Invitation Homes Reports Fourth Quarter 2020 and Full Year 2020 Results

DALLAS--(BUSINESS WIRE)--Invitation Homes Inc. (NYSE: INVH) ("Invitation Homes" or the "Company"), the nation's premier single-family home leasing company, today announced its Q4 2020 and FY 2020 financial and operating results.

Fourth Quarter 2020 and Full Year 2020 Highlights

• Year over year, in Q4 2020, total revenues increased 4.5% to $464 million, property operating and maintenance costs increased 0.6% to $169 million, net income available to common stockholders increased 36.0% to $71 million, and net income per diluted common share increased 30.2% to $0.12. In FY 2020, total revenues increased 3.3% to $1,823 million, property operating and maintenance costs increased 1.6% to $681 million, net income available to common stockholders increased 34.9% to $196 million, and net income per diluted common share increased 29.4% to $0.35.
• Year over year, in Q4 2020, Core FFO per share decreased 0.1% to $0.32, and AFFO per share decreased 1.3% to $0.27. In FY 2020, Core FFO per share increased 2.7% to $1.28, and AFFO per share increased 4.6% to $1.08. Excluded from Core FFO and AFFO was a $30 million unrealized gain in Q4 2020 on an investment in Opendoor.
• In Q4 2020, Same Store NOI grew 4.3% year over year on 2.0% Same Store Core revenue growth and a 2.4% decrease in Same Store Core operating expenses. In FY 2020, Same Store NOI grew 3.7% year over year on 2.8% Same Store Core revenue growth and 1.0% Same Store Core operating expense growth.
• In Q4 2020, Same Store average occupancy was 98.1%, up 210 basis points year over year. In FY 2020, Same Store average occupancy was 97.5%, up 130 basis points year over year.
• In Q4 2020, Same Store new lease rent growth of 6.9% and Same Store renewal rent growth of 3.8% drove Same Store blended rent growth of 4.9%. In FY 2020, Same Store new lease rent growth of 4.2% and Same Store renewal rent growth of 3.7% drove Same Store blended rent growth of 3.8%.
• In Q4 2020, revenue collections were approximately 97% of the Company's historical average collection rate.
• In Q4 2020, the Company began acquiring homes through its previously announced JV with Rockpoint Group. Invitation Homes owns a 20% interest in the JV, which is expected to invest over $1 billion in single-family rental homes, diversifying Invitation Homes' capital sources available to pursue external growth over a multi-year period.
• In Q4 2020, the Company capitalized on favorable buying fundamentals to increase its acquisition pace, purchasing 1,197 homes for $361 million, of which 1,057 were added to the wholly-owned portfolio for $316 million and 140 were added to the JV for $45 million. Also in Q4 2020, the Company sold 277 wholly-owned homes for $82 million.
• Net debt / TTM adjusted EBITDAre decreased from 8.1x at December 31, 2019 to 7.3x at December 31, 2020.
• As previously announced, in Q4 2020, the Company closed a $3.5 billion sustainability-linked unsecured credit facility, consisting of a $1.0 billion revolver and $2.5 billion term loan, to replace its previous facility and refinance secured debt. As a result, the Company has no debt (excluding convertible notes) reaching final maturity until December 2024, and the Company's unsecured debt as a percentage of total debt increased from 22% to 35%.

President & Chief Executive Officer Dallas Tanner comments: "Reflecting on 2020, I could not be prouder of the role Invitation Homes played in helping to provide comfortable homes and genuine care to residents in a year when the importance of home has never been greater. While delivering this experience to our residents, we also achieved another year of financial performance near the top of the real estate sector. Executing nimbly to meet strong demand, we increased occupancy in every month of 2020, and closed the year with record-high Same Store occupancy of 98.3% in December and our highest blended rent growth of the year. With a strong and stable resident base, we also continue to collect rents near historical average levels.

"This momentum positions us well for growth in 2021. In addition to enjoying favorable industry fundamentals, we are also entering the new year more active in the acquisition market than we have been since prior to our 2017 IPO. We'll remain opportunistic in what we see as a highly accretive environment, and continue to buy with the same discipline and rigor we have exercised throughout our history that led to the high-quality portfolio we have today. As we focus on executing our plan for 2021, we will also continue to prioritize the safety of our stakeholders, and support our residents and associates as we have done consistently throughout these uncertain times. The ever-changing environment of 2020 could not impede us from executing on strategic initiatives to drive growth and enhance the resident experience, and we are excited as we look into 2021 and beyond at strong fundamentals and an opportunity to raise the bar even higher."

Financial Results

Net Income, FFO, Core FFO, and AFFO Per Share — Diluted
	Q4 2020		Q4 2019		FY 2020		FY 2019
Net income ^(1)	$	0.12	$	0.10	$	0.35	$	0.27
FFO ^(1)	0.35		0.29		1.24		1.10
Core FFO ^(2)	0.32		0.32		1.28		1.25
AFFO ^(2)	0.27		0.28		1.08		1.03

1. In accordance with GAAP and Nareit guidelines, net income per share and FFO per share are calculated as if the 3.0% Convertible Notes due July 1, 2019 (the "2019 Convertible Notes") were converted to common shares at the beginning of 2019, and as if the 3.5% Convertible Notes due January 15, 2022 (the "2022 Convertible Notes") were converted to common shares at the beginning of each relevant period in 2019 and 2020, unless such treatment is anti-dilutive to net income per share or FFO per share. See "Reconciliation of FFO, Core FFO, and AFFO," footnote (1), for more detail on the treatment of convertible notes in each specific period presented in the table.
2. Core FFO and AFFO per share reflect the 2019 Convertible Notes and 2022 Convertible Notes in the form in which they were outstanding during each period. See "Reconciliation of FFO, Core FFO, and AFFO," footnote (2), for more detail on the treatment of convertible notes in each specific period presented in the table.

Net Income

Net income per share in the fourth quarter of 2020 was $0.12, compared to net income per share of $0.10 in the fourth quarter of 2019. Total revenues and total property operating and maintenance expenses in the fourth quarter of 2020 were $464 million and $169 million, respectively, compared to $444 million and $168 million, respectively, in the fourth quarter of 2019.

Net income per share in FY 2020 was $0.35, compared to net income per share of $0.27 in FY 2019. Total revenues and total property operating and maintenance expenses in FY 2020 were $1,823 million and $681 million, respectively, compared to $1,765 million and $670 million, respectively, in FY 2019.

Core FFO

Year over year, Core FFO per share in the fourth quarter of 2020 decreased 0.1% to $0.32.

Year over year, Core FFO per share in FY 2020 increased 2.7% to $1.28, primarily due to growth in Same Store NOI.

AFFO

Year over year, AFFO per share in the fourth quarter of 2020 decreased 1.3% to $0.27.

Year over year, AFFO per share in FY 2020 increased 4.6% to $1.08, primarily due to the increase in Core FFO per share described above and lower recurring capital expenditures.

Operating Results

Same Store Operating Results Snapshot
Number of homes in Same Store portfolio:	71,433
	Q4 2020		Q4 2019		FY 2020		FY 2019
Core revenue growth (year-over-year)	2.0	%			2.8	%
Core operating expense growth (year-over-year)	(2.4)	%			1.0	%
NOI growth (year-over-year)	4.3	%			3.7	%
Average occupancy	98.1	%	96.0	%	97.5	%	96.2	%
Bad debt % of gross rental revenues ^(1)	2.5	%	0.3	%	1.7	%	0.4	%
Turnover rate	5.6	%	6.4	%	26.1	%	29.7	%
Rental rate growth (lease-over-lease):
Renewals	3.8	%	4.6	%	3.7	%	5.0	%
New leases	6.9	%	1.3	%	4.2	%	3.7	%
Blended	4.9	%	3.3	%	3.8	%	4.6	%

1. Invitation Homes reserves residents' accounts receivables balances that are aged greater than 30 days as bad debt, under the rationale that a resident's security deposit should cover approximately the first 30 days of receivables. For all resident receivables balances aged greater than 30 days, the amount reserved as bad debt is 100% of outstanding receivables from the resident, less the amount of the resident's security deposit on hand. For the purpose of determining age of receivables, charges are considered to be due based on the terms of the original lease, not based on a payment plan if one is in place. All rental revenues and other property income, in both total portfolio and Same Store portfolio presentations, are reflected net of bad debt.

Revenue Collections Update
	Q4 2020		Q3 2020		Q2 2020		Pre-COVID Average ^(2)
Revenues collected % of revenues due: ^(1)
Revenues collected in same month billed	91	%	92	%	92	%	96	%
Late collections of prior month billings	5	%	5	%	4	%	3	%
Total collections	96	%	97	%	96	%	99	%

1. Includes both rental revenues and other property income. Rent is considered to be due based on the terms of the original lease, not based on a payment plan if one is in place. Security deposits retained to offset rents due are not included as revenue collected. See "Same Store Operating Results Snapshot," footnote (1), for detail on the Company's bad debt policy.
2. Represents the period from October 2019 to March 2020.

Same Store NOI

For the Same Store portfolio of 71,433 homes, fourth quarter 2020 Same Store NOI increased 4.3% year over year on Same Store Core revenue growth of 2.0% and a 2.4% decrease in Same Store Core operating expenses.

FY 2020 Same Store NOI increased 3.7% year over year on Same Store Core revenue growth of 2.8% and Same Store Core operating expense growth of 1.0%.

Same Store Core Revenues

Fourth quarter 2020 Same Store Core revenue growth of 2.0% year over year was driven by a 3.3% increase in average monthly rent and a 210 basis point increase in average occupancy to 98.1%. As a result of the increases in average monthly rent and average occupancy, Same Store rental revenues increased 5.7% year over year on a gross basis before bad debt. With respect to Same Store Core revenue growth, two factors related to COVID-19 partially offset the favorable increases in average rent and average occupancy: 1) an increase in bad debt from 0.3% of gross rental revenues in Q4 2019 to 2.5% of gross rental revenues in Q4 2020, which was a 221 basis point drag on Same Store Core revenue growth, all else equal; and 2) a 35.3% decrease in other property income, net of resident recoveries, which was a 125 basis point drag on Same Store Core revenue growth, all else equal, due primarily to non-enforcement and non-collection of almost all late fees in the quarter.

FY 2020 Same Store Core revenue growth of 2.8% year over year was driven by a 3.5% increase in average monthly rent and a 130 basis point increase in average occupancy to 97.5%. Bad debt increased from 0.4% of gross rental revenues in FY 2019 to 1.7% of gross rental revenues in FY 2020, which was a 133 basis point drag on Same Store Core revenue growth, all else equal. Other property income, net of resident recoveries, decreased 21.1% year over year, which was a 72 basis point drag on Same Store Core revenue growth, all else equal.

Same Store Core Operating Expenses

Fourth quarter 2020 Same Store Core operating expenses decreased 2.4% year over year, driven by a 7.9% decline in Same Store controllable expenses, net of resident recoveries.

FY 2020 Same Store Core operating expenses increased 1.0% year over year, primarily due to higher property taxes that were partially offset by a 2.8% decrease in controllable expenses, net of resident recoveries, as well as lower insurance and HOA expenses.

Investment Management Activity

In Q4 2020, Invitation Homes increased its pace of acquisitions to its highest level since the second quarter of 2014, leveraging the advantages of its in-house local teams in conjunction with proprietary "AcquisitionIQ" technology to source $361 million of acquisitions through multiple channels. Fourth quarter wholly-owned acquisitions totaled 1,057 homes for $316 million, including estimated renovation costs. In addition, 140 homes were purchased for $45 million through the Company's unconsolidated joint venture with Rockpoint Group (the "Rockpoint JV"), of which Invitation Homes owns 20%.

Included in the Company's wholly-owned acquisition activity in Q4 2020 was a previously announced bulk acquisition of 273 homes in Dallas and a bulk acquisition of 54 homes in Phoenix that overlap closely with Invitation Homes' existing footprints in those two markets. In total, the homes in these transactions were acquired for $75 million at a 5.5% NOI yield based on in-place rents, and the Company sees upside to NOI in the portfolios by bringing them onto its platform.

Dispositions in the fourth quarter of 2020 totaled 277 wholly-owned homes for gross proceeds of $82 million.

In FY 2020, in its wholly-owned portfolio, the Company closed on acquisitions of 2,252 homes for $691 million, including estimated renovation costs, and sold 1,580 homes for gross proceeds of $443 million, resulting in a total wholly-owned portfolio home count of 80,177 homes as of December 31, 2020. In the Rockpoint JV, 140 homes were purchased for $45 million in FY 2020, resulting in a Rockpoint JV home count of 140 homes as of December 31, 2020.

Opendoor Investment Update

In Q4 2020, Invitation Homes' private investment in Opendoor converted to approximately 2 million public shares of Opendoor common stock (NASDAQ: OPEN) as a result of Opendoor's merger with a special purpose acquisition company. Invitation Homes' original Series E private investment in Opendoor was made in March 2018 and consisted of $10 million of convertible notes. That investment, which has since converted to common shares of OPEN, was valued at $46 million as of December 31, 2020. In addition to being a successful investment for Invitation Homes, Opendoor has been and continues to be a valued partner for Invitation Homes in the growing iBuyer channel of the single-family home transaction market.

The investment in OPEN is now carried on Invitation Homes' balance sheet at its estimated fair market value and is included in Other Assets, net. The unrealized gain on investment that Invitation Homes recorded in Q4 2020 to mark the value of its OPEN investment to fair value is included in net income under GAAP and FFO as defined by Nareit, but is excluded from Core FFO and AFFO.

Balance Sheet and Capital Markets Activity

As of December 31, 2020, the Company had $1,213 million in available liquidity through a combination of unrestricted cash and undrawn capacity on its revolving credit facility. The Company's total indebtedness as of December 31, 2020 was $8,083 million, consisting of $5,238 million of secured debt and $2,845 million of unsecured debt. Net debt / TTM Adjusted EBITDAre at December 31, 2020 was 7.3x, down from 8.1x at December 31, 2019.

In Q4 2020, the Company issued 6,525,758 shares of common stock under its at-the-market equity agreement ("ATM Equity Program"), at an average price of $28.47 per share, for gross proceeds of $186 million. Proceeds were used primarily to acquire homes. $500 million of capacity remained under the ATM Equity Program as of December 31, 2020.

As previously announced, in Q4 2020, the Company closed a $3,500 million sustainability-linked senior unsecured credit facility (the “Credit Facility”), consisting of an undrawn $1,000 million revolving line of credit (the “Revolver”) and a fully funded $2,500 million term loan (the “Term Loan”). Initial maturities of the Revolver and Term Loan are in January 2025, with each carrying two 6-month extension options. The new $1,000 million Revolver replaced the Company’s previous $1,000 million revolver, which had no balance drawn at the time the Credit Facility closed. Proceeds from the new $2,500 million Term Loan were used to: 1) fully repay the Company’s previous $1,500 million unsecured term loan facility that was due to reach final maturity in February 2022; 2) fully repay the $731 million principal balance of the SWH 2017-1 securitization that was due to reach final maturity in January 2023; and 3) voluntarily prepay higher-cost classes of certificates of various securitizations due to reach final maturity between March 2025 and January 2026. For both the Revolver and Term loan, spreads at closing, based on the Company's total leverage ratio, were 5 bps lower than the spreads most recently in effect for the Company's previous credit facility. Based on improvement in total leverage ratio from September 30, 2020 to December 31, 2020, the Company expects the interest rates applicable to its Term Loan and used portion of its Revolver both to decrease by another 10 bps, effective February 2021, to LIBOR + 155 bps for the Term Loan and LIBOR + 160 bps for the Revolver.

As a result of these transactions, the Company has no debt reaching final maturity until December 2024, with the exception of $345 million of convertible notes maturing in January 2022. In addition, the Company’s unsecured debt as a percentage of total debt increased from 22% as of September 30, 2020 to 35% as of December 31, 2020, and the percentage of homes in the Company’s portfolio that are unencumbered increased from 51% as of September 30, 2020 to 57% as of December 31, 2020.

Dividend

As previously announced on January 29, 2021, the Company's Board of Directors declared a quarterly cash dividend of $0.17 per share of common stock, representing a 13.3% increase over the prior quarterly dividend of $0.15 per share. The dividend will be paid on or before February 26, 2021 to stockholders of record as of the close of business on February 10, 2021.

FY 2021 Guidance

FY 2021 Guidance
	FY 2021	FY 2020
	Guidance	Actual
Core FFO per share — diluted	$1.30 - $1.40	$1.28
AFFO per share — diluted	$1.09 - $1.19	$1.08
Same Store Core revenue growth	3.5% - 4.5%	2.8%
Same Store Core operating expense growth	4.5% - 5.5%	1.0%
Same Store NOI growth	3.0% - 4.0%	3.7%

Note: The Company does not provide guidance for the most comparable GAAP financial measures of net income (loss), total revenues, and property operating and maintenance expense, or a reconciliation of the forward-looking non-GAAP financial measures of Core FFO per share, AFFO per share, Same Store Core revenue growth, Same Store Core operating expense growth, and Same Store NOI growth to the comparable GAAP financial measures because it is unable to reasonably predict certain items contained in the GAAP measures, including non-recurring and infrequent items that are not indicative of the Company's ongoing operations. Such items include, but are not limited to, impairment on depreciated real estate assets, net (gain)/loss on sale of previously depreciated real estate assets, share-based compensation, casualty loss, non-Same Store revenues, and non-Same Store operating expenses. These items are uncertain, depend on various factors, and could have a material impact on our GAAP results for the guidance period.

Earnings Conference Call Information

Invitation Homes has scheduled a conference call at 11:00 a.m. Eastern Time on February 17, 2021 to discuss results for the fourth quarter of 2020. The domestic dial-in number is 1-888-317-6003, and the international dial-in number is 1-412-317-6061. The passcode is 3180201. An audio webcast may be accessed at www.invh.com. A replay of the call will be available through March 17, 2021 and can be accessed by calling 1-877-344-7529 (domestic) or 1-412-317-0088 (international) and using the replay passcode 10151712, or by using the link at www.invh.com.

Supplemental Information

The full text of the Earnings Release and Supplemental Information referenced in this release are available on Invitation Homes' Investor Relations website at www.invh.com.

Glossary & Reconciliations of Non-GAAP Financial and Other Operating Measures

Financial and operating measures found in the Earnings Release and Supplemental Information include certain measures used by Invitation Homes management that are measures not defined under accounting principles generally accepted in the United States ("GAAP"). These measures are defined in the Glossary and Reconciliations section of this press release and in the Supplemental Information and, as applicable, reconciled to the most comparable GAAP measures.

About Invitation Homes

Invitation Homes is the nation's premier single-family home leasing company, meeting changing lifestyle demands by providing access to high-quality, updated homes with valued features such as close proximity to jobs and access to good schools. The company's mission, "Together with you, we make a house a home," reflects its commitment to providing homes where individuals and families can thrive and high-touch service that continuously enhances residents' living experiences.

Forward-Looking Statements

This press release 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 the Company's expectations regarding the performance of the Company's business, its financial results, its 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,” “guidance,” “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 the Company's business model, macroeconomic factors beyond the Company's control, competition in identifying and acquiring properties, competition in the leasing market for quality residents, increasing property taxes, homeowners’ association (“HOA”) and insurance costs, the Company's dependence on third parties for key services, risks related to the evaluation of properties, poor resident selection and defaults and non-renewals by the Company's residents, performance of the Company's information technology systems, risks related to the Company's indebtedness, and risks related to the potential negative impact of the ongoing COVID-19 pandemic on the Company’s 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. Moreover, many of these factors have been heightened as a result of the ongoing and numerous adverse impacts of COVID-19. The Company believes these factors include, but are not limited to, those described under Part I. Item 1A. “Risk Factors” of the Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and in the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2020, filed with the Securities and Exchange Commission (the "SEC"), as such factors may be updated from time to time in the Company's periodic filings with 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 release and in the Company's other periodic filings. The forward-looking statements speak only as of the date of this press release, and the Company expressly disclaims 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.

Consolidated Balance Sheets
($ in thousands, except shares and per share data)
	December 31, 2020			December 31, 2019
	(unaudited)
Assets:
Investments in single-family residential properties, net	$	16,288,693		$	16,243,192
Cash and cash equivalents	213,422			92,258
Restricted cash	198,346			193,987
Goodwill	258,207			258,207
Investments in unconsolidated joint ventures	69,267			54,778
Other assets, net	478,287			550,488
Total assets	$	17,506,222		$	17,392,910
Liabilities:
Mortgage loans, net	$	4,820,098		$	6,238,461
Secured term loan, net	401,095			400,978
Term loan facility, net	2,470,907			1,493,747
Revolving facility	—			—
Convertible senior notes, net	339,404			334,299
Accounts payable and accrued expenses	149,299			186,110
Resident security deposits	157,936			147,787
Other liabilities	611,410			325,450
Total liabilities	8,950,149			9,126,832
Equity:
Stockholders' equity
Preferred stock, $0.01 par value per share, 900,000,000 shares authorized, none outstanding as of December 31, 2020 and December 31, 2019	—			—
Common stock, $0.01 par value per share, 9,000,000,000 shares authorized, 567,117,666 and 541,642,725 outstanding as of December 31, 2020 and December 31, 2019, respectively	5,671			5,416
Additional paid-in capital	9,707,258			9,010,194
Accumulated deficit	(661,162		)	(524,588		)
Accumulated other comprehensive loss	(546,942		)	(276,600		)
Total stockholders' equity	8,504,825			8,214,422
Non-controlling interests	51,248			51,656
Total equity	8,556,073			8,266,078
Total liabilities and equity	$	17,506,222		$	17,392,910

Consolidated Statements of Operations
($ in thousands, except shares and per share amounts)
	Q4 2020			Q4 2019			FY 2020			FY 2019
	(unaudited)			(unaudited)			(unaudited)
Revenues:
Rental revenues	$	429,866		$	410,578		$	1,687,724		$	1,633,799
Other property income	34,234			33,699			135,104			130,886
Rental revenues and other property income	464,100			444,277			1,822,828			1,764,685
Expenses:
Property operating and maintenance	168,628			167,576			680,543			669,987
Property management expense	14,888			14,561			58,613			61,614
General and administrative	16,679			15,375			63,305			74,274
Interest expense	95,382			88,417			353,923			367,173
Depreciation and amortization	142,090			133,764			552,530			533,719
Impairment and other	(3,974		)	6,940			696			18,743
Total expenses	433,693			426,633			1,709,610			1,725,510
Unrealized gains on investments in equity securities	29,689			—			29,723			6,480
Other, net	(2,087		)	3,130			(86		)	5,120
Gain on sale of property, net of tax	13,121			31,780			54,594			96,336
Net income	71,130			52,554			197,449			147,111
Net income attributable to non-controlling interests	(431		)	(562		)	(1,237		)	(1,648		)
Net income attributable to common stockholders	70,699			51,992			196,212			145,463
Net income available to participating securities	(113		)	(89		)	(448		)	(395		)
Net income available to common stockholders — basic and diluted	$	70,586		$	51,903		$	195,764		$	145,068
Weighted average common shares outstanding — basic	563,968,010			540,218,045			553,993,321			531,235,962
Weighted average common shares outstanding — diluted	565,541,098			541,505,031			555,458,607			532,499,787
Net income per common share — basic	$	0.13		$	0.10		$	0.35		$	0.27
Net income per common share — diluted	$	0.12		$	0.10		$	0.35		$	0.27
Dividends declared per common share	$	0.15		$	0.13		$	0.60		$	0.52

Glossary and Reconciliations

Glossary:

Average Monthly Rent
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 rental concessions and contractual rent increases amortized over the life of the lease.

Average Occupancy
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.

Core Operating Expenses
Core operating expenses for an identified population of homes reflect property operating and maintenance expenses, excluding any expenses recovered from residents.

Core Revenues
Core revenues for an identified population of homes reflects total revenues, net of any resident recoveries.

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 accounting principles generally accepted in the United States (“GAAP”) before the following items: interest expense; income tax expense; and depreciation and amortization. National Association of Real Estate Investment Trusts ("Nareit") recommends as a best practice that REITs that report an EBITDA performance measure also report EBITDAre. We define EBITDAre, consistent with the Nareit definition, as EBITDA, further adjusted for gain on sale of property, net of tax and impairment on depreciated real estate investments. Adjusted EBITDAre is defined as EBITDAre before the following items: share-based compensation expense; merger and transaction-related expenses; severance; casualty (gains) losses, net; unrealized gains on investments in equity securities; 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.

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. See "Reconciliation of Non-GAAP Measures" below for a reconciliation of GAAP net income to EBITDA, EBITDAre, and Adjusted EBITDAre.

Funds from Operations (FFO), Core Funds from Operations (Core FFO), and Adjusted Funds from Operations (AFFO)
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 partnerships and joint ventures. In calculating per share amounts, Core FFO and AFFO reflect convertible debt securities in the form in which they were outstanding during the period.

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 GAAP net income or loss.

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. Accordingly, there can be no assurance that our basis for computing this non-GAAP measures is comparable with that of other companies. See "Reconciliation of Non-GAAP measures" below for a reconciliation of GAAP net income to FFO, Core FFO, and Adjusted FFO.

Net Operating Income (NOI)
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, repairs and maintenance, leasing costs, and marketing expense). 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; and other income and expenses.

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. See "Reconciliation of Non-GAAP Measures" below for a reconciliation of GAAP net income (loss) to NOI for our total portfolio and NOI for our Same Store portfolio.

Recurring Capital Expenditures or Recurring CapEx
Recurring Capital Expenditures or Recurring CapEx represents general replacements and expenditures required to preserve and maintain the value and functionality of a home and its systems as a single-family rental.

Rental Rate Growth
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 any amortized non-service rent concessions and amortized contractual rent increases. 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.

Revenue Collections as a Percentage of Billings
Revenue collections as a percentage of billings represents the total cash received in a given period for rental revenues and other property income (including receipt of late payments that were billed in prior months) divided by the total amounts billed in that period. When a payment plan is in place with a resident, amounts are considered to be billed at the time they would have been billed based on the terms of the original lease, not the terms of the payment plan. "Historical average" revenue collections as a percentage of billings refer to revenue collections as a percentage of billings for the period from October 2019 through and including March 2020.

Same Store / Same Store Portfolio
Same Store or Same Store portfolio includes, for a given reporting period, 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 the Company has announced an intent to exit where the Company no longer operates a significant number of homes.

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 1^st of the year in which the Same Store portfolio was established.

We believe presenting 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 investors with meaningful information about the performance of our comparable homes across periods and about trends in our organic business.

Total Homes / Total Portfolio
Total homes or total portfolio refers to the total number of homes owned, whether or not stabilized, and excludes any properties previously acquired in purchases that have been subsequently rescinded or vacated.

Turnover Rate
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.

Reconciliation of Non-GAAP Measures:

Reconciliation of FFO, Core FFO, and AFFO
($ in thousands, except shares and per share amounts) (unaudited)
FFO Reconciliation	Q4 2020			Q4 2019			FY 2020			FY 2019
Net income available to common stockholders	$	70,586		$	51,903		$	195,764		$	145,068
Net income available to participating securities	113			89			448			395
Non-controlling interests	431			562			1,237			1,648
Depreciation and amortization on real estate assets	140,341			132,637			546,419			529,205
Impairment on depreciated real estate investments	376			2,921			4,578			14,210
Net gain on sale of previously depreciated investments in real estate	(13,121		)	(31,780		)	(54,594		)	(96,336		)
FFO	$	198,726		$	156,332		$	693,852		$	594,190
Core FFO Reconciliation	Q4 2020			Q4 2019			FY 2020			FY 2019
FFO	$	198,726		$	156,332		$	693,852		$	594,190
Non-cash interest expense	13,775			11,093			40,415			48,515
Share-based compensation expense	4,797			4,311			17,090			18,158
Offering related expenses	—			119			—			2,267
Merger and transaction-related expenses	—			—			—			4,347
Severance expense	213			240			601			8,465
Unrealized gains on investment in equity securities	(29,689		)	—			(29,723		)	(6,480		)
Casualty (gains) losses, net	(4,350		)	4,019			(3,882		)	4,533
Core FFO	$	183,472		$	176,114		$	718,353		$	673,995
AFFO Reconciliation	Q4 2020			Q4 2019			FY 2020			FY 2019
Core FFO	$	183,472		$	176,114		$	718,353		$	673,995
Recurring capital expenditures	(28,485		)	(25,425		)	(115,951		)	(118,988		)
Adjusted FFO	$	154,987		$	150,689		$	602,402		$	555,007
Net income available to common stockholders
Weighted average common shares outstanding — diluted ^(1)	565,541,098			541,505,031			555,458,607			532,499,787
Net income per common share — diluted ^(1)	$	0.12		$	0.10		$	0.35		$	0.27
FFO
Numerator for FFO per common share — diluted^(1)	$	203,037		$	160,580		$	711,033		$	599,776
Weighted average common shares and OP Units outstanding — diluted ^(1)	584,506,076			561,243,645			574,408,346			545,150,847
FFO per share — diluted ^(1)	$	0.35		$	0.29		$	1.24		$	1.10
Core FFO and Adjusted FFO
Weighted average common shares and OP Units outstanding — diluted ^(2)	569,405,633			546,143,202			559,307,903			538,925,506
Core FFO per share — diluted ^(2)	$	0.32		$	0.32		$	1.28		$	1.25
AFFO per share — diluted ^(2)	$	0.27		$	0.28		$	1.08		$	1.03

1. In accordance with GAAP and Nareit guidelines, net income per share and FFO per share are calculated as if the 2019 Convertible Notes were converted to common shares at the beginning of 2019, and as if the 2022 Convertible Notes were converted to common shares at the beginning of each relevant period in 2019 and 2020, unless such treatment is anti-dilutive to net income per share or FFO per share.

In Q4 2020, treatment of the 2022 Convertible Notes as if converted would be anti-dilutive to net income per share and dilutive to FFO per share. As such, Q4 2020 net income per share does not treat the 2022 Convertible Notes as converted. Q4 2020 FFO per share treats the 2022 Convertible Notes as if converted, thereby adjusting FFO in the numerator to remove the interest expense associated with the 2022 Convertible Notes and adjusting shares outstanding in the denominator to include shares issuable on conversion of the 2022 Convertible Notes.

In Q4 2019, treatment of the 2022 Convertible Notes as if converted would be anti-dilutive to both net income per share and FFO per share. As such, Q4 2019 net income per share and FFO per share do not treat the 2022 Convertible Notes as if converted.

In FY 2020, treatment of the 2022 Convertible Notes as if converted would be anti-dilutive to net income per share and dilutive to FFO per share. As such, FY 2020 net income per share does not treat the 2022 Convertible Notes as if converted. FY 2020 FFO per share treats the 2022 Convertible Notes as if converted, thereby adjusting FFO in the numerator to remove the interest expense associated with the 2022 Convertible Notes and adjusting shares outstanding in the denominator to include shares issuable on conversion of the 2022 Convertible Notes.

In FY 2019, treatment of the 2019 Convertible Notes as if converted for the period in which they were outstanding, from January 1, 2019 through June 30, 2019, would be anti-dilutive to net income per share and dilutive to FFO per share. Treatment of the 2022 Convertible Notes as if converted would be anti-dilutive to both net income per share and FFO per share in FY 2019. As such, FY 2019 net income per share reflects the conversion of the 2019 Convertible Notes for the period from July 1, 2019 through December 31, 2019, but does not treat the 2019 Convertible Notes as if converted for the period from January 1, 2019 through June 30, 2019, and does not treat the 2022 Convertible Notes as if converted. FY 2019 FFO per share does not treat the 2022 Convertible Notes as if converted, but treats the 2019 Convertible Notes as if converted on January 1, 2019, thereby adjusting FFO in the numerator to remove the interest expense associated with the 2019 Convertible Notes and adjusting shares outstanding in the denominator to include shares issuable on conversion of the 2019 Convertible Notes.

1. Core FFO and AFFO per share reflect the 2019 Convertible Notes and 2022 Convertible Notes in the form in which they were outstanding during each period.

As such, Q4 2020, Q4 2019, and FY 2020 Core FFO and AFFO per share reflect the conversion of the 2019 Convertible Notes, but do not treat the 2022 Convertible Notes as if converted.

FY 2019 Core FFO and AFFO per share reflect the conversion of the 2019 Convertible Notes for the period from July 1, 2019 through December 31, 2019, but do not treat the 2019 Convertible Notes as if converted for the period from January 1, 2019 through June 30, 2019. For the period from January 1, 2019 through June 30, 2019, cash interest expense associated with the 2019 Convertible Notes has been included in Core FFO and AFFO in the numerators, and shares issued upon conversion of the 2019 Convertible Notes have not been included as shares outstanding in the denominators. The 2022 Convertible Notes are not treated as if converted.

Reconciliation of Total Revenues to Same Store Total Revenues and Same Store Core Revenues, Quarterly
(in thousands) (unaudited)
	Q4 2020			Q3 2020			Q2 2020			Q1 2020			Q4 2019
Total revenues (total portfolio)	$	464,100		$	459,184		$	449,755		$	449,789		$	444,277
Non-Same Store revenues	(44,699		)	(42,054		)	(39,818		)	(36,308		)	(37,268		)
Same Store revenues	419,401			417,130			409,937			413,481			407,009
Same Store resident recoveries	(21,555		)	(21,476		)	(18,396		)	(18,407		)	(16,968		)
Same Store Core revenues	$	397,846		$	395,654		$	391,541		$	395,074		$	390,041

Reconciliation of Total Revenues to Same Store Total Revenues and Same Store Core Revenues, Full Year
(in thousands) (unaudited)
	FY 2020			FY 2019
Total revenues (total portfolio)	$	1,822,828		$	1,764,685
Non-Same Store revenues	(162,879		)	(161,013		)
Same Store revenues	1,659,949			1,603,672
Same Store resident recoveries	(79,834		)	(65,903		)
Same Store Core revenues	$	1,580,115		$	1,537,769

Reconciliation of Property Operating and Maintenance to Same Store Operating Expenses and Same Store Core Operating Expenses, Quarterly
(in thousands) (unaudited)
	Q4 2020			Q3 2020			Q2 2020			Q1 2020			Q4 2019
Property operating and maintenance expenses (total portfolio)	$	168,628		$	177,997		$	167,002		$	166,916		$	167,576
Non-Same Store operating expenses	(16,439		)	(16,151		)	(15,762		)	(15,706		)	(16,814		)
Same Store operating expenses	152,189			161,846			151,240			151,210			150,762
Same Store resident recoveries	(21,555		)	(21,476		)	(18,396		)	(18,407		)	(16,968		)
Same Store Core operating expenses	$	130,634		$	140,370		$	132,844		$	132,803		$	133,794

Reconciliation of Property Operating and Maintenance to Same Store Operating Expenses and Same Store Core Operating Expenses, Full Year
(in thousands) (unaudited)
	FY 2020			FY 2019
Property operating and maintenance expenses (total portfolio)	$	680,543		$	669,987
Non-Same Store operating expenses	(64,058		)	(72,995		)
Same Store operating expenses	616,485			596,992
Same Store resident recoveries	(79,834		)	(65,903		)
Same Store Core operating expenses	$	536,651		$	531,089

Reconciliation of Net Income to NOI and Same Store NOI, Quarterly
(in thousands) (unaudited)
	Q4 2020			Q3 2020			Q2 2020			Q1 2020			Q4 2019
Net income available to common stockholders	$	70,586		$	32,540		$	42,784		$	49,854		$	51,903
Net income available to participating securities	113			114			119			102			89
Non-controlling interests	431			211			275			320			562
Interest expense	95,382			87,713			86,071			84,757			88,417
Depreciation and amortization	142,090			138,147			137,266			135,027			133,764
Property management expense	14,888			14,824			14,529			14,372			14,561
General and administrative	16,679			17,972			14,426			14,228			15,375
Impairment and other	(3,974		)	1,723			(180		)	3,127			6,940
Gain on sale of property, net of tax	(13,121		)	(15,106		)	(11,167		)	(15,200		)	(31,780		)
Unrealized gains on investments in equity securities	(29,689		)	—			—			(34		)	—
Other, net	2,087			3,049			(1,370		)	(3,680		)	(3,130		)
NOI (total portfolio)	295,472			281,187			282,753			282,873			276,701
Non-Same Store NOI	(28,260		)	(25,903		)	(24,056		)	(20,602		)	(20,454		)
Same Store NOI	$	267,212		$	255,284		$	258,697		$	262,271		$	256,247

Reconciliation of Net Income to NOI and Same Store NOI, Full Year
(in thousands) (unaudited)
	FY 2020			FY 2019
Net income available to common stockholders	$	195,764		$	145,068
Net income available to participating securities	448			395
Non-controlling interests	1,237			1,648
Interest expense	353,923			367,173
Depreciation and amortization	552,530			533,719
Property management expense	58,613			61,614
General and administrative	63,305			74,274
Impairment and other	696			18,743
Gain on sale of property, net of tax	(54,594		)	(96,336		)
Unrealized gains on investments in equity securities	(29,723		)	(6,480		)
Other, net	86			(5,120		)
NOI (total portfolio)	1,142,285			1,094,698
Non-Same Store NOI	(98,821		)	(88,018		)
Same Store NOI	$	1,043,464		$	1,006,680

Reconciliation of Net Income to EBITDA, EBITDAre, and Adjusted EBITDAre
(in thousands, unaudited)
	Q4 2020			Q4 2019			FY 2020			FY 2019
Net income available to common stockholders	$	70,586		$	51,903		$	195,764		$	145,068
Net income available to participating securities	113			89			448			395
Non-controlling interests	431			562			1,237			1,648
Interest expense	95,382			88,417			353,923			367,173
Depreciation and amortization	142,090			133,764			552,530			533,719
EBITDA	308,602			274,735			1,103,902			1,048,003
Gain on sale of property, net of tax	(13,121		)	(31,780		)	(54,594		)	(96,336		)
Impairment on depreciated real estate investments	376			2,921			4,578			14,210
EBITDAre	295,857			245,876			1,053,886			965,877
Share-based compensation expense	4,797			4,311			17,090			18,158
Merger and transaction-related expenses	—			—			—			4,347
Severance	213			240			601			8,465
Casualty (gains) losses, net	(4,350		)	4,019			(3,882		)	4,533
Unrealized gains on investments in equity securities	(29,689		)	—			(29,723		)	(6,480		)
Other, net	2,087			(3,130		)	86			(5,120		)
Adjusted EBITDAre	$	268,915		$	251,316		$	1,038,058		$	989,780

Reconciliation of Net Debt / TTM Adjusted EBITDAre
(in thousands, except for ratio) (unaudited)
	As of			As of
	December 31, 2020			December 31, 2019
Mortgage loans, net	$	4,820,098		$	6,238,461
Secured term loan, net	401,095			400,978
Term loan facility, net	2,470,907			1,493,747
Revolving facility	—			—
Convertible senior notes, net	339,404			334,299
Total Debt per Balance Sheet	8,031,504			8,467,485
Retained and repurchased certificates	(247,526		)	(319,632		)
Cash, ex-security deposits and letters of credit ^(1)	(250,204		)	(138,059		)
Deferred financing costs, net	43,396			36,685
Unamortized discounts on note payable	7,885			13,342
Net Debt (A)	$	7,585,055		$	8,059,821
	For the Trailing Twelve			For the Trailing Twelve
	Months (TTM) Ended			Months (TTM) Ended
	December 31, 2020			December 31, 2019
Adjusted EBITDAre (B)	$	1,038,058		$	989,780
Net Debt / TTM Adjusted EBITDAre (A / B)	7.3		x	8.1		x

1. Represents cash and cash equivalents and the portion of restricted cash that excludes security deposits and letters of credit.