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NexPoint Residential Trust, Inc. Completes Refinancings of 18-Properties With 1 Additional Refinancing Expected to Close on December 1st; "De-risks" the Balance Sheet through Improved Cost of Capital/Extends Weighted Average Maturity to 6.3 years

DALLAS, Dec. 1, 2022 /PRNewswire/ -- NexPoint Residential Trust, Inc. ("NXRT" or the "Company") (NYSE: NXRT) announced today 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 20th 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.

Outstanding Debt Details

Mortgage Debt

The following table contains summary information concerning the mortgage debt of the Company as of December 1, 2022 ($ in 000s):

Operating Properties


Type


Term 
(months)


Outstanding
Principal (1)


Interest 
Rate (2)


Maturity Date


The Venue on Camelback


Floating


84


$ 28,093


5.75 %


7/1/2024

(5)

Sabal Palm
at Lake Buena Vista 


Floating


84


42,100


5.37 %


9/1/2025


Timber Creek


Floating


84


24,100


5.33 %


10/1/2025


Radbourne Lake


Floating


84


20,000


5.36 %


10/1/2025


Crestmont Reserve


Floating


84


12,061


5.25 %


10/1/2025


Brandywine I & II


Floating


84


43,835


5.25 %


10/1/2025


Summers Landing


Floating


84


10,109


5.25 %


10/1/2025


Residences
at Glenview Reserve


Floating


84


25,977


5.51 %


10/1/2025


Bella Vista


Floating


84


29,040


5.39 %


2/1/2026


The Enclave


Floating


84


25,322


5.39 %


2/1/2026


The Heritage


Floating


84


24,625


5.39 %


2/1/2026


Avant at Pembroke Pines


Floating


84


177,101


5.50 %


9/1/2026


Arbors of Brentwood


Floating


84


34,237


5.50 %


10/1/2026


Creekside at Matthews


Floating


84


31,900


5.52 %


7/1/2028


Residences at West Place


Fixed


120


33,817


4.24 %


10/1/2028


High House at Cary


Floating


84


46,625


5.68 %


1/1/2029


The Adair


Floating


84


35,115


5.64 %


4/1/2029


Estates on Maryland


Floating


84


43,157


5.64 %


4/1/2029


Six Forks Station


Floating


120


41,180


5.39 %


10/1/2031


Arbors on Forest Ridge


Floating


120


19,184


5.22 %


12/1/2032

(3)

Cutter's Point


Floating


120


21,524


5.22 %


12/1/2032

(3)

Silverbrook


Floating


120


46,088


5.22 %


12/1/2032

(3)

The Summit at Sabal Park


Floating


120


30,826


5.22 %


12/1/2032

(3)

Courtney Cove


Floating


120


36,146


5.22 %


12/1/2032

(3)

The Preserve at Terrell Mill


Floating


120


71,098


5.22 %


12/1/2032

(3)

Versailles


Floating


120


40,247


5.22 %


12/1/2032

(3)

Seasons 704 Apartments


Floating


120


33,132


5.22 %


12/1/2032

(3)

Madera Point


Floating


120


34,457


5.22 %


12/1/2032

(3)

Venue at 8651


Floating


120


18,690


5.22 %


12/1/2032

(3)

Parc500


Floating


120


29,416


5.22 %


12/1/2032

(3)

Rockledge Apartments


Floating


120


93,129


5.22 %


12/1/2032

(3)

Atera Apartments


Floating


120


46,198


5.22 %


12/1/2032

(3)

Torreyana Apartments


Floating


120


50,580


5.22 %


12/1/2032

(3)

Bloom


Floating


120


59,830


5.22 %


12/1/2032

(3)

Bella Solara


Floating


120


40,328


5.22 %


12/1/2032

(3)

Fairways at San Marcos


Floating


120


60,228


5.22 %


12/1/2032

(3)

The Verandas at Lake Norman


Floating


120


29,648


5.22 %


12/1/2032

(3)

Cornerstone


Floating


120


46,804


5.76 %


12/1/2032

(4)







$ 1,535,947


















Held For Sale Property












Hollister Place


Floating


84


14,811


5.41 %


10/1/2025


Old Farm


Floating


84


52,886


5.75 %


7/1/2024


Stone Creek at Old Farm


Floating


84


15,274


5.75 %


7/1/2024








$ 82,971


















(1)  Mortgage debt that is non-recourse to the Company and encumbers the multifamily properties.

(2)  Interest rate is based on a reference rate plus an applicable margin, except for fixed rate mortgage debt. One-month LIBOR was 4.07% and 30-Day Average SOFR was 3.67% as of November 28, 2022.

(3)  The Company completed a 10-year term refinancing of 18 properties at SOFR plus a 1.55% margin. The refinancing closed on November 30, 2022.

(4)  Reflects a 10-year term refinancing of the Cornerstone property at SOFR plus a 2.09% margin, which is expected to close on December 1, 2022.  

(5)  Reflects a 10-year term refinancing of the Venue on Camelback property at SOFR plus a 2.15% margin, which is expected to close on January 31, 2023.

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):

Effective Date


Termination Date


Counterparty


Notional Amount



Fixed Rate
(1)

June 1, 2019


June 1, 2024


KeyBank



50,000




2.0020 %

June 1, 2019


June 1, 2024


Truist



50,000




2.0020 %

September 1, 2019


September 1, 2026


KeyBank



100,000




1.4620 %

September 1, 2019


September 1, 2026


KeyBank



125,000




1.3020 %

January 3, 2020


September 1, 2026


KeyBank



92,500




1.6090 %

March 4, 2020


June 1, 2026


Truist



100,000




0.8200 %

June 1, 2021


September 1, 2026


KeyBank



200,000




0.8450 %

June 1, 2021


September 1, 2026


KeyBank



200,000




0.9530 %

March 1, 2022


March 1, 2025


Truist



145,000




0.5730 %

March 1, 2022


March 1, 2025


Truist



105,000




0.6140 %








1,167,500




1.0682 %(2)

(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 19th 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 19th 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.

About NXRT

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.

Cautionary Statement Regarding Forward-Looking Statements

This press release 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. Forward-looking statements can often be identified by words such as "expect," "anticipate," "estimate," "may," "should," "plan" and similar expressions, and variations or negatives of these words. These forward-looking statements include, but are not limited to, statements regarding the Company's debt profile following the refinancings, the expected closing of an additional property refinancing on December 1, 2022, the expected use of a portion of the refinancing proceeds to repay the corporate credit facility, the expected reduction in NXRT's weighted average interest rate before and after the effect of interest rate swaps, the expected closing of an additional property level mortgage refinancing in January 2023 and the results of the refinancings. They are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed in any forward-looking statement, including that the 19th property refinancing doesn't close on December 1, 2022 or is delayed and those described in our filings with the Securities and Exchange Commission, particularly those described in our Annual Report on Form 10-K. Readers 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 other filings with the SEC for a more complete discussion of the risks and other factors that could affect any forward-looking statements. The statements made herein speak only as of the date of this release and except as required by law, NXRT does not undertake any obligation to publicly update or revise any forward-looking statements.

Contact:
Kristen Thomas
Investor Relations
IR@nexpoint.com

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SOURCE NexPoint Residential Trust, Inc.

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