Invitation Homes Reports Fourth Quarter 2021 and Full Year 2021 Results

Invitation Homes Inc. (NYSE: INVH) ("Invitation Homes" or the "Company"), the nation's premier single-family home leasing company, today announced its Q4 2021 and FY 2021 financial and operating results.

Fourth Quarter 2021 and Full Year 2021 Highlights

• Year over year, in Q4 2021, total revenues increased 12.1% to $520 million, and property operating and maintenance costs increased 5.5% to $178 million. In FY 2021, total revenues increased 9.5% to $1,997 million, and property operating and maintenance costs increased 3.8% to $706 million.
• In Q4 2021, net income available to common stockholders totaled $74 million or $0.12 per diluted common share. In FY 2021, net income available to common stockholders totaled $261 million or $0.45 per diluted common share.
• Year over year, in Q4 2021, Core FFO per share increased 19.7% to $0.39, and AFFO per share increased 21.0% to $0.33. In FY 2021, Core FFO per share increased 16.2% to $1.49, and AFFO per share increased 18.8% to $1.28.
• In Q4 2021, Same Store NOI grew 12.6% year over year on 9.5% Same Store Core Revenues growth and 3.1% Same Store Core Operating Expenses growth. In FY 2021, Same Store NOI grew 9.4% year over year on 6.4% Same Store Core Revenues growth and 0.5% Same Store Core Operating Expenses growth.
• In Q4 2021, Same Store Average Occupancy was 98.1%. In FY 2021, Same Store Average Occupancy was 98.2%, up 70 basis points year over year.
• In Q4 2021, Same Store new lease rent growth of 17.3% and Same Store renewal rent growth of 9.0% drove Same Store blended rent growth of 11.1%, up 630 basis points year over year. In FY 2021, Same Store new lease rent growth of 14.4% and Same Store renewal rent growth of 6.7% drove Same Store blended rent growth of 8.8%, up 500 basis points year over year.
• In Q4 2021, revenue collections were approximately 99% of the Company's historical average collection rate. Same Store bad debt as a percentage of gross rental revenue decreased from 2.4% in Q4 2020 to 1.1% in Q4 2021.
• In Q4 2021, acquisitions by the Company and the Company's joint ventures totaled 1,543 homes for $656 million while dispositions totaled 139 homes for $51 million. In FY 2021, acquisitions by the Company and the Company's joint ventures totaled 4,802 homes for $1,947 million while dispositions totaled 783 homes for $263 million.
• As previously announced in November 2021, the Company closed a public bond offering of $1 billion aggregate principal balance, consisting of $600 million of bonds with a fixed coupon of 2.3% maturing on November 15, 2028 and $400 million of bonds with a fixed coupon of 2.7% maturing on January 15, 2034. Net proceeds were used primarily to voluntarily prepay secured indebtedness and for general corporate purposes including acquisitions.
• Net debt / TTM adjusted EBITDAre decreased from 7.3x at December 31, 2020 to 6.2x at December 31, 2021.
• As previously announced, the Company agreed to invest $250 million with Pathway Homes, a new real estate company that provides consumers multiple options to purchase a home. In addition to investing in the technology platform and homes for the startup and its real estate fund, Invitation Homes will provide maintenance and other services to all Pathway homes.

President & Chief Executive Officer Dallas Tanner comments:

"2021 was an extraordinary and active year for Invitation Homes. I extend my heartfelt thanks to all of our associates for exceeding the high expectations of our residents and stakeholders throughout the past year. Through multiple channels, we accretively grew our portfolio with nearly $2 billion of acquisitions while reducing our leverage and strengthening our investment-grade balance sheet. Steady job growth and positive demographic trends in our markets continue to generate favorable leasing results across our portfolio, and we expect the demand for single-family rental homes to remain strong in 2022. With these supportive backdrops, we expect Core FFO growth in 2022 of 11.4% at the midpoint of our guidance."

Financial Results

Net Income

Net income per share in the fourth quarter of 2021 was $0.12, compared to net income per share of $0.12 in the fourth quarter of 2020. Total revenues and total property operating and maintenance expenses in the fourth quarter of 2021 were $520 million and $178 million, respectively, compared to $464 million and $169 million, respectively, in the fourth quarter of 2020.

Net income per share in FY 2021 was $0.45, compared to net income per share of $0.35 in FY 2020. Total revenues and total property operating and maintenance expenses in FY 2021 were $1,997 million and $706 million, respectively, compared to $1,823 million and $681 million, respectively, in FY 2020.

Core FFO

Year over year, Core FFO per share in the fourth quarter of 2021 increased 19.7% to $0.39, primarily due to NOI growth and interest expense savings.

Year over year, Core FFO per share in FY 2021 increased 16.2% to $1.49, primarily due to NOI growth and interest expense savings.

AFFO

Year over year, AFFO per share in the fourth quarter of 2021 increased 21.0% to $0.33, primarily due to the increase in Core FFO per share described above.

Year over year, AFFO per share in FY 2021 increased 18.8% to $1.28, primarily due to the increase in Core FFO per share described above.

Operating Results

Same Store NOI

For the Same Store Portfolio of 72,245 homes, fourth quarter 2021 Same Store NOI increased 12.6% year over year on Same Store Core Revenues growth of 9.5% and Same Store Core Operating Expenses growth of 3.1%.

FY 2021 Same Store NOI increased 9.4% year over year on Same Store Core Revenues growth of 6.4% and Same Store Core Operating Expenses growth of 0.5%.

Same Store Core Revenues

Fourth quarter 2021 Same Store Core Revenues growth of 9.5% year over year was driven by a 7.1% increase in Average Monthly Rent, a 130 basis points year over year improvement in bad debt as a percentage of gross rental revenue, and a 53.6% increase in other income, net of resident recoveries.

FY 2021 Same Store Core Revenues growth of 6.4% year over year was driven by a 5.1% increase in Average Monthly Rent, a 70 basis point increase in Average Occupancy to 98.2%, and a 22.6% increase in other income, net of resident recoveries.

Same Store Core Operating Expenses

Fourth quarter 2021 Same Store Core Operating Expenses increased 3.1% year over year, driven by a 3.1% increase in Same Store fixed expense and a 12.6% increase in personnel expenses, partially offset by a 12.3% decline in turnover expenses, net of resident recoveries.

FY 2021 Same Store Core Operating Expenses increased 0.5% year over year, driven by a 2.9% increase in Same Store fixed expenses, partially offset by a 3.4% decline in Same Store controllable expenses, net of resident recoveries.

Investment Management Activity

Fourth quarter 2021 acquisitions totaled 1,543 homes for $656 million through diversified acquisition channels. This included 961 wholly owned homes for $420 million and 582 homes for $236 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 2,004 homes as of December 31, 2021.

Dispositions in the fourth quarter of 2021 included 129 wholly owned homes for gross proceeds of $47 million and 10 homes for gross proceeds of $4 million in the Company's unconsolidated joint venture with the Federal National Mortgage Association (the "FNMA JV").

In FY 2021, the Company acquired 4,802 homes for $1,947 million, including 2,938 wholly owned homes for $1,229 million and 1,864 homes for $718 million in the Rockpoint JV. The Company also sold 783 homes for $263 million, including 734 wholly owned homes for $244 million and 49 homes for $19 million in the FNMA JV.

As previously announced, the Company has agreed to invest $250 million with Pathway Homes, a new real estate company that provides consumers multiple options to purchase a home. In addition to investing in the technology platform and homes for the startup and its real estate fund, Invitation Homes will provide maintenance and other services to all Pathway homes.

Balance Sheet and Capital Markets Activity

As of December 31, 2021, the Company had $1,610 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 December 31, 2021 was $8,062 million, consisting of $4,591 million of unsecured debt and $3,471 million of secured debt.

As previously announced in November 2021, the Company closed a public bond offering of $1 billion aggregate principal balance, consisting of $600 million of bonds with a fixed coupon of 2.3% maturing on November 15, 2028 (the "November 2028 Notes") and $400 million of bonds with a fixed coupon of 2.7% maturing on January 15, 2034 (the "January 2034 Notes). The November 2028 Notes were priced at 99.871% of the principal amount, and the January 2034 Notes were priced at 99.809% of the principal amount. Net proceeds were used primarily to voluntarily prepay secured indebtedness and for general corporate purposes including acquisitions. As a result of the prepayment of secured indebtedness, 4,182 additional homes were unencumbered.

During Q4 2021, the Company issued 4.1 million shares of common stock under its 2019 at the market equity program (the "2019 ATM Equity Program") at an average price of $41.63 per share. Total gross proceeds of $169 million were used primarily to acquire homes. In December 2021, the Company terminated its 2019 ATM Equity Program and entered into a new at the market equity program (the "2021 ATM Equity Program") to sell, from time to time, up to an aggregate sales price of $1.25 billion of the Company's common stock through current and forward offerings. No shares were issued under the 2021 ATM Equity Program as of December 31, 2021.

On January 18, 2022, the Company settled the remaining $141 million principal balance of its 3.5% Convertible Notes due January 15, 2022 (the "2022 Convertible Notes") with the issuance of an additional 6,216,261 common shares.

Dividend

As previously announced on February 4, 2022, the Company's Board of Directors declared a quarterly cash dividend of $0.22 per share of common stock, representing a 29.4% increase over the prior quarterly dividend of $0.17 per share. The dividend will be paid on or before February 28, 2022, to stockholders of record as of the close of business on February 14, 2022.

FY 2022 Guidance

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 February 16, 2022, to discuss results for the fourth 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 400967. An audio webcast may be accessed at www.invh.com. A replay of the call will be available through March 16, 2022, and can be accessed by calling 1-866-813-9403 (domestic) or 1-929-458-6194 (international) and using the replay passcode 341803, 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 the COVID-19 pandemic. 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 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.

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 (gains) 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; joint venture management fees; 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.