Invitation Homes Inc. Q4 FY2025 earnings call

First, on housing affordability: Renting is an attractive alternative for many households, with about 1/3 of Americans renting since 1965. Invitation Homes provides homes for growing families, and residents save on average nearly $12,000 a year by renting. The company offers a free credit building program where over 160,000 residents are enrolled, with an average credit score increase of 50 points. Second, acquisition of ResiBuilt Homes: Accelerates in-house development capabilities, ResiBuilt has delivered over 4,000 homes since 2018, has 23 active fee built contracts with over 2,000 home starts planned for 2026 and beyond, and expands long-term supply strategy. Third, long-term objectives: Delivering attractive same-store NOI growth, allocating capital thoughtfully, using scale and technology to drive efficiencies and elevate resident experience, and maintaining a strong balance sheet. Also, operational results: 2025 had low turnover at 22.8%, average length of stay over 3 years, same-store average occupancy 96.8% (high end of guidance). Fourth quarter same-store leasing performance: Blended rent growth 1.8%, renewal rent growth 4.2% offsetting new lease rate decline. January occupancy held just under 96%, blended lease rate growth improved by 30 basis points, renewal growth roughly flat with December at about 4%, new lease rates down 4.2%.

For full year 2025, same-store NOI growth was 2.3%, driven by 2.4% core revenue growth and 2.6% core expense growth. Fourth quarter same-store NOI grew 0.7% year-over-year, with 1.7% growth in core revenues and 4% increase in core expenses. Fourth quarter blended rent growth was 1.8% (strong renewal rent growth of 4.2% offsetting 4.1% decline in new lease rates). Full year 2026 guidance for same-store NOI growth is between 0.3% and 2%, driven by same-store core revenue growth between 1.3% and 2.5% and same-store core expense growth between 3% and 4%. Core FFO for fourth quarter 2025 increased 1.3% year-over-year to $0.48 per share, full year 2025 core FFO up 1.7% to $1.91 per share. AFFO for fourth quarter 2025 was generally flat year-over-year at $0.41 per share, full year 2025 AFFO grew by 1.8% to $1.63 per share. 2026 core FFO guidance is $1.90 to $1.98 per share and AFFO is $1.60 to $1.68 per share.

Full year 2026 guidance includes same-store NOI growth between 0.3% and 2% driven by same-store core revenue growth between 1.3% and 2.5% and same-store core expense growth between 3% and 4%. Same-store core revenue growth guidance assumes average occupancy of 96.3% at midpoint, same-store blended rent growth in mid-2% range. Outlook incorporates approximately $550 million of dispositions at midpoint (primary funding source for share repurchases) and $250 million of anticipated wholly owned new home deliveries at midpoint. Core FFO guidance for 2026 is $1.90 to $1.98 per share and AFFO is $1.60 to $1.68 per share.

Certain statements include forward-looking statements subject to risks and uncertainties. Risks and uncertainties described in 2024 annual report on Form 10-K and other SEC filings. Also, property tax and insurance market dynamics could impact expenses. Regulatory landscape around housing affordability and related legislation could pose risks. Supply and demand imbalances in certain markets could affect performance.

Q: Thinking about expectations for same-store blended rent growth in mid-2% range, how does quarter-to-date track and peak leasing season play out?

A: Jon Olsen says mid-2% blend aligns with guidance, 6-7 weeks into year, peak leasing season just started, lead volume healthy but supply in some markets an issue; Tim Lobner adds supply slightly elevated in some core markets but coming down, peak season starts after Super Bowl, lead volume strong, spreads between renewal and new lease growth expected to narrow, no concessions on scatter site product, only specials on build-to-rent communities.

Q: Comments on institutional investor ban drafts, what to not see and advocate for?

A: Dallas Tanner says encouraged by policy discussions, industry hopes for clarity, BTR and new product production seen favorable, focus on affordability and homeownership transition, 16-17% of move-outs to homeownership, $1,000 cheaper to rent than own.

Q: Decision to buy shares and buyback, what's rough maximum amount without tax issues?

A: Jonathan Olsen says not getting into specifics, but see material disconnect between share price and asset value, share repurchases a compelling use of funds if shares trade at dislocated level.

Q: Commentary on expense growth assumptions, elevated numbers?

A: Jonathan Olsen says property tax 2025 favorable relative to guidance, insurance 2025 favorable creating tough comp, property market renewal for insurance, policy year runs March 1 to March 1, incorporated $0.02 per share estimate for advocacy and other costs.

Q: Follow up on blend, turnover, renewal, new lease rates, bad debt and ancillary?

A: Jonathan Olsen says turnover midpoint slightly higher than last year, renewal rate healthy but larger rental product competition leads to slightly higher turnover, days to re-resident elongated, earn-in from 2025 represents about 105 basis points, blended rent growth about 105 basis points, other income contributes 20 basis points, 40 basis point deduct for lower occupancy.

Q: January across new lease, renewal, blended rates and occupancy?

A: Tim Lobner says seen expected higher demand, lead volume stronger, new lease rent growth higher, renewal rates firm, spreads expected to narrow into spring.

Q: Property taxes, signs of differential treatment?

A: Jonathan Olsen says no differential treatment, hope property tax relief doesn't transfer costs from owner occupants to renters, property tax in Florida and Georgia has assessed value catch-up issues, structural caps in Florida.

Q: Development with ResiBuilt, need to buy more platforms?

A: Dallas Tanner says feel comfortable with ResiBuilt capability, Jay is seasoned operator, don't need to acquire other platforms, focus on managing ResiBuilt and blending/extending in right markets; Scott Eisen says acquisition of ResiBuilt advances BTR growth strategy, focused in Carolinas, Florida and Georgia.

Q: Homebuilder partnership pipeline moderating, evolution of relationships?

A: Scott Eisen says relationships strong, less aggressive in committing to future transactions due to cost of capital, still receive substantial opportunities, deal flow from builders in first 2 months of year, selective and listening to cost of capital balance.

Q: ResiBuilt as in-house development contractor, longer-term growth profile?

A: Scott Eisen says ResiBuilt is full-service GC developer, historically built for third parties and joint venture partners, will continue working in fee-based business and explore opportunities for own balance sheet when cost of capital improves.

Q: Time to double ResiBuilt's home starts?

A: Scott Eisen says too soon to speculate, just closed acquisition 5 weeks ago, still integrating, focus on current work.

Q: Homebuilders, supply-demand balance in Sunbelt, move-outs to buy?

A: Dallas Tanner says move-outs to homeownership around 16-17%, cost of ownership egregious with mortgage, property tax, insurance, builders buying down rates, low transaction volume and high inventory in MLS.

Q: Supply side, pressures alleviating?

A: Tim Lobner says supply higher than history, but transitory, build-to-rent product peak deliveries in rearview mirror, scatter site SFR from institutional and mom-and-pop, lead volume still there, average age of residents 38-39, long-term demand for product.

Q: Concessions on scattered site portfolio, renewal rates?

A: Tim Lobner says concessions not more or less than last year, typical, renewal rates hover around 4% range.