Invitation Homes Announces $200 Million Joint Venture

Rhea-AI Summary

Invitation Homes (NYSE: INVH) has announced a new joint venture partnership to invest in newly-constructed homes in high-growth markets. The JV will deploy approximately $500 million, including debt, with initial total equity commitment of $200 million. Invitation Homes will commit $50 million in equity and provide management services, earning management fees and potential promoted interest. The company will also have rights to potentially acquire the JV's homes in the future. The partnership aims to leverage Invitation Homes' builder relationships, management expertise, and scale to expand their housing portfolio.

Positive

• Secured $500 million investment capacity through JV
• capital commitment of $50 million while maintaining management control
• Additional revenue stream through management fees
• Future acquisition rights for JV properties
• Potential for increased equity commitment through follow-on investment tranches

Negative

• Additional debt leverage through JV structure
• Capital deployment risk in new construction market

Insights

Financial Analyst

This strategic joint venture marks a significant expansion of INVH's asset-light growth model. The $500M deployment capacity with only $50M of INVH's capital demonstrates efficient use of leverage and partnership capital. The structure offers multiple revenue streams: management fees, potential promoted interest and future acquisition rights. This approach allows INVH to grow its footprint in high-demand markets while minimizing capital risk.

The deal structure is particularly attractive as it provides INVH with first rights to potentially acquire the properties, essentially creating a pipeline of pre-vetted assets. The 25% equity stake suggests a conservative approach to capital allocation while maintaining meaningful upside potential through performance-based promotes. The partnership with an institutional investor also validates INVH's build-to-rent strategy and management capabilities.

Real Estate Market Analyst

This JV strategically positions INVH to capitalize on the growing build-to-rent sector while addressing housing supply constraints in high-growth markets. The focus on newly constructed homes aligns with consumer preferences for modern amenities and reduces maintenance costs compared to existing inventory. The partnership leverages INVH's established builder relationships and operational expertise to create a competitive advantage in securing prime properties.

The timing is opportune as single-family rental demand remains robust amid affordability challenges in the housing market. The structure allows INVH to maintain its market leadership while sharing development risks and capital requirements with an institutional partner, creating a scalable growth platform that can be expanded through future investment tranches.

DALLAS--(BUSINESS WIRE)-- Invitation Homes Inc. (NYSE: INVH) (“Invitation Homes” or the “Company”), the nation’s premier single-family home leasing and management company, announced today that it has entered into an agreement to form a new joint venture partnership (the “JV”) with a leading global real estate investment partner. The JV will leverage the Company’s strong homebuilder partnerships, management expertise, and unmatched scale to invest in newly-constructed homes and communities in several high-growth markets.

“We believe our partnership approach to investing in new homes with builders is an optimal strategy for Invitation Homes to maximize risk-adjusted returns while also helping to bring high-quality new housing options to where they are greatly needed,” said Dallas Tanner, the Company’s Chief Executive Officer. “This successful growth channel has become one of our trademark characteristics, and we’re pleased to work with an esteemed institutional partner to further expand upon that.”

The JV is expected to deploy approximately $500 million, including debt, to acquire newly constructed homes. The JV will be initially capitalized with a total equity commitment of $200 million, of which $50 million will be committed by Invitation Homes, with potential to upsize equity commitments through follow-on investment tranches in the future. The Company will provide various management services to the JV, for which the Company will earn management fees in addition to the opportunity to earn a promoted interest subject to certain performance thresholds. Invitation Homes also has certain rights to potentially acquire the JV’s homes in the future.

Eastdil Secured served as financial advisor to Invitation Homes in arranging the JV, and Latham & Watkins LLP acted as the Company’s legal advisor.

About Invitation Homes

Invitation Homes, an S&P 500 company, is the nation's premier single-family home leasing and management 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, 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 and insurance costs, poor resident selection and defaults and non-renewals by the Company’s residents, the Company’s dependence on third parties for key services, risks related to the evaluation of properties, performance of the Company’s information technology systems, development and use of artificial intelligence, risks related to the Company’s indebtedness, and risks related to the potential negative impact of unfavorable global and United States economic conditions (including inflation), uncertainty in financial markets (including as a result of events affecting financial institutions), geopolitical tensions, natural disasters, climate change, and public health crises, 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. The Company believes these factors include, but are not limited to, those described under Part I. Item 1A. “Risk Factors” of its Annual Report on Form 10-K for the year ended December 31, 2023 (the “Annual Report”), as such factors may be updated from time to time in the Company’s periodic filings with the Securities and Exchange Commission (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, in the Annual Report, and in the Company’s other periodic filings. 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241113983850/en/

Investor Relations Contact:

Scott McLaughlin

844.456.INVH (4684)

IR@InvitationHomes.com

Media Relations Contact:

Kristi DesJarlais

844.456.INVH (4684)

Media@InvitationHomes.com

Source: Invitation Homes Inc.

FAQ

How much is Invitation Homes (INVH) investing in the new joint venture?

Invitation Homes (INVH) is committing $50 million in equity to the joint venture, which has a total initial equity commitment of $200 million.

What is the total deployment value of INVH's new joint venture?

The joint venture is expected to deploy approximately $500 million, including debt, to acquire newly constructed homes.

What benefits will Invitation Homes (INVH) receive from the joint venture?

INVH will earn management fees, potential promoted interest subject to performance thresholds, and rights to potentially acquire the JV's homes in the future.

What is the purpose of INVH's new joint venture partnership?

The joint venture aims to invest in newly-constructed homes and communities in high-growth markets, leveraging INVH's homebuilder partnerships and management expertise.