NexPoint Residential ((NXRT)) has held its Q3 earnings call. Read on for the main highlights of the call.
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NexPoint Residential Trust’s recent earnings call painted a picture of cautious optimism amidst operational improvements and a positive market outlook. While the company reported gains in net operating income (NOI) and dividend growth, it also faced challenges with a net loss, declining revenues, and trading at a discount to its net asset value (NAV). Despite these hurdles, the management expressed confidence in future performance and growth strategies.
Improved NOI and Dividend Growth
NexPoint Residential Trust reported a net operating income (NOI) of $38.8 million for the third quarter of 2025, showing an increase from $38.1 million in the same quarter of the previous year. The company also declared a quarterly dividend of $0.53 per share, marking a 3.9% increase from the previous dividend, reflecting its commitment to returning value to shareholders.
Operational Efficiency Gains
The company achieved significant operational efficiency, with same-store operating expenses decreasing by 6.3% year-over-year. Notably, payroll and repairs and maintenance costs declined by 7.5% and 6.1%, respectively. Additionally, insurance expenses were favorable by 19%, and real estate taxes saw a reduction of 8.7%, contributing to overall cost savings.
Positive Market Outlook
NexPoint Residential Trust expressed an optimistic outlook for the multifamily housing market, particularly in regions like Atlanta and South Florida, where revenue growth of 2.8% was observed. The rental market is expected to outperform the for-sale market, providing a favorable environment for the company’s operations.
Successful Capital Recycling Strategy
The company announced plans to acquire a 321-unit multifamily community in Northern Las Vegas. This acquisition is expected to generate a 7% same-store NOI compound annual growth rate (CAGR) over the next five years, demonstrating the company’s strategic approach to capital recycling and growth.
Favorable Leasing Trends
Leasing trends remained positive, with renewal conversions for eligible tenants at 63.6% for the quarter. The portfolio’s occupancy rate stood at 93.6%, with a leasing rate of 95.8%, indicating strong demand and tenant retention.
Net Loss and Revenue Decrease
Despite operational improvements, NexPoint Residential Trust reported a net loss of $7.8 million for the third quarter, slightly better than the $8.9 million loss in the same period of 2024. Total revenues decreased to $62.8 million from $64.1 million, reflecting ongoing challenges in revenue generation.
Decline in Same-Store Revenue and Occupancy
The company faced a decline in same-store rent and occupancy, which decreased by 0.3% and 1.3%, respectively. Same-store revenues also saw a slight decrease of 0.6%, highlighting areas for potential improvement.
NAV Trading at a Discount
NexPoint Residential Trust’s stock has been trading at a significant discount to its net asset value (NAV), with no clear resolution in the short term. This presents a challenge for the company in terms of market perception and valuation.
Negative Lease Rate Trends
The company experienced a decline in new lease rates, which were down 4.06% for the quarter. This indicates challenges in achieving rent growth, a critical factor for future revenue enhancement.
Forward-Looking Guidance
Looking ahead, NexPoint Residential Trust provided updated guidance for the year, with a projected net loss per diluted share set at negative $1.31 and core funds from operations (FFO) per diluted share at $2.75. The company plans to continue its capital recycling strategy with the acquisition of a 321-unit property in Northern Las Vegas and expects to engage in sales transactions in 2026. The NAV per share is estimated to range between $43.40 and $56.24.
In conclusion, NexPoint Residential Trust’s earnings call reflected a blend of optimism and caution. While the company showcased operational improvements and a positive market outlook, it continues to navigate challenges such as net losses and declining revenues. The strategic focus on capital recycling and market opportunities positions the company for potential growth, though market conditions and valuation remain areas to watch closely.