Invitation Homes 2026 Q2 Earnings Call

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

Joining me today from Invitation Homes are Dallas Tanner, our President and Chief Executive Officer, Tim Lobner, our Chief Operating Officer, John Olson, our Chief Financial Officer, and Scott Ison, our Chief Investment 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 second quarter 2026 earnings release and supplemental information. We issued this document yesterday afternoon after the market closed, and it is 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.

Go ahead, Dallas. Thanks, Scott, and good morning, everyone.

It's been a busy peak season for us. Before getting into the quarter, I want to thank our residents for the trust they keep placing in us and our field teams for how they've handled the pace. Together, we delivered a strong second quarter. Average occupancy held above 97%. New lease rate growth accelerated for the sixth month in a row, and we grew core FFO per share by 5% and AFFO per share by just under 6%. Tim and John will get into the details, but it's a great foundation heading into the second half of the year. I'll kick off my comments by talking about the 21st Century Road to Housing Act. The law was enacted earlier this month, providing greater clarity for our business and the broader housing industry.

Among other things, the act includes some meaningful provisions into speeding up and encouraging new construction. That's a goal we fully support, since we've long known that better housing affordability is achieved by increasing new supply. In fact, that's been precisely our approach at Invitation Homes, growing through new construction and home builder partnerships. We're pleased that the law lets us keep doing what we do best, offering a valuable housing solution to the millions of Americans who choose to lease while helping deliver the new supply this country needs. That commitment goes well beyond supply. For our residents, that means continuing free positive credit reporting, helping them build credit simply by paying their rent on time. For policymakers, it means staying closely engaged with Treasury and HUD and others as these new regulatory guidances take further shape. Beyond the legislative backdrop, demand for our homes remains healthy.

According to the latest data from John Burns, on average, it's over $1,000 per month cheaper to lease today than to own a similar house in our markets. Based on our average resident tenure of just now over 40 months, that adds up to more than $40,000 in total savings for a typical family. That is a compelling value proposition, along with favorable demographics and the convenience of leasing will continue to support our demand. Turning now to capital allocation. The story during the second quarter was similar to the first quarter. Stock repurchases remained among the most attractive uses of our capital. During the second quarter, we bought back another $100 million of stock, which brings us to $600 million in stock repurchased since December at an average price of a little over $26 per share.

These share repurchases have been funded in large part by home sales priced well above where the public market is valuing our assets. We are also starting to see early signs of a thaw on the acquisition side. Deal flow has been relatively stagnant over the first 6 months of 2026, thanks to the legislative uncertainty. With the Road to Housing Act now settled, more sellers are coming to market, including some attractive smaller portfolios. It's still early, but encouraging, since it gives us another lever for accretive capital deployment. Similarly, we see opportunities in our development and our lending channels. ResiBuilt's pipeline has re-accelerated following some disruption earlier this year when the bill was still in flux. On the lending side, construction loan commitments, including some still in diligence, now total just under $350 million, with about 10% of that funded so far.

As a reminder, these loans typically yield in the high single digits and give us the opportunity to purchase the community once they're built. Zooming out, at our Investor Day last November, we talked about building the best-run SFR platform in the country. It's disciplined on cost and capital, but also focused on the resident experience. That discipline has been on full display in 3 ways so far this year. First, capital allocation, selling homes at a premium, redeploying that capital into accretive opportunities. Second, growth, supporting our platform through the acquisition of ResiBuilt and the expansion of our construction lending business. Third, in resident satisfaction, reflected in the renewal and retention numbers Tim will walk through shortly. In short, we're doing exactly what we said we were going to do.

Combined with what Tim and John are about to cover, our first-half performance gave us confidence to raise our full-year guidance. I'll let John cover the specifics here. The takeaway is that Invitation Homes continues to generate strong and stable cash flows, selling homes at a premium to where the market is valuing our assets and recycling that capital creatively create value for our shareholders.

Tim, over to you. Thanks, Dallas, and good morning, everyone.

I'll start with the headline. New lease rate growth accelerated every month, January through June, capping off peak leasing season on a high note. Our second quarter same-store renewal rate was approximately 77%. An average length of stay for our residents remained over 40 months. The data points reflect high level of resident satisfaction with both our homes and our service. Turning now to our second quarter same-store results. NOI grew 1.5% year-over-year, driven by 1.6% core revenue growth, core operating expense growth of just 1.9%. I'll touch on a few more details behind each of those items. On the revenue side, renewal rent growth rose through the quarter from just over 3% in April and May to 3.7% in June, averaging 3.3% for the second quarter.

Second quarter new lease rent growth was 1.1%, combined, that resulted in second quarter blended lease rent growth of 2.7%. Turnover improved 50 basis points year-over-year to 5.7%, and average occupancy for the quarter landed at 97.1%. Both strong results for the summer season. On the expense side, the best news is on the controllables, where expenses we manage on a day-to-day basis were down 1% year-over-year. It's a really good reflection how our teams are running the business. Fixed costs, including property taxes and insurance, increased by only 3.5% year-over-year. We're pleased to see both controllable and fixed expenses tracking in line with our expectations year to date. Supply backdrop across our markets is telling a similar story. Build-to-rent deliveries have continued to decline.