UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K/A 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest event reported): November 22, 2019

NEXPOINT RESIDENTIAL TRUST, INC.

(Exact Name Of Registrant As Specified In Its Charter)

 

 

 

 

 

 

Maryland

 

001-36663

 

47-1881359

(State or Other Jurisdiction

of Incorporation)

 

(Commission
File Number)

 

(IRS Employer
Identification No.)

300 Crescent Court, Suite 700

Dallas, Texas 75201

(Address of Principal Executive Offices) (Zip Code)

Registrants telephone number, including area code: (972) 628-4100 

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) 

Securities registered pursuant to Section 12(b) of the Act:

 

 

 

 

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange

on which registered

Common Stock, par value $0.01 per share

 

NXRT

 

New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

 

 


 


 

Explanatory Note

In its Current Report on Form 8-K, filed with the Securities and Exchange Commission on November 22, 2019 (the “Initial Report”), NexPoint Residential Trust, Inc. reported that it completed the acquisition of three multifamily properties located in Las Vegas, Nevada, from an unaffiliated third party for approximately $241 million. This Current Report on Form 8-K/A amends and supplements the Initial Report to provide the historical financial statements and unaudited pro forma information required by Item 9.01(a) and (b) of Form 8-K. This Form 8-K/A should be read in conjunction with the Initial Report.

 

Item 9.01.

Financial Statements and Exhibits.

(a) Financial Statement.

 

Report of Independent Auditors

1

Historical Statement of Revenues and Certain Direct Operating Expenses for the nine months ended September 30, 2019 and for the year ended December 31, 2018

3

Notes to Historical Statement of Revenues and Certain Direct Operating Expenses

4

(b) Pro Forma Financial Information.

 

Unaudited Pro Forma Consolidated Financial Information

6

Unaudited Pro Forma Consolidated Balance Sheet as of September 30, 2019

7

Unaudited Pro Forma Consolidated Statement of Operations for the nine months ended September 30, 2019 and for the year ended December 31, 2018

8

Notes to Unaudited Pro Forma Consolidated Financial Statements

10

(d) Exhibits.

 

Exhibit
Number

  

Exhibit Description

 

 

23.1

  

Consent of Frazier & Deeter, LLC, dated January 8, 2020

 

 

 

 

 

 


 

 

INDEPENDENT AUDITORS’ REPORT

 

To the Stockholders and Board of Directors

NexPoint Residential Trust, Inc.

 

 

We have audited the accompanying historical statement of revenues and certain direct operating expenses of The Vegas Portfolio (the "Properties") for the year ended December 31, 2018, and the related notes to the financial statement.

 

 

Management's Responsibility for the Financial Statement

 

Management is responsible for the preparation and fair presentation of the financial statement in accordance with accounting principles generally accepted in the United States of America and in accordance with applicable rules and regulations of the Securities and Exchange Commission for real estate properties acquired; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of a financial statement that is free from material misstatement, whether due to fraud or error.

 

 

Auditors' Responsibility

 

Our responsibility is to express an opinion on the financial statement based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free from material misstatement.

 

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statement. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statement, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statement in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statement.

 

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.


- 1 -


 

Opinion

 

In our opinion, the financial statement referred to above presents fairly, in all material respects, the historical revenues and certain direct operating expenses of the Properties for the year ended December 31, 2018, in accordance with accounting principles generally accepted in the United States of America and in accordance with applicable rules and regulations of the Securities and Exchange Commission for real estate properties acquired.

 

 

Emphasis of Matter

 

We draw attention to Note 2 to the accompanying financial statement, which describes that the historical statement of revenues and certain direct operating expenses of the Properties was prepared for the purpose of complying with the rules of the Securities and Exchange Commission (for the inclusion on Form 8-K/A of NexPoint Residential Trust, Inc.) and is not intended to be a complete presentation of the Properties' revenues and expenses. Our opinion has not been modified with respect to this matter.

 

 

/s/ Frazier & Deeter, LLC

 

 

Atlanta, Georgia

January 8, 2020

 

 

 

 

- 2 -


THE LAS VEGAS PORTFOLIO

HISTORICAL STATEMENTS OF REVENUES AND CERTAIN

DIRECT OPERATING EXPENSES

 

 

 

 

 

 

For the Nine Months Ended September 30, 2019

 

 

For the Year Ended December 31, 2018

 

 

 

(Unaudited)

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

Rental income

 

$

10,646

 

 

$

12,932

 

Other income

 

 

2,509

 

 

 

3,182

 

Total revenues

 

 

13,155

 

 

 

16,114

 

Certain direct operating expenses

 

 

 

 

 

 

 

 

Property operating expenses

 

 

2,137

 

 

 

2,758

 

Real estate taxes and insurance

 

 

752

 

 

 

936

 

Property management fees

 

 

329

 

 

 

403

 

Property general and administrative expenses

 

 

1,247

 

 

 

1,568

 

Total certain direct operating expenses

 

 

4,465

 

 

 

5,665

 

Revenues in excess of certain direct operating expenses

 

$

8,690

 

 

$

10,449

 

 

See accompanying notes to the historical financial statements

- 3 -

 


THE LAS VEGAS PORTFOLIO

NOTES TO HISTORICAL STATEMENTS OF REVENUES AND CERTAIN

DIRECT OPERATING EXPENSES

 

 

Note 1. Business

 

On November 22, 2019, NexPoint Residential Trust, Inc. (the "Company"), through its operating partnership, NexPoint Residential Trust Operating Partnership, L.P. (the “OP”), acquired a three-property portfolio in Las Vegas, Nevada for $241.0 million (the “Portfolio”). The accompanying historical statements of revenues and certain direct operating expenses ("Historical Summary") include the revenues and certain expenses of the Portfolio. See the table below for further detail of each property in the Portfolio:

 

Property Name

 

Location

 

Purchase Price (in thousands)

 

 

# Units

 

Bella Solara

 

Las Vegas, Nevada

 

 

66,500

 

 

 

320

 

Bloom

 

Las Vegas, Nevada

 

$

106,500

 

 

 

528

 

Torreyana

 

Las Vegas, Nevada

 

 

68,000

 

 

 

315

 

 

 

 

 

$

241,000

 

 

 

1,163

 

 

Note 2. Basis of Presentation

 

The accompanying Historical Summary has been prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission (the “SEC”), and is not intended to be a complete presentation of the Portfolio’s revenues and expenses.

 

The accompanying historical statements of revenues and certain direct operating expenses are presented in conformity with generally accepted accounting principles in the United States of America (“GAAP”) and in accordance with the provisions of Rule 3-14 of Regulation S-X promulgated by the SEC. Accordingly, the statements exclude historical income and expenses that are not comparable to the proposed future operations of the Portfolio such as ancillary income, depreciation, amortization, interest and corporate expenses. Therefore, the statements will not be comparable to the statements of operations of the Portfolio after their acquisition by the Company and are not intended to be a complete representation of the Portfolio’s revenues and expenses.

 

 

Note 3. Unaudited Interim Information

 

The Historical Summary for the nine months ended September 30, 2019 has been prepared in accordance with GAAP for interim financial information. In the opinion of the Portfolio’s management, all adjustments, consisting only of normal and recurring adjustments, necessary for a fair presentation (in accordance with Basis of Presentation as described in Note 2) have been made to the accompanying unaudited amounts for the nine months ended September 30, 2019.

 

 

Note 4. Significant Accounting Policies

 

Revenues

 

The Portfolio contains apartment units occupied under various lease agreements with residents, typically with terms of 12 months or less. All leases are accounted for as operating leases. Rental income is recognized as earned over the life of the lease agreements on a straight-line basis. Some of the leases include provisions under which the Portfolio is reimbursed for certain operating costs. Revenue related to these reimbursed costs is recognized in the period the applicable costs are incurred and billed to residents pursuant to the lease agreements. Other rental income consists of charges billed to residents for utilities reimbursements, administrative, application, and other fees and is recognized when earned.

 

Certain Direct Operating Expenses

 

Certain direct operating expenses include only those costs expected to be comparable to the proposed future operations of the Portfolio. Operating costs includes property staff salaries, marketing, utilities, landscaping, repairs and maintenance, and other general costs associated with operating the Portfolio. Costs such as depreciation, amortization, interest and corporate expenses are excluded from the Historical Summary.

 

- 4 -

 


THE LAS VEGAS PORTFOLIO

NOTES TO HISTORICAL STATEMENTS OF REVENUES AND CERTAIN

DIRECT OPERATING EXPENSES

 

Use of Estimates

 

The preparation of financial statements, as described in Note 2 and in conformity with GAAP, requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates.

 

 

Note 5. Commitments and Contingencies

 

Litigation

 

The Portfolio may become party to legal proceedings that arise in the ordinary course of its business. Management is not aware of any legal proceedings of which the outcome is probable or reasonably possible to have a material adverse effect on its results of operations or financial condition.

 

Other Matters

 

The Company is not aware of any material environmental liabilities relating to the Portfolio that could have a material adverse effect on its financial condition or results of operations. However, changes in applicable environment laws and regulations or other environmental conditions with respect to the Portfolio could result in future environmental liabilities.

 

 

Note 6. Subsequent Events

 

In preparation of the accompanying Historical Summary, subsequent events were evaluated for recognition or disclosure through January 8, 2020, which is the date the Historical Summary was issued.

 

 

 

- 5 -

 


NEXPOINT RESIDENTIAL TRUST, INC.

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

 

The following unaudited pro forma information should be read in conjunction with the Company’s historical consolidated financial statements and the notes thereto as filed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, which was filed with the SEC on February 19, 2019, and the Company’s Quarterly Report on Form 10-Q for the nine months ended September 30, 2019, which was filed with the SEC on November 7, 2019. In addition, this unaudited pro forma information should be read in conjunction with the historical statements of revenues and certain direct operating expenses and the notes thereto of the Portfolio, which are included herein.

 

The following unaudited pro forma consolidated balance sheet as of September 30, 2019 has been prepared to give effect to the acquisition of the Portfolio, which occurred on November 22, 2019, as if the acquisition occurred on September 30, 2019.

 

The following unaudited pro forma consolidated statement of operations for the nine months ended September 30, 2019 and for the year ended December 31, 2018 has been prepared to give effect to the acquisition of the Portfolio as if the acquisition occurred on January 1, 2018.

 

These unaudited pro forma consolidated financial statements are prepared for informational purposes only and are not necessarily indicative of future results or of actual results that would have been achieved had the acquisition of the Portfolio been consummated on January 1, 2018 or September 30, 2019.

 

In the opinion of the Company’s management, all adjustments necessary to reflect the effect of the transaction described above have been included in the pro forma consolidated financial statements.

 

 

- 6 -

 


NEXPOINT RESIDENTIAL TRUST, INC.

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET

As of September 30, 2019

(in thousands, except share and per share amounts)

 

 

 

NXRT

(Historical) (a)

 

 

Purchase of Portfolio (b)

 

 

Pro Forma Total

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Operating Real Estate Investments

 

 

 

 

 

 

 

 

 

 

 

 

Land

 

$

261,592

 

 

$

60,234

 

 

$

321,826

 

Buildings and improvements

 

 

1,316,087

 

 

 

175,536

 

 

 

1,491,623

 

Intangible lease assets

 

 

10,897

 

 

 

4,210

 

 

 

15,107

 

Construction in progress

 

 

1,598

 

 

 

 

 

 

1,598

 

Furniture, fixtures, and equipment

 

 

69,417

 

 

 

2,363

 

 

 

71,780

 

Total Gross Operating Real Estate Investments

 

 

1,659,591

 

 

 

242,343

 

 

 

1,901,934

 

Accumulated depreciation and amortization

 

 

(138,210

)

 

 

 

 

 

(138,210

)

Total Net Operating Real Estate Investments

 

 

1,521,381

 

 

 

242,343

 

 

 

1,763,724

 

Real estate held for sale, net of accumulated depreciation of $33,305

 

 

32,635

 

 

 

 

 

 

32,635

 

Total Net Real Estate Investments

 

 

1,554,016

 

 

 

242,343

 

 

 

1,796,359

 

Cash and cash equivalents

 

 

20,373

 

 

 

(144

)

 

 

20,229

 

Restricted cash

 

 

41,108

 

 

 

206

 

 

 

41,314

 

Accounts receivable

 

 

3,567

 

 

 

234

 

 

 

3,801

 

Prepaid and other assets

 

 

5,218

 

 

 

472

 

 

 

5,690

 

TOTAL ASSETS

 

$

1,624,282

 

 

$

243,111

 

 

$

1,867,393

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Mortgages payable, net

 

$

1,027,947

 

 

$

131,914

 

 

$

1,159,861

 

Mortgages payable held for sale, net

 

 

26,616

 

 

 

 

 

 

26,616

 

Credit facilities, net

 

 

106,034

 

 

 

110,545

 

 

 

216,579

 

Accounts payable and other accrued liabilities

 

 

13,314

 

 

 

374

 

 

 

13,688

 

Accrued real estate taxes payable

 

 

17,742

 

 

 

 

 

 

17,742

 

Accrued interest payable

 

 

3,111

 

 

 

 

 

 

3,111

 

Security deposit liability

 

 

2,732

 

 

 

259

 

 

 

2,991

 

Prepaid rents

 

 

1,500

 

 

 

19

 

 

 

1,519

 

Fair market value of interest rate swaps

 

 

2,051

 

 

 

 

 

 

2,051

 

Total Liabilities

 

 

1,201,047

 

 

 

243,111

 

 

 

1,444,158

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Redeemable noncontrolling interests in the Operating Partnership

 

 

3,424

 

 

 

 

 

 

3,424

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' Equity:

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock, $0.01 par value: 100,000,000 shares authorized; 0 shares issued

 

 

 

 

 

 

 

 

 

Common stock, $0.01 par value: 500,000,000 shares authorized; 23,895,442 shares issued and outstanding

 

 

247

 

 

 

 

 

 

247

 

Additional paid-in capital

 

 

337,694

 

 

 

 

 

 

337,694

 

Accumulated earnings less dividends

 

 

84,924

 

 

 

 

 

 

84,924

 

Accumulated other comprehensive income

 

 

(3,054

)

 

 

 

 

 

(3,054

)

Total Stockholders' Equity

 

 

419,811

 

 

 

 

 

 

419,811

 

TOTAL LIABILITIES AND EQUITY

 

$

1,624,282

 

 

$

243,111

 

 

$

1,867,393

 

 

See accompanying notes to the unaudited pro forma consolidated financial statements

 

- 7 -

 


NEXPOINT RESIDENTIAL TRUST, INC.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

For the Nine Months Ended September 30, 2019

(in thousands, except share and per share amounts)

 

 

NXRT

(Historical) (a)

 

 

Purchase of Portfolio (b)

 

 

Pro Forma Total

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Rental income

 

$

114,861

 

 

$

10,646

 

 

$

125,507

 

Other income

 

 

16,529

 

 

 

2,509

 

 

 

19,038

 

Total revenues

 

 

131,390

 

 

 

13,155

 

 

 

144,545

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

Property operating expenses

 

 

31,256

 

 

 

2,137

 

 

 

33,393

 

Real estate taxes and insurance

 

 

18,053

 

 

 

752

 

 

 

18,805

 

Property management fees (related party)

 

 

3,939

 

 

 

329

 

 

 

4,268

 

Advisory and administrative fees (related party)

 

 

5,613

 

 

 

 

(c)

 

5,613

 

Corporate general and administrative expenses

 

 

7,313

 

 

 

 

 

 

7,313

 

Property general and administrative expenses

 

 

4,973

 

 

 

1,247

 

 

 

6,220

 

Depreciation and amortization

 

 

45,692

 

 

 

5,166

 

(d)

 

50,858

 

Total expenses

 

 

116,839

 

 

 

9,631

 

 

 

126,470

 

Operating income before gain on sales of real estate

 

 

14,551

 

 

 

3,524

 

 

 

18,075

 

Gain on sales of real estate

 

 

127,700

 

 

 

 

 

 

127,700

 

Operating income

 

 

142,251

 

 

 

3,524

 

 

 

145,775

 

Interest expense

 

 

(26,638

)

 

 

(7,521

)

(e)

 

(34,159

)

Loss on extinguishment of debt and modification costs

 

 

(2,869

)

 

 

 

 

 

(2,869

)

Net income (loss)

 

 

112,744

 

 

 

(3,997

)

 

 

108,747

 

Net income attributable to redeemable noncontrolling interests in the Operating Partnership

 

 

338

 

 

 

 

 

 

338

 

Net income (loss) attributable to common stockholders

 

$

112,406

 

 

$

(3,997

)

 

$

108,409

 

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains on interest rate derivatives

 

 

(20,161

)

 

 

 

 

 

(20,161

)

Total comprehensive income (loss)

 

 

92,583

 

 

 

(3,997

)

 

 

88,586

 

Comprehensive income attributable to redeemable noncontrolling interests in the Operating Partnership

 

 

278

 

 

 

 

 

 

278

 

Comprehensive income (loss) attributable to common stockholders

 

$

92,305

 

 

$

(3,997

)

 

$

88,308

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding - basic

 

 

23,793

 

 

 

 

 

 

 

23,793

 

Weighted average common shares outstanding - diluted

 

 

24,280

 

 

 

 

 

 

 

24,280

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic loss per share

 

$

4.72

 

 

 

 

 

 

$

4.56

 

Diluted loss per share

 

$

4.63

 

 

 

 

 

 

$

4.46

 

 

See accompanying notes to the unaudited pro forma consolidated financial statements

 

 

 

 

- 8 -

 


NEXPOINT RESIDENTIAL TRUST, INC.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

For the Year Ended December 31, 2018

(in thousands, except share and per share amounts)

 

 

NXRT

(Historical) (f)

 

 

Purchase of Portfolio (b)

 

 

Pro Forma Total

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Rental income

 

$

127,964

 

 

$

12,932

 

 

$

140,896

 

Other income

 

 

18,633

 

 

 

3,182

 

 

 

21,815

 

Total revenues

 

 

146,597

 

 

 

16,114

 

 

 

162,711

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

Property operating expenses

 

 

35,824

 

 

 

2,758

 

 

 

38,582

 

Real estate taxes and insurance

 

 

20,713

 

 

 

936

 

 

 

21,649

 

Property management fees (related party)

 

 

4,382

 

 

 

403

 

 

 

4,785

 

Advisory and administrative fees (related party)

 

 

7,474

 

 

 

 

(c)

 

7,474

 

Corporate general and administrative expenses

 

 

7,808

 

 

 

 

 

 

7,808

 

Property general and administrative expenses

 

 

6,134

 

 

 

1,568

 

 

 

7,702

 

Depreciation and amortization

 

 

47,470

 

 

 

11,098

 

(d)

 

58,568

 

Total expenses

 

 

129,805

 

 

 

16,763

 

 

 

146,568

 

Operating income

 

 

16,792

 

 

 

(649

)

 

 

16,143

 

Interest expense

 

 

(28,572

)

 

 

(11,216

)

(e)

 

(39,788

)

Loss on extinguishment of debt and modification costs

 

 

(3,576

)

 

 

 

 

 

(3,576

)

Gain on sales of real estate

 

 

13,742

 

 

 

 

 

 

13,742

 

Net loss

 

 

(1,614

)

 

 

(11,865

)

 

 

(13,479

)

Net loss attributable to redeemable noncontrolling interests in the Operating Partnership

 

 

(5

)

 

 

 

 

 

(5

)

Net loss attributable to common stockholders

 

$

(1,609

)

 

$

(11,865

)

 

$

(13,474

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains on interest rate derivatives

 

 

1,931

 

 

 

 

 

 

1,931

 

Total comprehensive income (loss)

 

 

317

 

 

 

(11,865

)

 

 

(11,548

)

Comprehensive income attributable to redeemable noncontrolling interests in the Operating Partnership

 

 

1

 

 

 

 

 

 

1

 

Comprehensive income (loss) attributable to common stockholders

 

$

316

 

 

$

(11,865

)

 

$

(11,549

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding - basic

 

 

21,189

 

 

 

 

 

 

 

21,189

 

Weighted average common shares outstanding - diluted

 

 

21,667

 

 

 

 

 

 

 

21,667

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic loss per share

 

$

(0.08

)

 

 

 

 

 

$

(0.64

)

Diluted loss per share

 

$

(0.08

)

 

 

 

 

 

$

(0.62

)

 

See accompanying notes to the unaudited pro forma consolidated financial statements

 

- 9 -

 


NEXPOINT RESIDENTIAL TRUST, INC.

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

 

Balance sheet adjustments

 

a)

Represents the unaudited historical consolidated balance sheet of the Company as of September 30, 2019. See the historical consolidated financial statements and notes thereto included in the Company’s Quarterly Report on Form 10-Q for the nine months ended September 30, 2019.

 

b)

Represents the acquisition of the Portfolio as if it occurred on September 30, 2019.

 

Income statement adjustments

 

a)

Represents the unaudited historical consolidated operations of the Company for the nine months ended September 30, 2019. See the historical consolidated financial statements and notes thereto included in the Company’s Quarterly Report on Form 10-Q for the nine months ended September 30, 2019.

 

b)

Represents the historical operations of the Portfolio acquired by the Company. See the historical statements of revenues and certain direct operating expenses and the notes thereto of the Portfolio, which are included herein.

 

c)

Advisory and administrative fees related to the Portfolio that may have been payable to the Company’s advisor in connection with the acquisition were assumed to be waived, as these fees were actually waived during the third quarter of 2019.

 

d)

Represents depreciation and amortization expense (not reflected in the historical consolidated statements of operations of the Company) as if the Portfolio was acquired on January 1, 2018. Real estate-related depreciation and amortization are computed on a straight-line basis over the respective estimated useful lives of the assets.

 

e)

Represents interest expense (not reflected in the historical consolidated statements of operations of the Company) as if the borrowings attributable to the Portfolio were borrowed on January 1, 2018. In connection with the acquisition of the Portfolio, the Company:

 

Originated an approximately $36.6 million first mortgage for Bella Solara, which has a current annual interest rate of one-month LIBOR plus 1.70% and an 84-month term; and

 

Originated an approximately $58.9 million first mortgage for Bloom, which has a current annual interest rate of one-month LIBOR plus 1.70% and an 84-month term; and

 

Originated an approximately $37.4 million first mortgage for Torreyana, which has a current annual interest rate of one-month LIBOR plus 1.70% and an 84-month term; and

 

Drew approximately $111.0 million on its corporate credit facility, which currently has an annual interest rate of one-month LIBOR plus 2.25%.

Additionally, the adjustment reflects the amortization of deferred financing costs incurred in connection with the aforementioned loan.

 

f)

Represents the audited historical consolidated operations of the Company for the year ended December 31, 2018. See the historical consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

 

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

NEXPOINT RESIDENTIAL TRUST, INC.

 

 

By:

 

/s/ Brian Mitts

 

 

Name: Brian Mitts

Title: Chief Financial Officer, Executive

VP-Finance, Secretary and Treasurer

Date: January 8, 2020

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