Good day, and welcome to the NexPoint Residential Trust Q4 2021 quarterly conference call. The conference is being recorded. At this time, I would like to turn the conference over to Kristen Griffith. Please go ahead. Thank you. Good day, everyone, and welcome to NexPoint Residential Trust conference call to review the company's results for the fourth quarter and full year ended December 31, 2021. On the call today are Brian Mitts, Executive Vice President and Chief Financial Officer, and Matt McGraner, Executive Vice President and Chief Investment Officer. As a reminder, this call is being webcast through the company's website at nxrt.nexpoint.com. Before we begin, I would like to remind everyone that this conference call 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. 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 10-K, and the company's other filings 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 statements. 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 Brian Mitts. Please go ahead, Brian. Thank you, Jackie Graham, and I'd like to welcome everyone joining us this morning. We appreciate your time. I'm Brian Mitts, and I'm joined by Matt McGraner. I'll kick off the call with some commentary for the quarter and the year, and then cover our results and wrap up with guidance, which we're initiating for 2022. I'll then turn it over to Matt to discuss specifics on the leasing environment and metrics driving our performance guidance and our NAV estimate. With net migration continuing into our core Sun Belt markets and the continued shortage of high-quality affordable housing, NXRT continues to enjoy enormous pricing power, with new lease rates increasing 24.5% and renewal rates increasing 15.6% across the portfolio in Q4 of 2021. Net migration in our markets continues unabated. This continues to attract capital to cap rates to historic lows and rent increases to historic highs in our markets. As we have discussed before, our growth prospects are not dependent on acquisitions. We continue to achieve significant returns from our value-add strategy, where we can move yields 50-100 basis points over 3-5 years from acquisition, which makes us less sensitive to absolute acquisition cap rate levels. The ongoing and widening shortage of affordable housing in the U.S., which is more acute in our Sun Belt markets as new household formations outpace new housing deliveries, gives us plenty of runway to continue implementing our value-add strategy across our existing portfolio and new acquisitions. Increased net migration coupled with shortage of housing positions NXRT to continue to aggressively push rates into 2022 while still maintaining high occupancies. Net income for the fourth quarter is $38.8 million or $1.50 per diluted share on total revenue of $58.5 million, as compared to a net loss of $4.2 million or -$0.17 per diluted share in the same period in 2020 on total revenue of $50.5 million. For the quarter, same store rent increased 11.1% and same store occupancy was up 30 basis points to 94.2%. This, coupled with an increase in same store expenses of only 1.7%, led to an increase in same store NOI of $3.9 million, or 14.7% as compared to Q4 2020. We reported Q4 core funds from operations of $17.8 million or $0.69 per diluted share, compared to 56 cents per diluted share in Q4 of 2020 or an increase of 23%. Net income for the year ended December 31 was $23 million or $0.89 per diluted share, which included a gain on sales of real estate of $46.2 million, as compared to $44 million or $1.74 per diluted share for 2020, which included a gain on sales of real estate of $69.2 million. For the year, same store NOI increased $6 million or 5.5% as compared to 2020. We reported core funds from operations in 2021 of $62.5 million or $2.43 per diluted share, compared to $2.20 per diluted share for 2020, which is an increase of 10.3%. We continue to execute our value add business plan by completing 353 full and partial renovations during the fourth quarter and leased 243 renovated units, achieving an average monthly rent premium of $182 and a 24.1% ROI during the year. Since today, in the current portfolio as of December 31, we've completed 6,015 full and partial upgrades, 4,321 kitchen upgrades and washer/dryer installments and 9,624 technology package installments, achieving an average monthly rent premium of $136, $47, and $43 respectively, and an ROI of 21.6%, 72%, and 33.5% respectively. Collections for fourth quarter 2021 were 99.1% of total amounts charged, which is in line with pre-pandemic levels. Based on our current estimate of cap rates in our markets and forward NOI, we're reporting an NAV per share range as follows $90.23 on the low end, $106.36 on the high end, and $98.30 at the midpoint. This is based on the average cap rates ranging from 3.5% on the low end to 3.8% on the high end. For the fourth quarter, we paid a dividend of $0.38 per share on December 30. Yesterday, the board approved the dividend of $0.38 per share payable on March 31. Since inception, we've increased our dividend 84.5%. For 2021, our dividend was 1.73 x covered by core funds from operations with a payout ratio of 57.9% of core FFO. For 2022, we are initiating guidance as follows. Net income per share, $4.05 on the low end, $4.25 on the high end, and a midpoint of $4.15. Same-store revenue of 9.4% increase in the low end, 11.1% increase in the high end, and 10.2% increase at the midpoint. Same-store expenses, 7.2% increase on the low end, 5.5% increase at the high end, and 6.3% increase at the midpoint. Same-store NOI, 11% increase on the low end, 15% increase on the high end, with 13% increase for the midpoint. Our core funds from operations per diluted share of $2.87 on the low end, $3.07 on the high end, with a midpoint of $2.97. At the midpoint of our estimated 2022 core funds from operations at $2.97, this will represent a 22.4% increase over 2021 core FFO of $2.43. With that, let me turn it to Matt for his commentary. Thanks, Brian. Let me start by going over our fourth quarter same-store operational results. Our Q4 same-store NOI margin improved to 59.4%, up 358 basis points over the prior year period. Rents showed 6% or greater growth in all markets, while same-store average effective rent growth reached 11.2% for the portfolio. Houston lagged the other markets at 6.2%, while Atlanta, Phoenix, Las Vegas, Tampa all registered 12.8% or better year-over-year growth. Fourth quarter same-store NOI was remarkable across the board, with portfolio averaging 15.9%, driven by 8.9% growth in total revenues and a well-managed 1.7% growth in total operating expenses. Operationally, leasing activity and revenue growth showed sustained upward momentum in the fourth quarter, with seven out of our 10 markets achieving revenue growth of 7% or better. Our top five being Tampa at 15.3%, Orlando at 14.9%, Nashville at 10.8%, South Florida at 9.9%, and Phoenix at 9.3%. Renewal conversions were a healthy 55.2% for the quarter, with seven out of our 11 markets executing renewal rate growth of at least 15% and no markets under 9%. The leaders were Tampa at 24.5%, Orlando at 19%, South Florida at 17.5%, Phoenix at 17.1%, and Atlanta at 16.7%. 2020 rent growth picked up considerably in our markets starting in Q2 of last year. Through Q2 and Q3, we took advantage of market conditions and achieved new lease rates of 23.8% in Q3 and 24.5% in Q4. Renovation slowed in Q3 due to 60% resident retention, and the gap between organic new lease growth and renewals widened. We made the strategic decision to push for higher new renewal rates to close that gap and provide more renovation opportunities. As a result, we saw retention drop to 54%, and renewal increases grew from 10.5% in Q3 to 15.6% in Q4. In addition, we saw new leases increase from 23.8% to 24.5% quarter-over-quarter, and the organic growth delta between new leases and renewals were reduced by 60% to an average of $41 per lease. On the occupancy front, we're pleased to report that Q4 same-store occupancy remained over 94%, positioning us well for 2022. As of this morning, the portfolio is 96.5% leased with a healthy 60-day trend of 91.3%. During the full year same-store NOI performance, our margin improved by 32 basis points over 2020 to 57.6%. Same-store average effective rents and revenues each increased by 11.2% and 4.9% respectively, and NOI held strong across most of the portfolio in 2022, with seven out of our ten markets growing NOI by at least 4%. Notable same-store growth markets for the year were Tampa, Phoenix, and Atlanta at 11.8%, 8.9%, and 8.1% respectively. Operationally, the portfolio experienced continued positive revenue growth in 2021, with eight out of our 10 markets achieving growth of at least 3.6% or better, and Houston and Charlotte lagged the rest. Top five markets were Tampa at 9%, Phoenix 8.1%, South Florida at 5.9%, Las Vegas at 5.8%, and Orlando at 5.6%. Turning to our 2021 acquisitions and dispositions. As Brian mentioned, we acquired four assets in 2021. Creekside at Matthews, The Verandas at Lake Norman in high-growth suburbs of Charlotte, and Six Forks Station and Hudson High House in a new market and major focus for us, Raleigh-Durham. Total acquisition activity added 1,129 units to our portfolio at a total purchase value of $289.5 million. Once again, we were able to recycle capital from successful property dispositions while reloading our rehab pipeline and enhancing our next 4 years of growth and earnings profile. We sold Beechwood Terrace and Cedar Pointe in Nashville on November 1 for $91.25 million in gross proceeds, and produced a 3.5x multiple on invested capital and a 36.1% levered IRR on those sales, generating roughly $50 million in net cash proceeds that were used to complete the tax-efficient reverse 1031 exchange into the two Charlotte assets. The new acquisition properties have all been performing extremely well since takeover, beating budgeted NOI by roughly 15%, including the most recent acquisition of Hudson High House in Raleigh-Durham that we closed on December 7 of last year. At Hudson, we plan to fully upgrade 210 units at an average cost of $13,550 per unit, and generating premiums of $269 a unit with an ROI of approximately 27%. We plan to install roughly 160 washer and dryers and generate monthly premiums of $45 a unit. We also plan to install smart packages in every unit, and expect to generate monthly premiums of roughly $45 a unit. As a result, our underwritten 3 year average same-store NOI growth for this asset is 18.5%. Turning to the 2022 guidance. As Brian said, we're excited to guide at 13% same-store NOI growth at the midpoint. From a geographical perspective, we're expecting particular strength across the following markets. We expect Dallas to grow same-store NOI by 17.7% due to 12.4% budgeted revenue growth and 7.3% budgeted expense growth. We expect Vegas to grow same-store NOI by roughly 19.2%, driven by expected revenue growth of 10%-11% and budgeted total expense growth of 5%. We expect South Florida to grow same-store NOI by roughly 14.8%, driven by expected revenue of 9%-10% and expected 4% budgeted total expense growth. We expect Atlanta to grow same-store NOI by roughly 13%, driven by revenue growth of 10%-11% and 6.5% budgeted total expense growth. All of our other markets are expected to see NOI growth between 8%-11%. Turning to the acquisition guidance. While the acquisition market certainly has its challenges with the material supply-demand imbalance driving cap rates down to 3.5% and below, we will still remain active in evaluating attractive opportunities that fit our style box. We'll place a heavy focus on sourcing acquisitions in Atlanta, North Carolina, Phoenix, and South Florida, and are confident we will hit our $150 million-$300 million acquisition target. On the disposition side, we plan to exit Houston and bring Old Farm, Stone Creek, and Hollister Place to market in the second quarter this year. Houston has underperformed our other stronger Sun Belt markets since we took these positions in 2016, and we see an opportunity to trade this capital into a higher growth asset or assets while printing a multiple on invested capital in the 4x-4.4x range. A successful disposition here would represent approximately the midpoint of our NAV guidance range for the market. Notwithstanding an extremely competitive acquisition market, as Brian said, we continue to be an internal growth story at our business or at our core. To that end, our guidance includes the following assumptions regarding value add programs. We plan to upgrade 1,465 full interiors at an average cost of $10,460 per unit, generating $187 average monthly premiums for approximately a 21.4% ROI. Our four new acquisitions in the Carolinas make up roughly 20% of this total output. We plan to complete 460 partial interiors at an average cost of $5,000 per unit and generating roughly $100 in average monthly premiums for a 23.6% return on investment. We plan to complete another 500 of other minor bespoke interior upgrades, for example, new flooring, backsplash, countertops, appliances, patios, et cetera, at an average cost of $530 per unit, generating a $22 average monthly premium or a 49.2% ROI. We plan to install roughly 73 washer/dryer units this year at an average cost of $900 per unit, generating a $47 average monthly premium or a 63% return on investment. Finally, we plan to install 1,100 additional smart home tech packages, which will generate $40-$45 in average monthly premiums or a 62.7% return on investment. Going into 2022, we feel that the trend we have seen over the last half of 2021 will continue into the summer months. We're already seeing sustained rental growth in Q1 2022 with a blended lease trade out of roughly 21%. We also expect our renovation strategy to help reduce turn costs and other repair and maintenance items associated with our units. Heading into 2022, we feel like the last three quarters of 2021 should prove instructive for our value add programs. During these three quarters, rehabs as a percentage of new leases averaged roughly 20% and added roughly 4.5% growth to an already robust 16% organic new lease growth. In terms of the sustainability of such increases, as Brian mentioned, the tenant's next best option in our markets remain a newer garden unit or a single-family rental. The delta between this competition and our newly renovated housing stock remains historically wide and is deepening even more in most of our markets. For example, we analyzed effective rents for Class B apartments generally, Class A apartments generally, Mid-America's reported rents, Camden's reported rents, as well as Invitation Homes and then AMH, and compared them to our markets. For example, our Q4 2021 effective rent was $1,236 per unit, compared to an average Class B effective rent of $1,450 per unit, according to RealPage. Class A effective average rents, according to RealPage, are currently one thousand seven hundred and fifty dollars, roughly a $520 dollar premium to our portfolio average. MAA's and Camden's reported rents are $1,370 and $1,630 per unit, or $170 and $400 dollar premiums to our portfolio average respectively. Finally, Invitation Homes and AMH's rents are roughly $1,900 per unit or nearly $700 more than our portfolio average. These rent deltas inform our optimism about 2022, and we'll work hard to generate another year of outsized NOI and core earnings growth. That's all I have for prepared remarks. Thanks to our teams here at NexPoint and BH for continuing to execute. Now back to you, Brian. Thank you. We'll open it up for questions now. Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you are using a speaker phone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star one to ask a question. We'll go to our first question from Buck Horne with Raymond James. Hey, good morning, guys. Congratulations. Great work. Fantastic quarter. Question, I guess, relates to the. Again, you provided some great color around comparisons of alternative options for your customers. You know, the concern is, of course, affordability, and can the consumer continue to keep up with this rate of increase for too long? Just, you know, any color you have on rent-to-income ratios, how those are trending, what is the profile of the incoming renter in your portfolio looking like these days? You guys are starting to, you know, intentionally incur a little bit more turnover, just any signs of consumer pushback, any color you can add around that. Yeah. I'll take it, Buck. Thanks for the comments and the question. Pre-pandemic, our average household income was roughly $55,000. Today, that's ticking up over $60,000. We're attracting a higher demographic. Some of that's some of the newer deals in South Florida and Phoenix and Raleigh-Durham. But we're seeing. At the same time, we're pushing rents, you know, on a percentage basis materially, really it's, you know, a few hundred bucks. While we think our. We're seeing our average household income, you know, go up over 10% over that, you know, kind of pre-pandemic to today. That gives us that coupled with the delta and the deepening between, you know, us and single family or us and the next garden deal. We still think we're a seriously attractive option, especially when you consider all the amenities that we're adding to the asset. What we've seen is, you know, higher retention, as I alluded to in our comments, because when people look around, there's just not that great of an option to go somewhere else. To your question about are people pushing back, yes, absolutely, they are. Our teams at BH and NexPoint are doing a great job of asking the prospective tenant to go and source other options. Often when they do, they come back and they're saying, "Yeah, well, it's gonna cost me, you know, $500-$1,000 to move. You know what? I like what you guys have done here. There's no other better option." That's why we're seeing, you know, above average retention and above average renewal increases. That's great. One question I frequently come across is, you know, given the rate of these types of rent increases, what's your perspective? You know, is there gonna be pushback from, you know, whether it's local politicians or City Councils or, do you have any risk in certain jurisdictions where, you know, whether it's, you know, some sort of ordinance or whether or not, you know, a moratorium of sorts, you know, what's your perspective on, the risk of, you know, sort of rent regulation coming into play? Yeah, certainly lower than the gateway markets. You know, we haven't encountered really any you know other than pandemic moratoriums, we haven't necessarily encountered any you know sort of regulation or unionization of renters like you might find in San Francisco in our markets, thankfully. You know, oftentimes the municipalities are getting their pound of flesh, too, with increased you know property tax revenues. They kinda got a hand in this as well as filling their own coffers you know for their budgets. I think, you know, luckily, we own in markets, in core markets that are, you know, less regulated and, you know, as of today, we don't see anything from a regulatory standpoint pushing back on our ability to meet the demand out there for people moving into our markets. Sounds good, guys. Appreciate the call. Thanks. I'll drop back into the queue. Thanks. Thanks, bud. Again, as a reminder, if you would like to ask a question, please press star one at this time. Again, that is star one for questions. We'll go to our next question from Aaron Hecht with Citizens. Yep. Question about labor and cost of materials on your renovations. Can you tell us what you're projecting in your cost line for those types of items or any other costs outside of that that may alter your expectation, including things like property taxes or any other important expense line items, please? Thank you. Yeah, our cost of materials is up. Well, our cost of materials and labor are up a blended kind of additional 3% over what they were in 2021. Our rental increases are up, you know, roughly 9% above what they were in 2021. We feel like we're more than offsetting that cost. There's no other kind of line items other than what you mentioned between costs and labors that make up the renovation CapEx. Outside of renovations, the property taxes, real estate taxes, are you confident that the jurisdictions that you're speaking about being relatively friendly will remain friendly? Does that change with any other markets that you're evaluating new entries into? We're not evaluating entering into any new markets, and the jurisdictions historically haven't been friendly to us. They try to raise our property taxes by a massive degree. This year is a little bit better than last year. Last year, from 2020 to 2021, we expected double-digit increases in property taxes. This year it's closer to 7% on a same-store basis. We feel a little bit more optimistic this year about not having that large non-controllable expense be so high. Great. Thank you for your clarity. You bet. Again, if you would like to ask a question, please press star one. Take a follow-up question from Aaron Hecht. Can you tell us a little bit about what your capital structure look like going forward, what type of instruments you may be using and how that might affect, fully diluted shares outstanding going forward? Capital structure remains, you know, pretty simple for us. We're not in the market looking for any sort of exotic, you know, debt or equity instruments. We have a basic capital structure of common equity and then secured debt on each asset and then a company-wide revolver. To the extent that we, you know, raised equity, it would be on a common basis most likely through an ATM execution. We've historically done that at a premium or greater than a premium to our NAV. Thank you. We'll take our next question from Peter Abramowitz with Jefferies. Thank you. I just wanted to ask about the composition of your acquisition pipeline. How much of that is deals that are off market and sourced through relationships? Kind of, is there any big difference between those type of deals and what's being marketed? Yeah. Hey, Peter. Thanks for the question. I'd say roughly $100 million-$150 million are off what I would call sourced through the family of BH and our existing relationships. That will. I don't wanna say we're gonna get like a steal, but it should be a better cap rate than a widely marketed deal. You know, hopefully we'll hit on those and we think we will. We think there's a few in Raleigh. We think there's a few in Phoenix and a few in Atlanta that we're particularly interested in. Then kind of the marketed. That subset is about four deals of a couple hundred million. The marketed deals that have been launched from NMHC in heretofore average roughly 13-15 deals. We expect those to be extremely competitive, notwithstanding that, you know, spike in the 10-year and interest rates recently. There's not really been any discounts. We're still hovering around the low 3% cap range on a nominal basis. Got it. I guess for the off-market deals, would it be fair to say that those are dilutive kind of or excuse me, accretive, in year one? Are the cap rates kind of sufficient- Yes. to say that? Yeah, I mean, I think when you take a forward look and you use our NAV, the off-market deals would look to be in the high threes to low fours. Depending on where you think we're trading as an NAV perspective and what you think we could do with the same-store NOI growth profile in the first year, yeah, I think we'll have a positive ARV, especially when and if we're able to pair that with the disposition of Houston in the low threes too. Got it. Sounds good. Thank you. Thank you. All right. It looks like that was the final question. We appreciate everyone's time, and thank you for the questions and comments. This concludes today's call. Thank you for your participation. You may now disconnect.