NexPoint Residential Trust, Inc. Completes the Sale of Radbourne Lake Apartment Homes

Rhea-AI Summary

NexPoint Residential Trust, Inc. announced the completion of the sale of Radbourne Lake Apartment Homes in Charlotte, NC, a property acquired for $24.3 million in 2014. The sale generated net proceeds of approximately $18.6M, with impressive financial performance metrics well exceeding expectations.

Positive

• The sale of Radbourne Lake Apartment Homes provided net proceeds of approximately $18.6M.

• The sale delivered a trailing nominal tax and insurance adjusted cap rate of 5.18% and a levered internal rate of return of 19.24%.

• The sale resulted in a 3.64x multiple on invested capital, all of which exceeded expectations.

• NXRT will continue to monitor transaction and capital markets for future growth opportunities.

Negative

• None.

Insights

Real Estate Analyst

NexPoint Residential Trust, Inc.'s sale of Radbourne Lake Apartment Homes appears to be a strategic divestment that has resulted in significant capital gains, given the property's acquisition price of $24.3 million in 2014 and a solid operational performance with a high occupancy rate of 92.4%. The stated levered internal rate of return of 19.24% signals a robust return on investment. This transaction could reflect positively on NXRT's financial agility, offering the company additional liquidity. It's notable that the sale aligns with the company's intent shared in the first quarter earnings call, suggesting a proactive approach to portfolio management. Stakeholders might expect this capital to be deployed toward balance sheet enhancement, share repurchases, or debt reduction, all of which could bode well for the stock's future performance. The transaction’s cap rate of 5.18% indicates a yield that could be favorable compared to current market averages, depending on local market conditions. The multiple on invested capital of 3.64x is particularly impressive, signifying a substantial return relative to the original investment.

Market Research Analyst

The successful sale of a non-core asset by NXRT and the surging effective monthly rent from $896 in 2014 to $1,420 in 2024 showcases a remarkable appreciation of 58.5%. For retail investors, the substantial increase in rent over a decade represents the company's effective asset management and potential for generating value. Although the property's sale resulted in net proceeds of $18.6 million, which is below the initial acquisition cost, the overall return metrics present a different picture. The investment has yielded significant overall returns, as evidenced by the levered IRR and multiple on invested capital. Going forward, NXRT's strategy to enhance shareholder value through strategic dispositions, alongside prudently managing transactions and capital markets to unlock liquidity, may positively influence the company’s stock performance. Investors might interpret this as a sign of a management team that is focused on maximizing shareholder returns and managing their portfolio in a dynamic real estate market.

DALLAS, May 2, 2024 /PRNewswire/ -- NexPoint Residential Trust, Inc. ("NXRT" or the "Company") (NYSE: NXRT) announced today the closing of the sale of Radbourne Lake Apartment Homes in Charlotte, NC, a 225-unit property built in 1991.  The property was acquired for $24.3 million on September 30, 2014, and has provided consistent operational and cash flow performance for the portfolio for the last 9+ years.  As of April 30, 2024, the property was 92.4% leased with a weighted average effective monthly rent of approximately $1,420, which is 58.5%, or $524, higher than it was upon takeover. Net proceeds from the sale were approximately $18.6M, delivering a trailing nominal tax and insurance adjusted cap rate of 5.18%, a 19.24% levered internal rate of return and a 3.64x multiple on invested capital, each of which well exceeded expectations.

"NXRT is pleased to announce another successful 2024 disposition, as highlighted during the first quarter 2024 earnings call. Moving forward, NXRT will continue to diligently monitor the transaction and capital markets, seeking opportunities to unlock liquidity that the Company can utilize to enhance the balance sheet, repurchase shares, and/or pay off higher property-level debt, all of which would be conducive to future growth," 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  "should," "continue," "will," "seek" 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 strategic objectives, the execution of the strategic objectives, that NXRT will continue to diligently monitor the transaction and capital market activity, seeking opportunities to unlock liquidity which the Company can use to enhance the balance sheet, repurchase shares and/or pay off higher property-level debt that will be conducive to future growth and that the Company remains committed to prioritizing share repurchases. 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 statements 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

<p>When did NexPoint Residential Trust, Inc. complete the sale of Radbourne Lake Apartment Homes?</p>

NexPoint Residential Trust, Inc. completed the sale of Radbourne Lake Apartment Homes in 2024.

<p>What was the acquisition cost of Radbourne Lake Apartment Homes?</p>

The property was acquired for $24.3 million in 2014.

<p>What were the key financial metrics from the sale of Radbourne Lake Apartment Homes?</p>

The sale delivered a trailing nominal tax and insurance adjusted cap rate of 5.18%, a levered internal rate of return of 19.24%, and a 3.64x multiple on invested capital, all of which exceeded expectations.

<p>What are NXRT's future plans following the sale of Radbourne Lake Apartment Homes?</p>

NXRT will diligently monitor transaction and capital markets for opportunities to unlock liquidity for enhancing the balance sheet, repurchasing shares, and paying off higher property-level debt to facilitate future growth.