Invitation Homes Reports Third Quarter 2022 Results

Rhea-AI Summary

Invitation Homes Inc. (NYSE: INVH) reported strong Q3 2022 results with total revenues of $569 million, a 11.6% increase year over year. Net income available to common stockholders rose 14.4% to $79 million, leading to a net income per diluted share of $0.13, up 8.0%. Core FFO grew 9.5% to $0.42 per share. The company faced $19 million in estimated losses related to Hurricane Ian but reported no injuries. Its Same Store NOI increased 8.6%. Updated FY 2022 guidance indicates slight adjustments mainly due to property tax increases.

Positive

• Total revenues increased by 11.6% to $569 million.
• Net income available to common stockholders rose 14.4% to $79 million.
• Core FFO per share increased 9.5% to $0.42.
• Same Store NOI grew by 8.6% year over year.

Negative

• Average occupancy decreased by 60 basis points to 97.5%.
• Bad debt as a percentage of gross rental revenues increased to 1.7% from 0.9% year over year.
• Higher property taxes expected due to rising home prices, with increases around 30% in some areas.

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 2022 financial and operating results.

Third Quarter 2022 Highlights

• Year over year, total revenues increased 11.6% to $569 million, property operating and maintenance costs increased 10.5% to $204 million, net income available to common stockholders increased 14.4% to $79 million, and net income per diluted common share increased 8.0% to $0.13.
• Year over year, Core FFO per share increased 9.5% to $0.42, and AFFO per share increased 8.2% to $0.34.
• Same Store NOI increased 8.6% year over year on 8.3% Same Store Core Revenues growth and 7.6% Same Store Core Operating Expenses growth.
• Same Store Average Occupancy was 97.5%, down 60 basis points year over year.
• Same Store new lease rent growth of 15.6% and Same Store renewal rent growth of 10.2% drove Same Store blended rent growth of 11.6%, up 100 basis points year over year.
• Acquisitions by the Company and the Company's joint ventures totaled 559 homes for $254 million while dispositions totaled 197 homes for $74 million.
• The Company's Florida and Carolinas markets experienced limited wind and water damage as a result of Hurricane Ian. Fortunately, no injuries to residents or associates were reported, and the Company responded quickly to provide assistance to residents and impacted communities. The Company has accrued $19.0 million for estimated losses and damages related to the storm.
• The Company is pleased to announce that it has achieved a 13.3% increase on its Global Real Estate Sustainability Benchmark (“GRESB”) score from 2021 to 2022. As a result, the Company's sustainability-linked revolving line of credit and seven year term loan maintain their one basis point improvement in pricing.

President & Chief Executive Officer Dallas Tanner comments:

"This has been another solid quarter for Invitation Homes, with strong lease rate growth, low turnover and high resident satisfaction scores. Aided by favorable supply and demand fundamentals and a team of associates that are the best in this industry, we plan to continue to execute our strategy and be the premier choice for those who prefer to lease a home.

"Included within this release is our updated full year guidance for 2022. While these updates are generally consistent with our previous expectations for our overall business, our expected property taxes have been impacted more quickly than we had anticipated due to rising home price appreciation, and our reserve for bad debt is expected to remain elevated compared to pre-COVID averages, as it continues to take longer to address residents who are not current with their rent.

"We are proud of the results our teams continue to deliver in the current environment, and we believe the long-term attributes of our business remain strong."

Financial Results

Net Income, FFO, Core FFO, and AFFO Per Share — Diluted
		Q3 2022		Q3 2021		YTD 2022		YTD 2021
Net income		$ 0.13		$ 0.12		$ 0.46		$ 0.33
FFO		0.35		0.35		1.12		1.00
Core FFO		0.42		0.38		1.24		1.11
AFFO		0.34		0.32		1.05		0.95

Net Income

Net income per share for Q3 2022 was $0.13, compared to net income per share of $0.12 for Q3 2021. Total revenues and total property operating and maintenance expenses for Q3 2022 were $569 million and $204 million, respectively, compared to $510 million and $184 million, respectively, for Q3 2021.

Net income per share for YTD 2022 was $0.46, compared to net income per share of $0.33 for YTD 2021. Total revenues and total property operating and maintenance expenses for YTD 2022 were $1,658 million and $577 million, respectively, compared to $1,476 million and $528 million, respectively, for YTD 2021.

Core FFO

Year over year, Core FFO per share for Q3 2022 increased 9.5% to $0.42, primarily due to NOI growth.

Year over year, Core FFO per share for YTD 2022 increased 12.1% to $1.24, primarily due to NOI growth.

AFFO

Year over year, AFFO per share for Q3 2022 increased 8.2% to $0.34, primarily due to the increase in Core FFO per share described above.

Year over year, AFFO per share for YTD 2022 increased 10.6% to $1.05, 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:		74,881
		Q3 2022			Q3 2021			YTD 2022			YTD 2021
Core Revenues growth (year over year)		8.3	%					9.4	%
Core Operating Expenses growth (year over year)		7.6	%					6.1	%
NOI growth (year over year)		8.6	%					11.0	%
Average Occupancy		97.5	%		98.1	%		97.9	%		98.3	%
Bad debt % of gross rental revenues (1)		1.7	%		0.9	%		1.3	%		1.6	%
Turnover Rate		6.2	%		6.3	%		16.6	%		18.4	%
Rental Rate Growth (lease-over-lease):
Renewals		10.2	%		7.7	%		10.0	%		6.1	%
New Leases		15.6	%		18.3	%		15.7	%		13.7	%
Blended		11.6	%		10.6	%		11.4	%		8.2	%

(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 2022			Q2 2022			Q1 2022			Q4 2021			Pre-COVID Average (2)
Revenues collected % of revenues due: (1)
Revenues collected in same month billed		91	%		92	%		91	%		92	%		96	%
Late collections of prior month billings		6	%		7	%		6	%		6	%		3	%
Total collections		97	%		99	%		97	%		98	%		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 74,881 homes, Same Store NOI for Q3 2022 increased 8.6% year over year on Same Store Core Revenues growth of 8.3% and Same Store Core Operating Expenses growth of 7.6%.

YTD 2022 Same Store NOI increased 11.0% year over year on Same Store Core Revenues growth of 9.4% and Same Store Core Operating Expenses growth of 6.1%.

Same Store Core Revenues

Same Store Core Revenues growth for Q3 2022 of 8.3% year over year was primarily driven by a 9.7% increase in Average Monthly Rent, and a 15.5% increase in other income, net of resident recoveries, offset by a 60 basis points year over year decline in Average Occupancy and an 80 basis points year over year increase in bad debt as a percentage of gross rental revenue.

YTD 2022 Same Store Core Revenue growth of 9.4% year over year was primarily driven by an 9.1% increase in average monthly rent, a 30 basis points year over year improvement in bad debt as a percentage of gross rental revenues, and a 25.5% increase in other income, net of resident recoveries, offset by a 40 basis points year over year decline in Average Occupancy.

Same Store Core Operating Expenses

Same Store Core Operating Expenses for Q3 2022 increased 7.6% year over year, primarily driven by a 3.8% increase in Same Store fixed expenses, a 15.4% increase in repairs and maintenance expense, net of resident recoveries, and a 15.2% increase in turnover expenses, net of resident recoveries, mainly driven by inflationary pressures.

YTD 2022 Same Store Core operating expenses increased 6.1% year over year, primarily driven by a 4.1% increase in Same Store fixed expenses, and a 16.3% increase in repairs and maintenance expense, net of resident recoveries, mainly driven by inflationary pressures.

Investment Management Activity

Acquisitions for Q3 2022 totaled 559 homes for $254 million through diversified acquisition channels. This included 244 wholly owned homes for $98 million in addition to 315 homes for $156 million in the Company's joint ventures. Dispositions for Q3 2022 included 189 wholly owned homes for gross proceeds of $70 million and eight homes for gross proceeds of $4 million in the Company's joint ventures.

Year to date through September 30, 2022, the Company acquired 2,336 homes for $1,021 million, including 1,273 wholly owned homes for $543 million and 1,063 homes for $478 million in the Company's joint ventures. The Company also sold 527 homes for $202 million, including 506 wholly owned homes for $192 million and 21 homes for $10 million in the Company's joint ventures.

Update on Hurricane Ian Impact

In Q3 2022, the Company's Florida and Carolinas markets experienced limited wind and water damage as a result of Hurricane Ian. Fortunately, no injuries to residents or associates were reported, and the Company responded quickly to provide assistance to residents and impacted communities.

The Company has accrued $19.0 million for estimated losses and damages related to the storm. Based on previous experience, it is possible that additional damage, and thus costs, may be identified and incurred over the coming months. Estimates will therefore be adjusted if needed and as new information becomes available. Additionally, a portion of the losses may be recoverable through insurance policies that provide coverage for wind, flood, and business interruption, subject to deductibles and limits.

Balance Sheet and Capital Markets Activity

As of September 30, 2022, the Company had $1,875 million in available liquidity through a combination of unrestricted cash and undrawn capacity on its revolving credit facility and term loan. The Company's total indebtedness as of September 30, 2022 was $7,821 million, consisting of $5,200 million of unsecured debt and $2,621 million of secured debt. Net debt / TTM adjusted EBITDAre was 5.7x at September 30, 2022, down from 6.2x as of December 31, 2021.

Dividend

As previously announced on October 21, 2022, the Company's Board of Directors declared a quarterly cash dividend of $0.22 per share of common stock. The dividend will be paid on or before November 23, 2022, to stockholders of record as of the close of business on November 8, 2022.

FY 2022 Guidance Update

The Company's updated 2022 guidance is presented in the table below. The majority of the change in its updated guidance for Same Store Core Operating Expenses Growth is due to higher expectations for property taxes, which are approximately three percent higher than previous expectations. This increase is primarily due to an anticipated increase in tax bills on the Company's homes in Florida and Georgia based on recent assessments that are up nearly 30 percent over prior year in these states. The Company plans to appeal a much higher proportion of these assessments compared to prior years, noting that there will be a timing difference between the date of appeal and when any rebates are received. In addition, the Company's updated guidance for Same Store Core Revenues growth reflects its revised expectation that bad debt will remain somewhat elevated compared to pre-COVID averages, as it continues to take longer to address residents who are not current with their rent.

The Company has also revised its assumptions for annual 2022 acquisitions of $1.1 billion and dispositions of $250 million.

The updated guidance also reflects two additional non-recurring items for the quarter and year to date period ending September 30, 2022, as noted on Supplemental Schedule 1 and the Company's reconciliation of reported FFO to Core FFO. The first relates to an approximate $7.4 million global settlement of a multistate putative class action regarding resident late fees. The settlement covers claims initially asserted in May of 2018, and involves allegations similar to what others in the residential sector have experienced. The Company strongly believes that the allegations were without merit, and does not admit to any liability in the settlement, which remains subject to court approval. The second non-recurring item relates to an accrual of $19.0 million for estimated losses and damages relating to Hurricane Ian.

FY 2022 Guidance
		Current		Previous
		FY 2022		FY 2022
		Guidance		Guidance
Core FFO per share — diluted		$1.63 - $1.67		$1.66 - $1.72
AFFO per share — diluted		$1.38 - $1.42		$1.41 - $1.47
Same Store Core Revenues growth		8.75% - 9.25%		9.0% - 10.0%
Same Store Core Operating Expenses growth		8.75% - 9.25%		6.0% - 7.0%
Same Store NOI growth		8.75% - 9.25%		10.0% - 11.5%

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 27, 2022, to discuss results for the third quarter of 2022. The domestic dial-in number is 1-844-200-6205, and the international dial-in number is 1-929-526-1599. The access code is 535191. An audio webcast may be accessed at www.invh.com. A replay of the call will be available through November 24, 2022, and can be accessed by calling 1-866-813-9403 (domestic) or 1-929-458-6194 (international) and using the replay access code 147088, 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, an S&P 500 company, 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 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 unfavorable global and United States economic conditions (including inflation and interest rates), uncertainty in financial markets, geopolitical tensions, natural disasters, climate change, and public health crises, including 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. 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 year ended December 31, 2021 (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.

Consolidated Balance Sheets
($ in thousands, except shares and per share data)
		September 30, 2022				December 31, 2021
		(unaudited)
Assets:
Investments in single-family residential properties, net		$	17,108,963			$	16,935,322
Cash and cash equivalents			300,312				610,166
Restricted cash			215,584				208,692
Goodwill			258,207				258,207
Investments in unconsolidated joint ventures			286,897				130,395
Other assets, net			508,451				395,064
Total assets		$	18,678,414			$	18,537,846
Liabilities:
Mortgage loans, net		$	2,207,792			$	3,055,853
Secured term loan, net			401,476				401,313
Unsecured notes, net			2,517,272				1,921,974
Term loan facilities, net			2,626,491				2,478,122
Revolving facility			—				—
Convertible senior notes, net			—				141,397
Accounts payable and accrued expenses			325,967				193,633
Resident security deposits			173,280				165,167
Other liabilities			79,787				341,583
Total liabilities			8,332,065				8,699,042
Equity:
Stockholders' equity
Preferred stock, $0.01 par value per share, 900,000,000 shares authorized, none outstanding as of September 30, 2022 and December 31, 2021			—				—
Common stock, $0.01 par value per share, 9,000,000,000 shares authorized, 611,409,909 and 601,045,438 outstanding as of September 30, 2022 and December 31, 2021, respectively			6,114				6,010
Additional paid-in capital			11,133,258				10,873,539
Accumulated deficit			(916,138	)			(794,869	)
Accumulated other comprehensive income (loss)			91,892				(286,938	)
Total stockholders' equity			10,315,126				9,797,742
Non-controlling interests			31,223				41,062
Total equity			10,346,349				9,838,804
Total liabilities and equity		$	18,678,414			$	18,537,846

Consolidated Statements of Operations
($ in thousands, except shares and per share amounts) (unaudited)
		Q3 2022				Q3 2021				YTD 2022				YTD 2021
Revenues:
Rental revenues		$	514,670			$	464,086			$	1,504,601			$	1,351,332
Other property income			50,721				44,092				145,530				121,918
Management fee revenues			3,284				1,354				8,154				3,140
Total revenues			568,675				509,532				1,658,285				1,476,390
Expenses:
Property operating and maintenance			203,787				184,484				576,736				528,279
Property management expense			22,385				17,886				65,166				51,424
General and administrative			20,123				19,369				57,104				56,147
Interest expense			76,454				79,370				225,683				243,540
Depreciation and amortization			160,428				150,694				474,796				440,475
Impairment and other			20,004				4,294				22,874				5,630
Total expenses			503,181				456,097				1,422,359				1,325,495
Gains (losses) on investments in equity securities, net			(796	)			4,319				(4,000	)			(5,823	)
Other, net			(8,372	)			(1,508	)			(11,605	)			(3,181	)
Gain on sale of property, net of tax			23,952				13,047				69,486				45,450
Income (loss) from investments in unconsolidated joint ventures			(849	)			202				(5,870	)			564
Net income			79,429				69,495				283,937				187,905
Net income attributable to non-controlling interests			(250	)			(318	)			(1,180	)			(1,023	)
Net income attributable to common stockholders			79,179				69,177				282,757				186,882
Net income available to participating securities			(147	)			(69	)			(515	)			(260	)
Net income available to common stockholders — basic and diluted		$	79,032			$	69,108			$	282,242			$	186,622
Weighted average common shares outstanding — basic			610,845,820				577,011,178				609,212,132				570,808,028
Weighted average common shares outstanding — diluted			612,647,588				578,571,392				610,741,723				572,262,198
Net income per common share — basic		$	0.13			$	0.12			$	0.46			$	0.33
Net income per common share — diluted		$	0.13			$	0.12			$	0.46			$	0.33
Dividends declared per common share		$	0.22			$	0.17			$	0.66			$	0.51

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.

Core Operating Expenses

Core operating expenses for an identified population of homes reflect property operating and maintenance expenses, excluding any expenses recovered from residents.

Core Revenues

Core revenues for an identified population of homes reflects total revenues, net of any resident recoveries.

EBITDA, EBITDAre, and Adjusted EBITDAre

EBITDA, EBITDAre, and Adjusted EBITDAre are supplemental, non-GAAP measures often utilized to evaluate the performance of real estate companies. The Company defines EBITDA as net income or loss computed in accordance with accounting principles generally accepted in the United States (“GAAP”) before the following items: interest expense; income tax expense; depreciation and amortization; and adjustments for unconsolidated joint ventures. National Association of Real Estate Investment Trusts ("Nareit") recommends as a best practice that REITs that report an EBITDA performance measure also report EBITDAre. The Company defines EBITDAre, consistent with the Nareit definition, as EBITDA, further adjusted for gain on sale of property, net of tax and impairment on depreciated real estate investments. Adjusted EBITDAre is defined as EBITDAre before the following items: share-based compensation expense; severance; casualty losses, net; (gains) losses on investments in equity securities, net; and other income and expenses. EBITDA, EBITDAre, and Adjusted EBITDAre are used as supplemental financial performance measures by management and by external users of the Company's financial statements, such as investors and commercial banks. Set forth below is additional detail on how management uses EBITDA, EBITDAre, and Adjusted EBITDAre as measures of performance.

The GAAP measure most directly comparable to EBITDA, EBITDAre, and Adjusted EBITDAre is net income or loss. EBITDA, EBITDAre, and Adjusted EBITDAre are not used as measures of the Company's liquidity and should not be considered alternatives to net income or loss or any other measure of financial performance presented in accordance with GAAP. The Company's EBITDA, EBITDAre, and Adjusted EBITDAre may not be comparable to the EBITDA, EBITDAre, and Adjusted EBITDAre of other companies due to the fact that not all companies use the same definitions of EBITDA, EBITDAre, and Adjusted EBITDAre. Accordingly, there can be no assurance that the Company's basis for computing these non-GAAP measures is comparable with that of other companies. See below for a reconciliation of GAAP net income to EBITDA, EBITDAre, and Adjusted EBITDAre.

Funds from Operations (FFO), Core Funds from Operations (Core FFO), and Adjusted Funds from Operations (AFFO)

FFO, Core FFO, and Adjusted FFO are supplemental, non-GAAP measures often utilized to evaluate the performance of real estate companies. FFO is defined by Nareit as net income or loss (computed in accordance with GAAP) excluding gains or losses from sales of previously depreciated real estate assets, plus depreciation, amortization and impairment of real estate assets, and adjustments for unconsolidated joint ventures. In calculating per share amounts, Core FFO and AFFO reflect convertible debt securities in the form in which they were outstanding during the period.

The Company believes that FFO is a meaningful supplemental measure of the operating performance of its business because historical cost accounting for real estate assets in accordance with GAAP assumes that the value of real estate assets diminishes predictably over time, as reflected through depreciation and amortization. Because real estate values have historically risen or fallen with market conditions, management considers FFO an appropriate supplemental performance measure as it excludes historical cost depreciation and amortization, impairment on depreciated real estate investments, gains or losses related to sales of previously depreciated homes, as well non-controlling interests, from GAAP net income or loss.

The GAAP measure most directly comparable to Core FFO and Adjusted FFO is net income or loss. Core FFO and Adjusted FFO are not used as measures of the Company's liquidity and should not be considered alternatives to net income or loss or any other measure of financial performance presented in accordance with GAAP. The Company's Core FFO and Adjusted FFO may not be comparable to the Core FFO and Adjusted FFO of other companies due to the fact that not all companies use the same definition of Core FFO and Adjusted FFO. Accordingly, there can be no assurance that the Company's basis for computing this non-GAAP measures is comparable with that of other companies. See "Reconciliation of FFO, Core FFO, and Adjusted FFO" for a reconciliation of GAAP net income to FFO, Core FFO, and Adjusted FFO.

Net Operating Income (NOI)

NOI is a non-GAAP measure often used to evaluate the performance of real estate companies. The Company defines NOI for an identified population of homes as rental revenues and other property income less property operating and maintenance expense (which consists primarily of property taxes, insurance, HOA fees (when applicable), market-level personnel expenses, repairs and maintenance, leasing costs, and marketing expense). NOI excludes: interest expense; depreciation and amortization; property management expense; general and administrative expense; impairment and other; gain on sale of property, net of tax; (gains) losses on investments in equity securities, net; other income and expenses; management fee revenues; and income from investments in unconsolidated joint ventures.

The GAAP measure most directly comparable to NOI is net income or loss. NOI is not used as a measure of liquidity and should not be considered as an alternative to net income or loss or any other measure of financial performance presented in accordance with GAAP. The Company's NOI may not be comparable to the NOI of other companies due to the fact that not all companies use the same definition of NOI. Accordingly, there can be no assurance that the Company's basis for computing this non-GAAP measure is comparable with that of other companies.

The Company believes that Same Store NOI is also a meaningful supplemental measure of the Company's operating performance for the same reasons as NOI and is further helpful to investors as it provides a more consistent measurement of the Company's performance across reporting periods by reflecting NOI for homes in its Same Store Portfolio.

See below for a reconciliation of GAAP net income to NOI for the Company's total portfolio and NOI for its Same Store Portfolio.

Recurring Capital Expenditures or Recurring CapEx

Recurring Capital Expenditures or Recurring CapEx represents general replacements and expenditures required to preserve and maintain the value and functionality of a home and its systems as a single-family rental.

Rental Rate Growth

Rental rate growth for any home represents the percentage difference between the monthly rent from an expiring lease and the monthly rent from the next lease, and, in each case, reflects the impact of any amortized non-service rent concessions and amortized contractual rent increases. Leases are either renewal leases, where the Company's current resident chooses to stay for a subsequent lease term, or a new lease, where the Company's previous resident moves out and a new resident signs a lease to occupy the same home.

Revenue Collections

Revenue collections represent the total cash received in a given period for rental revenues and other property income (including receipt of late payments that were billed in prior months) divided by the total amounts billed in that period. When a payment plan is in place with a resident, amounts are considered to be billed at the time they would have been billed based on the terms of the original lease, not the terms of the payment plan. "Historical average" revenue collections as a percentage of billings refer to revenue collections as a percentage of billings for the period from October 2019 through and including March 2020.

Same Store / Same Store Portfolio

Same Store or Same Store portfolio includes, for a given reporting period, wholly owned homes that have been stabilized and seasoned, excluding homes that have been sold, homes that have been identified for sale to an owner occupant and have become vacant, homes that have been deemed inoperable or significantly impaired by casualty loss events or force majeure, homes acquired in portfolio transactions that are deemed not to have undergone renovations of sufficiently similar quality and characteristics as the existing Invitation Homes Same Store portfolio, and homes in markets that the Company has announced an intent to exit where the Company no longer operates a significant number of homes.

Homes are considered stabilized if they have (i) completed an initial renovation and (ii) entered into at least one post-initial renovation lease. An acquired portfolio that is both leased and deemed to be of sufficiently similar quality and characteristics as the existing Invitation Homes Same Store portfolio may be considered stabilized at the time of acquisition.

Homes are considered to be seasoned once they have been stabilized for at least 15 months prior to January 1^st of the year in which the Same Store portfolio was established.

The Company believes presenting information about the portion of its portfolio that has been fully operational for the entirety of a given reporting period and its prior year comparison period provides investors with meaningful information about the performance of the Company's comparable homes across periods and about trends in its organic business.

Total Homes / Total Portfolio

Total homes or total portfolio refers to the total number of homes owned, whether or not stabilized, and excludes any properties previously acquired in purchases that have been subsequently rescinded or vacated. Unless otherwise indicated, total homes or total portfolio refers to the wholly owned homes and excludes homes owned in joint ventures.

Turnover Rate

Turnover rate represents the number of instances that homes in an identified population become unoccupied in a given period, divided by the number of homes in such population.

Reconciliation of FFO, Core FFO, and AFFO
($ in thousands, except shares and per share amounts) (unaudited)
FFO Reconciliation		Q3 2022				Q3 2021				YTD 2022				YTD 2021
Net income available to common stockholders		$	79,032			$	69,108			$	282,242			$	186,622
Net income available to participating securities			147				69				515				260
Non-controlling interests			250				318				1,180				1,023
Depreciation and amortization on real estate assets			158,199				148,957				468,272				435,348
Impairment on depreciated real estate investments			101				126				238				650
Net gain on sale of previously depreciated investments in real estate			(23,952	)			(13,047	)			(69,486	)			(45,450	)
Depreciation and net gain on sale of investments in unconsolidated joint ventures			1,440				29				2,856				(61	)
FFO		$	215,217			$	205,560			$	685,817			$	578,392
Core FFO Reconciliation		Q3 2022				Q3 2021				YTD 2022				YTD 2021
FFO		$	215,217			$	205,560			$	685,817			$	578,392
Non-cash interest expense, including the Company's share from unconsolidated joint ventures			4,539				9,004				17,507				25,791
Share-based compensation expense			7,930				6,052				22,565				21,072
Legal settlements(1)			7,400				—				7,400				—
Severance expense			46				226				253				500
Casualty losses, net(2)			19,903				4,168				22,636				4,980
(Gains) losses on investments in equity securities, net			796				(4,319	)			4,000				5,823
Core FFO		$	255,831			$	220,691			$	760,178			$	636,558
AFFO Reconciliation		Q3 2022				Q3 2021				YTD 2022				YTD 2021
Core FFO		$	255,831			$	220,691			$	760,178			$	636,558
Recurring capital expenditures, including the Company's share from unconsolidated joint ventures			(44,683	)			(36,248	)			(115,057	)			(89,437	)
Adjusted FFO		$	211,148			$	184,443			$	645,121			$	547,121
Net income available to common stockholders
Weighted average common shares outstanding — diluted			612,647,588				578,571,392				610,741,723				572,262,198
Net income per common share — diluted		$	0.13			$	0.12			$	0.46			$	0.33
FFO
Numerator for FFO per common share — diluted		$	215,217			$	205,560			$	685,817			$	590,923
Weighted average common shares and OP Units outstanding — diluted			615,172,460				581,333,229				613,497,425				588,603,771
FFO per share — diluted		$	0.35			$	0.35			$	1.12			$	1.00
Core FFO and Adjusted FFO
Weighted average common shares and OP Units outstanding — diluted			615,172,460				581,333,229				613,497,425				575,639,449
Core FFO per share — diluted		$	0.42			$	0.38			$	1.24			$	1.11
AFFO per share — diluted		$	0.34			$	0.32			$	1.05			$	0.95

(1)		During Q3 2022, the Company entered into an approximate $7.4 million global settlement of a multistate putative class action regarding resident late fees. The settlement remains subject to court approval.
(2)		Includes an accrual of $19.0 million for estimated losses and damages related to Hurricane Ian during the three and nine months ended September 30, 2022.

Reconciliation of Total Revenues to Same Store Core Revenues, Quarterly
(in thousands) (unaudited)
		Q3 2022				Q2 2022				Q1 2022				Q4 2021				Q3 2021
Total revenues (Total Portfolio)		$	568,675			$	557,300			$	532,310			$	520,225			$	509,532
Management fee revenues			(3,284	)			(2,759	)			(2,111	)			(1,753	)			(1,354	)
Total portfolio resident recoveries			(31,260	)			(29,394	)			(28,762	)			(26,967	)			(27,972	)
Total Core Revenues (Total Portfolio)			534,131				525,147				501,437				491,505				480,206
Non-Same Store Core Revenues			(48,133	)			(43,646	)			(36,715	)			(33,661	)			(31,356	)
Same Store Core Revenues		$	485,998			$	481,501			$	464,722			$	457,844			$	448,850
Reconciliation of Total Revenue to Same Store Total Revenues and Same Store Core Revenues, YTD
(in thousands) (unaudited)
		YTD 2022				YTD 2021
Total revenues (Total Portfolio)		$	1,658,285			$	1,476,390
Management fee revenues			(8,154	)			(3,140	)
Total portfolio resident recoveries			(89,416	)			(78,788	)
Total Core Revenues (Total Portfolio)			1,560,715				1,394,462
Non-Same Store Core Revenues			(128,494	)			(85,596	)
Same Store Core Revenues		$	1,432,221			$	1,308,866

Reconciliation of Property Operating and Maintenance Expenses to Same Store Core Operating Expenses, Quarterly
(in thousands) (unaudited)
		Q3 2022				Q2 2022				Q1 2022				Q4 2021				Q3 2021
Property operating and maintenance expenses (Total Portfolio)		$	203,787			$	190,680			$	182,269			$	177,883			$	184,484
Total Portfolio resident recoveries			(31,260	)			(29,394	)			(28,762	)			(26,967	)			(27,972	)
Core Operating Expenses (Total Portfolio)			172,527				161,286				153,507				150,916				156,512
Non-Same Store Core Operating Expenses			(14,904	)			(13,056	)			(12,716	)			(11,072	)			(10,041	)
Same Store Core Operating Expenses		$	157,623			$	148,230			$	140,791			$	139,844			$	146,471
Reconciliation of Property Operating and Maintenance to Same Store Operating Expenses and Same Store Core Operating Expenses, YTD
(in thousands) (unaudited)
		YTD 2022				YTD 2021
Property operating and maintenance expenses (Total Portfolio)		$	576,736			$	528,279
Total Portfolio resident recoveries			(89,416	)			(78,788	)
Core Operating Expenses (Total Portfolio)			487,320				449,491
Non-Same Store Core Operating Expenses			(40,676	)			(28,661	)
Same Store Core Operating Expenses		$	446,644			$	420,830

Reconciliation of Net Income to Same Store NOI, Quarterly
(in thousands) (unaudited)
		Q3 2022				Q2 2022				Q1 2022				Q4 2021				Q3 2021
Net income available to common stockholders		$	79,032			$	110,815			$	92,395			$	74,476			$	69,108
Net income available to participating securities			147				148				220				67				69
Non-controlling interests			250				542				388				328				318
Interest expense			76,454				74,840				74,389				79,121				79,370
Depreciation and amortization			160,428				158,572				155,796				151,660				150,694
Property management expense			22,385				21,814				20,967				20,173				17,886
General and administrative			20,123				19,342				17,639				19,668				19,369
Impairment and other			20,004				1,355				1,515				3,046				4,294
Gain on sale of property, net of tax			(23,952	)			(27,508	)			(18,026	)			(14,558	)			(13,047	)
(Gains) losses on investments in equity securities, net			796				172				3,032				3,597				(4,319	)
Other, net			8,372				3,827				(594	)			2,654				1,508
Management fee revenues			(3,284	)			(2,759	)			(2,111	)			(1,753	)			(1,354	)
(Income) loss from investments in unconsolidated joint ventures			849				2,701				2,320				2,110				(202	)
NOI (Total Portfolio)			361,604				363,861				347,930				340,589				323,694
Non-Same Store NOI			(33,229	)			(30,590	)			(23,999	)			(22,589	)			(21,315	)
Same Store NOI		$	328,375			$	333,271			$	323,931			$	318,000			$	302,379
Reconciliation of Net Income to NOI and Same Store NOI, YTD
(in thousands) (unaudited)
		YTD 2022				YTD 2021
Net income available to common stockholders		$	282,242			$	186,622
Net income available to participating securities			515				260
Non-controlling interests			1,180				1,023
Interest expense			225,683				243,540
Depreciation and amortization			474,796				440,475
Property management expense			65,166				51,424
General and administrative			57,104				56,147
Impairment and other			22,874				5,630
Gain on sale of property, net of tax			(69,486	)			(45,450	)
Losses on investments in equity securities, net			4,000				5,823
Other, net			11,605				3,181
Management fee revenues			(8,154	)			(3,140	)
(Income) loss from investments in unconsolidated joint ventures			5,870				(564	)
NOI (Total Portfolio)			1,073,395				944,971
Non-Same Store NOI			(87,818	)			(56,935	)
Same Store NOI		$	985,577			$	888,036

Reconciliation of Net Income to EBITDA, EBITDAre, and Adjusted EBITDAre
(in thousands, unaudited)
		Q3 2022				Q3 2021				YTD 2022				YTD 2021
Net income available to common stockholders		$	79,032			$	69,108			$	282,242			$	186,622
Net income available to participating securities			147				69				515				260
Non-controlling interests			250				318				1,180				1,023
Interest expense			76,454				79,370				225,683				243,540
Interest expense in unconsolidated joint ventures			(613	)			370				838				669
Depreciation and amortization			160,428				150,694				474,796				440,475
Depreciation and amortization of investments in unconsolidated joint ventures			1,714				389				3,466				739
EBITDA			317,412				300,318				988,720				873,328
Gain on sale of property, net of tax			(23,952	)			(13,047	)			(69,486	)			(45,450	)
Impairment on depreciated real estate investments			101				126				238				650
Net gain on sale of investments in unconsolidated joint ventures			(251	)			(360	)			(567	)			(800	)
EBITDAre			293,310				287,037				918,905				827,728
Share-based compensation expense			7,930				6,052				22,565				21,072
Severance			46				226				253				500
Casualty losses, net(1)			19,903				4,168				22,636				4,980
(Gains) losses on investments in equity securities, net			796				(4,319	)			4,000				5,823
Other, net(2)			8,372				1,508				11,605				3,181
Adjusted EBITDAre		$	330,357			$	294,672			$	979,964			$	863,284
		Trailing Twelve Months (TTM) Ended
		September 30, 2022				December 31, 2021
Net income available to common stockholders		$	356,718			$	261,098
Net income available to participating securities			582				327
Non-controlling interests			1,508				1,351
Interest expense			304,804				322,661
Interest expense in unconsolidated joint ventures			1,378				1,209
Depreciation and amortization			626,456				592,135
Depreciation and amortization of investments in unconsolidated joint ventures			4,031				1,304
EBITDA			1,295,477				1,180,085
Gain on sale of property, net of tax			(84,044	)			(60,008	)
Impairment on depreciated real estate investments			238				650
Net gain on sale of investments in unconsolidated joint ventures			(817	)			(1,050	)
EBITDAre			1,210,854				1,119,677
Share-based compensation expense			28,663				27,170
Severance			810				1,057
Casualty (gains) losses, net(1)			25,682				8,026
(Gains) losses on investments in equity securities, net			7,597				9,420
Other, net(2)			14,259				5,835
Adjusted EBITDAre		$	1,287,865			$	1,171,185

(1)		Includes an accrual of $19.0 million for estimated losses and damages related to Hurricane Ian during the three and nine months ended September 30, 2022.
(2)		Includes interest income and other miscellaneous income and expenses.

Reconciliation of Net Debt / Trailing Twelve Months (TTM) Adjusted EBITDAre
(in thousands, except for ratio) (unaudited)
		As of				As of
		September 30, 2022				December 31, 2021
Mortgage loans, net		$	2,207,792			$	3,055,853
Secured term loan, net			401,476				401,313
Unsecured notes, net			2,517,272				1,921,974
Term loan facility, net			2,626,491				2,478,122
Revolving facility			—				—
Convertible senior notes, net			—				141,397
Total Debt per Balance Sheet			7,753,031				7,998,659
Retained and repurchased certificates			(116,706	)			(159,110	)
Cash, ex-security deposits and letters of credit (1)			(340,301	)			(649,722	)
Deferred financing costs, net			54,260				50,146
Unamortized discounts on note payable			13,917				13,605
Net Debt (A)		$	7,364,201			$	7,253,578
		For the Trailing Twelve				For the Trailing Twelve
		Months (TTM) Ended				Months (TTM) Ended
		September 30, 2022				December 31, 2021
Adjusted EBITDAre (B)		$	1,287,865			$	1,171,185
Net Debt / TTM Adjusted EBITDAre (A / B)		5.7x				6.2x

(1)

Represents cash and cash equivalents and the portion of restricted cash that excludes security deposits and letters of credit

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20221026005666/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 were Invitation Homes' Q3 2022 total revenues?

Invitation Homes reported total revenues of $569 million for Q3 2022.

How did Invitation Homes' net income change in Q3 2022?

Net income available to common stockholders increased by 14.4% to $79 million in Q3 2022.

What is the updated FY 2022 guidance for Invitation Homes?

The updated FY 2022 guidance for Core FFO per share is $1.63 - $1.67, reflecting slightly higher expectations for property taxes.

How much estimated loss did Invitation Homes accrue due to Hurricane Ian?

Invitation Homes accrued $19 million for estimated losses and damages related to Hurricane Ian.

What was the Same Store NOI growth for Invitation Homes in Q3 2022?

The Same Store NOI for Invitation Homes increased by 8.6% year over year in Q3 2022.