NexPoint Residential Trust, Inc. Completes Refinancings of 18-Properties With 1 Additional Refinancing Expected to Close on December 1st;

NexPoint Residential Trust, Inc. announced the closing of 18-property mortgage refinancings through KeyBank Real Estate Capital (“KeyBank”) and The Federal Home Loan Mortgage Corporation (“Freddie Mac”). The Company entered into 18 loan agreements and expects to enter into one additional loan agreement on December 1, 2022 for total gross proceeds of $807.6 million, which in the aggregate, represents ~ 47.7% of the Company’s total outstanding debt. Notably, NXRT was able to reach an agreement to refinance at interest rate pricing improved (SOFR + 155 bps) from prior terms. The Company expects to use approximately $245 million of cash from the refinancing proceeds to pay down the outstanding principal balance of the Company’s most expensive debt capital, the corporate credit facility. This refinancing activity extends the Company’s weighted average debt maturity schedule to ~6.34 years (from ~3.33 years) – after this refinancing activity, debt maturing through 2024 equates to ~5.5% of total debt (down from ~44% previously).

Holistically, these refinancings are expected to reduce NXRT’s weighted average interest rate on total debt by 12 bps to 5.35%, before the impact of interest rate swap contracts. Accounting for the hedging impact of the swaps, NXRT’s adjusted weighted average interest rate is expected to be reduced from 3.40% to 3.25%.

With the completion of these refinancings, the Company has no meaningful debt maturities until 2025. The Company has also executed a new loan application to refinance a 20^th property level mortgage, with an expected closing date in January 2023, which is expected to further improve the Company’s weighted average debt maturity and cost of capital.

Refinancing and extending maturities on a significant portion of the Company’s first mortgage debt at favorable terms provides greater strategic flexibility, increases liquidity and modestly “de-risks” the company’s balance sheet.

“NXRT is delighted to announce the completion of this significant refinancing initiative, fortifying our balance sheet and furthering our commitment to great partners in KeyBank and Freddie Mac. We identified an opportunity to capitalize on the slowdown in ‘Mission Driven’ agency debt production heading into the second half of 2022, leveraging our deep relationships and Select Sponsor status with Freddie Mac to drive best execution and deliver an excellent result for shareholders,” said Matt McGraner, Chief Investment Officer.

Interest Rate Swap Agreements

As of December 1, 2022, the Company had the following outstanding interest rate swaps that were designated as cash flow hedges of interest rate risk (dollars in thousands):

(1)  The floating rate option for the interest rate swaps is one-month LIBOR. As of November 28, 2022, one-month LIBOR was 4.07%.
(2)  Represents the weighted average fixed rate of the interest rate swaps.

As of December 1, 2022 and after giving effect to the closing of the 19^th property mortgage refinancing, we had total indebtedness of $1.74 billion at an adjusted weighted average interest rate of 3.25%, of which $1.7 billion was debt with a floating interest rate. As of December 1, 2022 and after giving effect to the closing of the 19^th property mortgage refinancing, interest rate swap agreements effectively covered 74% of our $1.6 billion of floating rate mortgage debt outstanding. For purposes of calculating the adjusted weighted average interest rate of the total indebtedness, we have included the weighted average fixed rate of 1.0682% for one-month LIBOR on the $1.2 billion notional amount of interest rate swap agreements that we have entered into as of December 1, 2022.

NexPoint Residential Trust is a publicly traded REIT, with its shares listed on the New York Stock Exchange under the symbol “NXRT,” primarily focused on acquiring, owning and operating well-located middle-income multifamily properties with “value-add” potential in large cities and suburban submarkets of large cities, primarily in the Southeastern and Southwestern United States. NXRT is externally advised by NexPoint Real Estate Advisors, L.P., an affiliate of NexPoint Advisors, L.P., an SEC-registered investment advisor, which has extensive real estate experience.

Contact:
Kristen Thomas
Investor Relations
IR@nexpoint.com

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