NexPoint Residential Trust, Inc. Completes Refinancings of 18-Properties With 1 Additional Refinancing Expected to Close on December 1st; "De-risks" the Balance Sheet through Improved Cost of Capital/Extends Weighted Average Maturity to 6.3 years

Rhea-AI Summary

NexPoint Residential Trust (NXRT) announced the closing of 18-property mortgage refinancings totaling $807.6 million through KeyBank and Freddie Mac, representing approximately 47.7% of its total debt. This refinancing improves interest rates significantly (SOFR + 155 bps) and extends the weighted average debt maturity to 6.34 years, with only 5.5% of total debt maturing through 2024. NXRT anticipates lower overall interest rates, reducing it to 3.25% after swaps. These actions enhance liquidity and de-risk the balance sheet, with no significant debt maturities until 2025.

Positive

• Refinanced 18 properties for $807.6 million, reducing interest costs.
• Extended weighted average debt maturity from 3.33 to 6.34 years.
• Reduced total debt maturing through 2024 to 5.5% from 44%.
• Lowered adjusted weighted average interest rate from 3.40% to 3.25%.

Negative

• None.

DALLAS, Dec. 1, 2022 /PRNewswire/ -- NexPoint Residential Trust, Inc. ("NXRT" or the "Company") (NYSE: NXRT) announced today the closing of 18-property mortgage refinancings through KeyBank Real Estate Capital ("KeyBank") and The Federal Home Loan Mortgage Corporation ("Freddie Mac"). The Company entered into 18 loan agreements and expects to enter into one additional loan agreement on December 1, 2022 for total gross proceeds of $807.6 million, which in the aggregate, represents ~ 47.7% of the Company's total outstanding debt. Notably, NXRT was able to reach an agreement to refinance at interest rate pricing improved (SOFR + 155 bps) from prior terms. The Company expects to use approximately $245 million of cash from the refinancing proceeds to pay down the outstanding principal balance of the Company's most expensive debt capital, the corporate credit facility. This refinancing activity extends the Company's weighted average debt maturity schedule to ~6.34 years (from ~3.33 years) – after this refinancing activity, debt maturing through 2024 equates to ~5.5% of total debt (down from ~44% previously).

Holistically, these refinancings are expected to reduce NXRT's weighted average interest rate on total debt by 12 bps to 5.35%, before the impact of interest rate swap contracts. Accounting for the hedging impact of the swaps, NXRT's adjusted weighted average interest rate is expected to be reduced from 3.40% to 3.25%.

With the completion of these refinancings, the Company has no meaningful debt maturities until 2025. The Company has also executed a new loan application to refinance a 20^th property level mortgage, with an expected closing date in January 2023, which is expected to further improve the Company's weighted average debt maturity and cost of capital.

Refinancing and extending maturities on a significant portion of the Company's first mortgage debt at favorable terms provides greater strategic flexibility, increases liquidity and modestly "de-risks" the company's balance sheet.

"NXRT is delighted to announce the completion of this significant refinancing initiative, fortifying our balance sheet and furthering our commitment to great partners in KeyBank and Freddie Mac. We identified an opportunity to capitalize on the slowdown in 'Mission Driven' agency debt production heading into the second half of 2022, leveraging our deep relationships and Select Sponsor status with Freddie Mac to drive best execution and deliver an excellent result for shareholders," said Matt McGraner, Chief Investment Officer.

Outstanding Debt Details
Mortgage Debt
The following table contains summary information concerning the mortgage debt of the Company as of December 1, 2022 ($ in 000s):
Operating Properties		Type		Term  (months)		Outstanding Principal (1)		Interest  Rate (2)		Maturity Date
The Venue on Camelback		Floating		84		$ 28,093		5.75 %		7/1/2024	(5)
Sabal Palm at Lake Buena Vista		Floating		84		42,100		5.37 %		9/1/2025
Timber Creek		Floating		84		24,100		5.33 %		10/1/2025
Radbourne Lake		Floating		84		20,000		5.36 %		10/1/2025
Crestmont Reserve		Floating		84		12,061		5.25 %		10/1/2025
Brandywine I & II		Floating		84		43,835		5.25 %		10/1/2025
Summers Landing		Floating		84		10,109		5.25 %		10/1/2025
Residences at Glenview Reserve		Floating		84		25,977		5.51 %		10/1/2025
Bella Vista		Floating		84		29,040		5.39 %		2/1/2026
The Enclave		Floating		84		25,322		5.39 %		2/1/2026
The Heritage		Floating		84		24,625		5.39 %		2/1/2026
Avant at Pembroke Pines		Floating		84		177,101		5.50 %		9/1/2026
Arbors of Brentwood		Floating		84		34,237		5.50 %		10/1/2026
Creekside at Matthews		Floating		84		31,900		5.52 %		7/1/2028
Residences at West Place		Fixed		120		33,817		4.24 %		10/1/2028
High House at Cary		Floating		84		46,625		5.68 %		1/1/2029
The Adair		Floating		84		35,115		5.64 %		4/1/2029
Estates on Maryland		Floating		84		43,157		5.64 %		4/1/2029
Six Forks Station		Floating		120		41,180		5.39 %		10/1/2031
Arbors on Forest Ridge		Floating		120		19,184		5.22 %		12/1/2032	(3)
Cutter's Point		Floating		120		21,524		5.22 %		12/1/2032	(3)
Silverbrook		Floating		120		46,088		5.22 %		12/1/2032	(3)
The Summit at Sabal Park		Floating		120		30,826		5.22 %		12/1/2032	(3)
Courtney Cove		Floating		120		36,146		5.22 %		12/1/2032	(3)
The Preserve at Terrell Mill		Floating		120		71,098		5.22 %		12/1/2032	(3)
Versailles		Floating		120		40,247		5.22 %		12/1/2032	(3)
Seasons 704 Apartments		Floating		120		33,132		5.22 %		12/1/2032	(3)
Madera Point		Floating		120		34,457		5.22 %		12/1/2032	(3)
Venue at 8651		Floating		120		18,690		5.22 %		12/1/2032	(3)
Parc500		Floating		120		29,416		5.22 %		12/1/2032	(3)
Rockledge Apartments		Floating		120		93,129		5.22 %		12/1/2032	(3)
Atera Apartments		Floating		120		46,198		5.22 %		12/1/2032	(3)
Torreyana Apartments		Floating		120		50,580		5.22 %		12/1/2032	(3)
Bloom		Floating		120		59,830		5.22 %		12/1/2032	(3)
Bella Solara		Floating		120		40,328		5.22 %		12/1/2032	(3)
Fairways at San Marcos		Floating		120		60,228		5.22 %		12/1/2032	(3)
The Verandas at Lake Norman		Floating		120		29,648		5.22 %		12/1/2032	(3)
Cornerstone		Floating		120		46,804		5.76 %		12/1/2032	(4)
						$ 1,535,947
Held For Sale Property
Hollister Place		Floating		84		14,811		5.41 %		10/1/2025
Old Farm		Floating		84		52,886		5.75 %		7/1/2024
Stone Creek at Old Farm		Floating		84		15,274		5.75 %		7/1/2024
						$ 82,971
(1)  Mortgage debt that is non-recourse to the Company and encumbers the multifamily properties. (2)  Interest rate is based on a reference rate plus an applicable margin, except for fixed rate mortgage debt. One-month LIBOR was 4.07% and 30-Day Average SOFR was 3.67% as of November 28, 2022. (3)  The Company completed a 10-year term refinancing of 18 properties at SOFR plus a 1.55% margin. The refinancing closed on November 30, 2022. (4)  Reflects a 10-year term refinancing of the Cornerstone property at SOFR plus a 2.09% margin, which is expected to close on December 1, 2022.   (5)  Reflects a 10-year term refinancing of the Venue on Camelback property at SOFR plus a 2.15% margin, which is expected to close on January 31, 2023.

Interest Rate Swap Agreements

As of December 1, 2022, the Company had the following outstanding interest rate swaps that were designated as cash flow hedges of interest rate risk (dollars in thousands):

Effective Date		Termination Date		Counterparty		Notional Amount				Fixed Rate (1)
June 1, 2019		June 1, 2024		KeyBank			50,000				2.0020 %
June 1, 2019		June 1, 2024		Truist			50,000				2.0020 %
September 1, 2019		September 1, 2026		KeyBank			100,000				1.4620 %
September 1, 2019		September 1, 2026		KeyBank			125,000				1.3020 %
January 3, 2020		September 1, 2026		KeyBank			92,500				1.6090 %
March 4, 2020		June 1, 2026		Truist			100,000				0.8200 %
June 1, 2021		September 1, 2026		KeyBank			200,000				0.8450 %
June 1, 2021		September 1, 2026		KeyBank			200,000				0.9530 %
March 1, 2022		March 1, 2025		Truist			145,000				0.5730 %
March 1, 2022		March 1, 2025		Truist			105,000				0.6140 %
							1,167,500				1.0682 %(2)

(1)  The floating rate option for the interest rate swaps is one-month LIBOR. As of November 28, 2022, one-month LIBOR was 4.07%.
(2)  Represents the weighted average fixed rate of the interest rate swaps.

As of December 1, 2022 and after giving effect to the closing of the 19^th property mortgage refinancing, we had total indebtedness of $1.74 billion at an adjusted weighted average interest rate of 3.25%, of which $1.7 billion was debt with a floating interest rate. As of December 1, 2022 and after giving effect to the closing of the 19^th property mortgage refinancing, interest rate swap agreements effectively covered 74% of our $1.6 billion of floating rate mortgage debt outstanding. For purposes of calculating the adjusted weighted average interest rate of the total indebtedness, we have included the weighted average fixed rate of 1.0682% for one-month LIBOR on the $1.2 billion notional amount of interest rate swap agreements that we have entered into as of December 1, 2022.

About NXRT

NexPoint Residential Trust is a publicly traded REIT, with its shares listed on the New York Stock Exchange under the symbol "NXRT," primarily focused on acquiring, owning and operating well-located middle-income multifamily properties with "value-add" potential in large cities and suburban submarkets of large cities, primarily in the Southeastern and Southwestern United States. NXRT is externally advised by NexPoint Real Estate Advisors, L.P., an affiliate of NexPoint Advisors, L.P., an SEC-registered investment advisor, which has extensive real estate experience.

Cautionary Statement Regarding Forward-Looking Statements

This press release 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. Forward-looking statements can often be identified by words such as "expect," "anticipate," "estimate," "may," "should," "plan" and similar expressions, and variations or negatives of these words. These forward-looking statements include, but are not limited to, statements regarding the Company's debt profile following the refinancings, the expected closing of an additional property refinancing on December 1, 2022, the expected use of a portion of the refinancing proceeds to repay the corporate credit facility, the expected reduction in NXRT's weighted average interest rate before and after the effect of interest rate swaps, the expected closing of an additional property level mortgage refinancing in January 2023 and the results of the refinancings. They are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed in any forward-looking statement, including that the 19^th property refinancing doesn't close on December 1, 2022 or is delayed and those described in our filings with the Securities and Exchange Commission, particularly those described in our Annual Report on Form 10-K. Readers 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 other filings with the SEC for a more complete discussion of the risks and other factors that could affect any forward-looking statements. The statements made herein speak only as of the date of this release and except as required by law, NXRT does not undertake any obligation to publicly update or revise any forward-looking statements.

Contact:
Kristen Thomas
Investor Relations
IR@nexpoint.com

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SOURCE NexPoint Residential Trust, Inc.

FAQ

What is the significance of NXRT's recent mortgage refinancing?

NexPoint Residential Trust refinanced 18 properties for $807.6 million, improving debt maturity and lowering interest rates, enhancing financial flexibility.

How much of NXRT's debt was refinanced?

Approximately 47.7% of NXRT's total outstanding debt was refinanced, amounting to $807.6 million.

What is NXRT's new weighted average interest rate after refinancing?

The adjusted weighted average interest rate for NXRT is expected to be reduced to 3.25% following the refinancing.

When are NXRT's next significant debt maturities?

After the refinancing, NXRT has no significant debt maturities until 2025.

Who were NXRT's partners in the refinancing process?

NXRT worked with KeyBank Real Estate Capital and Freddie Mac for the refinancing of its properties.