NexPoint Residential Trust Sees Resilience in Class-B Sunbelt Portfolio

With its focus on class-B multifamily properties located in the Southeastern and Southwestern United States, NexPoint Residential Trust, Inc. (NYSE: NXRT) has a business model that has proven resilient throughout the coronavirus crisis, CFO Brian Mitts said.

In a video interview, Mitts said that since April, NexPoint has seen rent collection “basically mirror what we’ve historically had. It’s trending very well for us.”

Las Vegas and Orlando, Florida were NexPoint’s hardest-hit markets, but are now trending “in a very positive way, but are lagging some of our other markets,” Mitts added.

Meanwhile, trends that were already in place pre-crisis are now in the process of accelerating, according to Mitts, such as migration to Sunbelt states from some of the coastal markets and higher tax states, as well as the early phases of a de-densification trend.

Mitts said NexPoint has always banked on class-B property being more resilient through a downturn. NexPoint’s renovation strategy to upgrade units across its portfolio has also attracted a tenant base that wants a quality product, but without the class-A rent. He added that NexPoint’s renovation strategy is demand-driven, with the company spending less in Las Vegas than in Phoenix.

Looking ahead, Mitts said NexPoint is fortunate to have a strong balance sheet and plenty of liquidity, putting the company in a position to grow the portfolio as opportunities emerge as a result of the crisis.