Invitation Homes(US:INVH)2022-10-27 21:59Financial Data and Key Metrics Changes - Invitation Homes reported same-store NOI growth of 8.6% and blended lease rate growth of 11.6% with an average occupancy of 97.5% [8][22] - Core FFO increased by 9.5% year-over-year to $0.42 per share, while AFFO rose by 8.2% to $0.34 per share [35] - Bad debt increased to 170 basis points, reflecting volatility influenced by rental assistance programs [23][90] Business Line Data and Key Metrics Changes - Same-store core revenue growth was 8.3%, driven by a 9.6% increase in average monthly rent and a 15.5% increase in other income [22] - New lease rates grew by 15.6% and renewal rates by 10.2%, resulting in blended rent growth of 11.6% [26] - Core operating expenses increased by 7.6% year-over-year, primarily due to inflationary pressures [25] Market Data and Key Metrics Changes - The company noted a significant difference in the cost of homeownership versus leasing, with leasing being over 20% cheaper on average [11] - Average household incomes for new residents climbed to over $134,000, indicating a healthy income-to-rent ratio of 5.3 times [24] Company Strategy and Development Direction - The company aims to grow its scale and technology while being prudent capital allocators, with an updated acquisition target of $1.1 billion for the year [12][13] - Invitation Homes is focusing on energy and sustainability initiatives, having improved its GRESB score by over 13% year-over-year [15] - The company is exploring opportunities in investment management and joint ventures to expand its growth [58] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning within the housing market despite challenges such as rising property taxes and bad debt [16][18] - The management highlighted the ongoing housing supply shortage and the favorable demographics supporting demand for single-family rentals [10][11] - Future guidance reflects expectations for increased property taxes and elevated bad debt, but overall business performance remains strong [39][42] Other Important Information - The company has a solid balance sheet with 99% of its debt fixed or swapped to fixed at a weighted average interest rate of 3.6% [33] - The company plans to appeal higher property tax assessments, particularly in Florida and Georgia, where assessments increased by nearly 30% [41][69] Q&A Session Summary Question: Supply growth or shrinkage in SFR homes available for sale - Management noted a cyclical behavior in the market with a drop in new listings, indicating a stable supply environment [46][50] Question: External growth and acquisition strategy - Management acknowledged a pullback on acquisitions but remains open to opportunities as market conditions evolve [53][56] Question: Real estate taxes and assessments process - Management explained the timing of assessments and millage rates, indicating a lack of clarity until final tax bills are received [61][66] Question: Bad debt resolution timeline - Management indicated that processing times for non-payers have increased significantly, particularly in California [72][75] Question: Property tax impact on future expenses - Management clarified that elevated property tax growth is expected in the fourth quarter due to prior under-accruals [80][125] Question: Loss to lease calculation and home price impact - Management explained that loss to lease is calculated based on market conditions and does not directly correlate with home ownership costs [127][129]