Q4 2025 NexPoint Residential Trust Inc Earnings Call

February 24, 2026

Operator: Hello, and thank you for standing by. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the NexPoint Residential Trust Q4 2025 Earnings Call. 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 that time, simply press Star, then the number one on your telephone keypad. I would now like to turn the call over to Kristen Griffith, Investor Relations. Kristen, please go ahead.

Speaker #2: All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question during that time, simply press star then the number 1 on your telephone keypad.

Speaker #2: I would now like to turn the call over to Kristen Griffith, Investor Relations. Kristen, please go ahead. Thank you. Good day, everyone, and welcome to NexPoint Residential Trust conference call to review the company's results for the fourth

Operator: Thank you. Good day, everyone, and welcome to NexPoint Residential Trust Conference Call to review the company's results for Q4 ended 31 December 2025. On the call today are Paul Richards, Executive Vice President and Chief Financial Officer, Matt McGraner, Executive Vice President and Chief Investment Officer, and Bonner McDermott, Vice President, Asset and Investment Management. As a reminder, this call is being webcast 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.

Kristen Griffith: Thank you. Good day, everyone, and welcome to NexPoint Residential Trust Conference Call to review the company's results for Q4 ended 31 December 2025. On the call today are Paul Richards, Executive Vice President and Chief Financial Officer, Matt McGraner, Executive Vice President and Chief Investment Officer, and Bonner McDermott, Vice President, Asset and Investment Management. As a reminder, this call is being webcast 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.

Speaker #1: A quarter ended December 31st , 2025 . On the call today are Paul Richards Executive Vice President and Chief Financial Officer , Matthew McGraner executive vice president and chief investment officer .

Speaker #1: Officer . And McDermott , vice president , asset and investment Management . As a reminder , this call is being webcast due to company's website at 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 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 .

Operator: 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 statement. 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. I would now like to turn the call over to Paul Richards. Please go ahead, Paul.

Kristen Griffith: 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 statement. 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. I would now like to turn the call over to Paul Richards. Please go ahead, Paul.

Speaker #1: For more , complete discussion of risk and other factors that could affect any forward looking statements . The statements made during this conference call speak only as of today's date and except as required by law , and SRT does not undertake any obligation to publicly update or revise any forward looking statements .

Speaker #1: 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 But now , let's turn the call over to Paul Richards .

Speaker #1: Please go ahead . Paul .

Speaker #2: Thanks , Kristen , and welcome , everyone . Joining us this morning . We appreciate your time . I'll kick off the call and cover our Q4 and full year results and highlights .

Paul Richards: Thanks, Kristen. Welcome everyone joining us this morning. We appreciate your time. I'll kick off the call, cover our Q4 and full year results and highlights, update our NAV calculation, provide initial 2026 guidance. I'll turn it over to Matt to discuss specifics on the leasing environment and metrics driving our performance and guidance and details on the portfolio. Results for Q4 are as follows: Net loss for Q4 was a loss of $10.3 million, or $0.41 per diluted share on total revenue of $62.1 million, as compared to a net loss of $26.9 million or $1.06 per diluted share in the same period in 2024 on total revenue of $63.8 million.

Speaker #2: Update our Nav calculation and then provide initial 2026 guidance . I'll then turn it over to Matt to discuss specifics on the leasing environment and metrics driving our performance and guidance , and details on the portfolio results for Q4 are as follows .

Speaker #2: Net loss for the fourth quarter was a loss of 10.3 million , or $0.41 per diluted share , on total revenue of 62.1 million , as compared to a net loss of 26.9 million , or $1.06 per diluted share , in the same period in 2024 .

Speaker #2: On total revenue of 63.8 million for the fourth quarter , NOI was 37.1 million on 35 properties , compared to 38.9 million on 35 properties for the fourth quarter of 2020 , for a 4.7% decrease in NOI .

Paul Richards: For Q4, NOI was $37.1 million on 35 properties, compared to $38.9 million on 35 properties for Q4 2024, a 4.7% decrease in NOI. For Q4, same-store rental income decreased 2.8%, and same-store occupancy closed at 92.7%. This, coupled with an increase in same-store expenses of 1.1%, led to a decrease in same-store NOI of 4.8% as compared to Q4 2024. We reported Q4 Core FFO of $16.5 million, or $0.65 per diluted share, compared to $0.68 per diluted share in Q4 2024.

Speaker #2: For the fourth quarter . Same store rental income decreased 2.8% and same store occupancy closed at 92.7% . This , coupled with an increase in same store expenses of 1.1% , led to a decrease in same store NOI of 4.8% as compared to Q4 2020 .

Speaker #2: Four . We reported Q4 core FFO of 16.5 million , or $0.65 per diluted share , compared to $0.68 per diluted share in Q4 of 24 .

Speaker #2: During 2025 , NXT repurchased 223,109 shares for a weighted average price of $34.29 per share , which is approximately 29% discount to the midpoint of our Q4 25 Nav to be discussed here shortly .

Paul Richards: During 2025, NXRT repurchased 223,109 shares for a weighted average price of $34.29 per share, which is approximately 29% discount to the midpoint of our Q4 2025 NAV, to be discussed here shortly. We continue to execute our value add business plan by completing 388 full and partial renovations during the quarter, and leased 275 renovated units, achieving an average monthly rent premium of $74 and a 22.2% ROI.

Speaker #2: We continue to execute our value add business plan by completing 388 full and partial renovations during the quarter , and leased 275 renovated units , achieving an average monthly rent premium of $74 and a 22.2% ROI since inception , and is completed .

Paul Richards: Since inception, NXRT has completed installation of 9,866 full and partial upgrades, 4,979 kitchen and laundry appliances, and 11,199 tech packages, resulting in $158, $50, and $43 average monthly rental increases per unit, and 20.8%, 63.7%, and 37.2% ROI, respectively. Results for the full year 2025 are as follows: Net loss for the year ended 31 December was $32 million, or a loss of $1.26 per diluted share, which included a $95.8 million of depreciation amortization expense.

Speaker #2: Completed installation of 9866 full and partial upgrades , 4979 kitchen and laundry appliances , and 11,199 tech packages , resulting in 158 , 50 and $43 average monthly rental increases per unit and 20.8% , 63.7% and 37.2% ROI , respectively Results for the full year 2025 are as follows .

Speaker #2: Net loss for the year ended December 31st was $32 million , or a loss of $1.26 $0.26 per diluted share , which included a $95.8 million of depreciation , amortization expense .

Speaker #2: This compared to net income of 1.1 million , or income of $0.04 per diluted share , for the full year of 24 , which included a gain on sale of real estate of 54.2 million and a $97.8 million of depreciation and amortization expense .

Paul Richards: This compared to net income of $1.1 million, or income of $0.04 per diluted share for the full year of 2024, which included a gain on sale of real estate of $54.2 million and $97.8 million of depreciation and amortization expense. As a quick reminder, the company sold our two remaining Houston assets, as well as Radbourne Lake and Charlotte in 2024. For the year, NOI was $151.7 million on 35 properties, as compared to $157 million on 35 properties for the same period in 2024, or a decrease of 3.4%. For the year, same-store rental income decreased 1.3%, and same-store occupancy closed at 92.7%.

Speaker #2: As a quick reminder, the company sold our two remaining Houston assets, as well as Radbourne Lake in Charlotte, in '24 for the year.

Speaker #2: NOI was $151.7 million on 35 properties, as compared to $157 million on 35 properties for the same period in 2024, or a decrease of 3.4% for the year.

Speaker #2: Same store rental income decreased 1.3% and same store occupancy closed at 92.7% . This , coupled with a slight increase in same store expenses of 0.1% , led to a decrease in same store NOI of 1.6% as compared to the full year in 24 .

Paul Richards: This, coupled with a slight increase in same-store expenses of 0.1%, led to a decrease in same-store NOI of 1.6% as compared to the full year in 2024. We reported Core FFO in 2025 of $71.3 million, or $2.79 per diluted share, compared to $2.79 per diluted share for 2024. Since inception of the business in 2015, NXRT has generated 8.54% compounded annual growth rate in our Core FFO. Moving to the NAV per share.

Speaker #2: We reported core FFO in 2025 of $71.3 million, or $2.79 per diluted share, compared to $2.79 per diluted share for 2024.

Speaker #2: Since inception of the business in 2015 . Nsx-t has generated 8.54% compounded annual growth rate in our core FFO Moving to the Nav per share based on our current estimate of cap rates in our markets , unchanged at 5.25% to 5.75% , and our 2026 NOI guidance , we are reporting a Nav per share range as follows $41.43 on the low end , $55.72 on the high end with a $48.57 , $48.57 at the midpoint .

Paul Richards: Based on our current estimate of cap rates in our markets, unchanged at 5.25% to 5.75%, and our 2026 NOI guidance, we are reporting a NAV per share range as follows: $41.43 on the low end, $55.72 on the high end, with a $48.57 at the midpoint. Next, our dividend update. For Q4, we paid a dividend of $0.53 per share on 31 December. Since inception, we have increased our dividend 157.3%. For 2025, our dividend was 1.35x covered by Core FFO, with a payout ratio of 73.8% of Core FFO. Now, our capital markets, balance sheet, leverage, and liquidity.

Speaker #2: Next , our dividend update for the fourth quarter . We paid a dividend of $0.53 per share on December 31st . Since inception , we have increased our dividend 157.3% for 2025 .

Speaker #2: Our dividend was 1.35 times covered by core FFO , with a payout ratio of 73.8% of core FFO . Now , our capital markets balance sheet leverage and liquidity on July 11th , 2025 , the company entered into a $200 million revolving credit facility with JPMorgan Chase Bank and the Lenders party thereto from time to time , the credit facility may be increased by up to an additional $200 million .

Paul Richards: On 11 July 2025, the company entered into a $200 million revolving credit facility with JPMorgan Chase Bank and the lenders parties thereto from time to time. The credit facility may be increased by up to an additional $200 million if the lenders agree to increase their commitments. The new facility improves pricing by 15 basis points across all leverage tiers to term SOFR plus 150 to 225 basis points. The credit facility will mature on 30 July 2028, unless the company exercises its option to extend for a 1-year term. NXRT has $13.7 million of unrestricted cash and $108 million of available undrawn capacity on our unsecured corporate credit facility, giving the company $121.7 million of available liquidity as we head into 2026.

Speaker #2: If the lenders agree to increase their commitments . The new facility improves pricing by 15 basis points across all leverage tiers to term Sofr plus 150 to 225 basis points .

Speaker #2: The credit facility will mature on July 30th , 2028 unless the company exercises its option to extend for a one year term and has $13.7 million of unrestricted cash and 108 million of available undrawn capacity on our unsecured corporate credit facility , giving the company 121.7 million of available liquidity .

Speaker #2: As we head into 2026 , we have no scheduled debt maturities until 2028 . Over time , we will look to reduce leverage , credit facility leverage , in particular through a disposition and recycling of long held , lower growth assets where we have the ability to harvest gains and put capital back in to work into more productive strategies and investments .

Paul Richards: We have no scheduled debt maturities until 2028. Over time, we will look to reduce leverage, credit facility leverage in particular, through a disposition and recycling of long-held, lower-growth assets, where we have the ability to harvest gains and put capital back in to work into more productive strategies and investments. As of 31 December 2025, we had total indebtedness of $1.6 billion at an adjusted weighted average interest rate at 3.28%. Interest rate swap agreements effectively fixed the interest rate on $0.9 billion, or 62% of our $1.5 billion of floating rate mortgage debt outstanding.

Speaker #2: As of December 31st , 2025 , we had total indebtedness of $1.6 billion at an adjusted weighted average interest rate at 3.28% . Interest rate swap agreements effectively fixed interest rate on 0.9 billion , or 62% of our 1.5 billion of floating rate mortgage debt outstanding .

Speaker #2: As we have done historically , we will continue to evaluate the credit markets for opportunities to hedge or restructure our debt to best position our assets and the portfolio for future growth , while maintaining the highly liquid , low friction optionality afforded to us through the use of floating rate agency mortgage financing arrangements Full year 2026 guidance for 2026 .

Paul Richards: As we have done historically, we will continue to evaluate the credit markets for opportunities to hedge or restructure our debt to best positions our assets and the portfolio for future growth, while maintaining the highly liquid, low-friction optionality afforded to us through the use of floating-rate agency mortgage financing arrangements. Full year 2026 guidance. For 2026, we are issuing the guidance as follows: Rental income, on the low end, 0%, with a midpoint of 0.9% and a high end of 1.9%. Total revenue, low end of 0.1%, with a midpoint of 1.1% and a high end of 2%. Total expenses, low end of 4.2%, midpoint 3.5%, high end 2.8%.

Speaker #2: We are issuing the guidance as follows: rental income on the low end, 0%, with a midpoint of 0.9%, and the high end of 1.9%.

Speaker #2: Total revenue: low end of 0.1%, with a midpoint of 1.1%, and a high end of 2%. Total expenses: low end of 4.2%.

Speaker #2: Midpoint 3.5% . High end 2.8% . Same store NOI low end negative 2.5% . Midpoint -0.5% and the high end of 1.5% . Earnings per diluted share , low end negative $1.54 .

Paul Richards: Same-store NOI, low end negative 2.5%, midpoint negative 0.5%, and the high end of 1.5%. Earnings per diluted share, low end negative $1.54, midpoint negative $1.40, and the high end negative $1.26. Lastly, Core FFO per diluted share, low end $2.42, midpoint $2.57, and at the high end, $2.71. Matt will go into detail on our same-store operating assumptions with his prepared remarks, and the largest driver from our 2025 actuals to 2026 midpoint guidance is interest expense. Again, Matt will provide details on our thoughts regarding upside on the operational front and our same-store operating assumptions. With that, I'll turn it over to Matt for commentary on the portfolio.

Speaker #2: Midpoint -$1.40 . And the high end -$1.26 . And lastly , core FFO per diluted share , low end $2.42 . Midpoint $2.57 .

Speaker #2: And at the high end $2.71 . Matt will go into detail on our same store operating assumptions with his prepared remarks . And the largest driver from our 25 actuals to 26 midpoint guidance is interest expense .

Speaker #2: And again , Matt will provide details on our thoughts regarding upside on the operational front and our same store operating assumptions . And with that , I'll turn it over to Matt for commentary on the portfolio .

Speaker #2: Thank you Paul . Let me start by diving a bit deeper into our fourth quarter . Same store operational results , same store average effective rents closed the year at $1,489 per unit per month , down ten basis points year over year Six of our ten same store markets generated positive year over year growth in effective rents , with Tampa leading the way at 3.1% , followed by Las Vegas , South Florida and Charlotte at 2.1% .

Matt McGraner: Thank you, Paul. Let me start by diving a bit deeper into our Q4 same-store operational results. Same-store average effective rents closed the year at $1,489 per unit per month, down 10 basis points year-over-year. Six of our 10 same-store markets generated positive year-over-year growth in effective rents, with Tampa leading the way at 3.1%, followed by Las Vegas, South Florida, and Charlotte at 2.1%, 1.6%, and 1.3% respectively. On the occupancy front, the same-store portfolio closed the year at 92.7%, down 195 basis points year-over-year. South Florida took the pole position at 94.5%, with Phoenix, Charlotte, then Raleigh rounding out the top four markets with at least 93% occupancy as of the year-end.

Speaker #2: 1.6% and 1.3% , respectively . On the occupancy front , the same store portfolio closed the year at 92.7% , down 195 basis points year over year .

Speaker #2: South Florida took the pole position at 94.5%, with Phoenix, Charlotte, then Raleigh rounding out the top four markets with at least 93% occupancy.

Speaker #2: As of the year end . We saw noteworthy occupancy improvement in Phoenix in particular , building to 94.5% as the team maintained heavy focus on defense to combat the heavy delivery of new new units .

Matt McGraner: We saw noteworthy occupancy improvement in Phoenix, in particular, building to 94.5% as the team maintained heavy focus on defense to combat the heavy delivery of new units over the past several quarters. Renewal conversions were 57.4% for the quarter and 54.25% for the full year, with 2026 retention starting off strong, with January over 50% and February month to date, it's 51.6%. March is projected to finish around 56%. Revenue for the year of 5 of our 10 same-store markets delivered positive revenue growth, with South Florida, Atlanta, and Raleigh each growing at least 1%. Tampa and Charlotte rounded out the growth markets.

Speaker #2: Over the past several quarters, renewal conversions were 57.4% for the quarter and 54.25% for the full year, with 2026 retention starting off strong, with January over 50% and February also above 50%.

Speaker #2: Month to date , it's 51.6% . March is projected to finish around 56% . Revenue for the year of five of our ten same store markets delivered positive revenue growth , with South Florida , Atlanta and Raleigh each growing at least 1% .

Speaker #2: Tampa and Charlotte rounded out the growth markets Bad debt continued to trend down , finishing the year at 80 basis points of GDP , a 42% improvement year over year , demonstrating both the health of our tenant demographic as well as the efficacy of the centralized screening techniques we have employed to strengthen our portfolio post Covid .

Matt McGraner: Bad debt continued to trend down, finishing the year at 80 basis points of GPR, a 42% improvement year-over-year, demonstrating both the health of our tenant demographic as well as the efficacy of the centralized screening techniques we have employed to strengthen our portfolio post-COVID. Tampa, Raleigh, and Atlanta saw particular improvements to bad debt, with each reducing losses by more than half the prior year total. Concession utilization has increased from 38 basis points as a percentage of gross potential rent in 2024, up to 69 basis points for the full year in 2025. The most noteworthy increase clearly seen within our Phoenix market at 1.4% of GPR, as our value-add assets were made to contend with the significant market level occupancy acquisition strategies for merchant builders throughout the year.

Speaker #2: Tampa , Raleigh and Atlanta saw particular improvements to bad debt , with each reducing losses by more than half the prior year . Total concession utilization has increased from 38 basis points as a percentage of gross potential rent in 2024 , up to 69 basis points for the full year 2025 .

Speaker #2: The most noteworthy increase clearly seen within our Phoenix market , at 1.4% of GDP . Our as our value add assets were made to contend with the significant market level occupancy acquisition , acquisition strategies for merchant builders throughout the year .

Speaker #2: Phoenix , Orlando , South Florida and Atlanta each saw a need for increased concessions , with 1.1% , 4.47% , 0.4 percent , and 0.36% increase in utilization , respectively .

Matt McGraner: Phoenix, Orlando, South Florida and Atlanta each saw a need for increased concessions, with 1.1%, 4.47%, 0.4%, and 0.36% increase in utilization respectively. Overall, same-store revenues were down 1% year-over-year. Turning to the expense side. With limited catalyst for revenue growth in 2025, the team paid particular attention to expense management, and we're pleased to report a full-year decline of 10 basis points to same-store operating expenses. Advances in AI and our strategic focus on its development to streamline workflows across both our resident and property staff experience enabled us to achieve a 3.7% year-over-year decrease in total payroll costs and an 80 basis point decline in office operations expense.

Speaker #2: Overall , same store revenues were down 1% year over year , and turning to the expense side with limited catalysts for revenue growth in 2025 , the team paid particular attention to expense management and were pleased to report a full year decline of ten basis points to same store operating expenses Advances in AI and our strategic focus on its development to streamline workflows across both our resident and property staff experience enabled us to achieve a 3.7% year over year decrease .

Speaker #2: In total payroll costs and an 80% 80 basis point decline in operating office operations expense . We see this trend continuing , and I'll have more detail later on this in my prepared remarks .

Matt McGraner: We see this trend continuing. I'll have more detail later on this in my prepared remarks. Thoughtful asset management, zero-based budgeting, and our sharp focus on turn management costs, turn cost management, and material contract negotiation kept the lid on repair and maintenance expense inflation growing by just 2.5% for the year. Other favorable results were realized through our real estate tax and insurance strategies, up 1.8% and down 12% for the year respectively. Our full year same-store NOI margin was a stable 60.8%, while our year-over-year same-store portfolio finished down 1.6%, as Paul mentioned. Notable same-store NOI growth markets for the year were South Florida, Charlotte, and Nashville, at 1.4%, 1%, and 90 basis points, respectively.

Speaker #2: Thoughtful asset management , zero based budgeting , and our sharp focus on turn management costs . Turn cost management and material contract negotiation kept a lid on repair and maintenance expense .

Speaker #2: Inflation grew by just 2.5% for the year. Other favorable results were realized through our real estate tax and insurance strategies, which were up 1.8% and down 12% for the year, respectively.

Speaker #2: Our full year same store NOI margin was a stable 60.8% , while our year over year same store portfolio finished down 1.6% . As Paul mentioned , notable same store NOI growth markets for the year were South Florida , Charlotte and Nashville .

Speaker #2: At 1.4% , 1% , and 90 basis points respectively . On December 11th , 2025 , NXT purchased Sedona at Lone Mountain in Las Vegas , Nevada for 73.25 million .

Matt McGraner: On 11 December 2025, NXRT purchased Sedona at Lone Mountain in Las Vegas, Nevada, for $73.25 million. Management identified an opportunistic high-growth acquisition in a long-term market, that the strategy involves deploying accretive value add capital to normalize economic occupancy and expand operating margins through targeted demand generation, interior and amenity enhancements, lifestyle upgrades, and disciplined execution, ultimately driving asset appreciation and outsized returns. Recent large-scale developments have driven significant expansion, job growth, and residential revitalization in North Las Vegas, which is now the Las Vegas Valley's most prominent industrial market. Over 15 million sq ft of industrial space is currently under construction or planned, supporting the creation of 8,000 new jobs in the market.

Speaker #2: Management identified an opportunistic high growth acquisition in a long term market . The strategy involves deploying accretive value added capital to normalize economic occupancy and expand operating margins through targeted demand generation , interior and amenity enhancements , lifestyle upgrades , and disciplined execution .

Speaker #2: Ultimately , driving asset appreciation and outsized returns Recent large scale developments have driven significant expansion , job growth , and residential revitalization in North Las Vegas , which is now the Las Vegas Valley's most prominent industrial market .

Speaker #2: Over 15,000,000 ft² of industrial space is currently under construction or planned, supporting the creation of 8,000 new jobs in the market. As a reminder, we intend to improve economic occupancy by approximately 900 basis points over four years, while upgrading 182 units and installing smart home technology throughout the community.

Matt McGraner: As a reminder, we intend to improve economic occupancy by approximately 900 basis points over four years, while upgrading 182 units and installing smart home technology throughout the community, driving a 7.2% NOI CAGR through 2029. Now turning to 2026 guidance. As Paul said, we are guiding between 2.5% decline and a 1.5% increase in same-store NOI growth for 2026, with the midpoint projecting a 50 basis points reduction year-over-year. Our 2026 guidance includes the following assumptions: A 90 basis point rental income growth at the midpoint, forecasting 93.4% to 94.1% financial occupancy, with peak occupancy modeled for Q3, with a more normal seasonal demand and performance expectation for the year.

Speaker #2: Driving a 7.2% NOI through 2029 . Now , turning to 2020 guidance , 2026 guidance . As Paul said , we are guiding between 2.5% decline and a 1.5% increase in same store NOI growth for 2026 .

Speaker #2: With the midpoint projecting a 50 basis point reduction year over year, our 2026 guidance includes the following assumptions: a 90 basis point rental income growth at the midpoint, forecasting 93.4% to 94.1%.

Speaker #2: Occupancy , with peak occupancy modeled for Q3 with a more normal seasonal demand and performance expectation for the year . A -30 basis point Earnout from lease trade outs and a gain to lease inversion in 2025 , a positive 1.2% market rent growth in 2025 , with roughly 40% realized this year , predominantly in the second half of the year .

Matt McGraner: A negative 30 basis point earn-out from lease trade outs and a gain to lease inversion in 25. A positive 1.2% market rent growth in 2025, with roughly 40% realized this year, predominantly in the second half of the year. A positive 40 basis point top-line growth attributable to ROI CapEx spending, as detailed further hereafter. Economic occupancy at 91.8% at the midpoint, 30 basis points lower vacancy costs at the midpoint, 93.7 versus 93.4 for the prior year. We're stabilizing bad debt at approximately 80 basis points, with a range of 70 basis points to 90 basis points, down more than 75% from peak pandemic-era payment behavior. Flattish concession utilization at 71 basis points to GPR, heavily weighted in the first half of the year.

Speaker #2: A positive 40 basis point top line growth attributable to ROI CapEx spending , as detailed further hereafter , flat economic occupancy at 91.8% at the midpoint , 30 basis points lower vacancy costs at the midpoint , 93.7 versus 93.4 for the prior year .

Speaker #2: We're stabilizing bad debt at approximately 80 basis points with a range of 70 basis points to 90 basis points , down more than 75% from peak pandemic era payment behavior and then flattish concession utilization at 7171 basis points to GDPR , heavily weighted in the first half of the year .

Speaker #2: We're assuming 1.1% total revenue growth at the midpoint , driven by modest rental income growth expectations . I just went over in mid-single digit other income growth .

Matt McGraner: We're assuming 1.1% total revenue growth at the midpoint, driven by modest rental income growth expectations I just went over, and mid-single-digit other income growth. Turning to expense guidance. We're assuming 6.4 controllable expense growth at the midpoint. 80% of this growth is attributable to bulk increase Wi-Fi contract costs that have a direct revenue offset. We're assuming down 1% R&M and turn cost growth, with turnover in interior R&M is expected to decrease $375,000 or 8.4% due to effective cost management and an increased volume of renovations in 2026. We're assuming 2% labor growth. The continuation of our rollout of AI technology and centralization of operations contribute to modest labor growth.

Speaker #2: Turning to expense guidance , we're assuming 6.4 controllable expense expense growth at the midpoint . 80% of this growth is attributable to bulk increase Wi-Fi contract costs that have a direct revenue offset .

Speaker #2: We're assuming down 1% . Rhnm in turn , cost growth with turnover and interior rooms expected to decrease 375,000 , or 8.4% due to effective cost management , effective cost management and an increased volume of renovations in 2026 .

Speaker #2: We're assuming 2% labor growth. The continuation of our rollout of AI technology in Central Asia and centralization of operations contribute to modest labor growth.

Speaker #2: We see optimism , optimism in outperforming our midpoint as we further implement Agentic AI strategies and maintenance . Potting across our markets , we're assuming a 7.4% growth in advertising and marketing expense , and just a ten basis point growth in a expense .

Matt McGraner: We see optimism in outperforming our midpoint as we further implement agentic AI strategies and maintenance potting across our markets. We're assuming a 7.4% growth in advertising and marketing ex-expense, just a 10 basis point growth in G&A expense. We're assuming total expense growth of 3.5% at the midpoint, which is a 4.5% increase in the utility expense line item, a 2.1% insurance premium reduction, assuming a 0% to 10% renewal on 1 April of this year. For that, our team, including Paul here, were recently meeting with the markets in both London and New York, we're optimistic we'll achieve another favorable outcome for the program with this 2026 renewal. On the real estate tax expense growth side, we're assuming a positive 4.4% growth.

Speaker #2: We're assuming total expense growth of 3.5% at the midpoint , which is a 4.5% increase in the utility expense line item , a 2.1% insurance premium reduction .

Speaker #2: Assuming a 0 to 10% renewal on April 1st of this year . For that , our team , including Paul here , were recently meeting with the markets in both London and New York .

Speaker #2: And we're optimistic we'll achieve another favorable outcome for the program. With this 2026 renewal on the real estate tax expense growth side, we're assuming a positive 4.4% growth.

Speaker #2: Real estate taxes make up 31% of the $3.9 million total expense increase at the midpoint, and we are expecting the band of real estate tax increases to be from 2% to 8% across the portfolio.

Matt McGraner: Real estate taxes make up 31% of the 3.9 total expense increase at the midpoint, and are expecting the band of real estate taxes to increase from 2% to 8% across the portfolio. Of course, we will protest and litigate outsized value assessments vigorously throughout the year. On the value add side, we continue to be an internal growth business at our core. To that end, our guidance includes the following assumptions regarding our value add programs, which remain aligned with our historical 15% to 20% ROI targets. We expect to accelerate value add CapEx deployment toward the back half of 2026 and into 2027, as our submarkets see net demand and occupancy pricing power improves for landlords.

Speaker #2: And of course , we will protest and litigate outsized value assessments vigorously throughout the year . On the value add side , we continue to be we continue to be an internal growth business at our core .

Speaker #2: And to that end, our guidance includes the following assumptions regarding our value-add programs, which remain aligned with historical 15% to 20% ROI targets.

Speaker #2: We expect to accelerate value , add CapEx deployment toward the back half of 2026 and into 2027 . As our submarkets , see net demand and occupancy pricing power improves for landlords .

Speaker #2: We're assuming approximately 300 full interior upgrades at an average cost of $16,500 per unit , generating a $240 average monthly premium . We're assuming approximately 400 partial interior upgrades at an average cost of $3,500 per unit , generating a $70 average monthly premium .

Matt McGraner: We're assuming approximately 300 full interior upgrades at an average cost of $16,500 per unit, generating a $240 average monthly premium. We're assuming approximately 400 partial interior upgrades at an average cost of $3,500 per unit, generating a $70 average monthly premium. These partial upgrades include varying bespoke additions such as new stainless steel appliances, hard surface countertops, updated tub enclosures, and private yards, among other aspects. These partial bespoke rehab initiatives are strategically tailored by property to drive rent growth, where we see opportunities among competing properties. Blended ROI expectations here are the low to mid-20s. If market conditions allow, we have identified another 1,500 bespoke upgrades across the portfolio with double-digit ROIs.

Speaker #2: These partial upgrades include varying , varying , bespoke additions such as new stainless steel appliances , hard surface countertops , updated tub enclosures , and private yards , among other aspects .

Speaker #2: These partial and bespoke rehab initiatives are strategically tailored by property to drive rent growth , where we see opportunities among competing properties , blended ROI expectations here are the low to mid 20s and if market conditions allow , we have identified another 1500 bespoke upgrades across the portfolio with Rois Finally , we also plan to install 680 washer dryer installs at an average cost of $1,200 per unit , generating a $54 month monthly average premium , or 54% return on investment .

Matt McGraner: Finally, we also plan to install 680 washer dryer installs at an average cost of $1,200 per unit, generating a $54 month, monthly average premium, or a 54% return on investment. Turning to summarize our outlook for the 2026 year. Basically, we like what we own. We believe affordable residential assets in well-located suburbs and the top job growth and net migration markets in the country will outpace demand over the near term. Our markets are business-friendly, with the continued and persistent tailwind of factors pointing towards Sun Belt growth. You name it, we have it. Taxes, weather, business climate, jobs, and investment in physical and digital infrastructure. Indeed, many signs for growth were already pointing to the Sun Belt, and we believe still are. Underpinning our guidance for the year is cautious optimism.

Speaker #2: Now , turning to summarize the our outlook for the 2026 year . Basically , we like what we own . We believe affordable residential assets and well-located suburbs , in the top job growth and net migration markets in the country will outpace demand over the near term .

Speaker #2: Our markets are business-friendly, with the continued and persistent tailwind of factors pointing towards Sunbelt growth. You name it, we have it.

Speaker #2: Taxes , weather , business , climate , jobs , investment and physical and digital infrastructure . Indeed , many signs for growth were already pointing to Sunbelt , and we believe still are in underpinning our guidance for the year is cautious optimism .

Speaker #2: We think the Sunbelt multifamily market is approaching , approaching its long awaited inflection point after absorbing the largest supply of waves since since the 1980s , completions with completions peaking at almost 700,000 units in 2024 , a 54% increase from 2021 .

Matt McGraner: We think the Sun Belt multifamily market is approaching its long-awaited inflection point. After absorbing the largest supply of waves since the 1980s, completions with completions peaking at almost 700,000 units in 2024, a 54% increase from 2021 baseline completions. We are optimistic that new lease growth is set to turn positive across most Sun Belt markets in the second half of this year, with sharp acceleration into 2027. Reasons for our belief include persistent structural demand. The cost to own a home is three times more than to rent an apartment in our markets. A 60% decline in new market rate deliveries from the peak, and construction starts running approximately 70% below their 2022 peak, locking in a multi-year supply trough.

Speaker #2: Baseline completions. We are optimistic that new lease growth is set to turn positive across most Sunbelt markets in the second half of this year, with sharp acceleration into 2027.

Speaker #2: Reasons for our belief include persistent structural demand , the cost to own a home is three times more than the rent an apartment in our markets .

Speaker #2: A 60% decline in new market rate deliveries from the peak in construction starts running approximately 7,070% below their 2022 peak , locking in a multiyear supply trough waiting each indexed market by unit exposure .

Matt McGraner: Weighing each NXRT market by unit exposure, the portfolio level to jobs new construction unit ratio bottomed at approximately 1.5 jobs to 1 unit of new delivery in mid-2025. Our entire portfolio is projected across a back above the historically significant ratio of 4 jobs to 1 unit by Q1 of 2027. The recovery is highly asymmetric. Roughly 35% of our portfolio, South Florida, Las Vegas, and Atlanta, is already at or approaching equilibrium, while 44%, including Phoenix and DFW, won't reach that threshold until 2026. For example, South Florida, or 21% of our NOI, has an adjusted BLS non-farm payroll divided by the CoStar and Yardi delivery ratio of 7.5 jobs to 1 unit, well above the equilibrium. Atlanta, or 12.5% of NOI, just crossed back over 5 to 1.

Speaker #2: The portfolio level to jobs , new construction unit ratio bottomed at approximately one and a half jobs to one unit of new delivery in mid 2025 , and our entire portfolio is projected to cross back above the historically significant ratio of four jobs to one unit by Q1 of 2027 .

Speaker #2: However , the recovery is highly asymmetric . Roughly 35% of our portfolio South Florida , Las Vegas and Atlanta is already at or approaching equilibrium .

Speaker #2: While 44% , including Phoenix and DFW won't reach that threshold until 2026 . But for example , South Florida or 21% of our NOI has an adjusted BLS nonfarm payroll .

Speaker #2: Divided by the CoStar and Yardi delivery ratio of seven and a half jobs to one unit, well above the equilibrium Atlanta, or 12.5% of NOI just crossed back over 5 to 1.

Speaker #2: And given that supply is now relatively muted over the near term , the key variable is whether Sunbelt job growth and net migration can maintain its recent pace .

Matt McGraner: Given that supply is now relatively muted over the near term, the key variable is whether Sun Belt job growth and net migration can maintain its recent pace. If it can, the supply cliff now baked into every NXRT market's pipeline creates the conditions for a sharp and synchronized recovery in the second half of 2026. Another reason for optimism is the demographic profile of our renter population. We do believe in AI, and that it will have a near-term chilling effect over entry-level, white-collar jobs. Today, the NXRT average renter is largely blue-collar, 38 years old, with a household income of $90,000 per year. Not really the AI bullseye. Furthermore, advances in health and wellness are adding longevity to the population, creating somewhat of a demographic backstop to demand.

Speaker #2: If it can, the supply cliff, now baked into every indexed market's pipeline, creates the conditions for sharp and synchronized recovery in the second half of 2026.

Speaker #2: Another reason for optimism is the demographic profile of our population . We do believe in AI and that it will have a near-term chilling effect over entry level white collar jobs .

Speaker #2: But today, the XRT average renter is largely blue collar, 38 years old, with a household income of $90,000 per year. Not really.

Speaker #2: The AI bullseye. Furthermore, advances in health and wellness are adding longevity to the population, creating somewhat of a demographic backstop to demand.

Speaker #2: The 65 plus percent population , 65 plus population , is growing at 3 to 5% across indexed markets , and Harvard JKS projects .

Matt McGraner: The 65-plus population is growing at 3% to 5% across NXRT markets, and Harvard JCHS projects the senior renter population to double from 5.8 million households to 12.2 million households by 2030. While obviously a senior housing tailwind, we're starting to see sizable signs of this trend in our own rent rolls. In closing, and though the last few years have indeed been difficult, we're optimistic that new lease inflection will happen in the Sun Belt this year for the vast majority of our portfolio. In the meantime, we will continue to do all that we can to utilize technology to become more efficient, drive value-add programs, and ultimately drive value for our tenants and our shareholders. That's all I have for prepared remarks.

Speaker #2: The senior renter population is expected to double from 5.8 million households to 12.2 million households by 2030. While this is obviously a senior housing tailwind, we are starting to see sizable signs of this trend in our own roles.

Speaker #2: So in closing and through the last few , and though the last few years have indeed been difficult , we're optimistic that new lease inflection will happen in the Sunbelt this year for the vast majority of our portfolio .

Speaker #2: In the meantime , we will continue to do all that we can to utilize technology to become more efficient , drive value , and programs , and ultimately drive value for our tenants and our shareholders .

Speaker #2: That's all I have for prepared remarks . Thanks to our teams here . At Nextpoint and for continuing to execute . And with that , we'll turn the call over to the operator for questions .

Matt McGraner: Thanks to our teams here at NexPoint and BH for continuing to execute. With that, we'll turn the call over to the operator for questions.

Speaker #3: At this time, if you would like to ask a question, please press star, then the number one on your telephone keypad.

Operator: At this time, if you would like to ask a question, press star, then the number one on your telephone keypad. To withdraw your question, simply press star one again. We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Omotayo Okusanya with Deutsche Bank. Please go ahead.

Speaker #3: To withdraw your question, simply press star one. Again, we'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Mateo Okusanya with Deutsche Bank.

Speaker #3: Please go ahead

David Brown: Yes. Good morning, everyone. First question around the refurbishments and remodeling. I think you mentioned that in 2026 you're going to do about 400 of those, and then you do, like, 600 washer-dryer installations. That's like a 1,000 altogether, versus I think in 2025 you did about 1,800 total volume. Just kind of curious why you kind of have the drop, especially as you're talking about, you know, they could still do another 1,500, you know, if market conditions allow.

Speaker #4: Yes. Good morning, everyone. First question around the refurbishments and remodeling. I think you mentioned that in 2026, you're going to do about 400 of those.

Omotayo Okusanya: Yes. Good morning, everyone. First question around the refurbishments and remodeling. I think you mentioned that in 2026 you're going to do about 400 of those, and then you do, like, 600 washer-dryer installations. That's like a 1,000 altogether, versus I think in 2025 you did about 1,800 total volume. Just kind of curious why you kind of have the drop, especially as you're talking about, you know, they could still do another 1,500, you know, if market conditions allow.

Speaker #4: And then you do like 600 washer dryer installations . So that's like a thousand altogether versus I think in 2025 you did about 1800 total volume , just kind of curious why you kind of have the drop , especially as you're talking about , you know , you could still do another 1500 , you know , if , if market conditions allow

Speaker #2: Yeah . Hey , it's Matt . Good morning . I maybe I didn't come across or you misheard the categories . So the plan is to do 300 full upgrades across the portfolio and additional 400 partials .

Matt McGraner: Yeah, Mateo, hey, it's Matt. Good morning. Maybe I didn't come across or you misheard the categories. The plan is to do 300 full upgrades across the portfolio, an additional 400 partials.

Speaker #2: And then roughly . Yeah . And so I think that was the delta . But we're ending up basically at the same place , about units .

David Brown: Gotcha.

Omotayo Okusanya: Gotcha.

Matt McGraner: Roughly. Yeah, that, I think that was the delta. We're ending up basically at the same place, about 1,700 units. As, you know, if we're, you know, if what we believe will happen happens, then we'll be able to drive those incremental bespoke upgrades that I mentioned, that can reach up to 1,500 additional units.

Speaker #2: And then as you know , if we're , you know , if what we believe will happen happens , then we'll be able to drive those , those incremental bespoke upgrades that I mentioned that can reach up to 1500 additional units

Speaker #4: Okay . That's awesome . Unhelpful . And then in regards to the interest rate swaps , again , a few years ago , you guys kind of successfully negotiated some of these swaps and kind of came out ahead with some lower rates .

David Brown: Okay, that's awesome and helpful. In regards to the interest rate swaps, again, a few years ago, you guys kind of successfully negotiated some of these swaps and kind of came out ahead with some lower rates. Just kind of curious, as you kind of think about 2026, how you kind of see that playing out this time around, especially when, again, you do kind of see, you know, rates have been coming down, at least to start the year?

Omotayo Okusanya: Okay, that's awesome and helpful. In regards to the interest rate swaps, again, a few years ago, you guys kind of successfully negotiated some of these swaps and kind of came out ahead with some lower rates. Just kind of curious, as you kind of think about 2026, how you kind of see that playing out this time around, especially when, again, you do kind of see, you know, rates have been coming down, at least to start the year?

Speaker #4: Just kind of curious as you kind of think about 26 , how you kind of see that playing out this time around , especially when , again , you do kind of see rates have been coming down , at least to start the year .

Speaker #2: Yeah , great question . Tyler , this is Paul . So yeah , we look at 26 and what the swap markets pricing .

Paul Richards: Yeah, great question, Tayo. This is Paul. Yeah, we looked at 26 and what the swap market's pricing, you know, a 3, 5, 7-year swap, and it just isn't taking in what we fully expect on the rate cut side. If you look at the current Fed dot plot, the dispersion is extremely interesting. You have a deeply divided committee with 175 basis points of actual spread, with mirroring at the bottom end at 2 and one-eighth %. You have a few multiple hawks that, you know, are pricing in 0 rate cuts this year.

Speaker #2: You know a three . Five . Seven year swap . And it just isn't taking in what we fully expect on the rate cut side .

Speaker #2: If you look at the current fed dot plot , the dispersion is extremely interesting . You have a deeply divided committee with 175 basis points of actual spread , with mirror and at the bottom end at two , two and one eighth percent .

Speaker #2: And you have a few multiple hawks that are pricing in zero rate cuts this year . You have three dissenters this past meeting .

David Brown: Mm-hmm.

Paul Richards: You had 3 dissenters this past meeting. It's a really deeply divided, you know, dot plot, which is, you know, affecting swap markets and not really pricing what we truly believe, you know, will be at the end of the year with rate cuts. We're holding tight right now, on putting and layering in additional swaps. Again, this can change in a moment's notice. It's a constant daily, you know, recheck and refresh of those rates to see if they're, you know, hitting what we believe to be kind of that 2.5 to 3 rate cuts for the year. You know, I'm a little more bullish too on that too.

Speaker #2: So it's a really deeply divided , you know , dot plot , which is , you know , affecting a swap markets and not really pricing what we truly believe , you know , will be at the end of the year with rate cuts .

Speaker #2: So we're holding tight right now . On putting and layering in additional swaps . But again , this can change in in a moment's notice .

Speaker #2: So it's a constant daily , you know , recheck and refresh of those rates to see if they're , you know , hitting what we believe to be kind of that two and a half to three three rate cuts for the year .

Speaker #2: And , you know , we're I'm a little more bullish to on that too . So it's it's just a constant refresh . And remodel of our models .

Paul Richards: it's just a constant refresh and remodel of our models and when we want to layer in additional swaps for the year to layer in behind the ones that are burning off here in Q3, Q4 this year.

Speaker #2: And when we want to layer in additional swaps for the year to layer in behind the ones that are burning off here in Q Q3 , Q4 of this year .

Speaker #4: Gotcha . Thank you

David Brown: Gotcha. Thank you.

Omotayo Okusanya: Gotcha. Thank you.

Speaker #3: Your next question comes from the line of Buckhorn with Raymond James . Please go ahead .

Operator: Your next question comes from the line of Buck Horne with Raymond James. Please go ahead.

Speaker #5: Hey , good morning guys . Just wondering if you could give us any updates on either January and or February trends since quarter end in terms of new renewal , blended lease rates , just occupancy , any additional color on how early spring leasing has gone

Buck Horne: Hey, good morning, guys. Just wondering if you could give us any updates on either January and/or February trends since quarter end in terms of new renewal, blended lease rates, just occupancy. Any additional color on how early spring leasing has gone?

Speaker #6: Yeah . Hey . Good morning , it's Matt . So January new leases were down 7% . Renewals were 1.6 for a blended minus 2.6 or 2 point 7 or $40 .

Matt McGraner: Yeah. Hey, hey, Buck. Good morning. It's Matt. The January new leases were down 7%. Renewals were 1.6 for a blended -2.6 or 2.7, or $40 trade out. February is better, getting better and firming. The new leases were down 5.7%, renewals were a positive 1.7% for a blended -1.8%. Again, we're seeing pretty positive trends on the renewal side too, on the trend.

Speaker #6: Trade out February is better . And getting better and firming the new leases were down 5.7% and renewals were a positive 1.7% for a blended negative 1.8% .

Speaker #6: And again , we're seeing we're seeing we're seeing pretty positive trends on the renewal side too . So on the on the trend

Speaker #5: , gotcha , gotcha . Appreciate the color there . And then I think secondly , my other question was on CapEx and maybe potential CapEx spending for the upcoming year .

Buck Horne: Gotcha. Gotcha. Appreciate the color there. Then I think secondly, my other question was on CapEx and maybe potential CapEx spending for the upcoming year. Looks like the trend in both kind of the recurring and nonrecurring maintenance CapEx numbers are still trending above normal or above trend line historically. You know, what were some of the key drivers for that this year? Then how are you thinking about total CapEx spending for this coming year?

Speaker #5: Looks like the trend in both kind of the the recurring and non-recurring maintenance CapEx numbers are still trending above normal or above trend line .

Speaker #5: Historically, you know, what were some of the key drivers for that this year? And then, how are you thinking about total CapEx spending for this coming year?

Speaker #6: Yeah , on the on the maintenance side , I'll kick that to Bonner . But some of the outside things that we're doing are the , you know , the bulk Wi-Fi on the resident amenity side , which again , has a direct offset .

Matt McGraner: On the maintenance side, I'll kick that to Bonner. Some of the outsized things that we're doing are the, you know, the bulk Wi-Fi on the resident amenity side, which again, has a direct offset. That's kind of elevated the numbers. Again, the net effect of that is minimal on the income statement. Bonner, do you have anything to add on the maintenance side?

Speaker #6: So that's that's kind of elevated the numbers . But again , the net effect of that is is minimal on the on the income statement .

Speaker #6: And do you have anything to add on the maintenance side? Yeah.

Bonner McDermott: Yeah, our 2026 outlook and relative to, you know, 2025, you see. You know, 2025, we had a little bit of a pickup in interior rehab spending. We had less of the exterior and common area this year, post, you know, refinancing the portfolio, that $2.2 million in 2024. There was some more major projects there. I think outside the Sedona acquisition, there is about $1 million of exterior work to do there. The capitalized rehab should be pretty stable year-over-year. I think the same for the capitalized maintenance, the recurring and nonrecurring. You know, we're certainly looking to control those expenses. Understand that's, you know, roughly $30 million for the full year 2025.

Bonner McDermett: Yeah, our 2026 outlook and relative to, you know, 2025, you see. You know, 2025, we had a little bit of a pickup in interior rehab spending. We had less of the exterior and common area this year, post, you know, refinancing the portfolio, that $2.2 million in 2024. There was some more major projects there. I think outside the Sedona acquisition, there is about $1 million of exterior work to do there. The capitalized rehab should be pretty stable year-over-year. I think the same for the capitalized maintenance, the recurring and nonrecurring. You know, we're certainly looking to control those expenses. Understand that's, you know, roughly $30 million for the full year 2025.

Speaker #7: So our 2026 outlook, and relative to, you know, '25, you see, you know, 2025 we had a little bit of a pickup in interior rehab spending.

Speaker #7: We had less of the exterior in common area . This year post . You know , refinancing the portfolio that 2.2 million in 2024 .

Speaker #7: There were some more major projects there. So I think, outside the Sedona acquisition, there is about a million bucks of exterior work to do.

Speaker #7: There . The the capitalized rehab should be pretty stable . Year over year . And I think that same for the capitalized maintenance .

Speaker #7: The recurring and non-recurring , you know , we're certainly looking to control those expenses . Understand that , you know , roughly 30 million bucks for the full year 2025 .

Speaker #7: I think that we've seen some some price easing . We're certainly thoughtful about that as a team . And , you know , as Matt has mentioned , we kind of have a strategic approach here where , you know , pricing power is going to dictate the volume of renovation output for the year .

Bonner McDermott: I think that we've seen some price easing. We're certainly being thoughtful about that as a team. You know, as Matt has mentioned, we kind of have a strategic approach here where, you know, pricing power is going to dictate the volume of renovation output for the year. If we can get healthy trade-outs that justify the spend, we'll see a little bit higher spend, probably more in line with 2025. If we're not getting to the, you know, the trade-offs that we need, the ROIs that we want, we may look to skinny that down a bit.

Bonner McDermett: I think that we've seen some price easing. We're certainly being thoughtful about that as a team. You know, as Matt has mentioned, we kind of have a strategic approach here where, you know, pricing power is going to dictate the volume of renovation output for the year. If we can get healthy trade-outs that justify the spend, we'll see a little bit higher spend, probably more in line with 2025. If we're not getting to the, you know, the trade-offs that we need, the ROIs that we want, we may look to skinny that down a bit.

Speaker #7: So if we can get healthy trade-outs that justify the spend, we'll see a little bit higher spend, probably more in line with 2025.

Speaker #7: But if we're not getting to the the trade offs that we need , the Rois that we want , we may , may look to to skinny that down a bit .

Speaker #5: Gotcha. All right. Thanks, guys. Good luck.

Buck Horne: Gotcha. All right, thanks, guys. Good luck.

Speaker #3: Your next question . Your next question comes from the line of Michael Lewis with Truist Securities . Please go ahead .

Matt McGraner: Thanks, Bonner.

Operator: Your next question comes from the line of Michael Lewis with Truist Securities. Please go ahead.

Michael Lewis: Great. Thank you. Maybe this question kind of logically follows after talking about CapEx. When we subtract CapEx from your AFFO calc, it looks like the dividend isn't covered. I know you recently raised the dividend. This is always a tough. I realize it's a board decision, it's a hard question to answer. As you look forward to 2026, do you think the dividend is covered by cash flow? Maybe just kind of remind us of what the dividend policy is.

Speaker #8: Great . Thank you . Maybe this question kind of logically follows after talking about CapEx when when we subtract CapEx from your AFO calc , it looks like the dividend isn't covered .

Speaker #8: I know you recently raised the dividend . This is always a tough I realize it's a board decision . It's a hard question to answer .

Speaker #8: But as you look forward to 26 , I mean , do you think the dividend is covered by cash flow and maybe just kind of remind us of what the dividend policy is

Matt McGraner: Yes, the dividend is covered by cash flow, and its target ratio is 65 to 75% of Core FFO.

Speaker #6: Yes. The dividend is covered by cash flow and its target ratio of 65% to 75% of core FFO.

Matt McGraner: Yes, the dividend is covered by cash flow, and its target ratio is 65 to 75% of Core FFO.

Speaker #8: , of AFFO . Okay . And then I wanted to ask , you gave a lot of great data about supply and demand , really detailed the occupancy for for Q was a little lower than we expected .

Michael Lewis: Of the FFO. Okay. I wanted to ask, you know, you gave a lot of great data about supply and demand, really detailed. The occupancy for Q4 was a little lower than we expected. I was wondering if it was lower than you expected, and you know, how you're kind of managing pricing versus occupancy, you know, right now, where we are before we kind of get to that inflection whenever it comes.

Speaker #8: I was wondering if it was lower than you expected . And you know , how you're kind of managing pricing versus occupancy . You know , right now where we are before we kind of get to that inflection when whenever it comes .

Speaker #6: Yeah , that's a great question , Michael . It is lower than we expected . But it was it was somewhat intentional . So you know , concession utilization , it has was increased over the over the fourth quarter .

Matt McGraner: Yeah, that's a great question, Michael. We, it is lower than we expected, but it was somewhat intentional. You know, concession utilization, it was increased over the Q4 and into January. It's abating somewhat in February, but we were reluctant to utilize, you know, more than a month of concessions, you know, on, particularly when we, you know, believe pricing power will significantly increase over the year. Also didn't want to look, you know, to lock in a negative 12-month, you know, earn-in and cannibalize what we believe is a, you know, an inflection year.

Speaker #6: And into January . It's abating somewhat in February . But we were reluctant to utilize , you know , more than a month of concessions , you know , on particularly when we , you know , believe pricing power will significantly increase over the year .

Speaker #6: And also didn't want to look , you know , look to lock in a -12 month , you know , earning and and cannibalize what we believe is a , you know , an inflection year .

Matt McGraner: You know, we truly believe that on a deal-by-deal basis, largely for the vast majority of our portfolio and, you know, not, you know, jumping up and down, happy with 92.7%. The good news is our Q1 guidance is at 93%. You know, I think we're, you know, I think we're on track to hit that, and, you know, hopefully we'll capture some of this inflection.

Speaker #6: You know , we truly believe that on a deal by deal basis , largely for the vast majority of our portfolio . And , you know , not not , you know , jumping up and down , happy with 92.7% , but the good news is first quarter guidance is at 93% .

Speaker #6: So , you know , I think we're , you know , I think we're on track to hit that . And you know , hopefully we'll we'll capture some of this inflection .

Speaker #8: Okay . Thank you .

Michael Lewis: Okay, thank you.

Speaker #6: You got it .

Matt McGraner: You got it.

Speaker #3: Your next question comes from the line of Linda Sy with Jefferies . Please go ahead .

Operator: Your next question comes from the line of Linda Tsai with Jefferies. Please go ahead.

Speaker #9: Hi . Thanks for taking my question . In terms of your comment on the senior renter population doubling by 2030 and that you're seeing sizable signs of this trend in your markets .

Linda Tsai: Hi, thanks for taking my question. In terms of your comment on the senior renter population doubling by 2030, and that you're seeing sizable signs of this trend in your markets, can you delve into this comment more? Then, you know, would you start to amenitize your properties any differently based on an aging population?

Speaker #9: Can you delve into this comment more and then would you start to monetize your properties any differently based on an aging population

Matt McGraner: Yes. Again, great question. We're seeing it because our average age is ticking up, and we're just getting, you know, anecdotally, from the sites, especially in, you know, the Sun Belt and particularly in Florida, for, you know, for resident amenities that cater more to the senior housing population. It's something that we've, you know, I guess, you know, taken notice of, as, you know, Welltower and the others catch a really good bid and believe in the, you know, this demographic backstop, as I mentioned in my prepared remarks. We do believe this trend. We think AI is going to, you know, be positive for GDP growth ultimately, and have, you know, people when, you know, when they live longer and, you know, make more money, they want to invest in their health and entertainment.

Speaker #6: Yes . Again , great question . We're we're seeing it because our average age is ticking up and we're just getting , you know , anecdotally from the sites , especially in , you know , Sunbelt and particularly in Florida for , you know , for resident amenities that cater more to the senior housing population .

Speaker #6: It's something that we've , you know , I guess , you know , taken notice of as you know , Welltower and the others catch a catch a really good bid and believe in the this demographic backstop .

Speaker #6: As I mentioned in my prepared remarks , we do believe this trend . We think AI is going to , you know , be positive for GDP growth .

Speaker #6: Ultimately . And have , you know , people when you know , when they live longer and , you know , make more money , they want to invest in their health and entertainment .

Speaker #6: And so we are , you know , actively looking to resource our portfolio designed to , you know , to cater to health and wellness and entertainment .

Matt McGraner: We are, you know, actively looking to resource our portfolio, designed to, you know, to cater to health and wellness and entertainment. I think that those things will, you know, produce a wider demand funnel than what we've historically been used to in catering to blue collars. There's no reason in our portfolio why we can't attract, you know, in Richardson, you know, Texas, a suburb, well-located suburb outside of Dallas, some empty nesters that want to, you know, be closer to their kids that go to SMU, for example. I think that that trend will continue, particularly in the Sun Belt, particularly in our markets, and just follow the same net migration trends as we, as we've seen over the last five years.

Speaker #6: And I think that that those things will , produce a wider demand funnel that what we've historically been used to and catering to a blue collars .

Speaker #6: And so there's no reason in our portfolio why we can't attract , you know , in Richardson , you know , Texas , a suburb well located suburb outside of Dallas , some empty nesters that want to , you know , be closer to their kids that go to SMU , for example .

Speaker #6: So I think that that trend will continue , particularly in the Sunbelt , particularly in our markets . And just follow the same net migration trends as we as we've seen over the last five years .

Speaker #9: Are you seeing new renter income from the older population increasing?

Linda Tsai: Are you seeing new renter income from the older population increasing?

Matt McGraner: Yes, indeed. That's adding to both of our, both our age and our average household demographics. When we started this company, 11, 12 years ago, our average renter was 28 years old and made $60,000 a year. We're increasingly catering, I think, to a purpose-driven renter. It makes sense. Aging population, they want less yard, they want more amenities. They don't want to deal with maintenance themselves, and they want to travel. We like that trend. We're going to play into it, I think we have the portfolio to take advantage of it.

Speaker #6: Yes , indeed . And that's that's adding to both of our , you know , both our age and our average household . You know , demographics .

Speaker #6: When we started this company , you know , 11 , 12 years ago , you know , our average , our average renter was , you know , 28 years old and , you know , made $60,000 a year .

Speaker #6: So we're increasingly catering , I think , to a purpose driven renter . And , you know , it makes sense , you know , aging population , they want less yard what they want .

Speaker #6: More amenities . They don't want to deal with , you know , maintenance themselves . And they want to travel . So we like that trend .

Speaker #6: We're going to play into it . And I think we have the portfolio to take advantage of it

Speaker #9: Thanks . And then just one guidance question . It doesn't seem like your guidance incorporates buybacks . Are you still considering buybacks in 26 ?

Linda Tsai: Thanks. Then just one guidance question. It doesn't seem like your guidance incorporates buybacks. Are you still considering buybacks in 2026?

Speaker #6: Yeah , we are . We'll always consider them I think that , you know we we the Sedona deal was important because we liked you know , we liked the ability to take that cap rate from A57 going in to a seven and a half .

Matt McGraner: Yeah, we are. We'll always consider them. I think that, you know, The Sedona deal was important because we liked, you know, the ability to take that cap rate from a 5.7 going in to a 7.5, and that was, you know, a one-off opportunity. Those opportunities we'll always do. In the meantime, you know, I think if we do, you know, sit at a stock price, you know, sub 30 and a 6.6 implied cap rate, you know, and we stay here for a while, I think you'll see us buy back some stock.

Speaker #6: And that was , you know , one off opportunity . And those opportunities will always will always do . But in the meantime , you know , I think if if we do , you know , sit at a stock price , you know , sub 30 and a 6.6 implied cap rate , you know , and we we stay here for a while .

Speaker #6: I think I think you'll see us buy back some stock . That being said , I , I mean , I really do believe that the , you know , that this year is the year that , you know , we will inflect and I think stock prices will follow that that upwards in the second half of the year .

Matt McGraner: That being said, I mean, I really do believe that, you know, that this year is the year that, you know, we will inflect, and I think stock prices will follow that upwards in the second half of the year.

Speaker #9: Thanks

Linda Tsai: Thank you.

Speaker #3: That concludes our question and answer session . I will now turn the call back over to Management team for closing remarks

Operator: That concludes our question-and-answer session. I will now turn the call back over to management team for closing remarks.

Matt McGraner: Thank you for all your time this morning. Appreciate everyone's, again, time and attention and look forward to speaking to you next quarter.

Speaker #6: Thank you for all your time this morning. I appreciate everyone's time and attention again, and I look forward to speaking to you next quarter.

Matt McGraner: Thank you for all your time this morning. Appreciate everyone's, again, time and attention and look forward to speaking to you next quarter.

Operator: Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.

Q4 2025 NexPoint Residential Trust Inc Earnings Call

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