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NexPoint Residential Trust, Inc. (NXRT)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered a modest beat vs Wall Street: diluted EPS loss of $0.28 vs consensus loss of $0.34* and revenue of $63.1M vs $63.1M*; Core FFO was $0.71 per diluted share and covered the $0.51 dividend 1.39x .
  • Guidance: Core FFO mid-point reaffirmed at $2.75; Same Store NOI mid-point reaffirmed at -1.5%; ranges revised for GAAP EPS (loss), Same Store rental income, total revenue and total expenses .
  • Operating trends improved sequentially: Same Store NOI down 1.1% YoY (vs -3.8% in Q1) and rents up 0.3% QoQ; portfolio occupancy was 93.3% with continued bad debt moderation to ~0.5% in Q2, helped by improved collections .
  • Balance sheet/liquidity catalysts: $200M revolver recast with 15 bps tighter spread, $100M SOFR swap at 3.489% fixed, and $7.6M share repurchases at ~32% discount to NAV, reinforcing undervaluation vs NAV midpoint of $50.31 .
  • Near-term stock reaction catalysts: EPS/revenue beats*, dividend coverage intact, NAV support via recent cap-rate prints (5.0–5.25%), and guidance stability despite supply pressures; watch Phoenix/Las Vegas occupancy normalization and insurance savings ramp in H2 .
    Disclaimers: *Values retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

  • Sequential improvement: Same Store NOI decline moderated to -1.1% YoY from -3.8% in Q1; Q2 same-store NOI margin at 60.9% .
  • Cost discipline: Same-store operating expenses up just 1.5% YoY; marketing and payroll down 4.7% and 2.8%; favorable insurance renewal to save ~$0.6M annually beginning H2 .
  • Capital/valuation: Recast $200M revolver with 15 bps tighter spread; executed $100M SOFR swap at 3.489%; repurchased 223,109 shares at $34.29 (~32% discount to Q2 NAV), with NAV per share range of $43.90–$56.73 (midpoint $50.31) .
  • Quote: “Our centralized platforms… alongside AI applications… are driving greater efficiency and enabling reductions in offsite staffing” .

What Went Wrong

  • Top-line softness: Total revenue down 1.7% YoY; Same Store rental income -0.6% and average effective rent -1.3% YoY; occupancy down 80 bps to 93.3% .
  • Market headwinds: Phoenix (-230 bps occupancy YoY; new lease pressure -8% to -10%) and Las Vegas (-160 bps occupancy YoY; localized traffic weakness) amid elevated supply/concessions .
  • GAAP loss driven by fewer asset sales: Q2 net loss was $(7.0)M vs income of $10.6M prior year, primarily due to $18.7M lower gains on sales YoY .

Financial Results

Key Financials vs Prior Periods and Estimates

MetricQ2 2024Q1 2025Q2 2025
Total Revenues ($USD Millions)$64.238 $63.2 $63.149
Diluted EPS ($USD)$0.40 $(0.27) $(0.28)
NOI ($USD Millions)$38.9 $37.760 $38.036
FFO per Diluted Share ($USD)$0.62 $0.68 $0.67
Core FFO per Diluted Share ($USD)$0.69 $0.75 $0.71
AFFO per Diluted Share ($USD)$0.79 $0.84 $0.80

Estimate Comparison (S&P Global)

MetricQ2 2025 Estimate*Q2 2025 Actual
Diluted EPS ($USD)$(0.336)$(0.28)
Total Revenues ($USD Millions)$63.061$63.149
# EPS Estimates4—
# Revenue Estimates7—
Disclaimers: *Values retrieved from S&P Global.

Segment/Market Breakdown (Same Store)

MarketOccupancy (%) Q2 2024Occupancy (%) Q2 2025Avg Effective Rent ($) Q2 2024Avg Effective Rent ($) Q2 2025Rental Income ($USD Thousands) Q2 2024Rental Income ($USD Thousands) Q2 2025
Atlanta93.9 93.7 $1,500 $1,467 $7,486 $7,615
South Florida95.2 94.6 $2,131 $2,154 $12,888 $13,116
Phoenix93.5 91.2 $1,481 $1,442 $9,469 $9,141
Las Vegas94.1 92.5 $1,368 $1,356 $5,128 $4,991
Orlando94.5 93.4 $1,584 $1,568 $5,707 $5,584
Raleigh/Durham94.6 93.9 $1,432 $1,397 $2,686 $2,724
Charlotte93.8 95.2 $1,388 $1,390 $2,287 $2,283
Dallas93.5 92.6 $1,261 $1,235 $7,884 $7,848
Nashville94.4 94.4 $1,297 $1,265 $5,615 $5,496
Tampa92.7 92.9 $1,385 $1,324 $2,465 $2,432

KPIs and Operating Metrics

KPIQ2 2024Q1 2025Q2 2025
Portfolio Occupancy (%)94.1 94.4 93.3
Avg Effective Monthly Rent/Unit ($)$1,517 $1,495 $1,500
Same Store NOI ($USD Millions)$38.442 $37.734 $38.036
Completed Rehab Units (quarter)113 210 555
Rent Premium on Upgraded Units ($/mo)—$62 $73
Dividend per Share ($)$0.46 $0.51 $0.51
Share Repurchases (shares/$)438,678 / $14.56M (Q2’24) —223,109 / $7.65M
Leverage Ratio (Net Debt/EV, %)59 59 64

Guidance Changes

MetricPeriodPrevious Guidance (Mid)Current GuidanceChange
Earnings (loss) per diluted shareFY 2025$(1.22) Range: $(1.40) to $(1.22); Mid: $(1.31) Lowered mid-point
Core FFO per diluted shareFY 2025Affirmed Range: $2.66 to $2.84; Mid: $2.75 Maintained
Same Store Rental Income YoYFY 2025+0.2% Range: -0.7% to +0.4%; Mid: -0.1% Lowered
Same Store Total Revenue YoYFY 2025+0.5% Range: -0.4% to +0.6%; Mid: +0.1% Lowered
Same Store Total Expenses YoYFY 2025+3.7% Range: +1.5% to +3.6%; Mid: +2.5% Lowered (better)
Same Store NOI YoYFY 2025-1.5% (Affirmed) Range: -3.0% to 0.0%; Mid: -1.5% Maintained
AcquisitionsFY 2025$100M $0–$200M; Mid: $100M Maintained
DispositionsFY 2025$100M $0–$200M; Mid: $100M Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024)Previous Mentions (Q1 2025)Current Period (Q2 2025)Trend
AI/technology for operationsFocus on margin expansion and centralized ops planned Early centralization benefits; outlook for more maintenance “pod” efficiency AI-driven centralized platforms reducing payroll; extending to maintenance Improving efficiency
Supply/deliveriesRecord deliveries; expecting transition year in 2025 RealPage forecasted steep delivery declines into 2026–2027 First quarterly drop >20 bps in inventory growth; deliveries to GFC-like levels by Q4/Q1 2026 Easing post-Q3
Tariffs/macroNot discussedTariffs monitored; muted impact on NXRT vendors Not emphasized in Q2 callStable/Muted
Product performance (renewals/rent growth)Renewal conversions 55.4%; bad debt down to 0.9% New lease growth inflecting positive; renewals ~54% Renewals 54.2%; front-end pricing improved; bad debt ~0.5% Improving renewals/bad debt
Regional trendsFY NOI strength in Las Vegas/Orlando/Raleigh/Atlanta Strength in Las Vegas, Tampa, DFW, South Florida H2 revenue outperformance expected in Tampa, Dallas, Charlotte, Las Vegas; softer South Florida, Orlando, Atlanta Mixed by market
Regulatory/legal (tax/insurance)Real estate taxes moderated in Q4; insurance renewal expected Insurance renewal favorable from Apr 1 ~$600k annual insurance savings expected H2 Tailwind
R&D execution / Value-addPlan to double output vs 2024, aiming 300–400/qtr later Accelerate partial upgrades; 210 units in Q1 555 upgrades in Q2; 26% ROI; targeting continued output Accelerating

Management Commentary

  • “Same-store operating expenses were up just 1.5% year over year… Insurance is down 20%, driven by a favorable market environment on the property casualty side.”
  • “Our centralized platforms for renewals, screening, and call centers, alongside AI applications… driving greater efficiency and enabling reductions in offsite staffing.”
  • “NAV per share range… $43.90 low end, $56.73 high end, and $50.31 midpoint… cap rates stable” .
  • “New credit facility spread has improved by 15 basis points… dividend of $0.51 per share” .
  • “Front-end pricing improved from negative 4.73% in Q1 to negative 1.5% in Q2… bad debt ~50 bps” .

Q&A Highlights

  • Capex mix: Recurring maintenance spend elevated in Q2 (roofs in Nashville; agency-mandated projects); expect normalization in Q4; value-add focus on “spoke” $1k–$3k opportunities .
  • Rehab output: Ramped above plan to 555 units in Q2 via faster deployment; ROI tenure assumption ~7 years; aiming sustained elevated output .
  • Market color: Phoenix occupancy pressure tied to adjacent lease-ups (Enclave, Heritage, Venue at Camelback) with new lease rate pressure (-8% to -10%); expect improvement by Q4/Q1’26; Las Vegas softness concentrated at Bella Solara .
  • Turn costs: Lower due to higher retention and using partial renovations (appliances, counters, lighting) to offset heavy turns and capture premiums .

Estimates Context

  • Q2 2025: NXRT beat consensus on GAAP EPS (actual $(0.28) vs $(0.336)) and slightly exceeded revenue (actual $63.149M vs $63.061M) .
  • Forward estimates: Q3 2025 consensus EPS $(0.361)* and revenue $63.03M*; Q4 2025 EPS $(0.343)* and revenue $63.25M*; target price consensus mean $34* (6 estimates) (*S&P Global).
    Disclaimers: *Values retrieved from S&P Global.

Forward vs Guidance

  • Core FFO guidance mid-point $2.75 aligns with expense tailwinds (insurance) and operational efficiencies; GAAP EPS loss mid-point widened to $(1.31) reflecting lower gains on sales and conservative revenue outlook .

Key Takeaways for Investors

  • EPS/revenue beat and reaffirmed Core FFO midpoint signal resilient fundamentals despite supply pressures; dividend coverage remains healthy (1.39x in Q2) .
  • NAV support strong: internal NAV midpoint $50.31 and recent market transactions at 5.0–5.25% cap rates; continued repurchases at ~32% discount to NAV underscore valuation support .
  • H2 setup: Insurance savings (~$0.6M), payroll efficiencies from centralization/AI, and tapering deliveries should support margins; watch Phoenix/Las Vegas occupancy normalization .
  • Growth levers: Value-add ramp (555 Q2 upgrades, 26% ROI) and selective capital recycling (acquisitions/dispositions guidance affirmed) to drive organic rent lift .
  • Risk monitors: Submarket supply and concession intensity (Phoenix, parts of Atlanta/South Florida/Orlando); front-end pricing moderating in late June/July .
  • Liquidity and rate risk: $200M revolver with tighter spread, swaps hedging ~62% of floating-rate debt; adjusted weighted average interest rate 3.51% with hedges .
  • Trading implications: Focus on estimate beats*, NAV discount, and H2 margin tailwinds; catalysts include occupancy stabilization in pressured markets, additional swaps/share repurchases, and visible insurance savings ramp.
    Disclaimers: *Values retrieved from S&P Global.

Appendix: Additional Q2 Press Releases and Prior Quarter References

  • Q2 earnings release and supplement with detailed financials, guidance, NAV and market metrics .
  • Dividend declaration ($0.51 payable Sep 30, 2025) .
  • Credit facility refinancing, maturity June 2028 (extendable to 2029), 15 bps spread improvement .
  • Q1 2025: revenue $63.2M; Core FFO $0.75; occupancy 94.4%; early value-add ramp; guidance raised via swaps/buybacks .
  • Q4 2024: Core FFO $0.58; occupancy 94.7%; taxes moderated; deliveries peaked; 2025 outlook framed as transition year .