NexPoint Residential Trust, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024. NexPoint is an externally managed REIT focused on value-add multifamily properties, primarily in the Southeastern and Southwestern United States. At quarter-end, it reported 37 properties with 13,399 apartment units, approximately 94.6% leased.
Financial performance
| Metric | Q1 2024 | Q1 2023 |
|---|---|---|
| Total revenue | $67.6 million | $69.2 million |
| Operating expenses | $58.3 million | $56.1 million |
| Operating income before property-sale gain | $9.3 million | $13.1 million |
| Net income (loss) attributable to common stockholders | $26.3 million | $(3.9) million |
| Diluted EPS | $1.00 | $(0.15) |
| Operating cash flow | $19.7 million | $27.9 million |
| FFO / Core FFO / AFFO per diluted share | $0.72 / $0.75 / $0.86 | $0.74 / $0.71 / $0.81 |
Net income included a $31.7 million gain from the sale of Old Farm; it therefore does not represent recurring operating performance. Total revenue fell about 2.4%, while operating expenses rose about 3.9%. Same-store NOI increased 4.0% to $39.2 million, while total NOI was nearly flat at $41.1 million. Same-store rents per occupied unit were $1,514 versus $1,520 a year earlier, and occupancy was 94.7% versus 94.4%.
Cash, cash equivalents and restricted cash totaled $68.7 million at quarter-end, compared with $47.1 million a year earlier. Investing cash flow was $94.2 million, including $102.7 million of net real-estate sale proceeds; financing cash outflow was $90.4 million, including debt repayments and dividends. The company declared $0.46242 per share for Q1.
Debt and liquidity
- Mortgage principal was approximately $1.50 billion, including $35.3 million associated with properties held for sale; the corporate credit facility had no balance at March 31.
- Reported mortgage weighted-average interest rate was 6.874%; the adjusted rate, reflecting swaps, was 3.470%. Swaps covered approximately 79.7% of floating-rate mortgage debt; caps covered about $1.3 billion.
- Scheduled debt principal maturities include $153.4 million in 2025 and $290.3 million in 2026. The credit facility’s revolving commitments mature June 30, 2025.
- Management stated available cash, expected operating cash flow and potential financing would cover operating, debt-service and dividend needs for the 12 months after March 31, 2024. Facility availability is inconsistent in the filing: one section reports $350 million available and another $309 million.
Changes, outlook and notable items
- Old Farm was sold for $103.0 million on March 1 to NexBank Capital, generating $102.7 million net proceeds and a $31.7 million gain. The buyer and the company have significant disclosed director/adviser relationships, making the related-party nature and transaction terms important to review.
- After quarter-end, Radbourne Lake was sold on April 30 for approximately $39.3 million. The company also reported post-quarter repurchases of 269,408 shares for about $8.6 million, averaging $31.76 per share.
- The board declared a $0.46242-per-share dividend on April 29, payable June 28, 2024. No formal earnings or operating guidance is provided in the filing.
- Management cited inflation, high interest rates and tighter commercial-real-estate credit as factors affecting financing, acquisitions and asset-sale timing. The company identifies interest-rate exposure, substantial debt, capital-market access, regional concentration and REIT qualification among key risks.
- The Adviser waived approximately $5.5 million of advisory and administrative fees during the quarter; future waivers on certain assets are discretionary. Management reported no material litigation involving the company, no known environmental liabilities and no real-estate impairment recorded in the quarter. Disclosure controls were assessed as effective.
Investor verification priorities
- Reconcile the stated $309 million versus $350 million of credit-facility availability and confirm borrowing conditions and covenant headroom.
- Review the Old Farm related-party sale, valuation, approval process and disclosed conflicts of interest.
- Assess the sustainability of recurring earnings using same-store NOI, FFO and AFFO rather than GAAP net income, which included the sale gain.
- Check execution and proceeds from the Radbourne Lake sale and whether remaining held-for-sale assets and related debt are resolved as expected.
- Evaluate floating-rate debt exposure, hedge and cap expirations, and the 2025–2026 maturity schedule.