Invitation Homes Inc. — 2022 Form 10-K
Business context and reporting period. This annual report covers the fiscal year ended December 31, 2022; it is not a standalone fourth-quarter report. Invitation Homes is a REIT that owns and operates single-family rental homes. At year-end it owned 83,113 homes across 16 U.S. markets, with a 74,646-home Same Store portfolio.
Financial and operating performance
| Metric | 2022 | 2021 |
|---|---|---|
| Total revenue | $2.238 billion | $1.997 billion |
| Rental revenue and other property income | $2.227 billion | $1.992 billion |
| GAAP net income | $384.8 million | $262.8 million |
| Diluted earnings per share | $0.63 | $0.45 |
| Net cash from operating activities | $1.024 billion | $907.7 million |
| Net cash used in investing activities | $814.4 million | $1.160 billion |
| Net cash from (used in) financing activities | $(574.1) million | $659.0 million |
| Total portfolio NOI (non-GAAP) | $1.440 billion | $1.286 billion |
| Same Store NOI (non-GAAP) | $1.312 billion | $1.203 billion |
| Core FFO per diluted share (non-GAAP) | $1.67 | $1.49 |
| Adjusted FFO per diluted share (non-GAAP) | $1.41 | $1.28 |
Rental operations. Average monthly rent per occupied home rose 9.4% to $2,158 for the total portfolio; average occupancy fell to 96.0% from 97.0%. Same Store average rent increased 9.2% to $2,151, while occupancy declined to 97.7% from 98.2%. Same Store homes were vacant an average of 37 days between residents, versus 27 days in 2021. Total portfolio renewal lease net effective rent growth averaged 9.9%; new-lease growth averaged 13.1%.
Margins, liquidity, and debt. Property operating and maintenance expense increased 11.4% to $786.4 million, reflecting a larger average portfolio and higher property taxes, repairs, utilities, and administrative costs. Interest expense declined 5.8% to $304.1 million, primarily following refinancing activity. At year-end, unrestricted cash was $262.9 million, restricted cash was $191.1 million, and the $1.0 billion revolving facility was undrawn. Gross debt principal was $7.834 billion; the company reported net debt of $7.469 billion. Weighted-average debt interest rate was 3.63%, with 98.3% of variable-rate borrowings effectively converted to fixed rates through swaps. Its stated long-term target is net debt of approximately 5.5–6.0 times trailing Adjusted EBITDAre, not a reported year-end leverage ratio.
Material changes versus 2021
- Total revenue increased 12.1% and GAAP net income increased 46.4%. Same Store NOI increased about 9.1%.
- Operating cash flow rose 12.8%; investing cash outflow narrowed mainly because home acquisitions fell to 1,423 from 2,938. Cash and cash equivalents declined to $262.9 million from $610.2 million.
- Property operating and maintenance costs grew 11.4%, while average occupancy decreased. Turnover declined, but the longer re-resident period contributed to lower occupancy.
- The company issued $600 million of 4.15% senior notes due 2032 and drew $725 million under a new term loan facility. It used financing proceeds and operating cash to repay $1.412 billion of mortgage loans, including three loans in full.
- Annual dividends increased to $0.88 per share from $0.68. Shares outstanding increased to 611.4 million at year-end from 601.0 million, including shares issued to settle convertible notes and under the ATM equity program.
Outlook, commentary, risks, and unusual items
- Outlook: The filing provides no specific earnings or operating guidance. Management said near-term rental income, net of expenses, is generally expected to fund operations and dividends, while noting macroeconomic and liquidity uncertainty.
- Costs and collections: Management reported inflationary pressure on labor, materials, repairs, and maintenance, and expects bad debt to remain elevated versus pre-COVID averages as assistance programs wind down and resolving delinquent accounts takes longer.
- Weather losses: Hurricanes Ian and Nicole caused damage in Florida and the Carolinas. The company recorded $28.4 million of net casualty losses, including $24.0 million of estimated losses and damages, and accrued $20.2 million for repairs; it recorded $7.5 million of insurance receivables, subject to coverage terms.
- Legal and regulatory matters: A $7.4 million estimated cost for a multistate putative class-action settlement concerning resident late fees was included in Core FFO adjustments; court approval remained pending. Congressional inquiries and a Federal Trade Commission information request were ongoing, and the company was responding to a January 2023 SEC inquiry concerning building codes, permits, and related procedures. Management said it could not predict the inquiries’ timing or outcome. The company reported no material litigation expected to materially adversely affect its financial statements.
- Commitments: Homebuilder purchase agreements cover 2,370 homes over six years, with approximately $770 million of estimated remaining commitments. Remaining joint-venture equity commitments were $128.3 million. The company also reported a $1.0 billion undrawn revolving facility.
- Principal risks: Rent growth and occupancy may be affected by economic weakness, resident delinquency, rent restrictions and eviction rules, and competition. Property taxes, insurance, HOA fees, labor, and maintenance costs can rise faster than rents. Other material exposures include interest rates and refinancing, regional concentration, natural disasters and insurance availability, cybersecurity and third-party service providers, and REIT qualification and distribution requirements. The planned transition from LIBOR to SOFR was expected before June 30, 2023.
- Audit and controls: Deloitte issued unqualified opinions on the financial statements and internal control over financial reporting; management also concluded controls were effective as of year-end.
Important facts for investors to verify
- Whether rent growth can continue to offset weaker occupancy, longer re-leasing periods, elevated bad debt, and rising property-level costs.
- The outcome and potential financial or operational effects of the late-fee settlement and the ongoing congressional, FTC, and SEC inquiries.
- Insurance recoveries and final repair costs for hurricane damage, and the timing of those repairs.
- Funding needs and returns for the homebuilder agreements and joint ventures, alongside the company’s acquisition pace and capital spending.
- Debt refinancing and covenant capacity, the LIBOR-to-SOFR transition, and progress against management’s leverage and secured-debt targets.
- The sustainability of dividends relative to cash flow, capital expenditures, debt service, and REIT distribution requirements; the board declared a $0.26-per-share dividend for February 2023.
FFO, Core FFO, Adjusted FFO, NOI, and Adjusted EBITDAre are non-GAAP measures and should be considered alongside, not as substitutes for, GAAP results.