Invitation Homes Announces $3.5 Billion Unsecured Credit Facility to Replace Existing Facility and Reduce Cost of Debt

Rhea-AI Summary

Invitation Homes Inc. (NYSE: INVH) has closed a $3.5 billion senior unsecured credit facility, comprising a $1.75 billion revolving line of credit and a $1.75 billion term loan. The facility matures in September 2028, with two 6-month extension options. This new facility replaces the company's existing $1.0 billion revolving credit facility and $2.5 billion unsecured term loan. The increased revolver size is expected to enhance liquidity and balance sheet flexibility for growth opportunities.

Based on INVH's BBB / Baa2 credit rating, the new revolver will bear interest at SOFR + 95 bps for used portions, with a 20 bps fee on aggregate commitments. The term loan will bear interest at SOFR + 105 bps. Both rates are 5 bps lower than the previous facility. The transaction involved 26 lenders, with Bank of America, N.A. as Administrative Agent.

Positive

• Increased credit facility from $1.0 billion to $3.5 billion, enhancing liquidity and growth potential
• Lower interest rates: 5 bps reduction compared to previous facility
• Extended maturity to September 2028 with options to extend to September 2029
• Improved balance sheet flexibility with larger revolving line of credit
• Strong lender participation with 26 financial institutions involved

Negative

• Increased debt load with $750 million borrowing on the new revolver at closing

Financial Analyst

Invitation Homes' new $3.5 billion credit facility is a strategic financial move that strengthens the company's liquidity position and reduces its cost of debt. The increased revolving credit line from $1 billion to $1.75 billion provides greater financial flexibility, potentially supporting future growth initiatives. The $1.75 billion term loan, combined with the new revolver and cash on hand, allows the company to refinance its existing $2.5 billion term loan at more favorable terms.

The lower interest rate spreads (5% reduction) on both the revolver and term loan will result in significant interest expense savings. This improved cost structure could positively impact the company's profitability and cash flow. The extended maturity dates to 2028 (with options to 2029) also reduce near-term refinancing risk, enhancing the company's financial stability.

The participation of 26 lenders in this facility demonstrates strong confidence in Invitation Homes' creditworthiness and business model. This robust financial backing positions the company well in the competitive single-family home leasing market.

Real Estate Market Analyst

Invitation Homes' new credit facility signals confidence in the single-family rental market. The increased borrowing capacity suggests the company anticipates growth opportunities, possibly through property acquisitions or portfolio expansion. This move aligns with the broader trend of institutional investors increasing their presence in the single-family rental sector.

The improved financial terms could give Invitation Homes a competitive edge in property acquisitions, allowing them to act swiftly on market opportunities. The extended credit line may also support renovation and property improvement initiatives, enhancing the quality of their portfolio and potentially justifying higher rental rates.

However, investors should monitor the company's leverage levels and occupancy rates, as increased debt could pose risks if market conditions deteriorate. Overall, this financial maneuver positions Invitation Homes to capitalize on the growing demand for single-family rentals, particularly as home ownership remains challenging for many Americans due to high property prices and mortgage rates.

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 closed a $3.5 billion senior unsecured credit facility (the “Credit Facility”), consisting of a $1.75 billion revolving line of credit (the “Revolver”) and a fully funded $1.75 billion term loan (the “Term Loan”). Initial maturities of the Revolver and Term Loan are in September 2028, with each carrying two 6-month extension options such that the Credit Facility’s final maturity date is September 2029. The new $1.75 billion Revolver replaces the Company’s existing $1.0 billion revolving credit facility, which had no balance drawn at the time the Credit Facility closed. The increased revolver size is expected to further enhance liquidity and the flexibility of the Company’s balance sheet to pursue potential growth opportunities. Proceeds from the new $1.75 billion Term Loan, a $750 million borrowing on the Revolver at closing, and excess cash on hand were used to fully repay without penalty the Company’s existing $2.5 billion unsecured term loan facility due to reach final maturity in January 2026, and to pay costs associated with the transaction.

The Revolver and Term Loan will bear interest at spreads based on the Company’s long-term unsecured credit rating. Based on the company’s BBB / Baa2 credit rating at closing, the new Revolver will bear interest at SOFR + 95 bps for any used portion and will incur a fee of 20 bps on the aggregate Revolver commitments. Based on the company’s BBB / Baa2 credit rating at closing, the Term Loan will bear interest at SOFR + 105 bps. For both the Revolver and the Term Loan, spreads at the closing date are 5 bps lower than the spreads most recently in effect for the Company’s previous credit facility.

A total of 26 lenders participated in the Company’s new Credit Facility, including Bank of America, N.A. as Administrative Agent, and Wells Fargo Bank, National Association, and JPMorgan Chase Bank, N.A. as Syndication Agents. BofA Securities, Inc., Wells Fargo Securities, LLC, JPMorgan Chase Bank, N.A., Deutsche Bank Securities Inc., Mizuho Bank, Ltd., and PNC Capital Markets LLC acted as Joint Lead Arrangers and Joint Bookrunners. BMO Capital Markets Corp., BNP Paribas, Capital One, National Association, Goldman Sachs Bank USA, Keybanc Capital Markets, Inc., M&T Bank, Morgan Stanley Senior Funding, Inc., RBC Capital Markets, Truist Securities, Inc., and U.S. Bank National Association acted as Passive Joint Lead Arrangers.

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 (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 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 and rising interest rates), 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/20240908740924/en/

Investor Relations Contact:

Scott McLaughlin

844.456.INVH (4684)

IR@InvitationHomes.com

Media Relations Contact:

Kristi DesJarlais

972.421.3587

Media@InvitationHomes.com

Source: Invitation Homes Inc.

FAQ

What is the size of Invitation Homes' new credit facility?

Invitation Homes (INVH) has closed a $3.5 billion senior unsecured credit facility, consisting of a $1.75 billion revolving line of credit and a $1.75 billion term loan.

When does Invitation Homes' new credit facility mature?

The new credit facility for INVH initially matures in September 2028, with two 6-month extension options that can extend the final maturity to September 2029.

How does the interest rate on INVH's new credit facility compare to the previous one?

The interest rates on INVH's new credit facility are 5 basis points lower than the spreads most recently in effect for the company's previous credit facility.

How many lenders participated in Invitation Homes' new credit facility?

A total of 26 lenders participated in Invitation Homes' (INVH) new $3.5 billion credit facility.