The paragraph is an introduction to Invitation Homes' Third Quarter 2024 Earnings Conference Call. The operator welcomes participants and introduces Scott McLaughlin, the Senior Vice President of Investor Relations. McLaughlin introduces the executive team present, including the CEO, President and COO, CFO, and CIO. He notes that after their prepared remarks, there will be a Q&A session with analysts. He mentions that the earnings release and supplemental information were issued the previous day and are available online. He also highlights that the call may include forward-looking statements and non-GAAP financial measures, with related risks and disclaimers noted in their SEC filings. The introduction concludes with McLaughlin handing over the call to CEO Dallas Tanner.

Dallas Tanner discusses the company's third quarter performance, highlighting their focus on maintaining high occupancy rates, controlling costs, and providing excellent resident experiences, with an average stay of nearly 38 months. He expresses gratitude for the associates' efforts, especially in helping residents affected by recent hurricanes. Tanner emphasizes the demand for flexible leasing options, noting that 110,000 households lease with their company. He is proud of their reputation as a leading single-family home leasing and management firm committed to transparency and service. The company aims to streamline home leasing comparable to car leasing or vacation home rentals. Tanner highlights their growth in third-party management, joint venture expansion, strategic homebuilder partnerships, and value-add services like smart home technology and bundled Internet. Their value-add services are projected to generate over $60 million in revenue this year, and they continue to look for ways to enhance amenities for residents. Tanner concludes by referencing their earnings expectations for the full year 2024.

The paragraph discusses a slight increase in core FFO and AFFO per share, despite some moderation in same-store revenue growth due to previous market growth and supply pressures from new built-to-rent (BTR) listings, especially in markets like Phoenix, Tampa, Orlando, and Dallas. However, with BTR deliveries expected to decrease significantly next year, the supply pressures are seen as temporary. The paragraph highlights the long-term attractiveness of these markets due to strong population and job growth, supported by demographics. Research predicts a significant increase in renter households and a large number of people turning 35 in the coming years, aligning with the age of new residents. The company is well-positioned to benefit from this demand growth.

The paragraph highlights the company's optimism about future growth in the residential REIT sector, crediting strong fundamentals and team dedication for this outlook. Charles Young, the President and COO, discusses the company's proactive response to recent hurricanes, noting limited damages and efficient service delivery through a mobile maintenance app and a vast network of vendors. He emphasizes the benefits of leasing with the company, including effective maintenance services and a strong commitment to residents and their communities.

The paragraph discusses the company's strong leasing performance and low turnover rates, with an average resident stay of 38 months and a 23% turnover rate. In the third quarter, renewal rent growth was 4.2%, new lease rent growth was 1.7%, and blended rent growth was 3.6%. Same-store core revenues increased by 3.6% year-over-year, with a healthy occupancy rate of 97%. Core expenses grew by 3.1%, resulting in a 3.9% increase in same-store NOI. Preliminary October results showed a stable occupancy rate of 96.5% but reflected some market pressures, leading to renewal rent growth of 3.7% and a decrease in new lease rents, resulting in a blended rent growth of 2.2%. The company remains optimistic despite supply challenges.

The paragraph discusses the financial performance and outlook of a company. It highlights solid acceleration in renewal rent growth and improved absorption rates, expressing optimism for the end of the year. The speaker thanks the team for enabling growth through acquisitions and management, expressing confidence in their ability to achieve year-end goals. The CFO, Jon Olsen, provides a financial update, noting over $2 billion in liquidity, mostly unsecured debt with favorable net debt ratios, and no major debt maturities until 2027. Most debt is at fixed rates and many homes are unencumbered. The company achieved several third quarter accomplishments, including a credit rating upgrade from Fitch Ratings.

The paragraph details several financial moves and updates by a company. They replaced a $3.5 billion bank credit facility with a new unsecured credit facility, improving their cost of funds by 15 basis points. They issued $500 million in senior notes extending debt maturity, priced favorably compared to existing bonds. They also adjusted interest rate swaps to extend $1.4 billion of hedges, expecting to stabilize the average strike rate by mid-2025. The company reported third-quarter financial results, showing year-over-year increases in Core FFO and AFFO per share due to higher same-store NOI, excluding certain losses and accruals. Lastly, they slightly raised their full-year 2024 FFO and AFFO per share guidance.

The paragraph discusses the company's financial performance and outlook, highlighting a 6.2% and 6% year-over-year growth in core FFO and AFFO per share, respectively. It mentions narrowing their same-store NOI growth guidance, maintaining a 4.5% growth rate at the midpoint, and revising expectations for more moderate same-store revenue growth in the year's second half. The company has improved expectations for same-store expense growth, especially due to favorable property tax information from Florida and Georgia. Consequently, the full-year property tax growth guidance has been adjusted to 5% to 6.5% year-over-year. The speaker acknowledges the progress made in the first ten months and emphasizes the need to remain focused for the remainder of the year. Following these remarks, the operator opens the line for questions, and Michael Goldsmith from UBS asks about the sequential occupancy decline and lease spread performance. Charles Young is prepared to respond.

The paragraph discusses the current real estate market conditions, highlighting supply pressures in several markets like Tampa, Orlando, Phoenix, and Dallas, which are causing increased price competition and slower absorption of new leases. This situation is not unexpected, as similar challenges occurred in Las Vegas in 2023. Despite these pressures, most other markets are performing as anticipated with normal seasonal trends. Overall, turnover is at a historically low level and renewal rates are high, with an 80% renewal rate considered very healthy. The overall occupancy level is slightly below early-year expectations, but strong demand suggests a quick adjustment is likely. The speaker anticipates working through the supply issues in certain markets over a few quarters, maintaining a generally healthy market position. Following this discussion, operator Steve Sakwa from Evercore ISI is introduced to ask a question about capital deployment and related yield changes.

In the paragraph, Scott Eisen reflects on his first year in his role and expresses satisfaction with the progress made in building relationships with multiple builders and increasing the builder backlog. He reports that in the third quarter, they closed nearly 900 homes valued at $320 million with a 6% capitalization rate and have closed about 1,600 homes year-to-date, totaling $560 million. Eisen remains positive about future opportunities, maintaining strategic dialogues with builders for projects expected in the next 3 to 9 months. Despite fluctuations in mortgage rates, they continue to target a 6% capitalization rate. Following his comments, Eric Wolfe from Citi inquires about the company's confidence in generating growth in the residential space.

In the paragraph, Jon Olsen addresses a question about next year's growth potential by stating that detailed discussions on the topic will be held in about 90 days, though he mentions an anticipated earn-in of around 2%. He refrains from commenting on the loss to lease for the time being. Jamie Feldman from Wells Fargo then questions Dallas Tanner about the company's development strategy, particularly in markets like Tampa and Orlando, where builders are very active and often offer concessions. Tanner acknowledges the cyclical nature of the real estate market and notes that while there are varying opportunities across different markets, the company has adapted over the years, shifting from focusing on the resale market to other strategies more recently.

The paragraph discusses the company's positive outlook on their new product, emphasizing a focus on both community-wide and scattered site developments with public and private homebuilders. They aim to balance risk for better returns by considering long-term demographic and supply factors, particularly as market conditions shift. The company recognizes differing opportunities in various markets due to factors like NOI margins and growth potential, mentioning specific locations like Nashville. Scott Eisen adds that the company is actively engaging with builders in key growth markets, including Denver, Tampa, the Carolinas, Phoenix, Vegas, and Nashville, to explore acquisition opportunities.

The paragraph discusses the impact of new supply in housing markets on investment strategies. The speaker explains that their investments aren't limited to markets with recent volume, but also include new acquisition opportunities in partially or fully leased communities. In further discussion sparked by Adam Kramer from Morgan Stanley, it is addressed that the impact of new supply, notably build-to-rent (BTR) developments, varies by market. The speaker notes that top operators in the single-family rental space have seen listings increase by 15% to 20% compared to earlier in the year, with specific examples such as Phoenix experiencing significant growth in new BTR deliveries monthly.

The paragraph discusses the company's outlook on the real estate market, particularly concerning new lease and renewal rates. The company is optimistic about a reduction in BTR (Build-to-Rent) deliveries by 60-65% next year, which they believe will have little impact on their renewal activities. In the previous three quarters, renewal rates were around 78-80%, which are considered normal compared to pre-pandemic levels. While there are challenges in new leases, particularly in areas with recent development, there are also positive trends, like significant new lease growth in places like Chicago. The company feels confident in handling these market dynamics in the coming quarters. The passage transitions to a new question, where Jesse Lederman asks about the company's lowered revenue growth guidance, referencing unexpectedly strong performance in early 2024.

Towards the end of June, some market softness emerged, prompting a reassessment of future projections by July due to supply pressures and slower market absorption. This necessitated competitive pricing strategies. Charles Young responded to John Pawlowski's question on renewal growth rates, stating that although there's been price sensitivity, renewal asks have increased since August. The renewal growth was stable from September to October but is now accelerating, with positive trends expected to continue into December. Overall, the adjustments in strategy reflect a clearer understanding of market conditions.

In the article paragraph, the discussion revolves around the company's current trajectory of improvement from a low point in September and October, with an emphasis on optimizing revenue and maintaining high renewal levels. Josh Dennerlein from Bank of America inquires about the difference in renewal rate negotiations compared to previous periods, noting a wide disparity. Charles Young responds by explaining that earlier supply and absorption issues in specific markets such as Tampa, Orlando, Dallas, and Phoenix led the company to adjust their pricing strategy to remain competitive. He mentions that with these adjustments and the recent absorption improvements, the company is optimistic about rebuilding their business and gradually capturing higher rates.

In the paragraph, Juan Sanabria raises a question about the company's strategy given its significant exposure to Florida, considering the changing climate and the frequency of hurricanes. Dallas Tanner responds by explaining that the company continuously assesses its asset management to mitigate risks, such as avoiding flood plains, due to Florida's promising growth potential. He mentions that they've sold a few hundred homes in Florida, particularly in South Florida, and are optimistic about growth in Central Florida, especially around Tampa and Orlando. Scott Eisen adds that the company has sold approximately 1,600 homes in Florida over the past four years, indicating ongoing adjustments to their portfolio.

The paragraph discusses the company's approach to managing their real estate portfolio in the Southeastern U.S. and Florida, particularly concerning storm risks. Despite the inherent hurricane activity in these regions, they emphasize that not every year incurs significant damage and that they have effective strategies in place for when it does. They highlight being well-insured and note their favorable loss history, which benefits their property program renewals. Their asset management approach allows for risk mitigation on a house-by-house basis, particularly by evaluating properties against updated flood maps and building codes, identifying those that may pose increased risk for potential disposition.

The paragraph features a conversation during an earnings call where Haendel St. Juste from Mizuho asks about the reasons behind a modest 3% growth in "other income" this quarter compared to previous double-digit growth and seeks information about third-party management income. Jon Olsen responds, explaining that out of the $19 million in total fee income for the third quarter, about $15 million is from third-party management, with the rest coming from joint ventures. He considers this $15 million to be a stable run rate for the future, with potential for slight increases. He also notes strong growth in segments of other income, especially in Internet and media bundled services.

The paragraph discusses the impact of storm costs on the company's finances, particularly focusing on how their insurance policy handles such events. Jon Olsen explains that the company has faced costs from four named windstorms affecting areas where they own properties. The insurance policy provides a $200 million coverage limit per named windstorm occurring within a 72-hour period. Deductibles vary by location, with Texas and Florida having a 5% deductible on total insured value, while it is 2% in other places like Georgia. The operator then invites the next question from Austin Wurschmidt.

The paragraph is a part of an earnings call or business update featuring a discussion between Austin Wurschmidt and Charles Young about recent business trends. Charles Young explains that while web traffic has slightly decreased compared to the previous year, it remains strong, especially when compared to historical pre-COVID periods. Showings are healthy, leading to strong conversion rates and occupancy levels at mid-96%, which is considered robust for this time of year. Young expresses optimism about the future, stating that demand persists due to a discrepancy between available homes and consumer demand. Despite some supply challenges in certain markets, the company is confident about navigating through them. The next speaker, Michael Gorman from BTIG, shifts the discussion to NOI margins and notes a significant expansion compared to pre-COVID periods, with an increase in other property income during the same timeframe.

In the paragraph, Jon Olsen addresses a question about the potential impact of an FTC settlement on margins and income growth as they move towards 2025. Olsen clarifies that the settlement primarily involves reporting and training requirements and will not affect their business operations or income lines. He attributes margin expansion to higher occupancy rates and stronger rental rate growth compared to pre-COVID levels. Olsen acknowledges the possibility of some mean reversion but highlights improved efficiency, a better resident experience, and low turnover. He is cautiously optimistic about a moderation in property tax expenses, which could benefit NOI margins in the future. The operator then opens the line for the next question from Julien Blouin of Goldman Sachs.

In the paragraph, Charles Young discusses the current dynamics of renewal asks versus realized renewals, indicating that the gap is wider than historically observed. He emphasizes the importance of focusing on actual results rather than the spread between asks and realizations, due to the dynamic nature of the market. Young notes positive trends in renewal rates, with significant acceleration from October to November and further indications of growth into December. He expresses confidence in the markets they operate in, citing demand and favorable demographics, and feels optimistic about the future as they approach 2025.

In the paragraph, Scott Eisen discusses the cap rates observed in various real estate acquisition channels, noting that new acquisitions typically have a cap rate around 6% while stabilized communities on the market exhibit cap rates around 5.5%. He mentions that stabilized communities carry less risk compared to forward purchases. Eisen also notes a lack of meaningful activity in the MLS market, making it difficult to assess current cap rates there. John Pawlowski then asks about the use and source of funds given the current cost of capital, to which Dallas Tanner responds that they take a balanced approach. Tanner highlights a recent bond deal with a favorable 4.89% coupon rate, indicating advantageous capital market activities.

The paragraph discusses the company's strategies for growth and capital management. They are focused on recycling resources, attracting third-party capital for joint ventures, and leveraging their strong cash flow and credit facilities to pursue growth opportunities. The company aims to enhance revenue through organic programming, improve customer experience, and boost free cash flow by optimizing resident retention processes. Jon Olsen adds that with a recent bond deal, they have a significant cash reserve, which they plan to use to pay off previous debt, and will evaluate future funding needs based on available opportunities.

The paragraph discusses the company's strategy of being opportunistic in capital markets while ensuring they have a clear purpose for raising capital. It also addresses concerns about the upcoming elections, emphasizing the focus on state-level issues, particularly those affecting rent control, with California being a significant area of interest. The speaker, Dallas Tanner, highlights that while federal politics get much attention, the actual risks and impacts on their operations are more pronounced at the state and local levels.

The paragraph discusses the positive dialogue between the industry and federal parties to create opportunities for private capital investment in housing supply. The company is focused on growth through building new homes and investing in markets and communities. They acknowledge the need for managing local supply access and expect demand to continue despite current supply pressures. The speaker anticipates more clarity after the election and concludes by expressing gratitude to shareholders and looking forward to upcoming NAREIT meetings.

This summary was generated with AI and may contain some inaccuracies.