Invitation Homes(US:INVH)2021-07-29 18:23Part I - Financial Information Financial Statements This section presents Invitation Homes Inc.'s unaudited condensed consolidated financial statements, including Balance Sheets, Statements of Operations, and Cash Flows, with detailed notes Condensed Consolidated Balance Sheets As of June 30, 2021, total assets were $17.48 billion, slightly down from $17.51 billion, with liabilities decreasing to $8.86 billion and equity increasing to $8.62 billion Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Investments in single-family residential properties, net | $16,333,324 | $16,288,693 | | Cash and cash equivalents | $126,168 | $213,422 | | Total assets | $17,484,611 | $17,506,222 | | Liabilities & Equity | | | | Mortgage loans, net | $4,498,289 | $4,820,098 | | Term loan facility, net | $2,474,495 | $2,470,907 | | Total liabilities | $8,864,935 | $8,950,149 | | Total stockholders' equity | $8,580,039 | $8,504,825 | | Total liabilities and equity | $17,484,611 | $17,506,222 | Condensed Consolidated Statements of Operations Q2 2021 total revenues rose to $491.6 million from $449.8 million, with net income increasing to $60.3 million ($0.11 per diluted share) from $42.9 million Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2021 | Q2 2020 | YTD 2021 | YTD 2020 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $491,633 | $449,755 | $966,858 | $899,544 | | Total expenses | $439,970 | $419,114 | $869,398 | $837,541 | | Net income | $60,688 | $43,178 | $118,410 | $93,454 | | Net income attributable to common stockholders | $60,338 | $42,903 | $117,705 | $92,859 | | Net income per common share — diluted | $0.11 | $0.08 | $0.21 | $0.17 | Condensed Consolidated Statements of Cash Flows Net cash from operating activities increased to $470.1 million for YTD 2021, while net cash used in investing activities rose to $282.9 million, and financing activities shifted to a $230.9 million outflow Six-Month Cash Flow Summary (in thousands) | Cash Flow Activity | YTD 2021 | YTD 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $470,101 | $395,935 | | Net cash used in investing activities | ($282,875) | ($89,504) | | Net cash provided by (used in) financing activities | ($230,850) | $202,937 | | Change in cash, cash equivalents, and restricted cash | ($43,624) | $509,368 | Notes to Condensed Consolidated Financial Statements These notes detail accounting policies, financial components, and significant events, covering COVID-19 impacts, joint ventures, debt instruments, derivatives, and share-based compensation - The company is closely monitoring the impact of the COVID-19 pandemic, which has led to resident requests for rent deferrals and has been affected by temporary eviction moratoriums and restrictions on rent increases imposed by various government entities4142 - The company has investments in two unconsolidated joint ventures with Rockpoint Group and FNMA, accounted for using the equity method, with a carrying value of $77.5 million as of June 30, 20213967 - As of June 30, 2021, the company had various derivative instruments, primarily interest rate swaps designated as cash flow hedges, with a total notional amount of $6.575 billion to manage interest rate risk on its variable-rate debt159 Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses the company's business, portfolio, and financial results for Q2 and H1 2021, covering performance drivers, COVID-19 impact, liquidity, debt strategy, and non-GAAP reconciliations Overview and COVID-19 Invitation Homes, a leading single-family rental owner, managed COVID-19 impacts through safety protocols and flexible payments, maintaining 98% revenue collection for Q2 2021 - The company's mission, "Together with you, we make a house a home," reflects its commitment to high-touch service for residents in its portfolio of over 80,000 homes across 16 markets228 - In response to COVID-19, the company implemented safety protocols, leveraged self-show and virtual tour technology, and offered flexible payment solutions to residents facing hardship232234 - Revenue collections as a percentage of monthly billings was 98% for Q2 2021, approximately 99% of the company's historical average234 Our Portfolio As of June 30, 2021, the portfolio comprised 80,612 homes with 97.6% average occupancy and $1,943 average monthly rent, primarily concentrated in the Western US and Florida Portfolio Summary by Region (as of June 30, 2021) | Region | Number of Homes | Average Occupancy (Q2'21) | Average Monthly Rent (Q2'21) | % of Revenue (Q2'21) | | :--- | :--- | :--- | :--- | :--- | | Western United States | 29,724 | 97.8% | $2,128 | 39.7% | | Florida | 24,614 | 97.5% | $1,956 | 31.4% | | Southeast United States | 17,610 | 97.6% | $1,646 | 18.6% | | Texas | 4,952 | 96.1% | $1,768 | 5.6% | | Midwest United States | 3,708 | 98.0% | $2,028 | 4.7% | | Total / Average | 80,612 | 97.6% | $1,943 | 100.0% | Results of Operations Q2 2021 revenues grew 9.3% to $491.6 million and net income increased 40.6% to $60.7 million, driven by higher occupancy and strong rental rate growth Q2 2021 vs Q2 2020 Performance | Metric | Q2 2021 | Q2 2020 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $491.6M | $449.8M | +9.3% | | Net Income | $60.7M | $43.2M | +40.6% | | Total Portfolio Avg. Occupancy | 97.6% | 96.0% | +160 bps | | Same Store Renewal Lease Growth | 5.8% | 3.5% | +230 bps | | Same Store New Lease Growth | 13.8% | 2.7% | +1110 bps | YTD 2021 vs YTD 2020 Performance | Metric | YTD 2021 | YTD 2020 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $966.9M | $899.5M | +7.5% | | Net Income | $118.4M | $93.5M | +26.7% | | Total Portfolio Avg. Occupancy | 97.5% | 95.2% | +230 bps | | Same Store Renewal Lease Growth | 5.1% | 3.8% | +130 bps | | Same Store New Lease Growth | 11.1% | 2.3% | +880 bps | Liquidity and Capital Resources As of June 30, 2021, the company had $126.2 million cash and a $1.0 billion undrawn revolving facility, pursuing a debt strategy to reduce leverage and increase unencumbered assets - As of June 30, 2021, liquidity included $126.2 million in unrestricted cash and a fully undrawn $1.0 billion revolving facility319 - The company's long-term debt strategy targets reducing net debt to 5.5 to 6.0 times trailing twelve months Adjusted EBITDAre and increasing unencumbered assets to over 70% of gross assets327 - In May 2021, the company issued $300 million of senior unsecured notes, using proceeds to prepay higher-cost secured debt319359 - The company has a purchase commitment of $275.9 million for 833 single-family homes, with completion dates from 2022 to 2025321403 Non-GAAP Measures This section defines and reconciles key non-GAAP measures like EBITDAre, NOI, FFO, and AFFO, showing Q2 2021 Same Store NOI growth to $285.9 million and increased FFO/AFFO per share Non-GAAP Performance Metrics (Q2 2021 vs Q2 2020) | Metric (in thousands, except per share) | Q2 2021 | Q2 2020 | | :--- | :--- | :--- | | Adjusted EBITDAre | $288,431 | $256,159 | | NOI (Same Store portfolio) | $285,868 | $263,710 | | FFO per common share — diluted | $0.32 | $0.30 | | Core FFO per common share — diluted | $0.37 | $0.32 | | AFFO per common share — diluted | $0.32 | $0.27 | Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks are interest rate fluctuations, with 95.9% of $6.01 billion variable-rate debt hedged, and operational seasonality impacting costs - The company's main market risks are interest rate fluctuations and operational seasonality427 - As of June 30, 2021, the company had $6.01 billion in variable-rate debt, with 95.9% effectively fixed via interest rate swaps; a 100 bps LIBOR increase would raise annual interest expense by an estimated $2.4 million429 - The company experiences higher resident move-outs and turnover costs during the summer, along with increased HVAC and landscaping expenses in certain markets431 Controls and Procedures Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2021, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2021432 - No material changes were made to the internal control over financial reporting during the second quarter of 2021433 Part II - Other Information Legal Proceedings The company is not subject to any material litigation beyond routine proceedings arising in the ordinary course of business - There is no material litigation currently pending or threatened against the company, other than routine matters435 Risk Factors No material changes have occurred to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2020 - The report refers to the risk factors disclosed in the Annual Report on Form 10-K, indicating no material updates in this filing436 Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities during the reporting period - The company reports no unregistered sales of equity securities for the quarter437 Exhibits This section lists exhibits filed with the Form 10-Q, including the Note Purchase Agreement, CEO/CFO certifications, and XBRL data files - Key exhibits filed include the Note Purchase Agreement for the May 2021 private placement of senior unsecured notes and certifications by the CEO and CFO as required by the Sarbanes-Oxley Act443