invh-20220930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM

10-Q

☑

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended

September 30, 2022

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission File Number

001-38004

Invitation Homes Inc.

(Exact name of registrant as specified in its charter)

Maryland

90-0939055

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

1717 Main Street,

Suite 2000

75201

Dallas,

Texas

(Address of principal executive offices)

(Zip Code)

(972)

421-3600

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, $0.01 par value

INVH

New York Stock Exchange

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes

☑

☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).

Yes

☑

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☑

Accelerated Filer

☐

Non-Accelerated Filer

☐

Smaller Reporting Company

☐

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes

☐

☑

As of October 25, 2022, there were 611,409,909 shares of common stock, par value $0.01 per share, outstanding.

INVITATION HOMES INC.


			Page
PART I
Item	1.	Financial Statements	6
Item	2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	42
Item	3.	Quantitative and Qualitative Disclosures About Market Risk	67
Item	4.	Controls and Procedures	68

PART II
Item	1.	Legal Proceedings	69
Item	1A.	Risk Factors	69
Item	2.	Unregistered Sales of Equity Securities and Use of Proceeds	69
Item	3.	Defaults Upon Senior Securities	69
Item	4.	Mine Safety Disclosures	69
Item	5.	Other Information	69
Item	6.	Exhibits	70

Signatures			71

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q 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 our expectations regarding the performance of our business, our financial results, our 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,” “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 our business model, macroeconomic factors beyond our control, competition in identifying and acquiring properties, competition in the leasing market for quality residents, increasing property taxes, homeowners’ association (“HOA”) and insurance costs, our dependence on third parties for key services, risks related to the evaluation of properties, poor resident selection and defaults and non-renewals by our residents, performance of our information technology systems, risks related to our indebtedness, 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 our 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. We believe these factors include but are not limited to, those described under Part I. Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021 (the “Annual Report on Form 10-K”) as such factors may be updated from time to time in our periodic filings with the Securities and Exchange Commission (the “SEC”), which are accessible on the SEC’s website at http://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 Quarterly Report on Form 10-Q, in the Annual Report on Form 10-K, and in our other periodic filings. The forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q, and we expressly disclaim 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.

DEFINED TERMS

Invitation Homes Inc. (“INVH”), a REIT, conducts its operations through Invitation Homes Operating Partnership LP (“INVH LP”). THR Property Management L.P., a wholly owned subsidiary of INVH LP, provides all management and other administrative services with respect to the properties we own. On November 16, 2017, INVH and certain of its affiliates entered into a series of transactions with Starwood Waypoint Homes (“SWH”) and certain SWH affiliates which resulted in SWH and its operating partnership being merged into INVH and INVH LP, respectively, with INVH and INVH LP being the surviving entities.

Unless the context suggests otherwise, references in this Quarterly Report on Form 10-Q to “Invitation Homes,” the “Company,” “we,” “our,” and “us” refer to INVH and its consolidated subsidiaries.

In this Quarterly Report on Form 10-Q:

•“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 rent concessions and contractual rent increases amortized over the life of the related lease. We believe average monthly rent reflects pricing trends that significantly impact rental revenues over time, making average monthly rent useful to management and external stakeholders as a means of evaluating changes in rental revenues across periods;

•“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. We believe average occupancy significantly impacts rental revenues in a given period, making comparisons of average occupancy across different periods helpful to management and external stakeholders in evaluating changes in rental revenues across periods;

•“Carolinas” includes Charlotte-Concord-Gastonia, NC-SC, Greensboro-High Point, NC, Raleigh-Cary, NC, Durham-Chapel Hill, NC, and Winston-Salem, SC;

•“days to re-resident” for an individual home represents the number of days between (i) the date the prior resident moves out of a home and (ii) the date the next resident is granted access to the same home, which is deemed to be the earlier of the next resident’s contractual lease start date and the next resident’s move-in date. Days to re-resident impacts our average occupancy and thus our rental revenues, making comparisons of days to re-resident helpful to management and external stakeholders in evaluating changes in rental revenues across periods;

•“in-fill” refers to markets, MSAs, submarkets, neighborhoods, or other geographic areas that are typified by significant population densities and low availability of land suitable for development into competitive properties, resulting in limited opportunities for new construction;

•“Metropolitan Statistical Area” or “MSA” is defined by the United States Office of Management and Budget as a region associated with at least one urbanized area that has a population of at least 50,000 and comprises the central county or counties containing the core, plus adjacent outlying counties having a high degree of social and economic integration with the central county or counties as measured through commuting;

•“net effective 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 non-service rent concessions and contractual rent increases amortized over the life of the related lease. Leases are either renewal leases, where our current resident chooses to stay for a subsequent lease term, or a new lease, where our previous resident moves out and a new resident signs a lease to occupy the same home. Net effective rental rate growth drives changes in our average monthly rent, making net effective rental rate growth useful to management and external stakeholders as a means of evaluating changes in rental revenues across periods;

•“Northern California” includes Sacramento-Roseville-Folsom, CA, San Francisco-Oakland-Berkeley, CA, Stockton, CA, Vallejo, CA, and Yuba City, CA;

•“PSF” means per square foot. When comparing homes or cohorts of homes, we believe PSF calculations help management and external stakeholders normalize metrics for differences in property size, enabling more meaningful comparisons based on characteristics other than property size;

•“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 we have announced an intent to exit where we no longer operate a significant number of homes for the primary purpose of income generation. 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 1st of the year in which the Same Store portfolio was established. We believe information about the portion of our portfolio that has been fully operational for the entirety of a given reporting period and its prior year comparison period provides management and external stakeholders with meaningful information about the performance of our comparable homes across periods and about trends in our organic business;

•“Southeast United States” includes our Atlanta and Carolinas markets;

•“South Florida” includes Miami-Fort Lauderdale-Pompano Beach, FL, and Port St. Lucie, FL;

•“Southern California” includes Los Angeles-Long Beach-Anaheim, CA, Oxnard-Thousand Oaks-Ventura, CA, Riverside-San Bernardino-Ontario, CA, and San Diego-Chula Vista-Carlsbad, CA;

•“total homes” or “total portfolio” refers to the total number of homes we own, 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 wholly owned homes and excludes homes owned in joint ventures. Additionally, unless the context otherwise requires, all measures in this Quarterly Report on Form 10-Q are presented on a total portfolio basis;

•“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. To the extent the measurement period shown is less than 12 months, the turnover rate may be reflected on an annualized basis. We believe turnover rate impacts average occupancy and thus our rental revenues, making comparisons of turnover rate helpful to management and external stakeholders in evaluating changes in rental revenues across periods. In addition, turnover can impact our cost to maintain homes, making changes in turnover rate useful to management and external stakeholders in evaluating changes in our property operating and maintenance expenses across periods; and

•“Western United States” includes our Southern California, Northern California, Seattle, Phoenix, Las Vegas, and Denver markets.

PART I

ITEM 1. FINANCIAL STATEMENTS

INVITATION HOMES INC.

CONDENSED 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:
Land	$	4,810,449	$	4,737,938
Building and improvements	15,817,725		15,270,443
	20,628,174		20,008,381
Less: accumulated depreciation	(3,519,211)		(3,073,059)
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
Commitments and contingencies (Note 14)

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

The accompanying notes are an integral part of these condensed consolidated financial statements.

INVITATION HOMES INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except shares and per share data)

(unaudited)



	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2022		2021		2022		2021
Revenues:
Rental revenues and other property income	$	565,391	$	508,178	$	1,650,131	$	1,473,250
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 (Note 12)	$	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

The accompanying notes are an integral part of these condensed consolidated financial statements.

INVITATION HOMES INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

(unaudited)


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,

	2022		2021		2022		2021
Net income	$	79,429	$	69,495	$	283,937	$	187,905

Other comprehensive income
Unrealized gains (losses) on interest rate swaps	102,940		(1,586)		316,479		57,283
Losses from interest rate swaps reclassified into earnings from accumulated other comprehensive loss	9,591		37,074		63,837		112,973
Other comprehensive income	112,531		35,488		380,316		170,256
Comprehensive income	191,960		104,983		664,253		358,161
Comprehensive income attributable to non-controlling interests	(677)		(550)		(2,739)		(2,216)

Comprehensive income attributable to common stockholders	$	191,283	$	104,433	$	661,514	$	355,945

The accompanying notes are an integral part of these condensed consolidated financial statements.

INVITATION HOMES INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

For the Three and Nine Months Ended September 30, 2022

(in thousands, except share and per share data)

(unaudited)


	Common Stock
	Number of Shares	Amount		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Stockholders' Equity		Non-Controlling Interests		Total Equity












































Balance as of June 30, 2022	610,359,909	$	6,104	$	11,113,146	$	(860,275)	$	(20,285)	$	10,238,690	$	43,299	$	10,281,989
Capital distributions	—	—		—		—		—		—		(488)		(488)
Net income	—	—		—		79,179		—		79,179		250		79,429
Dividends and dividend equivalents declared ($0.22 per share)	—	—		—		(135,042)		—		(135,042)		—		(135,042)
Share-based compensation expense	—	—		6,761		—		—		6,761		1,169		7,930
Total other comprehensive income	—	—		—		—		112,104		112,104		427		112,531
Redemption of OP Units for common stock	1,050,000	10		13,351		—		73		13,434		(13,434)		—
Balance as of September 30, 2022	611,409,909	$	6,114	$	11,133,258	$	(916,138)	$	91,892	$	10,315,126	$	31,223	$	10,346,349


	Common Stock
	Number of Shares	Amount		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Stockholders' Equity		Non-Controlling Interests		Total Equity












































Balance as of December 31, 2021	601,045,438	$	6,010	$	10,873,539	$	(794,869)	$	(286,938)	$	9,797,742	$	41,062	$	9,838,804
Capital distributions	—	—		—		—		—		—		(1,983)		(1,983)
Net income	—	—		—		282,757		—		282,757		1,180		283,937
Dividends and dividend equivalents declared ($0.66 per share)	—	—		—		(404,026)		—		(404,026)		—		(404,026)
Issuance of common stock — settlement of RSUs, net of tax	659,283	7		(12,857)		—		—		(12,850)		—		(12,850)
Issuance of common stock — settlement of 2022 Convertible Notes	6,216,261	62		141,157		—		—		141,219		—		141,219
Issuance of common stock, net	2,438,927	25		98,342		—		—		98,367		—		98,367
Share-based compensation expense	—	—		19,726		—		—		19,726		2,839		22,565
Total other comprehensive income	—	—		—		—		378,757		378,757		1,559		380,316
Redemption of OP Units for common stock	1,050,000	10		13,351		—		73		13,434		(13,434)		—
Balance as of September 30, 2022	611,409,909	$	6,114	$	11,133,258	$	(916,138)	$	91,892	$	10,315,126	$	31,223	$	10,346,349

INVITATION HOMES INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (continued)

For the Three and Nine Months Ended September 30, 2021

(in thousands, except share and per share data)

(unaudited)


	Common Stock
	Number of Shares	Amount		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders' Equity		Non-Controlling Interests		Total Equity












































Balance as of June 30, 2021	568,718,544	$	5,687	$	9,725,480	$	(737,444)	$	(413,684)	$	8,580,039	$	39,637	8,619,676
Capital distributions	—	—		—		—		—		—		(448)		(448)
Net income	—	—		—		69,177		—		69,177		318		69,495
Dividends and dividend equivalents declared ($0.17 per share)	—	—		—		(98,965)		—		(98,965)		—		(98,965)

Issuance of common stock — settlement of 2022 Convertible Notes	8,723,161	87		198,415		—		—		198,502		—		198,502
Issuance of common stock, net	17,451,969	175		693,270		—		—		693,445		—		693,445
Share-based compensation expense	—	—		5,526		—		—		5,526		526		6,052
Total other comprehensive income	—	—		—		—		35,256		35,256		232		35,488

Balance as of September 30, 2021	594,893,674	$	5,949	$	10,622,691	$	(767,232)	$	(378,428)	$	9,482,980	$	40,265	$	9,523,245


	Common Stock
	Number of Shares	Amount		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders' Equity		Non-Controlling Interests		Total Equity












































Balance as of December 31, 2020	567,117,666	$	5,671	$	9,707,258	$	(661,162)	$	(546,942)	$	8,504,825	$	51,248	8,556,073
Capital distributions	—	—		—		—		—		—		(1,659)		(1,659)
Net income	—	—		—		186,882		—		186,882		1,023		187,905
Dividends and dividend equivalents declared ($0.51 per share)	—	—		—		(292,952)		—		(292,952)		—		(292,952)
Issuance of common stock — settlement of RSUs, net of tax	675,618	7		(9,410)		—		—		(9,403)		—		(9,403)
Issuance of common stock — settlement of 2022 Convertible Notes	8,723,421	87		198,421		—		—		198,508		—		198,508
Issuance of common stock, net	17,451,969	175		693,270		—		—		693,445		—		693,445
Share-based compensation expense	—	—		19,495		—		—		19,495		1,577		21,072
Total other comprehensive income	—	—		—		—		169,063		169,063		1,193		170,256
Redemption of OP Units for common stock	925,000	9		13,657		—		(549)		13,117		(13,117)		—
Balance as of September 30, 2021	594,893,674	$	5,949	$	10,622,691	$	(767,232)	$	(378,428)	$	9,482,980	$	40,265	$	9,523,245

The accompanying notes are an integral part of these condensed consolidated financial statements.

INVITATION HOMES INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)



	For the Nine Months Ended September 30,
	2022		2021
Operating Activities:
Net income	$	283,937	$	187,905

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	474,796		440,475
Share-based compensation expense	22,565		21,072
Amortization of deferred leasing costs	5,534		8,227
Amortization of deferred financing costs	11,105		9,739
Amortization of debt discounts	1,254		5,309
Provisions for impairment	238		650
(Gains) losses on investments in equity securities, net	4,000		5,823
Gain on sale of property, net of tax	(69,486)		(45,450)
Change in fair value of derivative instruments	7,135		10,391
Loss (income) from investments in unconsolidated joint ventures, net of operating distributions	7,152		(214)
Other non-cash amounts included in net income	515		3,136
Changes in operating assets and liabilities:
Other assets, net	(1,953)		(9,950)
Accounts payable and accrued expenses	139,884