 1.7% year over year, and we carried a strong occupancy rate throughout the quarter.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
