Invitation Homes at Nareit REITweek: Strategic Growth Amid Market Dynamics

On Tuesday, 03 June 2025, Invitation Homes (NYSE:INVH) presented a strategic overview at the Nareit REITweek: 2025 Investor Conference. CEO Dallas Tanner highlighted the company’s robust performance in the first five months, surpassing expectations in occupancy and rental rates. Despite challenges in markets like Dallas, Tampa, and Phoenix, the company remains optimistic due to its strengths in Denver and Seattle. The focus on capital-light development strategies and a proactive approach to market dynamics underline Invitation Homes’ strategic positioning.

Key Takeaways

• Invitation Homes exceeded initial expectations in occupancy and rental rates.
• Strategic focus on capital-light development and partnerships with regional builders.
• Challenges in Dallas, Tampa, and Phoenix, but strong performance in Denver and Seattle.
• Affordability advantage with rental properties saving $1,100 compared to homeownership.
• Optimistic outlook with anticipated rent growth between 3% and 5%.

Financial Results

• Occupancy rates are running in the low 97s, slightly higher than projected.
• Blended rental rates are in the fours for renewals and new leases.
• Renewal rates are north of 4%, ranging from mid to high 4s.
• The company has invested $100 million in acquisitions.
• Disposition strategy involves funding growth through asset sales at attractive cap rates, sometimes below 4%, particularly in Southern California.

Operational Updates

• The renewal business is strong, accounting for 75% of leases.
• Market strengths are noted in Denver, Seattle, Northern and Southern California, Atlanta, and the Midwest.
• Build-to-Rent deliveries are slowing significantly.
• Development goals include a run rate of over 2,000 new homes per year.
• Third-party management encompasses approximately 25,000 homes.
• The average length of stay is over 38 months, with over five years in California.
• Days to re-resident are aligning with pre-pandemic levels.
• Renting is about $1,100 more affordable than buying in their markets.

Future Outlook

• Continued investment in capital-light development strategies.
• Expansion of the developer lending program, targeting $200-300 million annually, with an aim to build a $1 billion business over three years.
• Expected rent growth of 3% to 5% on a blended basis.
• Focus on accretive external growth and capital-light earnings.

Q&A Highlights

• Customer demographics include those renting by choice, in transition, or out of necessity.
• Demand remains strong, comparable to pre-COVID levels.
• Revenue management balances occupancy and rates using data-driven pricing.
• Monitoring of rising home inventory and competitive pressures, especially from BTR.
• Developer lending targets loans between $30 million and $60 million, with returns over 10%.

In conclusion, Invitation Homes remains confident in its strategic direction and market positioning. For a detailed account, readers are encouraged to refer to the full transcript.

Full transcript - Nareit REITweek: 2025 Investor Conference:

Austin Wurschmidt, Analyst, KeyBanc Capital Markets: Does that make it I think that’s official. So we got the green light. Alright. Well, welcome everybody to the 02:30 p.

M. Company presentation with Invitation Homes. For those of you that don’t know me, my name is Austin Wurschmidt. I’m covering residential healthcare and lodging analyst at KeyBanc Capital Markets. With me today, the executive management team at Invitation Homes.

Directly to my left, we’ve got Charles Young, President and Chief Operating Officer John Olson, Chief Financial Officer Dallas Tanner, Chief Executive Officer and Scott Eisen, Chief Investment Officer. I’m going to hand it over to Dallas to make some opening remarks here and then we’ll jump into Q and A.

Dallas Tanner, Chief Executive Officer, Invitation Homes: Great, thank you. We appreciate everybody being here and we’re thankful for the support that Invitation Homes widely receives from many of you. So thank you very much. First, I think as we look at where we are in the year, NAREIT is always really a good point for us to check-in. We feel really good generally about where we are through the first five months of the year, probably slightly ahead a little bit on occupancy and rate from what we laid out at the beginning of the year.

Renewals business, which is 75% of our leases plus has been really strong going into summer north of 4% or the mid to high 4s. New lease also pretty steady. We have a handful of markets that are creating a little bit of drag. We talked about at the beginning of the year, we knew Dallas and Tampa and Phoenix would sort of be tough as we continue to onboard a lot of that new supply. And so those markets have been a little bit challenging.

It’s pretty competitive environment. And I’d say on a year over year basis right now, those markets are pretty flat. I will argue that Denver, Seattle, Northern California, Southern California, Atlanta, all of our Midwest markets very strong, both on new and renewal. And so we’ve seen a nice blend as we head into summer. Occupancy is a touch higher than we would have expected, large part due to that renewal velocity that I talked about before.

Now we’re sitting sort of the low 97s with kind of blended rates in the fours between renewal and new. It’s a very healthy position for us to be as we sort of tackle peak leasing season through the summer. And I just add that we should expect and you all should expect that we’ll occupancy sort of come in over the next call it two to four months as we have more of our turnover traditionally between June and kind of early to mid September. Second point, along the lines of what I mentioned around some of the supply dynamics in the marketplace, we feel really good about where we’re seeing deliveries in the BTR segment specifically, sort of dramatically slow down in terms of those deliveries. We flagged that last summer, is that being a potential risk item in our July call that we knew that we’re going to see an increased amount of supply, particularly in like Tampa, Phoenix, some of the Texas markets.

Those deliveries are dramatically slowing. We’re going be in a very healthy spot here in a couple of quarters in terms of that being an issue around supply pressure. Lastly, Scott and the team, Charles with the onboarding, John with figuring out how to pay for it, have done a wonderful job in our homebuilder businesses and what we’re doing on the development front. So we take a very capital light approach to development. We have a number of strategic partners around the country, both large national builders, small to midsize regional builders, where we do CFO sort of structures where we’re really capital light on the front end, but we lock in pricing with a little bit of flexibility for our partner.

And that business continues to basically establish a run rate of right now it’s about north of 1,800 homes that are currently under construction and delivery. But the goal here is that we get the business to a place where on any given year we’re sort of bringing on 2,000 plus new homes a year as a sort of normalized run rate. In addition, and we sort of talked about this in our call in February, we mentioned it a little bit at Citi that we’re exploring ways to go up the curve on the development cycle. We announced in the last day or two, an update on what we’re calling our developer lending program. And that’s a sort of capital light way once again to go up the curve with regional builders and drive additional transaction volume to the company with a little bit of an outsized return while they’re in the market.

And Scott can give you a little bit more on the specifics and sort of the return profile here. But I mean, and large, what we’re trying to do with the business is continue to invest accretively on balance sheet, be really deliberate about where we want to own assets and why, continue to use the size and the scale of our portfolio to drive outsized opportunities that will lend themselves to ultimately hopefully balance sheet opportunities. You see that in our 3PM business, which today sits at about 25,000 homes that we manage for a few strategic partners. And then you’re going to start to see this with our development lending business, where Scott, over the last couple of years with the team have dealt developed really good relationships on the BTR front with a lot of small to midsize developers around the country. And while it sounds great, it’s actually hard in practice to go figure out your financing in a way that’s reasonable, especially if things start to slow.

And so what we think we can do with our low cost of capital sort of step in and bridge that gap, extend our relationships further, deepen the relationships with some of these regional partners that we really already like to do business with, and ultimately build another funnel with a lot of takeout opportunities for us in the long run. And so we’re excited to be here today. The business feels great. The markets sort of funny as we all know, but the business itself in Invitation Home is in a really strong and really healthy position. Happy to

Austin Wurschmidt, Analyst, KeyBanc Capital Markets: jump anything. I think you hit on a lot of themes that are worth hitting on one of which you started out with, which was the strong retention and kind of the demand side of this business. Can you just talk high level a little bit about the demographics, where we are in the adoption of single family rentals as a housing alternative and maybe speak to kind of the penetration rate of that target customer?

Charles Young, President and Chief Operating Officer, Invitation Homes: Go ahead. Yes, look, your question is kind of broader about the customer in general, but just to emphasize briefly what Dallas said. In terms of where we are this year, kind of right where we expected healthy occupancy, maybe a little stronger given the low turnover. We thought this would be a year where we kind of bring occupancy in a little bit from the COVID levels. We’re running really high.

And bit of a reset in terms of getting back to normal seasonality that have been out of the business. And so with that, we are seeing, to your question, our customer really has kind of three different angles, if you will. Those who are renting out a choice, and we see that as a growing segment, those who want the flexibility, the optionality, not have to pay for the high insurance costs and taxes rising or deal with a roof or otherwise. And so they choose the leasing lifestyle, if you will. You got those who are in transition, that’s a big part of our book, those who are moving new to an area or they’re going through a circumstance where they want to rent for a while, and hopefully, can capture them for longer term.

Our residents are staying over three years and getting longer every quarter. And then we have those who are kind of renting out of necessity because they don’t have their credit built up, and we’ll help them do that. And ultimately, they’ll stay longer or they may get to a place where they can choose to move on. But our goal, as Dallas alluded to, is we’re running a really good business. We’re adding value to the resident in terms of services that we provide.

It’s more affordable to rent one of our homes than it is to buy in all of our markets, on average about $1,100 more affordable. And as we look at that from a practical sense, that means a family can get into a school district, safe neighborhood and send their kids to a school that they may not be able to go to otherwise. And we’re finding that’s kind of rinse and repeating in a kind of inflationary environment. So I gave you a lot there. Don’t know if I answered your question directly, but it’s a good question.

Austin Wurschmidt, Analyst, KeyBanc Capital Markets: No, I think just hitting on the affordability piece a little bit, you talked about the $1,100 delta between renting versus owning and some of the renters by necessity, either credit perspective or otherwise, how does that historical relationship how wide has that spread been over time?

Charles Young, President and Chief Operating Officer, Invitation Homes: Yes. This is probably on the higher end of it, kind of given what’s happened post COVID, supply chain, all of that. We’ve always had a

Scott Eisen, Chief Investment Officer, Invitation Homes: bit of a spread in almost all of

Charles Young, President and Chief Operating Officer, Invitation Homes: our markets. At times, there’s been a couple of markets that are a little more even. But even when that number has been lower, we performed really well. And so yes, I think it stretched out a little bit. And I think as we work through and that’s showing up in many of our markets where we’re not seeing a little bit of the absorption challenges.

So when you look at the Carolinas or California or Seattle, Denver, that affordability factor is part of why we’re performing so well there. And I think as we work through some of the supply in the Phoenix and parts of Texas and parts of Northern Florida, we’ll start to go back to that as well. So yes, it’s about as wide as it’s been for a little while.

Austin Wurschmidt, Analyst, KeyBanc Capital Markets: How does traffic been up into this point? Because within the operations update, renewables remain strong, retention remains strong. You saw new lease rates maybe get back a little bit into May. What do you attribute from a demand perspective and traffic versus the supply that you just alluded to?

Charles Young, President and Chief Operating Officer, Invitation Homes: Yes. As we talked about, it’s kind of what we expected this year. This is more of a return to normal seasonality. Traffic demand is still strong, down from last year, but we still had some kind of COVID effects, but even or slightly better than pre COVID. And so those numbers are great.

Our teams are really executing well. So as you have your funnel, we’re able to pull through in the bottom line using technology, a little bit of AI is helping on that front. And outside of the markets that we’re talking about, you’re kind of in this normal kind of supply demand, where we’re strong occupancy, getting north of four blended rates. And if we get some of our bigger markets like Phoenix and Tampa returning to that normal seasonality, I think we’re going to get even a little bit more growth. But even with that, when you’re running a book in the low 97s and four plus on blend, it’s pretty good business for us right now.

Austin Wurschmidt, Analyst, KeyBanc Capital Markets: Days to re resident was another component you guys have spent a lot of time talking about and kind of how that came down pretty significantly during the COVID period that’s begun to normalize. How are you thinking about the days to re resident component, how that’s tracking relative to more pre pandemic levels?

Charles Young, President and Chief Operating Officer, Invitation Homes: Yes, we’re about in line to pre pandemic levels. There’s two parts that make up days of re resident. There’s the turn portion, how quickly we can turn that house and get it back in service, and then how long we have to wait on market to lease that home. Turn wise, we’re executing well. We’re right within our numbers kind of ten to fourteen days, some markets on the lower end, some markets on the higher end.

But we knew this year, we were going to have to compete on price a bit more, and we thought that it was going to take longer to get some homes leased, and that’s why we’re going to start to see occupancy come down relative to last year. And so we’re going back to kind of where we were pre pandemic. It was artificially low during COVID. We got down into the high 20s at some point. This year, I think we added three, four, maybe five days year over year in that expectation that we’re going to have to compete on price and knowing that occupancy was going to come in.

Right now, we’re tracking kind of on budget with that. We’ll see how the rest of the summer goes.

Austin Wurschmidt, Analyst, KeyBanc Capital Markets: So you referenced a little bit ago on traffic down just a little bit, but still stronger than what you saw pre pandemic. Can you just speak to from a revenue management perspective, kind of how hands on you are with the systems, how you think about sort of targeting a certain level of occupancy versus being a little bit more aggressive on rate?

Charles Young, President and Chief Operating Officer, Invitation Homes: Yes. This year, we knew we were going to solve for trying to capture as much market rate as we could, knowing that occupancy was going to come down. And we knew that was driven more out of days to be resident, of that on the market versus the turnover effect. We knew turnover was going to kind of hang where we were last year, and that’s what we’re seeing so far, maybe a little lower in the first quarter. And so as we’re looking at kind of how that plays out in the numbers for us right now, it’s kind of how we expected it would be.

And ultimately, we’re getting to a place where we feel like we have that right balance. And what we use in terms of pricing, going back to your revenue management question, we have the ability to basically see pricing, rental pricing across the country with publicly

Scott Eisen, Chief Investment Officer, Invitation Homes: available information. And we use that information to kind of set pricing based on algorithms, bed bath count, location,

Charles Young, President and Chief Operating Officer, Invitation Homes: all of that. Ultimately, that kind

Scott Eisen, Chief Investment Officer, Invitation Homes: of sets the price, so we know where we expect market to be. And then from there, we

Charles Young, President and Chief Operating Officer, Invitation Homes: look at the number of leads that are coming through to drive whether we think that price is in the strike zone or do we need to adjust one way or the other. And given that we manage over 110,000 homes, it’s really good data that we have within our submarkets, within our markets. And then ultimately, we have lots of people on

Scott Eisen, Chief Investment Officer, Invitation Homes: the ground. We have offices in each of our markets. And then if we have a house that’s

Charles Young, President and Chief Operating Officer, Invitation Homes: not getting a lot of leads or it doesn’t seem to be performing as we had thought, we’ll make

Scott Eisen, Chief Investment Officer, Invitation Homes: sure that we can roll a truck out there, get somebody to put eyes on assets to make sure that it’s at the quality that we expect. So it’s a

Charles Young, President and Chief Operating Officer, Invitation Homes: little bit of a lot of art, a lot of science, but a little bit of art in terms of trying to work with the teams locally and data. And I think over time AI will start to play into that even more. But right now, it’s really a lot of data science to make sure that we’re making smart decisions.

Austin Wurschmidt, Analyst, KeyBanc Capital Markets: On the supply side, I think everybody’s kind of waiting for some of the supply across various spectrums of the residential market to come down. Certainly, Bill DeRent has gotten good amount of attention on that front as well. But can you talk a little bit from a shadow supply perspective in the rising home inventory levels that are being seen, certainly, Florida market seems to come up a bit. Do you feel competitive pressure from some of that shadow inventory rising or more just specific to build to rent?

Dallas Tanner, Chief Executive Officer, Invitation Homes: Look, I agree with everything Charles said around sort of the supply demand dynamics that we see with somebody coming through our door. I think what is interesting about the housing sort of market generally and plays really well for Invitation Homes is that you have this rising cost of homeownership across pretty much every category, whether it’s mortgage, property tax, homeowners insurance, cost to maintain, you have noise around sort of your own procurement costs as a homeowner, right, that are elevated even from where they were two or three years ago. Resale supply has ticked up in parts of the country, three to five months, maybe four to six months in some markets. And yet you’re not seeing the transaction volume. I think on a run rate basis, we’re seeing about plus or minus, call it somewhere between 4,000,000 and 4,500,000.0 of annual sales, which typically pre pandemic was always kind of somewhere between 5,250,000.00 and say 6,000,000 on a national basis.

So like what’s going on? You have a higher mortgage rate with call it 75% of the country and something that’s pretty fixed and at a much lower price point. You have the rising costs that I mentioned before. And so I think there’s going to be a propensity to renew, which we’ve seen in our numbers for the first couple of quarters of this year. Renewals were a little bit stickier than what we’d seen.

You’re certainly not seeing the transaction volume to your point. I think the plus side for us on the new lease front when something’s vacant, is that for the last year, we’ve had to compete pretty heavily in our full community division, like our BTR business with outside communities that were coming online. And we saw pretty standard across the board, a month of concessions and this, that and that is now starting to burn off. Scott can speak to this as much as I can, but we have basically 60 plus full communities that we own or operate today. We have a really good idea of what a BTR customer is doing real time.

And so with that is going into our calculus of how we’re thinking about underwriting new opportunities. The second thing that we’re spending a ton of time on to sort of beat some of that supply risk is, look, the one thing that we’ve really figured out over the last three to five years is our scattered site business, which is the vast majority of our company, is a true strategic moat for single family. We have customers that are extremely sticky, they want to stay in that neighborhood, their kids are growing up playing with a bunch of homeowners in that neighborhood and they have no intention of moving out. Our average length of stay across the country is north of thirty eight months, keeps ticking up every quarter. In our California markets, it’s over five years.

That is an incredibly sticky customer and it’s a really interesting business model when you start to think about other ways that we can weave in other things into that leasing experience that can drive down costs for the customer. We have an ability to do that, I think in an even a more intelligent way in our scattered site business than we can in the BTR. So I think with BTR, little lower bear to entry for other people that want to go build it, operate it, figure out how to solve for it. I think in our scattered business, and we’re buying a lot of this right now, specifically from builders, as they’re having sitting inventory rise is an area that we’re really focused on. We’re not buying on the MLS, we’re not buying very much resale ever.

I think we did between twenty and thirty homes last year. I mean, that’s just not a focus for us. Our focus is how do we develop 2,000 plus new homes a year? How do we continue to be smarter on M and A? How do we leverage the platform, both from a third party management perspective and also now in lending perspective that we can create residual value for other housing providers in the market.

Austin Wurschmidt, Analyst, KeyBanc Capital Markets: So if we were to see these rising inventory levels, I guess, impact home price appreciation from any perspective, how do you think that affects your ability to price homes and push rents over time?

Dallas Tanner, Chief Executive Officer, Invitation Homes: Look, let’s be really clear about one thing. Like, we don’t and we say push rents, but the market dictates rent, like full stop. Like, if we are overpriced with a sitting home, it won’t lease. If we’re underpriced, it lease too fast. Like the market is what the market is.

I think where you can have leading indicators to your point is of where rents may be going, is that if we see decent home price appreciation in a particular submarket or market, that gives us a lot of conviction. We’ve seen how this has worked for the last twenty years that rents typically follow suit. And in a market like Texas, where we’ve had basically little to no home price appreciation for the last twelve to eighteen months, we’re still seeing sort of a CPI sort of number around our rent growth and on the renewal side, it’s probably a little bit better. And so as you kind of think about those dynamics, it makes sense that rents haven’t totally caught up to where home pricing has gone over the last five years. So we would expect that there’s fundamentally some pretty good tailwinds in our business.

But at the same time, you also pay the piper when it comes to property tax and the rising costs around all the Melarus and everything else. That seems to be sort of slowing down. So that’s another reason that we’re pretty optimistic that on the non controllable expense side, we’re going have a lot less volatility over the next few years because home price appreciation is going back to much more normal levels. So I think all things being equal, we said this in another meeting, like we can’t predict the future perfectly, but it feels like we’re in sort of back to this pre pandemic sort of norm. We could predict probably somewhere between 3% to 5% rent growth on a blend across our kind of book if things sort of stay somewhat normal.

And it feels like the expense growth is sort of inflationary. And that’s a good business for us. At base case scenario, that’s a really good business for us.

Austin Wurschmidt, Analyst, KeyBanc Capital Markets: When you think strategically about portfolio positioning within certain markets and submarkets really, and sort of the newer build to rent type full communities versus owning more one off infill submarkets. Do you have a preference or do you think one over the long term has a better ability to push rents over time?

Scott Eisen, Chief Investment Officer, Invitation Homes: Mean, look, I think when we think about how we’re targeting acquisitions today, there’s a balancing act obviously between the different channels we have, right? So we have the MLS channel through which we buy homes. We have buying inventory tapes from the builders. We have buying stabilized communities from developers and high quality operators, and then we’ve got our forward purchase program from the builders, right? When we look at markets, when we look at houses, we go within our markets.

We are trying to buy houses in areas where we already have boots on the ground. Every time we look at a portfolio acquisition, we’re looking at the three, five, 10 mile radius. What homes do we have in the area? What is the performance of our homes in that area? And we’re trying to get the right balance.

Obviously, we look at both infill and also areas where the builders are building. But at the end of the day, we’re going to areas where we’ve got homes, if it’s not infill next to it, it’s clearly adjacent to it. And so that’s as we think about our growth and how we place our capital. As Dallas said at the moment, think we’ve talked a lot about the difference between the resale inventory and the builder inventory. I think we’ve seen some real opportunity to work with the builders.

I think obviously you’ve seen rising inventory levels and we’ve been successful. Some of that $100,000,000 of acquisitions that we announced in our press release last night, some of that was buying directly from builders from some of their inventory tapes, and we found some very strong opportunity for us to make accretive acquisitions in the high fives and low sixes. And so we continue to pivot between those four channels and where we see accretive opportunities for our shareholders, we’re allocating capital.

Austin Wurschmidt, Analyst, KeyBanc Capital Markets: How significant getting into the developer lending program, which you hit on is kind of a new piece to the business. I mean, how significant of an opportunity is that? What are the economics that you see for

Scott Eisen, Chief Investment Officer, Invitation Homes: We think sorry, I can barely reach. We think about this builder program is just another extension of our business. If you think about it, we’re in the market every day talking to brokers, talking to builders, talking to developers, right? Many times more engaged with those folks, they’re trying to get us to either work with them on a forward purchase agreement, trying to work with them on buying a stabilized community. So those same counterparties with whom we engage every day, they also are looking for debt and equity capital to build their projects.

You’ve obviously seen the money setter banks have essentially exited financing for a home building. The regional banks have dialed it back a little. You’ve seen some nonbank lenders step into that area of the market. But we have relationships with these folks. We’d like to deepen our relationships.

As Dallas said, we’d like to go a little further up the chain with them. And I think we see this as an opportunity. Look, the average project that someone’s building is a 40,000,000 to $70,000,000 project. I think we’re kind of looking at making loans to those folks somewhere in that 75 plus LTC range, an advance rate. But to be clear, we want to lend money on communities that ultimately we would love to own and we would like to buy.

So we generally have not allocated capital to the one and two bedroom cottage style product. We’re doing three bedroom townhomes with two car garages. We’re doing detached three bedrooms, detached four bedrooms. And those same communities that we’d like to buy upon stabilization are the same communities that we have both the origination and underwriting capabilities to get our arms around. So that’s the market we’re going to target and that’s the consumer with whom we want to continue to evolve our relationships.

Dallas Tanner, Chief Executive Officer, Invitation Homes: To go just a step further, because you asked about size and pricing. Think what Scott would tell you is that we know that we’re a REIT. We know that ultimately we want to own assets on our balance sheet that are long term in nature, that on a risk adjusted basis over some long period of time are going to perform equal to or better than other alternatives that are We also know that we need to make sure that the aperture for our funnels are diverse because we’ve seen this even in the thirteen, fourteen years we’ve been in this business, there are seasons and times across those four cycles that Scott talked about. So in today’s market, it feels like Scott can do loans between 30,000,000 and $60,000,000 per loan that have sort of a three year term plus maybe one or two year extensions depending on where they are in their cycle.

It feels like we can put that out today at 10% or 10% plus sort of types of returns and then we can close on that up basically like a pre negotiated six cap or something like that. Now every market is a little different, every builder situations can be a little bit different, but I want to be really clear about a couple of facts on this. One, we’re going to go slow and methodical with it, and we’re only interested in doing projects that could live on our balance sheet. And we’re going to try to structure them in the way that ultimately we could be the buyer. Maybe not every time, but I hope most of the time.

Second, we are not interested in product to Scott’s point that is not homogenous with what we do today in the event that we need to take something on or finish something, etcetera. And I think lastly, the TAM on this is what’s the most exciting. Today, we don’t know exactly, but it’s tens of billions of dollars of this stuff is going on real time. It’s obviously going to grow. As the four lease segment gets more sophisticated, as BTR gets more sophisticated, as the fit and finish standards, the customer centric approach gets better and better, not just our company, but the industry, there are going to be a lot of smart developers that focus on this segment.

And we know based on our own experience and the partners that Scott talks to that, that banking environment is a little fickle and it changes all the time. So instead of doing a 65% LTC with a customer with a regional bank, maybe you can do a 75 or an 80% with us, certainty of closing a partner with an option price that Scott feels good about. And so I think, ultimately, we’ve sort of signaled that we’re going upstream with our thinking around development, but that doesn’t mean that we’re going go out and buy tens of thousands of lots. I don’t think we have to. I think we can do this in a capital light way that allows us to turn it on and off based on opportunity and to be really risk averse in our approach to it.

Austin Wurschmidt, Analyst, KeyBanc Capital Markets: Just to manage the size of that given sort of the higher yield nature of it, is there a cap sort of that you’re thinking about or a size where you would feel a little uncomfortable

Dallas Tanner, Chief Executive Officer, Invitation Homes: recycling

think we if we could put out 203 hundred million dollars year, every year and build up to where we had a billion dollar business over, call it a three year period. I think that’d be a success. If it’s half that, that’s okay. It’s just good growth. And so I think for us, it’s sort of the same approach to third party and if we do other services, it’s got to be the right partner, it’s got to the right sponsor.

Scott Eisen, Chief Investment Officer, Invitation Homes: And again, for us, this is just ultimately another channel of growth for us. Again, we view this as being look, every single loan we do, we’d love to be in a position of being able to buy it. We’re not going be able to buy every deal we loan on, but we just view this as being a long term way for us to add accretive growth and accretive acquisitions to the balance sheet over time. And so our intention is not to turn Invitation Homes into a bank. Our intention is to have an acquisitions pipeline and an accretive use of capital for our shareholders.

Austin Wurschmidt, Analyst, KeyBanc Capital Markets: The other strategic piece you hit on third party management you entered into last year. Curious just how that’s going? Any additional opportunities as you look to kind of broaden these acquisition channels through either third party management, whether it’s the developer lending program, and just speak to that.

Scott Eisen, Chief Investment Officer, Invitation Homes: Look, growing the third party business is obviously something we’re keen to try to do more of. But I think we’re just trying to find the right situations, right? And as we think about it, we want to be working with institutional capital, right? We want to have people that want to run our playbook, right? So sometimes we get approached and it may be that the assets that somebody owns, it’s not in our markets, it’s not in our buy box, it’s a different price point, it’s a different rent level.

And so for us, we also want to be selective in terms of how we allocate our time to the business. Not every third party management customer and contract is the same, and so some of it has to do with making sure that fits within our buy box and our playbook. And some of it just has to do with sort of our relationship with the customer, right? And if they want us to change how we’re operating our business day to day, that may not be the right customer and relationship for us.

Charles Young, President and Chief Operating Officer, Invitation Homes: I’ll just add overall, it’s been successful business for us on partnership. We’ve gotten it off the ground in one year with 20,000 homes, created a lot of efficiency for us in terms of having more homes in our markets that we can create some efficiency, have better procurement by getting rebates from our partners. And ultimately, it’s taken us into a few new markets that we can get more smart on. It gets back to our ability to have more data in terms of pricing the home. So ultimately, we’d like to grow that business, but it needs to match up to everything that Scott’s talking about.

They find the right fit and we’re having ongoing conversations. So we’ll see where it goes.

Austin Wurschmidt, Analyst, KeyBanc Capital Markets: Just to pick on John here, maybe give him a slide one in. It’s always getting a little easy, but just maybe talk about, you know, all of this or a lot of this requires capital and the various capital sources available and just what’s the most attractive today?

John Olson, Chief Financial Officer, Invitation Homes: Sure. So when we laid out our acquisition and disposition guidance for the year, our plan was to fund external growth with disposition proceeds, which we can still sell assets at really attractive cap rates, depending on the market, four cap, sub-four in the case of Southern California in some instances. So that’s really attractive. We throw off a significant chunk of excess operating cash flow each year. Those are funds available for external growth.

And we have an attractively priced revolver. I think the things that we are focused on are accretive external growth, capital light earnings growth where we can drive that, and then bringing the right assets onto our balance sheet over time. And the way we will do that is probably, for now, using our revolver. And then as that revolver balance grows, we’ll look to term it out in the bond market.

Austin Wurschmidt, Analyst, KeyBanc Capital Markets: Dallas, any final remarks? I think we’re wrapping up on time, but

Dallas Tanner, Chief Executive Officer, Invitation Homes: No, we just appreciate all the support. Company is in a great position right now. It feels like we can be a defensive sort of rally in a time where it’s a little uncertain. You never tell like where long term wins are going. But our business has been really consistent through cycles, we’ve got a great management team, as you can see here, and even better people on the ground running our business.

So we’re excited to be here and thanks for your time. We appreciate it.

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