Press Release

Invitation Homes Reports Third Quarter 2018 Results

Company Release - 11/5/2018 6:55 AM ET

DALLAS, Nov. 5, 2018 /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 third quarter 2018 financial and operating results.

Third Quarter 2018 Highlights

  • Year-over-year, total revenues increased 78.3% to $434 million, total property operating and maintenance expenses increased 82.3% to $170 million, and net income attributable to common shareholders increased to $1 million, or $0.00 per share.
  • Core FFO per share increased 21.3% year-over-year to $0.29 per share.
  • Same Store NOI grew 4.9% year-over-year on 4.4% Same Store Core revenue growth and 3.7% Same Store Core operating expense growth.
  • Same Store average occupancy was 95.5%, up 50 basis points year-over-year.
  • Continued strength in Same Store renewal rent growth of 4.8% and new lease rent growth of 3.3% drove Same Store blended rent growth of 4.2%.
  • As of October 31, 2018, $41 million of the total $50 - 55 million of expected merger synergies had been realized on a run-rate basis, outpacing management's previous expectation for 75% achievement by the end of 2018.
  • In October 2018, the Company used cash on hand to prepay $50 million of securitized debt maturing in 2021, incremental to the previously announced $200 million of securitized debt prepaid in the third quarter of 2018.
  • In the third quarter of 2018 and October 2018, pursuant to the Company's plan to further enhance portfolio quality, five bulk transactions were completed to dispose of homes with below-average rent. A total of 1,375 homes were sold across the five bulk transactions, with 147 homes closing in two September 2018 transactions, and the remaining 1,228 homes closing in three October 2018 transactions. Gross proceeds of $214 million from the five transactions are expected to be used for general corporate purposes and to repay debt.

Interim President Dallas Tanner comments:  "Fundamentals in our high-growth markets remain favorable, and the high-quality service and living experience we provide continues to resonate with residents.  As a result, we achieved another quarter of lower year-over-year turnover that drove Same Store average occupancy 50 basis points higher year-over-year to 95.5% in the third quarter of 2018.  Blended rent growth also remained strong, driving Same Store Core revenue growth of 4.4% year-over-year in the third quarter of 2018, consistent with growth in the first half of the year.

"In addition to strong top line execution, our other operational priorities for the year are progressing well.  With respect to merger integration, we achieved our 2018 year-end target of 75% run-rate synergy realization ahead of schedule.  We also continue to fine-tune our integrated repairs and maintenance technology platform to increase the efficiency with which we serve our residents.  With respect to capital recycling and balance sheet optimization, we closed the sale of 1,375 homes in bulk transactions in September and October to further enhance the quality of our portfolio and reduce leverage.

"We expect favorable fundamentals and execution on our key initiatives to continue driving growth, and are narrowing our 2018 Core FFO per share guidance to $1.16 - $1.18, a 12.0 - 13.9% increase versus 2017.  We look forward to finishing the year strong as we remain focused on delivering value for our residents, associates, and shareholders."


Financial Results

Net Income (Loss), FFO, Core FFO, and AFFO Per Share — Diluted















Q3 2018


Q3 2017


YTD 2018


YTD 2017




Net income (loss) (1)


$



$

(0.07)



$

(0.06)



$

(0.14)





FFO (2)


0.23



0.13



0.70



0.37





Core FFO (2)


0.29



0.24



0.87



0.74





AFFO (2)


0.22



0.20



0.70



0.63

















(1)

No shares of common stock were outstanding prior to the close of the Company's initial public offering.  As such, net income (loss) per share for YTD 2017 has been calculated based on operating results for the period from February 1, 2017 through September 30, 2017, and the weighted average number of shares outstanding during that same period, in accordance with GAAP.

(2)

No shares of common stock or OP Units 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 September 30, 2017, and as if shares issued in connection with the IPO were issued on January 1, 2017.

Net Income (Loss)
Net income attributable to common shareholders for the three months ended September 30, 2018 was $0.00 per share, compared to a loss of $0.07 per share for the three months ended September 30, 2017.  Total revenues and total operating and maintenance expenses for the three months ended September 30, 2018 were $434 million and $170 million, respectively, compared to $244 million and $93 million, respectively, for the three months ended September 30, 2017.

Net loss attributable to common shareholders for the nine months ended September 30, 2018 was a loss of $0.06 per share, compared to a loss of $0.14 per share for the prior year period during which the Company was public from February 1, 2017 to September 30, 2017.  Total revenues and total operating and maintenance expenses for the nine months ended September 30, 2018 were $1,290 million and $496 million, respectively, compared to $725 million and $274 million, respectively, for the prior year period during which the Company was public from February 1, 2017 to September 30, 2017.

Core FFO
Year-over-year, Core FFO for the three months ended September 30, 2018 increased 21.3% to $0.29 per share, primarily due to an increase in NOI per share, driven by higher revenues, lower adjusted general and administrative expense per share, and lower cash interest expense per share.

Year-over-year, Core FFO for the nine months ended September 30, 2018 increased 18.0% to $0.87 per share, primarily due to an increase in NOI per share, driven by higher revenues, lower adjusted general and administrative expense per share, and lower cash interest expense per share.

AFFO
Year-over-year, AFFO for the three months ended September 30, 2018 increased 10.2% to $0.22 per share, primarily driven by the increase in Core FFO described above.

Year-over-year, AFFO for the nine months ended September 30, 2018 increased 10.5% to $0.70 per share, primarily driven by the increase in Core FFO described above.

Operating Results

Same Store Operating Results Snapshot











Number of homes in Same Store portfolio:


71,226





















Q3 2018


Q3 2017


YTD 2018


YTD 2017


Core revenue growth (year-over-year)


4.4

%




4.4

%




Core operating expense growth (year-over-year)


3.7

%




4.2

%




NOI growth (year-over-year)


4.9

%




4.5

%














Average occupancy


95.5

%


95.0

%


95.8

%


95.5

%


Turnover rate


9.3

%


9.8

%


26.2

%


27.9

%












Rental rate growth (lease-over-lease):










Renewals


4.8

%


5.1

%


4.8

%


5.2

%


New leases


3.3

%


3.3

%


3.6

%


4.1

%


Blended


4.2

%


4.4

%


4.4

%


4.8

%












Same Store NOI
For the Same Store portfolio of 71,226 homes, third quarter 2018 Same Store NOI increased 4.9% year-over-year on Same Store Core revenue growth of 4.4% and Same Store Core operating expense growth of 3.7%.

YTD 2018 Same Store NOI increased 4.5% year-over-year on Same Store Core revenue growth of 4.4% and Same Store Core operating expense growth of 4.2%.

Same Store Core Revenues
Third quarter 2018 Same Store Core revenue growth of 4.4% year-over-year was driven by a 3.8% increase in average monthly rent, a 0.5% increase in average occupancy to 95.5%, and a 4.4% increase in other property income, net of resident reimbursements.

YTD 2018 Same Store Core revenue growth of 4.4% year-over-year was driven by a 3.9% increase in average monthly rent, a 0.3% increase in average occupancy to 95.8%, and a 7.5% increase in other property income, net of resident reimbursements.

Same Store Core Operating Expenses
Third quarter 2018 Same Store Core operating expenses increased 3.7% year-over-year, driven primarily by increases in repairs and maintenance (R&M) expenses and property taxes.  Repairs and maintenance expenses remain elevated, but in-line with the Company's expectations, prior to completion of the R&M technology and personnel optimization efforts that are underway.

YTD 2018 Same Store Core operating expenses increased 4.2% year-over-year, driven primarily by increases in repairs and maintenance expenses and property taxes.  The increase in repairs and maintenance expenses was primarily attributable to lower R&M productivity prior to completion of optimization efforts that are underway, and prioritization of service requests related to hurricane damage in the fourth quarter of 2017 that pushed routine, non-storm related service requests that otherwise would have been resolved in 2017 into the first quarter of 2018.

Investment Management Activity

Invitation Homes acquired 249 homes for $72.8 million in the third quarter of 2018, including estimated renovation costs, and sold 413 homes for gross proceeds of $85.9 million, resulting in total portfolio home count of 82,260 homes at September 30, 2018.

Year-to-date, the Company acquired 702 homes for $205.1 million, including estimated renovation costs, and sold 1,012 homes for gross proceeds of $217.9 million.

Of the 413 homes sold during the third quarter, 147 were sold in two bulk transactions that closed in September 2018 for $22.5 million of gross proceeds.  Subsequent to quarter end, the Company closed the sale of an additional 1,228 homes for $191.7 million in gross proceeds across three bulk transactions.  Homes included in the five bulk sales had average in-place monthly rent of $1,404, 19.8% below that of the remaining portfolio.  Proceeds from the transactions are expected to be used for general corporate purposes and to prepay debt.

Merger Integration Update

Completion of key integration milestones has unlocked $41 million of synergies on a run-rate basis as of October 31, 2018, and resulted in achievement of the Company's year-end 2018 target of 75% synergy realization faster than expected.  Of the $41 million of synergies realized as of October 31, 2018, $36 million are related to property management and G&A, $4 million are related to operating expenses, and $1 million are related to capitalized expenses.

The company continues to expect to achieve total annualized cost synergies between $50 million and $55 million on a run-rate basis by mid-2019.  Approximately two thirds of the remaining synergies are likely to be attributable to NOI and achieved after implementation of the Company's unified operating platform and field configuration in each market.

Balance Sheet and Capital Markets Activity

At September 30, 2018, the Company had $1,130 million in available liquidity through a combination of unrestricted cash and undrawn capacity on its revolving credit facility.  The Company's total indebtedness at September 30, 2018 was $9,544 million, consisting of $7,469 million of secured debt and $2,075 million of unsecured debt.

As previously announced, the Company prepaid $200 million of securitized debt (CSH 2016-1) in July 2018 using proceeds from its June 2018 refinancings and cash on hand.  In October 2018, the Company prepaid an additional $50 million of CSH 2016-1 using cash on hand.  As of September 30, 2018, weighted average years to maturity of the Company's debt was 5.2 years, and the weighted average interest rate on total debt during the third quarter of 2018 was 3.3%.

Dividend

As previously announced, on November 1, 2018 the Company's Board of Directors declared a quarterly cash dividend of $0.11 per share of common stock.  The dividend will be paid on or before November 30, 2018 to shareholders of record as of the close of business on November 14, 2018.

Full Year 2018 Guidance Update

FY 2018 Guidance









Revised


Previous




FY 2018


FY 2018




Guidance


Guidance


Core FFO per share – diluted


$1.16 - $1.18


$1.15 - $1.19


AFFO per share – diluted


$0.93 - $0.95


$0.94 - $0.98








Same Store Core revenue growth


4.4 - 4.5%


4.3 - 4.7%


Same Store Core operating expense growth


5.4 - 6.0%


4.6 - 5.4%


Same Store NOI growth


3.5 - 4.0%


3.8 - 4.8%








Changes to FY 2018 Guidance
The change in Same Store NOI growth guidance is primarily attributable to revised Same Store Core operating expense expectations.

The vast majority of the increase in Same Store Core operating expense growth guidance is attributable to higher expected real estate taxes.  Property tax reassessments received in October 2018 have trended higher than expected.  While the Company intends to appeal assessed values where appropriate, real estate tax expenses in the fourth quarter of 2018 are likely to be higher than what was contemplated in previous guidance.

Excluding real estate taxes, all other Same Store Core operating expenses are expected to fall within the previous range of expectations, though some are trending toward the high end of that previous range.  Repairs and maintenance operating expenses remain on track to meet the midpoint of what was contemplated in previous guidance.

Taking into account revised expectations for Same Store results, guidance ranges for Core FFO per share and AFFO per share have also been revised.

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, and Same Store NOI growth 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.

Earnings Conference Call Information

Invitation Homes has scheduled a conference call at 11:00 a.m. Eastern Time on Monday, November 5, 2018 to discuss results for the three months ended September 30, 2018.  The domestic dial-in number is 1-888-317-6003, and the international dial-in number is 1-412-317-6061.  The passcode is 8467806.  An audio webcast may be accessed at www.invh.com.  A replay of the call will be available through December 5, 2018, and can be accessed by calling 1-877-344-7529 (domestic) or 1-412-317-0088 (international) and using the replay passcode 10125240, or by using the link at www.invh.com.

Supplemental Information

The full text of the Earnings Release and Supplemental Information referenced in this release are available on Invitation Homes' Investor Relations website at www.invh.com.

Glossary & Reconciliations of Non-GAAP Financial and Other Operating Measures

Financial and operating measures found in the Earnings Release and 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 and Reconciliations section of this press release and 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 across America. With over 80,000 homes for lease in 17 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 statement, "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: [email protected]

Media Relations Contacts

Claire Parker
Phone: 202.257.2329
Email: [email protected]

Kristi DesJarlais
Phone: 972.421.3587
Email: [email protected]

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 anticipated benefits of the merger with Starwood Waypoint Homes, 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 associated with achieving expected revenue synergies or cost savings from the merger, 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, 2017, 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.

 


Consolidated Balance Sheets

($ in thousands, except shares and per share data)














September 30,


December 31,




2018


2017




(unaudited)




Assets:






Investments in single-family residential properties, net


$

16,802,352



$

17,312,264



Cash and cash equivalents


130,037



179,878



Restricted cash


253,603



236,684



Goodwill


258,207



258,207



Other assets, net


1,032,449



696,605



Total assets


$

18,476,648



$

18,683,638















Mortgage loans, net


$

7,409,700



$

7,580,153



Term loan facility, net


1,490,138



1,487,973



Revolving facility




35,000



Convertible senior notes, net


555,081



548,536



Accounts payable and accrued expenses


275,203



193,413



Resident security deposits


151,305



146,689



Other liabilities


30,573



41,999



Total liabilities


9,912,000



10,033,763









Equity:






Shareholders' equity






Preferred stock, $0.01 par value per share, 900,000,000 shares
  authorized, none outstanding at September 30, 2018 and
  December 31, 2017






Common stock, $0.01 par value per share, 9,000,000,000
  shares authorized, 520,579,577 and 519,173,142 outstanding
  at September 30, 2018 and December 31, 2017, respectively


5,206



5,192



Additional paid-in-capital


8,624,380



8,602,603



Accumulated deficit


(360,344)



(157,595)



Accumulated other comprehensive income


151,886



47,885



Total shareholders' equity


8,421,128



8,498,085



Non-controlling interests


143,520



151,790



Total equity


8,564,648



8,649,875



Total liabilities and equity


$

18,476,648



$

18,683,638









 

 

Consolidated Statements of Operations


($ in thousands, except shares and per share amounts) (unaudited)














Q3 2018


Q3 2017


YTD 2018


YTD 2017


Revenues:










Rental revenues


$

404,140



$

229,375



$

1,203,780



$

683,975



Other property income


30,111



14,161



86,566



40,527



Total revenues


434,251



243,536



1,290,346



724,502













Operating expenses:










Property operating and maintenance


170,021



93,267



496,211



274,275



Property management expense


16,692



10,852



48,204



31,436



General and administrative


21,152



27,462



73,424



104,154



Depreciation and amortization


139,371



67,466



430,321



202,558



Impairment and other


3,252



14,572



13,476



16,482



Total operating expenses


350,488



213,619



1,061,636



628,905



Operating income


83,763



29,917



228,710



95,597













Interest expense


(97,564)



(56,796)



(287,089)



(182,726)



Other, net


3,330



613



6,697



(482)



Gain on sale of property, net of tax


11,512



3,756



20,955



28,239













Net income (loss)


1,041



(22,510)



(30,727)



(59,372)



Net income (loss) attributable to non-
controlling interests


(21)





532















Net income (loss) attributable to common
     shareholders


$

1,020



$

(22,510)



$

(30,195)



$

(59,372)































February 1, 2017










through




Q3 2018


Q3 2017


YTD 2018


September 30, 2017












Net income (loss) available to common
     shareholders — basic and diluted


$

824



$

(22,745)



$

(30,822)



$

(42,837)













Weighted average common shares
     outstanding — basic


520,620,519



311,559,780



520,267,029



311,674,226



Weighted average common shares

     outstanding — diluted


521,761,076



311,559,780



520,267,029



311,674,226













Net income (loss) per common share —
     basic


$



$

(0.07)



$

(0.06)



$

(0.14)



Net income (loss) per common share —
     diluted


$



$

(0.07)



$

(0.06)



$

(0.14)













Dividends declared per common share


$

0.11



$

0.08



$

0.33



$

0.14













 

Glossary and Reconciliations

Glossary:

Average Monthly Rent

Average monthly rent represents average monthly rental income per home for occupied properties in an identified population of homes over the measurement period, and reflects the impact of non-service rental concessions and contractual rent increases amortized over the life of the lease.

Average Occupancy

Average occupancy for an identified population of homes represents (i) the total number of days that the homes in such population were occupied during the measurement period, divided by (ii) the total number of days that the homes in such population were owned during the measurement period.

Core Operating Expenses

Core operating expenses for an identified population of homes reflect property operating and maintenance expenses, excluding any expenses recovered from residents.

Core Revenues

Core revenues for an identified population of homes reflects total revenues, net of any resident recoveries.

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 Nareit as net income or loss (computed in accordance with GAAP) excluding 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, gains or losses related to sales of previously depreciated homes, as well non-controlling interests, from GAAP net income or loss.

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.

See "Reconciliation of Non-GAAP measures" below for a reconciliation of GAAP net income (loss) to FFO, Core FFO, and Adjusted FFO.

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.

Recurring Capital Expenditures or Recurring CapEx

Recurring Capital Expenditures or Recurring CapEx represents general replacements and expenditures required to preserve and maintain the value and functionality of a home and its systems as a single-family rental.

Rental Rate Growth

Rental rate growth for any home represents the percentage difference between the monthly rent from an expiring lease and the monthly rent from the next lease, and, in each case, reflects the impact of any amortized non-service rent concessions and contractual rent increases. 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.

Same Store / Same Store Portfolio

Same Store or Same Store portfolio includes, for a given reporting period, homes that have been stabilized for at least 15 months prior to January 1st of the year in which the Same Store portfolio was established, excluding homes that have been sold, homes that have been identified for sale to an owner occupant and have become vacant, and homes that have been deemed inoperable or significantly impaired by casualty loss events or force majeure.

Homes are considered stabilized if they have (i) completed an initial renovation and (ii) entered into at least one post-initial renovation lease.  An acquired portfolio that is both leased and deemed to be of sufficiently similar quality and characteristics as the existing Invitation Homes Same Store portfolio may be considered stabilized at the time of acquisition.

Additionally, homes acquired via the Starwood Waypoint Homes merger have been deemed to qualify for the Same Store portfolio beginning in 2018 if they were stabilized, according to the Invitation Homes criteria for stabilization, within Starwood Waypoint Homes' portfolio prior to the merger.

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.  In order to provide meaningful comparative information across periods that, in some cases, pre-date the Starwood Waypoint Homes merger, all information regarding the performance of the Same Store portfolio for periods prior to December 31, 2017 is presented as though the Starwood Waypoint Homes merger was consummated on January 1, 2017.

Total Homes / Total Portfolio

Total homes or total portfolio refers to the total number of homes owned, 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.

Reconciliation of Non-GAAP Measures:

Reconciliation of FFO, Core FFO, and AFFO

($ in thousands, except shares and per share amounts) (unaudited)












FFO Reconciliation


Q3 2018


Q3 2017


YTD 2018


YTD 2017


Net income (loss) available to common shareholders


$

824



$

(22,745)



$

(30,822)



$

(59,716)



Net income available to participating securities


196



235



627



344



Non-controlling interests


21





(532)





Depreciation and amortization on real estate assets


132,168



66,671



420,223



200,023



Impairment on depreciated real estate investments


1,296



424



3,570



1,556



Net gain on sale of previously depreciated investments in real estate


(11,512)



(3,756)



(20,955)



(28,239)



FFO


$

122,993



$

40,829



$

372,111



$

113,968













Core FFO Reconciliation


Q3 2018


Q3 2017


YTD 2018


YTD 2017


FFO


$

122,993



$

40,829



$

372,111



$

113,968



Noncash interest expense


13,401



3,473



33,439



23,744



Share-based compensation expense


6,068



12,004



23,582



64,464



IPO related expenses








8,287



Merger and transaction-related expenses (1)


9,406



4,944



18,009



4,944



Severance expense


1,952



(20)



6,292



417



Casualty losses, net


1,956



14,148



9,906



14,926



Core FFO


$

155,776



$

75,378



$

463,339



$

230,750













AFFO Reconciliation


Q3 2018


Q3 2017


YTD 2018


YTD 2017


Core FFO


$

155,776



$

75,378



$

463,339



$

230,750



Recurring capital expenditures


(39,399)



(13,391)



(93,640)



(34,225)



AFFO


$

116,377



$

61,987



$

369,699



$

196,525













Weighted average common shares outstanding — diluted (2)


521,761,076


311,559,780



520,267,029



311,674,226













Net income (loss) per common share — diluted (2)


$



$

(0.07)



$

(0.06)



$

(0.14)













Weighted average shares and units outstanding — diluted (3)


530,797,654


311,559,780



530,581,319



311,674,226













FFO per share — diluted (3)


$

0.23



$

0.13



$

0.70



$

0.37



Core FFO per share — diluted (3)


$

0.29



$

0.24



$

0.87



$

0.74



AFFO per share — diluted (3)


$

0.22



$

0.20



$

0.70



$

0.63













(1)

In Q3 2018 and YTD 2018, includes $6,067 of depreciation expense related to the write-down of legacy technology systems replaced by newly integrated systems and furniture, fixtures, and equipment from abandoned legacy offices.  All other merger and transaction-related expenses presented in the Core FFO Reconciliation are general and administrative expenses.

(2)

No shares of common stock were outstanding prior to the close of the Company's initial public offering.  As such, net income (loss) per share for YTD 2017 has been calculated based on operating results for the period from February 1, 2017 through September 30, 2017, and the weighted average number of shares outstanding during that same period, in accordance with GAAP.

(3)

No shares of common stock or OP Units 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 September 30, 2017, and as if shares issued in connection with the IPO were issued on January 1, 2017.

 

 

Reconciliation of Total Revenues to Same Store Total Revenues and Same Store Core Revenues, Quarterly

(in thousands) (unaudited)















Q3 2018


Q2 2018


Q1 2018


Q4 2017


Q3 2017


Total revenues (Invitation Homes total portfolio)


$

434,251



$

432,426



$

423,669



$

329,954



$

243,536



Starwood Waypoint Homes revenues (1)








84,775



166,546



Pro Forma total revenues


434,251



432,426



423,669



414,729



410,082



Non-Same Store revenues


(54,534)



(55,195)



(52,714)



(50,351)



(49,205)



Same Store revenues


379,717



377,231



370,955



364,378



360,877



Same Store resident recoveries


(12,807)



(11,475)



(11,927)



(9,451)



(9,544)



Same Store Core revenues


$

366,910



$

365,756



$

359,028



$

354,927



$

351,333















(1)

Represents revenues generated by Starwood Waypoint Homes prior to its merger with Invitation Homes, expressed using Invitation Homes' definition of total revenues.

 

 

Reconciliation of Total Revenues to Same Store Total Revenues and Same Store Core Revenues, YTD

(in thousands) (unaudited)















YTD 2018


YTD 2017








Total revenues (Invitation Homes total portfolio)


$

1,290,346



$

724,502









Starwood Waypoint Homes revenues (1)




462,475









Pro Forma total revenues


1,290,346



1,186,977









Non-Same Store revenues


(162,443)



(115,181)









Same Store revenues


1,127,903



1,071,796









Same Store resident recoveries


(36,209)



(25,867)









Same Store Core revenues


$

1,091,694



$

1,045,929





















(1)

Represents revenues generated by Starwood Waypoint Homes prior to its merger with Invitation Homes, expressed
using Invitation Homes' definition of total revenues.

 

 

Reconciliation of Property Operating and Maintenance to Same Store Operating Expenses and Same Store Core Operating Expenses, Quarterly

(in thousands) (unaudited)















Q3 2018


Q2 2018


Q1 2018


Q4 2017


Q3 2017


Property operating and maintenance expenses (total portfolio)


$

170,021



$

165,423



$

160,767



$

117,220



$

93,267



Starwood Waypoint Homes operating expenses (1)








31,919



66,106



Pro Forma total operating expenses


170,021



165,423



160,767



149,139



159,373



Non-Same Store operating expenses


(21,943)



(22,089)



(21,877)



(19,635)



(19,393)



Same Store operating expenses


148,078



143,334



138,890



129,504



139,980



Same Store resident recoveries


(12,807)



(11,475)



(11,927)



(9,451)



(9,544)



Same Store Core operating expenses


$

135,271



$

131,859



$

126,963



$

120,053



$

130,436















(1)

Represents property operating and maintenance expenses generated by Starwood Waypoint Homes prior to its merger with Invitation Homes, expressed using Invitation Homes' definition of property operating and maintenance expenses.

 

 

Reconciliation of Property Operating and Maintenance to Same Store Operating Expenses and Same Store Core Operating Expenses, YTD

(in thousands) (unaudited)















YTD 2018


YTD 2017








Property operating and maintenance expenses (total portfolio)


$

496,211



$

274,275









Starwood Waypoint Homes operating expenses (1)




180,597









Pro Forma total operating expenses


496,211



454,872









Non-Same Store operating expenses


(65,909)



(50,801)









Same Store operating expenses


430,302



404,071









Same Store resident recoveries


(36,209)



(25,867)









Same Store Core operating expenses


$

394,093



$

378,204





















(1)

Represents property operating and maintenance expenses generated by Starwood Waypoint Homes prior to its merger with Invitation Homes, expressed using Invitation Homes' definition of property operating and maintenance expenses.

 

 

Reconciliation of Net Income (Loss) to NOI and Same Store NOI, Quarterly

(in thousands) (unaudited)















Q3 2018


Q2 2018


Q1 2018


Q4 2017


Q3 2017


Net income (loss) available to common shareholders


$

824



$

(14,155)



$

(17,491)



$

(46,236)



$

(22,745)



Net income available to participating securities


196



209



222



271



235



Non-controlling interests


21



(242)



(311)



(489)





Interest expense


97,564



97,226



92,299



74,244



56,796



Depreciation and amortization


139,371



146,450



144,500



107,020



67,466



General and administrative


21,152



24,636



27,636



63,585



27,462



Property management expense


16,692



14,348



17,164



11,908



10,852



Impairment and other


3,252



4,103



6,121



7,611



14,572



Gain on sale of property, net of tax


(11,512)



(3,941)



(5,502)



(5,657)



(3,756)



Other, net


(3,330)



(1,631)



(1,736)



477



(613)



NOI (total portfolio)


264,230



267,003



262,902



212,734



150,269



Starwood Waypoint Homes NOI (1)








52,856



100,440



Pro Forma total NOI


264,230



267,003



262,902



265,590



250,709



Non-Same Store NOI


(32,591)



(33,106)



(30,837)



(30,716)



(29,812)



Same Store NOI


$

231,639



$

233,897



$

232,065



$

234,874



$

220,897















(1)

Represents NOI generated by Starwood Waypoint Homes prior to its merger with Invitation Homes, expressed using Invitation Homes' definition of NOI.

 

 

Reconciliation of Net Income (Loss) to NOI and Same Store NOI, YTD

(in thousands) (unaudited)















YTD 2018


YTD 2017








Net income (loss) available to common shareholders


$

(30,822)



$

(59,716)









Net income available to participating securities


627



344









Non-controlling interests


(532)











Interest expense


287,089



182,726









Depreciation and amortization


430,321



202,558









General and administrative


73,424



104,154









Property management expense


48,204



31,436









Impairment and other


13,476



16,482









Gain on sale of property, net of tax


(20,955)



(28,239)









Other, net


(6,697)



482









NOI (total portfolio)


794,135



450,227









Starwood Waypoint Homes NOI (1)




281,878









Pro Forma total NOI


794,135



732,105









Non-Same Store NOI


(96,534)



(64,380)









Same Store NOI


$

697,601



$

667,725





















(1)

Represents NOI generated by Starwood Waypoint Homes prior to its merger with Invitation Homes, expressed using Invitation Homes' definition of NOI.

View original content:http://www.prnewswire.com/news-releases/invitation-homes-reports-third-quarter-2018-results-300743580.html

SOURCE Invitation Homes