DALLAS, Aug. 10, 2017
/PRNewswire/ -- Invitation Homes Inc. (NYSE: INVH)
("Invitation Homes" or the "Company"), a leading owner and operator
of single-family homes for lease in the
United States, today announced its second quarter 2017
financial and operating results.
Second Quarter 2017 Highlights
- Year-over-year, total revenues increased 5.1% to $242 million, total property operating and
maintenance expenses increased 1.7% to $93
million, net income increased to $6
million, and total NOI increased 7.3% to $149 million.
- Same Store NOI grew 6.3% year-over-year on 4.6% Same Store
revenue growth and 1.9% Same Store operating expense growth.
Excluding the impact of property taxes attributable to first
quarter 2017 that were booked in second quarter 2017 when
California property tax
reassessments related to the IPO became estimable, Same Store NOI
growth in second quarter 2017 would have been 6.9%.
- Same Store Core NOI margin increased to 62.9% in the second
quarter of 2017 from 61.5% in the second quarter of 2016. Excluding
the impact of property taxes attributable to first quarter 2017
that were booked in second quarter 2017 when California property tax reassessments related
to the IPO became estimable, Same Store Core NOI margin in second
quarter 2017 would have been 63.2%.
- Same Store blended net effective rental rate growth was 5.1% on
leases signed in the second quarter of 2017.
- Same Store average occupancy was 95.9%.
- Same Store other property income grew 22.4%
year-over-year.
- Closed on a $1.0 billion,
ten-year, 4.2% fixed rate mortgage loan, with principal and
interest payments guaranteed by Fannie Mae.
- Prepaid $930 million of mortgage
debt with Fannie Mae proceeds, and an additional $100 million with excess cash flow.
Chief Executive Officer John
Bartling comments: "Invitation Homes continued to
achieve strong internal NOI growth in the second quarter of
2017. As expected, new lease rental rate growth accelerated
seasonally from the first quarter to the second quarter. In
addition, we continued to make progress on our strategic
operational initiatives related to lease expiration optimization,
other income opportunities, and cost efficiency."
"Supply/demand fundamentals remain favorable, particularly in
the Western US, and we believe our differentiated locations,
product, service, and professionals position us well to capitalize
on these industry tailwinds. We remain on track to achieve
6.5% to 7.5% Same Store NOI growth for the full year."
Financial Results
Net Income (Loss),
FFO, Core FFO, and AFFO Per Share — Diluted
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Q2
2017
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YTD
2017
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Net income (loss)
(1)
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$
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0.02
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$
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(0.06)
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FFO
(2)
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0.20
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0.23
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Core FFO
(2)
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0.25
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0.50
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AFFO
(2)
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0.21
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0.43
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(1)
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No shares of common
stock were outstanding prior to the close of the Company's initial
public offering. As such, net loss per share for YTD 2017 has
been calculated based on operating results for the period February
1, 2017 through June 30, 2017, and the weighted average number of
shares outstanding during that period, in accordance with
GAAP.
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(2)
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FFO, Core FFO, and
AFFO per share for YTD 2017 have been calculated based on operating
results for the full period from January 1, 2017 through
June 30, 2017, and as if weighted average shares
outstanding from February 1, 2017 through June 30, 2017 were
outstanding for the full period from January 1, 2017 through June
30, 2017.
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Net Income (Loss)
Net income for the three months
ended June 30, 2017 was $5.5
million, an increase of $25.2
million from the prior year's net loss. The increase
in net income (loss) was primarily due to higher revenues, lower
interest expense, and an increase in net gain on sale of property,
partially offset by higher total operating expenses. The
increase in total operating expenses included a $4.1 million increase in non-recurring
G&A and property management expense items including share-based
compensation, IPO costs, and severance expense. Exclusive of
these non-recurring G&A and property management items, net
income (loss) improved by $29.3
million from the prior year.
Net loss for the six months ended June 30, 2017 was
$36.9 million, an increase of
$7.2 million from the prior
year. The increase in net loss was primarily due to a
$51.0 million increase in
non-recurring or non-cash general and administrative and property
management items including share-based compensation, IPO costs, and
severance expense. Exclusive of non-recurring G&A and
property management items, net income (loss) improved by
$43.7 million from the prior year,
primarily due to higher revenues, lower interest expense, and an
increase in net gain on sale. For details, see the Condensed
Consolidated Statements of Operations in this press release.
Core FFO
Year-over-year, Core FFO for the three months
ended June 30, 2017 increased 17.9% to $77.2 million, primarily due to an increase in
NOI, driven by higher revenues. Revenue growth was driven by
an increase in average rental rate per home that more than offset a
slight decline in home count. Lower interest expense, net of
non-cash interest, also contributed to the increase in Core
FFO. For a reconciliation of net income (loss) to Core FFO,
see the Glossary and Reconciliations section of this press
release.
Core FFO for the six months ended June 30, 2017 increased
19.7% to $155.4 million, primarily
due to an increase in NOI, driven by higher revenues. Revenue
growth was driven by an increase in average rental rate per home
and higher occupancy that more than offset a slight decline in home
count. Lower interest expense, net of non-cash interest, also
contributed to the increase in Core FFO. For a reconciliation
of net income (loss) to Core FFO, see Schedule 1 of the
Supplemental Financial Information.
AFFO
Year-over-year, AFFO for the three months ended
June 30, 2017 increased 21.5% to $65.6
million, primarily driven by the increase in Core FFO
described above.
AFFO for the six months ended June 30, 2017 increased 25.9%
to $134.5 million, primarily driven
by the increase in Core FFO described above, as well as a 9.0%
decline in recurring capital expenditures. For a
reconciliation of net income (loss) to AFFO per share, see Schedule
1 of the Supplemental Financial Information.
Operating Results
Same Store
Operating Results Snapshot
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Number of homes in
Same Store portfolio:
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42,904
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Q2
2017
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Q2
2016
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YTD
2017
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YTD
2016
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Revenue growth
(year-over-year) (1)
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4.6%
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5.1%
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4.7%
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5.1%
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Operating Expense
growth (year-over-year) (1)
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1.9%
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0.4%
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2.4%
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1.5%
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NOI growth
(year-over-year) (1)
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6.3%
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8.4%
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6.1%
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7.4%
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Core NOI
margin
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62.9%
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61.5%
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63.6%
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62.4%
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Average occupancy
(2)
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95.9%
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96.4%
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95.8%
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96.4%
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Turnover rate
(annualized)
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38.7%
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38.8%
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35.2%
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34.9%
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Net effective rental
rate growth (lease-over-lease):
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New leases
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4.9%
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7.2%
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4.2%
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6.1%
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Renewals
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5.1%
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5.4%
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5.2%
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5.3%
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Blended
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5.1%
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6.2%
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4.8%
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5.6%
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(1)
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Same Store revenue,
operating expense, and NOI growth for Q2 2016 and YTD 2016 are for
the prior year's same store pool of 36,469 homes.
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(2)
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For the total
portfolio, occupancy decreased to 95.0% in Q2 2017 from 95.1% in Q2
2016, and increased to 95.0% in YTD 2017 from 94.8% in YTD
2016.
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Same Store NOI
For the Same Store portfolio of 42,904
homes, second quarter 2017 Same Store NOI increased 6.3%
year-over-year on Same Store revenue growth of 4.6% and Same Store
expense growth of 1.9%. As a result, Core NOI margin
increased to 62.9% in the second quarter of 2017 from 61.5% in the
second quarter of 2016. Excluding the impact of property
taxes attributable to first quarter 2017 that were booked in second
quarter 2017 when California
property tax reassessments related to the IPO became estimable,
Same Store NOI growth in second quarter 2017 would have been 6.9%,
and Same Store Core NOI margin would have been 63.2%.
YTD 2017 Same Store NOI increased 6.1% year-over-year on Same
Store revenue growth of 4.7% and Same Store expense growth of
2.4%. As a result, Core NOI margin increased to 63.6% in YTD
2017 from 62.4% in YTD 2016.
Same Store Revenues
Second quarter 2017 Same Store
revenue growth of 4.6% was driven by a 4.3% increase in average
monthly rent and a 22.4% increase in other property income,
partially offset by a 0.5% decline in average occupancy to
95.9%.
YTD 2017 Same Store revenue growth of 4.7% was driven by a 4.4%
increase in average monthly rent and a 22.3% increase in other
property income, partially offset by a 0.6% decline in average
occupancy to 95.8%.
Same Store Expenses
Second quarter 2017 Same Store
expenses increased 1.9% year-over-year, driven primarily by 11.3%
higher property taxes. California property tax reassessments related
to the IPO became estimable in second quarter 2017, and the
incremental taxes accrued in the first six months of 2017 for
expected reassessments were booked entirely in second quarter
2017. Excluding the impact of property taxes attributable to
first quarter 2017 that were booked in second quarter 2017, Same
Store property taxes in second quarter 2017 would have increased by
9.1%, and Same Store expenses would have increased by 1.0%.
Controllable expenses were 3.9% lower year-over-year, driven
primarily by an 18.8% decline in personnel expense. Insurance
expense was also lower by 23.8% year-over-year.
YTD 2017 Same Store expenses increased 2.4% year-over-year,
driven primarily by 9.2% higher property taxes. Controllable
expenses were 1.9% lower year-over-year, driven primarily by a
17.4% decline in personnel costs. Insurance expense was also
lower by 17.8% year-over-year.
Investment Management Activity
In the second quarter
of 2017, the Company acquired 229 homes for $64.1 million, including estimated renovation
cost, and sold 422 homes for gross proceeds of $58.7 million, resulting in total portfolio home
count at June 30, 2017 of 47,725 homes. Dispositions in
the second quarter of 2017 resulted in a gain on sale, net of tax,
of approximately $10.2 million.
Year-to-date, the Company acquired 350 homes for $95.3 million, including estimated renovation
cost, and sold 923 homes for gross proceeds of $136.4 million. Dispositions year-to-date
resulted in a gain on sale, net of tax, of approximately
$24.5 million.
Balance Sheet and Capital Markets Activity
At
June 30, 2017, the Company had $1,159
million in availability through a combination of
unrestricted cash and undrawn capacity on its credit facility.
The Company's total indebtedness at June 30, 2017 was
$5,681 million, consisting of
$4,181 million of secured debt and
$1,500 million of unsecured
debt. Weighted average years to maturity at quarter end was
4.5 years, with no debt scheduled to mature before September
2019. 80% of debt at quarter end was fixed rate or swapped to
fixed rate, and the weighted average interest rate on total debt
during the quarter was 3.7%.
During the quarter, as previously announced, the Company closed
a ten-year fixed rate securitization loan with a total principal
amount of $1,000 million.
The securitization loan is comprised of two components. Class
A certificates representing an indirect interest in the Class A
component of the loan, which totaled $944.5
million and represented the entirety of the gross proceeds
to the Company, were offered to investors, and feature principal
and interest payments that benefit from a guaranty by Fannie
Mae. Class B certificates representing an interest in the
Class B component of the loan, which totaled $55.5 million, were retained by the Company to
comply with the United States risk
retention requirements. The total cost of funds for the loan
is fixed at 4.23%. Structural features of the transaction
include the right to substitute properties (subject to certain loan
to value, debt service coverage, and geographic concentration tests
being met), as well as the right to release properties from the
loan by prepaying the loan in an amount equal to 105% to 120% of
the allocated loan amount associated with any properties released
(subject to certain loan to value, debt service coverage, and
geographic concentration tests being met, as well as the payment of
any yield maintenance amounts required). Additionally, twice
during the first five years of the loan, the Company will have the
ability to exercise special release rights to release properties
from the collateral pool (without any prepayment of the underlying
loan) to reset the size of the collateral pool based on asset
appreciation and cash flow growth. Following any such special
release, the allocated loan amounts related to the remaining homes
in the collateral pool will be resized based on loan-level loan to
value and debt service coverage tests, and the remaining collateral
pool must continue to meet certain geographic concentration
tests. Net proceeds of approximately $930 million were used to repay the remaining
outstanding balance of the IH1 2014-1 securitization and to
voluntarily prepay $510 million of
the IH1 2014-3 securitization.
In addition, as previously announced, the Company repaid an
additional $100 million of the IH1
2014-3 securitization with cash on hand in June 2017.
Full Year 2017 Guidance
2017 Guidance
(1)
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FY
2017
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Guidance
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Core FFO per share –
diluted (2)
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$0.96 -
$1.04
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AFFO per share –
diluted (2)
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$0.80 -
$0.88
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Same Store revenue
growth
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4.75% -
5.25%
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Same Store operating
expense growth
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1.50% -
2.00%
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Same Store NOI
growth
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6.50% -
7.50%
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Same Store Core NOI
margin
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63.0% -
64.0%
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(1)
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Guidance excludes any
potential impact from investment activity.
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(2)
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Core FFO and AFFO
guidance is for operating results for the full year from January 1,
2017 through December 31, 2017, and assumes that estimated weighted
average shares outstanding from February 1, 2017 through December
31, 2017 were outstanding for the full year 2017.
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Note: The
Company does not provide guidance for the most comparable GAAP
financial measures of net income (loss), total revenues, and
property operating and maintenance, or a reconciliation of the
forward-looking non-GAAP financial measures of Core FFO per share,
AFFO per share, Same Store revenue growth, Same Store operating
expense growth, Same Store NOI growth, and Same Store Core NOI
margin to the comparable GAAP financial measures because it is
unable to reasonably predict certain items contained in the GAAP
measures, including non-recurring and infrequent items that are not
indicative of the Company's ongoing operations. Such items
include, but are not limited to, impairment on depreciated real
estate assets, net (gain)/loss on sale of previously depreciated
real estate assets, share-based compensation, casualty loss,
non-Same Store revenues, and non-Same Store operating
expenses. These items are uncertain, depend on various
factors, and could have a material impact on our GAAP results for
the guidance period.
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Supplemental Information
The full text of the Earnings
Release and Supplemental Information are available on Invitation
Homes' Investor Relations website at ir.invitationhomes.com.
Glossary & Reconciliations of Non-GAAP Financial
Operating Measures
Financial and operating measures found in
the Earnings Release and the Supplemental Information include
certain measures used by Invitation Homes management that are
measures not defined under accounting principles generally accepted
in the United States
("GAAP"). These measures are defined in the Glossary in the
Supplemental Information and, as applicable, reconciled to the most
comparable GAAP measures.
About Invitation Homes
Invitation Homes is a leading
owner and operator of single-family homes for lease, offering
residents high-quality homes in desirable neighborhoods across
America. With nearly 50,000 homes for lease in 13 markets across
the country, Invitation Homes is meeting changing lifestyle demands
by providing residents access to updated homes with features they
value, such as close proximity to jobs and access to good
schools. The company's mission, "Together with you, we make a
house a home," reflects its commitment to high-touch service that
continuously enhances residents' living experiences and provides
homes where individuals and families can thrive.
Investor Relations Contact
Greg Van Winkle
Phone: 844.456.INVH (4684)
Email: IR@InvitationHomes.com
Media Relations Contact
Claire
Parker
Phone: 202.257.2329
Email: Media@InvitationHomes.com
Forward-Looking Statements
This press release contains
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended (the "Securities Act") and
Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), which include, but are not limited to, statements
related to the Company's expectations regarding the performance of
the Company's business, its financial results, its liquidity and
capital resources, and other non-historical statements. In
some cases, you can identify these forward-looking statements by
the use of words such as "outlook," "believes," "expects,"
"potential," "continues," "may," "will," "should," "could,"
"seeks," "projects," "predicts," "intends," "plans," "estimates,"
"anticipates" or the negative version of these words or other
comparable words. Such forward-looking statements are subject to
various risks and uncertainties, including, among others, risks
inherent to the single-family rental industry sector and the
Company's business model, macroeconomic factors beyond the
Company's control, competition in identifying and acquiring
the Company's properties, competition in the leasing market for
quality residents, increasing property taxes, homeowners'
association fees and insurance costs, the Company's dependence on
third parties for key services, risks related to evaluation of
properties, poor resident selection and defaults and non-renewals
by the Company's residents, performance of the Company's
information technology systems, and risks related to the Company's
indebtedness. Accordingly, there are or will be important factors
that could cause actual outcomes or results to differ materially
from those indicated in these statements. Additional factors
that could cause the Company's results to differ materially from
those described in the forward-looking statements can be found
under the section entitled "Part I-Item 1A. Risk Factors," of the
Annual Report on Form 10-K for the fiscal year ended December 31, 2016, filed with the Securities and
Exchange Commission (the "SEC"), as such factors may be updated
from time to time in the Company's periodic filings with the SEC,
which are accessible on the SEC's website at http://www.sec.gov.
These factors should not be construed as exhaustive and should be
read in conjunction with the other cautionary statements that are
included in this release and in the Company's filings with the SEC.
The forward-looking statements speak only as of the date of this
press release, and we expressly disclaim any obligation or
undertaking to publicly update or review any forward-looking
statement, whether as a result of new information, future
developments or otherwise, except to the extent otherwise required
by law.
Condensed
Consolidated Balance Sheets
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($ in thousands,
except per share amounts)
|
|
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|
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|
|
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June
30,
|
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December
31,
|
|
|
|
2017
|
|
2016
|
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(unaudited)
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Assets:
|
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Investments in
single-family residential properties:
|
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Land
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$
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2,716,934
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$
|
2,703,388
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Building and
improvements
|
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7,116,587
|
|
|
7,091,457
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|
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9,833,521
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|
|
9,794,845
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Less: accumulated
depreciation
|
|
(917,961)
|
|
|
(792,330)
|
|
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Investments in
single-family residential properties, net
|
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8,915,560
|
|
|
9,002,515
|
|
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Cash and cash
equivalents
|
|
158,934
|
|
|
198,119
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|
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Restricted
cash
|
|
138,264
|
|
|
222,092
|
|
|
Other assets,
net
|
|
306,568
|
|
|
309,625
|
|
|
Total
assets
|
|
$
|
9,519,326
|
|
|
$
|
9,732,351
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
Mortgage loans,
net
|
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$
|
4,158,666
|
|
|
$
|
5,254,738
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Term loan facility,
net
|
|
1,486,529
|
|
|
—
|
|
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Credit facilities,
net
|
|
—
|
|
|
2,315,541
|
|
|
Accounts payable and
accrued expenses
|
|
110,919
|
|
|
88,052
|
|
|
Resident security
deposits
|
|
88,781
|
|
|
86,513
|
|
|
Other
liabilities
|
|
30,460
|
|
|
30,084
|
|
|
Total
liabilities
|
|
5,875,355
|
|
|
7,774,928
|
|
|
|
|
|
|
|
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Equity:
|
|
|
|
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Shareholders'
equity
|
|
|
|
|
|
Preferred stock, $0.01
par value per share, 900,000,000 shares authorized, none
outstanding at June 30, 2017
|
|
—
|
|
|
—
|
|
|
Common stock, $0.01
par value per share, 9,000,000,000 shares authorized, 310,376,634
outstanding at June 30, 2017
|
|
3,104
|
|
|
—
|
|
|
Additional
paid-in-capital
|
|
3,675,094
|
|
|
—
|
|
|
Accumulated
deficit
|
|
(38,799)
|
|
|
—
|
|
|
Accumulated other
comprehensive income
|
|
4,572
|
|
|
—
|
|
|
Total shareholders'
equity
|
|
3,643,971
|
|
|
—
|
|
|
Combined
equity
|
|
—
|
|
|
1,957,423
|
|
|
Total
equity
|
|
3,643,971
|
|
|
1,957,423
|
|
|
Total liabilities
and equity
|
|
$
|
9,519,326
|
|
|
$
|
9,732,351
|
|
|
|
|
|
|
|
|
Condensed
Consolidated Statements of Operations
|
($ in thousands,
except per share amounts) (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2
2017
|
|
Q2
2016
|
|
YTD
2017
|
|
YTD
2016
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Rental
revenues
|
|
$
|
228,504
|
|
|
$
|
219,354
|
|
|
$
|
454,600
|
|
|
$
|
433,677
|
|
|
Other property
income
|
|
13,712
|
|
|
11,142
|
|
|
26,366
|
|
|
21,321
|
|
|
Total
revenues
|
|
242,216
|
|
|
230,496
|
|
|
480,966
|
|
|
454,998
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
Property operating
and maintenance
|
|
92,840
|
|
|
91,281
|
|
|
181,008
|
|
|
176,248
|
|
|
Property management
expense
|
|
9,135
|
|
|
7,530
|
|
|
20,584
|
|
|
14,923
|
|
|
General and
administrative
|
|
18,426
|
|
|
15,408
|
|
|
76,692
|
|
|
30,768
|
|
|
Depreciation and
amortization
|
|
67,515
|
|
|
66,079
|
|
|
135,092
|
|
|
131,781
|
|
|
Impairment and
other
|
|
706
|
|
|
546
|
|
|
1,910
|
|
|
363
|
|
|
Total operating
expenses
|
|
188,622
|
|
|
180,844
|
|
|
415,286
|
|
|
354,083
|
|
|
Operating
income
|
|
53,594
|
|
|
49,652
|
|
|
65,680
|
|
|
100,915
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expenses):
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
(57,358)
|
|
|
(70,523)
|
|
|
(125,930)
|
|
|
(140,800)
|
|
|
Other, net
|
|
(869)
|
|
|
185
|
|
|
(1,095)
|
|
|
32
|
|
|
Total other income
(expenses)
|
|
(58,227)
|
|
|
(70,338)
|
|
|
(127,025)
|
|
|
(140,768)
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from
continuing operations
|
|
(4,633)
|
|
|
(20,686)
|
|
|
(61,345)
|
|
|
(39,853)
|
|
|
Gain on sale of
property, net of tax
|
|
10,162
|
|
|
1,020
|
|
|
24,483
|
|
|
10,212
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
5,529
|
|
|
$
|
(19,666)
|
|
|
$
|
(36,862)
|
|
|
$
|
(29,641)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February 1,
2017
|
|
|
|
|
|
|
|
|
|
through
|
|
|
|
|
|
Q2
2017
|
|
|
|
June 30,
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
available to common shareholders — basic and diluted
|
|
$
|
5,420
|
|
|
|
|
$
|
(20,092)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding — basic
|
|
311,771,221
|
|
|
|
|
311,723,463
|
|
|
|
|
Weighted average
common shares outstanding — diluted
|
|
312,271,578
|
|
|
|
|
311,723,463
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
per common share — basic
|
|
$
|
0.02
|
|
|
|
|
$
|
(0.06)
|
|
|
|
|
Net income (loss)
per common share — diluted
|
|
$
|
0.02
|
|
|
|
|
$
|
(0.06)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared
per common share
|
|
$
|
0.06
|
|
|
|
|
$
|
0.06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Glossary and Reconciliations
Glossary:
Average Estimated Invested Basis
Average estimated
cost basis on acquisition represents the sum of purchase price, any
closing adjustments, and estimated upfront renovation expense for
an acquired home or population of homes.
Average Monthly Rent
Average monthly rent represents
the average of the contracted monthly rent for occupied properties
in an identified population of homes for the relevant period and
reflects rent concessions amortized over the life of the related
lease.
Average Occupancy
Average occupancy for an identified
population of homes represents (i) the number of days that the
homes available for lease in such population were occupied, divided
by (ii) the total number of available days in the measurement
period for the homes in that population.
Core NOI Margin
Core NOI margin for an identified
population of homes is calculated by dividing NOI by total
revenues, net of resident recoveries attributable to such
population.
Funds from Operations (FFO), Core Funds from Operations (Core
FFO), and Adjusted Funds from Operations (AFFO)
FFO, Core
FFO, and Adjusted FFO are supplemental, non-GAAP measures often
utilized to evaluate the performance of real estate companies. FFO
is defined by the National Association of Real Estate Investment
Trusts ("NAREIT") as net income or loss (computed in accordance
with GAAP) excluding net gains or losses from sales of previously
depreciated real estate assets, plus depreciation, amortization and
impairment of real estate assets, and adjustments for
unconsolidated partnerships and joint ventures.
We believe that FFO is a meaningful supplemental measure of the
operating performance of our business because historical cost
accounting for real estate assets in accordance with GAAP assumes
that the value of real estate assets diminishes predictably over
time, as reflected through depreciation and amortization. Because
real estate values have historically risen or fallen with market
conditions, management considers FFO an appropriate supplemental
performance measure as it excludes historical cost depreciation and
amortization, impairment on depreciated real estate investments, as
well as gains or losses related to sales of previously depreciated
homes, from GAAP net income or loss.
The GAAP measure most directly comparable to FFO is net income
or loss. FFO is not used as a measure of our liquidity and should
not be considered an alternative to net income or loss or any other
measure of financial performance presented in accordance with GAAP.
Our FFO may not be comparable to the FFO of other companies due to
the fact that not all companies use the same definition of FFO.
Accordingly, there can be no assurance that our basis for computing
this non-GAAP measures is comparable with that of other
companies.
We believe that Core FFO and Adjusted FFO are also meaningful
supplemental measures of our operating performance for the same
reasons as FFO and are further helpful to investors as they
provides a more consistent measurement of our performance across
reporting periods by removing the impact of certain items that are
not comparable from period to period. We define Core FFO as FFO
adjusted for noncash interest expense related to amortization of
deferred financing costs and discounts related to our financing
arrangements, noncash interest expense for derivatives, share-based
compensation expense, offering related expenses, severance
expenses, casualty losses, net, and acquisition costs, as
applicable. We define Adjusted FFO as Core FFO less recurring
capital expenditures that are necessary to help preserve the value
of and maintain functionality of our homes.
The GAAP measure most directly comparable to Core FFO and
Adjusted FFO is net income or loss. Core FFO and Adjusted FFO are
not used as measures of our liquidity and should not be considered
alternatives to net income or loss or any other measure of
financial performance presented in accordance with GAAP. Our Core
FFO and Adjusted FFO may not be comparable to the Core FFO and
Adjusted FFO of other companies due to the fact that not all
companies use the same definition of Core FFO and Adjusted FFO.
Accordingly, there can be no assurance that our basis for computing
this non-GAAP measures is comparable with that of other
companies.
Please see "Reconciliation of Non-GAAP measures" below for a
reconciliation of GAAP net income (loss) to FFO, Core FFO, and
Adjusted FFO.
Net Effective Rental Rate Growth
Net effective rental
rate growth for any home represents the difference between the
monthly rent from an expiring lease and the monthly rent from the
next lease, in each case, net of any amortized concessions. Leases
are either renewal leases, where our current resident chooses to
stay for a subsequent lease term, or a new lease, where our
previous resident moves out and a new resident signs a lease to
occupy the same home. Blended net effective rental rate
growth represents the blended average of net effective rental rate
growth for both new and renewal leases.
Net Operating Income (NOI)
NOI is a non-GAAP measure
often used to evaluate the performance of real estate companies. We
define NOI for an identified population of homes as rental revenues
and other property income less property operating and maintenance
expense (which consists primarily of property taxes, insurance, HOA
fees (when applicable), market-level personnel expenses, repairs
and maintenance, leasing costs and marketing). NOI excludes:
interest expense; depreciation and amortization; general and
administrative expense; property management expense; impairment and
other; acquisition costs; (gain) loss on sale of property, net of
tax; and interest income and other miscellaneous income and
expenses.
The GAAP measure most directly comparable to NOI is net income
or loss. NOI is not used as a measure of liquidity and should not
be considered as an alternative to net income or loss or any other
measure of financial performance presented in accordance with GAAP.
Our NOI may not be comparable to the NOI of other companies due to
the fact that not all companies use the same definition of NOI.
Accordingly, there can be no assurance that our basis for computing
this non-GAAP measure is comparable with that of other
companies.
We believe that Same Store NOI is also a meaningful supplemental
measure of our operating performance for the same reasons as NOI
and is further helpful to investors as it provides a more
consistent measurement of our performance across reporting periods
by reflecting NOI for homes in our Same Store portfolio.
See "Reconciliation of Non-GAAP Measures" below for a
reconciliation of GAAP net income (loss) to NOI for our total
portfolio and NOI for our Same Store portfolio.
Same Store / Same Store Portfolio
Same Store or Same
Store portfolio includes, for a given reporting period, homes that
have been stabilized (defined as homes that have (i) completed an
upfront renovation and (ii) entered into at least one
post-renovation Invitation Homes lease) for at least 90 days prior
to the first day of the prior-year measurement period and excludes
homes that have been sold and homes that have been designated for
sale but have not yet entered into a written sale agreement during
such reporting period. Same Store portfolios are established as of
January 1st of each calendar year.
Therefore, any home included in the Same Store portfolio will have
satisfied the conditions described in clauses (i) and (ii) above
prior to October 3rd of the year
prior to the first year of the comparison period. We believe
presenting information about the portion of our portfolio that has
been fully operational for the entirety of a given reporting period
and its prior year comparison period provides investors with
meaningful information about the performance of our comparable
homes across periods and about trends in our organic business.
Total Homes / Total Portfolio
Total homes or total
portfolio refers to the total number of homes we own, whether or
not stabilized, and excludes any properties previously acquired in
purchases that have been subsequently rescinded or vacated.
Turnover Rate
Turnover rate represents the number of
instances that homes in an identified population become unoccupied
in a given period, divided by the number of homes in such
population. To the extent the measurement period shown is less than
12 months, the turnover rate will be reflected on an annualized
basis.
Reconciliation of Non-GAAP Measures:
Reconciliation of
Net Income (Loss) to FFO, Core FFO, and AFFO
|
($ in thousands,
except per share amounts) (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
FFO
Reconciliation
|
|
Q2
2017
|
|
Q2
2016
|
|
YTD
2017
|
|
YTD
2016
|
|
Net income (loss)
available to common shareholders
|
|
$
|
5,420
|
|
|
$
|
(19,666)
|
|
|
$
|
(36,971)
|
|
|
$
|
(29,641)
|
|
|
Net income (loss)
available to participating securities
|
|
109
|
|
|
—
|
|
|
109
|
|
|
—
|
|
|
Depreciation and
amortization on real estate assets
|
|
66,699
|
|
|
64,775
|
|
|
133,352
|
|
|
129,184
|
|
|
Impairment on
depreciated real estate investments
|
|
95
|
|
|
519
|
|
|
1,132
|
|
|
519
|
|
|
Net gain on sale of
previously depreciated investments in real estate
|
|
(10,162)
|
|
|
(1,020)
|
|
|
(24,483)
|
|
|
(10,212)
|
|
|
FFO
|
|
$
|
62,161
|
|
|
$
|
44,608
|
|
|
$
|
73,139
|
|
|
$
|
89,850
|
|
|
|
|
|
|
|
|
|
|
|
|
Core FFO
Reconciliation
|
|
Q2
2017
|
|
Q2
2016
|
|
YTD
2017
|
|
YTD
2016
|
|
FFO
|
|
$
|
62,161
|
|
|
$
|
44,608
|
|
|
$
|
73,139
|
|
|
$
|
89,850
|
|
|
Noncash interest
expense
|
|
5,137
|
|
|
15,622
|
|
|
20,271
|
|
|
29,816
|
|
|
Share-based
compensation expense
|
|
8,216
|
|
|
4,106
|
|
|
52,460
|
|
|
8,312
|
|
|
Offering related
expenses
|
|
656
|
|
|
—
|
|
|
8,287
|
|
|
—
|
|
|
Severance
expense
|
|
392
|
|
|
1,102
|
|
|
437
|
|
|
1,908
|
|
|
Casualty losses,
net
|
|
611
|
|
|
27
|
|
|
778
|
|
|
(156)
|
|
|
Acquisition
costs
|
|
—
|
|
|
7
|
|
|
—
|
|
|
42
|
|
|
Core
FFO
|
|
$
|
77,173
|
|
|
$
|
65,472
|
|
|
$
|
155,372
|
|
|
$
|
129,772
|
|
|
|
|
|
|
|
|
|
|
|
|
AFFO
Reconciliation
|
|
Q2
2017
|
|
Q2
2016
|
|
YTD
2017
|
|
YTD
2016
|
|
Core FFO
|
|
$
|
77,173
|
|
|
$
|
65,472
|
|
|
$
|
155,372
|
|
|
$
|
129,772
|
|
|
Recurring capital
expenditures
|
|
(11,605)
|
|
|
(11,495)
|
|
|
(20,834)
|
|
|
(22,907)
|
|
|
AFFO
|
|
$
|
65,568
|
|
|
$
|
53,977
|
|
|
$
|
134,538
|
|
|
$
|
106,865
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding — diluted (1)
|
|
312,271,578
|
|
|
|
|
311,723,463
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO per share —
diluted (1)
|
|
$
|
0.20
|
|
|
|
|
$
|
0.23
|
|
|
|
|
Core FFO per share
— diluted (1)
|
|
$
|
0.25
|
|
|
|
|
$
|
0.50
|
|
|
|
|
AFFO per share —
diluted (1)
|
|
$
|
0.21
|
|
|
|
|
$
|
0.43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
No shares of common
stock were outstanding prior to the close of the Company's initial
public offering. For YTD 2017, FFO, Core FFO, and AFFO per
share have been calculated based on operating results for the full
period from January 1, 2017 through June 30, 2017, and as if
weighted average shares outstanding from February 1, 2017 through
June 30, 2017 were outstanding for the full period from January 1,
2017 through June 30, 2017.
|
Reconciliation of
Total Revenues to Same Store Total Revenues and Same Store Core
Revenues
|
(in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2
2017
|
|
Q2
2016
|
|
|
|
YTD
2017
|
|
YTD
2016
|
|
|
|
Total revenues (total
portfolio)
|
|
$
|
242,216
|
|
|
$
|
230,496
|
|
|
|
|
$
|
480,966
|
|
|
$
|
454,998
|
|
|
|
|
Non-Same Store total
revenues
|
|
(22,578)
|
|
|
(20,482)
|
|
|
|
|
(45,456)
|
|
|
(38,886)
|
|
|
|
|
Total revenues
(Same Store portfolio)
|
|
219,638
|
|
|
210,014
|
|
|
|
|
435,510
|
|
|
416,112
|
|
|
|
|
Resident recoveries
(Same Store portfolio)
|
|
(3,873)
|
|
|
(2,446)
|
|
|
|
|
(7,336)
|
|
|
(4,877)
|
|
|
|
|
Core revenues
(Same Store portfolio)
|
|
$
|
215,765
|
|
|
$
|
207,568
|
|
|
|
|
$
|
428,174
|
|
|
$
|
411,235
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Property Operating and Maintenance to Same Store Operating Expenses
and Same Store Core Operating Expenses
|
(in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2
2017
|
|
Q2
2016
|
|
|
|
YTD
2017
|
|
YTD
2016
|
|
|
|
Property operating
and maintenance expenses (total portfolio)
|
|
$
|
92,840
|
|
|
$
|
91,281
|
|
|
|
|
$
|
181,008
|
|
|
$
|
176,248
|
|
|
|
|
Non-Same Store
operating expenses
|
|
(8,855)
|
|
|
(8,841)
|
|
|
|
|
(17,884)
|
|
|
(16,937)
|
|
|
|
|
Operating expenses
(Same Store portfolio)
|
|
83,985
|
|
|
82,440
|
|
|
|
|
163,124
|
|
|
159,311
|
|
|
|
|
Resident recoveries
(Same Store portfolio)
|
|
(3,873)
|
|
|
(2,446)
|
|
|
|
|
(7,336)
|
|
|
(4,877)
|
|
|
|
|
Core operating
expenses (Same Store portfolio)
|
|
$
|
80,112
|
|
|
$
|
79,994
|
|
|
|
|
$
|
155,788
|
|
|
$
|
154,434
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Net Income (Loss) to NOI, Same Store NOI, and Same Store Core NOI
Margin
|
(in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2
2017
|
|
Q2
2016
|
|
YTD
2017
|
|
YTD
2016
|
|
|
Net income (loss)
available to common shareholders
|
|
$
|
5,420
|
|
$
|
(19,666)
|
|
$
|
(36,971)
|
|
$
|
(29,641)
|
|
|
Net income (loss)
available to participating securities
|
|
109
|
|
—
|
|
109
|
|
—
|
|
|
Interest
expense
|
|
57,358
|
|
70,523
|
|
125,930
|
|
140,800
|
|
|
Depreciation and
amortization
|
|
67,515
|
|
66,079
|
|
135,092
|
|
131,781
|
|
|
General and
administrative
|
|
18,426
|
|
15,408
|
|
76,692
|
|
30,768
|
|
|
Property management
expense
|
|
9,135
|
|
7,530
|
|
20,584
|
|
14,923
|
|
|
Impairment and
other
|
|
706
|
|
546
|
|
1,910
|
|
363
|
|
|
Acquisition
costs
|
|
—
|
|
7
|
|
—
|
|
42
|
|
|
Gain on sale of
property, net of tax
|
|
(10,162)
|
|
(1,020)
|
|
(24,483)
|
|
(10,212)
|
|
|
Other
|
|
869
|
|
(192)
|
|
1,095
|
|
(74)
|
|
|
NOI (total
portfolio)
|
|
149,376
|
|
139,215
|
|
299,958
|
|
278,750
|
|
|
Non-Same Store
NOI
|
|
(13,723)
|
|
(11,641)
|
|
(27,572)
|
|
(21,949)
|
|
|
NOI (Same Store
portfolio)
|
|
$
|
135,653
|
|
$
|
127,574
|
|
$
|
272,386
|
|
$
|
256,801
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core revenues (Same
Store portfolio)
|
|
$
|
215,765
|
|
$
|
207,568
|
|
$
|
428,174
|
|
$
|
411,235
|
|
|
Core NOI margin
(Same Store portfolio)
|
|
62.9%
|
|
61.5%
|
|
63.6%
|
|
62.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
View original content with
multimedia:http://www.prnewswire.com/news-releases/invitation-homes-reports-second-quarter-2017-results-300502285.html
SOURCE Invitation Homes