NexPoint Residential’s Earnings Call: Mixed Signals

NexPoint Residential ((NXRT)) has held its Q1 earnings call. Read on for the main highlights of the call.

The recent earnings call for NexPoint Residential Trust, Inc. presented a mixed sentiment, reflecting both positive strides and notable challenges. While the company reported growth in core FFO and increased dividends, it also faced a net loss, decreased revenue, and negative earnings guidance, painting a complex picture for investors.

Core FFO Growth

NexPoint Residential reported an increase in core FFO per diluted share, rising to $0.75 in Q1 2025 from $0.74 in Q1 2024. This growth, albeit modest, indicates a positive trend in the company’s operational efficiency and profitability.

Dividend Increase

The company announced a significant increase in its quarterly dividend to $0.51 per share, marking a 147.6% increase since inception. This move reflects NexPoint’s commitment to returning value to its shareholders, even amidst challenging financial conditions.

Successful Lease Upgrades

NexPoint completed 210 full and partial unit upgrades, leasing 201 of these upgraded units with a return on investment of 16.1%. This strategic initiative demonstrates the company’s focus on enhancing property value and rental income.

Stock Repurchase Program

The company repurchased 223,109 shares at a 33% discount to NAV midpoint, valued at $7.6 million. This buyback program underscores NexPoint’s confidence in its long-term value and commitment to enhancing shareholder value.

Decreased Supply Forecast

RealPage forecasts a 22% decline in deliveries in 2025 within key submarkets. This anticipated decrease in supply could potentially benefit NexPoint by reducing competitive pressure and supporting rental growth.

Net Loss Reported

NexPoint reported a net loss of $6.9 million, or $0.27 per diluted share, for the first quarter. This loss highlights the financial challenges the company faces, impacting investor sentiment.

Decrease in Revenue and NOI

Total revenue decreased to $63.2 million, with NOI down to $37.8 million from $41.1 million. This decline in revenue and NOI reflects the broader challenges in the market and the company’s operational hurdles.

Same-store Revenue Decline

Same-store rent and occupancy decreased by 1.3% and 0.3%, respectively, leading to a 3.8% decrease in same-store NOI. This decline indicates challenges in maintaining rental income and occupancy levels.

Negative Earnings Per Share Guidance

The company revised its full-year 2025 guidance for earnings per diluted share to a midpoint of negative $1.22, signaling a challenging financial outlook for the year.

Forward-looking Guidance

NexPoint provided updated guidance for 2025, projecting an earnings loss per diluted share between $1.08 and negative $1.36, with a midpoint of negative $1.22. The core FFO per diluted share is expected to range between $2.89 and $2.61, with a midpoint of $2.75. The company reaffirmed its same-store rental income and NOI guidance, while continuing its dividend and share buyback initiatives.

In summary, NexPoint Residential’s earnings call highlighted a mixed financial landscape, with positive developments in dividends and core FFO growth overshadowed by a net loss and negative earnings guidance. Investors will be closely monitoring the company’s strategic initiatives and market conditions as they navigate through 2025.