NexPoint Residential Trust Q1 Earnings Call Highlights

Key Points

• Q1 results and outlook: NexPoint reported a net loss of $6.8 million and Core FFO of $17.3 million ($0.68 per share), slightly above consensus, and reaffirmed full‑year Core FFO guidance of $2.42–$2.71 while keeping the dividend at $0.53 per share with roughly 1.21x coverage at the midpoint; liquidity stands at about $161.5 million and there are no debt maturities until 2028.
• Interest expense headwind: Core FFO was pressured by higher interest costs as swap benefits fell (from $8.4M to $5.5M) and a higher forward SOFR curve added roughly $2.2M of incremental interest, raising full‑year interest expense guidance to $69.3 million; the company has swaps covering 62% of floating debt and is evaluating additional hedges.
• Operating trends improving but mixed: Same‑store NOI fell ~2.7% with occupancy rising to 93.6% (April ~93.9%), bad debt improved materially to 55 bps of GPR from 102 bps, and concessions (1.9% of GPR) are expected to decline meaningfully through 2026 toward roughly 0.4–1.0% by year‑end.

NexPoint Residential Trust NYSE: NXRT reported a first-quarter 2026 net loss of $6.8 million, or $0.27 per diluted share, on total revenue of $63.5 million, Executive Vice President and Chief Financial Officer Paul Richards said on the company’s earnings call. The result compared with a net loss of $6.9 million, or $0.27 per diluted share, on $63.2 million of revenue in the first quarter of 2025.

Richards said total NOI was $37.6 million across 36 properties, including Sedona at Lone Mountain, which was acquired in December. On a same-store basis across 35 legacy properties and 12,984 units, total income was $61.4 million, down 2.2% year-over-year, while operating expenses declined 1.6% to $24.8 million. Same-store NOI was $36.7 million, down 2.7%, with an NOI margin of 59.8%. Same-store occupancy ended the quarter at 93.6%.

Core FFO, interest expense, and hedging

The company posted first-quarter Core FFO of $17.3 million, or $0.68 per diluted share, which Richards said was $0.03 above consensus. Core FFO per share was $0.75 in the prior-year quarter.

Richards attributed the year-over-year decline in Core FFO primarily to higher interest expense, noting that 2026 includes “a meaningful interest expense headwind as certain swap positions fall off.” Total interest expense was $15.4 million versus $14.4 million a year earlier, with the benefit from swaps declining to $5.5 million from $8.4 million.

Since initial guidance was issued in February, Richards said the forward SOFR swap curve moved 7 to 47 basis points higher across the remaining quarters of 2026, adding about $2.2 million, or roughly $0.08 per diluted share, of incremental interest expense versus original assumptions. Full-year 2026 interest expense is now projected at $69.3 million compared to $67.1 million in the company’s original model.

Richards said interest rate swaps fix the rate on $917.5 million, or 62%, of floating-rate mortgage debt, and the company is evaluating opportunities to add hedges “when risk-adjusted economics are compelling.” He pointed to a prior $100 million JPMorgan forward swap executed last April at 3.49% as an example of acting opportunistically.

Operating trends: leasing, concessions, and bad debt

Executive Vice President and Chief Investment Officer Matthew Ryan McGraner said the company’s leasing metrics improved through the quarter and into April. Across 1,388 new leases signed in the first quarter, new lease trade-outs were negative 6.6%, or a $97 per unit decrease, while renewals (1,528 transactions) produced a 2.3% increase, or $33 per unit. The blended change across 2,916 transactions was negative 1.9%.

McGraner emphasized the monthly cadence, saying new lease trade-outs improved from negative 7% in January to negative 5.6% in March and to approximately negative 4% in April month-to-date. Blended trade-outs narrowed from negative 1.9% in January to negative 1.7% in March and to roughly negative 1.2% in April month-to-date.

On occupancy, McGraner said the same-store portfolio ended the first quarter at 93.6% physical occupancy, up from 92.6% at the start of the quarter. April month-to-date physical occupancy improved to 93.9%, while lease percentage reached 95.9%, which he said was the highest since the third quarter of 2025. Citing ApartmentIQ data, McGraner said the portfolio outperformed market comparables by 136 basis points in occupancy.

McGraner also pointed to improved collections, stating that bad debt was 55 basis points of gross potential rent in the quarter, down from 1.02% of GPR a year earlier. He described the improvement as structural and tied to AI-enhanced screening and centralized credit evaluation.

Concessions were another focus. McGraner said portfolio-level concessions were 1.9% of GPR, compared to 5.7% for the competitive set in the company’s submarkets, according to ApartmentIQ. Total concessions were approximately $1.15 million in the quarter, up from $271,000 in the first quarter of 2025. He said 39% of the year-over-year increase was attributable to one asset, Avana at Pembroke Pines, where competitive supply entered the submarket in late 2025.

McGraner said the company expects concession utilization to decline meaningfully through 2026, projecting concessions at roughly 1% of GPR in the second quarter, 50 basis points in the third quarter, and 40 basis points in the fourth quarter, while financial occupancy is forecast to improve from 92.8% in the first quarter to 94% in the second quarter and 94.1% in the third quarter.

Expense items, insurance renewal, and value-add progress

On expenses, Richards said same-store payroll declined 4.3%, which he attributed to the company’s centralized operating model and an enhanced leasing platform. He also reported year-over-year declines in real estate taxes (down 11.2%) and insurance (down 23.5%), partially offset by a 15.2% increase in repairs and maintenance and a 50.5% increase in marketing spending.

Richards said the repairs and maintenance increase reflected accelerated deferred maintenance as part of a “portfolio quality initiative” and elevated one-time costs related to lender-required capex at certain Florida properties. He characterized those items as episodic and said the overall expense outlook remained steady relative to the original model.

On insurance, Richards said the company’s April 1 policy renewal produced a 13.3% year-over-year reduction, better than the strongest end of its previously guided range of 0% to negative 10%.

During the quarter, the company completed 252 full and partial unit upgrades and leased 225 upgraded units, achieving an average monthly rent premium of $69 and a 19% ROI, Richards said. Since inception, he said the company has completed more than 10,100 full and partial interior upgrades with average monthly premiums of 13.3% and an inception-to-date ROI of 20.7%.

Balance sheet, dividend, and guidance reaffirmed

Richards said the company declared a $0.53 per share dividend paid March 31, 2026, and reiterated commitment to the current distribution level. At the midpoint of Core FFO guidance, he said dividend coverage is approximately 1.21 times, with expectations for coverage to improve as revenue trends strengthen through peak season and into 2027.

On the balance sheet, Richards noted that on Jan. 30, 2026, the company entered into a $40.3 million mortgage loan secured by Sedona at Lone Mountain at 55% loan-to-value. The loan matures Feb. 1, 2033, with interest based on 30-day average SOFR plus a 1.23% margin. Total indebtedness at March 31, 2026 was approximately $1.6 billion at an adjusted weighted average interest rate of 3.3%.

The company ended the quarter with $18.5 million of unrestricted cash and $143 million of undrawn capacity on its credit facility, providing about $161.5 million of liquidity, Richards said. He added that the company has no scheduled debt maturities until 2028.

Richards reaffirmed full-year 2026 Core FFO guidance of $2.42 to $2.71 per diluted share and reaffirmed the company’s same-store NOI outlook, with midpoint guidance implying negative 0.5% growth. He said higher projected interest expense and a slightly lower-than-modeled first-quarter leasing environment were offset by better-than-expected insurance renewal results, expense discipline, and strategic fee income from the advisor private capital platform discussed by management.

During the Q&A, McGraner said the company sees opportunity to increase renewals and retention, particularly in the summer months, and management discussed efforts to narrow the spread between leased and occupied percentages as peak leasing season begins. McGraner also provided additional detail on potential fee and interest income opportunities related to the NexPoint Delaware Statutory Trust platform, describing potential lending spreads and sponsor fee economics, while noting that the company is not embedding additional transactions in its 2026 guidance.

About NexPoint Residential Trust NYSE: NXRT

NexPoint Residential Trust is a real estate investment trust focused on the acquisition, leasing and management of single‐family rental homes across the United States. The company targets suburban and Sun Belt markets with favorable demographic trends, seeking to build a diversified portfolio of standalone residences that serve the growing demand for quality rental housing. By concentrating on professionally managed homes rather than multi‐family apartments, NexPoint Residential Trust aims to offer tenants the benefits of privacy and space, while generating predictable rental income for investors.

The firm’s investment strategy combines direct acquisitions of built single‐family homes with selective joint ventures and partnerships to optimize scale and geographic diversification.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.