Invitation Homes (INVH) Nareit REIT Week: 2024 Investor Conference summary

Business and industry trends

• Single-family rental fundamentals remain strong, driven by a persistent housing supply shortage and highly qualified, long-term tenants adopting more ancillary services.

• Average customer tenure exceeds three years, with some western markets seeing over four years; occupancy stands at 97.5% with a blended rent growth rate of 5.3% in May.

• Expansion into new supply through partnerships with public, private, and regional builders is a key focus, responding to customer demand for new communities.

• Third-party management is being adopted to serve professional capital seeking a standardized operating model, with 20,000 units onboarded in six months, bringing the portfolio close to 110,000 homes.

• The company is targeting portfolios that align with its current offerings and leveraging third-party business to enhance returns on wholly owned assets.

Revenue optimization and market dynamics

• Revenue optimization balances occupancy, low turnover, and minimizing days to re-lease, with a focus on capturing loss to lease through renewals, which drive most of the blended rent growth.

• Loss to lease remains healthy but is lower than during the COVID period; occupancy and growth rates are strong compared to historical norms.

• The gap between rental costs and homeownership remains wide, supporting a long runway for rent growth, especially as housing remains undersupplied.

• Demand is driven by renters seeking affordability, good school districts, and safe communities, with renting offering flexibility and financial advantages.

• New build-for-rent supply has not dampened rent growth; demand remains high, especially for well-located, new single-family homes.

Customer profile and product strategy

• Tenants increasingly have higher incomes and credit scores, with positive credit reporting initiatives raising average scores by 30 points and moving 6% of the portfolio from subprime to prime.

• The core demographic is around 38-39 years old, with a combined household income of $140,000 and a rent-to-income ratio of 5.6x.

• Builder partnerships enable forward purchases of homes, with internal data and scorecards used to assess acquisitions and ensure alignment with target customer profiles.