NexPoint Residential Trust, Inc.

Thank you for standing by. At this time, I would like to welcome everyone to the next Point Residential Trust Q1 2023 conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star one. Thank you. Kristen Thomas, you may begin your conference.

Thank you. Good day, everyone, and welcome to Next Point Residential's conference call to review the company's results for the first quarter, March 31st, 2023. On the call today are Brian Mitt, Executive Vice President and Chief Financial Officer, Matt McGrainer, Executive Vice President and Chief Investment Officer, and Bonner McDermott, Vice President, Asset Investment Management. As a reminder, this call is being webcast through the company's website at nxrt.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 risk 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 NSRT 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 Mitts. Please go ahead, Brian.

Thank you, Kristen. Welcome to everyone joining us this morning. Appreciate your time. I'm Brian Mitz. As Kristen mentioned, I'm joined here with Matt McGrainer and Bonner McDermott. I'm going to kick off the call and cover our Q1 results, give our updated NAV, and then update our guidance for the remainder of the year. I'll turn it over to Matt and Bonner after that to discuss specifics on the Leasing environment and metrics driving our performance and guidance. So let's start with the Q1 results, which are as follows. Net loss for the first quarter was $3.9 million or $0.15 per diluted share. A total revenue of $69.2 million as compared to a net loss of $4.7 million or $0.18 per diluted share in the same period in 2022. on total revenue of $60.8 million, which represents a 14% increase in revenue. For the first quarter, NOI was $41.1 million on 40 properties, which compared to $36.7 million for the first quarter of 2022 on 39 properties, representing a 12.2% increase in NOI. For the quarter, year-over-year rent growth on renewals averaged 4.8% across the portfolio, And year-over-year rent growth on new leases averaged 2.8%. Given where rental rates are in our markets for Class B apartments and equivalent SR product, we believe there's still room for future outsized rent growth for the remainder of the year. For the corridor, same-store rent increased 13.3%, and same-store occupancy was down 3% to 94%. This coupled with an increase in same-store expenses of 15.1%, led to an increase in same-store NOI of 9.4% as compared to Q1 of 2022. Compared to Q4 2022, rents for this quarter on the same-store portfolio were up 0.6% quarter-over-quarter. We reported Q1 core FFO of $18.5 million, or $0.71 per diluted share, compared to $0.77 per diluted share in Q1 2022. For the quarter, we completed 494 full and partial renovations and leased 565 renovated units, achieving an average monthly rent premium of $153 and 21.2% PRI during the quarter. Inception to date in the portfolio, we've completed 8,127 full and partial upgrades, which represents 54% of our current units. 4,914 kitchen upgrades and washer and dryer installments, and 10,423 technology package installations, achieving an average monthly rent premium of $153, $47, and $45, respectively, and an ROI of 21.8%, 65.6%, and 37.4%, respectively. During the first quarter, we refinanced the venue on Camelback and paid down $17.5 million of the corporate credit facility through the refinancing proceeds and available cash. As of March 31st, the balance on the corporate credit facility is $57 million. With the sales of Old Farm and Stone Creek in Houston, which we expect this quarter, we'll use some of those expected net proceeds of $63 million to pay down the remainder of the corporate facility. Moving to NAV, based on our current estimates of cap rates in our markets and forward NOI, we are reporting a NAV range per share as follows. $66.66 on the low end, $76.82 on the high end, and $71.74 at the midpoint. These are based on average cap rates ranging from 5% on the low end to 5.3% on the high end, which remains flat from last quarter and has increased approximately 65 basis points from Q3 of 2022. Moving to full-year guidance, we're updating guidance as follows. On core FFO, we are guiding $2.92 on the low end, $3.20 on the high end, with a midpoint of $3.06. For rental income, we're estimating 10.5% increase on the low end, 12.1% increase on the high end for midpoint, 11.3% increase. For same-store NOI, we are estimating 9.2% growth on the low end, 12.8% growth on the high end, and 11% for the midpoint. And then to add some additional transparency and clarity and information, we are showing the components to interest expense, as that's obviously driving some of our results and our guidance. We estimate total interest expense for the year. It's $65.2 million on the low end, $63.2 million on the high end, and $64.3 two million at the midpoint. So with that, that completes my remarks. I'll turn it over to Matt and then Bonner for some commentary on the portfolio and lease environment.