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Invitation Homes Inc INVH

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Increased Demand for Single-Family Homes Drives Record Revenue Growth for Invitation Homes in Q2

Kevin Brown Equity Analyst

Analyst Note

| Kevin Brown |

Invitation Homes reported second-quarter results that were slightly ahead of our expectations, leading us to reaffirm our $34 fair value estimate for the no-moat company. Same-store occupancy held firm at 98.3%, only 10 basis points off the company's all-time high set the prior quarter. Demand has been very strong, allowing the firm to push 13.8% spreads on new leases while also achieving 5.8% spreads on renewal lease, leading to an overall 8.0% lease spread for the company in the second quarter. As a result, the firm reported same-store revenue growth of 5.9%, the highest single quarter in its history. Meanwhile, the excess demand allowed it to cut back on marketing expenses, keeping total expense growth low at just 0.9%, leading to same-store net operating income growth of 8.4% in the second quarter that was slightly ahead of our 6.9% estimate. Strong portfolio growth allowed the company to report core funds from operations of $0.37 in the second quarter, representing 14.4% year-over-year growth and coming in a penny ahead of our estimate.

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Company Profile

Business Description

Invitation Homes owns a portfolio of over 80,000 single-family rental homes. The company focuses on owning homes in the starter and move-up segments of the housing market with an average sale price below $300,000 and generally less than 1,800 square feet. The portfolio is spread across 16 target markets that feature high employment and household formation growth with nearly 70% of the portfolio in the Western U.S. and Florida; 15 of the 16 markets featuring average rents lower than homeownership costs.

1717 Main Street, Suite 2000
Dallas, TX, 75201
T +1 972 421-3600
Sector Real Estate
Industry REIT - Residential
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type Hard Assets
Employees 1,149