On Tuesday, Truist Securities maintained its Hold rating on shares of NexPoint Residential Trust (NYSE:NXRT) with a steady price target of $46.00. The company recently concluded the sale of Stone Creek at Old Farm for $24.5 million.
Following this transaction, management has adjusted its fiscal year 2024 guidance, with acquisition projections now at $0, down from the initial estimate of approximately $50 million. Disposition guidance has also been scaled back to $167 million from the prior forecast of around $175 million.
NexPoint's internal Net Asset Value (NAV) estimate has seen a 3% decline at the midpoint to $54.33 per share, compared to $55.87 per share last quarter, with a consistent applied capitalization rate of 5.5%. This figure stands in contrast to Truist Securities' own NAV estimate of $57.44 per share and the consensus NAV estimate of $50.26 per share. As of Monday's closing, NXRT's stock price was $43.00 per share.
On October 1, 2024, NexPoint completed the refinancing of $814 million in debt across 17 properties. The company anticipates refinancing the remaining 17 properties in its portfolio next month at a similar rate of SOFR+109 basis points. Truist Securities estimates that the net debt to EBITDA ratio has marginally decreased to 11.1 times from 11.2 times a quarter ago, reflecting a slight uptick in EBITDA.
Today, NexPoint announced a 10.3% increase in its quarterly dividend, which implies an annual yield of 4.7% based on the previous day's closing stock price. In terms of financial performance, third-quarter Funds From Operations (FFO) per share came in at $0.60, which was below both Truist Securities' estimate and the consensus of $0.65 per share.
However, when excluding certain non-recurring items, normalized FFO was $0.69 per share, surpassing both the estimated and consensus figures of $0.65 per share. This increase in normalized FFO, a 5.1% rise year-over-year and a 0.8% sequential growth, was primarily attributed to lower interest expenses, though this was largely offset by a decrease in Net Operating Income (NOI).
In other recent news, NexPoint Residential Trust, a real estate investment trust, reported a net income of $10.6 million, or $0.40 per diluted share, for the second quarter of 2024. The company's total revenue reached $64 million, including an $18.7 million gain from the sale of Radbourne Lake. Despite a 1% decrease in same-store rent, NexPoint maintained a stable occupancy rate of 94.1%.
Moreover, NexPoint's board of directors approved a 10.3% increase in its quarterly dividend rate to $0.51 per share, reflecting the company's ongoing financial performance. This decision marks a significant growth of 147.6% since the company's inception in 2015.
In the realm of analyst notes, Raymond James upgraded NexPoint Residential Trust from Market Perform to Outperform, setting a new price target of $50.00 for the company's shares. Concurrently, Truist Securities raised its price target for NexPoint from $37.00 to $46.00 while maintaining a Hold rating. Both adjustments were based on the company's strategic financial decisions and rent growth trends.
In other company news, NexPoint retired $14.6 million of its common stock and initiated a refinancing application for 17 properties with JPMorgan (NYSE:JPM) and Freddie Mac. This move is expected to reduce the average interest rate spread to 109 basis points, providing a four-year core earnings benefit of $0.15 to $0.20 per share annually.
InvestingPro Insights
NexPoint Residential Trust's recent financial moves and market performance align with several key insights from InvestingPro. The company's 10.3% dividend increase, as mentioned in the article, is consistent with an InvestingPro Tip noting that NXRT "Has raised its dividend for 9 consecutive years." This commitment to dividend growth is further supported by InvestingPro data showing a dividend yield of 4.3% and a dividend growth of 10.1% over the last twelve months.
The article's discussion of NexPoint's Net Asset Value (NAV) and stock price can be complemented by InvestingPro's P/E Ratio of 12.56 and Price to Book ratio of 2.25. These metrics suggest that NXRT is "Trading at a low earnings multiple," another InvestingPro Tip that could be of interest to value-oriented investors.
Additionally, InvestingPro data reveals a strong 6-month price total return of 32.04%, which aligns with the tip indicating a "Large price uptick over the last six months." This performance metric provides context to the company's recent market valuation discussed in the article.
For readers interested in a more comprehensive analysis, InvestingPro offers 7 additional tips and a range of financial metrics for NexPoint Residential Trust, providing a deeper understanding of the company's financial health and market position.
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