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01/11 11:06
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents mixed signals: slight improvements in core FFO and NOI, a dividend increase, and effective cost management are positive. However, revenue decline, occupancy drop, and weak lease rates offset these gains. The Q&A reveals management's optimism, but also highlights concerns about sustainability of savings and unclear asset acquisition strategy. The overall sentiment is neutral, as the positives and negatives balance out, suggesting limited stock price movement in the near term.
Net Loss Net loss for the third quarter was $7.8 million or a loss of $0.31 per diluted share, compared to a net loss of $8.9 million or $0.35 loss per diluted share for the same period in 2024. The improvement is attributed to reduced losses year-over-year.
Total Revenue Total revenues for Q3 2025 were $62.8 million, compared to $64.1 million in Q3 2024, reflecting a slight decrease in revenue.
NOI (Net Operating Income) NOI for Q3 2025 was $38.8 million on 35 properties, compared to $38.1 million for Q3 2024 on 36 properties, showing a slight increase in NOI despite a reduction in the number of properties.
Same-Store Rent and Occupancy Same-store rent and occupancy decreased by 0.3% and 1.3%, respectively, year-over-year. This led to a decrease in same-store revenues of 0.6% but was offset by a 6.2% decrease in same-store expenses, resulting in a 3.5% increase in same-store NOI.
Core FFO (Funds From Operations) Core FFO for Q3 2025 was $17.7 million or $0.70 per diluted share, compared to $0.69 per diluted share in Q3 2024, reflecting a slight improvement.
Upgraded Units and Rent Premium 365 full and partial upgrades were completed, with 297 upgraded units leased, achieving an average monthly rent premium of $72 and a 20.1% return on investment.
Dividend NXRT paid a Q3 dividend of $0.51 per share, which was 1.37x covered by core FFO with a 73.2% payout ratio. The dividend increased by 3.9% to $0.53 per share for the next quarter.
Same-Store Operating Expenses Same-store operating expenses decreased by 6.3% year-over-year, with payroll and R&M declining by 7.5% and 6.1%, respectively. Insurance costs decreased by 19%, and real estate taxes decreased by 8.7% due to favorable protest outcomes.
Same-Store NOI Growth Same-store NOI growth was 3.5% year-over-year, with a same-store NOI margin of 62.2%. Nashville and Atlanta led the growth with 26% and 7.8%, respectively.
Occupancy Portfolio occupancy was 93.6% as of the close of Q3 2025, with a leasing rate of 95.8%.
Bad Debt Bad debt improved by 32% year-over-year for Q3 2025, reflecting better financial health of tenants.
Upgraded Units: Completed 365 full and partial upgrades, leased 297 upgraded units, achieving an average monthly rent premium of $72 and a 20.1% return on investment.
New Acquisition: NXRT has been awarded the opportunity to acquire a 321-unit multifamily community in Northern Las Vegas, expected to generate a 7% same-store NOI CAGR over the next 5 years.
Market Expansion: Expansion in Northern Las Vegas, a high-growth area with significant industrial development and job creation.
Expense Reduction: Third quarter same-store operating expenses were down 6.3% year-over-year, with payroll and R&M declining 7.5% and 6.1%, respectively. Insurance costs decreased by 19%, and real estate taxes dropped by 8.7%.
Efficiency Improvements: Implemented centralized teams and AI technology for renewals, screening, and call centers, reducing on-site staffing and driving operational efficiencies.
Capital Recycling Strategy: Plan to sell mature assets and reinvest in high-growth assets, starting with the acquisition in Northern Las Vegas and expected sales in 2026.
Market competition from lease-up assets: The portfolio faces challenges from market competition, particularly from lease-up assets, which has led to elevated pressures on occupancy and concession utilization.
Occupancy rates: Occupancy rates are at 93.6%, with pressures from market competition affecting the ability to maintain higher occupancy levels.
Supply pressures in Sunbelt markets: Some Sunbelt markets still face supply issues, which could impact rental market performance despite strong demand.
Swap maturity overhang: The company is monitoring swap maturity overhang on earnings forecasts, which could pose financial risks if not addressed before expirations.
Economic uncertainties in submarkets: Submarket competition and stabilization timelines are uncertain, with some markets expected to stabilize only by year-end 2026.
Expense management: While expenses have moderated, there is ongoing pressure to maintain reductions in payroll, R&M, and other controllable expenses.
Dependence on capital recycling strategy: The company’s growth strategy heavily relies on capital recycling, which involves selling mature assets and acquiring new ones. This strategy carries execution risks and depends on favorable market conditions.
Supply chain and construction delays: The multifamily supply cycle is nearing its peak, but delays or changes in construction timelines could impact market stabilization and asset performance.
Full Year 2025 Guidance: NXRT is reaffirming guidance midpoints for loss per diluted share, core FFO per diluted share, same-store rental income, same-store total revenues, same-store total expenses, and same-store NOI. Loss per share core FFO ranges are as follows: loss per diluted share of negative $1.22 at the high end, negative $1.40 at the low end, with the midpoint of negative $1.31. For core FFO per diluted share, $2.84 at the high end, $2.66 at the low end, affirming the midpoint of $2.75.
Multifamily Supply Outlook: CoStar forecasts net deliveries of 508,000 units in 2025, down from 697,000 units in 2024. Deliveries are expected to fall significantly year-over-year in 2026 by 49% and in 2027 by an additional 20%. This marks the start of a lengthy period where deliveries are expected to be below the long-run average, supporting a more bullish long-term forecast for multifamily.
Rental Market Outlook: NXRT expects the rental market to take the lion's share of new household formation and outperform the for-sale market in the near term. While some markets still face supply issues, demand remains strong, particularly in fast-growing Sunbelt markets. The affordability challenge in the for-sale market is driving strong absorption of rental units.
Market Stabilization Projections: NXRT projects that 5 of its 10 markets will stabilize in the first quarter of 2026, 6 of 10 in the second quarter, and 8 of 10 in the third quarter, with all markets stabilizing by year-end 2026. Stabilization is defined as 92% occupancy with new construction deals being at least 70% leased.
Capital Recycling Strategy: NXRT plans to acquire a 321-unit multifamily community in Northern Las Vegas in late Q4 2025, utilizing available capacity. The company expects to execute one or more sales transactions in the first half of 2026, using tax-efficient 1031 reverse exchange mechanics. This strategy is expected to modestly boost 2026 performance and yield stronger core FFO growth from 2027 to 2030.
Operational Efficiency Initiatives: NXRT is implementing centralized teams and AI technology to drive greater efficiency and reduce on-site staffing, particularly in leasing offices. The company is also optimizing maintenance operations to achieve similar efficiencies across its markets.
Stock Buyback Plans: NXRT plans to prioritize stock buybacks in the low $30s over the near term as part of its capital allocation strategy.
Dividend Payment for Q3 2025: NXRT paid a third quarter dividend of $0.51 per share of common stock on September 30, 2025.
Dividend Coverage: For Q3, the dividend was 1.37x covered by core FFO with a 73.2% payout ratio of core FFO.
Dividend Increase: On October 27, 2025, the company's Board approved a quarterly dividend of $0.53 per share, a 3.9% increase from the previous dividend per share, payable on December 31, 2025, to stockholders of record on December 15, 2025.
Dividend Growth Since Inception: Since inception, NXRT has increased the dividend per share by 157.3%.
Stock Buyback Plan: NXRT plans to prioritize stock buybacks in the low $30s over the near term.
The earnings call presents mixed signals: slight improvements in core FFO and NOI, a dividend increase, and effective cost management are positive. However, revenue decline, occupancy drop, and weak lease rates offset these gains. The Q&A reveals management's optimism, but also highlights concerns about sustainability of savings and unclear asset acquisition strategy. The overall sentiment is neutral, as the positives and negatives balance out, suggesting limited stock price movement in the near term.
The earnings call highlights several concerns: declining revenue, net loss, and occupancy rates, coupled with market-specific weaknesses and economic uncertainty. The Q&A section reveals management's vague responses to critical questions, especially regarding non-revenue-generating expenditures. Despite a strong dividend history and share repurchase program, the negative financial results and cautious outlook outweigh these positives, leading to a negative sentiment.
The earnings call presents mixed signals. The financial performance shows a net loss and declining revenue, which are negative indicators. However, the dividend increase and share buyback program are positive factors. The Q&A reveals management's cautious optimism and strategic buybacks but also highlights uncertainties in market conditions and future guidance. The negative financial results are somewhat offset by optimistic guidance and shareholder returns, leading to a neutral overall sentiment.
The earnings call reveals a concerning decline in total revenue and NOI, alongside a slight decrease in occupancy and same store rent. Despite an increased dividend and share repurchases, these are overshadowed by unclear management responses and weak market performance in key areas like Atlanta. The Q&A highlights uncertainties, such as the vague explanation regarding swap strategies and the potential challenges in hitting lease rate growth targets. These factors suggest a negative sentiment, likely leading to a stock price decrease in the short term.
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