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Invitation Homes Inc INVH

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Morningstar’s Analysis

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Another Quarter of Historically High Occupancy and Solid Rate Growth for Invitation Homes

Kevin Brown Equity Analyst

Analyst Note

| Kevin Brown |

The fourth quarter saw continued growth in line with our expectations for Invitation Homes, leading us to reaffirm our $31.50 fair value estimate for the no-moat company. For the fourth straight quarter, same-store occupancy reached a new high of 98.1% in the fourth quarter, a 20-basis-point improvement over the third quarter. Same-store rents were up 3.3% year over year for the quarter, in line with our estimate of 3.5% rental rate growth. Rent collections remained steady at 97% of the historical average. So, despite solid occupancy and rate growth, same-store revenue growth was only 2.0% for the fourth quarter. However, the company managed to reduce its controllable operating expenses significantly, which caused same-store operating expenses to fall 2.4%. As a result, same-store net operating income increased 4.3%, in line with our estimate. While Invitation Homes renegotiated its credit facility to lower terms and prepaid some maturing debt early, the additional one-time expenses led to core funds from operations of $0.32 in the fourth quarter, flat with the same period in 2019.

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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 Dec 31, 2020
Fiscal Year End Dec 31, 2021
Stock Type Hard Assets
Employees 1,149