Invitation Homes Inc. - Quarter Report: 2023 September (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM

10-Q

☑

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended

September 30, 2023

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission File Number

001-38004

Invitation Homes Inc.

(Exact name of registrant as specified in its charter)

Maryland

90-0939055

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

1717 Main Street,

Suite 2000

75201

Dallas,

Texas

(Address of principal executive offices)

(Zip Code)

(972)

421-3600

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, $0.01 par value

INVH

New York Stock Exchange

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes

☑

☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).

Yes

☑

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☑

Accelerated Filer

☐

Non-Accelerated Filer

☐

Smaller Reporting Company

☐

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes

☐

☑

As of October 24, 2023, there were 611,958,239 shares of common stock, par value $0.01 per share, outstanding.

INVITATION HOMES INC.


			Page
PART I
Item	1.	Financial Statements	6
Item	2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	41
Item	3.	Quantitative and Qualitative Disclosures About Market Risk	66
Item	4.	Controls and Procedures	67

PART II
Item	1.	Legal Proceedings	68
Item	1A.	Risk Factors	68
Item	2.	Unregistered Sales of Equity Securities and Use of Proceeds	68
Item	3.	Defaults Upon Senior Securities	68
Item	4.	Mine Safety Disclosures	68
Item	5.	Other Information	68
Item	6.	Exhibits	69

Signatures			71

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which include, but are not limited to, statements related to our expectations regarding the performance of our business, our financial results, our liquidity and capital resources, and other non-historical statements. In some cases, you can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates,” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties, including, among others, risks inherent to the single-family rental industry and our business model, macroeconomic factors beyond our control, competition in identifying and acquiring properties, competition in the leasing market for quality residents, increasing property taxes, homeowners’ association (“HOA”) and insurance costs, poor resident selection and defaults and non-renewals by our residents, our dependence on third parties for key services, risks related to the evaluation of properties, performance of our information technology systems, risks related to our indebtedness, risks related to the potential negative impact of unfavorable global and United States economic conditions (including inflation and rising interest rates), uncertainty in financial markets (including as a result of events affecting financial institutions), geopolitical tensions, natural disasters, climate change, and public health crises on our financial condition, results of operations, cash flows, business, associates, and residents. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. We believe these factors include but are not limited to, those described under Part I. Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022 (the “Annual Report on Form 10-K”) as such factors may be updated from time to time in our periodic filings with the Securities and Exchange Commission (the “SEC”), which are accessible on the SEC’s website at http://www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this Quarterly Report on Form 10-Q, in the Annual Report on Form 10-K, and in our other periodic filings. The forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q, and we expressly disclaim any obligation or undertaking to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except to the extent otherwise required by law.

DEFINED TERMS

Invitation Homes Inc. (“INVH”), a REIT, conducts its operations through Invitation Homes Operating Partnership LP (“INVH LP”). THR Property Management L.P., a wholly owned subsidiary of INVH LP, provides all management and other administrative services with respect to the properties we own. On November 16, 2017, INVH and certain of its affiliates entered into a series of transactions with Starwood Waypoint Homes (“SWH”) and certain SWH affiliates which resulted in SWH and its operating partnership being merged into INVH and INVH LP, respectively, with INVH and INVH LP being the surviving entities.

Unless the context suggests otherwise, references in this Quarterly Report on Form 10-Q to “Invitation Homes,” the “Company,” “we,” “our,” and “us” refer to INVH and its consolidated subsidiaries.

In this Quarterly Report on Form 10-Q:

•“average monthly rent” represents average monthly rental income per home for occupied properties in an identified population of homes over the measurement period and reflects the impact of non-service rent concessions and contractual rent increases amortized over the life of the related lease. We believe average monthly rent reflects pricing trends that significantly impact rental revenues over time, making average monthly rent useful to management and external stakeholders as a means of evaluating changes in rental revenues across periods;

•“average occupancy” for an identified population of homes represents (i) the total number of days that the homes in such population were occupied during the measurement period, divided by (ii) the total number of days that the homes in such population were owned during the measurement period. We believe average occupancy significantly impacts rental revenues in a given period, making comparisons of average occupancy across different periods helpful to management and external stakeholders in evaluating changes in rental revenues across periods;

•“Carolinas” includes Charlotte-Concord-Gastonia, NC-SC, Greensboro-High Point, NC, Raleigh-Cary, NC, Durham-Chapel Hill, NC, and Winston-Salem, NC;

•“days to re-resident” for an individual home represents the number of days between (i) the date the prior resident moves out of a home and (ii) the date the next resident is granted access to the same home, which is deemed to be the earlier of the next resident’s contractual lease start date and the next resident’s move-in date. Days to re-resident impacts our average occupancy and thus our rental revenues, making comparisons of days to re-resident helpful to management and external stakeholders in evaluating changes in rental revenues across periods;

•“in-fill” refers to markets, MSAs, submarkets, neighborhoods, or other geographic areas that are typified by significant population densities and low availability of land suitable for development into competitive properties, resulting in limited opportunities for new construction;

•“Metropolitan Statistical Area” or “MSA” is defined by the United States Office of Management and Budget as a region associated with at least one urbanized area that has a population of at least 50,000 and comprises the central county or counties containing the core, plus adjacent outlying counties having a high degree of social and economic integration with the central county or counties as measured through commuting;

•“net effective rental rate growth” for any home represents the percentage difference between the monthly rent from an expiring lease and the monthly rent from the next lease and, in each case, reflects the impact of non-service rent concessions and contractual rent increases amortized over the life of the related lease. Leases are either renewal leases, where our current resident chooses to stay for a subsequent lease term, or a new lease, where our previous resident moves out and a new resident signs a lease to occupy the same home. Net effective rental rate growth drives changes in our average monthly rent, making net effective rental rate growth useful to management and external stakeholders as a means of evaluating changes in rental revenues across periods;

•“Northern California” includes Sacramento-Roseville-Folsom, CA, San Francisco-Oakland-Berkeley, CA, Stockton, CA, Vallejo, CA, and Yuba City, CA;

•“PSF” means per square foot. When comparing homes or cohorts of homes, we believe PSF calculations help management and external stakeholders normalize metrics for differences in property size, enabling more meaningful comparisons based on characteristics other than property size;

•“Same Store” or “Same Store portfolio” includes, for a given reporting period, wholly owned homes that have been stabilized and seasoned, excluding homes that have been sold, homes that have been identified for sale to an owner occupant and have become vacant, homes that have been deemed inoperable or significantly impaired by casualty loss events or force majeure, homes acquired in portfolio transactions that are deemed not to have undergone renovations of sufficiently similar quality and characteristics as the existing Invitation Homes Same Store portfolio, and homes in markets that we have announced an intent to exit where we no longer operate a significant number of homes for the primary purpose of income generation. Homes are considered stabilized if they have (i) completed an initial renovation and (ii) entered into at least one post-initial renovation lease. An acquired portfolio that is both leased and deemed to be of sufficiently similar quality and characteristics as the existing Invitation Homes Same Store portfolio may be considered stabilized at the time of acquisition. Homes are considered to be seasoned once they have been stabilized for at least 15 months prior to January 1st of the year in which the Same Store portfolio was established. We believe information about the portion of our portfolio that has been fully operational for the entirety of a given reporting period and its prior year comparison period provides management and external stakeholders with meaningful information about the performance of our comparable homes across periods and about trends in our organic business;

•“Southeast United States” includes our Atlanta and Carolinas markets;

•“South Florida” includes Miami-Fort Lauderdale-Pompano Beach, FL, and Port St. Lucie, FL;

•“Southern California” includes Los Angeles-Long Beach-Anaheim, CA, Oxnard-Thousand Oaks-Ventura, CA, Riverside-San Bernardino-Ontario, CA, and San Diego-Chula Vista-Carlsbad, CA;

•“total homes” or “total portfolio” refers to the total number of homes we own, whether or not stabilized, and excludes any properties previously acquired in purchases that have been subsequently rescinded or vacated. Unless otherwise indicated, total homes or total portfolio refers to wholly owned homes and excludes homes owned in joint ventures. Additionally, unless the context otherwise requires, all measures in this Quarterly Report on Form 10-Q are presented on a total portfolio basis;

•“turnover rate” represents the number of instances that homes in an identified population become unoccupied in a given period, divided by the number of homes in such population. To the extent the measurement period shown is less than 12 months, the turnover rate may be reflected on an annualized basis. We believe turnover rate impacts average occupancy and thus our rental revenues, making comparisons of turnover rate helpful to management and external stakeholders in evaluating changes in rental revenues across periods. In addition, turnover can impact our cost to maintain homes, making changes in turnover rate useful to management and external stakeholders in evaluating changes in our property operating and maintenance expenses across periods; and

•“Western United States” includes our Southern California, Northern California, Seattle, Phoenix, Las Vegas, and Denver markets.

PART I

ITEM 1. FINANCIAL STATEMENTS

INVITATION HOMES INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except shares and per share data)



	September 30, 2023		December 31, 2022
	(unaudited)
Assets:
Investments in single-family residential properties:
Land	$	4,907,452	$	4,800,110
Building and improvements	16,605,269		15,900,825
	21,512,721		20,700,935
Less: accumulated depreciation	(4,112,685)		(3,670,561)
Investments in single-family residential properties, net	17,400,036		17,030,374
Cash and cash equivalents	762,638		262,870
Restricted cash	217,253		191,057
Goodwill	258,207		258,207
Investments in unconsolidated joint ventures	258,030		280,571
Other assets, net	570,034		513,629
Total assets	$	19,466,198	$	18,536,708

Liabilities:
Mortgage loans, net	$	1,631,973	$	1,645,795
Secured term loan, net	401,460		401,530
Unsecured notes, net	3,304,082		2,518,185
Term loan facilities, net	3,209,725		3,203,567
Revolving facility	—		—

Accounts payable and accrued expenses	368,065		198,423
Resident security deposits	180,111		175,552
Other liabilities	101,236		70,025
Total liabilities	9,196,652		8,213,077
Commitments and contingencies (Note 14)

Equity:
Stockholders' equity
Preferred stock, $0.01 par value per share, 900,000,000 shares authorized, none outstanding as of September 30, 2023 and December 31, 2022	—		—
Common stock, $0.01 par value per share, 9,000,000,000 shares authorized, 611,958,239 and 611,411,382 outstanding as of September 30, 2023 and December 31, 2022, respectively	6,120		6,114
Additional paid-in capital	11,149,732		11,138,463
Accumulated deficit	(1,039,782)		(951,220)
Accumulated other comprehensive income	119,728		97,985
Total stockholders' equity	10,235,798		10,291,342
Non-controlling interests	33,748		32,289
Total equity	10,269,546		10,323,631
Total liabilities and equity	$	19,466,198	$	18,536,708

The accompanying notes are an integral part of these condensed consolidated financial statements.

INVITATION HOMES INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except shares and per share data)

(unaudited)



	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2023		2022		2023		2022
Revenues:
Rental revenues and other property income	$	614,291	$	565,391	$	1,797,730	$	1,650,131
Management fee revenues	3,404		3,284		10,227		8,154
Total revenues	617,695		568,675		1,807,957		1,658,285

Expenses:
Property operating and maintenance	229,488		203,787		651,793		576,736
Property management expense	23,399		22,385		70,563		65,166
General and administrative	22,714		20,123		59,957		57,104
Interest expense	86,736		76,454		243,408		225,683
Depreciation and amortization	170,696		160,428		501,128		474,796
Impairment and other	2,496		20,004		5,527		22,874
Total expenses	535,529		503,181		1,532,376		1,422,359

Gains (losses) on investments in equity securities, net	(499)		(796)		113		(4,000)
Other, net	(2,533)		(8,372)		(7,968)		(11,605)
Gain on sale of property, net of tax	57,989		23,952		134,448		69,486
Losses from investments in unconsolidated joint ventures	(4,902)		(849)		(11,087)		(5,870)

Net income	132,221		79,429		391,087		283,937
Net income attributable to non-controlling interests	(403)		(250)		(1,163)		(1,180)

Net income attributable to common stockholders	131,818		79,179		389,924		282,757
Net income available to participating securities	(181)		(147)		(518)		(515)


Net income available to common stockholders — basic and diluted (Note 12)	$	131,637	$	79,032	$	389,406	$	282,242



Weighted average common shares outstanding — basic	612,000,811		610,845,820		611,849,302		609,212,132
Weighted average common shares outstanding — diluted	613,580,042		612,647,588		613,155,041		610,741,723

Net income per common share — basic	$	0.22	$	0.13	$	0.64	$	0.46
Net income per common share — diluted	$	0.21	$	0.13	$	0.64	$	0.46

The accompanying notes are an integral part of these condensed consolidated financial statements.

INVITATION HOMES INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

(unaudited)


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,

	2023		2022		2023		2022
Net income	$	132,221	$	79,429	$	391,087	$	283,937

Other comprehensive income
Unrealized gains on interest rate swaps	27,845		102,940		73,853		316,479
(Gains) losses from interest rate swaps reclassified into earnings from accumulated other comprehensive income	(21,081)		9,591		(52,023)		63,837
Other comprehensive income	6,764		112,531		21,830		380,316
Comprehensive income	138,985		191,960		412,917		664,253
Comprehensive income attributable to non-controlling interests	(423)		(677)		(1,250)		(2,739)

Comprehensive income attributable to common stockholders	$	138,562	$	191,283	$	411,667	$	661,514

The accompanying notes are an integral part of these condensed consolidated financial statements.

INVITATION HOMES INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

For the Three and Nine Months Ended September 30, 2023

(in thousands, except share and per share data)

(unaudited)


	Common Stock
	Number of Shares	Amount		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income		Total Stockholders' Equity		Non-Controlling Interests		Total Equity












































Balance as of June 30, 2023	611,956,170	$	6,120	$	11,141,829	$	(1,011,060)	$	112,984	$	10,249,873	$	32,835	$	10,282,708
Capital distributions	—	—		—		—		—		—		(514)		(514)
Net income	—	—		—		131,818		—		131,818		403		132,221
Dividends and dividend equivalents declared ($0.26 per share)	—	—		—		(160,540)		—		(160,540)		—		(160,540)
Issuance of common stock — settlement of RSUs, net of tax	2,069	—		(22)		—		—		(22)		—		(22)
Share-based compensation expense	—	—		7,925		—		—		7,925		1,004		8,929
Total other comprehensive income	—	—		—		—		6,744		6,744		20		6,764
Balance as of September 30, 2023	611,958,239	$	6,120	$	11,149,732	$	(1,039,782)	$	119,728	$	10,235,798	$	33,748	$	10,269,546


	Common Stock
	Number of Shares	Amount		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income		Total Stockholders' Equity		Non-Controlling Interests		Total Equity












































Balance as of December 31, 2022	611,411,382	$	6,114	$	11,138,463	$	(951,220)	$	97,985	$	10,291,342	$	32,289	$	10,323,631
Capital distributions	—	—		—		—		—		—		(1,860)		(1,860)
Net income	—	—		—		389,924		—		389,924		1,163		391,087
Dividends and dividend equivalents declared ($0.78 per share)	—	—		—		(478,486)		—		(478,486)		—		(478,486)
Issuance of common stock — settlement of RSUs, net of tax	546,857	6		(8,155)		—		—		(8,149)		—		(8,149)
Share-based compensation expense	—	—		19,424		—		—		19,424		2,069		21,493
Total other comprehensive income	—	—		—		—		21,743		21,743		87		21,830

Balance as of September 30, 2023	611,958,239	$	6,120	$	11,149,732	$	(1,039,782)	$	119,728	$	10,235,798	$	33,748	$	10,269,546

The accompanying notes are an integral part of these condensed consolidated financial statements.

INVITATION HOMES INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (continued)

For the Three and Nine Months Ended September 30, 2022

(in thousands, except share and per share data)

(unaudited)


	Common Stock
	Number of Shares	Amount		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Stockholders' Equity		Non-Controlling Interests		Total Equity












































Balance as of June 30, 2022	610,359,909	$	6,104	$	11,113,146	$	(860,275)	$	(20,285)	$	10,238,690	$	43,299	$	10,281,989
Capital distributions	—	—		—		—		—		—		(488)		(488)
Net income	—	—		—		79,179		—		79,179		250		79,429
Dividends and dividend equivalents declared ($0.22 per share)	—	—		—		(135,042)		—		(135,042)		—		(135,042)



Share-based compensation expense	—	—		6,761		—		—		6,761		1,169		7,930
Total other comprehensive income	—	—		—		—		112,104		112,104		427		112,531
Redemption of OP Units for common stock	1,050,000	10		13,351		—		73		13,434		(13,434)		—
Balance as of September 30, 2022	611,409,909	$	6,114	$	11,133,258	$	(916,138)	$	91,892	$	10,315,126	$	31,223	$	10,346,349


	Common Stock
	Number of Shares	Amount		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Stockholders' Equity		Non-Controlling Interests		Total Equity












































Balance as of December 31, 2021	601,045,438	$	6,010	$	10,873,539	$	(794,869)	$	(286,938)	$	9,797,742	$	41,062	$	9,838,804
Capital distributions	—	—		—		—		—		—		(1,983)		(1,983)
Net income	—	—		—		282,757		—		282,757		1,180		283,937
Dividends and dividend equivalents declared ($0.66 per share)	—	—		—		(404,026)		—		(404,026)		—		(404,026)
Issuance of common stock — settlement of RSUs, net of tax	659,283	7		(12,857)		—		—		(12,850)		—		(12,850)
Issuance of common stock — settlement of 2022 Convertible Notes	6,216,261	62		141,157		—		—		141,219		—		141,219
Issuance of common stock, net	2,438,927	25		98,342		—		—		98,367		—		98,367
Share-based compensation expense	—	—		19,726		—		—		19,726		2,839		22,565
Total other comprehensive income	—	—		—		—		378,757		378,757		1,559		380,316
Redemption of OP Units for common stock	1,050,000	10		13,351		—		73		13,434		(13,434)		—
Balance as of September 30, 2022	611,409,909	$	6,114	$	11,133,258	$	(916,138)	$	91,892	$	10,315,126	$	31,223	$	10,346,349

The accompanying notes are an integral part of these condensed consolidated financial statements.

INVITATION HOMES INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)



	For the Nine Months Ended September 30,
	2023		2022
Operating Activities:
Net income	$	391,087	$	283,937

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	501,128		474,796
Share-based compensation expense	21,493		22,565
Amortization of deferred financing costs	12,003		11,105
Amortization of debt discounts	1,335		1,254
Provisions for impairment	342		238
(Gains) losses on investments in equity securities, net	(113)		4,000
Gain on sale of property, net of tax	(134,448)		(69,486)
Change in fair value of derivative instruments	7,011		7,135
Loss from investments in unconsolidated joint ventures, net of operating distributions	13,370		7,152
Other non-cash amounts included in net income	4,236		6,049
Changes in operating assets and liabilities:
Other assets, net	(19,466)		(1,953)
Accounts payable and accrued expenses	185,826		139,884
Resident security deposits	4,559		8,113
Other liabilities	31,181		9,157
Net cash provided by operating activities	1,019,544		903,946

Investing Activities:
Amounts deposited and held by others	5,212		(33,471)
Acquisition of single-family residential properties	(906,845)		(509,163)
Initial renovations to single-family residential properties	(18,980)		(104,943)
Other capital expenditures for single-family residential properties	(162,398)		(151,962)
Proceeds from sale of single-family residential properties	354,409		181,569

Repayment proceeds from retained debt securities	627		42,404
Investments in equity securities	(32,610)		(14,340)
Proceeds from sale of investments in equity securities	—		5,762
Investments in unconsolidated joint ventures	(442)		(166,588)
Non-operating distributions from unconsolidated joint ventures	9,613		2,934
Other investing activities	(18,182)		(8,291)
Net cash used in investing activities	(769,596)		(756,089)

Financing Activities:
Payment of dividends and dividend equivalents	(478,841)		(404,377)
Distributions to non-controlling interests	(1,860)		(1,983)
Payment of taxes related to net share settlement of RSUs	(8,149)		(12,850)

Payments on mortgage loans	(15,196)		(849,712)

Payments on secured term loan	(234)		—
Proceeds from unsecured notes	790,144		598,434

Proceeds from term loan facilities	—		150,000

Proceeds from revolving facility	150,000		130,000
Payments on revolving facility	(150,000)		(130,000)
Proceeds from issuance of common stock, net	—		98,367
Deferred financing costs paid	(7,741)		(13,043)
Other financing activities	(2,107)		(15,655)
Net cash provided by (used in) financing activities	276,016		(450,819)

INVITATION HOMES INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(in thousands)

(unaudited)



	For the Nine Months Ended September 30,
	2023		2022
Change in cash, cash equivalents, and restricted cash	525,964		(302,962)
Cash, cash equivalents, and restricted cash, beginning of period (Note 4)	453,927		818,858
Cash, cash equivalents, and restricted cash, end of period (Note 4)	$	979,891	$	515,896



Supplemental cash flow disclosures:
Interest paid, net of amounts capitalized	$	212,434	$	196,542
Interest capitalized as investments in single-family residential properties, net	1,779		5,805
Cash paid for income taxes	86		1,497
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	4,597		4,561
Financing cash flows from finance leases	2,101		2,032

Non-cash investing and financing activities:
Accrued renovation improvements at period end	$	3,429	$	5,847
Accrued residential property capital improvements at period end	10,801		11,562
Transfer of residential property, net to other assets, net for held for sale assets	122,329		65,074
Change in other comprehensive income from cash flow hedges	14,860		373,244
ROU assets obtained in exchange for operating lease liabilities	72		1,940
ROU assets obtained in exchange for finance lease liabilities	2,057		295
Net settlement of 2022 Convertible Notes in shares of common stock	—		141,219

The accompanying notes are an integral part of these condensed consolidated financial statements.

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

Note 1—Organization and Formation

Invitation Homes Inc. (“INVH”) is a real estate investment trust (“REIT”) that conducts its operations through Invitation Homes Operating Partnership LP (“INVH LP”). INVH LP was formed for the purpose of owning, renovating, leasing, and operating single-family residential properties. Through THR Property Management L.P., a wholly owned subsidiary of INVH LP (the “Manager”), we provide all management and other administrative services with respect to the properties we own.

On February 6, 2017, INVH completed an initial public offering (“IPO”), changed its jurisdiction of incorporation to Maryland, and amended its charter to provide for the issuance of up to 9,000,000,000 shares of common stock and 900,000,000 shares of preferred stock, in each case $0.01 par value per share. In connection with certain pre-IPO reorganization transactions, INVH LP became (1) owned by INVH directly and through Invitation Homes OP GP LLC, a wholly owned subsidiary of INVH (the “General Partner”), and (2) the owner of all of the assets, liabilities, and operations of certain pre-IPO ownership entities. These transactions were accounted for as a reorganization of entities under common control utilizing historical cost basis.

On November 16, 2017, INVH and certain of its affiliates entered into a series of transactions with Starwood Waypoint Homes (“SWH”) and certain SWH affiliates which resulted in SWH and its operating partnership being merged into INVH and INVH LP, respectively, with INVH and INVH LP being the surviving entities. These transactions were accounted for as a business combination in accordance with ASC 805, Business Combinations, and INVH was designated as the accounting acquirer.

The limited partnership interests of INVH LP consist of common units and other classes of limited partnership interests that may be issued (the “OP Units”). As of September 30, 2023, INVH owns 99.7% of the common OP Units and has the full, exclusive, and complete responsibility for and discretion over the day-to-day management and control of INVH LP.

Our organizational structure includes several wholly owned subsidiaries of INVH LP that were formed to facilitate certain of our financing arrangements (the “Borrower Entities”). These Borrower Entities are used to align the ownership of our single-family residential properties with certain of our debt instruments. Collateral for certain of our individual debt instruments may be in the form of equity interests in the Borrower Entities or in pools of single-family residential properties owned either directly by the Borrower Entities or indirectly by their wholly owned subsidiaries (see Note 7).

References to “Invitation Homes,” the “Company,” “we,” “our,” and “us” refer, collectively, to INVH, INVH LP, and the consolidated subsidiaries of INVH LP.

Note 2—Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and with the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with our audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2022.

These condensed consolidated financial statements include the accounts of INVH and its consolidated subsidiaries. All intercompany accounts and transactions have been eliminated in the condensed consolidated financial statements. In the opinion of management, all adjustments that are of a normal recurring nature considered necessary for a fair presentation of our interim financial statements have been included in these condensed consolidated financial statements. Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2023.

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

We consolidate wholly owned subsidiaries and entities we are otherwise able to control in accordance with GAAP. We evaluate each investment entity that is not wholly owned to determine whether to follow the variable interest entity (“VIE”) or the voting interest entity (“VOE”) model. Once the appropriate consolidation model is identified, we then evaluate whether the entity should be consolidated. Under the VIE model, we consolidate an investment if we have control to direct the activities of the entity and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. Under the VOE model, we consolidate an investment if (1) we control the investment through ownership of a majority voting interest if the investment is not a limited partnership or (2) we control the investment through our ability to remove the other partners in the investment, at our discretion, when the investment is a limited partnership.

Based on these evaluations, we account for each of the investments in joint ventures described in Note 5 using the equity method. Our initial investments in the joint ventures are recorded at cost, except for any such interest initially recorded at fair value in connection with a business combination. The investments in these joint ventures are subsequently adjusted for our proportionate share of net earnings or losses and other comprehensive income or loss, cash contributions made and distributions received, and other adjustments, as appropriate. Distributions of operating profit from the joint ventures are reported as part of operating activities while distributions related to a capital transaction, such as a refinancing transaction or sale, are reported as investing activities on our condensed consolidated statements of cash flows. When events or circumstances indicate that our investments in unconsolidated joint ventures may not be recoverable, we assess the investments for and recognize other-than-temporary impairment.

Non-controlling interests represent the OP Units not owned by INVH, including any OP Units resulting from vesting and conversion of units granted in connection with certain share-based compensation awards. Non-controlling interests are presented as a separate component of equity on the condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022, and the condensed consolidated statements of operations for the three and nine months ended September 30, 2023 and 2022 include an allocation of the net income attributable to the non-controlling interest holders. OP Units are redeemable for shares of our common stock on a one-for-one basis or, in our sole discretion, cash, and redemptions of OP Units are accounted for as a reduction in non-controlling interests with an offset to stockholders’ equity based on the pro rata number of OP Units redeemed.

Significant Risks and Uncertainties

Our financial condition and results of operations are subject to risks related to overall unfavorable global and United States economic conditions (including inflation and rising interest rates), uncertainty in financial markets (including as a result of events affecting financial institutions), ongoing geopolitical tensions, and a general decline in business activity and/or consumer confidence. These factors could adversely affect (i) our ability to acquire or dispose of single-family homes, (ii) our access to financial markets on attractive terms, or at all, and (iii) the value of our homes and our business that could cause us to recognize impairments in value of our tangible assets or goodwill. High levels of inflation and rising interest rates may also negatively impact consumer income, credit availability, and spending, among other factors, which may adversely impact our business, financial condition, cash flows, and results of operations, including the ability of our residents to pay rent. These factors, which include labor shortages and inflationary increases in labor and material costs, have impacted and may continue to impact certain aspects of our business.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. These estimates are inherently subjective in nature and actual results could differ from those estimates.

Reclassifications

We reclassified $14,340 of investments in equity securities for the nine months ended September 30, 2022 from other investing activities on the condensed consolidated statement of cash flows to a separate cash flow line item to conform to our current presentation. This reclassification had no effect on the total reported investing activities on the condensed consolidated statement of cash flows for the nine months ended September 30, 2022.

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

Accounting Policies

There have been no changes to our significant accounting policies that have had a material impact on our condensed consolidated financial statements and related notes, compared to those policies disclosed in our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022.

Recently Adopted Accounting Standards

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope, which refines the scope of Topic 848 and clarifies some of its guidance. ASU 2020-04 provides temporary optional guidance that provides transition relief for reference rate reform, including optional expedients and exceptions for applying GAAP to contract modifications, hedging relationships, and other transactions that reference the London Interbank Offer Rate (“LIBOR”) or a reference rate that is expected to be discontinued as a result of reference rate reform if certain criteria are met. ASU 2020-04 is effective upon issuance, and the provisions generally can be applied prospectively as of January 1, 2020 through December 31, 2024 (as extended by the FASB in December 2022). In certain cases, we have elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. We have also elected to apply practical expedients related to contract modifications, changes in critical terms, and updates to the designated hedged risk(s) as qualifying changes are made to applicable debt and derivative instruments. Application of these expedients preserves the presentation of derivatives contracts consistent with past presentation.

On April 18, 2023, we completed a series of transactions related to certain of our variable rate debt and derivative agreements that were originally indexed to LIBOR to effectuate a transition to the Secured Overnight Financing Rate (“SOFR”). While the original agreements provided for a prescribed transition to an alternate rate, this series of transactions amended or modified our Credit Facility (as defined in Note 7) and all of our LIBOR-indexed interest rate swap agreements such that each agreement is now indexed to a rate determined by reference to a published forward-looking SOFR rate for the interest period relevant to such borrowing (“Term SOFR”). Effective July 3, 2023, one of our mortgage loans, IH 2018-4, was amended to transition to Term SOFR from LIBOR. The related interest rate cap agreement was amended effective July 15, 2023 to transition to Term SOFR from LIBOR. As a result of these transactions, all of our debt and derivative instrument agreements are now indexed to Term SOFR. Please refer to Notes 7 and 8 for additional information about these modifications.

Note 3—Investments in Single-Family Residential Properties

The following table sets forth the net carrying amount associated with our properties by component:


	September 30, 2023		December 31, 2022
Land	$	4,907,452	$	4,800,110
Single-family residential property	15,915,306		15,228,631
Capital improvements	563,024		548,700
Equipment	126,939		123,494
Total gross investments in the properties	21,512,721		20,700,935
Less: accumulated depreciation	(4,112,685)		(3,670,561)
Investments in single-family residential properties, net	$	17,400,036	$	17,030,374

As of September 30, 2023 and December 31, 2022, the carrying amount of the residential properties above includes $134,275 and $129,341, respectively, of capitalized acquisition costs (excluding purchase price), along with $77,402 and $76,408, respectively, of capitalized interest, $30,691 and $30,435, respectively, of capitalized property taxes, $4,982 and $4,982, respectively, of capitalized insurance, and $3,663 and $3,627, respectively, of capitalized homeowners’ association (“HOA”) fees.

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

During the three months ended September 30, 2023 and 2022, we recognized $167,921 and $158,199, respectively, of depreciation expense related to the components of the properties, and $2,775 and $2,229, respectively, of depreciation and amortization related to corporate furniture and equipment. These amounts are included in depreciation and amortization in the condensed consolidated statements of operations. Further, during the three months ended September 30, 2023 and 2022, impairments totaling $83 and $101, respectively, have been recognized and are included in impairment and other in the condensed consolidated statements of operations. See Note 11 for additional information regarding these impairments.

During the nine months ended September 30, 2023 and 2022, we recognized $493,027 and $468,272, respectively, of depreciation expense related to the components of the properties, and $8,101 and $6,524, respectively, of depreciation and amortization related to corporate furniture and equipment. These amounts are included in depreciation and amortization in the condensed consolidated statements of operations. Further, during the nine months ended September 30, 2023 and 2022, impairments totaling $342 and $238, respectively, have been recognized and are included in impairment and other in the condensed consolidated statements of operations. See Note 11 for additional information regarding these impairments.

Note 4—Cash, Cash Equivalents, and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported on the condensed consolidated balance sheets that sum to the total of such amounts shown in the condensed consolidated statements of cash flows:


	September 30, 2023		December 31, 2022
Cash and cash equivalents	$	762,638	$	262,870
Restricted cash	217,253		191,057
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows	$	979,891	$	453,927

Pursuant to the terms of the mortgage loans and the Secured Term Loan (as defined in Note 7), we are required to establish, maintain, and fund from time to time (generally, either monthly or at the time borrowings are funded) certain specified reserve accounts. These reserve accounts include, but are not limited to, the following types of accounts: (i) property tax reserves; (ii) insurance reserves; (iii) capital expenditure reserves; and (iv) HOA reserves. The reserve accounts associated with our mortgage loans and Secured Term Loan are under the sole control of the loan servicer. Additionally, we hold security deposits pursuant to resident lease agreements that we are required to segregate. We are also required to hold letters of credit by certain of our insurance policies. Accordingly, amounts funded to these reserve accounts, security deposit accounts, and other restricted accounts have been classified on our condensed consolidated balance sheets as restricted cash.

The amounts funded, and to be funded, to the reserve accounts are subject to formulae included in the mortgage loan and Secured Term Loan agreements and are to be released to us subject to certain conditions specified in the loan agreements being met. To the extent that an event of default were to occur, the loan servicer has discretion to use such funds to either settle the applicable operating expenses to which such reserves relate or reduce the allocated loan amount associated with a residential property of ours.

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

The balances of our restricted cash accounts, as of September 30, 2023 and December 31, 2022, are set forth in the table below. As of September 30, 2023 and December 31, 2022, no amounts were funded to the insurance accounts as the conditions specified in the mortgage loan and Secured Term Loan agreements that require such funding did not exist.


	September 30, 2023		December 31, 2022
Resident security deposits	$	180,450	$	175,829
Collections	12,456		7,415
Property taxes	18,747		2,717
Letters of credit	2,612		2,109
Capital expenditures	2,297		2,297
Special and other reserves	691		690
Total	$	217,253	$	191,057

Note 5—Investments In Unconsolidated Joint Ventures

The following table summarizes our investments in unconsolidated joint ventures, which are accounted for using the equity method model of accounting, as of September 30, 2023 and December 31, 2022:


		Number of Properties Owned		Carrying Value
	Ownership Percentage	September 30, 2023	December 31, 2022	September 30, 2023		December 31, 2022
Pathway Property Company(1)	100.0%	473	340	$	125,613	$	131,542
2020 Rockpoint JV(1)	20.0%	2,609	2,610	64,745		70,103
FNMA(2)	10.0%	442	488	35,799		46,151
Pathway Operating Company(3)	15.0%	N/A	N/A	20,909		22,011
2022 Rockpoint JV(1)	16.7%	132	132	10,964		10,764
Total				$	258,030	$	280,571

(1)Owns homes in markets within the Western United States, Southeast United States, Florida, and Texas.

(2)Owns homes within the Western United States.

(3)Represents an investment in an operating company that provides a technology platform and asset management services.

In November 2021, we entered into agreements with Pathway Homes and its affiliates, among others, to form a joint venture that will provide unique opportunities for customers to identify a home whereby they are able to first lease and then, if they choose, purchase the home in the future. We have fully funded our capital commitment to the operating company (“Pathway Operating Company”) which provides the technology platform and asset management services for the entity that owns and leases the homes (“Pathway Property Company”). Pathway Homes and its affiliates are responsible for the operations and management of Pathway Operating Company, and we do not have a controlling interest in Pathway Operating Company. As of September 30, 2023, we have funded $136,700 to Pathway Property Company, and our remaining equity commitment is $88,300. A wholly owned subsidiary of INVH LP provides property management and renovation oversight services for and earns fees from Pathway Property Company. As the asset manager, Pathway Operating Company is responsible for the operations and management of Pathway Property Company, and we do not have a controlling interest in Pathway Property Company.

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

In October 2020, we entered into an agreement with Rockpoint Group, L.L.C. (“Rockpoint”) to form a joint venture that will acquire homes in markets where we already own homes (the “2020 Rockpoint JV”). The joint venture is funded with a combination of debt and equity, and we have guaranteed the funding of certain tax, insurance, and non-conforming property reserves related to the joint venture’s financing. We have fully funded our capital commitment to the 2020 Rockpoint JV. The administrative member of the 2020 Rockpoint JV is a wholly owned subsidiary of INVH LP and is responsible for the operations and management of the properties, subject to Rockpoint’s approval of major decisions. We earn property and asset management fees from the 2020 Rockpoint JV.

We acquired our interest in the joint venture with the Federal National Mortgage Association (“FNMA”) via the SWH merger. The managing member of the FNMA joint venture is a wholly owned subsidiary of INVH LP and is responsible for the operations and management of the properties, subject to FNMA’s approval of major decisions. We earn property and asset management fees from the FNMA joint venture.

In March 2022, we entered into a second agreement with Rockpoint to form a joint venture that will acquire homes in premium locations and at higher price points relative to our other investments in single-family residential properties (the “2022 Rockpoint JV”). As of September 30, 2023, we have funded $10,442 to the 2022 Rockpoint JV, and our remaining equity commitment is $39,558. The joint venture is funded with a combination of debt and equity, and we have guaranteed the funding of certain tax, insurance, and non-conforming property reserves related to the joint venture’s financing. The administrative member of the 2022 Rockpoint JV is a wholly owned subsidiary of INVH LP and is responsible for the operations and management of the properties, subject to Rockpoint’s approval of major decisions. We earn property and asset management fees from the 2022 Rockpoint JV.

We recorded net losses from these investments for the three months ended September 30, 2023 and 2022, totaling $4,902 and $849, respectively, and for the nine months ended September 30, 2023 and 2022, totaling $11,087 and $5,870, respectively, which are included in losses from investments in unconsolidated joint ventures in the condensed consolidated statements of operations.

The fees earned from our joint ventures (as described above) are related party transactions. For the three months ended September 30, 2023 and 2022, we earned $3,404 and $3,284, respectively, and for the nine months ended September 30, 2023 and 2022, we earned $10,227 and $8,154, respectively, of management fees which are included in management fee revenues in the condensed consolidated statements of operations.

Note 6—Other Assets

As of September 30, 2023 and December 31, 2022, the balances in other assets, net are as follows:


	September 30, 2023		December 31, 2022
Derivative instruments (Note 8)	$	134,017	$	119,193
Amounts deposited and held by others (Note 14)	95,770		97,709
Investments in debt securities, net	86,617		86,980
Rent and other receivables, net	58,874		54,091
Investments in equity securities	55,136		22,413
Prepaid expenses	43,333		41,972
Held for sale assets(1)	35,778		29,842
Corporate fixed assets, net	24,460		24,484
ROU lease assets — operating and finance, net	13,723		16,534
Deferred financing costs, net	3,702		5,850

Other	18,624		14,561
Total	$	570,034	$	513,629

(1)As of September 30, 2023 and December 31, 2022, 159 and 131 properties, respectively, are classified as held for sale.

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

Investments in Debt Securities, net

In connection with certain of our Securitizations (as defined in Note 7), we have retained and purchased certificates totaling $86,617, net of unamortized discounts of $1,320 as of September 30, 2023. These investments in debt securities are classified as held to maturity investments. As of September 30, 2023, we have not recognized any credit losses with respect to these investments in debt securities, and our retained certificates are scheduled to mature over the next three months to four years.

Rent and Other Receivables, net

We lease our properties to residents pursuant to leases that generally have an initial contractual term of at least 12 months, provide for monthly payments, and are cancelable by the resident and us under certain conditions specified in the related lease agreements. Rental revenues and other property income and the corresponding rent and other receivables are recorded net of any concessions and bad debt (including actual write-offs, credit reserves, and uncollectible amounts) for all periods presented.

Variable lease payments consist of resident reimbursements for utilities, and various other fees, including late fees and lease termination fees, among others. Variable lease payments are charged based on the terms and conditions included in the resident leases. For the three months ended September 30, 2023 and 2022, rental revenues and other property income includes $41,301 and $35,834 of variable lease payments, respectively. For the nine months ended September 30, 2023 and 2022, rental revenues and other property income includes $113,875 and $102,960 of variable lease payments, respectively.

Future minimum rental revenues and other property income under leases on our single-family residential properties in place as of September 30, 2023 are as follows:


Year	Lease Payments to be Received
Remainder of 2023	$	526,668
2024	1,002,245
2025	135,970
2026	—
2027	—
Thereafter	—
Total	$	1,664,883

Investments in Equity Securities

We hold investments in equity securities both with and without a readily determinable fair value. Investments with a readily determinable fair value are measured at fair value, and those without a readily determinable fair value are measured at cost, less any impairment, plus or minus changes resulting from observable price changes for identical or similar investments in the same issuer. As of September 30, 2023 and December 31, 2022, the values of our investments in equity securities are as follows:


	September 30, 2023		December 31, 2022
Investments without a readily determinable fair value	$	54,068	$	21,500
Investments with a readily determinable fair value	1,068		913
Total	$	55,136	$	22,413

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

The components of gains (losses) on investments in equity securities, net as of three and nine months ended September 30, 2023 and 2022 are as follows:


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,

	2023		2022		2023		2022
Net losses recognized on investments sold during the reporting period — with a readily determinable value	$	—	$	—	$	—	$	(1,452)
Net unrealized gains (losses) on investments still held at the reporting date — with a readily determinable fair value	(499)		(796)		113		(2,548)

Total	$	(499)	$	(796)	$	113	$	(4,000)

Right-of-Use (“ROU”) Lease Assets — Operating and Finance, net

The following table presents supplemental information related to leases into which we have entered as a lessee as of September 30, 2023 and December 31, 2022:


	September 30, 2023				December 31, 2022
	Operating Leases		Finance Leases		Operating Leases		Finance Leases
Other assets	$	9,920	$	3,803	$	12,862	$	3,672
Other liabilities (Note 14)	11,828		3,439		14,925		3,483
Weighted average remaining lease term	3.2 years		2.4 years		3.0 years		1.4 years
Weighted average discount rate	3.3%		4.6%		3.3%		4.0%

Deferred Financing Costs, net

In connection with the amended and restated Revolving Facility (see Note 7), we incurred $11,846 of financing costs, which have been deferred as other assets, net on our condensed consolidated balance sheets. We amortize deferred financing costs as interest expense on a straight-line basis over the term of the Revolving Facility and accelerate amortization if debt is retired before the maturity date. As of September 30, 2023 and December 31, 2022, the unamortized balances of these deferred financing costs are $3,702 and $5,850, respectively.

Note 7—Debt

Mortgage Loans

Our securitization transactions (the “Securitizations” or the “mortgage loans”) are collateralized by certain homes owned by the respective Borrower Entities. We utilize the proceeds from our Securitizations to fund: (i) repayments of then-outstanding indebtedness; (ii) initial deposits into Securitization reserve accounts; (iii) closing costs in connection with the mortgage loans; and (iv) general costs associated with our operations.

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

The following table sets forth a summary of our mortgage loan indebtedness as of September 30, 2023 and December 31, 2022:


						Outstanding Principal Balance(1)
	Origination Date	Maturity Date(2)	Maturity Date if Fully Extended(3)	Interest Rate(4)	Range of Spreads(5)	September 30, 2023		December 31, 2022
IH 2017-1(6)	April 28, 2017	June 9, 2027	June 9, 2027	4.23%	N/A	$	991,674	$	992,695

IH 2018-4(7)	November 7, 2018	January 9, 2024	January 9, 2026	6.66%	115-145 bps	647,118		661,029
Total Securitizations						1,638,792		1,653,724
Less: deferred financing costs, net						(6,819)		(7,929)
Total						$	1,631,973	$	1,645,795

(1)Outstanding principal balance is net of discounts and does not include deferred financing costs, net.

(2)Represents the maturity dates for all extension options that have been exercised for the mortgage loans.

(3)Represents the maturity date if we exercise each of the remaining one year extension options available, which are subject to certain conditions being met.

(4)IH 2017-1 bears interest at a fixed rate of 4.23% per annum, equal to the market determined pass-through rate payable on the certificates including applicable servicing fees. Effective July 3, 2023, the interest rate for IH 2018-4 is based on the weighted average spread over Term SOFR adjusted for an 0.11% credit spread adjustment. As of September 30, 2023, Term SOFR was 5.32%.

(5)Range of spreads is based on outstanding principal balances as of September 30, 2023.

(6)Net of unamortized discount of $1,320 and $1,584 as of September 30, 2023 and December 31, 2022, respectively.

(7)The initial maturity term of IH 2018-4 is two years, subject to five, one year extension options at the Borrower Entity’s discretion (provided that there is no continuing event of default under the mortgage loan agreement and the Borrower Entity obtains and delivers to the lender a replacement interest rate cap agreement from an approved counterparty within the required timeframe). Our IH 2018-4 mortgage loan has exercised the third extension option. The maturity date above reflects all extensions that have been exercised.

Securitization Transactions

For each Securitization transaction, the Borrower Entity executed a loan agreement with a third party lender. IH 2018-4 originally consisted of six floating rate components. The two year initial terms are individually subject to five, one year extension options at the Borrower Entity’s discretion. Such extensions are available provided there is no continuing event of default under the respective mortgage loan agreement and the Borrower Entity obtains and delivers a replacement interest rate cap agreement from an approved counterparty within the required timeframe to the lender. IH 2017-1 is a 10 year, fixed rate mortgage loan comprised of two components. Certificates issued by the trust in connection with Component A of IH 2017-1 benefit from FNMA’s guaranty of timely payment of principal and interest.

Each mortgage loan is secured by a pledge of the equity in the assets of the respective Borrower Entities, as well as first-priority mortgages on the underlying properties and a grant of security interests in all of the related personal property. As of September 30, 2023 and December 31, 2022, a total of 10,617 and 10,712 homes, respectively, with a gross book value of $2,350,078 and $2,355,083, respectively, and a net book value of $1,799,650 and $1,859,614, respectively, are pledged pursuant to the mortgage loans. Each Borrower Entity has the right, subject to certain requirements and limitations outlined in the respective loan agreements, to substitute properties. We are obligated to make monthly payments of interest for each mortgage loan.

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

Transactions with Trusts

Concurrent with the execution of each mortgage loan agreement, the respective third party lender sold each loan it originated to individual depositor entities (the “Depositor Entities”) who subsequently transferred each loan to Securitization-specific trust entities (the “Trusts”). The Depositor Entities for our currently outstanding Securitizations are wholly owned subsidiaries. We accounted for the transfers of the individual Securitizations from the wholly owned Depositor Entities to the respective Trusts as sales under ASC 860, Transfers and Servicing, with no resulting gain or loss as the Securitizations were both originated by the lender and immediately transferred at the same fair market value.

As consideration for the transfer of each loan to the Trusts, the Trusts issued classes of certificates which mirror the components of the individual loans (collectively, the “Certificates”) to the Depositor Entities, except that Class R certificates do not have related loan components as they represent residual interests in the Trusts. The Certificates represent the entire beneficial interest in the Trusts. Following receipt of the Certificates, the Depositor Entities sold the Certificates to investors and used the proceeds as consideration for the loans sold to the Depositor Entities by the lenders. These transactions had no effect on our condensed consolidated financial statements other than with respect to Certificates we retained in connection with Securitizations or purchased at a later date.

The Trusts are structured as pass-through entities that receive interest payments from the Securitizations and distribute those payments to the holders of the Certificates. The assets held by the Trusts are restricted and can only be used to fulfill the obligations of those entities. The obligations of the Trusts do not have any recourse to the general credit of any entities in these condensed consolidated financial statements. We have evaluated our interests in certain certificates of the Trusts held by us (discussed below) and determined that they do not create a more than insignificant variable interest in the Trusts. Additionally, the retained certificates do not provide us with any ability to direct activities that could impact the Trusts’ economic performance. Therefore, we do not consolidate the Trusts.

Retained Certificates

As the Trusts made Certificates available for sale to both domestic and foreign investors, sponsors of the mortgage loans are required to retain a portion of the risk that represents a material net economic interest in each loan pursuant to Regulation RR (the “Risk Retention Rules”) under the Securities Exchange Act of 1934, as amended. As such, loan sponsors are required to retain a portion of the credit risk that represents not less than 5% of the aggregate fair value of the loan as of the closing date.

IH 2017-1 issued Class B certificates, which are restricted certificates that were made available exclusively to INVH LP in order to comply with the Risk Retention Rules. The Class B certificates bear a stated annual interest rate of 4.23%, including applicable servicing fees.

For IH 2018-4, we retain 5% of each class of certificates to meet the Risk Retention Rules. These retained certificates accrue interest at a floating rate of Term SOFR plus a spread ranging from 1.15% to 1.45%.

The retained certificates, net of discount, total $86,617 and $86,980 as of September 30, 2023 and December 31, 2022, respectively, and are classified as held to maturity investments and recorded in other assets, net on the condensed consolidated balance sheets (see Note 6).

Loan Covenants

The general terms that apply to all of the mortgage loans require each Borrower Entity to maintain compliance with certain affirmative and negative covenants. Affirmative covenants include each Borrower Entity’s, and certain of their respective affiliates’, compliance with (i) licensing, permitting, and legal requirements specified in the mortgage loan agreements, (ii) organizational requirements of the jurisdictions in which they are organized, (iii) federal and state tax laws, and (iv) books and records requirements specified in the respective mortgage loan agreements. Negative covenants include each Borrower Entity’s, and certain of their affiliates’, compliance with limitations surrounding (i) the amount of each Borrower Entity’s indebtedness and the nature of their investments, (ii) the execution of transactions with affiliates, (iii) the Manager, (iv) the nature of each Borrower Entity’s business activities, and (v) the required maintenance of specified cash reserves. As of September 30, 2023, and through the date our condensed consolidated financial statements were issued, we believe each Borrower Entity is in compliance with all affirmative and negative covenants for the mortgage loans.

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

Prepayments

For the mortgage loans, prepayments of amounts owed by us are generally not permitted under the terms of the respective mortgage loan agreements unless such prepayments are made pursuant to the voluntary election or mandatory provisions specified in such agreements. The specified mandatory provisions become effective to the extent that a property becomes characterized as a disqualified property, a property is sold, and/or upon the occurrence of a condemnation or casualty event associated with a property. To the extent either a voluntary election is made, or a mandatory prepayment condition exists, in addition to paying all interest and principal, we must also pay certain breakage costs as determined by the loan servicer and a spread maintenance premium if prepayment occurs before the month following the one or two year anniversary of the closing dates of each of the mortgage loans except for IH 2017-1. For IH 2017-1, prepayments on or before December 2026 will require a yield maintenance premium. For the nine months ended September 30, 2023 and 2022, we made voluntary and mandatory prepayments of $15,196 and $849,712, respectively, under the terms of the mortgage loan agreements. For the nine months ended September 30, 2022, prepayments included the full repayment of the 2018-2 and 2018-3 mortgage loans.

Secured Term Loan

On June 7, 2019, 2019-1 IH Borrower LP, a consolidated subsidiary (“2019-1 IH Borrower” and one of our Borrower Entities), entered into a 12 year loan agreement with a life insurance company (the “Secured Term Loan”). The Secured Term Loan bears interest at a fixed rate of 3.59%, including applicable servicing fees, for the first 11 years and bears interest at a floating rate based on a spread of 147 bps, including applicable servicing fees, over one month LIBOR for the twelfth year (subject to certain adjustments as outlined in the loan agreement, including conversion by the lender to a successor variable rate once LIBOR is discontinued). The Secured Term Loan is secured by first priority mortgages on a portfolio of single-family rental properties as well as a first priority pledge of the equity interests of 2019-1 IH Borrower. We utilized the proceeds from the Secured Term Loan to fund: (i) repayments of then-outstanding indebtedness; (ii) initial deposits into the Secured Term Loan’s reserve accounts; (iii) transaction costs related to the closing of the Secured Term Loan; and (iv) general corporate purposes.

The following table sets forth a summary of our Secured Term Loan indebtedness as of September 30, 2023 and December 31, 2022:


	Maturity Date	Interest Rate(1)	September 30, 2023		December 31, 2022
Secured Term Loan	June 9, 2031	3.59%	$	403,129	$	403,363
Deferred financing costs, net			(1,669)		(1,833)
Secured Term Loan, net			$	401,460	$	401,530

(1)The Secured Term Loan bears interest at a fixed rate of 3.59% per annum including applicable servicing fees for the first 11 years and for the twelfth year bears interest at a floating rate based on a spread of 147 bps over a comparable or successor rate to one month LIBOR as provided for in our loan agreement, including applicable servicing fees, subject to certain adjustments as outlined in the loan agreement. Interest payments are made monthly.

Collateral

As of September 30, 2023 and December 31, 2022, the Secured Term Loan’s collateral pool contains 3,332 and 3,334 homes, respectively, with a gross book value of $825,513 and $813,543, respectively, and a net book value of $679,394 and $688,625, respectively. 2019-1 IH Borrower has the right, subject to certain requirements and limitations outlined in the loan agreement, to substitute properties representing up to 20% of the collateral pool annually, and to substitute properties representing up to 100% of the collateral pool over the life of the Secured Term Loan. In addition, four times after the first anniversary of the closing date, 2019-1 IH Borrower has the right, subject to certain requirements and limitations outlined in the loan agreement, to execute a special release of collateral representing up to 15% of the then-outstanding principal balance of the Secured Term Loan in order to bring the loan-to-value ratio back in line with the Secured Term Loan’s loan-to-value ratio as of the closing date. Any such special release of collateral would not change the then-outstanding principal balance of the Secured Term Loan, but rather would reduce the number of single-family rental homes included in the collateral pool.

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

Loan Covenants

The Secured Term Loan requires 2019-1 IH Borrower to maintain compliance with certain affirmative and negative covenants. Affirmative covenants include 2019-1 IH Borrower’s, and certain of its affiliates’, compliance with (i) licensing, permitting and legal requirements specified in the loan agreement, (ii) organizational requirements of the jurisdictions in which they are organized, (iii) federal and state tax laws, and (iv) books and records requirements specified in the loan agreement. Negative covenants include 2019-1 IH Borrower’s, and certain of its affiliates’, compliance with limitations surrounding (i) the amount of 2019-1 IH Borrower’s indebtedness and the nature of its investments, (ii) the execution of transactions with affiliates, (iii) the Manager, (iv) the nature of 2019-1 IH Borrower’s business activities, and (v) the required maintenance of specified cash reserves. As of September 30, 2023, and through the date our condensed consolidated financial statements were issued, we believe 2019-1 IH Borrower is in compliance with all affirmative and negative covenants for the Secured Term Loan.

Prepayments

Prepayments of the Secured Term Loan are generally not permitted unless such prepayments are made pursuant to the voluntary election or mandatory provisions specified in the loan agreement. The specified mandatory provisions become effective to the extent that a property becomes characterized as a disqualified property, a property is sold, and/or upon the occurrence of a condemnation or casualty event associated with a property. To the extent either a voluntary election is made, or a mandatory prepayment condition exists, in addition to paying all interest and principal, we must also pay certain breakage costs as determined by the loan servicer and a yield maintenance premium if prepayment occurs before June 9, 2030. During the nine months ended September 30, 2023, we made mandatory prepayments of $234 under the terms of the Secured Term Loan agreement. No such prepayments were made during the nine months ended September 30, 2022.

Unsecured Notes

Our unsecured notes are issued in connection with either an underwritten public offering pursuant to our existing shelf registration statement that automatically became effective upon filing with the SEC in July 2021 and expires in July 2024 or in connection with a private placement transaction with certain institutional investors (collectively, the “Unsecured Notes”). We utilize proceeds from the Unsecured Notes to fund: (i) repayments of then-outstanding indebtedness, including the Securitizations; (ii) closing costs in connection with the Unsecured Notes; and (iii) general costs associated with our operations and other corporate purposes, including acquisitions. Interest on the Unsecured Notes is payable semi-annually in arrears.

The following table sets forth a summary of our Unsecured Notes as of September 30, 2023 and December 31, 2022:


	Interest Rate(1)	September 30, 2023		December 31, 2022
Total Unsecured Notes, net(2)	2.00% — 5.50%	$	3,329,281	$	2,538,066
Deferred financing costs, net		(25,199)		(19,881)
Total		$	3,304,082	$	2,518,185

(1)Represents the range of contractual rates in place as of September 30, 2023.

(2)Net of unamortized discount of $20,719 and $11,934 as of September 30, 2023 and December 31, 2022. See “Debt Maturities Schedule” for information about maturity dates for the Unsecured Notes.

Debt Issuances

On August 2, 2023, in a public offering under our existing shelf registration statement, we issued $450,000 and $350,000 aggregate principal amount of Senior Notes with 5.45% and 5.50% interest rates, respectively, and which mature on August 15, 2030 and August 15, 2033, respectively.

On April 5, 2022, in a public offering under our existing shelf registration statement, we issued $600,000 aggregate principal amount of 4.15% Senior Notes which mature on April 15, 2032.

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

Prepayments

The Unsecured Notes are redeemable in whole at any time or in part from time to time, at our option, at a redemption price equal to (i) 100% of the principal amount to be redeemed plus accrued and unpaid interest and (ii) a make-whole premium calculated in accordance with the respective loan agreements if the redemption occurs in certain amounts or in certain periods that range from one to three months prior to the maturity date. The privately placed Unsecured Notes require any prepayment to be an amount not less than 5% of the aggregate principal amount then outstanding.

Guarantees

The Unsecured Notes are fully and unconditionally guaranteed, jointly and severally, by INVH and two of its wholly owned subsidiaries, the General Partner and IH Merger Sub, LLC (“IH Merger Sub”). Prior to the September 17, 2021 execution of a parent guaranty agreement, the privately placed Unsecured Notes were not guaranteed.

Loan Covenants

The Unsecured Notes issued publicly under our registration statement contain customary covenants, including, among others, limitations on the incurrence of debt; and they include the following financial covenants related to the incurrence of debt: (i) an aggregate debt test; (ii) a debt service test; (iii) a maintenance of total unencumbered assets; and (iv) a secured debt test.

The privately placed Unsecured Notes contain customary covenants, including, among others, limitations on distributions, fundamental changes, and transactions with affiliates; and they include the following financial covenants, subject to certain qualifications: (i) a maximum total leverage ratio; (ii) a maximum secured leverage ratio; (iii) a maximum unencumbered leverage ratio; (iv) a minimum fixed charge coverage ratio; and (v) a minimum unsecured interest coverage ratio.

The Unsecured Notes contain customary events of default (subject in certain cases to specified cure periods), the occurrence of which would allow the holders of notes to take various actions, including the acceleration of amounts due under the Unsecured Notes. As of September 30, 2023, and through the date our condensed consolidated financial statements were issued, we believe we were in compliance with all affirmative and negative covenants for the Unsecured Notes.

Term Loan Facilities and Revolving Facility

On December 8, 2020, we entered into an Amended and Restated Revolving Credit and Term Loan Agreement with a syndicate of banks, financial institutions, and institutional lenders for a new credit facility (the “Credit Facility”). The Credit Facility provides $3,500,000 of borrowing capacity and consists of a $1,000,000 revolving facility (the “Revolving Facility”) and a $2,500,000 term loan facility (the “2020 Term Loan Facility”), both of which mature on January 31, 2025, with two six month extension options available. The Revolving Facility also includes borrowing capacity for letters of credit. The Credit Facility provides us with the option to enter into additional incremental credit facilities (including an uncommitted incremental facility that provides us with the option to increase the size of the Revolving Facility and/or the 2020 Term Loan Facility such that the aggregate amount does not exceed $4,000,000 at any time), subject to certain limitations. On April 18, 2023, we amended the Credit Facility to convert the applicable interest rate from a LIBOR-based index to a Term SOFR-based index.

On June 22, 2022, we entered into a Term Loan Agreement with a syndicate of banks for new senior unsecured term loans (the “2022 Term Loan Facility” and together with the 2020 Term Loan Facility, the “Term Loan Facilities”). The 2022 Term Loan Facility provided $725,000 of borrowing capacity, consisting of a $150,000 initial term loan (the “Initial Term Loan”) and delayed draw term loans totaling $575,000 (the “Delayed Draw Term Loans”) which were fully drawn on December 8, 2022. The Initial Term Loan and the Delayed Draw Term Loans (together, the “2022 Term Loans”) mature on June 22, 2029. The 2022 Term Loan Facility also includes an accordion feature providing the option to increase the size of the 2022 Term Loans or enter into additional incremental 2022 Term Loans, such that the aggregate amount of all 2022 Term Loans does not exceed $950,000 at any time, subject to certain limitations.

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

The following table sets forth a summary of the outstanding principal amounts under the Term Loan Facilities and the Revolving Facility as of September 30, 2023 and December 31, 2022:


	Maturity Date	Interest Rate	September 30, 2023		December 31, 2022
2020 Term Loan Facility(1)(2)	January 31, 2025	6.42%	$	2,500,000	$	2,500,000
2022 Term Loan Facility(3)	June 22, 2029	6.66%	725,000		725,000
Total Term Loan Facilities			3,225,000		3,225,000
Less: deferred financing costs, net			(15,275)		(21,433)
Term Loan Facilities, net			$	3,209,725	$	3,203,567

Revolving Facility(1)(2)	January 31, 2025	6.31%	$	—	$	—

(1)Interest rates for the 2020 Term Loan Facility and the Revolving Facility are based on Term SOFR adjusted for a 0.10% credit spread adjustment, plus an applicable margin. As of September 30, 2023, the applicable margins were 1.00% and 0.89% for the 2020 Term Loan Facility and the Revolving Facility, respectively, and Term SOFR was 5.32%.

(2)If we exercise the two six month extension options, the maturity date will be January 31, 2026.

(3)Interest rate for the 2022 Term Loan Facility is based on Term SOFR adjusted for a 0.10% credit spread adjustment, plus the applicable margin. As of September 30, 2023, the applicable margin was 1.24%, and Term SOFR was 5.32%.

Interest Rate and Fees

As a result of the April 18, 2023 amendment to the Credit Facility, borrowings thereunder bear interest, at our option, at a rate equal to (a) a Term SOFR rate determined by reference to the forward-looking SOFR rate published by Reuters (or a comparable or successor rate as provided for in our loan agreement) for the interest period relevant to such borrowing plus 0.10% credit spread adjustment or (b) a base rate determined by reference to the highest of (1) the administrative agent’s prime lending rate, (2) the federal funds effective rate plus 0.50%, (3) the Term SOFR rate that would be payable on such day for a Term SOFR rate loan with a one month interest period plus 1.00%, and (4) 1.00%.

Prior to the April 18, 2023 amendment to the Credit Facility, borrowings thereunder bore interest, at our option, at a rate equal to a margin over either (a) a LIBOR rate determined by reference to the Bloomberg LIBOR rate (or a comparable or successor rate as provided for in our loan agreement) for the interest period relevant to such borrowing or (b) a base rate determined by reference to the highest of (1) the administrative agent’s prime lending rate, (2) the federal funds effective rate plus 0.50%, and (3) the LIBOR rate that would be payable on such day for a LIBOR rate loan with a one month interest period plus 1.00%.

Borrowings under the 2022 Term Loan Facility bear interest, at our option, at a rate equal to a margin over either (a) Term SOFR adjusted for an applicable credit spread adjustment (“Adjusted SOFR”) for the interest period relevant to such borrowing or (b) a base rate determined by reference to the highest of (1) the administrative agent’s prime lending rate, (2) the federal funds effective rate plus 0.50%, and (3) Adjusted SOFR for a one month interest period plus 1.00%.

The margins for the Term Loan Facilities and the Revolving Facility as of September 30, 2023 are as follows:


	Base Rate Loans			Adjusted SOFR Rate Loans
2020 Term Loan Facility	0.00%	—	0.65%			0.80%	—	1.65%
2022 Term Loan Facility	0.15%	—	1.20%	1.15%	—	2.20%
Revolving Facility	0.00%	—	0.45%			0.75%	—	1.45%

The Revolving Facility and the 2022 Term Loan Facility include a sustainability component whereby pricing can improve upon our achievement of certain sustainability ratings, determined via an independent third party evaluation.

In addition to paying interest on outstanding principal, we are required to pay certain facility and unused commitment fees. Under the Credit Facility, we are required to pay a facility fee ranging from 0.10% to 0.30%. We are also required to pay customary letter of credit fees. Under the 2022 Term Loan Facility, we were required to pay an unused commitment fee

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

to the lenders equal to the daily unused balance of the Delayed Draw Term Loan commitments at a rate of 0.20% per annum prior to December 8, 2022 when the commitments were fully funded.

Prepayments and Amortization

No principal reductions are required under the Credit Facility or the 2022 Term Loan Facility. We are permitted to voluntarily repay amounts outstanding under the 2020 Term Loan Facility at any time without premium or penalty, subject to certain minimum amounts and the payment of customary “breakage” costs with respect to Term SOFR loans. We are also permitted to voluntarily repay amounts outstanding under the 2022 Term Loan Facility (a) on or prior to the first anniversary of the closing subject to a 2.0% prepayment fee, (b) on or prior to the second anniversary of the closing subject to a 1.0% prepayment fee, and (c) at any time thereafter without premium or penalty. Once repaid, no further borrowings will be permitted under the Term Loan Facilities.

Loan Covenants

The Credit Facility and the 2022 Term Loan Facility contain certain customary affirmative and negative covenants and events of default. Such covenants will, among other things, restrict, subject to certain exceptions, our ability and that of our subsidiaries to (i) engage in certain mergers, consolidations, or liquidations, (ii) sell, lease, or transfer all or substantially all of their respective assets, (iii) engage in certain transactions with affiliates, (iv) make changes to our fiscal year, (v) make changes in the nature of our business and our subsidiaries, and (vi) enter into certain burdensome agreements.

The Credit Facility and the 2022 Term Loan Facility also require us, on a consolidated basis with our subsidiaries, to maintain a (i) maximum total leverage ratio, (ii) maximum secured leverage ratio, (iii) maximum unencumbered leverage ratio, (iv) minimum fixed charge coverage ratio, (v) minimum unsecured interest coverage ratio, and (vi) maximum secured recourse. If at any time we do not have an Investment Grade Rating (defined below), we will also be required to maintain a maximum secured recourse leverage ratio. If an event of default occurs, the lenders under the Credit Facility and the 2022 Term Loan Facility are entitled to take various actions, including the acceleration of amounts due thereunder. As of September 30, 2023, and through the date our condensed consolidated financial statements were issued, we believe we were in compliance with all affirmative and negative covenants for the Credit Facility and the 2022 Term Loan Facility.

Guarantees

After obtaining the requisite rating on our non-credit enhanced, senior unsecured long term debt as defined in the Credit Facility agreement (the “Investment Grade Rating”), our direct and indirect wholly owned subsidiaries that directly own unencumbered assets (the “Subsidiary Guarantors”) were released from their previous guarantee requirements under the Credit Facility (the “Investment Grade Release”) effective May 5, 2021. Prior to the Investment Grade Release, the obligations under the Credit Facility were guaranteed on a joint and several basis by each Subsidiary Guarantor, subject to certain exceptions.

On September 17, 2021, as a result of the execution of a parent guaranty agreement, the obligations under the Credit Facility became guaranteed on a joint and several basis by INVH and two of its wholly owned subsidiaries, the General Partner and IH Merger Sub. In connection with the 2022 Term Loan Facility, we entered into a similar parent guaranty agreement with INVH, the General Partner, and IH Merger Sub.

Convertible Senior Notes

In connection with the SWH merger, we assumed certain convertible senior notes including $345,000 in aggregate principal amount of 3.50% convertible senior notes due 2022 issued by SWH in January 2017 (the “2022 Convertible Notes”). Interest on the 2022 Convertible Notes was payable semiannually in arrears on January 15th and July 15th of each year, and the 2022 Convertible Notes had an effective interest rate of 5.12% which included the effect of an adjustment to the fair value of the debt in connection with the SWH merger. On January 18, 2022, we settled the $141,490 outstanding principal balance of the 2022 Convertible Notes with the issuance of 6,216,261 shares of our common stock and a cash payment of $271.

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

Debt Maturities Schedule

The following table summarizes the contractual maturities of our debt as of September 30, 2023:


Year	Mortgage Loans(1)		Secured Term Loan		Unsecured Notes		Term Loan Facilities(2)		Revolving Facility(2)		Total
2023	$	—	$	—	$	—	$	—	$	—	$	—
2024	647,118		—		—		—		—		647,118
2025	—		—		—		2,500,000		—		2,500,000
2026	—		—		—		—		—		—
2027	992,994		—		—		—		—		992,994
Thereafter	—		403,129		3,350,000		725,000		—		4,478,129
Total	1,640,112		403,129		3,350,000		3,225,000		—		8,618,241
Less: deferred financing costs, net	(6,819)		(1,669)		(25,199)		(15,275)		—		(48,962)

Less: unamortized debt discount	(1,320)		—		(20,719)		—		—		(22,039)
Total	$	1,631,973	$	401,460	$	3,304,082	$	3,209,725	$	—	$	8,547,240

(1)The maturity dates of the obligations are reflective of all extensions that have been exercised as of September 30, 2023. If fully extended, we would have no mortgage loans maturing before 2026. Such extensions are available provided there is no continuing event of default under the respective mortgage loan agreement and the Borrower Entity obtains and delivers to the lender a replacement interest rate cap agreement from an approved counterparty within the required timeframe.

(2)If we exercise the two six month extension options, the maturity date for the 2020 Term Loan Facility and the Revolving Facility will be January 31, 2026.

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

Note 8—Derivative Instruments

From time to time, we enter into derivative instruments to manage the economic risk of changes in interest rates. We do not enter into derivative transactions for speculative or trading purposes. Designated hedges are derivatives that meet the criteria for hedge accounting and that we have elected to designate as hedges. Non-designated hedges are derivatives that do not meet the criteria for hedge accounting or that we did not elect to designate as hedges.

Designated Hedges

We have entered into various interest rate swap agreements, which are used to hedge the variable cash flows associated with variable-rate interest payments. Each of our swap agreements is designated for hedge accounting purposes and is currently indexed to one month Term SOFR. On April 18, 2023, we completed a series of transactions related to certain of our variable rate debt and derivative agreements that were originally indexed to LIBOR to effectuate a transition to Term SOFR. While the original agreements provided for a prescribed transition to an alternate rate, this series of transactions amended or modified our Credit Facility and all of our LIBOR-indexed interest rate swap agreements such that each agreement is now indexed to Term SOFR. See Note 2 for additional information about reference rate reform and our transition from LIBOR. Changes in the fair value of these swaps are recorded in other comprehensive income and are subsequently reclassified into earnings in the period in which the hedged forecasted transactions affect earnings.

The table below summarizes our interest rate swap instruments as of September 30, 2023:

Agreement Date

Forward
Effective Date

Maturity
Date

Strike
Rate

Index

Notional
Amount

April 18, 2023

March 31, 2023

January 31, 2025

2.80%

One month Term SOFR

400,000

April 18, 2023

March 31, 2023

November 30, 2024

2.83%

One month Term SOFR

400,000

April 18, 2023

April 15, 2023

November 30, 2024

2.78%

One month Term SOFR

400,000

April 18, 2023

April 15, 2023

February 28, 2025

2.79%

One month Term SOFR

400,000

April 18, 2023

April 15, 2023

June 9, 2025

2.94%

One month Term SOFR

325,000

April 18, 2023

April 15, 2023

June 9, 2025

2.95%

One month Term SOFR

595,000

April 18, 2023

April 15, 2023

July 9, 2025

2.83%

One month Term SOFR

1,100,000

April 18, 2023

April 15, 2023

July 31, 2025

3.08%

One month Term SOFR

200,000

March 22, 2023

July 9, 2025

May 31, 2029

2.99%

One month Term SOFR

300,000

During the nine months ended September 30, 2022, we terminated interest rate swaps or portions thereof and paid the counterparties $13,292 in connection with these terminations. There were no such terminations during the nine months ended September 30, 2023.

During the nine months ended September 30, 2023 and 2022, interest rate swap instruments were used to hedge the variable cash flows associated with existing variable-rate interest payments. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on our variable-rate debt. During the next 12 months, we estimate that $82,542 will be reclassified to earnings as a decrease in interest expense.

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

Non-Designated Hedges

Concurrent with entering into certain of the mortgage loan agreements and in connection with previous mergers, we entered into or acquired and maintain interest rate cap agreements with terms and notional amounts equivalent to the terms and amounts of the mortgage loans made by the third party lenders. To the extent that the maturity date of a mortgage loan is extended through an exercise of one or more extension options, a replacement or extension interest rate cap agreement must be executed with terms similar to those associated with the initial interest rate cap agreement and strike prices equal to the greater of the interest rate cap strike price and the interest rate at which the debt service coverage ratio (as defined) is not less than 1.2 to 1.0. The interest rate cap agreement, including all of our rights to payments owed by the counterparties and all other rights, has been pledged as additional collateral for the mortgage loan. Additionally, in certain instances, in order to minimize the cash impact of purchasing required interest rate caps, we simultaneously sell interest rate caps (which have identical terms and notional amounts) such that the purchase price and sales proceeds of the related interest rate caps are intended to offset each other. As of September 30, 2023, the remaining interest rate cap has a strike price of 8.46%.

Fair Values of Derivative Instruments on the Condensed Consolidated Balance Sheets

The table below presents the fair value of our derivative financial instruments as well as their classification on the condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022:


	Asset Derivatives					Liability Derivatives
		Fair Value as of					Fair Value as of
	Balance Sheet Location	September 30, 2023		December 31, 2022		Balance Sheet Location	September 30, 2023		December 31, 2022
Derivatives designated as hedging instruments:
Interest rate swaps	Other assets	$	134,017	$	119,157	Other liabilities	$	—	$	—

Derivatives not designated as hedging instruments:
Interest rate caps	Other assets	—		36		Other liabilities	—		—
Total		$	134,017	$	119,193		$	—	$	—

Offsetting Derivatives

We enter into master netting arrangements, which reduce risk by permitting net settlement of transactions with the same counterparty. The tables below present a gross presentation, the effects of offsetting, and a net presentation of our derivatives as of September 30, 2023 and December 31, 2022:


	September 30, 2023
							Gross Amounts Not Offset in the Statement of Financial Position
	Gross Amounts of Recognized Assets/ Liabilities		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Assets/ Liabilities Presented in the Statement of Financial Position		Financial Instruments		Cash Collateral Received		Net Amount
Offsetting assets:
Derivatives	$	134,017	$	—	$	134,017	$	—	$	—	$	134,017
Offsetting liabilities:
Derivatives	$	—	$	—	$	—	$	—	$	—	$	—

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)


	December 31, 2022
							Gross Amounts Not Offset in the Statement of Financial Position
	Gross Amounts of Recognized Assets/ Liabilities		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Assets/ Liabilities Presented in the Statement of Financial Position		Financial Instruments		Cash Collateral Received		Net Amount
Offsetting assets:
Derivatives	$	119,193	$	—	$	119,193	$	—	$	—	$	119,193
Offsetting liabilities:
Derivatives	$	—	$	—	$	—	$	—	$	—	$	—

Effect of Derivative Instruments on the Condensed Consolidated Statements of Comprehensive Income (Loss) and the Condensed Consolidated Statements of Operations

The tables below present the effect of our derivative financial instruments in the condensed consolidated statements of comprehensive income (loss) and the condensed consolidated statements of operations for the three months ended September 30, 2023 and 2022:


	Amount of Gain Recognized in OCI on Derivative				Location of Gain (Loss) Reclassified from Accumulated OCI into Net Income	Amount of Gain (Loss) Reclassified from Accumulated OCI into Net Income				Total Amount of Interest Expense Presented in the Condensed Consolidated Statements of Operations

	For the Three Months Ended September 30,					For the Three Months Ended September 30,				For the Three Months Ended September 30,
	2023		2022			2023		2022		2023		2022
Derivatives in cash flow hedging relationships:
Interest rate swaps	$	27,845	$	102,940	Interest expense	$	21,081	$	(9,591)	$	86,736	$	76,454


	Location of Loss Recognized in Net Income on Derivative	Amount of Loss Recognized in Net Income on Derivative

		For the Three Months Ended September 30,
		2023		2022
Derivatives not designated as hedging instruments:

Interest rate caps	Interest expense	$	1	$	28

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)


	Amount of Gain Recognized in OCI on Derivative				Location of Gain (Loss) Reclassified from Accumulated OCI into Net Income	Amount of Gain (Loss) Reclassified from Accumulated OCI into Net Income				Total Amount of Interest Expense Presented in the Condensed Consolidated Statements of Operations

	For the Nine Months Ended September 30,					For the Nine Months Ended September 30,				For the Nine Months Ended September 30,
	2023		2022			2023		2022		2023		2022
Derivatives in cash flow hedging relationships:
Interest rate swaps	$	73,853	$	316,479	Interest expense	$	52,023	$	(63,837)	$	243,408	$	225,683


	Location of Loss Recognized in Net Income on Derivative	Amount of Loss Recognized in Net Income on Derivative

		For the Nine Months Ended September 30,
		2023		2022
Derivatives not designated as hedging instruments:

Interest rate caps	Interest expense	$	41	$	63

Credit-Risk-Related Contingent Features

The agreements with our derivative counterparties which govern our interest rate swap agreements contain a provision where we could be declared in default on our derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to our default on the indebtedness.

As of September 30, 2023, we were not in a net liability position with any of our derivative counterparties.

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

Note 9—Stockholders’ Equity

As of September 30, 2023, we have issued 611,958,239 shares of common stock. In addition, we issue OP Units from time to time which, upon vesting, are redeemable for shares of our common stock on a one-for-one basis or, in our sole discretion, cash and are reflected as non-controlling interests on our condensed consolidated balance sheets and statements of equity. As of September 30, 2023, 1,869,483 outstanding OP Units are redeemable.

During the three and nine months ended September 30, 2023, we issued 2,069 and 546,857 shares of common stock, respectively. During the three and nine months ended September 30, 2022, we issued 1,050,000 and 10,364,471 shares of common stock, respectively.

At the Market Equity Program

On December 20, 2021, we entered into distribution agreements with a syndicate of banks (the “Agents” and the “Forward Sellers”), pursuant to which we may sell, from time to time, up to an aggregate sales price of $1,250,000 of our common stock through the Agents and the Forward Sellers (the “2021 ATM Equity Program”). In addition to the issuance of shares of our common stock, the distribution agreements permit us to enter into separate forward sale transactions with certain forward purchasers who may borrow shares from third parties and, through affiliated Forward Sellers, offer a number of shares of our common stock equal to the number of shares of our common stock underlying the particular forward transaction. During the nine months ended September 30, 2022, we sold 2,438,927 shares of our common stock under our 2021 ATM Equity Program, generating net proceeds of $98,367, after giving effect to Agent commissions and other costs totaling $1,633. We did not sell any shares of common stock under the 2021 ATM Equity Program during the three and nine months ended September 30, 2023 or the three months ended September 30, 2022. As of September 30, 2023, $1,150,000 remains available for future offerings under the 2021 ATM Equity Program.

Dividends

To qualify as a REIT, we are required to distribute annually to our stockholders at least 90% of our REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains, and to pay tax at regular corporate rates to the extent that we annually distribute less than 100% of our net taxable income. We intend to pay quarterly dividends to our stockholders that in the aggregate are approximately equal to or exceed our net taxable income in the relevant year. The timing, form, and amount of distributions, if any, to our stockholders, will be at the sole discretion of our board of directors.

The following table summarizes our dividends declared from January 1, 2022 through September 30, 2023:

Record Date

Amount
per Share

Pay Date

Total Amount Declared

Q3-2023

August 8, 2023

0.26

August 25, 2023

160,540

Q2-2023

May 10, 2023

0.26

May 26, 2023

159,493

Q1-2023

February 14, 2023

0.26

February 28, 2023

158,453

Q4-2022

November 8, 2022

0.22

November 23, 2022

135,654

Q3-2022

August 9, 2022

0.22

August 26, 2022

135,042

Q2-2022

May 10, 2022

0.22

May 27, 2022

134,744

Q1-2022

February 14, 2022

0.22

February 28, 2022

134,240

On October 19, 2023, our board of directors declared a dividend of $0.26 per share to stockholders of record on November 7, 2023, which is payable on November 22, 2023 (see Note 15).

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

Note 10—Share-Based Compensation

Our board of directors adopted, and our stockholders approved, the Invitation Homes Inc. 2017 Omnibus Incentive Plan (the “Omnibus Incentive Plan”) to provide a means through which to attract and retain key associates and to provide a means whereby our directors, officers, associates, consultants, and advisors can acquire and maintain an equity interest in us, or be paid incentive compensation, including incentive compensation measured by reference to the value of our common stock, and to align their interests with those of our stockholders. Under the Omnibus Incentive Plan, we may issue up to 16,000,000 shares of common stock.

Our share-based awards consist of restricted stock units (“RSUs”), which may be time vesting, performance based vesting, or market based vesting, and Outperformance Awards (defined below). Time-vesting RSUs are participating securities for earnings (loss) per share (“EPS”) purposes, and performance and market based RSUs (“PRSUs”) and Outperformance Awards are not. For detailed discussion of RSUs and PRSUs issued prior to January 1, 2023, refer to our Annual Report on Form 10-K for the year ended December 31, 2022.

Share-Based Awards

The following summarizes our share-based award activity during the nine months ended September 30, 2023.

Annual Long Term Incentive Plan (“LTIP”):

•Annual LTIP Awards Granted: During the nine months ended September 30, 2023, we granted 776,492 RSUs pursuant to LTIP awards. Each award includes components which vest based on time-vesting conditions, market based vesting conditions, and performance based vesting conditions, each of which is subject to continued employment through the applicable vesting date.

LTIP time-vesting RSUs vest in three equal annual installments based on an anniversary date of March 1st. LTIP PRSUs may be earned based on the achievement of certain measures over a three year performance period. The number of PRSUs earned will be determined based on performance achieved during the performance period for each measure at certain threshold, target, or maximum levels and corresponding payout ranges. In general, the LTIP PRSUs are earned after the end of the performance period on the date on which the performance results are certified by our compensation and management development committee (the “Compensation Committee”).

All of the LTIP Awards are subject to certain change in control and retirement eligibility provisions that may impact these vesting schedules.

•PRSU Results: During the nine months ended September 30, 2023, certain LTIP PRSUs vested and achieved performance in excess of the target level, resulting in the issuance of an additional 188,001 shares of common stock. Such awards are reflected as an increase in the number of awards granted and vested in the table below.

Other Award Activity

•Other Awards: During the nine months ended September 30, 2023, we granted 50,895 time-vesting RSUs to members of our board of directors, which will fully vest on the date of INVH’s 2024 annual stockholders meeting, subject to continued service on the board of directors through such date. During the nine months ended September 30, 2023, we granted 56,562 employment awards in the form of time-vesting RSUs that vest in three equal annual installments based on an anniversary date of the grant date.

•Modifications: On February 1, 2023, the vesting conditions of certain outstanding equity awards with a pre-modification aggregate fair value of $3,741 were modified resulting, in an incremental $309 of share-based compensation expense over the remaining service period. During the nine months ended September 30, 2023, $1,941 of previously recognized share-based compensation expense with respect to these awards was reversed, and we began amortizing the modified fair value over the remaining service period.

Outperformance Awards

On May 1, 2019, the Compensation Committee approved equity based awards in the form of PRSUs and OP Units (the “2019 Outperformance Awards”). The 2019 Outperformance Awards included market based vesting conditions related to absolute and relative total shareholder returns (“TSRs”) over a three year performance period that ended on March 31, 2022. In April 2022, the absolute TSR and the relative TSR were separately calculated, and the Compensation Committee certified

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

achievement of each at maximum achievement. The number of earned 2019 Outperformance Awards was then determined based on the earned dollar value of the awards (at maximum) and the stock price at the performance certification date, resulting in 311,425 earned PRSUs and 498,224 earned OP Units. Earned awards vested 50% on the certification date in April 2022, 25% vested on March 31, 2023, and the remaining 25% will vest on March 31, 2024, subject to continued employment. The estimated fair value of 2019 Outperformance Awards that fully vested during the nine months ended September 30, 2023 was an aggregate $3,164. The aggregate $12,160 grant-date fair value of the 2019 Outperformance Awards that were earned was determined based on Monte-Carlo option pricing models which estimated the probability of achievement of the TSR thresholds. The grant-date fair value is amortized ratably over each vesting period.

On April 1, 2022, the Compensation Committee granted equity based awards with market based vesting conditions in the form of PRSUs and OP Units (the “2022 Outperformance Awards” and together with the 2019 Outperformance Awards, the “Outperformance Awards”). The 2022 Outperformance Awards may be earned based on the achievement of rigorous absolute TSR and relative TSR return thresholds over a three year performance period ending March 31, 2025. The 2022 Outperformance Awards provide that upon completion of 75% of the performance period, or June 30, 2024 (the “Interim Measurement Date”), performance achieved as of the Interim Measurement Date will be calculated consistent with the award terms. To the extent performance through the Interim Measurement Date would result in a payout if the performance period had ended on that date, a minimum of 50% of such hypothetical payout amounts will be guaranteed as a minimum level payout for the full performance period, so long as certain minimum levels of relative TSR are achieved for the full performance period. The final award achievement will be equal to the greater of the payouts determined based on the Interim Measurement Date and performance through March 31, 2025. Upon completion of the performance period, the dollar value of the awards earned under the absolute and relative TSR components will be separately calculated, and the number of earned 2022 Outperformance Awards will be determined based on the earned dollar value of the awards and the stock price at the performance certification date. Earned awards will vest 50% on the certification date and 50% on March 31, 2026, subject to continued employment. As of September 30, 2023, 2022 Outperformance Awards with an approximate aggregate $17,500 grant-date fair value have been issued and remain outstanding. The grant-date fair value was determined based on Monte-Carlo option pricing models which estimate the probability of achievement of the TSR thresholds, and it is amortized ratably over each vesting period.

Summary of Total Share-Based Awards

The following table summarizes activity related to non-vested time-vesting RSUs and PRSUs, other than Outperformance Awards, during the nine months ended September 30, 2023:


	Time-Vesting Awards			PRSUs			Total Share-Based Awards(1)
	Number	Weighted Average Grant Date Fair Value (Actual $)		Number	Weighted Average Grant Date Fair Value (Actual $)		Number	Weighted Average Grant Date Fair Value (Actual $)












Balance, December 31, 2022	509,872	$	34.54	1,211,571	$	32.08	1,721,443	$	32.81
Granted	350,949	31.67		721,001	30.51		1,071,950	30.89
Vested(2)	(220,208)	(33.06)		(505,933)	(31.54)		(726,141)	(32.00)
Forfeited / canceled	(23,376)	(33.82)		(57,933)	(31.39)		(81,309)	(32.09)
Balance, September 30, 2023	617,237	$	33.46	1,368,706	$	31.48	1,985,943	$	32.09

(1)Total share-based awards excludes Outperformance Awards.

(2)All vested share-based awards are included in basic EPS for the periods after each award’s vesting date. The estimated aggregate fair value of share-based awards that fully vested during the nine months ended September 30, 2023 was $23,265. During the nine months ended September 30, 2023, 5,306 RSUs were accelerated pursuant to the terms and conditions of the Omnibus Incentive Plan and related award agreements.

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

Grant-Date Fair Values

The grant-date fair values of the time-vesting RSUs and PRSUs with performance condition vesting criteria are generally based on the closing price of our common stock on the grant date. However, the grant-date fair values for share-based awards with market condition vesting criteria are based on Monte-Carlo option pricing models. The following table summarizes the significant inputs utilized in these models for such awards granted or modified during the nine months ended September 30, 2023:


						For the Nine Months Ended September 30, 2023


Expected volatility(1)						20.5% — 30.0%
Risk-free rate						4.31% — 4.62%
Expected holding period (years)						1.00 — 2.84

(1)Expected volatility was estimated based on the historical volatility of INVH’s realized returns and of the applicable index.

Summary of Total Share-Based Compensation Expense

During the three and nine months ended September 30, 2023 and 2022, we recognized share-based compensation expense as follows:


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,

	2023		2022		2023		2022
General and administrative	$	7,099	$	6,169	$	16,261	$	17,584
Property management expense	1,830		1,761		5,232		4,981
Total	$	8,929	$	7,930	$	21,493	$	22,565

As of September 30, 2023, there is $42,284 of unrecognized share-based compensation expense related to non-vested share-based awards which is expected to be recognized over a weighted average period of 1.84 years.

Note 11—Fair Value Measurements

The carrying amounts of restricted cash, certain components of other assets, accounts payable and accrued expenses, resident security deposits, and certain components of other liabilities approximate fair value due to the short maturity of these amounts. Our interest rate swap agreements, interest rate cap agreements, and investments in equity securities with a readily determinable fair value are recorded at fair value on a recurring basis within our condensed consolidated financial statements. The fair values of our interest rate caps and swaps, which are classified as Level 2 in the fair value hierarchy, are estimated using market values of instruments with similar attributes and maturities. See Note 8 for the details of the condensed consolidated balance sheet classification and the fair values for the interest rate caps and swaps. The fair values of our investments in equity securities with a readily determinable fair value are classified as Level 1 in the fair value hierarchy. For additional information related to our investments in equity securities as of September 30, 2023 and December 31, 2022, refer to Note 6.

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

Recurring Fair Value Measurements

The following table displays the carrying values and fair values of financial instruments as of September 30, 2023 and December 31, 2022:


		September 30, 2023				December 31, 2022
		Carrying Value		Fair Value		Carrying Value		Fair Value
Assets carried at historical cost on the condensed consolidated balance sheets:
Investments in debt securities(1)	Level 2	$	86,617	$	83,111	$	86,980	$	84,992

Liabilities carried at historical cost on the condensed consolidated balance sheets:
Unsecured Notes — public offering(2)	Level 1	$	3,029,281	$	2,546,147	$	2,238,066	$	1,798,658
Mortgage loans(3)	Level 2	1,638,792		1,550,094		1,653,724		1,588,550
Unsecured Notes — private placement(4)	Level 2	300,000		225,582		300,000		228,726
Secured Term Loan(5)	Level 3	403,129		348,818		403,363		356,557
Term Loan Facilities(6)	Level 3	3,225,000		3,228,291		3,225,000		3,233,677

(1)The carrying values of investments in debt securities are shown net of discount.

(2)The carrying value of the Unsecured Notes — public offering includes $20,719 and $11,934 of unamortized discount and excludes $23,979 and $18,534 of deferred financing costs as of September 30, 2023 and December 31, 2022, respectively.

(3)The carrying values of the mortgage loans include $1,320 and $1,584 of unamortized discount and exclude $6,819 and $7,929 of deferred financing costs as of September 30, 2023 and December 31, 2022, respectively.

(4)The carrying value of the Unsecured Notes — private placement excludes $1,220 and $1,347 of deferred financing costs as of September 30, 2023 and December 31, 2022, respectively.

(5)The carrying value of the Secured Term Loan excludes $1,669 and $1,833 of deferred financing costs as of September 30, 2023 and December 31, 2022, respectively.

(6)The carrying values of the Term Loan Facilities exclude $15,275 and $21,433 of deferred financing costs as of September 30, 2023 and December 31, 2022, respectively.

We value our Unsecured Notes — public offering using quoted market prices for each underlying issuance, a Level 1 price within the fair value hierarchy. The fair values of our investments in debt securities, Unsecured Notes — private placement, and mortgage loans, which are classified as Level 2 in the fair value hierarchy, are estimated based on market bid prices of comparable instruments at period end.

We review the fair value hierarchy classifications each reporting period. Changes in the observability of the valuation attributes may result in a reclassification of certain financial assets or liabilities. Such reclassifications are reported as transfers in and out of Level 3 at the beginning fair value for the reporting period in which the changes occur. Availability of secondary market activity and consistency of pricing from third-party sources impacts our ability to classify securities as Level 2 or Level 3.

The following table displays the significant unobservable inputs used to develop our Level 3 fair value measurements as of September 30, 2023:

Quantitative Information about Level 3 Fair Value Measurement(1)

Fair Value

Valuation Technique

Unobservable Input

Rate

Secured Term Loan

348,818

Discounted Cash Flow

Effective Rate

5.76%

Term Loan Facilities

3,228,291

Discounted Cash Flow

Effective Rate

5.00%

—

6.77%

(1)Our Level 3 fair value instruments require interest only payments.

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

Nonrecurring Fair Value Measurements

Our assets measured at fair value on a nonrecurring basis are those assets for which we have recorded impairments.

Single-Family Residential Properties

The single-family residential properties for which we have recorded impairments, measured at fair value on a nonrecurring basis, are summarized below:



	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2023		2022		2023		2022
Investments in single-family residential properties, net held for sale (Level 3):
Pre-impairment amount	$	567	$	125	$	1,606	$	861
Total impairments	(83)		(101)		(342)		(238)
Fair value	$	484	$	24	$	1,264	$	623

We did not record any impairments for our investments in single-family residential properties, net held for use during the three and nine months ended September 30, 2023 and 2022. For additional information related to our single-family residential properties as of September 30, 2023 and December 31, 2022, refer to Note 3.

Note 12—Earnings per Share

Basic and diluted EPS are calculated as follows:


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,

	2023		2022		2023		2022
(in thousands, except share and per share data)
Numerator:
Net income available to common stockholders — basic and diluted	$	131,637	$	79,032	$	389,406	$	282,242

Denominator:
Weighted average common shares outstanding — basic	612,000,811		610,845,820		611,849,302		609,212,132
Effect of dilutive securities:
Incremental shares attributed to non-vested share-based awards	1,579,231		1,801,768		1,305,739		1,529,591
Weighted average common shares outstanding — diluted	613,580,042		612,647,588		613,155,041		610,741,723

Net income per common share — basic	$	0.22	$	0.13	$	0.64	$	0.46
Net income per common share — diluted	$	0.21	$	0.13	$	0.64	$	0.46

Incremental shares attributed to non-vested share-based awards are excluded from the computation of diluted EPS when they are anti-dilutive. Because their inclusion would have been anti-dilutive, incremental shares attributed to non-vested share-based awards are excluded from the denominator. Anti-dilutive shares total 12,501 and zero for the three months ended September 30, 2023 and 2022, respectively, and 4,167 and 21,254 for the nine months ended September 30, 2023 and 2022, respectively.

For the three and nine months ended September 30, 2023 and 2022, vested OP Units have been excluded from the computation of EPS because all income attributable to such vested OP Units has been recorded as non-controlling interest and thus excluded from net income available to common stockholders.

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

The outstanding balance of the 2022 Convertible Notes was settled in January 2022. As such, they had no effect on potential dilution for the three months ended September 30, 2022. For the nine months ended September 30, 2022, using the “if-converted” method, 387,834 potential shares of common stock issuable upon the conversion of the 2022 Convertible Notes are excluded from the computation of diluted EPS as they are anti-dilutive. Additionally, no adjustment to the numerator was required for interest expense related to the 2022 Convertible Notes for the three and nine months ended September 30, 2022. See Note 7 for further discussion about the 2022 Convertible Notes.

Note 13—Income Tax

We account for income taxes under the asset and liability method. For our taxable REIT subsidiaries (“TRSs”), deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. We provide a valuation allowance, from time to time, for deferred tax assets for which we do not consider realization of such assets to be more likely than not. As of September 30, 2023 and December 31, 2022, we have not recorded any deferred tax assets and liabilities or unrecognized tax benefits. We do not anticipate a significant change in unrecognized tax benefits within the next 12 months.

We have sold assets that were either subject to state and local income taxes or Section 337(d) of the Internal Revenue Code of 1986, as amended, or were held by TRSs. These transactions resulted in $60 and $73 of current income tax expense for each of the three months ended September 30, 2023 and 2022, respectively, and resulted in $76 and $235 of current income tax expense for the nine months ended September 30, 2023 and 2022, respectively.

Note 14—Commitments and Contingencies

Lease Commitments

The following table sets forth our fixed lease payment commitments as a lessee as of September 30, 2023, for the periods below:


Year	Operating Leases		Finance Leases

Remainder of 2023	$	1,154	$	782
2024	4,544		1,372
2025	3,157		621
2026	1,940		577
2027	1,264		314
Thereafter	429		—
Total lease payments	12,488		3,666
Less: imputed interest	(660)		(227)
Total lease liability	$	11,828	$	3,439

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

The components of lease expense for the three and nine months ended September 30, 2023 and 2022 are as follows:


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,

	2023		2022		2023		2022
Operating lease cost:
Fixed lease cost	$	793	$	800	$	2,514	$	2,466
Variable lease cost	444		384		1,174		1,133
Total operating lease cost	$	1,237	$	1,184	$	3,688	$	3,599

Finance lease cost:
Amortization of ROU assets	$	717	$	675	$	2,011	$	2,055
Interest on lease liabilities	106		51		247		178
Total finance lease cost	$	823	$	726	$	2,258	$	2,233

New-Build Commitments

We have entered into binding purchase agreements with certain homebuilders for the purchase of 1,931 homes over the next seven years. Estimated remaining commitments under these agreements total approximately $680,000 as of September 30, 2023.

Insurance Policies

Pursuant to the terms of certain of our loan agreements (see Note 7), laws and regulations of the jurisdictions in which our properties are located, and general business practices, we are required to procure insurance on our properties. As of September 30, 2023, there are no material contingent liabilities related to uninsured losses with respect to our properties.

Legal Matters

We are subject to various legal proceedings and claims that arise in the ordinary course of our business as well as congressional and regulatory inquiries and engagements. We accrue a liability when we believe that it is both probable that a liability has been incurred and that we can reasonably estimate the amount of the loss. We do not believe that the final outcome of these proceedings or matters will have a material adverse effect on our condensed consolidated financial statements.

Note 15—Subsequent Events

In connection with the preparation of the accompanying condensed consolidated financial statements, we have evaluated events and transactions occurring after September 30, 2023, for potential recognition or disclosure.

Dividend Declaration

On October 19, 2023, our board of directors declared a dividend of $0.26 per share to stockholders of record on November 7, 2023, which is payable on November 22, 2023.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the information appearing elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K. This discussion and analysis contains forward-looking statements based upon our current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under Part I. Item 1A. “Risk Factors” of our Annual Report on Form 10-K.

Capitalized terms used without definition have the meaning provided elsewhere in this Quarterly Report on Form 10-Q.

Overview

Invitation Homes is a leading owner and operator of single-family homes for lease, offering residents high-quality homes in sought-after neighborhoods across the United States. With over 80,000 homes for lease in 16 core markets across the country as of September 30, 2023, we are meeting the needs of a growing share of Americans who prefer the ease of a leasing lifestyle over the burden of owning a home. We provide our residents access to updated homes with features they value, as well as close proximity to jobs and access to good schools. The continued demand for our product proves that the choice and flexibility we offer is attractive to many prospective residents.

We operate in markets with strong demand drivers, high barriers to entry, and high rent growth potential, primarily in the Western United States, Florida, and the Southeast United States. Through disciplined market and asset selection, as well as through strategic mergers and acquisitions, we designed our portfolio to capture the operating benefits of local density as well as economies of scale that we believe cannot be readily replicated. Since our founding in 2012, we have built a proven, vertically integrated operating platform that enables us to effectively and efficiently acquire, renovate, lease, maintain, and manage our homes.

Our homes average approximately 1,880 square feet with three bedrooms and two bathrooms, appealing to a resident base that we believe is less transitory than a typical multifamily resident. We invest in the upfront renovation of homes in our portfolio in order to address capital needs, reduce ongoing maintenance costs, and drive resident demand.

At Invitation Homes, we are committed to creating a better way to live and to being a force for positive change, while at the same time advancing efforts that make our company more innovative and our processes more sustainable. Environmental, Social, and Governance initiatives are an important part of our strategic business objectives and are critical to our long-term success.

Our mission statement, “Together with you, we make a house a home,” reflects our commitment to high-touch customer service that continuously enhances residents’ living experiences and provides homes where individuals and families can thrive. Each aspect of our operations — whether in our corporate headquarters or field offices located in our 16 core markets — is driven by a resident-centric model. Our associates take our values seriously and work hard every day to honor the trust our residents have placed in us to provide clean, safe, and functional homes for them and their loved ones. In turn, we focus on ensuring that our associates are fairly compensated and that we provide a diverse, equitable, and inclusive culture where they are appreciated for who they are and what they bring to the business. We also place a strong emphasis on the impact we have in our communities and to the environment in general, and we continue to develop programs that demonstrate that commitment. In addition, we ensure that we operate under strong, well-defined governance practices and adhere to the highest ethical standards at all times.

Impact of Macroeconomic Trends

Overall unfavorable global and United States economic conditions (including inflation and rising interest rates), uncertainty in financial markets (including as a result of events affecting financial institutions), ongoing geopolitical tensions, and a general decline in business activity and/or consumer confidence could adversely affect (i) our ability to acquire or dispose of single-family homes, (ii) our access to financial markets on attractive terms, or at all, and (iii) the value of our homes and our business that could cause us to recognize impairments in value of our tangible assets or goodwill. High levels of inflation and rising interest rates may also negatively impact consumer income, credit availability, and spending, among other factors, which may adversely impact our business, financial condition, cash flows, and results of operations, including

the ability of our residents to pay rent. These factors, which include labor shortages and inflationary increases in labor and material costs, have impacted and may continue to impact certain aspects of our business. For example, we have experienced and continue to expect higher levels of bad debt expense compared to pre-COVID averages, as it continues to take longer to address residents who are not current with their rent.

For further discussion of risks related to general economic conditions, see Part I. Item 1A. “Risk Factors — Risks Related to Our Business and Industry — Our operating results are subject to general economic conditions and risks associated with our real estate assets” of our Annual Report on Form 10-K.

Climate Change

Climate change continues to attract considerable public, political, and scientific attention. Experiencing or addressing the various physical, regulatory, and adaptation/transition risks of climate change may affect our profitability. Government authorities, including the SEC, and various interest groups are promoting laws and regulations relating to climate change, including regulations aimed at drastically increasing reporting and governance related to climate change as well as focused on limiting greenhouse gas emissions and the implementation of “green” building codes. These laws and regulations may require us to make costly improvements to our existing properties beyond our current plans to decrease the impact of our homes on the environment, resulting in increased operating costs. The ongoing transition to non-carbon energy sources also presents certain risks for us and our residents, including macroeconomic risks related to rising energy and water expenses, shortages, and use restrictions. Implementation of any voluntary improvements requires consideration of multiple factors, including whether such elections would raise our costs to maintain our homes. Alternatively, choosing not to enhance our homes’ resource efficiency could make our portfolio less attractive to residents and investors. We may also incur additional expenses as a result of regulations requiring additional detailed climate-related disclosures, including regarding greenhouse gas emissions.

We recognize that climate change could have a significant impact on our portfolio of homes located in a variety of United States markets and that an increase in the number of acute weather events, natural disasters, and other climate-related events could significantly impact our business, operations, and homes. We actively consider physical risks such as the potential for natural disasters such as hurricanes, floods, droughts, and wildfires when assessing our portfolio of homes and our business processes. We take a proactive approach to protect our properties against potential risks related to climate change and business interruptions, and we recognize that we must continue to adapt our policies, objectives, and processes to prepare for such events and improve the resiliency of our physical properties and our business.

Our management and the Board of Directors are focused on managing our business risks, including climate change-related risks. The process to identify, manage, and integrate climate-change risk is part of our enterprise risk management program. For more information on risks related to climate change, see Part I. Item 1A. “Risk Factors — Risks Related to Environmental, Social, and Governance Issues — Climate change and related environmental issues, related legislative and regulatory responses to climate change, and the transition to a lower-carbon economy may adversely affect our business, — We are subject to risks from natural disasters such as earthquakes, wildfires, and severe weather, and — We are subject to increasing scrutiny from investors and others regarding our environmental, social, governance, or sustainability responsibilities, which could result in additional costs or risks and adversely impact our reputation, associate retention, and ability to raise capital from such investors” of our Annual Report on Form 10-K.

Other Matters

In 2021 and 2022, we received congressional inquiries requesting information and documentation about our eviction practices during the COVID-19 pandemic, including information relating to compliance with federal eviction moratorium requirements, cooperation with impacted residents to use federal assistance funds as an alternative to eviction, and our activities in the housing market. We have responded to and have cooperated with these inquiries and information requests.

In August 2021, we received a letter from the staff of the Federal Trade Commission requesting information as to how we conduct our business generally and during the COVID-19 pandemic specifically. We are in the process of responding to and cooperating with this request.

In January 2023, we received an inquiry from the staff of the SEC requesting information relating to our compliance with building codes and permitting requirements, related policies and procedures, and other matters. We are in the process of responding to and cooperating with this request.

We cannot currently predict the timing, outcome, or scope of the ongoing inquiries.

Our Portfolio

The following table provides summary information regarding our total and Same Store portfolios as of and for the three months ended September 30, 2023 as noted below:


Market	Number of Homes(1)	Average Occupancy(2)	Average Monthly Rent(3)	Average Monthly Rent PSF(3)	% of Revenue(4)
Western United States:
Southern California	7,605	96.1%	$2,982	$1.76	11.3	%
Northern California	4,351	96.7%	2,654	1.69	5.9	%
Seattle	4,054	97.2%	2,786	1.45	5.9	%
Phoenix	9,233	96.7%	2,003	1.18	9.6	%
Las Vegas	3,423	95.5%	2,167	1.10	3.8	%
Denver	2,595	96.9%	2,471	1.35	3.4	%
Western United States Subtotal	31,261	96.5%	2,493	1.43	39.9	%

Florida:
South Florida	8,336	96.5%	2,887	1.54	12.3	%
Tampa	9,110	95.6%	2,225	1.18	10.3	%
Orlando	6,690	95.8%	2,165	1.16	7.5	%
Jacksonville	1,995	95.5%	2,127	1.07	2.1	%
Florida Subtotal	26,131	95.9%	2,417	1.28	32.2	%


Southeast United States:
Atlanta	12,752	95.8%	1,963	0.95	12.6	%
Carolinas	5,475	97.1%	1,989	0.93	5.5	%
Southeast United States Subtotal	18,227	96.1%	1,971	0.95	18.1	%

Texas:
Houston	2,367	94.4%	1,868	0.94	2.2	%
Dallas	2,992	94.9%	2,193	1.06	3.4	%
Texas Subtotal	5,359	94.7%	2,051	1.01	5.6	%

Midwest United States:
Chicago	2,496	96.3%	2,306	1.44	2.8	%
Minneapolis	1,085	95.6%	2,255	1.15	1.3	%
Midwest United States Subtotal	3,581	96.1%	2,291	1.34	4.1	%

Other(5):	138	83.6%	1,614	0.78	0.1	%

Total / Average	84,697	96.1%	$2,321	$1.24	100.0	%
Same Store Total / Average	76,138	96.9%	$2,318	$1.24	90.9	%

(1)As of September 30, 2023.

(2)Represents average occupancy for the three months ended September 30, 2023.

(3)Represents average monthly rent for the three months ended September 30, 2023.

(4)Represents the percentage of rental revenues and other property income generated in each market for the three months ended September 30, 2023.

(5)Represents a portfolio of homes acquired during the three months ended September 30, 2023 that are located outside of our 16 core markets. These homes are generally being held for sale or evaluated for disposition once they become vacant.

Factors That Affect Our Results of Operations and Financial Condition

Our results of operations and financial condition are affected by numerous factors, many of which are beyond our control. See Part I. Item 1A. “Risk Factors” of our Annual Report on Form 10-K for more information regarding factors that could materially adversely affect our results of operations and financial condition. Key factors that impact our results of operations and financial condition include market fundamentals, rental rates and occupancy levels, collection rates, turnover rates and days to re-resident homes, property improvements and maintenance, property acquisitions and renovations, and financing arrangements. Sensitivity to many of these factors has been heightened as a result of current macroeconomic conditions, including rapidly accelerating economic inflation and increasing interest rates.

Market Fundamentals: Our results are impacted by housing market fundamentals and supply and demand conditions in our markets, particularly in the Western United States and Florida, which represented 72.1% of our rental revenues and other property income during the three months ended September 30, 2023. We actively monitor the impact of macroeconomic conditions on market fundamentals and quickly implement changes in pricing as market fundamentals shift.

Rental Rates and Occupancy Levels: Rental rates and occupancy levels are primary drivers of rental revenues and other property income. Our rental rates and occupancy levels are affected by macroeconomic factors and local and property-level factors, including market conditions, seasonality, resident defaults, and the amount of time it takes to prepare a home for its next resident and re-lease homes when residents vacate. An important driver of rental rate growth is our ability to increase monthly rents from expiring leases, which typically have a term of one to two years.

Collection Rates: Our rental revenues and other property income are impacted by the rate at which we collect such revenues from our residents. Despite our efforts to assist residents facing financial hardships who need flexibility to fulfill their lease obligations, a portion of amounts receivable may not ultimately be collected. We may also be constrained in our ability to collect resident receivables due to local ordinances restricting residential lease compliance options. Any amounts billed to residents that have been deemed uncollectible along with our estimate of amounts that may ultimately be uncollectible decrease our rental revenues and other property income.

Turnover Rates and Days to Re-Resident: Other drivers of rental revenues and property operating and maintenance expense include the length of stay of our residents, resident turnover rates, and the number of days a home is unoccupied between residents. Our operating results are also impacted by the amount of time it takes to market and lease a property, which is a component of the number of days a home is unoccupied between residents. The period of time to market and lease a property can vary greatly and is impacted by local demand, our marketing techniques, the size of our available inventory, the ability of our suppliers and other business partners to carry out their assigned tasks and/or source labor or supply materials at ordinary levels of performance relative to the conduct of our business, and both current economic conditions and future economic outlook, including the impact of rising inflation and interest rates which could adversely affect demand for our properties.

Property Improvements and Maintenance: Property improvements and maintenance impact capital expenditures, property operating and maintenance expense, and rental revenues. We actively manage our homes on a total portfolio basis to determine what capital and maintenance needs may be required and what opportunities we may have to generate additional revenues or expense savings from such expenditures. As a result of current inflationary trends, we have experienced, and expect to continue to incur, increased costs for certain materials and services necessary to improve and maintain our homes. We continue to actively manage the impact of inflation on these costs, and we believe we are able to purchase goods and services at favorable prices compared to other purchasers due to our size and scale both nationally and locally.

Property Acquisitions and Renovations: Future growth in rental revenues and other property income may be impacted by our ability to identify and acquire homes, our pace of property acquisitions, and the time and cost required to renovate and lease a newly acquired home. Our ability to identify and acquire single-family homes that meet our investment criteria is impacted by home prices in targeted acquisition locations, the inventory of homes available for sale through our acquisition channels, and competition for our target assets. All of these factors may be negatively impacted by current inflationary trends and rising interest rates, potentially reducing the number of homes we acquire.

The acquisition of homes involves expenditures in addition to payment of the purchase price, including payments for acquisition fees, property inspections, closing costs, title insurance, transfer taxes, recording fees, broker commissions, property taxes, and HOA fees (when applicable). Additionally, we typically incur costs to renovate a home to prepare it for rental. The scope of renovation work varies, but may include paint, flooring, carpeting, cabinetry, appliances, plumbing hardware, roof replacement, HVAC replacement, and other items required to prepare the home for rental. The time and cost involved in accessing our homes and preparing them for rental can significantly impact our financial performance. The time

to renovate a newly acquired property can vary significantly among homes for several reasons, including the property’s acquisition channel, the condition of the property, whether the property was vacant when acquired, and whether there are any state or local restrictions on our ability to complete renovations as an essential business function. Additionally, the ability of our suppliers and other business partners to carry out their assigned tasks and/or source labor or supply materials at ordinary levels of performance relative to the conduct of our business have increased the time required to renovate our homes. As a result of current inflationary trends, we have experienced, and expect to continue to incur, increased costs for certain materials and services necessary to renovate our homes. We continue to actively manage the impact of inflation on the cost of renovations, and we believe we are able to purchase goods and services at favorable prices compared to other purchasers due to our size and scale both nationally and locally.

Financing Arrangements: Financing arrangements directly impact our interest expense, our various debt instruments, and our ability to acquire and renovate homes. We have historically utilized indebtedness to fund the acquisition and renovation of new homes. Our current financing arrangements contain financial covenants and other terms and conditions, including variable interest rates in some cases, that are impacted by market conditions. Current macroeconomic conditions may continue to negatively affect volatility, availability of funds, and transaction costs (including interest rates) within financial markets. These factors may also negatively affect our ability to access financial markets as well as our business, results of operations, and financial condition. See Part I. Item 3. “Quantitative and Qualitative Disclosures about Market Risk” of our Annual Report on Form 10-K for further discussion regarding interest rate risk. Our future financing arrangements may not have similar terms with respect to amounts, interest rates, financial covenants, and durations.

Components of Revenues and Expenses

The following is a description of the components of our revenues and expenses.

Revenues

Rental Revenues and Other Property Income

Rental revenues, net of any concessions and bad debt (including write-offs, credit reserves, and uncollectible amounts), consist of rents collected under lease agreements related to our single-family homes for lease. We enter into leases directly with our residents, and the leases typically have a term of one to two years.

Other property income is comprised of: (i) resident reimbursements for utilities, HOA fines, and other charge-backs; (ii) rent and non-refundable deposits associated with pets; (iii) revenues from ancillary services such as smart homes and HVAC replacement filters; and (iv) various other fees, including late fees and lease termination fees, among others.

Management Fee Revenues

Management fee revenues consist of asset and property management fees from our unconsolidated joint ventures.

Expenses

Property Operating and Maintenance

Once a property is available for its initial lease, which we refer to as “rent-ready,” we incur ongoing property-related expenses, which consist primarily of property taxes, insurance, HOA fees (when applicable), market-level personnel expenses, utility expenses, repairs and maintenance, and property administration. Prior to a property being “rent-ready,” certain of these expenses are capitalized as building and improvements. Once a property is “rent-ready,” expenditures for ordinary repairs and maintenance thereafter are expensed as incurred, and we capitalize expenditures that improve or extend the life of a home.

Property Management Expense

Property management expense represents personnel and other costs associated with the oversight and management of our portfolio of homes, including those within our unconsolidated joint ventures. All of our homes are managed through our internal property manager.

General and Administrative

General and administrative expense represents personnel costs, professional fees, and other costs associated with our day-to-day activities. General and administrative expense may also include expenses that are of a non-recurring nature, such as severance.

Share-Based Compensation Expense

We issue share-based awards to align the interests of our associates with those of our investors, and all share-based compensation expense is recognized in our condensed consolidated statements of operations as components of general and administrative expense and property management expense.

Interest Expense

Interest expense includes interest payable on our debt instruments, payments and receipts related to our interest rate swap agreements, amortization of discounts and deferred financing costs, unrealized gains (losses) on non-designated hedging instruments, and non-cash interest expense related to our interest rate swap agreements.

Depreciation and Amortization

We recognize depreciation and amortization expense associated with our homes and other capital expenditures over the expected useful lives of the assets.

Impairment and Other

Impairment and other represents provisions for impairment when the carrying amount of our single-family residential properties is not recoverable and casualty (gains) losses, net of any insurance recoveries.

Gains (Losses) on Investments in Equity Securities, net

Gains (losses) on investments in equity securities, net includes unrealized gains and losses resulting from mark to market adjustments and realized gains and losses recognized upon the sale of such securities.

Other, net

Other, net includes interest income and other miscellaneous income and expenses.

Gain on Sale of Property, net of tax

Gain on sale of property, net of tax consists of net gains and losses resulting from sales of our homes.

Income (Loss) from Investments in Unconsolidated Joint Ventures

Income (loss) from investments in unconsolidated joint ventures consists of our share of net earnings and losses from investments in unconsolidated joint ventures accounted for using the equity method.

Results of Operations

Portfolio Information

As of September 30, 2023 and 2022, we owned 84,697 and 83,148 single-family rental homes, respectively, in our total portfolio. During the three months ended September 30, 2023 and 2022, we acquired 2,257 and 244 homes, respectively, and sold 397 and 189 homes, respectively. During the three months ended September 30, 2023 and 2022, we owned an average of 84,252 and 83,123 single-family rental homes, respectively. During the nine months ended September 30, 2023 and 2022, we acquired 2,626 and 1,273 homes, respectively, and sold 1,042 and 506 homes, respectively. During the nine months ended September 30, 2023 and 2022, we owned an average of 83,416 and 82,859 single-family rental homes, respectively.

We believe presenting information about the portion of our total portfolio that has been fully operational for the entirety of both a given reporting period and its prior year comparison period provides investors with meaningful information about the performance of our comparable homes across periods and about trends in our organic business. To do so, we provide information regarding the performance of our Same Store portfolio.

As of September 30, 2023, our Same Store portfolio consisted of 76,138 single-family rental homes.

Three Months Ended September 30, 2023 Compared to Three Months Ended September 30, 2022

The following table sets forth a comparison of the results of operations for the three months ended September 30, 2023 and 2022:


	For the Three Months Ended September 30,
($ in thousands)	2023		2022		$ Change		% Change
Revenues:
Rental revenues and other property income	$	614,291	$	565,391	$	48,900	8.6	%
Management fee revenues	3,404		3,284		120		3.7	%
Total revenues	617,695		568,675		49,020		8.6	%

Expenses:
Property operating and maintenance	229,488		203,787		25,701		12.6	%
Property management expense	23,399		22,385		1,014		4.5	%
General and administrative	22,714		20,123		2,591		12.9	%
Interest expense	86,736		76,454		10,282		13.4	%
Depreciation and amortization	170,696		160,428		10,268		6.4	%
Impairment and other	2,496		20,004		(17,508)		(87.5)	%
Total expenses	535,529		503,181		32,348		6.4	%

Losses on investments in equity securities, net	(499)		(796)		297		37.3	%
Other, net	(2,533)		(8,372)		5,839		69.7	%
Gain on sale of property, net of tax	57,989		23,952		34,037		142.1	%
Losses from investments in unconsolidated joint ventures	(4,902)		(849)		(4,053)		(477.4)	%

Net income	$	132,221	$	79,429	$	52,792	66.5	%

Revenues

For the three months ended September 30, 2023 and 2022, total revenues were $617.7 million and $568.7 million, respectively. Set forth below is a discussion of changes in the individual components of total revenues.

For the three months ended September 30, 2023 and 2022, total portfolio rental revenues and other property income totaled $614.3 million and $565.4 million, respectively, an increase of 8.6%, driven by an increase in average monthly rent per occupied home and a 1,129 home increase between periods in the average number of homes owned.

Average occupancy for the three months ended September 30, 2023 and 2022 for the total portfolio was 96.0% and 96.0%, respectively. Average monthly rent per occupied home for the total portfolio for the three months ended

September 30, 2023 and 2022 was $2,323 and $2,189, respectively, a 6.1% increase. For our Same Store portfolio, average occupancy was 96.9% and 97.5% for the three months ended September 30, 2023 and 2022, respectively, and average monthly rent per occupied home for the three months ended September 30, 2023 and 2022 was $2,318 and $2,183, respectively, a 6.2% increase.

The annualized turnover rate for the Same Store portfolio for the three months ended September 30, 2023 and 2022 was 27.2% and 25.0%, respectively. For the Same Store portfolio, an average home remained unoccupied for 37 and 34 days between residents for the three months ended September 30, 2023 and 2022, respectively. The increase in annualized turnover rate and days to re-resident resulted in an overall decrease in average Same Store occupancy on a year over year basis.

To monitor prospective changes in average monthly rent per occupied home, we compare the monthly rent from an expiring lease to the monthly rent from the next lease for the same home, in each case, net of any amortized non-service concessions, to calculate net effective rental rate growth. Leases are either renewal leases, where our current resident stays for a subsequent lease term, or new leases, where our previous resident moves out and a new resident signs a lease to occupy the same home.

Renewal lease net effective rental rate growth for the total portfolio averaged 6.4% and 10.2% for the three months ended September 30, 2023 and 2022, respectively, and new lease net effective rental rate growth for the total portfolio averaged 4.7% and 15.2% for the three months ended September 30, 2023 and 2022, respectively. For our Same Store portfolio, renewal lease net effective rental rate growth averaged 6.6% and 10.1% for the three months ended September 30, 2023 and 2022, respectively, and new lease net effective rental rate growth averaged 5.2% and 15.2% for the three months ended September 30, 2023 and 2022, respectively.

Other property income for the three months ended September 30, 2023 increased compared to September 30, 2022, primarily due to enhanced ancillary revenue programs and increased utility billbacks as new leases are entered into, among other things.

For the three months ended September 30, 2023 and 2022, management fee revenues totaled $3.4 million and $3.3 million, respectively. These fees increased as a result of an increase in the number of homes generating revenues within our joint venture investments.

Expenses

For the three months ended September 30, 2023 and 2022, total expenses were $535.5 million and $503.2 million, respectively. Set forth below is a discussion of changes in the individual components of total expenses.

For the three months ended September 30, 2023, property operating and maintenance expense increased to $229.5 million from $203.8 million for the three months ended September 30, 2022. In addition to a 1,129 home increase between periods in the average numbers of homes owned, increases in property taxes, utilities, turnover expense, and property administrative costs resulted in the overall 12.6% net increase in property operating and maintenance expense.

Property management expense and general and administrative expense increased to $46.1 million from $42.5 million for the three months ended September 30, 2023 and 2022, respectively, primarily due to increased personnel costs.

Interest expense increased to $86.7 million for the three months ended September 30, 2023 from $76.5 million for the three months ended September 30, 2022. The increase in interest expense was primarily due to a $797.0 million increase in gross debt outstanding and 23 bps increase in our weighted average interest rate in each case, as of September 30, 2023 as compared to the prior period end, and a $1.4 million reduction in capitalized interest during the three months ended September 30, 2023 compared to the three months ended September 30, 2022 due to a decrease in the number of homes undergoing an initial renovation.

Depreciation and amortization expense increased to $170.7 million for the three months ended September 30, 2023 from $160.4 million for the three months ended September 30, 2022 due to an increase in cumulative capital expenditures and a 1,129 home increase in the average number of homes owned during the three months ended September 30, 2023.

Impairment and other expenses were $2.5 million and $20.0 million for the three months ended September 30, 2023 and 2022, respectively. During the three months ended September 30, 2023, impairment and other expenses were comprised of $2.4 million of net casualty losses and $0.1 million of impairment losses on our single-family residential properties. During the three months ended September 30, 2022, impairment and other expenses were comprised of impairment losses of $0.1 million on our single-family residential properties and net casualty losses of $19.9 million which include an accrual of $19.0 million for estimated losses and damages related to Hurricane Ian.

Gains (Losses) on Investments in Equity Securities, net

For the three months ended September 30, 2023 and 2022, gains (losses) on investments in equity securities, net was comprised of net unrealized gains (losses) from marking investments still held at period end to market.

Other, net

Other, net decreased to $2.5 million for the three months ended September 30, 2023 from $8.4 million for the three months ended September 30, 2022, primarily due to an increase in interest income on cash balances.

Gain on Sale of Property, net of tax

Gain on sale of property, net of tax was $58.0 million and $24.0 million for the three months ended September 30, 2023 and 2022, respectively. An increase in the number of homes sold from 189 for the three months ended September 30, 2022 to 397 for the three months ended September 30, 2023 was the primary driver of the increase.

Losses from Investments in Unconsolidated Joint Ventures

Our share of losses from unconsolidated joint ventures was a net loss of $4.9 million and $0.8 million for the three months ended September 30, 2023 and 2022, respectively. The increase in loss is primarily driven by a $4.7 million increase in non-cash interest expense, including the impact of decreases in the fair value of underlying derivative instruments for certain of our joint ventures, during the three months ended September 30, 2023 compared to the three months ended September 30, 2022, partially offset by increased operating profits due to an increase in the number of homes within our joint venture investments.

Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022

The following table sets forth a comparison of the results of operations for the nine months ended September 30, 2023 and 2022:


	For the Nine Months Ended September 30,

($ in thousands)	2023		2022		$ Change		% Change
Revenues:
Rental revenues and other property income	$	1,797,730	$	1,650,131	$	147,599	8.9	%
Management fee revenues	10,227		8,154		2,073		25.4	%
Total revenues	1,807,957		1,658,285		149,672		9.0	%

Expenses:
Property operating and maintenance	651,793		576,736		75,057		13.0	%
Property management expense	70,563		65,166		5,397		8.3	%
General and administrative	59,957		57,104		2,853		5.0	%
Interest expense	243,408		225,683		17,725		7.9	%
Depreciation and amortization	501,128		474,796		26,332		5.5	%
Impairment and other	5,527		22,874		(17,347)		(75.8)	%
Total expenses	1,532,376		1,422,359		110,017		7.7	%

Gains (losses) on investments in equity securities, net	113		(4,000)		4,113		102.8	%
Other, net	(7,968)		(11,605)		3,637		31.3	%
Gain on sale of property, net of tax	134,448		69,486		64,962		93.5	%
Losses from investments in unconsolidated joint ventures	(11,087)		(5,870)		(5,217)		(88.9)	%

Net income	$	391,087	$	283,937	$	107,150	37.7	%

Revenues

For the nine months ended September 30, 2023 and 2022, total revenues were $1,808.0 million and $1,658.3 million, respectively. Set forth below is a discussion of changes in the individual components of total revenues.

For the nine months ended September 30, 2023 and 2022, total portfolio rental revenues and other property income totaled $1,797.7 million and $1,650.1 million, respectively, an increase of 8.9%, driven by an increase in average monthly rent per occupied home, a 70 bps increase in occupancy, and a 557 home increase between periods in the average number of homes owned.

Average occupancy for the nine months ended September 30, 2023 and 2022 for the total portfolio was 96.7% and 96.0%, respectively. Average monthly rent per occupied home for the total portfolio for the nine months ended September 30, 2023 and 2022 was $2,290 and $2,133, respectively, a 7.4% increase. For our Same Store portfolio, average occupancy was 97.5% and 97.9% for the nine months ended September 30, 2023 and 2022, respectively, and average monthly rent per occupied home for the nine months ended September 30, 2023 and 2022 was $2,285 and $2,129, respectively, a 7.3% increase.

The annualized turnover rate for the Same Store portfolio for the nine months ended September 30, 2023 and 2022 was 24.6% and 22.5%, respectively. For the Same Store portfolio, a home remained unoccupied on average for 37 and 34 days between residents for the nine months ended September 30, 2023 and 2022, respectively. The increase in annualized turnover and days to re-resident resulted in an overall decrease in average Same Store occupancy on a year over year basis.

a subsequent lease term, or new leases, where our previous resident moves out and a new resident signs a lease to occupy the same home.

Renewal lease net effective rental rate growth for the total portfolio averaged 6.9% and 10.0% for the nine months ended September 30, 2023 and 2022, respectively, and new lease net effective rental rate growth for the total portfolio averaged 5.6% and 15.4% for the nine months ended September 30, 2023 and 2022, respectively. For our Same Store portfolio, renewal lease net effective rental rate growth averaged 7.1% and 10.0% for the nine months ended September 30, 2023 and 2022, respectively, and new lease net effective rental rate growth averaged 6.0% and 15.4% for the nine months ended September 30, 2023 and 2022, respectively.

Other property income for the nine months ended September 30, 2023 increased compared to September 30, 2022, primarily due to enhanced ancillary revenue programs and increased utility billbacks as new leases are entered into, among other things.

For the nine months ended September 30, 2023 and 2022, management fee revenues totaled $10.2 million and $8.2 million, respectively. These fees increased as a result of an increase in the number of homes generating revenues within our joint venture investments.

Expenses

For the nine months ended September 30, 2023 and 2022, total expenses were $1,532.4 million and $1,422.4 million, respectively. Set forth below is a discussion of changes in the individual components of total expenses.

For the nine months ended September 30, 2023, property operating and maintenance expense increased to $651.8 million from $576.7 million for the nine months ended September 30, 2022. In addition to a 557 home increase between periods in the average number of homes owned, increases in property taxes, utilities, turnover expense, and property administrative costs resulted in the overall 13.0% net increase in property operating and maintenance expense.

Property management expense and general and administrative expense increased to $130.5 million from $122.3 million for the nine months ended September 30, 2023 and 2022, respectively, primarily due to increased personnel costs related to property management.

Interest expense increased to $243.4 million for the nine months ended September 30, 2023 from $225.7 million for the nine months ended September 30, 2022. The increase in interest expense was primarily due to a $797.0 million increase in gross debt outstanding and 23 bps increase in our weighted average interest rate in each case, as of September 30, 2023 as compared to the prior period end, and a $4.0 million reduction in capitalized interest during the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 due to a decrease in the number of homes undergoing an initial renovation.

Depreciation and amortization expense increased to $501.1 million for the nine months ended September 30, 2023 from $474.8 million for the nine months ended September 30, 2022 due to an increase in cumulative capital expenditures and a 557 home increase in the average number of homes owned during the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022.

Impairment and other expenses were $5.5 million and $22.9 million for the nine months ended September 30, 2023 and 2022, respectively. During the nine months ended September 30, 2023, impairment and other expenses were comprised of $5.2 million of net casualty losses and $0.3 million of impairment losses on our single-family residential properties. During the nine months ended September 30, 2022, impairment and other expenses were comprised of net casualty losses of $22.6 million, which include an accrual of $19.0 million for estimated losses and damages related to Hurricane Ian and impairment losses of $0.2 million on our single-family residential properties.

Gains (losses) on Investments in Equity Securities, net

For the nine months ended September 30, 2023, gain on investments in equity securities, net of $0.1 million was comprised of net unrealized gains recognized since December 31, 2022 on investments held as of September 30, 2023. For the nine months ended September 30, 2022, losses on investments in equity securities, net of $4.0 million was comprised of $7.3 million of unrealized losses from reversals of previously recorded unrealized gains on equity securities sold during the period and marking investments still held at period end to market, partially offset by a $3.3 million gain from the sale of equity securities compared to the actual amount originally invested.

Other, net

Other, net decreased to $8.0 million for the nine months ended September 30, 2023 from $11.6 million for the nine months ended September 30, 2022, primarily due to an increase in interest income on cash balances, partially offset by increases in administrative costs between those periods.

Gain on Sale of Property, net of tax

Gain on sale of property, net of tax was $134.4 million and $69.5 million for the nine months ended September 30, 2023 and 2022, respectively. An increase in the number of homes sold from 506 for the nine months ended September 30, 2022 to 1,042 for the nine months ended September 30, 2023 was the primary driver of the increase.

Losses from Investments in Unconsolidated Joint Ventures

Our share of equity in earnings and/or losses from unconsolidated joint ventures was a net loss of $11.1 million and $5.9 million for the nine months ended September 30, 2023 and 2022, respectively. The increase in loss is primarily driven by a $7.5 million increase in non-cash interest expense, including the impact of changes in the fair value of underlying derivative instruments for certain of our joint ventures, during the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, partially offset by increased operating profits due to an increase in the number of homes within our joint venture investments.

Liquidity and Capital Resources

Our liquidity and capital resources as of September 30, 2023 and December 31, 2022 include unrestricted cash and cash equivalents of $762.6 million and $262.9 million, respectively, a 190.1% increase primarily due to proceeds from the issuance of unsecured notes, as discussed below, during the nine months ended September 30, 2023.

As of September 30, 2023, our $1,000.0 million revolving facility (the “Revolving Facility”) is undrawn, and there are no restrictions on our ability to draw funds thereunder provided we remain in compliance with all covenants. We have no debt reaching final maturity until January 2026, provided all extension options are exercised.

Public Offerings

On August 2, 2023, in a public offering under our existing shelf registration statement, we issued $450.0 million and $350.0 million aggregate principal amount of Senior Notes with 5.45% and 5.50% interest rates, respectively, and which mature on August 15, 2030 and August 15, 2033, respectively. A portion of the proceeds from these public offerings were used to pay down $150.0 million of indebtedness outstanding on our Revolving Facility, and the remaining net proceeds will be used for general corporate purposes, including, without limitation, repayment of other indebtedness including secured debt, working capital, acquisitions and renovations of single-family properties.

Acquisition of Single-family Residential Properties

During the three months ended September 30, 2023, we completed the purchase of a portfolio of 1,870 single-family residential homes with a an aggregate purchase price of approximately $646.6 million.

SOFR Transition

On April 18, 2023, we amended the 2020 Term Loan and Revolving Facilities (the “Credit Facility”) to convert the applicable interest rate from a London Interbank Offered Rate-based (“LIBOR”) index to a Secured Overnight Financing Rate-based (“SOFR”) index rate determined by reference to a published forward-looking SOFR rate for the interest period relevant to such borrowing (“Term SOFR”) and converted the variable rate on our interest rate swap agreements from a LIBOR-based index to a Term SOFR-based index.

Effective July 3, 2023, one of our mortgage loans, IH 2018-4, was amended to transition to a Term SOFR-based index from a LIBOR-based index. The related interest rate cap agreement was amended effective July 15, 2023 to transition to a Term SOFR-based index from a LIBOR-based index. These modifications did not have a material impact on our condensed consolidated financial statements.

These transactions completed the conversion of all LIBOR-based agreements to Term SOFR.

Other

Our ability to access capital as well as to use cash from operations to continue to meet our liquidity needs, all of which are highly uncertain and cannot be predicted, could be affected by various risks and uncertainties, including, but not limited to, the effects of general economic conditions, including rising inflation and interest rates, as detailed in Part I. Item 1A. “Risk Factors” of our Annual Report on Form 10-K.

Long-Term Debt Strategy

The following table summarizes certain information about our debt obligations as of September 30, 2023 ($ in thousands):




Debt Instruments(1)	Balance (Gross of Retained Certificates and Unamortized Discounts)		Balance (Net of Retained Certificates)		Weighted Average Interest Rate(2)	Weighted Average Years to Maturity(3)	Amount Freely Prepayable (Gross)
Secured:
IH 2017-1(4)	$	992,994	$	937,494	4.23%	3.7	$	—
IH 2018-4(5)	647,118		614,681		S + 123 bps	2.3	647,118
Secured Term Loan(6)	403,129		403,129		3.59%	7.7	—
Total secured(7)	2,043,241		$	1,955,304	4.09%	4.0	647,118

Unsecured:

2020 Term Loan Facility(8)	$	2,500,000			S + 100 bps	2.3	$	2,500,000
2022 Term Loan Facility(8)	725,000				S + 124 bps	5.7	—
Revolving Facility(8)	—				S + 89 bps	2.3	—
Unsecured Notes — May 2028	150,000				2.46%	4.7	—
Unsecured Notes — November 2028	600,000				2.30%	5.1	—
Unsecured Notes — August 2030	450,000				5.45%	6.8	—
Unsecured Notes — August 2031	650,000				2.00%	7.9	—
Unsecured Notes — April 2032	600,000				4.15%	8.5	—
Unsecured Notes — August 2033	350,000				5.50%	9.8	—
Unsecured Notes — January 2034	400,000				2.70%	10.3	—
Unsecured Notes — May 2036	150,000				3.18%	12.7	—
Total unsecured(7)	6,575,000				3.73%	5.6	2,500,000

Total debt(7)	8,618,241				3.82%	5.2	$	3,147,118
Unamortized discounts	(22,039)
Deferred financing costs, net	(48,962)
Total debt per balance sheet	8,547,240
Retained certificates	(87,937)
Cash and restricted cash, excluding security deposits and letters of credit	(796,829)
Deferred financing costs, net	48,962
Unamortized discounts	22,039
Net debt	$	7,733,475

(1)For detailed information about and definition of each of our financing arrangements see Part I. Item 1. “Financial Statements — Note 7 of Notes to Condensed Consolidated Financial Statements.” For information about our derivative instruments that hedge floating rate debt, see Part I. Item 1. “Financial Statements — Note 8 of Notes to Condensed Consolidated Financial Statements.”

(2)Variable interest rate loans are Term SOFR-based, including any credit spread adjustments provided for in the terms of the underlying agreement (“Adjusted SOFR”), reflected as “S” in the table above.

(3)Weighted average years to maturity assumes all extension options are exercised, which are subject to certain conditions being met.

(4)IH 2017-1 bears interest at a fixed rate of 4.23% per annum, equal to the market determined pass-through rate payable on the certificates including applicable servicing fees.

(5)Effective July 3, 2023, the interest rate for IH 2018-4 is based on the weighted average spread over Term SOFR adjusted for an 0.11% credit spread adjustment. As of September 30, 2023, Term SOFR was 5.32%.

(6)The Secured Term Loan bears interest at a fixed rate of 3.59% per annum including applicable servicing fees for the first 11 years and for the twelfth year bears interest at a floating rate based on a spread of 147 bps over a comparable or successor rate to one month LIBOR as provided for in our loan agreement, including applicable servicing fees, subject to certain adjustments as outlined in the loan agreement.

(7)For secured debt, unsecured debt, and total debt, the weighted average interest rate is calculated based on September 30, 2023, Term SOFR of 5.32% adjusted for either a 0.11% or a 0.10% credit spread adjustment (Adjusted SOFR), as appropriate, and includes the impact of interest rate swap agreements effective as of that date.

(8)Interest rate is based on Term SOFR of 5.32% plus the applicable margin and a 0.10% credit spread adjustment.

As part of our long-term debt strategy, our goal is to improve our credit ratings, and, over time, we generally intend to target net debt that is approximately 5.5 to 6.0 times trailing twelve months Adjusted EBITDAre (see “— Non-GAAP Measures — EBITDA, EBITDAre, and Adjusted EBITDAre”), secured debt that is less than 20% of gross assets, and unencumbered assets that are greater than 70% of gross assets. To facilitate our long-term debt strategy we expect to seek to, among other things, (a) refinance a significant portion of our secured debt maturing in 2026 (assuming all extension options are exercised) with unsecured debt, including potential unsecured bond issuances and/or (b) repay a portion of such debt. There can be no assurance that we will be successful in implementing our long-term debt strategy, improving our credit ratings, or adhering to our targets in the short or medium term or at all, or that we will not change our strategy or targets in the future. We may from time to time fall outside of our target ranges. In addition, we cannot assure you that we will be able to access the capital and credit markets to obtain additional unsecured debt financing or that we will be able to obtain financing on terms favorable to us. For further discussion of risks related to our indebtedness, see Part I. Item 1A. “Risk Factors — Risks Related to Our Indebtedness,” including “Risk Factors — Risks Related to Our Indebtedness — We may be unable to obtain financing through the debt and equity markets, which would have a material adverse effect on our growth strategy and our financial condition and results of operations” in our Annual Report on Form 10-K.

Short-Term and Long-Term Liquidity Needs

Liquidity is a measure of our ability to meet potential cash requirements, maintain our assets, fund our operations, make dividend payments to our stockholders, and meet other general requirements of our business. Our liquidity, to a certain extent, is subject to general economic, financial, competitive, and other factors beyond our control. Our near-term liquidity requirements consist primarily of:

•acquisition of homes currently under contract;

•renovation of newly-acquired homes;

•HOA fees (as applicable), property taxes, insurance premiums, and the ongoing maintenance of our homes;

•property management and general and administrative expenses;

•interest expense;

•dividend payments to our stockholders; and

•required contributions to our joint ventures.

We believe our rental income, net of total expenses, will generally provide cash flow sufficient to fund operations and dividend payments on a near-term basis. Additionally, we have guaranteed the funding of certain tax, insurance, and non-conforming property reserves related to the financing of certain of our joint ventures. We do not expect these guarantees to have a material current or future effect on our liquidity. See Part I. Item 1. “Financial Statements — Note 5 of Notes to Condensed Consolidated Financial Statements” for additional information about our investments in unconsolidated joint ventures.

Overall macroeconomic conditions, including rising inflation and interest rates, may negatively impact our operating cash flow such that we are unable to make required debt service payments, which would result in an event of default for any debt instrument under whose loan agreement such payments were not made. Specifically, the collateral within individual borrower entities may underperform, resulting in cash flow shortfalls for debt service while consolidated cash flows are sufficient to fund our operations. If an event of default occurs for a specific mortgage loan or for our secured term loan, our loan agreements provide certain remedies, including our ability to fund shortfalls from consolidated cash flow; and such an event of default would not result in an immediate acceleration of the loan.

Our real estate assets are illiquid in nature. A timely liquidation of assets may not be a viable source of short-term liquidity should a cash flow shortfall arise, and we may need to source liquidity from other financing sources, such as the Revolving Facility which had undrawn balances of $1,000.0 million as of September 30, 2023.

Our long-term liquidity requirements consist primarily of funds necessary to pay for the acquisition of, and non-recurring capital expenditures for, our homes, and principal and interest payments of our indebtedness. We intend to satisfy our long-term liquidity needs through cash provided by operations, long-term secured and unsecured borrowings, the issuance of debt and equity securities, and property dispositions. As a REIT, we are required to distribute to our stockholders at least 90% of our taxable income, excluding net capital gain, on an annual basis. Therefore, as a general matter, it is unlikely that we will be able to retain substantial cash balances from our annual taxable income that could be used to meet our liquidity needs. Instead, we will need to meet these needs from external sources of capital and amounts, if any, by which our cash flow generated from operations exceeds taxable income.

Cash Flows

Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022

The following table summarizes our cash flows for the nine months ended September 30, 2023 and 2022:


	For the Nine Months Ended September 30,

($ in thousands)	2023		2022		$ Change		% Change
Net cash provided by operating activities	$	1,019,544	$	903,946	$	115,598	12.8	%
Net cash used in investing activities	(769,596)		(756,089)		(13,507)		(1.8)	%
Net cash provided by (used in) financing activities	276,016		(450,819)		726,835		161.2	%
Change in cash, cash equivalents, and restricted cash	$	525,964	$	(302,962)	$	828,926	273.6	%

Operating Activities

Our cash flows provided by operating activities depend on numerous factors, including the occupancy level of our homes, the rental rates achieved on our leases, the collection of rent from our residents, and the amount of our operating and other expenses. Net cash provided by operating activities was $1,019.5 million and $903.9 million for the nine months ended September 30, 2023 and 2022, respectively, an increase of 12.8%. The increase in cash provided by operating activities is primarily due to improved operational profitability, including a $74.6 million increase in total revenues net of property operating and maintenance expense from period to period and a $46.9 million source of cash between periods from changes in operating assets and liabilities.

Investing Activities

Net cash used in investing activities consists primarily of the acquisition costs of homes, capital improvements, and proceeds from property sales. Net cash used in investing activities was $769.6 million and $756.1 million for the nine months ended September 30, 2023 and 2022, respectively, an increase of $13.5 million. The increase in net cash used in investing activities resulted primarily from the combined effect of the following significant changes in cash flows during the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022: (1) an increase in cash used for the acquisition of homes; (2) a decrease in cash used for investments in joint ventures; (3) an increase in cash from the proceeds from sale of single-family homes; (4) a decrease in cash used for initial renovations of homes; and (5) a decrease in cash from repayment proceeds from retained debt securities. Acquisition spend increased by $397.7 million from period to period due to an increase in the number of homes acquired from 1,273 during the nine months ended September 30, 2022 to 2,626 homes acquired during the nine months ended September 30, 2023. Cash invested in joint ventures decreased $166.1 million due to reduced acquisition activity in existing joint ventures during the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022. Proceeds from the sale of single-family homes increased $172.8 million due to an increase in the number of homes sold from 506 during the nine months ended September 30, 2022 to 1,042 homes sold during the nine months ended September 30, 2023. Renovation spend decreased by $86.0 million due to a decrease in the number of unoccupied homes acquired between periods, resulting in fewer renovations being completed during the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022. In connection with the full prepayments of the IH 2018-2 and IH 2018-3 mortgage loans and partial repayments on mortgage loans related to the sale of homes during the nine months ended September 30, 2022, $42.4 million of repayments of the related retained certificates were received. There were no such full prepayments of mortgage loans during the nine months ended September 30, 2023.

Financing Activities

Net cash provided by financing activities was $276.0 million for the nine months ended September 30, 2023 compared to net cash used in financing activities of $450.8 million for the nine months ended September 30, 2022. During the nine months ended September 30, 2023 and 2022, we made dividend and distribution payments totaling $480.7 million and $406.4 million, respectively, which were funded by cash flows from operations. We issued $790.1 million of unsecured notes, net of discount, during the nine months ended September 30, 2023 compared to $598.4 million of unsecured notes issued and $150.0 million borrowed on a new term loan facility during the nine months ended September 30, 2022. During the nine months ended September 30, 2022, proceeds from financing activity along with cash from operations were used to repay $849.7 million of mortgage loans, and issuances and sales of stock under our 2021 ATM Equity Program generated $98.4 million of net proceeds which were used primarily for acquisitions.

Contractual Obligations

Our contractual obligations as of September 30, 2023, consist of the following:


($ in thousands)	Total		2023(1)		2024-2025		2026-2027		Thereafter
Mortgage loans(2)(3)(4)	$	1,894,706	$	21,512	$	171,610	$	1,701,584	$	—
Secured Term Loan(2)(3)	514,409		3,616		28,967		28,927		452,899
Unsecured Notes(2)(3)	4,282,068		28,684		229,784		229,470		3,794,130
Term Loan Facilities(2)(3)(4)	3,886,229		53,348		423,883		2,611,715		797,283
Revolving Facility(2)(3)(4)(5)	4,744		511		4,061		172		—

Derivative instruments(6)	(174,785)		(24,016)		(126,536)		(14,186)		(10,047)
Purchase commitments(7)	29,656		29,656		—		—		—
Operating leases	12,488		1,154		7,701		3,204		429
Finance leases	3,666		782		1,993		891		—
Total	$	10,453,181	$	115,247	$	741,463	$	4,561,777	$	5,034,694

(1)Includes estimated payments for the remaining three months of 2023.

(2)Includes estimated interest payments through the extended maturity date, as applicable, based on the principal amount outstanding as of September 30, 2023.

(3)Interest is calculated at rates in effect as of September 30, 2023, including the indexed rate, any credit spread adjustment, and any applicable margin, and that rate is held constant until the maturity date. As of September 30, 2023, Term SOFR was 5.32%.

(4)Calculated based on the maturity date if we exercise each of the remaining extension options available, which are subject to certain conditions being met. See Part I. Item 1. “Financial Statements — Note 7 of Notes to Condensed Consolidated Financial Statements” for a description of maturity dates without consideration of extension options.

(5)Includes the related unused commitment fee, as applicable.

(6)Includes payments (receipts) related to interest rate swap and interest rate cap obligations calculated using Term SOFR. As of September 30, 2023, Term SOFR was 5.32%.

(7)Represents commitments, net of previously funded deposits, to acquire 85 single-family rental homes.

The amounts above do not include commitments pursuant to binding purchase agreements with certain homebuilders for the purchase of 1,931 homes over the next seven years. Estimated remaining commitments under these agreements total approximately $680.0 million as of September 30, 2023.

Additionally, we have commitments, which are not reflected in the table above, to make additional capital contributions to our joint ventures. As of September 30, 2023, our remaining equity commitments to our joint ventures total $127.9 million.

LIBOR Transition

The Financial Conduct Authority of the United Kingdom, which has statutory powers to require panel banks to contribute to LIBOR, has announced that it will cease publication of one month USD LIBOR immediately after June 30, 2023. Further, on March 15, 2022, the Consolidated Appropriations Act of 2022, which includes the Adjustable Interest Rate (LIBOR) Act, was signed into law in the United States. This legislation establishes a uniform benchmark replacement process for financial contracts that matured after June 30, 2023 which did not contain clearly defined or practicable fallback provisions. The legislation also created a safe harbor that shields lenders from litigation if they choose to utilize a replacement rate recommended by the Board of Governors of the Federal Reserve.

On April 18, 2023, we completed a series of transactions related to certain of our variable rate debt and derivative agreements that were originally indexed to LIBOR to effectuate a transition to Term SOFR. While the original agreements provided for a prescribed transition to an alternate rate, this series of transactions amended or modified our Credit Facility and all of our LIBOR-indexed interest rate swap agreements such that each agreement is now indexed to Term SOFR. Effective July 3, 2023, one of our mortgage loans, IH 2018-4, was amended to transition to Term SOFR from LIBOR. The related interest rate cap agreement was amended effective July 15, 2023 to transition to Term SOFR from LIBOR. These transactions completed the conversion of all LIBOR-based agreements to Term SOFR.

Furthermore, we have continued to make the appropriate elections available within Accounting Standard Update 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2022-04”) to ease the impact of transition from LIBOR to comparable or successor rates on hedge accounting. As more fully described in Part I. Item 1. “Financial Statements — Note 2 of Notes to Condensed Consolidated Financial Statements,” we have also elected to apply practical expedients related to contract modifications, changes in critical terms, and updates to the designated hedged risk(s) as qualifying changes are made to applicable debt and derivative instruments. Specifically, in connection with the April 18, 2023 modifications, we elected to apply the optional expedients in ASU 2020-04 that enable us to consider the new swaps a continuation of the existing contracts and to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. As a result, the transition from LIBOR for these financial instruments did not impact our hedge accounting or have a material impact on our condensed consolidated financial statements.

Supplemental Guarantor Information

In March 2020, the SEC adopted amendments to Rule 3-10 of Regulation S-X and created Rule 13-01 to simplify disclosure requirements related to certain registered securities. The amendments became effective on January 4, 2021. INVH, INVH LP, the General Partner, and IH Merger Sub, LLC (“IH Merger Sub”) have filed a registration statement on Form S-3 with the SEC registering, among other securities, debt securities of INVH LP, fully and unconditionally guaranteed, on a joint and several basis, by INVH, the General Partner, and/or IH Merger Sub. As a result of the amendments to Rule 3-10 of Regulation S-X, subsidiary issuers of obligations guaranteed by the parent are not required to provide separate financial statements, provided that the subsidiary obligor is consolidated into the parent company’s consolidated financial statements, the parent guarantee is “full and unconditional” and, subject to certain exceptions as set forth below, the alternative disclosure required by Rule 13-01 is provided, which includes narrative disclosure and summarized financial information. Accordingly, separate consolidated financial statements of INVH LP, the General Partner, and IH Merger Sub have not been presented.

Furthermore, as permitted under Rule 13-01(a)(4)(vi) of Regulation S-X, we have excluded the summarized financial information for the INVH LP, the General Partner, and IH Merger Sub, because the combined assets, liabilities, and results of operations of INVH, INVH LP, the General Partner, and IH Merger Sub are not materially different than the corresponding amounts in our condensed consolidated financial statements, and management believes such summarized financial information would be repetitive and would not provide incremental value to investors.

Purchase of Outstanding Debt Securities or Loans

As market conditions warrant, we may from time to time seek to purchase our outstanding debt or debt securities that we may issue in the future, in privately negotiated or open market transactions, by tender offer or otherwise. Subject to any applicable limitations contained in the agreements governing our indebtedness, any purchases made by us may be funded by the use of cash on our condensed consolidated balance sheet or the incurrence of new secured or unsecured debt, including

borrowings under our Credit Facility. The amounts involved in any such purchase transactions, individually or in the aggregate, may be material. Any such purchases may be with respect to a substantial amount of a particular class or series of debt, with the attendant reduction in the trading liquidity of such class or series. In addition, any such purchases made at prices below the “adjusted issue price” (as defined for United States federal income tax purposes) may result in taxable cancellation of indebtedness income to us, which amounts may be material, and in related adverse tax consequences to us.

Critical Accounting Policies and Estimates

Critical accounting policies are those accounting policies that management believes are important to the portrayal of our financial condition and results and require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. We believe that our critical accounting policies pertain to our investments in single-family residential properties, including acquisition of real estate assets, related cost capitalization, provisions for impairment, and single-family residential properties held for sale. These critical policies and estimates are summarized in Part II. Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K. There were no material changes to our critical accounting policies during the nine months ended September 30, 2023.

For a discussion of recently adopted accounting standards, if any, see Part I. Item 1. “Financial Statements — Note 2 of Notes to Condensed Consolidated Financial Statements.”

Segment Reporting

Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources and in assessing performance. Our CODM is the Chief Executive Officer.

Under the provisions of ASC 280, Segment Reporting, we have determined that we have one reportable segment related to acquiring, renovating, leasing, and operating single-family homes as rental properties. The CODM evaluates operating performance and allocates resources on a total portfolio basis. The CODM utilizes NOI as the primary measure to evaluate performance of the total portfolio.

Non-GAAP Measures

EBITDA, EBITDAre, and Adjusted EBITDAre

EBITDA, EBITDAre, and Adjusted EBITDAre are supplemental, non-GAAP measures often utilized to evaluate the performance of real estate companies. We define EBITDA as net income or loss computed in accordance with GAAP before the following items: interest expense; income tax expense; depreciation and amortization; and adjustments for unconsolidated joint ventures. The National Association of Real Estate Investment Trusts (“Nareit”) recommends as a best practice that REITs that report an EBITDA performance measure also report EBITDAre. Consistent with the Nareit definition, we define EBITDAre as EBITDA, further adjusted for the following: gain on sale of property, net of tax; impairment on depreciated real estate investments; and adjustments for unconsolidated joint ventures.

Adjusted EBITDAre is defined as EBITDAre before the following items: share-based compensation expense; severance; casualty losses, net; (gains) losses on investments in equity securities, net; and other income and expenses. EBITDA, EBITDAre, and Adjusted EBITDAre are used as supplemental financial performance measures by management and by external users of our financial statements, such as investors and commercial banks. Set forth below is additional detail on how management uses EBITDA, EBITDAre, and Adjusted EBITDAre as measures of performance.

Our management uses EBITDA, EBITDAre, and Adjusted EBITDAre in a number of ways to assess our consolidated financial and operating performance, and we believe these measures are helpful to management and external users in identifying trends in our performance. EBITDA, EBITDAre, and Adjusted EBITDAre help management identify controllable expenses and make decisions designed to help us meet our current financial goals and optimize our financial performance, while neutralizing the impact of capital structure on results. Accordingly, we believe these metrics measure our financial performance based on operational factors that management can impact in the short-term, namely our cost structure and expenses.

We believe that the presentation of EBITDA, EBITDAre, and Adjusted EBITDAre provides information useful to investors in assessing our financial condition and results of operations. The GAAP measure most directly comparable to EBITDA, EBITDAre, and Adjusted EBITDAre is net income or loss. EBITDA, EBITDAre, and Adjusted EBITDAre are not used as measures of our liquidity and should not be considered alternatives to net income or loss or any other measure of financial performance presented in accordance with GAAP. Our EBITDA, EBITDAre, and Adjusted EBITDAre may not be comparable to the EBITDA, EBITDAre, and Adjusted EBITDAre of other companies due to the fact that not all companies use the same definitions of EBITDA, EBITDAre, and Adjusted EBITDAre. Accordingly, there can be no assurance that our basis for computing these non-GAAP measures is comparable with that of other companies.

The following table presents a reconciliation of net income (as determined in accordance with GAAP) to EBITDA, EBITDAre, and Adjusted EBITDAre for each of the periods indicated:


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,

($ in thousands)	2023		2022		2023		2022
Net income available to common stockholders	$	131,637	$	79,032	$	389,406	$	282,242
Net income available to participating securities	181		147		518		515
Non-controlling interests	403		250		1,163		1,180
Interest expense	86,736		76,454		243,408		225,683
Interest expense in unconsolidated joint ventures	5,051		(613)		12,774		838
Depreciation and amortization	170,696		160,428		501,128		474,796
Depreciation and amortization of investments in unconsolidated joint ventures	2,690		1,714		7,686		3,466
EBITDA	397,394		317,412		1,156,083		988,720
Gain on sale of property, net of tax	(57,989)		(23,952)		(134,448)		(69,486)
Impairment on depreciated real estate investments	83		101		342		238
Net gain on sale of investments in unconsolidated joint ventures	(554)		(251)		(1,188)		(567)
EBITDAre	338,934		293,310		1,020,789		918,905
Share-based compensation expense(1)	8,929		7,930		21,493		22,565
Severance	392		46		916		253
Casualty losses, net (2)	2,429		19,903		5,214		22,636
(Gains) losses on investments in equity securities, net	499		796		(113)		4,000
Other, net(3)	2,533		8,372		7,968		11,605
Adjusted EBITDAre	$	353,716	$	330,357	$	1,056,267	$	979,964

(1)For the three months ended September 30, 2023 and 2022, $1,830 and $1,761 was recorded in property management expense, respectively, and $7,099 and $6,169 was recorded in general and administrative expense, respectively. For the nine months ended September 30, 2023 and 2022, $5,232 and $4,981 was recorded in property management expense, respectively, and $16,261 and $17,584 was recorded in general and administrative expense, respectively.

(2)Includes our share from unconsolidated joint ventures. The three and nine months ended September 30, 2022 include an accrual of $19,000 for estimated losses and damages related to Hurricane Ian.

(3)Includes interest income and other miscellaneous income and expenses.

Net Operating Income

NOI is a non-GAAP measure often used to evaluate the performance of real estate companies. We define NOI for an identified population of homes as rental revenues and other property income less property operating and maintenance expense (which consists primarily of property taxes, insurance, HOA fees (when applicable), market-level personnel expenses, utility expenses, repairs and maintenance, and property administration). NOI excludes: interest expense; depreciation and amortization; property management expense; general and administrative expense; impairment and other; gain on sale of property, net of tax; (gains) losses on investments in equity securities, net; other income and expenses; management fee revenues; and losses from investments in unconsolidated joint ventures.

We consider NOI to be a meaningful supplemental financial measure of our performance when considered with the financial statements determined in accordance with GAAP. We believe NOI is helpful to investors in understanding the core performance of our real estate operations. The GAAP measure most directly comparable to NOI is net income or loss. NOI is not used as a measure of liquidity and should not be considered as an alternative to net income or loss or any other measure of financial performance presented in accordance with GAAP. Our NOI may not be comparable to the NOI of other companies due to the fact that not all companies use the same definition of NOI. Accordingly, there can be no assurance that our basis for computing this non-GAAP measure is comparable with that of other companies.

We believe that Same Store NOI is also a meaningful supplemental measure of our operating performance for the same reasons as NOI and is further helpful to investors as it provides a more consistent measurement of our performance across reporting periods by reflecting NOI for homes in our Same Store portfolio.

The following table presents a reconciliation of net income (as determined in accordance with GAAP) to NOI for our total portfolio and NOI for our Same Store portfolio for each of the periods indicated:


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,

($ in thousands)	2023		2022		2023		2022
Net income available to common stockholders	$	131,637	$	79,032	$	389,406	$	282,242
Net income available to participating securities	181		147		518		515
Non-controlling interests	403		250		1,163		1,180
Interest expense	86,736		76,454		243,408		225,683
Depreciation and amortization	170,696		160,428		501,128		474,796
Property management expense(1)	23,399		22,385		70,563		65,166
General and administrative(2)	22,714		20,123		59,957		57,104
Impairment and other(3)	2,496		20,004		5,527		22,874
Gain on sale of property, net of tax	(57,989)		(23,952)		(134,448)		(69,486)
(Gains) losses on investments in equity securities, net	499		796		(113)		4,000
Other, net(4)	2,533		8,372		7,968		11,605
Management fee revenues	(3,404)		(3,284)		(10,227)		(8,154)
Losses from investments in unconsolidated joint ventures	4,902		849		11,087		5,870
NOI (total portfolio)	384,803		361,604		1,145,937		1,073,395
Non-Same Store NOI	(34,248)		(24,606)		(92,380)		(63,838)
NOI (Same Store portfolio)(5)	$	350,555	$	336,998	$	1,053,557	$	1,009,557

(1)Includes $1,830 and $1,761 of share-based compensation expense for the three months ended September 30, 2023 and 2022, respectively. Includes $5,232 and $4,981 of share-based compensation expense for the nine months ended September 30, 2023 and 2022, respectively.

(2)Includes $7,099 and $6,169 of share-based compensation expense for the three months ended September 30, 2023 and 2022, respectively. Includes $16,261 and $17,584 of share-based compensation expense for the nine months ended September 30, 2023 and 2022, respectively.

(3)The three and nine months ended September 30, 2022 include an accrual of $19,000 for estimated losses and damages related to Hurricane Ian.

(4)Includes interest income and other miscellaneous income and expenses.

(5)The Same Store portfolio totaled 76,138 homes for the three and nine months ended September 30, 2023.

Funds from Operations, Core Funds from Operations, and Adjusted Funds from Operations

Funds From Operations (“FFO”), Core FFO, and Adjusted FFO are supplemental, non-GAAP measures often utilized to evaluate the performance of real estate companies. FFO is defined by Nareit as net income or loss (computed in accordance with GAAP) excluding gains or losses from sales of previously depreciated real estate assets, plus depreciation, amortization and impairment of real estate assets, and adjustments for unconsolidated joint ventures.

We believe that FFO is a meaningful supplemental measure of the operating performance of our business because historical cost accounting for real estate assets in accordance with GAAP assumes that the value of real estate assets diminishes predictably over time, as reflected through depreciation and amortization. Because real estate values have historically risen or fallen with market conditions, management considers FFO an appropriate supplemental performance measure as it excludes historical cost depreciation and amortization, impairment on depreciated real estate investments, gains or losses related to sales of previously depreciated homes, as well non-controlling interests, from net income or loss (computed in accordance with GAAP). By excluding depreciation and amortization and gains or losses on sales of real estate, management uses FFO to measure returns on its investments in homes. However, because FFO excludes depreciation and amortization and captures neither the changes in the value of the homes that result from use or market conditions nor the level of capital expenditures to maintain the operating performance of the homes, all of which have real economic effect and could materially affect our results from operations, the utility of FFO as a measure of our performance is limited.

Management also believes that FFO, combined with the required GAAP presentations, is useful to investors in providing more meaningful comparisons of the operating performance of a company’s real estate between periods or as compared to other companies. The GAAP measure most directly comparable to FFO is net income or loss. FFO is not used as a measure of our liquidity and should not be considered an alternative to net income or loss or any other measure of financial performance presented in accordance with GAAP. Our FFO may not be comparable to the FFO of other companies due to the fact that not all companies use the same definition of FFO. Accordingly, there can be no assurance that our basis for computing this non-GAAP measures is comparable with that of other companies.

We believe that Core FFO and Adjusted FFO are also meaningful supplemental measures of our operating performance for the same reasons as FFO and are further helpful to investors as they provide a more consistent measurement of our performance across reporting periods by removing the impact of certain items that are not comparable from period to period. We define Core FFO as FFO adjusted for the following: non-cash interest expense related to amortization of deferred financing costs, loan discounts, and non-cash interest expense from derivatives; share-based compensation expense; legal settlements; severance expense; casualty (gains) losses, net; and (gains) losses on investments in equity securities, net, as applicable. We define Adjusted FFO as Core FFO less recurring capital expenditures, including adjustments for unconsolidated joint ventures, that are necessary to help preserve the value, and maintain the functionality, of our homes. The GAAP measure most directly comparable to Core FFO and Adjusted FFO is net income or loss. Core FFO and Adjusted FFO are not used as measures of our liquidity and should not be considered alternatives to net income or loss or any other measure of financial performance presented in accordance with GAAP. Our Core FFO and Adjusted FFO may not be comparable to the Core FFO and Adjusted FFO of other companies due to the fact that not all companies use the same definition of Core FFO and Adjusted FFO. No adjustments were made to the Core FFO and Adjusted FFO per common share — diluted computations for potential shares of common stock related to the Convertible Senior Notes during the periods the notes were outstanding. Accordingly, there can be no assurance that our basis for computing this non-GAAP measures is comparable with that of other companies.

The following table presents a reconciliation of net income (as determined in accordance with GAAP) to FFO, Core FFO, and Adjusted FFO for each of the periods indicated:


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,

(in thousands, except shares and per share data)	2023		2022		2023		2022
Net income available to common stockholders	$	131,637	$	79,032	$	389,406	$	282,242
Add (deduct) adjustments from net income to derive FFO:
Net income available to participating securities	181		147		518		515
Non-controlling interests	403		250		1,163		1,180
Depreciation and amortization on real estate assets	167,921		158,199		493,027		468,272
Impairment on depreciated real estate investments	83		101		342		238
Net gain on sale of previously depreciated investments in real estate	(57,989)		(23,952)		(134,448)		(69,486)
Depreciation and net gain on sale of investments in unconsolidated joint ventures	2,111		1,440		6,425		2,856
FFO	244,347		215,217		756,433		685,817
Non-cash interest expense related to amortization of deferred financing costs, loan discounts, and non-cash interest expense from derivatives(1)	9,561		4,539		25,875		17,507
Share-based compensation expense(2)	8,929		7,930		21,493		22,565
Legal settlements	2,000		7,400		2,000		7,400
Severance expense	392		46		916		253
Casualty losses, net(1)(3)	2,429		19,903		5,214		22,636
(Gains) losses on investments in equity securities, net	499		796		(113)		4,000
Core FFO	268,157		255,831		811,818		760,178
Recurring capital expenditures(1)	(49,007)		(44,683)		(122,700)		(115,057)
Adjusted FFO	$	219,150	$	211,148	$	689,118	$	645,121

Net income available to common stockholders
Weighted average common shares outstanding — diluted(4)(5)(6)	613,580,042		612,647,588		613,155,041		610,741,723

Net income per common share — diluted(4)(5)(6)	$	0.21	$	0.13	$	0.64	$	0.46

FFO, Core FFO, and Adjusted FFO

Weighted average common shares and OP Units outstanding — diluted(4)(5)(6)	615,699,631		615,172,460		615,208,781		613,497,425

FFO per common share — diluted(4)(5)(6)	$	0.40	$	0.35	$	1.23	$	1.12




Core FFO per common share — diluted(4)(5)(6)	$	0.44	$	0.42	$	1.32	$	1.24
AFFO per common share — diluted(4)(5)(6)	$	0.36	$	0.34	$	1.12	$	1.05

(1)Includes our share from unconsolidated joint ventures.

(2)For the three months ended September 30, 2023 and 2022, $1,830 and $1,761 was recorded in property management expense, respectively, and $7,099 and $6,169 was recorded in general and administrative expense, respectively. For the nine months ended September 30, 2023 and 2022, $5,232 and $4,981 was recorded in property management expense, respectively, and $16,261 and $17,584 was recorded in general and administrative expense, respectively.

(3)The three and nine months ended September 30, 2022 include an accrual of $19,000 for estimated losses and damages related to Hurricane Ian.

(4)On January 18, 2022, we settled the $141,490 outstanding principal balance of the 2022 Convertible Notes with the issuance of 6,216,261 shares of our common stock. For the three and nine months ended September 30, 2023, the shares of common stock issued with respect to this settlement are included within all net income, FFO, Core FFO, and AFFO per common share calculations subsequent to the conversion date.

(5)Incremental shares attributed to non-vested share-based awards totaling 1,579,231 and 1,801,768 for the three months ended September 30, 2023 and 2022, respectively, and 1,305,739 and 1,529,591 for the nine months ended September 30, 2023 and 2022, respectively, are included in weighted average common shares outstanding in the calculation of net income per common share — diluted. For the computations of FFO, Core FFO, and AFFO per common share — diluted, common share equivalents of 1,829,337 and 2,008,267 for the three months ended September 30, 2023 and 2022, respectively, and 1,535,182 and 1,743,556 for the nine months ended September 30, 2023 and 2022, respectively, related to incremental shares attributed to non-vested share-based awards are included in the denominator.

(6)Vested units of partnership interests in INVH LP (“OP Units”) have been excluded from the computation of net income per common share — diluted for the periods above because all net income attributable to the vested OP Units has been recorded as non-controlling interest and thus excluded from net income available to common stockholders. Weighted average vested OP Units of 1,869,483 and 2,318,373 for the three months ended September 30, 2023 and 2022, respectively, and 1,824,297 and 2,541,737 for the nine months ended September 30, 2023 and 2022, respectively, are included in the denominator for the computations of FFO, Core FFO, and AFFO per common share — diluted.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our future income, cash flows, and fair values relevant to financial instruments are dependent upon prevalent market interest rates. Market risk refers to the risk of loss from adverse changes in interest rates, seasonality, market prices, commodity prices, and inflation. The primary market risks to which we are exposed are interest rate risk and seasonality. We may in the future use derivative financial instruments to manage, or hedge, interest rate risks related to any borrowings we may have. We may enter into such contracts only with major financial institutions based on their credit ratings and other factors.

Interest Rate Risk

A primary market risk to which we believe we are exposed is interest rate risk, which may result from many factors, including government monetary and tax policies, unfavorable global and United States economic conditions (including inflation and rising interest rates), geopolitical tensions, and other factors that are beyond our control. We may incur additional variable rate debt in the future, including additional amounts that we may borrow under the Credit Facility. In addition, decreases in interest rates may lead to additional competition for the acquisition of single-family homes, which may lead to future acquisitions being more costly and resulting in lower yields on single-family homes targeted for acquisition. Significant increases in interest rates may also have an adverse impact on our earnings if we are unable to increase rents on expired leases or acquire single-family homes with rental rates high enough to offset the increase in interest rates on our borrowings.

As of September 30, 2023, our $3,872.1 million of outstanding variable-rate debt was comprised of borrowings on our mortgage loans of $647.1 million and Term Loan Facilities of $3,225.0 million. As of September 30, 2023, we had effectively converted 98.7% of these borrowings to a fixed rate through interest rate swap agreements. Our variable-rate borrowings bear interest at Adjusted SOFR plus the applicable spread. Assuming no change in the outstanding balance of our existing debt, the projected effect of a 100 bps increase or decrease in Adjusted SOFR, collectively, on our annual interest expense would be an estimated increase or decrease of $0.5 million. This estimate considers the impact of our interest rate swap agreements, interest rate cap agreement, and any Term SOFR floors or minimum interest rates stated in the agreements of the respective borrowings.

This analysis does not consider the effects of the reduced level of overall economic activity that could exist in such an environment. Further, in the event of a change of such magnitude, we may consider taking actions to further mitigate our exposure to the change. However, because of the uncertainty of the specific actions that would be taken and their possible effects, the sensitivity analysis assumes no changes in our capital structure.

Inflation

Inflation primarily impacts our results of operations as a result of increased repair and maintenance and other costs and wage pressures. Inflation could also impact our cost of capital as a result of changing interest rates on variable rate debt that is not hedged or if our debt instruments are refinanced in a high-inflation environment. Our resident leases typically have a term of one to two years, which generally enables us to compensate for inflationary effects by increasing rents on our homes to current market rates. Although an extreme or sustained escalation in costs could have a negative impact on our residents and their ability to absorb rent increases, we do not believe this had a material impact on our results of operations for the three and nine months ended September 30, 2023.

Seasonality

Our business and related operating results have been, and we believe will continue to be, impacted by seasonal factors throughout the year. In particular, we have experienced higher levels of resident move-outs during the summer months, which impacts both our rental revenues and related turnover costs. Further, our property operating costs are seasonally impacted in certain markets by increases in expenses such as HVAC repairs and costs to re-resident during the summer season.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain a set of disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) designed to ensure that information required to be disclosed in reports we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. The design of any disclosure controls and procedures is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its goals under all potential future conditions. Any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2023. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2023, the design and operation of our disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level.

Changes in Internal Control

There has been no change in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II

ITEM 1. LEGAL PROCEEDINGS

We are not subject to any material litigation nor, to management’s knowledge, is any material litigation currently threatened against us other than routine litigation and administrative proceedings arising in the ordinary course of business.

ITEM 1A. RISK FACTORS

For a discussion of our potential risks or uncertainties, you should carefully read and consider risk factors previously disclosed under Part I. Item 1A. “Risk Factors” of our Annual Report on Form 10-K. There have been no material changes to the risk factors disclosed in Part I. Item 1A. of the Annual Report on Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

EXHIBIT INDEX

Exhibit number

Description

3.1

Charter of Invitation Homes Inc., dated as of February 6, 2017 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on February 6, 2017).

3.2

Amended and Restated Bylaws of Invitation Homes Inc., dated as of May 17, 2023 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on May 18, 2023).

4.1

Fifth Supplemental Indenture, dated as of August 2, 2023, among Invitation Homes Operating Partnership LP, Invitation Homes Inc., Invitation Homes OP GP LLC, IH Merger Sub, LLC, and U.S. Bank Trust Company, National Association , as trustee, including the form of the 5.450% Senior Notes due 2030 (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on August 2, 2023).

4.2

Sixth Supplemental Indenture, dated as of August 2, 2023, among Invitation Homes Operating Partnership LP, Invitation Homes Inc., Invitation Homes OP GP LLC, IH Merger Sub, LLC, and U.S. Bank Trust Company, National Association , as trustee, including the form of the 5.500% Senior Notes due 2033 (incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K filed on August 2, 2023).

31.1

Certificate of Dallas B. Tanner, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certificate of Jonathan S. Olsen, Executive Vice President and Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

Certificate of Dallas B. Tanner, Chief Executive Officer, pursuant to Section 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).

32.2

Certificate of Jonathan S. Olsen, Executive Vice President and Chief Financial Officer, pursuant to Section 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).

101.INS

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH

Inline XBRL Taxonomy Extension Schema Document.

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104

Cover page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

Certain agreements and other documents filed as exhibits to this Quarterly Report on Form 10-Q contain representations and warranties that the parties thereto made to each other. These representations and warranties have been made solely for the benefit of the other parties to such agreements and may have been qualified by certain information that has been disclosed to the other parties to such agreements and other documents and that may not be reflected in such agreements and other documents. In addition, these representations and warranties may be intended as a way of allocating risks among parties if the statements contained therein prove to be incorrect, rather than as actual statements of fact. Accordingly, there can be no reliance on any such representations and warranties as characterizations of the actual state of facts. Moreover, information concerning the subject matter of any such representations and warranties may have changed since the date of such agreements or other documents.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


Invitation Homes Inc.

By:			/s/ Jonathan S. Olsen
			Name: Jonathan S. Olsen
			Title: Executive Vice President and Chief Financial Officer
			(Principal Financial Officer)
			Date: October 26, 2023

By:			/s/ Kimberly K. Norrell
			Name: Kimberly K. Norrell
			Title: Executive Vice President and Chief Accounting Officer
			(Principal Accounting Officer)
			Date: October 26, 2023