Invitation Homes Still Generates Low but Steady NOI Growth From a Diversified Portfolio
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.
United States