Core Viewpoint - Wall Street analysts expect Invitation Home (INVH) to report quarterly earnings of $0.46 per share, reflecting a year-over-year increase of 4.6%, with revenues projected at $659.53 million, a 6.8% increase compared to the previous year [1]. Group 1: Earnings and Revenue Estimates - The consensus EPS estimate for the quarter has remained unchanged over the past 30 days, indicating analysts' reassessment of their initial projections [1]. - Analysts project 'Revenues- Management Fee Revenues' to be $16.74 million, representing a significant increase of 391.7% year-over-year [4]. - The average estimate for 'Revenues- Rental revenues' is $643.98 million, suggesting a year-over-year change of 16% [4]. Group 2: Depreciation and Stock Performance - Analysts estimate 'Depreciation and amortization' to be $176.49 million, compared to $170.70 million reported in the same quarter last year [5]. - Over the past month, shares of Invitation Home have decreased by 4.8%, while the Zacks S&P 500 composite has increased by 1.7% [5]. - Currently, INVH holds a Zacks Rank 3 (Hold), indicating its performance may align with the overall market in the near future [5].

Core Insights - Invitation Homes (INVH) is set to report its third-quarter 2024 results on October 30, with analysts and investors keen to evaluate its performance in the current economic environment [1] Financial Performance - In the last reported quarter, INVH achieved a core FFO per share of 47 cents, aligning with the Zacks Consensus Estimate, driven by increased total revenues and same-store blended rent, although rising interest expenses slightly impacted results [2] - Over the past four quarters, INVH's core FFO per share met the Zacks Consensus Estimate twice, exceeded it once, and fell short once, with an average miss of 0.01% [3] U.S. Apartment Market Overview - The U.S. apartment market absorbed 192,649 market-rate units from July to September 2024, while 162,595 new units were delivered, resulting in an annual supply of 557,842 units, the highest since 1974, with demand at 488,773 units [4] - Occupancy rates in market-rate apartments stood at 94.4%, a slight decline of 10 basis points year-over-year, with rents increasing by 0.2% year-over-year in September, and the average effective rent at $1,838 [5] Company Growth Factors - INVH is expected to benefit from its diverse portfolio located in high-growth markets across the Western U.S., Sunbelt locations, and Florida [6] - The company's third-party management business has been a significant growth driver, with a homebuilder-relationship approach to build-to-rent yielding high investment returns with minimal capital investment [6] Lease Rate Trends - For the period of July to August, INVH reported same-store renewal lease rate growth of 4.4%, down from 5.6% in Q2 2024, while new lease rate growth decreased to 1.9% from 3.6% in Q2 2024 [7] - The blended lease rate growth was 3.7%, down from 5.0% in Q2 2024, with an average occupancy of 97.1%, slightly lower than 97.5% in Q2 2024 [7] Projections and Estimates - The Zacks Consensus Estimate for INVH's rental revenues in Q3 is $644 million, reflecting a 16% increase from the previous year, while total revenues are estimated at $659.5 million, indicating a 6.8% rise [8] - The consensus estimate for quarterly FFO per share remains at 46 cents, suggesting a 4.6% year-over-year increase, but the model does not predict a surprise in FFO this season [9][10]

Introduction to the Transaction On September 30, 2024, Norges Bank made a significant addition to its investment portfolio by acquiring 13,255,017 shares of Invitation Homes Inc. (INVH, Financial), a prominent player in the single-family rental sector. This transaction increased Norges Bank's total holdings in the company to 52,861,723 shares, reflecting a substantial commitment to INVH. The shares were purchased at a price of $35.26, marking a notable investment move by the firm. Profile of Norges Bank Nor ...

Core Insights - The focus is on providing insightful rating analysis of leading financial firms to identify investment opportunities and potential risks [1] Group 1 - The preferred investment picks are those that exhibit both growth and quality factors, characterized by strong growth narratives supported by robust financial statements [1] - The analyst has a background of seven years in investment, having passed all CFA Program exams, indicating a level of expertise in financial analysis [1]

A deal with a regulator shone a light on some ugly allegations in the company's conduct with tenants. Invitation Homes (INVH -2.60%) is getting ready to raid its coffers in order to satisfy the terms of a new settlement with a regulator, and it's clear investors aren't all that happy with it. On news of the agreement with the U.S. Federal Trade Commission (FTC) over alleged wrongdoing by the company, Invitation Homes's share price fell to close the day 2.6% lower. Meanwhile, the trading session saw the bask ...

Core Viewpoint - Invitation Homes is experiencing signs of softening in its performance metrics, leading to a decline in share prices despite the company's optimistic long-term outlook for growth in annual funds from operations (AFFO) [1][2][4]. Company Performance - Invitation Homes reported a quarter-to-date renewal lease rate growth of 4.4%, down from 5.6% in the previous quarter, and new lease rate growth of 1.9%, compared to 3.6% in the prior three months [3][4]. - The company emphasized the strength of its third-party management business and strong relationships with homebuilders, positioning itself well for future growth [2][5]. Market Context - The current trends indicate a potential slowdown, which has raised concerns among investors, particularly in light of broader economic conditions affecting consumer health [4]. - Despite recent stock performance, which has seen a 20% decline since the start of 2022, the company maintains that leasing remains more affordable than buying in all 16 of its core markets, suggesting long-term growth opportunities [5][6].

Market Overview - The average home price in the United States has increased to over $360,000, a 77% rise from $203,000 in April 2016 [1] - As of July 31, 2024, the median sale price is $361,500, with a median list price of $405,933 [2] - The current 30-year fixed mortgage rate is approximately 6.5%, up from below 4.0% in 2016 [2][4] Affordability Crisis - The housing affordability index is at its worst since the mid-1990s, even worse than before the Great Financial Crisis [3] - The average monthly payment for a 6.5% mortgage is about 43% of the average salary of a full-time employee in the U.S. [4] - Proposed solutions to the affordability crisis include building 3 million homes and providing down payment assistance of $25,000 for middle-class Americans [4] Invitation Homes Inc. (INVH) - Invitation Homes owns approximately 85,000 homes in 16 core markets, focusing on high-growth areas [6][7] - The company benefits from a housing shortage of 2 to 4 million homes, which supports pricing power [6] - INVH expects to grow its same-store NOI by at least 3.75% this year, with a dividend yield of 3.1% and a payout ratio of 61% [13][14] Sun Communities, Inc. (SUI) - Sun Communities operates manufactured housing communities that are 97% occupied, providing affordable living options [16] - The company has a strong investment-grade balance sheet with no significant maturities until 2026 [18] - SUI offers a dividend yield of 2.8% with a healthy payout ratio of 53% and a five-year CAGR of 5.1% [19] Investment Outlook - Both Invitation Homes and Sun Communities are well-positioned to benefit from the ongoing affordability challenges in the housing market [22] - These companies provide solid growth opportunities and attractive dividends, making them compelling options for investors seeking capital appreciation and income [22]

Financial Data and Key Metrics Changes - Core FFO increased by 6.5% year-to-date, with a 7.3% increase in Q2 to $0.47 per share, while AFFO rose by 4.1% to $0.40 per share [75] - Same-store NOI grew by 3.8% year-over-year, driven by a 4.8% increase in core revenues and a 7.1% rise in core expenses [60][61] - Average occupancy remained high at 97.5%, approximately 140 basis points above the three-year historical average for Q2 prior to 2020 [63] Business Line Data and Key Metrics Changes - Same-store core revenues increased by 4.8%, primarily due to a 4.2% rise in average monthly rent and a 9.6% increase in other income [60] - Renewal rent growth was 5.6%, while new lease rates grew by 3.6%, resulting in blended rent growth of 5% year-over-year [63] Market Data and Key Metrics Changes - The company noted a moderation in markets like Phoenix and Central Florida, which had previously shown strong performance [84] - In South Florida, renewal growth reached 9.5%, while Atlanta saw a 6.3% increase, indicating strong performance in certain markets despite moderation elsewhere [86] Company Strategy and Development Direction - The company is focused on expanding partnerships with homebuilders to address housing supply shortages, with a pipeline of nearly 2,700 new homes planned for lease [50][51] - The strategy includes balancing rate and occupancy to optimize core revenue growth, with a focus on maintaining high occupancy levels [21][64] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the operating environment, noting that while some markets are experiencing moderation, the overall business remains strong [84][87] - The company anticipates a return to normal seasonality in occupancy and leasing rates as the summer leasing season concludes [64] Other Important Information - The company has approximately $1.7 billion in available liquidity and maintains a proactive approach to managing its balance sheet [67] - Property tax expenses are expected to remain elevated in the third quarter, with year-over-year growth projected at 8% to 9.5% [70] Q&A Session Summary Question: Is the company seeing a larger trend in lower turnover? - Management indicated that turnover has been lower due to ongoing lease compliance cleanup, but trends are returning to normal levels [1][2][6] Question: How much do rates need to come down for acquisitions to accelerate? - Management stated that they evaluate acquisition cap rates based on market conditions and cost of capital, but specific thresholds are difficult to predict [8][9] Question: What are the expectations for blended spreads in the second half of the year? - Management indicated that blended rent growth is expected to be in the high 4s to low 5s for the remainder of the year, with a focus on balancing rate and occupancy [31] Question: Can you provide specifics on growth expectations for Florida, Phoenix, and Vegas? - Management noted a moderation in growth expectations for these markets, attributing it to seasonality and increased supply [20][21] Question: Which markets came in below expectations for property taxes? - Management highlighted Washington State and Minnesota as markets where property tax expectations were revised down due to better-than-expected assessments [24] Question: How quickly is the pipeline of new homes expected to be delivered? - Management explained that new homes are delivered gradually, with 691 homes expected in the second half of the year and the remainder over the next few years [14][15] Question: What is the outlook for renewal rate growth in the upcoming months? - Management expects renewal rates to improve in the fall, with current rates reflecting seasonal trends and loss to lease dynamics [104]

4 • "PSF" means per square foot. When comparing homes or cohorts of homes, we believe PSF calculations help management and external stakeholders normalize metrics for differences in property size, enabling more meaningful comparisons based on characteristics other than property size; • "Same Store" or "Same Store portfolio" includes, for a given reporting period, wholly owned homes that have been stabilized and seasoned, excluding homes that have been sold, homes that have been identified for sale to an own ...

The reported revenue compares to the Zacks Consensus Estimate of $654.7 million, representing a surprise of -0.19%. The company has not delivered EPS surprise, with the consensus EPS estimate being $0.47. Here is how Invitation Home performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts: Shares of Invitation Home have returned +2.7% over the past month versus the Zacks S&P 500 composite's +1.8% change. The stock currently has a Zacks Rank # ...