Invitation Homes Inc. — Q1 2021 Form 10-Q
Reporting period: Three months ended March 31, 2021; comparison is Q1 2020 unless stated otherwise. Invitation Homes is a REIT owning and operating single-family rental homes. It reported 80,330 homes across 16 markets at quarter-end.
Financial and operating results
| Metric | Q1 2021 | Q1 2020 / comparison |
|---|---|---|
| Total revenue | $475.2 million | $449.8 million; +5.7% |
| Rental revenue and other property income | $474.5 million | $449.8 million; +5.5% |
| Net income | $57.7 million | $50.3 million; +14.8% |
| Net income per diluted share | $0.10 | $0.09 |
| Same Store NOI | $280.3 million | $268.5 million; +4.4% |
| Adjusted EBITDAre | $280.2 million | $258.4 million |
| Core FFO per diluted share | $0.36 | $0.34 |
| Adjusted FFO per diluted share | $0.31 | $0.29 |
| Operating cash flow | $240.6 million | $177.7 million |
Average occupancy for the total portfolio was 97.3%, up from 94.4%; average monthly rent per occupied home was $1,916, up 3.5%. Same Store occupancy was 98.4%, versus 96.7%. Same Store annualized turnover fell to 21.2% from 25.2%, and average days vacant between residents declined to 29 from 51.
Same Store renewal lease net effective rent growth was 4.4% (4.2% prior year); new-lease growth was 7.9% (1.8% prior year). Revenue collections were 97% of billings, approximately 98% of the company’s historical average. Bad debt rose to 2.3% of gross rental income from 0.4%.
Liquidity, debt and cash flow
At March 31, unrestricted cash was $187.3 million; restricted cash was $223.5 million. The $1.0 billion revolving facility was undrawn. Debt carrying value, net of financing costs and discounts, was $8.02 billion, comprising $4.81 billion of mortgage loans, $2.47 billion of term-loan borrowings, $401.1 million of secured term debt and $340.7 million of convertible notes. The company reported compliance with applicable debt covenants.
Cash provided by operations was $240.6 million; investing activities used $122.6 million and financing activities used $119.0 million. Investing cash use increased year over year, primarily as home-sale proceeds declined. The company paid $97.2 million of dividends and dividend equivalents in the quarter. The board subsequently declared a $0.17-per-share dividend, payable May 28, 2021.
Contractual debt maturities include $2.34 billion of mortgage principal for the remainder of 2021 and $345 million of convertible notes due January 2022. Management noted that mortgage extensions are available subject to conditions; extension requests for two loans were submitted in March and April 2021. If all available extensions are exercised, management stated that no debt reaches final maturity before December 2024, except the convertible notes.
Changes, outlook and risks
Revenue growth reflected higher occupancy, rent per occupied home and average homes owned, partly offset by higher bad debt and lower fee income. Property operating and maintenance expense rose 0.9%; property management and general and administrative expenses together increased, primarily due in part to higher share-based compensation. Interest expense declined 1.6%, mainly due to lower average debt outstanding. Depreciation and amortization increased 7.0%. Net gains on property sales were $14.5 million, compared with $15.2 million.
Management said the pandemic had not significantly disrupted the business model in Q1, but identified continuing uncertainty from resident payment hardship, eviction and rent-related restrictions, collections and future occupancy. It also noted that lower turnover and eviction moratoria may have contributed to improved occupancy. No specific full-year financial guidance was provided in the supplied filing text.
Other items to monitor include the $54.4 million remaining equity commitment to the Rockpoint joint venture; the planned LIBOR transition after June 2023; and $142.4 million of accumulated swap losses estimated to be reclassified as higher interest expense over the next 12 months. Interest-rate swaps had a $425.4 million liability fair value at quarter-end. The company disclosed no material litigation and reported no material changes in internal control.
Most important facts for investors to verify
- Whether rent collections and bad-debt levels improve as pandemic assistance and eviction restrictions change.
- Whether the near-term mortgage maturity extensions are completed and on what terms.
- Whether rent growth, occupancy and turnover gains persist beyond pandemic-related effects and seasonal patterns.
- How the LIBOR transition, variable-rate borrowings and swap-related interest expense affect financing costs.
- Funding needs for acquisitions, renovations, dividends and the Rockpoint joint venture commitment.