Invitation Homes Reports Third Quarter 2021 Results

DALLAS–(BUSINESS WIRE)–Invitation Homes Inc. (NYSE: INVH) (“Invitation Homes” or the “Company”), the nation’s premier single-family home leasing company, today announced its Q3 2021 financial and operating results.

Third Quarter 2021 Highlights

Year over year, total revenues increased 11.0% to $510 million, and property operating and maintenance costs increased 3.6% to $184 million.
Net income available to common stockholders totaled $69 million or $0.12 per diluted common share.
Year over year, Core FFO per share increased 27.0% to $0.38, and AFFO per share increased 32.7% to $0.32.
Same Store NOI grew 11.9% year over year on 7.9% Same Store Core Revenues growth and 0.6% Same Store Core Operating Expenses growth.
Same Store Average Occupancy was 98.1%, up 30 basis points year over year.
Same Store new lease rent growth of 18.4% and Same Store renewal rent growth of 7.8% drove Same Store blended rent growth of 10.6%, up 660 basis points year over year.
Revenue collections were approximately 98% of the Company’s historical average collection rate. Bad debt as a percentage of gross rental revenue decreased from 2.0% in 3Q 2020 to 1.0% in 3Q 2021.
The Company accelerated its acquisition pace in 3Q 2021. Acquisitions by the Company and the Company’s joint ventures totaled 1,684 homes for $722 million while dispositions totaled 161 homes for $57 million.
The Company issued and sold 17,451,969 shares of common stock for net proceeds of $693 million. Subsequent to quarter end, in October 2021, the Company sold an additional 1,875,000 shares pursuant to the underwriters’ full exercise of the option to purchase additional shares, generating net proceeds of $75 million. The proceeds from these issuances were and will be used primarily for general corporate purposes, including acquisitions.
As previously announced in August 2021, the Company closed its first public bond offering of $650 million aggregate principal with a fixed coupon of 2.00%. Net proceeds were used to voluntarily prepay secured indebtedness.
In conjunction with this release, the Company is raising its full year 2021 guidance as follows: increasing and narrowing its Same Store Core Revenues growth by 87.5 basis points at the midpoint to 6.375%; decreasing its Same Store Core Operating Expenses growth by 150 basis points at the midpoint to 1.5%; and increasing its Same Store NOI growth by 200 basis points at the midpoint to 9.0%. The Company is also raising its full year 2021 guidance for Core FFO per share by $0.05 at the midpoint to $1.49 and for AFFO per share by $0.04 at the midpoint to $1.28. Additionally, as previously announced, the Company increased its full year 2021 acquisition target from $1.0 billion to between $1.7 billion and $1.8 billion.
The Company is pleased to announce that it has achieved a 13.2% increase on its Global Real Estate Sustainability Benchmark (“GRESB”) score from 2020 to 2021. As a result, the Company has surpassed its sustainability performance threshold to trigger a one basis point improvement in pricing on its revolving line of credit. The Company remains committed to sustainability transparency and improving performance. For additional information, please visit www.invitationhomes.com/sustainability.

President & Chief Executive Officer Dallas Tanner comments:

“We are pleased to announce another strong quarter of operating and financial results. Fundamentals remain as supportive as ever, and we believe our ability to identify and capture accretive growth opportunities that complement our portfolio of well-located, high-quality homes is second to none. As a result of these attributes and our execution, including our premier resident experience from our best-in-class teams, we have once again raised our full year guidance.”

Financial Results

Net Income, FFO, Core FFO, and AFFO Per Share — Diluted⁽¹⁾

	Q3 2021		Q3 2020		YTD 2021		YTD 2020
Net income	$	0.12	$	0.06	$	0.33	$	0.23
FFO	0.35		0.27		1.00		0.89
Core FFO	0.38		0.30		1.11		0.96
AFFO	0.32		0.24		0.95		0.81

(1)

See “Reconciliation of FFO, Core FFO, and AFFO,” footnotes (1) and (2), for details on the treatment of convertible notes in each specific period presented in the table.

Net Income

Net income per share in the third quarter of 2021 was $0.12, compared to net income per share of $0.06 in the third quarter of 2020. Total revenues and total property operating and maintenance expenses in the third quarter of 2021 were $510 million and $184 million, respectively, compared to $459 million and $178 million, respectively, in the third quarter of 2020.

Net income per share in YTD 2021 was $0.33, compared to net income per share of $0.23 in YTD 2020. Total revenues and total property operating and maintenance expenses in YTD 2021 were $1,476 million and $528 million, respectively, compared to $1,359 million and $512 million, respectively, in YTD 2020.

Core FFO

Year over year, Core FFO per share in the third quarter of 2021 increased 27.0% to $0.38, primarily due to NOI growth and interest expense savings.

Year over year, Core FFO per share in YTD 2021 increased 14.9% to $1.11, primarily due to NOI growth and interest expense savings.

AFFO

Year over year, AFFO per share in the third quarter of 2021 increased 32.7% to $0.32, primarily due to the increase in Core FFO per share described above.

Year over year, AFFO per share in YTD 2021 increased 18.1% to $0.95, primarily due to the increase in Core FFO per share described above.

Operating Results

Same Store Operating Results Snapshot

Number of homes in Same Store Portfolio:	72,423

	Q3 2021		Q3 2020		YTD 2021		YTD 2020
Core Revenues growth (year over year)	7.9	%			5.4	%
Core Operating Expenses growth (year over year)	0.6	%			(0.3)	%
NOI growth (year over year)	11.9	%			8.3	%

Average Occupancy	98.1	%	97.8	%	98.3	%	97.3	%
Bad debt % of gross rental revenues ⁽¹⁾	1.0	%	2.0	%	1.7	%	1.4	%
Turnover Rate	6.3	%	7.4	%	18.2	%	20.7	%

Rental Rate Growth (lease-over-lease):
Renewals	7.8	%	3.2	%	6.1	%	3.6	%
New leases	18.4	%	5.6	%	13.6	%	3.5	%
Blended	10.6	%	4.0	%	8.1	%	3.6	%

(1)

Invitation Homes reserves residents’ accounts receivables balances that are aged greater than 30 days as bad debt, under the rationale that a resident’s security deposit should cover approximately the first 30 days of receivables. For all resident receivables balances aged greater than 30 days, the amount reserved as bad debt is 100% of outstanding receivables from the resident, less the amount of the resident’s security deposit on hand. For the purpose of determining age of receivables, charges are considered to be due based on the terms of the original lease, not based on a payment plan if one is in place. All rental revenues and other property income, in both Total Portfolio and Same Store Portfolio presentations, are reflected net of bad debt.

Revenue Collections Update

	Q3 2021		Q2 2021		Q1 2021		Q4 2020		Pre-COVID Average ⁽²⁾
Revenues collected % of revenues due: ⁽¹⁾
Revenues collected in same month billed	92	%	92	%	91	%	91	%	96	%
Late collections of prior month billings	5	%	6	%	6	%	5	%	3	%
Total collections	97	%	98	%	97	%	96	%	99	%

(1)		Includes both rental revenues and other property income. Rent is considered to be due based on the terms of the original lease, not based on a payment plan if one is in place. Security deposits retained to offset rents due are not included as revenue collected. See “Same Store Operating Results Snapshot,” footnote (1), for detail on the Company’s bad debt policy.
(2)		Represents the period from October 2019 to March 2020.

Same Store NOI

For the Same Store Portfolio of 72,423 homes, third quarter 2021 Same Store NOI increased 11.9% year over year on Same Store Core Revenues growth of 7.9% and Same Store Core Operating Expenses growth of 0.6%.

YTD 2021 Same Store NOI increased 8.3% year over year on Same Store Core Revenues growth of 5.4% and a 0.3% decrease in Same Store Core Operating Expenses.

Same Store Core Revenues

Third quarter 2021 Same Store Core Revenues growth of 7.9% year over year was driven by a 5.8% increase in Average Monthly Rent, a 30 basis point increase in Average Occupancy to 98.1%, a 100 basis points year over year improvement in bad debt as a percentage of gross rental revenue, and a 39.5% increase in Other income, net of resident recoveries.

YTD 2021 Same Store Core Revenues growth of 5.4% year over year was driven by a 4.4% increase in Average Monthly Rent, a 100 basis point increase in Average Occupancy to 98.3%, and a 14.1% increase in Other income, net of resident recoveries. Bad debt increased from 1.4% of gross rental revenues in YTD 2020 to 1.7% of gross rental revenues in YTD 2021, which was a 29 basis point drag on Same Store Core Revenues growth, all else equal.

Same Store Core Operating Expenses

Third quarter 2021 Same Store Core Operating Expenses increased 0.6% year over year, driven by a 3.5% increase in Same Store fixed expenses, partially offset by a 4.0% decline in Same Store controllable expenses, net of resident recoveries.

YTD 2021 Same Store Core Operating Expenses decreased 0.3% year over year, driven by a 5.3% decline in Same Store controllable expenses, net of resident recoveries, partially offset by a 2.8% increase in Same Store fixed expenses.

Investment Management Activity

Invitation Homes increased its acquisition pace during 3Q 2021. Third quarter 2021 acquisitions totaled 1,684 homes for $722 million through multiple acquisition channels. This included 1,082 wholly owned homes for $477 million and 602 homes for $245 million in the Company’s unconsolidated joint venture with the Rockpoint Group (the “Rockpoint JV”). Invitation Homes owns 20% of the Rockpoint JV, which owned a total of 1,422 homes as of September 30, 2021.

Dispositions in the third quarter of 2021 included 145 wholly owned homes for gross proceeds of $51 million and 16 homes for gross proceeds of $6 million in the Company’s unconsolidated joint venture with the Federal National Mortgage Association (the “FNMA JV”).

Year to date through September 30, 2021, the Company acquired 3,259 homes for $1,291 million, including 1,977 wholly owned homes for $810 million and 1,282 homes for $481 million in the Rockpoint JV. The Company also sold 644 homes for $212 million, including 605 wholly owned homes for $197 million and 39 homes for $15 million in the FNMA JV.

Balance Sheet and Capital Markets Activity

As of September 30, 2021, the Company had $1,570 million in available liquidity through a combination of unrestricted cash and undrawn capacity on its revolving credit facility. The Company’s total indebtedness as of September 30, 2021, was $7,870 million, consisting of $4,273 million of secured debt and $3,597 million of unsecured debt.

The Company issued and sold 17,451,969 shares of common stock for net proceeds of $693 million. Of the shares issued during the quarter, 12,500,000 were sold through a public offering that was previously announced in September, and 4,951,969 shares were sold through the Company’s at the market equity program, under which $300 million of gross capacity remained as of September 30, 2021. Subsequent to quarter end, in October 2021, the Company sold 1,875,000 shares pursuant to the underwriters’ full exercise of the option to purchase additional shares, generating net proceeds of $75 million. The proceeds from these issuances were and will be used primarily for general corporate purposes, including acquisitions.

As previously announced in August 2021, the Company closed its first public bond offering of $650 million aggregate principal with a fixed coupon of 2.00% (the “Senior Notes”). The Senior Notes were priced at 98.396% of the principal amount and will mature on August 15, 2031. Net proceeds were used to voluntarily prepay secured indebtedness.

As previously announced in July 2021, the Company gave notice of its intent to settle conversions of its 3.5% Convertible Notes due January 15, 2022 (the “2022 Convertible Notes”), with common stock. As of September 30, 2021, the Company settled $199 million of principal balance outstanding of the 2022 Convertible Notes with the issuance of 8,723,421 shares of its common stock. On a pro forma basis, whereby net debt is reduced for the impact of the conversion of remaining 2022 Convertible Notes, Net Debt / Trailing Twelve Months Adjusted EBITDAre at September 30, 2021, would have been 6.1x, down from 6.2x on an as-reported basis, and from 7.3x at the end of 2020 on an as-reported basis, with no debt reaching final maturity until December 2024.

Dividend

As previously announced on October 22, 2021, the Company’s Board of Directors declared a quarterly cash dividend of $0.17 per share of common stock. The dividend will be paid on or before November 24, 2021, to stockholders of record as of the close of business on November 9, 2021.

FY 2021 Guidance Update

FY 2021 Guidance
	Current	Previous
	FY 2021	FY 2021
	Guidance	Guidance
Core FFO per share — diluted	$1.47 – $1.51	$1.40 – $1.48
AFFO per share — diluted	$1.26 – $1.30	$1.20 – $1.28

Same Store Core Revenues growth	6.25% – 6.5%	5.0% – 6.0%
Same Store Core Operating Expenses growth	1.0% – 2.0%	2.5% – 3.5%
Same Store NOI growth	8.5% – 9.5%	6.5% – 7.5%

Note: The Company does not provide guidance for the most comparable GAAP financial measures of net income (loss), total revenues, and property operating and maintenance expense, or a reconciliation of the forward-looking non-GAAP financial measures of Core FFO per share, AFFO per share, Same Store Core Revenues growth, Same Store Core Operating Expenses growth, and Same Store NOI growth to the comparable GAAP financial measures because it is unable to reasonably predict certain items contained in the GAAP measures, including non-recurring and infrequent items that are not indicative of the Company’s ongoing operations. Such items include, but are not limited to, impairment on depreciated real estate assets, net (gain)/loss on sale of previously depreciated real estate assets, share-based compensation, casualty loss, non-Same Store revenues, and non-Same Store operating expenses. These items are uncertain, depend on various factors, and could have a material impact on the Company’s GAAP results for the guidance period.

Earnings Conference Call Information

Invitation Homes has scheduled a conference call at 11:00 a.m. Eastern Time on October 28, 2021, to discuss results for the third quarter of 2021. The domestic dial-in number is 1-844-200-6205, and the international dial-in number is 1-929-526-1599. The passcode is 889970. An audio webcast may be accessed at www.invh.com. A replay of the call will be available through November 25, 2021, and can be accessed by calling 1-866-813-9403 (domestic) or 1-929-458-6194 (international) and using the replay passcode 768378, or by using the link at www.invh.com.

Supplemental Information

The full text of the Earnings Release and Supplemental Information referenced in this release are available on Invitation Homes’ Investor Relations website at www.invh.com.

Glossary & Reconciliations of Non-GAAP Financial and Other Operating Measures

Financial and operating measures found in the Earnings Release and Supplemental Information include certain measures used by Invitation Homes management that are measures not defined under accounting principles generally accepted in the United States (“GAAP”). These measures are defined herein and, as applicable, reconciled to the most comparable GAAP measures.

About Invitation Homes

Invitation Homes is the nation’s premier single-family home leasing company, meeting changing lifestyle demands by providing access to high-quality, updated homes with valued features such as close proximity to jobs and access to good schools. The company’s mission, “Together with you, we make a house a home,” reflects its commitment to providing homes where individuals and families can thrive and high-touch service that continuously enhances residents’ living experiences.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which include, but are not limited to, statements related to the Company’s expectations regarding the performance of the Company’s business, its financial results, its liquidity and capital resources, and other non-historical statements. In some cases, you can identify these forward-looking statements by the use of words such as “outlook,” “guidance,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates,” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties, including, among others, risks inherent to the single-family rental industry and the Company’s business model, macroeconomic factors beyond the Company’s control, competition in identifying and acquiring properties, competition in the leasing market for quality residents, increasing property taxes, homeowners’ association (“HOA”) fees, and insurance costs, the Company’s dependence on third parties for key services, risks related to the evaluation of properties, poor resident selection and defaults and non-renewals by the Company’s residents, performance of the Company’s information technology systems, risks related to the Company’s indebtedness, and risks related to the potential negative impact of the ongoing COVID-19 pandemic on the Company’s financial condition, results of operations, cash flows, business, associates, and residents. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. Moreover, many of these factors have been heightened as a result of the ongoing and numerous adverse impacts of COVID-19. The Company believes these factors include, but are not limited to, those described under Part I. Item 1A. “Risk Factors” of the Annual Report on Form 10-K for the fiscal year ended December 31, 2020, filed with the Securities and Exchange Commission (the “SEC”), as such factors may be updated from time to time in the Company’s periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release and in the Company’s other filings with the SEC. The forward-looking statements speak only as of the date of this press release, and the Company expressly disclaims any obligation or undertaking to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except to the extent otherwise required by law.

Consolidated Balance Sheets
($ in thousands, except shares and per share data)

	September 30, 2021			December 31, 2020
	(unaudited)
Assets:
Investments in single-family residential properties, net	$	16,653,447		$	16,288,693
Cash and cash equivalents	569,663			213,422
Restricted cash	251,487			198,346
Goodwill	258,207			258,207
Investments in unconsolidated joint ventures	93,096			69,267
Other assets, net	424,666			478,287
Total assets	$	18,250,566		$	17,506,222

Liabilities:
Mortgage loans, net	$	3,857,863		$	4,820,098
Secured term loan, net	401,258			401,095
Unsecured notes, net	931,889			—
Term loan facility, net	2,476,309			2,470,907
Revolving facility	—			—
Convertible senior notes, net	145,818			339,404
Accounts payable and accrued expenses	297,073			149,299
Resident security deposits	163,663			157,936
Other liabilities	453,448			611,410
Total liabilities	8,727,321			8,950,149

Equity:
Stockholders’ equity
Preferred stock, $0.01 par value per share, 900,000,000 shares authorized, none outstanding as of September 30, 2021 and December 31, 2020	—			—
Common stock, $0.01 par value per share, 9,000,000,000 shares authorized, 594,893,674 and 567,117,666 outstanding as of September 30, 2021 and December 31, 2020, respectively	5,949			5,671
Additional paid-in capital	10,622,691			9,707,258
Accumulated deficit	(767,232		)	(661,162		)
Accumulated other comprehensive loss	(378,428		)	(546,942		)
Total stockholders’ equity	9,482,980			8,504,825
Non-controlling interests	40,265			51,248
Total equity	9,523,245			8,556,073
Total liabilities and equity	$	18,250,566		$	17,506,222

Consolidated Statements of Operations
($ in thousands, except shares and per share amounts) (unaudited)

	Q3 2021			Q3 2020			YTD 2021			YTD 2020

Revenues:
Rental revenues	$	464,086		$	424,191		$	1,351,332		$	1,257,858
Other property income	44,092			34,993			121,918			100,870
Joint venture management fees	1,354			—			3,140			—
Total revenues	509,532			459,184			1,476,390			1,358,728

Expenses:
Property operating and maintenance	184,484			177,997			528,279			511,915
Property management expense	17,886			14,824			51,424			43,725
General and administrative	19,369			17,972			56,147			46,626
Interest expense	79,370			87,713			243,540			258,541
Depreciation and amortization	150,694			138,147			440,475			410,440
Impairment and other	4,294			1,723			5,630			4,670
Total expenses	456,097			438,376			1,325,495			1,275,917

Gains (losses) on investments in equity securities, net	4,319			—			(5,823		)	34
Other, net	(1,508		)	(3,049		)	(3,181		)	2,001
Gain on sale of property, net of tax	13,047			15,106			45,450			41,473
Income from investments in unconsolidated joint ventures	202			—			564			—

Net income	69,495			32,865			187,905			126,319
Net income attributable to non-controlling interests	(318		)	(211		)	(1,023		)	(806		)

Net income attributable to common stockholders	69,177			32,654			186,882			125,513
Net income available to participating securities	(69		)	(114		)	(260		)	(335		)

Net income available to common stockholders — basic and diluted	$	69,108		$	32,540		$	186,622		$	125,178

Weighted average common shares outstanding — basic	577,011,178			560,598,995			570,808,028			550,722,684
Weighted average common shares outstanding — diluted	578,571,392			561,871,373			572,262,198			551,947,278

Net income per common share — basic	$	0.12		$	0.06		$	0.33		$	0.23
Net income per common share — diluted	$	0.12		$	0.06		$	0.33		$	0.23

Dividends declared per common share	$	0.17		$	0.15		$	0.51		$	0.45

Glossary and Reconciliations

Average Monthly Rent

Average monthly rent represents average monthly rental income per home for occupied properties in an identified population of homes over the measurement period, and reflects the impact of non-service rental concessions and contractual rent increases amortized over the life of the lease.

Average Occupancy

Average occupancy for an identified population of homes represents (i) the total number of days that the homes in such population were occupied during the measurement period, divided by (ii) the total number of days that the homes in such population were owned during the measurement period.

Contacts

Investor Relations Contact
Scott McLaughlin

Phone: 844.456.INVH (4684)

Email: IR@InvitationHomes.com

Media Relations Contact
Kristi DesJarlais

Phone: 972.421.3587

Email: Media@InvitationHomes.com

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