NexPoint Residential Trust Inc (NXRT) Q4 2020 Earnings Call Transcript

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NexPoint Residential Trust Inc (NXRT 1.68%)
Q4 2020 Earnings Call
Feb 16, 2021, 11:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day and welcome to the NexPoint Residential Trust, Inc. Fourth Quarter Conference Call. [Operator Instructions]

At this time, I would like to turn the conference over to Jackie Graham. Please go ahead.

Jackie Graham -- Investor Relations

Thank you. Good day, everyone and welcome to NexPoint Residential Trust's conference call to review the Company's results for the fourth quarter ended December 31, 2020. 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. Forward-looking statements can often be identified by words such as expect, anticipate, estimate, may, should, intend and similar expressions and variations or negatives of these words.

These forward-looking statements include, but are not limited to statements regarding NXRT's business and industry in general, the COVID-19 pandemic and its effect from company. NXRT's strategy and guidance for the full year 2021 and the related assumptions, guidance for the first quarter of 2021 and the related assumptions -- and related assumptions; NXRT's net value add and its related components, assumptions and planned value-add programs including projected average rent, rent change and return on investments, the expected return to service of damaged units and expected acquisitions and dispositions. They are not guarantees of future results and forward-looking statements are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed in any forward-looking statements, including the ultimate geographic spread, duration and severity of the COVID-19 pandemic.

In the effectiveness of actions taken or actions that may be taken by governmental authorities to contain the outbreak or previous impact as well as those described in greater detail in our filings with the Securities and Exchange Commission, particularly those specifically described in the Company's Annual Report on Form 10-K and quarterly reports on Form 10-Q. 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 includes analysis of funds from operations or FFO, core funds from operations or core FFO, adjusted funds from operations or AFFO, net operating income or NOI, and net debt, all of which are non-GAAP financial numbers -- measures of performance of our total debt. These non-GAAP measures should be used as a supplement to and not a substitute for net income loss and total debt computed in accordance with GAAP. For a more complete discussion of FFO, core FFO, AFFO and NOI and net debt, 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.

Brian Mitts -- Chief Financial Officer, Treasurer and Executive Vice President

Thank you, Jackie, and welcome, everyone, for joining us on the NXRT 2020 fourth quarter conference call. I'm Brian Mitts and joined here with Matt McGraner. Let me start with some highlights from 2020. Net income for the year $44 million or $1.74 per diluted share as compared to $99.1 million or $4.03 per diluted share in 2019. Same-store NOI increase was $2.1 million or an increase of 3.2% as compared to 2019.

We reported 2020 core FFO of $55.5 million or $2.20 per diluted share, which is an increase of 14% on a per share basis as compared to 2019. Total revenue for 2020 was $204.8 million and total NOI was $116.1 million, which was an increase over 2019 of 13.1% and 13.2% respectively. NOI margins for 2020 were 56.7% which is equal to margins of 56.7% during the same period in 2019. We continue to execute our value-add business plan by completing the 1,679 full and partial renovations during the year, achieving an average monthly rent premium $131 and a 21.7% ROI. Since inception today, the portfolio as of 12/31, we have completed 5,355 full and partial upgrades, 4,280 kitchen upgrades and washing dryer installs and 8880 technology packages installed achieving an average monthly written premium of $126, $48 and $44 respectively and an ROI of 21.5%, 74.2%, 33.8% respectively.

During 2020, we issued 1.3 million shares of stock for approximately $59.5 million gross proceeds. Based on updated cap rates and NOI, we are revising our NAV per share range upward as follows. On the low end, $43.83, on the high end $52.94, the midpoint of $47.88. These are based on cap rates ranging from 4% on the low end and 5% on the high side. NAV compares to midpoint of $46.31, 12/31/2019 by 3.2% year-over-year increase. For the forth quarter, we paid a dividend of $0.34125 per share on December 31 to shareholders of record as of December 15.

Yesterday, the Board declared a dividend per share of $0.34125 payable on March 31 to shareholders of record on March 16. Since inception, we've increased our dividend 66% and year-to-date, our dividend was 1.72 times covered by core FFO for the payout ratio of 58% of core FFO for the year. Overall, although 2020 provided some early challenges, we continued our track record for capital allocation and earnings growth. As the payment make hit in stocks in general, key specifically dropped multi-year lows, we aggressively bought back stock by 1.6 million shares of common stock at an average price of $27.07 per share.

The stocks recover including NXRT. We issued 718,000 shares of common stock at an average price of $43.90 per share creating significant permanent value for shareholders. Inception to-date we have issued 2.8 million shares of common stock at an average price of $47.14 per share and if repurchased 2.4 million shares of common stock at an average repurchase price of $25.70 per share. Spike drawn [Phonetic] facilities continue the pandemic to ensure maximum liquidity, we were able to containing our long-term deleveraging plan by paying our facilities down to $183 million by the end of the year.

So at 12/31 we had $57.1 million cash on the balance sheet and a $43 million capacity under our facility for approximately 100 million of successful liquidity in our dividend as 1.72 times covered by core FFO. Since going public in April 2015 we've grown a core FFO of 62% and NOI by 92%. This performance combine the thoughtful capital allocation dividend policies has translated NXRT the only best performing REIT stocks among all REIT's regardless of property type since we went public in April 2015.

Let me go through some of the specific results for full year 2020, total revenues return were $304.8 million compared to $181.1 million in 2019 or 13.1% increase. Net operating income for 2020 is $116.1 million, which compared to $102.6 million for 2019 or 13.2% increase. Core FFO was $55.5 million or $2.20 per diluted share as compared to $47.6 million or $1.93 per diluted share in 2019, which represents an increase of 14% on a per share basis. Despite the challenges presented by the pandemic, our core FFO came in at the midpoint of our original 2020 guidance. For our same-store pool, We had 24 properties consisting of 9,074 units. Our same-store rent increase was 1.4%. Same store occupancy declined slightly by 10 basis points from 94.3% to 94.2% and same store NOI increased 3.2% for the year from $66.1 million to $68.2 million.

Since the pandemic began, we, as did all of our peers withdrew guidance starting the second quarter 2020. We are -- on this call, reinstating guidance for the full year 2021 as follows, core FFO on a per diluted share basis, $2.16 in the low-end, $2.35 on the high end with a midpoint of $2.25 to represent an increase in 2.3% over 2020. Same-store revenue 3.9% increase in the low end, 5.2% increase in the high end, the midpoint of 4.5% increase. Same-store expenses, we estimate will increase 7.9%, on the low end by 5.3%, on the high end, 6.6% in the midpoint. And for same-store NOI, we have a 0.9% increase in the low end, 5.1% increase in the high end, the 3% increase in the form.

So with that, let me turn it over to Matt for his comments.

Matt McGraner -- Chief Investment Officer and Executive Vice President

Thanks, Brian. I'll start by recapping our fourth quarter same-store operational results. Strength in the fourth quarter grew in six out of our 10 markets in 2020 with Nashville and Orlando being essentially flat, and Houston the only one, that's slightly. Every other market ended of the year in the black. Notable markets for same-store NOI growth for the fourth quarter were Phoenix at 11.3% and Dallas at 9%. Even during the pandemic leasing activity and revenue growth continued to improve in the fourth quarter. Over the second to third quarters with eight out of our nine markets achieving revenue growth of 1% or better. The top 5 were Phoenix at 8.4%, South Florida at 3.9%, Dallas-Fort Worth at 3.3%, Tampa at 3%, Nashville at 2.9%.

Renewal conversions were healthy -- were healthy at 53% for the quarter, with 5 out of our 10 margins delivering renewal growth rates of at least 2% and every market was in the black. The leaders were Tampa at 3.1%, Atlanta at 2.6%, Phoenix at 3%, Dallas-Fort Worth at 2.3%, Nashville at 2.1%. On the occupancy front, we are pleased to report that Q4 same store occupancy remain over 94%, and is well positioned for 2021. As of this morning, the portfolio is 96.5% leased and have a healthy 60 days trend at 91.5%.

Turning to full year 2020 same-store NOI performance. Our same-store margin improved as Brian mentioned with 55.8%. same store average rents in revenue each increased by 1.3% and 3.6% respectively. NOI hold strong across the majority of the portfolio in 2020 with six out of our nine markets growing NOI by at least 3.9%. Notable same-store NOI growth markets for the year were again Phoenix in top 4 at 12.3% and 10% respectively. Operationally overall, the portfolio generated positive revenue growth for the entire year 2020 with eight markets achieving growth of at least 2.4% or better. Orlando being the only outlier. The top five markets were Phoenix at 8%, South Florida at 6.1%. Charlotte at 5.2%, Tampa at 5%, Nashville at 4.8%.

On 2020 collections April through December, in 2020, the portfolio has collected 98.5% of all total charges. Standard plans continues to decrease month over month, since we started offering the program in April 2020. 2020 payment plans are 97.2% collected as of Friday and there were 959 payment plans in April of 2020. Those numbers were down to 168 payment plans at the end of the year, and as of today, just under 198.

Turning into 2020 acquisitions. As Brian mentioned, we acquired one asset in 2020, Fairways at San Marcos and Chandler, Arizona for $84.5 million selling four assets for $142 million and exiting the DC market entirely. We plan to upgrade Fairways a 156 units at an average cost of $11,800 per unit and generate premiums of $153 a unit with an ROI of approximately 15.5%. We also plan to install smart tech packages in every unit and we expect to generate monthly premiums there of $40 a unit. As a result, our underwritten three-year average same-store NOI growth for this asset is 7.5%. Today Fairway's is $150,000 or 19% ahead of our NOI underwriting budget already.

Turning to 2021 guidance. As Brian said, we're optimistic, we can grow same-store NOI in 2020 by at least 3%. And from a geographical perspective, we're expecting particular strength across the following markets. We expect Atlanta to grow same-store NOI by 6.7% due to the strength in rental market, economic growth, favorable supply demand for affordable housing and interior renovation plans for over 200 units, 85 at The Preserve at Terrell Mill and 120 at Rockledge. It's already $180 to $235 rent premiums and high teens and low-20s ROIs. As a result, we're budgeting 5.6% revenue growth for Atlanta.

Next on to Tampa to grow same-store NOI by roughly 5.5%, again driven by economic growth both internally and from surging that migration trends in Florida. All told, we expect to -- we expect revenue growth to reach the high fours to 5% this year while continuing to upgrade over 50 units in the market. Next, South Florida, we expect to grow same-store NOI by 5.4% driven again by economic growth, both internally and from surging at migration trends. We have large interior renovation plans for South Florida, particularly at the Avant at Pembroke Pines where we expect to complete our comprehensive common area and mainly upgrades at Pembroke in 2021.

We're also having tremendous amount of success upgrading units at Avant and we see a pipeline for another 200 or more at roughly $250 in premium in the low 20s ROI. Finally, we expect Charlotte to grow same-store NOI by 5% driven by again, economic growth, strength of rental markets and net migration in the state of North Carolina. We expect to upgrade over 30 units in the market and generate revenue growth of high 4% to 5% in 2021. At last, we expect both Phoenix and Las Vegas to grow same-store NOI in the range of 3.5% -- 3% to 5% due to continued strength in the middle income rental market, 4.5% revenue growth and roughly 300 unit upgrades -- 200 in Phoenix and 100 in Las Vegas.

On to the acquisition and internal growth and disposition front for 2021, we are witnessing a material supply demand imbalance for Class B Sunbelt product, driving cap rates down to 4% and below in some markets, particularly debt financing, remaining at historical lows. With that said, we remain active in evaluating attractive opportunities that fit our style box and we do think we could likely acquire $100 million to $200 million properties this year. We would expect to pay just $102 million of acquisitions with $75 million to $150 million of dispositions, with the most likely candidates being a couple of assets in Nashville, where we've completed our business plans and generated tremendous value over the past five years.

Notwithstanding an extremely competitive acquisition market, we continue to be an internal growth company at our core. To that end, our guidance in 2021 includes the following assumptions regarding our value-add programs. We expect to complete at least 1,300 full interior upgrades and are roughly the same as 2020, expect the average cost to be roughly $10,000 per unit and generating roughly $170 in average monthly premium or approximately 20% ROIs. We expect to complete approximate 75 partial interior upgrades at an average cost of $4,400 per unit and generate $77 in average monthly premium or 21% ROIs.

We expect to complete roughly 100 of other minor interior upgrades. For example, new back slashes, bespoke appliance upgrades and gears [Phonetic] to name a few. We think these upgrades will average roughly $1,000 per unit and generate $50 in average monthly premium or over 30% ROIs. We expect to install approximately 425 washer dryer sets at an average cost of $850 per unit and generate $44 in average monthly premium or roughly at 60% ROI. And finally, we expect to add 700 additional smart home tech packages, which will generate $40 to $45 an average monthly premium and the 52% profit margin.

So far in 2020, we're off to a good start and January, February leasing activity in 2021 showing signs of improvement. Combined January and February, new lease growth is up over 3% and renewals continue to exceed 2% across the entirety of the portfolio.

So in closing, I'll just reiterate that we're excited about 2021 and we'll work hard to generate another year of outsized NOI growth for shareholders and for earnings. That's all I have for prepared remarks. I appreciate our team's work at NexPoint BH and their continued execution.

Back to you, Brian.

Brian Mitts -- Chief Financial Officer, Treasurer and Executive Vice President

Thanks, Matt. We will turn it over now for questions.

Questions and Answers:

Operator

[Operator Instructions] We'll take the first question at this time. It comes from Buck Horne from Raymond James. Please go ahead.

Buck Horne -- Raymond James -- Analyst

Hey, thanks. Good morning, guys. I guess let's start with the real estate taxes to begin with and just kind of how that impacts your outlook for 2021 guidance. It certainly seems like that is the biggest variable. So, I guess I'm curious up to what degree we know that the assessments are going to come in at these elevated ranges? What amount is your best guess work here? I know Tennessee seems to be the most volatile component of coming up with these estimates, but trying to get a sense of to what degree we know the assessments are going to come in this range and to what degree is conservatism on your part relative to the guidance?

Matt McGraner -- Chief Investment Officer and Executive Vice President

Hey, Buck. It's Matt. Good questions. And so there's -- between outside case in our guidance and the base case, the two significant drivers were basically increase in rental revenue, roughly 90 basis points and that's the market rent and a reduction of roughly $1.3 million in property taxes. And so, you add those two together and you get a 5% ROI growth or plus that. We think that the midpoint represents a fairly conservative range, which includes the uncertainty in Tennessee with the millage rate increases the rent implemented in 2022 to shore up municipality budgets. So, we don't expect property taxes to exceed that base case level and we're optimistic that there's some number between zero and that $1.3 million that would allow us to reach the upside case.

Buck Horne -- Raymond James -- Analyst

Okay, sound good. One other quick one for you. There was a line item noting miscellaneous income, I think for the year total about $1.8 million. But is there any color you could add to what the miscellaneous income represented? And is that some sort of repeatable fee income or what's in that line?

Matt McGraner -- Chief Investment Officer and Executive Vice President

It's just late fees and admin fees that were that we were able to collect in 2020, which is down from historical levels. But nonetheless, I think that they can be collected this year again, particularly after the CDC lifts their monetary.

Buck Horne -- Raymond James -- Analyst

I got you. Okay, great. I'll turn the call over to the next analyst and will follow up later. Thank you.

Brian Mitts -- Chief Financial Officer, Treasurer and Executive Vice President

Thanks, Buck.

Operator

[Operator Instructions] Our next question comes from Rob Stevenson from Janney. Please go ahead.

Rob Stevenson -- Janney Montgomery Scott -- Analyst

Good morning, guys. Matt, did you say that you had 198 payment plans versus 168 at year-end? Or did I get those numbers mixed up?

Matt McGraner -- Chief Investment Officer and Executive Vice President

Yeah. That's about right. We started out with roughly [Indecipherable] in April, down to...

Brian Mitts -- Chief Financial Officer, Treasurer and Executive Vice President

Ninety-eight.

Matt McGraner -- Chief Investment Officer and Executive Vice President

Yeah, down to 98 in February. We're at 168 at year-end.

Rob Stevenson -- Janney Montgomery Scott -- Analyst

Okay, so just 98, not 198? It's not an increase, it's a continued decrease?

Matt McGraner -- Chief Investment Officer and Executive Vice President

That's right. That's right.

Rob Stevenson -- Janney Montgomery Scott -- Analyst

Okay, perfect? I was wondering why was going up? I just didn't hear that right. Thank you. And then did you give January 2021 collection percentage yet?

Matt McGraner -- Chief Investment Officer and Executive Vice President

Yeah. We have it. It is just the 95%.

Rob Stevenson -- Janney Montgomery Scott -- Analyst

And how does that compare versus December at this point, sort of 45 days in or November is an improvement? Status quo? Little bit weaker? How would you characterize that?

Matt McGraner -- Chief Investment Officer and Executive Vice President

Yeah, it's so -- you could kind of compare it to last year in 2019 and it's about 70 basis points behind. But it's about 30 basis points behind trend but it's caught up and seems in-line for now.

Rob Stevenson -- Janney Montgomery Scott -- Analyst

Okay. And then any substantial no differential per day versus core FFO and what NAREIT would be calculated as of that you're anticipating prepayment penalties or anything else big that's likely to come through?

Brian Mitts -- Chief Financial Officer, Treasurer and Executive Vice President

No. I think we're in-line with NAREIT. If we sold those properties that Matt indicated, we would think has some prepayment penalties. But that's factored into our guidance.

Rob Stevenson -- Janney Montgomery Scott -- Analyst

Okay. And then the last one for me, you guys gave the market-by-market, quarter-over-quarter same-store operating metrics. I think it's paid 16 in the supplemental. Nashville had negative, a slightly negative average effect of rent sequentially and flat occupancy, but total rental income was up 10%. Can you walk me through how those numbers -- how you get to that big of a jump in rental revenue with occupancy flat and rental rate down slightly? [Indecipherable] Because the total rental revenue maybe includes some sort of fees or something that we're outsized in Nashville that drove that?

Brian Mitts -- Chief Financial Officer, Treasurer and Executive Vice President

Hold on one second, Rob.

Rob Stevenson -- Janney Montgomery Scott -- Analyst

Okay. But Tampa and South Florida, both have -- both negative effect of rent changes quarter-over-quarter and negative occupancy and are slightly positive, but that 10.1% jump in Nashville really stuck out?

Brian Mitts -- Chief Financial Officer, Treasurer and Executive Vice President

Yes, I think it might just include the additional property Argus [Phonetic] being added to the pool.

Rob Stevenson -- Janney Montgomery Scott -- Analyst

Okay, all right. Thanks, guys. Appreciate it.

Brian Mitts -- Chief Financial Officer, Treasurer and Executive Vice President

Thanks, Rob.

Operator

We'll take the next question that comes from Amanda Sweitzer from Baird. Please go ahead.

Amanda Sweitzer -- Robert W. Baird -- Analyst

Thanks. Good morning, guys. On your fourth quarter results, what was the main driver of the 90 basis points sequential decline in occupancy? And on that, the demand for renovated or non-renovated units deviated off from your expectations during the quarter?

Brian Mitts -- Chief Financial Officer, Treasurer and Executive Vice President

Yeah, the demand didn't deviate. We thought we would upgrade basically what we did. There were a couple market specific issues, one in Houston with an asset hold [Phonetic] replaced that experienced some evictions that is now recovered. It's about 94% occupied today, and the other one was an asset in Charlotte, that same issue, right. And then, the other deal we have now in Charlotte had a small fire to Timber Creek that had some occupancy. But those are the main drivers of the decline and like I said, today we're back in 94 plus percent for those assets.

Amanda Sweitzer -- Robert W. Baird -- Analyst

Good, that's helpful. And then pulling up until the earlier question is, how much bad debt are you assuming in 2021 guidance? And then how much of a benefit did you realize from some of those state-issued rental assistance bonds in the fourth quarter?

Matt McGraner -- Chief Investment Officer and Executive Vice President

Yeah. Bad debt assumptions, roughly 120 basis points for 2021. And were in the band, I think this is your question in the band from the base case to the upside case. I think that number can decrease to about 80 basis points to cause further upside, but more often that it will be better on bad debt in 2021 than 2020. We're already seeing an increase in first payment with rent on time. And like I said to Rob's question, the decrease in the payment plans.

Amanda Sweitzer -- Robert W. Baird -- Analyst

Go ahead.

Brian Mitts -- Chief Financial Officer, Treasurer and Executive Vice President

Yeah, I was going to answer the aid -- particularly, we've collected around $1 million dollars of aid across our various markets from local aids that's being offered outside of everything and the stimulus packages.

Amanda Sweitzer -- Robert W. Baird -- Analyst

Okay, that's helpful, and then, are you expecting additional aid in your guidance ranges at all? Or that would be incremental if you received that?

Matt McGraner -- Chief Investment Officer and Executive Vice President

Yeah, it'd be incremental. I mean, from all the states, in our markets, there's over $7 billion of available aid, $40 million at the county level. And that's all available that we're not underwriting out of the guidance.

Amanda Sweitzer -- Robert W. Baird -- Analyst

Okay, thanks. And then last question for me, it's just on capital allocation, the expected capital is like grading your guidance, right, total sense to their given cap rates, but are you exploring any alternative external growth opportunities, given how competitive the transaction market is today?

Matt McGraner -- Chief Investment Officer and Executive Vice President

Not at the moment in terms of any other deviation from our core property tied for value and multifamily, we're not trying to venture outside of any of that. We're focused on the internal growth first and foremost and buying -- recycling the capital. And then, we can orb [Phonetic] our stock like we did in 2020, which I think Brian mentioned, we bought $60 million and implied 5.8 cap [Phonetic] and sold plus $50 million at a 4.6; I think we'll continue to do that.

Amanda Sweitzer -- Robert W. Baird -- Analyst

Thanks. That's it for me.

Operator

The next question comes from John Massocca from Ladenburg Thalmann. Please go ahead.

John Massocca -- Ladenburg Thalmann -- Analyst

Good morning. In the prepared remarks, you mentioned some market-specific NOI expectations. But if I heard correctly, they were all at or above the midpoint of total NOI growth expectations. So what are the markets counterbalancing those stronger markets? And why are they making relative underperformers?

Matt McGraner -- Chief Investment Officer and Executive Vice President

Yeah, the three largest attractors, or under the 4% or 5%, are Dallas, Fort Worth and Nashville. The good news for both of those markets are, if the tax has come in at the upside case for either markets, and those markets will be above the midpoint, it should provide upside to our guidance. So it's largely -- it's almost entirely texture.

John Massocca -- Ladenburg Thalmann -- Analyst

Understood. And then, as you think about Q4 same-store rental rate change, what would that have been if you exclude uplift from rehab projects?

Matt McGraner -- Chief Investment Officer and Executive Vice President

Actually, we have organic -- probably just under 1%, so call it, 70 basis points.

John Massocca -- Ladenburg Thalmann -- Analyst

And then, if you think about the NOI expectation for next year, in terms of occupancy, are you seeing the current levels of maybe the ceiling on total occupancy particularly versus 4Q? Or is a potential uplift there as well as kind of rental rate?

Matt McGraner -- Chief Investment Officer and Executive Vice President

Yeah, I think I think there's a lot of uplift in occupancy, I think it's going to be a primary driver of growth first, and then the rates will -- once you have stabilization across...

John Massocca -- Ladenburg Thalmann -- Analyst

I think it was a feeling kind of the 96.5% you're at today or you could even go higher? Because everything kind of shakes out when we get to the end the month.

Matt McGraner -- Chief Investment Officer and Executive Vice President

Yeah, I mean, we've historically run around 94%, so -- and pushed up interest rates for -- instead of another 0.5% to 1.5% in occupancy. So, I think we'll continue to do that. I'd be surprised if we pushed in higher than 96%.

John Massocca -- Ladenburg Thalmann -- Analyst

Okay, that's it from me.

Operator

The next question is a follow up question from Buck Horne from Raymond James. Please go ahead.

Buck Horne -- Raymond James -- Analyst

Yeah, just one quick follow up for me. So you mentioned in some of your NOI forecasts and your outlooks that you're seeing continued economic strength into Sunbelt markets, plus, some facts there continued in migration, population trends that seem to be playing out. I'm just wondering, in some of the early lease application data, whether it's fourth quarter or the January, February numbers you got so far, is there any tangible uptick in applications coming from out-of-state or out-of-market residents that are part of that net migration effect that you can quantify?

Matt McGraner -- Chief Investment Officer and Executive Vice President

Yeah, absolutely. So January -- the January numbers, we have to net migration until moving into our markets for NXRT markets as they enter our markets is 10.9%. Majority of that is 11% from California, 9% New York, Ohio is 8%, and then Illinois was above 5%. January 2021 net migration data into our markets, and we can send it to you later after the call, but just to give it to you here was 14.4%, to roughly 3.5% increase January to January. Same leading markets, California 19% of those numbers, so from almost 11% in January 2020 from California to 19% in 2021. New York, 14%, that number is up about 8% year-over-year; so definitely seeing an impact, and in a big way, both in Texas, specifically Phoenix, and Florida.

Brian Mitts -- Chief Financial Officer, Treasurer and Executive Vice President

Hey, it's Brian. So I just want to follow from your earlier question about miscellaneous income. You were talking about the actual miscellaneous income on the face of financial, so we misunderstood the question, but what that $1.77 million is mostly business interruption insurance that we received on the cutters property, which was basically completely destroyed in October of 2019. So we've been rebuilding it this year and getting income from that insurance.

Buck Horne -- Raymond James -- Analyst

There we go. That's helpful, I appreciate that color. Thanks for that.

Brian Mitts -- Chief Financial Officer, Treasurer and Executive Vice President

Yeah. Once that's operational again, that'll flip up the NOI and out will be the miscellaneous income.

Buck Horne -- Raymond James -- Analyst

Got it. Thanks.

Operator

The next question comes from Jon Petersen from Jefferies. Please go ahead.

Jon Petersen -- Jefferies -- Analyst

Great. Thanks. If we think about kind of more leisure travel affecting certain markets, and looking specifically at Orlando and Vegas, places that you have significant exposure; I mean, if you can help us characterize, maybe specifically how some of your properties are positioned there and if you expect some uplift, as we see more leisure travel? And then on the other side of it, I like the migration trends you were just talking about, I mean, it's your same guidance, underwriting some unwinding of that in migration turning into out migration as things reopen?

Matt McGraner -- Chief Investment Officer and Executive Vice President

Yeah, we really took it on the chin, if it's your first question on leisure travel markets. In Orlando in 2020, the one asset I can think that comes to mind and say we'll call him a like what -- like one of us which was directly impacted by the closure of the theme parks and in some cases got down to 90% flat occupancy, which we hadn't seen since we all know -- since we own the asset. That we're getting through those issues, and are really optimistic that we can see that property come back and perform much better in 2021.

Vegas, on the other hand, really, really wasn't as weak as we thought it would be. Obviously, the district closed down and a lot of the leisure-related jobs were lost or furloughed. But we saw that kind of offset that was in migration from California particularly, and that helped us have a pretty good year in Vegas, all told, and I think, ended the year positive, from a year-over-year basis.

I particularly don't believe that net migration trends into these markets will reverse because of a vaccine or some other development. I think that these cities are Argus cities they were 20 years ago, they offer a lot of lifestyle and other amenities at an affordable cost. While we're located in these markets, and we think they'll continue to grow, and I don't think that once a millennial or other new jobs applicants comes and stays in the Sunbelt will return anytime soon. But that's our personal belief.

Brian Mitts -- Chief Financial Officer, Treasurer and Executive Vice President

And yeah, a lot of that is this -- the jobs in companies that moved there, and they're not likely to turn around and move back. Especially in our renter cohort, these aren't people that were escaping the cities, and then they're going to go back once things return to normal. They are more working-class people that are made permanently to follow jobs, or companies.

Jon Petersen -- Jefferies -- Analyst

Appreciate the color. Thank you.

Operator

The next question that comes from Michael Lewis from Truist Securities. Please go ahead.

Michael Lewis -- Truist Securities -- Analyst

Great, thank you. I wanted to ask about the cap rate assumption in the NAV calculation; it looks like you took the cap rate down about 30 basis points across all the markets. So I was just wondering if you could give a little more color on -- is that due to interest rates or some blanket assumption? Or, alternatively, that it's based more on transactions you're seeing in each of those markets, just a coincidence that they're all the same? And, the level of transactions and the confidence you have in cap rates right now?

Matt McGraner -- Chief Investment Officer and Executive Vice President

Yeah, the main drivers were tightening at the high end, and there was supreme cap rates, sub 5%; I haven't seen a 5% cap rate in several years now. And so, I think that from what -- when we surveyed CVRE and Green Street in real page, they came back, frankly, a lower number than these are. And from a transactional perspective in the acquisition marketing and bidding intent, we haven't seen and have offered on assets, most recently in Tampa and Charlotte, that have gone sub 4%. And we're holding our notice bidding around for 4.4%, 4.5% cap rates. So there is a lot of capital out there to your point, I mean there is an incredible amount of sub-figures in debt financing, as well. And it's just driving material supply demand in balance for this type of product in the Sunbelt.

Michael Lewis -- Truist Securities -- Analyst

Thanks. Matt, you mentioned Nordics Core [Phonetic], this is an internal growth company, you have about 14,000 units, you get this kind of modest acquisition activity in the 2021 guidance. Do you like the size of the company or do you think there are any advantages to diversifying or going into new markets? Or, just growth of the portfolio, in general, or do you like where you are now?

Matt McGraner -- Chief Investment Officer and Executive Vice President

Yeah, great question that we've debated a lot. And we've never been the company that's saying we're going to own 50,000, 75,000 or 100,000 units. We have basically 40 properties since we've been public and we went public in 2015. And we were able to quadruple the market cap by recycling capital. And that's what we care about, first and foremost, is the stock price and getting that up for stockholders. We don't want to venture into any new property types of speed, but we are looking at and intrigued a little bit by Research Triangle in Raleigh, Durham. Yeah, ultimately, we have made some, in the life sciences a part of -- like private space, made some acquisition there. We like the growth there. We like the demand drivers there. That's a market that we were searching for. And it could be interesting over the next few years for us, but other than that, we're comfortable and like what we're doing.

Michael Lewis -- Truist Securities -- Analyst

Sounds good. And then just lastly, for me, I'm going to ask about a line item in the Income Statement, as well. That corporate TNA line was down a fair amount sequentially in year-over-year. When I looked at the guidance for next year it looks like it goes back up. Was there anything unique or that we should look through that -- that kind of draws that number over the lower?

Brian Mitts -- Chief Financial Officer, Treasurer and Executive Vice President

Yeah. I think maybe being conservative on the guidance, the cheese and drop in auto cost in some of our transfer overhead; they are pretty minimal and immaterial now, but they're certainly less travel and stuff, it's getting flushed through corporate G&A, except the pandemic. But yeah, we don't really expect a material increase in those expenses, but I think we -- for guidance kind of averaged it back out to you where we thought it would be historically.

Operator

Next question comes from John Massocca, it's a follow-up question from Ladenburg Thalmann. Please go ahead.

John Massocca -- Ladenburg Thalmann -- Analyst

Just a quick one on capital recycling. I guess, as you think about that today, understanding the timing and the bespoke transactions, would that be day one dilutive on a per share basis, given kind of the cap rate dynamics you're seeing today? Or do you think it would be largely, potentially what you can dispose of is equal on a day one NOI versus what you can take on?

Matt McGraner -- Chief Investment Officer and Executive Vice President

Certainly, we've done it in a reverse manner. So we've acquired the property before we've settled on the disposition. And that's cash -- that's cash accretive. But depending on where you buy the deals could be, to your point, cap rate dilutive. But, on a stabilized basis would probably, more than likely that could beat by $4.25, $4.5 [Phonetic]. Our goal is to generate 75 basis point to 125 basis point in a whitelist post-rehab in three years. So, kind of second -- year half, second year, cap rate accretion would deliver at that point -- would be the way we think about it.

Brian Mitts -- Chief Financial Officer, Treasurer and Executive Vice President

Yeah, and just a couple of other things. Sorry, we typically recycle on something that's older and has gone through the rehab process. And so, the upside there is not as much, to Matt's point, as the new deal we're burning in and then not too much NOI focus but core FFO for refinancing that -- that new deal or putting financing on that new deal at a cheaper cost of debt and what the current deal was, ultimately, I think that's accretive to core FFO and the NAV.

John Massocca -- Ladenburg Thalmann -- Analyst

Understood. That's it for me. Thank you.

Operator

That ends the question-and-answer session for today, and I'd like to turn it back over to you for any closing remarks.

Brian Mitts -- Chief Financial Officer, Treasurer and Executive Vice President

Yeah, no, we're good. I appreciate everybody's participation, a lot of good questions. Look forward to 2021. 2020 was definitely a tougher year than we thought going in, but I think we came out pretty well and well-positioned and have some good prospects for the future. So, thank you for everybody's participation.

Operator

[Operator Closing Remarks]

Duration: 39 minutes

Call participants:

Jackie Graham -- Investor Relations

Brian Mitts -- Chief Financial Officer, Treasurer and Executive Vice President

Matt McGraner -- Chief Investment Officer and Executive Vice President

Buck Horne -- Raymond James -- Analyst

Rob Stevenson -- Janney Montgomery Scott -- Analyst

Amanda Sweitzer -- Robert W. Baird -- Analyst

John Massocca -- Ladenburg Thalmann -- Analyst

Jon Petersen -- Jefferies -- Analyst

Michael Lewis -- Truist Securities -- Analyst

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