NexPoint Residential Trust, Inc. ($NXRT)

Thank you for standing by. My name is Carly, and I will be your conference operator today. At this time, I would like to welcome everyone to the NexPoint Residential Trust Q1 2026 Earnings Call. [Operator Instructions] I would now like to turn the call over to Kristen Griffith, Investor Relations. Please go ahead.

Thank you. Good day, everyone, and welcome to NexPoint Residential Trust conference call to review the company's results for the first quarter ended March 31, 2026. On the call today are Paul Richards, 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 through the company's website at nxrp.nextpoint.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 Paul Richards. Please go ahead, Paul.

Thank you, Kristen, and welcome to everyone joining us this morning. We appreciate your time. I'll cover our Q1 2026 financial results and then walk through a refresher on our full year outlook. Matt will then discuss the operating environment, our technology platform and AI strategy as well as portfolio positioning. Q1 2026 results are as follows: Net loss for the first quarter was $6.8 million or $0.27 per diluted share on total revenue of $63.5 million. This compares to a net loss of $6.9 million or $0.27 per diluted share in Q1 2025 on total revenue of $63.2 million. Total NOI was $37.6 million across 36 properties, including Sedona and Lone Mountain, which we acquired last December, this compares to $37.7 million on 35 properties for Q1 2025. On a same-store basis across our legacy -- 35 legacy properties and 12,984 units, total income was $61.4 million, down 2.2% year-over-year. Total operating expenses declined 1.6% to $24.8 million resulting in same-store NOI of $36.7 million, a 2.7% decrease and an NOI margin of 59.8%, and same-store occupancy closed the quarter at 93.6%. While the year-over-year comparison reflects the tail end of supply-driven pricing reset, our mostly trajectory is improving materially. And Matt will walk you through that cadence on the structural factors driving our confidence in the second half. Reported Q1 core FFO of $17.3 million or $0.68 per diluted share, $0.03 better than consensus, compared to $0.75 per diluted share in Q1 2025. The year-over-year decline is primarily driven by interest expense, which I'll address now. We have always been transparent that 2026 carries a meaningful expense headwind as certain swap positions fall off. Q1 total interest expense was $15.4 million versus $14.4 million in Q1 with the swap benefit declining from $8.4 million to $5.5 million. Since we issued initial guidance in February, the forward store for curve has shifted 7 to 47 basis points higher across the remaining quarters of '26. This adds approximately $2.2 million or roughly $0.08 per diluted share of incremental interest expense versus our original assumptions. Q1 came in essentially in line with our prior model. Q2 modestly higher, Q3 steps up as swap positions begin to expire, and Q4 reflects the full run rate impact. Full year '26 interest expense is now projected at $69.3 million versus $67.1 million in our in model. We do not attempt to forecast rates, we manage the risk. The same volatility that has moved the curve against us in recent weeks creates the entry points for our next swap execution. We have visibility into the maturity schedule, the optionality to execute forward starting hedges before September, and we will move when economics are compelling as we did with the $100 million GPM forward swap last April at 3.49% and we are not waiting for the September 1. Interest rate swaps currently fixed the rate on $917.5 million or 62% of floating rate mortgage debt, we continue to evaluate opportunities to layer additional hedges and will act when risk-adjusted economics are compelling. Moving to expense detail. On the expense side, same-store operating expenses improved 1.6% year-over-year, payroll declined 4.3%, a direct output of centralized operating model and AI-enhanced leasing platform and Matt will discuss in detail. Real estate tax decreased 11.2% and insurance declined 23.5% and partially offset by a 15.2% increase in repairs and maintenance, which included bulk fiber service contract costs offset by revenue gains and a 50.5% increase in marketing spend as we invested in lease-up velocity at properties below target occupancy. The R&M increase reflects 2 primary drivers. First, we accelerated deferred maintenance at several properties as part of a deliberate portfolio quality initiative. Second, we incurred elevated onetime costs associated with lender required CapEx at select Florida properties. These are episodic expenses that position the affected units for improved performance and do not reflect a structural change in our cost base. Importantly, our expense outlook is steady relative to our original model. Operating expense is on track as is corporate G&A. On insurance specifically, we settled rates for our new policy renewal on April 1, achieving 13.3% reduction year-over-year better than the strongest end of our originally guided range of 0% to negative 10%. Moving to value-add update. During the first quarter, NXRT completed 252 floor and partial upgrades leased 225 upgraded units, achieving an average monthly rent premium of $69 and a 19% ROI. Since inception, NXRT has completed over 10,100 full and partial interior upgrades across the portfolio, generating average monthly premiums of 13.3% and inception-to-date ROIs of 20.7%. In addition, we have completed 5,027 kitchen and laundry appliance upgrades and 11,199 tech packages, generating ROIs of 63.5% and 37.2%, respectively. For Q1, we declared a dividend of $0.53 per share paid March 31, 2026. Since inception, we have increased our dividend 157.3%. We remain fully committed to current distribution level, and our core FFO guidance midpoint coverage stands at approximately 1.21x and we expect coverage to improve as revenue trends strengthen through peak season into 2027. On the balance sheet and liquidity. On January 30, 2026, the company entered into a 55% LTV million mortgage loan secured by Sedona at Lone Mountain with Newmark. The loan matures on February 1, 2033, with all principal due at maturity and bears interest rate based on 30-day average silver plus a margin of 1.23%. As of March 31, 2026, total indebtedness was approximately $1.6 billion at an adjusted weighted average interest rate of 3.3% and with $18.5 million of unrestricted cash and $143 million of undrawn capacity on our credit facility, providing approximately $161.5 million of available liquidity. We have no scheduled debt maturities until 2028 when our $33.8 million 4.24% fixed-rate loan matures at residences at West Place. That loan should be easily refinanced with a new agency see when the time comes. NAV per share. Our estimated net asset value per quarter, at quarter end is $47.70 per diluted share at the midpoint using a blended cap rate of 5.5% across the portfolio. The range spans $40.56 at a 5.75% cap rate to $54.74 at 5.25% and based on approximately 25.6 million diluted shares outstanding, the closing stock price as of yesterday at $26.36 represents a 44.7% discount to point NAV. Even at the most conservative end of our range, stock trades at a 27% discount to estimated liquidation value. We believe the disconnect between public market pricing and the underlying real estate value is significant, and the capital recycling initiatives we will discuss providing a path to validating these values through third-party transactions. 2026 guidance reaffirmed, we are reaffirming our full year 2026 core FFO guidance range of $2.42 to $2.71 per diluted share as well as our same-store NOI range of negative 0.5% at the midpoint. Two months ago, we issued initial guidance. Since then, we have absorbed 2 distinct headwinds and realize meaningful offsets that, in aggregate, fully neutralize the pressure. On the headwind side. a 7 to 47 basis point shift in the forward silver curve adds approximately $0.08 per share of incremental interest expense and a slightly lower than model Q1 leasing environment. On the offset side, a stronger insurance renewal, expense discipline and strategic fee income from our adviser private capital platform, which Matt will address in a moment, together fully absorb those pressures. Our core FFO and same-store guidance range is unchanged. We're also reaffirming our same-store submetric ranges for the year. To reiterate, our full year targets, we see the range are as follows: Same-store rental income growth of 0% to positive 1.9% with a midpoint of 0.9%. Same-store revenue growth of positive 0.1% to positive 2% with a midpoint of 1.1%. Same-store expense growth of positive 2.8% to positive 4.2% with a midpoint of 3.5%. And lastly, our same-store NOI growth of negative 2.5% to positive 1.5% and with a midpoint of negative 0.5%. With that financial overview, let me turn it over to Matt.

Thank you, Paul. Let me start with the macro backdrop because the structural setup for our portfolio has become increasingly compelling. And even the largest real estate investors in the world are now publicly validating the thesis we have been articulating. Last week, John Gray described real estate as a sleeping giant at Blackstone and signaled conviction that an acceleration is approaching particularly around sectors with favorable supply-demand fundamentals. Reinforcing this point, they highlighted the collapse of new supply will be very supportive of fundamentals over time across major sectors, including multifamily where industry forecasts call for deliveries this year to be at their lowest level in 12 years. That's the headline that multifamily deliveries in 2026 will be at their lowest level since 2014. That is precisely the supply backdrop we are operating in, and it is the primary structural driver of our confidence in the second half of the year and into 2027. Let me put some numbers around it. National multifamily deliveries peaked near 700,000 units in 2024 and are declining sharply. New construction starts have fallen 70% from their peak and units under construction nationally had declined 29% from their Q1 2024 high of 760,000 units. By Q4 of this year, net deliveries are projected to fall to roughly 69,000 units nationally, the lowest level in a decade. In our Sunbelt markets, this deceleration is even more pronounced. In NXRT specific submarkets, the demand picture is compelling. Q1 net absorption was positive 1,307 units against supply of 2,426 units with total demand of 3,733 units. For the full year, our submarkets are projected to see 10,158 units of supply against 10,239 units of demand, effectively a balanced market with demand now outpacing the remaining supply wave. On the demand side, homeownership remains increasingly out of reach. Today, average monthly mortgage payments run 36.7% above average multifamily rent nationally. Move-outs to purchase a home fell to 7.9% for the quarter, down from 10.6% a year ago. The longer-term demographic picture remains favorable as I covered last quarter. The bottom line here, while near-term fundamentals are weaker than initially expected in select markets, the structural setup is improving quarter-by-quarter. The supply cliff, the construction starts collapse, the demand supply convergence, these are all intact and accelerating. The recovery is asymmetric rather than synchronize with roughly 35% of our NOI already at or near equilibrium and another 44% reaching that threshold through the balance of the year. We expect fundamentals to stabilize and then accelerate as the back half of 2026 unfolds. On to operating performance. Let me walk through the leasing cadence because the monthly trajectory tells the story. Across 1,388 new leases signed in Q1, our new lease rate out was a negative 6.6% or $97 per unit decrease. On 1,500 renewal transactions, we achieved positive 2.3% or $33 per unit increase. The blended rate across 2,916 total transactions was negative 1.9%. The monthly progression is what matters. New lease trade-outs improved from negative 7% in January to negative 5.6% in March. Blended trade-offs narrowed from negative 1.9% in January to negative 1.7% in March. And the momentum has continued into April. New lease trade-outs have improved to approximately negative 4% a month to date a 300 basis point improvement from January to April. Blended trade-outs approximately negative 1.2%. At the market level, Las Vegas renewals led the portfolio at positive 12.2% or $164 per unit increase. Raleigh renewals grew 2.2% with new lease trade-outs at a negative 3.8% and the shallowest decline in the portfolio. Dallas even generated $181 renew at a positive 1.9%. On the occupancy front, the same-store portfolio closed Q1 at 93.6% fiscal occupancy up from 92.6% at the start of the quarter and 92.7% at the end of Q4. April month-to-date has improved to 93.9% and our lease percentage reached 95.9%, the highest since Q3 of 2025. Per apartment IQ data, our portfolio is outperforming market comps by 136 basis points in occupancy, which validates both our pricing discipline and the effectiveness of our central leasing program. Resident turnover was 44.4%, essentially flat sequentially, but down from 46.3% a year ago. Resident retention improved to 55.6% with March reaching 57.2%. Same-store total income was $61.4 million, down 2.2% year-over-year. Rental revenue declined 3.1%, partially offset by a 39% increase in other income, driven primarily by resident amenity fee programs, which added $469,000 of incremental revenue versus the prior year. The standout within revenue is bad debt. We achieved 55 basis points of gross potential rent in Q1, down 45.7% year-over-year from 1.02% of GPR. This is a structural improvement driven by AI enhanced screening and centralized credit evaluation, not a 1-quarter anomaly. On to concessions, let me address concessions directly because I know this is in the front of mind of -- for our investors. First, the context. Our portfolio level concession rate is 1.9% of gross potential rent. Per apartment, the competitive set in our submarkets is running 5.7%. That is a 380 basis point advantage, and it reflects a deliberate operating philosophy. We compete on occupancy through operational execution and technology not through concession givebacks. Our revenue per available unit exceeded comps by 3.77% in Q1. Second, the concentration. Total concessions were approximately $1.15 million in the quarter up from $271,000 in Q1 of 2025. However, a 39% of the year-over-year increase, or $342,000 was driven by a single asset of one timer lines where a concentrated competitive supply wave entered the submarket in Q4 of 2025. Concessions were deployed proactively to the fill occupancy and market position, and that strategy has worked. We closed Q1 at 94.1% occupancy at Penbrook and have continued to build, reaching 94.9% quarter-to-date. Concessions at Pembrook have already been reduced from 1 month free to a $500 incentive which is a 75% reduction. Excluding Avon, the portfolio concession increase was approximately $535,000 or roughly 2x the prior year. Elevated, but a fundamentally different story than the headline. Third and most importantly, the forward trajectory. Our full year 2026 operating forecast projects cushion utilization declined 75% and from Q1 levels by the second half of the year. Q1 again ran at 2% of GPR, Q2 at 1% of GPR, Q3 at 50 basis points in Q4 of 40 basis points. Simultaneously, financial occupancy improves from 92.8% in Q1 to 94% in Q2, and 94.1% in Q3. 6 of our 10 markets showed improving concession environments sequentially in Q1 versus Q4 of 2025. Those are Atlanta, Las Vegas, Nashville, Orlando, Raleigh and South Florida. Even the 4 markets still facing supply-driven pressure, the rate of deterioration has stopped. As 1 month free concessions roll off, we realized an approximately 8% pop in effective rents without raising prices. This embedded tailwind begins to materialize through the balance of the year as supply deliveries decelerate and seasonal demand strengthens. We believe Q1 was the trough for concession deployment in this cycle. Let me spend a few minutes on the technology platform, as Paul alluded to, because Q1 results are a direct product of the investments we have been making. We are deploying a 2-layer architecture model for technology. Layer one is property operations, BH Management and their funnel leasing AI CRM platform handling day-to-day leasing, maintenance and resident services under their centralized operating model. Layer 2 is what we are building at the adviser level. NexPoint Intelligence and asset management platform that drives better decisions at the portfolio, market and unit level. We are literally building agents per property across the portfolio to enhance predictive analytics. This architecture is delivering. Self-managed peers investing in AI must spend across both layers simultaneously. Our model delivers a disproportionate share of the AI impact at a fraction of the capital outlay. The management's funnel AI platform gives us the property operations layer as a managed service, and we focus our investment on the intelligence layer for the highest value judgment happen. We will provide the full AI product road map and financial impact thesis at REIT Week in early June. Q1 results from the platform, our AI-powered leasing platform processed $31,882 a leads and converted them into 1,571 signed leases during the quarter, a 4.9% lead-to-lease conversion rate versus the industry benchmark of 3.2%. The year-over-year, leads were up 26% and applications were up 34% with move-ins up 53%. Our total application conversion hit 36.8% for the quarter, the best of the 4 quarters since we launched our new AI-enabled CRM system. So aditoring technology enabled 24.7 of our leases to be executed after business hours, demand that would have been lost entirely without technology-enabled engagement. We hosted nearly 800 self-guided tours during the quarter and expect to surpass 1,000 per quarter as we move into peak leasing season. 59% of self-guided visitors submit a lease application and extraordinary conversion rate that speaks to the quality of the funnel. A 4.3% payroll reduction, the 45.7% improvement in bad debt, the 136 basis point occupancy advantage over comps and concessions at point GPR versus 5.7% for the comps. These are all outputs of the centralized data-driven model. Turning to Sedona Lone Mountain as a quick update on our latest acquisition. As a reminder, we acquired this 321-unit community in North Las Vegas in December for $73.25 million. Occupancy closed Q1 at 87.9% and as of April 28, the property is approximately 90.3% with a projected 30-day trend of 92.2%. The rent roll cleanup and operating recovery is ahead of our underwriting and tracking well ahead of budget. Q1 rental income beat budget by 6.7% or approximately $88,000 driven by lower-than-expected bad debt write-offs. Total expenses be budgeted by 13.4% or $71,000. All in, NOI is leading budget by 13.4% or $130,000 through Q1. We continue to target a 7.2% NOI CAGR through 2029 and taking this asset from a high 5 cap acquisition to a 7.5% stabilized yield. On to the transaction market, capital recycling and other earnings opportunities. For Walker & Dunlop. Q1 2026 institutional multifamily sales volume was $15.1 billion across 213 deals at a weighted average cap rate of 5.9% and $260,000 per unit. Full year 2025 volume reached $161.6 billion, up 9.1% year-over-year. Institutional capital is returning selectively with institutions and REITs comprising 36.6% of multifamily acquisitions in 2025, the highest share since 2019. Related to our capital recycling and transaction activity, I wanted to address proactively one element of our potential earnings growth that Paul touched on. The role of strategic fee and interest income generated through our advisers DST platform. Some context. Our adviser NexPoint is one of the largest sponsors of Delaware Statutory Trust in the United States, distributing through the NexPoint Securities broker-dealer network. Since 2017, NexPoint has sponsored over $4 billion of DSTs across a variety of property types, including core and core+ multifamily. The DST market itself reached a record of $8.4 billion of equity raised in 2025, a 49% year-over-year and multifamily is the largest category within it. Each DST transaction generates fee opportunities for sponsors financing, acquisition, asset management fees and creates lending and bridge capital opportunities where our balance sheet partners needed. Looking forward, we meaningfully -- a meaningful potential for additional activity of this type within NXRT. The DST platform is active, the multifamily category within it continues to grow and in NXRT's balance sheet positioning is well suited to participate selectively. While we are not embedding additional transactions in our 2026 guidance, we believe the platform represents a credible source of income earnings optionality, potentially in the range of $0.10 to $0.20 of core FFO over the next 12 months under favorable conditions, balanced against our risk-adjusted return discipline and capital availability. More broadly, this reflects a deliberate strategy to diversify NXRT's earnings streams. Larger peers like Prologis, Welltower, Realty Income, into, Equinix of all built private capital platforms in response to capital markets dynamics publicly where public equity costs can be prohibited. NXRT through its external adviser possesses the core infrastructure to pursue a similar appropriately scaled strategy. We will be outlining about our vision at this at NARI in early June. Let me close with this. We are entering the most favorable supply backdrop in over a decade. Again, Blackstone is calling multifamily of sleeping giant. New construction starts are down 70% from the peak. Deliveries are projected at their lowest level in 12 years, and demand is absorbing the remaining supply wave in our submarkets. The setup is asymmetric. 2026 absorbs the swap repricing in the supply tail. 2027 captures the supply cliff and earn-in to put numbers around that earn-in. If new lease growth returns 2% by Q4 of this year, consistent with the deliveries cliff, the carryover earning alone delivers 150 to 200 basis points of 2027 same-store revenue growth before a single new 2027 leases signed. We're not providing 2027 guidance today, obviously, but the structural drivers are clear and they compound in our favor. Against that backdrop, our operating platform is performing. Bad debt is at a multiyear low, payroll is declining, insurance renewed significantly better than expected. Leasing conversion rates are at record levels, concessions at 1.9% of gross potential rent versus 5.7% for the competitive set, occupancy is building again, 93.9% in April and rising. Potential for DST transactions generate incremental fee and interest income to diversify our earnings streams, but the operating thesis still stands on its own. The monthly trajectory is encouraging. New lease trade-outs improved 300 basis points from January to April, and we're entering the peak leasing season with strong conversion metrics, declining supply and really tepid expectations. Indeed, the trends and trajectories give us reason for optimism. We appreciate everyone continued hard work here at NexPoint and BH, and with that, we'll turn the call over to the operator for questions.

[Operator Instructions] There are no questions at this time -- sorry, we do have a question from Michael Lewis with Truist Securities.

My first question, I wanted to ask, you talked about it a little bit, this 200 basis point difference between the occupied and lease percentages I was just wondering if there's any opportunity to narrow that. And likewise, the resident retention in the mid-50% range looks like it was going up the last couple of months. do you see upside there through operational efficiencies as well.

Yes, thanks Michael. Yes, we definitely see an opportunity to continue to drive renewals and also retention particularly as you get to the summer months, folks don't want to move in our Southeastern southeastern markets. So that's always been a core focus and any incremental improvement there, just obviously, it allows us to do a lease growth as the supply wave captures. Paul, I don't know if you have anything to add to the first point.

Yes. I think on that spread, I mean, here we are in April, right? The start of kind of peak leasing season, the properties are looking great, traffic flows. I think in the highlight section, you can kind of see last year traffic patterns, right? This is where we -- our demand funnel is the widest getting out these percentage higher -- that helps us with pricing power, right? Fewer units available. We're able to push pricing dynamics a little bit more, try to continue to narrow that gap on the new lease pricing side. So that's the focus, pushing as Matt alluded to, going into the back half of the year, continuing to hopefully start to inflect positively on rates. So the more leases we can sign, I think the better pricing dynamics we have.

And then you talked about the core portfolio like it was essentially in line. You kept the full year same-store guidance. But occupancy was up quite a bit. In almost all the markets, Vegas was up a lot sequentially. I was wondering if the occupancy increase surprised you at all? And is it fair that 1Q kind of ran in line with your expectations? Or are you running a little bit ahead to start the year? How would you kind of frame that? .

I think Q1 to me and Bonner, you can give your thoughts. But to me, Q1 felt better. I wouldn't say we hit our -- in fact, we missed -- I think we missed our NOI budget by $0.25 million or $300,000, but it did feel better from a demand perspective in that we saw the rent rolls continue to firm. We saw trends build, and we didn't particularly give up that much or at least give up that much relative to the prior quarters. And so I personally was pleased with -- and as you can tell from my prepared remarks, I think it's firming out there, and I'm pleased with the trajectory and the trends and occupancy. Bonner, if you have anything to add to that?

Yes, I think, look, on our aggressive forecast internally. I think we put the squeeze 10, 20 basis points higher in occupancy. It is improving, and that's structurally where we're looking to go in the peak leasing season, I would say that the major wins and Matt described in the call, the ability to squeeze that debt back down to 50 basis points. I mean that that's lateral in. And I think that we utilize a software technology called 2 dots. We're getting to a point now where we can get to a credit screening approval on app in a 15-minute interaction and being able to close those leads same day, same interaction where some of our prospects may be applying here and across the street, that time to decision is really important to us. So that's helping some of the occupancy of the operating platform that we're building is really helping. So I would say we're happy with occupancy. We'd love to continue to build it. we described a little bit of an uptick in concession utilization, hoping to see that moderate. But overall, revenue expectations within $0.01 of kind of our optimistic goal for the quarter.

And then lastly for me, this seems like the most interesting question. I don't know exactly how to frame it or if you can answer it. But -- so the interest expense is going to be higher because rates are higher. It sounds like the offset is the fee income that you talked about. Is there anything -- you said you're going to give more details at a -- is there anything more to say about how that's kind of offsetting this year? What you need to -- what you're investing or what you're earning or what exactly you're going to be doing to earn, I think you said $0.10 to $0.20 over the next 12 months. Is there any more detail you could share on that? .

Yes, happy to. So the one thing we know is that we're going to be wrong on the curve. It's bouncing around. It has bounced around. And I think unfortunately, for us, the sell side tends to model max rate pain and we get fundamentals out there possibly. So that's the backdrop. As our as the NexPoint platform, we manage about $20 billion or so across a variety of property types and have built out broker-dealer and infrastructure across those property types. . And that allows NXRT to utilize that broker-dealer infrastructure. And what I mean by that is NXRT would sponsor the DST program. And so basically utilizing the balance sheet, we could be a lender to the transaction and make a spread above our credit line, you have 300 to 400 basis point spread there. The sponsor typically takes acquisition fees. We could be 1% to 2% of the gross purchase price of the deal. So you can estimate that fee income to be typically $1 million to $2.5 million per transaction. And so it adds up. And given the fact that we -- I think we've been an aligned shareholder here since inception when we took public with fee deferrals, fee waivers, extraordinary side-by-side alignment and ownership. This is just another tool in our toolkit to help earnings and diversify earnings. And so we think it's the right thing to do for the business. And look, I hope is we don't need it. The curve comes our way. We're able to swap appropriately and opportunistically and I just add this extra earnings layer on top of it. So we see it as a good thing. You bet.

Your next question comes from Buck Horne with Raymond James.

I was just wondering if you could give us a little bit more detail on the real estate taxes line. And I guess, what were the good guys and kind of how that year-over-year comps are looking as you peer into the back half in terms of appraisals or potential recoveries? Or just kind of what's going on with taxes this quarter and the outlook for the remainder of the year.

Yes, I'll be happy to help you that. So Q1, we were still fighting last year's taxes, right? We've got a couple of wins on the board. I think, in particular, a Dallas County. DFW had a number of favorable protests from last year roll into the Q1 booking. In terms of kind of the overall, I would say, we've been working with our tax consultants, right? We've gotten kind of initial values, notices in May in Texas and a couple of other of our municipalities and overall, I think our outlook is pretty stable. Valuations are down. There's less ammunition, there's less sales, that are really pushing kind of the equalniform story for us. So we believe in access should be favorable this year to the last couple. I think we've got in our numbers roughly 4.1% year-over-year growth at the midpoint with some savings in the Q1 bookings. So we're going to continue to shoot to outperform that work to do there. Some of those flights roll into the next year. But overall, the outlook is kind of in the 3% to 4% range, and we booked, I think, 3 or 4 settlements in Q1 to help that quarterly number.

And just on the repairs and maintenance expenses, you mentioned you pulled forward some deferred CapEx, is that trend going to continue into the second quarter? When does that kind of deferred CapEx spending or that maintenance spend start to normalize? .

Yes. I think there were a few things that were a little bit noisy. Again, it's 1 quarter. Some of that is seasonal. Some of that is lender-driven on the 2024, '25. We think R&M broadly stabilizes. And when you look at the component parts of R&M that we report One of the things that's in there is that service contract revenue, it probably deserves some better specification outside that. That includes our bulk fiber contract billing. So it looks a little bit outsized, but there is a revenue offset there. So Q1, I would say, we got hit by a couple of kind of onetime things, a few of the deferred maintenance items Matt mentioned. But I think the outlook for the year generally is pretty favorable, again, kind of inflation level of R&M growth. And then we're certainly working to outperform.

Congrats good job.

Thanks, Bob.

And there are no further questions at this time.

All right. Thanks for everyone's participation and look forward to speaking seeing everyone at NAREIT in June. Have a good day. .

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.