Company Reports

Invitation Homes is the largest single-family rental real estate investment trust with a portfolio of over 86,000 homes. The portfolio is geographically diversified across 17 US markets with approximately 35% of its homes in the Western United States, 31% in Florida, and 22% in other Southeastern markets. The cost of renting is lower than homeownership in most of the portfolio's markets, which supports high occupancy and should allow the company to pass along significant rent increases without much pushback. The company's size gives it some economies of scale in terms of controlling costs as it can hire its own maintenance and repair technicians to service its homes, allowing it to maintain higher operating margins than smaller competitors that need to contract out the same services. The company regularly recycles capital by selling noncore assets and using the proceeds on higher-quality acquisitions with better growth prospects.

Invitation Homes reported core funds from operations of $0.51 per share and same-store net operating income growth of 1.5% for the second quarter.

Invitation Homes reported core funds from operations of $0.48 per share and a same-store net operating income decline of 0.7% for the first quarter.

Invitation Homes is the largest single-family rental real estate investment trust with a portfolio of over 86,000 homes. The portfolio is geographically diversified across 17 US markets with approximately 38% of its homes in the Western United States, 32% in Florida, and 19% in other Southeastern markets. The cost of renting is lower than homeownership in most of the portfolio's markets, which supports high occupancy and should allow the company to pass along significant rent increases without much pushback. The company's size gives it some economies of scale in terms of controlling costs as it can hire its own maintenance and repair technicians to service its homes, allowing it to maintain higher operating margins than smaller competitors that need to contract out the same services. The company regularly recycles capital by selling noncore assets and using the proceeds on higher-quality acquisitions with better growth prospects.

Invitation Homes reported core funds from operations of $0.48 per share and same-store net operating income growth of 0.7% for the fourth quarter.

Invitation Homes reported core funds from operations of $0.47 per share and same-store net operating income growth of 1.1% for the third quarter on a year-over-year basis.

Invitation Homes is the largest single-family rental real estate investment trust with a portfolio of over 85,000 homes. The portfolio is geographically diversified across 17 US markets with approximately 39% of its homes in the Western United States, 33% in Florida, and 19% in other Southeastern markets. The cost of renting is lower than homeownership in most of the portfolio's markets, which supports high occupancy and should allow the company to pass along significant rent increases without much pushback. The company's size gives it some economies of scale in terms of controlling costs as it can hire its own maintenance and repair technicians to service its homes, allowing it to maintain higher operating margins than smaller competitors that need to contract out the same services. The company regularly recycles capital by selling noncore assets and using the proceeds on higher-quality acquisitions with better growth prospects.

Invitation Homes reported second-quarter results with core funds from operations at $0.48 per share and same-store net operating income growth of 2.5% from a year ago.

Invitation Homes is the largest single-family rental real estate investment trust with a portfolio of over 85,000 homes. The portfolio is geographically diversified across 17 U.S. markets with approximately 36% of its homes in the Western United States, 31% in Florida, and 22% in other Southeastern markets. The cost of renting is lower than homeownership in most of the portfolio's markets, which supports high occupancy and should allow the company to pass along significant rent increases without much pushback. The company's size gives it some economies of scale in terms of controlling costs as it can hire its own maintenance and repair technicians to service its homes, allowing it to maintain higher operating margins than smaller competitors that need to contract out the same services. The company regularly recycles capital by selling noncore assets and using the proceeds on higher-quality acquisitions with better growth prospects.

No-moat-rated Invitation Homes reported first-quarter results roughly in line with our expectations, leading us to maintain our $41 fair value estimate. Same-store occupancy rose 50 basis points sequentially to 97.2%, slightly higher than our estimate for the quarter, while average monthly rent was up 3.1% year over year. This led to same-store revenue increasing by 2.5% in the first quarter, which was 80 basis points above our estimate. Same-store expenses were flat from the prior year, significantly lower than our estimate of expenses climbing 4.6% year over year. The company reported same-store net operating income growth of 3.7%, significantly better than our 0.3% estimate for the quarter. Invitation Homes posted core funds from operations of $0.48 per share in the first quarter, one cent better than our $0.47 estimate and in line with the core funds from operations posted in the first quarter of 2024.

Invitation Homes is the largest single-family rental real estate investment trust with a portfolio of over 85,000 homes. The portfolio is geographically diversified across 16 U.S. markets with approximately 36% of its homes in the Western United States, 31% in Florida, and 22% in other Southeastern markets. The cost of renting is lower than homeownership in most of the portfolio's markets, which supports high occupancy and should allow the company to pass along significant rent increases without much pushback. The company's size gives it some economies of scale in terms of controlling costs as it can hire its own maintenance and repair technicians to service its homes, allowing it to maintain higher operating margins than smaller competitors that need to contract out the same services. The company regularly recycles capital by selling noncore assets and using the proceeds on higher-quality acquisitions with better growth prospects.

Invitation Homes reported fourth-quarter results that were in line with our expectations, leading us to reaffirm our $41 fair value estimate for the no-moat company. Same-store occupancy fell 30 basis points sequentially to 96.7%, matching our estimate for the quarter, while average monthly rent was up 3.1% year over year. As a result, same-store revenue increased 2.7% in the fourth quarter, below our estimate of 4.0%. However, same-store expenses fell 1.5%, significantly better than our estimate of expenses rising 4.6%. Therefore, the company reported same-store net operating income growth of 4.7%, slightly better than our estimate of 4.3%. Invitation Homes reported core funds from operations of $0.47 per share for the fourth quarter, in line with our estimate and $0.02 better than the $0.45 reported in the fourth quarter of 2023.

Over the past few years, we have observed an inverse relationship between share prices in the REIT sector and interest-rate movements. We believe a major reason is that all commercial real estate valuations are connected to interest rates. Capitalization rates directly indicate the return expectations for a real estate investment and expectations for risk and growth. Historically, we have observed that commercial real trades at cap rates consistently spread above the 10-year US Treasury. If interest rates rise, investors will require a higher return, and thus a higher cap rate, to accept the risk associated with an investment in a real estate asset. Since return expectations have held relatively steady for most real estate sectors over the past few years, higher cap rates translate to falling prices for real estate.

Third-quarter results for no-moat Invitation Homes were relatively in line with our expectations, giving us confidence in our $41 fair value estimate. Same-store occupancy fell 60 basis points sequentially to 97.0% but was only down 10 basis points year over year. Average monthly rent increased 3.7% year over year, leading to same-store revenue growth of 3.6% that was slightly below our estimate of 4.2% growth. However, same-store operating expenses were only up 3.1%, better than our estimate of expenses growth 4.6%, so the company reported same-store net operating income growth of 3.9% that was in line with our 4.0% growth estimate for the third quarter. Invitation Homes reported core funds from operations of $0.47 per share for the third quarter, two cents better than our $0.45 estimate and three cents better than the $0.44 figure the company reported in the third quarter of 2023.

The REIT sector in the US offers many companies that should see relatively stable cashflow growth over the next several years. While the pandemic hurt REIT valuations in 2020, the recovery of fundamentals across most sectors combined with low interest rates led to strong total returns in 2021 and early 2022. However, despite fundamentals continuing to perform well over the past three years with many reaching historical levels of net operating income growth, the REIT sector underperformed the broader equity markets in 2023 and into the first half of 2024. We believe that is due to the sector’s negative correlation with interest rates, as income-oriented investors rotate out of the sector, higher rates lower the value REITs can create with external growth, and property valuations fall in line with higher rates. However, interest rates have fallen since the end of July, leading to a rally for the REIT sector. Still, we still view many of companies in the US REIT sector as being undervalued as the companies should continue to produce solid long-term growth.

Despite a rally over the past two months, we still view the US REIT sector as being undervalued. While the pandemic hurt REIT valuations in 2020, the recovery of fundamentals across most sectors led combined with low interest rates led to strong total returns in 2021 and early 2022. However, despite fundamentals continuing to perform well over the past three years, with many reaching historical levels of net operating income growth, the REIT sector has underperformed the broader equity markets in 2023 and into the first half of 2024. We believe that the cause has been due to the sector's negative correlation with interest rates as income-oriented investors rotate out of the sector, higher rates lower the value REITs can create with external growth, and property valuations fall in line with higher rates. However, interest rates have fallen since the end of July, leading to a rally for the REIT sector. We believe that US REITs will continue to see share price movements that are inverse of interest rate movements.

Invitation Homes is the largest single-family rental real estate investment trust with a portfolio of nearly 85,000 homes. The portfolio is geographically diversified across 16 U.S. markets with approximately 37% of its homes in the Western United States, 31% in Florida, and 22% in other Southeastern markets. The cost of renting is lower than homeownership in most of the portfolio's markets, which supports high occupancy and should allow the company to pass along significant rent increases without much pushback. The company's size gives it some economies of scale in terms of controlling costs as it can hire its own maintenance and repair technicians to service its homes, allowing it to maintain higher operating margins than smaller competitors that need to contract out the same services. The company regularly recycles capital by selling noncore assets and using the proceeds on higher-quality acquisitions with better growth prospects.

Invitation Homes reported second-quarter results that were in line with our estimates, leading us to reaffirm our $41 fair value estimate for the no-moat company. Same-store occupancy fell 30 basis points sequentially to 97.5%, though same-store average monthly rent was up 4.2% year over year. As a result, same-store revenue increased 4.8% in the quarter, slightly better than our 4.4% estimate. However, same-store operating expenses were up 7.1% in the second quarter, leading to same-store net operating income growth of 3.8%, which was relatively in line with our estimate of 3.6% growth. Invitation Homes reported core funds from operations of $0.47 per share in the quarter, which matched our estimate and was 7.3% higher than the $0.44 figure the company reported in the same period in 2023.

The US REIT sector remains significantly undervalued, in our perspective. While the pandemic hurt REIT valuations in 2020, the recovery of fundamentals across most sectors combined with low interest rates led to strong total returns in 2021 and early 2022. However, despite fundamentals continuing to perform well over the past two years, with many REITs reaching historical levels of net operating income growth, the sector has underperformed the broader equity markets over the past two years. We believe that the cause has been the sector’s negative correlation with interest rates as income-oriented investors rotate out of the sector, higher rates lower the value REITs can create with external growth, and property valuations fall in line with higher rates. However, we don’t believe that higher rates significantly change our fair value estimates for the sector. Additionally, interest rates are down from the October 2023 highs, and REIT share prices have generally inversely followed the movements of the US 10-year Treasury.

First-quarter results for Invitation Homes were in line with our expectations, leading us to reaffirm our $41 fair value estimate for the no-moat company. Same-store occupancy improved 50 basis points sequentially to 97.6%, better than our estimate of flat growth. Average monthly rents increased 4.6% year over year, leading to same-store revenue growth of 5.6%, which was slightly better than our estimate of 5.1%. However, same-store operating expenses were up even higher, increasing 7.4% in the first quarter. As a result, same-store net operating income increased 4.7% in the quarter, which was in line with our estimate of 4.6%. Invitation Homes reported core funds from operations of $0.47 per share, which was in line with our estimate and 6.0% higher than the $0.44 reported in the first quarter of 2023.