Q2 2026 NexPoint Residential Trust Inc Earnings Call

August 4, 2026

Operator 3: Hello, everyone. Thank you for joining us. Welcome to the NexPoint Residential Trust Q2 2026 Earnings Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Kristen Griffith, Investor Relations. Kristen, please go ahead.

Operator: Hello, everyone. Thank you for joining us. Welcome to the NexPoint Residential Trust Q2 2026 Earnings Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Kristen Griffith, Investor Relations. Kristen, please go ahead.

Speaker #1: If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Kristen Griffith, Investor Relations.

Speaker #1: Kristen, please go ahead.

Speaker #2: Thank you. Good day, everyone, and welcome to the NexPoint Residential Trust conference call to review the company's results for the second quarter ended June 30, 2026.

Kristen Griffith: Thank you. Good day, everyone, and welcome to NexPoint Residential Trust conference call to review the company's results for the Q2 ending 30 June 2026. 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 the Q2 ending 30 June 2026. On the call today are Paul Richards, Executive Vice President and Chief Financial Officer, Matthew 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 #2: 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.

Speaker #2: As a reminder, this call is being webcast through the company's website, at nxrt.nextpoint.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 #2: 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, as well as 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 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 statements. The statements made during this conference call speak only as of city state, and except as required by law, NXRT does not undertake any obligation to publicly update or revise any forward-looking statements. 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 #2: If statements made during this conference call speak only as of today's date and accept as required by law, NXRT does not undertake any obligation to publicly update or revise any forward-looking statements.

Speaker #2: 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.

Speaker #2: I would now like to turn the call over to Paul Richards. Please go ahead, Paul.

Speaker #3: Thank you, Kristen, and welcome, everyone. We appreciate you joining us this morning. I'll take you through our second quarter results and the changes we're making to our full-year outlook.

Paul Richards: Thank you, Kristen, and welcome everyone. We appreciate you joining us this morning. I'll take you through our Q2 results and the changes we're making for a full year outlook, and then Matt will cover the operating environment, our leasing trajectory, the technology platform, and how the portfolio is positioned. In April, we affirmed our full year guidance. This morning, we are lowering it to a Core FFO midpoint of $2.45 per share, down $0.12 from $2.57. I'll explain what drove the change and what has and has not changed. In short, most of the reduction is from higher interest rate expense, reflecting an upward shift in the forward curve since our last update. A smaller portion reflects a slower same-store revenue rebound, which affects the full year. Importantly, our operating trajectory continues to improve month by month.

Speaker #3: And then Matt will cover the operating environment, our leasing trajectory, the technology platform, and how the portfolio's positioned. In April, we affirmed our full-year guidance.

Speaker #3: This morning, we are lowering it to a core FFO midpoint of $2.445 per share, down $0.12 from $2.57. I'll explain what drove the change, and what has and has not changed.

Speaker #3: In short, most of the reduction is from higher interest rate expense, reflecting an upward shift in the forward curve since our last update. A smaller portion reflects a slower same-store revenue rebound, which affects the full year.

Speaker #3: Importantly, our operating trajectory continues to improve month by month. Given recent macro shifts and clear visibility into Q3, operating performance, we believe this is the right time to update our forecast.

Paul Richards: Given recent macro shifts and clear visibility into Q3 operating performance, we believe this is the right time to update our forecast. Q2 2026 results. Q2 Core FFO was $16.9 million or $0.66 per diluted share, a penny ahead of consensus. That compared to $18 million or $0.71 a year ago. FFO was $15.2 million or $0.60 per share, and ASFO was $19.7 million or $0.77 per share. Total NOI was $37.9 million across our 36 properties, essentially flat with last year. Net loss for the quarter was $8.6 million or $0.34 per diluted share, which includes $23.9 million of depreciation and amortization. That compares to a net loss of $7 million or $0.28 per share in the Q2 of 2025. Total revenue was $64.6 million, up from $63.1 million a year ago as Sedona came online and into the numbers.

Speaker #3: Q2 2026 results: second quarter core FFO was 16.9 million, or 66 cents per diluted share, a penny ahead of consensus. That compared to 18 million, or 71 cents, a year ago.

Speaker #3: FFO was $15.2 million, or $0.60 per share, and AFFO was $19.7 million, or $0.77 per share. Total NOI was $37.9 million across our 36 properties, essentially flat with last year.

Speaker #3: Net loss for the quarter was $8.6 million, or $0.34 per diluted share, which includes $23.9 million of depreciation and amortization. That compares to a net loss of $7 million, or $0.28 per share, in the second quarter of 2025.

Speaker #3: Total revenue was 64.6 million, up from 63.1 million a year ago, as Sedona came online and into the numbers. On a same-store basis, 35 properties, which is about 98% of our units, total revenue was 62.4 million, down 0.6%.

Paul Richards: On a same-store basis, 35 properties, which is about 98% of our units, total revenue was $62.4 million, down 0.6%, and same-store NOI was $36.9 million, down 2.9%. Same-store occupancy closed the quarter at 93.6%, up 30 basis points from a year ago, and the average effective rent was $1,487, down 80 basis points. One point on the H1 of the year before I get into guidance. It came in about where we expected on net. The company earned $0.68 in the Q1 and $0.66 in the Q2, which equates to $1.34 through June. Each quarter, a little ahead of the street. The revision today is almost entirely about the H2, and is driven mostly by interest expense as our swap protection steps down, which I'll run through now. Interest expense and hedging.

Speaker #3: And same-store NOI was $36.9 million, down 2.9%. Same-store occupancy closed the quarter at 93.6%, up 30 basis points from a year ago. The average effective rent was $1,487, down 80 basis points.

Speaker #3: One point on the first half of the year before I get into guidance: it came in about where we expected on net. The company earned $0.68 in the first quarter and $0.66 in the second, which equates to $1.34 through June.

Speaker #3: Each quarter, we're a little ahead of the Street. The revision today is almost entirely about the back half of the year, and it's driven mostly by interest expense as our swap protection steps down, which I'll run through now.

Speaker #3: Interest expense and hedging: we've mentioned since our initial guidance that 2026 carries a real interest rate interest expense headwind, as certain swap positions roll off.

Paul Richards: We've mentioned since our initial guidance that 2026 carries a real interest expense headwind as certain swap positions roll off, and the step down lands in the H2. Q2 interest expense was $15.8 million versus $15.2 million a year ago. What's changed since April is the rate curve. The forward SOFR has moved higher roughly 30 basis points in the Q3 and 72 basis points in the Q4 relative to our assumptions. In practical terms, that's about $14.6 million fewer projected swap inflows over the rest of the year, or roughly $0.16 per share of additional interest expense. It's the single largest piece of today's revision. Full year 2026 interest expense is now projected at approximately $71.2 million, up from a roughly $69 million discussed last quarter and $67 million in the original model. One timing note.

Speaker #3: And the step-down lands in the second half. Q2 interest expense was 15.8 million versus 15.2 million a year ago. What changed since April is the rate curve.

Speaker #3: The forward SOFR has moved higher—roughly 30 basis points in the third quarter and 72 basis points in the fourth—relative to our assumptions.

Speaker #3: In practical terms, that's about 14.6 million fewer projected swap inflows over the rest of the year, or roughly $0.16 per share of additional interest expense.

Speaker #3: It's the single largest piece of today's revision. Full-year 2026 interest expense is now projected at approximately $71.2 million, up from roughly $69 million discussed last quarter and $67 million in the original model.

Speaker #3: One timing note: the Federal Reserve met last week and held its benchmark rate at 3.5% to 3.75%, with a few members dissenting in favor of a hike.

Paul Richards: The Federal Reserve met last week and held its benchmark rate at 3.5% to 3.75%, with a few members dissenting in favor of a hike. Interest rate swaps currently fix the rate on $817.5 million or approximately 51.5% of our floating rate mortgage debt, and we have full visibility into the maturity schedule. The bulk of that protection, approximately $717.5 million at a weighted average fixed rate near 1.1392%, rolls off in September. We have the ability to layer in more protection and will do it when the risk-adjusted economics make sense. Second, on the affirmation. In April, we mentioned the offsets we identified neutralize this headwind, and we affirmed. The curve then moved against us more than we assumed, and a handful of markets' revenue production came in softer than we modeled.

Speaker #3: Interest rate swaps currently fix the rate on 817.5 million, or approximately 51.5% of our floating-rate mortgage debt. And we have full visibility in the into the maturity schedule.

Speaker #3: The bulk of that protection, approximately 717.5 million, at a weighted average fixed rate near 1.1392%, rolls off in September. We have the ability to layer in more protection, and we'll do it when the risk-adjusted economics make sense.

Speaker #3: Second, on the affirmation: in April, we mentioned the offsets we'd identified of neutralized this headwind, and we affirmed. The curve then moved against us more than we assumed, and a handful of markets' revenue production came in softer than we modeled.

Speaker #3: Rather than lean on offsets to hold that number, we're resetting to a level we're confident we can deliver. I'll walk through the bridge in a minute.

Paul Richards: Rather than lean on offsets to hold that number, we're resetting to a level we're confident we can deliver. I'll walk through the bridge in a minute. Moving on to expense detail. The expense side is where we're picking up real ground. We're lowering our full year same-store expense growth outlook by 140 basis points to about 2.1% at the midpoint from 3.5% originally. It's broad based. Every market in the portfolio is now guiding to lower expense growth than we assumed at the start of the year, led by real estate taxes, insurance, and continued payroll discipline from the centralized operating model Matt was describing. Our April insurance renewal, which came in more than 30% year-over-year, is now fully in the run rate. Let me put some numbers on the quarter itself.

Speaker #3: Moving on to expense detail: the expense side is where we're picking up real ground. We're lowering our full-year same-store expense growth outlook by 140 basis points to about 2.1% at the midpoint from 3.5% originally.

Speaker #3: It's broad-based. Every market in the portfolio is now guiding to lower expense growth than we assumed at the start of the year, led by real estate taxes and insurance, and continued payroll discipline from the centralized operating model Matt will describe.

Speaker #3: Our April insurance renewal, which came in more than 30% year over year, is now fully in the run rate. Let me put some numbers on the second on the quarter itself.

Speaker #3: Same-store operating expenses were up 2.4% year-over-year, and the mix is favorable where it counts most. Real estate taxes were down 3.5%, and insurance was down 11.7% on the April renewal.

Paul Richards: Same-store operating expenses were up 2.4% year over year. The mix is favorable where it counts most. Real estate taxes were down 3.5%, insurance was down 11.7% on the April renewal, and payroll was down 1%, with property management fees and office operations each down about 1%. The pressure sat in two lines, repair and maintenance of 13.9% and marketing of 38.2% off a small base where we've leaned into lead generation at properties below target occupancy. Utilities were up 6.1%. The repair and maintenance increase is concentrated rather than broad, and we treat that as episodic rather than a change in our underlying cost base. Net controllables held roughly in line, while our two largest non-controllables, real estate taxes and insurance, came down, which is what underpins the improved full-year expense outlook. One important note regarding the elevated R&M cost.

Speaker #3: And payroll was down 1%, with property management fees and office operations each down about a percent. The pressure sat in two lines: repair and maintenance, up 13.9%, and marketing, up 38.2%, off a small base where we where we've leaned into lead generation at properties below target occupancy.

Speaker #3: Utilities were up 6.1%. The repair and maintenance increase is concentrated rather than broad, and we treat that as episodic rather than a change in our underlying cost base.

Speaker #3: Net controllables held roughly in line, while our two largest non-controllables—real estate taxes and insurance—came down, which is what underpins the improved full-year expense outlook.

Speaker #3: One important note regarding the elevated R&M cost: we aggregate resident amenity services, including bulk fiber, into the total here. The resident amenity services subcategory drives 83% of total R&M growth, and it's concentrated in the four markets undergoing a fiber build-out: Atlanta, Nashville, Phoenix, and South Florida.

Paul Richards: We aggregate resident amenity services, including bulk fiber, into total here. The resident amenity services subcategory drives 83% of total R&M growth and is concentrated in the four markets undergoing a fiber build-out: Atlanta, Nashville, Phoenix, and South Florida. We see a corresponding offset to these expense increases within the resident amenity fee subcategory of other income, which is the significant driver of the 29.2% other income growth for the quarter. A value add update. During Q2, we completed 459 full and partial upgrades and leased 258 upgraded units at an average monthly rent premium of $89 and a 23% return.

Speaker #3: We see a corresponding offset to these expense increases within the resident amenity fees subcategory of other income, which is a significant driver of the 29.2 other income growth for the quarter.

Speaker #3: A value-add update: during the second quarter, we completed 459 full and partial upgrades in at least 258 upgraded units at an average monthly rent premium of $89 and a 23% return.

Speaker #3: Since inception, for the properties currently in the portfolio, we've completed 10,474 full and partial interior upgrades, over 5,100 kitchen and laundry packages, and roughly 11,200 tech packages, generating average monthly rent increases of $152.50 and $43 per unit, at returns of 20.7%, 63.4%, and 37.2%, respectively.

Paul Richards: Since inception, for the properties currently in the portfolio, we've completed 10,474 full and partial interior upgrades, over 5,100 kitchen and laundry packages, and roughly 11,200 tech packages, generating average monthly rent increases of $152, $50, and $43 per unit at returns of 20.7%, 63.4%, and 37.2% respectively. This is still one of the most reliable capital efficient sources of growth we have. Moving on to the dividend. For Q2, we declared a dividend of $0.53 per share payable. Since inception, we've raised the dividend 157.3%. As of 30 June, total indebtedness was approximately $1.6 billion at an adjusted weighted average interest rate of approximately 3.58%. We held approximately $14.6 million of unrestricted cash on $118.9 million of undrawn capacity on the credit facility for a total available liquidity of approximately $133.5 million.

Speaker #3: This is still one of the most reliable, capital-efficient sources of growth we have. Moving on to the dividend—for the second quarter, we declared a dividend of $0.53 per share, payable.

Speaker #3: Since inception, we've raised the dividend 157.3%. As of June 30th, total indebtedness was approximately $1.6 billion, at an adjusted weighted average interest rate of approximately 3.58%.

Speaker #3: We held approximately $14.6 million of unrestricted cash and $118.9 million of undrawn capacity on the credit facility, for a total available liquidity of approximately $133.5 million.

Speaker #3: We have no scheduled debt maturities until 2028, which consists of only a small $33 million fixed-rate loan. Net leverage is about 57% of our internal NAV estimate, and deleveraging over the medium term, funded mainly through disposition proceeds, remains a priority.

Paul Richards: We have no scheduled debt maturities until 2028, which consists of only a small $33 million fixed rate loan. Net leverage is about 57% of our internal NAV estimate. De-leveraging over the medium term, funded mainly through disposition proceeds, remains a priority. Our estimated net asset value as the quarter ended is $46.76 per diluted share at the midpoint, using a cap rate range of five and a quarter to five and three quarters across the portfolio. The range runs $40.35 at the high end and $53.16 at the low end. At a recent price of $25.91, the stock trades at more of a 40% discount to that midpoint. Even at the most conservative end of our range, it's a meaningful discount to estimated liquidation value.

Speaker #3: Our estimated net asset value at quarter-end is $46.76 per diluted share at the midpoint, using a cap rate range of 5.25% to 5.75% across the portfolio.

Speaker #3: The rate runs $40.35 at the high end and $53.16 at the low end. At a recent price of $25.91, the stock trades at more of a 40% discount to that midpoint.

Speaker #3: Even at the most conservative end of our range, it's meaningful discount to estimated liquidation value. We think the gap between where the stock trades and what the real estate is worth is significant, and our capital recycling and buyback tools give us a way to close that.

Paul Richards: We think the gap between where the stock trades and what the real estate is worth is significant, and our capital recycling and buyback tools give us a way to close that. 2026 guidance revised. I'll now walk through the revised guidance by component. We're lowering full year 2026 Core FFO guidance to a range of $2.35 to $2.54 per diluted share at a midpoint of $2.45, down from a prior midpoint of $2.57. We're lowering same-store NOI guidance to a range of -2.5% to 0.5% at a midpoint of -1% from a prior midpoint of -0.5%. The components of the bridge from $2.57 to $2.45 in five pieces are as follows. Interest expense down $0.16. Again, the forward curve move described before. About $14.6 million of fewer projected swap inflows, the largest single driver. Same-store revenue down $0.09.

Speaker #3: 2026 guidance revised: I'll now walk through the revised guidance by component. We're lowering full-year 2026 core FFO guidance to a range of $2.35 to $2.54 per diluted share, with a midpoint of $2.45.

Speaker #3: Down from a prior midpoint of $2.57. We're lowering same-store NOI guidance to a range of -2.5% to 0.5%, with a midpoint of -1%, down from a prior midpoint of -0.5%.

Speaker #3: The components of the bridge from $2.57 to $2.45 in five pieces are as follows: interest expense down $0.16, again, the forward curve move described before—we have about $14.6 million of fewer projected swap inflows, the largest single driver.

Speaker #3: Same-store revenue down 0.09. We're taking full-year same-store revenue growth down about 90 basis points to roughly 0.2% at the midpoint. It's concentrated. Matt has the market detail with Nashville accounting for most of the same-store NOI reduction.

Paul Richards: We're taking full year same-store revenue growth down about 90 basis points to roughly 0.2% at the midpoint. It's concentrated. Matt has the market detail with Nashville accounting for most of the same-store NOI reduction. Same-store expense up $0.06. The 140 basis point improvement I recently walked to for about 2.1%. Fourth component is interest income up $0.05. Realized income from bridge lending investments tied to Waterford DST transaction, which Matt will put in context. Lastly, corporate G&A, and other up $0.02. Favorable G&A management. That nets to $0.12 reduction to $2.45. A brief word on where the same-store cut sits because it's concentrated rather than broad. Nashville is about 85% of the same-store NOI reduction. Softer revenue combined with the steepest same-store expense growth in the portfolio, near 15%. There's little expense cushion there.

Speaker #3: Same-store expense up 0.06, the 140 basis point improvement I recently walked through for about 2.1%. Fourth component is interest income up 0.05. Realized income from bridge lending investment tied to Waterford DST transaction, which Matt will put in context.

Speaker #3: And lastly, corporate G&A and other up 0.02. Favorable G&A management. That nets to 0.12 reduction to $2.45. A brief word on where the same-store cut sits, because it's concentrated rather than broad.

Speaker #3: Nashville is about 85% of the same-store NOI reduction. Software revenue combined with the steepest same-store expense growth in the portfolio, near 15%. So there's little expense cushion there.

Speaker #3: Four markets are guiding to better same-store NOI than we assumed to the start of the year: South Florida, Atlanta, Phoenix, and Raleigh-Durham. And Dallas is a good example of the expense discipline at work.

Paul Richards: Four markets are guiding to better same-store NOI than we assumed at the start of the year. South Florida, Atlanta, Phoenix, and Raleigh-Durham. Dallas is a good example of the expense discipline at work. Roughly 590,000 revenue reduction was almost entirely offset by about 505,000 of expense savings. Very little drop to NOI. This is a concentrated revision, not a portfolio-wide one. On where this puts us versus Street. Consensus is about $2.51 with a few more recent estimates closer to $2.40 a share. Our new midpoint is in general agreement with external estimates. The H1 is in the books ahead of plan. The revision is forward-looking, largely rate driven, reset to the H2. Our acquisition with disposition assumptions are unchanged at 0 to $200 million each, $100 million at the midpoint, reflecting continued capital recycling within guidance.

Speaker #3: Roughly 590,000 revenue reduction was almost entirely offset by about 505,000 of expense savings. So very little drop to NOI. This is a concentrated revision, not a portfolio-wide one.

Speaker #3: On where this puts us versus Street: consensus is about $2.51, with a few more recent estimates closer to $2.40 a share. Our new midpoint is in general agreement with external estimates.

Speaker #3: The first half is in the books, ahead of plan. The revision is forward-looking, largely rate-driven, and reset to the back half. Our acquisition and disposition assumptions are unchanged at $0 to $200 million each, with $100 million at the midpoint, reflecting continued capital recycling within guidance.

Speaker #3: And with that, let me turn it over to Matt.

Paul Richards: With that, let me turn it to Matt.

Speaker #1: All right. Thank you, Paul. I'll start with the backdrop, because the fundamental setup for our portfolio keeps improving. Starting with supply: Nashville deliveries peaked near 7,000 units in 2024; starts were off roughly 70% from the peak.

Matt McGraner: Thank you, Paul. I'll start with the backdrop because the fundamental setup for our portfolio keeps improving. Starting with supply, national deliveries peaked near 700,000 units in 2024. Starts are off roughly 70% from the peak, and deliveries this year are tracking to the lowest level in more than a decade. In our Sunbelt sub-markets, the drop-off is steeper still. Two-thirds of our sub-markets have less than 2% active annual inventory growth, and more than half have fewer than 500 units under development today. H1 bore that out. Our sub-markets absorbed almost 6,000 units in Q2 against 3,146 units of new supply. Net absorption of +2,852 units, that follows +1,307 in Q1. The remaining 2026 supply is real and concentrated.

Matthew McGraner: Thank you, Paul. I'll start with the backdrop because the fundamental setup for our portfolio keeps improving. Starting with supply, national deliveries peaked near 700,000 units in 2024. Starts are off roughly 70% from the peak, and deliveries this year are tracking to the lowest level in more than a decade. In our Sunbelt sub-markets, the drop-off is steeper still. Two-thirds of our sub-markets have less than 2% active annual inventory growth, and more than half have fewer than 500 units under development today. H1 bore that out. Our sub-markets absorbed almost 6,000 units in Q2 against 3,146 units of new supply. Net absorption of +2,852 units, that follows +1,307 in Q1. The remaining 2026 supply is real and concentrated.

Speaker #1: And deliveries this year are tracking to the lowest level in more than a decade, and in our Sunbelt submarkets, the drop-off is steeper still.

Speaker #1: Two-thirds of our submarkets have less than 2% active annual inventory growth, and more than half have fewer than 500 units under development today. The first half bore that out.

Speaker #1: Our submarkets absorbed almost 6,000 units in the second quarter, against 3,146 units of new supply. Net absorption was a positive 2,852 units, and that follows a positive 1,307 in the first quarter.

Speaker #1: The remaining 2026 supply is real and concentrated. The most meaningful pressure for us is in North Charlotte, South Las Vegas, and the southern portion of Orange County in Orlando.

Matt McGraner: The most meaningful pressure for us is in North Charlotte, South Las Vegas, and the southern portion of Orange County and Orlando. The supply cliff remains intact and the backdrop continues to improve, we think, leading to a clean inflection approaching in late 2026 and into 2027. On demand, the structural case hasn't changed, the affordability channel has only gotten more extreme. John Burns has the premium to own versus rent at 44% against a 17% long-run average. Zelman has the entry-level payment gap at its widest since 1984, move-outs to buy a home were 8.7% this quarter, down from 10.9% a year ago. Here's the part I'd underline. On 135 million households, every 50 basis point decline in home ownership rate creates 675,000 renter households. Two years of normal absorption from a channel that requires no population growth at all.

Matthew McGraner: The most meaningful pressure for us is in North Charlotte, South Las Vegas, and the southern portion of Orange County and Orlando. The supply cliff remains intact and the backdrop continues to improve, we think, leading to a clean inflection approaching in late 2026 and into 2027. On demand, the structural case hasn't changed, the affordability channel has only gotten more extreme. John Burns has the premium to own versus rent at 44% against a 17% long-run average. Zelman has the entry-level payment gap at its widest since 1984, move-outs to buy a home were 8.7% this quarter, down from 10.9% a year ago. Here's the part I'd underline. On 135 million households, every 50 basis point decline in home ownership rate creates 675,000 renter households. Two years of normal absorption from a channel that requires no population growth at all.

Speaker #1: Still, the supply cliff remains intact, and the backdrop continues to improve, we think, leading to a clean inflection approaching in late 2026 and into 2027.

Speaker #1: On demand, the structural case hasn't changed, and the affordability channel has only gotten more extreme. John Burns has the premium to own versus rent at 44%, against a 17% long-run average.

Speaker #1: Zelman has the entry-level payment gap at its widest since 1984, and move-outs to buy a home were 8.7% this quarter down from 10.9% a year ago.

Speaker #1: Here's the part I'd underline: on 135 million households, every 50 basis point decline in homeownership rate creates 675,000 renter households. Two years of normal absorption.

Speaker #1: From a channel that requires no population growth at all. And on the geography, Zelman's own work has national household growth running at near 70 basis points annually, through the end of the decade.

Matt McGraner: On the geography, Zelman's own work has national household growth running at near 70 basis points annually through the end of the decade. Our markets run at roughly twice that. Per Witten Advisors, job growth, population, and domestic migration continue to favor the Sun Belt for the balance of the decade. Slower national household formation is a real headwind to the national number. It is not the same input as the one that drives our markets. On to leasing. The leasing cadence is the real story this quarter. Across 1,360 new leases, our new lease trade out was -5%, across 1,684 renewals, we were +1.9%, for a blended trade out of -1.16%, roughly 75 basis points better than Q1. The month-to-month tells a more encouraging story.

Matthew McGraner: On the geography, Zelman's own work has national household growth running at near 70 basis points annually through the end of the decade. Our markets run at roughly twice that. Per Witten Advisors, job growth, population, and domestic migration continue to favor the Sun Belt for the balance of the decade. Slower national household formation is a real headwind to the national number. It is not the same input as the one that drives our markets. On to leasing. The leasing cadence is the real story this quarter. Across 1,360 new leases, our new lease trade out was -5%, across 1,684 renewals, we were +1.9%, for a blended trade out of -1.16%, roughly 75 basis points better than Q1. The month-to-month tells a more encouraging story.

Speaker #1: Our markets run at roughly twice that. And per Whitten Advisors, job growth, population, and domestic migration continue to favor the Sunbelt for the balance of the decade.

Speaker #1: Slower national household formation is a real headwind to the national number. It is not the same input as the one that drives our markets.

Speaker #1: On to leasing: the leasing cadence is the real story this quarter. Across 1,360 new leases, our new lease tradeout was -5%, and across 1,684 renewals, we were positive 1.9% for a blended tradeout of -1.16%, roughly 75 basis points better than the first quarter.

Speaker #1: The month-to-month tells a more encouraging story. Blended tradeouts went from -1.7% in April to -1.2% in May to -50 basis points in June. And it turned positive at about 30 basis points in July.

Matt McGraner: Blended trade outs went from -1.7% in April to -1.2% in May to -50 basis points in June, it turned +30 basis points in July. New lease trade outs, the hardest line, improved from -5.4% in April to -2.3% in July, roughly 310 basis points while renewals held above 2%. That is the first positive blended print since early 2025 for us. It is just one month, but encouraging nonetheless. Raleigh was our only market with positive new lease trade outs in the quarter, the laggards on the new lease line, Orlando, Charlotte, Dallas, and Nashville, are the same markets carrying the most remaining supply. On the occupancy and revenue front, the same store portfolio closed at 93.6% physical occupancy, up 30 basis points year-over-year and flat sequentially, with leased at roughly 95%.

Matthew McGraner: Blended trade outs went from -1.7% in April to -1.2% in May to -50 basis points in June, it turned +30 basis points in July. New lease trade outs, the hardest line, improved from -5.4% in April to -2.3% in July, roughly 310 basis points while renewals held above 2%. That is the first positive blended print since early 2025 for us. It is just one month, but encouraging nonetheless. Raleigh was our only market with positive new lease trade outs in the quarter, the laggards on the new lease line, Orlando, Charlotte, Dallas, and Nashville, are the same markets carrying the most remaining supply. On the occupancy and revenue front, the same store portfolio closed at 93.6% physical occupancy, up 30 basis points year-over-year and flat sequentially, with leased at roughly 95%.

Speaker #1: New lease tradeouts, the hardest line, improved from -5.4% in April to -2.3% in July, roughly 310 basis points, while renewals held above 2%. That is the first positive blended print since early 2025 for us.

Speaker #1: It is just one month, but encouraging nonetheless. Raleigh was our only market with positive new lease tradeouts in the quarter, and the laggers on the new lease line, Orlando, Charlotte, Dallas, and Nashville, are the same markets carrying the most remaining supply.

Speaker #1: On the occupancy and revenue front, the same-store portfolio closed at 93.6% physical occupancy, up 30 basis points year-over-year and flat sequentially, with leased at roughly 95%.

Speaker #1: Retention was 55.9%, and turnover improved to 44.1% from 46.5%. Same-store total revenue was 62.4 million, down 60 basis points year-over-year. The number I'd point you to is the trajectory in that comparison.

Matt McGraner: Retention was 55.9%, turnover improved to 44.1% from 46.5%. Same store total revenue was $62.4 million, down 60 basis points year-over-year. The number I'd point you to is the trajectory in that comparison. We went from a -2.2% year-over-year in Q1 to just -60 basis points in Q2, 160 basis point improvement in the year-over-year comp in a single quarter. Effective rent was down 80 basis points, a much shallower decline than the new lease line alone would suggest, that is occupancy and retention discipline doing its job. On bad debt, 60 basis points of gross potential rent against 1.02% in Q1 last year, a roughly 40% improvement, a fraction of where we ran before centralization rebuilt our screening process. Rent to income ratios remain 20% across the portfolio, a very healthy margin.

Matthew McGraner: Retention was 55.9%, turnover improved to 44.1% from 46.5%. Same store total revenue was $62.4 million, down 60 basis points year-over-year. The number I'd point you to is the trajectory in that comparison. We went from a -2.2% year-over-year in Q1 to just -60 basis points in Q2, 160 basis point improvement in the year-over-year comp in a single quarter. Effective rent was down 80 basis points, a much shallower decline than the new lease line alone would suggest, that is occupancy and retention discipline doing its job. On bad debt, 60 basis points of gross potential rent against 1.02% in Q1 last year, a roughly 40% improvement, a fraction of where we ran before centralization rebuilt our screening process. Rent to income ratios remain 20% across the portfolio, a very healthy margin.

Speaker #1: We went from a -2.2% year-over-year in the first quarter to just -60 basis points in the second, a 160 basis point improvement in the year-over-year comp in a single quarter.

Speaker #1: Effective rent was down 80 basis points, a much shallower decline than the new lease line alone would suggest, and that is occupancy and retention discipline doing its job.

Speaker #1: On bad debt, 60 basis points of gross potential rent, against 1.02% in the first quarter of last year, are roughly 40% improvement and a fraction of where we ran before centralization rebuilt our screening process.

Speaker #1: Rent-to-income ratios remain 20% across the portfolio, a very healthy margin. On to concessions: two different measures to discuss here. Utilization: the share of new leases taking a month free, we cut that roughly in half, from 55.6% in the first quarter to 27.7% in the second quarter, and average weeks free fell from 2.2 weeks to 1.1 week.

Matt McGraner: On to concessions. Two different measures to discuss here. Utilization, the share of new leases taking a month free. We cut that roughly in half from 55.6% in Q1 to 27.7% in Q2, average weeks free fell from 2.2 weeks to 1.1 week. South Florida drove most of that, going from 87.6 utilization to just 4.8% utilization in Q2. On cost, concession dollars as a percentage of gross potential rent, we ran at about 1% for the quarter, still slightly above our forecast, use was heaviest in Tampa, Orlando, Nashville, and Dallas. About a third of the portfolio has no active concession offering today, roughly half are offering selective pricing only on aged vacants and specific floor plans. We project utilization falls another 50 cent by year end. On to our technology platform.

Matthew McGraner: On to concessions. Two different measures to discuss here. Utilization, the share of new leases taking a month free. We cut that roughly in half from 55.6% in Q1 to 27.7% in Q2, average weeks free fell from 2.2 weeks to 1.1 week. South Florida drove most of that, going from 87.6 utilization to just 4.8% utilization in Q2. On cost, concession dollars as a percentage of gross potential rent, we ran at about 1% for the quarter, still slightly above our forecast, use was heaviest in Tampa, Orlando, Nashville, and Dallas. About a third of the portfolio has no active concession offering today, roughly half are offering selective pricing only on aged vacants and specific floor plans. We project utilization falls another 50 cent by year end. On to our technology platform.

Speaker #1: South Florida drove most of that, going from 87.6 utilization to just 4.8% utilization in the second quarter. On cost: concession dollars as a percentage of gross potential rent, we ran at about 1% for the quarter, still slightly above our forecast, and use was heaviest in Tampa, Orlando, Nashville, and Dallas.

Speaker #1: About a third of the portfolio has no active concession offering today, and roughly half are offering selective pricing only on age vacants and specific floor plans.

Speaker #1: We project utilization falls another 50 cent by year-end. On to our technology platform: a lot of what you're seeing in the quarter, especially on the expense side, comes out of the technology work we've laid out during REIT T Week in June.

Matt McGraner: A lot of what you're seeing in the quarter, especially on the expense side, comes out of the technology work we've laid out during REITweek in June. We run a two-layer model. Property operations go through BH Management and their Funnel leasing platform. At the advisory level, we're building NexPoint Intelligence. That's deliberate. Self-managed peers have to spin across every layer at once, while our model captures a disproportionate share of that benefit at a fraction of the capital. In the quarter, the platform converted 24,703 leads into 1,321 applications and 1,226 move-ins, a 5.3% lead to application rate and a 34.6% tour to application rate, both improved from Q1. Self-guided touring keeps scaling. 26.2% of tours in the quarter were self-guided, that's up from 18.7% in Q1, that's after hours demand we otherwise would lose.

Matthew McGraner: A lot of what you're seeing in the quarter, especially on the expense side, comes out of the technology work we've laid out during REITweek in June. We run a two-layer model. Property operations go through BH Management and their Funnel leasing platform. At the advisory level, we're building NexPoint Intelligence. That's deliberate. Self-managed peers have to spin across every layer at once, while our model captures a disproportionate share of that benefit at a fraction of the capital. In the quarter, the platform converted 24,703 leads into 1,321 applications and 1,226 move-ins, a 5.3% lead to application rate and a 34.6% tour to application rate, both improved from Q1. Self-guided touring keeps scaling. 26.2% of tours in the quarter were self-guided, that's up from 18.7% in Q1, that's after hours demand we otherwise would lose.

Speaker #1: We run a two-layer model: property operations go through BH Management and their Funnel leasing platform. At the advisor level, we're building NextPoint Intelligence. That's deliberate. Self-managed peers have to spend across every layer at once, while our model captures a disproportionate share of that benefit at a fraction of the capital.

Speaker #1: In the quarter, the platform converted 24,703 leads into 1,321 applications and 1,226 move-ins; a 5.3% lead-to-application rate and a 34.6% tour-to-application rate, both improved from the first quarter.

Speaker #1: Self-guided touring keeps scaling, 26.2% of tours in the quarter were self-guided, and that's up from 18.7% in the first quarter. And that's after hours demand we otherwise would lose.

Speaker #1: Quick word on Sedona Mountain: the 321-unit community in North Las Vegas that we brought in December of last year for 73.25 million. The occupancy at the property closed at 92.2% for the quarter, up 430 basis points from the first quarter, and NOI is beating budget by almost 5%, with expenses 12.2% under forecast.

Matt McGraner: Quick word on Sedona Mountain, the 321-unit community in North Las Vegas that we bought in December of last year for $73.25 million. The occupancy at the property closed at 92.2% for the quarter, up 430 basis points from Q1, NOI is beating budget by almost 5%, with expenses 12.2% under forecast. Roof, exterior paint, SmartRent, and amenity work are complete, we're still targeting and on track to generate a 7.2% NOI CAGR through 2029, taking a high 5 cap rate purchase to a 7.5% to 8% stabilized yield. On the transaction market and capital allocation, institutional volume remains well below last year, cap rates have remained sticky, the bid-ask remains wide, pointing to 2027 for a clear recovery and more transaction volume.

Matthew McGraner: Quick word on Sedona Mountain, the 321-unit community in North Las Vegas that we bought in December of last year for $73.25 million. The occupancy at the property closed at 92.2% for the quarter, up 430 basis points from Q1, NOI is beating budget by almost 5%, with expenses 12.2% under forecast. Roof, exterior paint, SmartRent, and amenity work are complete, we're still targeting and on track to generate a 7.2% NOI CAGR through 2029, taking a high 5 cap rate purchase to a 7.5% to 8% stabilized yield. On the transaction market and capital allocation, institutional volume remains well below last year, cap rates have remained sticky, the bid-ask remains wide, pointing to 2027 for a clear recovery and more transaction volume.

Speaker #1: Roof, exterior paint, smart rent, and amenity work are complete, and we're still targeting—and on track to generate—a 7.2% NOI CAGR through 2029, taking a high-five cap rate purchase to a 7.5% to 8% stabilized yield.

Speaker #1: On the transaction market and capital allocation: institutional volume remains well below last year, and cap rates have remained sticky. The bid-ask spread also remains wide.

Speaker #1: Pointing to 2027 for a clearer recovery and more transaction volume. That said, we’ve watched well-located Sunbelt assets trade materially tighter than our own implied cap rate, which reinforces the NAV gap Paul described.

Matt McGraner: That said, we've watched well-located Sun Belt assets trade materially tighter than our own implied NAV cap rate, which reinforces the NAV gap Paul described. Our capital allocation priorities are straightforward. Our job is to close the value gap through operating execution into 2027, recycling capital, and buying back stock. One item on earnings composition. Our revised guidance includes about $0.05 of realized interest income from a bridge lending investment tied to a Waterford DST transaction sourced through our advisor's platform. It's a discrete realized deployment of balance sheet capacity earning an accretive market return. We're carrying it as realized income rather than embedding a forward estimate, and we'll report it as it happens. In closing, the H1 beat our plan. Same-store revenue improved 160 basis points in its year-over-year comp between the Q1 and Q2.

Matthew McGraner: That said, we've watched well-located Sun Belt assets trade materially tighter than our own implied NAV cap rate, which reinforces the NAV gap Paul described. Our capital allocation priorities are straightforward. Our job is to close the value gap through operating execution into 2027, recycling capital, and buying back stock. One item on earnings composition. Our revised guidance includes about $0.05 of realized interest income from a bridge lending investment tied to a Waterford DST transaction sourced through our advisor's platform. It's a discrete realized deployment of balance sheet capacity earning an accretive market return. We're carrying it as realized income rather than embedding a forward estimate, and we'll report it as it happens. In closing, the H1 beat our plan. Same-store revenue improved 160 basis points in its year-over-year comp between the Q1 and Q2.

Speaker #1: Our capital allocation priorities are straightforward. Our job is to close the value gap through operating execution into 2027, recycling capital, and buying back stock.

Speaker #1: One item on earnings composition: our revised guidance includes about $0.05 of realized interest income from a bridge lending investment tied to a Waterford DST transaction, sourced through our advisor's platform.

Speaker #1: It's a discrete realized deployment of balance sheet capacity, earning an accretive market return. We're carrying it as realized income rather than embedding it forward estimate, and we'll report it as it happens.

Speaker #1: In closing, the first half beat our plan. Same-store revenue improved 160 basis points in its year-over-year comp between the first and second quarters. Blended lease tradeouts went from a negative 1.7% in April to a positive 30 basis points in July.

Matt McGraner: Blended lease trade outs went from a -1.7% in April to a +30 basis points in July. Occupancy is stable, retention is up, and expenses are coming in better across every market, and supply is rolling over fastest in the markets where we've been most pressured. That's what makes the setup compelling. 2026, we absorb the rate repricing and the last of the supply. 2027, we get to the supply cliff and the leasing earn in. The earn in is not a forecast. It's math on leases we've already signed. We're moving into the best supply-demand backdrop in five years, and the renter-by-necessity cohort is only expanding as affordability stays extreme. The fundamental recovery is more certain today than it has been in recent memory. I want to thank everyone here at NexPoint and BH for their hard work.

Matthew McGraner: Blended lease trade outs went from a -1.7% in April to a +30 basis points in July. Occupancy is stable, retention is up, and expenses are coming in better across every market, and supply is rolling over fastest in the markets where we've been most pressured. That's what makes the setup compelling. 2026, we absorb the rate repricing and the last of the supply. 2027, we get to the supply cliff and the leasing earn in. The earn in is not a forecast. It's math on leases we've already signed. We're moving into the best supply-demand backdrop in five years, and the renter-by-necessity cohort is only expanding as affordability stays extreme. The fundamental recovery is more certain today than it has been in recent memory. I want to thank everyone here at NexPoint and BH for their hard work.

Speaker #1: Occupancy is stable, retention is up, and expenses are coming in better across every market, and supply is rolling over fastest in the markets where we've been most pressured.

Speaker #1: That's what makes the setup compelling: 2026, we absorbed the rate repricing, 2027, we get to the supply flip in the leasing earn-in, and the earn-in is not a forecast.

Speaker #1: It's math on leases we've already signed. We're moving into the best supply-demand backdrop in five years, and the winner by necessity cohort is only expanding as affordability stays extreme.

Speaker #1: The fundamental recovery is more certain today than it has been in recent memory. I want to thank everyone here at NexPoint and BH for their hard work. With that, operator, let's open it up for questions.

Matt McGraner: With that, the operator, let's open it up for questions.

Matthew McGraner: With that, the operator, let's open it up for questions.

Speaker #2: We will now begin the question and answer session. If you would like to ask a question, please press star 1 to raise your hand.

Operator 3: We will now begin the question-and-answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Peter Abramowitz with Deutsche Bank. Your line is open. Please go ahead.

Operator: We will now begin the question-and-answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Peter Abramowitz with Deutsche Bank. Your line is open. Please go ahead.

Speaker #2: To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality.

Speaker #2: If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Peter Abramowitz with Deutsche Bank.

Speaker #2: Your line is open. Please go ahead.

Speaker #3: Yes, thank you for taking the question. I appreciate it. I just want to go back to Matt. I think you had some comments about the improvements in the operating environment, and I think you used the term, sort of expecting a clean inflection in the second half of the year and into 2027.

Peter Abramowitz: Yes. Thank you for taking the question. I appreciate it. I just want to go back to Matt. I think you had some comments about the improvements in the operating environment. I think you used the term sort of expecting a clean inflection in the H2 of the year and into 2027. I guess just wondering how to interpret that. What do you consider sort of a clean inflection as you described it? Is it positive new lease rates, or otherwise? Just help us frame how you're thinking about that and how it kind of shapes how you're thinking about the operating environment into next year.

Speaker #3: I guess I’m just wondering how to interpret that. What do you consider a sort of a clean inflection, as you described it? Is it positive new lease rates, or otherwise?

Speaker #3: Just help us frame how you're thinking about that, and how it kind of shapes how you're thinking about the operating environment into next year.

Speaker #1: Yeah. I was referring to positive new lease rates. Our revisions to the guidance are concentrated really in four assets, four or five assets. That make up about 2.2 million dollars of gross potential rent revisions.

Matt McGraner: Yeah. I was referring to positive new lease rates. Our revisions to the guidance are concentrated really in four or five assets that make up about $2.2 million of gross potential rent revisions. Really those markets were just not as strong as we originally thought. As we look forward in the new guidance and what it implies for new leases, we're slightly negative in the Q3 and then modeling slightly positive in the Q4. That's the quarter that I think we feel the best about of the year, and that kind of clean inflection is the positive new lease pricing that's implied in that guidance.

Matthew McGraner: Yeah. I was referring to positive new lease rates. Our revisions to the guidance are concentrated really in four or five assets that make up about $2.2 million of gross potential rent revisions. Really those markets were just not as strong as we originally thought. As we look forward in the new guidance and what it implies for new leases, we're slightly negative in the Q3 and then modeling slightly positive in the Q4. That's the quarter that I think we feel the best about of the year, and that kind of clean inflection is the positive new lease pricing that's implied in that guidance.

Speaker #1: And really, those markets were just not as strong as we originally thought. And so as we look forward in the new guidance and what it implies for new leases, we're slightly negative in the third quarter and then modeling slightly positive in the fourth quarter.

Speaker #1: And that's the quarter that I think we feel the best about of the year, and that kind of clean inflection is the positive new lease pricing that's implied in that guidance.

Speaker #3: Okay. That makes sense. And then I think your average occupancy was 93.6 for the entire quarter. I know in your NAREET update, I think you were running around 94% at the end of April and the end of May.

Peter Abramowitz: Okay. That makes sense. I think your average occupancy was 93.6 for the entire quarter. I know in your NAREIT update, I think you were running around 94% at the end of April and the end of May. Just wondering, I know there can be differences between average occupancy and month end and quarter end, but did you have a little bit of occupancy kind of give back as pricing was starting to ramp or continuing to ramp throughout June? I guess what was the update on occupancy in July as well?

Speaker #3: So just wondering, I know there can be differences between average occupancy and month-end and quarter-end. But did you have a little bit of occupancy kind of give back as pricing was starting to ramp or continuing to ramp?

Speaker #3: Throughout June, and, I guess, what was the update on occupancy in July as well?

Speaker #1: Yeah, Bona, can you get a July occupancy for me? But the in terms of the strategy, we had we were deliberate in trying to hold rates on the new lease front.

Matt McGraner: Yeah. Bonner, can you get July occupancy for me? In terms of the strategy we had, we were deliberate in trying to hold rates on the new lease front. We lost a little bit of, call it 30, 40 basis points. Good memory back to NAREIT. The strategy was to try to hold pricing as much as we could, which bore out sequentially month by month. The new lease pricing did improve as we just reported. Then, Barnett, do you have?

Matthew McGraner: Yeah. Bonner, can you get July occupancy for me? In terms of the strategy we had, we were deliberate in trying to hold rates on the new lease front. We lost a little bit of, call it 30, 40 basis points. Good memory back to NAREIT. The strategy was to try to hold pricing as much as we could, which bore out sequentially month by month. The new lease pricing did improve as we just reported. Then, Barnett, do you have?

Speaker #1: And so we lost a little bit of call it 30, 40 basis points. Good memory back to NAREET. But we're the strategy was to try to hold pricing as much as we could, which bore out sequentially month by month.

Speaker #1: The new lease pricing did improve, as we just reported. And then Bona, do you have July?

Bonner McDermett: Yeah, just a little bit of clarification. Peter, the occupancy numbers we report in the supplement are as of point in time, so that 93.6 is a 30 June physical end date. The average financial occupancy for the quarter was about 93.8. You're right. When we were at NAREIT early June, we were 94 flat physical. I think, looking at where we thought we had some better pricing, we were a little bit more aggressive, both on new lease pricing and renewals. I think that a certain number of these assets that Matt's talking to, we thought we had a little bit more pricing power than was borne out, and that ultimately eroded, call it 40 basis points of occupancy between first week of June toward the end of the month.

Speaker #4: Yeah. And just a little bit of clarification. So Peter, the occupancy numbers we report in the supplement are as of point in time, so that 93.6 is a 630 physical end date.

Speaker #4: So, the average financial occupancy for the quarter was about 93.8%. You're right. When we were at NAREIT in early June, we were 94% flat on physical.

Speaker #4: I think, looking at where we thought we had some better pricing, we were a little bit more aggressive, both on new lease pricing and renewals.

Speaker #4: I think that, and with a certain number of these assets that Matt's talking to, we thought we had a little bit more pricing power than was borne out.

Speaker #4: And that ultimately eroded, call it, 40 bps of occupancy between the first week of June and toward the end of the month. Rolling into July, I think in the operational update we provide in the supplement, you'll see the leasing funnel is working.

Bonner McDermett: Rolling into July, I think in the operational update we provide in the supplement, you'll see the leasing Funnel is working. We're generating pretty high lead volume. We think it's a very healthy seasonal time, and the inflection to a positive blend on rates. We're prioritizing pricing a little bit. We're trying to push pricing, and we're okay. Certainly we'd love to be a little bit healthier on occupancy, but running kind of mid 93s and getting to that inflection point in new lease rates is more of a focus today.

Speaker #4: We're generating pretty high lead volume. We think it's a very healthy seasonal time. And with the inflection to a positive blend on rates, we're prioritizing pricing a little bit.

Speaker #4: We're trying to push pricing, and we're okay. I mean, certainly, we'd love to be a little bit healthier on occupancy, but we're running kind of mid-93s, and getting to that inflection point in new lease rates is more of a focus today.

Speaker #3: All right. That's all from me. Thanks for the time.

Peter Abramowitz: All right. That's all for me. Thanks for the time.

Speaker #4: Thanks, Peter.

Matt McGraner: Thank you.

Matthew McGraner: Thank you.

Speaker #2: There are no further questions at this time. I will now turn the call back to the management team for closing remarks.

Operator 3: There are no further questions at this time. I will now turn the call back to the management team for closing remarks.

Operator: There are no further questions at this time. I will now turn the call back to the management team for closing remarks.

Speaker #1: Yeah. Thank you for everyone's participation today, and we look forward to speaking after Q3. Have a good day.

Matt McGraner: Yeah, thank you for everyone's participation today. Look forward to speaking after Q3. Have a good day.

Matthew McGraner: Yeah, thank you for everyone's participation today. Look forward to speaking after Q3. Have a good day.

Operator 3: This concludes today's call. Thank you for attending. You may now disconnect.

Operator: This concludes today's call. Thank you for attending. You may now disconnect.

Q2 2026 NexPoint Residential Trust Inc Earnings Call

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