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Invitation Homes Reports Fourth Quarter 2019 and Full Year 2019 Results

DALLAS, Feb. 18, 2020 /PRNewswire/ -- Invitation Homes Inc. (NYSE: INVH) ("Invitation Homes" or the "Company"), the nation's premier single-family home leasing company, today announced its fourth quarter 2019 and full year 2019 financial and operating results.

Invitation Homes

Fourth Quarter 2019 Highlights and Full Year 2019 Highlights

  • Year over year, in Q4 2019, total revenues increased 2.7% to $444 million , total property operating and maintenance expenses increased 5.3% to $168 million , and net income attributable to common stockholders increased 107.0% to $52 million , or $0.10 per share. In FY 2019, total revenues increased 2.4% to $1,765 million , total property operating and maintenance expenses increased 2.2% to $670 million , and net income attributable to common stockholders increased by $151 million to $145 million , or $0.27 per share.
  • Year over year, in Q4 2019, Core FFO per share increased 6.1% to $0.32 , and AFFO per share increased 10.8% to $0.28 . In FY 2019, Core FFO per share increased 6.2% to $1.25 , and AFFO per share increased 8.9% to $1.03 .
  • In Q4 2019, Same Store NOI grew 3.8% year over year on 4.3% Same Store Core revenue growth and 5.3% Same Store Core operating expense growth. In FY 2019, Same Store NOI grew 5.6% year over year on 4.5% Same Store Core revenue growth and 2.5% Same Store Core operating expense growth.
  • In Q4 2019, Same Store average occupancy was 96.0%, flat year over year. In FY 2019, Same Store average occupancy was 96.3%, up 50 basis points year over year.
  • In Q4 2019, Same Store renewal rent growth of 4.5% and Same Store new lease rent growth of 1.6% drove Same Store blended rent growth of 3.4%. In FY 2019, Same Store renewal rent growth of 5.0% and Same Store new lease rent growth of 3.8% drove Same Store blended rent growth of 4.6%.
  • As previously announced, in December 2019 , the Company closed a bulk sale of 708 homes in Nashville , its smallest market by home count, for gross proceeds of $210 million . With this transaction, Invitation Homes leveraged strong investor demand for single-family rental homes in Nashville to sell 89% of its portfolio in the market, as part of a strategic decision to exit Nashville and focus on other high-growth markets where Invitation Homes has greater scale and density.
  • Net debt / annualized adjusted EBITDA re decreased from 9.0x at December 31, 2018 to 8.0x at December 31, 2019 .
  • As previously announced, Blackstone completed the exit of its position in Invitation Homes. After a secondary offering of 57.6 million shares of Invitation Homes common stock in November 2019 , and distribution of 0.3 million shares to its partners, Blackstone no longer beneficially owns shares in Invitation Homes.

President & Chief Executive Officer Dallas Tanner comments:   "2019 was an excellent year for Invitation Homes, marked by Same Store NOI growth near the top of the REIT sector, further refinement of the best-in-class resident experience we provide through ProCare, significant portfolio enhancement through capital recycling, completion of merger integration activities with greater synergies than anticipated, and meaningful reduction in balance sheet leverage.  Furthermore, we ended 2019 with strong occupancy, positioning us well operationally for 2020.

"We are encouraged by the momentum we are carrying into 2020, and see further opportunities for both organic and external growth.  Fundamentally, supply and demand trends remain favorable across our high-growth markets, and we believe our refined operating platform, high-quality portfolio, and scale efficiencies position us to execute better than ever before.  As we continue to raise our already-high bar for resident service, we'll also seek to grow our home count in 2020 if today's accretive acquisition opportunity persists as expected.  In addition, we'll continue to build on growth initiatives related to ancillary services, leasing efficiency, and value enhancing capex in 2020.

"With these growth drivers at our back, we expect FY 2020 Same Store NOI growth of 4.25% at the midpoint of our guidance."

Financial Results

Net Income (Loss), FFO, Core FFO, and AFFO Per Share Diluted













Q4 2019


Q4 2018


FY 2019


FY 2018


Net income (loss) (1)


$

0.10



$

0.05



$

0.27



$

(0.01)



FFO (1)


0.29



0.24



1.10



0.94



Core FFO (2)


0.32



0.30



1.25



1.18



AFFO (2)


0.28



0.25



1.03



0.95















(1)

In accordance with GAAP and Nareit guidelines, net income (loss) 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 each relevant period in 2018 and 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, unless such treatment is anti-dilutive to net income (loss) 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 (Loss)
Net income in the fourth quarter of 2019 was $0.10 per share, compared to net income of $0.05 per share in the fourth quarter of 2018.  Total revenues and total property operating and maintenance expenses in the fourth quarter of 2019 were $444 million and $168 million , respectively, compared to $433 million and $159 million , respectively, in the fourth quarter of 2018.

Net income in FY 2019 was $0.27 per share, compared to a net loss of $0.01 per share in FY 2018.  Total revenues and total property operating and maintenance expenses in FY 2019 were $1,765 million and $670 million , respectively, compared to $1,723 million and $655 million , respectively, in FY 2018.

Core FFO
Year over year, Core FFO in the fourth quarter of 2019 increased 6.1% to $0.32 per share, primarily due to lower adjusted G&A and property management expense and lower cash interest expense.  As previously announced, and as included in FY 2019 guidance, Core FFO in the fourth quarter includes a $2.1 million favorable timing impact related to accelerated cost within Other, net, in the third quarter of 2019.

Year over year, Core FFO in FY 2019 increased 6.2% to $1.25 per share, primarily due to an increase in NOI and lower cash interest expense.

AFFO
Year over year, AFFO in the fourth quarter of 2019 increased 10.8% to $0.28 per share, primarily due to the increase in Core FFO described above and lower recurring capital expenditures.

Year over year, AFFO in FY 2019 increased 8.9% to $1.03 per share, primarily due to the increase in Core FFO described above and lower recurring capital expenditures.

Operating Results

Same Store Operating Results Snapshot











Number of homes in Same Store portfolio:


70,799





















Q4 2019


Q4 2018


FY 2019


FY 2018


Core revenue growth (year-over-year)


4.3

%




4.5

%




Core operating expense growth (year-over-year)


5.3

%




2.5

%




NOI growth (year-over-year)


3.8

%




5.6

%














Average occupancy


96.0

%


96.0

%


96.3

%


95.8

%


Turnover rate


6.5

%


5.9

%


30.1

%


32.5

%












Rental rate growth (lease-over-lease):










Renewals


4.5

%


4.8

%


5.0

%


4.8

%


New leases


1.6

%


2.2

%


3.8

%


3.4

%


Blended


3.4

%


3.8

%


4.6

%


4.3

%












Same Store NOI
For the Same Store portfolio of 70,799 homes, fourth quarter 2019 Same Store NOI increased 3.8% year over year on Same Store Core revenue growth of 4.3% and Same Store Core operating expense growth of 5.3%.

FY 2019 Same Store NOI increased 5.6% year over year on Same Store Core revenue growth of 4.5% and Same Store Core operating expense growth of 2.5%.

Same Store Core Revenues
Fourth quarter 2019 Same Store Core revenue growth of 4.3% year over year was driven primarily by a 4.0% increase in average monthly rent and a 10.8% increase in other property income, net of resident recoveries.  Same Store average occupancy was 96.0%, flat year over year.

FY 2019 Same Store Core revenue growth of 4.5% year over year was driven primarily by a 4.1% increase in average monthly rent and a 50 basis point increase in average occupancy to 96.3%.

Same Store Core Operating Expenses
Fourth quarter 2019 Same Store Core operating expenses increased 5.3% year over year, driven primarily by higher repairs and maintenance expenses and property taxes, as expected.

FY 2019 Same Store Core operating expenses increased 2.5% year over year.  Same Store controllable expenses, net of resident recoveries, decreased 3.3% year over year, driven most significantly by lower personnel and turnover expenses.  Controllable expenses also benefited from a favorable first quarter comparison resulting from higher-than-normal repairs and maintenance work order volume in the first quarter of 2018.  The favorable factors impacting controllable expense growth were partially offset by a negative impact from last year's realignment of utility bill-back timing that resulted in higher than normal resident recoveries in the first quarter of 2018.  Fixed expenses, net of resident recoveries, increased 6.5% year over year, driven primarily by higher property taxes.

Investment Management Activity
In the fourth quarter of 2019, Invitation Homes acquired 627 homes for $197 million , including estimated renovation costs, and sold 1,354 homes for gross proceeds of $372 million , resulting in a total portfolio home count of 79,505 homes as of December 31, 2019.

In FY 2019, the Company acquired 2,153 homes for $653 million , including estimated renovation costs, and sold 3,455 homes for gross proceeds of $900 million .

As previously announced, the Company intends to exit Nashville , its smallest market by home count, and focus on growing accretively in other high-growth markets where the Company has greater scale and density.  In December 2019 , the Company leveraged strong investor demand to close a bulk sale of 708 homes in Nashville , or 89% of its portfolio in that market at the time, for gross proceeds of $210 million .  As of December 31, 2019 , the Company owned 87 homes in Nashville , which will be marketed for sale across multiple disposition channels.

Balance Sheet and Capital Markets Activity
As of December 31, 2019, the Company had $1,092 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, 2019 was $8,518 million, consisting of $6,673 million of secured debt and $1,845 million of unsecured debt.

In Q4 2019, the Company used cash on hand, including proceeds from its bulk sale of homes in Nashville , to repay $199 million of secured debt that carried a weighted average interest rate of LIBOR + 201 basis points.

In Q4 2019, the Company issued 1,286,119 shares of common stock under its at-the-market equity agreement ("ATM Equity Program"), at an average price of $29.67 per share, for gross proceeds of $38 million .  Proceeds were used primarily to acquire homes.  $743 million of capacity remained under the ATM Equity Program as of December 31, 2019 .

Net debt / annualized Adjusted EBITDA re declined to 8.0x at the end of 2019, down from 9.0x at the end of 2018.

Dividend
As previously announced, on January 30, 2020 the Company's Board of Directors declared a quarterly cash dividend of $0.15 per share of common stock, representing a 15.4% increase over the prior quarterly dividend of $0.13 per share.  The dividend will be paid on or before February 28, 2020 to stockholders of record as of the close of business on February 12, 2020 .

Full Year 2020 Guidance Details

FY 2020 Guidance















FY 2020


FY 2019




Guidance


Actual


Core FFO per share diluted


$1.27 - $1.35


$1.25


AFFO per share diluted


$1.04 - $1.12


$1.03








Same Store Core revenue growth


3.75% - 4.25%


4.5%


Same Store Core operating expense growth


3.25% - 4.25%


2.5%


Same Store NOI growth


3.75% - 4.75%


5.6%








 

Bridge from FY 2019 Results to FY 2020 Guidance Midpoint







Core FFO/sh


FY 2019 reported result


$

1.25







Impact from settlement of 2019 Convertible Notes:




Interest expense


0.01



Share count


(0.01)



Net impact of settlement of 2019 Convertible Notes








Impact from Q4 2019 Nashville bulk sale:




NOI


(0.02)



Interest expense


0.01



Net impact of Q4 2019 Nashville bulk sale


(0.01)







Impact from Changes in:




Same Store NOI (1)


0.08



Non-Same Store NOI, excluding Nashville bulk sale impact


0.04



Property management and G&A expense


(0.01)



Financing costs (interest expense and share count), excluding 2019 Convertible Notes and Nashville bulk sale impact


(0.03)



Other


(0.01)



Total change, excluding 2019 Convertible Notes and Nashville bulk sale impact


0.07







FY 2020 guidance midpoint


$

1.31









(1)

Based on the 2020 Same Store pool, consisting of 73,046 homes as of January 2020.



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 Wednesday , February 19, 2020 to discuss results for the fourth quarter and full year 2019.  The domestic dial-in number is 1-888-317-6003, and the international dial-in number is 1-412-317-6061.  The passcode is 9650856.  An audio webcast may be accessed at www.invh.com .  A replay of the call will be available through March 19, 2020 and can be accessed by calling 1-877-344-7529 (domestic) or 1-412-317-0088 (international) and using the replay passcode 10138573, 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.

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

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 Details."  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, and risks related to the Company's indebtedness.  Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. The Company believes these factors include, but are not limited to, those described under Part I. Item 1A. "Risk Factors" of the Annual Report on Form 10-K for the fiscal year ended December 31, 2018 , 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,


December 31,




2019


2018




(unaudited)




Assets:






Investments in single-family residential properties, net


$

16,243,192



$

16,686,060



Cash and cash equivalents


92,258



144,940



Restricted cash


193,987



215,051



Goodwill


258,207



258,207



Other assets, net


605,266



759,170



Total assets


$

17,392,910



$

18,063,428









Liabilities:






Mortgage loans, net


$

6,238,461



$

7,201,654



Secured term loan, net


400,978





Term loan facility, net


1,493,747



1,490,860



Revolving facility






Convertible senior notes, net


334,299



557,301



Accounts payable and accrued expenses


186,110



169,603



Resident security deposits


147,787



148,995



Other liabilities


325,450



125,829



Total liabilities


9,126,832



9,694,242









Equity:






Stockholders' equity






Preferred stock, $0.01 par value per share, 900,000,000 shares authorized, none outstanding as of December 31, 2019 and 2018






Common stock, $0.01 par value per share, 9,000,000,000 shares authorized, 541,642,725 and 520,647,977 outstanding as of December 31, 2019 and 2018, respectively


5,416



5,206



Additional paid-in capital


9,010,194



8,629,462



Accumulated deficit


(524,588)



(392,594)



Accumulated other comprehensive loss


(276,600)



(12,963)



Total stockholders' equity


8,214,422



8,229,111



Non-controlling interests


51,656



140,075



Total equity


8,266,078



8,369,186



Total liabilities and equity


$

17,392,910



$

18,063,428















 

...

Consolidated Statements of Operations

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