Q2 2024 NexPoint Residential Trust Inc Earnings Call

Thank you for standing by. My name is Christina and I'll be your conference operator today. At this time I would like to welcome everyone to the NexPoint Residential Trust second quarter 2024 earnings call.

Unknown Executive: At this time, I would like to welcome everyone to the next point, Residential Trust 2nd quarter, 2022 earnings call. All lines have been placed on mute to prevent any background noise.

Operator: At this time, I would like to welcome everyone to the NexPoint Residential Trust's second quarter 2024 earnings call. All lines have been placed on mute to prevent any background noise.

Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star one. I will now turn the floor over to Kristen Thomas, Investor Relations. Kristen, you may begin the call.

Unknown Executive: After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star one.

All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, again press star 1.

Kristen Thomas: And I will now turn the floor over to Kristen Thomas, investor relations. Kristen, you may begin the call.

And I will now turn the floor over to Kristen Thomas, Investor Relations. Kristen, you may begin the call.

Kristen Thomas: Thank you. Good day everyone, and welcome to NexPoint Residential Trust conference call to review the company's results from 2nd quarter in June 30, 2024. On the call today, Brian Mitts, Executive Vice President and Chief Financial Officer; Matt McGraner, Executive Vice President and Chief Investment Officer; and Bonner McDermett, Vice President, Acid and Investment Management.

Kristen Thomas: Thank you. Good day, everyone, and welcome to NexPoint Residential Trust's conference call to review the company's results for the second quarter ending June 30, 2024. On the call today are Brian Mitts, Executive Vice President and Chief Financial Officer; Matt McGraner, Executive Vice President and Chief Investment Officer; and Bonner McDermitt, Vice President, Asset and Investment Manager. Before we begin, I would like to remind everyone that this conference call contains forward-looking statements within the meaning of the Private Security Litigation Reform Act of 1995 that are based on management's current expectations, assumptions, and beliefs.

Speaker Change: Thank you. Good day, everyone, and welcome to NexPoint Residential Trust's conference call to review the company's results from the second quarter in mid-June 30, 2024. On the call today are Brian Mitts, Executive Vice President and Chief Financial Officer, Matt McGraner, Executive Vice President and Chief Investment Officer,

Kristen Thomas: As a reminder, this call is being passed through the company's website at nxrt.nexpoint.com. Before we begin, I would like to remind everyone that this conference call 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. Listeners should not place under relies on any forward looking statements. In our encouraged review the company's most recent annual report on form 10-K and the company's other findings with the SEC for a more complete discussion of risks and other factors that could affect any forward looking statements.

Speaker Change: and Bonner McDermett, Vice President, Asset and Investment Management.

Speaker Change: As a reminder, this call is being webcast through the company's website at nsrt.nexpoint.com.

Kristen Thomas: Listeners 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 the company's other filings with the SEC for a more complete discussion of risks and other factors that could affect any forward-looking statement. The statements made during this conference call speak only as of today's date, and, except as required by law, NXRT does not undertake any obligation to publicly update or revise any forward-looking statements.

Speaker Change: Before we begin, I would like to remind everyone that this conference call contains forward-looking statements within the meanings of the Private Securities Litigation Reform Act of 1995 that are based on management's current expectations, assumptions, and beliefs.

Speaker Change: Listeners 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 the company's other filings with the SEC for a more complete discussion of risks and other factors that could affect any forward-looking statement.

Kristen Thomas: The statements made during this conference call speak only as of today's date, and except as required by law, NXRT does not undertake any obligation to publicly update or revise any forward-looking statements.

NXRT: The statements made during this conference call speak only as of today's date, and except as required by law, NXRT does not undertake any obligation to publicly update or revise any forward-looking statements.

Kristen Thomas: This conference call also includes an analysis of non-GAAP financial measures. For a more complete discussion of these non-GAAP financial measures, see the company's earnings release that was filed earlier today.

Kristen Thomas: This conference call also includes an analysis of non-GAAP financial measures. For a more complete discussion of these non-GAAP financial measures, see the company's earnings release that was filed earlier. I would now like to turn the call over to Brian Mitts. Please go ahead, Brian.

NXRT: This conference call also includes an analysis of non-GAAP financial measures. For a more complete discussion of these non-GAAP financial measures, see the company's earnings release that was filed earlier today.

Brian Mitts: Are we now looking to turn the call over to Brian Bitt? Please go ahead, Brian.

Brian Dale Mitts: Thanks, Kristen. Welcome to everyone joining us this morning. I appreciate your time. I'm Brian Mitts.

Brian Mitts: Thanks, Kristen. Welcome to everyone joining us this morning. Appreciate your time. I'm Brian Bitt. I will be joined today by Matt McRainer and Bonner McDermott.

Speaker Change: I would now like to turn the call over to Brian Mitts. Please go ahead, Brian .

Brian Dale Mitts: I will be joined today by Matt McGraner and Bonner McDermott. I'll start the call and cover our Q2 results, updated NAV, and guidance outlook for the year. Then I'll turn it over to Matt and Bonner to discuss some of the specifics in the leasing environment and metrics driving our performance and guidance. Results for the second quarter are as follows. Net income for the second quarter was $10.6 million, or $0.40 per diluted share, on total revenue of $64 million.

Speaker Change: Thanks, Kristen. Welcome to everyone joining us this morning. I appreciate your time. I'm Brian Mitts. I will be joined today by Matt McGraner and Bonner McDermott.

Brian Mitts: I'll start the call and cover our Q2 results, update in NAV, and guidance. I'll look for the year.

Brian Dale Mitts: This includes an $18.7 million gain on the sale of Rodbourne Lake that was completed on April 30th. The $10.6 million net income for the quarter compares to a net loss of $4 million, or $0.15 loss per diluted share for the same period in 2023, on total revenue of $69.6 million. For the second quarter of 2024, NOI was $38.9 million on 36 properties, compared to $42 million for the second quarter of 2023 on 40 properties. For the quarter, same-store rent decreased 1% while same-store occupancy held stable at 94.1%.

Speaker Change: I'll start the call and cover our Q2 results, updated NAV and guidance outlook for the year. Then I'll turn it over to Matt and Bonner to discuss some of the specifics in the leasing environment and metrics driving our performance and guidance.

Brian Dale Mitts: This coupled with an increase in same store revenues of 2.3% led to an increase in same store NOI of 2.4% as compared to Q2 2023. As compared to Q1 2024, rents for the second quarter on the same store portfolio were up 0.4% or $6 sequentially. The company reported Q2 core FFO of $18 billion or $0.68 per diluted share compared to $0.77 per diluted share in Q2 of 2023. During the second quarter, for the properties in our portfolio, we completed 59 full and partial upgrades and at least 56 upgraded units, achieving an average monthly rent premium of $240 and a 20.1% return on investment. Since inception, for the properties currently in our portfolio, we've completed 8,271 full and partial renovations.

Brian Mitts: I'll turn over to Matt and Bonner to discuss some of the specifics in the leasing environment and metrics driving our performance and guidance. Results for the second quarter, as far as net income for the second quarter is 10.6 million or 40 cents per diluted share on total revenue of 64 million. This includes an 18.7 million dollar gain on the sale of Ride-Borne Lake that was completed on April 30. The 10.6 million net income for the quarter appears to have net loss of 4 million or 15 cent loss per diluted chair for the same period in 2023 on total revenue of 69.6 million.

Speaker Change: Results for the second quarter are as follows. Net income for the second quarter is $10.6 million, or $0.40 per diluted share, on total revenue of $64 million. This includes an $18.7 million gain on the sale of Rodbourne Lake that was completed on April 30th.

Speaker Change: The $10.6 million net income for the quarter compares to a net loss of $4 million, or $0.15 loss per diluted share for the same period in 2023, on total revenue of $69.6 million.

Brian Mitts: For the second quarter of 2024, NOI was 38.9 million on 36 properties compared to 42 million for the second quarter of 2023 on 40 properties. The quarter same store rent decreased 1 percent, while same store occupancy held stable at 94.1 percent. This coupled with an increase in same store revenues of 2.3 percent led to an increase in same store NOI of 2.4 percent as compared to Q2 2023. It was compared to Q1 2024, rents for 2nd quarter on the same store portfolio, we're up 0.4% or $6 sequentially, re-reported Q2 core FFO of 18 million or 68 cents per diluted share, compared to 77 cents per diluted share and Q2 of 23.

Speaker Change: For the second quarter of 2024, NOI was $38.9 million on 36 properties, compared to $42 million for the second quarter of 2023 on 40 properties.

Speaker Change: For the quarter, same-store rent decreased 1%, while same-store occupancy held stable

Speaker Change: This, coupled with an increase in same store revenues of 2.3%, led to an increase in same store NOI of 2.4% as compared to Q2 2023.

Speaker Change: As compared to Q1 2024, rents for second quarter on the same store portfolio were up 0.4% or $6 sequentially.

Speaker Change: We reported Q2 core FFO of $18 billion or $0.68 per diluted share compared to $0.77 per diluted share in Q2 of 2023.

Brian Mitts: During the 2nd quarter for the properties in our portfolio, we completed 59 full and partial upgrades and 36, sorry, at least 56 upgraded units, achieving an average monthly rent premium of $240 to 20.1% return on investment. System section for the properties currently in our portfolio: we've completed 8,271 full and partial renovations, 4,659 kitchen and laundry appliance installs, and 11,389 technology package installs, resulting in $175, $48, and $43 average monthly rental increase per unit in a 20.8%, 62.9%, and 37.2% return on investment, respectively. NSRT paid a 2nd quarter dividend of 46 cents per share of common stock on June 28.

Speaker Change: During the second quarter, for the properties in our portfolio, we completed 59 full and partial upgrades and at least 56 upgraded units, achieving an average monthly rent premium of $240 and a 20.1% return on investment.

Speaker Change: Since inception, for the properties currently in our portfolio, we've completed 8,271 full and partial

Speaker Change: renovations.

Speaker Change: $4,659 kitchen and laundry appliance installs and $11,389 technology package installs, resulting in a $175, $48, and $43 average monthly rental increase.

Speaker Change: per unit in a 20.8%, 62.9%, and 37.2% return on investment, respectively.

Brian Dale Mitts: $4,659 in kitchen and laundry appliance installs and $11,389 in technology package installs, resulting in a $175, $48, and $43 average monthly rental increase per unit at a 20.8%, 62.9%, and 37.2% return on investment, respectively. NSRT paid a second quarter dividend of 46 cents per share of common stock on June 28. Since inception, we've increased our dividend 124.5%.

Speaker Change: NXRT paid a second quarter dividend of 46 cents per share of common stock on June 28th. Since inception, we've increased our dividend 124.5%.

Brian Mitts: Since inception, we've increased our dividend of 124.5%. The 2nd quarter dividend was 1.48 times covered by core FFO, with a payout ratio of 68%. During the 2nd quarter, NSRT completed the sale for Outborn late for a sales price of 39.25 million, but it generated 18.6 million of net sales proceeds and resulted in a 19.2% levered IRR in the 3.6 times multiple uninvested capital. The 2nd quarter of the company purchased and subsequently retired 14.6 million of its common stock. The retired stock has purchased a weighted average price of $33.19 per share, which represented an attractive 37% discount to the midpoint of our Q1 24-nav range.

Speaker Change: So the second quarter dividend was 1.48 times covered by core FFO with a payout ratio of 68%.

Brian Dale Mitts: During the second quarter, NXRT completed the sale of Radbourne Lake for a sales price of $39.25 million. This generated $18.6 million of net sales proceeds and resulted in a 19.2% levered IRR and 3.6 times the multiple on invested capital. In the second quarter, the company purchased and subsequently retired $14.6 million of its common stock. The retired stock was purchased at a weighted average price of $33.19 per share, which represented an attractive 37% discount to the midpoint of our Q1-24 NAV range.

Speaker Change: through the second quarter.

Speaker Change: NXRT completed the sale of Broadbourne Lake for a sales price of $39.25 million.

Speaker Change: has generated $18.6 million of net sales proceeds and resulted in a 19.2% levered IRR and 3.6 times the multiple on invested capital.

Speaker Change: The second quarter, the company purchased and subsequently retired $14.6 million of its common stock.

Speaker Change: The retired stock was purchased at a weighted average price of $33.19 per share, which represented an attractive 37% discount to the midpoint of our Q1-24 NAV range.

Brian Mitts: On June 27, NSRT is cash on hand to retire the 15.3 million mortgage on the Stone Creek at Old Foreign property.

Brian Dale Mitts: On June 27th, NXRT used cash on hand to retire the $15.3 million mortgage on the Stone Creek at Old Farm Property, as of June 30th, 2024. We had $21.3 million of cash and $350 million of available liquidity on the corporate credit facility. Turning to NAV, based on our current estimates of cap rates in our markets and forward NOI, we're reporting an NAV per range as follows, per share range as follows: 49.

Speaker Change: On June 27th, NXRT used cash on hand to retire the $15.3 million mortgage on the Stone Creek at Old Forum property.

Brian Mitts: As of June 30, 2024, we had 21.3 million of cash and 350 million of available equity on the corporate credit facility.

Speaker Change: As of June 30, 2024, we had $21.3 million of cash and $350 million of available equity on the corporate credit facility.

Brian Mitts: Turning to NAV, based on our current estimate of cap rates in our markets and forward to NOI, we are reporting an NAV per range as far as per share range as far as $49.77 from the low end, $61.97 from a high end, $55.87 at the midpoint. These are based on average cap rates ranging from 5.25% to 5.75% on the high end, which provides down 25 basis points to this quarter based on recent market intelligence and transaction activity.

Speaker Change: Turning to NAV, based on our current estimate of cap rates in our markets and forward NOI, we're reporting an NAV per range as follows, per share range as follows.

Brian Dale Mitts: Sorry, $49.77 on the low end, $61.97 on the high end, and $55.87 at the midpoint. These are based on average cap rates ranging from 5.25% on the low end to 5.75% on the high end, which was revised down 25 basis points this quarter based upon recent market intelligence and transaction activity. NXRT is updating its 2024 guidance range for core FFO per diluted share, same store revenues, same store expenses, and same store NOI as follows.

Speaker Change: 49 point

Speaker Change: Sorry, $49.77 on the low end.

Speaker Change: $61.97 on the high end and $55.87 at the midpoint.

Speaker Change: These are based on average cap rates ranging from 5.25% on the low end to 5.75% on the high end, which revised down 25 basis points this quarter based upon recent market intelligence and transaction activity.

Brian Mitts: NSRT is updating 2024 guidance range for core FFO per diluted share, same store revenue, same store expenses, and same store NOI as follows. Core FFO per diluted share, $2.66 from the low end, $2.79 from a high end, and a midpoint of $2.79 from the low end. Total revenue, 1.3% increase in low-end, 2.2% increase on the high-end, 1.7% increase at the midpoint. Total expenses, 4.4% increase on the low-end, 3.7% increase on the high-end, and a midpoint is 3.7%. The same store, NOI, a negative 0.6% increase in the low-end, 1.6% increase on the high-end, and a 0.5% increase at the midpoint.

Speaker Change: NXRT is updating 2024 guidance range for core FFO per diluted share, same store revenue, same store expenses, and same store NOI as follows.

Brian Dale Mitts: Core FFO per diluted share, $2.66 on the low end, $2.79 on the high end, and a midpoint of $2.72. Total revenue, 1.3% increase on the low end, 2.2% increase on the high end, and 1.7% increase at the midpoint. Total expenses, 4.4% increase on the low end, 3% increase on the high end, and a midpoint of 3.7%. The same store, NOI, a negative 0.6% increase on the low end, or, sorry, decrease, 1.6% increase on the high end, and a 0.5% increase at the midpoint. That concludes my prepared remarks. I'll now turn it over to Matt.

Speaker Change: Core FFO per diluted share, $2.66 on the low end, $2.79 on the high end, and a midpoint of $2.72.

Speaker Change: Total revenue, 1.3% increase in low-end, 2.2% increase on the high-end, and 1.7% increase at the midpoint.

Speaker Change: Total expenses, 4.4% increase on the low end, 3.7%, or sorry, 3% increase on the high end, and a midpoint of 3.7%.

Speaker Change: In the same store, NOI, a negative 0.6% increase on the low end, 1.6% increase on the high end, and a 0.5% increase at the midpoint.

Matthew McGraner: Please, my prepared remarks will now turn over to Matt. Thanks, Ryan. Let me start by reviewing our second quarter, same-store operational results. Same-store real revenue was 2.6%, with 5 of 10 markets averaging at least 2% growth. While our Las Vegas and Atlanta markets led the way at 9.2% and 6.6% growth, respectively. Total same-store revenues for the portfolio were up 2.3% year-over-year. We're also pleased to report some continued moderation and expense growth for the quarter. Second quarter, same-store operating expenses were up just 1.2% year-over-year. Specifically, marketing and payroll decline 5.2% and 80 basis points, respectively. Year-over-year, our economic expense growth continued to moderate, up just 80 basis points from 2Q 2023.

Speaker Change: That completes my prepared remarks. I'll now turn it over to Matt.

Matthew Ryan McGraner: Thanks Brian. Let me start by reviewing our second quarter same store operational results. Same store rental revenue was 2.6%, with 5 of 10 markets averaging at least 2% growth, while our Las Vegas and Atlanta markets led the way at 9.2% and 6.6% growth, respectively. Total same-store revenues for the portfolio were up 2.3% year-over-year. We're also pleased to report some continued moderation in expense growth for the quarter. For the second quarter, same-store operating expenses were up just 1.2% year-over-year.

Matthew Ryan McGraner: Thanks Brian . Let me start by reviewing our second quarter same store operational results.

Matthew Ryan McGraner: Same store rental revenue was 2.6%, with 5 of 10 markets averaging at least 2% growth, while our Las Vegas and Atlanta markets led the way at 9.2% and 6.6% growth, respectively.

Matthew Ryan McGraner: Total same-store revenues for the portfolio were up 2.3% year-over-year. We're also pleased to report some continued moderation in expense growth for the quarter. Second quarter same-store operating expenses were up just 1.2% year-over-year.

Matthew Ryan McGraner: Specifically, marketing and payroll declined 5.2% and 80 basis points, respectively. Year over year, R&M expense growth continued to moderate, up just 80 basis points from 2Q 2023. And we finalized several prior year property tax appeals resulting in 1.6% reductions year over year and are still in active property tax appeals on 14 assets. In second quarter, same store and OI maintained healthy growth in our markets with the portfolio averaging 2.4%. Five of ten markets achieved year-over-year NOI growth of 3.7% or greater, with Las Vegas and Atlanta leading the way at 12.3% and 9.6% growth, respectively.

Matthew Ryan McGraner: Specifically, marketing and payroll declined 5.2% and 80 basis points respectively. Year-over-year, R&M expense growth continued to moderate up just 80 basis points from 2Q2023.

Matthew McGraner: And we finalized several prior year property tax appeals, resulting in 1.6% reductions year-over-year, and are still in active property tax appeals on 14 assets. Second quarter, same-store and NOI maintained a healthy growth in our markets, with the portfolio averaging 2.4%. 5 of 10 markets achieved year-over-year and NOI growth of 3.7% or greater, with Las Vegas and Atlanta leading the way at 12.3% and 9.6% growth, respectively. Our Q2 same-store NOI margin registered a healthy 61.1%, which was up 10 basis points from the prior year. Operationally, on the income front, the portfolio experience continued positive revenue growth in Q2, with 5 out of our 10 markets achieving growth of at least 2.3% or better.

Speaker Change: And we finalized several prior year property tax appeals, resulting in 1.6% reductions year-over-year, and are still in active property tax appeals on 14 assets.

Speaker Change: Second quarter, same store and OI maintained a healthy growth in our markets with the portfolio averaging 2.4%.

Speaker Change: Five of ten markets achieved year-over-year NOI growth of 3.7% or greater, with Las Vegas and Atlanta leading the way at 12.3% and 9.6% growth, respectively.

Matthew Ryan McGraner: Our Q2 Same Store NOI margin registered a healthy 61.1%, which was up 10 basis points from the prior year. Operationally on the income front, the portfolio experienced continued positive revenue growth in Q2, with 5 out of our 10 markets achieving growth of at least 2.3% or better. Our top 5 markets were Las Vegas at 8.4%, Charlotte at 6.8%, Atlanta at 5.5%, South Florida at 4%, and Raleigh at 2.4%.

Speaker Change: Our Q2 same-store NOI margin registered a healthy 61.1%, which was up 10 basis points from the prior year.

Speaker Change: Operationally on the income front, the portfolio experience continued positive revenue growth in Q2 with five out of our ten markets achieving growth of at least 2.3 percent or better.

Matthew McGraner: Our top 5 markets were Las Vegas at 8.4%, Charlotte at 6.8%, Atlanta at 5.5%, South Florida at 4%, and Raleigh at 2.4%. Renewal conversions for eligible tenants were 65% for the quarter, with 8 out of 10 markets executing renewable rate growth of at least 1.1% and a blended average of 2.1%. On the occupancy front, the portfolio registered a healthy 94.1% as of the close of the quarter and as of today remains 94.1% occupied, 96.5% lease, and a healthy 68% of 92%.

Speaker Change: Our top 5 markets were Las Vegas at 8.4%, Charlotte at 6.8%, Atlanta at 5.5%, South Florida at 4% and Raleigh at 2.4%.

Matthew Ryan McGraner: Renewal conversions for eligible tenants were 65% for the quarter, with 8 out of 10 markets achieving renewal rate growth of at least 1.1% and a blended average of 2.11%. On the occupancy front, the portfolio registered a healthy 94.1% as of the close of the quarter, and as of today, remains 94.1% occupied, 96.5% leased, and a healthy 60-day trend of 92%, operationally heading into As Brian mentioned, we have bumped, Unknown Executive, Buck Horne, Brian Mitts, Barry Oxford, Michael Lewis, Unknown Executive. In addition, supply, demand, and balances continue to favor landlords as we enter 2025 and beyond. Some notes on starts from our quarterly updates with RealPage and consultants, tracking starts and deliveries are as follows. Annual starts are now at their lowest level in 10 years, approximately 280,000 units on a run rate basis.

Speaker Change: Renewal conversions for eligible tenants were 65% for the quarter, with 8 out of 10 markets executing renewal rate growth of at least 1.1% and a blended average of 2.11%.

Speaker Change: On the occupancy front, the portfolio registered a healthy 94.1% as of the close of the quarter, and as of today, remains 94.1% occupied, 96.5% leased, and a healthy 60-day trend of 92%.

Matthew McGraner: Operationally heading into the second half of the year, as Brian mentioned, we have bumped into the higher. While supply continues to be a challenge, demand outperformed expectations in the first half of the year and was really exceptional on a historic basis. Even so, we have still seen resistance to growing rents and have focused on occupancy to grow revenue. Demand has stayed resilient going into the second half of the year that we expect seasonality to play our role as deliveries peaked throughout the rest of 2024. Also, positive evictions continue to come down. We're optimistic that we will see bad debt surprise the upside in the second half of the year also.

Speaker Change: Operationally heading into the second half of the year, as Brian mentioned, we have bumped

Brian Dale Mitts: While supply continues to be a challenge, demand outperformed expectations in the first half of the year and was really exceptional on a historic basis.

Speaker Change: Even so, we have still seen resistance to growing rents and a focus on occupancy to grow revenue. Demand has stayed resilient going into the second half of the year, but we expect seasonality to play a role as deliveries peak throughout the rest of 2024.

Speaker Change: Also positive, evictions continue to come down. We're optimistic that we will see bad debt surprise to the upside in the second half of the year also.

Matthew McGraner: In addition, supply demand and balance has continued to favor landlords as we will enter 2025 and beyond.

Speaker Change: In addition, supply, demand, and balances continue to favor landlords as we will enter 2025 and beyond. Some notes on starts from our quarterly updates with RealPage and consultants, tracking starts and deliveries are as follows.

Matthew Ryan McGraner: The year-over-year drawdown in starts from 2023 is approximately 40%. 2Q2024 starts came in at just 38,000 units, which would represent an annual run rate of 150,000 units or 50% of the trailing 10-year average. Trailing 12-month starts are way down from the peak across all major metros, including Sunbelt Markets, down anywhere from 40-60% versus the 2020 peak, with Sunbelt Markets down 54%. Finally, RealPage forecasts a return of a normal 2 to 4% annual rent growth in 2025.

Matthew McGraner: Some notes on starts from our quarterly updates with RealPage and consultants tracking starts and deliveries are as follows. Annual starts are now at their lowest level in 10 years, approximately 280,000 units on a run rate. The year-rear drawdown starts from 2023 as approximately 40%. 2Q 2024 starts came in at just 38,000 units, which would represent an annual run rate of 150,000 units or 50% of the trailing 10-year average. Trailing 12 month starts are way down from the peak across all major metrics, including Sunbelt markets, down anywhere from 40 to 60% versus the 2020's peak, with Sunbelt markets down 54%.

Speaker Change: Annual starts are now at their lowest level in 10 years, approximately 280,000 units on a run rate. The year-over-year drawdown in starts from 2023 is approximately 40%.

Speaker Change: 2Q2024 starts came in at just 38,000 units, which would represent an annual run rate of 150,000 units, or 50% of the trailing 10-year average.

Speaker Change: Trailing 12-month starts are way down from the peak across all major metros, including Sunbelt markets, down anywhere from 40-60% versus the 2020s peak, with Sunbelt markets down 54%. Finally, RealPage forecasts a return of a normal 2-4% annual rent growth in 2025.

Matthew McGraner: Finally, real-page forecast return of a normal 2-4% annual run growth in 2025.

Matthew Ryan McGraner: Turning to perhaps one of the bigger items, the balance sheet. On the heels of deleveraging and retiring the entire credit facility, and as we alluded to at NARI, we have been working to take advantage of the spread tightening in the real estate debt markets broadly. Today we are pleased to announce we have signed an application with J.P. Morgan and Freddie Mac to refinance 17 properties at SOFR plus 109 basis points, 49 basis points below the portfolio average spread of 158.

Matthew McGraner: 2, perhaps one of the bigger items are the balance sheet. On the heels of de-leveraging and retiring the entire credit facility. And as we alluded to it in ARI, we have been working to take advantage of the spread tightening in the real estate dead markets broadly. Today, we're pleased to announce we have signed an application with JP Morgan and Freddie Mac to refinance 17 properties at SOFR plus 109 basis points, 49 basis points below the portfolio average spread of 158. We're also in agreement with Freddie to refinance the remaining portfolio at the same terms by the end of 2024, thereby refinancing the entirety of our first mortgage debt.

Speaker Change: Turning to perhaps one of the bigger items, the balance sheet. On the heels of deleveraging and retiring the entire credit facility,

Matthew Ryan McGraner: We are also in agreement with Freddie to refinance the remaining portfolio at the same terms by the end of 2024, thereby refinancing the entirety of our first mortgage debt. By executing this strategy, we would bring our weighted average interest rate spread to 109 basis points. We expect the first tranche of refinancings to close by October 1st of this year, and the remaining assets will be refinanced shortly after the lock-up period expires on November 1st. The four-year core earnings benefit is forecasted to provide 15 to 20 cents of earnings annually.

Speaker Change: And as we alluded to at NARI, we have been working to take advantage of the spread tightening in the real estate debt markets broadly. Today, we're pleased to announce we have signed an application with JPMorgan and Freddie Mac to refinance 17 properties at SOFR plus 109 basis points.

Speaker Change: 49 basis points below the portfolio average spread of 158. We're also in agreement with Freddie to refinance the remaining portfolio at the same terms by the end of 2024, thereby refinancing the entirety of our first mortgage debt.

Matthew McGraner: By executing this strategy, we would bring our weighted average interest rate spread to 109 basis points. We expect the first launch of refinancing is to close by October 1st of this year, and the remaining assets will be refinanced shortly after the lock-up period expires on November 1st. The four-year core earnings benefit is forecasted to provide 15 to 20 cents of earnings annually. One significant added benefit to this refinancing initiative, beyond extending maturities, out another seven years, is to offset the expected impact of our interest rate swaps maturing over the next three years. As we project core FFO into the future, is our expectation that we can add them in and maintain our 2024 core performance throughout swap expirations by achieving at least a 3% compound annual growth in NLI.

Speaker Change: By executing this strategy, we would bring our weighted average interest rate spread to 109 basis points. We expect the first tranche of refinancings to close by October 1st of this year, and the remaining assets will be refinanced shortly after their lock-up period expires on November 1st.

Speaker Change: The four-year core earnings benefit is forecasted to provide 15 to 20 cents of earnings annually.

Matthew Ryan McGraner: One significant added benefit to this refinancing initiative, beyond extending maturities out another seven years, is to offset the expected impact of our interest rate swaps maturing over the next three years. As we project core FFO into the future, it is our expectation that we can, at a minimum, maintain our 2024 core performance throughout swap expirations by achieving at least a 3% compounded annual growth in NOI, a metric we have historically doubled over our operating history.

Speaker Change: One significant added benefit to this refinancing initiative, beyond extending maturity without another seven years, is to offset the expected impact of our interest rate swaps maturing over the next three years.

Speaker Change: As we project core FFO into the future, it is our expectation that we can, at a minimum, maintain our 2024 core performance throughout swap expirations by achieving at least a 3% compounded annual growth in NOI, a metric we have historically doubled over our operating history.

Matthew McGraner: A metric we have historically doubled over our operating history. We see this initiative bolstering our balance sheet, shoring up core FFO estimates in the out years, and positioning of the company for future success and growth. Importantly, these refinancing remains flexible and allow us to sell assets with minimal breakage fees and no defeats and or yield maintenance penalties. And as always, we'll look to hedge this exposure opportunistically on a ladder basis as inflation expectations moderate.

Matthew Ryan McGraner: We see this initiative as bolstering our balance sheet, choring up 4FFO estimates in the out years, and positioning the company for future success and growth. Importantly, these refinancings remain flexible and allow us to sell assets with minimal breakage fees and no defeasance and or yield maintenance penalties, and as always, we'll look to hedge this exposure opportunistically on a latter basis as inflation expectations moderate. Finally, on the NAB, as Brian mentioned, our new NAB Midpoint is $55.87 per share using a 5.5% cap rate on a revised 2024 NOI.

Speaker Change: We see this initiative as bolstering our balance sheet, shoring up 4FFO estimates in the out years and positioning the company for future success and growth.

Speaker Change: Importantly, these refinancings remain flexible and allow us to sell assets with minimal breakage fees and no defeasance and or yield maintenance penalties.

Speaker Change: And as always, we'll look to hedge this exposure opportunistically on a laddered basis as inflation expectations moderate.

Matthew McGraner: Finally, on the NAB, as Ryan mentioned, our new NAB midpoint is $55.87 per share using a 5.5% cap rate on a revised 2024 NLI. We made a 25 basis point downward adjustment to our cap rate assumption to 5.5% and 3.4%, based upon current knowledge of successful trades on comparable assets in our markets. In addition, the Blackstone AIR CDO and the Lunar Transaction with KKR, both of which were struck in the low five to five and a quarter cap rate range. Today's crisis, our implied cap rate is roughly 6.22%. As we've routinely done in the past and to the extent we stay at these levels, we'll use our NAV as our guideposts and utilize free cash flow and/or look to sell assets to free up liquidity, buy back stock at a discount, or purchase new assets utilizing a 1031 exchange.

Speaker Change: Finally, on the NAV, as Brian mentioned, our new NAV Midpoint is $55.87 per share using a 5.5% cap rate on a revised 2024 NOI.

Matthew Ryan McGraner: We made a 25 basis point downward adjustment to our cap rate assumption to 5.25% to 5.75% based upon current knowledge of successful trades on comparable assets in our market. In addition, the Blackstone AIRC deal and the Lenar transaction with KKR, both of which were struck in the low 5 to 5.25 cap rate range. At today's prices, our implied cap rate is roughly 6.22%, and as we have routinely done in the past, and to the extent we stay at these levels, we use our NAB as our guidepost and utilize free cash flow or look to sell assets to free up liquidity, buy back stock at a discount, or purchase new assets utilizing a 1031 exchange.

Brian Dale Mitts: We made a 25-basis point downward adjustment to our cap rate assumption to 5.25% to 5.75%, based upon current knowledge of successful trades on comparable assets in our markets.

Brian Dale Mitts: In addition, the Blackstone AIRC deal and the Lenar transaction with KKR, both of which were struck in the low 5 to 5.25 cap rate range.

Brian Dale Mitts: At today's prices, our implied cap rate is roughly 6.22%.

Brian Dale Mitts: As we have routinely done in the past, and to the extent we stay at these levels, we use our NAB as our guideposts and utilize free cash flow and or look to sell assets to free up liquidity, buy back stock at a discount, or purchase new assets utilizing a 1031 exchange.

Matthew McGraner: In closing, I'll just reiterate, we're excited about the new term outlook for the company, our current refinancing, and we'll work hard to generate another year of our performance. That's all I have for prepare remarks thanks to our teams here at NexPoint and BH for continuing to execute.

Matthew Ryan McGraner: In closing, I'll just reiterate, we're excited about the near-term outlook for the company, our current refinancings, and we'll work hard to generate another year of outperformance. That's all I have for prepared remarks. Thanks to our teams here at NexPoint and BH for continuing to excel.

Brian Dale Mitts: In closing, I'll just reiterate, we're excited about the near-term outlook for the company, our current refinancings, and we'll work hard to generate another year of outperformance. That's all I have for prepared remarks. Thanks to our teams here at NexPoint and BH for continuing to execute.

Unknown Executive: Brian? Appreciate a map.

Brian Dale Mitts: I appreciate it, Matt. Let's open it up for questions.

Unknown Executive: Let's open it up for questions. Thank you. As a reminder, if you would like to ask a question, please press star, then the number one on your telephone keypad. Again, that's star one to ask a question, and we'll pause for just a moment to compile the Q&A roster. Thank you.

Brian Dale Mitts: [inaudible]

Speaker Change: Appreciate it Matt. Let's open it up for questions.

Operator: Thank you. As a reminder, if you would like to ask a question, please press star, then the number one on your telephone keypad. Again, that's star one to ask a question. And we'll pause for just a moment to compile the Q&A roster. Thank you. Your first question comes from the line of Kyle Katorincek from Janney Montgomery Scott. Your line is open.

Speaker Change: Thank you. As a reminder, if you would like to ask a question, please press star, then the number one on your telephone keypad. Again, that's star one to ask a question. And we'll pause for just a moment to compile the Q&A roster.

Kyle Katorincek: Your first question comes from the line of Kyle Katarinsic from Jenny Montgomery Scott. Your line is open.

Speaker Change: Thank you. Your first question comes from the line of Kyle Katorincek from Janney, Montgomery, Scott. Your line is open.

Kyle Felice Katorincek: Hey, good morning, guys. Did you notice that Raleigh real estate taxes accounted for 33% of your total expenses year to date due to the four-year reassessment? Did that come in materially higher than you guys initially estimated?

Kyle Katorincek: Hey, good morning, guys. You noted that what Raleigh real estate taxes accounted for 33% of your total expenses, year to the four-year assessment. Did that come in material higher than you guys initially estimated? Yeah, so right now in Raleigh, it's kind of a tale of two deals, right? The six fourth asset, we actually came in ahead of our consultant's estimates. We're pretty satisfied with that outcome. The Mooresville asset, the High House asset, that one we're having to do a little bit more fighting, so you see us still accruing at a higher rate. We think that they're savings there.

Kyle Felice Katorincek: Hey, good morning, guys. You noted that Raleigh real estate taxes accounted for 33% of your total expenses year-to-date due to the four-year reassessment. Did that come in materially higher than you guys initially estimated?

Unknown Executive: Yeah, so right now in Raleigh, it's kind of a tale of two deals, right? The Six Forks asset, we actually came in ahead of our consultants' estimates. We're pretty satisfied with that outcome.

Speaker Change: Yeah, so right now in Raleigh, it's kind of a tale of two deals, right? The six quarts asset, we actually came in ahead of our consultants' estimates.

Unknown Executive: The Mooresville asset, the high house asset, that one we're having to do a little bit more fighting. So you see us still accruing at a higher rate. We think that there's savings there. If you look at our spread for four-year numbers, there's about a half-million dollar range of outcomes. Matt referenced the 14 deals that are actively in protest for 2024. The high house asset there is one of those, and that could be one of the more material drivers if we can get that down.

Speaker Change: We're pretty satisfied with that outcome. The Mooresville asset, the high house asset, that one we're having to do a little bit more fighting.

Kyle Katorincek: If you look at our spread for four-year numbers, there's about a half a million dollar range of outcomes. Not reference the 14 deals that are actively in protest for 2024. The High House asset there is one of those, and that could be one of the more material drivers. We can get that down, so we're still working on that. It certainly is a big impact, but as you mentioned, it's kind of a four-year opportunity by the apple, and then it'll be fixed to the next three.

Speaker Change: still accruing at a higher rate. We think that there's savings there. If you look at our spread for four-year numbers, there's about a half a million dollar range of outcomes. Matt referenced that.

Speaker Change: 14 deals that are actively in protest for 2024. The high house asset there is one of those, and that could be one of the more material drivers if we can get that down. So we're still working on that. It certainly is a big impact, but as you mentioned, it's a

Unknown Executive: So we're still working on that. It certainly is a big impact, but as you mentioned, it's kind of a four-year opportunity. Bite the apple, and then it'll be fixed for the next three. So we're going to do everything we can as a consultant to control that outcome. But hopefully, we have more to report come Q3.

Kyle Katorincek: So we're going to do everything we can to consult and to control that outcome, but hopefully we have more to report come to three. Okay.

Speaker Change: and a four year opportunity to buy the Apple and then it will be fixed for the next three. So we are going to do everything we can as a consultant to control that outcome. But hopefully have more to report come Q3.

Unknown Executive: Okay, and then are there any other multi-year tax reassessments, maybe including that 14, in larger markets that are going to be coming up in the second half of 24?

Kyle Katorincek: And then, are there any other multi-year tax reassignments? Maybe that's 14 in a larger market that are going to be coming up in the second half of 24? No, that's the one. So Charlotte Mecklenburg County was last year; Nashville, last year as well. So those are the three with kind of odd tax situations, but we're dealing with rallies now. I think we're pleasantly surprised with Six Forks outcome, and we think we can, you know, through some sale count data, some income approach, get the High House result down. Okay. Thank you.

Speaker Change: Okay, and then are there any other multi-year tax reassessments in the larger markets that are going to be coming up in the second half of 2024?

Unknown Executive: No, that's the one. So, Charlotte, Mecklenburg County, was last year. Nashville, last year as well. So, those are the three with kind of odd tax situations, but we're dealing with Raleigh now. I think we're pleasantly surprised with Six Forks' outcome, and we think we can, you know, through some sale comp data, some income approach, get the high house results.

Speaker Change: No, that's the one. So, Charlotte, Mecklenburg County was last year. Nashville, last year as well. So, those are the three with kind of odd tax situations, but we're dealing with Raleigh now. I think we're pleasantly surprised with Six Forks' outcome, and we think we can...

Speaker Change: You know, through some sale comp data, some income approach, get the high house result down.

Unknown Executive: Okay, thank you. And then, can you guys provide an update on the sales process with Stone Creek and Houston? Should we still expect it to close by the four-year end of 2024?

Kyle Katorincek: And then did you guys provide an update on the sales process with Stone Creek and Houston? Should we still expect the close to four-year and 24? Yeah. We were still marketing it and negotiating with a couple of different buyers to have offers, you know, attractive offers that we think we can execute on and believe we can transact before year. Okay.

Speaker Change: Okay, thank you. And then, can you guys provide an update on the sales process with Stone Creek and Houston? Should we still expect it to close before year-end 24?

Unknown Executive: Yeah, we were still marketing it and negotiating with a couple of different buyers. We do have offers, you know, attractive offers that we think we can execute on and, you know, believe we can transact before year end.

Speaker Change: Yeah, we were still marketing it and negotiating with a couple of different buyers, do have offers, you know, attractive offers that we think we can execute on and, you know, believe we can transact before year end.

Kyle Felice Katorincek: Okay, sounds good. Thanks, guys. I appreciate it.

Omotayo Okusanya: Ok, thanks guys, appreciate it, you both. And your next question comes from the line of Omotayo, Akizana from Deutsche Bank; your line is open. Yes, good morning everyone. Just in terms of the refinancing of the debt, could you talk about any fees or prepayments you may have to do with now as a pretend to kind of refinancing these assets, if that exists?

Speaker Change: Okay, sounds good. Thanks, guys. Appreciate it. You bet.

Omotayo Tejumade Okusanya: And your next question comes from the line of Omotayo Okusanya from Deutsche Bank. Your line is open.

Speaker Change: And your next question comes from the line of Omotayo Okusanya from Deutsche Bank. Your line is open.

Matthew Ryan McGraner: Yes, good morning everyone. Just in terms of the refinancing of the debt, one, could you talk about any fees or prepayments you may have to do with now as it relates to the kind of refinancing of these assets, if that exists? And then second of all, the ongoing process to refinance. I know sometimes with HUD and GSE debt, it can take a while, there's a lot of paperwork, it can be very administrative. Just kind of talk us through a little bit about how easy that process will be to kind of get it done.

Omotayo Tejumade Okusanya: Yes, good morning everyone, just in terms of the refinancing of the debt.

Omotayo Tejumade Okusanya: One, could you talk about any fees or prepayments you may have to deal with now as it pertains to kind of refinancing?

Matthew McGraner: And then, second of all, the ongoing process to refinance. I know sometimes with HUD and GSE that it can take a while; there's a lot of paperwork, it can be very administrative. Just going to talk us through a little bit about how easy that process will be to kind of get it done. Yeah, hey Teo, it's Matt. So the fees, because we're sticking with in our, you know, the Freddie Mac currently has, I think, all the debt on the portfolio, it's really considered a modification versus a complete refinancing for accounting purposes. There's going to be some breakage costs, but they're negligible, you know, 10, 15 million bucks that can be amortized over the life of the seven years.

Speaker Change: these assets, if that exists. And then second of all, the ongoing process to refinance. I know sometimes with HUD and GFC that it can take a while. There's a lot of paperwork. It can be very administrative. Just kind of talk us through a little bit about how easy that process will be.

Matthew Ryan McGraner: Yeah, hey, Teo, it's Matt. So the fees, because we're sticking with in our, you know, Freddie Mac currently has, I think, all the debt on the portfolio. It's really considered a modification versus a complete refinancing for accounting purposes. There are going to be some breakage costs, but they're negligible, you know, 10, 15 million bucks that can be amortized over the life of the seven years. So that's that.

Speaker Change: to kind of get it done.

Speaker Change: Yeah, hey Teo, it's Matt.

Speaker Change: So, the fees, because we're sticking with, you know, Freddie Mac currently has, I think, all the debt on the portfolio, it's really considered...

Matthew Ryan McGraner: A modification versus a complete refinancing for accounting purposes. There's going to be some breakage costs, but they're negligible. You know, 10, 15 million bucks that can be amortized over the life of the seven years. So that's.

Matthew McGraner: So that's that, and then the, you know, the execution on the Freddie side with JP Morgan. You know, JP Morgan's a current lender, and then Freddie Mac obviously is, we're a sponsor with Freddie and have refinanced and financed with them, I think, over $6 billion in history of the company. So we're in a very good cadence with them. We have signed applications; we, you know, will be working through thirds over the next 30 days, third parties, and would like to, and believe we can't close by the end of the third quarter on the first tranche, and work concurrently while we're doing the first tranche, work concurrently on the second tranche, and then close out a month later.

Matthew Ryan McGraner: And then the, you know, the execution on the Freddie side with J.P. Morgan, you know, J.P. Morgan's a current lender. And then Freddie Mac, obviously, we're a select sponsor with Freddie and have refinanced and financed with them for over $6 billion in the history of the company. So we're in a very good pace with them. We have signed applications. We, you know, we'll be working through third parties over the next 30 days, third parties, and would like to, and believe we can close by the end of the third quarter on the first tranche and work concurrently, while we're doing the first tranche, work concurrently on the second tranche, and then close out a month later. And so we expect this to, you know, be pretty routine for us and, again, pretty excited about it.

Matthew Ryan McGraner: That's that. And then the execution on the Freddie side with J.P. Morgan. J.P. Morgan's a current lender, and then Freddie Mac obviously is. We're a sponsor with Freddie and have refinanced and financed with them, I think, over $6 billion in the history of the company.

Matthew Ryan McGraner: So, we're in a very good cadence with them, we've signed applications, we'll be working through thirds over the next 30 days, third parties.

Matthew Ryan McGraner: and would like to, and believe we can, close by the end of the third quarter on the first tranche and work concurrently, while we're doing the first tranche, work concurrently on the second tranche and then close out a month later.

Omotayo Okusanya: And so we expect this to, you know, to be pretty routine for us, and again, pretty excited about it. That's helpful.

Matthew Ryan McGraner: And so we expect this to, you know, to be pretty routine for us and again, pretty excited about it.

Matthew Ryan McGraner: That's helpful. And then the same-store revenue guidance, sorry, same-store revenue in the second quarter, again, it seems like occupancy was somewhat flattish year over year. Rents, again, were kind of down a little bit, but your same-store revenue numbers, I think for the quarter you were up a little bit. Just curious, again, is that ancillary income doing better? Is that bad debt doing better? Could you talk a little bit about that and its potential implications for the rest of the year?

Omotayo Okusanya: And then the same store revenue guidance. Oh, sorry, same store revenue in the second quarter, again, the same stack occupancy was somewhat flat this year over year. Rents again, we're kind of down a little bit, but the same store revenue numbers, I think the guy, you know, for the quarter, you were up, you know, you were up a little bit.

Speaker Change: That's helpful. And then the same store revenue guidance.

Speaker Change: Oh sorry, same store revenue in second quarter. Again, it seems like occupancy was somewhat flattish year-over-year, rents again were kind of down a little bit, but your same store revenue numbers...

Matthew McGraner: Just curious, again, is that ancillary income doing better? Is that bad debt doing better? Could you talk a little bit through that and potential implications for the rest of the year? Yeah, you can give me the specifics, but I think a lot of it is bad debt, and as we go forward the second half of the year, we're underwriting a GPR reduction of roughly $2 million, but also lower vacancy loss of about $300,000, and then better bad debt of upwards of $800,000, and I think that's what drove the income total revenue for the first half of the year.

Speaker Change: I think for the quarter you were up a little bit, just curious, is that ancillary income doing better, is that bad debt doing better, could you talk a little bit through that and potential implications for the rest of the year?

Unknown Executive: Yeah, Bonner, you can give me the specifics, but I think a lot of it is bad debt, and as we go forward, the second half of the year, we were underwriting a GPR reduction of roughly $2 million, but also a lower vacancy loss of about $300,000, and then better bad debt of upwards of $800,000, and I think that's what drove the total revenue for the first half. Yeah, and I think one of the things that might get lost in translation here, so, you know, we report 630 physical occupancy in 94.1 for the Samesnore pool.

Speaker Change: Yeah, Bonner, you can give me the specifics, but I think a lot of it is bad debt. And as we go forward, the second half of the year, we were underwriting a GPR reduction of roughly $2 million.

Bonner McDermett: But also lower vacancy loss of about $300,000 and then better bad debt of upwards of $800,000. And I think that's what drove the income total revenue for the first half of the bond.

Matthew McGraner: Yeah, and I think one of the things that might get lost in translation here. So, you know, we report 630 visible occupancy in 941 for the same sort of pool. The full quarter effective occupancy, financial occupancy was 949. We carried pretty strong occupancy into the quarter, and the average occupancy throughout was higher, so overall, you know, we had to pick up an occupancy. We also have, you know, our bad debt is down about 1.7% year every year, so we're pleasantly surprised there. I think we've, you know, done well to work through kind of the fiction activity overhang from COVID, and so the quarter, we did 1.9% growth in revenue.

Speaker Change: Yeah, and I think one of the things that might get lost in translation here, so...

Unknown Executive: The full quarter effective occupancy, financial occupancy, was 94.9. We carried pretty strong occupancy into the quarter, and the, you know, average occupancy throughout was higher, so overall, you know, we had a pickup in occupancy. We also have, you know, our bad debt is down about 1.7% year over year, so we're pleasantly surprised there. I think we've done well to work through kind of the eviction activity overhang from COVID, and so in the quarter, we did 1.9% growth in revenue. A lot of that is in, you know. I think a pickup in occupancy and bad debt. Thank you.

Speaker Change: You know, we report 630 physical occupancy in 94.1 for the same store pool. The full quarter effective occupancy, financial occupancy, was 94.9. We carried pretty strong occupancy into the quarter, and the average occupancy throughout was higher. So, overall, you know, we had a pickup in occupancy. We also have...

Speaker Change: Our bad data is down about 1.7% year-over-year, so we're pleasantly surprised there.

Speaker Change: You know, done well to work through kind of the, you know, the eviction activity overhang from from COVID. And so the, you know, quarter, we did 1.9% growth in revenue. A lot of that is in, you know, I think a pickup in occupancy and bad debt.

Matthew McGraner: A lot of that is in, you know, I think I pick up an occupancy and bad debt.

Unknown Executive: Thank you. And once again, if you do have a question, you can press star 1 on your telephone keypad. Again, if you do have a question, please press star 1. Thank you.

Operator: And once again, if you do have a question, you can press star one on your telephone keypad. Again, if you do have a question, please press star one. Thank you. If there are no further questions, I'll turn the floor back over to the management team.

Speaker Change: Thank you.

Speaker Change: And once again, if you do have a question, you can press star 1 on your telephone keypad. Again, if you do have a question, please press star 1.

Unknown Executive: With no further questions, I'll turn the floor back over to the management team. Yeah, thank you. Appreciate everyone's time this morning, and we'll talk again next quarter. Thank you.

Speaker Change: Thank you. With no further questions, I'll turn the floor back over to the management team.

Brian Dale Mitts: Yeah, I appreciate everyone's time this morning, and we'll talk again next quarter. Thank you.

Speaker Change: I appreciate everyone's time this morning and we'll talk again next quarter. Thank you.

Operator: Thank you. This does conclude today's conference call. You may now disconnect. Have a great day.

Unknown Executive: This does conclude today's conference call. You may now disconnect. Have a great day.

Speaker Change: Thank you. This does conclude today's conference call. You may now disconnect. Have a great day.

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