Press Release

Invitation Homes Gives Notice of Intent for Physical Settlement of 2019 Convertible Notes

Company Release - 1/3/2019 5:30 PM ET

DALLAS, Jan. 3, 2019 /PRNewswire/ -- Invitation Homes Inc. (NYSE: INVH) ("Invitation Homes" or the "Company") today announced that on December 28, 2018 the Company notified holders of its 3.00% Convertible Senior Notes due 2019 (the "Notes"), which mature on July 1, 2019, of the Company's intent to settle conversions of the Notes with common shares.  The par value of the Notes outstanding is $230 million.

Invitation Homes has the option to settle conversions of the Notes in cash, common shares, or a combination thereof.  The Company believes that a common share settlement is the option most aligned with its stated balance sheet strategy of reducing leverage and pursuing an investment grade rating.

For all note holders electing conversion on or before June 27, 2019, the Notes will be exchanged for common shares according to a prescribed conversion ratio.  As of September 30, 2018, the conversion ratio was 53.7294 shares per $1,000 principal amount of Notes.  This conversion ratio is subject to adjustment, through the date of maturity, for cash dividends paid to common stockholders and other potential transactions as described in Section 10.04(d) of the indenture for the Notes.  In the event that note holder(s) do not elect conversion by June 27, 2019, such Notes would be repaid in cash at the par value of the Notes on the maturity date.

Assuming the September 30, 2018 conversion ratio of 53.7294 shares per $1,000 principal amount of Notes, settlement of the $230 million (par value) of Notes would result in the issuance of approximately 12.4 million common shares and a reduction in cash interest expense of approximately $6.9 million on an annualized basis.

On a pro forma basis, whereby net debt is reduced for the impact of the conversion of the Notes, net debt / annualized Adjusted EBITDAre at September 30, 2018 would have been 9.1x, versus 9.4x as reported by the Company in its third quarter 2018 Earnings Release and Supplemental Information.

Reconciliation of Net Debt / Annualized Adjusted EBITDAre

(in thousands, except for ratio) (unaudited)















9/30/2018


Pro Forma


9/30/2018



As Reported


Adjustments(1)


Pro Forma


Mortgage loans, net

$7,409,700


-


$7,409,700


Term loan facility, net

1,490,138


-


1,490,138


Convertible senior notes, net

555,081


(226,804)


328,277


Total Debt per Balance Sheet

9,454,919


(226,804)


9,228,115


Retained and repurchased certificates

(395,941)


-


(395,941)


Cash, ex-security deposits

(230,148)


-


(230,148)


Deferred financing costs

66,544


-


66,544


Unamortized discounts on note payable

22,993


(3,189)


19,804


Net Debt (A)

$8,918,367


($229,993)


$8,688,374

















Q3 2018


Pro Forma


Q3 2018



As Reported


Adjustments(1)


Pro Forma


Net income available to common shareholders(2)

$824


$2,777


$3,601


Net income available to participating







securities

196


-


196


Non-controlling interests

21


-


21


Interest expense(2)

97,564


(2,777)


94,787


Depreciation and amortization

139,371


-


139,371


EBITDA

237,976


-


237,976


Gain on sale of property, net of tax

(11,512)


-


(11,512)


Impairment on depreciated real estate







investments

1,296


-


1,296


EBITDAre

227,760


-


227,760


Share-based compensation expense

6,068


-


6,068


Merger and transaction-related expenses

3,339


-


3,339


Severance

1,952


-


1,952


Casualty losses, net

1,956


-


1,956


Other, net

(3,330)


-


(3,330)


Adjusted EBITDAre

$237,745


-


$237,745









Annualized Adjusted EBITDAre (C = B x 4)

$950,980




$950,980









Net debt / annualized Adjusted EBITDAre







(A / C)

9.4x




9.1x









(1)

Does not include adjustments for refinancing or voluntary prepayments of securitized loans after 9/30/2018.

(2)

Pro forma adjustment for $2,777 of Q3 2018 interest expense associated with the Notes includes $1,052 of non-cash amortization of fair value discount.  Q3 2018 cash interest expense associated with the Notes was $1,725.

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 more than 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, "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:
Kristi DesJarlais
Phone: 972.421.3587
Email: [email protected]

Claire Parker
Phone: 202.257.2329
Email: [email protected]

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SOURCE Invitation Homes