Press Release

Invitation Homes Reports First Quarter 2020 Results

Company Release - 5/6/2020 4:15 PM ET

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 first quarter 2020 financial and operating results.

First Quarter 2020 Highlights

  • Year over year, total revenues increased 3.3% to $450 million, total property operating and maintenance expenses increased 4.1% to $167 million, net income attributable to common stockholders increased 140.7% to $50 million, and net income per diluted common share increased 130.9% to $0.09.
  • Year over year, Core FFO per share increased 4.4% to $0.34, and AFFO per share increased 5.1% to $0.29.
  • Same Store NOI grew 4.0% year over year on 4.5% Same Store Core revenue growth and 5.3% Same Store Core operating expense growth.
  • Same Store average occupancy was 96.7%, up 20 bps year over year.
  • Same Store renewal rent growth of 4.3% and Same Store new lease rent growth of 1.7% drove Same Store blended rent growth of 3.4%.

COVID-19 Update

With the safety and wellbeing of its residents and associates being Invitation Homes' highest priority, the Company began taking proactive measures in March 2020 in response to the COVID-19 pandemic. These health and safety measures include:

  • Observation of social distancing and sanitary best practices throughout all operations.
  • Reliance on self-tours to show homes.
  • Deferral of non-critical service trips.
  • Implementation of financial and health care benefits to support associates who may have been exposed to COVID-19.

In addition, to act on its core values of "Genuine Care" and "Standout Citizenship," the Company began working in March to find appropriate solutions for residents experiencing financial hardship, including:

  • A voluntary moratorium on evictions.
  • The creation of payment plans, without late fees, for residents requiring flexibility to meet rental obligations over time.

The Company has also taken measures to maximize operating and financial results, further enhance its favorable liquidity position, and mitigate risk related to COVID-19. These measures, and their resulting impact to operations since the end of the first quarter of 2020, include the following:

  • Resident satisfaction survey scores have continued climbing, as the Company acted early to implement and communicate COVID-19-specific safety protocols, and continued to serve residents' needs when safe to do so.
  • Same Store average occupancy increased to a record-high 97.2% in April, up 60 basis points year over year, and up 30 basis points from March, as the Company adjusted its revenue management strategy to further prioritize occupancy. Including the impact of concessions, blended lease-over-lease rent growth was 3.2% in April.
  • The Company's rent collection rate in April was over 95% of historical average, and less than 2% of residents elected to defer a portion of their rent in April. For May, the rent collection rate improved to over 100% of the pre-COVID-19 historical average through the first five days of the month, and almost 109% of April’s pace through day five.
  • As of April 30, 2020, the Company had liquidity of $1,075 million through a combination of unrestricted cash and undrawn capacity on its credit facility, no debt maturing prior to 2022, and only $19 million of commitments in its acquisition pipeline. Disposition channels have remained open, with $31 million of sales closed in April, and another $59 million under contract. Unencumbered homes increased to 51% of total homes, as of April 30, 2020.
  • In March, to further mitigate risk, the Company increased its unrestricted cash working capital balance by partially drawing on its revolving line of credit. In addition, the Company has temporarily paused placing new acquisitions under contract, but continues to monitor the housing market for the opportune time to resume acquisition activity.

President & Chief Executive Officer Dallas Tanner comments: "We are very pleased with both our first quarter results and the efforts of our team in the new operating environment we have entered as a result of the COVID-19 pandemic. Our mission statement, 'Together with you, we make a house a home,' resonates now more than ever. We are proud to provide safe homes and genuine care that bring comfort to the lives of thousands of families in these trying times.

"The health and safety of our residents, associates, partners, and communities remains our number one priority. Since early March, our management team and COVID-19 task force have engaged in continuous discussion and implementation of efforts to support the wellbeing of our many stakeholders. Our teams have done an exceptional job adapting to challenges around them to continue caring for residents while going above and beyond to protect public health.

"The last two months have confirmed for me the strength and resiliency of our people and the platform we have built. I am confident that Invitation Homes will emerge from the pandemic on course to grow toward a bright future. In the meantime, I am very happy with how we have navigated and performed through this period of near-term uncertainty so far, and believe we are well-prepared for a variety of potential scenarios that may play out with respect to public health and the broader economy. We entered the pandemic from a position of strength. April occupancy was an all-time high, and rent collections and leasing velocity have remained healthy thus far. We operate a high-margin business, and we have over $1 billion of available liquidity, with no debt maturing until 2022 and minimal near-term investing commitments. As disciplined stewards of capital, we are committed to mitigating risk in today's environment, but will remain nimble and ready to grow when the time is right."

Financial Results

 

Net Income, FFO, Core FFO, and AFFO Per Share — Diluted

 

 

 

 

 

 

 

Q1 2020

 

Q1 2019

Net income (1)

 

$

0.09

 

 

$

0.04

 

FFO (1)

 

0.31

 

 

0.26

 

Core FFO (2)

 

0.34

 

 

0.33

 

AFFO (2)

 

0.29

 

 

0.28

 

 

 

 

 

 

(1)

In accordance with GAAP and Nareit guidelines, net income per share and FFO per share are calculated as if the 3.0% Convertible Notes due July 1, 2019 (the "2019 Convertible Notes") were converted to common shares at the beginning of 2019, and as if the 3.5% Convertible Notes due January 15, 2022 (the "2022 Convertible Notes") were converted to common shares at the beginning of each relevant period in 2019 and 2020, unless such treatment is anti-dilutive to net income per share or FFO per share. See "Reconciliation of FFO, Core FFO, and AFFO," footnote (1), for more detail on the treatment of convertible notes in each specific period presented in the table.

(2)

Core FFO and AFFO per share reflect the 2019 Convertible Notes and 2022 Convertible Notes in the form in which they were outstanding during each period. See "Reconciliation of FFO, Core FFO, and AFFO," footnote (2), for more detail on the treatment of convertible notes in each specific period presented in the table.

Net Income

Net income per share in the first quarter of 2020 was $0.09, compared to net income per share of $0.04 in the first quarter of 2019. Total revenues and total property operating and maintenance expenses in the first quarter of 2020 were $450 million and $167 million, respectively, compared to $436 million and $160 million, respectively, in the first quarter of 2019.

Core FFO

Year over year, Core FFO per share in the first quarter of 2020 increased 4.4% to $0.34, primarily due to growth in Same Store NOI. Lower adjusted property management expenses and lower adjusted general and administrative expenses also contributed to the year over year increase in Core FFO per share.

AFFO

Year over year, AFFO per share in the first quarter of 2020 increased 5.1% to $0.29, 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:

 

72,707

 

 

 

 

 

 

 

 

 

 

Q1 2020

 

Q1 2019

Core revenue growth (year-over-year)

 

4.5

%

 

 

Core operating expense growth (year-over-year)

 

5.3

%

 

 

NOI growth (year-over-year)

 

4.0

%

 

 

 

 

 

 

 

Average occupancy

 

96.7

%

 

96.5

%

Turnover rate

 

6.3

%

 

6.3

%

 

 

 

 

 

Rental rate growth (lease-over-lease):

 

 

 

 

Renewals

 

4.3

%

 

5.2

%

New leases

 

1.7

%

 

3.7

%

Blended

 

3.4

%

 

4.7

%

 

 

 

 

 

Same Store NOI

For the Same Store portfolio of 72,707 homes, first quarter 2020 Same Store NOI increased 4.0% year over year on Same Store Core revenue growth of 4.5% and Same Store Core operating expense growth of 5.3%.

Same Store Core Revenues

First quarter 2020 Same Store Core revenue growth of 4.5% year over year was driven by a 3.9% increase in average monthly rent, a 20 basis point increase in average occupancy to 96.7%, and a 13.5% increase in other property income, net of resident recoveries.

Same Store Core Operating Expenses

First quarter 2020 Same Store Core operating expenses increased 5.3% year over year, driven primarily by higher property taxes, higher repairs and maintenance expenses, and higher turnover expenses.

Investment Management Activity

In the first quarter of 2020, Invitation Homes acquired 504 homes for $154 million, including estimated renovation costs, and sold 484 homes for gross proceeds of $132 million, resulting in a total portfolio home count of 79,525 homes as of March 31, 2020.

Subsequent to quarter end, the Company closed $28 million of acquisitions in April, and has $19 million of acquisitions under contract expected to close between May and October. The Company also closed $31 million of dispositions in April, and has $59 million of dispositions under contract expected to close between May and July.

Balance Sheet and Capital Markets Activity

In the first quarter of 2020, the Company issued 1,872,066 shares of common stock in trades executed through the first week of March under its at-the-market equity agreement ("ATM Equity Program"), at an average price of $30.36 per share, for gross proceeds of $57 million. Proceeds were used primarily to acquire homes. $686 million of capacity remained under the ATM Equity Program as of March 31, 2020. The Company has not issued any shares of common stock subsequent to March 31, 2020.

In addition, the Company prepaid $107 million of secured debt in the first quarter of 2020 with cash generated from operations and dispositions. The debt prepaid in the first quarter carried a weighted average interest rate of LIBOR + 190 bps.

In March 2020, the Company increased its borrowings under its revolving credit facility to $270 million, out of an abundance of caution amid the COVID-19 pandemic. $730 million of additional capacity remains available through the credit facility, and the Company has considerable cushion with respect to the facility's covenants. Total unrestricted cash increased by $205 million from year-end, while total debt increased by only $163 million in spite of the increased revolver balance, as debt drawn from the credit facility was partially offset by the aforementioned paydown of higher cost secured debt earlier in the quarter. Through a combination of unrestricted cash and undrawn capacity on its credit facility, the Company had $1,027 million in available liquidity as of March 31, 2020.

The Company has no debt reaching final maturity before 2022, and weighted average years to maturity was 4.7 years as of March 31, 2020. Total indebtedness as of March 31, 2020 was $8,680 million, consisting of $6,565 million of secured debt and $2,115 million of unsecured debt. 51% of the Company's homes were unencumbered at March 31, 2020, and net debt / TTM Adjusted EBITDAre at March 31, 2020 was 8.0x, down from 8.1x at December 31, 2019.

Dividend

As previously announced on May 1, 2020, the Company's Board of Directors declared a quarterly cash dividend of $0.15 per share of common stock. The dividend will be paid on or before May 29, 2020 to stockholders of record as of the close of business on May 13, 2020.

Full Year 2020 Guidance Update

Due to uncertainty regarding the future economic impact of the COVID-19 pandemic, the Company no longer believes it is appropriate to provide FY 2020 guidance, and is withdrawing its previously issued guidance. The Company anticipates resuming its practice of providing full year guidance when there is sufficient clarity on economic conditions.

Earnings Conference Call Information

Invitation Homes has scheduled a conference call at 11:00 a.m. Eastern Time on May 7, 2020 to discuss results for the first quarter 2020. The domestic dial-in number is 1-888-317-6003, and the international dial-in number is 1-412-317-6061. The passcode is 9085269. An audio webcast may be accessed at www.invh.com. A replay of the call will be available through June 7, 2020 and can be accessed by calling 1-877-344-7529 (domestic) or 1-412-317-0088 (international) and using the replay passcode 10142486, 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 in the Glossary and Reconciliations section of this press release and in the Supplemental Information 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, including without limitation the information under the heading “Full Year 2020 Guidance Update.” 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”) 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 outbreak of the novel coronavirus strain, known as COVID-19, on the Company’s financial condition, results of operations, cash flows, business, associates, and residents. The extent to which COVID-19 impacts the Company will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity, and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic, containment measures, monetary and/or fiscal policies implemented to provide support or relief to businesses and/or residents, and other government, regulatory, and/or legislative changes precipitated by the COVID-19 pandemic, among others. 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 COVID-19. 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, 2019, 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 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 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.

 

Consolidated Balance Sheets

($ in thousands, except shares and per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

 

 

 

2020

 

2019

 

 

 

(unaudited)

 

 

 

Assets:

 

 

 

 

 

Investments in single-family residential properties, net

 

$

16,216,490

 

 

$

16,243,192

 

 

Cash and cash equivalents

 

297,060

 

 

92,258

 

 

Restricted cash

 

218,735

 

 

193,987

 

 

Goodwill

 

258,207

 

 

258,207

 

 

Other assets, net

 

602,853

 

 

605,266

 

 

Total assets

 

$

17,593,345

 

 

$

17,392,910

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

Mortgage loans, net

 

$

6,137,744

 

 

$

6,238,461

 

 

Secured term loan, net

 

401,033

 

 

400,978

 

 

Term loan facility, net

 

1,494,469

 

 

1,493,747

 

 

Revolving facility

 

270,000

 

 

 

 

Convertible senior notes, net

 

335,559

 

 

334,299

 

 

Accounts payable and accrued expenses

 

180,222

 

 

186,110

 

 

Resident security deposits

 

150,160

 

 

147,787

 

 

Other liabilities

 

666,031

 

 

325,450

 

 

Total liabilities

 

9,635,218

 

 

9,126,832

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

Preferred stock, $0.01 par value per share, 900,000,000 shares authorized, none outstanding as of March 31, 2020 and December 31, 2019

 

 

 

 

 

Common stock, $0.01 par value per share, 9,000,000,000 shares authorized, 543,767,445 and 541,642,725 outstanding as of March 31, 2020 and December 31, 2019, respectively

 

5,438

 

 

5,416

 

 

Additional paid-in capital

 

9,066,512

 

 

9,010,194

 

 

Accumulated deficit

 

(556,305

)

 

(524,588

)

 

Accumulated other comprehensive loss

 

(607,402

)

 

(276,600

)

 

Total stockholders' equity

 

7,908,243

 

 

8,214,422

 

 

Non-controlling interests

 

49,884

 

 

51,656

 

 

Total equity

 

7,958,127

 

 

8,266,078

 

 

Total liabilities and equity

 

$

17,593,345

 

 

$

17,392,910

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Statements of Operations

 

($ in thousands, except shares and per share amounts) (unaudited)

 

 

 

 

 

 

 

 

 

Q1 2020

 

Q1 2019

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

Rental revenues

 

$

414,466

 

 

$

405,515

 

 

Other property income

 

35,323

 

 

29,985

 

 

Rental revenues and other property income

 

$

449,789

 

 

$

435,500

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

Property operating and maintenance

 

166,916

 

 

160,346

 

 

Property management expense

 

14,372

 

 

15,160

 

 

General and administrative

 

14,228

 

 

26,538

 

 

Interest expense

 

84,757

 

 

93,983

 

 

Depreciation and amortization

 

135,027

 

 

133,609

 

 

Impairment and other

 

3,127

 

 

5,392

 

 

Total expenses

 

418,427

 

 

435,028

 

 

 

 

 

 

 

 

Other, net

 

3,714

 

 

3,125

 

 

Gain on sale of property, net of tax

 

15,200

 

 

17,572

 

 

 

 

 

 

 

 

Net income

 

50,276

 

 

21,169

 

 

Net income attributable to non-controlling interests

 

(320

)

 

(347

)

 

 

 

 

 

 

 

Net income attributable to common stockholders

 

49,956

 

 

20,822

 

 

Net income available to participating securities

 

(102

)

 

(106

)

 

 

 

 

 

 

 

Net income available to common stockholders — basic and diluted

 

$

49,854

 

 

$

20,716

 

 

 

 

 

 

 

 

Weighted average common shares outstanding — basic

 

542,549,512

 

 

521,440,822

 

 

Weighted average common shares outstanding — diluted

 

543,904,420

 

 

521,871,494

 

 

 

 

 

 

 

 

Net income per common share — basic

 

$

0.09

 

 

$

0.04

 

 

Net income per common share — diluted

 

$

0.09

 

 

$

0.04

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$

0.15

 

 

$

0.13

 

 

 

 

 

 

 

 

Glossary and Reconciliations

Glossary:

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. We define 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; and depreciation and amortization. National Association of Real Estate Investment Trusts ("Nareit") recommends as a best practice that REITs that report an EBITDA performance measure also report EBITDAre. We define 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; merger and transaction-related expenses; severance; casualty losses, 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 our 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 our liquidity and should not be considered alternatives to net income or loss or any other measure of financial performance presented in accordance with GAAP. Our 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 our basis for computing these non-GAAP measures is comparable with that of other companies. See "Reconciliation of Non-GAAP Measures" 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 partnerships and 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.

We believe that FFO is a meaningful supplemental measure of the operating performance of our 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 our liquidity and should not be considered alternatives to net income or loss or any other measure of financial performance presented in accordance with GAAP. Our 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 our basis for computing this non-GAAP measures is comparable with that of other companies. See "Reconciliation of Non-GAAP measures" below 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. We define 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; and other income and expenses.

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. Our 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 our basis for computing this non-GAAP measure is comparable with that of other companies.

We believe that Same Store NOI is also a meaningful supplemental measure of our operating performance for the same reasons as NOI and is further helpful to investors as it provides a more consistent measurement of our performance across reporting periods by reflecting NOI for homes in our Same Store portfolio. See "Reconciliation of Non-GAAP Measures" below for a reconciliation of GAAP net income (loss) to NOI for our total portfolio and NOI for our 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 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.

Same Store / Same Store Portfolio

Same Store or Same Store portfolio includes, for a given reporting period, 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 1st of the year in which the Same Store portfolio was established.

We believe presenting 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 investors with meaningful information about the performance of our comparable homes across periods and about trends in our 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.

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 Non-GAAP Measures:

 

Reconciliation of FFO, Core FFO, and AFFO

($ in thousands, except shares and per share amounts) (unaudited)

 

 

 

 

 

 

 

FFO Reconciliation

 

Q1 2020

 

Q1 2019

 

Net income available to common stockholders

 

$

49,854

 

 

$

20,716

 

 

Net income available to participating securities

 

102

 

 

106

 

 

Non-controlling interests

 

320

 

 

347

 

 

Depreciation and amortization on real estate assets

 

133,914

 

 

132,520

 

 

Impairment on depreciated real estate investments

 

2,471

 

 

3,253

 

 

Net gain on sale of previously depreciated investments in real estate

 

(15,200

)

 

(17,572

)

 

FFO

 

$

171,461

 

 

$

139,370

 

 

 

 

 

 

 

 

Core FFO Reconciliation

 

Q1 2020

 

Q1 2019

 

FFO

 

$

171,461

 

 

$

139,370

 

 

Noncash interest expense

 

10,391

 

 

14,865

 

 

Share-based compensation expense

 

4,101

 

 

5,607

 

 

Offering related expenses

 

 

 

1,543

 

 

Merger and transaction-related expenses

 

 

 

2,795

 

 

Severance expense

 

 

 

6,969

 

 

Unrealized gains on investment in equity securities

 

(34

)

 

 

 

Casualty losses, net

 

656

 

 

2,139

 

 

Core FFO

 

$

186,575

 

 

$

173,288

 

 

 

 

 

 

 

 

AFFO Reconciliation

 

Q1 2020

 

Q1 2019

 

Core FFO

 

$

186,575

 

 

$

173,288

 

 

Recurring capital expenditures

 

(25,988

)

 

(25,111

)

 

Adjusted FFO

 

$

160,587

 

 

$

148,177

 

 

 

 

 

 

 

 

Net income available to common stockholders

 

 

 

 

 

Weighted average common shares outstanding — diluted (1)

 

543,904,420

 

521,817,494

 

 

 

 

 

 

 

 

Net income per common share — diluted (1)

 

$

0.09

 

 

$

0.04

 

 

 

 

 

 

 

 

FFO

 

 

 

 

 

FFO for per share calculation(1)

 

$

175,740

 

 

$

142,173

 

 

Weighted average common shares and OP Units outstanding — diluted (1)

 

562,886,872

 

543,717,533

 

 

 

 

 

 

 

 

FFO per share — diluted (1)

 

$

0.31

 

 

$

0.26

 

 

 

 

 

 

 

 

Core FFO and Adjusted FFO

 

 

 

 

 

Weighted average common shares and OP Units outstanding — diluted (2)

 

547,786,429

 

531,226,791

 

 

 

 

 

 

 

 

Core FFO per share — diluted (2)

 

$

0.34

 

 

$

0.33

 

 

AFFO per share — diluted (2)

 

$

0.29

 

 

$

0.28

 

 

 

 

 

 

 

 

(1)

In accordance with GAAP and Nareit guidelines, net income per share and FFO per share are calculated as if the 2019 Convertible Notes were converted to common shares at the beginning of 2019, and as if the 2022 Convertible Notes were converted to common shares at the beginning of each relevant period in 2019 and 2020, unless such treatment is anti-dilutive to net income per share or FFO per share.

 

In Q1 2020, treatment of the 2022 Convertible Notes as if converted would be anti-dilutive to net income per share and dilutive to FFO per share. As such, Q1 2020 net income per share does not treat the 2022 Convertible Notes as if converted. Q1 2020 FFO per share treats the 2022 Convertible Notes as if converted, thereby adjusting FFO in the numerator to remove the interest expense associated with the 2022 Convertible Notes and adjusting shares outstanding in the denominator to include shares issuable on conversion of the 2022 Convertible Notes.

 

In Q1 2019, treatment of the 2019 Convertible Notes as if converted would be anti-dilutive to net income per share and dilutive to FFO per share. Treatment of the 2022 Convertible Notes as if converted would be anti-dilutive to both net income per share and FFO per share. As such, Q1 2019 net income per share treats neither the 2019 Convertible Notes nor the 2022 Convertible Notes as if converted. Q1 2019 FFO per share treats the 2019 Convertible Notes as if converted, thereby adjusting FFO in the numerator to remove the interest expense associated with the 2019 Convertible Notes and adjusting shares outstanding in the denominator to include shares issuable on conversion of the 2019 Convertible Notes, but does not treat the 2022 Convertible Notes as if converted.

 

(2)

Core FFO and AFFO per share reflect the 2019 Convertible Notes and 2022 Convertible Notes in the form in which they were outstanding during each period.

 

As such, Q1 2020 Core FFO and AFFO per share reflect the conversion of the 2019 Convertible Notes, but do not treat the 2022 Convertible Notes as if converted.

 

Q1 2019 Core FFO and AFFO per share treat neither the 2019 Convertible Notes nor the 2022 Convertible Notes as if converted.

Reconciliation of Total Revenues to Same Store Total Revenues and Same Store Core Revenues, Quarterly

(in thousands) (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q1 2020

 

Q4 2019

 

Q3 2019

 

Q2 2019

 

Q1 2019

 

Total revenues (total portfolio)

 

$

449,789

 

 

$

444,277

 

 

$

443,326

 

 

$

441,582

 

 

$

435,500

 

 

Non-Same Store revenues

 

(28,719

)

 

(29,618

)

 

(32,095

)

 

(33,944

)

 

(35,289

)

 

Same Store revenues

 

421,070

 

 

414,659

 

 

411,231

 

 

407,638

 

 

400,211

 

 

Same Store resident recoveries

 

(18,776

)

 

(17,288

)

 

(17,915

)

 

(16,851

)

 

(15,088

)

 

Same Store Core revenues

 

$

402,294

 

 

$

397,371

 

 

$

393,316

 

 

$

390,787

 

 

$

385,123

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Property Operating and Maintenance to Same Store Operating Expenses and Same Store Core Operating Expenses, Quarterly

(in thousands) (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q1 2020

 

Q4 2019

 

Q3 2019

 

Q2 2019

 

Q1 2019

 

Property operating and maintenance expenses (total portfolio)

 

$

166,916

 

 

$

167,576

 

 

$

175,491

 

 

$

166,574

 

 

$

160,346

 

 

Non-Same Store operating expenses

 

(12,871

)

 

(14,035

)

 

(15,096

)

 

(16,152

)

 

(16,850

)

 

Same Store operating expenses

 

154,045

 

 

153,541

 

 

160,395

 

 

150,422

 

 

143,496

 

 

Same Store resident recoveries

 

(18,776

)

 

(17,288

)

 

(17,915

)

 

(16,851

)

 

(15,088

)

 

Same Store Core operating expenses

 

$

135,269

 

 

$

136,253

 

 

$

142,480

 

 

$

133,571

 

 

$

128,408

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Net Income to NOI and Same Store NOI, Quarterly

(in thousands) (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q1 2020

 

Q4 2019

 

Q3 2019

 

Q2 2019

 

Q1 2019

 

Net income available to common stockholders

 

$

49,854

 

 

$

51,903

 

 

$

33,616

 

 

$

38,833

 

 

$

20,716

 

 

Net income available to participating securities

 

102

 

 

89

 

 

91

 

 

109

 

 

106

 

 

Non-controlling interests

 

320

 

 

562

 

 

276

 

 

463

 

 

347

 

 

Interest expense

 

84,757

 

 

88,417

 

 

89,067

 

 

95,706

 

 

93,983

 

 

Depreciation and amortization

 

135,027

 

 

133,764

 

 

133,315

 

 

133,031

 

 

133,609

 

 

Property management expense

 

14,372

 

 

15,375

 

 

16,405

 

 

16,021

 

 

26,538

 

 

General and administrative

 

14,228

 

 

14,561

 

 

15,872

 

 

15,956

 

 

15,160

 

 

Impairment and other

 

3,127

 

 

6,940

 

 

4,740

 

 

1,671

 

 

5,392

 

 

Gain on sale of property, net of tax

 

(15,200

)

 

(31,780

)

 

(20,812

)

 

(26,172

)

 

(17,572

)

 

Other, net

 

(3,714

)

 

(3,130

)

 

(4,735

)

 

(610

)

 

(3,125

)

 

NOI (total portfolio)

 

282,873

 

 

276,701

 

 

267,835

 

 

275,008

 

 

275,154

 

 

Non-Same Store NOI

 

(15,848

)

 

(15,583

)

 

(16,999

)

 

(17,792

)

 

(18,439

)

 

Same Store NOI

 

$

267,025

 

 

$

261,118

 

 

$

250,836

 

 

$

257,216

 

 

$

256,715

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Net Income to EBITDA, EBITDAre, and Adjusted EBITDAre

(in thousands, unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trailing Twelve Months (TTM) Ended

 

 

 

Q1 2020

 

Q1 2019

 

March 31, 2020

 

December 31, 2019

 

Net income available to common stockholders

 

$

49,854

 

 

$

20,716

 

 

$

174,206

 

 

$

145,068

 

 

Net income available to participating securities

 

102

 

 

106

 

 

391

 

 

395

 

 

Non-controlling interests

 

320

 

 

347

 

 

1,621

 

 

1,648

 

 

Interest expense

 

84,757

 

 

93,983

 

 

357,947

 

 

367,173

 

 

Depreciation and amortization

 

135,027

 

 

133,609

 

 

535,137

 

 

533,719

 

 

EBITDA

 

270,060

 

 

248,761

 

 

1,069,302

 

 

1,048,003

 

 

Gain on sale of property, net of tax

 

(15,200

)

 

(17,572

)

 

(93,964

)

 

(96,336

)

 

Impairment on depreciated real estate investments

 

2,471

 

 

3,253

 

 

13,428

 

 

14,210

 

 

EBITDAre

 

257,331

 

 

234,442

 

 

988,766

 

 

965,877

 

 

Share-based compensation expense

 

4,101

 

 

5,607

 

 

16,652

 

 

18,158

 

 

Merger and transaction-related expenses

 

 

 

2,795

 

 

1,552

 

 

4,347

 

 

Severance

 

 

 

6,969

 

 

1,496

 

 

8,465

 

 

Casualty losses, net

 

656

 

 

2,139

 

 

3,050

 

 

4,533

 

 

Other, net

 

(3,714

)

 

(3,125

)

 

(12,189

)

 

(11,600

)

 

Adjusted EBITDAre

 

$

258,374

 

 

$

248,827

 

 

$

999,327

 

 

$

989,780

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Net Debt / Annualized Adjusted EBITDAre

 

(in thousands, except for ratio) (unaudited)

 

 

 

 

 

 

 

 

 

As of

 

As of

 

 

 

March 31, 2020

 

December 31, 2019

 

Mortgage loans, net

 

$

6,137,744

 

 

$

6,238,461

 

 

Secured term loan, net

 

401,033

 

 

400,978

 

 

Term loan facility, net

 

1,494,469

 

 

1,493,747

 

 

Revolving facility

 

270,000

 

 

 

 

Convertible senior notes, net

 

335,559

 

 

334,299

 

 

Total Debt per Balance Sheet

 

8,638,805

 

 

8,467,485

 

 

Retained and repurchased certificates

 

(314,093

)

 

(319,632

)

 

Cash, ex-security deposits (1)

 

(365,175

)

 

(138,059

)

 

Deferred financing costs, net

 

29,326

 

 

36,685

 

 

Unamortized discounts on note payable

 

11,994

 

 

13,342

 

 

Net Debt (A)

 

$

8,000,857

 

 

$

8,059,821

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Trailing Twelve

 

For the Trailing Twelve

 

 

 

Months (TTM) Ended

 

Months (TTM) Ended

 

 

 

March 31, 2020

 

December 31, 2019

 

Adjusted EBITDAre (B)

 

$

999,327

 

 

$

989,780

 

 

 

 

 

 

 

 

Net Debt / TTM Adjusted EBITDAre (A / B)

 

8.0

x

 

8.1

x

 

 

 

 

 

 

 

(1) Represents cash and cash equivalents and the non-security deposit portion of restricted cash.

 

Investor Relations Contact
Greg Van Winkle
Phone: 844.456.INVH (4684)
Email: IR@InvitationHomes.com

Media Relations Contact
Kristi DesJarlais
Phone: 972.421.3587
Email: Media@InvitationHomes.com

Source: Invitation Homes Inc.