NexPoint Residential Trust, Inc.

Good day and welcome to the NextPoint Residential Trust, Inc. third quarter 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. Thank you.

Good day, everyone, and welcome to NextPoint Residential Trust's conference call to review the company's results for the third quarter ended September 30, 2021. On the call today are Brian Mist, Executive Vice President and Chief Financial Officer, Matt McGrainer, Executive Vice President and Chief Investment Officer, and Bonner McDermott, Vice President, Asset Management. As a reminder, this call is being webcast through the company's website at nsrt.nextpoint.com. Before we begin, I would like to remind everyone that this conference call 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. Listeners 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 the company's other filings with the SEC for a more complete discussion of risks and other factors that could affect any forward-looking statements. The statements made during the conference call speak only as of today's date, and accept as required by law, NXRT does not undertake any obligation to publicly update or revise any forward-looking statements. This conference call also includes an analysis of non-GAAP financial measures. For a more complete discussion of these non-GAAP financial measures, see the company's earnings release that was filed earlier today. I would now like to turn the call over to Brian Mitch. Please go ahead, Brian.

Thank you, Jackie, and welcome to everyone for joining us this morning. Appreciate your time. I'm Brian Metz. I'm joined by Matt McGrainer for our prepared remarks. I'll kick off the call with some commentary on the quarter and year and cover our results, wrap up with guidance, which we are, again, revising upward. I'll then turn it over to Matt to discuss specifics on the leasing environment and metrics driving our performance and leading us to revise guidance and add upward. With net migration continuing into our core Sunbelt markets and continued shortage of high-quality affordable housing, NXRT continues to enjoy enormous pricing power, with new lease rates increasing 23.8% for the quarter and renewal rates increasing 10.5% for the quarter across the portfolio. Net migration into our markets continues pretty much unabated. This continues to track capital and send cap rates to historic lows in our markets as reflected in our revised NAV calculations. We continue to find attractive deals despite the competitive acquisition market and have acquired three assets this year. The current environment also allows us to sell assets that have been fully renovated at a premium and recycle that capital into new value-add products where we can achieve higher rates of return and move out of slower-growth assets. Yesterday, we closed on the sale of two assets in Nashville, achieving a combined IRR of 36.1% and a multiple on invested capital 3.55 times. As we've discussed before, our growth prospects are not dependent on acquisitions. We continue to achieve significant returns from our value-add strategy, where we can move cap rates 75 to 150 basis points over three to five years from acquisition, which makes us less sensitive to the absolute cap rate levels. The ongoing and widening shortage of affordable housing in the U.S., which is more acute in our Sunbelt markets, as new household formation outpaces new housing deliveries, gives us plenty of runway to continue implementing our value-add strategy across the portfolio and on new acquisitions. The increased net migration coupled with the shortage of housing allowed our portfolio to achieve all-time high occupancies, It sets us up to continue to aggressively push rates for the remainder of the year and into 2022 while still maintaining high occupancies. That loss in the second quarter was $5.4 million or negative 21 cents per diluted share on total revenues of $56.4 million as compared to $29.6 million or $1.19 per diluted share in 2020 on total revenues of $51 million. For the quarter, same-store rent increased 6.8%, and same-store occupancy was up 40 basis points at 95.4%. This, coupled with an increase in same-store expenses of 5.2%, led to an increase in same-store NOI of 1.9 million, or 6.6%, as compared to Q3 2020. Reported Q3 core FFO of 16.4 million, or $0.65 per diluted share, compared to $0.53 per diluted share in Q3 2020, or an increase of 22.6 percent. That loss the nine months into September 30th was $15.7 million, or minus $0.62 per diluted share, as compared to a $48.2 million gain, or $1.91 per diluted share of the same period in 2020. For the year, same-store NOI has increased 2 million or 2.4 percent as compared to 2020. Year-to-date, we reported core FFO 44.7 million or $1.78 per diluted share compared to $1.64 per diluted share for the same period in 2020, or an increase of 8.5 percent. We continue to execute our value-add business plan by completing 290 full and partial renovations during the quarter, and leased 349 renovated units, achieving an average monthly rent premium of $172 and a 21.2 percent return on investment during the quarter. Conception to date in the current portfolio is a 930. We've completed 5,979 full and partial upgrades, 4,554 kitchen upgrades and washer-dryer installments, and 10,134 technology package installations. achieving an average monthly premium of $134, $47, and $43, respectively, and a return on investment of 21.5 percent, 72.7 percent, and 35 percent, respectively. Based on our current estimate of cap rates in our markets and forward NOI, we're reporting an NAV per share range as follows, $75.03 on the low end, $86.22 on the high end, and $80.62 at the midpoint. These are based on average cap rates ranging from 3.5% on the low end to 3.8% on the high end. The third quarter, we paid a dividend of $34.125 per share on September 30th. The board declared a dividend per share of $0.38 per share payable on December 31st, representing an 11.4% increase over the prior dividend. Since inception, we've increased our dividend to 84.5%. Near to date, our dividend was 1.74 times covered by core FFO with a payout ratio of 58% of core FFO. For 2021, we're revising guidance upwards as follows. Core FFO per diluted share, $2.36 on the low end, $2.41 on the high end for a midpoint of $2.38. Same-store revenue, 4.7% on the low end, 5.1% on the high end, 4.9% on the low end. Same-store expenses, 5.4% on the low end, 4.6% on the high end, and 5% on the midpoint. For same-store NOI, 4.4% on the low end, 5.6% on the high end, and 5.5% on the midpoint. That's up from 4% from prior guidance, and our core FFO is up 3 cents from $2.35 per share previously. If we achieve our midpoint of 2021 core FFO guidance, this will represent an 8.2% increase over our 2020 core FFO of $1.93 per share. So with that, I'll turn it over to Matt.