UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM10-Q
☑QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
June 30, 20202021
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number001-38004
Invitation Homes Inc.
(Exact name of registrant as specified in its charter)
Maryland90-0939055
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
1717 Main Street,Suite 200075201
Dallas,Texas
(Address of principal executive offices)(Zip Code)
(972)421-3600
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, $0.01 par valueINVHNew York Stock Exchange
Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes☑No☐
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).
Yes☑No☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer☑Accelerated Filer☐
Non-Accelerated Filer☐Smaller Reporting Company☐
Emerging Growth Company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes☐No☑
As of August 3, 2020,July 28, 2021, there were 560,533,071576,485,342 shares of common stock, par value $0.01 per share, outstanding.






INVITATION HOMES INC.
Page
PART I
Item1.
6
Item2.
43
Item3.
73
Item4.
74
PART II
Item1.
75
Item1A.
75
Item2.
75
Item3.
75
Item4.
75
Item5.
75
Item6.
76
78









FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, 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 our expectations regarding the performance of our business, our financial results, our 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 and our business model, macroeconomic factors beyond our control, competition in identifying and acquiring properties, competition in the leasing market for quality residents, increasing property taxes, homeowners’ association (“HOA”) fees, and insurance costs, our dependence on third parties for key services, risks related to the evaluation of properties, poor resident selection and defaults and non-renewals by our residents, performance of our information technology systems, risks related to our indebtedness, and risks related to the potential negative impact of the outbreak of the coronavirus strain, known asongoing COVID-19 pandemic on our financial condition, results of operations, cash flows, business, associates, and residents. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. ManyMoreover, many of these factors have been heightened as a result of the ongoing and numerous adverse impacts of COVID-19. We believe these factors include but are not limited to, those described under Part I. Item 1A. “Risk Factors” inof our Annual Report on Form 10-K for the year ended December 31, 20192020 (the “Annual Report on Form 10-K”) and under Part II. Item 1A. “Risk Factors” in this Quarterly Report on Form 10-Q as such factors may be updated from time to time in our periodic filings with the Securities and Exchange Commission (the “SEC”), which are accessible on the SEC’s website at http:https://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 Quarterly Report on Form 10-Q, in the Annual Report on Form 10-K, and in our other periodic filings. The forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q, 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.


3





DEFINED TERMS
Invitation Homes Inc. (“INVH”), a real estate investment trust (“REIT”), conducts its operations through Invitation Homes Operating Partnership LP (“INVH LP”). THR Property Management L.P., a wholly owned subsidiary of INVH LP (the “Manager”), provides all management and other administrative services with respect to the properties we own. On November 16, 2017 (the “Merger Date”), INVH and certain of its affiliates entered into a series of transactions with Starwood Waypoint Homes (“SWH”) and certain SWH affiliates which resulted in SWH and its operating partnership being merged into INVH and INVH LP, respectively, with INVH and INVH LP being the surviving entities (the “Mergers”).
Unless the context suggests otherwise, references in this Quarterly Report on Form 10-Q to “Invitation Homes,” the “Company,” “we,” “our,” and “us” refer to INVH and its consolidated subsidiaries.
In this Quarterly Report on Form 10-Q:
•“average monthly rent” represents average monthly rental income per home for occupied properties in an identified population of homes over the measurement period and reflects the impact of non-service rent concessions and contractual rent increases amortized over the life of the related lease. We believe average monthly rent reflects pricing trends that significantly impact rental revenues over time, making average monthly rent useful to management and external stakeholders as a means of evaluating changes in rental revenues across periods;
•“average occupancy” for an identified population of homes represents (i) the total number of days that the homes in such population were occupied during the measurement period, divided by (ii) the total number of days that the homes in such population were owned during the measurement period. We believe average occupancy significantly impacts rental revenues in a given period, making comparisons of average occupancy across different periods helpful to management and external stakeholders in evaluating changes in rental revenues across periods;
•“Carolinas” includes Charlotte, NC, Greensboro, NC, Raleigh, NC, and Fort Mill, SC;
•“days to re-resident” for an individual home represents the number of days between (i) the date the prior resident moves out of a home, and (ii) the date the next resident is granted access to the same home, which is deemed to be the earlier of the next resident’s contractual lease start date and the next resident’s move-in date. Days to re-resident impacts our average occupancy and thus our rental revenues, making comparisons of days to re-resident helpful to management and external stakeholders in evaluating changes in rental revenues across periods;
•“in-fill” refers to markets, MSAs, submarkets, neighborhoods or other geographic areas that are typified by significant population densities and low availability of land suitable for development into competitive properties, resulting in limited opportunities for new construction;
•“historical average” is the simple average of each of the six months beginning October 2019 and to and including March 2020;
•“Metropolitan Statistical Area” or “MSA” is defined by the United States Office of Management and Budget as a region associated with at least one urbanized area that has a population of at least 50,000 and comprises the central county or counties containing the core, plus adjacent outlying counties having a high degree of social and economic integration with the central county or counties as measured through commuting;
•“net effective rental rate growth” for any home represents the percentage difference between the monthly rent from an expiring lease and the monthly rent from the next lease and, in each case, reflects the impact of non-service rent concessions and contractual rent increases amortized over the life of the related lease. 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. Net effective rental rate growth drives changes in our average monthly rent, making net effective rental rate growth useful to management and external stakeholders as a means of evaluating changes in rental revenues across periods;
•“Northern California” includes Sacramento-Arden-Arcade-Roseville, CA, San Francisco-Oakland-Hayward, CA, Stockton-Lodi, CA, Vallejo-Fairfield, CA, and Yuba City, CA;


4




•“PSF” means per square foot. When comparing homes or cohorts of homes, we believe PSF calculations help management and external stakeholders normalize metrics for differences in property size, enabling more meaningful comparisons based on characteristics other than property size;
•
•“revenue collections as a percentage of monthly billings” represents the total cash received in a given monthly period for rental revenues and other property income (including receipt of late payments that were billed in prior months) divided by the total amounts billed in that period. When a payment plan is in place with a resident, amounts are considered to be billed at the time they would have been billed based on the terms of the original lease, not the terms of the payment plan. We believe this provides management and external stakeholders with meaningful information about our success in collecting amounts due under our lease agreements;
•
“Same Store” or “Same Store portfolio” includes, for a given reporting period, wholly owned homes that have been stabilized and seasoned, excluding homes that have been sold, homes that have been identified for sale to an owner occupant and have become vacant, homes that have been deemed inoperable or significantly impaired by casualty loss events or force majeure, homes acquired in portfolio transactions that are deemed not to have undergone renovations of sufficiently similar quality and characteristics as the existing Invitation Homes Same Store portfolio, and homes in markets that we have announced an intent to exit where we no longer operate a significant number of homes for the primary purpose of income generation. Homes are considered stabilized if they have (i) completed an initial renovation and (ii) entered into at least one post-initial renovation lease. An acquired portfolio that is both leased and deemed to be of sufficiently similar quality and characteristics as the existing Invitation Homes Same Store portfolio may be considered stabilized at the time of acquisition. Homes are considered to be seasoned once they have been stabilized for at least 15 months prior to January 1st of the year in which the Same Store portfolio was established. We believe 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 management and external stakeholders with meaningful information about the performance of our comparable homes across periods and about trends in our organic business;
•“Southeast United States” includes our Atlanta and Carolinas markets;
•“South Florida” includes Miami-Fort Lauderdale-West Palm Beach, FL, and Port St. Lucie, FL;
•“Southern California” includes Los Angeles-Long Beach-Anaheim, CA, Oxnard-Thousand Oaks-Ventura, CA, Riverside-San Bernardino-Ontario, CA, and San Diego-Carlsbad, CA;
•“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. Unless otherwise indicated, total homes or total portfolio refers to the wholly owned homes and excludes homes owned in joint ventures. Additionally, unless the context otherwise requires, all measures in this Quarterly Report on Form 10-Q are presented on a total portfolio basis;
•“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 may be reflected on an annualized basis. We believe turnover rate impacts average occupancy and thus our rental revenues, making comparisons of turnover rate helpful to management and external stakeholders in evaluating changes in rental revenues across periods. In addition, turnover can impact our cost to maintain homes, making changes in turnover rate useful to management and external stakeholders in evaluating changes in our property operating and maintenance expenses across periods; and
•“Western United States” includes our Southern California, Northern California, Seattle, Phoenix, Las Vegas, and Denver markets.


5

PART I
ITEM 1. FINANCIAL STATEMENTS
INVITATION HOMES INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except shares and per share data)



June 30,
2021		December 31, 2020
(unaudited)
Assets:
Investments in single-family residential properties:
Land$4,578,219 $4,539,796 
Building and improvements14,540,813 14,261,954 
19,119,032 18,801,750 
Less: accumulated depreciation(2,785,708)(2,513,057)
Investments in single-family residential properties, net16,333,324 16,288,693 
Cash and cash equivalents126,168 213,422 
Restricted cash241,976 198,346 
Goodwill258,207 258,207 
Investments in unconsolidated joint ventures77,523 69,267 
Other assets, net447,413 478,287 
Total assets$17,484,611 $17,506,222 
Liabilities:
Mortgage loans, net$4,498,289 $4,820,098 
Secured term loan, net401,204 401,095 
Unsecured notes, net298,399 0 
Term loan facility, net2,474,495 2,470,907 
Revolving facility0 0 
Convertible senior notes, net342,050 339,404 
Accounts payable and accrued expenses217,394 149,299 
Resident security deposits162,225 157,936 
Other liabilities470,879 611,410 
Total liabilities8,864,935 8,950,149 
Commitments and contingencies (Note 14)00
Equity:
Stockholders' equity
Preferred stock, $0.01 par value per share, 900,000,000 shares authorized, NaN outstanding as of June 30, 2021 and December 31, 20200 0 
Common stock, $0.01 par value per share, 9,000,000,000 shares authorized, 568,718,544 and 567,117,666 outstanding as of June 30, 2021 and December 31, 2020, respectively5,687 5,671 
Additional paid-in capital9,725,480 9,707,258 
Accumulated deficit(737,444)(661,162)
Accumulated other comprehensive loss(413,684)(546,942)
Total stockholders' equity8,580,039 8,504,825 
Non-controlling interests39,637 51,248 
Total equity8,619,676 8,556,073 
Total liabilities and equity$17,484,611 $17,506,222 



  June 30,
2020		 December 31, 2019
  (unaudited)  
Assets: 
  
Investments in single-family residential properties:    
Land $4,487,945
 $4,499,346
Building and improvements 13,882,606
 13,747,818
  18,370,551

18,247,164
Less: accumulated depreciation (2,252,814) (2,003,972)
Investments in single-family residential properties, net 16,117,737

16,243,192
Cash and cash equivalents 571,719
 92,258
Restricted cash 223,894
 193,987
Goodwill 258,207
 258,207
Other assets, net 574,759
 605,266
Total assets $17,746,316

$17,392,910
     
Liabilities:    
Mortgage loans, net $6,118,575
 $6,238,461
Secured term loan, net 400,986
 400,978
Term loan facility, net 1,495,191
 1,493,747
Revolving facility —
 —
Convertible senior notes, net 336,820
 334,299
Accounts payable and accrued expenses 190,344
 186,110
Resident security deposits 154,200
 147,787
Other liabilities 706,327
 325,450
Total liabilities 9,402,443

9,126,832
Commitments and contingencies (Note 14) 


 


     
Equity:    
Stockholders' equity    
Preferred stock, $0.01 par value per share, 900,000,000 shares authorized, none outstanding as of June 30, 2020 and December 31, 2019 —
 —
Common stock, $0.01 par value per share, 9,000,000,000 shares authorized, 560,532,679 and 541,642,725 outstanding as of June 30, 2020 and December 31, 2019, respectively 5,605
 5,416
Additional paid-in capital 9,515,625
 9,010,194
Accumulated deficit (595,318) (524,588)
Accumulated other comprehensive loss (632,148) (276,600)
Total stockholders' equity 8,293,764

8,214,422
Non-controlling interests 50,109
 51,656
Total equity 8,343,873

8,266,078
Total liabilities and equity $17,746,316

$17,392,910
The accompanying notes are an integral part of these condensed consolidated financial statements.


6

INVITATION HOMES INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except shares and per share data)
(unaudited)


For the Three Months
Ended June 30,		For the Six Months
Ended June 30,
2021202020212020
Revenues:
Rental revenues and other property income$490,618 $449,755 $965,072 $899,544 
Joint venture management fees1,015 0 1,786 0 
Total revenues491,633 449,755 966,858 899,544 
Expenses:
Property operating and maintenance175,422 167,002 343,795 333,918 
Property management expense17,696 14,529 33,538 28,901 
General and administrative19,828 14,426 36,778 28,654 
Interest expense80,764 86,071 164,170 170,828 
Depreciation and amortization145,280 137,266 289,781 272,293 
Impairment and other980 (180)1,336 2,947 
Total expenses439,970 419,114 869,398 837,541 
Gains (losses) on investments in equity securities, net(7,002)0 (10,142)34 
Other, net(1,903)1,370 (1,673)5,050 
Gain on sale of property, net of tax17,919 11,167 32,403 26,367 
Income from investments in unconsolidated joint ventures11 0 362 0 
Net income60,688 43,178 118,410 93,454 
Net income attributable to non-controlling interests(350)(275)(705)(595)
Net income attributable to common stockholders60,338 42,903 117,705 92,859 
Net income available to participating securities(96)(119)(191)(221)
Net income available to common stockholders — basic and diluted (Note 12)$60,242 $42,784 $117,514 $92,638 
Weighted average common shares outstanding — basic567,931,472 548,811,968 567,655,034 545,680,740 
Weighted average common shares outstanding — diluted569,283,166 549,920,213 569,056,182 546,836,809 
Net income per common share — basic$0.11 $0.08 $0.21 $0.17 
Net income per common share — diluted$0.11 $0.08 $0.21 $0.17 
  For the Three Months
Ended June 30,		 For the Six Months
Ended June 30,
  2020 2019 2020 2019
Rental revenues and other property income $449,755
 $441,582
 $899,544

$877,082
         
Expenses:        
Property operating and maintenance 167,002
 166,574
 333,918
 326,920
Property management expense 14,529
 16,021
 28,901
 31,181
General and administrative 14,426
 15,956
 28,654
 42,494
Interest expense 86,071
 95,706
 170,828
 189,689
Depreciation and amortization 137,266
 133,031
 272,293
 266,640
Impairment and other (180) 1,671
 2,947
 7,063
Total expenses 419,114
 428,959
 837,541

863,987
         
Other, net 1,370
 610
 5,084
 3,735
Gain on sale of property, net of tax 11,167
 26,172
 26,367
 43,744
         
Net income 43,178

39,405
 93,454

60,574
Net income attributable to non-controlling interests (275) (463) (595) (810)
         
Net income attributable to common stockholders 42,903

38,942
 92,859

59,764
Net income available to participating securities (119) (109) (221) (215)
         
Net income available to common stockholders — basic and diluted (Note 12) $42,784
 $38,833
 $92,638
 $59,549
         
Weighted average common shares outstanding — basic 548,811,968
 525,070,036
 545,680,740
 523,265,455
Weighted average common shares outstanding — diluted 549,920,213
 525,933,643
 546,836,809
 524,190,469
         
Net income per common share — basic
$0.08
 $0.07
 $0.17
 $0.11
Net income per common share — diluted $0.08
 $0.07
 $0.17
 $0.11

The accompanying notes are an integral part of these condensed consolidated financial statements.

7

INVITATION HOMES INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands)
(unaudited)


For the Three Months
Ended June 30,		For the Six Months
Ended June 30,
2021202020212020
Net income$60,688 $43,178 $118,410 $93,454 
Other comprehensive income (loss)
Unrealized gains (losses) on interest rate swaps(21,190)(52,817)58,869 (394,255)
Losses from interest rate swaps reclassified into earnings from accumulated other comprehensive loss38,256 28,042 75,899 36,609 
Other comprehensive income (loss)17,066 (24,775)134,768 (357,646)
Comprehensive income (loss)77,754 18,403 253,178 (264,192)
Comprehensive (income) loss attributable to non-controlling interests(593)(246)(1,666)1,503 
Comprehensive income (loss) attributable to common stockholders$77,161 $18,157 $251,512 $(262,689)

  For the Three Months
Ended June 30,		 For the Six Months
Ended June 30,
  2020 2019 2020 2019
Net income $43,178
 $39,405
 $93,454
 $60,574
         
Other comprehensive loss        
Unrealized losses on interest rate swaps (52,817) (148,599) (394,255) (236,467)
(Gains) losses from interest rate swaps reclassified into earnings from accumulated other comprehensive loss 28,042
 (7,891) 36,609
 (18,754)
Other comprehensive loss (24,775) (156,490) (357,646)
(255,221)
Comprehensive income (loss) 18,403

(117,085) (264,192)
(194,647)
Comprehensive (income) loss attributable to non-controlling interests (246) 1,312
 1,503
 2,583
         
Comprehensive income (loss) attributable to common stockholders $18,157

$(115,773) $(262,689) $(192,064)

The accompanying notes are an integral part of these condensed consolidated financial statements.

8

INVITATION HOMES INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
For the Three and Six Months Ended June 30, 2021
(in thousands, except share and per share data)
(unaudited)

Common Stock
Number of SharesAmountAdditional
Paid-in Capital		Accumulated DeficitAccumulated Other Comprehensive LossTotal Stockholders' EquityNon-Controlling InterestsTotal Equity
Balance as of March 31, 2021567,650,434 $5,677 $9,705,122 $(700,728)$(429,958)$8,580,113 $52,247 $8,632,360 
Capital distributions— — — — — — (606)(606)
Net income— — — 60,338 — 60,338 350 60,688 
Dividends and dividend equivalents declared ($0.17 per share)— — — (97,054)— (97,054)— (97,054)
Issuance of common stock — settlement of RSUs, net of tax142,850 1 (1,991)— — (1,990)— (1,990)
Issuance of common stock — settlement of 2022 Convertible Notes260 — 6 — — 6 0 6 
Share-based compensation expense— — 8,686 — — 8,686 520 9,206 
Total other comprehensive income— — — — 16,823 16,823 243 17,066 
Redemption of OP Units for common stock925,000 9 13,657 — (549)13,117 (13,117)0 
Balance as of June 30, 2021568,718,544 $5,687 $9,725,480 $(737,444)$(413,684)$8,580,039 $39,637 $8,619,676 
Common Stock
Number of SharesAmountAdditional
Paid-in Capital		Accumulated DeficitAccumulated Other Comprehensive LossTotal Stockholders' EquityNon-Controlling InterestsTotal Equity
Balance as of December 31, 2020567,117,666 $5,671 $9,707,258 $(661,162)$(546,942)$8,504,825 $51,248 $8,556,073 
Capital distributions— — — — — — (1,211)(1,211)
Net income— — — 117,705 — 117,705 705 118,410 
Dividends and dividend equivalents declared ($0.34 per share)— — — (193,987)— (193,987)— (193,987)
Issuance of common stock — settlement of RSUs, net of tax675,618 7 (9,410)— — (9,403)— (9,403)
Issuance of common stock — settlement of 2022 Convertible Notes260 — 6 — — 6 0 6 
Share-based compensation expense— — 13,969 — — 13,969 1,051 15,020 
Total other comprehensive income— — — — 133,807 133,807 961 134,768 
Redemption of OP Units for common stock925,000 9 13,657 — (549)13,117 (13,117)0 
Balance as of June 30, 2021568,718,544 $5,687 $9,725,480 $(737,444)$(413,684)$8,580,039 $39,637 $8,619,676 



9

INVITATION HOMES INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (continued)
For the Three and Six Months Ended June 30, 2020
(in thousands, except share and per share data)
(unaudited)


Common Stock
Number of SharesAmountAdditional
Paid-in Capital		Accumulated DeficitAccumulated Other Comprehensive LossTotal Stockholders' EquityNon-Controlling InterestsTotal Equity
Balance as of March 31, 2020543,767,445 $5,438 $9,066,512 $(556,305)$(607,402)$7,908,243 $49,884 $7,958,127 
Capital distributions— — — — — — (534)(534)
Net income— — — 42,903 — 42,903 275 43,178 
Dividends and dividend equivalents declared ($0.15 per share)— — — (81,916)— (81,916)— (81,916)
Issuance of common stock — settlement of RSUs, net of tax74,834 0 (190)— — (190)— (190)
Issuance of common stock, net16,690,400 167 447,710 — — 447,877 — 447,877 
Share-based compensation expense— — 1,593 — — 1,593 513 2,106 
Total other comprehensive loss— — — — (24,746)(24,746)(29)(24,775)
Balance as of June 30, 2020560,532,679 $5,605 $9,515,625 $(595,318)$(632,148)$8,293,764 $50,109 $8,343,873 
Common Stock
Number of SharesAmountAdditional
Paid-in Capital		Accumulated DeficitAccumulated Other Comprehensive LossTotal Stockholders' EquityNon-Controlling InterestsTotal Equity
Balance as of December 31, 2019541,642,725 $5,416 $9,010,194 $(524,588)$(276,600)$8,214,422 $51,656 $8,266,078 
Capital distributions— — — — — — (1,068)(1,068)
Net income— — — 92,859 — 92,859 595 93,454 
Dividends and dividend equivalents declared ($0.30 per share)— — — (163,589)— (163,589)— (163,589)
Issuance of common stock — settlement of RSUs, net of tax327,488 3 (3,364)— — (3,361)— (3,361)
Issuance of common stock, net18,562,466 186 503,612 — — 503,798 — 503,798 
Share-based compensation expense— — 5,183 — — 5,183 1,024 6,207 
Total other comprehensive loss— — — — (355,548)(355,548)(2,098)(357,646)
Balance as of June 30, 2020560,532,679 $5,605 $9,515,625 $(595,318)$(632,148)$8,293,764 $50,109 $8,343,873 
  Common Stock            
  Number of Shares Amount Additional
Paid-in Capital		 Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholders' Equity Non-Controlling Interests Total Equity
Balance as of March 31, 2020 543,767,445

$5,438

$9,066,512

$(556,305)
$(607,402)
$7,908,243

$49,884

$7,958,127
Capital distributions —
 —
 —
 —
 —
 —
 (534) (534)
Net income —
 —
 —
 42,903
 —
 42,903
 275
 43,178
Dividends and dividend equivalents declared ($0.15 per share) —
 —
 —
 (81,916) —
 (81,916) —
 (81,916)
Issuance of common stock — settlement of RSUs, net of tax 74,834
 —
 (190) —
 —
 (190) —
 (190)
Issuance of common stock, net 16,690,400
 167
 447,710
 —
 —
 447,877
 —
 447,877
Share-based compensation expense —
 —
 1,593
 —
 —
 1,593
 513
 2,106
Total other comprehensive loss —
 —
 —
 —
 (24,746) (24,746) (29) (24,775)
Balance as of June 30, 2020 560,532,679
 $5,605
 $9,515,625
 $(595,318) $(632,148) $8,293,764
 $50,109
 $8,343,873

  Common Stock            
  Number of Shares Amount Additional
Paid-in Capital		 Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholders' Equity Non-Controlling Interests Total Equity
Balance as of December 31, 2019 541,642,725
 $5,416
 $9,010,194
 $(524,588) $(276,600) $8,214,422
 $51,656
 $8,266,078
Capital distributions —
 —
 —
 —
 —
 —
 (1,068) (1,068)
Net income —
 —
 —
 92,859
 —
 92,859
 595
 93,454
Dividends and dividend equivalents declared ($0.30 per share) —
 —
 —
 (163,589) —
 (163,589) —
 (163,589)
Issuance of common stock — settlement of RSUs, net of tax 327,488
 3
 (3,364) —
 —
 (3,361) —
 (3,361)
Issuance of common stock, net 18,562,466
 186
 503,612
 —
 —
 503,798
 —
 503,798
Share-based compensation expense —
 —
 5,183
 —
 —
 5,183
 1,024
 6,207
Total other comprehensive loss —
 —
 —
 —
 (355,548) (355,548) (2,098) (357,646)
Balance as of June 30, 2020 560,532,679
 $5,605
 $9,515,625
 $(595,318) $(632,148) $8,293,764
 $50,109
 $8,343,873

The accompanying notes are an integral part of these condensed consolidated financial statements.



10
INVITATION HOMES INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (continued)
For the Three and Six Months Ended June 30, 2019
(in thousands, except share and per share data)
(unaudited)


  Common Stock            
  Number of Shares Amount Additional
Paid-in Capital		 Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholders' Equity Non-Controlling Interests Total Equity
Balance as of March 31, 2019 524,989,775
 $5,250
 $8,685,058
 $(439,737) $(110,655) $8,139,916
 $81,452
 $8,221,368
Capital distributions —
 —
 —
 —
 —
 —
 (711) (711)
Net income —
 —
 —
 38,942
 —
 38,942
 463
 39,405
Dividends and dividend equivalents declared ($0.13 per share) —
 —
 —
 (68,334) —
 (68,334) —
 (68,334)
Issuance of common stock — settlement of RSUs, net of tax 137,172
 1
 (1,386) —
 —
 (1,385) —
 (1,385)
Share-based compensation expense —
 —
 3,255
 —
 —
 3,255
 360
 3,615
Total other comprehensive loss —
 —
 —
 —
 (154,715) (154,715) (1,775) (156,490)
Balance as of June 30, 2019 525,126,947
 $5,251
 $8,686,927
 $(469,129) $(265,370) $7,957,679
 $79,789
 $8,037,468
  Common Stock            
  Number of Shares Amount Additional
Paid-in Capital		 Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholders' Equity Non-Controlling Interests Total Equity
Balance as of December 31, 2018 520,647,977
 $5,206
 $8,629,462
 $(392,594) $(12,963) $8,229,111
 $140,075
 $8,369,186
Capital distributions —
 —
 —
 —
 —
 —
 (1,886) (1,886)
Net income —
 —
 —
 59,764
 —
 59,764
 810
 60,574
Dividends and dividend equivalents declared ($0.26 per share) —
 —
 —
 (136,299) —
 (136,299) —
 (136,299)
Issuance of common stock — settlement of RSUs, net of tax 905,677
 9
 (8,117) —
 —
 (8,108) —
 (8,108)
Share-based compensation expense —
 —
 8,862
 —
 —
 8,862
 360
 9,222
Total other comprehensive loss —
 —
 —
 —
 (251,828) (251,828) (3,393) (255,221)
Redemption of OP Units for common stock 3,573,293
 36
 56,720
 —
 (579) 56,177
 (56,177) —
Balance as of June 30, 2019 525,126,947
 $5,251
 $8,686,927
 $(469,129) $(265,370) $7,957,679
 $79,789
 $8,037,468

The accompanying notes are an integral part of these condensed consolidated financial statements.


INVITATION HOMES INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)


For the Six Months
Ended June 30,
20212020
Operating Activities:
Net income$118,410 $93,454 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization289,781 272,293 
Share-based compensation expense15,020 6,207 
Amortization of deferred leasing costs5,546 5,828 
Amortization of deferred financing costs6,567 14,353 
Amortization of debt discounts2,828 2,697 
Provisions for impairment524 3,913 
(Gains) losses on investments in equity securities, net10,142 (34)
Gain on sale of property, net of tax(32,403)(26,367)
Change in fair value of derivative instruments7,179 2,707 
Income from investments in unconsolidated joint ventures, net of operating distributions(136)0 
Other non-cash amounts included in net income2,145 (315)
Changes in operating assets and liabilities:
Other assets, net(13,843)(14,288)
Accounts payable and accrued expenses67,059 17,612 
Resident security deposits4,289 6,413 
Other liabilities(13,007)11,462 
Net cash provided by operating activities470,101 395,935 
Investing Activities:
Deposits for acquisition of single-family residential properties(11,185)733 
Acquisition of single-family residential properties(305,976)(179,901)
Initial renovations to single-family residential properties(37,457)(61,623)
Other capital expenditures for single-family residential properties(72,060)(84,025)
Proceeds from sale of single-family residential properties136,951 228,728 
Repayment proceeds from retained debt securities16,211 6,787 
Proceeds from sale of investments in equity securities2,607 0 
Investments in unconsolidated joint ventures(9,000)0 
Non-operating distributions from unconsolidated joint ventures880 0 
Other investing activities(3,846)(203)
Net cash used in investing activities(282,875)(89,504)
Financing Activities:
Payment of dividends and dividend equivalents(193,827)(163,456)
Distributions to non-controlling interests(1,211)(1,068)
Payment of taxes related to net share settlement of RSUs(9,403)(3,361)
Payments on mortgage loans(323,355)(131,677)
Payments on secured term loan0 (101)
Proceeds from unsecured notes300,000 0 
Proceeds from revolving facility300,000 320,000 
Payments on revolving facility(300,000)(320,000)
11
  For the Six Months
Ended June 30,
  2020 2019
Operating Activities:    
Net income $93,454
 $60,574
     
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 272,293
 266,640
Share-based compensation expense 6,207
 9,222
Amortization of deferred leasing costs 5,828
 5,060
Amortization of deferred financing costs 14,353
 20,158
Amortization of debt discounts 2,697
 4,709
Provisions for impairment 3,913
 7,329
Gain on sale of property, net of tax (26,367) (43,744)
Change in fair value of derivative instruments 2,707
 2,170
Other non-cash amounts included in net income (349) 785
Changes in operating assets and liabilities:    
Other assets, net (14,288) (9,823)
Accounts payable and accrued expenses 17,612
 48,771
Resident security deposits 6,413
 3,000
Other liabilities 11,462
 491
Net cash provided by operating activities 395,935
 375,342
     
Investing Activities:    
Amounts deposited and held by others 733
 (966)
Acquisition of single-family residential properties (179,901) (246,306)
Initial renovations to single-family residential properties (61,623) (18,749)
Other capital expenditures for single-family residential properties (84,025) (70,161)
Proceeds from sale of single-family residential properties 228,728
 336,523
Repayment proceeds from retained debt securities 6,787
 35,687
Other investing activities (203) 3,163
Net cash provided by (used in) investing activities (89,504) 39,191
     
Financing Activities:    
Payment of dividends and dividend equivalents (163,456) (136,299)
Distributions to non-controlling interests (1,068) (1,886)
Payment of taxes related to net share settlement of RSUs (3,361) (8,108)
Payments on mortgage loans (131,677) (709,383)
Proceeds from secured term loan —
 403,464
Payments on secured term loan (101) —
Proceeds from revolving facility 320,000
 135,000
Payments on revolving facility (320,000) (135,000)
Proceeds from issuance of common stock, net 503,798
 —
Deferred financing costs paid —
 (2,613)
Other financing activities (1,198) (244)
Net cash provided by (used in) financing activities 202,937
 (455,069)
     
Change in cash, cash equivalents, and restricted cash 509,368
 (40,536)
Cash, cash equivalents, and restricted cash, beginning of period (Note 4) 286,245
 359,991
Cash, cash equivalents, and restricted cash, end of period (Note 4) $795,613
 $319,455
     

INVITATION HOMES INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(in thousands)
(unaudited)

For the Six Months
Ended June 30,
20212020
Proceeds from issuance of common stock, net0 503,798 
Deferred financing costs paid(1,666)0 
Other financing activities(1,388)(1,198)
Net cash provided by (used in) financing activities(230,850)202,937 

Change in cash, cash equivalents, and restricted cash(43,624)509,368 
Cash, cash equivalents, and restricted cash, beginning of period (Note 4)411,768 286,245 
Cash, cash equivalents, and restricted cash, end of period (Note 4)$368,144 $795,613 
Supplemental cash flow disclosures:
Interest paid, net of amounts capitalized$149,086 $153,151 
Cash paid for income taxes501 967 
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases2,965 2,760 
Financing cash flows from finance leases1,282 1,062 
Non-cash investing and financing activities:
Accrued renovation improvements at period end$6,207 $2,931 
Accrued residential property capital improvements at period end9,161 8,459 
Transfer of residential property, net to other assets, net for held for sale assets45,643 98,254 
Change in other comprehensive gain (loss) from cash flow hedges127,694 (360,301)
ROU assets obtained in exchange for operating lease liabilities1,452 2,961 
ROU assets obtained in exchange for finance lease liabilities0 9,235 
Net settlement of 2022 Convertible Notes in shares of common stock6 0 
  For the Six Months
Ended June 30,
  2020 2019
Supplemental cash flow disclosures:    
Interest paid, net of amounts capitalized $153,151
 $164,766
Cash paid for income taxes 967
 1,699
Cash paid for amounts included in the measurement of lease liabilities:    
Operating cash flows from operating leases 2,760
 2,581
Financing cash flows from finance leases 1,062
 244
     
Non-cash investing and financing activities:    
Accrued renovation improvements at period end $2,931
 $6,188
Accrued residential property capital improvements at period end 8,459
 12,617
Transfer of residential property, net to other assets, net for held for sale assets 98,254
 198,138
Change in other comprehensive loss from cash flow hedges (360,301) (257,358)
ROU assets obtained in exchange for operating lease liabilities 2,961
 1,721
ROU assets obtained in exchange for finance lease liabilities 9,235
 —

The accompanying notes are an integral part of these condensed consolidated financial statements.

12

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)







Note 1—Organization and Formation
Invitation Homes Inc. (“INVH”) is a real estate investment trust (“REIT”) that conducts its operations through Invitation Homes Operating Partnership LP (“INVH LP”). INVH LP was formed for the purpose of owning, renovating, leasing, and operating single-family residential properties. Through THR Property Management L.P., a wholly owned subsidiary of INVH LP (the “Manager”), we provide all management and other administrative services with respect to the properties we own.
On February 6, 2017, INVH completed an initial public offering (“IPO”), changed its jurisdiction of incorporation to Maryland, and amended its charter to provide for the issuance of up to 9,000,000,000 shares of common stock and 900,000,000 shares of preferred stock, in each case $0.01 par value per share. In connection with certain pre-IPO reorganization transactions, INVH LP became (1) owned by INVH directly and through Invitation Homes OP LLC, a wholly owned subsidiary of INVH, and (2) the owner of all of the assets, liabilities, and operations of certain pre-IPO ownership entities. These transactions were accounted for as a reorganization of entities under common control utilizing historical cost basis.
On November 16, 2017 (the “Merger Date”), INVH and certain of its affiliates entered into a series of transactions with Starwood Waypoint Homes (“SWH”) and certain SWH affiliates which resulted in SWH and its operating partnership being merged into INVH and INVH LP, respectively, with INVH and INVH LP being the surviving entities (the “Mergers”). The Mergers were accounted for as a business combination in accordance with ASC 805, Business Combinations, and INVH was designated as the accounting acquirer.
The limited partnership interests of INVH LP consist of common units and other classes of limited partnership interests that may be issued (the “OP Units”). As of June 30, 2020,2021, INVH owns 99.4%99.6% of the common OP Units and has the full, exclusive, and complete responsibility for and discretion over the day to day management and control of INVH LP.
Our organizational structure includes several wholly owned subsidiaries of INVH LP that were formed to facilitate certain of our financing arrangements (the “Borrower Entities”). These Borrower Entities are used to align the ownership of our single-family residential properties with certain of our debt instruments. Collateral for certain of our individual debt instruments may be in the form of equity interests in the Borrower Entities or in pools of single-family residential properties owned either directly by the Borrower Entities or indirectly by their wholly owned subsidiaries (see Note 6)7).
References to “Invitation Homes,” the “Company,” “we,” “our,” and “us” refer, collectively, to INVH, INVH LP, and the consolidated subsidiaries of INVH LP.
Note 2—Significant Accounting Policies
Basis of Presentation
The accompanying interim condensed consolidated financial statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and with the rules and regulations of the Securities and Exchange Commission for interim financial information and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with our audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019.2020.
These condensed consolidated financial statements include the accounts of INVH and its consolidated subsidiaries. All intercompany accounts and transactions have been eliminated in the condensed consolidated financial statements. In the opinion of management, all adjustments that are of a normal recurring nature considered necessary for a fair presentation of our interim financial statements have been included in these condensed consolidated financial statements. Operating results for the three and six months ended June 30, 20202021 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2020.2021.
13

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)







We consolidate entities when we own, directly or indirectly, a majority interest in the entity or are otherwise able to control the entity. We consolidate variable interest entities (“VIEs”) in accordance with ASC 810, Consolidation, if we are the primary beneficiary of the VIE as determined by our power to direct the VIE’s activities and the obligation to absorb its losses or the right to receive its benefits, which are potentially significant to the VIE. A VIE is broadly defined as an entity with one or more of the following characteristics: (a) the total equity investment at risk is insufficient to finance the entity’s activities without additional subordinated financial support; (b) as a group, the holders of the equity investment at risk lack (i) the ability to make decisions about the entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; or (c) the equity investors have voting rights that are not proportional to their economic interests, and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights.
As described in Note 5, we have an investmentinvested in a joint ventureventures with Rockpoint Group, L.L.C. (“Rockpoint”) and the Federal National Mortgage Association (“FNMA”), both of which is aare voting interest entity.entities. We do not hold a controlling financial interest in theeither joint venture but have significant influence over itsthe operating and financial policies.policies of each joint venture. Additionally, both Rockpoint and FNMA holdshold certain substantive participating rights that preclude the presumption of control by us;us of either joint venture; as such, we account for oureach investment using the equity method. In connection withOur investment in the Mergers, weRockpoint joint venture is recorded at cost, and our investment in the FNMA joint venture was initially recorded this investment at fair value in connection with purchase accounting and havefor the Mergers. The investments in these joint ventures are subsequently adjusted for our proportionate share of net earnings or losses and other comprehensive income or loss, cash contributions made and distributions received, and other adjustments, as appropriate. Distributions of operating profit from the joint ventureventures are reported as part of operating cash flows while distributions related to a capital transaction, such as a refinancing transaction or sale, are reported as investing activities.
Non-controlling interests represent the OP Units not owned by INVH, including any vested OP Units granted in connection with certain share-based compensation awards. Non-controlling interests are presented as a separate component of equity on the condensed consolidated balance sheets as of June 30, 20202021 and December 31, 2019,2020, and the condensed consolidated statements of operations for the three and six months ended June 30, 2021 and 2020 include an allocation of the net income attributable to the non-controlling interest holders. Vested OP Units are redeemable for shares of our common stock on a one-for-one1-for-one basis or, in our sole discretion, cash, and redemptions of OP Units are accounted for as a reduction in non-controlling interests with an offset to stockholders’ equity based on the pro rata number of OP Units redeemed.
Significant Risks and Uncertainties
One of the most significant risks and uncertainties to our financial condition and results of operations iscontinues to be the potential adverse effect of the ongoing pandemic resulting from the coronavirus, or COVID-19. We are closely monitoring the impact of the pandemic on all aspects of our business.
Since the outbreak, a number of our residents have requested rent deferral and/or late fee relief, and components of our rental revenues and other property income have been impacted by the pandemic. In addition, entities directed by, or notionally affiliated with, the Federal government as well as some state and local jurisdictions across the United States have imposed temporary eviction moratoriums andif certain criteria are met by residents, are allowing residents to defer missed rent payments without incurring late fees, and such jurisdictionsare prohibiting rent increases. We comply with all applicable Federal, state, and local laws, regulations, and ordinances, and we adhere to restrictions on evictions, collections, rent increases, and late fees as appropriate. Jurisdictions and other local and national authorities may expand or extend measures imposing restrictions on our ability to enforce residents’ contractual rental obligations and limiting our ability to increase rents. We cannot predict if states, municipalities, local, and/or localnational authorities will expand existing restrictions, if additional states or municipalities will implement similar restrictions, or when restrictions currently in place will expire. Certain other restrictions imposed by jurisdictions across the United States are intended to limit operations by businesses not deemed “essential businesses.” While none of the current restrictions have materially impacted our ability to provide services to our residents or homes, future measures may negatively impact our ability to access our homes, complete service requests, or make our homes ready for new residents. Many experts predict that the outbreak will trigger, or even has already triggered, a period of global economic slowdown or a global recession.
The COVID-19 pandemic could have material and adverse effects on our financial condition, results of operations, and cash flows in the near term due to, but not limited to, the following: (1) reduced economic activity that severely impacts the earnings or health of our residents, thereby causing them to be unable to fully meet their obligations to us and resulting in increases in uncollectible revenues and thus reductions in rental revenues and other property income; (2) governmental regulations, restrictions and moratoriums that negatively impact our ability to charge and collect rental revenues and other property
14

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
income or impose restrictions on our ability to provide services to our residents and homes; (3) negative financial impact of the pandemic that could impact our ability to access funds available under our Revolving Facility (as defined in Note 6)7) or affect future compliance with financial covenants of our Credit Facility (as defined in Note 6)7) and other debt agreements; and (4) weaker economic conditions that could cause us to recognize impairments in value of our tangible assets or goodwill.

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amountsOn March 11, 2021, the American Rescue Plan Act (the “ARPA”), a $1.9 trillion COVID-19 relief package authorizing additional federal spending and an increase in thousands)
(unaudited)







anti-poverty programs to help millions of families still struggling amid the pandemic, was signed into law. The ARPA includes nearly $50 billion in housing and homelessness resources and provides over $27 billion for rental assistance. We continue to examine the impacts that the ARPA, as well as any future economic relief legislation, may have on our business. It is uncertain if the ARPA’s housing and rental assistance resources will enable longer term housing stability for some of our residents and/or reduce rent receivable balances accrued during the pandemic.
The extent to which the ongoing COVID-19 pandemic ultimately impacts our operations depends on ongoing developments, which remain highly uncertain and cannot be predicted with confidence, including the scope, severity, and duration of the pandemic, the extent and duration of actions taken to contain the pandemic or mitigate its impact, the availability, distribution, and efficacy of vaccines, development and availability of effective therapeutic drugs, and the direct and indirect economic effects of the pandemic, containment measures, monetary and/or fiscal policies implemented to provide support or relief to businesses and/or residents, and other government, regulatory, and/or legislative changes precipitated by the ongoing COVID-19 pandemic, among others. While we have taken steps to mitigate the impact of the pandemic on our results of operations, there can be no assurance that these efforts will be successful.
AdoptionReclassifications
We reclassified $34 of New Accounting Standards
In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Lossesunrealized gains on Financial Instruments, which changes how companies measure credit losses for certain financial assets, excluding receivables arisinginvestments in equity securities from operating leases. This guidance requires an entity to estimate its expected credit loss and record an allowance basedother, net into gains (losses) on this estimate so that it is presented at theinvestments in equity securities, net amount expected to be collected on the financial asset. We adopted this standard as of January 1, 2020, and it did not have a material impact on our condensed consolidated financial statements.
In Marchstatement of operations for the six months ended June 30, 2020 the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) (“ASU 2020-04”), which contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives, and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. We have elected to apply the hedge accounting expedients relatedconform to probability and the assessments of effectiveness for future London Interbank Offer Rate (“LIBOR”) indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with pastour current presentation. We continue to evaluate the impactalso reclassified $34 of the guidance and may applyunrealized gains on investments in equity securities from other elections as applicable as additional changesnon-cash amounts included in the market occur.
In April 2020, the FASB staff issued a question and answer document (the “Lease Modification Q&A”) focusednet income into (gains) losses on the application of lease accounting guidance to lease accommodations resulting from the COVID-19 pandemic as many lessors have been asked to provide rent deferrals, rent abatements, late fee waivers, and other lease concessions to lessees (collectively, “lease accommodations”). While the lease modification guidanceinvestments in ASC 842, Leases, addresses routine changes to lease terms resulting from negotiations between a lessee and lessor, it did not contemplate the rapid implementation of lease accommodations to address the sudden liquidity constraints of some lessees arising from the COVID-19 pandemic.
Under existing lease guidance, we would have been required to determine, on a lease by lease basis, if each lease accommodation resulted from a new arrangement reached with the resident (treated within the lease modification accounting framework) or if each was contemplated under the enforceable rights and obligations within the existing lease agreement (precluded from applying the lease modification accounting framework). If certain criteria are met, the Lease Modification Q&A allows lessors to bypass the lease by lease analysis and instead elect to either apply the lease modification accounting framework or not, with such election applied consistently to leases with similar characteristics and similar circumstances. We elected to apply the Lease Modification Q&A guidance not to perform a lease by lease analysis with respect to any lease accommodations and to account for such accommodations outside of the lease modification framework. The Lease Modification Q&A has not had a material impactequity securities, net on our condensed consolidated financial statementsstatement of cash flows for the six months ended June 30, 2020 to conform to our current presentation. There were 0 reclassifications for the three months ended June 30, 2020. These reclassifications had no effect on the total reported net income on the condensed consolidated statement of operations for the three and six months ended June 30, 2020. However,2020, or on the extent of lease accommodations granted to residents as a result oftotal net cash provided by operating activities on the COVID-19 pandemic in future periods may materially affect our condensed consolidated financial statements.statement of cash flows for the three and six months ended June 30, 2020.
Use of Estimates
The preparation of the condensed consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. These estimates are inherently subjective in nature and actual results could differ from those estimates.

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)







Accounting Policies
There have been no changes to our significant accounting policies that have had a material impact on our condensed consolidated financial statements and related notes, compared to those policies disclosed in our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019.2020.
Recent Accounting Pronouncements
In August 2020, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”), which simplifies an issuer’s accounting for convertible instruments and contracts in its own equity. The guidance reduces the number of accounting models for convertible instruments, requires entities to use the “if-converted” method in diluted earnings (loss) per share (“EPS”), and requires that the effect of potential share settlement be included in the diluted EPS calculation when an instrument may be settled in cash or shares. The new standard will be effective for annual reporting periods beginning after December 15, 2021, and interim periods within that
15

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
reporting period, with early adoption permitted beginning after December 15, 2020 and interim periods within that reporting period. The only new application of ASU 2020-06 relates to our 2022 Convertible Notes (as defined in Note 7), and these notes mature on January 15, 2022. As such, ASU 2020-06 will not materially affect our condensed consolidated financial statements.
Note 3—Investments in Single-Family Residential Properties
The following table sets forth the net carrying amount associated with our properties by component:
June 30,
2021		December 31, 2020
Land$4,578,219 $4,539,796 
Single-family residential property13,906,597 13,631,859 
Capital improvements518,712 515,479 
Equipment115,504 114,616 
Total gross investments in the properties19,119,032 18,801,750 
Less: accumulated depreciation(2,785,708)(2,513,057)
Investments in single-family residential properties, net$16,333,324 $16,288,693 
  June 30,
2020		 December 31, 2019
Land $4,487,945
 $4,499,346
Single-family residential property 13,258,956
 13,121,179
Capital improvements 510,574
 513,269
Equipment 113,076
 113,370
Total gross investments in the properties 18,370,551
 18,247,164
Less: accumulated depreciation (2,252,814) (2,003,972)
Investments in single-family residential properties, net $16,117,737
 $16,243,192

As of June 30, 20202021 and December 31, 2019,2020, the carrying amount of the residential properties above includes $119,454$121,168 and $119,608,$119,929, respectively, of capitalized acquisition costs (excluding purchase price), along with $68,727$68,738 and $65,747,$68,197, respectively, of capitalized interest, $26,438$27,304 and $25,565,$26,899, respectively, of capitalized property taxes, $4,643$4,668 and $4,616,$4,654, respectively, of capitalized insurance, and $2,992$3,157 and $2,836,$3,090, respectively, of capitalized homeowners’ association (“HOA”) fees.
During the three months ended June 30, 20202021 and 2019,2020, we recognized $135,647$143,607 and $131,782,$135,647, respectively, of depreciation expense related to the components of the properties, and $1,619$1,673 and $1,249,$1,619, respectively, of depreciation and amortization related to corporate furniture and equipment. These amounts are included in depreciation and amortization in the condensed consolidated statements of operations. Further, during the three months ended June 30, 20202021 and 2019,2020, impairments totaling $1,442$93 and $4,076,$1,442, respectively, have been recognized and are included in impairment and other in the condensed consolidated statements of operations. See Note 11 for additional information regarding these impairments.
During the six months ended June 30, 20202021 and 2019,2020, we recognized $269,561$286,391 and $264,302,$269,561, respectively, of depreciation expense related to the components of the properties, and $2,732$3,390 and $2,338,$2,732, respectively, of depreciation and amortization related to corporate furniture and equipment. These amounts are included in depreciation and amortization in the condensed consolidated statements of operations. Further, during the six months ended June 30, 20202021 and 2019,2020, impairments totaling $3,913$524 and $7,329,$3,913, respectively, have been recognized and are included in impairment and other in the condensed consolidated statements of operations. See Note 11 for additional information regarding these impairments.

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)







Note 4—Cash, Cash Equivalents, and Restricted Cash
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported on the condensed consolidated balance sheets that sum to the total of such amounts shown in the condensed consolidated statements of cash flows:
June 30,
2021		December 31, 2020
Cash and cash equivalents$126,168 $213,422 
Restricted cash241,976 198,346 
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows$368,144 $411,768 
  June 30,
2020		 December 31, 2019
Cash and cash equivalents $571,719
 $92,258
Restricted cash 223,894
 193,987
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows $795,613
 $286,245
16

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
Pursuant to the terms of the mortgage loans and Secured Term Loan (as defined in Note 6)7), we are required to establish, maintain, and fund from time to time (generally, either monthly or at the time borrowings are funded) certain specified reserve accounts. These reserve accounts include, but are not limited to, the following types of accounts: (i) property tax reserves; (ii) insurance reserves; (iii) capital expenditure reserves; and (iv) HOA reserves. The reserve accounts associated with our mortgage loans and Secured Term Loan are under the sole control of the loan servicer. Additionally, we hold security deposits pursuant to resident lease agreements that we are required to segregate. We are also required to hold letters of credit by certain of our insurance policies. Accordingly, amounts funded to these reserve accounts, security deposit accounts, and other restricted accounts have been classified on our condensed consolidated balance sheets as restricted cash.
The amounts funded, and to be funded, to the reserve accounts are subject to formulae included in the mortgage loan and Secured Term Loan agreements and are to be released to us subject to certain conditions specified in the loan agreements being met. To the extent that an event of default were to occur, the loan servicer has discretion to use such funds to either settle the applicable operating expenses to which such reserves relate or reduce the allocated loan amount associated with a residential property of ours.
The balances of our restricted cash accounts, as of June 30, 20202021 and December 31, 2019,2020, are set forth in the table below. As of June 30, 20202021 and December 31, 2019,2020, no amounts were funded to the insurance accounts as the conditions specified in the mortgage loan and Secured Term Loan agreements that require such funding did not exist.
June 30,
2021		December 31, 2020
Resident security deposits$162,579 $158,244 
Property taxes49,518 7,511 
Collections19,800 22,978 
Capital expenditures4,919 4,919 
Letters of credit3,786 3,320 
Special and other reserves1,374 1,374 
Total$241,976 $198,346 
  June 30,
2020		 December 31, 2019
Resident security deposits $154,529
 $148,186
Property taxes 39,413
 10,443
Collections 18,759
 24,034
Capital expenditures 5,632
 5,627
Letters of credit 3,317
 3,459
Special and other reserves 2,244
 2,238
Total $223,894
 $193,987
Note 5—Investments In Unconsolidated Joint Ventures
We have invested in two joint ventures which are accounted for using the equity method model of accounting. The following table summarizes our investments in unconsolidated joint ventures as of June 30, 2021 and December 31, 2020:
Number of PropertiesCarrying Value
Ownership PercentageJune 30,
2021		December 31, 2020June 30,
2021		December 31, 2020
FNMA(1)
10 %548571$53,193 $53,678 
Rockpoint(2)
20 %82014024,330 15,589 
Total$77,523 $69,267 
(1)Contains homes primarily located in Arizona, California, and Nevada.
(2)Contains homes in markets within the Western United States, Southeast United States, Florida, and Texas.

In October 2020, we entered into an agreement with Rockpoint to form a joint venture that will acquire homes in markets where we already own homes. As of February 2021, the joint venture is funded with a combination of debt and equity, and we have guaranteed the funding of certain tax, insurance, and non-conforming property reserves related to the joint venture’s financing. As of June 30, 2021, our remaining equity commitment to the joint venture is $50,400.
17

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)


For the three and six months ended June 30, 2021, we recorded $11 and $362, respectively, of income from investments in unconsolidated joint ventures which is included in income from investments in unconsolidated joint ventures in the condensed consolidated statements of operations. For the three and six months ended June 30, 2020, we recorded $201 and $723, respectively, of income from investments in unconsolidated joint ventures which is included in other, net in the condensed consolidated statements of operations.

The administrative member of Rockpoint and the managing member of FNMA are wholly owned subsidiaries of INVH LP and are responsible for the operations and management of the properties, subject to Rockpoint and FNMA’s respective approval of major decisions. The subsidiaries earn asset and property management fees from our joint ventures, which are considered to be related parties. For the three and six months ended June 30, 2021, we earned $1,015 and $1,786, respectively, of management fees which are included in joint venture management fees in the condensed consolidated statements of operations. For the three and six months ended June 30, 2020, we earned $629 and $1,309, respectively, of management fees which are included in other, net in the condensed consolidated statements of operations.




Note 5—6—Other Assets
As of June 30, 20202021 and December 31, 2019,2020, the balances in other assets, net are as follows:
  June 30,
2020		 December 31, 2019
Investments in debt securities, net $310,380
 $316,991
Held for sale assets(1)
 77,386
 116,529
Investment in unconsolidated joint venture 54,152
 54,778
Rent and other receivables, net 31,644
 25,244
Prepaid expenses 31,345
 32,106
ROU lease assets — operating and finance, net 23,063
 13,768
Investments in equity securities 16,734
 16,650
Corporate fixed assets, net 9,138
 9,825
Deferred leasing costs, net 7,801
 7,427
Amounts deposited and held by others 2,787
 1,348
Deferred financing costs, net 1,580
 2,765
Derivative instruments (Note 7) 86
 1,643
Other 8,663
 6,192
Total $574,759
 $605,266
June 30,
2021		December 31, 2020
Investments in debt securities, net$229,202 $245,237 
Prepaid expenses45,932 41,347 
Rent and other receivables, net37,966 35,256 
Investments in equity securities36,953 47,189 
Held for sale assets(1)
24,977 44,163 
ROU lease assets — operating and finance, net19,931 21,705 
Deferred financing costs, net10,202 11,637 
Corporate fixed assets, net9,301 9,995 
Amounts deposited and held by others7,144 2,852 
Deferred leasing costs, net6,859 7,631 
Derivative instruments (Note 8)1 1 
Other18,945 11,274 
Total$447,413 $478,287 

(1)As of June 30, 2020 and December 31, 2019, 327 and 478 properties, respectively, are classified as held for sale.
(1)As of June 30, 2021 and December 31, 2020, 98 and 179 properties, respectively, are classified as held for sale.
Investments in Debt Securities, net
In connection with certain of our Securitizations (as defined in Note 6)7), we have retained and purchased certificates totaling $310,380,$229,202, net of unamortized discounts of $2,465,$2,113, as of June 30, 2020.2021. These investments in debt securities are classified as held to maturity investments. As of June 30, 2020,2021, we have not recognized any credit losses with respect to these investments in debt securities. As of December 31, 2019, there were no gross unrecognized holding gains or losses,securities, and there were 0 other than temporary impairments recognized in accumulated other comprehensive loss. As of June 30, 2020, our retained certificates are scheduled to mature over the next one month to sevensix years.
Investment
18

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in Unconsolidated Joint Venturethousands)
(unaudited)
Investments in Equity Securities
We ownhold investments in equity securities both with and without a 10% interestreadily determinable fair value. Investments with a readily determinable fair value are measured at fair value, and those without a readily determinable fair value are measured at cost, less any impairment, plus or minus changes resulting from observable price changes for identical or similar investments in a joint venture with FNMA to operate, lease, and manage a portfolio of properties primarily located in Arizona, California, and Nevada. A wholly owned subsidiary of INVH LP is the managing member of the joint venture and is responsible for the operation and management of the properties, subject to FNMA’s approval of major decisions.same issuer. As of June 30, 20202021 and December 31, 2019,2020, the joint venture owned 602values of our investments in equity securities are as follows:
June 30,
2021		December 31, 2020
Investments with a readily determinable fair value$33,590 $46,339 
Investments without a readily determinable fair value3,363 850 
Total$36,953 $47,189 


The components of gains (losses) on investments in equity securities, net for the three and 641 properties, respectively.six months ended June 30, 2021 and 2020 are as follows:
For the Three Months
Ended June 30,		For the Six Months
Ended June 30,
2021202020212020
Realized gains on investments with a readily determinable fair value$1,888 $0 $1,888 $0 
Unrealized losses on investments with a readily determinable fair value(8,890)0 (12,030)0 
Unrealized gains on investments without a readily determinable fair value0 0 0 34 
Total$(7,002)$0 $(10,142)$34 
Rent and Other Receivables
We lease our properties to residents pursuant to leases that generally have an initial contractual term of at least 12 months, provide for monthly payments, and are cancelable by the resident and us under certain conditions specified in the related lease agreements. Rental revenues and other property income and the corresponding rent and other receivables are recorded net of any concessions and bad debt (including actual write-offs, credit reserves, and uncollectible amounts) for all periods presented.

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)







Variable lease payments consist of resident reimbursements for utilities, and various other fees, including late fees and lease termination fees, among others. Variable lease payments are charged based on the terms and conditions included in the resident leases. For the three months ended June 30, 20202021 and 2019,2020, rental revenues and other property income includes $19,613$28,253 and $23,253$19,613 of variable lease payments, respectively. For thethe six months ended June 30, 20202021 and 2019,2020, rental revenues and other property income includes $44,660$52,647 and $44,583$44,660 of variable lease payments, respectively.
19

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
Future minimum rental revenues and other property income under leases existing on our single-family residential properties as of June 30, 20202021 are as follows:
YearLease Payments to be Received
Remainder of 2021$730,963 
2022468,913 
202339,258 
20240 
20250 
Thereafter0 
Total$1,239,134 
Year Lease Payments to be Received
Remainder of 2020 $698,441
2021 502,586
2022 43,571
2023 —
2024 —
Thereafter —
Total $1,244,598

Right-of-Use (“ROU”) Lease Assets — Operating and Finance, net
The following table presents supplemental information related to leases into which we have entered as a lessee as of June 30, 20202021 and December 31, 2019:2020:
  June 30, 2020 December 31, 2019
  
Operating
Leases
 
Finance
Leases
 
Operating
Leases
 
Finance
Leases
Other assets $13,225
 $9,838
 $12,552
 $1,216
Other liabilities 14,483
 9,382
 13,787
 1,210
Weighted average remaining lease term 3.9 years
 3.6 years
 3.8 years
 2.0 years
Weighted average discount rate 4.0% 4.0% 4.0% 4.0%

Investments in Equity Securities
We hold investments in equity securities without a readily determinable fair value. We have elected to measure the investments at cost, less any impairment, plus or minus changes resulting from observable price changes for identical or similar investments in the same issuers. As of June 30, 2020 and December 31, 2019, the carrying amount of our investments in equity securities was $16,734 and $16,650, respectively. During the six months ended June 30, 2020, we recorded $34 of unrealized gains on our investments in equity securities which are included in other, net in the condensed consolidated statements of operations. No unrealized gains or losses were recorded during the three months ended June 30, 2020 and the three and six months ended June 30, 2019.
June 30, 2021December 31, 2020
Operating
Leases
Finance
Leases
Operating
Leases
Finance
Leases
Other assets$12,531 $7,400 $12,942 $8,763 
Other liabilities (Note 14)15,337 7,107 15,988 8,389 
Weighted average remaining lease term4.0 years2.7 years4.0 years3.1 years
Weighted average discount rate3.3 %4.0 %3.5 %4.0 %
Deferred Financing Costs, net
In connection with ourthe amended and restated Revolving Facility (see Note 7), we incurred $9,673$11,846 of financing costs, during the year ended December 31, 2017, which have been deferred as other assets, net on our condensed consolidated balance sheets. TheseWe amortize deferred financing costs are being amortized as interest expense on a straight-line basis over the term of the Revolving Facility.Facility and accelerate amortization if debt is retired before the maturity date. As of June 30, 20202021 and December 31, 2019,2020, the unamortized balances of these deferred financing costs are $1,580$10,202 and $2,765,$11,637, respectively.

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)







Note 6—7—Debt
Mortgage Loans
Our securitization transactions (the “Securitizations” or the “mortgage loans”) are collateralized by certain homes owned by the respective Borrower Entities. We utilize the proceeds from our securitizations to fund: (i) repayments of then-outstanding indebtedness; (ii) initial deposits into Securitization reserve accounts; (iii) closing costs in connection with the mortgage loans; and (iv) general costs associated with our operations.
The following table sets forth a summary of our mortgage loan indebtedness as of June 30, 2020 and December 31, 2019:
20
            
Outstanding Principal
Balance(5)
  
Origination
Date
 
Maturity
Date(1)
 
Maturity Date if
Fully Extended(2)
 
Interest
Rate(3)
 
Range of Spreads(4)
 June 30,
2020		 December 31, 2019
IH 2017-1(6)
 April 28,
2017		 June 9,
2027		 June 9,
2027		 4.23% N/A $994,606
 $995,520
SWH 2017-1(7)
 September 29,
2017		 October 9,
2020		 January 9,
2023		 1.73% 102-347 bps 736,208
 744,092
IH 2017-2(7)
 November 9,
2017		 December 9,
2020		 December 9,
2024		 1.31% 91-186 bps 616,429
 624,475
IH 2018-1(7)
 February 8,
2018		 March 9,
2021		 March 9,
2025		 1.28% 76-206 bps 780,718
 793,720
IH 2018-2(7)
 May 8,
2018		 June 9,
2021		 June 9,
2025		 1.50% 95-230 bps 934,426
 957,135
IH 2018-3(7)(8)
 June 28,
2018		 July 9,
2020		 July 9,
2025		 1.51% 105-230 bps 1,143,986
 1,213,035
IH 2018-4(7)
 November 7,
2018		 January 9,
2021		 January 9,
2026		 1.58% 115-225 bps 928,533
 938,430
Total Securitizations 6,134,906
 6,266,407
Less: deferred financing costs, net (16,331) (27,946)
Total $6,118,575
 $6,238,461
(1)The maturity dates above reflect all extension options that have been exercised.
(2)Represents the maturity date if we exercise each of the remaining one year extension options available, which are subject to certain conditions being met.
(3)
Except for IH 2017-1, interest rates are based on a weighted average spread over
 LIBOR (or a comparable or successor rate as provided for in our loan agreements), plus applicable servicing fees; as of June 30, 2020, LIBOR was 0.16%. Our IH 2017-1 mortgage loan bears interest at a fixed rate of 4.23% per annum, equal to the market determined pass-through rate payable on the certificates including applicable servicing fees.
(4)
Range of spreads is based on outstanding principal balances as of June 30, 2020.
(5)Outstanding principal balance is net of discounts and does not include deferred financing costs, net.
(6)
Net of unamortized discount of $2,465 and $2,641 as of June 30, 2020 and December 31, 2019, respectively.
(7)
The initial maturity term of each of these mortgage loans is two years, individually subject to 3 to 5, one year extension options at the Borrower Entity’s discretion (provided that there is no continuing event of default under the mortgage loan agreement and the Borrower Entity obtains and delivers a replacement interest rate cap agreement from an approved counterparty within the required timeframe to the lender). Our SWH 2017-1, IH 2017-2, IH 2018-1 and IH 2018-2 mortgage loans have exercised the first extension option. The maturity dates above reflect all extensions that have been exercised.
(8)On July 9, 2020, the extension of the maturity date of the IH 2018-3 mortgage loan from July 9, 2020 to July 9, 2021 was approved by the lender (see Note 15).

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)


The following table sets forth a summary of our mortgage loan indebtedness as of June 30, 2021 and December 31, 2020:

Outstanding Principal
Balance(5)
Origination
Date
Maturity
Date(1)
Maturity Date
if Fully Extended(2)
Interest
Rate(3)
Range of Spreads(4)
June 30,
2021		December 31, 2020
IH 2017-1(6)
April 28,
2017		June 9,
2027		June 9,
2027		4.23%N/A$994,183 $994,787 
IH 2017-2(7)
November 9,
2017		December 9,
2021		December 9,
2024		1.17%91-151 bps551,280 612,506 
IH 2018-1(7)
February 8,
2018		March 9,
2022		March 9,
2025		1.05%76-151 bps641,153 646,021 
IH 2018-2(7)
May 8,
2018		June 9,
2022		June 9,
2025		1.19%95-150 bps691,013 693,988 
IH 2018-3(7)(8)
June 28,
2018		July 9,
2021		July 9,
2025		1.26%105-170 bps878,314 1,036,561 
IH 2018-4(7)
November 7,
2018		January 9,
2022		January 9,
2026		1.38%115-170 bps753,011 848,270 
Total Securitizations4,508,954 4,832,133 
Less: deferred financing costs, net(10,665)(12,035)
Total$4,498,289 $4,820,098 




Securitization Transactions(1)The maturity dates above reflect all extension options that have been exercised.
(2)Represents the maturity date if we exercise each of the remaining one year extension options available, which are subject to certain conditions being met.
(3)Except for IH 2017-1, interest rates are based on a weighted average spread over the London Interbank Offer Rate (“LIBOR”) (or a comparable or successor rate as provided for in our loan agreements), plus applicable servicing fees; as of June 30, 2021, LIBOR was 0.10%. Our IH 2017-1 mortgage loan bears interest at a fixed rate of 4.23% per annum, equal to the market determined pass-through rate payable on the certificates including applicable servicing fees.
(4)Range of spreads is based on outstanding principal balances as of June 30, 2021.
(5)Outstanding principal balance is net of discounts and does not include deferred financing costs, net.
(6)Net of unamortized discount of $2,113 and $2,289 as of June 30, 2021 and December 31, 2020, respectively.
(7)The initial maturity term of each of these mortgage loans is two years, individually subject to 3 to 5, one year extension options at the Borrower Entity’s discretion (provided that there is no continuing event of default under the mortgage loan agreement and the Borrower Entity obtains and delivers to the lender a replacement interest rate cap agreement from an approved counterparty within the required timeframe). Our IH 2018-3 and IH 2018-4 mortgage loans have exercised the first extension option, and our IH 2017-2, IH 2018-1, and IH 2018-2 mortgage loans have exercised the second extension option. The maturity dates above reflect all extensions that have been exercised.
(8)On July 9, 2021, the extension of the maturity date of the IH 2018-3 mortgage loan from July 9, 2021 to July 9, 2022 was approved by the lender (see Note 15).
Securitization Transactions
For each Securitization transaction, the Borrower Entity executed a loan agreement with a third party lender. Except for IH 2017-1, each outstanding mortgage loan originally consisted of 6 floating rate components. The two year initial terms are individually subject to 3 to 5, one year extension options at the Borrower Entity’s discretion. Such extensions are available provided there is no continuing event of default under the respective mortgage loan agreement and the Borrower Entity obtains and delivers a replacement interest rate cap agreement from an approved counterparty within the required timeframe to the lender. IH 2017-1 is a 10 year, fixed rate mortgage loan comprised of 2 components. Certificates issued by the trust in connection with Component A of IH 2017-1 benefit from FNMA’s guaranty of timely payment of principal and interest.
21

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
Each mortgage loan is secured by a pledge of the equity in the assets of the respective Borrower Entities, as well as first-priority mortgages on the underlying properties and a grant of security interests in all of the related personal property. As of June 30, 20202021 and December 31, 2019,2020, a total of 35,78631,196 and 37,04031,316 homes, respectively, with a gross book value of $6,893,683 and $6,888,308, respectively, and a net book value of $6,862,201$5,665,143 and $7,137,576,$5,761,551, respectively, are pledged pursuant to the mortgage loans. Each Borrower Entity has the right, subject to certain requirements and limitations outlined in the respective loan agreements, to substitute properties. We are obligated to make monthly payments of interest for each mortgage loan.
Transactions with Trusts
Concurrent with the execution of each mortgage loan agreement, the respective third party lender sold each loan it originated to individual depositor entities (the “Depositor Entities”) who subsequently transferred each loan to Securitization-specific trust entities (the “Trusts”). The Depositor Entities for our currently outstanding Securitizations are wholly owned subsidiaries. We accounted for the transfers of the individual Securitizations from the wholly owned Depositor Entities to the respective Trusts as sales under ASC 860, Transfers and Servicing, with no resulting gain or loss as the Securitizations were both originated by the lender and immediately transferred at the same fair market value.
As consideration for the transfer of each loan to the Trusts, the Trusts issued classes of certificates which mirror the components of the individual loans (collectively, the “Certificates”) to the Depositor Entities, except that Class R certificates do not have related loan components as they represent residual interests in the Trusts. The Certificates represent the entire beneficial interest in the Trusts. Following receipt of the Certificates, the Depositor Entities sold the Certificates to investors and used the proceeds as consideration for the loans sold to the Depositor Entities by the lenders. These transactions had no effect on our condensed consolidated financial statements other than with respect to Certificates we retained in connection with Securitizations or purchased at a later date.
The Trusts are structured as pass-through entities that receive interest payments from the Securitizations and distribute those payments to the holders of the Certificates. The assets held by the Trusts are restricted and can only be used to fulfill the obligations of those entities. The obligations of the Trusts do not have any recourse to the general credit of any entities in these condensed consolidated financial statements. We have evaluated our interests in certain certificates of the Trusts held by us (discussed below) and determined that they do not create a more than insignificant variable interest in the Trusts. Additionally, the retained certificates do not provide us with any ability to direct activities that could impact the Trusts’ economic performance. Therefore, we do not consolidate the Trusts.
Retained Certificates
As the Trusts made Certificates available for sale to both domestic and foreign investors, sponsors of the mortgage loans are required to retain a portion of the risk that represents a material net economic interest in each loan pursuant to Regulation RR (the “Risk Retention Rules”) under the Securities Exchange Act of 1934, as amended. As such, loan sponsors are required to retain a portion of the credit risk that represents not less than 5% of the aggregate fair value of the loan as of the closing date.
IH 2017-1 issued Class B certificates, which are restricted certificates that were made available exclusively to INVH LP in order to comply with the Risk Retention Rules. The Class B certificates bear a stated annual interest rate of 4.23%, including applicable servicing fees.

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)







For SWH 2017-1, IH 2017-2, IH 2018-1, IH 2018-2, IH 2018-3, and IH 2018-4, we retain 5% of each class of certificates to meet the Risk Retention Rules. These retained certificates accrue interest at a floating rate of LIBOR plus a spread ranging from 0.76% to 3.47%1.70%.
The retained certificates total $310,380$229,202 and $316,991$245,237 as of June 30, 20202021 and December 31, 2019,2020, respectively, and are classified as held to maturity investments and recorded in other assets, net on the condensed consolidated balance sheets (see Note 5)6).
Loan Covenants
The general terms that apply to all of the mortgage loans require each Borrower Entity to maintain compliance with certain affirmative and negative covenants. Affirmative covenants include each Borrower Entity’s, and certain of their
22

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
respective affiliates’, compliance with (i) licensing, permitting and legal requirements specified in the mortgage loan agreements, (ii) organizational requirements of the jurisdictions in which they are organized, (iii) federal and state tax laws, and (iv) books and records requirements specified in the respective mortgage loan agreements. Negative covenants include each Borrower Entity’s, and certain of their affiliates’, compliance with limitations surrounding (i) the amount of each Borrower Entity’s indebtedness and the nature of their investments, (ii) the execution of transactions with affiliates, (iii) the Manager, (iv) the nature of each Borrower Entity’s business activities, and (v) the required maintenance of specified cash reserves. As of June 30, 2020,2021, and through the date our condensed consolidated financial statements were issued, we believe each Borrower Entity is in compliance with all affirmative and negative covenants.
Prepayments
For the mortgage loans, prepayments of amounts owed by us are generally not permitted under the terms of the respective mortgage loan agreements unless such prepayments are made pursuant to the voluntary election or mandatory provisions specified in such agreements. The specified mandatory provisions become effective to the extent that a property becomes characterized as a disqualified property, a property is sold, and/or upon the occurrence of a condemnation or casualty event associated with a property. To the extent either a voluntary election is made, or a mandatory prepayment condition exists, in addition to paying all interest and principal, we must also pay certain breakage costs as determined by the loan servicer and a spread maintenance premium if prepayment occurs before the month following the one or two year anniversary of the closing dates of each of the mortgage loans except for IH 2017-1. For IH 2017-1, prepayments on or before December 2026 will require a yield maintenance premium. For the six months ended June 30, 20202021 and 2019,2020, we made voluntary and mandatory prepayments of $131,677$323,355 and $709,383,$131,677, respectively, under the terms of the mortgage loan agreements. During the six months ended June 30, 2019, prepayments included the full repayment of the CSH 2016-2 mortgage loan.
Secured Term Loan
On June 7, 2019, 2019-1 IH Borrower LP, a consolidated subsidiary (“2019-1 IH Borrower” and one of our Borrower Entities), entered into a 12 year loan agreement with a life insurance company (the “Secured Term Loan”). The Secured Term Loan bears interest at a fixed rate of 3.59%, including applicable servicing fees, for the first 11 years and bears interest at a floating rate based on a spread of 147 bps, including applicable servicing fees, over one month LIBOR (subject to certain adjustments as outlined in the loan agreement) for the twelfth year. The Secured Term Loan is secured by first priority mortgages on a portfolio of single-family rental properties as well as a first priority pledge of the equity interests of 2019-1 IH Borrower. We utilized the proceeds from the Secured Term Loan to fund: (i) repayments of then-outstanding indebtedness; (ii) initial deposits into the Secured Term Loan’s reserve accounts; (iii) transaction costs related to the closing of the Secured Term Loan; and (iv) general corporate purposes.

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)







The following table sets forth a summary of our Secured Term Loan indebtedness as of June 30, 20202021 and December 31, 2019:2020:
Maturity
Date
Interest
Rate(1)
June 30,
2021		December 31, 2020
Secured Term LoanJune 9, 20313.59%$403,363 $403,363 
Deferred financing costs, net(2,159)(2,268)
Secured Term Loan, net$401,204 $401,095 
  
Maturity
Date
 
Interest
Rate(1)
 June 30,
2020		 December 31, 2019
Secured Term Loan June 9, 2031 3.59% $403,363
 $403,464
Deferred financing costs, net(2,377) (2,486)
Secured Term Loan, net$400,986
 $400,978

(1)
The Secured Term Loan bears interest at a fixed rate of 3.59% per annum including applicable servicing fees for the first 11 years and for the twelfth year bears interest at a floating rate based on a spread of 147 bps over one month LIBOR (or a comparable or successor rate as provided for in our loan agreement), including applicable servicing fees, subject to certain adjustments as outlined in the loan agreement. Interest payments are made monthly.
Collateral(1)The Secured Term Loan bears interest at a fixed rate of 3.59% per annum including applicable servicing fees for the first 11 years and for the twelfth year bears interest at a floating rate based on a spread of 147 bps over one month LIBOR (or a comparable or successor rate as provided for in our loan agreement), including applicable servicing fees, subject to certain adjustments as outlined in the loan agreement. Interest payments are made monthly.
23

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
Collateral
The Secured Term Loan’s collateral pool contains 3,334 and 3,332 and 3,333 homes respectively, as of June 30, 20202021 and December 31, 2019,2020, respectively, with a gross book value of $796,598 and $791,860, respectively, and a net book value of $727,530$711,784 and $734,759,$719,762, respectively. 2019-1 IH Borrower has the right, subject to certain requirements and limitations outlined in the loan agreement, to substitute properties representing up to 20% of the collateral pool annually, and to substitute properties representing up to 100% of the collateral pool over the life of the Secured Term Loan. In addition, 4 times after the first anniversary of the closing date, 2019-1 IH Borrower has the right, subject to certain requirements and limitations outlined in the loan agreement, to execute a special release of collateral representing up to 15% of the then-outstanding principal balance of the Secured Term Loan in order to bring the loan-to-value ratio back in line with the Secured Term Loan’s loan-to-value ratio as of the closing date. Any such special release of collateral would not change the then-outstanding principal balance of the Secured Term Loan, but rather would reduce the number of single-family rental homes included in the collateral pool.
Loan Covenants
The Secured Term Loan requires 2019-1 IH Borrower to maintain compliance with certain affirmative and negative covenants. Affirmative covenants include 2019-1 IH Borrower’s, and certain of its affiliates’, compliance with (i) licensing, permitting and legal requirements specified in the loan agreement, (ii) organizational requirements of the jurisdictions in which they are organized, (iii) federal and state tax laws, and (iv) books and records requirements specified in the loan agreement. Negative covenants include 2019-1 IH Borrower’s, and certain of its affiliates’, compliance with limitations surrounding (i) the amount of 2019-1 IH Borrower’s indebtedness and the nature of its investments, (ii) the execution of transactions with affiliates, (iii) the Manager, (iv) the nature of 2019-1 IH Borrower’s business activities, and (v) the required maintenance of specified cash reserves. As of June 30, 2020,2021, and through the date our condensed consolidated financial statements were issued, we believe 2019-1 IH Borrower is in compliance with all affirmative and negative covenants.
Prepayments
Prepayments of the Secured Term Loan are generally not permitted unless such prepayments are made pursuant to the voluntary election or mandatory provisions specified in the loan agreement. The specified mandatory provisions become effective to the extent that a property becomes characterized as a disqualified property, a property is sold, and/or upon the occurrence of a condemnation or casualty event associated with a property. To the extent either a voluntary election is made, or a mandatory prepayment condition exists, in addition to paying all interest and principal, we must also pay certain breakage costs as determined by the loan servicer and a yield maintenance premium if prepayment occurs before June 9, 2030. For the six months ended June 30, 2020, we made mandatory prepayments of $101.$101. No such prepayments were made forduring the six months ended June 30, 2019.
2021.
24

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)


Unsecured Notes

On May 25, 2021, we entered into a note purchase agreement in connection with a private placement of senior unsecured notes. Under such note purchase agreement, we issued and sold $300,000 aggregate principal amount of senior unsecured notes to certain institutional investors consisting of (i) $150,000 aggregate principal amount of 2.46% Senior Notes, Series A, due May 25, 2028 (the “2028 Unsecured Notes”) and (ii) $150,000 aggregate principal amount of 3.18% Senior Notes, Series B, due May 25, 2036 (the “2036 Unsecured Notes,” and together with the 2028 Unsecured Notes, the “Unsecured Notes”). Proceeds from the Unsecured Notes were used for general corporate purposes, including voluntary prepayment of then-outstanding indebtedness. Interest on the Unsecured Notes is payable semi-annually in arrears on May 25th and November 25th of each year, commencing on November 25, 2021, until such principal becomes due and payable.

The following table sets forth a summary of our Unsecured Notes as of June 30, 2021 and December 31, 2020:

Maturity
Date		Interest
Rate		June 30,
2021		December 31, 2020
2028 Unsecured NotesMay 25, 20282.46%$150,000 $0 
2036 Unsecured NotesMay 25, 20363.18%150,000 0 
Total300,000 0 
Deferred financing costs, net(1,601)0 
Unsecured Notes, net$298,399 $0 

Prepayments
We may, at our option, upon notice to each holder of the Unsecured Notes, prepay at any time all, or from time to time any part of, the Unsecured Notes, in an amount not less than 5% of the aggregate principal amount of the Unsecured Notes then outstanding in the case of a partial prepayment, at 100% of the principal amount so prepaid, together with interest accrued thereon to the date of prepayment and the make-whole premium as outlined in the note purchase agreement.
Guarantees
In the event that any of our subsidiaries guarantees or otherwise becomes liable in respect of our Credit Facility, or any other material credit facility as defined in the note purchase agreement, then the obligations of the Unsecured Notes must also then be unconditionally guaranteed by each of those subsidiaries.
Loan Covenants
The Unsecured Notes contain customary covenants, including, among others, limitations on distributions, fundamental changes, and transactions with affiliates. The Unsecured Notes also include the following financial covenants, subject to certain qualifications, (i) a maximum total leverage ratio, (ii) a maximum secured leverage ratio, (iii) a maximum unencumbered leverage ratio, (iv) a minimum fixed charge coverage ratio, and (v) a minimum unsecured interest coverage ratio.
The Unsecured Notes contain customary events of default (subject in certain cases to specified cure periods), the occurrence of which would allow the holders of notes to take various actions, including the acceleration of amounts due under the Unsecured Notes. As of June 30, 2021, and through the date our condensed consolidated financial statements were issued, we believe we were in compliance with all affirmative and negative covenants.
25

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
Term Loan Facility and Revolving Facility
On February 6, 2017,December 8, 2020, we entered into a credit agreementan Amended and Restated Revolving Credit and Term Loan Agreement with a syndicate of banks, financial institutions, and institutional lenders for a new credit facility (the “Credit Facility”), which was amended on December 18, 2017 to include all entities and homes acquired in the Mergers.. The Credit Facility provides $2,500,000$3,500,000 of borrowing capacity and consists of a $1,000,000 revolving facility (the “Revolving Facility”), which will mature on February 6, 2021, with a one year extension option, and a $1,500,000$2,500,000 term loan facility (the “Term Loan Facility”), both of which will mature on February 6, 2022.January 31, 2025, with two six month extension options available. The Revolving Facility also includes borrowing capacity available for letters of credit and for short-term borrowings referred to as swing line borrowings, in each case subject to certain sublimits.credit. The Credit Facility provides us with the option to enter into additional incremental credit facilities (including an uncommitted incremental facility that provides us with the option to increase the size of the Revolving Facility and/or the Term Loan Facility by ansuch that the aggregate amount of up to $1,500,000)does not exceed $4,000,000 at any time), subject to certain limitations.
The Credit Facility replaced a credit facility that consisted of a $1,000,000 revolving facility (the “2017 Revolving Facility”) and a $1,500,000 term loan facility (the “2017 Term Loan Facility” and together with the 2017 Revolving Facility, the “2017 Credit Facility”). The terms and conditions of the Credit Facility are consistent with those of the 2017 Credit Facility unless otherwise noted below. Proceeds from the Term Loan Facility were used to repay then-outstanding indebtedness, and for general corporate purposes.including the 2017 Term Loan Facility. Proceeds from the Revolving Facility are used for general corporate purposes.
The following table sets forth a summary of the outstanding principal amounts under the Credit Facility as of June 30, 20202021 and December 31, 2019:2020, respectively:
  Maturity
Date		 
Interest
Rate(1)
 June 30,
2020		 December 31, 2019
Term Loan Facility February 6, 2022 1.86% $1,500,000
 $1,500,000
Deferred financing costs, net (4,809) (6,253)
Term Loan Facility, net $1,495,191
 $1,493,747
         
Revolving Facility(2)
 February 6, 2021 1.91% $—
 $—
Maturity
Date
Interest
Rate(1)
June 30,
2021		December 31, 2020
Term Loan Facility(2)
January 31, 20251.10%$2,500,000 $2,500,000 
Deferred financing costs, net(25,505)(29,093)
Term Loan Facility, net$2,474,495 $2,470,907 
Revolving Facility(2)
January 31, 20251.00%$0 $0 
(1)
Interest rates for the Term Loan Facility and the Revolving Facility are based on LIBOR plus an applicable margin. As of June 30, 2020, the applicable margins were 1.70% and 1.75%, respectively, and LIBOR was 0.16%
(1)Interest rates for the Term Loan Facility and the Revolving Facility are based on LIBOR plus an applicable margin. As of June 30, 2021, the applicable margins were 1.00% and 0.90%, respectively, and LIBOR was 0.10%.
(2)If we exercise the two six month extension options, the maturity date will be January 31, 2026.
(2)
If we exercise the one year extension option, the maturity date will be February 6, 2022.
Interest Rate and Fees
Borrowings under the Credit Facility bear interest, at our option, at a rate equal to a margin over either (a) a LIBOR rate determined by reference to the Bloomberg LIBOR rate (or a comparable or successor rate as provided for in our loan agreement) for the interest period relevant to such borrowing, or (b) a base rate determined by reference to the highest of (1) the administrative agent’s prime lending rate, (2) the federal funds effective rate plus 0.50%, and (3) the LIBOR rate that would be payable on such day for a LIBOR rate loan with a one month interest period plus 1.00%. After obtaining the requisite rating on our non-credit enhanced, senior unsecured long term debt as defined in the Credit Facility agreement (the “Investment Grade Rating”), we elected to convert to a credit rating based pricing grid (the “Pricing Grid Conversion”)
26

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
effective April 22, 2021. The margin ismargins for the Term Loan Facility and Revolving Facility under the credit rating based pricing grid are as follows:
Base Rate LoansLIBOR Rate Loans
Term Loan Facility0.00 %—0.65%0.80%—1.65%
Revolving Facility0.00 %—0.45%0.75%—1.45%
Prior to the Pricing Grid Conversion, the margins were based on a total leverage based grid. The margin for the Revolving Facility ranges from 0.75% to 1.30% in the case of base rate loans, and 1.75% to 2.30% in the case of LIBOR rate loans. The marginmargins for the Term Loan Facility, ranges from 0.70% to 1.30%Revolving Facility, 2017 Term Loan Facility, and 2017 Revolving Facility under the total leverage based grid were as follows:
Base Rate LoansLIBOR Rate Loans
Term Loan Facility0.45%—1.15%1.45%—2.15%
Revolving Facility0.50%—1.15%1.50%—2.15%
2017 Term Loan Facility0.70%—1.30%1.70%—2.30%
2017 Revolving Facility0.75%—1.30%1.75%—2.30%

0The Credit Facility also includes a sustainability component whereby the Revolving Facility pricing can improve upon the Company’s achievement of certain sustainability ratings, determined via an independent third party evaluation. This sustainability feature was not included in the case of base rate loans, and 1.70% to 2.30% in the case of LIBOR rate loans. In addition, the Credit Facility provides that, upon receiving an investment grade rating on its non-credit enhanced, senior unsecured long term debt of BBB- or better from Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies, Inc., or Baa3 or better from Moody’s Investors Service, Inc. (an “Investment Grade Rating Event”), we may elect to convert to a credit rating based pricing grid.2017 Revolving Facility.
In addition to paying interest on outstanding principal under the Credit Facility, we are required to pay a facility fee to the lenders under the Revolving Facility in respect of the unused commitments thereunder. The facility fee rate is based on the daily unused amount of the Revolving Facility and is either 0.35% or 0.20% per annum based on the unused facility amount. Upon converting to a credit rating pricing based grid, the unused facility fee will no longer apply and we will be required to pay a facility fee ranging from 0.125%0.10% to 0.300%0.30%. We are also required to pay customary letter of credit fees.

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts Prior to the Pricing Grid Conversion, instead of a facility fee, we were required to pay an unused facility fee to the lenders under the Revolving Facility and the 2017 Revolving Facility in thousands)
(unaudited)







respect of the unused commitments thereunder. The unused facility fee rate was either 0.30% or 0.20% per annum for the Revolving Facility and 0.35% or 0.20% per annum for the 2017 Revolving Facility.
Prepayments and Amortization
No principal reductions are required under the Credit Facility. We are permitted to voluntarily repay amounts outstanding under the Term Loan Facility at any time without premium or penalty, subject to certain minimum amounts and the payment of customary “breakage” costs with respect to LIBOR loans. Once repaid, no further borrowings will be permitted under the Term Loan Facility.
Loan Covenants
The Credit Facility contains certain customary affirmative and negative covenants and events of default. Such covenants will, among other things, restrict, subject to certain exceptions, our ability and that of the Subsidiary Guarantors (as defined below) and their respective subsidiaries to (i) engage in certain mergers, consolidations or liquidations, (ii) sell, lease or transfer all or substantially all of their respective assets, (iii) engage in certain transactions with affiliates, (iv) make changes to our fiscal year, (v) make changes in the nature of our business and our subsidiaries, and (vi) incur additional indebtedness that is secured on a pari passu basis with the Credit Facility.enter into certain burdensome agreements.
The Credit Facility also requires us, on a consolidated basis with our subsidiaries, to maintain a (i) maximum total leverage ratio, (ii) maximum secured leverage ratio, (iii) maximum unencumbered leverage ratio, (iv) minimum fixed charge coverage ratio, and (v) minimum unencumbered fixed chargeunsecured interest coverage ratio, and (vi) minimum tangible net worth.ratio. Prior to obtaining an Investment Grade Rating, we were also required to maintain a maximum secured recourse leverage ratio. If an event of default occurs, the lenders under the Credit Facility are entitled to take various actions, including the acceleration of amounts due under the Credit Facility and all actions permitted to be taken by a secured creditor.Facility. As of June 30, 2020,2021, and through the date our condensed consolidated financial statements were issued, we believe we were in compliance with all affirmative and negative covenants.
27

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
Guarantees and Security
TheAfter we obtained the requisite Investment Grade Rating, our direct and indirect domestic wholly owned subsidiaries that directly own unencumbered assets (the “Subsidiary Guarantors”) were released from their previous guarantee requirements under the Credit Facility (the “Investment Grade Release”) effective May 5, 2021. Prior to the Investment Grade Release, the obligations under the Credit Facility arewere guaranteed on a joint and several basis by each of our direct and indirect domestic wholly owned subsidiaries that own, directly or indirectly, unencumbered assets (the “Subsidiary Guarantors”),Subsidiary Guarantor, subject to certain exceptions. The guarantee provided by any Subsidiary Guarantor will be automatically released upon the occurrence of certain events, including if it no longer has a direct or indirect interest in an unencumbered asset or as a result of certain non-recourse refinancing transactions pursuant to which such Subsidiary Guarantor becomes contractually prohibited from providing its guaranty of the Credit Facility. In addition, INVH and each subsidiary of INVH that owns equity in the borrower may be required to provide a guarantee of the Credit Facility under certain circumstances, including if INVH does not maintain its qualification as a REIT.
The
Although the 2017 Credit Facility was secured, such security interests have been released and the Credit Facility is collateralized by first priority or equivalent security interests in all the capital stock of, or other equity interests in, any Subsidiary Guarantor held by us and each of the Subsidiary Guarantors. The security interests granted under the Credit Facility will be automatically released upon the occurrence of certain events, including upon an Investment Grade Rating Event or if the total net leverage ratio is less than or equal to 8.00:1.00 for four consecutive fiscal quarters.unsecured.
Convertible Senior Notes
In connection with the Mergers, we assumed SWH’s convertible senior notes. In July 2014, SWH issued $230,000 in aggregate principal amount of 3.00% convertible senior notes due 2019 (the “2019 Convertible Notes”). Interest on the 2019 Convertible Notes was payable semiannually in arrears on January 1st and July 1st of each year. The notes matured on July 1, 2019, and we settled substantially all of the outstanding balance of the 2019 Convertible Notes through the issuance of 12,553,864 shares of our common stock.

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)







In January 2017, SWH issued $345,000 in aggregate principal amount of 3.50% convertible senior notes due 2022 (the “2022 Convertible Notes” and together with the 2019 Convertible Notes,or the “Convertible Senior Notes”). Interest on the 2022 Convertible Notes is payable semiannually in arrears on January 15th and July 15th of each year. The 2022 Convertible Notes will mature on January 15, 2022.
The following table summarizes the terms of the Convertible Senior Notes outstanding as of June 30, 20202021 and December 31, 2019:2020:
            Principal Amount
  Coupon
Rate		 
Effective
Rate(1)
 
Conversion
Rate(2)
 Maturity
Date		 Remaining Amortization
Period		 June 30,
2020		 December 31, 2019
2022 Convertible Notes 3.50% 5.12% 43.7694 January 15, 2022 1.54 years $345,000
 $345,000
Net unamortized fair value adjustment(8,180) (10,701)
Total$336,820
 $334,299
Principal Amount
Coupon
Rate
Effective
Rate(1)
Conversion
Rate(2)
Maturity
Date		Remaining Amortization
Period		June 30,
2021		December 31, 2020
2022 Convertible Notes3.50%5.12%43.9448January 15, 20220.54 years$344,994 $345,000 
Net unamortized fair value adjustment(2,944)(5,596)
Total$342,050 $339,404 
(1)
Effective rate includes the effect of the adjustment to the fair value of the debt as of the Merger Date, the value of which reduced the initial liability recorded to $324,252 for the 2022 Convertible Notes.
(2)
The conversion rate as of June 30, 2020Effective rate includes the effect of the adjustment to the fair value of the debt as of the Merger Date, the value of which reduced the initial liability recorded to $324,252 for the 2022 Convertible Notes.
(2)The conversion rate as of June 30, 2021 represents the number of shares of common stock issuable per $1,000 principal amount (actual $) of the 2022 Convertible Notes converted on such date, as adjusted in accordance with the indenture as a result of cash dividend payments and the effects of previous mergers. As of June 30, 2020, the 2022 Convertible Notes do not meet the criteria for conversion. We have the option to settle the 2022 Convertible Notes in cash, common stock, or a combination thereof.
Terms of Conversion
On July 1, 2019, we settled substantially all of the outstanding balance of the 2019 Convertible Notes with the issuance of 12,553,864 shares of our common stock. At the settlement date, the conversion rate applicable to the 2019 Convertible Notes was 54.5954 shares of our common stock per $1,000 principal amount (actual $) of the 20192022 Convertible Notes (equivalentconverted on such date, as adjusted in accordance with the indenture as a result of cash dividend payments and the effects of previous mergers. Effective July 15, 2021, we notified note holders of our intent to a conversion pricesettle conversions of approximately $18.32 per common share — actual $). For the three and six months ended June 30, 2019, interest expense for the 20192022 Convertible Notes including non-cash amortizationin shares of discounts, was $2,783 and $5,586, respectively.common stock (see Note 15).
28

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
Terms of Conversion
As of June 30, 2020,2021, the conversion rate applicable to the 2022 Convertible Notes is 43.769443.9448 shares of our common stock per $1,000 principal amount (actual $) of the 2022 Convertible Notes (equivalent to a conversion price of approximately $22.85$22.76 per common share — actual $). The conversion rate for the 2022 Convertible Notes is subject to adjustment in some events, but will not be adjusted for any accrued and unpaid interest. In addition, following certain events that occur prior to the maturity date, we will adjust the conversion rate for a holder who elects to convert its 2022 Convertible Notes in connection with such an event in certain circumstances. At any time prior to July 15, 2021, holders may convert the 2022 Convertible Notes at their option only under specific circumstances as defined in the indenture agreement, dated as of January 10, 2017, between us and our trustee, Wilmington Trust National Association (the “Convertible Notes Trustee”). On or after July 15, 2021 and until maturity, holders may convert all or any portion of the 2022 Convertible Notes at any time. Upon conversion,Effective July 15, 2021, we will pay or deliver, asnotified note holders of our intent to settle conversions of the case may be, cash,2022 Convertible Notes in shares of common stock, or a combinationstock. From July 1, 2021 through the date our condensed consolidated financial statements were issued, $176,740 of cash andprincipal was converted into 7,766,798 shares of common stock at our election.the election of the note holders (see Note 15). The “if-converted” value of the 2022 Convertible Notes exceeds the principal amount by $70,715$220,348 as of June 30, 20202021 as the closing market price of our common stock of $27.53$37.29 per common share (actual $) exceeds the implicit conversion price. For the three months ended June 30, 20202021 and 2019,2020, interest expense for the 2022 Convertible Notes, including non-cash amortization of discounts, was $4,279$4,344 and $4,217,$4,279, respectively. For the six months ended June 30, 20202021 and 2019,2020, interest expense for the 2022 Convertible Notes, including non-cash amortization of discounts, was $8,688 and $8,558, and $8,434, respectively.

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)







General Terms
We may not redeem the 2022 Convertible Notes prior to their maturity date except to the extent necessary to preserve our status as a REIT for United States federal income tax purposes, as further described in the indenture. If we undergo a fundamental change as defined in the indenture, holders may require us to repurchase for cash all or any portion of their 2022 Convertible Notes at a fundamental change repurchase price equal to 100% of the principal amount of the 2022 Convertible Notes to be repurchased, plus accrued and unpaid interest up to, but excluding, the fundamental change repurchase date.
The indenture contains customary terms and covenants and events of default. If an event of default occurs and is continuing, the Convertible Notes Trustee, by notice to us, or the holders of at least 25% in aggregate principal amount of the outstanding 2022 Convertible Notes, by notice to us and the Convertible Notes Trustee, may, and the Convertible Notes Trustee at the request of such holders shall, declare 100% of the principal of and accrued and unpaid interest on all the 2022 Convertible Notes to be due and payable. In the case of an event of default arising out of certain events of bankruptcy, insolvency or reorganization in respect to us (as set forth in the indenture), 100% of the principal of and accrued and unpaid interest on the 2022 Convertible Notes will automatically become due and payable.
29

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
Debt Maturities Schedule
The following table summarizes the contractual maturities of our debt as of June 30, 2020:2021:
Year 
Mortgage
Loans(1)(2)
 Secured Term Loan Term Loan Facility 
Revolving Facility(3)
 Convertible Senior Notes Total
Remainder of 2020 $2,496,623
 $—
 $—
 $—
 $—
 $2,496,623
2021 2,643,677
 —
 —
 —
 —
 2,643,677
2022 —
 —
 1,500,000
 —
 345,000
 1,845,000
2023 —
 —
 —
 —
 —
 —
2024 —
 —
 —
 —
 —
 —
Thereafter 994,606
 403,363
 —
 —
 —
 1,397,969
Total 6,134,906
 403,363
 1,500,000
 —
 345,000
 8,383,269
Less: deferred financing costs, net (16,331) (2,377) (4,809) —
 —
 (23,517)
Less: unamortized fair value adjustment —
 —
 —
 —
 (8,180) (8,180)
Total $6,118,575
 $400,986
 $1,495,191
 $—
 $336,820
 $8,351,572
Year
Mortgage
Loans(1)(2)
Secured Term LoanUnsecured Notes
Term Loan Facility(3)
Revolving Facility(3)
Convertible Senior NotesTotal
Remainder of 2021$1,429,594 $0 $0 $0 $0 $0 $1,429,594 
20222,085,177 0 0 0 0 344,994 2,430,171 
20230 0 0 0 0 0 0 
20240 0 0 0 0 0 0 
20250 0 0 2,500,000 0 0 2,500,000 
Thereafter994,183 403,363 300,000 0 0 0 1,697,546 
Total4,508,954 403,363 300,000 2,500,000 0 344,994 8,057,311 
Less: deferred financing costs, net(10,665)(2,159)(1,601)(25,505)0 0 (39,930)
Less: unamortized fair value adjustment0 0 0 0 0 (2,944)(2,944)
Total$4,498,289 $401,204 $298,399 $2,474,495 $0 $342,050 $8,014,437 
(1)The maturity dates of the obligations are reflective of all extensions that have been exercised as of June 30, 2020. If fully extended, we would have no mortgage loans maturing before 2023. Such extensions are available provided there is no continuing event of default under the respective mortgage loan agreement and the Borrower Entity obtains and delivers a replacement interest rate cap agreement from an approved counterparty within the required timeframe to the lender.
(2)On July 9, 2020, the extension of the maturity date of the IH 2018-3 mortgage loan from July 9, 2020 to July 9, 2021 was approved by the lender (see Note 15).
(3)If we exercise the one year extension option, the maturity date will be in 2022.
(1)The maturity dates of the obligations are reflective of all extensions that have been exercised as of June 30, 2021. If fully extended, we would have no mortgage loans maturing before 2024. Such extensions are available provided there is no continuing event of default under the respective mortgage loan agreement and the Borrower Entity obtains and delivers to the lender a replacement interest rate cap agreement from an approved counterparty within the required timeframe.
(2)On July 9, 2021, the extension of the maturity date of the IH 2018-3 mortgage loan from July 9, 2021 to July 9, 2022 was approved by the lender (see Note 7—15).
(3)If we exercise the two six month extension options, the maturity date will be January 31, 2026.
Note 8—Derivative Instruments
From time to time, we enter into derivative instruments to manage the economic risk of changes in interest rates. We do not enter into derivative transactions for speculative or trading purposes. Designated hedges are derivatives that meet the criteria for hedge accounting and that we have elected to designate as hedges. Non-designated hedges are derivatives that do not meet the criteria for hedge accounting or that we did not elect to designate as hedges.

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)







Designated Hedges
We have entered into various interest rate swap agreements, which are used to hedge the variable cash flows associated with variable-rate interest payments. Currently, each of our swap agreements is indexed to one month LIBOR and is designated for hedge accounting purposes. One month LIBOR is set to expire at the end of 2021,after June 30, 2023, and we will work with the counterparties to our swap agreements to adjust each floating rate to a comparable or successor rate. Changes in the fair value of these swaps are recorded in other comprehensive income and are subsequently reclassified into earnings in the period in which the hedged forecasted transactions affect earnings.
30

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
The table below summarizes our interest rate swap instruments as of June 30, 2020:2021:
Agreement DateForward
Effective Date		Maturity
Date		Strike
Rate		IndexNotional
Amount
December 11, 2019February 28, 2017December 31, 20241.74%One month LIBOR$750,000 
April 19, 2018January 31, 2019January 31, 20252.86%One month LIBOR400,000 
February 15, 2019March 15, 2019March 15, 20222.23%One month LIBOR800,000 
April 19, 2018March 15, 2019November 30, 20242.85%One month LIBOR400,000 
April 19, 2018March 15, 2019February 28, 20252.86%One month LIBOR400,000 
May 8, 2018March 9, 2020June 9, 20252.99%One month LIBOR325,000 
May 8, 2018June 9, 2020June 9, 20252.99%One month LIBOR595,000 
June 3, 2016July 15, 2020July 15, 20211.47%One month LIBOR450,000 
June 28, 2018August 7, 2020July 9, 20252.90%One month LIBOR1,100,000 
January 10, 2017January 15, 2021July 15, 20212.23%One month LIBOR550,000 
December 9, 2019July 15, 2021November 30, 20242.90%One month LIBOR400,000 
November 7, 2018March 15, 2022July 31, 20253.14%One month LIBOR400,000 
November 7, 2018March 15, 2022July 31, 20253.16%One month LIBOR400,000 
Agreement Date Forward
Effective Date		 Maturity
Date		 Strike
Rate		 Index Notional
Amount
December 21, 2016 February 28, 2017 January 31, 2022 1.97% One month LIBOR $750,000
December 11, 2019 February 28, 2017 December 31, 2024 1.74% One month LIBOR 750,000
January 12, 2017 February 28, 2017 August 7, 2020 1.59% One month LIBOR 1,100,000
April 19, 2018 January 31, 2019 January 31, 2025 2.86% One month LIBOR 400,000
February 15, 2019 March 15, 2019 March 15, 2022 2.23% One month LIBOR 800,000
April 19, 2018 March 15, 2019 November 30, 2024 2.85% One month LIBOR 400,000
April 19, 2018 March 15, 2019 February 28, 2025 2.86% One month LIBOR 400,000
June 3, 2016 July 15, 2019 July 15, 2020 1.30% One month LIBOR 450,000
January 10, 2017 January 15, 2020 January 15, 2021 2.13% One month LIBOR 550,000
May 8, 2018 March 9, 2020 June 9, 2025 2.99% One month LIBOR 325,000
May 8, 2018 June 9, 2020 June 9, 2025 2.99% One month LIBOR 595,000
June 3, 2016 July 15, 2020 July 15, 2021 1.47% One month LIBOR 450,000
June 28, 2018 August 7, 2020 July 9, 2025 2.90% One month LIBOR 1,100,000
January 10, 2017 January 15, 2021 July 15, 2021 2.23% One month LIBOR 550,000
December 9, 2019 July 15, 2021 November 30, 2024 2.90% One month LIBOR 400,000
November 7, 2018 March 15, 2022 July 31, 2025 3.14% One month LIBOR 400,000
November 7, 2018 March 15, 2022 July 31, 2025 3.16% One month LIBOR 400,000


During the three and six months ended June 30, 20202021 and 2019,2020, such derivatives were used to hedge the variable cash flows associated with existing variable-rate interest payments. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on our variable-rate debt. During the next 12 months, we estimate that $153,198$139,696 will be reclassified to earnings as an increase in interest expense.

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)







Non-Designated Hedges
Concurrent with entering into certain of the mortgage loan agreements and in connection with previous mergers, we entered into or acquired and maintain interest rate cap agreements with terms and notional amounts equivalent to the terms and amounts of the mortgage loans made by the third party lenders. Currently, each of our cap agreements is indexed to one month LIBOR, which is set to expire at the end of 2021.on June 30, 2023. We will work with the counterparties to our cap agreements to adjust each floating rate to a comparable or successor rate. To the extent that the maturity date of one or more of the mortgage loans is extended through an exercise of one or more extension options, replacement or extension interest rate cap agreements must be executed with terms similar to those associated with the initial interest rate cap agreements and strike prices equal to the greater of the interest rate cap strike price and the interest rate at which the debt service coverage ratio (as defined) is not less than 1.2 to 1.0. The interest rate cap agreements, including all of our rights to payments owed by the counterparties and all other rights, have been pledged as additional collateral for the mortgage loans. Additionally, in certain instances, in order to minimize the cash impact of purchasing required interest rate caps, we simultaneously sell interest rate caps (which have identical terms and notional amounts) such that the purchase price and sales proceeds of the related interest rate caps are intended to offset each other. The purchased and sold interest rate caps have strike prices ranging from approximately 3.24%3.75% to 5.31%7.03%.
31

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
Fair Values of Derivative Instruments on the Condensed Consolidated Balance Sheets
The table below presents the fair value of our derivative financial instruments as well as their classification on the condensed consolidated balance sheets as of June 30, 20202021 and December 31, 2019:2020:
Asset DerivativesLiability Derivatives
Fair Value as ofFair Value as of
Balance
Sheet Location		June 30,
2021		December 31, 2020Balance
Sheet Location		June 30,
2021		December 31, 2020
Derivatives designated as hedging instruments:
Interest rate swapsOther assets$0 $0 Other liabilities$411,866 $539,560 
Derivatives not designated as hedging instruments:
Interest rate capsOther assets1 1 Other liabilities0 0 
Total$1 $1 $411,866 $539,560 
  Asset Derivatives Liability Derivatives
    Fair Value as of   Fair Value as of
  Balance
Sheet Location		 June 30,
2020		 December 31, 2019 Balance
Sheet Location		 June 30,
2020		 December 31, 2019
Derivatives designated as hedging instruments:            
Interest rate swaps Other
assets		 $—
 $1,643
 Other liabilities $634,337
 $275,679
             
Derivatives not designated as hedging instruments:            
Interest rate caps Other
assets		 86
 —
 Other liabilities 2
 —
Total   $86
 $1,643
   $634,339
 $275,679

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)







Offsetting Derivatives
We enter into master netting arrangements, which reduce risk by permitting net settlement of transactions with the same counterparty. The tables below present a gross presentation, the effects of offsetting, and a net presentation of our derivatives as of June 30, 20202021 and December 31, 2019:2020:
June 30, 2021
Gross Amounts Not Offset in the Statement of Financial Position
Gross Amounts of Recognized Assets/ LiabilitiesGross Amounts Offset in the Statement of Financial PositionNet Amounts of Assets/ Liabilities Presented in the Statement of Financial PositionFinancial InstrumentsCash Collateral ReceivedNet
Amount
Offsetting assets:
Derivatives$1 $0 $1 $0 $0 $1 
Offsetting liabilities:
Derivatives$411,866 $0 $411,866 $0 $0 $411,866 
  June 30, 2020
        Gross Amounts Not Offset in the Statement of Financial Position  
  Gross Amounts of Recognized Assets/ Liabilities Gross Amounts Offset in the Statement of Financial Position Net Amounts of Assets/ Liabilities Presented in the Statement of Financial Position Financial Instruments Cash Collateral Received Net
Amount
Offsetting assets:            
Derivatives $86
 $—
 $86
 $—
 $—
 $86
Offsetting liabilities:            
Derivatives $634,339
 $—
 $634,339
 $—
 $—
 $634,339

December 31, 2020
Gross Amounts Not Offset in the Statement of Financial Position
Gross Amounts of Recognized Assets/ LiabilitiesGross Amounts Offset in the Statement of Financial PositionNet Amounts of Assets/ Liabilities Presented in the Statement of Financial PositionFinancial InstrumentsCash Collateral ReceivedNet
Amount
Offsetting assets:
Derivatives$1 $0 $1 $0 $0 $1 
Offsetting liabilities:
Derivatives$539,560 $0 $539,560 $0 $0 $539,560 
  December 31, 2019
        Gross Amounts Not Offset in the Statement of Financial Position  
  Gross Amounts of Recognized Assets/ Liabilities Gross Amounts Offset in the Statement of Financial Position Net Amounts of Assets/ Liabilities Presented in the Statement of Financial Position Financial Instruments Cash Collateral Received Net
Amount
Offsetting assets:            
Derivatives $1,643
 $—
 $1,643
 $(1,054) $—
 $589
Offsetting liabilities:            
Derivatives $275,679
 $—
 $275,679
 $(1,054) $—
 $274,625
32


INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)







Effect of Derivative Instruments on the Condensed Consolidated Statements of Comprehensive LossIncome (Loss) and the Condensed Consolidated Statements of Operations
The tables below present the effect of our derivative financial instruments in the condensed consolidated statements of comprehensive lossincome (loss) and the condensed consolidated statements of operations for the three months ended June 30, 20202021 and 2019:2020:
Amount of Loss Recognized in OCI on DerivativeLocation of Loss Reclassified from Accumulated OCI into Net IncomeAmount of Loss Reclassified from Accumulated OCI into Net IncomeTotal Amount of Interest Expense Presented in the Condensed Consolidated Statements of Operations
For the Three Months
Ended June 30,		For the Three Months
Ended June 30,		For the Three Months
Ended June 30,
202120202021202020212020
    Derivatives in cash flow hedging relationships:
Interest rate swaps$(21,190)$(52,817)Interest expense$(38,256)$(28,042)$80,764 $86,071 
  
Amount of Loss Recognized
in OCI on Derivative
 
Location of Gain
Reclassified from
Accumulated OCI
into Net Income
 Amount of Gain (Loss) Reclassified from Accumulated OCI into Net Income Total Amount of Interest Expense Presented in the Condensed Consolidated Statements of Operations
  
For the Three Months
Ended June 30,
  
For the Three Months
Ended June 30,
 
For the Three Months
Ended June 30,
  2020 2019  2020 2019 2020 2019
Derivatives in cash flow hedging relationships:              
Interest rate swaps $(52,817) $(148,599) Interest expense $(28,042) $7,891
 $86,071
 $95,706

Location of
Loss
Recognized in
Net Income on Derivative		Amount of Loss Recognized in Net Income on Derivative
 Location of
Loss
Recognized in
Net Income on Derivative		 Amount of Loss Recognized in Net Income on Derivative
 
For the Three Months
Ended June 30,
For the Three Months
Ended June 30,
 2020 201920212020
Derivatives not designated as hedging instruments:    Derivatives not designated as hedging instruments:
Interest rate caps Interest expense 39
 1
Interest rate capsInterest expense$74 $39 
The tables below present the effect of our derivative financial instruments in the condensed consolidated statements of comprehensive lossincome (loss) and the condensed consolidated statements of operations for the six months ended June 30, 20202021 and 2019:2020:
Amount of Gain (Loss) Recognized
in OCI on Derivative		Location of Loss Reclassified from Accumulated OCI into Net IncomeAmount of Loss Reclassified from Accumulated OCI into Net IncomeTotal Amount of Interest Expense Presented in the Condensed Consolidated Statements of Operations
For the Six Months
Ended June 30,		For the Six Months
Ended June 30,		For the Six Months
Ended June 30,
202120202021202020212020
Derivatives in cash flow hedging relationships:
Interest rate swaps$58,869 $(394,255)Interest expense$(75,899)$(36,609)$164,170 $170,828 
  
Amount of Loss Recognized
in OCI on Derivative
 Location of Gain
Reclassified from
Accumulated OCI
into Net Income		 Amount of Gain (Loss) Reclassified from Accumulated OCI into Net Income Total Amount of Interest Expense Presented in the Condensed Consolidated Statements of Operations
  For the Six Months
Ended June 30,		  For the Six Months
Ended June 30,		 For the Six Months
Ended June 30,
  2020 2019  2020 2019 2020 2019
Derivatives in cash flow hedging relationships:              
Interest rate swaps $(394,255) $(236,467) Interest expense $(36,609) $18,754
 $170,828
 $189,689

Location of
Loss
Recognized in
Net Income on Derivative		Amount of Loss Recognized in Net Income on Derivative
For the Six Months
Ended June 30,
20212020
Derivatives not designated as hedging instruments:
Interest rate capsInterest expense$105 $52 
  Location of
Loss
Recognized in
Net Income on Derivative		 Amount of Loss Recognized in Net Income on Derivative
   For the Six Months
Ended June 30,
   2020 2019
Derivatives not designated as hedging instruments:      
Interest rate caps Interest expense $52
 $34

33

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)







Credit-Risk-Related Contingent Features
The agreements with our derivative counterparties which govern our interest rate swap agreements contain a provision where we could be declared in default on our derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to our default on the indebtedness.
As of June 30, 2020,2021, the fair value of certain derivatives in a net liability position was $634,339.$411,866. If we had breached any of these provisions at June 30, 2020,2021, we could have been required to settle the obligations under the agreements at their termination value, which includes accrued interest and excludes the nonperformance risk related to these agreements, of $665,305.$423,564.
Note 8—9—Stockholders' Equity
As of June 30, 2020,2021, we have issued 560,532,679568,718,544 shares of common stock. In addition, we issue OP Units from time to time which, upon vesting, are redeemable for shares of our common stock on a 1-for-one basis or, in our sole discretion, cash and are reflected as non-controlling interests on our condensed consolidated balance sheets and statements of equity. As of June 30, 2020, 3,463,2852021, 2,538,285 outstanding OP Units are redeemable.
During the three and six months ended June 30, 2021, we issued 1,068,110 and 1,600,878, respectively, shares of common stock. During the three and six months ended June 30, 2020, we issued 16,765,234 and 18,889,954, respectively, shares of common stock.
Public Offering
On June 4, 2020, we completed an underwritten public offering of 16,675,000 shares of our common stock, including 2,175,000 shares sold pursuant to the underwriters’ full exercise of the option to purchase additional shares. During the three and six months ended June 30, 2020,, this offering generated net proceeds of $447,533,$447,533, after giving effect to commissions and other costs totaling $6,861.
At the Market Equity Program
On August 22, 2019, we entered into distribution agreements with a syndicate of banks (the “Agents”), pursuant to which we may sell, from time to time, up to an aggregate sales price of $800,000 of our common stock through the Agents (the “ATM Equity Program”). During the three and six months ended June 30, 2020, we sold 15,400 and 1,887,466 shares of our common stock under our ATM Equity Program, respectively, generating net proceeds of $344 and $56,265, respectively, after giving effect to Agent commissions and other costs totaling $66 and $977, respectively. We did not sell any shares of common stock under the ATM Equity Program during the three and six months ended June 30, 2021. As of June 30, 2020, $685,7992021, $500,000 remains available for future offerings under the ATM Equity Program.
Dividends
To qualify as a REIT, we are required to distribute annually to our stockholders at least 90% of our REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains, and to pay tax at regular corporate rates to the extent that we annually distribute less than 100% of our net taxable income. We intend to pay quarterly dividends to our stockholders, which in the aggregate are approximately equal to or exceed our net taxable income in the relevant year. The timing, form, and amount of distributions, if any, to our stockholders, will be at the sole discretion of our board of directors.
34

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)







The following table summarizes our dividends declared from January 1, 20192020 through June 30, 2020:2021:
Record Date
Amount
per Share
Pay DateTotal Amount Declared
Q2-2021May 11, 2021$0.17 May 28, 2021$97,054 
Q1-2021January 28, 20210.17 February 26, 202196,933 
Q4-2020November 10, 20200.15 November 25, 202084,911 
Q3-2020August 12, 20200.15 August 28, 202084,286 
Q2-2020May 13, 20200.15 May 29, 202081,916 
Q1-2020February 12, 20200.15 February 28, 202081,673 
  Record Date 
Amount
per Share
 Pay Date Total Amount Declared
Q2-2020 May 13, 2020 $0.15
 May 29, 2020 $81,916
Q1-2020 February 12, 2020 0.15
 February 28, 2020 81,673
Q4-2019 November 13, 2019 0.13
 November 27, 2019 70,693
Q3-2019 August 15, 2019 0.13
 August 30, 2019 70,465
Q2-2019 May 15, 2019 0.13
 May 31, 2019 68,334
Q1-2019 February 13, 2019 0.13
 February 28, 2019 67,965
On July 22, 2020,20, 2021, our board of directors declared a dividend of $0.15$0.17 per share to stockholders of record on August 12, 2020,10, 2021, which is payable on August 28, 202027, 2021 (see Note 15).
Note 9—Related Party Transactions
Management Services
One of our consolidated subsidiaries, as the managing member of a joint venture with FNMA (see Note 5), earns a management fee based upon the venture’s gross receipts. For the three months ended June 30, 2020 and 2019, we earned $629 and $713, respectively, and for the six months ended June 30, 2020 and 2019, we earned $1,309 and $1,449, respectively, of management fees which are included in other, net in the accompanying condensed consolidated statements of operations.
Note 10—Share-Based Compensation
Prior to completion of the IPO, our board of directors adopted, and our stockholders approved, the Invitation Homes Inc. 2017 Omnibus Incentive Plan (the “Omnibus Incentive Plan”) to provide a means through which to attract and retain key personnel and to provide a means whereby our directors, officers, employees,associates, consultants, and advisors can acquire and maintain an equity interest in us, or be paid incentive compensation, including incentive compensation measured by reference to the value of our common stock, and to align their interests with those of our stockholders. Under the Omnibus Incentive Plan, we may issue up to 16,000,000 shares of common stock.
Our share-based awards consist of time-vesting restricted stock units (“RSUs”), performance and market based vesting RSUs (“PRSUs”), and Outperformance Awards (defined below). Time-vesting RSUs are participating securities for earnings (loss) per common share (“EPS”)EPS purposes, and PRSUs and Outperformance Awards are not. For detailed discussion of RSUs and PRSUs issued prior to January 1, 2020,2021, refer to our Annual Report on Form 10-K for the year ended December 31, 2019.

2020.
Share-Based Awards
The following summarizes our share-based award activity during the six months ended June 30, 2020.2021.
Annual Long Term Incentive Plan (“LTIP”):
•
•Annual LTIP Awards Granted: During the six months ended June 30, 2021, we granted 675,627 RSUs pursuant to LTIP awards (together with previously granted annual LTIP awards, “LTIP Awards”). Each award includes components which vest based on time-vesting conditions, market based vesting conditions, and performance based vesting conditions, each of which is subject to continued employment through the applicable vesting date. The time-vesting RSUs granted during the six months ended June 30, 2021 vest in three equal annual installments based on an anniversary date of March 1, 2021. The PRSUs granted during the six months ended June 30, 2021 may be earned based on the achievement of certain measures over a three year performance period that ends December 31, 2023. The number of PRSUs earned will be determined based on performance achieved during the performance period for each measure at certain threshold, target, or maximum levels and corresponding payout ranges. In general, the LTIP Awards Granted: During the six months ended June 30, 2020, we granted 499,228 RSUs pursuant to LTIP awards (together with previously granted annual LTIP awards, “LTIP Awards”). Each award includes components which vest based on time-vesting conditions, market based vesting conditions, and performance based vesting conditions, each of which is subject to continued employment through the applicable vesting date. The time-vesting RSUs granted during the six months ended June 30, 2020 vest in three equal annual installments based on an anniversary date of March 1, 2020. The PRSUs granted during the six months ended June 30, 2020 may be earned based on the achievement of certain measures over a three year performance period that ends December 31, 2022. The number of PRSUs earned will be determined based on performance achieved during the performance period for each measure at certain threshold, target, or maximum levels and corresponding payout ranges. In general, the LTIP

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)







PRSUs are earned after the end of the performance period on the date on which the performance results are certified by our compensation and management development committee (the “Compensation Committee”).
All of the LTIP Awards are subject to certain change in control and retirement eligibility provisions that may impact these vesting schedules.
•
PRSU Results: In February 2020, the Compensation Committee certified performance achievement with respect to Tranche 3 of our 2017 LTIP Awards. Certain PRSUs vested and achieved performance in excess of the target level, resulting in the issuance of an additional 91,200 shares of common stock. Such awards are reflected as an increase in the number of awards granted and vested in the table below. Certain other PRSUs did not achieve performance criteria, resulting in the cancellation of 5,348
•PRSU Results: During the six months ended June 30, 2021, the Compensation Committee certified performance achievement with respect to our 2018 LTIP Awards. Certain PRSUs vested and achieved performance in excess of the target level, resulting in the issuance of an additional 159,180 shares of common stock. Such awards are reflected as an increase in the number of awards granted and vested in the table below. Certain other PRSUs did not achieve performance criteria, resulting in the cancellation of 47,145 awards. Such awards are reflected as an increase in the number of awards forfeited/canceled in the table below.

35

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
Director Awards
During the six months ended June 30, 2020,2021, we granted 58,69043,767 time-vesting RSUs to members of our board of directors, which awards will fully vest on the date of INVH’s 20212022 annual stockholders meeting, subject to continued service on the board of directors through such date.
Outperformance Awards
On May 1, 2019, the Compensation Committee approved one-time equity based awards with market based vesting conditions in the form of PRSUs and OP Units (the “Outperformance Awards”). The Outperformance Awards may be earned based on the achievement of rigorous absolute total shareholder return and relative total shareholder return thresholds over a three year performance period ending on March 31, 2022. Upon completion of the performance period, the dollar value of the awards earned under the absolute and relative total shareholder return components will be separately calculated, and the number of earned Outperformance Awards will be determined based on the earned dollar value of the awards and the stock price at the performance certification date. Earned awards will vest 50% on March 31, 2022 and 25% on each of the first and second anniversaries of such date, subject to continued employment. The current aggregate $12,390$12,160 grant-date fair value of the Outperformance Awards still outstanding was determined based on Monte-Carlo option pricing models which estimate the probability of the vesting conditions being satisfied.
Summary of Total Share-Based Awards
The following table summarizes activity related to non-vested time-vesting RSUs and PRSUs, other than Outperformance Awards, during the six months ended June 30, 2020:2021:
  Time-Vesting Awards PRSUs 
Total Share-Based Awards(1)
  Number Weighted
Average Grant
Date Fair Value
(Actual $)		 Number Weighted Average Grant Date Fair Value (Actual $) Number Weighted
Average Grant
Date Fair Value
(Actual $)
Balance, December 31, 2019 685,069
 $22.48
 925,076
 $23.13
 1,610,145
 $22.86
Granted 225,760
 28.25
 423,358
 29.73
 649,118
 29.21
Vested(2)
 (291,694) (22.96) (152,967) (22.25) (444,661) (22.72)
Forfeited / canceled (7,362) (25.31) (17,833) (23.24) (25,195) (23.85)
Balance, June 30, 2020 611,773
 $24.35
 1,177,634
 $25.62
 1,789,407
 $25.18
Time-Vesting AwardsPRSUs
Total Share-Based Awards(1)
NumberWeighted
Average Grant
Date Fair Value
(Actual $)		NumberWeighted
Average Grant
Date Fair Value
(Actual $)		NumberWeighted
Average Grant
Date Fair Value
(Actual $)
Balance, December 31, 2020560,123 $24.54 975,811 $26.36 1,535,934 $25.70 
Granted252,249 30.30 626,325 27.44 878,574 28.26 
Vested(2)
(395,851)(23.43)(436,493)(23.31)(832,344)(23.37)
Forfeited / canceled(8,457)(27.63)(59,490)(22.79)(67,947)(23.39)
Balance, June 30, 2021408,064 $29.12 1,106,153 $28.37 1,514,217 $28.57 
(1)Total share-based awards excludes Outperformance Awards.
(2)All vested share-based awards are included in basic EPS for the periods after each award’s vesting date. The estimated fair value of share-based awards that fully vested during the six months ended June 30, 2020 was $9,759. During the six months ended June 30, 2020, 322 RSUs were accelerated pursuant to the terms and conditions of the Omnibus Incentive Plan and related award agreements.
(1)Total share-based awards excludes Outperformance Awards.
(2)All vested share-based awards are included in basic EPS for the periods after each award’s vesting date. The estimated fair value of share-based awards that fully vested during the six months ended June 30, 2021 was $18,204. During the six months ended June 30, 2021, 1,033 RSUs were accelerated pursuant to the terms and conditions of the Omnibus Incentive Plan and related award agreements.
36

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)







Grant-Date Fair Values
The grant-date fair values of the time-vesting RSUs and PRSUs with performance condition vesting criteria are generally based on the closing price of our common stock on the grant date. However, the grant-date fair values for share-based awards with market condition vesting criteria are based on Monte-Carlo option pricing models. The following table summarizes the significant inputs utilized in these models for such awards granted during the six months ended June 30, 2020:
  
For the Six Months
Ended June 30, 2020
Expected volatility(1)
 17.2%—17.3%
Risk-free rate 0.85%
Expected holding period (years) 2.09
—2.84
2021:
For the Six Months
Ended June 30, 2021
Expected volatility(1)
33.2%
Risk-free rate0.31%
Expected holding period (years)2.84
(1)Expected volatility was estimated based on the historical volatility of INVH’s realized returns and the applicable index.

(1)Expected volatility was estimated based on the historical volatility of INVH’s realized returns and the applicable index.
Summary of Total Share-Based Compensation Expense
During the three and six months ended June 30, 20202021 and 2019,2020, we recognized share-based compensation expense as follows:
For the Three Months
Ended June 30,		For the Six Months
Ended June 30,
2021202020212020
General and administrative$7,503 $1,659 $12,143 $4,927 
Property management expense1,703 447 2,877 1,280 
Total$9,206 $2,106 $15,020 $6,207 
  For the Three Months
Ended June 30,		 For the Six Months
Ended June 30,
  2020 2019 2020 2019
General and administrative $1,659
 $2,795
 $4,927
 $7,715
Property management expense 447
 820
 1,280
 1,507
Total $2,106
 $3,615
 $6,207
 $9,222
As of June 30, 2020,2021, there is $27,382$36,987 of unrecognized share-based compensation expense related to non-vested share-based awards which is expected to be recognized over a weighted average period of 2.101.99 years.
Note 11—Fair Value Measurements
The carrying amounts of restricted cash, certain components of other assets, accounts payable and accrued expenses, resident security deposits, and certain components of other liabilities approximate fair value due to the short maturity of these amounts. Our interest rate swap agreements, and interest rate cap agreements, and investments in equity securities with a readily determinable fair value are the only financial instruments recorded at fair value on a recurring basis within our condensed consolidated financial statements. The fair values of our interest rate caps and swaps, which are classified as Level 2 in the fair value hierarchy, are estimated using market values of instruments with similar attributes and maturities. See Note 78 for the details of the condensed consolidated balance sheet classification and the fair values for the interest rate caps and swaps. The fair values of our investments in equity securities with a readily determinable fair value are classified as Level 1 in the fair value hierarchy. For additional information related to our investments in equity securities as of June 30, 2021 and December 31, 2020, refer to Note 6.
37

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)







Recurring Fair Value Measurements
The following table displays the carrying values and fair values of financial instruments as of June 30, 20202021 and December 31, 2019:2020:
    June 30, 2020 December 31, 2019
    Carrying
Value		 Fair
Value		 Carrying
Value		 Fair
Value
Assets carried at historical cost on the condensed consolidated balance sheets:          
Investments in debt securities(1)
 Level 2 $310,380
 $309,011
 $316,991
 $318,299
           
Liabilities carried at historical cost on the condensed consolidated balance sheets:          
Mortgage loans(2)
 Level 2 $6,134,906
 $6,113,628
 $6,266,407
 $6,292,261
Secured Term Loan(3)
 Level 3 403,363
 450,008
 403,464
 411,213
Term Loan Facility(4)
 Level 3 1,500,000
 1,491,166
 1,500,000
 1,500,444
Convertible Senior Notes(5)
 Level 3 336,820
 351,456
 334,299
 346,489
June 30, 2021December 31, 2020
Carrying
Value		Fair
Value		Carrying
Value		Fair
Value
Assets carried at historical cost on the condensed consolidated balance sheets:
Investments in debt securities(1)
Level 2$229,202 $234,000 $245,237 $249,736 
Liabilities carried at historical cost on the condensed consolidated balance sheets:
Mortgage loans(2)
Level 2$4,508,954 $4,605,498 $4,832,133 $4,923,107 
Secured Term Loan(3)
Level 3403,363 427,915 403,363 447,190 
Unsecured Notes(4)
Level 3300,000 296,869 0 0 
Term Loan Facility(5)
Level 32,500,000 2,506,403 2,500,000 2,514,623 
Convertible Senior Notes(6)
Level 3342,050 349,539 339,404 351,166 
(1)The carrying values of investments in debt securities are shown net of discount.
(2)The carrying values of the mortgage loans are shown net of discount and exclude $16,331 and $27,946 of deferred financing costs as of June 30, 2020 and December 31, 2019, respectively.
(3)The carrying value of the Secured Term Loan excludes $2,377 and $2,486 of deferred financing costs as of June 30, 2020 and December 31, 2019, respectively.
(4)The carrying value of the Term Loan Facility excludes $4,809 and $6,253 of deferred financing costs as of June 30, 2020 and December 31, 2019, respectively.
(5)The carrying values of the Convertible Senior Notes include unamortized discounts of $8,180 and $10,701 as of June 30, 2020 and December 31, 2019, respectively.
(1)The carrying values of investments in debt securities are shown net of discount.
(2)The carrying values of the mortgage loans are shown net of discount and excludes $10,665 and $12,035 of deferred financing costs as of June 30, 2021 and December 31, 2020, respectively.
(3)The carrying value of the Secured Term Loan excludes $2,159 and $2,268 of deferred financing costs as of June 30, 2021 and December 31, 2020, respectively.
(4)The carrying value of the Unsecured Notes excludes $1,601 of deferred financing costs as of June 30, 2021.
(5)The carrying values of the Term Loan Facility excludes $25,505 and $29,093 of deferred financing costs as of June 30, 2021 and December 31, 2020, respectively.
(6)The carrying values of the Convertible Senior Notes include unamortized discounts of $2,944 and $5,596 as of June 30, 2021 and December 31, 2020, respectively.

The fair values of our investmentinvestments in debt securities and mortgage loans, which are classified as Level 2 in the fair value hierarchy, are estimated based on market bid prices of comparable instruments at the end of the period. The following table displays the significant unobserverableunobservable inputs used to develop our Level 3 fair value measurements as of June 30, 2020:2021:
  
Quantitative Information about Level 3 Fair Value Measurement(1)
  Fair Value Valuation Technique Unobservable Input Rate
Secured Term Loan $450,008
 Discounted Cash Flow Effective Rate 2.39%
Term Loan Facility 1,491,166
 Discounted Cash Flow Effective Rate 2.19%—2.28%
Convertible Senior Notes 351,456
 Discounted Cash Flow Effective Rate 2.26%
Quantitative Information about Level 3 Fair Value Measurement(1)
Fair ValueValuation TechniqueUnobservable InputRate
Secured Term Loan$427,915 Discounted Cash FlowEffective Rate2.88%
Unsecured Notes296,869 Discounted Cash FlowEffective Rate2.66 %—3.25%
Term Loan Facility2,506,403 Discounted Cash FlowEffective Rate1.08 %—2.51%
Convertible Senior Notes349,539 Discounted Cash FlowEffective Rate1.07%
(1)Our Level 3 fair value instruments require interest only monthly payments.
(1)Our Level 3 fair value instruments require interest only monthly payments.

38

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)







Nonrecurring Fair Value Measurements
Our assets measured at fair value on a nonrecurring basis are those assets for which we have recorded impairments.
Single-Family Residential Properties
The assetssingle-family residential properties for which we have recorded impairments, measured at fair value on a nonrecurring basis, are summarized below:
  For the Three Months
Ended June 30,		 For the Six Months
Ended June 30,
  2020 2019 2020 2019
Investments in single-family residential properties, net held for use (Level 3):        
Pre-impairment amount $451
 $7,313
 $451
 $7,553
Total impairments (89) (1,788) (89) (1,818)
Fair value $362
 $5,525
 $362
 $5,735
  For the Three Months
Ended June 30,		 For the Six Months
Ended June 30,
  2020 2019 2020 2019
Investments in single-family residential properties, net held for sale (Level 3):        
Pre-impairment amount $6,994
 $12,090
 $17,794
 $31,114
Total impairments (1,353) (2,288) (3,824) (5,511)
Fair value $5,641
 $9,802
 $13,970
 $25,603

For the Three Months
Ended June 30,		For the Six Months
Ended June 30,
2021202020212020
Investments in single-family residential properties, net held for use (Level 3):
Pre-impairment amount$0 $451 $0 $451 
Total impairments0 (89)0 (89)
Fair value$0 $362 $0 $362 
For the Three Months
Ended June 30,		For the Six Months
Ended June 30,
2021202020212020
Investments in single-family residential properties, net held for sale (Level 3):
Pre-impairment amount$672 $6,994 $2,953 $17,794 
Total impairments(93)(1,353)(524)(3,824)
Fair value$579 $5,641 $2,429 $13,970 
For additional information related to our single-family residential properties as of June 30, 20202021 and December 31, 2019,2020, refer to Note 3.
Note 12—Earnings per Share
Basic and diluted EPS are calculated as follows:
For the Three Months
Ended June 30,		For the Six Months
Ended June 30,
2021202020212020
(in thousands, except share and per share data)
Numerator:
Net income available to common stockholders — basic and diluted$60,242 $42,784 $117,514 $92,638 
Denominator:
Weighted average common shares outstanding — basic567,931,472 548,811,968 567,655,034 545,680,740 
Effect of dilutive securities:
Incremental shares attributed to non-vested share-based awards1,351,694 1,108,245 1,401,148 1,156,069 
Weighted average common shares outstanding — diluted569,283,166 549,920,213 569,056,182 546,836,809 
Net income per common share — basic$0.11 $0.08 $0.21 $0.17 
Net income per common share — diluted$0.11 $0.08 $0.21 $0.17 
  For the Three Months
Ended June 30,		 For the Six Months
Ended June 30,
  2020 2019 2020 2019
(in thousands, except share and per share data)        
Numerator:        
Net income available to common stockholders — basic and diluted $42,784
 $38,833
 $92,638
 $59,549
         
Denominator:        
Weighted average common shares outstanding — basic 548,811,968
 525,070,036
 545,680,740
 523,265,455
Effect of dilutive securities:        
Incremental shares attributed to non-vested share-based awards 1,108,245
 863,607
 1,156,069
 925,014
Weighted average common shares outstanding — diluted 549,920,213
 525,933,643
 546,836,809
 524,190,469
         
Net income per common share — basic $0.08
 $0.07
 $0.17
 $0.11
Net income per common share — diluted $0.08
 $0.07
 $0.17
 $0.11
39

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
Incremental shares attributed to non-vested share-based awards are excluded from the computation of diluted EPS when they are anti-dilutive. ForBecause their inclusion would have been anti-dilutive, the three and six months ended June 30, 2020, 342,849 and 250,538following number of incremental shares attributed to non-vested share-based awards respectively,are excluded from the denominator: for the three months ended June 30, 2020, 342,849; and 9,495 for the six months ended June 30, 2021 and 2020, 33,877 and 250,538, respectively. There are not any anti-dilutive incremental shares attributed to non-vested share-based awards for the six months ended June 30, 2019 are excluded from the denominator as their inclusion would have been anti-dilutive. For the three months ended June 30, 2019, all incremental shares attributed to non-vested share-based awards were included in the denominator.

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)







2021.
For the three and six months ended June 30, 20202021 and 2019, the2020, vested OP Units have been excluded from the computation of EPS because all income attributable to thesuch vested OP Units has been recorded as non-controlling interest and thus excluded from net income available to common stockholders.
UsingFor the three and six months ended June 30, 2021, using the “if-converted” method, 12,553,86415,160,692 potential shares of common stock forissuable upon the 2019conversion of the 2022 Convertible Notes are excluded from the computation of diluted EPS for the three and six months ended June 30, 2019 as they are anti-dilutive. For the three and six months ended June 30, 2020, and 2019,using the “if-converted” method, 15,100,443 potential shares of common stock issuable upon the conversion of the 2022 Convertible Notes are also excluded from the computation of diluted EPS as they are anti-dilutive. Additionally, no adjustment to the numerator is required for interest expense related to the 2022 Convertible Senior Notes for the three and six months ended June 30, 20202021 and 2019.2020. See Note 67 for further discussion about the 2022 Convertible Senior Notes.
Note 13—Income Tax
We account for income taxes under the asset and liability method. For our taxable REIT subsidiaries (“TRSs”), deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. We provide a valuation allowance, from time to time, for deferred tax assets for which we do not consider realization of such assets to be more likely than not.
As of June 30, 20202021 and December 31, 2019,2020, we have not recorded any deferred tax assets and liabilities or unrecognized tax benefits. We do not anticipate a significant change in unrecognized tax benefits within the next 12 months.
We have sold assets that were either subject to Section 337(d) of the Internal Revenue Code of 1986, as amended, or were held by TRSs. These transactions resulted in $299$142 and $844$299 of current income tax expense for the three months ended June 30, 20202021 and 2019,2020, respectively, and $429$383 and $1,605$429 of current income tax expense for the six months ended June 30, 2021 and 2020, and 2019,respectively, which has been recorded in gain on sale of property, net of tax in the condensed consolidated statements of operations.
40

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
Note 14—Commitments and Contingencies
Lease Commitments
The following table sets forth our fixed lease payment commitments as a lessee as of June 30, 2020,2021, for the periods below:
Year 
Operating
Leases
 
Finance
Leases
Remainder of 2020 $2,353
 $1,533
2021 4,735
 3,009
2022 3,228
 2,456
2023 2,220
 2,410
2024 2,084
 680
Thereafter 1,096
 —
Total lease payments 15,716
 10,088
Less: imputed interest (1,233) (706)
Total lease liability $14,483
 $9,382

Year
Operating
Leases
Finance
Leases
Remainder of 2021$2,559 $1,684 
20224,318 2,570 
20233,516 2,505 
20243,178 758 
20251,751 0 
Thereafter1,038 0 
Total lease payments16,360 7,517 
Less: imputed interest(1,023)(410)
Total lease liability$15,337 $7,107 

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)







The components of lease expense for the three and six months ended June 30, 20202021 and 20192020 are as follows:
For the Three Months
Ended June 30,		For the Six Months
Ended June 30,
2021202020212020
Operating lease cost:
Fixed lease cost$1,055 $1,158 $2,114 $2,151 
Variable lease cost261 262 604 597 
Total operating lease cost$1,316 $1,420 $2,718 $2,748 
Finance lease cost:
Amortization of ROU assets$712 $713 $1,416 $921 
Interest on lease liabilities70 128 156 270 
Total finance lease cost$782 $841 $1,572 $1,191 
  For the Three Months
Ended June 30,		 For the Six Months
Ended June 30,
  2020 2019 2020 2019
Operating lease cost:        
Fixed lease cost $1,158
 $916
 $2,151
 $1,897
Variable lease cost 262
 356
 597
 699
Total operating lease cost $1,420
 $1,272
 $2,748
 $2,596
         
Finance lease cost:        
Amortization of ROU assets $713
 $129
 $921
 $237
Interest on lease liabilities 128
 5
 270
 18
Total finance lease cost $841
 $134
 $1,191
 $255

Insurance Policies
Pursuant to the terms of certain of our loan agreements (see Note 6)7), laws and regulations of the jurisdictions in which our properties are located, and general business practices, we are required to procure insurance on our properties. As of June 30, 2020,2021, there are no material contingent liabilities related to uninsured losses with respect to our properties.
Legal Matters
We are subject to various legal proceedings and claims that arise in the ordinary course of our business. We accrue a liability when we believe that it is both probable that a liability has been incurred and that we can reasonably estimate the amount of the loss. We do not believe that the final outcome of these proceedings or matters will have a material adverse effect on our condensed consolidated financial statements.
41

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
Note 15—Subsequent Events
In connection with the preparation of the accompanying condensed consolidated financial statements, we have evaluated events and transactions occurring after June 30, 2020,2021, for potential recognition or disclosure.
Extension of Existing Mortgage Loan
On July 9, 2020,2021, the extension of the maturity date of the IH 2018-3 mortgage loan from July 9, 20202021 to July 9, 20212022 was approved by the lender.
2022 Convertible Notes
Effective July 15, 2021, we notified note holders of our intent to settle conversions of the 2022 Convertible Notes in shares of common stock. From July 1, 2021 through the date our condensed consolidated financial statements were issued, $176,740 of principal was converted into 7,766,798 shares of common stock at the election of the note holders.
Dividend Declaration
On July 22, 2020,20, 2021, our board of directors declared a dividend of $0.15$0.17 per share to stockholders of record on August 12, 2020,10, 2021, which is payable on August 28, 2020.



27, 2021.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the information appearing elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K. This discussion and analysis contains forward-looking statements based upon our current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under Part I. Item 1A. “Risk Factors” inof our Annual Report on Form 10-K and Part II. Item 1A. “Risk Factors” in this Quarterly Report on Form 10-Q.10-K.
Capitalized terms used without definition have the meaning provided elsewhere in this Quarterly Report on Form 10-Q.
Overview
Invitation Homes is a leading owner and operator of single-family homes for lease, offering residents high-quality homes in sought-after neighborhoods across America. With approximatelyover 80,000 homes for lease in 16 markets across the country as of June 30, 2020,2021, 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. Our mission statement, “Together with you, we make a house a home,” reflects our commitment to high-touch service that continuously enhances residents’ living experiences and provides homes where individuals and families can thrive.
We operate in markets with strong demand drivers, high barriers to entry, and high rent growth potential, primarily in the Western United States, Florida, and the Southeast United States. Through disciplined market and asset selection, as well as through strategic mergers and acquisitions, we designed our portfolio to capture the operating benefits of local density as well as economies of scale that we believe cannot be readily replicated. Since our founding in 2012, we have built a proven, vertically integrated operating platform that enables us to effectively and efficiently acquire, renovate, lease, maintain, and manage our homes.
We invest in markets that we expect will exhibit lower new supply, stronger job and household formation growth, and superior net operating income (“NOI”) growth relative to the broader United States housing and rental markets. Within our 16 markets, we target attractive neighborhoods in in-fill locations with multiple demand drivers, such as proximity to major employment centers, desirable schools, and transportation corridors. Our homes average approximately 1,870 square feet with three bedrooms and two bathrooms, appealing to a resident base that we believe is less transitory than the typical multifamily resident. We invest in the upfront renovation of homes in our portfolio in order to address capital needs, reduce ongoing maintenance costs, and drive resident demand. The in-fill locations and high quality of our homes and service further differentiate our resident experience, which we continue to refine.
COVID-19
The outbreak ofongoing COVID-19 in many countries, including the United States,pandemic has had a significant adverse impact on global and United States economic activity and has contributed to significant volatility and disruption in financial markets. The ultimate impacts remain unknown, but could include the potential worsening ofrange from macroeconomic effects (such as continued strain on global and United States economic conditions and the continued disruptions to, and volatility in, the credit and financial markets, consumer spending, and the market for acquisition and disposition of single-family homes,homes) to more industry-specific effects (such as well asdepressed collection rates, higher or lower occupancy levels, and restrictions on evictions, collections, rent increases, and late fees), and other unanticipated consequences. As such, we arecontinue to closely monitoringmonitor the impact of the ongoing COVID-19 pandemic on all aspects of our business including operating, investment management, and capital markets activities.actively manage our response thereto in collaboration with our residents and business partners.
With the safety and well-being of our residents and associates being our highest priority during the ongoing COVID-19 pandemic, we implemented a host of measures and continue to follow protocols that enable teams to safely continue providingprovide outstanding service to residents. The safety and service measures currently in placeThese protocols include: (1) creating and implementing a safety training program and providing personal protective equipment for all associates; (2) maintainingassociates including a three-month supply of masks, gloves, shoe covers, and hand sanitizer for field teams; (3) continuing to leverage self-show and virtual-tour technology as both safety measures and competitive advantages; (4)(2) adhering to strict safety protocols for maintenance service trips; (3) leveraging self-show and (5) adapting to offervirtual-tour technology; and (4) offering virtual options for resident move-in orientations and pre-move-out visits.


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We also continue to adhere to Federal, state, and local restrictions on items such as evictions, collections, rent increases, and late fees as appropriate. Additionally, to act on our core values of "Genuine Care" and "Standout Citizenship," we offer flexible solutions for residents experiencing financial hardship when requested, including payment plans and late fee abatements. Due to the impact of these measures, overall revenue collections as a percentage of monthly billings was 98% for the three months ended June 30, 2021, or approximately 99% of our historical average.
In May 2021, we began gradually allowing our office-based associates to return to working on-site while practicing social distancing and other safety measures. We considered factors such as the safety of our associates and residents, our business needs, applicable government regulations, community case trends, and recommendations from public health officials in determining our schedule for re-opening offices to associates. Furthermore, our myFlexibility program provides associates with an option to coordinate with their people leaders and teams to create flexible work schedules in terms of both location and hours.
Neither these procedural adjustments nor the overall impact of the COVID-19 pandemic created significant disruptions to our business model during the three and six months ended June 30, 2020. However, the pandemic did impact our business, including operating, investment management, and capital markets activities as more fully described below.
Operations
The direct impacts on our results of operations and key operating metrics from the effects of the COVID-19 pandemic may include, but are not limited to: (1) a decrease in gross rental revenues and other property income (before concessions and bad debt) due to jurisdictional restrictions on rent increases and late fees; (2) an increase in occupancy due to lower turnover partially driven by residents’ decisions not to relocate during the pandemic, strong demand for homes that become vacant, and the impact of eviction moratoriums; (3) an increase in uncollectible revenues (or decline in rent collections percentages) due to resident hardships and eviction moratoriums; and (4) a decrease in property operating and maintenance expenses for turnover costs (lower turnover rates) and property administrative fees (eviction moratoriums).
In March, to act on our core values of "Genuine Care" and "Standout Citizenship," we began to offer solutions for residents experiencing financial hardship when requested, including the ongoing creation of payment plans, without late fees, for residents requiring flexibility to meet rental obligations over time and a voluntary moratorium on evictions through June 2020. Additionally, we continue to adhere to federal, state, and local restrictions on items such as evictions, rent increases, and late fees as appropriate.
The ongoing COVID-19 outbreak in the United States has led certain states and cities, including those in which we own properties and where our principal places of business are located, to impose and continue to implement measures intended to control the spread of COVID-19, including instituting quarantines, restrictions on travel, “shelter in place” rules, and restrictions on types of business that may continue to operate. We depend on rental revenues and other property income from residents for substantially all of our revenues. Overall revenue collections as a percentage of monthly billings was 94% in April, 96% in May, 98% in June, and 97% in July, compared to a historical average of 99%. While collection of revenues has remained near historical levels thus far through the pandemic, the COVID-19 outbreak, as well as continuing measures taken by governmental authorities and private actors to limit the spread of this virus or mitigate its impact, is interfering with the ability of some of our residents to meet their lease obligations and make their rent payments on time or at all. In addition, some jurisdictions across the United States have imposed temporary eviction moratoriums and are allowing residents to defer missed rent payments without incurring late fees, and such jurisdictions and other local and national authorities may expand or extend measures imposing restrictions on our ability to enforce residents’ contractual rental obligations and limiting our ability to increase rents. We cannot predict if states, municipalities, and/or local authorities will expand existing restrictions, if additional states or municipalities will implement similar restrictions, or when restrictions currently in place will expire. Such measures are likely to enable residents to stay in their homes despite an inability to pay because of financial or other hardship stemming from the pandemic.
Certain other restrictions imposed by jurisdictions across the United States are intended to limit operations by businesses not deemed “essential businesses.” While none of the current restrictions have materially impacted our ability to provide services to our residents or homes, future measures may negatively impact our ability to access our homes, complete service requests, or make our homes ready for new residents. Since the pandemic began, we have continued to complete emergency work orders, and we now schedule non-emergency maintenance service requests on a case-by-case basis. For all service calls, we work with residents to ensure they are addressed in a timely and safe manner.
A majority of our homes are located in areas where COVID-19 infection rates are greater than the national average. As such, the pandemic may disproportionately impact our ability to lease homes, collect rents, service our homes, and perform other fundamental property management functions.
While COVID-19 and related containment measures may interfere with the ability of our associates, suppliers, and other business partners to carry out their assigned tasks or to supply materials and services at ordinary levels of performance relative to the conduct of our business in the future, to date we have not experienced such disruptions. Our office-based associates continue to work from home and will continue to do so until we determine it is in our and their best interests to return to our offices. Additionally, changes to the working environment have not had a material effect on our internal controls over financial reporting since the pandemic began (see Part I. Item 4. “Controls and Procedures” for additional information).


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Investment Management
We continue to successfully source and effectuate compelling acquisition and disposition opportunities. Since the pandemic began, we have continued to sell homes identified for disposition. We resumed sourcing new acquisitions in June 2020 after pausing activity from mid-March through May. That said, our ability to acquire or dispose of properties could be impaired by local rules and ordinances that could be put in place to mitigate the impact of the COVID-19 pandemic, and a general decline in economic and business activity could adversely affect the single-family residential housing market and our ability to acquire and dispose of homes.
Capital Markets
To date, our access to capital markets has not been significantly impacted by the COVID-19 pandemic. We continue to make scheduled debt service payments and do not anticipate non-compliance with our key affirmative and negative debt covenants. (see “ — Liquidity and Capital Resources” for additional information). That said, a severe disruption of, and/or instability in, the global financial markets or deteriorations in credit and financing conditions may affect our access to capital necessary to fund business operations, including acquisitions, or address maturing liabilities on a timely basis.
Current Status
As a result of our differentiated business model and measures taken to maximize operating and financial results, we have experienced positive trends in many key performance metrics and maintained a favorable liquidity position during the COVID-19 pandemic:
Resident satisfaction survey scores have continued to climb as we further refine our COVID-19 response.
Same Store average occupancy has continued to climb through the summer reaching record highs of 97.5% in the second quarter of 2020 and 97.8% in July 2020. Same Store average occupancy was 170 bps higher in July 2020 than in July 2019. Same Store new lease rent growth accelerated during the three months ended June 30, 2020 and averaged 4.9% in July.
As of June 30, 2020, total liquidity from unrestricted cash and undrawn credit facility capacity was $1,571.7 million.
These strong underlying trends in our business and our favorable liquidity position have afforded us the opportunity to pursue or resume pursuing initiatives aimed at generating incremental value for shareholders, including:
Successful issuance and sale of 16.7 million common shares for net proceeds of $447.5 million to provide capital primarily for acquisition opportunities.
Full repayment of the $270.0 million revolving credit facility balance that had been drawn in March.
Resumption of sourcing new acquisitions in June, returning us to an acquisition pace similar to pre-COVID-19 levels.
Ongoing Considerations2021.
The situation surrounding the ongoing COVID-19 pandemic remains fluid, and the full ensuing impact of the COVID-19 pandemictherefrom on our rental revenues and other property income, in particular, cannot be fully be determined at present due to an inability to estimate actual collection rates, occupancy levels,collections of delinquent accounts and expiration of temporary restrictions in some markets on evictions, collections, rent increases, and late fees. We will continue to actively manage our response in collaboration with our residents and business partners and to assess potential impacts to our financial position and operating results, as well as potential adverse developments in our business.
In additionFor further discussion of risks related to the foregoing uncertainties,pandemic, see Part I. Item 1A. “Risk Factors — Risks Related to Our Business and Industry — Our business, results of operations, financial condition, and cash flows may be adversely affected by pandemics and outbreaks of infectious disease, particularly the ongoing COVID-19 pandemic” in our Annual Report on Form 10-K.
In July 2021, we are unable to predict the impact thatreceived congressional inquiries requesting information and documentation about our eviction practices during the COVID-19 pandemic, will have on our future financial condition, resultsincluding information relating to compliance with federal eviction moratorium requirements and cooperation with impacted residents to use federal assistance funds as an alternative to eviction. We are in the process of operations,cooperating with these inquiries and cash flows due to numerous uncertainties regarding external factors. These uncertainties include the scope, severity, and duration of the pandemic, the extent and duration of actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic, containment measures, monetary and/or fiscal policies implemented to provide support or relief to businesses and/or residents, and other government, regulatory, and/or legislative changes precipitated by the COVID-19 pandemic, among others. For further information regarding the impact of COVID-19 on our Company, see Part II. Item 1A. “Risk Factors.”

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Our Portfolio
The following table provides summary information regarding our total and Same Store portfolios as of and for the three months ended June 30, 20202021 as noted below:
Market 
Number of Homes(1)
 
Average Occupancy(2)
 
Average Monthly
Rent(3)
 
Average Monthly
Rent PSF(3)
 
% of
Revenue(4)
Western United States:          
Southern California 8,000 97.3% $2,515 $1.48 13.3%
Northern California 4,301 96.9% 2,199 1.42 6.5%
Seattle 3,555 95.6% 2,302 1.20 5.6%
Phoenix 7,861 95.5% 1,454 0.89 7.9%
Las Vegas 3,003 95.7% 1,687 0.85 3.4%
Denver 2,298 94.9% 2,092 1.16 3.3%
Western United States Subtotal 29,018 96.2% 2,039 1.18 40.0%
           
Florida:          
South Florida 8,454 95.3% 2,221 1.19 12.4%
Tampa 8,107 96.2% 1,710 0.92 9.5%
Orlando 6,147 95.6% 1,714 0.92 7.1%
Jacksonville 1,858 96.7% 1,721 0.87 2.2%
Florida Subtotal 24,566 95.8% 1,887 1.01 31.2%
           
Southeast United States:          
Atlanta 12,501 96.5% 1,553 0.75 13.1%
Carolinas 4,719 96.4% 1,623 0.75 5.2%
Southeast United States Subtotal 17,220 96.5% 1,572 0.75 18.3%
           
Texas:          
Houston 2,190 94.5% 1,583 0.81 2.4%
Dallas 2,376 93.5% 1,832 0.87 2.9%
Texas Subtotal 4,566 94.0% 1,711 0.85 5.3%
           
Midwest United States:          
Chicago 2,699 95.4% 2,009 1.24 3.6%
Minneapolis 1,129 97.1% 1,933 0.99 1.5%
Midwest United States Subtotal 3,828 95.9% 1,986 1.15 5.1%
           
Announced Market-in-Exit:          
Nashville(5)
 58 65.0% 2,157 0.82 0.1%
           
Total / Average 79,256 96.0% $1,869 $1.00 100.0%
Same Store Total / Average 72,261 97.5% $1,868 $1.00 92.2%
Market
Number of Homes(1)
Average Occupancy(2)
Average Monthly
Rent(3)
Average Monthly
Rent PSF(3)
% of
Revenue(4)
Western United States:
Southern California7,90998.3%$2,609$1.5412.3 %
Northern California4,24198.5%2,2771.466.1 %
Seattle3,75397.9%2,3631.235.6 %
Phoenix8,33897.8%1,5860.968.7 %
Las Vegas3,01798.0%1,7920.903.6 %
Denver2,46694.5%2,1921.203.4 %
Western United States Subtotal29,72497.8%2,1281.2339.7 %
Florida:
South Florida8,24397.4%2,2971.2312.2 %
Tampa8,23697.6%1,7820.969.6 %
Orlando6,26197.2%1,7850.967.4 %
Jacksonville1,87498.4%1,7910.902.2 %
Florida Subtotal24,61497.5%1,9561.0431.4 %
Southeast United States:
Atlanta12,57397.8%1,6270.7913.2 %
Carolinas5,03797.2%1,6930.795.4 %
Southeast United States Subtotal17,61097.6%1,6460.7918.6 %
Texas:
Houston2,14296.5%1,6240.842.2 %
Dallas2,81095.7%1,8780.913.4 %
Texas Subtotal4,95296.1%1,7680.885.6 %
Midwest United States:
Chicago2,58598.2%2,0401.263.3 %
Minneapolis1,12397.6%2,0001.021.4 %
Midwest United States Subtotal3,70898.0%2,0281.184.7 %
Announced Market-in-Exit:
Nashville(5)
455.2%2,4510.85— %
Total / Average80,61297.6%$1,943$1.04100.0 %
Same Store Total / Average72,65898.3%$1,941$1.0490.8 %
(1)As of June 30, 2020.
(2)Represents average occupancy for the three months ended June 30, 2020.
(3)Represents average monthly rent for the three months ended June 30, 2020.
(4)
(1)As of June 30, 2021.
(2)Represents average occupancy for the three months ended June 30, 2021.
(3)Represents average monthly rent for the three months ended June 30, 2021.
(4)Represents the percentage of rental revenues and other property income generated in each market for the three months ended June 30, 2021.
(5)In December 2019, we announced a plan to fully exit the Nashville market. As of June 30, 2021, we have four remaining homes in the market.rental revenues and other property income generated in each market for the three months ended June 30, 2020.
(5)In December 2019, we announced a plan to fully exit the Nashville market and sold 708 homes in Nashville in a bulk transaction. As of June 30, 2020, we have 58 remaining homes in the market.


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Factors That Affect Our Results of Operations and Financial Condition
Our results of operations and financial condition are affected by numerous factors, many of which are beyond our control. See Part I. Item 1A. “Risk Factors” inof our Annual Report on Form 10-K as updated in Part II. Item 1A. “Risk Factors” in this Quarterly Report on Form 10-Q, for more information regarding factors that could materially adversely affect our results of operations and financial condition. Key factors that impact our results of operations and financial condition include market fundamentals, rental rates and occupancy levels, collection rates, turnover rates and days to re-resident homes, property improvements and maintenance, property acquisitions and renovations, and financing arrangements. Sensitivity to many of these factors has been heightened as a result of the ongoing and numerous adverse impacts of COVID-19.
Market Fundamentals: Our results are impacted by housing market fundamentals and supply and demand conditions in our markets, particularly in the Western United States and Florida, which represented 71.2%71.1% of our rental revenues and other property income during the three months ended June 30, 2020.2021. We are actively monitoringmonitor the impact of the COVID-19 outbreak on market fundamentals and are quickly implementingimplement changes in pricing as market fundamentals shift.
Rental Rates and Occupancy Levels: Rental rates and occupancy levels are primary drivers of rental revenues and other property income. Our rental rates and occupancy levels are affected by macroeconomic factors and local and property-level factors, including market conditions, seasonality, resident defaults, and the amount of time it takes to prepare a home for its next resident and re-lease homes when residents vacate. An important driver of rental rate growth is our ability to increase monthly rents from expiring leases, which typically have a term of one to two years. The ongoing COVID-19 pandemic has negatively impacted our ability to increase rents in certain markets and may impact our ability to maintain occupancy levels.
Collection Rates: Our rental revenues and other property income is impacted by the rate at which we collect such revenues from our residents. We routinely work with residents facing financial hardships who need flexibility to fulfill their lease obligations, but the ongoing COVID-19 pandemic has increased the number of such residents. When requested, we work with these residents to create payment plans, without late fees, and then actively manage these receivables. However, a portion of these amounts may not ultimately be collected, and our estimate ofcollected. Any amounts billed to residents that have been deemed uncollectible along with our estimate of amounts that may ultimately be uncollectible decreasesdecrease our rental revenues and other property income.
Turnover Rates and Days to Re-Resident: Other drivers of rental revenues and property operating and maintenance expense include the length of stay of our residents, resident turnover rates, and the number of days a home is unoccupied between residents. Our operating results are also impacted by the amount of time it takes to market and lease a property, which is a component of the number of days a home is unoccupied between residents. The period of time to market and lease a property can vary greatly and is impacted by local demand, our marketing techniques, the size of our available inventory, and both current economic conditions and future economic outlook, both of which are impacted by the ongoing COVID-19 pandemic. Days to re-resident may be negatively affected by homes potentially remaining vacant while prospective residents remain in their current housing. Our turnover rate may be affected by the current COVID-19 pandemic as a result of delayed eviction proceedings and/or move outs potentially being canceled by residents who have not secured their next housing plans. Increases in turnover rates and the average number of days to re-resident reduce rental revenues as the homes are not generating income during this period of vacancy.
Property Improvements and Maintenance: Property improvements and maintenance impact capital expenditures, property operating and maintenance expense, and rental revenues. We actively manage our homes on a total portfolio basis to determine what capital and maintenance needs may be required and what opportunities we may have to generate additional revenues or expense savings from such expenditures. Due to our size and scale both nationally and locally, we believe we are able to purchase goods and services at favorable prices.
While the COVID-19 outbreak has required us to modify our property improvement and maintenance procedures to accommodate resident preferences, as a currently designated “essential business” we are presently continuing to complete all emergency maintenance work orders. Additionally, asorders in a timely manner unless a resident reports symptoms of June 2020, we resumed completion of non-emergency work orders on a case-by-case basis and began addressing our backlog of deferred work orders. However, future potential governmental measures may restrict our abilityor exposure to function as an “essential business.”

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Property Acquisitions and Renovations: Future growth in rental revenues and other property income may be impacted by our ability to identify and acquire homes, our pace of property acquisitions, and the time and cost required to renovate and lease a newly acquired home. Our ability to identify and acquire single-family homes that meet our investment criteria is impacted by home prices in targeted acquisition locations, the inventory of homes available for sale through our acquisition channels, and competition for our target assets. All of these factors may be negatively impacted by the ongoing COVID-19 outbreak,pandemic, potentially reducing the number of homes we acquire.
The acquisition of homes involves expenditures in addition to payment of the purchase price, including payments for acquisition fees, property inspections, closing costs, title insurance, transfer taxes, recording fees, broker commissions, property taxes, and HOA fees (when applicable). Additionally, we typically incur costs to renovate a home to prepare it for rental. The scope of renovation work varies, but may include paint, flooring, carpeting, cabinetry, appliances, plumbing hardware, roof replacement, HVAC replacement, and other items required to prepare the home for rental. The time and cost involved in accessing our homes and preparing them for rental can significantly impact our financial performance. The time to renovate a newly acquired property can vary significantly among homes for several reasons, including the property’s acquisition channel, the condition of the property, whether the property was vacant when acquired, and whether there are any state or local restrictions on our ability to complete renovations as an essential business function. Additionally, COVID-19 and related containment measures may interfere with the ability of our suppliers and other business partners to carry out their assigned tasks and/or source labor or supply materials at ordinary levels of performance relative to the conduct of our business. Due to our size and scale both nationally and locally, we believe we are able to purchase goods and services at favorable prices.
Financing Arrangements: Financing arrangements directly impact our interest expense, mortgage loans, secured term loan, term loan facility, revolving facility,our various debt instruments, and convertible debt, as well as our ability to acquire and renovate homes. We have historically utilized indebtedness to fund the acquisition and renovation of new homes. Our current financing arrangements contain financial covenants, and certain financing arrangements contain variable interest rate terms. Interest rates are impacted by market conditions and the terms of the underlying financing arrangements. Inability by our residents to meet their lease obligations due to the COVID-19 pandemic could reduce our cash flows, which could impact our ability to make all required debt service payments. Furthermore, theThe COVID-19 pandemic has resulted in a widespread health crisis adversely affecting the economy and financial markets of many countries resulting in an economic downturn that could negatively affect our ability to access financial markets as well as our business, results of operations, and financial condition. See Part I. Item 3. “Quantitative and Qualitative Disclosures about Market Risk” for further discussion regarding interest rate risk. Our future financing arrangements may not have similar terms with respect to amounts, interest rates, financial covenants, and durations.
Components of Revenues and Expenses
The following is a description of the components of our revenues and expenses.
Revenues
Rental Revenues and Other Property Income
Rental revenues, net of any concessions and bad debt (including write-offs, credit reserves, and uncollectible amounts), consist of rents collected under lease agreements related to our single-family homes for lease. We enter into leases directly with our residents, and the leases typically have a term of one to two years.
Other property income is comprised of: (i) resident reimbursements for utilities, HOA fines, and other charge-backs; (ii) rent and non-refundable deposits associated with pets; (iii) revenues from ancillary services such as smart homes and (iii)HVAC replacement filters; and (iv) various other fees, including late fees, and lease termination fees, among others.
Joint Venture Management Fees
Joint venture management fees consist of asset and property management fees from our unconsolidated joint ventures.
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Expenses
Property Operating and Maintenance
Once a property is available for its initial lease, which we refer to as “rent-ready,” we incur ongoing property-related expenses, which consist primarily of property taxes, insurance, HOA fees (when applicable), market-level personnel


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expenses, utility expenses, repairs and maintenance, leasing costs, marketing expenses, and property administration. Prior to a property being “rent-ready,” certain of these expenses are capitalized as building and improvements. Once a property is “rent-ready,” expenditures for ordinary repairs and maintenance thereafter are expensed as incurred, and we capitalize expenditures that improve or extend the life of a home.
Property Management Expense
Property management expense represents personnel and other costs associated with the oversight and management of our portfolio of homes.homes, including those within our unconsolidated joint ventures. All of our homes are managed through our internal property manager.
General and Administrative
General and administrative expense represents personnel costs, professional fees, and other costs associated with our day-to-day activities. General and administrative expense may also includes merger and transaction-relatedinclude expenses among other things, that are of a non-recurring nature.nature, such as severance.
Share-Based Compensation Expense
All share-based compensation expense is recognized in our condensed consolidated statements of operations as components of general and administrative expense and property management expense. We issue share-based awards to align the interests of our employees’ interestsassociates with those of our investors.
Interest Expense
Interest expense includes interest payable on our debt instruments, payments and receipts related to our interest rate swap agreements, amortization of discounts and deferred financing costs, unrealized gains (losses) on non-designated hedging instruments, and non-cash interest expense related to our interest rate swap agreements.
Depreciation and Amortization
We recognize depreciation and amortization expense associated with our homes and other capital expenditures over theirthe expected useful lives.lives of the assets.
Impairment and Other
Impairment and other represents provisions for impairment when the carrying amount of our single-family residential properties is not recoverable and casualty (gains) losses, net of any insurance recoveries.
Gains (Losses) on Investments in Equity Securities, net
Gains (losses) on investments in equity securities, net includes unrealized gains and losses resulting from mark to market adjustments and realized gains and losses resulting from the sale of such securities.
Other, net
Other, net includes interest income third party management fee income, equity in earnings from an unconsolidated joint venture, unrealized gains from investments in equity securities, and other miscellaneous income and expenses.
Gain on Sale of Property, net of tax
Gain on sale of property, net of tax consists of net gains and losses resulting from sales of our homes.
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Income from Investments in Unconsolidated Joint Ventures
Income from investments in unconsolidated joint ventures consists of our share of net earnings and losses from investments in unconsolidated joint ventures accounted for using the equity method.
Results of Operations
Portfolio Information
As of June 30, 20202021 and 2019,2020, we owned 79,25680,612 and 80,32279,256 single-family rental homes, respectively, in our total portfolio. During the three months ended June 30, 20202021 and 2019,2020, we acquired 147494 and 740147 homes, respectively, and sold 416212 and 779416 homes, respectively. During the three months ended June 30, 20202021 and 2019,2020, we owned an average of 79,44980,412 and 80,45579,449 single-family rental homes, respectively. During the six months ended June 30, 20202021 and 2019,2020, we acquired 651895 and 948651 homes, respectively, and sold 900460 and 1,433900 homes, respectively. During the six months ended June 30, 20202021 and 2019,2020, we owned an average of 79,47580,315 and 80,55979,475 single-family rental homes, respectively.


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We believe presenting information about the portion of our total portfolio that has been fully operational for the entirety of both 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. To do so, we provide information regarding the performance of our Same Store portfolio.
As of June 30, 2020,2021, our Same Store portfolio consisted of 72,26172,658 single-family rental homes.
Three Months Ended June 30, 20202021 Compared to Three Months Ended June 30, 20192020
The following table sets forth a comparison of the results of operations for the three months ended June 30, 20202021 and 2019:2020:
For the Three Months
Ended June 30,
($ in thousands)20212020$ Change% Change
Revenues:
Rental revenues and other property income$490,618 $449,755 $40,863 9.1 %
Joint venture management fees1,015 — 1,015 N/M
Total revenues491,633 449,755 41,878 9.3 %
Expenses:
Property operating and maintenance175,422 167,002 8,420 5.0 %
Property management expense17,696 14,529 3,167 21.8 %
General and administrative19,828 14,426 5,402 37.4 %
Interest expense80,764 86,071 (5,307)(6.2)%
Depreciation and amortization145,280 137,266 8,014 5.8 %
Impairment and other980 (180)1,160 644.4 %
Total expenses439,970 419,114 20,856 5.0 %
Gains (losses) on investments in equity securities, net(7,002)— (7,002)N/M
Other, net(1,903)1,370 (3,273)(238.9)%
Gain on sale of property, net of tax17,919 11,167 6,752 60.5 %
Income from investments in unconsolidated joint ventures11 — 11 N/M
Net income$60,688 $43,178 $17,510 40.6 %
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  For the Three Months
Ended June 30,		    
($ in thousands) 2020 2019 $ Change % Change
Rental revenues and other property income $449,755
 $441,582
 $8,173
 1.9 %
         
Expenses:        
Property operating and maintenance 167,002
 166,574
 428
 0.3 %
Property management expense 14,529
 16,021
 (1,492) (9.3)%
General and administrative 14,426
 15,956
 (1,530) (9.6)%
Interest expense 86,071
 95,706
 (9,635) (10.1)%
Depreciation and amortization 137,266
 133,031
 4,235
 3.2 %
Impairment and other (180) 1,671
 (1,851) (110.8)%
Total expenses 419,114
 428,959
 (9,845) (2.3)%
         
Other, net 1,370
 610
 760
 124.6 %
Gain on sale of property, net of tax 11,167
 26,172
 (15,005) (57.3)%
         
Net income $43,178
 $39,405
 $3,773
 9.6 %
Revenues
Rental Revenues and Other Property Income
For the three months ended June 30, 2021 and 2020, total revenues were $491.6 million and 2019,$449.8 million, respectively. Set forth below is a discussion of changes in the individual components of total revenues.
For the three months ended June 30, 2021 and 2020, total portfolio rental revenues and other property income totaled $449.8$490.6 million and $441.6$449.8 million, respectively, an increase of 1.9%9.1%, driven by an increase in average occupancy, an increase in average monthly rent per occupied home, and utilities reimbursements, partially offset by ana 963 home increase in bad debt, reduced fee income, and a 1,006 home decrease between periods in the average number of homes owned.
Average occupancy for the three months ended June 30, 20202021 and 20192020 for the total portfolio was 96.0%97.6% and 94.6%96.0%, respectively. Average monthly rent per occupied home for the total portfolio for the three months ended June 30, 2021 and 2020 was $1,943 and 2019 was $1,869, and $1,800, respectively, a 3.8%4.0% increase. For our Same Store portfolio, average occupancy was 97.5%98.3% and 96.5%97.5% for the three months ended June 30, 20202021 and 2019,2020, respectively, and average monthly rent per occupied home for the three months ended June 30, 2021 and 2020 was $1,941 and 2019 was $1,868, and $1,801, respectively, a 3.7%3.9% increase.
The annualized turnover rate for the Same Store portfolio for the three months ended June 30, 2021 and 2020 was 26.8% and 2019 was 27.7% and 32.9%27.9%, respectively. For the Same Store portfolio, an average home remained unoccupied for 3723 and 4236 days between residents for the three months ended June 30, 20202021 and 2019,2020, respectively. The decreases in these two metrics contributed to our increase in average occupancy on a year over year basis. Furthermore, we believe the decrease inOur turnover is partially attributable to the effects of the COVID-19 pandemic (e.g., eviction moratoriumsrate may have been, and residents who are not inclined to relocate during this period). We cannot predict how long eviction moratoriums will remain in place nor when the general effects of the pandemic will subside and how those items may affect our turnover and occupancy rates.


47




To monitor prospective changes in average monthly rent per occupied home, we compare the monthly rent from an expiring lease to the monthly rent from the next lease for the same home, in each case, net of any amortized non-service concessions, to calculate net effective rental rate growth. Leases are either renewal leases, where our current resident stays for a subsequent lease term, or new leases, where our previous resident moves out and a new resident signs a lease to occupy the same home.
Renewal lease net effective rental rate growth for the total portfolio averaged 3.5% and 5.4% for the three months ended June 30, 2020 and 2019, respectively, and new lease net effective rental rate growth for the total portfolio averaged 2.9% and 5.3% for the three months ended June 30, 2020 and 2019, respectively. For our Same Store portfolio, renewal lease net effective rental rate growth averaged 3.5% and 5.3% for the three months ended June 30, 2020 and 2019, respectively, and new lease net effective rental rate growth averaged 2.7% and 5.2% for the three months ended June 30, 2020 and 2019, respectively.
The COVID-19 pandemic has negatively impacted our rental revenues and other property income in three notable ways: (1) lower collection rates, which caused our bad debt to increase from 0.4% of gross rental income for the three months ended June 30, 2019 to 1.9% of gross rental income for the three months ended June 30, 2020; (2) non-enforcement of late fees during the three months ended June 30, 2020, which was a primary driver of a decrease in fee income year over year; and (3) lower reimbursements of move out and other costs as a result of lower turnover and eviction moratoriums. The decreases in fee income and reimbursements were partially offset by continued increases in utilities reimbursements as more utilities remained in our name compared to the prior year.
The COVID-19 pandemic is likely to continue to affect our collection rates and ability to raise rents and charge fees, and the impact of jurisdictional restrictions on rental rates, late fees, payment deferral programs, and eviction moratoriums is likely to affect our ability to increase rental revenues and other operating income.
Expenses
For the three months ended June 30, 2020 and 2019, total expenses were $419.1 million and $429.0 million, respectively. Set forth below is a discussion of changes in the individual components of total expenses.
For the three months ended June 30, 2020, property operating and maintenance expense increased to $167.0 million from $166.6 million for the three months ended June 30, 2019. This 0.3% net increase resulted from an overall increase in fixed expenses (e.g., property taxes), net of decreases in controllable expenses such as turnover and property administrative costs that declined to due lower turnover and eviction moratoriums. The 1,006 home decrease between periods in the average number of homes owned also offset the increases in fixed expenses. The COVID-19 pandemic is likely to continue to impact our turnover rates, and thus turnover costs, and other property operating and maintenance expense may continue to be, affectedimpacted by the ongoing impacts of the pandemic.
Property management expense and general and administrative expense decreased to $29.0 million from $32.0 million for the three months ended June 30, 2020 and 2019, respectively, primarily due to decreases in merger and transaction-related expenses of $1.6 million, share-based compensation expense of $1.5 million, and offering related expenses of $0.5 million for the three months ended June 30, 2020 as compared to the three months ended June 30, 2019. To date, the COVID-19 pandemic has not had a material impact on our property management and general and administrative expenses.
Interest expense was $86.1 million and $95.7 million for the three months ended June 30, 2020 and 2019, respectively. The decrease in interest expense was primarily driven by a decrease in the average debt balance outstanding during the three months ended June 30, 2020 as compared to the three months ended June 30, 2019 due to various prepayments and redemption of a portion of our convertible debt for common equity subsequent to June 30, 2019. Debt outstanding, net of deferred financing costs and discounts, decreased to $8,351.6 million as of June 30, 2020 from $8,965.0 million as of June 30, 2019.
Depreciation and amortization expense increased to $137.3 million for the three months ended June 30, 2020 from $133.0 million for the three months ended June 30, 2019, due to an increase in cumulative capital expenditures. This was partially offset by a decrease in the average number of homes owned during the three months ended three months ended June 30, 2020 compared to the three months ended June 30, 2019.


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Impairment and other expenses were $(0.2) million and $1.7 million for the three months ended June 30, 2020 and 2019, respectively. During the three months ended June 30, 2020, impairment and other expenses were primarily comprised of impairment losses of $1.4 million on our single-family residential properties and net gains on casualty losses of $1.7 million. During the three months ended June 30, 2019, impairment and other expenses were primarily comprised of impairment losses of $4.1 million on our single-family residential properties, partially offset by net gains on casualty losses of $2.4 million. The impairment costs recognized during the three months ended June 30, 2020 were not a direct result of the COVID-19 pandemic.
Other, net
Other, net increased to $1.4 million for the three months ended June 30, 2020 from $0.6 million for the three months ended June 30, 2019, due to changes in the components of our miscellaneous income and expenses between periods.
Gain on Sale of Property, net of tax
Gain on sale of property, net of tax was $11.2 million and $26.2 million for the three months ended June 30, 2020 and 2019, respectively. The primary driver of the decrease was a decrease in the number of homes sold from 779 during the three months ended June 30, 2019 to 416 during the three months ended June 30, 2020.
Six Months Ended June 30, 2020 Compared to Six Months Ended June 30, 2019
The following table sets forth a comparison of the results of operations for the six months ended June 30, 2020 and 2019:
  
For the Six Months
Ended June 30,
    
($ in thousands) 2020 2019 $ Change % Change
Rental revenues and other property income $899,544
 $877,082
 $22,462
 2.6 %
         
Expenses:        
Property operating and maintenance 333,918
 326,920
 6,998
 2.1 %
Property management expense 28,901
 31,181
 (2,280) (7.3)%
General and administrative 28,654
 42,494
 (13,840) (32.6)%
Interest expense 170,828
 189,689
 (18,861) (9.9)%
Depreciation and amortization 272,293
 266,640
 5,653
 2.1 %
Impairment and other 2,947
 7,063
 (4,116) (58.3)%
Total expenses 837,541
 863,987
 (26,446) (3.1)%
         
Other, net 5,084
 3,735
 1,349
 36.1 %
Gain on sale of property, net of tax 26,367
 43,744
 (17,377) (39.7)%
         
Net income $93,454
 $60,574
 $32,880
 54.3 %
Rental Revenues and Other Property Income
For the six months ended June 30, 2020 and 2019, total portfolio rental revenues and other property income totaled $899.5 million and $877.1 million, respectively, an increase of 2.6%, driven by an increase in average occupancy, average monthly rent per occupied home, and utilities reimbursements, partially offset by an increase in bad debt, reduced fee income, and a 1,084 home decrease between periods in the average number of homes owned.
Average occupancy for the six months ended June 30, 2020 and 2019 for the total portfolio was 95.2% and 94.7%, respectively. Average monthly rent per occupied home for the total portfolio for the six months ended June 30, 2020 and 2019 was $1,860 and $1,791, respectively, a 3.9% increase. For our Same Store portfolio, average occupancy was 97.1% and 96.5% for the six months ended June 30, 2020 and 2019, respectively, and average monthly rent per occupied home for the six months ended June 30, 2020 and 2019 was $1,860 and $1,792, respectively, a 3.8% increase.


49




The annualized turnover rate for the Same Store portfolio for the six months ended June 30, 2020 and 2019 was 26.3% and 29.0%, respectively. For the Same Store portfolio, an average home remained unoccupied for 44 and 47 days between residents for the six months ended June 30, 2020 and 2019, respectively. The decreases in these two metrics contributed to our increase in occupancy on a year over year basis. Furthermore, we believe the decrease in turnover is partially attributable to the effects of the COVID-19 pandemic (e.g., eviction moratoriums and residents who are not inclined to relocate during this period). We cannot predict how long eviction moratoriums will remain in place nor when the general effects of the pandemic will subside and how those items may affect our turnover and occupancy rates.
To monitor prospective changes in average monthly rent per occupied home, we compare the monthly rent from an expiring lease to the monthly rent from the next lease for the same home, in each case, net of any amortized non-service concessions, to calculate net effective rental rate growth. Leases are either renewal leases, where our current resident stays for a subsequent lease term, or new leases, where our previous resident moves out and a new resident signs a lease to occupy the same home.
Renewal lease net effective rental rate growth for the total portfolio averaged 3.9%5.8% and 5.3%3.5% for the sixthree months ended June 30, 20202021 and 2019,2020, respectively, and new lease net effective rental rate growth for the total portfolio averaged 2.5%13.8% and 4.5%2.9% for the sixthree months ended June 30, 20202021 and 2019,2020, respectively. For our Same Store portfolio, renewal lease net effective rental rate growth averaged 3.9%5.8% and 5.3%3.5% for the sixthree months ended June 30, 20202021 and 2019,2020, respectively, and new lease net effective rental rate growth averaged 13.8% and 2.7% for the three months ended June 30, 2021 and 2020, respectively.
During the three months ended June 30, 2020, almost all late fees typically enforced in accordance with our lease agreements were not enforced or collected. During the three months ended June 30, 2021, enforcement and collection of late fees generally re-commenced in all markets where permissible. While the effects of the COVID-19 pandemic and the ensuing jurisdictional restrictions on rental rates, late fees, collections, and evictions have decreased over time, they may continue to affect our future collection rates, ability to increase rental revenues in certain markets, and fees and other ancillary income charged to residents.
For the three months ended June 30, 2021, joint venture management fees totaled $1.0 million.
Expenses
For the three months ended June 30, 2021 and 2020, total expenses were $440.0 million and $419.1 million, respectively. Set forth below is a discussion of changes in the individual components of total expenses.
For the three months ended June 30, 2021, property operating and maintenance expense increased to $175.4 million from $167.0 million for the three months ended June 30, 2020. In addition to a 963 home increase in the average number of homes owned between periods, increases in utilities, property taxes, property administrative costs, turnover costs, and HOA expenses contributed to the overall 5.0% net increase in property operating and maintenance expense. During the three months ended June 30, 2020, as a result of the COVID-19 pandemic, controllable expenses such as turnover and property administrative costs declined significantly. We also believe HOA expenses were lower due to stay-at-home orders that reduced the number of fines and violations we received. Although the ongoing effects of COVID-19 continue to impact our
50

operations in some ways, the COVID-related decline in turnover and property administrative costs during the three months ended June 30, 2020 has generally reversed during the three months ended June 30, 2021.
Property management expense and general and administrative expense increased to $37.5 million from $29.0 million for the three months ended June 30, 2021 and 2020, respectively, due to a $7.1 million increase in share-based compensation expense primarily related to changes in expected results for performance-based awards and a $1.6 million increase in other compensation costs for the three months ended June 30, 2021 as compared to the three months ended June 30, 2020. To date, other than the impact on share-based compensation expense, the COVID-19 pandemic has not had a material impact on our property management and general and administrative expenses.
Interest expense decreased from $86.1 million for the three months ended June 30, 2020 to $80.8 million for the three months ended June 30, 2021 due to the following: (1) a 57 bps decrease in the average margin on our term loan between those periods due to conversion to an investment grade pricing grid pursuant to an amended and restated credit facility and (2) a decrease in our average debt outstanding, net of deferred financing costs and discounts, from $8,351.6 million as of June 30, 2020 to $8,014.4 million as of June 30, 2021 due to various prepayments made subsequent to June 30, 2020.
Depreciation and amortization expense increased to $145.3 million for the three months ended June 30, 2021 from $137.3 million for the three months ended June 30, 2020 due to an increase in cumulative capital expenditures and an increase in the average number of homes owned during the three months ended June 30, 2021 compared to the three months ended June 30, 2020.
Impairment and other expenses were $1.0 million and $(0.2) million for the three months ended June 30, 2021 and 2020, respectively. During the three months ended June 30, 2021, impairment and other expenses were comprised of impairment losses of $0.1 million on our single-family residential properties and net casualty losses of $0.9 million. During the three months ended June 30, 2020, impairment and other expenses were comprised of impairment losses of $1.4 million on our single-family residential properties and net gains on casualty losses of $1.7 million. The impairment costs recognized during the three months ended June 30, 2021 and 2020 were not a direct result of the COVID-19 pandemic.
Gains (Losses) on Investments in Equity Securities, net
For the three months ended June 30, 2021, $7.0 million of gains (losses) on investments in equity securities, net was comprised of an $8.9 million unrealized loss from marking an investment that has a readily determinable fair value to market and a $1.9 million realized gain from the sale of equity securities. There were no gains (losses) on investments in equity securities, net during the three months ended June 30, 2020.
Other, net
Other, net decreased to $(1.9) million for the three months ended June 30, 2021 from $1.4 million for the three months ended June 30, 2020, primarily due to lower interest income from our investments in debt securities and increases in debt and transaction costs between those periods. Additionally, joint venture management fees and income from investments in unconsolidated joint ventures presented separately on our condensed consolidated statement of operations for the three months ended June 30, 2021 were included in other, net during the three months ended June 30, 2020.
Gain on Sale of Property, net of tax
Gain on sale of property, net of tax was $17.9 million and $11.2 million for the three months ended June 30, 2021 and 2020, respectively. The primary driver of the increase was an increase in disposition proceeds received per home for the three months ended June 30, 2021 compared to the three months ended June 30, 2020.
Income from Investments in Unconsolidated Joint Ventures
Income from investments in unconsolidated joint ventures was comprised of our equity in earnings therefrom.
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Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020
The following table sets forth a comparison of the results of operations for the six months ended June 30, 2021 and 2020:
For the Six Months
Ended June 30,
($ in thousands)20212020$ Change% Change
Revenues:
Rental revenues and other property income$965,072 $899,544 $65,528 7.3 %
Joint venture management fees1,786 — 1,786 N/M
Total revenues966,858 899,544 67,314 7.5 %
Expenses:
Property operating and maintenance343,795 333,918 9,877 3.0 %
Property management expense33,538 28,901 4,637 16.0 %
General and administrative36,778 28,654 8,124 28.4 %
Interest expense164,170 170,828 (6,658)(3.9)%
Depreciation and amortization289,781 272,293 17,488 6.4 %
Impairment and other1,336 2,947 (1,611)(54.7)%
Total expenses869,398 837,541 31,857 3.8 %
Gains (losses) on investments in equity securities, net(10,142)34 (10,176)N/M
Other, net(1,673)5,050 (6,723)(133.1)%
Gain on sale of property, net of tax32,403 26,367 6,036 22.9 %
Income from investments in unconsolidated joint ventures362 — 362 N/M
Net income$118,410 $93,454 $24,956 26.7 %
Revenues
For the six months ended June 30, 2021 and 2020, total revenues were $966.9 million and $899.5 million, respectively. Set forth below is a discussion of changes in the individual components of total revenues.
For the six months ended June 30, 2021 and 2020, total portfolio rental revenues and other property income totaled $965.1 million and $899.5 million, respectively, an increase of 7.3%, driven by an increase in average occupancy, an increase in average monthly rent per occupied home, and an 840 home increase between periods in the average number of homes owned, partially offset by an increase in bad debt.
Average occupancy for the six months ended June 30, 2021 and 2020 for the total portfolio was 97.5% and 95.2%, respectively. Average monthly rent per occupied home for the total portfolio for the six months ended June 30, 2021 and 2020 was $1,930 and $1,860, respectively, a 3.8% increase. For our Same Store portfolio, average occupancy was 98.4% and 97.1% for the six months ended June 30, 2021 and 2020, respectively, and average monthly rent per occupied home for the six months ended June 30, 2021 and 2020 was $1,928 and $1,859, respectively, a 3.7% increase.
The annualized turnover rate for the Same Store portfolio for the six months ended June 30, 2021 and 2020 was 23.9% and 26.6%, respectively. For the Same Store portfolio, an average home remained unoccupied for 26 and 44 days between residents for the six months ended June 30, 2021 and 2020, respectively. The decreases in these two metrics contributed to our increase in average occupancy on a year over year basis. Our turnover rate may have been, and may continue to be, impacted by the effects of the COVID-19 pandemic (e.g., eviction moratoriums and residents who are not inclined to relocate during this period). We cannot predict how long eviction moratoriums will remain in place nor when the general effects of the pandemic will subside and how those items may affect our turnover and occupancy rates.
To monitor prospective changes in average monthly rent per occupied home, we compare the monthly rent from an expiring lease to the monthly rent from the next lease for the same home, in each case, net of any amortized non-service
52

concessions, to calculate net effective rental rate growth. Leases are either renewal leases, where our current resident stays for a subsequent lease term, or new leases, where our previous resident moves out and a new resident signs a lease to occupy the same home.
Renewal lease net effective rental rate growth for the total portfolio averaged 5.1% and 3.9% for the six months ended June 30, 2021 and 2020, respectively, and new lease net effective rental rate growth for the total portfolio averaged 11.2% and 2.5% for the six months ended June 30, 2021 and 2020, respectively. For our Same Store portfolio, renewal lease net effective rental rate growth averaged 5.1% and 3.8% for the six months ended June 30, 2021 and 2020, respectively, and new lease net effective rental rate growth averaged 11.1% and 2.3% for the six months ended June 30, 2021 and 4.6%2020, respectively.
The COVID-19 pandemic has negatively impacted rental revenues and other property income since the onset of the pandemic in mid-March 2020 in two notable ways: (1) we experienced lower collection rates, which caused bad debt as a percentage of gross rental income to increase from 1.1% for the six months ended June 30, 2020 and 2019, respectively.
The COVID-19 pandemic has negatively impacted our rental revenues and other property income in three notable ways: (1) lower collection rates, which caused our bad debt to increase from 0.5% of gross rental income2.0% for the six months ended June 30, 2019 to 1.1%2021; and (2) a significant portion of gross rental income forall late fees typically enforced in accordance with our lease agreements were not enforced or collected. As of the six months ended June 30, 2020; (2) non-enforcementsecond quarter of 2021, enforcement and collections of late fees duringhave generally re-commenced in all markets where permissible. While the six months ended June 30, 2020, which was a primary drivereffects of a decrease in fee income year over year; and (3) lower reimbursements of move out and other costs as a result of lower turnover and eviction moratoriums. The decreases in fee income and reimbursements were partially offset by continued increases in utilities reimbursements as more utilities remained in our name compared to the prior year.
The COVID-19 pandemic is likely to continue to affect our collection rates and ability to raise rents and charge fees, and the impact ofensuing jurisdictional restrictions on rental rates, late fees, payment deferral programs,collections, and eviction moratoriums is likelyevictions have decreased over time, they may continue to affect our future collection rates, ability to increase rental revenues in certain markets, and fees and other operating income.ancillary income charged to residents.
For the six months ended June 30, 2021, joint venture management fees totaled $1.8 million.
Expenses
For the six months ended June 30, 20202021 and 2019,2020, total expenses were $837.5$869.4 million and $864.0$837.5 million, respectively. Set forth below is a discussion of changes in the individual components of total expenses.
For the six months ended June 30, 2020,2021, property operating and maintenance expense increased to $333.9$343.8 million from $326.9$333.9 million for the six months ended June 30, 2019. This 2.1% net2020. In addition to an 840 home increase resulted from an increase in property taxes, repairs and maintenance, and utilities, partially offset by decreases in turnover and property administrative costs that declined to due lower turnover and eviction moratoriums and savings in personnel and other costs. The 1,084 home decrease between periods in the average number of homes owned, also offset the increases in expenses.property taxes, utilities, and HOA expenses, partially offset by decreases in repairs and maintenance and turnover costs, resulted in the overall 3.0% net increase in property operating and maintenance expense. The COVID-19 pandemic is likely to continue to impact our turnover rates, and thus turnover costs, and otherimpacted property operating and maintenance expense may continue to be affected bydifferently on a year over year basis between the ongoing impactsthree months ended March 31, 2021 and 2020 and the three months ended June 30, 2021 and 2020. The severity of the pandemic.pandemic during the three months ended June 30, 2020 decreased controllable expenses (e.g., turnover and property administrative costs) and those cost declines have generally reversed during the three months ended June 30, 2021.
Property management expense and general and administrative expense decreasedincreased to $57.6$70.3 million from $73.7$57.6 million for the six months ended June 30, 20202021 and 2019,2020, respectively, due to decreasesa $8.8 million increase in severance expense of $7.1 million, merger and transaction-related expenses of $4.3 million, share-based compensation expense of $3.0primarily related to changes in expected results for performance-based awards and a $4.7 million and offering related expenses of $2.0increase in other compensation costs, partially offset by a $0.8 million decrease in administrative fees for the six months ended June 30, 20202021 as compared to the six months ended June 30, 2019. To2020. Other than the impact on share-based compensation expense, to date, the COVID-19 pandemic has not had a material impact on our property management and general and administrative expenses.
Interest expense wasdecreased from $170.8 million and $189.7 million for the six months ended June 30, 2020 and 2019, respectively. The decrease in interest expense was primarily driven by a decrease in the average debt balance outstanding duringto $164.2 million for the six months ended June 30, 2020 as compared2021 due to the six months ended June 30, 2019following: (1) a 36 bps decrease in the average margin on our term loan between those periods due to various prepaymentsconversion to an investment grade pricing grid pursuant to an amended and redemption ofrestated credit facility and (2) a portion ofdecrease in our convertibleaverage debt for common equity subsequent to June 30, 2019. Debt outstanding, net of deferred financing costs and discounts, decreased tofrom $8,351.6 million as of June 30, 2020 from $8,965.0to $8,014.4 million as of June 30, 2019.


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2021 due to various prepayments made subsequent to June 30, 2020.
Depreciation and amortization expense increased to $289.8 million for the six months ended June 30, 2021 from $272.3 million for the six months ended June 30, 2020 from $266.6 million for the six months ended June 30, 2019 due to an increase in cumulative capital expenditures. This was partially offset by a decreaseexpenditures and an increase in the average number of homes owned during the six months ended June 30, 20202021 compared to the six months ended June 30, 2019.2020.
Impairment and other expenses were $2.9$1.3 million and $7.1$2.9 million for the six months ended June 30, 2021 and 2020, respectively. During the six months ended June 30, 2021, impairment and 2019, respectively.other expenses were comprised of impairment
53

losses of $0.5 million on our single-family residential properties and net casualty losses of $0.8 million. During the six months ended June 30, 2020, impairment and other expenses waswere comprised of impairment losses of $3.9 million on our single-family residential properties and net gains on casualty losses of $1.0 million. During the six months ended June 30, 2019, impairment and other expenses was comprised of impairment losses of $7.3 million on our single-family residential properties, partially offset by net gains on casualty losses of $0.2 million. The impairment costs recognized during the six months ended June 30, 2021 and 2020 were not a direct result of the COVID-19 pandemic.
Gains (Losses) on Investments in Equity Securities, net
For the six months ended June 30, 2021, $10.1 million of gains (losses) on investments in equity securities, net was comprised of a $12.0 million unrealized loss from marking an investment that has a readily determinable fair value to market and a $1.9 million realized gain from the sale of equity securities.
Other, net
Other, net increaseddecreased to $1.7 million for the six months ended June 30, 2021 from $5.1 million for the six months ended June 30, 2020, primarily due to lower interest income from $3.7 millionour investments in debt securities and increases in debt and transaction costs between those periods. Additionally, joint venture management fees and income from investments in unconsolidated joint ventures presented separately on our condensed consolidated statement of operations for the six months ended June 30, 2019, due to changes2021 were included in other, net during the components of our miscellaneous income and expenses.six months ended June 30, 2020.
Gain on Sale of Property, net of tax
Gain on sale of property, net of tax was $26.4$32.4 million and $43.7$26.4 million for the six months ended June 30, 20202021 and 2019,2020, respectively. The primary driver of the decreaseincrease was a decreasean increase in disposition proceeds received per home for the numbersix months ended June 30, 2021 compared to the six months ended June 30, 2020.
Income from Investments in Unconsolidated Joint Ventures
Income from investments in unconsolidated joint ventures was comprised of homes sold from 1,433our equity in earnings therefrom and totaled $0.4 million during the six months ended June 30, 2019 to 900 during the six months ended June 30, 2020.2021.
Liquidity and Capital Resources
Our liquidity and capital resources as of June 30, 20202021 and December 31, 20192020 include unrestricted cash and cash equivalents of $571.7$126.2 million and $92.3$213.4 million, respectively, a 519.7% increase. In May 2020, we used40.9% decrease primarily due to use of cash on hand to fund acquisitions of single-family properties. In May 2021, we issued and sold $300.0 million of unsecured notes in a private placement transactions. We used the proceeds to repay $120.0$300.0 million of the $270.0highest-cost classes of various securitizations due to reach final maturity between December 2024 and January 2026. As of June 30, 2021, our $1,000.0 million revolving facility (the “Revolving Facility”) that had previously been outstanding. In June 2020, we completed an underwritten public offering to sell 16,675,000 shares of our common stockremains undrawn, and generated net proceeds of $447.5 million, and $150.0 million of the proceeds were used to fully repay the balance outstanding on our Revolving Facility. The remaining proceeds are expected to be used primarily for acquisitions. As of June 30, 2020, our $1,000.0 million Revolving Facility remains undrawn. Additionally, there are no restrictions on our ability to draw additional funds from the Revolving Facility,thereunder provided we remain in compliance with all covenants; and wecovenants. We have no debt maturing before 2022,reaching final maturity until December 2024, provided all extension optionsextensions are exercised.exercised, with the exception of $345.0 million of convertible notes maturing in January 2022. Effective July 15, 2021, we notified note holders of our intent to settle conversions of the 2022 Convertible Notes in shares of common stock. From July 1, 2021 through the date our condensed consolidated financial statements were issued, $176.7 million of principal was converted into 7,766,798 shares of common stock at the election of the note holders.
Our ability to access capital as well as to use cash from operations to continue to meet our liquidity needs, all of which are highly uncertain and cannot be predicted, could be affected by various risks and uncertainties, including, but not limited to, the effects of the COVID-19 pandemic, as detailed in Part II.I. Item 1A. “Risk Factors” in this Quarterly Report on Form 10-Q and in the risk factors identified in other reports we have filed with the SEC, including without limitationof our Annual Report on Form 10-K for the year ended December 31, 2019.10-K.
Through June 30, 2020,2021, disposition channels remained healthy in our markets, and we continuedcontinue to sell homes that had beenare designated for disposition. Additionally,With a pipeline of acquisitions to which we are committed of $275.9 million as of June 30, 2021, we have limited cash commitments outside of debt service as we do not engage in any development activity, and the pipeline of acquisitions to which we are committed is $47.5 million as of June 30, 2020.service. However, the ongoing impact of the COVID-19 pandemic may impact the acquisition and disposition of single-family homes in ways that we are unable to predict.
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Long-Term Debt Strategy
The following table summarizes certain information about our debt obligations as of June 30, 2021 ($ in thousands):
Debt InstrumentsBalance
(Gross of Retained Certificates and Unamortized Discounts)		Balance
(Net of Retained Certificates)		Weighted Average Interest Rate
Weighted Average Years to Maturity(1)
Amount Freely Prepayable (Gross)
Secured:
IH 2017-1(2)
$996,296 $940,796 4.23%5.9$— 
IH 2017-2(2)
551,280 523,701 L + 107 bps3.4551,280 
IH 2018-1(2)
641,153 609,060 L + 95 bps3.7641,153 
IH 2018-2(2)
691,013 656,457 L + 109 bps3.9691,013 
IH 2018-3(2)
878,314 834,384 L + 116 bps4.0878,314 
IH 2018-4(2)
753,011 715,354 L + 128 bps4.5753,011 
Secured Term Loan(3)(4)
403,363 403,363 3.59%9.9— 
Total secured(5)
4,914,430 $4,683,115 3.68%4.93,514,771 
Unsecured:
2022 Convertible Senior Notes(4)(6)
344,994 3.50%0.5— 
2028 Unsecured Notes(4)
150,000 2.46%6.9— 
2036 Unsecured Notes(4)
150,000 3.18%14.9— 
Term Loan Facility(4)
2,500,000 L + 100 bps4.62,500,000 
Revolving Facility(4)
— L + 90 bps4.6— 
Total unsecured(5)
3,144,994 3.31%4.82,500,000 
Total:
Total debt(5)
8,059,424 3.54%4.8$6,014,771 
Unamortized discounts and fair value adjustments(5,057)
Deferred financing costs, net(39,930)
Total debt per balance sheet8,014,437 
Retained certificates(231,315)
Cash and restricted cash, excluding security deposits and letters of credit(201,779)
Deferred financing costs, net39,930 
Unamortized discounts and fair value adjustments5,057 
Net debt$7,626,330 
(1)Weighted average years to maturity assumes all extension options are exercised, which are subject to certain conditions being met.
(2)Except for IH 2017-1, interest rates are based on a weighted average spread over the London Interbank Offer Rate (“LIBOR”) (or a comparable or successor rate as provided for in our loan agreements), plus applicable servicing fees; as of June 30, 2021, LIBOR was 0.10%. Our IH 2017-1 mortgage loan bears interest at a fixed rate of 4.23% per annum, equal to the market determined pass-through rate payable on the certificates including applicable servicing fees.
(3)The Secured Term Loan bears interest at a fixed rate of 3.59% per annum including applicable servicing fees for the first 11 years and for the twelfth year bears interest at a floating rate based on a spread of 147 bps over one month LIBOR (or a comparable or successor rate as provided for in our loan agreement), including applicable servicing fees, subject to certain adjustments as outlined in the loan agreement. Interest payments are made monthly.
(4)Defined below.
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(5)For secured debt, unsecured debt, and total debt, the weighted average interest rate is calculated based on LIBOR as of June 30, 2021, 0.10%, and includes the impact of interest rate swap agreements effective as of June 30, 2021.
(6)Effective July 15, 2021, we notified note holders of our intent to settle conversions of the 2022 Convertible Notes in shares of common stock

As part of our long-term debt strategy, our goal is to improve our credit ratings, and, over time, we generally intend to target a reduction in our level of net debt to approximately 5.5 to 6.0 times trailing twelve months Adjusted EBITDAre (see “— Non-GAAP Measures — EBITDA, EBITDAre, and Adjusted EBITDAre”), a reduction in our level of secured debt to less than 20% of gross assets, and an increase in our level of unencumbered assets to greater than 70% of gross assets. To facilitate our long-term debt strategy, we expect to seek to, among other things, (a) refinance a significant portion of our secured debt maturing in 2024 through 2026 (assuming all extension options are exercised) with unsecured debt, including potential unsecured bond issuances and/or (b) repay a portion of such debt. There can be no assurance that we will be successful in implementing our long-term debt strategy, improving our credit ratings, or achieving our targets in the short or medium term or at all or that we will not change our strategy or targets in the future. Even if we do achieve our targets, we may from time to time fall outside of our target ranges; and there can be no assurance that we will continue to meet our targets. In addition, we cannot assure you that we will be able to access the capital and credit markets to obtain additional unsecured debt financing or that we will be able to obtain financing on terms favorable to us. For further discussion of risks related to our indebtedness, see Part I. Item 1A. “Risk Factors — Risks Related to Our Indebtedness,” including “Risk Factors — Risks Relating to Our Indebtedness — We may be unable to obtain financing through the debt and equity markets, which would have a material adverse effect on our growth strategy and our financial condition and results of operations” in our Annual Report on Form 10-K.
Short-Term and Long-Term Liquidity Needs
Liquidity is a measure of our ability to meet potential cash requirements, maintain our assets, fund our operations, make dividend payments to our stockholders, and meet other general requirements of our business. Our liquidity, to a certain extent, is subject to general economic, financial, competitive, and other factors beyond our control. Our near-term liquidity requirements consist primarily of: (i) renovating newly-acquired homes; (ii) funding HOA fees (as applicable), property taxes, insurance premiums, and the ongoing maintenance of our homes; (iii) interest expense; and (iv) payment of dividends to our equity investors.investors; and (v) required contributions to the Rockpoint Group, L.L.C. (“Rockpoint”) joint venture. We believe our rental income, net of total expenses, will generally provide cash flow sufficient to fund operations and dividend payments on a near-term basis.


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 Additionally, we have guaranteed the funding of certain tax, insurance, and non-conforming property reserves related to the Rockpoint joint venture’s financing. We do not expect this guarantee to have a material current or future effect on our liquidity.
However, the COVID-19 pandemic may negatively impact our operating cash flow such that we are unable to make required debt service payments, which would result in an event of default for any such loan agreement under which payments were not made. Specifically, the collateral within individual borrower entities may underperform, resulting in cash flow shortfalls for debt service while consolidated cash flows are sufficient to fund our operations. If an event of default occurs for a specific mortgage loan or for our secured term loan, our loan agreements provide certain remedies, including our ability to fund shortfalls from consolidated cash flow; and such an event of default would not result in an immediate acceleration of the loan.
Our real estate assets are illiquid in nature. A timely liquidation of assets may not be a viable source of short-term liquidity should a cash flow shortfall arise, and we may need to source liquidity from other financing sources, such as the Revolving Facility, which had an undrawn balance of $1,000.0 million as of June 30, 2020.2021.
Our long-term liquidity requirements consist primarily of funds necessary to pay for the acquisition of, and non-recurring capital expenditures for, our homes and principal payments on and maturities of our indebtedness.
We intend to satisfy our long-term liquidity needs through cash provided by operations, long-term secured and unsecured borrowings, the issuance of debt and equity securities, and property dispositions. As a REIT, we are required to distribute to our stockholders at least 90% of our taxable income, excluding net capital gain, on an annual basis. Therefore, as a general matter, it is unlikely that we will be able to retain substantial cash balances from our annual taxable income that could be used to meet our liquidity needs. Instead, we will need to meet these needs from external sources of capital and amounts, if any, by which our cash flow generated from operations exceeds taxable income.
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On August 22, 2019, we entered into distribution agreements with a syndicate of banks (the “Agents”), pursuant to which we may sell, from time to time, up to an aggregate sales price of $800.0 million of our common stock through the Agents (the “ATM Equity Program”). During the three and six months ended June 30, 2020, we sold 15,400 and 1,887,466 shares of our common stock under our ATM Equity Program, respectively, generating net proceeds of $0.3 million and $56.3 million, respectively, after giving effect to Agent commissions and other costs totaling $0.1 million and $1.0 million, respectively. As of June 30, 2020, $685.8 million remains available for future offerings under the ATM Equity Program.
LIBOR Transition
Certain Securitizations, the Secured Term Loan, the Term Loan Facility, (all defined below), and the Revolving Facility (collectively, the “LIBOR-Based Loans”) use London Interbank Offer Rate (“LIBOR”)the one month LIBOR as a benchmark for establishing interest rates. Our derivative instruments are also indexed to one month LIBOR. TheOn March 5, 2021, the Financial Conduct Authority inof the United Kingdom, the governing body responsible for regulatingwhich has statutory powers to require panel banks to contribute to LIBOR, announced that it will no longer compel or persuade financial institutionswould cease publication of the one week and panel banks to maketwo month USD LIBOR submissionsimmediately after 2021.December 31, 2021 and cease publication of the remaining tenors immediately after June 30, 2023. Once one month LIBOR is phased out after June 30, 2023, the interest rates for our LIBOR-Based Loans will be based on a comparable or successor rate as provided for in our loan agreements. We will work with the counterparties to our swap and cap agreements to adjust each floating rate to a comparable or successor rate. While we do not expect that the transition from LIBOR and risks related thereto will have a material adverse effect on our financing costs, the ultimate outcome of this change is uncertain at this time, and significant management time and attention may be required to transition to using the new benchmark rates and to implement necessary changes to our financial models.
The following describes the key terms of our current indebtedness.
Mortgage Loans
Our securitization transactions (the “Securitizations” or the “mortgage loans”) are collateralized by certain homes owned by wholly owned subsidiaries of INVH LP that were formed to facilitate certain of our financing arrangements (the “Borrower Entities”). We utilize the proceeds from our securitizations to fund: (i) repayments of then-outstanding indebtedness; (ii) initial deposits into Securitization reserve accounts; (iii) closing costs in connection with the mortgage loans; and (iv) general costs associated with our operations.


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The following table sets forth a summary of our mortgage loan indebtedness as of June 30, 20202021 and December 31, 2019:2020:
          
Outstanding Principal Balance(5)
($ in thousands) 
Maturity
Date(1)
 
Maturity Date if
Fully Extended(2)
 
Interest
Rate(3)
 
Range of Spreads(4)
 June 30,
2020		 December 31, 2019
IH 2017-1(6)
 June 9, 2027 June 9, 2027 4.23% N/A $994,606
 $995,520
SWH 2017-1(7)
 October 9, 2020 January 9, 2023 1.73% 102-347 bps 736,208
 744,092
IH 2017-2(7)
 December 9, 2020 December 9, 2024 1.31% 91-186 bps 616,429
 624,475
IH 2018-1(7)
 March 9, 2021 March 9, 2025 1.28% 76-206 bps 780,718
 793,720
IH 2018-2(7)
 June 9, 2021 June 9, 2025 1.50% 95-230 bps 934,426
 957,135
IH 2018-3(7)(8)
 July 9, 2020 July 9, 2025 1.51% 105-230 bps 1,143,986
 1,213,035
IH 2018-4(7)
 January 9, 2021 January 9, 2026 1.58% 115-225 bps 928,533
 938,430
Total Securitizations 6,134,906
 6,266,407
Less: deferred financing costs, net (16,331) (27,946)
Total $6,118,575
 $6,238,461
Outstanding Principal Balance(5)
($ in thousands)
Maturity
Date(1)
Maturity Date if
Fully Extended(2)
Interest
Rate(3)
Range of Spreads(4)
June 30,
2021		December 31, 2020
IH 2017-1(6)
June 9, 2027June 9, 20274.23%N/A$994,183 $994,787 
IH 2017-2(7)
December 9, 2021December 9, 20241.17%91-151 bps551,280 612,506 
IH 2018-1(7)
March 9, 2022March 9, 20251.05%76-151 bps641,153 646,021 
IH 2018-2(7)
June 9, 2022June 9, 20251.19%95-150 bps691,013 693,988 
IH 2018-3(7)(8)
July 9, 2021July 9, 20251.26%105-170 bps878,314 1,036,561 
IH 2018-4(7)
January 9, 2022January 9, 20261.38%115-170 bps753,011 848,270 
Total Securitizations4,508,954 4,832,133 
Less: deferred financing costs, net(10,665)(12,035)
Total$4,498,289 $4,820,098 
(1)The maturity dates above reflect all extension options that have been exercised.
(2)Represents the maturity date if we exercise each of the remaining one year extension options available, which are subject to certain conditions being met.
(3)
Except for IH 2017-1, interest rates are based on a weighted average spread over LIBOR, plus applicable servicing fees; as of June 30, 2020, LIBOR was 0.16%. Our IH 2017-1 mortgage loan bears interest at a fixed rate of 4.23% per annum, equal to the market determined pass-through rate payable on the certificates including applicable servicing fees.
(4)
Range of spreads is based on outstanding principal balances as of June 30, 2020.
(5)Outstanding principal balance is net of discounts and does not include deferred financing costs, net.
(6)
Net of unamortized discount of $2.5 million and $2.6 million as of June 30, 2020 and December 31, 2019, respectively.
(7)
The initial maturity term of each of these mortgage loans is two years, individually subject to three to five, one year extension options at the Borrower Entity’s discretion (provided that there is no continuing event of default under the mortgage loan agreement and the Borrower Entity obtains and delivers a replacement interest rate cap agreement from an approved counterparty within the required timeframe to the lender). Our SWH 2017-1, IH 2017-2, IH 2018-1 and IH 2018-2 mortgage loans have exercised the first extension option. The maturity dates above reflect all extensions that have been exercised.
(8)On July 9, 2020, the extension of the maturity date of the IH 2018-3 mortgage loan from July 9, 2020 to July 9, 2021 was approved by the lender.
(1)The maturity dates above reflect all extension options that have been exercised.
(2)Represents the maturity date if we exercise each of the remaining one year extension options available, which are subject to certain conditions being met.
(3)Except for IH 2017-1, interest rates are based on a weighted average spread over the LIBOR, plus applicable servicing fees; as of June 30, 2021, LIBOR was 0.10%. Our IH 2017-1 mortgage loan bears interest at a fixed rate of 4.23% per annum, equal to the market determined pass-through rate payable on the certificates including applicable servicing fees.
(4)Range of spreads is based on outstanding principal balances as of June 30, 2021.
(5)Outstanding principal balance is net of discounts and does not include deferred financing costs, net.
(6)Net of unamortized discount of $2.1 million and $2.3 million as of June 30, 2021 and December 31, 2020, respectively.
(7)The initial maturity term of each of these mortgage loans is two years, individually subject to three to five, one year extension options at the Borrower Entity’s discretion (provided that there is no continuing event of default under the mortgage loan agreement and the Borrower Entity obtains and delivers to the lender a replacement interest rate cap
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agreement from an approved counterparty within the required timeframe). Our IH 2018-3 and IH 2018-4 mortgage loans have exercised the first extension option, and our IH 2017-2, IH 2018-1, and IH 2018-2 mortgage loans have exercised the second extension option. The maturity dates above reflect all extensions that have been exercised.
(8)On July 9, 2021, the extension of the maturity date of the IH 2018-3 mortgage loan from July 9, 2021 to July 9, 2022 was approved by the lender.
Securitization Transactions
For each Securitization transaction, the Borrower Entity executed a loan agreement with a third party lender. Except for IH 2017-1, each outstanding mortgage loan originally consisted of six floating rate components. The two year initial terms are individually subject to three to five, one year extension options at the Borrower Entity’s discretion. Such extensions are available provided there is no continuing event of default under the respective mortgage loan agreement and the Borrower Entity obtains and delivers a replacement interest rate cap agreement from an approved counterparty within the required timeframe to the lender. IH 2017-1 is a 10 year, fixed rate mortgage loan comprised of two components. Certificates issued by the trust in connection with Component A of IH 2017-1 benefit from the Federal National Mortgage Association’s guaranty of timely payment of principal and interest.


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Each mortgage loan is secured by a pledge of the equity in the assets of the respective Borrower Entities, as well as first-priority mortgages on the underlying properties and a grant of security interests in all of the related personal property. As of June 30, 20202021 and December 31, 2019,2020, a total of 35,78631,196 and 37,04031,316 homes, respectively, with a gross book value of $6,893.7 million and $6,888.3 million, respectively, and a net book value of $6,862.2$5,665.1 million and $7,137.6$5,761.6 million, respectively, are pledged pursuant to the mortgage loans. Each Borrower Entity has the right, subject to certain requirements and limitations outlined in the respective loan agreements, to substitute properties. We are obligated to make monthly payments of interest for each mortgage loan.
Transactions with Trusts
Concurrent with the execution of each mortgage loan agreement, the respective third party lender sold each loan it originated to individual depositor entities (the “Depositor Entities”) who subsequently transferred each loan to Securitization-specific trust entities (the “Trusts”). The Depositor Entities for our currently outstanding Securitizations are wholly owned subsidiaries.
As consideration for the transfer of each loan to the Trusts, the Trusts issued classes of certificates which mirror the components of the individual loans (collectively, the “Certificates”) to the Depositor Entities, except that Class R certificates do not have related loan components as they represent residual interests in the Trusts. The Certificates represent the entire beneficial interest in the Trusts. Following receipt of the Certificates, the Depositor Entities sold the Certificates to investors and used the proceeds as consideration for the loans sold to the Depositor Entities by the lenders. These transactions had no effect on our condensed consolidated financial statements other than with respect to Certificates we retained in connection with Securitizations or purchased at a later date.
The Trusts are structured as pass-through entities that receive interest payments from the Securitizations and distribute those payments to the holders of the Certificates. The assets held by the Trusts are restricted and can only be used to fulfill the obligations of those entities. The obligations of the Trusts do not have any recourse to the general credit of any entities in these condensed consolidated financial statements. We have evaluated our interests in certain certificates of the Trusts held by us (discussed below) and determined that they do not create a more than insignificant variable interest in the Trusts. Additionally, the retained certificates do not provide us with any ability to direct activities that could impact the Trusts’ economic performance. Therefore, we do not consolidate the Trusts.
Retained Certificates
As the Trusts made Certificates available for sale to both domestic and foreign investors, sponsors of the mortgage loans are required to retain a portion of the risk that represents a material net economic interest in each loan pursuant to Regulation RR (the “Risk Retention Rules”) under the Securities Exchange Act of 1934, as amended. As such, loan sponsors are required to retain a portion of the credit risk that represents not less than 5% of the aggregate fair value of the loan as of the closing date.
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IH 2017-1 issued Class B certificates, which are restricted certificates that were made available exclusively to INVH LP in order to comply with the Risk Retention Rules. The Class B certificates bear a stated annual interest rate of 4.23%, including applicable servicing fees.
For SWH 2017-1, IH 2017-2, IH 2018-1, IH 2018-2, IH 2018-3, and IH 2018-4, we retain 5% of each class of certificates to meet the Risk Retention Rules. These retained certificates accrue interest at a floating rate of LIBOR plus a spread ranging from 0.76% to 3.47%1.70%.
The retained certificates total $310.4$229.2 million and $317.0$245.2 million as of June 30, 20202021 and December 31, 2019,2020, respectively, and are classified as held to maturity investments and recorded in other assets, net on the condensed consolidated balance sheets.


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Loan Covenants
The general terms that apply to all of the mortgage loans require each Borrower Entity to maintain compliance with certain affirmative and negative covenants. Affirmative covenants include each Borrower Entity’s, and certain of their respective affiliates’, compliance with (i) licensing, permitting and legal requirements specified in the mortgage loan agreements, (ii) organizational requirements of the jurisdictions in which they are organized, (iii) federal and state tax laws, and (iv) books and records requirements specified in the respective mortgage loan agreements. Negative covenants include each Borrower Entity’s, and certain of their affiliates’, compliance with limitations surrounding (i) the amount of each Borrower Entity’s indebtedness and the nature of their investments, (ii) the execution of transactions with affiliates, (iii) the Manager, (iv) the nature of each Borrower Entity’s business activities, and (v) the required maintenance of specified cash reserves. As of June 30, 2020,2021, and through the date our condensed consolidated financial statements were issued, we believe each Borrower Entity is in compliance with all affirmative and negative covenants.
Prepayments
For the mortgage loans, prepayments of amounts owed by us are generally not permitted under the terms of the respective mortgage loan agreements unless such prepayments are made pursuant to the voluntary election or mandatory provisions specified in such agreements. The specified mandatory provisions become effective to the extent that a property becomes characterized as a disqualified property, a property is sold, and/or upon the occurrence of a condemnation or casualty event associated with a property. To the extent either a voluntary election is made, or a mandatory prepayment condition exists, in addition to paying all interest and principal, we must also pay certain breakage costs as determined by the loan servicer and a spread maintenance premium if prepayment occurs before the month following the one or two year anniversary of the closing dates of each of the mortgage loans except for IH 2017-1. For IH 2017-1, prepayments on or before December 2026 will require a yield maintenance premium. For the six months ended June 30, 20202021 and 2019,2020, we made voluntary and mandatory prepayments of $131.7$323.4 million and $709.4$131.7 million, respectively, under the terms of the mortgage loan agreements. During the six months ended June 30, 2019, prepayments included the full repayment of the CSH 2016-2 mortgage loan.
Secured Term Loan
On June 7, 2019, 2019-1 IH Borrower LP, a consolidated subsidiary (“2019-1 IH Borrower” and one of our Borrower Entities), entered into a 12 year loan agreement with a life insurance company (the “Secured Term Loan”). The Secured Term Loan bears interest at a fixed rate of 3.59%, including applicable servicing fees, for the first 11 years and bears interest at a floating rate based on a spread of 147 bps, including applicable servicing fees, over one month LIBOR (subject to certain adjustments as outlined in the loan agreement) for the twelfth year. The Secured Term Loan is secured by first priority mortgages on a portfolio of single-family rental properties as well as a first priority pledge of the equity interests of 2019-1 IH Borrower. We utilized the proceeds from the Secured Term Loan to fund: (i) repayments of then-outstanding indebtedness; (ii) initial deposits into the Secured Term Loan’s reserve accounts; (iii) transaction costs related to the closing of the Secured Term Loan; and (iv) general corporate purposes.


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The following table sets forth a summary of our Secured Term Loan indebtedness as of June 30, 20202021 and December 31, 2019:2020:
($ in thousands) 
Maturity
Date
 
Interest
Rate(1)
 June 30,
2020		 December 31, 2019
Secured Term Loan June 9, 2031 3.59% $403,363
 $403,464
Deferred financing costs, net(2,377) (2,486)
Secured Term Loan, net$400,986
 $400,978

($ in thousands)
Maturity
Date
Interest
Rate(1)
June 30,
2021		December 31, 2020
Secured Term LoanJune 9, 20313.59%$403,363 $403,363 
Deferred financing costs, net(2,159)(2,268)
Secured Term Loan, net$401,204 $401,095 
(1)
The Secured Term Loan bears interest at a fixed rate of 3.59% per annum including applicable servicing fees for the first 11The Secured Term Loan bears interest at a fixed rate of 3.59% per annum including applicable servicing fees for the first 11 years and for the twelfth year bears interest at a floating rate based on a spread of 147 bps over one month LIBOR (or a comparable or successor rate as provided for in our loan agreement), including applicable servicing fees, subject to certain adjustments as outlined in the loan agreement. Interest payments are made monthly.
Collateral
Collateral
The Secured Term Loan’s collateral pool contains 3,334 and 3,332 and 3,333 homes respectively, as of June 30, 20202021 and December 31, 2019,2020, respectively, with a gross book value of $796.6 million and $791.9 million, respectively, and a net book value of $727.5$711.8 million and $734.8$719.8 million, respectively. 2019-1 IH Borrower has the right, subject to certain requirements and limitations outlined in the loan agreement, to substitute properties representing up to 20% of the collateral pool annually, and to substitute properties representing up to 100% of the collateral pool over the life of the Secured Term Loan. In addition, four times after the first anniversary of the closing date, 2019-1 IH Borrower has the right, subject to certain requirements and limitations outlined in the loan agreement, to execute a special release of collateral representing up to 15% of the then-outstanding principal balance of the Secured Term Loan in order to bring the loan-to-value ratio back in line with the Secured Term Loan’s loan-to-value ratio as of the closing date. Any such special release of collateral would not change the then-outstanding principal balance of the Secured Term Loan, but rather would reduce the number of single-family rental homes included in the collateral pool.
Loan Covenants
The Secured Term Loan requires 2019-1 IH Borrower to maintain compliance with certain affirmative and negative covenants. Affirmative covenants include 2019-1 IH Borrower’s, and certain of its affiliates’, compliance with (i) licensing, permitting and legal requirements specified in the loan agreement, (ii) organizational requirements of the jurisdictions in which they are organized, (iii) federal and state tax laws, and (iv) books and records requirements specified in the loan agreement. Negative covenants include 2019-1 IH Borrower’s, and certain of its affiliates’, compliance with limitations surrounding (i) the amount of 2019-1 IH Borrower’s indebtedness and the nature of its investments, (ii) the execution of transactions with affiliates, (iii) the Manager, (iv) the nature of 2019-1 IH Borrower’s business activities, and (v) the required maintenance of specified cash reserves. As of June 30, 2020,2021, and through the date our condensed consolidated financial statements were issued, we believe 2019-1 IH Borrower is in compliance with all affirmative and negative covenants.
Prepayments
Prepayments of the Secured Term Loan are generally not permitted unless such prepayments are made pursuant to the voluntary election or mandatory provisions specified in the loan agreement. The specified mandatory provisions become effective to the extent that a property becomes characterized as a disqualified property, a property is sold, and/or upon the occurrence of a condemnation or casualty event associated with a property. To the extent either a voluntary election is made, or a mandatory prepayment condition exists, in addition to paying all interest and principal, we must also pay certain breakage costs as determined by the loan servicer and a yield maintenance premium if prepayment occurs before June 9, 2030. For the six months ended June 30, 2020, we made mandatory prepayments of $0.1 million.million. No such prepayments were made forduring the six months ended June 30, 2019.2021.

Unsecured Notes

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On May 25, 2021, we entered into a note purchase agreement in connection with a private placement of senior unsecured notes. Under such note purchase agreement, we issued and sold $300.0 million aggregate principal amount of senior unsecured notes to certain institutional investors consisting of (i) $150.0 million aggregate principal amount of 2.46% Senior Notes, Series A, due May 25, 2028 (the “2028 Unsecured Notes”) and (ii) $150.0 million aggregate principal amount of 3.18% Senior Notes, Series B, due May 25, 2036 (the “2036 Unsecured Notes,” and together with the 2028 Unsecured Notes, the “Unsecured Notes”). Proceeds from the Unsecured Notes were used for general corporate purposes, including voluntary prepayment of then-outstanding indebtedness. Interest on the Unsecured Notes is payable semi-annually in arrears on May 25th and November 25th of each year, commencing on November 25, 2021, until such principal becomes due and payable.
The following table sets forth a summary of our Unsecured Notes as of June 30, 2021 and December 31, 2020:
($ in thousands)
Maturity
Date
Interest
Rate		June 30,
2021		December 31, 2020
2028 Unsecured NotesMay 25, 20282.46%$150,000 $— 
2036 Unsecured NotesMay 25, 20363.18%150,000 — 
Total300,000 — 
Deferred financing costs, net(1,601)— 
Unsecured Notes, net$298,399 $— 
Prepayments
We may, at our option, upon notice to each holder of the Unsecured Notes, prepay at any time all, or from time to time any part of, the Unsecured Notes, in an amount not less than 5% of the aggregate principal amount of the Unsecured Notes then outstanding in the case of a partial prepayment, at 100% of the principal amount so prepaid, together with interest accrued thereon to the date of prepayment and the make-whole premium as outlined in the note purchase agreement.
Guarantees
In the event that any of our subsidiaries guarantees or otherwise becomes liable in respect of our Credit Facility, or any other material credit facility as defined in the note purchase agreement, then the obligations of the Unsecured Notes must also then be unconditionally guaranteed by each of those subsidiaries.
Loan Covenants
The Unsecured Notes contain customary covenants, including, among others, limitations on distributions, fundamental changes, and transactions with affiliates. The Unsecured Notes also include the following financial covenants, subject to certain qualifications, (i) a maximum total leverage ratio, (ii) a maximum secured leverage ratio, (iii) a maximum unencumbered leverage ratio, (iv) a minimum fixed charge coverage ratio, and (v) a minimum unsecured interest coverage ratio.
The Unsecured Notes contain customary events of default (subject in certain cases to specified cure periods), the occurrence of which would allow the holders of notes to take various actions, including the acceleration of amounts due under the Unsecured Notes. As of June 30, 2021, and through the date our condensed consolidated financial statements were issued, we believe we were in compliance with all affirmative and negative covenants.
Term Loan Facility and Revolving Facility
On February 6, 2017,December 8, 2020, we entered into a credit agreementan Amended and Restated Revolving Credit and Term Loan Agreement with a syndicate of banks, financial institutions, and institutional lenders for a new credit facility (the “Credit Facility”), which was amended on December 18, 2017 to include all entities and homes acquired in the Mergers.. The Credit Facility provides $2,500.0$3,500.0 million of borrowing capacity and consists of athe $1,000.0 million Revolving Facility which will mature on February 6, 2021, with a one year extension option, and a $1,500.0$2,500.0 million term loan facility (the “Term Loan Facility”), both of which will mature on February 6, 2022.January 31, 2025, with two six month extension options available. The Revolving Facility also includes borrowing capacity available for letters of credit and for short-term borrowings referred to as swing line borrowings, in each case subject to certain sublimits.credit. The Credit Facility provides us with the option to enter into additional incremental credit facilities (including an uncommitted
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incremental facility that provides us with the option to increase the size of the Revolving Facility and/or the Term Loan Facility by ansuch that the aggregate amount of up to $1,500.0 million)does not exceed $4,000.0 million at any time), subject to certain limitations.
The Credit Facility replaced a credit facility that consisted of a $1,000.0 million revolving facility (the “2017 Revolving Facility”) and a $1,500.0 million term loan facility (the “2017 Term Loan Facility” and together with the 2017 Revolving Facility, the “2017 Credit Facility”). The terms and conditions of the Credit Facility are consistent with those of the 2017 Credit Facility unless otherwise noted below. Proceeds from the Term Loan Facility were used to repay then-outstanding indebtedness, and for general corporate purposes.including the 2017 Term Loan Facility. Proceeds from the Revolving Facility are used for general corporate purposes.
The following table sets forth a summary of the outstanding principal amounts under the Credit Facility as of June 30, 20202021 and December 31, 2019:2020, respectively:
($ in thousands) Maturity
Date		 
Interest
Rate(1)
 June 30,
2020		 December 31, 2019
Term Loan Facility February 6, 2022 1.86% $1,500,000
 $1,500,000
Deferred financing costs, net(4,809) (6,253)
Term Loan Facility, net$1,495,191
 $1,493,747
    
Revolving FacilityFebruary 6, 2021 1.91% $—
 $—
($ in thousands)Maturity
Date
Interest
Rate(1)
June 30,
2021		December 31, 2020
Term Loan Facility(2)
January 31, 20251.10%$2,500,000 $2,500,000 
Deferred financing costs, net(25,505)(29,093)
Term Loan Facility, net$2,474,495 $2,470,907 
Revolving Facility(2)
January 31, 20251.00%$— $— 
(1)
Interest rates for the Term Loan Facility and the Revolving Facility are based on LIBOR plus an applicable margin. As of June 30, 2020, the applicable margins were 1.70% and 1.75%, respectively, and LIBOR was 0.16%
(1)Interest rates for the Term Loan Facility and the Revolving Facility are based on LIBOR plus an applicable margin. As of June 30, 2021, the applicable margins were 1.00% and 0.90%, respectively, and LIBOR was 0.10%.
(2)If we exercise the two six month extension options, the maturity date will be January 31, 2026.
(2)
If we exercise the one year extension option, the maturity date will be February 6, 2022.
Interest Rate and Fees
Borrowings under the Credit Facility bear interest, at our option, at a rate equal to a margin over either (a) a LIBOR rate determined by reference to the Bloomberg LIBOR rate (or a comparable or successor rate as provided for in our loan agreement) for the interest period relevant to such borrowing, or (b) a base rate determined by reference to the highest of (1) the administrative agent’s prime lending rate, (2) the federal funds effective rate plus 0.50%, and (3) the LIBOR rate that would be payable on such day for a LIBOR rate loan with a one month interest period plus 1.00%. After obtaining the requisite rating on our non-credit enhanced, senior unsecured long term debt as defined in the Credit Facility agreement (the “Investment Grade Rating”), we elected to convert to a credit rating based pricing grid (the “Pricing Grid Conversion”) effective April 22, 2021. The margin ismargins for the Term Loan Facility and Revolving Facility under the credit rating based pricing grid are as follows:
Base Rate LoansLIBOR Rate Loans
Term Loan Facility0.00 %—0.65%0.80%—1.65%
Revolving Facility0.00 %—0.45%0.75%—1.45%
Prior to the Pricing Grid Conversion, the margins were based on a total leverage based grid. The margin for the Revolving Facility ranges from 0.75% to 1.30% in the case of base rate loans, and 1.75% to 2.30% in the case of LIBOR rate loans. The marginmargins for the Term Loan Facility, ranges from 0.70% to 1.30%Revolving Facility, 2017 Term Loan Facility, and 2017 Revolving Facility under the total leverage based grid were as follows:
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Base Rate LoansLIBOR Rate Loans
Term Loan Facility0.45%—1.15%1.45%—2.15%
Revolving Facility0.50%—1.15%1.50%—2.15%
2017 Term Loan Facility0.70%—1.30%1.70%—2.30%
2017 Revolving Facility0.75%—1.30%1.75%—2.30%
The Credit Facility also includes a sustainability component whereby the Revolving Facility pricing can improve upon the Company’s achievement of certain sustainability ratings, determined via an independent third party evaluation. This sustainability feature was not included in the case of base rate loans, and 1.70% to 2.30% in the case of LIBOR rate loans. In addition, the Credit Facility provides that, upon receiving an investment grade rating on its non-credit enhanced, senior unsecured long term debt of BBB- or better from Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies, Inc., or Baa3 or better from Moody’s Investors Service, Inc. (an “Investment Grade Rating Event”), we may elect to convert to a credit rating based pricing grid.2017 Revolving Facility.
In addition to paying interest on outstanding principal under the Credit Facility, we are required to pay a facility fee to the lenders under the Revolving Facility in respect of the unused commitments thereunder. The facility fee rate is based on the daily unused amount of the Revolving Facility and is either 0.35% or 0.20% per annum based on the unused facility amount. Upon converting to a credit rating pricing based grid, the unused facility fee will no longer apply and we will be required to pay a facility fee ranging from 0.125%0.10% to 0.300%0.30%. We are also required to pay customary letter of credit fees.


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 Prior to the Pricing Grid Conversion, instead of a facility fee, we were required to pay an unused facility fee to the lenders under the Revolving Facility and the 2017 Revolving Facility in respect of the unused commitments thereunder. The unused facility fee rate was either 0.30% or 0.20% per annum for the Revolving Facility and 0.35% or 0.20% per annum for the 2017 Revolving Facility.
Prepayments and Amortization
No principal reductions are required under the Credit Facility. We are permitted to voluntarily repay amounts outstanding under the Term Loan Facility at any time without premium or penalty, subject to certain minimum amounts and the payment of customary “breakage” costs with respect to LIBOR loans. Once repaid, no further borrowings will be permitted under the Term Loan Facility.
Loan Covenants
The Credit Facility contains certain customary affirmative and negative covenants and events of default. Such covenants will, among other things, restrict, subject to certain exceptions, our ability and that of the Subsidiary Guarantors (as defined below) and their respective subsidiaries to (i) engage in certain mergers, consolidations or liquidations, (ii) sell, lease or transfer all or substantially all of their respective assets, (iii) engage in certain transactions with affiliates, (iv) make changes to our fiscal year, (v) make changes in the nature of our business and our subsidiaries, and (vi) incur additional indebtedness that is secured on a pari passu basis with the Credit Facility.enter into certain burdensome agreements.
The Credit Facility also requires us, on a consolidated basis with our subsidiaries, to maintain a (i) maximum total leverage ratio, (ii) maximum secured leverage ratio, (iii) maximum unencumbered leverage ratio, (iv) minimum fixed charge coverage ratio, and (v) minimum unencumbered fixed chargeunsecured interest coverage ratio, and (vi) minimum tangible net worth.ratio. Prior to obtaining an Investment Grade Rating, we were also required to maintain a maximum secured recourse leverage ratio. If an event of default occurs, the lenders under the Credit Facility are entitled to take various actions, including the acceleration of amounts due under the Credit Facility and all actions permitted to be taken by a secured creditor.Facility. As of June 30, 2020,2021, and through the date our condensed consolidated financial statements were issued, we believe we were in compliance with all affirmative and negative covenants.
Guarantees and Security
TheAfter we obtained the requisite Investment Grade Rating, our direct and indirect domestic wholly owned subsidiaries that directly own unencumbered assets (the “Subsidiary Guarantors”) were released from their previous guarantee requirements under the Credit Facility (the “Investment Grade Release”) effective May 5, 2021. Prior to the Investment Grade Release, the obligations under the Credit Facility arewere guaranteed on a joint and several basis by each of our direct and indirect domestic wholly owned subsidiaries that own, directly or indirectly, unencumbered assets (the “Subsidiary Guarantors”),Subsidiary Guarantor, subject to certain exceptions. The guarantee provided by any Subsidiary Guarantor will be automatically released upon the occurrence of certain events, including if it no longer has a direct or indirect interest in an unencumbered asset or as a result of certain non-recourse refinancing transactions pursuant to which such Subsidiary Guarantor becomes contractually prohibited from providing its guaranty of the Credit Facility. In addition, INVH and each subsidiary of INVH that owns equity in the borrower may be required to provide a guarantee of the Credit Facility under certain circumstances, including if INVH does not maintain its qualification as a REIT.
TheAlthough the 2017 Credit Facility was secured, such security interests have been released and the Credit Facility is collateralized by first priority or equivalent security interests in all the capital stock of, or other equity interests in, any Subsidiary Guarantor held by us and each of the Subsidiary Guarantors. The security interests granted under the Credit Facility will be automatically released upon the occurrence of certain events, including upon an Investment Grade Rating Event or if the total net leverage ratio is less than or equal to 8.00:1.00 for four consecutive fiscal quarters.unsecured.
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Convertible Senior Notes
In connection with the Mergers, we assumed SWH’s convertible senior notes. In July 2014, SWH issued $230.0 million in aggregate principal amount of 3.00% convertible senior notes due 2019 (the “2019 Convertible Notes”). Interest on the 2019 Convertible Notes was payable semiannually in arrears on January 1st and July 1st of each year. The notes matured on July 1, 2019, and we settled substantially all of the outstanding balance of the 2019 Convertible Notes through the issuance of 12,553,864 shares of our common stock.
In January 2017, SWH issued $345.0 million in aggregate principal amount of 3.50% convertible senior notes due 2022 (the “2022 Convertible Notes” and together with the 2019 Convertible Notes,or the “Convertible Senior Notes”). Interest on the 2022 Convertible Notes is payable semiannually in arrears on January 15th and July 15th of each year. The 2022 Convertible Notes will mature on January 15, 2022.


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The following table summarizes the terms of the Convertible Senior Notes outstanding as of June 30, 20202021 and December 31, 2019:2020:
            Principal Amount
($ in thousands) Coupon
Rate		 
Effective
Rate(1)
 
Conversion
Rate(2)
 Maturity
Date		 Remaining Amortization
Period		 June 30,
2020		 December 31, 2019
2022 Convertible Notes 3.50% 5.12% 43.7694 January 15, 2022 1.54 years $345,000
 $345,000
Net unamortized fair value adjustment(8,180) (10,701)
Total$336,820
 $334,299
Principal Amount
($ in thousands)
Coupon
Rate
Effective
Rate(1)
Conversion
Rate(2)
Maturity
Date
Remaining Amortization
Period
June 30,
2021		December 31, 2020
2022 Convertible Notes3.50%5.12%43.9448January 15, 20220.54 years$344,994 $345,000 
Net unamortized fair value adjustment(2,944)(5,596)
Total$342,050 $339,404 
(1)
Effective rate includes the effect of the adjustment to the fair value of the debt as of the Merger Date, the value of which reduced the initial liability recorded to $324.3 million for the 2022 Convertible Notes.
(2)
The conversion rate as of June 30, 2020Effective rate includes the effect of the adjustment to the fair value of the debt as of the Merger Date, the value of which reduced the initial liability recorded to $324.3 million for the 2022 Convertible Notes.
(2)The conversion rate as of June 30, 2021 represents the number of shares of common stock issuable per $1,000 principal amount (actual $) of the 2022 Convertible Notes converted on such date, as adjusted in accordance with the indenture as a result of cash dividend payments and the effects of previous mergers. As of June 30, 2020, the 2022 Convertible Notes do not meet the criteria for conversion. We have the option to settle the 2022 Convertible Notes in cash, common stock, or a combination thereof.
Terms of Conversion
On July 1, 2019, we settled substantially all of the outstanding balance of the 2019 Convertible Notes with the issuance of 12,553,864 shares of our common stock. At the settlement date, the conversion rate applicable to the 2019 Convertible Notes was 54.5954 shares of our common stock per $1,000 principal amount (actual $) of the 20192022 Convertible Notes (equivalentconverted on such date, as adjusted in accordance with the indenture as a result of cash dividend payments and the effects of previous mergers. Effective July 15, 2021, we notified note holders of our intent to a conversion pricesettle conversions of approximately $18.32 per common share — actual $). For the three and six months ended June 30, 2019, interest expense for the 20192022 Convertible Notes including non-cash amortizationin shares of discounts, was $2.8 million and $5.6 million, respectively.common stock.
Terms of Conversion
As of June 30, 2020,2021, the conversion rate applicable to the 2022 Convertible Notes is 43.769443.9448 shares of our common stock per $1,000 principal amount (actual $) of the 2022 Convertible Notes (equivalent to a conversion price of approximately $22.85$22.76 per common share — actual $). The conversion rate for the 2022 Convertible Notes is subject to adjustment in some events, but will not be adjusted for any accrued and unpaid interest. In addition, following certain events that occur prior to the maturity date, we will adjust the conversion rate for a holder who elects to convert its 2022 Convertible Notes in connection with such an event in certain circumstances. At any time prior to July 15, 2021, holders may convert the 2022 Convertible Notes at their option only under specific circumstances as defined in the indenture agreement, dated as of January 10, 2017, between us and our trustee, Wilmington Trust National Association (the “Convertible Notes Trustee”). On or after July 15, 2021 and until maturity, holders may convert all or any portion of the 2022 Convertible Notes at any time. Upon conversion,Effective July 15, 2021, we will pay or deliver, asnotified note holders of our intent to settle conversions of the case may be, cash,2022 Convertible Notes in shares of common stock, or a combinationstock. From July 1, 2021 through the date our condensed consolidated financial statements were issued, $176.7 million of cash andprincipal was converted into 7,766,798 shares of common stock at our election.the election of the note holders. The “if-converted” value of the 2022 Convertible Notes exceeds the principal amount by $70.7$220.3 million as of June 30, 20202021 as the closing market price of our common stock of $27.53$37.29 per common share (actual $) exceeds the implicit conversion price. For the three months ended June 30, 20202021 and 2019,2020, interest expense for the 2022 Convertible Notes, including non-cash amortization of discounts, was $4.3 million and $4.2$4.3 million,, respectively. For the six months ended June 30, 20202021 and 2019,2020, interest expense for the 2022 Convertible Notes, including non-cash amortization of discounts, was $8.7 million and $8.6 million, and $8.4 million, respectively.
General Terms
We may not redeem the 2022 Convertible Notes prior to their maturity date except to the extent necessary to preserve our status as a REIT for United States federal income tax purposes, as further described in the indenture. If we undergo a fundamental change as defined in the indenture, holders may require us to repurchase for cash all or any portion of their 2022 Convertible Notes at a fundamental change repurchase price equal to 100% of the principal amount of the 2022 Convertible Notes to be repurchased, plus accrued and unpaid interest up to, but excluding, the fundamental change repurchase date.


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The indenture contains customary terms and covenants and events of default. If an event of default occurs and is continuing, the Convertible Notes Trustee, by notice to us, or the holders of at least 25% in aggregate principal amount of the outstanding 2022 Convertible Notes, by notice to us and the Convertible Notes Trustee, may, and the Convertible Notes Trustee at the request of such holders shall, declare 100% of the principal of and accrued and unpaid interest on all the 2022 Convertible Notes to be due and payable. In the case of an event of default arising out of certain events of bankruptcy, insolvency or reorganization in respect to us (as set forth in the indenture), 100% of the principal of and accrued and unpaid interest on the 2022 Convertible Notes will automatically become due and payable.
Certain Hedging Arrangements
From time to time, we enter into derivative instruments to manage the economic risk of changes in interest rates. We do not enter into derivative transactions for speculative or trading purposes. Designated hedges are derivatives that meet the criteria for hedge accounting and that we have elected to designate as hedges. Non-designated hedges are derivatives that do not meet the criteria for hedge accounting or that we did not elect to designate as hedges.
Designated Hedges
We have entered into various interest rate swap agreements, which are used to hedge the variable cash flows associated with variable-rate interest payments. Currently, each of our swap agreements is indexed to one month LIBOR and is designated for hedge accounting purposes. One month LIBOR is set to expire at the end of 2021,after June 30, 2023, and we will work with the counterparties to our swap agreements to adjust each floating rate to a comparable or successor rate. Changes in the fair value of these swaps are recorded in other comprehensive income and are subsequently reclassified into earnings in the period in which the hedged forecasted transactions affect earnings.
The table below summarizes our interest rate swap instruments as of June 30, 20202021 ($ in thousands):
Agreement DateForward
Effective Date		Maturity
Date		Strike
Rate		IndexNotional
Amount
December 11, 2019February 28, 2017December 31, 20241.74%One month LIBOR$750,000 
April 19, 2018January 31, 2019January 31, 20252.86%One month LIBOR400,000 
February 15, 2019March 15, 2019March 15, 20222.23%One month LIBOR800,000 
April 19, 2018March 15, 2019November 30, 20242.85%One month LIBOR400,000 
April 19, 2018March 15, 2019February 28, 20252.86%One month LIBOR400,000 
May 8, 2018March 9, 2020June 9, 20252.99%One month LIBOR325,000 
May 8, 2018June 9, 2020June 9, 20252.99%One month LIBOR595,000 
June 3, 2016July 15, 2020July 15, 20211.47%One month LIBOR450,000 
June 28, 2018August 7, 2020July 9, 20252.90%One month LIBOR1,100,000 
January 10, 2017January 15, 2021July 15, 20212.23%One month LIBOR550,000 
December 9, 2019July 15, 2021November 30, 20242.90%One month LIBOR400,000 
November 7, 2018March 15, 2022July 31, 20253.14%One month LIBOR400,000 
November 7, 2018March 15, 2022July 31, 20253.16%One month LIBOR400,000 
Agreement Date Forward
Effective Date		 Maturity
Date		 Strike
Rate		 Index Notional
Amount
December 21, 2016 February 28, 2017 January 31, 2022 1.97% One month LIBOR $750,000
December 11, 2019 February 28, 2017 December 31, 2024 1.74% One month LIBOR 750,000
January 12, 2017 February 28, 2017 August 7, 2020 1.59% One month LIBOR 1,100,000
April 19, 2018 January 31, 2019 January 31, 2025 2.86% One month LIBOR 400,000
February 15, 2019 March 15, 2019 March 15, 2022 2.23% One month LIBOR 800,000
April 19, 2018 March 15, 2019 November 30, 2024 2.85% One month LIBOR 400,000
April 19, 2018 March 15, 2019 February 28, 2025 2.86% One month LIBOR 400,000
June 3, 2016 July 15, 2019 July 15, 2020 1.30% One month LIBOR 450,000
January 10, 2017 January 15, 2020 January 15, 2021 2.13% One month LIBOR 550,000
May 8, 2018 March 9, 2020 June 9, 2025 2.99% One month LIBOR 325,000
May 8, 2018 June 9, 2020 June 9, 2025 2.99% One month LIBOR 595,000
June 3, 2016 July 15, 2020 July 15, 2021 1.47% One month LIBOR 450,000
June 28, 2018 August 7, 2020 July 9, 2025 2.90% One month LIBOR 1,100,000
January 10, 2017 January 15, 2021 July 15, 2021 2.23% One month LIBOR 550,000
December 9, 2019 July 15, 2021 November 30, 2024 2.90% One month LIBOR 400,000
November 7, 2018 March 15, 2022 July 31, 2025 3.14% One month LIBOR 400,000
November 7, 2018 March 15, 2022 July 31, 2025 3.16% One month LIBOR 400,000

During the three and six months ended June 30, 20202021 and 2019,2020, such derivatives were used to hedge the variable cash flows associated with existing variable-rate interest payments. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on our variable-rate debt. During the next 12 months, we estimate that $153.2$139.7 million will be reclassified to earnings as an increase in interest expense.


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Non-Designated Hedges
Concurrent with entering into certain of the mortgage loan agreements and in connection with previous mergers, we entered into or acquired and maintain interest rate cap agreements with terms and notional amounts equivalent to the terms and amounts of the mortgage loans made by the third party lenders. Currently, each of our cap agreements is indexed to one month LIBOR, which is set to expire at the end of 2021.on June 30, 2023. We will work with the counterparties to our cap agreements to adjust
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each floating rate to a comparable or successor rate. To the extent that the maturity date of one or more of the mortgage loans is extended through an exercise of one or more extension options, replacement or extension interest rate cap agreements must be executed with terms similar to those associated with the initial interest rate cap agreements and strike prices equal to the greater of the interest rate cap strike price and the interest rate at which the debt service coverage ratio (as defined) is not less than 1.2 to 1.0. The interest rate cap agreements, including all of our rights to payments owed by the counterparties and all other rights, have been pledged as additional collateral for the mortgage loans. Additionally, in certain instances, in order to minimize the cash impact of purchasing required interest rate caps, we simultaneously sell interest rate caps (which have identical terms and notional amounts) such that the purchase price and sales proceeds of the related interest rate caps are intended to offset each other. The purchased and sold interest rate caps have strike prices ranging from approximately 3.24%3.75% to 5.31%7.03%.
Purchase of Outstanding Debt Securities or Loans
As market conditions warrant, we, our equity investors, our and their respective affiliates, and members of our management, may from time to time seek to purchase our outstanding debt, including borrowings under our credit facilitiesfacility and mortgage loans or debt securities that we may issue in the future, in privately negotiated or open market transactions, by tender offer or otherwise. Subject to any applicable limitations contained in the agreements governing our indebtedness, any purchases made by us may be funded by the use of cash on our condensed consolidated balance sheet or the incurrence of new secured or unsecured debt, including borrowings under our credit facility and mortgage loans. The amounts involved in any such purchase transactions, individually or in the aggregate, may be material. Any such purchases may be with respect to a substantial amount of a particular class or series of debt, with the attendant reduction in the trading liquidity of such class or series. In addition, any such purchases made at prices below the “adjusted issue price” (as defined for United States federal income tax purposes) may result in taxable cancellation of indebtedness income to us, which amounts may be material, and in related adverse tax consequences to us.
Cash Flows
Six Months Ended June 30, 20202021 Compared to Six Months Ended June 30, 20192020
The following table summarizes our cash flows for the six months ended June 30, 20202021 and 2019:2020:
 For the Six Months
Ended June 30,		    For the Six Months
Ended June 30,
($ in thousands) 2020 2019 $ Change % Change($ in thousands)20212020$ Change% Change
Net cash provided by operating activities $395,935
 $375,342
 $20,593
 5.5 %Net cash provided by operating activities$470,101 $395,935 $74,166 18.7 %
Net cash provided by (used in) investing activities (89,504) 39,191
 (128,695) (328.4)%
Net cash used in investing activitiesNet cash used in investing activities(282,875)(89,504)(193,371)(216.0)%
Net cash provided by (used in) financing activities 202,937
 (455,069) 658,006
 144.6 %Net cash provided by (used in) financing activities(230,850)202,937 (433,787)(213.8)%
Change in cash, cash equivalents, and restricted cash $509,368

$(40,536)
$549,904
 N/M
Change in cash, cash equivalents, and restricted cash$(43,624)$509,368 $(552,992)(108.6)%
Operating Activities
Our cash flows provided by operating activities depend on numerous factors, including the occupancy level of our homes, the rental rates achieved on our leases, the collection of rent from our residents, and the amount of our operating and other expenses. Net cash provided by operating activities was $395.9$470.1 million and $375.3$395.9 million for the six months ended June 30, 20202021 and 2019,2020, respectively, an increase of 5.5%18.7%. The increase in cash provided by operating activities was driven by improved operational profitability, which was partially offset byincluding a $57.4 million increase in total revenues net of property operating and maintenance expense from period to period, and a net $23.3 million source of cash from changes in operating assets and liabilities.


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Investing Activities
Net cash provided by (used in)used in investing activities consists primarily of the acquisition costs of homes, capital improvements, and proceeds from property sales. Net cash provided by (used in)used in investing activities was $(89.5)$282.9 million and $39.2$89.5 million for the six months ended June 30, 2021 and 2020, and 2019, respectively, a decreasean increase of $128.7$193.4 million. The decreaseincrease in net cash provided by (used in)used in investing
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activities primarily resulted from the combined effect of the following significant changes in cash flows during the six months ended June 30, 2021 compared to the six months ended June 30, 2020: (1) an increase in cash used for the acquisition of homes; (2) a decrease in proceeds from the sale of homes; and (3) an offsetting decrease in cash used for the initial renovation of homes. More specifically, acquisition spend increased $126.1 million due to an increase in the number of homes acquired from 651 to 895 homes during the six months ended June 30, 2021 and 2020, respectively. Proceeds from sales of homes decreased $91.8 million from the six months ended June 30, 2020 to the six months ended June 30, 2021 due to a significant decrease in the number of homes sold from 900 to 460, respectively, partially offset by an increase in proceeds per home. Initial renovation spend decreased $24.2 million from the six months ended June 30, 2020 compared to the six months ended June 30, 2019: (1) a decrease in proceeds from the sale of homes; (2) an increase in cash used for the initial renovation of homes; (3) a decrease in cash provided by repayment proceeds from retained debt securities; all offset by (4) a decrease in cash used for the acquisition of homes. More specifically, proceeds from sales of homes decreased $107.8 million from the six months ended June 30, 2019 to the six months ended June 30, 20202021 due to a significant decrease in the number of homes sold from 1,433 to 900, respectively, partially offset by an increase in proceeds per home. Initial renovation spend increased $42.9 million from the six months ended June 30, 2019 compared to the six months ended June 30, 2020 due to a significant increase in the number of homes undergoing their initial renovation and an increase in the cost per home. Proceeds from repayment of retained debt securities decreased $28.9 million from the six months ended June 30, 2019 to the six months ended June 30, 2020 due to a decrease in prepayments of mortgage loans. Acquisition spend decreased $66.4 million due to a significant decrease in the number of homes acquired from 948 homes during the six months ended June 30, 2019 to 651 homes during the six months ended June 30, 2020.renovation.
Financing Activities
Net cash provided by (used in) financing activities was $202.9$(230.9) million and $(455.1)$202.9 million for the six months ended June 30, 2021 and 2020, respectively. During the six months ended June 30, 2021, $300.0 million of proceeds from the issuance and 2019, respectively.sale of the Unsecured Notes along with cash from operations were used to repay $323.4 million of principal on our mortgage loans, including partial repayments of IH 2017-2, IH 2018-3, and IH 2018-4, and to fund $195.0 million of dividend and distribution payments. During the six months ended June 30, 2020, issuances and sales of stock under our public offering and ATM Equity Programproceeds from our at the market equity program, net of commissions, resulted in $503.8 million of proceeds, and we repaid $131.7 million of our mortgage loans, including partial repayments of IH 2018-2 and IH 2018-3, and funded $163.5$164.5 million of dividend and distribution payments. For the six months ended June 30, 2019, proceeds from our Secured Term Loan of $403.5 million, along with proceeds from home sales and operating cash flows were used to repay $709.4 million of our mortgage loans, including full repayment of CSH 2016-2 and partial repayments of IH 2017-2 and IH 2018-1, and for dividend payments which totaled $136.3 million.
Off-Balance Sheet Arrangements
We have no material off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K.


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Contractual Obligations
Our contractual obligations as of June 30, 2020,2021, consist of the following:
($ in thousands) Total 
2020(1)
 2021-2022 2023-2024 Thereafter
Mortgage loans, net(2)(3)
 $6,786,956
 $60,298
 $239,914
 $1,566,729
 $4,920,015
Secured Term Loan 561,661
 7,236
 28,944
 28,944
 496,537
Term Loan Facility, net(2)
 1,545,415
 14,260
 1,531,155
 —
 —
Revolving Facility(2)(3)(4)
 5,697
 1,789
 3,908
 —
 —
2022 Convertible Notes(5)
 369,151
 6,038
 363,113
 —
 —
Derivative instruments(6)
 674,299
 73,682
 283,588
 272,767
 44,262
Purchase commitments(7)
 47,482
 47,482
 —
 —
 —
Operating leases 15,716
 2,353
 7,963
 4,304
 1,096
Finance leases 10,088
 1,533
 5,465
 3,090
 —
Total $10,016,465
 $214,671
 $2,464,050
 $1,875,834
 $5,461,910
($ in thousands)Total
2021(1)
2022-20232024-2025Thereafter
Mortgage loans(2)(3)
$4,934,485 $42,933 $171,019 $2,910,371 $1,810,162 
Secured Term Loan(2)
547,189 7,236 28,944 28,944 482,065 
Unsecured Notes396,673 4,230 16,920 16,920 358,603 
Term Loan Facility(2)
2,628,028 14,056 55,764 55,840 2,502,368 
Revolving Facility(2)(3)(4)
9,311 1,022 4,056 4,061 172 
2022 Convertible Notes(5)
357,068 6,037 351,031 — — 
Derivative instruments(6)
530,194 67,215 279,031 183,948 — 
Purchase commitments(7)
275,943 225,587 22,115 28,241 — 
Operating leases16,360 2,559 7,834 4,929 1,038 
Finance leases7,517 1,684 5,075 758 — 
Total$9,702,768 $372,559 $941,789 $3,234,012 $5,154,408 
(1)Includes estimated payments for the remaining six months of 2020.
(2)Includes estimated interest payments on the respective debt based on amounts outstanding as of June 30, 2020 at rates in effect as of such date; as of June 30, 2020, LIBOR was 0.16%.
(3)Represents the maturity date if we exercise each of the remaining one year extension options available, which are subject to certain conditions being met. See Part I. Item 1. “Financial Statements — Note 6 of Notes to Condensed Consolidated Financial Statements” for a description of maturity dates without consideration of extension options.
(4)Includes the related unused commitment fee.
(5)Represents the principal amount and interest obligation of the 2022 Convertible Notes which is calculated using the notes’ coupon rate.
(6)Includes interest rate swap and interest rate cap obligations calculated using LIBOR as of June 30, 2020, or 0.16%.
(7)Represents commitments to acquire 165 single-family rental homes as of June 30, 2020.
(1)Includes estimated payments for the remaining six months of 2021.
(2)Includes estimated interest payments on the respective debt based on amounts outstanding as of June 30, 2021 at rates in effect as of such date; as of June 30, 2021, LIBOR was 0.10%.
(3)Represents the maturity date if we exercise each of the remaining one year extension options available, which are subject to certain conditions being met. See Part I. Item 1. “Financial Statements — Note 7 of Notes to Condensed Consolidated Financial Statements” for a description of maturity dates without consideration of extension options.
(4)Includes the related unused commitment fee.
(5)Represents the principal amount and interest obligation of the 2022 Convertible Notes which is calculated using the notes’ coupon rate. The 2022 Convertible Notes principal amount of $345.0 million is included in 2022 maturities presented above. Effective July 15, 2021, we notified note holders of our intent to settle conversions of the 2022 Convertible Notes in shares of common stock. From July 1, 2021 through the date our condensed consolidated financial
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statements were issued, $176.7 million of principal was converted into 7,766,798 shares of common stock at the election of the note holders.
(6)Includes interest rate swap and interest rate cap obligations calculated using LIBOR as of June 30, 2021, or 0.10%.
(7)Represents commitments to acquire 833 single-family rental homes, of which 193 are part of agreements with homebuilders to purchase homes with expected completion dates ranging from 2022 to 2025.

We have a commitment, which is not reflected in the table above, to make additional capital contributions to a joint venture. As of June 30, 2021, our remaining equity commitment to the joint venture is $50.4 million.
Critical Accounting Policies and Estimates
Critical accounting policies are those accounting policies that management believes are important to the portrayal of our financial condition and results and require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. We believe that our critical accounting policies pertain to the following: (i) our investments in single-family residential properties, including acquisition of real estate assets, related cost capitalization, provisions for impairment, and single-family residential properties held for sale; and (ii) derivative financial instruments.sale. These critical policies and estimates are summarized in Part II. Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K. There were no material changes to our critical accounting policies during the six months ended June 30, 2020.2021.
For a discussion of recently adopted accounting standards, if any, see Part I. Item 1. “Financial Statements — Note 2 of Notes to Condensed Consolidated Financial Statements.”
Segment Reporting
Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the CODMchief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance. Our CODM is the Chief Executive Officer.
Under the provisionprovisions of ASC 280, Segment Reporting, we have determined that we have one reportable segment related to acquiring, renovating, leasing, and operating single-family homes as rental properties. The CODM evaluates operating


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performance and allocates resources on a total portfolio basis. The CODM utilizes NOI as the primary measure to evaluate performance of the total portfolio. The aggregation of individual homes constitutes the total portfolio. Decisions regarding acquisitions and dispositions of homes are made at the individual home level with a focus on growing accretively in high-growth locations where we have greater scale and density.
Non-GAAP Measures
EBITDA, EBITDAre, and Adjusted EBITDAre
EBITDA, EBITDAre, and Adjusted EBITDAre are supplemental, non-GAAP measures often utilized to evaluate the performance of real estate companies. We define EBITDA as net income or loss computed in accordance with GAAP before the following items: interest expense; income tax expense; and depreciation and amortization.amortization; and adjustments for unconsolidated joint ventures. The National Association of Real Estate Investment Trusts (“Nareit”) recommends as a best practice that REITs that report an EBITDA performance measure also report EBITDAre. We define EBITDAre, consistent with the Nareit definition, as EBITDA, further adjusted for the following: gain on sale of property, net of tax andtax; impairment on depreciated real estate investments.investments; and adjustments for unconsolidated joint ventures.
Adjusted EBITDAre is defined as EBITDAre before the following items: share-based compensation expense; merger and transaction-related expenses; severance; casualty (gains) losses, net; (gains) losses on investments in equity securities, net; and other income and expenses. EBITDA, EBITDAre, and Adjusted EBITDAre are used as supplemental financial performance measures by management and by external users of our financial statements, such as investors and commercial banks. Set forth below is additional detail on how management uses EBITDA, EBITDAre, and Adjusted EBITDAre as measures of performance.
Our management uses EBITDA, EBITDAre, and Adjusted EBITDAre in a number of ways to assess our condensed consolidated financial and operating performance, and we believe these measures are helpful to management and external
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users in identifying trends in our performance. EBITDA, EBITDAre, and Adjusted EBITDAre help management identify controllable expenses and make decisions designed to help us meet our current financial goals and optimize our financial performance, while neutralizing the impact of capital structure on results. Accordingly, we believe these metrics measure our financial performance based on operational factors that management can impact in the short-term, namely our cost structure and expenses.
We believe that the presentation of EBITDA, EBITDAre, and Adjusted EBITDAre provides information useful to investors in assessing our financial condition and results of operations. The GAAP measure most directly comparable to EBITDA, EBITDAre, and Adjusted EBITDAre is net income or loss. EBITDA, EBITDAre, and Adjusted EBITDAre 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 EBITDA, EBITDAre, and Adjusted EBITDAre may not be comparable to the EBITDA, EBITDAre, and Adjusted EBITDAre of other companies due to the fact that not all companies use the same definitions of EBITDA, EBITDAre, and Adjusted EBITDAre. Accordingly, there can be no assurance that our basis for computing these non-GAAP measures is comparable with that of other companies.


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The following table presents a reconciliation of net income (as determined in accordance with GAAP) to EBITDA, EBITDAre, and Adjusted EBITDAre for each of the periods indicated:
  For the Three Months
Ended June 30,		 For the Six Months
Ended June 30,
($ in thousands) 2020 2019 2020 2019
Net income available to common stockholders $42,784
 $38,833
 $92,638
 $59,549
Net income available to participating securities 119
 109
 221
 215
Non-controlling interests 275
 463
 595
 810
Interest expense 86,071
 95,706
 170,828
 189,689
Depreciation and amortization 137,266
 133,031
 272,293
 266,640
EBITDA 266,515
 268,142
 536,575

516,903
Gain on sale of property, net of tax (11,167) (26,172) (26,367) (43,744)
Impairment on depreciated real estate investments 1,442
 4,076
 3,913
 7,329
EBITDAre
 256,790
 246,046
 514,121

480,488
Share-based compensation expense(1)
 2,106
 3,615
 6,207
 9,222
Merger and transaction-related expenses(2)
 —
 1,552
 —
 4,347
Severance 255
 375
 255
 7,344
Casualty losses, net (1,622) (2,405) (966) (266)
Other, net(3)
 (1,370) (610) (5,084) (3,735)
Adjusted EBITDAre
 $256,159
 $248,573
 $514,533

$497,400
For the Three Months
Ended June 30,		For the Six Months
Ended June 30,
($ in thousands)2021202020212020
Net income available to common stockholders$60,242 $42,784 $117,514 $92,638 
Net income available to participating securities96 119 191 221 
Non-controlling interests350 275 705 595 
Interest expense80,764 86,071 164,170 170,828 
Interest expense in unconsolidated joint ventures225 — 299 — 
Depreciation and amortization145,280 137,266 289,781 272,293 
Depreciation and amortization of investments in unconsolidated joint ventures246 — 350 — 
EBITDA287,203 266,515 573,010 536,575 
Gain on sale of property, net of tax(17,919)(11,167)(32,403)(26,367)
Impairment on depreciated real estate investments93 1,442 524 3,913 
Net gain on sale of investments in unconsolidated joint ventures(104)— (440)— 
EBITDAre
269,273 256,790 540,691 514,121 
Share-based compensation expense(1)
9,206 2,106 15,020 6,207 
Severance160 255 274 255 
Casualty (gains) losses, net887 (1,622)812 (966)
(Gains) losses on investments in equity securities, net7,002 — 10,142 (34)
Other, net(2)
1,903 (1,370)1,673 (5,050)
Adjusted EBITDAre
$288,431 $256,159 $568,612 $514,533 
(1)For the three months ended June 30, 2020 and 2019, $447 and $820 was recorded in property management expense, respectively, and $1,659 and $2,795 was recorded in general and administrative expense, respectively. For the six months ended June 30, 2020 and 2019, $1,280 and $1,507 was recorded in property management expense, respectively, and $4,927 and $7,715 was recorded in general and administrative expense, respectively.
(2)Includes merger and transaction-related expenses included within general and administrative.
(3)Includes interest income, unrealized gains from investments in equity securities, and other miscellaneous income and expenses.
(1)For the three months ended June 30, 2021 and 2020, $1,703 and $447 was recorded in property management expense, respectively, and $7,503 and $1,659 was recorded in general and administrative expense, respectively. For the six months ended June 30, 2021 and 2020, $2,877 and $1,280 was recorded in property management expense, respectively, and $12,143 and $4,927 was recorded in general and administrative expense, respectively.
(2)Includes interest income and other miscellaneous income and expenses.
Net Operating Income
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
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(which consists primarily of property taxes, insurance, HOA fees (when applicable), market-level personnel expenses, repairs and maintenance, leasing costs, and marketing expense). NOI excludes: interest expense; depreciation and amortization; property management expense; general and administrative expense; impairment and other; gain on sale of property, net of tax; and(gains) losses on investments in equity securities, net; other income and expenses.expenses; joint venture management fees; and income from investments in unconsolidated joint ventures.
We consider NOI to be a meaningful supplemental financial measure of our performance when considered with the financial statements determined in accordance with GAAP. We believe NOI is helpful to investors in understanding the core performance of our real estate operations. 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.


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The following table presents a reconciliation of net income (as determined in accordance with GAAP) to NOI for our total portfolio and NOI for our Same Store portfolio for each of the periods indicated:
  For the Three Months
Ended June 30,		 For the Six Months
Ended June 30,
($ in thousands) 2020 2019 2020 2019
Net income available to common stockholders $42,784
 $38,833
 $92,638
 $59,549
Net income available to participating securities 119
 109
 221
 215
Non-controlling interests 275
 463
 595
 810
Interest expense 86,071
 95,706
 170,828
 189,689
Depreciation and amortization 137,266
 133,031
 272,293
 266,640
Property management expense(1)
 14,529
 16,021
 28,901
 31,181
General and administrative(2)
 14,426
 15,956
 28,654
 42,494
Impairment and other (180) 1,671
 2,947
 7,063
Gain on sale of property, net of tax (11,167) (26,172) (26,367) (43,744)
Other, net(3)
 (1,370) (610) (5,084) (3,735)
NOI (total portfolio) 282,753
 275,008
 565,626

550,162
Non-Same Store NOI (21,233) (19,379) (38,556)
(39,422)
NOI (Same Store portfolio)(4)
 $261,520
 $255,629
 $527,070
 $510,740
For the Three Months
Ended June 30,		For the Six Months
Ended June 30,
($ in thousands)2021202020212020
Net income available to common stockholders$60,242 $42,784 $117,514 $92,638 
Net income available to participating securities96 119 191 221 
Non-controlling interests350 275 705 595 
Interest expense80,764 86,071 164,170 170,828 
Depreciation and amortization145,280 137,266 289,781 272,293 
Property management expense(1)
17,696 14,529 33,538 28,901 
General and administrative(2)
19,828 14,426 36,778 28,654 
Impairment and other980 (180)1,336 2,947 
Gain on sale of property, net of tax(17,919)(11,167)(32,403)(26,367)
(Gains) losses on investments in equity securities, net7,002 — 10,142 (34)
Other, net(3)
1,903 (1,370)1,673 (5,050)
Joint venture management fees(1,015)— (1,786)— 
Income from investments in unconsolidated joint ventures(11)— (362)— 
NOI (total portfolio)315,196 282,753 621,277 565,626 
Non-Same Store NOI(29,328)(19,043)(55,906)(34,456)
NOI (Same Store portfolio)(4)
$285,868 $263,710 $565,371 $531,170 
(1)Includes $447 and $820 of share-based compensation expense for the three months ended June 30, 2020 and 2019, respectively. Includes $1,280 and $1,507 of share-based compensation expense for the six months ended June 30, 2020 and 2019, respectively.
(2)Includes $1,659 and $2,795 of share-based compensation expense for the three months ended June 30, 2020 and 2019, respectively. Includes $4,927 and $7,715 of share-based compensation expense for the six months ended June 30, 2020 and 2019, respectively.
(3)Includes interest income, unrealized gains from investments in equity securities, and other miscellaneous income and expenses.
(4)The Same Store portfolio totaled 72,261 homes for the six months ended June 30, 2020 and 2019.

(1)Includes $1,703 and $447 of share-based compensation expense for the three months ended June 30, 2021 and 2020, respectively. Includes $2,877 and $1,280 of share-based compensation expense for the six months ended June 30, 2021 and 2020, respectively.
(2)Includes $7,503 and $1,659 of share-based compensation expense for the three months ended June 30, 2021 and 2020, respectively. Includes $12,143 and $4,927 of share-based compensation expense for the six months ended June 30, 2021 and 2020, respectively.
(3)Includes interest income and other miscellaneous income and expenses.
(4)The Same Store portfolio totaled 72,658 homes for the six months ended June 30, 2021 and 2020.

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Funds from Operations, Core Funds from Operations, and Adjusted Funds from Operations
Funds From Operations (“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 Nareit as net income or loss (computed in accordance with GAAP) excluding 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, gains or losses related to sales of previously depreciated homes, as well non-controlling interests, from net income or loss (computed in accordance with GAAP). By excluding depreciation and amortization and gains or losses on sales of real estate, management uses FFO to measure returns on its investments in homes. However, because FFO excludes depreciation and amortization and captures neither the changes in the value of the homes that result from use or market conditions nor the level of capital expenditures to maintain the operating performance of the homes, all of which have real economic effect and could materially affect our results from operations, the utility of FFO as a measure of our performance is limited.
Management also believes that FFO, combined with the required GAAP presentations, is useful to investors in providing more meaningful comparisons of the operating performance of a company’s real estate between periods or as compared to other companies. 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 provide 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 the following: non-cash interest expense related to amortization of deferred financing costs, loan discounts, and non-cash interest expense forfrom derivatives; share-based compensation expense; offering related expenses; merger and transaction-related expenses; severance expense; unrealized gainscasualty (gains) losses, net; and (gains) losses on investments in equity securities; and casualty losses,securities, net, as applicable. We define Adjusted FFO as Core FFO less recurring capital expenditures, including adjustments for unconsolidated joint ventures, that are necessary to help preserve the value, and maintain the 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. No adjustments were made to the Core FFO and Adjusted FFO per common share — diluted computations for potential shares of common stock related to the Convertible Senior Notes. Accordingly, there can be no assurance that our basis for computing this non-GAAP measures is comparable with that of other companies.


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The following table presents a reconciliation of net income (as determined in accordance with GAAP) to FFO, Core FFO, and Adjusted FFO for each of the periods indicated:
  For the Three Months
Ended June 30,		 For the Six Months
Ended June 30,
(in thousands, except shares and per share data) 2020 2019 2020 2019
Net income available to common stockholders $42,784
 $38,833
 $92,638
 $59,549
Add (deduct) adjustments from net income to derive FFO:        
Net income available to participating securities 119
 109
 221
 215
Non-controlling interests 275
 463
 595
 810
Depreciation and amortization on real estate assets 135,647
 131,782
 269,561
 264,302
Impairment on depreciated real estate investments 1,442
 4,076
 3,913
 7,329
Net gain on sale of previously depreciated investments in real estate (11,167) (26,172) (26,367) (43,744)
FFO 169,100
 149,091
 340,561

288,461
Non-cash interest expense related to amortization of deferred financing costs, loan discounts, and non-cash interest expense from derivatives 9,366
 12,172
 19,757
 27,037
Share-based compensation expense(1)
 2,106
 3,615
 6,207
 9,222
Offering related expenses(2)
 —
 476
 —
 2,019
Merger and transaction-related expenses(3)
 —
 1,552
 —
 4,347
Severance expense 255
 375
 255
 7,344
Unrealized gains on investments in equity securities(4)
 —
 —
 (34) —
Casualty losses, net (1,622) (2,405) (966) (266)
Core FFO 179,205
 164,876
 365,780

338,164
Recurring capital expenditures (27,617) (31,799) (53,605) (56,910)
Adjusted FFO $151,588
 $133,077
 $312,175

$281,254
         
Net income available to common stockholders        
Weighted average common shares outstanding — diluted(5)(6)(7)
 549,920,213
 525,933,643
 546,836,809
 524,190,469
         
Net income per common share — diluted(5)(6)(7)
 $0.08
 $0.07
 $0.17
 $0.11
         
FFO        
Numerator for FFO per common share — diluted(5)
 $173,379
 $151,874
 $349,119
 $294,047
Weighted average common shares and OP Units outstanding — diluted(4)(5)(6)
 568,769,738
 544,335,990
 565,753,742
 544,365,617
         
FFO per common share — diluted(5)(6)(7)
 $0.30
 $0.28
 $0.62
 $0.54
         
Core FFO and Adjusted FFO        
Weighted average common shares and OP Units outstanding — diluted(5)(6)(7)
 553,669,295
 531,782,126
 550,653,299
 531,811,753
         
Core FFO per common share — diluted(5)(6)(7)
 $0.32
 $0.31
 $0.66
 $0.64
AFFO per common share — diluted(5)(6)(7)
 $0.27
 $0.25
 $0.57
 $0.53
For the Three Months
Ended June 30,		For the Six Months
Ended June 30,
(in thousands, except shares and per share data)2021202020212020
Net income available to common stockholders$60,242 $42,784 $117,514 $92,638 
Add (deduct) adjustments from net income to derive FFO:
Net income available to participating securities96 119 191 221 
Non-controlling interests350 275 705 595 
Depreciation and amortization on real estate assets143,607 135,647 286,391 269,561 
Impairment on depreciated real estate investments93 1,442 524 3,913 
Net gain on sale of previously depreciated investments in real estate(17,919)(11,167)(32,403)(26,367)
Depreciation and net gain on sale of investments in unconsolidated joint ventures142 — (90)— 
FFO186,611 169,100 372,832 340,561 
Non-cash interest expense related to amortization of deferred financing costs, loan discounts, and non-cash interest expense from derivatives, including our share from unconsolidated joint ventures8,169 9,366 16,787 19,757 
Share-based compensation expense(1)
9,206 2,106 15,020 6,207 
Severance expense160 255 274 255 
Casualty (gains) losses, net887 (1,622)812 (966)
(Gains) losses on investments in equity securities, net7,002 — 10,142 (34)
Core FFO212,035 179,205 415,867 365,780 
Recurring capital expenditures, including our share from unconsolidated joint ventures(28,714)(27,617)(53,189)(53,605)
Adjusted FFO$183,321 $151,588 $362,678 $312,175 
Net income available to common stockholders
Weighted average common shares outstanding — diluted(2)(3)(4)
569,283,166 549,920,213 569,056,182 546,836,809 
Net income per common share — diluted(2)(3)(4)
$0.11 $0.08 $0.21 $0.17 
FFO
Numerator for FFO per common share — diluted(2)
$190,955 $173,379 $381,520 $349,119 
Weighted average common shares and OP Units outstanding — diluted(2)(3)(4)
587,982,707 568,769,738 587,906,276 565,753,742 
FFO per common share — diluted(2)(3)(4)
$0.32 $0.30 $0.65 $0.62 
Core FFO and Adjusted FFO
Weighted average common shares and OP Units outstanding — diluted(2)(3)(4)
572,822,015 553,669,295 572,745,584 550,653,299 
Core FFO per common share — diluted(2)(3)(4)
$0.37 $0.32 $0.73 $0.66 
AFFO per common share — diluted(2)(3)(4)
$0.32 $0.27 $0.63 $0.57 
(1)
(1)For the three months ended June 30, 2021 and 2020, $1,703 and 2019, $447 and $820 was recorded in property management expense, respectively, and $7,503 and $1,659 and $2,795 was recorded in general and administrative expense, respectively. For the six months ended June 30, 2020 and 2019, $1,280 and $1,507 was recorded in property management expense, respectively, and $4,927 and $7,715 was recorded in general and administrative expense, respectively.


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(2)Includes expenses associated with secondary offerings of common stock completed during the three and six months ended June 30, 2019 included within other, net.
(3)Includes merger and transaction-related expenses included within general and administrative.
(4)Includes unrealized gains on our investments in equity securities during the six months ended June 30, 2020 included within other, net. There were no unrealized gains or losses on our investments in equity securities in any other period.
(5)On July 1, 2019, we settled the full outstanding balance of the 2019 Convertible Notes with the issuance of 12,553,864 shares of common stock, and these shares of common stock are included within all net income, FFO, Core FFO, and AFFO per common share calculations subsequent to that date. The impact of the 2019 Convertible Notes in the period prior to conversion is reflected in the FFO per common share — diluted computation above in accordance with the “if-converted” method consistent with Nareit’s guidance for calculating FFO per share. For the three and six months ended June 30, 2019, the numerator for FFO per common share — diluted is adjusted for $2,783 and $5,586, respectively, of interest expense on the 2019 Convertible Notes, including non-cash amortization of discounts. The denominator is adjusted for 12,553,864 shares of common stock issued on July 1, 2019 upon the conversion of the 2019 Convertible Notes. No such adjustments were made to Core FFO and AFFO per common share — diluted.

With respect to the 2022 Convertible Notes, for the three and six months ended June 30, 2021 and 2020, the$2,877 and $1,280 was recorded in property management expense, respectively, and $12,143 and $4,927 was recorded in general and administrative expense, respectively.
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(2)The numerator for FFO per common share — diluted is adjusted for $4,279 and $8,558, respectively, of interest expense on the 2022 Convertible Notes, including non-cash amortization of discounts, totaling $4,344 and $4,279 for the three months ended June 30, 2021 and 2020, respectively, and $8,688 and $8,558 for the six months ended June 30, 2021 and 2020, respectively. For the three and six months ended June 30, 2021, the denominator is adjusted for 15,160,692 potential shares of common stock issuable upon the conversion of the 2022 Convertible Notes. For the three and six months ended June 30, 2020, the denominator is adjusted for 15,100,443 potential shares of common stock issuable upon the conversion of the 2022 Convertible Notes. NoAdditionally, no such adjustments were made to Core FFO and AFFO per common share —diluted. For
(3)Incremental shares attributed to non-vested share-based awards totaling 1,351,694 and 1,108,245 shares for the three months ended June 30, 2021 and 2020, respectively, and 1,401,148 and 1,156,069 for the six months ended June 30, 2019, 15,100,443 potential2021 and 2020, respectively, are included in weighted average common shares of common stock issuable uponoutstanding in the conversion of the 2022 Convertible Notes are excluded from the computationcalculation of net income or loss and FFO per common share — diluted as they are anti-dilutive, and are excluded fromdiluted. For the computations of FFO, Core FFO, and AFFO per common share — diluted.
(6)Incremental shares attributed to non-vested share-based awards totaling 1,108,245 and 863,607 shares for the three months ended June 30, 2020 and 2019, respectively, and 1,156,069 and 925,014 for the six months ended June 30, 2020 and 2019, respectively, are included in the denominator for net income per common share — diluted. For the computations of FFO, Core FFO, and AFFO per common share — diluted, common share equivalents of 1,394,042 and 1,248,805 for the three months ended June 30, 2020 and 2019, respectively, and 1,509,274 and 1,479,272 for the six months ended June 30, 2020 and 2019, respectively, related to incremental shares attributed to non-vested share-based awards are included in the denominator.
(7)Vested units of partnership interests in INVH LP (“OP Units”) have been excluded from the computation of net income per common share — diluted for the periods above because all net income attributable to the vested OP Units has been recorded as non-controlling interest and thus excluded from net income available to common stockholders. Weighted average vested OP Units of 3,463,285 and 5,463,285 for the three months ended June 30, 2020 and 2019, respectively, and 3,463,285 and 7,067,026 for the six months ended June 30, 2020 and 2019, respectively, are included in the denominator for the computations of FFO, Core FFO, and AFFO per common share — diluted.

diluted, common share equivalents of 1,658,302 and 1,394,042 for the three months ended June 30, 2021 and 2020, respectively, and 1,743,425 and 1,509,274 six months ended June 30, 2021 and 2020, respectively, related to incremental shares attributed to non-vested share-based awards are included in the denominator.

(4)Vested units of partnership interests in INVH LP (“OP Units”) have been excluded from the computation of net income per common share — diluted for the periods above because all net income attributable to the vested OP Units has been recorded as non-controlling interest and thus excluded from net income available to common stockholders. Weighted average vested OP Units of 3,232,241 and 3,463,285 for the three months ended June 30, 2021 and 2020, respectively, and 3,347,125 and 3,463,285 for the six months ended June 30, 2021 and 2020, respectively, are included in the denominator for the computations of FFO, Core FFO, and AFFO per common share — diluted.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our future income, cash flows, and fair values relevant to financial instruments are dependent upon prevalent market interest rates. Market risk refers to the risk of loss from adverse changes in interest rates, seasonality, market prices, commodity prices, and inflation. The primary market risks to which we are exposed are interest rate risk and seasonality. We may in the future use derivative financial instruments to manage, or hedge, interest rate risks related to any borrowings we may have. We may enter into such contracts only with major financial institutions based on their credit ratings and other factors.
Interest Rate Risk
A primary market risk to which we believe we are exposed is interest rate risk, which may result from many factors, including government monetary and tax policies, domestic and international economic and political considerations, and other factors that are beyond our control. We may incur additional variable rate debt in the future, including additional amounts that we may borrow under the Credit Facility. In addition, decreases in interest rates may lead to additional competition for the acquisition of single-family homes, which may lead to future acquisitions being more costly and resulting in lower yields on single-family homes targeted for acquisition. Significant increases in interest rates may also have an adverse impact on our earnings if we are unable to increase rents on expired leases or acquire single-family homes with rental rates high enough to offset the increase in interest rates on our borrowings.
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As of June 30, 2020,2021, our outstanding variable-rate debt was comprised of borrowings on our mortgage loans of $5,140.3$3,514.8 million and Term Loan Facility of $1,500.0$2,500.0 million for a combined total of $6,640.3$6,014.8 million. We effectively converted 98.2%95.9% of these borrowings to a fixed rate through interest rate swap agreements. Additionally, all borrowings bear interest at LIBOR plus the applicable spread. Assuming no change in the outstanding balance of our existing debt, the projected effect of a 100 bps increase or decrease in LIBOR on our annual interest expense would be an estimated increase of $1.2$2.4 million or $11.4$20.1 million, respectively. This estimate considers the impact of our interest rate swap agreements, interest rate cap agreements, and any LIBOR floors or minimum interest rates stated in the agreements of the respective borrowings. A 100 bps decrease in LIBOR results in a negative LIBOR rate and additional interest expense for us. Our variable rate loan agreements contain LIBOR floors, and there is no reciprocal feature in our interest rate swap agreements.
This analysis does not consider the effects of the reduced level of overall economic activity that could exist in such an environment. Further, in the event of a change of such magnitude, we may consider taking actions to further mitigate our exposure to the change. However, because of the uncertainty of the specific actions that would be taken and their possible effects, the sensitivity analysis assumes no changes in our capital structure.
Seasonality
Our business and related operating results have been, and we believe that they will continue to be, impacted by seasonal factors throughout the year. In particular, we have experienced higher levels of resident move-outs during the summer months, which impacts both our rental revenues and related turnover costs. Further, our property operating costs are seasonally impacted in certain markets by increases in expenses such as HVAC repairs, costs to re-resident, and landscaping expenses during the summer season.

ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We maintain a set of disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) designed to ensure that information required to be disclosed in reports we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. The design of any disclosure controls and procedures is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its goals under all potential future conditions. Any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives. Our management, with the participation of our Chief Executive Officer and Chief Financial


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Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2020.2021. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2020,2021, the design and operation of our disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level.
Changes in Internal Control
There has been no change in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II



ITEM 1. LEGAL PROCEEDINGS
The Company currently isWe are not subject to any material litigation nor, to management’s knowledge, is any material litigation currently threatened against the Companyus other than routine litigation and administrative proceedings arising in the ordinary course of business.

ITEM 1A. RISK FACTORS
For a discussion of our potential risks or uncertainties, you should carefully read and consider risk factors previously disclosed under Part I. Item 1A. “Risk Factors” of our Annual Report on Form 10-K. There have been no material changes from the risk factors previously disclosed except for the risk factors listed below. Additional risks not presently known to us or that we currently deem immaterial may also impair our business operations. Moreover, many risk factors set forth in the Annual Report on Form 10-K have been heightened as a result of the impact of the COVID-19 pandemic.
Our business, results of operations, financial condition, and cash flows may be adversely affected by pandemic infectious diseases, particularly the ongoing COVID-19 pandemic.
Pandemic infectious diseases, such as the current COVID-19 strain, may adversely impact our business, results of operations, financial condition, and cash flows. The ongoing COVID-19 outbreak in the United States has led certain states and cities, including those in which we own properties and where our principal places of business are located, to impose and continue to implement measures intended to control the spread of COVID-19, including instituting quarantines, restrictions on travel, “shelter in place” rules, and restrictions on types of business that may continue to operate. We depend on rental revenues and other property income from residents for substantially all of our revenues. The COVID-19 outbreak, as well as continuing measures taken by governmental authorities and private actors to limit the spread of this virus or mitigate its impact, is interfering with the ability of some of our residents to meet their lease obligations and make their rent payments on time or at all. In addition, some jurisdictions across the United States have imposed temporary eviction moratoriums and are allowing residents to defer missed rent payments without incurring late fees, and such jurisdictions and other local and national authorities may expand or extend measures imposing restrictions on our ability to enforce residents’ contractual rental obligations and limiting our ability to increase rents. While such measures are likely to enable residents to stay in their homes despite an inability to pay because of financial or other hardship stemming from the pandemic, they are likely to continue to result in loss of rental income and other property income. We may not be able to promptly re-lease properties that are vacant or become vacant because residents decide not to renew their leases or for other reasons, and the rental rates or other terms under new leases may be less favorable than the terms of the current leases. We cannot predict if states, municipalities, and/or local authorities will expand existing restrictions, if additional states or municipalities will implement similar restrictions, or when restrictions currently in place will expire.
Additionally, COVID-19 and related containment measures may also continue to interfere with the ability of our associates, suppliers, and other business partners to carry out their assigned tasks or supply materials, services, or funding (in the case of our Revolving Facility) at ordinary levels of performance relative to the conduct of our business.
Business continuity and disaster recovery issues which may result from the current COVID-19 pandemic or any future pandemic could materially interrupt our business operations. In accordance with phased re-opening guidelines and the ongoing spread of COVID-19 cases in certain states where we operate, the majority of our associates based at our headquarters and local offices continue working remotely. An extended period of remote work arrangements could strain our business continuity plans, introduce operational risk, including, but not limited to cybersecurity risks, and impair our ability to manage our business.
A significant outbreak of pandemic infectious diseases in the human population may result, and the COVID-19 pandemic has resulted, in a widespread health crisis adversely affecting the economies and financial markets of many countries, resulting in an economic downturn that could negatively affect our business, results of operations, and financial condition.


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The COVID-19 pandemic, or a future pandemic, could also have material and adverse effects on our ability to successfully operate our business and on our financial condition, results of operations and cash flows due to, among other factors:
demand for single-family rental properties decreasing substantially and/or occupancy decreasing materially;
inability by our residents to meet their lease obligations has reduced and may continue to reduce our cash flows, and the resulting impact on rental and other property income could impact our ability to make all required debt service payments and to continue paying dividends to our stockholders at expected levels or at all. For example, our securitized financings require that monthly cash collections from their respective property collateral pools be controlled by the servicer until monthly debt service payments and property management fees are paid and escrow reserves are funded. So long as we remain in compliance with certain covenants contained in the underlying loan agreements, after such monthly payments are made the servicer releases all residual net cash flow to us. This residual net cash flow represents a material portion of our cash flows. If the property collateral pools experience higher rates of resident defaults or delinquencies these covenants may not be achieved. This would result in the servicer holding all residual net cash flow from any collateral pool that does not meet the covenant requirements, net of a monthly funding to us for budgeted operating expenses, in blocked collateral accounts for the benefit of the securitized lender rather than being made available to us. Our lack of access to the net cash flow from securitized collateral pools could have a material adverse effect on our business, results of operations and financial condition;
a general decline in business activity and demand for real estate transactions could adversely affect (1) our ability to acquire or dispose of single-family homes on terms that are attractive or at all and (2) the value of our homes and our business such that we may recognize impairment on the carrying value of our investments in single-family residential properties and other assets subject to impairment review, including, but not limited to, goodwill;
difficulty accessing debt and equity capital on attractive terms, or at all, impacts to our credit ratings, and a severe disruption of, and/or instability in, the global financial markets or deteriorations in credit and financing conditions may affect our access to capital necessary to fund business operations, including acquisitions, or address maturing liabilities on a timely basis;
the financial impact of the COVID-19 pandemic could negatively impact our future compliance with financial covenants of our Credit Facility and other debt agreements and result in a default and potentially an acceleration of indebtedness, which non-compliance could negatively impact our ability to make additional borrowings under our Revolving Facility or to exercise extension options on our mortgage loans and the Revolving Facility;
a deterioration in our ability to operate in affected areas or delays in the supply of products or services by vendors that are needed for our efficient operations; and
the potential negative consequences for the health of our associates, particularly if a significant number of them are impacted, could result in a deterioration in our ability to ensure business continuity during this disruption.
The extent to which the COVID-19 pandemic ultimately impacts our operations depends on ongoing developments, which remain highly uncertain and cannot be predicted with confidence, including the scope, severity, and duration of the pandemic, the extent and duration of actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic, containment measures, monetary and/or fiscal policies implemented to provide support or relief to businesses and/or residents, and other government, regulatory, and/or legislative changes precipitated by the COVID-19 pandemic, among others.
The ongoing development and fluidity of this situation precludes any prediction as to the full adverse impact of the COVID-19 pandemic. Nevertheless, the COVID-19 pandemic presents material uncertainty and risk with respect to our financial condition, results of operations, cash flows and performance. While we have taken steps to mitigate the impact of the pandemic on our results of operations, there can be no assurance that these efforts will be successful.



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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.

ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.

ITEM 5. OTHER INFORMATION
None.

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ITEM 6. EXHIBITS
EXHIBIT INDEX
Exhibit number
Description
3.1
3.1
3.2
31.1
10.1
10.2
10.3
31.1
31.2
32.1
32.2
101.INSInline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCHInline XBRL Taxonomy Extension Schema Document.
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document.
101.LABInline XBRL Taxonomy Extension Label Linkbase Document.
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document.
104Cover page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).



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Certain agreements and other documents filed as exhibits to this Quarterly Report on Form 10-Q contain representations and warranties that the parties thereto made to each other. These representations and warranties have been made solely for the benefit of the other parties to such agreements and may have been qualified by certain information that has been disclosed to the other parties to such agreements and other documents and that may not be reflected in such agreements and other documents. In addition, these representations and warranties may be intended as a way of allocating risks among parties if the statements contained therein prove to be incorrect, rather than as actual statements of fact. Accordingly, there can be no reliance on any such representations and warranties as characterizations of the actual state of facts. Moreover, information concerning the subject matter of any such representations and warranties may have changed since the date of such agreements or other documents.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Invitation Homes Inc.
Invitation Homes Inc.
By:
By:/s/ Ernest M. Freedman
Name: Ernest M. Freedman
Title: Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
Date: August 4, 2020July 29, 2021
By:/s/ Kimberly K. Norrell
Name: Kimberly K. Norrell
Title: Executive Vice President and Chief Accounting Officer
(Principal Accounting Officer)
Date: August 4, 2020July 29, 2021



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