PR Newswire
DALLAS, Oct. 29, 2019
DALLAS, Oct. 29, 2019 /PRNewswire/ -- NexPoint Residential Trust, Inc. (NYSE:NXRT) reported financial results for the third quarter ended September 30, 2019.
Highlights
"We're proud to report continued Core FFO growth during the quarter, as well as the successful disposition of six assets in which the proceeds were used to acquire well located properties in our core markets of Nashville and South Florida. We are also pleased with the Board's approval of another double-digit increase to NXRT's quarterly dividend. Over the past five years, we've maintained a consistent payout ratio while doubling the dividend per share over that period," stated NXRT Chairman and President, Jim Dondero.
Third Quarter 2019 Financial Results
2019 Year to Date Financial Results
Third Quarter Earnings Conference Call
NXRT will host a call on Tuesday, October 29, 2019 at 11:00 a.m. ET to discuss its third quarter financial results. The conference call can be accessed live over the phone by dialing 800-367-2403 or, for international callers, +1 334-777-6978, and using passcode Conference ID: 6897827. A live audio webcast of the call will be available online at the Company's website, http://www.nexpointliving.com (under "Investor Relations"). 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, November 5, 2019, by dialing 888-203-1112 or, for international callers, +1 719-457-0820 and entering passcode 6897827.
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, www.nexpointliving.com, under the "Investor Relations" 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," "intend" 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, new business metrics relating to Avant at Pembroke Pines and Arbors of Brentwood, NXRT's guidance for financial results for the full year 2019 and the related assumptions, net asset value and the related components and assumptions, guidance for the fourth quarter 2019 and the related assumptions, planned value-add programs, including projected average rent, rent change and return on investment and expected 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. 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.
Contact:
Investor Relations
Jackie Graham
972-419-6213
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 nine months ended September 30, 2019 and 2018 (in thousands, except per share amounts):
For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | % Change (1) | |||||||||||||||||
Net income (loss) | $ | 119,104 | $ | (5,260) | $ | 112,744 | $ | 3,168 | 3458.8 | % | |||||||||||
Depreciation and amortization | 17,228 | 11,228 | 45,692 | 33,638 | 35.8 | % | |||||||||||||||
Gain on sales of real estate | (127,700) | — | (127,700) | (13,742) | 829.3 | % | |||||||||||||||
Adjustment for noncontrolling interests | (26) | (28) | (92) | (70) | 31.4 | % | |||||||||||||||
FFO attributable to common stockholders | 8,606 | 5,940 | 30,644 | 22,994 | 33.3 | % | |||||||||||||||
FFO per share - basic | $ | 0.36 | $ | 0.29 | $ | 1.29 | $ | 1.10 | 16.8 | % | |||||||||||
FFO per share - diluted | $ | 0.35 | $ | 0.28 | $ | 1.26 | $ | 1.08 | 17.1 | % | |||||||||||
Loss on extinguishment of debt and modification costs | 2,869 | 2,947 | 2,869 | 3,576 | -19.8 | % | |||||||||||||||
Casualty-related expenses/(recoveries) | 34 | (36) | 26 | (702) | -103.7 | % | |||||||||||||||
Amortization of deferred financing costs - acquisition term notes | — | — | — | 21 | -100.0 | % | |||||||||||||||
Adjustment for noncontrolling interests | (9) | 2 | (9) | (9) | 0.0 | % | |||||||||||||||
Core FFO attributable to common stockholders | 11,500 | 8,853 | 33,530 | 25,880 | 29.6 | % | |||||||||||||||
Core FFO per share - basic | $ | 0.48 | $ | 0.43 | $ | 1.41 | $ | 1.24 | 13.5 | % | |||||||||||
Core FFO per share - diluted | $ | 0.47 | $ | 0.42 | $ | 1.38 | $ | 1.21 | 13.8 | % | |||||||||||
Amortization of deferred financing costs - long term debt | 541 | 341 | 1,443 | 1,061 | 36.0 | % | |||||||||||||||
Equity-based compensation expense | 1,291 | 1,094 | 3,944 | 3,103 | 27.1 | % | |||||||||||||||
Adjustment for noncontrolling interests | (6) | (4) | (16) | (12) | 33.3 | % | |||||||||||||||
AFFO attributable to common stockholders | 13,326 | 10,284 | 38,901 | 30,032 | 29.5 | % | |||||||||||||||
AFFO per share - basic | $ | 0.55 | $ | 0.50 | $ | 1.63 | $ | 1.44 | 13.5 | % | |||||||||||
AFFO per share - diluted | $ | 0.54 | $ | 0.48 | $ | 1.60 | $ | 1.41 | 13.8 | % | |||||||||||
Weighted average common shares outstanding - basic | 24,088 | 20,775 | 23,793 | 20,847 | 14.1 | % | |||||||||||||||
Weighted average common shares outstanding - diluted | 24,557 | 21,262 | 24,280 | 21,328 | 13.8 | % | |||||||||||||||
Dividends declared per common share | $ | 0.275 | $ | 0.250 | $ | 0.825 | $ | 0.750 | 10.0 | % | |||||||||||
FFO Coverage - diluted | (2) | 1.27x | 1.12x | (2) | 1.53x | 1.44x | 6.42 | % | |||||||||||||
Core FFO Coverage - diluted | (2) | 1.70x | 1.67x | (2) | 1.67x | 1.62x | 3.46 | % | |||||||||||||
AFFO Coverage - diluted | (2) | 1.97x | 1.93x | (2) | 1.94x | 1.88x | 3.44 | % |
(1) | Represents the percentage change for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018. |
(2) | Indicates coverage ratio of FFO/Core FFO/AFFO per common share (diluted) over dividends declared per common share during the period. |
Definitions and Reconciliations of Non-GAAP Measures
Definitions
This presentation contains non-GAAP financial measures. A "non-GAAP financial measure" is defined as a numerical measure of a company's financial performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with GAAP in the statements of income, balance sheets or statements of cash flows of the Company. The non-GAAP financial measures used within this presentation are net operating income ("NOI"), funds from operations attributable to common stockholders ("FFO"), FFO per diluted share, Core FFO, Core FFO per diluted share, adjusted FFO ("AFFO"), AFFO per diluted share and net debt.
NOI is used by investors and our management to evaluate and compare the performance of our properties to other comparable properties, to determine trends in earnings and to compute the fair value of our properties. NOI is calculated by adjusting net income (loss) to add back (1) the cost of funds, (2) acquisition costs, (3) advisory and administrative fees, (4) the impact of depreciation and amortization expenses as well as gains or losses from the sale of operating real estate assets that are included in net income computed in accordance with GAAP, (5) corporate general and administrative expenses, (6) other gains and losses that are specific to us, (7) casualty-related expenses/(recoveries), and (8) property general and administrative expenses that are not reflective of the continuing operations of the properties or are incurred on behalf of the Company at the property for expenses such as legal, professional and franchise tax fees. We define "Same Store NOI" as NOI for our properties that are comparable between periods. We view Same Store NOI as an important measure of the operating performance of our properties because it allows us to compare operating results of properties owned for the entirety of the current and comparable periods and therefore eliminates variations caused by acquisitions or dispositions during the periods.
FFO is defined by the National Association of Real Estate Investment Trusts ("NAREIT"), as net income (loss) computed in accordance with GAAP, excluding gains or losses from real estate dispositions, plus real estate depreciation and amortization and impairment charges. We compute FFO in accordance with NAREIT's definition. Our presentation differs slightly in that we begin with net income (loss) before adjusting for amounts attributable to (1) noncontrolling interests in consolidated joint ventures and (2) redeemable noncontrolling interests in the OP and we show the combined amounts attributable to such noncontrolling interests as an adjustment to arrive at FFO attributable to common stockholders.
Core FFO makes certain adjustments to FFO, which are either not likely to occur on a regular basis or are otherwise not representative of the ongoing operating performance of our Portfolio. Core FFO adjusts FFO to remove items such as losses on extinguishment of debt and modification costs (includes prepayment penalties and defeasance costs incurred and the write-off of unamortized deferred financing costs and fair market value adjustments of assumed debt related to the retirement of debt and costs incurred in connection with a debt modification that are expensed), casualty-related expenses and recoveries, the amortization of deferred financing costs incurred in connection with obtaining short-term debt financing and the noncontrolling interests related to these items.
AFFO makes certain adjustments to Core FFO. There is no industry standard definition of AFFO and practice is divergent across the industry. AFFO adjusts Core FFO to remove items such as equity-based compensation expense and the amortization of deferred financing costs incurred in connection with obtaining long-term debt financing, and the noncontrolling interests related to these items.
Net debt is calculated by subtracting cash and cash equivalents and restricted cash held for value-add upgrades and green improvements from total debt outstanding.
We believe that the use of NOI, FFO, Core FFO, AFFO and net debt, combined with the required GAAP presentations, improves the understanding of operating results and debt levels of real estate investment trusts ("REITs") among investors and makes comparisons of operating results and debt levels among such companies more meaningful. While NOI, FFO, Core FFO, AFFO and net debt are relevant and widely used measures of operating performance and debt levels of REITs, they do not represent cash flows from operations, net income (loss) or total debt as defined by GAAP and should not be considered an alternative to those measures in evaluating our liquidity, operating performance and debt levels. NOI, FFO, Core FFO and AFFO do not purport to be indicative of cash available to fund our future cash requirements. We present net debt because we believe it provides our investors a better understanding of our leverage ratio. Net debt should not be considered an alternative to total debt, as we may not always be able to use our available cash to repay debt. Our computation of NOI, FFO, Core FFO, AFFO and net debt may not be comparable to NOI, FFO, Core FFO, AFFO and net debt reported by other REITs. For a more complete discussion of NOI, FFO, Core FFO and AFFO, see our most recent Annual Report on Form 10-K and our other filings with the SEC.
Reconciliations
NOI and Same Store NOI for the three and nine months ended September 30, 2019 and 2018
The following table, which has not been adjusted for the effects of noncontrolling interests, reconciles NOI and our Q3 and YTD Same Store NOI for the three and nine months ended September 30, 2019 and 2018 to net income (loss), the most directly comparable GAAP financial measure (in thousands):
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Net income | $ | 119,104 | $ | (5,260) | $ | 112,744 | $ | 3,168 | ||||||||
Adjustments to reconcile net income to NOI: | ||||||||||||||||
Advisory and administrative fees | 1,891 | 1,885 | 5,613 | 5,586 | ||||||||||||
Corporate general and administrative expenses | 2,339 | 1,932 | 7,313 | 5,731 | ||||||||||||
Casualty-related expenses | (1) | 34 | (36) | 26 | (702) | |||||||||||
Property general and administrative expenses | (2) | 375 | 144 | 1,069 | 930 | |||||||||||
Depreciation and amortization | 17,228 | 11,228 | 45,692 | 33,638 | ||||||||||||
Interest expense | 9,960 | 7,119 | 26,638 | 20,739 | ||||||||||||
Loss on extinguishment of debt and modification costs | 2,869 | 2,947 | 2,869 | 3,576 | ||||||||||||
Gain on sales of real estate | (127,700) | — | (127,700) | (13,742) | ||||||||||||
NOI | $ | 26,100 | $ | 19,959 | $ | 74,264 | $ | 58,924 | ||||||||
Less Non-Same Store | ||||||||||||||||
Revenues | (3) | (16,112) | (6,863) | (40,719) | (20,072) | |||||||||||
Operating expenses | (3) | 6,910 | 3,089 | 16,825 | 9,084 | |||||||||||
Same Store NOI | (3) | $ | 16,898 | $ | 16,185 | $ | 50,370 | $ | 47,936 |
NOI and Same Store NOI for the year ended December 31, 2018
The following table, which has not been adjusted for the effects of noncontrolling interests, reconciles our NOI and our 2017-2018 Same Store NOI for the year ended December 31, 2018 to net loss, the most directly comparable GAAP financial measure (in thousands):
For the Year Ended December 31, 2018 | ||||
Net loss | $ | (1,614) | ||
Adjustments to reconcile net loss to NOI: | ||||
Advisory and administrative fees | 7,474 | |||
Corporate general and administrative expenses | 7,808 | |||
Casualty-related recoveries | (1) | (663) | ||
Property general and administrative expenses | (2) | 1,294 | ||
Depreciation and amortization | 47,470 | |||
Interest expense | 28,572 | |||
Loss on extinguishment of debt and modification costs | 3,576 | |||
Gain on sales of real estate | (13,742) | |||
NOI | $ | 80,175 | ||
Less Non-Same Store | ||||
Revenues | (3) | (23,012) | ||
Operating expenses | (3) | 10,744 | ||
Same Store NOI | (3) | $ | 67,907 |
(1) | Adjustment to net income (loss) to exclude certain property operating expenses that are casualty-related recoveries. |
(2) | Adjustment to net income (loss) to exclude certain property general and administrative expenses that are not reflective of the continuing operations of the properties or are incurred on our behalf at the property for expenses such as legal, professional and franchise tax fees. |
(3) | Amounts for the three months ended September 30, 2019 and 2018 are derived from the operations of our Q3 Same Store and Non-Same Store properties; amounts for the nine months ended September 30, 2019 and 2018 are derived from the operations of our YTD Same Store and Non-Same Store properties; amounts for the year ended December 31, 2018 is derived from the operations of our 2017-2018 Same Store and Non-Same Store properties. |
Reconciliation of Debt to Net Debt
(dollar amounts in thousands) | Q3 2019 | Q3 2018 | ||||||
Total mortgage debt | $ | 1,060,948 | $ | 845,945 | ||||
Credit facilities | 107,000 | 80,000 | ||||||
Adjustments to arrive at net debt: | ||||||||
Cash and cash equivalents | (20,373) | (18,312) | ||||||
Restricted cash held for value-add upgrades and green improvements | (16,535) | (3,702) | ||||||
Net Debt | $ | 1,131,040 | $ | 903,931 | ||||
Enterprise Value (1) | $ | 2,291,040 | $ | 1,593,931 | ||||
Leverage Ratio | 49 | % | 57 | % |
(1) | Enterprise Value is calculated as Market Capitalization plus Net Debt. |
Reconciliations of NOI, Same Store NOI, FFO, Core FFO and AFFO
The following table, which has not been adjusted for the effects of noncontrolling interests, reconciles NOI to net income (loss) (the most directly comparable GAAP financial measure) for the periods presented below (in thousands):
For the Year Ended December 31, 2019 | 2019 Quarters Ended | |||||||||||||||||||
Guidance (1) | December 31 (1) | September 30 | June 30 | March 31 | ||||||||||||||||
Net income (loss) | $ | 108,925 | $ | (3,819) | $ | 119,104 | $ | (1,987) | $ | (4,373) | ||||||||||
Adjustments to reconcile net loss to NOI: | ||||||||||||||||||||
Advisory and administrative fees | 7,500 | 1,887 | 1,891 | 1,872 | 1,850 | |||||||||||||||
Corporate general and administrative expenses | 9,654 | 2,341 | 2,339 | 2,741 | 2,233 | |||||||||||||||
Casualty-related expenses/(recoveries) | (8) | (34) | 34 | (43) | 35 | |||||||||||||||
Property general and administrative expenses | (2) | 1,400 | 330 | 375 | 339 | 356 | ||||||||||||||
Depreciation and amortization | 63,200 | 17,508 | 17,228 | 13,066 | 15,398 | |||||||||||||||
Interest expense | 36,473 | 9,835 | 9,960 | 8,590 | 8,088 | |||||||||||||||
Loss on extinguishment of debt and modification costs | 2,869 | — | 2,869 | — | — | |||||||||||||||
Gain on sales of real estate | (127,700) | — | (127,700) | — | — | |||||||||||||||
NOI | $ | 102,313 | $ | 28,048 | $ | 26,100 | $ | 24,578 | $ | 23,587 | ||||||||||
Less Non-Same Store | ||||||||||||||||||||
Revenues | (3) | (61,597) | ||||||||||||||||||
Operating expenses | (3) | 25,828 | ||||||||||||||||||
Same Store NOI | (3) | $ | 66,544 |
(1) | Estimates shown for full year and fourth quarter 2019 guidance. Assumptions made for full year and fourth quarter 2019 NOI guidance include the Same Store operating growth projections included in the "2019 Full Year Guidance Summary" section of this release, the effect of the acquisition of the Phoenix Portfolio, Summer's Landing, Residences at Glenview Reserve, Residences at West Place, Avant at Pembroke Pines, Arbors of Brentwood and the other acquisition and disposition assumptions presented under "2019 Full Year Guidance Summary." |
(2) | Adjustment to net income to exclude certain property general and administrative expenses that are not reflective of the continuing operations of the properties or are incurred on our behalf at the property for expenses such as legal, professional and franchise tax fees. |
(3) | Amounts are derived from the results of operations of our pro forma Full Year 2019 Same Store properties and Non-Same Store properties. There are 25 properties in our Pro Forma Full Year 2019 Same Store pool. |
The following table reconciles our FFO, Core FFO and AFFO guidance to our net loss (the most directly comparable GAAP financial measure) guidance for the year ended December 31, 2019 (in thousands, except per share data):
For the Year Ended December 31, 2019 | ||||
Mid-Point | ||||
Net income | $ | 108,925 | ||
Depreciation and amortization | 63,200 | |||
Gain on sales of real estate | (127,700) | |||
Adjustment for noncontrolling interests | (133) | |||
FFO attributable to common stockholders | 44,292 | |||
FFO per share - diluted (1) | $ | 1.80 | ||
Loss on extinguishment of debt and modification costs | 2,869 | |||
Casualty-related recoveries | (8) | |||
Adjustment for noncontrolling interests | (9) | |||
Core FFO attributable to common stockholders | 47,144 | |||
Core FFO per share - diluted (1) | $ | 1.92 | ||
Amortization of deferred financing costs - long term debt | 2,019 | |||
Equity-based compensation expense | 5,154 | |||
Adjustment for noncontrolling interests | (22) | |||
AFFO attributable to common stockholders | 54,295 | |||
AFFO per share - diluted (1) | $ | 2.21 | ||
Weighted average common shares outstanding - diluted | 24,580 |
(1) | For purposes of calculating per share data, we assume a weighted average diluted share count of approximately 24.6 million for the full year 2019. |
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SOURCE NexPoint Residential Trust, Inc.
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