NexPoint Residential Trust Q2 2026 Earnings Call Transcript

Quartr
Provided by Quartr
August 4, 2026

Key Takeaways

  • Negative Sentiment: 2026 core FFO guidance was reduced to a midpoint of $2.45 per share from $2.57, primarily due to higher projected interest expense and a slower same-store revenue recovery. Same-store NOI guidance was also lowered to a midpoint decline of 1%.
  • Negative Sentiment: Higher forward SOFR assumptions and the expiration of approximately $717.5 million of swap protection in September are expected to increase full-year interest expense to about $71.2 million. Management estimates the rate-related impact at roughly $0.16 per share for the remainder of the year.
  • Positive Sentiment: Operating trends improved during the quarter, with same-store revenue deterioration narrowing to 0.6% year over year, occupancy at 93.6%, concessions declining sharply, and bad debt improving. Blended lease trade-outs improved from negative 1.7% in April to positive 0.3% in July, supporting management’s expectation for slightly positive new-lease pricing in the fourth quarter.
  • Positive Sentiment: Expense performance is outperforming expectations, prompting management to reduce its full-year same-store expense growth outlook to approximately 2.1% from 3.5%. Lower real estate taxes, insurance costs, and payroll expenses are offsetting higher repairs, maintenance, marketing, and utilities.
  • Neutral Sentiment: Management highlighted a supportive longer-term Sun Belt outlook as new apartment supply falls and renter demand remains strong, but remaining 2026 deliveries continue to pressure markets including Nashville, North Charlotte, South Las Vegas, and parts of Orlando. The company ended the quarter with approximately $133.5 million of liquidity, no material debt maturities until 2028, and plans to pursue capital recycling, deleveraging, and share repurchases.
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Earnings Conference Call
NexPoint Residential Trust Q2 2026
00:00 / 00:00

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Operator

I will now hand the conference over to Kristen Griffith, investor relations. Kristen, please go ahead.

Kristen Griffith
Kristen Griffith
Investor Relations Operations Associate at NexPoint Residential Trust

Thank you. Good day, everyone, and welcome to NexPoint Residential Trust conference call to review the company's results for the second quarter ended June 30th, 2026. On the call today are Paul Richards, Executive Vice President and Chief Financial Officer, Matt McGraner, Executive Vice President and Chief Investment Officer, and Bonner McDermett, Vice President, Asset and Investment Management.

Kristen Griffith
Kristen Griffith
Investor Relations Operations Associate at NexPoint Residential Trust

As a reminder, this call is being webcast through the company's website at nxrt.nexpoint.com. Before we begin, I would like to remind everyone that this conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on management's current expectations, assumptions, and beliefs.

Kristen Griffith
Kristen Griffith
Investor Relations Operations Associate at NexPoint Residential Trust

Listeners should not place undue reliance on any forward-looking statements and are encouraged to review the company's most recent annual report on Form 10-K and the company's other filings with the SEC for a more complete discussion of risks and other factors that could affect any forward-looking statement.

Kristen Griffith
Kristen Griffith
Investor Relations Operations Associate at NexPoint Residential Trust

The statements made during this conference call speak only as of today's date, and except as required by law, NXRT does not undertake any obligation to publicly update or revise any forward-looking statements. This conference call also includes an analysis of non-GAAP financial measures. For a more complete discussion of these non-GAAP financial measures, see the company's earnings release that was filed earlier today. I would now like to turn the call over to Paul Richards. Please go ahead, Paul.

Paul Richards
Paul Richards
EVP and CFO at NexPoint Residential Trust

Thank you, Kristen, and welcome everyone. We appreciate you joining us this morning. I'll take you through our second quarter results and the changes we're making for a full-year outlook, and then Matt will cover the operating environment, our leasing trajectory, the technology platform, and how the portfolio is positioned.

Paul Richards
Paul Richards
EVP and CFO at NexPoint Residential Trust

In April, we affirmed our full-year guidance. This morning, we are lowering it to a core FFO midpoint of $2.45 per share, down $0.12 from $2.57. I'll explain what drove the change and what has, and has not changed. In short, most of the reduction is from higher interest rate expense, reflecting an upward shift in the forward curve since our last update. A smaller portion reflects a slower same-store revenue rebound, which affects the full year. Importantly, our operating trajectory continues to improve month by month.

Paul Richards
Paul Richards
EVP and CFO at NexPoint Residential Trust

Given recent macro shifts and clear visibility into Q3 operating performance, we believe this is the right time to update our forecast. Q2 2026 results. Second quarter core FFO was $16.9 million, or $0.66 per diluted share, a penny ahead of consensus. That compared to $18 million, or $0.71 a year ago. FFO was $15.2 million or $0.60 per share, and AFFO was $19.7 million or $0.77 per share.

Paul Richards
Paul Richards
EVP and CFO at NexPoint Residential Trust

Total NOI was $37.9 million across our 36 properties, essentially flat with last year. Net loss for the quarter was $8.6 million or $0.34 per diluted share, which includes $23.9 million of depreciation amortization. That compares to a net loss of $7 million or $0.28 per share in the second quarter of 2025. Total revenue was $64.6 million, up from $63.1 million a year ago as Sedona came online and into the numbers.

Paul Richards
Paul Richards
EVP and CFO at NexPoint Residential Trust

On a same-store basis, 35 properties, which is about 98% of our units, total revenue was $62.4 million, down 0.6%, and same-store NOI was $36.9 million, down 2.9%. Same-store occupancy closed the quarter at 93.6%, up 30 basis points from a year ago, and the average effective rent was $1,487, down 80 basis points.

Paul Richards
Paul Richards
EVP and CFO at NexPoint Residential Trust

One point on the first half of the year before I get into guidance. It came in about where we expected on net. The company earned $0.68 in the first quarter and $0.66 in the second, which equates to $1.34 through June. Each quarter, a little ahead of the street. The revision today is almost entirely about the back half, and is driven mostly by interest expense as our swap protection steps down, which I'll run through now. Interest expense and hedging.

Paul Richards
Paul Richards
EVP and CFO at NexPoint Residential Trust

We've mentioned since our initial guidance that 2026 carries a real interest expense headwind as certain swap positions roll off, and the step-down lands in the second half. Q2 interest expense was $15.8 million versus $15.2 million a year ago. What's changed since April is the rate curve. The forward SOFR has moved higher roughly 30 basis points in the third quarter and 72 basis points in the fourth relative to our assumptions.

Paul Richards
Paul Richards
EVP and CFO at NexPoint Residential Trust

In practical terms, that's about $14.6 million fewer projected swap inflows over the rest of the year, or roughly $0.16 per share of additional interest expense. It's the single largest piece of today's revision. Full-year 2026 interest expense is now projected at approximately $71.2 million, up from a roughly $69 million discussed last quarter and $67 million in the original model. One timing note.

Paul Richards
Paul Richards
EVP and CFO at NexPoint Residential Trust

The Federal Reserve met last week and held its benchmark rate at 3.5%-3.75%, with a few members dissenting in favor of a hike. Interest rate swaps currently fix the rate on $817.5 million, or approximately 51.5% of our floating-rate mortgage debt, and we have full visibility into the maturity schedule. The bulk of that protection, approximately $717.5 million at a weighted average fixed rate near 1.1392%, rolls off in September.

Paul Richards
Paul Richards
EVP and CFO at NexPoint Residential Trust

We have the ability to layer in more protection, and will do it when the risk-adjusted economics make sense. Second, on the affirmation. In April, we mentioned the offsets we identified neutralize this headwind, and we affirmed. The curve moved against us more than we assumed, and a handful of markets' revenue production came in softer than we modeled. Rather than lean on offsets to hold that number, we're resetting to a level we're confident we can deliver. I'll walk through the bridge in a minute.

Paul Richards
Paul Richards
EVP and CFO at NexPoint Residential Trust

Moving on to expense detail. The expense side is where we're picking up real ground. We're lowering our full-year same-store expense growth outlook by 140 basis points to about 2.1% at the midpoint from 3.5% originally. It's broad based. Every market in the portfolio is now guiding to lower expense growth than we assumed at the start of the year, led by real estate taxes, insurance, and continued payroll discipline from the centralized operating model Matt will describe. Our April insurance renewal, which came in more than 30% year-over-year, is now fully in the run rate. Let me put some numbers on the quarter itself.

Paul Richards
Paul Richards
EVP and CFO at NexPoint Residential Trust

Same-store operating expenses were up 2.4% year-over-year. The mix is favorable where it counts most. Real estate taxes were down 3.5%, insurance was down 11.7% on the April renewal, and payroll was down 1%, with property management fees and office operations each down about 1%. The pressure sat in two lines, repair and maintenance of 13.9% and marketing up 38.2% off a small base where we've leaned into lead generation at properties below target occupancy.

Paul Richards
Paul Richards
EVP and CFO at NexPoint Residential Trust

Utilities were up 6.1%. The repair and maintenance increase is concentrated rather than broad. We treat that as episodic rather than a change in our underlying cost base. Net controllables held roughly in line, while our two largest non-controllables, real estate taxes, insurance came down, which is what underpins the improved full-year expense outlook. One important note regarding the elevated R&M cost.

Paul Richards
Paul Richards
EVP and CFO at NexPoint Residential Trust

We aggregate resident amenity services, including bulk fiber, into total here. The resident amenity services subcategory drives 83% of total R&M growth and is concentrated in the four markets undergoing a fiber build-out: Atlanta, Nashville, Phoenix, and South Florida. We see a corresponding offset to these expense increases within the resident amenity fee subcategory of other income, which is a significant driver of the 29.2 other income growth for the quarter. A value add update. During the second quarter, we completed 459 full and partial upgrades and leased 258 upgraded units at an average monthly rent premium of $89 and a 23% return.

Paul Richards
Paul Richards
EVP and CFO at NexPoint Residential Trust

Since inception, for the properties currently in the portfolio, we've completed 10,474 full and partial interior upgrades, over 5,100 kitchen and laundry packages, and roughly 11,200 tech packages, generating average monthly rent increases of $152, $50, and $43 per unit at returns of 20.7%, 63.4%, and 37.2% respectively. This is still one of the most reliable capital-efficient sources of growth we have.

Paul Richards
Paul Richards
EVP and CFO at NexPoint Residential Trust

Moving on to the dividend. For the second quarter, we declared a dividend of $0.53 per share, payable September 30th. Since incepttion, we've raised the dividend 157.3%. As of June 30th, total indebtedness was approximately $1.6 billion at an adjusted weighted average interest rate of approximately 3.58%. We held approximately $14.6 million of unrestricted cash on $118.9 million of undrawn capacity on the credit facility for a total available liquidity of approximately $133.5 million.

Paul Richards
Paul Richards
EVP and CFO at NexPoint Residential Trust

We have no scheduled debt maturities until 2028, which consists of only a small $33 million fixed rate loan. Net leverage is about 57% of our internal NAV estimate, and de-leveraging over the medium term, funded mainly through disposition proceeds, remains a priority. Our estimated net asset value as the quarter ended is $46.76 per diluted share at the midpoint, using a cap rate range of 5.25%-5.75% across the portfolio. The range runs $40.35 at the high end and $53.16 at the low end. At a recent price of $25.91, the stock trades at more of a 40% discount to that midpoint. Even at the most conservative end of our range, it's a meaningful discount to estimated liquidation value.

Paul Richards
Paul Richards
EVP and CFO at NexPoint Residential Trust

We think the gap between where the stock trades and what the real estate is worth is significant. Our capital recycling and buyback tools give us a way to close that. 2026 guidance revised. I'll now walk through the revised guidance by component. We're lowering full year 2026 core FFO guidance to a range of $2.35-$2.54 per diluted share at a midpoint of $2.45, down from a prior midpoint of $2.57. We're lowering same-store NOI guidance to a range of -2.5% to 0.5% at a midpoint of -1% from a prior midpoint of -0.5%. The components of the bridge from $2.57 to $2.45 in five pieces are as follows. Interest expense, down $0.16.

Paul Richards
Paul Richards
EVP and CFO at NexPoint Residential Trust

Again, the forward curve move described before. About $14.6 million of fewer projected swap inflows, the largest single driver. Same-store revenue, down $0.09. We're taking full-year same-store revenue growth down about 90 basis points to roughly 0.2% at the midpoint. It's concentrated. Matt has the market detail, with Nashville accounting for most of the same-store NOI reduction. Same-store expense up $0.06. The 140-basis point improvement I recently walked to for about 2.1%.

Paul Richards
Paul Richards
EVP and CFO at NexPoint Residential Trust

Fourth component is interest income up $0.05. Realized income from bridge lending investment tied to Waterford DST transaction, which Matt will put in context. Lastly, corporate G&A and other, up $0.02. Favorable G&A management. That nets a $0.12 reduction to $2.45. A brief word on where the same-store cut sits because it's concentrated rather than broad. Nashville is about 85% of the same-store NOI reduction. Softer revenue combined with the steepest same-store expense growth in the portfolio, near 15%. There's little expense cushion there.

Paul Richards
Paul Richards
EVP and CFO at NexPoint Residential Trust

Four markets are guiding to better same-store NOI than we assumed at the start of the year. South Florida, Atlanta, Phoenix, and Raleigh-Durham. Dallas is a good example of the expense discipline at work. Roughly $590,000 revenue reduction was almost entirely offset by about $505,000 of expense savings. Very little drop to NOI. This is a concentrated revision, not a portfolio-wide one.

Paul Richards
Paul Richards
EVP and CFO at NexPoint Residential Trust

On where this puts us versus Street. Consensus is about $2.51 with a few more recent estimates closer to $2.40 a share. Our new midpoint is in general agreement with external estimates. The first half is in the books. It had a plan. The revision is forward-looking, largely rate-driven, reset to the back half. Our acquisition with disposition assumptions are unchanged at $0-$200 million each, $100 million at the midpoint, reflecting continued capital recycling within guidance. With that, let me turn it to Matt.

Matt McGraner
Matt McGraner
EVP and Chief Investment Officer at NexPoint Residential Trust

All right. Thank you, Paul. I'll start with the backdrop because the fundamental setup for our portfolio keeps improving. Starting with supply, national deliveries peaked near 700,000 units in 2024. Starts are off roughly 70% from the peak. Deliveries this year are tracking to the lowest level in more than a decade. In our Sun Belt submarkets, the drop off is steeper still. Two-thirds of our submarkets have less than 2% active annual inventory growth, and more than half have fewer than 500 units under development today. The first half bore that out.

Matt McGraner
Matt McGraner
EVP and Chief Investment Officer at NexPoint Residential Trust

Our submarkets absorbed almost 6,000 units in the second quarter against 3,146 units of new supply. Net absorption of a +2,852 units. That follows a +1,307 in the first quarter. The remaining 2026 supply is real and concentrated. The most meaningful pressure for us is in North Charlotte, South Las Vegas, and the southern portion of Orange County in Orlando. Still, the supply cliff remains intact, and the backdrop continues to improve, we think, leading to a clean inflection approaching in late 2026 and into 2027.

Matt McGraner
Matt McGraner
EVP and Chief Investment Officer at NexPoint Residential Trust

On demand, the structural case hasn't changed, and the affordability channel has only gotten more extreme. John Burns has the premium to own versus rent at 44% against a 17% long-run average. Zelman has the entry-level payment gap at its widest since 1984, and move-outs to buy a home were 8.7% this quarter, down from 10.9% a year ago. Here's the part I'd underline. On 135 million households, every 50 basis point decline in home ownership rate creates 675,000 renter households. Two years of normal absorption from a channel that requires no population growth at all.

Matt McGraner
Matt McGraner
EVP and Chief Investment Officer at NexPoint Residential Trust

On the geography, Zelman's own work has national household growth running at near 70 basis points annually through the end of the decade. Our markets run at roughly twice that. Per Witten Advisors, job growth, population, and domestic migration continue to favor the Sun Belt for the balance of the decade. Slower national household formation is a real headwind to the national number. It is not the same input as the one that drives our markets.

Matt McGraner
Matt McGraner
EVP and Chief Investment Officer at NexPoint Residential Trust

On to leasing. The leasing cadence is the real story this quarter. Across 1,360 new leases, our new lease trade out was -5%, and across 1,684 renewals, we were a +1.9%, for a blended trade out of -1.16%, roughly 75 basis points better than the first quarter. The month-to-month tells a more encouraging story.

Matt McGraner
Matt McGraner
EVP and Chief Investment Officer at NexPoint Residential Trust

Blended trade outs went from -1.7% in April to -1.2% in May to -50 basis points in June. It turned positive at about 30 basis points in July. New lease trade outs, the hardest line, improved from -5.4% in April to -2.3% in July, roughly 310 basis points, while renewals held above 2%. That is the first positive blended print since early 2025 for us. It is just one month, but encouraging nonetheless.

Matt McGraner
Matt McGraner
EVP and Chief Investment Officer at NexPoint Residential Trust

Raleigh was our only market with positive new lease trade outs in the quarter, and the laggards on the new lease line, Orlando, Charlotte, Dallas, and Nashville, are the same markets carrying the most remaining supply. On the occupancy and revenue front, the same-store portfolio closed at 93.6% physical occupancy, up 30 basis points year-over-year and flat sequentially, with leased at roughly 95%. Retention was 55.9%, and turnover improved to 44.1% from 46.5%.

Matt McGraner
Matt McGraner
EVP and Chief Investment Officer at NexPoint Residential Trust

Same-store total revenue was $62.4 million, down 60 basis points year-over-year. The number I'd point you to is the trajectory in that comparison. We went from a -2.2% year-over-year in the first quarter to just -60 basis points in the second. 160 basis point improvement in a year-over-year comp in a single quarter. Effective rent was down 80 basis points, a much shallower decline than the new lease line alone would suggest. That is occupancy and retention discipline doing its job.

Matt McGraner
Matt McGraner
EVP and Chief Investment Officer at NexPoint Residential Trust

On bad debt, 60 basis points of gross potential rent against 1.02% in the first quarter of last year, a roughly 40% improvement and a fraction of where we ran before centralization rebuilt our screening process. Rent to income ratios remain 20% across the portfolio, a very healthy margin. On to concessions. Two different measures to discuss here.

Matt McGraner
Matt McGraner
EVP and Chief Investment Officer at NexPoint Residential Trust

Utilization, the share of new leases taking a month free, we cut that roughly in half from 55.6% in the first quarter to 27.7% in the second quarter. Average weeks free fell from 2.2 weeks to 1.1 week. South Florida drove most of that, going from 87.6 utilization to just 4.8% utilization in the second quarter. On cost, concession dollars as a percentage of gross potential rent, we ran at about 1% for the quarter, still slightly above our forecast. Use was heaviest in Tampa, Orlando, Nashville, and Dallas. About a third of the portfolio has no active concession offering today, and roughly half are offering selective pricing only on aged vacants and specific floor plans. We project utilization falls another $0.50 by year-end.

Matt McGraner
Matt McGraner
EVP and Chief Investment Officer at NexPoint Residential Trust

On to our technology platform. A lot of what you're seeing in the quarter, especially on the expense side, comes out of the technology work we've laid out during REITweek in June. We run a two-layer model. Property operations go through BH Management and their funnel leasing platform. At the advisor level, we're building NexPoint intelligence.

Matt McGraner
Matt McGraner
EVP and Chief Investment Officer at NexPoint Residential Trust

That's deliberate. Self-managed peers have to spin across every layer at once, while our model captures a disproportionate share of that benefit at a fraction of the capital. In the quarter, the platform converted 24,703 leads into 1,321 applications and 1,226 move-ins, a 5.3% lead-to-application rate, a 34.6% tour-to-application rate, both improved from the first quarter. Self-guided touring keeps scaling. 26.2% of tours in the quarter were self-guided, and that's up from 18.7% in the first quarter. That's after-hours demand we otherwise would lose.

Matt McGraner
Matt McGraner
EVP and Chief Investment Officer at NexPoint Residential Trust

Quick word on Sedona Mountain, the 321-unit community in North Las Vegas that we bought in December of last year for $73.25 million. The occupancy at the property closed at 92.2% for the quarter, up 430 basis points from the first quarter. NOI is beating budget by almost 5%, with expenses 12.2% under forecast. Roof, exterior paint, SmartRent, and amenity work are complete. We're still targeting and on track to generate a 7.2% NOI CAGR through 2029, taking a high five cap rate purchase to a 7.5%-8% stabilized yield. On the transaction market and capital allocation, institutional volume remains well below last year. Cap rates have remained sticky. The bid-ask remains wide, with most participants pointing to 2027 for a clear recovery and more transaction volume.

Matt McGraner
Matt McGraner
EVP and Chief Investment Officer at NexPoint Residential Trust

That said, we watched well-located Sun Belt assets trade materially tighter than our own implied cap rate, which reinforces the NAV gap Paul described. Our capital allocation priorities are straightforward. Our job is to close the value gap through operating execution into 2027, recycling capital, and buying back stock. One item on earnings composition.

Matt McGraner
Matt McGraner
EVP and Chief Investment Officer at NexPoint Residential Trust

Our revised guidance includes about $0.05 of realized interest income from a bridge lending investment tied to a Waterford DST transaction sourced through our advisor's platform. It's a discrete realized deployment of balance sheet capacity earning an accretive market return. We're carrying it as realized income rather than embedding a forward estimate. We'll report it as it happens. In closing, the first half beat our plan. Same-store revenue improved 160 basis points in its year-over-year comp between the first and second quarters.

Matt McGraner
Matt McGraner
EVP and Chief Investment Officer at NexPoint Residential Trust

Blended lease trade outs went from a -1.7% in April to a +30 basis points in July. Occupancy is stable. Retention is up. Expenses are coming in better across every market. Supply is rolling over fastest in the markets where we've been most pressured. That's what makes the setup compelling. 2026, we absorb the rate repricing and the last of the supply. 2027, we get to the supply cliff and the leasing earn-in. The earn-in is not a forecast. It's math on leases we've already signed.

Matt McGraner
Matt McGraner
EVP and Chief Investment Officer at NexPoint Residential Trust

We're moving into the best supply-demand backdrop in five years. The renter-by-necessity cohort is only expanding as affordability stays extreme. The fundamental recovery is more certain today than it has been in recent memory. I want to thank everyone here at NexPoint and BH for their hard work. With that, the operator, let's open it up for questions.

Operator

We will now begin the question-and-answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Peter Abramowitz with Deutsche Bank. Your line is open. Please go ahead.

Peter Abramowitz
Peter Abramowitz
Analyst at Deutsche Bank

Yes. Thank you for taking the question. I appreciate it. I just want to go back to Matt. I think you had some comments about the improvements in the operating environment. I think you used the term sort of expecting a clean inflection in the second half of the year and into 2027. I guess, just wondering how to interpret that. What do you consider sort of a clean inflection as you described it? Is it positive new lease rates, or otherwise? Just help us frame how you're thinking about that and how it kind of shapes how you're thinking about the operating environment into next year.

Matt McGraner
Matt McGraner
EVP and Chief Investment Officer at NexPoint Residential Trust

Yeah. I was referring to positive new lease rates. Our revisions to the guidance are concentrated really in four or five assets that make up about $2.2 million of gross potential rent revisions. Really, those markets were just not as strong as we originally thought. As we look forward in the new guidance and what it implies for new leases, we're slightly negative in the third quarter and then modeling slightly positive in the fourth quarter. That's the quarter that I think we feel the best about of the year, and that kind of clean inflection is the positive new lease pricing that's implied in that guidance.

Peter Abramowitz
Peter Abramowitz
Analyst at Deutsche Bank

Okay, that makes sense. I think your average occupancy was 93.6% for the entire quarter. I know in your may REIT update, I think you were running around 94% at the end of April and the end of May. Just wondering, I know there can be differences between average occupancy and month end and quarter end, but did you have a little bit of occupancy kind of give back as pricing was starting to ramp or continuing to ramp throughout June? I guess, what was the update on occupancy in July as well?

Matt McGraner
Matt McGraner
EVP and Chief Investment Officer at NexPoint Residential Trust

Yeah. Bonner, can you get July occupancy for me? In terms of the strategy, we were deliberate in trying to hold rates on the new lease front. We lost a little bit of, call it 30, 40 basis points. Good memory back to NAREIT. The strategy was to try to hold pricing as much as we could. Which bore out sequentially month-over-month. The new lease pricing did improve as we just reported. Bonner, do you have

Bonner McDermett
Bonner McDermett
VP of Asset and Investment Management at NexPoint Residential Trust

Yeah, just a little bit of clarification. Peter, the occupancy numbers we report in the supplement are as of point in time, so that 93.6 is a 6/30 physical end date. The average financial occupancy for the quarter was about 93.8. You're right, when we were at NAREIT early June, we were 94 flat physical. I think, looking at where we thought we had some better pricing, we were a little bit more aggressive both on our new lease pricing and renewals. I think that a certain number of these assets that Matt's talking to, we thought we had a little bit more pricing power than was borne out, and that ultimately eroded, call it 40 basis points of occupancy between first week of June toward the end of the month. Rolling into July, I think in the operational update we provide the supplement.

Bonner McDermett
Bonner McDermett
VP of Asset and Investment Management at NexPoint Residential Trust

You'll see the leasing funnel is working. We're generating pretty high lead volume. We think it's a very healthy seasonal time and the inflection to a positive blend on rates. We're prioritizing pricing a little bit. We're trying to push pricing, and we're okay. Certainly would love to be a little bit healthier on occupancy, but running kind of mid-93s and getting to that inflection point in new lease rates is more of a focus today.

Peter Abramowitz
Peter Abramowitz
Analyst at Deutsche Bank

All right. That's all for me. Thanks for the time.

Matt McGraner
Matt McGraner
EVP and Chief Investment Officer at NexPoint Residential Trust

Thanks, Peter.

Operator

There are no further questions at this time. I will now turn the call back to the management team for closing remarks.

Matt McGraner
Matt McGraner
EVP and Chief Investment Officer at NexPoint Residential Trust

Yeah, thank you for everyone's participation today and look forward to speaking after Q3. Have a good day.

Operator

This concludes today's call. Thank you for attending. You may now disconnect.

Executives
    • Kristen Griffith
      Kristen Griffith
      Investor Relations Operations Associate
    • Paul Richards
      Paul Richards
      EVP and CFO
    • Matt McGraner
      Matt McGraner
      EVP and Chief Investment Officer
    • Bonner McDermett
      Bonner McDermett
      VP of Asset and Investment Management
Analysts
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