Invitation Homes Inc. Common Stock 2026 Q3 Earnings Call

Please go ahead. Thank you, operator, and good morning.

On the call today, we'll hear from Dallas Tanner, our President and Chief Executive Officer, Tim Lobner, our Chief Operating Officer, and Jon Olsen, our Chief Financial Officer. Following our prepared remarks, we'll open the line for questions from our covering sell-side analysts. During today's call, we may reference our third quarter 2026 earnings release and supplemental information. We issued this document yesterday afternoon after the market closed, and it's available on the investor relations section of our website at www.invh.com. Certain statements we make during this call may include forward-looking statements relating to the future performance of our business, financial results, liquidity and capital resources, and other non-historical statements, which are subject to risks and uncertainties that could cause actual outcomes or results to differ materially from those indicated.

We describe some of these risks and uncertainties in our 2025 annual report on Form 10-K and other filings we make with the SEC from time to time. Except to the extent otherwise required by law, we do not update forward-looking statements and expressly disclaim any obligation to do so. We may also discuss certain non-GAAP financial measures during the call. You can find additional information regarding these non-GAAP measures, including reconciliations to the most comparable GAAP measures, in yesterday's earnings release. With that, I'll turn the call over to Dallas Tanner.

Please begin, Dallas. Thank you, Scott, and good morning, everyone.

Since our Investor Day last November, we've been focusing on executing the plan we laid out while serving residents better, running more efficiently, and allocating capital in ways that create the most value for stockholders. It's been an eventful year, and I want to thank our associates for staying focused on our residents. Helping families find quality homes they can afford is common ground for us, for policymakers, and most importantly, for our residents. Last week, Treasury released proposed regulations under the 21st Century ROAD to Housing Act that are now open for public comment. Our preliminary read is that the framework is workable, generally in line with what Congress intended. We're reviewing the details and will remain engaged in the comment process. Millions of American families rely on leasing a single-family home.

It's important they continue to have that flexible and affordable choice. Through it all, our associates delivered another solid quarter. Same-store blended rent growth came in at 3%, our best quarter of the year, with renewals at 4.3%. We also grew Core FFO per share 2.4% to $0.48. This performance reflects a resilient business and a team that delivers. Part of this resilience comes from healthy demand for our homes. Based on John Burns data and weighted to our markets, as of September, it was on average over $1,000 a month cheaper to lease a home than own one. As mortgage rates rise, that gap likely widens. With our average resident staying with us for more than 41 months, this adds up to savings of over $42,000. That's money a family could put toward a down payment on a home of their own if they should so choose.

Nowhere is our discipline clearer than in how we've allocated capital this past year. As you've seen, we've sold a substantial number of homes on the open market this year, mostly to families buying for their own use. These sales give us real-time read on both value and demand. Since December of last year, our average gross sales price has been approximately $460,000 per home. Meanwhile, at the prices at which we've been buying back our own stock, the market is valuing our homes at only $280,000 each. It's one thing to say our stock is undervalued, it's another to act on it again and again. That's what we've done. This past year, we've repurchased nearly $1 billion of our stock, which represents 6% of our shares outstanding, funded in large part by proceeds from home sales.

Against our revised full-year disposition guidance midpoint of $950 million, we've already sold $833 million through September. We've been pleased with the execution to date. In fact, we believe that we've bought back more stock this past year than any other residential REIT. In addition, the new $500 million repurchase program our board just authorized, we intend to keep funding buybacks with home sale proceeds whenever our stock trades at a meaningful discount to the value of our homes, guided by market conditions and a disciplined approach to the balance sheet. In summary, our business remains healthy, and leasing offers real value that our residents appreciate. We're focused on earning their trust every day with the same discipline we bring to allocating capital. With that, I'll hand it over to Tim to discuss our operating results.

Thanks, Dallas, and good morning, everyone. The story this quarter is renewal strength, partly offset by softer new lease growth, with fundamentals that remain supportive as we head into year-end. During the third quarter, our teams delivered same-store NOI growth of 1.1% year-over-year. That reflects core revenue growth of 1.6%, tempered by core operating expense growth of 2.5%. Breaking that down, let me cover revenue first, where rent growth was the key driver.

Blended rent growth was 3% in the third quarter, up from 2.7% in the second quarter and 1.6% in the first, representing sequential improvement in each quarter of 2026 year to date. Looking at the components, rent growth is driven largely by renewals. Renewal rents grew 4.3% in the third quarter, a full point above the second quarter. New lease rent growth was negative 0.2%, or 50 basis points better than last year. That is down from positive 1.2% in the second quarter, but in line with normal seasonal patterns. Together, those produced the 3% blend in the third quarter. Beyond rent growth, average monthly rent grew 1.8% year over year. Turnover edged down 10 basis points to 6.2%, and occupancy averaged 96.4% for the quarter. Let me add some additional color, beginning with supply. Supply from large single-family rental operators has been moderating.

According to John Burns data, listings were down 13% year over year in August, including declines in our three largest markets of Atlanta, Tampa, and Phoenix. Builder rent deliveries also peaked two years ago in 2024, and Burns expects the pace to keep slowing through 2027 and 2028. That data tells part of the story. Mom-and-pop landlords matter here, too. They are harder to measure and can play a sizable role within infill neighborhoods. We are also watching the for sale side. Higher mortgage rates are contributing to greater supply in some markets, resulting in unsold homes from both accidental landlords and builders. In short, the supply picture remains mixed, and we will continue to monitor it. Though at present, we do not see any signals that warrant a change to our approach. On the demand front, conditions remain healthy.

Lead and showing volumes are meeting or beating last year's levels, and we continue to move home steadily through the re-leasing process. Turning now to expenses. Core expenses grew 2.5% in the third quarter and 3.3% year to date, which is inside our full year guidance range. Fixed expenses grew just 1.1% in the quarter as slightly lower property taxes offset higher insurance and HOA costs. Controllable expenses grew 4.9%, mostly on higher repair and utility expenses as a result of this summer's extreme heat. Now to October. Preliminary same-store results showed blended rent growth of 2.2%, slightly ahead of last year and reflecting an expected seasonal moderation from the third quarter. Within that, new lease rent growth improved 100 basis points from a year ago to negative 2.2%, and renewal rent growth was 4.2% in line with last year.

October average occupancy was 96.1%, nearly flat with a year ago. Beyond the leasing numbers, our teams continue to make progress on several of our Investor Day initiatives, including centralizing our rent collection and HOA functions. We have also advanced our resident CRM system, which lets us communicate with residents on a more personal basis. We look forward to sharing more as we get further along. As we move into the winter months, we will continue to balance occupancy with rate, with the goal of starting the new year from a strong position. Thank you to all of our teams for their hard work behind these results and for their continued efforts as we close out the year. John, over to you. Thanks, Tim.