Invitation Homes Inc . (NYSE:INVH), a leading real estate investment trust specializing in single-family rental homes, has announced the closure of a $500 million public offering of senior notes. The offering, which took place on Monday, involved the issuance of 4.875% Senior Notes due in 2035 by the company's principal operating subsidiary, Invitation Homes Operating Partnership LP.
The notes, guaranteed by Invitation Homes and certain of its subsidiaries, will pay interest semi-annually and have been priced at 98.205% of their principal amount. They rank equally with the issuer's other senior unsecured obligations but are subordinate to secured debts and liabilities of non-guarantor subsidiaries.
The indenture governing the notes includes restrictive covenants, such as maintaining a minimum percentage of total unencumbered assets. Under certain conditions, additional subsidiary guarantees for the notes may be triggered if they become obligated in respect of the issuer's revolving credit facility.
The company has the option to redeem the notes, in whole or in part, at a redemption price that includes the principal amount, accrued interest, and, if applicable, a make-whole premium. However, no make-whole premium will be included for redemptions after November 1, 2034.
Default events that could accelerate the notes' maturity include non-payment of interest or principal, non-compliance with agreements in the notes or indenture, and certain bankruptcy or insolvency events among others.
In other recent news, Invitation Homes has been in the spotlight due to a series of significant events. The company recently settled a Federal Trade Commission (FTC) investigation for $48 million without admitting any wrongdoing. This settlement is expected to refund renters affected by undisclosed fees and misrepresented lease costs.
Morgan Stanley reaffirmed its Overweight rating for the company, viewing the FTC settlement as a positive development that aligns with management's anticipated probable loss. However, the firm also cautioned about potential challenges ahead for Invitation Homes due to possible political action such as rent regulation or tax policy changes.
In contrast, CFRA downgraded Invitation Homes from "Buy" to "Hold" following the FTC fine, expressing concerns about the company's diminishing pricing power in the single-family home rental market. BofA Securities and RBC Capital also downgraded the company, while Goldman Sachs initiated coverage with a Buy rating.
On the financial front, Invitation Homes secured $3.5 billion in credit facilities and priced a $500 million offering of 4.875% Senior Notes due in 2035. The company also declared a quarterly dividend of $0.28 per share, providing value to its shareholders. In terms of portfolio expansion, Invitation Homes invested approximately $216 million in acquiring 580 single-family homes in Tampa, Denver, and the Carolinas.
InvestingPro Insights
Invitation Homes Inc. (NYSE:INVH), while expanding its financial base through the recent public offering of senior notes, also presents noteworthy financial metrics and trends. According to InvestingPro data, the company boasts a market capitalization of $21.52 billion, reflecting its significant presence in the real estate investment trust market. The company's P/E ratio stands at a high 45.1, which could indicate investor confidence in its future earnings potential, despite it trading at a high multiple relative to near-term earnings growth.
InvestingPro Tips highlight that Invitation Homes has a commendable track record of raising its dividend for seven consecutive years, with a current dividend yield of 3.17%. This could be an attractive point for income-focused investors. Additionally, the company's liquid assets surpass its short-term obligations, suggesting a strong liquidity position that may reassure investors of its ability to meet immediate financial commitments.
For those considering an investment in Invitation Homes, it's worth noting that the company is trading near its 52-week high and analysts predict it will be profitable this year, having been profitable over the last twelve months. For a comprehensive view of the company's financial health and future outlook, including additional InvestingPro Tips, visiting the dedicated InvestingPro page for Invitation Homes at https://www.investing.com/pro/INVH is recommended, where numerous other tips are available.
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