Press Release

Invitation Homes Reports Second Quarter 2017 Results

Company Release - 8/10/2017 7:01 AM ET

DALLAS, Aug. 10, 2017 /PRNewswire/ -- Invitation Homes Inc. (NYSE: INVH) ("Invitation Homes" or the "Company"), a leading owner and operator of single-family homes for lease in the United States, today announced its second quarter 2017 financial and operating results.

Second Quarter 2017 Highlights

  • Year-over-year, total revenues increased 5.1% to $242 million, total property operating and maintenance expenses increased 1.7% to $93 million, net income increased to $6 million, and total NOI increased 7.3% to $149 million.
  • Same Store NOI grew 6.3% year-over-year on 4.6% Same Store revenue growth and 1.9% Same Store operating expense growth. Excluding the impact of property taxes attributable to first quarter 2017 that were booked in second quarter 2017 when California property tax reassessments related to the IPO became estimable, Same Store NOI growth in second quarter 2017 would have been 6.9%.
  • Same Store Core NOI margin increased to 62.9% in the second quarter of 2017 from 61.5% in the second quarter of 2016. Excluding the impact of property taxes attributable to first quarter 2017 that were booked in second quarter 2017 when California property tax reassessments related to the IPO became estimable, Same Store Core NOI margin in second quarter 2017 would have been 63.2%.
  • Same Store blended net effective rental rate growth was 5.1% on leases signed in the second quarter of 2017.
  • Same Store average occupancy was 95.9%.
  • Same Store other property income grew 22.4% year-over-year.
  • Closed on a $1.0 billion, ten-year, 4.2% fixed rate mortgage loan, with principal and interest payments guaranteed by Fannie Mae.
  • Prepaid $930 million of mortgage debt with Fannie Mae proceeds, and an additional $100 million with excess cash flow.

Chief Executive Officer John Bartling comments:  "Invitation Homes continued to achieve strong internal NOI growth in the second quarter of 2017.  As expected, new lease rental rate growth accelerated seasonally from the first quarter to the second quarter.  In addition, we continued to make progress on our strategic operational initiatives related to lease expiration optimization, other income opportunities, and cost efficiency."

"Supply/demand fundamentals remain favorable, particularly in the Western US, and we believe our differentiated locations, product, service, and professionals position us well to capitalize on these industry tailwinds.  We remain on track to achieve 6.5% to 7.5% Same Store NOI growth for the full year."

Financial Results

Net Income (Loss), FFO, Core FFO, and AFFO Per Share — Diluted

















Q2 2017






YTD 2017






Net income (loss) (1)


$

0.02







$

(0.06)







FFO (2)


0.20







0.23







Core FFO (2)


0.25







0.50







AFFO (2)


0.21







0.43























(1)

No shares of common stock were outstanding prior to the close of the Company's initial public offering.  As such, net loss per share for YTD 2017 has been calculated based on operating results for the period February 1, 2017 through June 30, 2017, and the weighted average number of shares outstanding during that period, in accordance with GAAP.

(2)

FFO, Core FFO, and AFFO per share for YTD 2017 have been calculated based on operating results for the full period from January 1, 2017 through June 30, 2017, and as if weighted average shares outstanding from February 1, 2017 through June 30, 2017 were outstanding for the full period from January 1, 2017 through June 30, 2017.

Net Income (Loss)
Net income for the three months ended June 30, 2017 was $5.5 million, an increase of $25.2 million from the prior year's net loss.  The increase in net income (loss) was primarily due to higher revenues, lower interest expense, and an increase in net gain on sale of property, partially offset by higher total operating expenses.  The increase in total operating expenses included a $4.1 million increase in non-recurring G&A and property management expense items including share-based compensation, IPO costs, and severance expense.  Exclusive of these non-recurring G&A and property management items, net income (loss) improved by $29.3 million from the prior year.

Net loss for the six months ended June 30, 2017 was $36.9 million, an increase of $7.2 million from the prior year.  The increase in net loss was primarily due to a $51.0 million increase in non-recurring or non-cash general and administrative and property management items including share-based compensation, IPO costs, and severance expense.  Exclusive of non-recurring G&A and property management items, net income (loss) improved by $43.7 million from the prior year, primarily due to higher revenues, lower interest expense, and an increase in net gain on sale.  For details, see the Condensed Consolidated Statements of Operations in this press release.

Core FFO
Year-over-year, Core FFO for the three months ended June 30, 2017 increased 17.9% to $77.2 million, primarily due to an increase in NOI, driven by higher revenues.  Revenue growth was driven by an increase in average rental rate per home that more than offset a slight decline in home count.  Lower interest expense, net of non-cash interest, also contributed to the increase in Core FFO.  For a reconciliation of net income (loss) to Core FFO, see the Glossary and Reconciliations section of this press release.

Core FFO for the six months ended June 30, 2017 increased 19.7% to $155.4 million, primarily due to an increase in NOI, driven by higher revenues.  Revenue growth was driven by an increase in average rental rate per home and higher occupancy that more than offset a slight decline in home count.  Lower interest expense, net of non-cash interest, also contributed to the increase in Core FFO.  For a reconciliation of net income (loss) to Core FFO, see Schedule 1 of the Supplemental Financial Information.

AFFO
Year-over-year, AFFO for the three months ended June 30, 2017 increased 21.5% to $65.6 million, primarily driven by the increase in Core FFO described above. 

AFFO for the six months ended June 30, 2017 increased 25.9% to $134.5 million, primarily driven by the increase in Core FFO described above, as well as a 9.0% decline in recurring capital expenditures.  For a reconciliation of net income (loss) to AFFO per share, see Schedule 1 of the Supplemental Financial Information.

Operating Results

Same Store Operating Results Snapshot











Number of homes in Same Store portfolio:


42,904




















Q2 2017


Q2 2016


YTD 2017


YTD 2016


Revenue growth (year-over-year) (1)


4.6%


5.1%


4.7%


5.1%


Operating Expense growth (year-over-year) (1)


1.9%


0.4%


2.4%


1.5%


NOI growth (year-over-year) (1)


6.3%


8.4%


6.1%


7.4%


Core NOI margin


62.9%


61.5%


63.6%


62.4%












Average occupancy (2)


95.9%


96.4%


95.8%


96.4%


Turnover rate (annualized)


38.7%


38.8%


35.2%


34.9%












Net effective rental rate growth (lease-over-lease):










New leases


4.9%


7.2%


4.2%


6.1%


Renewals


5.1%


5.4%


5.2%


5.3%


Blended


5.1%


6.2%


4.8%


5.6%














(1)

Same Store revenue, operating expense, and NOI growth for Q2 2016 and YTD 2016 are for the prior year's same store pool of 36,469 homes.

(2)

For the total portfolio, occupancy decreased to 95.0% in Q2 2017 from 95.1% in Q2 2016, and increased to 95.0% in YTD 2017 from 94.8% in YTD  2016.

Same Store NOI
For the Same Store portfolio of 42,904 homes, second quarter 2017 Same Store NOI increased 6.3% year-over-year on Same Store revenue growth of 4.6% and Same Store expense growth of 1.9%.  As a result, Core NOI margin increased to 62.9% in the second quarter of 2017 from 61.5% in the second quarter of 2016.  Excluding the impact of property taxes attributable to first quarter 2017 that were booked in second quarter 2017 when California property tax reassessments related to the IPO became estimable, Same Store NOI growth in second quarter 2017 would have been 6.9%, and Same Store Core NOI margin would have been 63.2%.

YTD 2017 Same Store NOI increased 6.1% year-over-year on Same Store revenue growth of 4.7% and Same Store expense growth of 2.4%.  As a result, Core NOI margin increased to 63.6% in YTD 2017 from 62.4% in YTD 2016.

Same Store Revenues
Second quarter 2017 Same Store revenue growth of 4.6% was driven by a 4.3% increase in average monthly rent and a 22.4% increase in other property income, partially offset by a 0.5% decline in average occupancy to 95.9%.

YTD 2017 Same Store revenue growth of 4.7% was driven by a 4.4% increase in average monthly rent and a 22.3% increase in other property income, partially offset by a 0.6% decline in average occupancy to 95.8%.

Same Store Expenses
Second quarter 2017 Same Store expenses increased 1.9% year-over-year, driven primarily by 11.3% higher property taxes.  California property tax reassessments related to the IPO became estimable in second quarter 2017, and the incremental taxes accrued in the first six months of 2017 for expected reassessments were booked entirely in second quarter 2017.  Excluding the impact of property taxes attributable to first quarter 2017 that were booked in second quarter 2017, Same Store property taxes in second quarter 2017 would have increased by 9.1%, and Same Store expenses would have increased by 1.0%.  Controllable expenses were 3.9% lower year-over-year, driven primarily by an 18.8% decline in personnel expense.  Insurance expense was also lower by 23.8% year-over-year.

YTD 2017 Same Store expenses increased 2.4% year-over-year, driven primarily by 9.2% higher property taxes.  Controllable expenses were 1.9% lower year-over-year, driven primarily by a 17.4% decline in personnel costs.  Insurance expense was also lower by 17.8% year-over-year.

Investment Management Activity
In the second quarter of 2017, the Company acquired 229 homes for $64.1 million, including estimated renovation cost, and sold 422 homes for gross proceeds of $58.7 million, resulting in total portfolio home count at June 30, 2017 of 47,725 homes.  Dispositions in the second quarter of 2017 resulted in a gain on sale, net of tax, of approximately $10.2 million.

Year-to-date, the Company acquired 350 homes for $95.3 million, including estimated renovation cost, and sold 923 homes for gross proceeds of $136.4 million.  Dispositions year-to-date resulted in a gain on sale, net of tax, of approximately $24.5 million.

Balance Sheet and Capital Markets Activity
At June 30, 2017, the Company had $1,159 million in availability through a combination of unrestricted cash and undrawn capacity on its credit facility.

The Company's total indebtedness at June 30, 2017 was $5,681 million, consisting of $4,181 million of secured debt and $1,500 million of unsecured debt.  Weighted average years to maturity at quarter end was 4.5 years, with no debt scheduled to mature before September 2019.  80% of debt at quarter end was fixed rate or swapped to fixed rate, and the weighted average interest rate on total debt during the quarter was 3.7%.

During the quarter, as previously announced, the Company closed a ten-year fixed rate securitization loan with a total principal amount of $1,000 million.  The securitization loan is comprised of two components.  Class A certificates representing an indirect interest in the Class A component of the loan, which totaled $944.5 million and represented the entirety of the gross proceeds to the Company, were offered to investors, and feature principal and interest payments that benefit from a guaranty by Fannie Mae.  Class B certificates representing an interest in the Class B component of the loan, which totaled $55.5 million, were retained by the Company to comply with the United States risk retention requirements.  The total cost of funds for the loan is fixed at 4.23%.  Structural features of the transaction include the right to substitute properties (subject to certain loan to value, debt service coverage, and geographic concentration tests being met), as well as the right to release properties from the loan by prepaying the loan in an amount equal to 105% to 120% of the allocated loan amount associated with any properties released (subject to certain loan to value, debt service coverage, and geographic concentration tests being met, as well as the payment of any yield maintenance amounts required).  Additionally, twice during the first five years of the loan, the Company will have the ability to exercise special release rights to release properties from the collateral pool (without any prepayment of the underlying loan) to reset the size of the collateral pool based on asset appreciation and cash flow growth.  Following any such special release, the allocated loan amounts related to the remaining homes in the collateral pool will be resized based on loan-level loan to value and debt service coverage tests, and the remaining collateral pool must continue to meet certain geographic concentration tests.  Net proceeds of approximately $930 million were used to repay the remaining outstanding balance of the IH1 2014-1 securitization and to voluntarily prepay $510 million of the IH1 2014-3 securitization.

In addition, as previously announced, the Company repaid an additional $100 million of the IH1 2014-3 securitization with cash on hand in June 2017.

Full Year 2017 Guidance

2017 Guidance (1)









FY 2017






Guidance




Core FFO per share – diluted (2)


$0.96 - $1.04




AFFO per share – diluted (2)


$0.80 - $0.88










Same Store revenue growth


4.75% - 5.25%




Same Store operating expense growth


1.50% - 2.00%




Same Store NOI growth


6.50% - 7.50%




Same Store Core NOI margin


63.0% - 64.0%












(1)

Guidance excludes any potential impact from investment activity.

(2)

Core FFO and AFFO guidance is for operating results for the full year from January 1, 2017 through December 31, 2017, and assumes that estimated weighted average shares outstanding from February 1, 2017 through December 31, 2017 were outstanding for the full year 2017.


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, or a reconciliation of the forward-looking non-GAAP financial measures of Core FFO per share, AFFO per share, Same Store revenue growth, Same Store operating expense growth, Same Store NOI growth, and Same Store Core NOI margin 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.

Supplemental Information
The full text of the Earnings Release and Supplemental Information are available on Invitation Homes' Investor Relations website at ir.invitationhomes.com.

Glossary & Reconciliations of Non-GAAP Financial Operating Measures
Financial and operating measures found in the Earnings Release and the 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 in the Supplemental Information and, as applicable, reconciled to the most comparable GAAP measures.

About Invitation Homes
Invitation Homes is a leading owner and operator of single-family homes for lease, offering residents high-quality homes in desirable neighborhoods across America. With nearly 50,000 homes for lease in 13 markets across the country, Invitation Homes is meeting changing lifestyle demands by providing residents access to updated homes with features they value, 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 high-touch service that continuously enhances residents' living experiences and provides homes where individuals and families can thrive.

Investor Relations Contact
Greg Van Winkle
Phone: 844.456.INVH (4684)
Email: IR@InvitationHomes.com

Media Relations Contact
Claire Parker
Phone: 202.257.2329
Email: Media@InvitationHomes.com

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") 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," "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 sector and the Company's business model, macroeconomic factors beyond the Company's  control, competition in identifying and acquiring the Company's properties, competition in the leasing market for quality residents, increasing property taxes, homeowners' association fees and insurance costs, the Company's dependence on third parties for key services, risks related to evaluation of properties, poor resident selection and defaults and non-renewals by the Company's residents, performance of the Company's information technology systems, and risks related to the Company's indebtedness. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements.  Additional factors that could cause the Company's results to differ materially from those described in the forward-looking statements can be found under the section entitled "Part I-Item 1A. Risk Factors," of the Annual Report on Form 10-K for the fiscal year ended December 31, 2016, 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 filings with the SEC. The forward-looking statements speak only as of the date of this press release, 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.

Condensed Consolidated Balance Sheets

($ in thousands, except per share amounts)














June 30,


December 31,




2017


2016




(unaudited)




Assets:






Investments in single-family residential properties:






Land


$

2,716,934



$

2,703,388



Building and improvements


7,116,587



7,091,457





9,833,521



9,794,845



Less: accumulated depreciation


(917,961)



(792,330)



Investments in single-family residential properties, net


8,915,560



9,002,515



Cash and cash equivalents


158,934



198,119



Restricted cash


138,264



222,092



Other assets, net


306,568



309,625



Total assets


$

9,519,326



$

9,732,351









Liabilities:






Mortgage loans, net


$

4,158,666



$

5,254,738



Term loan facility, net


1,486,529





Credit facilities, net




2,315,541



Accounts payable and accrued expenses


110,919



88,052



Resident security deposits


88,781



86,513



Other liabilities


30,460



30,084



Total liabilities


5,875,355



7,774,928









Equity:






Shareholders' equity






Preferred stock, $0.01 par value per share, 900,000,000 shares authorized, none outstanding at June 30, 2017






Common stock, $0.01 par value per share, 9,000,000,000 shares authorized, 310,376,634 outstanding at June 30, 2017


3,104





Additional paid-in-capital


3,675,094





Accumulated deficit


(38,799)





Accumulated other comprehensive income


4,572





Total shareholders' equity


3,643,971





Combined equity




1,957,423



Total equity


3,643,971



1,957,423



Total liabilities and equity


$

9,519,326



$

9,732,351









 

Condensed Consolidated Statements of Operations

($ in thousands, except per share amounts) (unaudited)













Q2 2017


Q2 2016


YTD 2017


YTD 2016


Revenues:










Rental revenues


$

228,504



$

219,354



$

454,600



$

433,677



Other property income


13,712



11,142



26,366



21,321



Total revenues


242,216



230,496



480,966



454,998













Operating expenses:










Property operating and maintenance


92,840



91,281



181,008



176,248



Property management expense


9,135



7,530



20,584



14,923



General and administrative


18,426



15,408



76,692



30,768



Depreciation and amortization


67,515



66,079



135,092



131,781



Impairment and other


706



546



1,910



363



Total operating expenses


188,622



180,844



415,286



354,083



Operating income


53,594



49,652



65,680



100,915













Other income (expenses):










Interest expense


(57,358)



(70,523)



(125,930)



(140,800)



Other, net


(869)



185



(1,095)



32



Total other income (expenses)


(58,227)



(70,338)



(127,025)



(140,768)













Loss from continuing operations


(4,633)



(20,686)



(61,345)



(39,853)



Gain on sale of property, net of tax


10,162



1,020



24,483



10,212













Net income (loss)


$

5,529



$

(19,666)



$

(36,862)



$

(29,641)





























February 1, 2017










through






Q2 2017




June 30, 2017














Net income (loss) available to common shareholders — basic and diluted


$

5,420





$

(20,092)















Weighted average common shares outstanding — basic


311,771,221





311,723,463





Weighted average common shares outstanding — diluted


312,271,578





311,723,463















Net income (loss) per common share — basic


$

0.02





$

(0.06)





Net income (loss) per common share — diluted


$

0.02





$

(0.06)















Dividends declared per common share


$

0.06





$

0.06















Glossary and Reconciliations

Glossary:

Average Estimated Invested Basis
Average estimated cost basis on acquisition represents the sum of purchase price, any closing adjustments, and estimated upfront renovation expense for an acquired home or population of homes.

Average Monthly Rent
Average monthly rent represents the average of the contracted monthly rent for occupied properties in an identified population of homes for the relevant period and reflects rent concessions amortized over the life of the related lease.

Average Occupancy
Average occupancy for an identified population of homes represents (i) the number of days that the homes available for lease in such population were occupied, divided by (ii) the total number of available days in the measurement period for the homes in that population.

Core NOI Margin
Core NOI margin for an identified population of homes is calculated by dividing NOI by total revenues, net of resident recoveries attributable to such population.

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 the National Association of Real Estate Investment Trusts ("NAREIT") as net income or loss (computed in accordance with GAAP) excluding net 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.

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, as well as gains or losses related to sales of previously depreciated homes, from GAAP net income or loss.

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 provides 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 noncash interest expense related to amortization of deferred financing costs and discounts related to our financing arrangements, noncash interest expense for derivatives, share-based compensation expense, offering related expenses, severance expenses, casualty losses, net, and acquisition costs, as applicable. We define Adjusted FFO as Core FFO less recurring capital expenditures that are necessary to help preserve the value of and maintain 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. Accordingly, there can be no assurance that our basis for computing this non-GAAP measures is comparable with that of other companies.

Please see "Reconciliation of Non-GAAP measures" below for a reconciliation of GAAP net income (loss) to FFO, Core FFO, and Adjusted FFO.

Net Effective Rental Rate Growth
Net effective rental rate growth for any home represents the difference between the monthly rent from an expiring lease and the monthly rent from the next lease, in each case, net of any amortized concessions. 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.  Blended net effective rental rate growth represents the blended average of net effective rental rate growth for both new and renewal leases.

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). NOI excludes: interest expense; depreciation and amortization; general and administrative expense; property management expense; impairment and other; acquisition costs; (gain) loss on sale of property, net of tax; and interest income and other miscellaneous 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.

Same Store / Same Store Portfolio
Same Store or Same Store portfolio includes, for a given reporting period, homes that have been stabilized (defined as homes that have (i) completed an upfront renovation and (ii) entered into at least one post-renovation Invitation Homes lease) for at least 90 days prior to the first day of the prior-year measurement period and excludes homes that have been sold and homes that have been designated for sale but have not yet entered into a written sale agreement during such reporting period. Same Store portfolios are established as of January 1st of each calendar year. Therefore, any home included in the Same Store portfolio will have satisfied the conditions described in clauses (i) and (ii) above prior to October 3rd of the year prior to the first year of the comparison period. 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 we own, 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. To the extent the measurement period shown is less than 12 months, the turnover rate will be reflected on an annualized basis.

Reconciliation of Non-GAAP Measures:

Reconciliation of Net Income (Loss) to FFO, Core FFO, and AFFO

($ in thousands, except per share amounts) (unaudited)












FFO Reconciliation


Q2 2017


Q2 2016


YTD 2017


YTD 2016


Net income (loss) available to common shareholders


$

5,420



$

(19,666)



$

(36,971)



$

(29,641)



Net income (loss) available to participating securities


109





109





Depreciation and amortization on real estate assets


66,699



64,775



133,352



129,184



Impairment on depreciated real estate investments


95



519



1,132



519



Net gain on sale of previously depreciated investments in real estate


(10,162)



(1,020)



(24,483)



(10,212)



FFO


$

62,161



$

44,608



$

73,139



$

89,850













Core FFO Reconciliation


Q2 2017


Q2 2016


YTD 2017


YTD 2016


FFO


$

62,161



$

44,608



$

73,139



$

89,850



Noncash interest expense


5,137



15,622



20,271



29,816



Share-based compensation expense


8,216



4,106



52,460



8,312



Offering related expenses


656





8,287





Severance expense


392



1,102



437



1,908



Casualty losses, net


611



27



778



(156)



Acquisition costs




7





42



Core FFO


$

77,173



$

65,472



$

155,372



$

129,772













AFFO Reconciliation


Q2 2017


Q2 2016


YTD 2017


YTD 2016


Core FFO


$

77,173



$

65,472



$

155,372



$

129,772



Recurring capital expenditures


(11,605)



(11,495)



(20,834)



(22,907)



AFFO


$

65,568



$

53,977



$

134,538



$

106,865













Weighted average common shares outstanding — diluted (1)


312,271,578





311,723,463















FFO per share — diluted (1)


$

0.20





$

0.23





Core FFO per share — diluted (1)


$

0.25





$

0.50





AFFO per share — diluted (1)


$

0.21





$

0.43

















(1)

No shares of common stock were outstanding prior to the close of the Company's initial public offering.  For YTD 2017, FFO, Core FFO, and AFFO per share have been calculated based on operating results for the full period from January 1, 2017 through June 30, 2017, and as if weighted average shares outstanding from February 1, 2017 through June 30, 2017 were outstanding for the full period from January 1, 2017 through June 30, 2017.

 

Reconciliation of Total Revenues to Same Store Total Revenues and Same Store Core Revenues

(in thousands) (unaudited)

















Q2 2017


Q2 2016




YTD 2017


YTD 2016




Total revenues (total portfolio)


$

242,216



$

230,496





$

480,966



$

454,998





Non-Same Store total revenues


(22,578)



(20,482)





(45,456)



(38,886)





Total revenues (Same Store portfolio)


219,638



210,014





435,510



416,112





Resident recoveries (Same Store portfolio)


(3,873)



(2,446)





(7,336)



(4,877)





Core revenues (Same Store portfolio)


$

215,765



$

207,568





$

428,174



$

411,235



















 

Reconciliation of Property Operating and Maintenance to Same Store Operating Expenses and Same Store Core Operating Expenses

(in thousands) (unaudited)

















Q2 2017


Q2 2016




YTD 2017


YTD 2016




Property operating and maintenance expenses (total portfolio)


$

92,840



$

91,281





$

181,008



$

176,248





Non-Same Store operating expenses


(8,855)



(8,841)





(17,884)



(16,937)





Operating expenses (Same Store portfolio)


83,985



82,440





163,124



159,311





Resident recoveries (Same Store portfolio)


(3,873)



(2,446)





(7,336)



(4,877)





Core operating expenses (Same Store portfolio)


$

80,112



$

79,994





$

155,788



$

154,434



















 

Reconciliation of Net Income (Loss) to NOI, Same Store NOI, and Same Store Core NOI Margin

(in thousands) (unaudited)














Q2 2017


Q2 2016


YTD 2017


YTD 2016



Net income (loss) available to common shareholders


$

5,420


$

(19,666)


$

(36,971)


$

(29,641)



Net income (loss) available to participating securities


109



109




Interest expense


57,358


70,523


125,930


140,800



Depreciation and amortization


67,515


66,079


135,092


131,781



General and administrative


18,426


15,408


76,692


30,768



Property management expense


9,135


7,530


20,584


14,923



Impairment and other


706


546


1,910


363



Acquisition costs



7



42



Gain on sale of property, net of tax


(10,162)


(1,020)


(24,483)


(10,212)



Other


869


(192)


1,095


(74)



NOI (total portfolio)


149,376


139,215


299,958


278,750



Non-Same Store NOI


(13,723)


(11,641)


(27,572)


(21,949)



NOI (Same Store portfolio)


$

135,653


$

127,574


$

272,386


$

256,801














Core revenues (Same Store portfolio)


$

215,765


$

207,568


$

428,174


$

411,235



Core NOI margin (Same Store portfolio)


62.9%


61.5%


63.6%


62.4%














 

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SOURCE Invitation Homes