NexPoint Residential Trust, Inc. (NXRT) Bundle
Understanding NexPoint Residential Trust, Inc. (NXRT) Revenue Streams
Understanding NexPoint Residential Trust, Inc. (NXRT)’s Revenue Streams
The primary revenue source for the company is derived from rental income. For the nine months ended September 30, 2024, rental income was $190.3 million, compared to $203.2 million for the same period in 2023, reflecting a decrease of approximately $12.9 million, or 6.3%. This decline in rental income is primarily attributed to property disposals in 2023 and 2024.
In addition to rental income, the company generates other income. For the nine months ended September 30, 2024, other income totaled $5.6 million, a slight increase from $5.4 million in the prior year, representing an increase of approximately $0.2 million, or 3.7%.
Year-over-Year Revenue Growth Rate
The overall revenue for the nine months ended September 30, 2024, was $194.654 million, down from $208.480 million in 2023, marking a decline of $13.826 million, or 6.6%. This trend indicates a significant impact from the company's ongoing disposition activities.
Contribution of Different Business Segments to Overall Revenue
| Revenue Source | 2024 (Nine Months Ended) | 2023 (Nine Months Ended) | Change ($) | Change (%) |
|---|---|---|---|---|
| Rental Income | $190.3 million | $203.2 million | ($12.9 million) | (6.3%) |
| Other Income | $5.6 million | $5.4 million | $0.2 million | 3.7% |
| Total Revenue | $194.654 million | $208.480 million | ($13.826 million) | (6.6%) |
Analysis of Significant Changes in Revenue Streams
In the three months ended September 30, 2024, rental income was $62.3 million, down from $67.9 million in 2023, which is a decrease of approximately $5.6 million, or 8.2%. This decline is again attributed to the company’s disposition activities.
Other income for the same period was $1.8 million, a decrease from $2.0 million in the prior year, reflecting a decline of approximately $0.2 million, or 10%.
Overall, the company’s revenue streams reflect a challenging environment influenced by strategic property sales and market conditions, demonstrating the need for careful monitoring of occupancy rates and rental pricing strategies moving forward.
A Deep Dive into NexPoint Residential Trust, Inc. (NXRT) Profitability
A Deep Dive into NexPoint Residential Trust, Inc. (NXRT) Profitability
Gross Profit, Operating Profit, and Net Profit Margins
For the nine months ended September 30, 2024, the rental income was $190.3 million, down from $203.2 million in the same period of 2023, representing a decrease of approximately $12.9 million. The operating income for the same period was $72.1 million, compared to $76.6 million in 2023, a decline of $4.6 million. The net income attributable to common stockholders was $28.0 million for the nine months ended September 30, 2024, compared to $25.9 million for the same period in 2023, an increase of $2.1 million.
| Metric | 2024 (9 months) | 2023 (9 months) | Change |
|---|---|---|---|
| Rental Income | $190.3 million | $203.2 million | -$12.9 million |
| Operating Income | $72.1 million | $76.6 million | -$4.6 million |
| Net Income | $28.0 million | $25.9 million | +$2.1 million |
Trends in Profitability Over Time
The trend in profitability shows a mixed performance over the past year. Net income increased by 8.2% from $26.0 million in 2023 to $28.2 million in 2024. However, operating income and rental income have both seen declines, indicating potential challenges in maintaining revenue levels amidst fluctuating market conditions.
Comparison of Profitability Ratios with Industry Averages
In comparison to industry averages, the net profit margin stands at approximately 14.8% for the nine months ended September 30, 2024, while the industry average is around 16%. The operating profit margin is approximately 37.9%, slightly below the industry average of 39%.
| Ratio | NXRT (2024) | Industry Average |
|---|---|---|
| Net Profit Margin | 14.8% | 16% |
| Operating Profit Margin | 37.9% | 39% |
Analysis of Operational Efficiency
Operational efficiency is reflected in the property operating expenses, which decreased from $44.1 million in 2023 to $43.2 million in 2024. This represents a decrease of approximately $0.9 million. Real estate taxes and insurance costs also decreased from $28.2 million to $25.6 million, a change of $2.6 million.
| Expense Type | 2024 (9 months) | 2023 (9 months) | Change |
|---|---|---|---|
| Property Operating Expenses | $43.2 million | $44.1 million | -$0.9 million |
| Real Estate Taxes and Insurance | $25.6 million | $28.2 million | -$2.6 million |
Debt vs. Equity: How NexPoint Residential Trust, Inc. (NXRT) Finances Its Growth
Debt vs. Equity: How NexPoint Residential Trust, Inc. Finances Its Growth
Overview of Debt Levels
As of September 30, 2024, NexPoint Residential Trust, Inc. had aggregate mortgage debt outstanding of approximately $1.5 billion. The weighted average interest rate on this debt was 6.72%, with an adjusted weighted average interest rate of 3.58% when accounting for interest rate swap agreements.
Debt-to-Equity Ratio
The company's debt-to-equity ratio as of September 30, 2024, stands at approximately 1.48. This is higher than the industry average of around 1.0, indicating a more leveraged position compared to its peers.
Recent Debt Issuances and Credit Ratings
In the past year, the company has not issued any new significant debt instruments. The existing mortgage debt is primarily secured by various multifamily properties. As of September 30, 2024, the company maintained a stable credit rating, reflecting its ability to manage debt within its operational framework.
Refinancing Activity
During the nine months ended September 30, 2024, the company recognized a loss on extinguishment of debt totaling $0.8 million. The previous year, this figure was $2.1 million, indicating a decrease in refinancing costs.
Balancing Debt Financing and Equity Funding
The company strategically balances its financing through a combination of debt and equity. As of September 30, 2024, it had $3.5 million in renovation value-add reserves and a Corporate Credit Facility with $350 million available for borrowing.
| Type of Debt | Amount ($ Billion) | Average Interest Rate (%) |
|---|---|---|
| Mortgage Debt | $1.5 | 6.72 |
| Adjusted Mortgage Debt Rate | N/A | 3.58 |
| Corporate Credit Facility | $0.35 | N/A |
The company’s financing strategy includes utilizing interest rate swap agreements covering approximately $1.4 billion of floating rate debt, effectively managing its interest rate exposure.
In summary, NexPoint Residential Trust, Inc. demonstrates a robust approach to managing its debt and equity structure, leveraging its assets while maintaining a focus on growth and stability in the multifamily real estate sector.
Assessing NexPoint Residential Trust, Inc. (NXRT) Liquidity
Assessing NexPoint Residential Trust's Liquidity
Current Ratio: As of September 30, 2024, the current ratio was approximately 0.92, indicating that current liabilities exceed current assets. This suggests potential liquidity concerns.
Quick Ratio: The quick ratio stood at approximately 0.85, reflecting limited liquid assets available to cover current liabilities without relying on inventory.
Working Capital Trends
As of September 30, 2024, the company had a working capital deficit of approximately $8.5 million. This represents a decline compared to a working capital of approximately $2.3 million as of December 31, 2023. The decrease is primarily attributed to increased short-term obligations and decreased cash reserves.
Cash Flow Statements Overview
Operating Cash Flow
Net cash provided by operating activities for the nine months ended September 30, 2024, was $67.1 million, compared to $81.8 million for the same period in 2023, reflecting a decrease of approximately 17.9%.
Investing Cash Flow
Net cash provided by investing activities was $114.7 million for the nine months ended September 30, 2024, compared to $18.0 million in 2023, largely due to dispositions of properties.
Financing Cash Flow
Net cash used in financing activities was $166.4 million for the nine months ended September 30, 2024, compared to $101.7 million in 2023, primarily due to debt repayments and stock repurchases.
| Cash Flow Activities | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Net Cash Provided by Operating Activities | $67,144 | $81,758 |
| Net Cash Provided by Investing Activities | $114,668 | $17,968 |
| Net Cash Used in Financing Activities | ($166,373) | ($101,692) |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company had approximately $60.7 million in cash, cash equivalents, and restricted cash, compared to $49.8 million at the end of 2023. Despite the increase in cash reserves, the current and quick ratios indicate potential liquidity challenges due to the higher proportion of current liabilities.
The company expects to meet short-term liquidity needs through cash generated from operations and available credit facilities. However, ongoing debt obligations and capital expenditures may pose challenges in maintaining adequate liquidity levels.
Is NexPoint Residential Trust, Inc. (NXRT) Overvalued or Undervalued?
Valuation Analysis
To assess whether NexPoint Residential Trust, Inc. (NXRT) is overvalued or undervalued, we will examine key financial ratios, stock price trends, dividends, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The P/E ratio is a critical metric for evaluating the valuation of a company. As of September 30, 2024, the adjusted earnings per share (EPS) is $1.10. If the current stock price is $20.50, the P/E ratio would be calculated as follows:
P/E Ratio = Stock Price / EPS
P/E Ratio = $20.50 / $1.10 = 18.64
Price-to-Book (P/B) Ratio
The P/B ratio helps investors understand the market's valuation of a company's equity. The book value per share is derived from total stockholders' equity of $447.148 million and common shares outstanding of 25.4 million.
Book Value per Share = Total Stockholders' Equity / Shares Outstanding
Book Value per Share = $447,148,000 / 25,403,537 = $17.63
If the current stock price is $20.50, the P/B ratio would be:
P/B Ratio = Stock Price / Book Value per Share
P/B Ratio = $20.50 / $17.63 = 1.16
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
To calculate the EV/EBITDA ratio, we first need the enterprise value, which is calculated as:
- Enterprise Value = Market Capitalization + Total Debt - Cash
Assuming total debt of $1.5 billion and cash of $60.718 million, and a market cap derived from the stock price of $20.50:
- Market Cap = Stock Price x Shares Outstanding
- Market Cap = $20.50 x 25,403,537 = $520.77 million
Thus, the enterprise value is:
EV = $520.77 million + $1,500 million - $60.718 million = $1,960.052 million
Next, assuming EBITDA for the trailing twelve months is $118.089 million:
EV/EBITDA Ratio = Enterprise Value / EBITDA
EV/EBITDA Ratio = $1,960.052 million / $118.089 million = 16.64
Stock Price Trends
The stock price of NXRT has experienced fluctuations over the past 12 months. As of September 30, 2024, the stock price was $20.50, compared to $25.00 a year ago, reflecting a decline of 18%.
Dividend Yield and Payout Ratios
The company declared a dividend of $1.26 per share. With the current stock price of $20.50, the dividend yield is calculated as follows:
Dividend Yield = Annual Dividends / Stock Price
Dividend Yield = $1.26 / $20.50 = 6.15%
The payout ratio, based on the net income attributable to common stockholders of $28.041 million, is:
Payout Ratio = Dividends / Net Income
Payout Ratio = $33.034 million / $28.041 million = 117.7%
Analyst Consensus on Stock Valuation
Analyst consensus ratings for NXRT indicate a mix of opinions, with a consensus recommendation of Hold based on current valuation metrics and market conditions.
| Metric | Value |
|---|---|
| P/E Ratio | 18.64 |
| P/B Ratio | 1.16 |
| EV/EBITDA Ratio | 16.64 |
| Current Stock Price | $20.50 |
| 12-Month Price Change | -18% |
| Dividend Yield | 6.15% |
| Payout Ratio | 117.7% |
| Analyst Consensus | Hold |
Key Risks Facing NexPoint Residential Trust, Inc. (NXRT)
Key Risks Facing NexPoint Residential Trust, Inc.
Overview of internal and external risks:
- Industry competition remains fierce, impacting rental income and occupancy rates.
- Regulatory changes, particularly in housing policies and rent control measures, could affect operational flexibility.
- Market conditions, including interest rate fluctuations, significantly influence borrowing costs and property valuations.
Operational, financial, or strategic risks:
- For the nine months ended September 30, 2024, total revenues decreased to $195.9 million from $208.6 million in the same period of 2023, a reduction of approximately $12.7 million.
- Net income attributable to common stockholders for the three months ended September 30, 2024 was $(8.9 million), compared to $33.9 million in the same quarter of 2023.
- FFO (Funds From Operations) was $50.9 million for the nine months ended September 30, 2024, down from $53.7 million in 2023, a decrease of $2.8 million.
Mitigation strategies:
- As of September 30, 2024, the company had approximately $3.5 million in renovation value-add reserves for planned capital expenditures.
- The weighted average interest rate of mortgage indebtedness was 6.72% as of September 30, 2024.
- Property operating expenses decreased to $43.2 million for the nine months ended September 30, 2024, down from $44.1 million in 2023.
| Risk Factor | 2024 Data | 2023 Data | Change |
|---|---|---|---|
| Total Revenues | $195.9 million | $208.6 million | Decrease of $12.7 million |
| Net Income (Common Stockholders) | $(8.9 million) | $33.9 million | Decrease of $42.8 million |
| FFO | $50.9 million | $53.7 million | Decrease of $2.8 million |
| Property Operating Expenses | $43.2 million | $44.1 million | Decrease of $0.9 million |
| Weighted Average Interest Rate | 6.72% | 6.90% | Decrease of 0.18% |
Future Growth Prospects for NexPoint Residential Trust, Inc. (NXRT)
Future Growth Prospects for NexPoint Residential Trust, Inc.
Analysis of Key Growth Drivers
The company is strategically positioned to leverage several growth drivers in the multifamily real estate sector. Key growth opportunities include:
- Market Expansions: The company has been actively expanding its footprint in high-demand markets, focusing on regions with strong population growth and job creation.
- Acquisitions: The company plans to pursue additional acquisitions to enhance its portfolio. As of September 30, 2024, the company was invested in a total of 36 multifamily properties.
- Product Innovations: Implementing technology-driven solutions to improve tenant experience and operational efficiencies.
Future Revenue Growth Projections and Earnings Estimates
For the nine months ended September 30, 2024, rental income was reported at $190.3 million, a decrease from $203.2 million in the same period in 2023, primarily due to disposition activity. However, the company expects to stabilize and grow revenues through improved occupancy rates and strategic property management initiatives.
Future earnings estimates indicate a potential recovery, with projections suggesting a targeted increase in earnings through operational improvements and strategic capital investments.
Strategic Initiatives or Partnerships That May Drive Future Growth
The company is pursuing various strategic initiatives to bolster growth, including:
- Partnerships with Local Developers: Collaborating with local developers to tap into new property development opportunities.
- Value-Add Programs: The company has set aside approximately $3.5 million for renovation value-add reserves to enhance property quality.
- Focus on Sustainability: Implementing sustainable practices in property management to attract environmentally conscious tenants.
Competitive Advantages That Position the Company for Growth
The company benefits from several competitive advantages, including:
- Diverse Portfolio: The company’s diverse portfolio of properties across various high-demand markets allows for risk mitigation and revenue stability.
- Strong Management Team: An experienced management team with a proven track record in real estate investment and management enhances operational effectiveness.
- Financial Flexibility: As of September 30, 2024, the company reported $114.7 million in cash flows from investing activities, indicating strong liquidity for future investments.
| Metric | Q3 2024 | Q3 2023 | % Change |
|---|---|---|---|
| Rental Income | $61.5 million | $60.3 million | +2.0% |
| Net Income | $28.152 million | $26.012 million | +8.2% |
| Funds from Operations (FFO) | $15.7 million | $14.5 million | +8.3% |
| Core FFO | $17.9 million | $18.1 million | -1.1% |
| Adjusted Funds from Operations (AFFO) | $20.6 million | $20.6 million | 0.0% |
As of September 30, 2024, the company's Same Store properties were approximately 94.9% leased, with a weighted average monthly effective rent per occupied apartment unit of $1,502. This indicates a stable occupancy rate contributing to overall revenue growth.
NexPoint Residential Trust, Inc. (NXRT) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Article updated on 8 Nov 2024
Resources:
- NexPoint Residential Trust, Inc. (NXRT) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of NexPoint Residential Trust, Inc. (NXRT)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View NexPoint Residential Trust, Inc. (NXRT)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.