NexPoint Residential Trust Inc (NYSE:NXRT) Q4 2019 Earnings Conference Call - Final Transcript

Feb 18, 2020 • 11:00 am ET

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NexPoint Residential Trust Inc (NYSE:NXRT) Q4 2019 Earnings Conference Call - Final Transcript

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Presentation
Executive
Brian Mitts

of $587 million of properties. Same-store NOI increase for the year was 6.7%, which was 20 basis points above our midpoint guidance. Consistent with the high growth strategy for 2019, we reported a 19% increase in core FFO per share, which is $1.93 per share and 10 basis points above the midpoint of our guidance.

During the year, we acquired 11 properties for $877 million, consisting of 4,583 units, an increase in our redevelopment pipeline by nearly 3,000 units. We sold six properties during the year, consisting of 2,218 units for sell price of $290 million and rolled those net proceeds into a couple of new acquisitions.

Total revenue for 2019 was $181 million, and total NOI was $103 million, which was an increase of 28.3% and 30.8% year-over-year respectively, reflecting the large net acquisition activity during the year.

NOI margin increased 200 basis points to 56.7% for the year from 54.7% in 2018. We continue to execute our value-add business plan by completing 2,516 full and partial renovations during the year, with 1,671 of those units being leased, achieving a 25.3% return on investment during the year.

Inception to date within properties still in the portfolio is 12/31. We've completed 6,927 full and partial upgrades, achieving an average return on investment of 24.5%.

Additionally, for 2019, we completed Smart Home Technology installs in 8,546 units and completed 1,327 washer-dryer installs for the year. We utilized the ATM in 2019, raising gross proceeds to $72 million at an average price of $45.98, and increased our shares outstanding by approximately 1.6 million shares. Generally, we used the net proceeds from the ATM to fund acquisitions and pay down our revolver.

Based on updates in cap rates, which are based on tightening in the market, as evidenced by transactions that we're seeing, as well as the NOI growth mentioned, we're revising our NAV per share range upward as follow: On the low end, $42.08, on the high end $50.53, for midpoint $46.31. That's compared to midpoint of $40.36 in the prior quarter or 14.7% quarter-over-quarter increase, and a midpoint of $35.09 at the end of 2018 or 32% year-over-year increase, while our stock also returned 32%.

In the fourth quarter, we paid a dividend of $0.3125 per share on December 31, and yesterday the Board declared a dividend per share of $0.3125, payable on March 31, to shareholders of record on March 16.

Year-to-date, our dividend is 1.7 times covered by core FFO, making our payout ratio of approximately 59% of core FFO. Going to our just high-level results for 2019 as compared to '18, as mentioned, total revenues were $181 million in 2019, as compared to $147 million in 2018. So, 23% increase.

Net operating income was $103 million in 2019 versus $80 million in 2018, a 28% increase. Core FFO was $47.6 million or $1.93 per share versus $35.1 million, which was a 31% increase or 19.1% increase for the year.

Our same-store pool, we have 25 properties comprised of