NexPoint Residential Trust, Inc. Completes Sale of Hollister Place, Announces Entrance into Contract to Sell Old Farm & Stone Creek in Houston, Texas, and Looks Ahead to 2023

Rhea-AI Summary

NexPoint Residential Trust (NXRT) has successfully closed the sale of Hollister Place in Houston, TX, for $20.6 million after acquiring it for $24.5 million in 2017. The property, boasting a 93.07% occupancy and a monthly rent of approximately $1,200, delivered strong financial metrics, including a 4.37% cap rate and a 2.02x equity multiple. The company aims to utilize proceeds from this and upcoming property sales, projected to yield $62-64 million, to continue debt reduction efforts, including a significant $25.6 million payment on its credit facility. NXRT anticipates resolving its corporate credit facility balance by Q2 2023, enhancing liquidity and strategic flexibility for growth opportunities.

Positive

• Successfully closed the sale of Hollister Place for $20.6 million, exceeding expectations.
• Achieved strong financial metrics from the sale with a 4.37% cap rate and 2.02x equity multiple.
• Plans to generate $62-64 million from upcoming sales of Old Farm and Stone Creek.
• Significant debt reduction of $25.6 million on corporate credit facility, reducing balance to $72.6 million.

Negative

• None.

DALLAS, Jan. 25, 2023 /PRNewswire/ -- NexPoint Residential Trust, Inc. ("NXRT" or the "Company") (NYSE: NXRT) announced today the December 30, 2022 closing of the sale of Hollister Place in Houston, TX, a 260-unit property built in 1997.  The Company acquired the property for $24.5 million on February 1, 2017 and completed an extensive repositioning and value-add initiative, improving both the common area amenities and a significant portion of the unit interiors.  As of December 29, 2022, the property was 93.07% occupied with a weighted average effective monthly rent of approximately $1,200.  Net proceeds from the sale were approximately $20.6M, delivering a trailing nominal cap rate of 4.37%, a 13.5% levered IRR and a 2.02x equity multiple, each of which well exceeded expectations.  Management used the net proceeds from the sale, and proceeds and reserve deposits received from the 18-property mortgage refinancing announced on December 1, 2022, to make a $25.6 million paydown on the Company's corporate credit facility on December 30, 2022, continuing our strategic de-leveraging and balance sheet improvement initiatives. This paydown reduced the drawn balance on the facility to $72.6 million, a 78% reduction from September 30, 2022.

Additionally, the Company is pleased to announce the execution of a purchase and sale agreement to sell Old Farm and Stone Creek at Old Farm in Houston, TX, with an expected closing in late Q1 or Q2 2023. The Company expects the dispositions of these assets to generate approximately $62 to 64 million of net sales proceeds at an approximate trailing nominal cap rate of 4.97%.

And as previously disclosed, the Company has executed a new loan application to refinance The Venue on Camelback, with an expected closing date on January 31, 2023. This refinancing is expected to further improve the Company's weighted average debt maturity and cost of capital going forward.

With the completion of these sales and refinancings, the Company expects to pay off the full $72.6 million outstanding balance on the corporate credit facility by the second quarter of 2023. The combination of these asset sales, refinancings and maturity extensions, 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 heading into 2023.

"NXRT is thrilled to enter 2023 fulfilling our strategic objectives to sell out of our positions in the Houston market, completing our portfolio refinancing initiatives, and paying off our most expensive debt capital. These maneuvers unlock liquidity the Company can use to repurchase shares, should our stock continue to trade at a material discount to our internal NAV estimate, and/or to pursue attractive internal and external growth strategies should those opportunities present themselves throughout the new year.," said Matt McGraner, Chief Investment Officer.

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 expected closing of the sale of the Old Farm and Stone Creek properties, the expected net sales proceeds and nominal cap rate from the sale of the properties, the expected closing of the refinancing of the Venue on Camelback, the expected results of the refinancing, the expected payoff of the corporate credit facility and related timing of payoff, the expected results of the sales, refinancing and maturity extensions and that these maneuvers will unlock liquidity which the Company can use to repurchase common stock and pursue internal and external growth strategies. 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 property sales and/or refinancing do not close or are 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 was the sale price of Hollister Place by NexPoint Residential Trust?

NexPoint Residential Trust sold Hollister Place for $20.6 million.

What financial metrics did NexPoint achieve from the sale of Hollister Place?

The sale of Hollister Place had a trailing nominal cap rate of 4.37% and a 2.02x equity multiple.

What are the expected proceeds from the sale of Old Farm and Stone Creek?

NexPoint expects to generate approximately $62 to $64 million from the sale of Old Farm and Stone Creek.

When does NexPoint expect to pay off its corporate credit facility?

NexPoint anticipates paying off its corporate credit facility by the second quarter of 2023.

What are NexPoint's future plans after selling its Houston properties?

NexPoint plans to use the proceeds to repurchase shares and pursue growth strategies.