NexPoint Residential ((NXRT)) has held its Q2 earnings call. Read on for the main highlights of the call.
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NexPoint Residential Trust’s recent earnings call revealed a mixed sentiment, reflecting both positive achievements and ongoing challenges. The company reported strong returns from property upgrades and efficient expense management, yet faced a net loss and supply pressures in key markets. Declines in occupancy in Phoenix and Vegas, along with modest revenue growth expectations, further underscore the balanced outlook.
Dividend Increase
NexPoint Residential Trust announced a significant dividend increase, paying a second-quarter dividend of $0.51 per share. This marks a 147.6% increase since inception, with the dividend being 1.39 times covered by core FFO and a payout ratio of 72.2%.
Strong Return on Investment for Upgrades
The company completed 555 full and partial upgrades during Q2 2025, achieving an impressive 26% return on investment. These upgrades resulted in an average monthly rent premium of $73, showcasing the effectiveness of their investment strategy.
Credit Facility Improvement
On July 11, 2025, NexPoint Residential Trust entered into a $200 million corporate revolving credit facility. This new facility improved the spread by 15 basis points compared to the previous one, enhancing the company’s financial flexibility.
Efficient Expense Management
The second quarter saw NexPoint Residential Trust effectively manage its expenses, with same-store operating expenses rising only 1.5% year-over-year. Notably, marketing and payroll expenses declined by 4.7% and 2.8%, respectively.
Insurance Cost Reduction
The company benefited from a favorable market environment, leading to a 20% reduction in insurance costs. This contributed to the overall moderation of expenses, aiding in financial stability.
Net Loss Reported
NexPoint Residential Trust reported a net loss of $7 million, or $0.28 per diluted share, for Q2 2025. This contrasts with a net income of $10.6 million, or $0.40 earnings per diluted share, in Q2 2024, highlighting financial challenges.
Decrease in Same-Store Metrics
The company experienced a decrease in same-store rent and occupancy by 1.3% and 0.8%, respectively, in Q2 2025. This resulted in a decrease in same-store NOI of 1.1% compared to the previous year.
Supply Pressures in Key Markets
Supply pressures continue to pose challenges in certain submarkets, with significant deliveries expected in Q3 2025. These pressures are anticipated to impact the market dynamics moving forward.
Occupancy Decline in Phoenix and Vegas
Phoenix and Las Vegas markets faced occupancy declines of 340 and 250 basis points, respectively. These declines were attributed to local supply issues and decreased traffic, affecting overall performance.
Modest Revenue Growth Expectations
Revenue growth is projected to be more muted in the second half of 2025. Markets such as South Florida, Orlando, and Atlanta are expected to perform weaker than initially anticipated, impacting overall growth prospects.
Forward-Looking Guidance
NexPoint Residential Trust tightened its 2025 guidance ranges for core FFO per diluted share and same-store NOI, affirming the midpoint. The company completed 555 unit upgrades, achieving a 26% ROI, and entered into a new credit facility. For full-year 2025, NXRT adjusted its earnings loss per diluted share to a range of $1.22 to $1.40, and core FFO per diluted share from $2.66 to $2.84, maintaining the midpoint at $2.75.
In conclusion, NexPoint Residential Trust’s earnings call highlighted a balanced mix of positive developments and challenges. While the company achieved strong returns on investments and managed expenses efficiently, it also faced a net loss and supply pressures in key markets. The forward-looking guidance reflects cautious optimism, with adjustments made to earnings expectations. Investors will be keenly watching how these dynamics play out in the coming quarters.