NexPoint Residential Trust, Inc.

Good day and welcome to the NextPoint Residential Trust Q4 2021 Quarterly Conference Call. 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 Conference Call to review the company's results for the fourth quarter and full year ended December 31, 2021. On the call today are Brian Mitts, Executive Vice President and Chief Financial Officer, and Matt McGranner, Executive Vice President and Chief Investment Officer. 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 any 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 FDC for a more complete discussion of risks and other factors that could affect any forward-looking statements. The statements made during this 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 Mitz. Please go ahead, Brian.

Thank you, Jackie, and I'd like to welcome everyone joining us this morning. We appreciate your time. I'm Brian Mitz, and I'm joined by Matt McGrainer. I'll kick off the call with some commentary for the quarter and the year, and then cover our results and wrap up with guidance, which we're initiating for 2022. I'll then turn it over to Matt to discuss specifics on the leasing environment and metrics driving our performance, guidance, and our NAV estimate. With net migration continuing into our core Sunbelt markets and the continued shortage of high-quality, affordable housing, NXRT continues to enjoy enormous pricing power with new lease rates increasing 24.5% and renewal rates increasing 15.6% across the portfolio in Q4 of 2021. That migration in our markets continues unabated. This continues to attract capital and cap rates to historic lows and then rent increases to historic highs in our markets. 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 yields 50 to 100 basis points over three to five years from acquisition, which makes us less sensitive to absolute acquisition 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 formations outpace new housing deliveries, gives us plenty of runway to continue implementing our value-add strategy across our existing portfolio and new acquisitions. Increased debt migration coupled with shortage of housing positions NXRT to continue to aggressively push rates into 2022 while still maintaining high occupancies. Net income for the fourth quarter was $38.8 million, or $1.50 per diluted share, on total revenue of $58.5 million, as compared to a net loss of $4.2 million, or minus $0.17 per diluted share in the same period of 2020, on total revenue of $50.5 million. For the quarter, same-store rent increased 11.1%, and same-store occupancy was up 30 basis points to 94.2%. This coupled with an increase in same store expenses of only 1.7% led to an increase in same store NOI of 3.9 million or 14.7% as compared to Q4 2020. We reported Q4 core funds from operations of 17.8 million or 69 cents per diluted share compared to 56 cents per diluted share in Q4 2020 or an increase of 23%. Net income for the year ended December 31 was 23 million or 89 cents per diluted share, which included a gain on sales and real estate of 46.2 million as compared to 44 million or $1.74 per diluted share for 2020, which included a gain on sales and real estate of 69.2 million. For the year, same-store NOI increased $6 million, or 5.5% as compared to 2020. We reported poor funds from operations in 2021 of $62.5 million, or $2.43 per diluted share, compared to $2.20 per diluted share for 2020, which is an increase of 10.3%. We continue to execute our value-add business plan by completing 353 full and partial renovations during the fourth quarter and leased 243 renovated units, achieving an average monthly rent premium of $182 and a 24.1% ROI during the year. Inception to date in the current portfolio is that December 31st, we've completed 6,015 full and partial upgrades 4,321 kitchen upgrades and washer-dryer installments, and 9,624 technology package installments, achieving an average monthly rent premium of $136, $47, and $43 respectively, and an ROI of 21.6%, 72%, and 33.5% respectively. Collections for fourth quarter 2021 were 99.1% of total amounts charged, which is in line with pre-pandemic levels. Based on our current estimate of cap rates in our markets and forward NOI, we're reporting an NAV per share range as follows. $90.23 on the low end, $106.36 on the high end, and $98.30 at the midpoint. This is based on the average cap rates ranging from 3.5% on the low end to 3.8% on the high end. For the fourth quarter, we paid a dividend of $0.38 per share on December 30th. Yesterday, the board approved a dividend of $0.38 per share payable on March 31st. Since inception, we've increased our dividend to 84.5%. And for 2021, our dividend was 1.73 times covered by core funds from operations with a payout ratio of 57.9% of core FFO. For 2022, we are initiating guidance as follows. Net income per share, $4.05 on the low end, $4.25 on the high end, and a midpoint of $4.15. Same-store revenue of 9.4% increase in the low end, 11.1% increase in the high end, and 10.2% increase at the midpoint. Same-store expenses, 7.2% increase on the low end, 5.5% increase at the high end, and 6.3% increase at the midpoint. Same-store NOI, 11% increase on the low end, 15% increase on the high end with 13% increase for the midpoint. And core funds from operations per diluted share of $2.87 on the low end, $3.07 on the high end with a midpoint of $2.97. At the midpoint of our estimated 2022 core funds from operations, At $2.97, this will represent a 22.4% increase over 2021 core FFO of $2.43. So with that, let me turn it to Matt for his commentary.