NexPoint Residential Trust, Inc.

Thank you for standing by. My name is Christina and I'll be your conference operator today. At this time, I would like to welcome everyone to the NextPoint Residential Trust Second Quarter 2024 Earnings 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. And I will now turn the floor over to Kristen Thomas, Investor Relations. Kristen, you may begin the call.

Thank you. Good day, everyone, and welcome to Nextmont Residential Trust's conference call to review the company's results from the second quarter into June 30, 2024. On the call today are Brian Mitz, Executive Vice President and Chief Financial Officer, Matt McGrainor, Executive Vice President and Chief Investment Officer, and Bonner McDermott, Vice President, Asset and Investment 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 meanings 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 this conference call speak only as of today's date, and except as required by law, NSRC 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.

Thanks, Kristen. Welcome to everyone joining us this morning. Appreciate your time. I'm Brian Mitts. I will be joined today by Matt McGrainer and Bonner McDermott. I'll start the call and cover our Q2 results, updated NAV and guidance outlook for the year. Then I'll turn it over to Matt and Bonner to discuss some of the specifics in the leasing environment and metrics driving our performance and guidance. Results for the second quarter are as follows. Net income for the second quarter is $10.6 million, or 40 cents per diluted share, on total revenue of $64 million. This includes an $18.7 million gain on the sale of Radbourne Lake that was completed on April 30th. The $10.6 million net income for the quarter compares to a net loss of $4 million or $0.15 loss per diluted share for the same period in 2023 on total revenue of $69.6 million. For the second quarter of 2024, NOI was $38.9 million on 36 properties. compared to 42 million for the second quarter of 2023 on 40 properties. For the quarter, same-store rent decreased 1%, while same-store occupancy held stable at 94.1%. This, coupled with an increase in same-store revenues of 2.3%, led to an increase in same-store NOI of 2.4% as compared to Q2 2023. As compared to Q1 2024, rents for second quarter on the same store portfolio were up 0.4 percent or six dollars sequentially we reported q2 core ffo of 18 million or 68 cents per diluted share compared to 77 cents per diluted share in q2 of 23. during the second quarter for the properties in our portfolio we completed 59 full impartial upgrades and 36 or sorry at least 56 upgraded units achieving an average monthly rent premium of $240 and a 20.1% return on investment. Since inception for the properties currently in our portfolio, we've completed 8,271 full and partial renovations, 4,659 kitchen and laundry appliance installs, and 11,389 technology package installs. resulting in $175, $48, and $43 average monthly rental increase per unit and a 20.8%, 62.9%, and 37.2% return on investment, respectively. NSRT paid a second quarter dividend of $0.46 per share of common stock on June 28th. Since inception, we've increased our dividend 124.5%. For the second quarter, our dividend was 1.48 times covered by core FFO with a payout ratio of 68%. During the second quarter, NXRT completed the sale of Radbourne Lake for a sales price of $39.25 million. This generated $18.6 million of net sales proceeds and resulted in a 19.2% levered IRR and 3.6 times the multiple on invested capital. Second quarter, the company purchased and subsequently retired $14.6 million of its common stock. The retired stock was purchased at a weighted average price of $33.19 per share, which represented an attractive 37% discount to the midpoint of our Q1-24 NAV range. On June 27th, NXRT used cash on hand to retire the $15.3 million mortgage on the Stone Creek at Old Forum Property. As of June 30th, 2024, We had $21.3 million of cash and $350 million of available liquidity on the corporate credit facility. Turning to NAV, based on our current estimate of cap rates in our markets and forward NOI, we're reporting an NAV per share range as follows. $49.77 on the low end, $61.97 on the high end, and $55.87 at the midpoint. These are based on average cap rates ranging from 5.25% on the low end to 5.75% on the high end, which revised down 25 basis points this quarter based upon recent market intelligence and transaction activity. NXRT is updating 2024 guidance range for core FFO prediluted share, same store revenue, same store expenses, and same store NOI as follows. Core FFO per diluted share, $2.66 on the low end, $2.79 on the high end, and a midpoint of $2.72. Total revenue, 1.3% increase in low end, 2.2% increase on the high end, and 1.7% increase at the midpoint. Total expenses, 4.4% increase on the low end, 3.7% or sorry, 3% increase on the high end and a midpoint of 3.7%. The same story, NOI, a negative 0.6% increase in the low end, or sorry, decrease, 1.6% increase on the high end and a 0.5% increase at the midpoint. That completes my prepared remarks. I'll now turn it over to Matt. Thanks, Brian.