NexPoint Residential Trust, Inc. (NYSE: NXRT) shares gain ground on announcing the execution of agreements to sell Old Farm in Houston, and Silverbrook in Dallas, TX to separate buyers, with an expected closing in early Q4 2023. Old Farm and Silverbrook's trailing nominal cap rates are 5.12% and 4.55%, and their tax and insurance-adjusted cap rates are 4.96% and 4.61%, respectively.
The Company expects the dispositions of these assets to generate approximately $67 to 69 million of net sales proceeds at a combined approximate trailing nominal cap rate of 4.96% and tax and insurance-adjusted cap rate of 4.82%.
The executed agreements have $3.0 million (or approximately 2% of the combined purchase price) of non-refundable earnest money held in escrow. The properties are being sold to separate institutional investors at cap rates below their respective market cap rates calculated within our Net Asset Value Summary/
The dispositions are expected to close in early October. After completing these sales, the Company expects to pay off the entire $57 million outstanding balance on the corporate credit facility. The retirement of the corporate credit facility and the property-level debt will reduce portfolio-level debt by approximately $156 million. NXRT's hedged debt will increase to 97% from 88%. The portfolio will be hedged, 77% by swaps, 18% property-level rate caps, and 2% first mortgage fixed debt. The combination of these asset sales provides greater strategic flexibility and de-risks the Company's balance sheet heading into 2024.
NXRT shares added 73 cents, or 2.1%, to $36.30.
