DALLAS, May 1, 2018 /PRNewswire/ -- NexPoint Residential
Trust, Inc. (NYSE:NXRT) reported financial results for the first
quarter ended March 31, 2018.
Highlights
- NXRT reported Net Income, FFO1, Core FFO1
and AFFO1 of $10.1M,
$7.7M, $8.3M and $9.5M,
respectively, attributable to common stockholders for the quarter
ended March 31, 2018.
- For the three months ended March 31,
2018, Same Store properties average effective rent, total
revenue and NOI1 increased 3.9%, 3.6% and 5.9%,
respectively, over the prior year period.
- The weighted average effective monthly rent per unit across all
32 properties held as of March 31,
2018 (the "Portfolio"), consisting of 11,471 units, was
$958, while physical occupancy was
94.0%.
- NXRT paid a first quarter dividend of $0.25 per share of common stock on March 29, 2018.
- During the first quarter, NXRT completed the disposition of
Timberglen for gross sales proceeds of $30.0
million.
- In February 2018, NXRT used
$8.6 million of proceeds from the
Timberglen sale to pay the remaining outstanding balance on the
bridge facility with KeyBank National Association (the "2017 Bridge
Facility"), which retired the bridge facility.
- During the first quarter, for the properties in our Portfolio,
NXRT completed 298 full and partial upgrades and leased 167
upgraded units, achieving $95 average
monthly rent premiums and a 21.2% ROI2. Since inception,
for the properties in our Portfolio, we have completed 4,527 full
and partial upgrades and achieved a $90 average monthly rental increase per unit,
equating to a 21.2% ROI on all units leased as of March 31, 2018.
- During the first quarter of 2018, NXRT repurchased 203,953
shares of its common stock at a total cost of approximately
$5,058,000, or $24.80 per share. As of March 31, 2018, NXRT had repurchased a total of
558,470 shares of its common stock at a total cost of approximately
$12,079,000, or $21.63 per share.
- On February 12, 2018, NXRT's
board of directors, including its independent directors,
unanimously approved a renewal of the Advisory Agreement with
NexPoint Real Estate Advisors, L.P. (the "Adviser") for a one-year
term that expires on March 16,
2019.
"We achieved a strong start for the year in the first quarter,
maintaining a steady pace of revenue growth while limiting
controllable operating expense inflation. The Company
strategically disposed of Timberglen for gross sale proceeds of
$30.0 million, retired the 2017
Bridge Facility, and bought back over 200,000 shares at appreciable
discounts to our internal Net Asset Value projection," according to
NXRT's Chairman and President, Jim
Dondero. "Management remains bullish on the fundamentals for
well-located workforce housing in the Southeast and Southwest and
we will keep working methodically to produce strong financial
performance."
First Quarter 2018 Financial Results
- Total revenues were $35.1 million
for the first quarter of 2018, compared to $37.0 million for the first quarter of 2017.
- Net income for the first quarter of 2018 totaled $10.1 million, or earnings of $0.47 per diluted share, which included
$13.7 million of gain on sale of real
estate and $11.4 million of
depreciation and amortization expense. This compared to a net loss
of $(3.6) million, or $(0.17) per diluted share, for the first quarter
of 2017, which included $12.4 million
of depreciation and amortization expense.
- The change in our net income (loss) between the periods
primarily relates to increases in gain on sale of real estate and
same store operating results, and was partially offset by increases
in corporate general and administrative expenses and loss on
extinguishment of debt and modification costs.
- For the first quarter of 2018, NOI¹ was $19.1 million on 32 properties, compared to
$19.7 million for the first quarter
of 2017 on 40 properties.
- For the first quarter of 2018, Same Store NOI¹ increased 5.9%
to $16.5 million, compared to
$15.6 million for the first quarter
of 2017.
- For the first quarter of 2018, FFO¹ totaled $7.7 million, or $0.36 per diluted share, compared to $8.0 million, or $0.38 per diluted share, for the first quarter of
2017.
- For the first quarter of 2018, Core FFO¹ totaled $8.3 million, or $0.39 per diluted share, compared to $8.1 million, or $0.38 per diluted share, for the first quarter of
2017.
- For the first quarter of 2018, AFFO¹ totaled $9.5 million, or $0.45 per diluted share, compared to $9.1 million, or $0.43 per diluted share, for the first quarter of
2017.
1.
|
FFO, Core FFO, AFFO
and NOI are non-GAAP measures. For reconciliations of FFO, Core
FFO, AFFO and NOI to net income, and a discussion of why we
consider these non-GAAP measures useful, see the "Definitions and
Reconciliations" section of this release.
|
2.
|
We define Return on
Investment ("ROI") as the sum of the actual rent premium divided by
the sum of the total cost.
|
Same Store Results of Operations
There are 29 properties encompassing 10,123 units of apartment
space in our same store pool for the three months ended
March 31, 2018 (our "Same Store"
properties). As of March 31, 2018,
our Same Store properties were approximately 94.1% leased with a
weighted average monthly effective rent per occupied apartment unit
of $933. As of March 31, 2017, our Same Store properties were
approximately 94.6% leased with a weighted average monthly
effective rent per occupied apartment unit of $899.
The following table reflects the revenues, property operating
expenses and NOI for the three months ended March 31,
2018 and 2017 for our Same Store and Non-Same Store properties
(dollars in thousands):
|
For the Three
Months Ended March 31,
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
$
Change
|
|
|
%
Change
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same Store
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental
income
|
$
|
26,167
|
|
|
$
|
25,183
|
|
|
$
|
984
|
|
|
|
3.9
|
%
|
Other
income
|
|
3,996
|
|
|
|
3,943
|
|
|
|
53
|
|
|
|
1.3
|
%
|
Same Store
revenues
|
|
30,163
|
|
|
|
29,126
|
|
|
|
1,037
|
|
|
|
3.6
|
%
|
Non-Same
Store
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental
income
|
|
4,406
|
|
|
|
6,725
|
|
|
|
(2,319)
|
|
|
|
-34.5
|
%
|
Other
income
|
|
488
|
|
|
|
1,140
|
|
|
|
(652)
|
|
|
|
-57.2
|
%
|
Non-Same Store
revenues
|
|
4,894
|
|
|
|
7,865
|
|
|
|
(2,971)
|
|
|
|
-37.8
|
%
|
Total
revenues
|
|
35,057
|
|
|
|
36,991
|
|
|
|
(1,934)
|
|
|
|
-5.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same Store
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property operating
expenses (1)
|
|
7,723
|
|
|
|
7,565
|
|
|
|
158
|
|
|
|
2.1
|
%
|
Real estate taxes and
insurance
|
|
4,033
|
|
|
|
4,079
|
|
|
|
(46)
|
|
|
|
-1.1
|
%
|
Property management
fees (2)
|
|
911
|
|
|
|
874
|
|
|
|
37
|
|
|
|
4.2
|
%
|
Property general and
administrative expenses (3)
|
|
1,024
|
|
|
|
1,047
|
|
|
|
(23)
|
|
|
|
-2.2
|
%
|
Same
Store operating expenses
|
|
13,691
|
|
|
|
13,565
|
|
|
|
126
|
|
|
|
0.9
|
%
|
Non-Same
Store
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property operating
expenses (4)
|
|
1,130
|
|
|
|
2,301
|
|
|
|
(1,171)
|
|
|
|
-50.9
|
%
|
Real estate taxes and
insurance
|
|
823
|
|
|
|
886
|
|
|
|
(63)
|
|
|
|
-7.1
|
%
|
Property management
fees (2)
|
|
143
|
|
|
|
239
|
|
|
|
(96)
|
|
|
|
-40.2
|
%
|
Property general and
administrative expenses (5)
|
|
143
|
|
|
|
308
|
|
|
|
(165)
|
|
|
|
-53.6
|
%
|
Non-Same Store
operating expenses
|
|
2,239
|
|
|
|
3,734
|
|
|
|
(1,495)
|
|
|
|
-40.0
|
%
|
Total operating
expenses
|
|
15,930
|
|
|
|
17,299
|
|
|
|
(1,369)
|
|
|
|
-7.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOI
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same Store
|
|
16,472
|
|
|
|
15,561
|
|
|
|
911
|
|
|
|
5.9
|
%
|
Non-Same
Store
|
|
2,655
|
|
|
|
4,131
|
|
|
|
(1,476)
|
|
|
|
-35.7
|
%
|
Total NOI
(6)
|
$
|
19,127
|
|
|
$
|
19,692
|
|
|
$
|
(565)
|
|
|
|
-2.9
|
%
|
|
|
(1)
|
For the three months
ended March 31, 2018 and 2017, excludes approximately $23,000 and
$0, respectively, of casualty-related expenses.
|
(2)
|
Fees incurred to an
unaffiliated third party that is an affiliate of the noncontrolling
limited partner of NexPoint Residential Trust Operating
Partnership, L.P. (the "OP").
|
(3)
|
For the three months
ended March 31, 2018 and 2017, excludes approximately $343,000 and
$161,000, respectively, of expenses that are not reflective of the
continuing operations of the properties or are incurred on our
behalf at the property for expenses such as legal, professional and
franchise tax fees.
|
(4)
|
For the three months
ended March 31, 2018 and 2017, excludes approximately $1,000 and
$5,000, respectively, of casualty-related expenses.
|
(5)
|
For the three months
ended March 31, 2018 and 2017, excludes approximately $37,000 and
$70,000, respectively, of expenses that are not reflective of the
continuing operations of the properties or are incurred on our
behalf at the property for expenses such as legal, professional and
franchise tax fees.
|
(6)
|
For additional
information regarding NOI, see the "Definitions and
Reconciliations" section of this release.
|
|
|
Disposition of Property
As previously reported, we sold Timberglen on January 31, 2018 for a gross sales price of
$30.0 million, achieving a 44.77% IRR
and 3.78x multiple on invested capital1. We used
$8.6 million of the proceeds from the
sale to pay the remaining $8.6
million outstanding on our 2017 Bridge Facility, which
retired the bridge facility. Details of the Timberglen sale are in
the table below (in thousands):
Property
Name
|
|
Location
|
|
Date of
Sale
|
|
Sales
Price
|
|
|
Net Cash
Proceeds (2)
|
|
|
Gain on
Sale
of Real
Estate
|
|
Timberglen
|
(3)
|
Dallas,
Texas
|
|
January 31,
2018
|
|
$
|
30,000
|
|
|
$
|
29,553
|
|
|
$
|
13,742
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
We define a "multiple
on invested capital" as the total return to NXRT (inclusive of our
share of property distributions and net cash proceeds from sale,
less mortgage debt repaid) divided by NXRT's total capital
investment in the property.
|
(2)
|
Represents sales
price, net of closing costs.
|
(3)
|
We completed the
reverse portion of the 1031 Exchange of Atera Apartments with the
sale of Timberglen.
|
|
|
Value-Add Programs
For the properties in our Portfolio as of March 31, 2018, we completed full and partial
renovations on 298 units in the first quarter of 2018 at an average
cost of $5,409 per renovated unit.
Since inception, for the properties in our Portfolio, we have
completed full and partial renovations on 4,527 units at an average
cost of $5,002 per renovated unit
that has been leased as of March 31,
2018. We have achieved average rent growth of 10.8%, or a
$90 average monthly rental increase
per unit, on all units renovated and leased as of March 31, 2018, resulting in a 21.2% ROI.
The following table sets forth a summary of our capital
expenditures related to our value-add program for the three months
ended March 31, 2018 and 2017 (in
thousands):
|
|
For the Three
Months Ended March 31,
|
|
Rehab
Expenditures
|
|
2018
|
|
|
2017
|
|
Interior
|
(1)
|
$
|
1,516
|
|
|
$
|
2,446
|
|
Exterior and common
area
|
|
|
2,449
|
|
|
|
1,404
|
|
Total rehab
expenditures
|
|
$
|
3,965
|
|
|
$
|
3,850
|
|
|
|
(1)
|
Includes total
capital expenditures during the period on completed and in-progress
interior rehabs. For the three months ended March 31, 2018 and
2017, we completed full and partial interior rehabs on 298 and 430
units, respectively.
|
|
|
Second Quarter 2018 Dividend
On April 30, 2018, NXRT's board of
directors declared a quarterly dividend of $0.25 per share of common stock. The dividend
will be paid on June 29, 2018 to
stockholders of record on June 15,
2018.
Share Repurchase Program
As noted above, during the first quarter, NXRT repurchased
203,953 shares of its common stock at a total cost of approximately
$5,058,000, or $24.80 per share. As of March 31, 2018, NXRT had repurchased a total of
558,470 shares of its common stock at a total cost of approximately
$12,079,000, or $21.63 per share. As of March 31, 2018, NXRT had 20,926,355 shares of its
common stock issued and outstanding.
Subsequent Events
Share Repurchase Program
Subsequent to March 31, 2018 and
through April 30, 2018, NXRT
repurchased 167,267 shares of its common stock at a total cost of
approximately $4,307,000 or
$25.75 per share. As of April 30, 2018, NXRT had repurchased a total of
725,737 shares of its common stock at a total cost of approximately
$16,386,000, or $22.58 per share. On April
30, 2018, the Board authorized increasing the Share
Repurchase Program to up to $40.0
million, and extending it by an additional two years to
June 15, 2020.
2018 Full Year Guidance Summary
NXRT is reaffirming 2018 guidance ranges1 for
Earnings (loss) per diluted share, Core FFO per diluted
share2 Same Store Rental Income, Same Store Total
Revenue, Same Store Total Expenses, and Same Store NOI2
as follows:
|
Low-End
|
Mid-Point
|
High-End
|
|
|
|
|
Earnings (loss)/sh
(3)
|
$(0.03)
|
$0.02
|
$0.07
|
|
|
|
|
Core FFO/sh
(3)
|
$1.60
|
$1.65
|
$1.70
|
|
|
|
|
Same Store Growth:
(4)
|
|
|
|
Rental
Income
|
4.8%
|
5.3%
|
5.8%
|
Total
Revenue
|
5.0%
|
5.5%
|
6.0%
|
Total
Expenses
|
3.5%
|
4.0%
|
4.5%
|
NOI
(5)
|
5.5%
|
6.5%
|
7.5%
|
|
|
(1)
|
Full Year 2018
guidance forecast includes same store growth projections presented
above, taking into effect the Timberglen sale, and no further
acquisition or disposition activity for the remainder of the year.
For more information and a reconciliation of 2018 Full Year
Non-GAAP Guidance to 2018 Full Year net income guidance, see the
"Definitions and Reconciliations" section of this
release.
|
(2)
|
Same Store NOI and
Core FFO are non-GAAP measures. For reconciliations of Same Store
NOI and Core FFO to net income, and a discussion of why we consider
these non-GAAP measures useful, see the "Definitions and
Reconciliations" section of this release.
|
(3)
|
Weighted average
diluted share count estimate for FY 2018 is approximately 21.3
million.
|
(4)
|
Year-over-year growth
for 2018 pro forma same store pool (29 properties, excluding
Timberglen).
|
(5)
|
NOI is a Non-GAAP
measure. For reconciliations of NOI to net income and a discussion
of why we consider this non-GAAP measure useful, see the
"Definitions and Reconciliations" section of this
release.
|
|
|
Additional information on first quarter 2018 results and 2018
financial and earnings guidance is included in supplemental data
that can be found in the Investor Relations section of the
Company's website at www.nexpointliving.com.
Supplemental Information
Supplemental information to this press release can be found in
the Investor Relations section of the Company's website at
www.nexpointliving.com.
First Quarter Earnings Conference Call
NXRT will host a call on Tuesday, May 1,
2018 at 11:00 a.m. ET to
discuss its first quarter financial results. The conference call
can be accessed live over the phone by dialing (334) 323-0522 or,
for international callers, (877) 260-1479, and using passcode
Conference ID: 6756596. A live audio webcast of the call will be
available online at the Company's website,
http://www.nexpointliving.com (under "Investor Relations"). An
online replay will be available shortly after the call on the
Company's website and continue to be available for 60 days.
A replay of the conference call will also be available through
Tuesday, May 8, 2018, by dialing
(888) 203-1112 or, for international callers, (719) 457-0820 and
entering passcode 6756596.
About NXRT
NexPoint Residential Trust is a publicly traded REIT, with its
shares listed on the New York Stock Exchange under the symbol
"NXRT," primarily focused on acquiring, owning and operating
well-located middle-income multifamily properties with "value-add"
potential in large cities and suburban submarkets of large cities,
primarily in the Southeastern and Southwestern United States. NXRT is externally
advised by NexPoint Real Estate Advisors, L.P., an affiliate of
Highland Capital Management, L.P., a leading global alternative
asset manager and an SEC-registered investment adviser. More
information about NXRT is available at
http://www.nexpointliving.com.
Cautionary Notice Regarding Forward-Looking
Statements
This press release 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. Forward-looking statements can often be identified by
words such as "expect," "anticipate," "estimate," "may," "should,"
"intend" and similar expressions, and variations or negatives of
these words. These forward-looking statements include, but are not
limited to, statements regarding NXRT's guidance for financial
results for the full year 2018 or expected dispositions or
acquisitions. They are not guarantees of future results and are
subject to risks, uncertainties and assumptions that could cause
actual results to differ materially from those expressed in any
forward-looking statement. Readers 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 other filings
with the Securities and Exchange Commission (the "SEC") for a more
complete discussion of the risks and other factors that could
affect any forward-looking statements. Except as required by law,
NXRT does not undertake any obligation to publicly update or revise
any forward-looking statements.
Contact:
Marilynn
Meek
Financial Relations Board
212-827-3773
|
|
Select
Financial Information
|
NEXPOINT
RESIDENTIAL TRUST, INC. AND SUBSIDIARIES
|
CONSOLIDATED
BALANCE SHEETS
|
(in thousands,
except share and per share amounts)
|
|
|
March 31,
2018
|
|
|
December 31,
2017
|
|
|
(Unaudited)
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Operating Real Estate
Investments
|
|
|
|
|
|
|
|
Land
|
$
|
189,615
|
|
|
$
|
189,615
|
|
Buildings and
improvements
|
|
808,686
|
|
|
|
806,981
|
|
Intangible lease
assets
|
|
1,340
|
|
|
|
1,340
|
|
Construction in
progress
|
|
4,239
|
|
|
|
3,786
|
|
Furniture, fixtures,
and equipment
|
|
47,647
|
|
|
|
44,725
|
|
Total Gross Operating
Real Estate Investments
|
|
1,051,527
|
|
|
|
1,046,447
|
|
Accumulated
depreciation and amortization
|
|
(99,501)
|
|
|
|
(88,252)
|
|
Total Net Operating
Real Estate Investments
|
|
952,026
|
|
|
|
958,195
|
|
Real estate held for
sale, net of accumulated depreciation of $897 and $3,397,
respectively
|
|
17,199
|
|
|
|
32,961
|
|
Total Net Real Estate
Investments
|
|
969,225
|
|
|
|
991,156
|
|
Cash and cash
equivalents
|
|
13,935
|
|
|
|
16,036
|
|
Restricted
cash
|
|
18,258
|
|
|
|
27,212
|
|
Accounts
receivable
|
|
2,714
|
|
|
|
2,932
|
|
Prepaid and other
assets
|
|
3,352
|
|
|
|
1,559
|
|
Fair market value of
interest rate swaps
|
|
24,146
|
|
|
|
16,480
|
|
TOTAL
ASSETS
|
$
|
1,031,630
|
|
|
$
|
1,055,375
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
Mortgages payable,
net
|
$
|
723,663
|
|
|
$
|
724,057
|
|
Mortgages payable held
for sale, net
|
|
13,469
|
|
|
|
30,348
|
|
Credit facility,
net
|
|
29,882
|
|
|
|
29,843
|
|
Bridge facility,
net
|
|
—
|
|
|
|
8,576
|
|
Accounts payable and
other accrued liabilities
|
|
4,455
|
|
|
|
6,226
|
|
Accrued real estate
taxes payable
|
|
4,532
|
|
|
|
9,684
|
|
Accrued interest
payable
|
|
2,199
|
|
|
|
2,074
|
|
Security deposit
liability
|
|
1,541
|
|
|
|
1,518
|
|
Prepaid
rents
|
|
2,069
|
|
|
|
1,470
|
|
Total
Liabilities
|
|
781,810
|
|
|
|
813,796
|
|
|
|
|
|
|
|
|
|
Redeemable
noncontrolling interests in the Operating Partnership
|
|
2,097
|
|
|
|
2,135
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity:
|
|
|
|
|
|
|
|
Preferred stock, $0.01
par value: 100,000,000 shares authorized; 0 shares
issued
|
|
—
|
|
|
|
—
|
|
Common stock, $0.01
par value: 500,000,000 shares authorized; 20,926,355 and 21,049,565
shares issued and outstanding, respectively
|
|
209
|
|
|
|
210
|
|
Additional paid-in
capital
|
|
202,085
|
|
|
|
206,227
|
|
Accumulated earnings
less dividends
|
|
22,569
|
|
|
|
17,885
|
|
Accumulated other
comprehensive income
|
|
22,860
|
|
|
|
15,122
|
|
Total
Stockholders' Equity
|
|
247,723
|
|
|
|
239,444
|
|
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY
|
$
|
1,031,630
|
|
|
$
|
1,055,375
|
|
|
|
|
NEXPOINT
RESIDENTIAL TRUST, INC. AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
AND COMPREHENSIVE
INCOME (LOSS)
|
(in thousands,
except per share amounts)
|
(Unaudited)
|
|
|
For the Three
Months Ended March 31,
|
|
|
2018
|
|
|
2017
|
|
Revenues
|
|
|
|
|
|
|
|
Rental
income
|
$
|
30,573
|
|
|
$
|
31,908
|
|
Other
income
|
|
4,484
|
|
|
|
5,083
|
|
Total
revenues
|
|
35,057
|
|
|
|
36,991
|
|
Expenses
|
|
|
|
|
|
|
|
Property operating
expenses
|
|
8,877
|
|
|
|
9,871
|
|
Real estate taxes and
insurance
|
|
4,856
|
|
|
|
4,965
|
|
Property management
fees (1)
|
|
1,054
|
|
|
|
1,113
|
|
Advisory and
administrative fees (2)
|
|
1,838
|
|
|
|
1,825
|
|
Corporate general and
administrative expenses
|
|
1,813
|
|
|
|
1,333
|
|
Property general and
administrative expenses
|
|
1,547
|
|
|
|
1,586
|
|
Depreciation and
amortization
|
|
11,372
|
|
|
|
12,443
|
|
Total
expenses
|
|
31,357
|
|
|
|
33,136
|
|
Operating
income
|
|
3,700
|
|
|
|
3,855
|
|
Interest
expense
|
|
(6,797)
|
|
|
|
(7,159)
|
|
Loss on extinguishment
of debt and modification costs
|
|
(551)
|
|
|
|
—
|
|
Gain on sale of real
estate
|
|
13,742
|
|
|
|
—
|
|
Net income
(loss)
|
|
10,094
|
|
|
|
(3,304)
|
|
Net income
attributable to noncontrolling interests
|
|
—
|
|
|
|
312
|
|
Net income
attributable to redeemable noncontrolling interests in the
Operating Partnership
|
|
30
|
|
|
|
—
|
|
Net income (loss)
attributable to common stockholders
|
$
|
10,064
|
|
|
$
|
(3,616)
|
|
Other
comprehensive income
|
|
|
|
|
|
|
|
Unrealized gains on
interest rate derivatives
|
|
7,761
|
|
|
|
1,046
|
|
Total
comprehensive income (loss)
|
|
17,855
|
|
|
|
(2,258)
|
|
Comprehensive
income attributable to noncontrolling interests
|
|
—
|
|
|
|
412
|
|
Comprehensive
income attributable to redeemable noncontrolling interests in the
Operating Partnership
|
|
53
|
|
|
|
—
|
|
Comprehensive
income (loss) attributable to common stockholders
|
$
|
17,802
|
|
|
$
|
(2,670)
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding - basic
|
|
20,987
|
|
|
|
21,044
|
|
Weighted average
common shares outstanding - diluted
|
|
21,430
|
|
|
|
21,293
|
|
|
|
|
|
|
|
|
|
Earnings (loss)
per share - basic
|
$
|
0.48
|
|
|
$
|
(0.17)
|
|
Earnings (loss)
per share - diluted
|
$
|
0.47
|
|
|
$
|
(0.17)
|
|
|
|
|
|
|
|
|
|
Dividends declared
per common share
|
$
|
0.25
|
|
|
$
|
0.22
|
|
|
|
(1)
|
Fees incurred to an
unaffiliated third party that is an affiliate of the noncontrolling
limited partner of the OP.
|
(2)
|
Fees incurred to the
Company's adviser.
|
|
|
Definitions and Reconciliations
This press release includes analysis of funds from operations
("FFO"), core funds from operations ("Core FFO"), adjusted funds
from operations ("AFFO"), and net operating income ("NOI"), all of
which are non-GAAP financial measures of performance. These
non-GAAP measures should be used as a supplement to, and not a
substitute for, net income (loss) computed in accordance with GAAP.
For a more complete discussion of FFO, Core FFO, AFFO, and NOI, see
our most recent Annual Report on Form 10-K and our other filings
with the SEC.
This press release also includes an analysis of our Same Store
properties, which are defined as those that are stabilized and
comparable for both the current and the prior reporting periods.
Same Store analysis for the first quarter includes 29 properties
totaling 10,123 units, or approximately 88% of our Portfolio.
Net Operating Income
NOI is a non-GAAP financial measure of performance. NOI is used
by investors and our management to evaluate and compare the
performance of our properties to other comparable properties, to
determine trends in earnings and to compute the fair value of our
properties as NOI is not affected by (1) the cost of funds, (2)
acquisition costs, (3) advisory and administrative fees, (4) the
impact of depreciation and amortization expenses as well as gains
or losses from the sale of operating real estate assets that are
included in net income computed in accordance with GAAP, (5)
corporate general and administrative expenses, (6) other gains and
losses that are specific to us, (7) casualty-related
expenses/(recoveries), and (8) property general and administrative
expenses that are not reflective of the continuing operations of
the properties or are incurred on behalf of NXRT at the property
for expenses such as legal, professional and franchise tax
fees.
The following table, which has not been adjusted for the effects
of noncontrolling interests, reconciles our NOI and Same Store NOI
for the three months ended March 31,
2018 and 2017 to net income (loss), the most directly
comparable GAAP financial measure (in thousands):
|
|
For the Three
Months Ended March 31,
|
|
|
|
2018
|
|
|
2017
|
|
Net income
(loss)
|
|
$
|
10,094
|
|
|
$
|
(3,304)
|
|
Adjustments to
reconcile net income (loss) to NOI:
|
|
|
|
|
|
|
|
|
Advisory and
administrative fees
|
|
|
1,838
|
|
|
|
1,825
|
|
Corporate
general and administrative expenses
|
|
|
1,813
|
|
|
|
1,333
|
|
Casualty-related expenses
|
(1)
|
|
24
|
|
|
|
5
|
|
Property
general and administrative expenses
|
(2)
|
|
380
|
|
|
|
231
|
|
Depreciation
and amortization
|
|
|
11,372
|
|
|
|
12,443
|
|
Interest
expense
|
|
|
6,797
|
|
|
|
7,159
|
|
Loss on
extinguishment of debt and modification costs
|
|
|
551
|
|
|
|
—
|
|
Gain on sale of
real estate
|
|
|
(13,742)
|
|
|
|
—
|
|
NOI
|
|
$
|
19,127
|
|
|
$
|
19,692
|
|
Less Non-Same
Store
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
(4,894)
|
|
|
|
(7,865)
|
|
Operating
expenses
|
|
|
2,239
|
|
|
|
3,734
|
|
Same Store
NOI
|
|
$
|
16,472
|
|
|
$
|
15,561
|
|
|
|
(1)
|
Adjustment to net
income (loss) to exclude certain property operating expenses that
are casualty-related expenses.
|
(2)
|
Adjustment to net
income (loss) to exclude certain property general and
administrative expenses that are not reflective of the continuing
operations of the properties or are incurred on our behalf at the
property for expenses such as legal, professional and franchise tax
fees.
|
|
|
FFO, Core FFO and AFFO
We believe that net income, as defined by GAAP, is the most
appropriate earnings measure. We also believe that FFO, as defined
by the National Association of Real Estate Investment Trusts
("NAREIT"), Core FFO, and AFFO are important non-GAAP supplemental
measures of operating performance for a REIT.
Since the historical cost accounting convention used for real
estate assets requires depreciation except on land, such accounting
presentation implies that the value of real estate assets
diminishes predictably over time. However, since real estate values
have historically risen or fallen with market and other conditions,
presentations of operating results for a REIT that use historical
cost accounting for depreciation could be less informative. Thus,
NAREIT created FFO as a supplemental measure of operating
performance for REITs that excludes historical cost depreciation
and amortization, among other items, from net income, as defined by
GAAP. FFO is defined by NAREIT as net income computed in accordance
with GAAP, excluding gains or losses from real estate dispositions,
plus real estate depreciation and amortization and impairment
charges. We compute FFO attributable to common stockholders in
accordance with NAREIT's definition. Our presentation differs
slightly in that we begin with net income (loss) before adjusting
for amounts attributable to (1) noncontrolling interests in
consolidated joint ventures and (2) redeemable noncontrolling
interests in the OP; we show the combined amounts attributable to
such noncontrolling interests as an adjustment to arrive at FFO
attributable to common stockholders. Core FFO makes certain
adjustments to FFO, which are either not likely to occur on a
continuing basis or are otherwise not representative of the
continuing operating performance of our portfolio.
Core FFO adjusts FFO to remove items such as acquisition
expenses, losses on extinguishment of debt and modification costs
(includes prepayment penalties incurred and the write-off of
unamortized deferred loan costs related to the early retirement of
debt and costs incurred in connection with a debt modification that
are expensed), the amortization of deferred financing costs
incurred in connection with obtaining short-term debt financing,
the ineffective portion of fair value adjustments on our interest
rate derivatives designated as cash flow hedges, and the
noncontrolling interests (as described above) related to these
items. We believe Core FFO is useful to investors as a supplemental
gauge of our operating performance and is useful in comparing our
operating performance with other REITs that are not as involved in
the aforementioned activities.
AFFO makes certain adjustments to Core FFO. There is no industry
standard definition of AFFO and practice is divergent across the
industry. AFFO adjusts Core FFO to remove items such as
equity-based compensation expense and the amortization of deferred
financing costs incurred in connection with obtaining long-term
debt financing, and the noncontrolling interests (as described
above) related to these items. We believe AFFO is useful to
investors as a supplemental gauge of our operating performance and
is useful in comparing our operating performance with other REITs
that are not as involved in the aforementioned activities.
The effect of the conversion of OP Units held by noncontrolling
limited partners is not reflected in the computation of basic and
diluted FFO, Core FFO and AFFO per share, as they are exchangeable
for common stock on a one-for-one basis. The FFO, Core FFO and AFFO
allocable to such units is allocated on this same basis and
reflected in the adjustments for noncontrolling interests below. As
such, the assumed conversion of these units would have no net
impact on the determination of diluted FFO, Core FFO and AFFO per
share.
We believe that the use of FFO, Core FFO and AFFO, combined with
the required GAAP presentations, improves the understanding of
operating results of REITs among investors and makes comparisons of
operating results among such companies more meaningful. While FFO,
Core FFO and AFFO are relevant and widely used measures of
operating performance of REITs, they do not represent cash flows
from operations or net income (loss) as defined by GAAP and should
not be considered as an alternative or substitute to those measures
in evaluating our liquidity or operating performance. FFO, Core FFO
and AFFO do not purport to be indicative of cash available to fund
our future cash requirements. Further, our computation of FFO, Core
FFO and AFFO may not be comparable to FFO, Core FFO and AFFO
reported by other REITs that do not define FFO in accordance with
the current NAREIT definition or that interpret the current NAREIT
definition or define Core FFO or AFFO differently than we do.
The following table reconciles our calculations of FFO, Core FFO
and AFFO to net income (loss), the most directly comparable GAAP
financial measure, for the three months ended March 31, 2018 and 2017 (in thousands, except per
share amounts):
|
For the Three
Months Ended March 31,
|
|
|
2018
|
|
|
2017
|
|
Net income
(loss)
|
$
|
10,094
|
|
|
$
|
(3,304)
|
|
Depreciation and
amortization
|
|
11,372
|
|
|
|
12,443
|
|
Gain on sale of real
estate
|
|
(13,742)
|
|
|
|
—
|
|
Adjustment for
noncontrolling interests
|
|
(23)
|
|
|
|
(1,123)
|
|
FFO attributable
to common stockholders
|
|
7,701
|
|
|
|
8,016
|
|
|
|
|
|
|
|
|
|
FFO per share -
basic
|
$
|
0.37
|
|
|
$
|
0.38
|
|
FFO per share -
diluted
|
$
|
0.36
|
|
|
$
|
0.38
|
|
|
|
|
|
|
|
|
|
Loss on
extinguishment of debt and modification costs
|
|
551
|
|
|
|
—
|
|
Change in fair value
on derivative instruments - ineffective portion
|
|
—
|
|
|
|
20
|
|
Amortization of
deferred financing costs - acquisition term notes
|
|
21
|
|
|
|
94
|
|
Adjustment for
noncontrolling interests
|
|
(2)
|
|
|
|
(2)
|
|
Core FFO
attributable to common stockholders
|
|
8,271
|
|
|
|
8,128
|
|
|
|
|
|
|
|
|
|
Core FFO per share
- basic
|
$
|
0.39
|
|
|
$
|
0.39
|
|
Core FFO per share
- diluted
|
$
|
0.39
|
|
|
$
|
0.38
|
|
|
|
|
|
|
|
|
|
Amortization of
deferred financing costs - long term debt
|
|
368
|
|
|
|
438
|
|
Equity-based
compensation expense
|
|
914
|
|
|
|
608
|
|
Adjustment for
noncontrolling interests
|
|
(4)
|
|
|
|
(33)
|
|
AFFO attributable
to common stockholders
|
|
9,549
|
|
|
|
9,141
|
|
|
|
|
|
|
|
|
|
AFFO per share -
basic
|
$
|
0.45
|
|
|
$
|
0.43
|
|
AFFO per share -
diluted
|
$
|
0.45
|
|
|
$
|
0.43
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding - basic
|
|
20,987
|
|
|
|
21,044
|
|
Weighted average
common shares outstanding - diluted
|
|
21,430
|
|
|
|
21,293
|
|
|
|
|
|
|
|
|
|
Dividends declared
per common share
|
$
|
0.25
|
|
|
$
|
0.22
|
|
|
|
|
|
|
|
|
|
FFO Coverage -
diluted
|
1.44x
|
|
|
1.71x
|
|
Core FFO Coverage
- diluted
|
1.54x
|
|
|
1.74x
|
|
AFFO Coverage -
diluted
|
1.78x
|
|
|
1.95x
|
|
|
|
|
|
|
|
FFO was $7.7 million for the three
months ended March 31, 2018 compared
to $8.0 million for the three months
ended March 31, 2017, which was a
decrease of approximately $0.3
million. The change in our FFO between periods primarily
relates to a decrease in total revenues of approximately
$1.9 million and an increase in loss
on extinguishment of debt and modification costs of approximately
$0.6 million, and was partially
offset by decreases in total property operating expenses of
approximately $1.2 million and
interest expense of approximately $0.4
million and adjustments for amounts attributable to
noncontrolling interests.
Core FFO was $8.3 million for the
three months ended March 31, 2018
compared to $8.1 million for the
three months ended March 31, 2017,
which was an increase of approximately $0.2
million. The change in our Core FFO between periods
primarily relates to an increase in loss on extinguishment of debt
and modification costs of approximately $0.6
million, and was partially offset by decreases in
amortization of deferred financing costs incurred in connection
with obtaining short-term debt financing of approximately
$0.1 million and FFO.
AFFO was $9.5 million for the
three months ended March 31, 2018
compared to $9.1 million for the
three months ended March 31, 2017,
which was an increase of approximately $0.4
million. The change in our AFFO between periods primarily
relates to increases in equity-based compensation expense of
approximately $0.3 million and Core
FFO.
Same Store Properties
We review our stabilized multifamily communities on a comparable
basis between periods. Our Same Store properties are defined as
those that are stabilized and comparable for both the current
period and the same period for the prior reporting year.
For our Same Store properties, there are 29 properties meeting
this definition: Arbors on Forest
Ridge, Cutter's Point, Eagle Crest, Silverbrook, Edgewater
at Sandy Springs, Beechwood Terrace, Willow
Grove, Woodbridge, Abbington Heights, Courtney Cove, The Summit at Sabal Park, Timber
Creek, Belmont at Duck Creek, Radbourne Lake, Sabal Palm at Lake
Buena Vista, Southpoint Reserve at Stoney Creek, Cornerstone, The
Preserve at Terrell Mill, The Ashlar, Heatherstone, Versailles, Seasons 704 Apartments,
Madera Point, The Pointe at the
Foothills, Venue at 8651, Parc500, The Colonnade, Old Farm and
Stone Creek at Old Farm.
Reconciliation of FY 2018 Guidance for NOI, FFO, Core FFO and
AFFO
The following table, which has not been adjusted for the effects
of noncontrolling interests, reconciles our NOI guidance to our net
income (the most directly comparable GAAP financial measure)
guidance for the year ended December 31,
2018 (in thousands):
|
For the Full Year
Ended December 31, 2018
|
|
|
Mid-point
|
|
Net income
|
$
|
500
|
|
Adjustments to
reconcile net income to NOI:
|
|
|
|
Advisory and
administrative fees
|
|
7,465
|
|
Corporate
general and administrative expenses
|
|
7,321
|
|
Casualty-related expenses (1)
|
|
24
|
|
Property
general and administrative expenses (2)
|
|
1,100
|
|
Depreciation
and amortization
|
|
47,781
|
|
Interest
expense
|
|
27,265
|
|
Loss on
extinguishment of debt and modification costs
|
|
636
|
|
Gain on sale of
real estate
|
|
(13,742)
|
|
NOI
|
$
|
78,350
|
|
|
|
(1)
|
Adjustment to net
income to exclude certain property operating expenses that are
casualty-related expenses.
|
(2)
|
Adjustment to net
income to exclude certain property general and administrative
expenses that are not reflective of the continuing operations of
the properties or are incurred on our behalf at the property for
expenses such as legal, professional and franchise tax
fees.
|
|
|
The following table reconciles our FFO, Core FFO and AFFO
guidance to our net income (the most directly comparable GAAP
financial measure) guidance for the year ended December 31, 2018 (in thousands, except per share
data):
|
For the Full Year
Ended December 31, 2018
|
|
|
Mid-point
|
|
Net income
|
$
|
500
|
|
Depreciation and
amortization
|
|
47,781
|
|
Gain on sale of real
estate
|
|
(13,742)
|
|
Adjustment for
noncontrolling interests
|
|
(104)
|
|
FFO attributable to
common stockholders
|
$
|
34,435
|
|
|
|
|
|
FFO per share -
diluted (1)
|
$
|
1.62
|
|
|
|
|
|
Loss on
extinguishment of debt and modification costs
|
$
|
636
|
|
Amortization of
deferred financing costs - acquisition term notes
|
|
21
|
|
Adjustment for
noncontrolling interests
|
|
(2)
|
|
Core FFO
attributable to common stockholders
|
$
|
35,090
|
|
|
|
|
|
Core FFO per share
- diluted (1)
|
$
|
1.65
|
|
|
|
|
|
Amortization of
deferred financing costs - long term debt
|
$
|
1,356
|
|
Equity-based
compensation expense
|
|
4,221
|
|
Adjustment for
noncontrolling interests
|
|
(17)
|
|
AFFO attributable
to common stockholders
|
$
|
40,650
|
|
|
|
|
|
AFFO per share -
diluted (1)
|
$
|
1.91
|
|
|
|
|
|
Weighted average
common shares outstanding - diluted
|
|
21,273
|
|
|
|
(1)
|
For purposes of
calculating per share data, NXRT assumes a weighted average diluted
share count of 21.3 million for the full year 2018.
|
|
|
In this release, "we," "us," "our," the "Company," "NexPoint
Residential Trust," and "NXRT" each refer to NexPoint Residential
Trust, Inc., a Maryland
corporation.
View original
content:http://www.prnewswire.com/news-releases/nexpoint-residential-trust-inc-reports-first-quarter-2018-results-300639947.html
SOURCE NexPoint Residential Trust, Inc.