Thank you for standing by, and welcome to the NexPoint Residential Trust Q3 2023 Conference Call. I would now like to welcome Kristen Thomas, Investor Relations, to begin the call. Kristen, over to you.

Thank you. Good day, everyone, and welcome to NexPoint Residential Trust's conference call to review the company's results for the third quarter ended September 30, 2023. On the call today are Brian Mitts, Executive Vice President and Chief Financial Officer; Matt McGraner, Executive Vice President and Chief Investment Officer; and Bonner McDermett, Vice President, Asset and Investment Management. As a reminder, this call is being webcast at 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, Kristen. Welcome to everyone joining us this morning. I'm joined here with -- by Matt McGraner and Bonner McDermett. I'm going to kick off the call and cover our Q3 and year-to-date results, walk through our updated NAV calculation. And then give our revised guidance. I'll then turn it over to Matt and Bonner to discuss specifics on the portfolio lease environment metrics and the items driving our performance and guidance. So I'll start with Q3 results. Net income for the third quarter was $33.7 million or $1.28 per diluted share on total revenue of $69.8 million as compared to a net loss of $600,000 or $0.02 loss per diluted share in the same period in 2022. On total revenue of $68.1 million, a 2.5% increase in revenue on 39 properties versus 41 properties for the prior year period. For the third quarter, NOI was $42.1 million on 39 properties as compared to $40 million for the third quarter of 2022 on 41 properties, a 5.3% increase in NOI. For the quarter, same-store rent increased 3.1%, and same-store occupancy dropped 10 basis points to 93.9%. This coupled with a 7.7% increase in other income and a 0.3% decrease in same-store expenses led to an increase in same-store NOI of 8% as compared to the third quarter of 2022. As compared to Q2 2023, rents for the third quarter on the same-store portfolio were down 40 basis points to $1,529 per unit per month. We reported Q3 core FFO of $17.1 million or $0.65 per diluted share compared to $0.84 per diluted share in the third quarter of 2022. For the quarter, we completed 420 full and partial renovations and leased 330 renovated units, achieving an average monthly rent premium of $215 and 23.6% ROI, which is slightly higher…

Thanks, Brian. Let me start by going over our third quarter same-store operational results. Same-store effective rents ended the quarter at $1,529 per unit per month, up 3.1% year-over-year. Seven out of our 10 markets averaged at least 3% growth, while our South Florida and Raleigh markets led the way at 8.1% and 5.5% growth, respectively. Same-store rental revenue growth was 4.6% for the period, with the Florida markets again facing the field at 10.3%, 8.2% and 4.6% respectively, for South Florida, Tampa and Orlando. Dallas-Fort Worth also had strong showing at 7.3% growth. Total same-store revenues were up 4.6% year-over-year. And we're also pleased to report some welcome moderation in expense growth for the quarter. Third quarter same-store operating expenses were down 40 basis points year-over-year. Payroll growth was a mere 60 basis points in Q3, down from 15.3% and 6.9% in Q1 and Q2, respectively. R&M expense growth was 6.6% lower than the prior period, off of an elevated post-COVID comp in 2022. Real estate taxes have also moderated and true-ups booked in Q3 reflect a reduction to our overall real estate tax forecast for the year. Year-to-date, same-store tax growth was down to 6% year-over-year. Insurance expense growth stabilized at 6% in Q3 after a successful Q2 renewal negotiation as well. On the NOI side, the portfolio achieved strong third quarter same-store NOI growth of 9.5%, while our NOI margin improved to 61.4%. Nominal NOI quarter-over-quarter also increased, as Brian mentioned, as our teams continue to operate more efficiently. And six of 10 same-store markets achieved year-over-year NOI growth of 8.7% or greater, with South Florida, again, setting the tone at a healthy 18.4%. Turning to operating performance and the go-forward strategy. While our average effective monthly rents per unit ended Q3 at $1,497 per unit, a…

That's it. We got -- we'll open up for questions.

[Operator Instructions]. We have a question from the line of Kyle Katorincek with Janney Montgomery Scott. Please go ahead.

Okay. Good morning guys. What's driven the decision to raise the dividend by 10% versus buying back stock or paying down additional debt at this time?

Hey, Kyle. The incremental dividend on a just a nominal dollar basis is $4 million roughly. And at a current share price of $25, $26, it's $130,000-ish of -- or 130,000 shares of stock to repurchase. Our strategy has always been to generate high single-digit same-store NOI growth, earnings growth and dividend growth. And we think that's an important aspect of our strategy. And given that we have these dispositions on tap for the Q4 and early Q1 to retire all the remaining unhedged debt and enter the '24 year with the ability to reaccelerate earnings. We were -- we just thought that was the better use of capital and just an effective tenet of our strategy for the last eight years.

Okay. Thank you. And then related to the Atlanta/Las Vegas markets. You had mentioned last quarter that Atlanta courts opened in 2Q. So where do those backlogs stand today versus where they were at last quarter?

I think the Atlanta backlog was 70,000-ish skips and evictions. Is that right, Bonner?

Across the Atlanta market for seven months this year, it's on about 70,000 evictions. When you look at our AR balances and our actual net bad debt, we've seen, I think, the peak for net bad debt at June of this year. We think that continues to moderate and we close the year sub-3% bad debt there. So it's getting better. It's also getting better in Vegas as well. We've seen, I think, a healthier balance there as well. So getting better. It's been a bit of a struggle, but we see some positive momentum heading into the end of the year in '24.

And then one last one for me. What does unit turnover been for this quarter and last quarter? And where does that compare to historical levels?

Yes. It's been pretty consistent in the low 50% -- or I guess, turnover in the mid to high-40s, retention in the low 50s, and that's been pretty consistent. Our strategy going into Q4 and Q1, we'll continue to prioritize renewals. And as I mentioned in the prepared remarks, keep the back door closed.

Okay. Thanks guys. Appreciate it.

There are no further questions at this time. I would now like to turn it over to the management team for closing remarks.

Great. Thank you. Appreciate everyone's time. I'll probably see some of you at NAREIT in a few weeks. Thank you.

I would like to thank our speakers for today's presentation, and thank you all for joining us. This now concludes today's call. You may now disconnect.