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NXRT NexPoint Residential Trust

Participants
Jackie Graham IR Manager
Brian Mitts EVP, Finance, Treasurer, CFO, Secretary & Director
Matthew McGraner CIO & EVP
Jonathan Petersen Jefferies
John Massocca Ladenburg Thalmann & Co.
Barry Oxford D.A. Davidson & Co.
Call transcript
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Operator

Please stand by. Good day, and welcome to the NexPoint Residential Trust Second Quarter 2019 Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Jackie Graham. Please go ahead.

Jackie Graham

you. Thank and company's Residential quarter results everyone, to Conference of to the review for welcome day, Trust NexPoint Call XXXX. Good the second

President and call Chief Officer. President the today Brian Investment Executive On are and Chief Financial McGraner, Matt Vice Officer; Executive Vice Mitts, and

at reminder, a website is through the being As webcast call company's this www.nexpointliving.com.

are Before conference the statements that forward-looking meaning of on call Private of I Litigation based within like Act remind to expectations, beliefs. would begin, current contains we everyone this Reform Securities assumptions that management's the XXXX and

and for as the Forward-looking anticipate, variations for guidance be statements related words. but regarding and can identified for and assumptions acquisitions materially statement. asset assumptions, and expressed and cause industry value often results quarter of those financial business limited guidance future negatives and and of to by They and These full are assumptions, and in results to expected actual forward-looking third could words expressions from the general, not year in assumptions results subject XXXX such risks, statements XXXX include, statements related and and are any not expect, guarantees related uncertainties NXRT's similar the that of forward-looking net the these intend to, are dispositions. differ or components NXRT's the

and obligation revise statements. NXRT on statements. for does and to that XX-K any and to SEC forward-looking affect by review factors could encouraged law, other as more Form of undertake are company's the with or Except any update publicly place risks statements recent Listeners complete discussion forward-looking the not forward-looking not most annual on should report reliance undue other a company's the the filings required

income NOI, funds be measures This funds or FFO; conference from used net call of a supplement with or to financial measures These operations, loss operations, includes core non-GAAP substitute which should computed Core and performance. not funds of operating non-GAAP from or in adjusted net income, of all and are a accordance from operations, AFFO; FFO; analysis for or as also GAAP.

of complete company's discussion filed more earnings was AFFO a earlier and For see Core today. FFO, release the NOI, that FFO,

now would Mitts. go to Please Brian. ahead, call the Brian turn over like I to

Brian Mitts

Jackie. portfolio everyone second conference XXXX, by joined Mitts, for some call. Matt welcome I'm McGraner, to Brian our our I our for Officer. dispositions guidance want discuss you, update in we of in Investment and markets Thank will to XXXX Officer, year-to-date our general. and discuss quarter recent our the Today, Chief Financial QX and acquisitions XXXX, results Chief discuss

jump me So for highlights let into some of the our quarter.

we the for We for We're solid XX-odd be quarter are six of increase the reporting NOI quarter per Core months in same June XX share period for and were for increase percent as with XX.X% were year-over-year. increased in FFO compared June X.X% what the six second the again, reporting XX.X%, Total months same-store another XX.X% and ended for feel to ended XXXX XX. in XXXX. Total the revenues total XXXX. and up total to has period the increased same quarter year-to-date NOI XX.X% revenues versus NOI the up X.X% second

quarter, margins X.X%, respectively. quarter We and growth X.X% strong renewals second year-to-date. saw NOI at the in at leases strong the XX% for new Our and in remained rent and second XX.X% both

quarter, leased completing on We quarter full renovation on the of XXX during during continue partial XXX XX.X% ROI value-add those spend units, to our by the leasing dollars units. achieving the and execute renovations the interior a business plan

of and is in increase XX.X%. date the to Inception rent XXX, we an XX.X% average completed have the X,XXX portfolio average achieving units, ROI of

Home Smart washer X,XXX and installs. dryer quarter, we installs units the in completed in Additionally, Technology XXX

to of Subsequent we million $XX.X units for property, second $XXX total consisting in acquired XXX a of we and million price for the Summer's Landing Worth units. additional Fort properties acquired purchase XXX end, quarter, consisting quarter Place West together. two Glenview one During of

price So million $XXX entered X,XXX adding June of year, for for through and rehab an properties XXX sales approximately into consisting a sale the we've units On our acquired for purchase a comprising pipeline. X,XXX million. properties for of six the XX, $XXX six units we units agreement of total price

close August expect We on XX. the to sale before or

Glenview an with corporate $XX.XX, before XX, utilized we by XXX,XXX shares conjunction outstanding $XX West quarter, $XX offering $XX.X our net upsized average drew June million purchase the price place, During raising on million of and we in at revolver. our million and On of the approximately additional ATM we shares. revolver of from proceeds $XXX increasing million to an cost the that our

-- follows. based and our NOI our our supplement, rates updated NAV Our our updates as slide share some in and revising per on cap in we've range NAV growth upwards

$XX.XX, of on low-end high-end, the the On $XX.XX.

For midpoint a quarter at $XX.XX increase. midpoint X% or compared as to of last $XX.XX

on of second a share XX. the September XX. label Yesterday Board XX or share on shareholders paid of record XX.X% per dividend in June dividend $X.XXX we on September $X.XXX to quarter, For dividends, declared per payable the

For the Core XX% dividend of our year, approximately payout FFO. ratio is

is of for in Core per $X.XX increase. $X.XX to -- In period XX% income our or million million which quarter our Net through results XX.X% 'XX for Net $XX share million operating 'XX, to increase. $XX.X $X.X loss. QX QX to pool second Total was 'XX, versus quarter quarter XX the for same-store, as a is was million $XX.X minus in share second second the per million of million of units or So $X.XX the 'XX. same pool and FFO the results. million per high-level properties just or second year-to-date in which share $X.XX per for the second revenue quarter of the 'XX the is or loss quickly, $XX.X was in compared the million as a $X share. as $X.X XX.X% -- or quarter compared the same-store $XX.X for are of run is some XX,XXX XXXX compared

a to increased which million, $XX.X the XX revenues on Same-store occupancy million. and same-store increased as was increased gain in up or minus same-store to XX.X%. Net a which increased year-to-date X.X%. or share NOI X.X% revenue months a On is minus six June to increased 'XX. total Same-store same-store million X% XX.X% period XXXX, ended over share. Net X.X% $X.XX Core points or portfolio, same-store million X.X% million $X.XX $XX.X per FFO same to per a per basis came was is Rent $XX.X in was $X.X $XX.X XXXX. million million. compared million, is $X.XX a at XXXX, increase loss XX.X% XX.X% Year-to-date, expenses $XX.X basis, share, rent per $X.X as $X.XX over million which over to XXXX. to XXXX, income a a or was $XX in $XX of compared share operating increase XX, increase

increased and million. was $XX.X Our $XX.X million. Same-store the expenses NOI up X.X% X.X% million to up X.X% to year-to-date for to same-store is XXXX $XX.X XXXX same-store revenue over

at we quarter for we the for full of we And assuming $XXX midpoint we going midpoint $XXX XXXX, deals, to bought we year As This second from couple as to January, Landing to second $XXX the Phoenix million. as the redeploy increased from and subsequent million quarter $XXX quarter. are forward of the we've property million, three Glenview will the the acquisitions West about compares and acquired hundred guidance, includes million. bought midpoint, million assumes the last place, Portfolio proceeds in the the remaining or so Summer's well which approximately in this sale a Sunbelt towards

includes range million. the the Sunbelt $XXX midpoint dispositions in of mentioned million midpoint the assumes Our that low-end of guidance $XXX sale and the also the the at to million. $XXX was $XXX Portfolio quarter This we million last on of

that of Portfolio the a signed we result a bit So as Sunbelt deal quite we've that up. increased

decreasing with a of the at quarter, follows. of updating those portfolio a the assumptions, So was gain $X.XX the sorry, midpoint to to $X.XX compared the X% the result, a Same-store last which substantial compared last at -- of we're X%. And loss to from midpoint Core per the increasing $X.XX share, keeping Sunbelt which we as per at -- guidance the revenue, Portfolio. the which FFO previously. primarily, income are increase are Sunbelt previously. sale same is $X.XX, X.X% X.X% is NOI share, quarter. on we're from midpoint, the Same-store mid-points to expenses, -- increasing to increasing we X.X% we're same-store at Net versus as

with details markets. to of So over Matt in let me our it to that, some turn about through walk portfolio the

Matthew McGraner

Brian. Thanks,

with during Atlanta across in least West Atlanta, XX.X%, at saw strength performance entirety same-store the portfolio markets The Palm, the XX out as on of and NOI were for quarter. by As also notable growth activity at to of markets growing growing of Phoenix, we including Tampa basis a and the NOI a our X.X%. X Brian Charlotte, X.X% Orlando. equally D.C., saw strong and revenue reacceleration we Leasing said, Phoenix

we growth X example, better. new on achieved markets pool overall of For and healthy with X% X.X% out or X.X% same-store growth of delivering the of lease XX

QX delivered portfolio X.X%, Metro growing X.X%. categories X.X%. then X.X% finishing markets to or the market, renewal Orlando at and across X.X%, X% DFW, Renewal at at Atlanta with XX%. D.C. at both at Phoenix and outpace D.C. X.X% were X.X%, Charlotte Houston, in growth Metro leases X.X% X%, Leaders were at the X.X%, quarter for market, at Phoenix was X.X%, largest except new with better. unchanged every and healthy Renewal at retention at X Atlanta at from Charlotte continued Top growth at a our

guys alone X and through offers a resulted portfolios assets. activity, offers, both portfolio marketed you on disclosed, CBRE XX and on in offers over update property as the proceeding our as acquisitions and new individually XXX transaction the competitive previously individual on very portfolio, To we X subsequent dispositions, that

reminder, Edgewater the X.X% to and screens, rate at The IRR generate at Pointe cap six Abbington was nominal a were and The a X.XXx on Foothills Duck capital. adjustment, these and a expect assets Heatherstone, we Creek, invested Heights, at levered a disposition after-tax Belmont the Ashlar. multiple XX% As Sandy

is dispositions, the close to to, of all by to of Brian acquisitions to the quarter, as and which during money reversed of $XX roughly The attractive we either exchanges estimate are purchase nonrefundable rate include completed one net of August cap acquisition Summer's for these two transactions in million on the recycle generate July. Examples million earnest four in limited of Landing at said, $XXX XXXX arbitrages. the today We made proceeds, but aren't expected the early plan XX. and all

acquisition a a million X.XX%. this year We first unit attractive of We one plan $XXX located Worth. BH the upgraded Summer's XXX asset of purchased which cost yielding is average at yielding quarter average Fort premiums The to $XX.X at for community of unit, an of to $X,XXX generate was of submarket per units an also unit XX and per plan at XX monthly XX% partially fully unit during rate in premiums an Landing, unit an We in a average through $X,XXX of cap off-market a the units $XX upgrade ROI. cost XX.X% monthly ROI. for average

planning we and monthly washer on dryer to Finally, we generating that Smart XX% packages expect are also installing XXX $XX sets, generate premium over tech a XXX ROIs.

average this underwritten NOI As year X.X%. asset is a three our for result, growth same-store

unit second approximate The Nashville plan of $XXX year XXX-unit the upgrade XXXX, the an cap million ROIs to this X.XX%. of generate an in a yielding $XX in residence and XXX cost Glenview. quarter was, unit XX%. following unit, average made for of in a community $X,XXX at We we premiums acquisition for rate from Located one and purchased the built

We $XX generate of premiums unit. and dryer to and a washer sets expect unit every also to plan monthly install in

rate million XX.X% plan $XX cap unit is West same-store asset a final XXX and X.XX%. average average We built for NOI unit, growth purchased premiums average following for or our of quarter generating Place. As to monthly upgrade an XXXX this This one located units of result, ROI. acquisition a in was for XX.X%. residence $XX,XXX at per in three cost at the asset made underwritten was of year Orlando The year per $XXX

in install to premium. units, XX% $XX Technology plan Smart also a yielding Home We of packages the

from three result, NOI call. same-store taxes underwritten refund potential property As our last a to have is our briefly XX.X%. Also, unsettled year I still growth for this average We wanted asset July. touch end of the me strong going as so to of experienced asset. a closing, Atera pool appeal let $XXX,XXX, leasing result an we're largely In in on far in activity with the on $XXX,XXX

BH our for today a sits to teams XX.X%, renewals at leases and here leased portfolio XX% now to at exceeding That's back have for prepared continuing NexPoint growth with all average Our both physically and Thanks X%. and on I occupied to remarks. new execute, Brian.

Brian Mitts

so for I've it turn either, over Thanks, questions. no Yes. Matt. remarks we'll additional

Operator

with we'll And to Instructions]. go [Operator Jon Jefferies. first Petersen

Jonathan Petersen

specific the was Even was -- at revenue I your like pretty markets was good. page, overall declined looking it if occupancy Florida rate of a growth So markets. good, it and your like lot pretty growth still in looks looked though

sure the wasn't there quite some occupancy there's differences So markets? how driving to about, I just think not. But and in maybe what's what level, those high maybe in timing

Matthew McGraner

it's tough a really from year. comp John, just last Yes.

right I from think in QX. that was and the quarter end we're usually at then in there XX% XX% date market just

So that change. was the biggest

almost the both and occupancy financial believe our renewals was leases, other said, growth like still new As healthy. on revenue you was income I XX%, XX.X%.

quarter timing a issue. I it's sort So just, ending think of,

Jonathan Petersen

do you that then terms And rent excluding of on growth guess, the I rehabs? have number leases, in new

Matthew McGraner

Yes.

or pool just the same-store leases New overall? on

Jonathan Petersen

same-store pool, the On yes.

Matthew McGraner

X.X%.

Jonathan Petersen

July All rent rehabs? in growth you And Okay. the In for do terms then the excluding have -- too? that right. overall

Matthew McGraner

XXX.

Jonathan Petersen

then timing percentage if -- that acquisition of, Okay, with know that any you I still just actually a terms don't cool. -- whether we thoughts us in the maybe guys July had have expect And give of if the around to And I pipeline should you closing in -- presentation of any, close? can sort on those pipeline. guess some acquisitions. you of your

Matthew McGraner

the are we given nondilutive way in of I guidance acquisitions made earnings we Yes. to today, completing good -- timing. about a feel that terms raise that's in pretty transacted that

-- in said, same that or I near big a be in as just portfolio day good pretty felt manner or XX. the timely it today that we hitting can midpoint sits like on that number So closes at after about the August

Operator

John Massocca Ladenburg go And with next, to Thalmann. we'll

John Massocca

the color that kind of, kind at -- you point, low just -- Do some guys of touching driving high-end? the the last end on what, of just on the gave is number kind is what's we driving and acquisition midpoint and of I guidance. driving what that assumptions mean, But XXX

Matthew McGraner

Yes.

that we've out Florida, high-end, in weeks Nashville, in in think locked been on targeted hard-earnest number offers Phoenix, of for the four at really in markets as I or last sale have in -- the three earnest we of kind a really in that money. we've working South the

them, So it, being able that we'll midpoint. maybe which X in we're good of think higher-end you on two to the them. one best to thereafter. gets feel and final I but not hit reach We mid- least call pretty September about at of but, to shortly

John Massocca

what's midpoint Just Okay. on the And of then maybe the for disposition side, assumption that? in the high-end? any on of kind in kind color the

Matthew McGraner

Yes.

of Just one that high-end the if a be Southpoint roughly which sold in deal both it the more be for deal Woodbridge. or on And that either the would those, up but we Nashville, year. would makes midpoint,

John Massocca

subsequent the I if And to completed on then apologizes but close what the quarter prepared this acquisitions the missed in was remarks, end? date

Matthew McGraner

want was Summer's And to June Summer's for and I then Landing. X I July closing July was Place. -- say on think reserve Glenview XX the West X

John Massocca

guess struggled Houston that's little Is a something And that quarter. that? you market I guys? market weather-related? the What just bit then was the in affecting drove it supply there And Okay. in

Matthew McGraner

Yes.

strong the There's So this still lease today, pretty topic here. contribute had in third have growth the there. quarter. in as terms that at in more said, contribute our has the It's or expect expect of concessions, the to recently anemic same-store do new discussing some we are it at yesterday conversation That three market, QX assets own growth. a real the seeing And high-end those still sits you're in -- of it. And largely of the of of been in we space. at whether to office is B two just page and we psychology a pickup or

John Massocca

other Nashville, of that's the there? that go disposition -- in the in under was Nashville away then in any going the potentially when asset slight And versus performance portfolio you given to market's one

Matthew McGraner

Absolutely. Yes.

pool Heights in same-store improved that and struggled probably asset has I once the especially single think dramatically largest underperformance that is contributor us in our Nashville. for Nashville to sold, Abbington

Operator

D.A. to Barry And with [Operator go Oxford next Davidson. Instructions]. we'll

Barry Oxford

selling showing hotchpotch? XX what a you just When the the guys Portfolio I on type more offers other you were buyers up of, or there kind portfolio, and said think had were it was guys you -- of Sunbelt of,

Matthew McGraner

Yes.

So Dallas they're real commercial the the did at the what firm CBRE we in office, a single ran portfolio and or buyer was services we estate out we nationwide list of searched on nationwide but their to of blasted every world. largest kind type

So they reach everyone.

So you them buy we or can all can buy portfolio offer the individually. you them both as

larger, all, of so received individually, sophisticated, offers that either groups institutional local them funds, which national over was from or individual your private to then XX we from And buyers. buy offers types think, was people the XXX XXX, wanted buyer. those there and type I sponsors And

for I be rate opted a sophisticated will close to to $XX this strong buyer hard-earnest could time. do said a then with like, a feel very we and So group we once. that at that what of And million all on we transaction today, them believe strong money cap

Barry Oxford

in you a the little Do of general feel a portfolio there bit that out in there's premium? marketplace

Matthew McGraner

is year off-market a three or Atlanta that these The that the further years and deal luckily, were the properties our Starwood Nashville asset that that mean what and than rates one-off Yes, pushed all XX now the it had X.X% -- Starwood market through the $XXX for asset lost this at We properties at on we right for deals X.XX% was product. recently range. cap cap lower Yes, to XX-year-old for even old. Phoenix in individual on BH. Depends B extremely in had $XXX selling I was was in million competitive. in million the is. or resource rates We've Sunbelt B rate selling anticipated lost what acquisitions, cap

So on instead one-off bit we've competing a acquisitions. to cap [ph] that's why get the of been orb little able of rate

Barry Oxford

right. Right,

-- feel kind last that of a most process? question the lack out see for of, source on horizon you over to sellers the do it? work-competitive On that to of want continue to better the Do off-market. -- opportunities, out go kind you as you look there to Or bid

Matthew McGraner

do I but, on the hitting and about good to tried historically we that. an two latter, we've previous larger pretty auction And question, sellers size on continue like to one think I or generate checks opt Certainly, John's most Yes. to will again, feel focus said to will more.

Operator

it things And turn have Instructions]. no any closing our [Operator questions. appears speakers for I'll or we further over back additional to remarks.

Brian Mitts

Great. Thank you. we everyone's Yes, so appreciate time. nothing have further,

conclude Let's Thank the you. call.

Operator

today's conclude your you, participation. conference will for call. that And everyone, Thank

You may now disconnect.