NexPoint Residential Trust's Q4 2024: Unpacking Contradictions in Occupancy, Expenses, and Bad Debt

These are the key contradictions discussed in NexPoint Residential Trust's latest 2024Q4 earnings call, specifically including: Occupancy Growth and Bad Debt Trends, Expense Control Strategies, Raleigh Real Estate Taxes, and Bad Debt Expectations:



Financial Performance:
- NexPoint Residential Trust reported a net loss of $26.9 million or $1.06 per diluted share for Q4 2024, compared to a net income of $18.4 million or $0.70 per diluted share in the same period last year.
- The decrease in net operating income (NOI) from $42.2 million to $38.9 million was driven by a 7.6% decline in Q4 2024, attributed to a 2.2% increase in same-store expenses, which offset a 90 basis point growth in same-store rental income.

Value-Add Business and ROI:
- NexPoint completed 58 full and partial renovations in Q4 2024, achieving an average monthly rent premium of $150 and a 19.2% return on investment (ROI).
- The company executed its value-add business plan by installing 4,730 kitchen and laundry appliances and 11,389 technology packages, resulting in average monthly rental increases of $175 and $50 per unit, respectively.

Dividend and NAV:
- NexPoint declared a quarterly dividend of $0.51 per share, an increase of 147.6% since inception.
- The net asset value (NAV) per share was reported within a range of $44.56 to $58.52, with a midpoint of $51.54, reflecting stability in capital markets and cap rates in their markets.

2025 Guidance:
- For 2025, NexPoint is guiding for Core FFO per diluted share between $2.56 and $2.83, with a midpoint of $2.70.
- Same-store NOI is expected to range between a 3.5% decline and a 50 basis point increase, with a midpoint projecting a negative 1.5% year-over-year reduction.

Occupancy and Rental Revenue Trends:
- NexPoint achieved a same-store occupancy rate of 94.7% for Q4 2024, stable year-over-year.
- Same-store rental income increased by 90 basis points, which was offset by a 2.2% increase in same-store expenses, leading to a 40 basis point decline in same-store NOI.