NexPoint Residential Trust, Inc.

Good morning. My name is Dennis and I will be your conference operator today. At this time, I would like to welcome everyone to the NextPoint Residential Trust fourth quarter 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 and the number one on your telephone keypad. To withdraw your question, press star one again. I would now like to turn the conference over to Kristen Thomas, Investor Relations. Please go ahead.

Thank you. Good day, everyone, and welcome to Nextway Residential Trust Conference Call to review the company's results for the fourth quarter in December 31, 2023. On the call today are Brian Mitts, Executive Vice President and Chief Financial Officer, Matt McGranor, Executive Vice President and Chief Investment Officer, and Bonner McDermott, Vice President, Asset Investment Management. As a reminder, this call is being web-passed 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 form, 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. If 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 on publicly updated or revised 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, Kristen. Welcome, everyone. Appreciate you joining this morning. I'm Brian Mitz, and I'm also joined by Matt McGrainer and Bonner McNermott. I'll kick off the call and cover our fourth quarter and full year results and highlights. I'll update our NAV calculation and then provide initial guidance for 2024. I'll then turn it over to Matt and Bonnie to discuss specifics on the leasing environment and metrics driving our performance and guidance, as well as details on the portfolio. So let me start with the results from the fourth quarter, which are as follows. Net income for the fourth quarter was $18.4 million or $0.70 per diluted share on total revenue of $68.9 million. That's compared to net income of $3.8 million or $0.15 per diluted share in the same period in 2022 on total revenue of $69.3 million. For the fourth quarter, NOI was $42.2 million on 38 properties as compared to $41.8 million for the fourth quarter of 2022 on 40 properties, a 0.9% increase in NOI. For the quarter, same-store rental income increased 3.8%, and same-store occupancy was up 60 basis points to 94.7%. This, coupled with an increase in same-store expenses of 2%, led to an increase in same-store NOI of 4.5% as compared to Q4 2022. Rental income for the fourth quarter of 23 on the same store portfolio was up 1.3% quarter over quarter from the third quarter of 23. We reported Q4 core FFO of $17.4 million, or $0.60 per diluted share, compared to $0.75 per diluted share in the fourth quarter of 22. We continue to execute our value-add business plan by completing 113 full and partial renovations during the quarter, and leased 132 renovated units, achieving an average monthly rent premium of $214 and a 19.9% return on investment. Exception to date in the current portfolio is a 1231. We have completed 8,534 full and partial upgrades, 4,761 kitchen and laundry appliance installations, and 12,348 technology package installations, resulting in $169, $49, and $43 average monthly rental increase per unit, and 20.9%, 64.7%, and 37.8% return on investment, respectively. Moving to the full year, full year results are as follows. Net income for the year ended December 31st was $44.3 million, or $1.69 per diluted share, which included a gain on sales of real estate of 67.9 million. This compared to a net loss of 9.3 million or 36, negative 36 cents per diluted share for the full year of 2022, which included a gain on sale of real estate of 14.7 million. For the year NOI was 167.4 million on 38 properties as compared to 157.4 million on 40 properties for the same period in 2022 for an increase of 6.3% in NOI. For the year, same-store rental income increased 7.1%, and same-store occupancy was up 60 basis points to 94.7%. This coupled with an increase in same-store expenses of 5.5% led to an increase in same-store NOI of 8.2% as compared to the full year of 2022. of $73.5 million, or $2.80 per diluted share, compared to $3.13 in 2022. Since inception of the business in 2015, NXRT has generated 10.92% compound annual growth in core FFO. For the fourth quarter, we paid a dividend of $0.46 per share on December 29th. Since inception, we've increased our dividend 124.5%. For 2023, our dividend was 1.62 times covered by core FFO with a payout ratio of 61.6% of core FFO. Moving to our NAV, based on our current estimates of cap rates in our markets and forward NOI, we're reporting a NAV per share range as follows. $47.64 on the low end. $61.23 on the high end, $54.43 at the midpoint. These are based on average cap rates ranging from 5.5% on the low end to 6% on the high end, which remained the same as last quarter and increased 60 basis points a year to date to reflect a rise in interest rates and observable increases in cap rates in our markets. Before we go to guidance such on our 2023 dispositions and subsequent events, since 1241. September 22nd completed the sale of Silverbrook in Dallas for gross proceeds of $70 million, representing a cap rate of 4.55%. The gain on sale was $43.1 million, and $16 million of the $19.5 million net proceeds were used to partially pay down the corporate credit facility on September 25th. On December 13th, We completed the sale of Timber Creek in Charlotte for gross proceeds of $49 million, representing a cap rate of 5.01%. The gain on sale is $24.8 million, and $17 million of the $24.5 million net proceeds were used to pay down the corporate credit facility on December 15th. We currently have two properties, Old Farm located in Houston and Adborne Lake located in Charlotte, under contract. that we expect to close the first half of the year. The estimated net proceeds of 66.1 million will be used to fully pay down the rest of the corporate credit facility. Going to guidance for 2024, we are issuing initial guidance as follows. For core FFO per diluted share, $2.85 at the high end, $2.60 at the low end, with a midpoint of $2.72. For same store revenue, 3.9% increase on the high end, 1.1% increase on the low end, with a midpoint of 2% increase. Same store expenses, increase of 4.3% for the high end, 6% for the low end, and 5.1% increase for the midpoint, which results in a same store NOI of a 2% increase on the high end, a 2% decrease on the low end, and a 0% or flat increase at the midpoint. So with that, let me turn it over to Matt and Bonner for additional commentary.