NexPoint Residential Trust (NXRT) Secures New Credit Facility to Enhance Financial Flexibility
- NexPoint Residential Trust refinanced its corporate revolving credit facility, improving interest rates and borrowing arrangements until June 2028.
- The new credit facility enhances NXRT's acquisition strategies and financial flexibility, with a potential increase of $200 million.
- NXRT's refinancing reflects its commitment to growth in the multifamily housing sector and strengthening its financial foundation.
NexPoint Residential Trust Enhances Financial Flexibility with New Credit Facility
NexPoint Residential Trust, Inc. (NXRT) announces a significant step forward in its financial strategy through the successful refinancing of its corporate revolving credit facility. Engaging a consortium of financial institutions, including J.P. Morgan Chase Bank, Raymond James Bank, Royal Bank of Canada, and Synovus, NXRT secures a new facility that matures in June 2028, with the potential for extension to June 2029. The refinancing not only improves the interest rate structure but also provides NXRT with a more favorable borrowing arrangement, as the interest rate is now tied to the term Secured Overnight Financing Rate (SOFR) plus 150 to 225 basis points based on the company’s leverage ratio. This marks a 15 basis point reduction across all leverage ratios compared to the previous facility, highlighting the company's improved financial standing.
The new credit facility is designed to bolster NXRT’s acquisition strategies, working capital requirements, and other corporate needs, with the potential to increase the facility by up to $200 million upon lender agreement. Secured by the equity interests of the operating partnership’s subsidiaries, this refinancing positions the company to better navigate the recovering real estate market. Chief Investment Officer Matt McGraner emphasizes that this strategic move enhances NXRT's ability to seize growth opportunities, aligning with its focus on acquiring and managing multifamily properties in key markets across the Southeast and Southwest United States.
NXRT's proactive refinancing is indicative of its commitment to maintaining a robust financial foundation while pursuing growth in the multifamily housing sector. By eliminating any existing debt associated with the prior facility, the company strengthens its financial flexibility, enabling it to capitalize on potential acquisitions in a competitive landscape. As a publicly traded real estate investment trust (REIT), NXRT remains dedicated to enhancing value in its portfolio of middle-income properties, which is vital given the ongoing recovery in the housing market post-pandemic.
In addition to enhancing its credit facilities, NXRT operates under the guidance of NexPoint Real Estate Advisors, L.P., which brings extensive experience in the real estate sector. This partnership not only underscores NXRT's strategic orientation but also positions the company to leverage expert insights and market knowledge effectively. As NXRT continues to navigate the evolving real estate landscape, the refinancing serves as a crucial element in its long-term strategy for sustainable growth and value creation.