Thank you for standing by. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to the Next Point Residential Trust Q2 2025 earning call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press start follow visit number one and on your telephone keypad. If you would like to withdraw your question, press star one again. I would now like to turn the call over to Christine Griffith, Investor Relations, so please go ahead.

Thank you. Good day everyone, and welcome to Nexmont Residential Trust Conference Calls to review the company's results for the second quarter into June 30th, 2025. On the call today are Paul Richards, Executive Vice President and Chief Financial Officer, Matt McGriner, Executive Vice President and Chief Investment Officer, and Bonner McDermott, Vice President, Asset Investment Management. As a reminder, this call is being webcast through the company's website at nsrt.nextpoint.com. Before we begin, I would like to remind everyone that this conference call contains forward-looking statements within the meeting of the Private Securities Litigation Reform Act of 1995 that are based on management's current expectations, assumptions, and beliefs. Listeners should not place undue reliance on any forward-looking statements and are encouraged to review the company's most recent annual report on form 10k and the company's other families with the sec for a more complete discussion of risks and other factors that could affect any forward-looking statements the statements made during this conference call speak only as of today's date and except as required by law nxrt does not undertake any obligation to publicly update or revise any forward-looking statement this conference call also includes an analysis of non-GAAP financial measures. For a more complete discussion of these non-GAAP financial measures, see the company's earnings release that was filed earlier today. I would now like to turn the call over to Paul Richards. Please go ahead, Paul.

Thank you, Kristin, and welcome everyone joining us this morning. We appreciate your time. I'll kick off the call and cover our Q2 results, updated NAV, and guidance outlook for the year, and briefly touch on a few subsequent events. I will then turn over to Matt to discuss specifics on leasing environment and metrics driving our performance and guidance. Results for Q2 are as follows. Net loss for the first quarter was $7 million, or a loss of $0.28 per diluted share on total revenue of $63.1 million. The $7 million net loss for the quarter compares to net income of $10.6 million, or $0.40 earnings per diluted share for the same period in 2024 on total revenue of $64.2 million. For the second quarter of 2025, NOI was $38 million on 35 properties, compared to $38.9 million for the second quarter of 2024 on 36 properties. For the quarter, same-store rent and occupancy decreased 1.3% and 0.8% respectively. This, coupled with a decrease in same-store revenues of 0.2%, led to a decrease in same-store NOI of 1.1% as compared to Q2 2024. As compared to Q1 2025, rents for Q2 2025 on the same sort of portfolio were up 0.3% or $4. We reported Q2 core FFO of $18 million or $0.71 per diluted share compared to $0.69 per diluted share in Q2 2024. During the second quarter for the properties in the portfolio, we completed 555 full and partial upgrades, leased 381 upgraded units, units, achieving an average monthly rent premium of $73 and a 26% return on investment. Since inception, NXRT has completed installation of 9,113 full and partial upgrades, 4,870 kitchen and laundry appliances, and 11,199 tech packages, resulting in $165, $50, and $43 average monthly monthly rental increase per unit, and 20.8%, 64.2%, and 37.2% return on investment respectively. NXRT paid second quarter dividend of $0.51 per share of common stock on June 30th, 2025. Since inception with increased our dividend 147.6%, for Q2 our dividend was 1.39 times covered by Core FFO with the 72.2% payout ratio of Core FFO. During the second quarter, the company repurchased 223,109 shares of its common stock, totaling approximately $7.6 million, at an average price of $34.29 per share. During the second quarter, the company entered into a new five-year $100 million SOFR swap with JPMorgan Chase, with a fixed rate of 3.489%. Turning to the details of our updated NAV estimate. Based on our current estimate of cap rates in our markets and forward NOI, we are reporting a NAV per share range as follows. $43.90 on the low end, $56.73 on the high end, and $50.31 at the midpoint. These are based on average cap rates ranging from 5.25 at the low end to 5.75 at the high end, which remains stable quarter over quarter. Turning to full year 2025 guidance, NXRT is tightening 2025 guidance ranges for core FFO per diluted share and same-store NOI while affirming the midpoint. NXRT is revising 2025 guidance ranges for earnings loss per diluted share, same-store rental income, same-store total revenue, and same-store total expenses. Loss per share and core FFO ranges are as follows. For earnings, loss per diluted share, $1.22 at the high end, $1.40 at the low end, with a midpoint of $1.31, and core FFO per diluted share, $2.84 at the high end, $2.66 at the low end, with affirming the midpoint of $2.75. NXRT is also reaffirming acquisitions and disposition guidance. Lastly, I would like to take the time to discuss a few subsequent events which have occurred over the past few weeks. On July 11, 2025, the company entered into a $200 million corporate revolving credit facility with JPMorgan Chase Bank, Raymond James Bank, RBC, and Synovus. The credit facility may be increased by up to an additional $200 million upon lender consent. The credit facility will mature on June 30, 2028, unless the company exercises its option to extend for an additional one-year term. The new credit facility spread has improved by 15 basis points compared to the prior corporate credit facility on july 28 2025 the company's board approved a quarterly dividend of 51 cents per share payable on september 30th 2025 to stockholders of record on september 15 2025. this completes my prepared remarks so i'll now turn it over to matt for commentary on the portfolio thank you paul let me start by going over our second quarter same store operational results same store total revenue was down 20 basis points with four out of our ten markets averaging at least 1% growth, while our Atlanta and South Florida markets led the way at 3.6% and 2.3%

growth, respectively. Notably, Atlanta's positive results were driven in part by 1% bad debt expense versus second quarter of 2024 bad debt expense of 4%. We're also pleased to report some continued moderation and expense growth for the quarter. Second quarter, same-store operating expenses were up just 1.5% year-over-year. Marketing and payroll declined 4.7% and 2.8% respectively year-over-year, and total controllable expenses are up just 50 basis points. Insurance is down 20%, driven by a favorable market environment on the property casualty side. Second quarter, same-story NOI growth continues to improve in our markets, with the portfolio averaging at negative 1.1%, a marketable improvement from negative 3.8% in the first quarter. Five out of our 10 markets achieved year-over-year NOI growth of 1% or greater, with Raleigh and Atlanta leading the way with 6.8% and 4.4% growth, respectively. Our Q2 same-story NOI margin registered a healthy 60.9%. The portfolio experienced improved revenue growth in Q2 2025, with four out of our 10 markets achieving growth of at least 1.2% or better. Our top four markets were atlanta at 3.6 south florida at 2.3 raleigh at 1.5 charlotte at 1.2 renewal conversions for eligible eligible tenants were 54.2 percent for the quarter with seven out of our ten markets executing renewal rate growth of at least 2.75 again on the expense front they continue to moderate and finish the quarter up only 1.5 percent payroll decline 2.8 percent for this quarter and continues to trend downward as we implement centralized teams and in ai technology our centralized platforms for renewals screening and call centers alongside ai applications deployed across various aspects of the resident experience are driving greater efficiency and enabling reductions in off-site staffing particularly within leasing offices as mentioned previously we are now focused on optimizing our maintenance operations to drive similar efficiencies across our markets again marketing and insurance for the other categories that saw negative growth in the quarter turning to 2025 second half guidance supply pressures have eased somewhat but continue to present concentrated challenges in some of our sub markets according to real page 22q 2025 marked the first quarterly drop of over 20 basis points in inventory growth in over 15 years as new deliveries tapered after peaking in late 2024 despite the slowdown over 400,000 units were delivered in the trailing 12 months sustaining elevated competition in leads ups the upshot here is that after one more quarter of significant deliveries in 3q of 2025 the national delivery outlook contracts to a gfc level output of just 77,000 units per quarter which supports our thesis on accelerating fundamentals in 2026, 27, and 28. More positive news, demand outperformed expectations in the first half of the year. Net absorption surged. The national stabilized occupancy rate improved to 94.6% in July. And XRT started the year off with occupancy at 94.7% and saw an opportunity to take advantage of our historically higher occupancy by upgrading units to market standards, completing 765 units to date with an average ROI of 20.2% and pushing rent growth, which has increased 1% on average since the end of 2024, driven by stronger retention and renewal leasing activity. Front-end pricing has improved from negative 4.73% in Q1 to negative 1.5% in Q2. And in late June and July, we have seen new lease growth slow modestly as operators remain defensive amid economic uncertainty and soft consumer sentiment. Renewal rent growth has been the strongest we've seen over the past 12 months and will remain a focus for the second half of the year. We see several markets continuing to see top-line growth in the second half of this year, and think Tampa, Dallas, Charlotte, and Las Vegas will all exceed our revenue expectations by anywhere from 80 basis points on the low end to 130 basis points on the high end. On the flip side, we think South Florida, Orlando, and Atlanta will be modestly weaker in the second half of the year. South Florida is projected to finish the year at 1.8% top-line growth versus our prior forecast of 2.6% growth. This remains our strongest market overall for rent growth, but our most optimistic expectations for growth have been tempered for now. Orlando, we expect to finish the year at negative 1% versus prior forecast of being flat. And Atlanta, to finish the year at negative 70 basis points versus our prior forecast of flat. And while bad debt has improved significantly, we are feeling the pressure of new supply here, particularly in Cobb County. Due to supply pressures in these sub-markets, we anticipate many of these headwinds to be short-term, as many of the lease-ups are expected to achieve stabilization in the later part of 2025. Bad debt performance has continued to exceed expectations, driven by a decline in evictions. The portfolio finished 2Q with only 50 basis points of net bad debt. We have continued to see bad debt stabilize and expect to hold bad debt between 50 and 75 basis points for the remainder of the year. We expect the growth benefit of reduced bad debt to stabilize in the fourth quarter of this year and remain flat at pre-COVID run rates going into 26. To sum up our revenue outlook, even though rents are decelerating from the first half of 2025 modestly, we still expect to see some growth when compared to the trough that occurred in the second half of 2024. Our occupancy will remain the focus, but our expectation is to average 94% in the second half of 2025 versus 94.7%, which was achieved in the second half of 2024. For this reason, we expect the second half 2025 revenue to be more muted than we initially thought. On the expense front, controllable operating expenses have improved, supported by ongoing efficiencies through centralized operations and implementation of AI-driven technologies. payroll has improved from our initial forecast and we expect that we will lock in better performance in the second half of the year as we beat our first half forecast by just about five hundred thousand or nine point seven percent we see salaries remaining stable in the second half of the year with an expectation that they remain flat repairs and maintenance costs have also moderated particularly turn costs which are trending down and we expect to finish the year 3% below 2024 totals. Again, on our insurance renewal, it was very favorable and the impact will be fully recognized in the second half of 2025 to the tune of $600,000 a year in savings year-over-year. Collectively, these trends support maintaining our current same-store NOI guidance at the midpoint of negative 1.5%, slightly softer revenue growth expectations fully offset by efficient expense management. And while rent growth has underperformed historical Q2 expectations, tightening supply-demand fundamentals, stabilizing occupancy, improving collections, and continued expense discipline support maintaining the NOI outlook. The latest real page summary echoes the sentiment. Quote, momentum trails expectations, but fundamentals are affirming. And that's what we're seeing as well. A brief update on the transaction markets. We continue to actively monitor the sales markets for opportunities and stay close to many movements on cap rates. Several recent portfolio processes in our markets were recently awarded in the five to five and a quarter cap rate range, again, supporting our NAV guide. We, too, are optimistic we'll be able to recycle capital in the second half of the year with targeted acquisitions and dispositions to continue to replenish our rehab pipeline. In closing, in the near term, we will continue to prioritize the balanced approach, again, driving occupancy, maintaining discipline, risk strategies, and managing controllable expenses to support steady NOI growth despite a transitional operating environment. That's all I have for prepared remarks. Thanks to our teams here at NextPointBH for continuing to execute. Now we'd like to turn the call over to the operator to take your questions.

At this time, I would like to remind everyone in order to ask a question, press star then the number one on your telephone keypad. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Kyle Katerinsic with Janie Montgomery Scott. Your line is open.

Hey guys, how much of the $8 million in recurring capitalized maintenance expenditures year to date are non-revenue producing?

Good question. As part of the refinancing activity last year, the agencies looked at, you know, required capex, parking, pavement, siding, things like that. So we have a little bit of elevated spend this quarter over the normal. We also have some more significant projects, particularly in Nashville. We're doing two roof replacement projects in Nashville, some other chunkier spend. So I would say it's elevated certainly over run rate and skewed a little bit more towards that non-revenue generating today uh i think as we work through that in the third quarter uh we'll get to a more normalized run rate in q4 um and i know matt touched on you know the the increase in output of renovations that that's really more focused on kind of a spoke you know one to three thousand dollar opportunities so it's not been an acceleration uh and all that much spend there that's helpful okay and then on the rehab program uh last quarter's call you guys mentioned it would take a probably a few quarters to get back to 400 units a quarter target so what drew such a large increase that allowed you guys to ramp up to the 500 plus units in the second quarter versus uh what you were thinking yeah it's certainly been a focus of ours uh going into the year we recognize um you know there's an opportunity uh it's probably not uh you know 10 to 15 000 a unit full upgrade that we've been doing but where we've seen opportunity we've been able to uh i think deploy a little bit faster than the expected uh credit credit to the bh construction team and the asset management folks here uh we identified an opportunity and we're attacking it full on and then last one on that um for the roi on your post rehab units what like is the useful

life or tenure you usually use to calculate your roi on those and is there any difference between full and partial units no difference and uh i think historically it's been seven years All right.

Thanks, guys. Appreciate it.

Got it.

Your next question comes from the line of Linda Tarr with Jeffries. Your line is open.

Hi. Good morning. Phoenix and Vegas saw bigger drops in 2Q occupancy of down 340 and 250 basis points, respectively. Could you just provide some color on what's happening there? Does that have to do with value add?

And then you also mentioned that Vegas should exceed expectations by year end. is the inflection in 3q or 4q yay hey linda it's matt um take phoenix first phoenix is is uh perhaps the most uh mar the the most um supply constraint or supply um uh driven market that we that we're seeing right now um really it's three properties in the second quarter that uh we're surrounding um lease up deals uh enclave heritage and venue at camelback that's where we saw the most new lease rate pressure of kind of negative eight to negative 10% in terms of new leases. Again, as I mentioned, my prepared remarks, we expect this to subside in the third, probably not the third quarter, but the fourth quarter in the first quarter, first quarter of 2026. So we're doing all we can to be defensive there. And that makes up some of the occupancy loss on the on the Vegas front and um bonner correct me if if you see anything different but really it's it's targeted to one asset um bella solaro which which had um a little bit more uh weaker traffic than um you know than than we thought so um that that makes up uh most of the loss bonner if you have a thing to add to that yeah i would i would say for phoenix obviously a large geographic concentration there that that market being one of the more recent peaks in supply you've got more concession utilization in that market than we've been accustomed to we've had to adjust to that in the second and going in the third quarter overall we

think we'll finish the year there actually low 93 to you know high 92 occupancy I think we'll be alright we need to use a little bit more concessions to buy some occupancy there but feel okay in vegas you know in vegas we've been seeing negative trade outs now for a period of time our revenue our gross potential rent is actually better um on the outlook for the rest of the year than we had originally envisioned for it but we do see a little bit of softness and occupancy that we're working through to map point bell salar in particular uh saw a decrease in traffic it only net resulted in about eight few releases for the second quarter but it's something we're monitoring and something we think we can do better upon

that's another you know midpoint of our guidance there to finish the year at 92 8 occupancy we certainly think we could do better and hope to but you know i think we're you know being appropriately defensive at this point thanks and then just one follow-up what's driving the lower turn costs yeah i i think um you know i think the the first and foremost thing was higher retention you know we're trying to to close the back door and have focused on renewals really you know kind of proud of of the of the second quarter and into the third quarter you know renewal rates and so

that'll continue to be a focus but yeah we're also prioritizing in those you know market updates that we're doing you know that the increase in the kind of partial renovations is targeted towards those potential heavy turns where, you know, maybe a unit we've already touched before and they have, you know, the majority of kind of a modern update package, but we have an opportunity to go in, you know, add a hard service counter, add a stand-of-feel appliance package, lighting package. We're doing smaller upgrades, trying to get, you know, a $20 premium there, and then that goes into the capital bucket. So, the increase in value add is offsetting some of that turn cost.

Thanks. Appreciate the color.

I will now turn the call back to the management team for closing remarks.

Yeah, well, thank you for everyone's time this morning and I look forward to talking to you again next quarter. Thanks.

Ladies and gentlemen, that concludes today's call. You can now disconnect. Thank you and have a great day.