Earnings call transcript: Invitation Homes Q2 2025 earnings beat estimates

Invitation Homes Inc. (INVH), a prominent residential REIT with a market capitalization of $19.07 billion, reported its second-quarter earnings for 2025, surpassing analysts’ expectations. The company posted an earnings per share (EPS) of $0.23, exceeding the forecasted $0.19, marking a 21.05% surprise. Revenue also came in slightly above expectations at $681 million, compared to the anticipated $673.88 million. Trading at a P/E ratio of 39.82, the stock experienced a decline, with premarket trading showing a 2.8% drop to $30.50. According to InvestingPro, the company maintains strong profitability metrics and has shown consistent performance over the past year.

Key Takeaways

• EPS of $0.23 beat the forecast by 21.05%.
• Revenue reached $681 million, slightly above expectations.
• Stock price fell 2.8% in premarket trading despite earnings beat.
• Acquired approximately 1,000 homes, focusing on newly built properties.
• Strong presence in Sunbelt and coastal markets.

Company Performance

Invitation Homes demonstrated robust performance in Q2 2025, with a focus on expanding its portfolio by acquiring approximately 1,000 homes, primarily newly built. The company continues to benefit from its strategic positioning in the Sunbelt and coastal markets, which are known for high demand and growth potential. The average resident tenure remained stable at 40 months, and the renewal rate approached 80%, indicating strong customer retention.

Financial Highlights

• Revenue: $681 million, up from the forecasted $673.88 million.
• EPS: $0.23, exceeding the forecast of $0.19.
• Core FFO: $0.48 per share for the quarter.
• AFFO: $0.41 per share for Q2.
• Same-store core revenue growth: 2.4% year-over-year.

Earnings vs. Forecast

Invitation Homes reported an EPS of $0.23, surpassing the forecasted $0.19 by 21.05%. This significant earnings surprise reflects the company’s effective cost management and revenue growth strategies. Revenue also exceeded expectations by 1.06%, coming in at $681 million compared to the anticipated $673.88 million. This performance demonstrates the company’s ability to outperform in a competitive market.

Market Reaction

Despite the positive earnings surprise, Invitation Homes’ stock fell 2.8% in premarket trading, reaching $30.50. While this decline may concern some investors, InvestingPro analysis indicates the stock generally trades with low price volatility, with a beta of 0.8. Based on InvestingPro’s Fair Value analysis, the stock appears slightly overvalued at current levels. The stock’s performance contrasts with its 52-week high of $37.80, indicating potential investor caution or profit-taking.

Outlook & Guidance

The company remains optimistic about its full-year guidance, projecting a Core FFO of $1.88 to $1.94 per share. Supporting this outlook, two analysts have recently revised their earnings estimates upward for the upcoming period. Invitation Homes anticipates acquiring $500-700 million worth of properties by year-end, backed by a strong current ratio of 2.41. The company expects a mid-three percent blended rate growth and a normalization of property tax expense growth to 4-5% annually.

Executive Commentary

CEO Dallas Tanner emphasized the company’s strategic positioning, stating, "We are well positioned to drive long-term value for our shareholders." President Charles Young noted, "The year is unfolding as we expected," highlighting the company’s confidence in meeting its full-year targets. CFO John Olson added, "We continue to have opportunities to capture market rate growth," underscoring the company’s focus on leveraging market conditions.

Risks and Challenges

• Potential market saturation in new lease markets due to build-to-rent supply.
• Macroeconomic pressures, including interest rate fluctuations.
• Property tax expense growth normalization.
• Competition in high-demand markets like the Sunbelt.
• Dependence on broader economic conditions for housing demand.

Q&A

During the earnings call, analysts raised questions about the challenges in new lease markets, influenced by the build-to-rent supply. The company addressed its exploration of developer lending opportunities and expressed a positive outlook on potential rate cuts and the home sales market. Analysts also inquired about the company’s capital recycling strategy, which remains a focus for Invitation Homes moving forward.

Full transcript - Invitation Homes Inc (INVH) Q2 2025:

Conference Operator: Welcome to the Invitation Homes Second Quarter twenty twenty five Earnings Conference Call. All participants are in listen only mode at this time. As a reminder, this conference is being recorded. At this time, I would like to turn the conference over to Scott McLaughlin, Senior Vice President of Investor Relations. Please go ahead.

Scott McLaughlin, Senior Vice President of Investor Relations, Invitation Homes: Thank you, operator, and good morning. I’m joined today from Invitation Homes with Dallas Tanner, our Chief Executive Officer Charles Young, our President John Olson, our Chief Financial Officer Scott Eisen, our Chief Investment Officer and Tim Loebner, our Chief Operating Officer. Following our prepared remarks, we’ll open the line for questions from our covering sell side analysts. During today’s call, we may reference our second quarter twenty twenty five earnings release and supplemental information. We issued this document yesterday afternoon after the market closed, and it is available on the Investor Relations section of our website at www.invh.com.

Certain statements we make during this call may include forward looking statements relating to the future performance of our business, financial results, liquidity and capital resources and other non historical statements, which are subject to risks and uncertainties that could cause actual outcomes or results to differ materially from those indicated. We describe some of these risks and uncertainties in our 2024 annual report on Form 10 ks and other filings we make with the SEC from time to time. Except to the extent otherwise required by law, we do not update forward looking statements and expressly disclaim any obligation to do so. We may also discuss certain non GAAP financial measures during the call. You can find additional information regarding these non GAAP measures, including reconciliations to the most comparable GAAP measures in yesterday’s earnings release.

With that, I’ll now turn the call over to Dallas Tanner. Please begin, Dallas.

Dallas Tanner, Chief Executive Officer, Invitation Homes: Thank you, Scott, and good morning, everyone. We appreciate you joining us today. I’m pleased to share our second quarter results that once again reflect the outstanding work of our associates, the disciplined execution of our long term strategy and the strength of our resident focused experience. Before we dive in, I want to take a moment to acknowledge the devastating flash floods that struck the Texas Hill Country earlier this month. The images and stories have been heartbreaking and with some of our own friends and family having been impacted.

In response, we’ve made a donation to support the Red Cross’ local aid work in addition to our annual support of their national relief efforts, and we’re matching associate donations dollar for dollar. As a Texas based company, it’s our responsibility and privilege to support our neighbors in their times of need and by investing in communities during both good and difficult times. That’s who we are, and it’s what Genuine Care is all about. Speaking of genuine care, there’s been no greater ambassador of that mindset than my friend and colleague, Charles Young. As many of you know, Charles has accepted an exciting opportunity to lead another public REIT.

While we’re excited for what lies ahead for him, we’re also mindful that today marks his final earnings call with us. Charles, it’s been an incredible eight point five year journey. Your leadership, integrity and heart have left a lasting mark on our company, and we’re all better for having worked alongside you. We wish you nothing but continued success in your next chapter. As you heard Scott say earlier, Tim Lobner is with us in the room today.

Tim has been with Invitation Homes since 2012 and is an exceptional and experienced leader, having overseen our repairs, turns and maintenance teams since 2014 and in more recent years also led our field and leasing teams. He’ll continue in his role as our Chief Operating Officer and I’ll reassume the title of President and what we expect to be a seamless transition. Let’s turn now to our second quarter performance and highlight the key drivers behind our results. What really stands out is the continued validation of our approach. During the second quarter, our average resident tenure was forty months and our renewal rate approached 80%, a continued testament to the quality of our homes, the strength of our service platform and the trust we’ve built with our residents.

Zooming out to the broader housing landscape, the macro environment continues to reinforce the value of our offering. According to recent research from John Burns, the U. S. Needs an average of nearly 1,500,000 new homes each year through 02/1934. That includes 600,000 rental units per year just to restore balance within the market.

And given that our average new resident age is in the late 30s and John Burns’ estimate that there are 13,000 people turning 35 every day for the next ten years, we believe there should be a long lasting demand tailwind for our business over the next decade and well beyond. And this is where Invitation Homes is uniquely positioned, to unlock the power of home for the millions of Americans who choose to lease a home. In the second quarter, we acquired just under 1,000 wholly owned homes, most of which were newly built and often in communities offering a mix of both for sale and for lease options. This approach brings high quality homes into our portfolio while helping builders to add and accelerate needed housing delivery in markets where we have high conviction and long term performance. Our builder partnerships remain a key growth engine for us, giving us access to a thoughtfully designed home and master plan communities while allowing us to maintain high standards for quality.

We’re also expanding our toolkit with the recent launch of our developer lending program, which positioned us to participate earlier in the value chain, typically with the goal of purchasing the communities upon stabilization. We’re just getting started and are excited about the possibilities. Combined with our homebuilder partnerships and third party property management relationships, these initiatives enhance our acquisition strategies and boost our trust in the opportunities ahead. On that front, we’re confident that we will meet or exceed our acquisition guidance of 500,000,000 to $700,000,000 this year. Our pipeline is robust and we continue to target attractive yields with upside through operational efficiencies and improved scale.

In closing, our strategy remains clear to consistently deliver high quality housing in desirable neighborhoods backed by a service platform that puts the resident first. With strong demographic tailwinds, a disciplined investment approach and our best in class team, we are well positioned to drive long term value for our shareholders and meet the evolving needs of American families. With that, I’ll turn it over to Charles Young to walk through our operating results in more detail.

Charles Young, President, Invitation Homes: Thank you, Dallas, and I truly appreciate your kind words earlier. It’s been a privilege to work with you and this great team. To all of our associates, the success of our company starts with you. What I’ll miss most are the relationships and camaraderie we’ve built together over the years. I’m deeply grateful for the pride, dedication, and commitment you bring to work every single day.

It’s been an honor to be a part of this journey with you. Following my last day on September 1, I’ll leave confident that you’re in great hands with Dallas, Tim, and the entire team. The future of Invitation Homes is bright, and I look forward to watching what you accomplish together. Now on to our second quarter operational results. On the revenue side, we delivered solid growth through a combination of strategic rate optimization and healthy occupancy.

Bad debt continued to improve returning to the high end of our historical range, a reflection of both the stability of our resident base and the strength of our screening processes. We also maintained effective cost controls while continuing to invest in our homes. Maintenance and repair costs remained well managed through ProCare and our in house maintenance teams. Preventative maintenance programs and prompt response times helped contain costs while supporting high resident satisfaction. At the same time, our investments in technology and process improvements continue to drive operational efficiencies across the portfolio.

We’re especially proud of our team’s ability to balance cost discipline with high quality service. As Dallas mentioned, our average resident stay is now forty months, a strong indicator of this success. Longer stays not only reflect resident satisfaction, but also contribute to lower turnover costs and better condition of our homes. Satisfied residents tend to stay longer and take better care of their homes, supporting long term asset performance. Altogether, we achieved second quarter same store core revenue growth of 2.4% year over year, while core operating expenses rose 2.2% resulting percent NOI growth.

Turning now to leasing performance. We saw strong results across key metrics. During the second quarter, blended rent growth was 4% driven by 4.7% renewal rent growth and 2.2% growth in new leases. This demonstrates our ability to capture market opportunities during the peak leasing season and underscores the importance of renewal rate growth given that over three quarters of our business is renewals. The year continues to unfold in line with our expectations, including with our preliminary July results.

Same store average occupancy is coming in at 96.6% for the month of July, while renewal lease rate growth remained strong at 5% combined with new lease rate growth of 1.3%. This brings our blended lease rate growth for July to 3.8%. To wrap up, our second quarter operating results reflect the strength of our platform, the quality of our portfolio and the dedication of our best in class associates. As we look ahead to the second half of the year, the teams remain well positioned to build on this momentum. I have strong confidence in their ability to deliver and to continue setting a higher standard with each step forward.

With that, I’ll turn the call over to John Olson to walk through our financial results and capital position.

John Olson, Chief Financial Officer, Invitation Homes: Thanks, Charles. Today, I’ll provide an update on our financial position and capital markets activities and then wrap up by discussing our second quarter financial results. Before I do, I’d like to take a moment to echo Dallas’ earlier comments. It has been my great pleasure to work with Charles over the last eight years. As a leader, Charles is both calm and inspirational.

And as a colleague and friend, he sets a standard to which others can aspire. I wish Charles great success in his next endeavor, and I look forward to watching what he achieves. Turning now to the second quarter, as of quarter end, our investment grade rated balance sheet offered robust liquidity of approximately $1,300,000,000 in unrestricted cash and undrawn capacity on our revolving credit facility. This provides us with substantial dry powder and the flexibility to pursue compelling growth initiatives and capitalize on strategic opportunities. Our capital structure remains strong with our net debt to trailing twelve month adjusted EBITDA ratio at 5.3 times as of quarter end.

This remains slightly below our target range of 5.5 to six times underscoring our disciplined approach to leverage and balance sheet management. In addition, over 83% of our debt is unsecured and nearly 88% of our debt is fixed rate or swap to fixed rate. This includes the benefit of $400,000,000 of new interest rate swaps we executed during the second quarter, which brings our total swap book to over $2,000,000,000 with a weighted average strike rate of just over 3%. The quality of our balance sheet is further enhanced by our substantial pool of unencumbered assets that provide additional financial flexibility. We have well laddered debt maturities with no debt reaching final maturity until mid-twenty twenty seven and we continue to evaluate opportunities in the capital markets to optimize our maturity schedule and cost of capital.

Let me now turn to our financial results and outlook for the remainder of the year. In the second quarter, we reported core FFO of $0.48 per share and year to date core FFO of $0.97 per share, positioning us well relative to our full year guidance range of $1.88 to $1.94 per share. AFFO, which reflects the impact of recurring capital expenditures, was $0.41 per share for the quarter, bringing our year to date total to $0.84 per share, which is also tracking well relative to our full year guidance range of $1.58

Charles Young, President, Invitation Homes: to $1.64 per share.

John Olson, Chief Financial Officer, Invitation Homes: We’re pleased with our strong first half performance and the momentum we’ve built, which gives us high conviction in our original outlook. We remain focused on execution and on carrying our momentum into the back half of the year. With that, operator, we’re ready to open the line for questions.

Conference Operator: We will now begin our question and answer session. If you are using a speakerphone, please pick up your handset before pressing the keys. In the interest of time, we ask that participants limit themselves to one question and then reach you by pressing star one to ask a follow-up question. The first question comes from Eric Wolf with Citi.

Eric Wolf, Analyst, Citi: Hey, thanks. Your occupancy guidance implies a pretty large acceleration in the back half of the year to I think around 96% maybe even

Analyst: a little bit lower.

Eric Wolf, Analyst, Citi: I think you said July was around 96.6%. So I was just curious whether that’s sort of a conservative projection for the rest of the year, if you’re actually seeing something in your future expirations that would cause that occupancy to keep coming down?

Charles Young, President, Invitation Homes: Yes. So the years are unfolding as we expected. And first half of the year, turnover is a little lower, so occupancy stayed a bit higher. But we expected that come Q3, seasonal turnover would show up and that’s what you’re seeing in the July occupancy numbers. And that’s typical for how the year kind of unfolds.

Through Q3, you’ll get some turnover. And as we get towards the end of the year, we’re kind of build back. Hard to predict exactly where it’s going to end up, but it’s right in line with what we expected. The other thing that I’d mention is, we know that there’s a little bit of supply, especially in some of our markets as we think about Central Florida, Texas and others, where we’re having to stay on market a little longer, bringing our days to re resident up slightly. And so that’s another thing that’s adding towards the what we expected was a bit of a reset year on occupancy to get down into the mid-96s.

Conference Operator: The next question comes from Steve Sakwa with Evercore ISI.

Steve Sakwa, Analyst, Evercore ISI: Yes, great. Thanks. Good morning. I guess sort of following up on Eric’s question, I guess the inverse of that is kind of the new lease side, which obviously has been slower than the renewals. And I realize it’s only maybe 20% to 25% of the business.

But I guess what gets the kind of the new lease pricing to kind of move higher? And would it be your expectation as we move into next year as some of the supply comes down that you would see an acceleration in new lease pricing?

Charles Young, President, Invitation Homes: Yes. This is Charles. Yes, we expected that was that this is the year in terms of new lease that we’re going have a little bit more pressure given what we were seeing with the build to rent supply in some of our bigger markets. The good news is we’re past the peak of deliveries and we’re watching that now. We expect that they’re going to continue to kind of come down at the second half of the year, but we still have some absorbing to do.

And as we do that, I think we’ll be pretty set well set up for 2026. How quickly each market kind of absorbs is going to vary. We’re seeing good signs as you look at Orlando, Texas, Phoenix, Tampa. We’re keeping an eye on it. Demand is still here.

Just in those bigger markets, we’re having to absorb and stay on market a little longer and fight for that rate on the newly side and balance that with the occupancy. But you mentioned it, we’re also really the strength has been renewals, not two thirds of what we do and we’ve been accelerating on renewals since April with July being at 5%, which is great. And it just is testament to the resiliency of the platform and our residents, and that they’re choosing to stay with us, which is great.

Conference Operator: The next question comes from Jana Gallen with Bank of America.

Jana Gallen, Analyst, Bank of America: Thank you. Good morning. Question on the transaction markets and kind of views around any potential portfolios of size that could come to market? And then just also curious what you’re seeing for your dispositions kind of where are the cap rates there? And are these going to owner occupants or potentially other investor groups?

Scott Eisen, Chief Investment Officer, Invitation Homes: Yes. I’d say on the transaction market, look, we are we look at portfolios as they come. I think we’re kind of seeing the same cadence of opportunities from bulk purchases that we’ve seen over the last few years here. So I don’t think we’ve seen any material change in terms of what we see there. I think we continue to have a great dialogue with the homebuilders.

I think the end of month tapes and some of the builder inventory, I think we found some attractive opportunities and modest size to pick up attractive cap rates there. We continue to engage with our homebuilder partners every day on forward purchase opportunities and evaluate them as they come. And so I think we see a pretty consistent market. We’re being cautious. We’re trying to find the right deals in the right markets at the right cap rate and we’ll continue to be cautious about the acquisition side.

In terms of dispose, I think most of that market continues to be an end user focus for us. And we continue to try to dispose in the markets that we’ve already identified. Obviously, it’s California and Florida and places like that. And we continue to execute mostly the end users one at a time and we’ll see how that market evolves.

Conference Operator: The next question comes from Jamie Feldman with Wells Fargo.

Analyst: Great. I guess just following up on Jana’s question here. So you think about second quarter some of your largest acquisition markets are also like campus specifically is one of the markets where it seems like you’re having some of the weaker fundamentals.

Scott McLaughlin, Senior Vice President of Investor Relations, Invitation Homes: So how do we how do you

Analyst: think long term about, you know, buying in some of these more active home build market homebuilder markets with more supply risk over the long term where, you know, cycles may put more pressure on fundamentals as you think about building up the portfolio and expanding your relationships?

Dallas Tanner, Chief Executive Officer, Invitation Homes: Yes. Hi, this is Dallas. Take a step back. I mean, you have to zoom out and remember that we have a view that on a long term risk adjusted basis, we want to be primarily Sunbelt and coastal with our footprint. And so you’re totally right in saying that there’s been a little bit of near term noise specifically on the newly side in some of these markets.

But on the renewal side of the house, once you get a customer in place, it’s actually quite strong even in a market where maybe there is a bit more supply that you’re competing against if something goes vacant. That being said, Scott sort of touched on this. When we’re looking at some of these opportunities, specifically right now, things that are coming in from the builders, where there’s sort of inventory that they want to move, we’re getting pretty significant discounts going in, which allows us to be really conservative on our underwritten rents. Specifically in the end of month sort of end of quarter takes by market, we’re able to be pretty aggressive there. And so we definitely think about those types of things like a Tampa where maybe we’re seeing some softness on the new lease side of things in our same store pool, but you just have to underwrite that risk on the front end going in.

And so we feel very comfortable with the acquisitions that were made in the second quarter. We talked about this in the script that most of these are brand new homes either one off that fills in north our scattered business really well and or some of the BTR deliveries that were scheduled.

Scott McLaughlin, Senior Vice President of Investor Relations, Invitation Homes0: And as a reminder, in some of these markets, we’re

Scott Eisen, Chief Investment Officer, Invitation Homes: also doing capital recycling. And so we’ve got some markets where we’ve got older homes or homes that we have a gain on and we’re trying to recycle capital into newer inventory and brand new homes. So it’s both being in markets where we have a big presence and we see resiliency, but also recycling capital in some of our selected homes.

Conference Operator: The next question comes from Michael Goldsmith with UBS.

Scott McLaughlin, Senior Vice President of Investor Relations, Invitation Homes1: Hi, thanks. This is Amy on for Michael. I was hoping that you could dig in a little bit more in terms of BTR supply in some of the large markets to maybe help put some context or numbers around what you’re seeing. And additionally, are you seeing any incremental pressure from scattered site supply? Thank you.

Dallas Tanner, Chief Executive Officer, Invitation Homes: Let me take the last part of your question on scattered site supply. There’s no doubt that as the home buying and selling market on the resale side is sort of stuck right now in terms of where the bid ask spread is between somebody’s current mortgage rate, a home they may or may want to go buy, we’ve certainly seen in some of these markets a little bit of that inventory creep into the overall SFR scattered site sort of inventory that’s out there. And that’s probably putting a little bit of some additional pressure in the near term on rents and new lease rent growth in some of the markets we’ve talked about. In terms of BTR, it actually feels like it’s getting a bit better. And I’ll let Scott comment on this a little bit differently.

But if you went back to last year, you would see a lot of concessions as people were kind of leasing things up. We’re still seeing some of that from our peers. But by and large, it’s just sort of normal absorption, albeit that the markets in some of those kind of key Sunbelt markets we talked about this last fall, we’re going to have a pretty significant amount of supply that’s coming through. It’s not it actually feels in my view based on our own data and things we’re seeing a bit better than it was maybe last year, but that too will wane. Mean Burns has talked about deliveries being down significantly year over year as we go into 2026 and all the data that we’re following suggests the same.

Conference Operator: The next question comes from Haendel St. Juste with Mizuho.

Scott McLaughlin, Senior Vice President of Investor Relations, Invitation Homes: Hey, guys. Good morning. Thanks for taking the question and congratulations Charles. It’s been a pleasure and I look forward to following your next chapter. My question is more on the investment side on the investment book, the mezz investment book, I guess the lending book.

So can you I know you’re just getting started, but can you talk about kind of the opportunity that you see there, maybe putting some numbers around what potentially you can deploy capital in that niche over the near term could look like and perhaps over the longer term? Thank you.

Scott Eisen, Chief Investment Officer, Invitation Homes: Yes. Thanks. Look, in terms of this program like we said, we announced it in June. We closed on our first loan. It’s early days for this program.

We’re out in the market as we speak building relationships with the developers, building relationships with the brokerage community. We’ve got a lot of lines in the water in terms of understanding the opportunity and engaging with prospective borrowers here. So I think we continue to be excited about the program and I think it’s going to be the same thing targeting build to rent communities and markets where we have operational presence, where we feel like we understand rents, where we feel like we understand the market and ideally on project that eventually we’d like to own those communities. But it’s kind of hard to put an exact number around it in this certain point in terms of volume, but we’re out there engaging every day. We’ve got term sheets and lines in the water and we’ll report back to you when we have more progress.

Conference Operator: The next question comes from Jesse Letterman with Zelman and Associates.

Scott McLaughlin, Senior Vice President of Investor Relations, Invitation Homes2: Hey, thanks for taking the question. Another one on the acquisitions, maybe for Scott. So roughly 1,000 acquisitions during the quarter, but only four eighty five or so deliveries. So were there remaining I understand those are probably still new homes, but not categorized as deliveries per se in the supplemental. So I mean, those existing homes?

Were those just one off from builders and they’re not categorized as deliveries because they’re not CDFR communities? Maybe some more clarity there would be great. Thanks.

Scott Eisen, Chief Investment Officer, Invitation Homes: Yes. Great question, Jesse. In terms of that you’re exactly right that the four eighty five identifies the forward purchase communities where we had a forward contract with a builder to have them deliver over a twelve month period etcetera. And then the rest was a combination of buying end of month builder tapes in terms of one off opportunities where we saw attractive pricing from the builders. Some of this as you’ve noted we bought some homes from our partners.

And we had some of our JV three pm partners that were interested in getting a little bit of liquidity and there were houses that we knew very well and we already managed and there was an opportunity for us to purchase them at an attractive price. And so when you put it all together, it was a combination of that. I think you’ve got another stabilized build to rent community that was an attractive acquisition opportunity at a good cap rate for us. So you’re right, it was a combination of both forward deliveries and buying on a one off basis. Thanks.

Conference Operator: The next question comes from Julien Blumen with Goldman Sachs.

Scott McLaughlin, Senior Vice President of Investor Relations, Invitation Homes3: Thank you for taking my question. Maybe just digging into the new lease side. So positive 1.3 in July. I guess should we expect it to weaken seasonally further into August and September? And then how should we think about the 4Q deceleration?

Just thinking about sort of the rent curve last year, could it look similar? Or does sort of your willingness to flex occupancy this year mean you might hold on to more rate?

Charles Young, President, Invitation Homes: Yes. This is Charles. It is, as I said earlier, the year is

John Olson, Chief Financial Officer, Invitation Homes: kind of

Charles Young, President, Invitation Homes: unfolding We peaked in Q2, which is typical. And then in Q3, you kind of balance out and depending on what’s going on with that market. So Q4, typically as it gets to the holidays, it does slow down

Scott McLaughlin, Senior Vice President of Investor Relations, Invitation Homes: a little bit. So we’ll

Charles Young, President, Invitation Homes: see where we end up. As you think about the newly side, that balance really is being affected by some of our larger markets as we talked about. And I think that’s what makes it a bit more unpredictable. We do see line of sight though that the absorption in those markets, we’re chopping through that. And ultimately, we think we were seeing, as Dallas said earlier, that there’s going to be deliveries is down and will be substantially down next year, hopefully at some point later this year.

But what we do have clear line of sight on the renewal side, which has been really strong in two thirds of what we do and we expect that that’s going to kind of maintain in that range where we are right now through the end of the year and maybe have some upside in Q4. So the blend will balance out. But we’re in that normal seasonality where you get the curve, you kind of peak and then it’s going to step down depending on kind of the market impacts.

Conference Operator: The next question comes from John Pawlowski with Green Street.

Scott McLaughlin, Senior Vice President of Investor Relations, Invitation Homes4: Thanks for the time. A question on the proportion of the book that’s multiyear term leases, the twenty four month leases. I think it’s 25% of total leases. Are the in place rents of that proportion, of tenants well above market at this point? And is that kind of a slow but consistent drag on the headline new and renewal figures reported?

John Olson, Chief Financial Officer, Invitation Homes: Yes. I wouldn’t necessarily say that, John. I mean, I think if you look at loss to lease right now, and, you know, I would caution everyone not to read too much into it because it does bounce around a little bit. You know, it it’s sort of, you know, call it a a little bit kind of between one and a half and 2% is probably the the right rule of thumb. I I don’t think that the multiyear leasing profile of our book is substantially above market.

You know, we do think that we continue to have opportunities to go capture sort of market rate growth and do think that particularly in the case of residents who’ve been with us for a long time who’ve renewed several times over average length of stay is now approaching forty months. We are probably below market on a number of those and we’ll be looking to try to extract what we can when those leases do turn.

Conference Operator: The next question comes from Juan Sanabrio with BMO Capital Markets. Hi, thanks for the time. Just curious on the expense side, it seems like you’re running ahead

Scott McLaughlin, Senior Vice President of Investor Relations, Invitation Homes: as a whole in particular on taxes and insurance, which you kind of flush out more concretely in guidance. So just curious on the expectations for the second half. Is there a tougher comp? Or is there just some conservatism into the unchanged guidance with the range is still pretty wide?

John Olson, Chief Financial Officer, Invitation Homes: Thanks, Juan. It’s John. Yes, I think it’s the latter really. As Charles said, we feel very comfortable with where we sit relative to our guidance. The year is unfolding about how we anticipated.

We’re sort of in line with to maybe slightly ahead of where we expected we’d be. But at the same time, think it’s important to acknowledge that we’re right in the depth of peak leasing season. It is a more challenging new lease environment. It is taking a little bit longer to get stuff absorbed. And I think we want to be mindful of the fact that it’s a little bit of a grind in a few of our markets.

Now that said, we are also waiting on Florida and Georgia property tax. We’ll have a lot more information on those in the next sixty days. So if I put it all together, just to be clear, we feel really good about where we are. I think if I look at the balance of risks and opportunities, I feel good. But it just didn’t make sense given the information in hand to go revise guidance today when we’re going to know a lot more sixty days from now and we can do it with a much greater level of clarity and confidence.

Conference Operator: The next question comes from Adam Kramer with Morgan Stanley.

Scott McLaughlin, Senior Vice President of Investor Relations, Invitation Homes5: Hey, thanks for the time. Maybe just to I think it’s sort of similar to some of the earlier questions, but maybe just to put a fine point on it. I think you guys in the past have talked about sort of a mid-three percent blended rate growth guide or informal guide for the year. Given what you’ve done to date, obviously, has been really strong. Yet you you’ve sort of covered what’s happening on the new lease side.

Wondering if there’s any change to that number or how you’re thinking about that 3.5% or mid-three percent blended rate growth guidance for the full year at this point?

John Olson, Chief Financial Officer, Invitation Homes: No, I don’t think we’re in a position where we’re going to, as I said, revise guidance today. We’re certainly watching it. Renewals, as Charles said, have been really healthy, very resilient, and that’s three quarters of our business. So if we can continue to sort of see positive results on the renewal side, continue to get homes absorbed, I feel comfortable with where we are relative to our guide as I said earlier. But I don’t think we’re in a position where we’re going to go back and sort of speak to how that number may change.

We’ll obviously know more here by the time of our next call and we’ll have a couple opportunities I think before then to meet with some of you all.

Conference Operator: The next question comes from Brad Heffern with RBC.

Scott McLaughlin, Senior Vice President of Investor Relations, Invitation Homes0: Thanks. Hi, everybody. Congratulations to Charles. SoCal has been a pain point for Multi It doesn’t look that way, at least obviously in your numbers.

So can you walk through the fundamentals on the SFR side in Southern California?

Charles Young, President, Invitation Homes: Yes. SoCal has been a strength for us, running high occupancy, high blended, high new lease. New lease is affected by AB fourteen eighty two where we’re limited on the renewal. So there’s kind of built in kind of loss to lease when we get to the new lease side. Given the lack of supply of homes, single family homes in California, it puts our book in good shape.

On the operating side, there’s been some noise, but we’re improving on the bad debt side. So overall, it’s been a nice portfolio, and kudos to the team for their execution.

Conference Operator: The next question comes from Jade Rahmani with KBW.

Scott McLaughlin, Senior Vice President of Investor Relations, Invitation Homes6: Hi, thank you. It’s clear that the Midwest has seen stronger rent growth recently. So do you view this trend as sustainable? And have you evaluated any acquisition opportunities there to diversify? Thank you.

Dallas Tanner, Chief Executive Officer, Invitation Homes: Hi, great question. Look, we’ve been in the Midwest now since 2012, and we really enjoy the numbers that we’ve seen out of it the last year, year and a half. That being said, generally speaking, it’s been a tougher market tougher marketplace for us to on a risk adjusted basis to both see great home price appreciation and great revenue growth. And so the short answer is no. We don’t see it as a reason to strategically pivot or do anything different with our long term lens.

We certainly enjoy the footprint that we have there. We kind of kept the flag in the Midwest with a little bit in Chicago and Minneapolis. And we’re grateful for all the good growth fundamentals there, but it’s because basically there was no development or building for ten years. And so it’s nice to see it get its pop, but we’re still long on kind of these high growth kind of net migration markets in the South and Southeast and Southwest where we think both household formation, demographic information, the amount of 35 year olds moving there year in and year out, all lend themselves to a good long term lens on growth on a risk adjusted basis.

Conference Operator: Next question comes from Anthony Paolone with JPMorgan.

Scott McLaughlin, Senior Vice President of Investor Relations, Invitation Homes7: Thanks and congratulations Charles. I guess, apologies if I missed this, but you guys had another quarter of pretty strong dispositions at very low cap rates. Can you talk about just how much more of those you think you could do over the next few quarters? And also beyond just maybe selling to users, like any commonality among those assets as to why they’ve gone off at such low cap rates?

Dallas Tanner, Chief Executive Officer, Invitation Homes: No, think, look, taking us this is Dallas jumping in here. Look, you have to think about things a couple of different ways. One, many times some of our assets have a higher in place sort of use for a retail buyer and we target those as part of our asset management strategy. So as a home in California, for example, gets to such a low cap rate on a relative retail basis, we’re a net seller. And as you think about where we can recycle those capital rates into sorry, me, not capital rates, into cap rates on the buy side, Scott and the team have done a really nice job like basically selling in the high threes, low fours, maybe mid fours right now because things are a little bit more competitive.

And we’re moving that into basically six cap properties at today’s pricing. And so as we look at sort of it’s hard to forecast. We definitely feel good about our initial guide of what we said we would do both from a buy and a sell. And look, we’re probably a little bit on the high side of our acquisition guide because we’re seeing really good opportunities. But they’ll be measured in terms of what we sell and when we sell it.

And it’s a great way to continue to recycle and to also offset risk in the portfolio. So if Scott sells a forty five year old home in Southern California and reinvests in a brand new home in Atlanta, definitely like that as part of our capital recycling strategy.

Conference Operator: The next question comes from Michael Goldsmith with UBS.

Scott McLaughlin, Senior Vice President of Investor Relations, Invitation Homes1: Hi, thanks for the follow-up. I was wondering kind of a bigger picture item. If we do see a rate cut and then we do see an increase in home sales, how would you expect that to impact your ability to continue to achieve strong market rent growth? So would that more liquid home buying market be any sort of a headwind for rents or perhaps a tailwind?

Dallas Tanner, Chief Executive Officer, Invitation Homes: Hi, really interesting question. And I think we’re all wondering the same thing. Look, there’s clearly we have an interesting vantage point as a company because we see transaction volume both in the for sale market alongside our rental business. And as we look at the for sale market, there’s no doubt that maybe a little cheaper mortgage rate would help create some lubricant in sort of the resale marketplaces and that we would view as generally always a net positive for our business. Transaction volume is a very good thing for a couple of reasons.

One, gives us great marks on where our portfolio values are and where they should be trading. And it also creates near term demand both for rental space and it takes existing inventory off the market at times in the for lease space. So if you look in some of our markets where we’re currently operating and we’re talking about new lease rate being a little bit softer, there’s definitely been homes that have converted from the for sale side of the house into the for lease side of the business. And so that’s additional competition for both us and for our peers. And so I would say, yes, we would view more home volume and transaction buying and selling as a better tailwind for our business generally.

And candidly, it just creates a more healthy environment. People should have choice, flexibility and options across all the different parameters of housing.

Conference Operator: The next question comes from John Pawlowski with Green Street.

Scott McLaughlin, Senior Vice President of Investor Relations, Invitation Homes4: Thanks for taking the follow-up. John, I want to pick your brain on the swap book and $2,000,000,000 notional amount of swaps is not a small number. So can you just give me a sense of the total upfront cost you paid to execute these swaps? Maybe I’m old fashioned, but it’s kind of prefer you’d simplify things, just term out the debt naturally with fixed rate, longer day bonds and took the medicine, took your medicine on higher rates. But I’m not that smart on how cost effective swaps are.

Could just flesh out the thought process on this kind of unique strategy?

John Olson, Chief Financial Officer, Invitation Homes: Sure. Thanks for the question, John. And I’ll start off by saying I agree with you. Over time and distance, our expectation is that our balance sheet is going to become more and more fixed rate. Our swap book is sort of a legacy of what our historical capital structure look like.

But I think for us, if you think about the cost of a swap, basically there is a credit charge baked into the spread we pay. So if you look at that strike rate column on Schedule two d, typically in addition to a a true kind of cost related specifically to the swap, there’s a credit charge that the counterparty charges to us. It’s fairly de minimis. And then, you know, there is, obviously, the the sort of mark to mark effect over time whereas these swaps can become either an asset or a liability. And there have been instances where we’ve amended swaps to take advantage of the asset position and there have been times when that’s been a more substantial liability.

But our overall strategy is to try to make, the interest expense related to our capital structure, more knowable, you know, more transparent, and more sort of, I would say, less volatile over time.

Analyst: But I think your

John Olson, Chief Financial Officer, Invitation Homes: point is well taken. And I would say that as the years continue to pass, we will expect to be less reliant on sort of hedging to manage a fixed rate sort of capital structure.

Conference Operator: The next question comes from Nick Yulico with Scotiabank.

Scott McLaughlin, Senior Vice President of Investor Relations, Invitation Homes7: Thanks. I just wanted to go back to the topic of property taxes and you have the guidance this year of 5% to 6%. You did just under 6% last year and you were talking about it had come down. But I so I guess what I’m wondering is, at this point, I don’t think home values are appreciating as they were nor rental any sort of rental product. So at what point do you start seeing some tax relief?

Is that a possibility in 2026? Just trying to think about like a longer term property tax rate of growth. Thanks.

John Olson, Chief Financial Officer, Invitation Homes: Yes. Thanks for the question. And it’s obviously the right one. I would say that over the long term, our expectation is that our property tax expense growth starts to look more like what it did historically. We’ve talked on and off over the last couple of years about the degree to which assessed values sort of lag market values and there’s a bit of a catch up.

And I think your point is well taken and we are certainly cognizant of the fact that home price appreciation has slowed pretty significantly, particularly in some of the Florida markets. I think what’s important to remember is, taxing authorities have sort of revenue obligations that they need to fulfill. And at least in the last several years, tax has I think been a little bit of a plug in terms of getting those budgets where they need them to be. And so given the magnitude of property tax as an expense item, I think it’s always going to have the potential to be both a risk and an opportunity area for us. We are certainly hopeful that the property tax relief you referenced comes to pass.

And my expectation is that over the longer term period, we should be back in that sort of 4% to 5% annual property tax expense growth zip code. It’s just a question of when we get back to that more historical run rate.

Conference Operator: This completes our question and answer session. I would now like to turn the conference back over to Dallas Canner for any closing remarks.

Dallas Tanner, Chief Executive Officer, Invitation Homes: Hey, we want to thank everyone for joining us again. Also want to thank Charles for his leadership, his partnership and extend all our gratitude to our entire leadership teams and the associates in our business. They’re working really hard every day and doing a great job. We appreciate everyone’s continued support. We look forward to talking to everyone soon.

Conference Operator: The conference has now concluded. You may now disconnect.

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