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Invitation Homes Reports Fourth Quarter 2020 and Full Year 2020 Results

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Invitation Homes Inc. (NYSE: INVH) ("Invitation Homes" or the "Company"), the nation's premier single-family home leasing company, today announced its Q4 2020 and FY 2020 financial and operating results.

Fourth Quarter 2020 and Full Year 2020 Highlights

  • Year over year, in Q4 2020, total revenues increased 4.5% to $464 million, property operating and maintenance costs increased 0.6% to $169 million, net income available to common stockholders increased 36.0% to $71 million, and net income per diluted common share increased 30.2% to $0.12. In FY 2020, total revenues increased 3.3% to $1,823 million, property operating and maintenance costs increased 1.6% to $681 million, net income available to common stockholders increased 34.9% to $196 million, and net income per diluted common share increased 29.4% to $0.35.

  • Year over year, in Q4 2020, Core FFO per share decreased 0.1% to $0.32, and AFFO per share decreased 1.3% to $0.27. In FY 2020, Core FFO per share increased 2.7% to $1.28, and AFFO per share increased 4.6% to $1.08. Excluded from Core FFO and AFFO was a $30 million unrealized gain in Q4 2020 on an investment in Opendoor.

  • In Q4 2020, Same Store NOI grew 4.3% year over year on 2.0% Same Store Core revenue growth and a 2.4% decrease in Same Store Core operating expenses. In FY 2020, Same Store NOI grew 3.7% year over year on 2.8% Same Store Core revenue growth and 1.0% Same Store Core operating expense growth.

  • In Q4 2020, Same Store average occupancy was 98.1%, up 210 basis points year over year. In FY 2020, Same Store average occupancy was 97.5%, up 130 basis points year over year.

  • In Q4 2020, Same Store new lease rent growth of 6.9% and Same Store renewal rent growth of 3.8% drove Same Store blended rent growth of 4.9%. In FY 2020, Same Store new lease rent growth of 4.2% and Same Store renewal rent growth of 3.7% drove Same Store blended rent growth of 3.8%.

  • In Q4 2020, revenue collections were approximately 97% of the Company's historical average collection rate.

  • In Q4 2020, the Company began acquiring homes through its previously announced JV with Rockpoint Group. Invitation Homes owns a 20% interest in the JV, which is expected to invest over $1 billion in single-family rental homes, diversifying Invitation Homes' capital sources available to pursue external growth over a multi-year period.

  • In Q4 2020, the Company capitalized on favorable buying fundamentals to increase its acquisition pace, purchasing 1,197 homes for $361 million, of which 1,057 were added to the wholly-owned portfolio for $316 million and 140 were added to the JV for $45 million. Also in Q4 2020, the Company sold 277 wholly-owned homes for $82 million.

  • Net debt / TTM adjusted EBITDAre decreased from 8.1x at December 31, 2019 to 7.3x at December 31, 2020.

  • As previously announced, in Q4 2020, the Company closed a $3.5 billion sustainability-linked unsecured credit facility, consisting of a $1.0 billion revolver and $2.5 billion term loan, to replace its previous facility and refinance secured debt. As a result, the Company has no debt (excluding convertible notes) reaching final maturity until December 2024, and the Company's unsecured debt as a percentage of total debt increased from 22% to 35%.

President & Chief Executive Officer Dallas Tanner comments: "Reflecting on 2020, I could not be prouder of the role Invitation Homes played in helping to provide comfortable homes and genuine care to residents in a year when the importance of home has never been greater. While delivering this experience to our residents, we also achieved another year of financial performance near the top of the real estate sector. Executing nimbly to meet strong demand, we increased occupancy in every month of 2020, and closed the year with record-high Same Store occupancy of 98.3% in December and our highest blended rent growth of the year. With a strong and stable resident base, we also continue to collect rents near historical average levels.

"This momentum positions us well for growth in 2021. In addition to enjoying favorable industry fundamentals, we are also entering the new year more active in the acquisition market than we have been since prior to our 2017 IPO. We'll remain opportunistic in what we see as a highly accretive environment, and continue to buy with the same discipline and rigor we have exercised throughout our history that led to the high-quality portfolio we have today. As we focus on executing our plan for 2021, we will also continue to prioritize the safety of our stakeholders, and support our residents and associates as we have done consistently throughout these uncertain times. The ever-changing environment of 2020 could not impede us from executing on strategic initiatives to drive growth and enhance the resident experience, and we are excited as we look into 2021 and beyond at strong fundamentals and an opportunity to raise the bar even higher."

Financial Results

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

Q4 2020

Q4 2019

FY 2020

FY 2019

Net income (1)

$

0.12

$

0.10

$

0.35

$

0.27

FFO (1)

0.35

0.29

1.24

1.10

Core FFO (2)

0.32

0.32

1.28

1.25

AFFO (2)

0.27

0.28

1.08

1.03

  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 fourth quarter of 2020 was $0.12, compared to net income per share of $0.10 in the fourth quarter of 2019. Total revenues and total property operating and maintenance expenses in the fourth quarter of 2020 were $464 million and $169 million, respectively, compared to $444 million and $168 million, respectively, in the fourth quarter of 2019.

Net income per share in FY 2020 was $0.35, compared to net income per share of $0.27 in FY 2019. Total revenues and total property operating and maintenance expenses in FY 2020 were $1,823 million and $681 million, respectively, compared to $1,765 million and $670 million, respectively, in FY 2019.

Core FFO

Year over year, Core FFO per share in the fourth quarter of 2020 decreased 0.1% to $0.32.

Year over year, Core FFO per share in FY 2020 increased 2.7% to $1.28, primarily due to growth in Same Store NOI.

AFFO

Year over year, AFFO per share in the fourth quarter of 2020 decreased 1.3% to $0.27.

Year over year, AFFO per share in FY 2020 increased 4.6% to $1.08, primarily due to the increase in Core FFO per share described above and lower recurring capital expenditures.

Operating Results

Same Store Operating Results Snapshot

Number of homes in Same Store portfolio:

71,433

Q4 2020

Q4 2019

FY 2020

FY 2019

Core revenue growth (year-over-year)

2.0

%

2.8

%

Core operating expense growth (year-over-year)

(2.4)

%

1.0

%

NOI growth (year-over-year)

4.3

%

3.7

%

Average occupancy

98.1

%

96.0

%

97.5

%

96.2

%

Bad debt % of gross rental revenues (1)

2.5

%

0.3

%

1.7

%

0.4

%

Turnover rate

5.6

%

6.4

%

26.1

%

29.7

%

Rental rate growth (lease-over-lease):

Renewals

3.8

%

4.6

%

3.7

%

5.0

%

New leases

6.9

%

1.3

%

4.2

%

3.7

%

Blended

4.9

%

3.3

%

3.8

%

4.6

%

  1. Invitation Homes reserves residents' accounts receivables balances that are aged greater than 30 days as bad debt, under the rationale that a resident's security deposit should cover approximately the first 30 days of receivables. For all resident receivables balances aged greater than 30 days, the amount reserved as bad debt is 100% of outstanding receivables from the resident, less the amount of the resident's security deposit on hand. For the purpose of determining age of receivables, charges are considered to be due based on the terms of the original lease, not based on a payment plan if one is in place. All rental revenues and other property income, in both total portfolio and Same Store portfolio presentations, are reflected net of bad debt.

Revenue Collections Update

Q4 2020

Q3 2020

Q2 2020

Pre-COVID
Average (2)

Revenues collected % of revenues due: (1)

Revenues collected in same month billed

91

%

92

%

92

%

96

%

Late collections of prior month billings

5

%

5

%

4

%

3

%

Total collections

96

%

97

%

96

%

99

%

  1. Includes both rental revenues and other property income. Rent is considered to be due based on the terms of the original lease, not based on a payment plan if one is in place. Security deposits retained to offset rents due are not included as revenue collected. See "Same Store Operating Results Snapshot," footnote (1), for detail on the Company's bad debt policy.

  2. Represents the period from October 2019 to March 2020.

Same Store NOI

For the Same Store portfolio of 71,433 homes, fourth quarter 2020 Same Store NOI increased 4.3% year over year on Same Store Core revenue growth of 2.0% and a 2.4% decrease in Same Store Core operating expenses.

FY 2020 Same Store NOI increased 3.7% year over year on Same Store Core revenue growth of 2.8% and Same Store Core operating expense growth of 1.0%.

Same Store Core Revenues

Fourth quarter 2020 Same Store Core revenue growth of 2.0% year over year was driven by a 3.3% increase in average monthly rent and a 210 basis point increase in average occupancy to 98.1%. As a result of the increases in average monthly rent and average occupancy, Same Store rental revenues increased 5.7% year over year on a gross basis before bad debt. With respect to Same Store Core revenue growth, two factors related to COVID-19 partially offset the favorable increases in average rent and average occupancy: 1) an increase in bad debt from 0.3% of gross rental revenues in Q4 2019 to 2.5% of gross rental revenues in Q4 2020, which was a 221 basis point drag on Same Store Core revenue growth, all else equal; and 2) a 35.3% decrease in other property income, net of resident recoveries, which was a 125 basis point drag on Same Store Core revenue growth, all else equal, due primarily to non-enforcement and non-collection of almost all late fees in the quarter.

FY 2020 Same Store Core revenue growth of 2.8% year over year was driven by a 3.5% increase in average monthly rent and a 130 basis point increase in average occupancy to 97.5%. Bad debt increased from 0.4% of gross rental revenues in FY 2019 to 1.7% of gross rental revenues in FY 2020, which was a 133 basis point drag on Same Store Core revenue growth, all else equal. Other property income, net of resident recoveries, decreased 21.1% year over year, which was a 72 basis point drag on Same Store Core revenue growth, all else equal.

Same Store Core Operating Expenses

Fourth quarter 2020 Same Store Core operating expenses decreased 2.4% year over year, driven by a 7.9% decline in Same Store controllable expenses, net of resident recoveries.

FY 2020 Same Store Core operating expenses increased 1.0% year over year, primarily due to higher property taxes that were partially offset by a 2.8% decrease in controllable expenses, net of resident recoveries, as well as lower insurance and HOA expenses.

Investment Management Activity

In Q4 2020, Invitation Homes increased its pace of acquisitions to its highest level since the second quarter of 2014, leveraging the advantages of its in-house local teams in conjunction with proprietary "AcquisitionIQ" technology to source $361 million of acquisitions through multiple channels. Fourth quarter wholly-owned acquisitions totaled 1,057 homes for $316 million, including estimated renovation costs. In addition, 140 homes were purchased for $45 million through the Company's unconsolidated joint venture with Rockpoint Group (the "Rockpoint JV"), of which Invitation Homes owns 20%.

Included in the Company's wholly-owned acquisition activity in Q4 2020 was a previously announced bulk acquisition of 273 homes in Dallas and a bulk acquisition of 54 homes in Phoenix that overlap closely with Invitation Homes' existing footprints in those two markets. In total, the homes in these transactions were acquired for $75 million at a 5.5% NOI yield based on in-place rents, and the Company sees upside to NOI in the portfolios by bringing them onto its platform.

Dispositions in the fourth quarter of 2020 totaled 277 wholly-owned homes for gross proceeds of $82 million.

In FY 2020, in its wholly-owned portfolio, the Company closed on acquisitions of 2,252 homes for $691 million, including estimated renovation costs, and sold 1,580 homes for gross proceeds of $443 million, resulting in a total wholly-owned portfolio home count of 80,177 homes as of December 31, 2020. In the Rockpoint JV, 140 homes were purchased for $45 million in FY 2020, resulting in a Rockpoint JV home count of 140 homes as of December 31, 2020.

Opendoor Investment Update

In Q4 2020, Invitation Homes' private investment in Opendoor converted to approximately 2 million public shares of Opendoor common stock (NASDAQ: OPEN) as a result of Opendoor's merger with a special purpose acquisition company. Invitation Homes' original Series E private investment in Opendoor was made in March 2018 and consisted of $10 million of convertible notes. That investment, which has since converted to common shares of OPEN, was valued at $46 million as of December 31, 2020. In addition to being a successful investment for Invitation Homes, Opendoor has been and continues to be a valued partner for Invitation Homes in the growing iBuyer channel of the single-family home transaction market.

The investment in OPEN is now carried on Invitation Homes' balance sheet at its estimated fair market value and is included in Other Assets, net. The unrealized gain on investment that Invitation Homes recorded in Q4 2020 to mark the value of its OPEN investment to fair value is included in net income under GAAP and FFO as defined by Nareit, but is excluded from Core FFO and AFFO.

Balance Sheet and Capital Markets Activity

As of December 31, 2020, the Company had $1,213 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, 2020 was $8,083 million, consisting of $5,238 million of secured debt and $2,845 million of unsecured debt. Net debt / TTM Adjusted EBITDAre at December 31, 2020 was 7.3x, down from 8.1x at December 31, 2019.

In Q4 2020, the Company issued 6,525,758 shares of common stock under its at-the-market equity agreement ("ATM Equity Program"), at an average price of $28.47 per share, for gross proceeds of $186 million. Proceeds were used primarily to acquire homes. $500 million of capacity remained under the ATM Equity Program as of December 31, 2020.

As previously announced, in Q4 2020, the Company closed a $3,500 million sustainability-linked senior unsecured credit facility (the "Credit Facility"), consisting of an undrawn $1,000 million revolving line of credit (the "Revolver") and a fully funded $2,500 million term loan (the "Term Loan"). Initial maturities of the Revolver and Term Loan are in January 2025, with each carrying two 6-month extension options. The new $1,000 million Revolver replaced the Company’s previous $1,000 million revolver, which had no balance drawn at the time the Credit Facility closed. Proceeds from the new $2,500 million Term Loan were used to: 1) fully repay the Company’s previous $1,500 million unsecured term loan facility that was due to reach final maturity in February 2022; 2) fully repay the $731 million principal balance of the SWH 2017-1 securitization that was due to reach final maturity in January 2023; and 3) voluntarily prepay higher-cost classes of certificates of various securitizations due to reach final maturity between March 2025 and January 2026. For both the Revolver and Term loan, spreads at closing, based on the Company's total leverage ratio, were 5 bps lower than the spreads most recently in effect for the Company's previous credit facility. Based on improvement in total leverage ratio from September 30, 2020 to December 31, 2020, the Company expects the interest rates applicable to its Term Loan and used portion of its Revolver both to decrease by another 10 bps, effective February 2021, to LIBOR + 155 bps for the Term Loan and LIBOR + 160 bps for the Revolver.

As a result of these transactions, the Company has no debt reaching final maturity until December 2024, with the exception of $345 million of convertible notes maturing in January 2022. In addition, the Company’s unsecured debt as a percentage of total debt increased from 22% as of September 30, 2020 to 35% as of December 31, 2020, and the percentage of homes in the Company’s portfolio that are unencumbered increased from 51% as of September 30, 2020 to 57% as of December 31, 2020.

Dividend

As previously announced on January 29, 2021, the Company's Board of Directors declared a quarterly cash dividend of $0.17 per share of common stock, representing a 13.3% increase over the prior quarterly dividend of $0.15 per share. The dividend will be paid on or before February 26, 2021 to stockholders of record as of the close of business on February 10, 2021.

FY 2021 Guidance

FY 2021 Guidance

FY 2021

FY 2020

Guidance

Actual

Core FFO per share — diluted

$1.30 - $1.40

$1.28

AFFO per share — diluted

$1.09 - $1.19

$1.08

Same Store Core revenue growth

3.5% - 4.5%

2.8%

Same Store Core operating expense growth

4.5% - 5.5%

1.0%

Same Store NOI growth

3.0% - 4.0%

3.7%

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 revenue growth, Same Store Core operating expense 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 our 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 17, 2021 to discuss results for the fourth quarter of 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 3180201. An audio webcast may be accessed at www.invh.com. A replay of the call will be available through March 17, 2021 and can be accessed by calling 1-877-344-7529 (domestic) or 1-412-317-0088 (international) and using the replay passcode 10151712, 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. 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 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 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 and in the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 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 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)

December 31,
2020

December 31,
2019

(unaudited)

Assets:

Investments in single-family residential properties, net

$

16,288,693

$

16,243,192

Cash and cash equivalents

213,422

92,258

Restricted cash

198,346

193,987

Goodwill

258,207

258,207

Investments in unconsolidated joint ventures

69,267

54,778

Other assets, net

478,287

550,488

Total assets

$

17,506,222

$

17,392,910

Liabilities:

Mortgage loans, net

$

4,820,098

$

6,238,461

Secured term loan, net

401,095

400,978

Term loan facility, net

2,470,907

1,493,747

Revolving facility

Convertible senior notes, net

339,404

334,299

Accounts payable and accrued expenses

149,299

186,110

Resident security deposits

157,936

147,787

Other liabilities

611,410

325,450

Total liabilities

8,950,149

9,126,832

Equity:

Stockholders' equity

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

Common stock, $0.01 par value per share, 9,000,000,000 shares authorized, 567,117,666 and 541,642,725 outstanding as of December 31, 2020 and December 31, 2019, respectively

5,671

5,416

Additional paid-in capital

9,707,258

9,010,194

Accumulated deficit

(661,162

)

(524,588

)

Accumulated other comprehensive loss

(546,942

)

(276,600

)

Total stockholders' equity

8,504,825

8,214,422

Non-controlling interests

51,248

51,656

Total equity

8,556,073

8,266,078

Total liabilities and equity

$

17,506,222

$

17,392,910

Consolidated Statements of Operations

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

Q4 2020

Q4 2019

FY 2020

FY 2019

(unaudited)

(unaudited)

(unaudited)

Revenues:

Rental revenues

$

429,866

$

410,578

$

1,687,724

$

1,633,799

Other property income

34,234

33,699

135,104

130,886

Rental revenues and other property income

464,100

444,277

1,822,828

1,764,685

Expenses:

...

168,628

167,576

680,543

669,987

Property management expense

14,888

...

14,561

58,613

61,614

General and administrative

16,679

15,375

63,305

74,274

Interest expense

95,382

88,417

353,923

367,173

Depreciation and amortization

142,090

133,764

552,530

533,719

Impairment and other

(3,974

)

6,940

696

18,743

Total expenses

433,693

426,633

1,709,610

1,725,510

Unrealized gains on investments in equity securities

29,689

29,723

6,480

Other, net

(2,087

)

3,130

(86

)

5,120

Gain on sale of property, net of tax

13,121

31,780

54,594

96,336

Net income

71,130

52,554

197,449

147,111

Net income attributable to non-controlling interests

(431

)

(562

)

(1,237

)

(1,648

)

Net income attributable to common stockholders

70,699

51,992

196,212

145,463

Net income available to participating securities

(113

)

(89

)

(448

)

(395

)

Net income available to common stockholders — basic and diluted

$

70,586

$

51,903

$

195,764

$

145,068

Weighted average common shares outstanding — basic

563,968,010

540,218,045

553,993,321

531,235,962

Weighted average common shares outstanding — diluted

565,541,098

541,505,031

555,458,607

532,499,787

Net income per common share — basic

$

0.13

$

0.10

$

0.35

$

0.27

Net income per common share — diluted

$

0.12

$

0.10

$

0.35

$

0.27

Dividends declared per common share

$

0.15

$

0.13

$

0.60

$

0.52

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 (gains) losses, net; unrealized gains on investments in equity securities; 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.

Revenue Collections as a Percentage of Billings
Revenue collections as a percentage of billings represents 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, 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

Q4 2020

Q4 2019

FY 2020

FY 2019

Net income available to common stockholders

$

70,586

$

51,903

$

195,764

$

145,068

Net income available to participating securities

113

89

448

395

Non-controlling interests

431

562

1,237

1,648

Depreciation and amortization on real estate assets

140,341

132,637

546,419

529,205

Impairment on depreciated real estate investments

376

2,921

4,578

14,210

Net gain on sale of previously depreciated investments in real estate

(13,121

)

(31,780

)

(54,594

)

(96,336

)

FFO

$

198,726

$

156,332

$

693,852

$

594,190

Core FFO Reconciliation

Q4 2020

Q4 2019

FY 2020

FY 2019

FFO

$

198,726

$

156,332

$

693,852

$

594,190

Non-cash interest expense

13,775

11,093

40,415

48,515

Share-based compensation expense

4,797

4,311

17,090

18,158

Offering related expenses

119

2,267

Merger and transaction-related expenses

4,347

Severance expense

213

240

601

8,465

Unrealized gains on investment in equity securities

(29,689

)

(29,723

)

(6,480

)

Casualty (gains) losses, net

(4,350

)

4,019

(3,882

)

4,533

Core FFO

$

183,472

$

176,114

$

718,353

$

673,995

AFFO Reconciliation

Q4 2020

Q4 2019

FY 2020

FY 2019

Core FFO

$

183,472

$

176,114

$

718,353

$

673,995

Recurring capital expenditures

(28,485

)

(25,425

)

(115,951

)

(118,988

)

Adjusted FFO

$

154,987

$

150,689

$

602,402

$

555,007

Net income available to common stockholders

Weighted average common shares outstanding — diluted (1)

565,541,098

541,505,031

555,458,607

532,499,787

Net income per common share — diluted (1)

$

0.12

$

0.10

$

0.35

$

0.27

FFO

Numerator for FFO per common share — diluted(1)

$

203,037

$

160,580

$

711,033

$

599,776

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

584,506,076

561,243,645

574,408,346

545,150,847

FFO per share — diluted (1)

$

0.35

$

0.29

$

1.24

$

1.10

Core FFO and Adjusted FFO

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

569,405,633

546,143,202

559,307,903

538,925,506

Core FFO per share — diluted (2)

$

0.32

$

0.32

$

1.28

$

1.25

AFFO per share — diluted (2)

$

0.27

$

0.28

$

1.08

$

1.03

  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 Q4 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, Q4 2020 net income per share does not treat the 2022 Convertible Notes as converted. Q4 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 Q4 2019, 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, Q4 2019 net income per share and FFO per share do not treat the 2022 Convertible Notes as if converted.

In FY 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, FY 2020 net income per share does not treat the 2022 Convertible Notes as if converted. FY 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 FY 2019, treatment of the 2019 Convertible Notes as if converted for the period in which they were outstanding, from January 1, 2019 through June 30, 2019, 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 in FY 2019. As such, FY 2019 net income per share reflects the conversion of the 2019 Convertible Notes for the period from July 1, 2019 through December 31, 2019, but does not treat the 2019 Convertible Notes as if converted for the period from January 1, 2019 through June 30, 2019, and does not treat the 2022 Convertible Notes as if converted. FY 2019 FFO per share does not treat the 2022 Convertible Notes as if converted, but treats the 2019 Convertible Notes as if converted on January 1, 2019, 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.

  1. 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, Q4 2020, Q4 2019, and FY 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.

FY 2019 Core FFO and AFFO per share reflect the conversion of the 2019 Convertible Notes for the period from July 1, 2019 through December 31, 2019, but do not treat the 2019 Convertible Notes as if converted for the period from January 1, 2019 through June 30, 2019. For the period from January 1, 2019 through June 30, 2019, cash interest expense associated with the 2019 Convertible Notes has been included in Core FFO and AFFO in the numerators, and shares issued upon conversion of the 2019 Convertible Notes have not been included as shares outstanding in the denominators. The 2022 Convertible Notes are not treated as if converted.

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

(in thousands) (unaudited)

Q4 2020

Q3 2020

Q2 2020

Q1 2020

Q4 2019

Total revenues (total portfolio)

$

464,100

$

459,184

$

449,755

$

449,789

$

444,277

Non-Same Store revenues

(44,699

)

(42,054

)

(39,818

)

(36,308

)

(37,268

)

Same Store revenues

419,401

417,130

409,937

413,481

407,009

Same Store resident recoveries

(21,555

)

(21,476

)

(18,396

)

(18,407

)

(16,968

)

Same Store Core revenues

$

397,846

$

395,654

$

391,541

$

395,074

$

390,041

Reconciliation of Total Revenues to Same Store Total Revenues and Same Store Core Revenues, Full Year

(in thousands) (unaudited)

FY 2020

FY 2019

Total revenues (total portfolio)

$

1,822,828

$

1,764,685

Non-Same Store revenues

(162,879

)

(161,013

)

Same Store revenues

1,659,949

1,603,672

Same Store resident recoveries

(79,834

)

(65,903

)

Same Store Core revenues

$

1,580,115

$

1,537,769

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

(in thousands) (unaudited)

Q4 2020

Q3 2020

Q2 2020

Q1 2020

Q4 2019

Property operating and maintenance expenses (total portfolio)

$

168,628

$

177,997

$

167,002

$

166,916

$

167,576

Non-Same Store operating expenses

(16,439

)

(16,151

)

(15,762

)

(15,706

)

(16,814

)

Same Store operating expenses

152,189

161,846

151,240

151,210

150,762

Same Store resident recoveries

(21,555

)

(21,476

)

(18,396

)

(18,407

)

(16,968

)

Same Store Core operating expenses

$

130,634

$

140,370

$

132,844

$

132,803

$

133,794

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

(in thousands) (unaudited)

FY 2020

FY 2019

Property operating and maintenance expenses (total portfolio)

$

680,543

$

669,987

Non-Same Store operating expenses

(64,058

)

(72,995

)

Same Store operating expenses

616,485

596,992

Same Store resident recoveries

(79,834

)

(65,903

)

Same Store Core operating expenses

$

536,651

$

531,089

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

(in thousands) (unaudited)

Q4 2020

Q3 2020

Q2 2020

Q1 2020

Q4 2019

Net income available to common stockholders

$

70,586

$

32,540

$

42,784

$

49,854

$

51,903

Net income available to participating securities

113

114

119

102

89

Non-controlling interests

431

211

275

320

562

Interest expense

95,382

87,713

86,071

84,757

88,417

Depreciation and amortization

142,090

138,147

137,266

135,027

133,764

Property management expense

14,888

14,824

14,529

14,372

14,561

General and administrative

16,679

17,972

14,426

14,228

15,375

Impairment and other

(3,974

)

1,723

(180

)

3,127

6,940

Gain on sale of property, net of tax

(13,121

)

(15,106

)

(11,167

)

(15,200

)

(31,780

)

Unrealized gains on investments in equity securities

(29,689

)

(34

)

Other, net

2,087

3,049

(1,370

)

(3,680

)

(3,130

)

NOI (total portfolio)

295,472

281,187

282,753

282,873

276,701

Non-Same Store NOI

(28,260

)

(25,903

)

(24,056

)

(20,602

)

(20,454

)

Same Store NOI

$

267,212

$

255,284

$

258,697

$

262,271

$

256,247

Reconciliation of Net Income to NOI and Same Store NOI, Full Year

(in thousands) (unaudited)

FY 2020

FY 2019

Net income available to common stockholders

$

195,764

$

145,068

Net income available to participating securities

448

395

Non-controlling interests

1,237

1,648

Interest expense

353,923

367,173

Depreciation and amortization

552,530

533,719

Property management expense

58,613

61,614

General and administrative

63,305

74,274

Impairment and other

696

18,743

Gain on sale of property, net of tax

(54,594

)

(96,336

)

Unrealized gains on investments in equity securities

(29,723

)

(6,480

)

Other, net

86

(5,120

)

NOI (total portfolio)

1,142,285

1,094,698

Non-Same Store NOI

(98,821

)

(88,018

)

Same Store NOI

$

1,043,464

$

1,006,680

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

(in thousands, unaudited)

Q4 2020

Q4 2019

FY 2020

FY 2019

Net income available to common stockholders

$

70,586

$

51,903

$

195,764

$

145,068

Net income available to participating securities

113

89

448

395

Non-controlling interests

431

562

1,237

1,648

Interest expense

95,382

88,417

353,923

367,173

Depreciation and amortization

142,090

133,764

552,530

533,719

EBITDA

308,602

274,735

1,103,902

1,048,003

Gain on sale of property, net of tax

(13,121

)

(31,780

)

(54,594

)

(96,336

)

Impairment on depreciated real estate investments

376

2,921

4,578

14,210

EBITDAre

295,857

245,876

1,053,886

965,877

Share-based compensation expense

4,797

4,311

17,090

18,158

Merger and transaction-related expenses

4,347

Severance

213

240

601

8,465

Casualty (gains) losses, net

(4,350

)

4,019

(3,882

)

4,533

Unrealized gains on investments in equity securities

(29,689

)

(29,723

)

(6,480

)

Other, net

2,087

(3,130

)

86

(5,120

)

Adjusted EBITDAre

$

268,915

$

251,316

$

1,038,058

$

989,780

Reconciliation of Net Debt / TTM Adjusted EBITDAre

(in thousands, except for ratio) (unaudited)

As of

As of

December 31, 2020

December 31, 2019

Mortgage loans, net

$

4,820,098

$

6,238,461

Secured term loan, net

401,095

400,978

Term loan facility, net

2,470,907

1,493,747

Revolving facility

Convertible senior notes, net

339,404

334,299

Total Debt per Balance Sheet

8,031,504

8,467,485

Retained and repurchased certificates

(247,526

)

(319,632

)

Cash, ex-security deposits and letters of credit (1)

(250,204

)

(138,059

)

Deferred financing costs, net

43,396

36,685

Unamortized discounts on note payable

7,885

13,342

Net Debt (A)

$

7,585,055

$

8,059,821

For the Trailing Twelve

For the Trailing Twelve

Months (TTM) Ended

Months (TTM) Ended

December 31, 2020

December 31, 2019

Adjusted EBITDAre (B)

$

1,038,058

$

989,780

Net Debt / TTM Adjusted EBITDAre (A / B)

7.3

x

8.1

x

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

View source version on businesswire.com: https://www.businesswire.com/news/home/20210216006021/en/

Contacts

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