Key Highlights

  • Core FFO was USD 0.52 per diluted share in the third quarter of 2026, down from USD 0.70 a year earlier, and management said it was USD 0.07 below consensus.
  • The full-year Core FFO midpoint was lowered to USD 2.22 from USD 2.45, and the same-store NOI midpoint to negative 4.3% from negative 1%.
  • Same-store NOI fell 8.2% to USD 35.6 million as same-store expenses rose 11.2%, while same-store Revenue slipped 0.7% and occupancy fell 70 basis points.
  • Estimated net asset value per share at the midpoint dropped to USD 38.33 from USD 46.76 last quarter, partly because the cap rate range was raised by 25 basis points.

Third Quarter Misses as Expenses Outrun Flat Revenue

NexPoint Residential Trust (NYSE:NXRT) reported third quarter 2026 results on November 3, 2026. Total revenue was USD 64.5 million, up from USD 62.8 million, but the net loss attributable to common stockholders widened to USD 11.5 million, or USD 0.45 per diluted share, from USD 7.8 million. FFO was USD 0.46 per share and AFFO USD 0.63 per share, against USD 0.63 and USD 0.80 a year earlier. Management attributed about USD 2.7 million of the USD 3.2 million same-store NOI decline to expenses, including a Nashville real estate tax refund in the prior-year quarter worth about USD 854 thousand that did not repeat. It also cited a bulk fiber internet rollout, higher repairs and Marketing spending, and utilities up 11.8%.

Higher Rates, Swap Runoff and a Lower NAV Estimate

The trust owns middle-income, value-add apartment communities, mostly in the Southeast and Southwest, and is externally advised. Interest cost is a second drag: swaps covering about USD 717.5 million of Debt at roughly 1.14% reached scheduled runoff in September, leaving about USD 192.5 million of swaps. The adjusted weighted average Interest Rate was 4.75% at quarter end, against 3.58% at June 30, and third quarter interest expense was USD 18.1 million. Net Leverage rose to 62% from 57%, and total indebtedness was about USD 1.2 billion. Management lifted the cap rate range to 5.5% to 6%, which accounts for USD 4.45 of the USD 8.43 drop in estimated NAV to USD 38.33, with lower NOI expectations explaining much of the rest.

Dividend Cover, Buyback and Asset Sales to Watch

The board approved a quarterly Dividend of USD 0.53 per share, payable December 31, 2026 to holders of record on December 15, 2026. That exceeds third quarter Core FFO of USD 0.52 per share, simple arithmetic on two reported figures, though AFFO of USD 0.63 covers it. A USD 150.0 million buyback authorization runs to October 26, 2028, and management said repurchases would be funded from sale proceeds, with debt reduction first. The company bought Midtown Crossing, a 228-unit Raleigh community, on October 2, 2026; the release lists a purchase price of USD 32.0 million while the call cited USD 43.2 million, so the price is unresolved. Same-store NOI guidance implies about a 3.3% fourth quarter decline.

Where Things Stand

The outlook was cut because a weak operating quarter, with expenses up 11.2% against falling revenue, was combined with a sharp rise in interest costs as old swaps expired. Management argues the 8.2% NOI drop is not a run rate, since it includes a nonrecurring tax refund, a self-funding fiber rollout and spending pulled forward, and the implied fourth quarter decline is smaller. Even so, NexPoint Residential Trust (NYSE:NXRT) carries high leverage, a dividend above Core FFO and a lower NAV estimate. The next tests are asset sales, leverage reduction and whether Lease trade-outs recover from the October new lease decline of 3.6%.