UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM

10-Q

☑

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended

~~June~~September 30, 2022

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission File Number

001-38004

Invitation Homes Inc.

(Exact name of registrant as specified in its charter)

Maryland

90-0939055

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

1717 Main Street,

Suite 2000

75201

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 class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, $0.01 par value

INVH

New 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

☑

☐

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

☑

☐

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

☐

☑

As of ~~July~~October 25, 2022, there were ~~610,359,909~~611,409,909 shares of common stock, par value $0.01 per share, outstanding.

INVITATION HOMES INC.

Page

PART I

Item

Financial Statements

Item

Financial Statements

Item

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item

Quantitative and Qualitative Disclosures About Market Risk

Item

Quantitative and Qualitative Disclosures About Market Risk

Item

Controls and Procedures

Item

Controls and Procedures

PART II

Item

Legal Proceedings

Item

Legal Proceedings

Item

1A.

Risk Factors

Item

1A.

Risk Factors

Item

Unregistered Sales of Equity Securities and Use of Proceeds

Item

Unregistered Sales of Equity Securities and Use of Proceeds

Item

Defaults Upon Senior Securities

Item

Defaults Upon Senior Securities

Item

Mine Safety Disclosures

Item

Mine Safety Disclosures

Item

Item

Item

Item

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”) 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, risks related to the potential negative impact of unfavorable global and United States economic conditions (including inflation and interest rates), uncertainty in financial markets, geopolitical tensions, natural disasters, climate change, and public health crises, including the ongoing 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. We believe these factors include but are not limited to, those described under Part I. Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021 (the “Annual Report on Form 10-K”) 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://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.

DEFINED TERMS

Invitation Homes Inc. (“INVH”), a 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, 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.

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-Concord-Gastonia, NC-SC, Greensboro-High Point, NC, Raleigh-Cary, NC, Durham-Chapel Hill, NC, and Winston-Salem, 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;

•“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-Roseville-Folsom, CA, San Francisco-Oakland-Berkeley, CA, Stockton, CA, Vallejo, CA, and Yuba City, CA;

•“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;

•“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-Pompano 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-Chula Vista-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.

PART I

ITEM 1. FINANCIAL STATEMENTS

INVITATION HOMES INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except shares and per share data)


		June 30, 2022		December 31, 2021			September 30, 2022		December 31, 2021
		(unaudited)					(unaudited)
Assets:	Assets:					Assets:
Investments in single-family residential properties:	Investments in single-family residential properties:					Investments in single-family residential properties:
Land	Land	$	4,802,144	$	4,737,938	Land	$	4,810,449	$	4,737,938
Building and improvements	Building and improvements	15,692,603		15,270,443		Building and improvements	15,817,725		15,270,443
		20,494,747		20,008,381			20,628,174		20,008,381
Less: accumulated depreciation	Less: accumulated depreciation	(3,369,562)		(3,073,059)		Less: accumulated depreciation	(3,519,211)		(3,073,059)
Investments in single-family residential properties, net	Investments in single-family residential properties, net	17,125,185		16,935,322		Investments in single-family residential properties, net	17,108,963		16,935,322
Cash and cash equivalents	Cash and cash equivalents	272,708		610,166		Cash and cash equivalents	300,312		610,166
Restricted cash	Restricted cash	206,888		208,692		Restricted cash	215,584		208,692
Goodwill	Goodwill	258,207		258,207		Goodwill	258,207		258,207
Investments in unconsolidated joint ventures	Investments in unconsolidated joint ventures	244,730		130,395		Investments in unconsolidated joint ventures	286,897		130,395
Other assets, net	Other assets, net	399,266		395,064		Other assets, net	508,451		395,064
Total assets	Total assets	$	18,506,984	$	18,537,846	Total assets	$	18,678,414	$	18,537,846

Liabilities:	Liabilities:					Liabilities:
Mortgage loans, net	Mortgage loans, net	$	2,211,739	$	3,055,853	Mortgage loans, net	$	2,207,792	$	3,055,853
Secured term loan, net	Secured term loan, net	401,421		401,313		Secured term loan, net	401,476		401,313
Unsecured notes, net	Unsecured notes, net	2,516,359		1,921,974		Unsecured notes, net	2,517,272		1,921,974
Term loan facilities, net	Term loan facilities, net	2,624,412		2,478,122		Term loan facilities, net	2,626,491		2,478,122
Revolving facility	Revolving facility	—		—		Revolving facility	—		—
Convertible senior notes, net	Convertible senior notes, net	—		141,397		Convertible senior notes, net	—		141,397
Accounts payable and accrued expenses	Accounts payable and accrued expenses	237,915		193,633		Accounts payable and accrued expenses	325,967		193,633
Resident security deposits	Resident security deposits	171,413		165,167		Resident security deposits	173,280		165,167
Other liabilities	Other liabilities	61,736		341,583		Other liabilities	79,787		341,583
Total liabilities	Total liabilities	8,224,995		8,699,042		Total liabilities	8,332,065		8,699,042
Commitments and contingencies (Note 14)	Commitments and contingencies (Note 14)	0		0		Commitments and contingencies (Note 14)

Equity:	Equity:					Equity:
Stockholders' equity	Stockholders' equity					Stockholders' equity
Preferred stock, $0.01 par value per share, 900,000,000 shares authorized, none outstanding as of June 30, 2022 and December 31, 2021		—		—
Common stock, $0.01 par value per share, 9,000,000,000 shares authorized, 610,359,909 and 601,045,438 outstanding as of June 30, 2022 and December 31, 2021, respectively		6,104		6,010
Preferred stock, $0.01 par value per share, 900,000,000 shares authorized, none outstanding as of September 30, 2022 and December 31, 2021						Preferred stock, $0.01 par value per share, 900,000,000 shares authorized, none outstanding as of September 30, 2022 and December 31, 2021	—		—
Common stock, $0.01 par value per share, 9,000,000,000 shares authorized, 611,409,909 and 601,045,438 outstanding as of September 30, 2022 and December 31, 2021, respectively						Common stock, $0.01 par value per share, 9,000,000,000 shares authorized, 611,409,909 and 601,045,438 outstanding as of September 30, 2022 and December 31, 2021, respectively	6,114		6,010
Additional paid-in capital	Additional paid-in capital	11,113,146		10,873,539		Additional paid-in capital	11,133,258		10,873,539
Accumulated deficit	Accumulated deficit	(860,275)		(794,869)		Accumulated deficit	(916,138)		(794,869)
Accumulated other comprehensive loss		(20,285)		(286,938)
Accumulated other comprehensive income (loss)						Accumulated other comprehensive income (loss)	91,892		(286,938)
Total stockholders' equity	Total stockholders' equity	10,238,690		9,797,742		Total stockholders' equity	10,315,126		9,797,742
Non-controlling interests	Non-controlling interests	43,299		41,062		Non-controlling interests	31,223		41,062
Total equity	Total equity	10,281,989		9,838,804		Total equity	10,346,349		9,838,804
Total liabilities and equity	Total liabilities and equity	$	18,506,984	$	18,537,846	Total liabilities and equity	$	18,678,414	$	18,537,846

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

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,					For the Three Months Ended September 30,				For the Nine Months Ended September 30,
		2022		2021		2022		2021			2022		2021		2022		2021
Revenues:	Revenues:									Revenues:
Rental revenues and other property income	Rental revenues and other property income	$	554,541	$	490,618	$	1,084,740	$	965,072	Rental revenues and other property income	$	565,391	$	508,178	$	1,650,131	$	1,473,250
Management fee revenues	Management fee revenues	2,759		1,015		4,870		1,786		Management fee revenues	3,284		1,354		8,154		3,140
Total revenues	Total revenues	557,300		491,633		1,089,610		966,858		Total revenues	568,675		509,532		1,658,285		1,476,390

Expenses:	Expenses:									Expenses:
Property operating and maintenance	Property operating and maintenance	190,680		175,422		372,949		343,795		Property operating and maintenance	203,787		184,484		576,736		528,279
Property management expense	Property management expense	21,814		17,696		42,781		33,538		Property management expense	22,385		17,886		65,166		51,424
General and administrative	General and administrative	19,342		19,828		36,981		36,778		General and administrative	20,123		19,369		57,104		56,147
Interest expense	Interest expense	74,840		80,764		149,229		164,170		Interest expense	76,454		79,370		225,683		243,540
Depreciation and amortization	Depreciation and amortization	158,572		145,280		314,368		289,781		Depreciation and amortization	160,428		150,694		474,796		440,475
Impairment and other	Impairment and other	1,355		980		2,870		1,336		Impairment and other	20,004		4,294		22,874		5,630
Total expenses	Total expenses	466,603		439,970		919,178		869,398		Total expenses	503,181		456,097		1,422,359		1,325,495

Gains (losses) on investments in equity securities, net	Gains (losses) on investments in equity securities, net	(172)		(7,002)		(3,204)		(10,142)		Gains (losses) on investments in equity securities, net	(796)		4,319		(4,000)		(5,823)
Other, net	Other, net	(3,827)		(1,903)		(3,233)		(1,673)		Other, net	(8,372)		(1,508)		(11,605)		(3,181)
Gain on sale of property, net of tax	Gain on sale of property, net of tax	27,508		17,919		45,534		32,403		Gain on sale of property, net of tax	23,952		13,047		69,486		45,450
Income (loss) from investments in unconsolidated joint ventures	Income (loss) from investments in unconsolidated joint ventures	(2,701)		11		(5,021)		362		Income (loss) from investments in unconsolidated joint ventures	(849)		202		(5,870)		564

Net income	Net income	111,505		60,688		204,508		118,410		Net income	79,429		69,495		283,937		187,905
Net income attributable to non-controlling interests	Net income attributable to non-controlling interests	(542)		(350)		(930)		(705)		Net income attributable to non-controlling interests	(250)		(318)		(1,180)		(1,023)

Net income attributable to common stockholders	Net income attributable to common stockholders	110,963		60,338		203,578		117,705		Net income attributable to common stockholders	79,179		69,177		282,757		186,882
Net income available to participating securities	Net income available to participating securities	(148)		(96)		(368)		(191)		Net income available to participating securities	(147)		(69)		(515)		(260)

Net income available to common stockholders — basic and diluted (Note 12)	Net income available to common stockholders — basic and diluted (Note 12)	$	110,815	$	60,242	$	203,210	$	117,514	Net income available to common stockholders — basic and diluted (Note 12)	$	79,032	$	69,108	$	282,242	$	186,622

Weighted average common shares outstanding — basic	Weighted average common shares outstanding — basic	610,331,643		567,931,472		608,381,768		567,655,034		Weighted average common shares outstanding — basic	610,845,820		577,011,178		609,212,132		570,808,028
Weighted average common shares outstanding — diluted	Weighted average common shares outstanding — diluted	611,620,475		569,283,166		609,775,270		569,056,182		Weighted average common shares outstanding — diluted	612,647,588		578,571,392		610,741,723		572,262,198

Net income per common share — basic	Net income per common share — basic	$	0.18	$	0.11	$	0.33	$	0.21	Net income per common share — basic	$	0.13	$	0.12	$	0.46	$	0.33
Net income per common share — diluted	Net income per common share — diluted	$	0.18	$	0.11	$	0.33	$	0.21	Net income per common share — diluted	$	0.13	$	0.12	$	0.46	$	0.33

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

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,				For the Three Months Ended September 30,		For the Nine Months Ended September 30,

		2022		2021		2022		2021				2022		2021		2022		2021
Net income	Net income	$	111,505	$	60,688	$	204,508	$	118,410		Net income	$	79,429	$	69,495	$	283,937	$	187,905

Other comprehensive income	Other comprehensive income										Other comprehensive income
Unrealized gains (losses) on interest rate swaps	Unrealized gains (losses) on interest rate swaps	37,474		(21,190)		213,539		58,869			Unrealized gains (losses) on interest rate swaps	102,940		(1,586)		316,479		57,283
Losses from interest rate swaps reclassified into earnings from accumulated other comprehensive loss	Losses from interest rate swaps reclassified into earnings from accumulated other comprehensive loss	23,018		38,256		54,246		75,899			Losses from interest rate swaps reclassified into earnings from accumulated other comprehensive loss	9,591		37,074		63,837		112,973
Other comprehensive income	Other comprehensive income	60,492		17,066		267,785		134,768			Other comprehensive income	112,531		35,488		380,316		170,256
Comprehensive income	Comprehensive income	171,997		77,754		472,293		253,178			Comprehensive income	191,960		104,983		664,253		358,161
Comprehensive income attributable to non-controlling interests	Comprehensive income attributable to non-controlling interests	(785)		(593)		(2,062)		(1,666)			Comprehensive income attributable to non-controlling interests	(677)		(550)		(2,739)		(2,216)

Comprehensive income attributable to common stockholders	Comprehensive income attributable to common stockholders	$	171,212	$	77,161	$	470,231	$	251,512		Comprehensive income attributable to common stockholders	$	191,283	$	104,433	$	661,514	$	355,945

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

INVITATION HOMES INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

For the Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2022

(in thousands, except share and per share data)

(unaudited)


		Common Stock																Common Stock
		Number of Shares	Amount		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders' Equity		Non-Controlling Interests		Total Equity			Number of Shares	Amount		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Stockholders' Equity		Non-Controlling Interests		Total Equity

Balance as of March 31, 2022		609,844,461	$	6,098	$	11,093,786	$	(836,494)	$	(80,534)	$	10,182,856	$	42,276	$	10,225,132
Balance as of June 30, 2022																	Balance as of June 30, 2022	610,359,909	$	6,104	$	11,113,146	$	(860,275)	$	(20,285)	$	10,238,690	$	43,299	$	10,281,989
Capital distributions	Capital distributions	—	—		—		—		—		—		(915)		(915)		Capital distributions	—	—		—		—		—		—		(488)		(488)
Net income	Net income	—	—		—		110,963		—		110,963		542		111,505		Net income	—	—		—		79,179		—		79,179		250		79,429
Dividends and dividend equivalents declared ($0.22 per share)	Dividends and dividend equivalents declared ($0.22 per share)	—	—		—		(134,744)		—		(134,744)		—		(134,744)		Dividends and dividend equivalents declared ($0.22 per share)	—	—		—		(135,042)		—		(135,042)		—		(135,042)
Issuance of common stock — settlement of RSUs, net of tax		155,294	2		(1,880)		—		—		(1,878)		—		(1,878)

Issuance of common stock, net		360,154	4		14,404		—		—		14,408		—		14,408
Share-based compensation expense	Share-based compensation expense	—	—		6,836		—		—		6,836		1,153		7,989		Share-based compensation expense	—	—		6,761		—		—		6,761		1,169		7,930
Total other comprehensive income	Total other comprehensive income	—	—		—		—		60,249		60,249		243		60,492		Total other comprehensive income	—	—		—		—		112,104		112,104		427		112,531
Redemption of OP Units for common stock																	Redemption of OP Units for common stock	1,050,000	10		13,351		—		73		13,434		(13,434)		—
Balance as of September 30, 2022																	Balance as of September 30, 2022	611,409,909	$	6,114	$	11,133,258	$	(916,138)	$	91,892	$	10,315,126	$	31,223	$	10,346,349

Balance as of June 30, 2022		610,359,909	$	6,104	$	11,113,146	$	(860,275)	$	(20,285)	$	10,238,690	$	43,299	$	10,281,989


		Common Stock																Common Stock
		Number of Shares	Amount		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders' Equity		Non-Controlling Interests		Total Equity			Number of Shares	Amount		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Stockholders' Equity		Non-Controlling Interests		Total Equity

Balance as of December 31, 2021	Balance as of December 31, 2021	601,045,438	$	6,010	$	10,873,539	$	(794,869)	$	(286,938)	$	9,797,742	$	41,062	$	9,838,804	Balance as of December 31, 2021	601,045,438	$	6,010	$	10,873,539	$	(794,869)	$	(286,938)	$	9,797,742	$	41,062	$	9,838,804
Capital distributions	Capital distributions	—	—		—		—		—		—		(1,495)		(1,495)		Capital distributions	—	—		—		—		—		—		(1,983)		(1,983)
Net income	Net income	—	—		—		203,578		—		203,578		930		204,508		Net income	—	—		—		282,757		—		282,757		1,180		283,937
Dividends and dividend equivalents declared ($0.44 per share)		—	—		—		(268,984)		—		(268,984)		—		(268,984)
Dividends and dividend equivalents declared ($0.66 per share)																	Dividends and dividend equivalents declared ($0.66 per share)	—	—		—		(404,026)		—		(404,026)		—		(404,026)
Issuance of common stock — settlement of RSUs, net of tax	Issuance of common stock — settlement of RSUs, net of tax	659,283	7		(12,857)		—		—		(12,850)		—		(12,850)		Issuance of common stock — settlement of RSUs, net of tax	659,283	7		(12,857)		—		—		(12,850)		—		(12,850)
Issuance of common stock — settlement of 2022 Convertible Notes	Issuance of common stock — settlement of 2022 Convertible Notes	6,216,261	62		141,157		—		—		141,219		—		141,219		Issuance of common stock — settlement of 2022 Convertible Notes	6,216,261	62		141,157		—		—		141,219		—		141,219
Issuance of common stock, net	Issuance of common stock, net	2,438,927	25		98,342		—		—		98,367		—		98,367		Issuance of common stock, net	2,438,927	25		98,342		—		—		98,367		—		98,367
Share-based compensation expense	Share-based compensation expense	—	—		12,965		—		—		12,965		1,670		14,635		Share-based compensation expense	—	—		19,726		—		—		19,726		2,839		22,565
Total other comprehensive income	Total other comprehensive income	—	—		—		—		266,653		266,653		1,132		267,785		Total other comprehensive income	—	—		—		—		378,757		378,757		1,559		380,316

Balance as of June 30, 2022		610,359,909	$	6,104	$	11,113,146	$	(860,275)	$	(20,285)	$	10,238,690	$	43,299	$	10,281,989
Redemption of OP Units for common stock																	Redemption of OP Units for common stock	1,050,000	10		13,351		—		73		13,434		(13,434)		—
Balance as of September 30, 2022																	Balance as of September 30, 2022	611,409,909	$	6,114	$	11,133,258	$	(916,138)	$	91,892	$	10,315,126	$	31,223	$	10,346,349

INVITATION HOMES INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (continued)

For the Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2021

(in thousands, except share and per share data)

(unaudited)


		Common Stock																Common Stock
		Number of Shares	Amount		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders' Equity		Non-Controlling Interests		Total Equity			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, 2021		567,650,434	$	5,677	$	9,705,122	$	(700,728)	$	(429,958)	$	8,580,113	$	52,247	$	8,632,360
Balance as of June 30, 2021																	Balance as of June 30, 2021	568,718,544	$	5,687	$	9,725,480	$	(737,444)	$	(413,684)	$	8,580,039	$	39,637	8,619,676
Capital distributions	Capital distributions	—	—		—		—		—		—		(606)		(606)		Capital distributions	—	—		—		—		—		—		(448)		(448)
Net income	Net income	—	—		—		60,338		—		60,338		350		60,688		Net income	—	—		—		69,177		—		69,177		318		69,495
Dividends and dividend equivalents declared ($0.17 per share)	Dividends and dividend equivalents declared ($0.17 per share)	—	—		—		(97,054)		—		(97,054)		—		(97,054)		Dividends and dividend equivalents declared ($0.17 per share)	—	—		—		(98,965)		—		(98,965)		—		(98,965)
Issuance of common stock — settlement of RSUs, net of tax		142,850	1		(1,991)		—		—		(1,990)		—		(1,990)

Issuance of common stock — settlement of 2022 Convertible Notes	Issuance of common stock — settlement of 2022 Convertible Notes	260	—		6		—		—		6		—		6		Issuance of common stock — settlement of 2022 Convertible Notes	8,723,161	87		198,415		—		—		198,502		—		198,502

Issuance of common stock, net																	Issuance of common stock, net	17,451,969	175		693,270		—		—		693,445		—		693,445
Share-based compensation expense	Share-based compensation expense	—	—		8,686		—		—		8,686		520		9,206		Share-based compensation expense	—	—		5,526		—		—		5,526		526		6,052
Total other comprehensive income	Total other comprehensive income	—	—		—		—		16,823		16,823		243		17,066		Total other comprehensive income	—	—		—		—		35,256		35,256		232		35,488
Redemption of OP Units for common stock		925,000	9		13,657		—		(549)		13,117		(13,117)		—
Balance as of June 30, 2021		568,718,544	$	5,687	$	9,725,480	$	(737,444)	$	(413,684)	$	8,580,039	$	39,637	$	8,619,676

Balance as of September 30, 2021																	Balance as of September 30, 2021	594,893,674	$	5,949	$	10,622,691	$	(767,232)	$	(378,428)	$	9,482,980	$	40,265	$	9,523,245


		Common Stock																Common Stock
		Number of Shares	Amount		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders' Equity		Non-Controlling Interests		Total Equity			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, 2020	Balance as of December 31, 2020	567,117,666	$	5,671	$	9,707,258	$	(661,162)	$	(546,942)	$	8,504,825	$	51,248	$	8,556,073	Balance as of December 31, 2020	567,117,666	$	5,671	$	9,707,258	$	(661,162)	$	(546,942)	$	8,504,825	$	51,248	8,556,073
Capital distributions	Capital distributions	—	—		—		—		—		—		(1,211)		(1,211)		Capital distributions	—	—		—		—		—		—		(1,659)		(1,659)
Net income	Net income	—	—		—		117,705		—		117,705		705		118,410		Net income	—	—		—		186,882		—		186,882		1,023		187,905
Dividends and dividend equivalents declared ($0.34 per share)		—	—		—		(193,987)		—		(193,987)		—		(193,987)
Dividends and dividend equivalents declared ($0.51 per share)																	Dividends and dividend equivalents declared ($0.51 per share)	—	—		—		(292,952)		—		(292,952)		—		(292,952)
Issuance of common stock — settlement of RSUs, net of tax	Issuance of common stock — settlement of RSUs, net of tax	675,618	7		(9,410)		—		—		(9,403)		—		(9,403)		Issuance of common stock — settlement of RSUs, net of tax	675,618	7		(9,410)		—		—		(9,403)		—		(9,403)
Issuance of common stock — settlement of 2022 Convertible Notes	Issuance of common stock — settlement of 2022 Convertible Notes	260	—		6		—		—		6		—		6		Issuance of common stock — settlement of 2022 Convertible Notes	8,723,421	87		198,421		—		—		198,508		—		198,508

Issuance of common stock, net																	Issuance of common stock, net	17,451,969	175		693,270		—		—		693,445		—		693,445
Share-based compensation expense	Share-based compensation expense	—	—		13,969		—		—		13,969		1,051		15,020		Share-based compensation expense	—	—		19,495		—		—		19,495		1,577		21,072
Total other comprehensive income	Total other comprehensive income	—	—		—		—		133,807		133,807		961		134,768		Total other comprehensive income	—	—		—		—		169,063		169,063		1,193		170,256
Redemption of OP Units for common stock	Redemption of OP Units for common stock	925,000	9		13,657		—		(549)		13,117		(13,117)		—		Redemption of OP Units for common stock	925,000	9		13,657		—		(549)		13,117		(13,117)		—
Balance as of June 30, 2021		568,718,544	$	5,687	$	9,725,480	$	(737,444)	$	(413,684)	$	8,580,039	$	39,637	$	8,619,676
Balance as of September 30, 2021																	Balance as of September 30, 2021	594,893,674	$	5,949	$	10,622,691	$	(767,232)	$	(378,428)	$	9,482,980	$	40,265	$	9,523,245

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,
2022 2021
Operating Activities:
Net income $ 204,508 $ 118,410
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 314,368 289,781
Share-based compensation expense 14,635 15,020
Amortization of deferred leasing costs 4,094 5,546
Amortization of deferred financing costs 7,195 6,567
Amortization of debt discounts 855 2,828
Provisions for impairment 137 524
(Gains) losses on investments in equity securities, net 3,204 10,142
Gain on sale of property, net of tax (45,534) (32,403)
Change in fair value of derivative instruments 4,775 7,179
Loss (income) from investments in unconsolidated joint ventures, net of operating distributions 5,611 (136)
Other non-cash amounts included in net income 581 2,145
Changes in operating assets and liabilities:
Other assets, net (7,419) (13,843)
Accounts payable and accrued expenses 50,063 67,059
Resident security deposits 6,246 4,289
Other liabilities (11,262) (13,007)
Net cash provided by operating activities 552,057 470,101
Investing Activities:
Amounts deposited and held by others (26,961) (11,185)
Acquisition of single-family residential properties (416,288) (305,976)
Initial renovations to single-family residential properties (72,797) (37,457)
Other capital expenditures for single-family residential properties (91,271) (72,060)
Proceeds from sale of single-family residential properties 114,856 136,951
Repayment proceeds from retained debt securities 42,170 16,211
Proceeds from sale of investments in equity securities 5,762 2,607
Investments in unconsolidated joint ventures (121,588) (9,000)
Non-operating distributions from unconsolidated joint ventures 1,642 880
Other investing activities (16,209) (3,846)
Net cash used in investing activities (580,684) (282,875)
Financing Activities:
Payment of dividends and dividend equivalents (269,808) (193,827)
Distributions to non-controlling interests (1,495) (1,211)
Payment of taxes related to net share settlement of RSUs (12,850) (9,403)
Payments on mortgage loans (845,225) (323,355)
Proceeds from unsecured notes 598,434 300,000
Proceeds from term loan facilities 150,000 —
Proceeds from revolving facility 130,000 300,000
Payments on revolving facility (130,000) (300,000)
Proceeds from issuance of common stock, net 98,367 —
Deferred financing costs paid (13,046) (1,666)
Other financing activities (15,012) (1,388)
Net cash used in financing activities (310,635) (230,850)

`



	For the Nine Months Ended September 30,
	2022		2021
Operating Activities:
Net income	$	283,937	$	187,905

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	474,796		440,475
Share-based compensation expense	22,565		21,072
Amortization of deferred leasing costs	5,534		8,227
Amortization of deferred financing costs	11,105		9,739
Amortization of debt discounts	1,254		5,309
Provisions for impairment	238		650
(Gains) losses on investments in equity securities, net	4,000		5,823
Gain on sale of property, net of tax	(69,486)		(45,450)
Change in fair value of derivative instruments	7,135		10,391
Loss (income) from investments in unconsolidated joint ventures, net of operating distributions	7,152		(214)
Other non-cash amounts included in net income	515		3,136
Changes in operating assets and liabilities:
Other assets, net	(1,953)		(9,950)
Accounts payable and accrued expenses	139,884		136,989
Resident security deposits	8,113		5,727
Other liabilities	9,157		2,485
Net cash provided by operating activities	903,946		782,314

Investing Activities:
Amounts deposited and held by others	(33,471)		(33,658)
Acquisition of single-family residential properties	(509,163)		(743,797)
Initial renovations to single-family residential properties	(104,943)		(52,576)
Other capital expenditures for single-family residential properties	(151,962)		(117,324)
Proceeds from sale of single-family residential properties	181,569		187,230

Repayment proceeds from retained debt securities	42,404		48,246
Proceeds from sale of investments in equity securities	5,762		22,267
Investments in unconsolidated joint ventures	(166,588)		(25,000)
Non-operating distributions from unconsolidated joint ventures	2,934		1,385

Other investing activities	(22,631)		(15,083)
Net cash used in investing activities	(756,089)		(728,310)

Financing Activities:
Payment of dividends and dividend equivalents	(404,377)		(292,110)
Distributions to non-controlling interests	(1,983)		(1,659)
Payment of taxes related to net share settlement of RSUs	(12,850)		(9,403)

Payments on mortgage loans	(849,712)		(964,318)


Proceeds from unsecured notes	598,434		939,574

Proceeds from term loan facilities	150,000		—

Proceeds from revolving facility	130,000		400,000
Payments on revolving facility	(130,000)		(400,000)
Proceeds from issuance of common stock, net	98,367		693,445
Deferred financing costs paid	(13,043)		(8,002)
Other financing activities	(15,655)		(2,149)
Net cash provided by (used in) financing activities	(450,819)		355,378

INVITATION HOMES INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(in thousands)

(unaudited)


		For the Six Months Ended June 30,					For the Nine Months Ended September 30,
		2022		2021			2022		2021
Change in cash, cash equivalents, and restricted cash	Change in cash, cash equivalents, and restricted cash	(339,262)		(43,624)		Change in cash, cash equivalents, and restricted cash	(302,962)		409,382
Cash, cash equivalents, and restricted cash, beginning of period (Note 4)	Cash, cash equivalents, and restricted cash, beginning of period (Note 4)	818,858		411,768		Cash, cash equivalents, and restricted cash, beginning of period (Note 4)	818,858		411,768
Cash, cash equivalents, and restricted cash, end of period (Note 4)	Cash, cash equivalents, and restricted cash, end of period (Note 4)	$	479,596	$	368,144	Cash, cash equivalents, and restricted cash, end of period (Note 4)	$	515,896	$	821,150

Supplemental cash flow disclosures:	Supplemental cash flow disclosures:					Supplemental cash flow disclosures:
Interest paid, net of amounts capitalized	Interest paid, net of amounts capitalized	$	130,112	$	149,086	Interest paid, net of amounts capitalized	$	196,542	$	221,284
Cash paid for income taxes	Cash paid for income taxes	1,107		501		Cash paid for income taxes	1,497		607
Cash paid for amounts included in the measurement of lease liabilities:	Cash paid for amounts included in the measurement of lease liabilities:					Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	Operating cash flows from operating leases	3,075		2,965		Operating cash flows from operating leases	4,561		4,524
Financing cash flows from finance leases	Financing cash flows from finance leases	1,388		1,282		Financing cash flows from finance leases	2,032		2,043

Non-cash investing and financing activities:	Non-cash investing and financing activities:					Non-cash investing and financing activities:
Accrued renovation improvements at period end	Accrued renovation improvements at period end	$	7,938	$	6,207	Accrued renovation improvements at period end	$	5,847	$	11,342
Accrued residential property capital improvements at period end	Accrued residential property capital improvements at period end	11,714		9,161		Accrued residential property capital improvements at period end	11,562		13,096
Transfer of residential property, net to other assets, net for held for sale assets	Transfer of residential property, net to other assets, net for held for sale assets	44,274		45,643		Transfer of residential property, net to other assets, net for held for sale assets	65,074		67,337
Change in other comprehensive loss from cash flow hedges		263,045		127,694
Change in other comprehensive income from cash flow hedges						Change in other comprehensive income from cash flow hedges	373,244		159,971
ROU assets obtained in exchange for operating lease liabilities	ROU assets obtained in exchange for operating lease liabilities	1,592		1,452		ROU assets obtained in exchange for operating lease liabilities	1,940		1,452
ROU assets obtained in exchange for finance lease liabilities	ROU assets obtained in exchange for finance lease liabilities	295		—		ROU assets obtained in exchange for finance lease liabilities	295		115
Net settlement of 2022 Convertible Notes in shares of common stock	Net settlement of 2022 Convertible Notes in shares of common stock	141,219		6		Net settlement of 2022 Convertible Notes in shares of common stock	141,219		198,508

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

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 GP LLC, a wholly owned subsidiary of INVH (the “General Partner”), 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. These transactions 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~~September 30, 2022, INVH owns ~~99.5%~~99.7% 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 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 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 (the “SEC”) 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, 2021.

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~~nine months ended ~~June~~September 30, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2022.

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

We consolidate wholly owned subsidiaries and entities we are otherwise able to control in accordance with GAAP. We evaluate each investment entity that is not wholly owned to determine whether to follow the variable interest entity (“VIE”) or the voting interest entity (“VOE”) model. Once the appropriate consolidation model is identified, we then evaluate whether the entity should be consolidated. Under the VIE model, we consolidate an investment if we have control to direct the activities of the entity and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. Under the VOE model, we consolidate an investment if (1) we control the investment through ownership of a majority voting interest if the investment is not a limited partnership or (2) we control the investment through our ability to remove the other partners in the investment, at our discretion, when the investment is a limited partnership.

Based on these evaluations, we account for each of the investments in joint ventures described in Note 5 using the equity method. Our initial investments in the joint ventures are recorded at cost, except for any such interest initially recorded at fair value in connection with a business combination. 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 ventures are reported as part of operating activities while distributions related to a capital transaction, such as a refinancing transaction or sale, are reported as investing activities on our condensed consolidated statements of cash flows.

Non-controlling interests represent the OP Units not owned by INVH, including any OP Units resulting from vesting and conversion of 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~~September 30, 2022 and December 31, 2021, and the condensed consolidated statements of operations for the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021 include an allocation of the net income attributable to the non-controlling interest holders. OP Units are redeemable for shares of our common stock on a ~~1-for-one~~one-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

Our financial condition and results of operations are subject to risks related to overall weaker economic conditions, ongoing geopolitical tensions, uncertainty in financial markets, including the impact of inflation and rising interest rates, and a general decline in business activity and/or consumer confidence. These factors could adversely affect (i) our ability to acquire or dispose of single-family homes, (ii) our access to financial markets on attractive terms, or at all, and (iii) the value of our homes and our business that could cause us to recognize impairments in value of our tangible assets or goodwill. High levels of inflation and interest rates may also negatively impact consumer income, credit availability, and spending, among other factors, which may adversely impact our business, financial condition, cash flows, and results of ~~operations.~~operations, including the ability of our residents to pay rent. These factors, which include supply chain disruptions, labor shortages, and inflationary increases in labor and material costs, have impacted and may continue to impact certain aspects of our business.

~~Additionally, we~~We may continue to be subject to risks related to the ongoing COVID-19 pandemic and its accompanying variants, including the adverse health impact on the general population, our residents, associates, and suppliers, direct and indirect economic effects of the pandemic and containment measures, the overall reopening progress in the states and municipalities in which we operate, financial hardship experienced by our residents, and the potential long-term changes in consumer spending and preferences. As such, we continue to closely monitor the impact of the pandemic on all aspects of our business and actively manage our response thereto in collaboration with our residents and business partners. 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.

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

We periodically evaluate the appropriateness of our accounting policies in accordance with authoritative guidance. Based on a review of the useful lives of the components of our buildings and improvements, we extended the weighted average useful lives range for depreciation thereof from 7 to 28.5 years to 7 to 32 years. This change was implemented for additions to our single-family residential properties placed in service after January 1, 2022.

There have been no additional 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, 2021.

Recently Adopted Accounting Standards

In August 2020, the Financial Accounting Standards Board (“FASB”) 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. We adopted ASU 2020-06 as of January 1, 2022, and it did not have a material impact on our condensed consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope, which refines the scope of Topic 848 and clarifies some of its guidance. ASU 2020-04 provides temporary optional guidance that provides transition relief for reference rate reform, including optional expedients and exceptions for applying GAAP to contract modifications, hedging relationships, and other transactions that reference the London Interbank Offer Rate (“LIBOR”) or a reference rate that is expected to be discontinued as a result of reference rate reform if certain criteria are met. ASU 2020-04 is effective upon issuance, and the provisions generally can be applied prospectively as of January 1, 2020 through December 31, 2022 (the FASB has proposed an extension through December 31, 2024). We have elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. We have and will continue to elect to apply practical expedients related to contract modifications, changes in critical terms, and updates to the designated hedged risk(s) as qualifying changes are made to applicable debt and derivative instruments. To date, specific changes include the June 2022 issuance of a secured term loan facility that is indexed to the Secured Overnight Financing Rate (“SOFR”). Application of these expedients preserves the presentation of derivatives contracts consistent with past presentation. ~~In January 2021, the FASB issued ASU 2021-01,~~ ~~Reference Rate Reform (Topic 848): Scope, which refines the scope of Topic 848 and clarifies some of its guidance.~~ We continue to evaluate the impact of the guidance and may apply other applicable elections as additional changes in the market and with respect to our debt and derivative instruments occur.

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

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, 2022		December 31, 2021			September 30, 2022		December 31, 2021
Land	Land	$	4,802,144	$	4,737,938	Land	$	4,810,449	$	4,737,938
Single-family residential property	Single-family residential property	15,018,795		14,610,188		Single-family residential property	15,140,964		14,610,188
Capital improvements	Capital improvements	551,665		540,252		Capital improvements	554,199		540,252
Equipment	Equipment	122,143		120,003		Equipment	122,562		120,003
Total gross investments in the properties	Total gross investments in the properties	20,494,747		20,008,381		Total gross investments in the properties	20,628,174		20,008,381
Less: accumulated depreciation	Less: accumulated depreciation	(3,369,562)		(3,073,059)		Less: accumulated depreciation	(3,519,211)		(3,073,059)
Investments in single-family residential properties, net	Investments in single-family residential properties, net	$	17,125,185	$	16,935,322	Investments in single-family residential properties, net	$	17,108,963	$	16,935,322

As of ~~June~~September 30, 2022 and December 31, 2021, the carrying amount of the residential properties above includes ~~$127,922~~$128,721 and $125,236, respectively, of capitalized acquisition costs (excluding purchase price), along with ~~$73,477~~$75,481 and $70,145, respectively, of capitalized interest, ~~$30,006~~$30,744 and $28,211, respectively, of capitalized property taxes, ~~$4,954~~$5,002 and $4,762, respectively, of capitalized insurance, and ~~$3,528~~$3,595 and $3,280, respectively, of capitalized homeowners’ association (“HOA”) fees.

During the three months ended ~~June~~September 30, 2022 and 2021, we recognized ~~$156,433~~$158,199 and ~~$143,607,~~$148,957, respectively, of depreciation expense related to the components of the properties, and ~~$2,139~~$2,229 and ~~$1,673,~~$1,737, 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~~September 30, 2022 and 2021, impairments totaling ~~$36~~$101 and ~~$93,~~$126, 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~~nine months ended ~~June~~September 30, 2022 and 2021, we recognized ~~$310,073~~$468,272 and ~~$286,391,~~$435,348, respectively, of depreciation expense related to the components of the properties, and ~~$4,295~~$6,524 and ~~$3,390,~~$5,127, 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~~nine months ended ~~June~~September 30, 2022 and 2021, impairments totaling ~~$137~~$238 and ~~$524,~~$650, 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.

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, 2022		December 31, 2021			September 30, 2022		December 31, 2021
Cash and cash equivalents	Cash and cash equivalents	$	272,708	$	610,166	Cash and cash equivalents	$	300,312	$	610,166
Restricted cash	Restricted cash	206,888		208,692		Restricted cash	215,584		208,692
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows	Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows	$	479,596	$	818,858	Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows	$	515,896	$	818,858

Pursuant to the terms of the mortgage loans and the Secured Term Loan (as defined in Note 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

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

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~~September 30, 2022 and December 31, 2021, are set forth in the table below. As of ~~June~~September 30, 2022 and December 31, 2021, 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, 2022		December 31, 2021			September 30, 2022		December 31, 2021
Resident security deposits	Resident security deposits	$	171,441	$	165,454	Resident security deposits	$	173,488	$	165,454
Property taxes	Property taxes	17,909		12,615		Property taxes	20,960		12,615
Collections	Collections	11,673		21,402		Collections	15,270		21,402
Capital expenditures	Capital expenditures	2,833		4,368		Capital expenditures	2,833		4,368
Letters of credit	Letters of credit	2,106		3,682		Letters of credit	2,107		3,682
Special and other reserves	Special and other reserves	926		1,171		Special and other reserves	926		1,171
Total	Total	$	206,888	$	208,692	Total	$	215,584	$	208,692

Note 5—Investments In Unconsolidated Joint Ventures

The following table summarizes our investments in unconsolidated joint ventures, which are accounted for using the equity method model of accounting, as of ~~June~~September 30, 2022 and December 31, 2021:

Number of Properties Owned Carrying Value
Ownership Percentage June 30,
2022 December 31, 2021 June 30,
2022 December 31, 2021
2020 Rockpoint JV(1)
20.0% 2,538 2,004 $ 73,112 $ 54,579
2022 Rockpoint JV(2)
16.7% 19 N/A 5,487 —
FNMA(3)
10.0% 509 522 51,120 52,791
Pathway Property Company(4)
100.0% 195 N/A 93,106 —
Pathway Operating Company(5)
15.0% N/A N/A 21,905 23,025
Total $ 244,730 $ 130,395


		Number of Properties Owned		Carrying Value
	Ownership Percentage	September 30, 2022	December 31, 2021	September 30, 2022		December 31, 2021
Pathway Property Company(1)	100.0%	328	N/A	$	133,189	$	—
2020 Rockpoint JV(2)	20.0%	2,607	2,004	72,122		54,579
FNMA(3)	10.0%	502	522	49,449		52,791
Pathway Operating Company(4)	15.0%	N/A	N/A	21,331		23,025
2022 Rockpoint JV(5)	16.7%	131	N/A	10,806		—
Total				$	286,897	$	130,395

(1)Owns homes in markets within the Western United States, Southeast United States, Florida, and Texas.

(2)Owns homes ~~primarily located~~ in markets within the Western United States, Southeast United States, Florida, and ~~Florida.~~Texas.

(3)Owns homes primarily located in Arizona, California, and Nevada.

(4)~~Owns homes within the Western United States and Southeast United States.~~

~~(5)~~Represents an investment in an operating company that provides a technology platform and asset management services.

(5)

~~INVITATION HOMES INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(dollar amounts in thousands)~~

~~(unaudited)~~

~~In October 2020, we entered into an agreement with Rockpoint Group, L.L.C. (“Rockpoint”) to form a joint venture that will acquire~~Owns homes in markets ~~where we already own homes (the “2020 Rockpoint JV”). As of February 2021,~~within the ~~joint venture is funded with a combination of debt~~Western United States, Southeast United States, Florida, 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, 2022, we have fully funded our capital commitment to the 2020 Rockpoint JV. The administrative member of the 2020 Rockpoint JV is a wholly owned subsidiary of INVH LP and is responsible for the operations and management of the properties, subject to Rockpoint’s approval of major decisions. We earn property and asset management fees for the 2020 Rockpoint JV.Texas.

In March 2022, we entered into a second agreement with Rockpoint to form a joint venture that will acquire homes in premium locations and at higher price points relative to our other investments in single-family residential properties (the “2022 Rockpoint JV”). As of June 30, 2022, we have funded $5,000 to the 2022 Rockpoint JV, and our remaining equity commitment is $45,000. The administrative member of the 2022 Rockpoint JV is a wholly owned subsidiary of INVH LP and is responsible for the operations and management of the properties, subject to Rockpoint’s approval of major decisions. We earn property and asset management fees for the 2022 Rockpoint JV.

We acquired our interest in the joint venture with the Federal National Mortgage Association (“FNMA”) via the SWH merger. The managing member of the FNMA joint venture is a wholly owned subsidiary of INVH LP and is responsible for the operations and management of the properties, subject to FNMA’s approval of major decisions. We earn property and asset management fees for the FNMA joint venture.

In November 2021, we entered into agreements with Pathway Homes and its affiliates, among others, to form a joint venture that will provide unique opportunities for customers to identify a home whereby they are able to first lease and then, if they choose, purchase the home in the future. We have fully funded our capital commitment to the operating company (“Pathway Operating Company”) which provides the technology platform and asset management services for the entity that owns and leases the homes (“Pathway Property Company”). Pathway Homes and its affiliates are responsible for the operations and management of Pathway Operating Company, and we do not have a controlling interest in Pathway Operating

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

Company. As of ~~June~~September 30, 2022, we have funded ~~$96,700~~$136,700 to Pathway Property Company, and our remaining equity commitment is ~~$128,300.~~$88,300. A wholly owned subsidiary of INVH LP provides property management and renovation oversight services for and earns fees from the homes owned by Pathway Property Company. As the asset manager, Pathway Operating Company is responsible for the operations and management of Pathway Property Company, and we do not have a controlling interest in Pathway Property Company.

In October 2020, we entered into an agreement with Rockpoint Group, L.L.C. (“Rockpoint”) to form a joint venture that will acquire homes in markets where we already own homes (the “2020 Rockpoint JV”). 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 September 30, 2022, we have fully funded our capital commitment to the 2020 Rockpoint JV. The administrative member of the 2020 Rockpoint JV is a wholly owned subsidiary of INVH LP and is responsible for the operations and management of the properties, subject to Rockpoint’s approval of major decisions. We earn property and asset management fees for the 2020 Rockpoint JV.

In March 2022, we entered into a second agreement with Rockpoint to form a joint venture that will acquire homes in premium locations and at higher price points relative to our other investments in single-family residential properties (the “2022 Rockpoint JV”). As of September 30, 2022, we have funded $10,000 to the 2022 Rockpoint JV, and our remaining equity commitment is $40,000. 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. The administrative member of the 2022 Rockpoint JV is a wholly owned subsidiary of INVH LP and is responsible for the operations and management of the properties, subject to Rockpoint’s approval of major decisions. We earn property and asset management fees for the 2022 Rockpoint JV.

We recorded income (loss) from these investments for the three months ended ~~June~~September 30, 2022 and 2021, totaling ~~$(2,701)~~$(849) and ~~$11,~~$202, respectively, and for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, totaling ~~$(5,021)~~$(5,870) and ~~$362,~~$564, respectively, which is included in income (loss) from investments in unconsolidated joint ventures in the condensed consolidated statements of operations.

The fees earned from our joint ventures (as described above) are related party transactions. For the three months ended ~~June~~September 30, 2022 and 2021, we earned ~~$2,759~~$3,284 and ~~$1,015,~~$1,354, respectively, and for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, we earned ~~$4,870~~$8,154 and ~~$1,786,~~$3,140, respectively, of management fees which are included in management fee revenues in the condensed consolidated statements of operations.

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

Note 6—Other Assets

As of ~~June~~September 30, 2022 and December 31, 2021, the balances in other assets, net are as follows:


		June 30, 2022		December 31, 2021			September 30, 2022		December 31, 2021
Derivative instruments (Note 8)						Derivative instruments (Note 8)	$	115,383	$	6
Investments in debt securities, net	Investments in debt securities, net	$	115,179	$	157,173	Investments in debt securities, net	115,034		157,173
Amounts deposited and held by others	Amounts deposited and held by others	90,285		62,241		Amounts deposited and held by others	95,720		62,241
Rent and other receivables, net						Rent and other receivables, net	40,768		37,473
Prepaid expenses	Prepaid expenses	47,769		41,490		Prepaid expenses	38,685		41,490
Rent and other receivables, net		37,170		37,473
Held for sale assets(1)	Held for sale assets(1)	25,429		20,022		Held for sale assets(1)	25,475		20,022
Investments in equity securities	Investments in equity securities	19,798		16,337		Investments in equity securities	21,015		16,337
Corporate fixed assets, net	Corporate fixed assets, net	17,563		16,595		Corporate fixed assets, net	20,437		16,595
ROU lease assets — operating and finance, net	ROU lease assets — operating and finance, net	15,487		16,975		ROU lease assets — operating and finance, net	14,192		16,975
Deferred financing costs, net	Deferred financing costs, net	7,300		8,751		Deferred financing costs, net	6,575		8,751
Deferred leasing costs, net	Deferred leasing costs, net	3,064		5,837		Deferred leasing costs, net	1,648		5,837
Derivative instruments (Note 8)		7,285		6
Other	Other	12,937		12,164		Other	13,519		12,164
Total	Total	$	399,266	$	395,064	Total	$	508,451	$	395,064

(1)As of ~~June~~September 30, 2022 and December 31, 2021, ~~106~~122 and 80 properties, respectively, are classified as held for sale.

Investments in Debt Securities, net

In connection with certain of our Securitizations (as defined in Note 7), we have retained and purchased certificates totaling ~~$115,179,~~$115,034, net of unamortized discounts of ~~$1,761~~$1,672 as of ~~June~~September 30, 2022. These investments in debt securities are classified as held to maturity investments. As of ~~June~~September 30, 2022, we have not recognized any credit losses with respect to these investments in debt securities, and our retained certificates are scheduled to mature over the next ~~six~~three months to five years.

Amounts Deposited and Held by Others

Amounts deposited and held by others consists of earnest money deposits for the acquisition of single-family residential properties, including deposits made to homebuilders, and amounts owed to us for sold homes. See Note 14 for additional information about commitments related to these deposits made to homebuilders.

Rent and Other Receivables, net

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.

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~~September 30, 2022 and 2021, rental revenues and other property income includes ~~$34,078~~$35,834 and ~~$28,253~~$30,243 of variable lease payments, respectively. For the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, rental revenues and other property income includes ~~$67,126~~$102,960 and ~~$52,647~~$82,890 of variable lease payments, respectively.

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~~September 30, 2022 are as follows:


Year	Year	Lease Payments to be Received		Year	Lease Payments to be Received
Remainder of 2022	Remainder of 2022	$	785,613	Remainder of 2022	$	470,469
2023	2023	550,383		2023	888,990
2024	2024	54,665		2024	116,918
2025	2025	—		2025	—
2026	2026	—		2026	—
Thereafter	Thereafter	—		Thereafter	—
Total	Total	$	1,390,661	Total	$	1,476,377

Investments in Equity Securities

We hold investments in equity securities both with and without a readily 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 the same issuer. As of ~~June~~September 30, 2022 and December 31, 2021, the values of our investments in equity securities are as follows:


		June 30, 2022		December 31, 2021			September 30, 2022		December 31, 2021
Investments with a readily determinable fair value	Investments with a readily determinable fair value	$	1,603	$	10,499	Investments with a readily determinable fair value	$	837	$	10,499
Investments without a readily determinable fair value	Investments without a readily determinable fair value	18,195		5,838		Investments without a readily determinable fair value	20,178		5,838
Total	Total	$	19,798	$	16,337	Total	$	21,015	$	16,337

The components of gains (losses) on investments in equity securities, net as of three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021 are as follows:

For the Three Months
Ended June 30, For the Six Months
Ended June 30,
2022 2021 2022 2021
Net losses recognized on investments sold during the reporting period — with a readily determinable value $ — $ (447) $ (1,452) $ (669)
Net unrealized losses on investments still held at the reporting date — with a readily determinable fair value (172) (6,555) (1,752) (9,473)
Total $ (172) $ (7,002) $ (3,204) $ (10,142)


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,

	2022		2021		2022		2021
Net gains (losses) recognized on investments sold during the reporting period — with a readily determinable value	$	—	$	161	$	(1,452)	$	(6,008)
Net unrealized gains (losses) on investments still held at the reporting date — with a readily determinable fair value	(796)		4,158		(2,548)		185
Total	$	(796)	$	4,319	$	(4,000)	$	(5,823)

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

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~~September 30, 2022 and December 31, 2021:


		June 30, 2022						December 31, 2021							September 30, 2022						December 31, 2021
		Operating Leases			Finance Leases			Operating Leases			Finance Leases				Operating Leases			Finance Leases			Operating Leases			Finance Leases
Other assets	Other assets	$	10,586		$	4,901		$	10,959		$	6,016		Other assets	$	9,955		$	4,237		$	10,959		$	6,016
Other liabilities (Note 14)	Other liabilities (Note 14)	12,737			4,691			13,256			5,784			Other liabilities (Note 14)	12,060			4,047			13,256			5,784
Weighted average remaining lease term	Weighted average remaining lease term	3.3 years			1.9 years			3.7 years			2.2 years			Weighted average remaining lease term	3.3 years			1.7 years			3.7 years			2.2 years
Weighted average discount rate	Weighted average discount rate	3.2		%	4.0		%	3.2		%	4.0		%	Weighted average discount rate	3.3		%	4.0		%	3.2		%	4.0		%

Deferred Financing Costs, net

In connection with the amended and restated Revolving Facility (see Note 7), we incurred $11,846 of financing costs, which have been deferred as other assets, net on our condensed consolidated balance sheets. We amortize deferred financing costs as interest expense on a straight-line basis over the term of the Revolving Facility and accelerate amortization if debt is retired before the maturity date. As of ~~June~~September 30, 2022 and December 31, 2021, the unamortized balances of these deferred financing costs are ~~$7,300~~$6,575 and $8,751, respectively.

Note 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~~September 30, 2022 and December 31, 2021:

Outstanding Principal

Balance(5)

Outstanding Principal

Balance(5)

Origination
Date

Maturity

Date(1)

Maturity Date

if Fully Extended(2)

Interest
Rate(3)

Range of Spreads(4)

June 30,
2022

December 31, 2021

Origination
Date

Maturity

Date(1)

Maturity Date

if Fully Extended(2)

Interest
Rate(3)

Range of Spreads(4)

September 30, 2022

December 31, 2021

IH 2017-1(6)

April 28,
2017

June 9,
2027

4.23%

N/A

992,889

993,703

IH 2017-1(6)

April 28,
2017

June 9,
2027

4.23%

N/A

992,866

993,703

IH 2018-1(7)

February 8,
2018

March 9,
2023

March 9,
2025

2.67%

76-131 bps

563,116

568,495

IH 2018-1(7)

February 8,
2018

March 9,
2023

March 9,
2025

4.02%

76-131 bps

560,459

568,495

IH 2018-2

May 8,
2018

June 9,
2022

N/A

—

629,237

IH 2018-2

May 8,
2018

June 9,
2022

N/A

—

629,237

IH 2018-3

June 28,
2018

April 8,
2022

N/A

—

204,637

IH 2018-3

June 28,
2018

April 8,
2022

N/A

—

204,637

IH 2018-4(7)

November 7,
2018

January 9,
2023

January 9,
2026

3.01%

115-145 bps

664,566

669,548

IH 2018-4(7)

November 7,
2018

January 9,
2023

January 9,
2026

4.37%

115-145 bps

662,848

669,548

Total Securitizations

2,220,571

3,065,620

Total Securitizations

2,216,173

3,065,620

Less: deferred financing costs, net

(8,832)

(9,767)

Less: deferred financing costs, net

(8,381)

(9,767)

Total

2,211,739

3,055,853

Total

2,207,792

3,055,853

(1)Maturity date represents repayment date for mortgage loans which have been repaid in full prior to ~~June~~September 30, 2022. For all other mortgage loans, the maturity dates above reflect all extension options that have been exercised.

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

(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~~September 30, 2022, LIBOR was ~~1.79%~~3.14%. IH 2017-1 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~~September 30, 2022.

(5)Outstanding principal balance is net of discounts and does not include deferred financing costs, net.

(6)Net of unamortized discount of ~~$1,761~~$1,672 and $1,937 as of ~~June~~September 30, 2022 and December 31, 2021, respectively.

(7)The initial maturity term of each of these mortgage loans is two years, individually subject to 5,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 agreement from an approved counterparty within the required timeframe). Our IH 2018-4 mortgage loan has exercised the second extension option, and our IH 2018-1 mortgage loan has exercised the third extension option. The maturity dates above reflect all extensions that have been exercised.

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 6six floating rate components. The two year initial terms are individually subject to 3three to 5,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 2two 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.

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~~September 30, 2022 and December 31, 2021, a total of ~~14,702~~14,673 and 26,950 homes, respectively, with a gross book value of ~~$3,543,986~~$3,547,876 and $6,043,652, respectively, and a net book value of ~~$2,937,988~~$2,914,824 and $4,922,037, 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

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

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.

For IH 2018-1 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 1.45%.

The retained certificates, net of discount, total ~~$115,179~~$115,034 and $157,173 as of ~~June~~September 30, 2022 and December 31, 2021, respectively, and are classified as held to maturity investments and recorded in other assets, net on the condensed consolidated balance sheets (see Note 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 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~~September 30, 2022, 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 for the mortgage loans.

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~~nine months ended ~~June~~September 30, 2022 and 2021, we made voluntary and mandatory prepayments of ~~$845,225~~$849,712 and ~~$323,355,~~$964,318, respectively, under the terms of the mortgage loan agreements. For the ~~six~~nine months ended ~~June~~September 30, 2022, prepayments included the full repayment of the IH 2018-2 and IH 2018-3 mortgage loans.

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

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

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.

The following table sets forth a summary of our Secured Term Loan indebtedness as of ~~June~~September 30, 2022 and December 31, 2021:


		Maturity Date	Interest Rate(1)	June 30, 2022		December 31, 2021			Maturity Date	Interest Rate(1)	September 30, 2022		December 31, 2021
Secured Term Loan	Secured Term Loan	June 9, 2031	3.59%	$	403,363	$	403,363	Secured Term Loan	June 9, 2031	3.59%	$	403,363	$	403,363
Deferred financing costs, net	Deferred financing costs, net			(1,942)		(2,050)		Deferred financing costs, net			(1,887)		(2,050)
Secured Term Loan, net	Secured Term Loan, net			$	401,421	$	401,313	Secured Term Loan, net			$	401,476	$	401,313

(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

The Secured Term Loan’s collateral pool contains 3,334 homes as of ~~June~~September 30, 2022 and December 31, 2021 with a gross book value of ~~$806,038~~$810,354 and $801,318, respectively, and a net book value of ~~$694,886~~$692,392 and $703,492, 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, 4four 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~~September 30, 2022, 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 for the Secured Term Loan.

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. No such prepayments were made during the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021.

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

Unsecured Notes

Our unsecured notes are issued in connection with either an underwritten public offering pursuant to our existing shelf registration statement that automatically became effective upon filing with the SEC in July 2021 and expires in July 2024 or in connection with a private placement transaction with certain institutional investors (collectively, the “Unsecured Notes”). We utilize proceeds from the Unsecured Notes to fund: (i) repayments of then-outstanding indebtedness, including the Securitizations; (ii) closing costs in connection with the Unsecured Notes; and (iii) general costs associated with our operations and other corporate purposes, including acquisitions. Interest on the Unsecured Notes is payable semi-annually in arrears.

The following table sets forth a summary of our Unsecured Notes as of ~~June~~September 30, 2022 and December 31, 2021:


		Interest Rate(1)	June 30, 2022		December 31, 2021			Interest Rate(1)	September 30, 2022		December 31, 2021
Total Unsecured Notes, net(2)	Total Unsecured Notes, net(2)	2.00% — 4.15%	$	2,537,445	$	1,938,425	Total Unsecured Notes, net(2)	2.00% — 4.15%	$	2,537,755	$	1,938,425
Deferred financing costs, net	Deferred financing costs, net		(21,086)		(16,451)		Deferred financing costs, net		(20,483)		(16,451)
Total	Total		$	2,516,359	$	1,921,974	Total		$	2,517,272	$	1,921,974

(1)Represents the range of contractual rates in place as of ~~June~~September 30, 2022.

(2)Net of unamortized discount of ~~$12,555~~$12,245 and $11,575 as of ~~June~~September 30, 2022 and December 31, 2021. See “Debt Maturities Schedule” for information about maturity dates for the Unsecured Notes.

Current Year Activity

On March 25, 2022, we priced a public offering of $600,000 aggregate principal amount of 4.15% Senior Notes which mature in April 2032; and on April 5, 2022, we closed the offering and issued the related notes.

Prepayments

The Unsecured Notes are redeemable in whole at any time or in part from time to time, at our option, at a redemption price equal to (i) 100% of the principal amount to be redeemed plus accrued and unpaid interest and (ii) a make-whole premium calculated in accordance with the respective loan agreements if the redemption occurs more than one month prior to the maturity date. The privately placed Unsecured Notes require any prepayment to be an amount not less than 5% of the aggregate principal amount then outstanding. If any of the Unsecured Notes issued publicly under our registration statement are redeemed on or after a specified date that is either two or three months prior to the maturity date, the redemption price will not include a make-whole premium.

Guarantees

The Unsecured Notes are fully and unconditionally guaranteed, jointly and severally, by INVH and two of its wholly owned subsidiaries, the General Partner and IH Merger Sub, LLC (“IH Merger Sub”). Prior to the September 17, 2021 execution of a parent guaranty agreement, the privately placed Unsecured Notes were not guaranteed.

Loan Covenants

The Unsecured Notes issued publicly under our registration statement contain customary covenants, including, among others, limitations on the incurrence of debt; and they include the following financial covenants related to the incurrence of debt: (i) an aggregate debt test; (ii) a debt service test; (iii) a maintenance of total unencumbered assets; and (iv) a secured debt test.

The privately placed Unsecured Notes contain customary covenants, including, among others, limitations on distributions, fundamental changes, and transactions with affiliates; and they 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.

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

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~~September 30, 2022, and through the date our condensed consolidated financial statements were issued, we believe we were in compliance with all affirmative and negative covenants for the Unsecured Notes.

Term Loan Facilities and Revolving Facility

On December 8, 2020, we entered into an 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”). The Credit Facility provides $3,500,000 of borrowing capacity and consists of a $1,000,000 revolving facility (the “Revolving Facility”) and a $2,500,000 term loan facility (the “2020 Term Loan Facility”), both of which mature on January 31, 2025, with 2two six month extension options available. The Revolving Facility also includes borrowing capacity for letters of 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 2020 Term Loan Facility such that the aggregate amount does not exceed $4,000,000 at any time), subject to certain limitations.

On June 22, 2022, we entered into a Term Loan Agreement with a syndicate of banks for new senior unsecured term loans (the “2022 Term Loan ~~Facility;”~~Facility”; and together with the 2020 Term Loan Facility, the “Term Loan Facilities”). The 2022 Term Loan Facility provides $725,000 of borrowing capacity, consisting of a $150,000 initial term loan (the “Initial Term Loan”) and up to 3three delayed draw term loans (the “Delayed Draw Term Loans”) totaling $575,000 which may be drawn during the six month period following the effective date of the 2022 Term Loan Facility. The Initial Term Loan and any Delayed Draw Term Loans (together, the “2022 Term Loans”) mature on June 22, 2029. The 2022 Term Loan Facility also includes an accordion feature providing the option to increase the size of the 2022 Term Loans or enter into additional incremental 2022 Term Loans, such that the aggregate amount of all 2022 Term Loans does not exceed $950,000 at any time, subject to certain limitations.

The following table sets forth a summary of the outstanding principal amounts under the Term Loan Facilities and the Revolving Facilities as of ~~June~~September 30, 2022 and December 31, 2021:


		Maturity Date	Interest Rate	June 30, 2022		December 31, 2021			Maturity Date	Interest Rate	September 30, 2022		December 31, 2021
2020 Term Loan Facility(1)(2)	2020 Term Loan Facility(1)(2)	January 31, 2025	2.79%	$	2,500,000	$	2,500,000	2020 Term Loan Facility(1)(2)	January 31, 2025	4.14%	$	2,500,000	$	2,500,000
2022 Term Loan Facility(3)	2022 Term Loan Facility(3)	June 22, 2029	3.03%	150,000		—		2022 Term Loan Facility(3)	June 22, 2029	4.38%	150,000		—
Total Term Loan Facilities	Total Term Loan Facilities			2,650,000		2,500,000		Total Term Loan Facilities			2,650,000		2,500,000
Less: deferred financing costs, net	Less: deferred financing costs, net			(25,588)		(21,878)		Less: deferred financing costs, net			(23,509)		(21,878)
Term Loan Facilities, net	Term Loan Facilities, net			$	2,624,412	$	2,478,122	Term Loan Facilities, net			$	2,626,491	$	2,478,122

Revolving Facility(1)(2)	Revolving Facility(1)(2)	January 31, 2025	2.68%	$	—	$	—	Revolving Facility(1)(2)	January 31, 2025	4.03%	$	—	$	—

(1)Interest rates for the 2020 Term Loan Facility and the Revolving Facility are based on LIBOR plus an applicable margin. As of ~~June~~September 30, 2022, the applicable margins were 1.00% and 0.89%, respectively, and LIBOR was ~~1.79%~~3.14%.

(2)If we exercise the 2two six month extension options, the maturity date will be January 31, 2026.

(3)Interest rate for the 2022 Term Loan Facility is based on SOFR adjusted for a 0.10% credit spread adjustment (“Adjusted SOFR”), plus the applicable margin. As of ~~June~~September 30, 2022, the applicable margin was 1.24%, and Adjusted SOFR was ~~1.79%~~3.14%.

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

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.

Borrowings under the 2022 Term Loan Facility bear interest, at our option, at a rate equal to a margin over either (a) Adjusted SOFR 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) SOFR for a one-month interest period plus 1.00%.

The current margins for the Term Loan Facilities and the Revolving Facility ~~under~~ are as follows:


	Base Rate Loans			LIBOR Rate Loans			SOFR Rate Loans
2020 Term Loan Facility	0.00%	—	0.65%	0.80%	—	1.65%	N/A
2022 Term Loan Facility	0.15%	—	1.20%	N/A			1.15%	—	2.20%
Revolving Facility	0.00%	—	0.45%	0.75%	—	1.45%	N/A

The Revolving Facility and the 2022 Term Loan Facility include a sustainability component whereby pricing can improve upon our achievement of certain sustainability ratings, determined via an independent third party evaluation.

Prior to the Pricing Grid Conversion, the margins for the Credit Facility were based on a total leverage based grid. The margins for the 2020 Term Loan Facility and Revolving Facility under the total leverage based grid were as follows:


	Base Rate Loans			LIBOR Rate Loans
2020 Term Loan Facility	0.45%	—	1.15%	1.45%	—	2.15%
Revolving Facility	0.50%	—	1.15%	1.50%	—	2.15%

~~0In~~In addition to paying interest on outstanding principal, we are required to pay certain facility and unused commitment fees. Under the Credit Facility, we are required to pay a facility fee ranging from 0.10% to 0.30%. We are also required to pay customary letter of credit fees. 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 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. Under the 2022 Term Loan Facility, we are required to pay an unused commitment fee to the lenders equal to the daily unused balance of the Delayed Draw Term Loan commitments at a rate of 0.20% per annum.

Prepayments and Amortization

No principal reductions are required under the Credit Facility or the 2022 Term Loan Facility. We are permitted to voluntarily repay amounts outstanding under the 2020 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. We are also permitted to voluntarily repay amounts outstanding under the 2022 Term Loan Facility (a) on or prior to the first anniversary of the closing subject to a 2.0% prepayment fee, (b) on or prior to the second anniversary of the closing subject to a 1.0% prepayment fee, and (c) at any time thereafter without premium or penalty. Once repaid, no further borrowings will be permitted under the Term Loan Facilities.

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

Loan Covenants

The Credit Facility and the 2022 Term Loan Facility contain 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 our 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) enter into certain burdensome agreements.

The Credit Facility and the 2022 Term Loan Facility also require 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, (v) minimum unsecured interest coverage ratio, and (vi) maximum secured recourse. If at any time we do not have an Investment Grade Rating, we will also be required to maintain a maximum secured recourse leverage ratio. If an event of default occurs, the lenders under the Credit Facility and the 2022 Term Loan Facility are entitled to take various actions, including the acceleration of amounts due thereunder. As of ~~June~~September 30, 2022, and through the date our condensed consolidated financial statements were issued, we believe we were in compliance with all affirmative and negative covenants for the Credit Facility and the 2022 Term Loan Facility.

Guarantees

After we obtained the requisite Investment Grade Rating, our direct and indirect 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 were guaranteed on a joint and several basis by each Subsidiary Guarantor, subject to certain exceptions.

On September 17, 2021, as a result of the execution of a parent guaranty agreement, the obligations under the Credit Facility became guaranteed on a joint and several basis by INVH and two of its wholly owned subsidiaries, the General Partner and IH Merger Sub. In connection with the 2022 Term Loan Facility, we entered into a similar parent guaranty agreement ~~for~~with INVH, the General Partner, and IH Merger Sub.

Convertible Senior Notes

In connection with the SWH merger, we assumed certain convertible senior notes including $345,000 in aggregate principal amount of 3.50% convertible senior notes due 2022 issued by SWH in January 2017 (the “2022 Convertible Notes”). Interest on the 2022 Convertible Notes was payable semiannually in arrears on January 15th and July 15th of each year, and the 2022 Convertible Notes had an effective interest rate of 5.12% which included the effect of an adjustment to the fair value of the debt as of the Merger Date. On January 18, 2022, we settled the $141,490 outstanding principal balance of the 2022 Convertible Notes with the issuance of 6,216,261 shares of our common stock and a cash payment of $271.

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~~September 30, 2022:


Year	Year	Mortgage Loans(1)		Secured Term Loan		Unsecured Notes		Term Loan Facilities(2)		Revolving Facility(2)		Total		Year	Mortgage Loans(1)		Secured Term Loan		Unsecured Notes		Term Loan Facilities(2)		Revolving Facility(2)		Total
2022	2022	$	—	$	—	$	—	$	—	$	—	$	—	2022	$	—	$	—	$	—	$	—	$	—	$	—
2023	2023	1,227,682		—		—		—		—		1,227,682		2023	1,223,307		—		—		—		—		1,223,307
2024	2024	—		—		—		—		—		—		2024	—		—		—		—		—		—
2025	2025	—		—		—		2,500,000		—		2,500,000		2025	—		—		—		2,500,000		—		2,500,000
2026	2026	—		—		—		—		—		—		2026	—		—		—		—		—		—
Thereafter	Thereafter	994,650		403,363		2,550,000		150,000		—		4,098,013		Thereafter	994,538		403,363		2,550,000		150,000		—		4,097,901
Total	Total	2,222,332		403,363		2,550,000		2,650,000		—		7,825,695		Total	2,217,845		403,363		2,550,000		2,650,000		—		7,821,208
Less: deferred financing costs, net	Less: deferred financing costs, net	(8,832)		(1,942)		(21,086)		(25,588)		—		(57,448)		Less: deferred financing costs, net	(8,381)		(1,887)		(20,483)		(23,509)		—		(54,260)

Less: unamortized debt discount	Less: unamortized debt discount	(1,761)		—		(12,555)		—		—		(14,316)		Less: unamortized debt discount	(1,672)		—		(12,245)		—		—		(13,917)
Total	Total	$	2,211,739	$	401,421	$	2,516,359	$	2,624,412	$	—	$	7,753,931	Total	$	2,207,792	$	401,476	$	2,517,272	$	2,626,491	$	—	$	7,753,031

(1)The maturity dates of the obligations are reflective of all extensions that have been exercised as of ~~June~~September 30, 2022. If fully extended, we would have no mortgage loans maturing before 2025. 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)If we exercise the 2two six month extension options, the maturity date for the 2022 Term Loan Facility and the Revolving Facility 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.

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 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 (see Note 2 for additional information about reference rate reform and our transition from LIBOR). 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.

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~~September 30, 2022:

Agreement Date

Forward
Effective Date

Maturity
Date

Strike
Rate

Index

Notional
Amount

April 19, 2018

January 31, 2019

January 31, 2025

2.86%

One month LIBOR

400,000

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

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 28, 2018

August 7, 2020

July 9, 2025

2.90%

One month LIBOR

1,100,000

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

200,000

During the ~~six~~nine months ended ~~June~~September 30, 2022, we terminated interest rate swaps or portions thereof and paid the counterparties $13,292 in connection with these terminations.

During the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, the derivatives in the table above 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 ~~$2,160~~$44,013 will be reclassified to earnings as ~~an increase~~a decrease in interest expense.

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 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 ~~6.87%~~7.56% to 9.00%.

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~~September 30, 2022 and December 31, 2021:


		Asset Derivatives					Liability Derivatives						Asset Derivatives					Liability Derivatives
			Fair Value as of					Fair Value as of						Fair Value as of					Fair Value as of
		Balance Sheet Location	June 30, 2022		December 31, 2021		Balance Sheet Location	June 30, 2022		December 31, 2021			Balance Sheet Location	September 30, 2022		December 31, 2021		Balance Sheet Location	September 30, 2022		December 31, 2021
Derivatives designated as hedging instruments:	Derivatives designated as hedging instruments:											Derivatives designated as hedging instruments:
Interest rate swaps	Interest rate swaps	Other assets	$	7,253	$	—	Other liabilities	$	2,073	$	271,156	Interest rate swaps	Other assets	$	115,378	$	—	Other liabilities	$	—	$	271,156

Derivatives not designated as hedging instruments:	Derivatives not designated as hedging instruments:											Derivatives not designated as hedging instruments:
Interest rate caps	Interest rate caps	Other assets	32		6		Other liabilities	—		—		Interest rate caps	Other assets	5		6		Other liabilities	—		—
Total	Total		$	7,285	$	6		$	2,073	$	271,156	Total		$	115,383	$	6		$	—	$	271,156

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~~September 30, 2022 and December 31, 2021:


		June 30, 2022													September 30, 2022
								Gross Amounts Not Offset in the Statement of Financial Position													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			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:	Offsetting assets:													Offsetting assets:
Derivatives	Derivatives	$	7,285	$	—	$	7,285	$	(2,073)	$	—	$	5,212	Derivatives	$	115,383	$	—	$	115,383	$	—	$	—	$	115,383
Offsetting liabilities:	Offsetting liabilities:													Offsetting liabilities:
Derivatives	Derivatives	$	2,073	$	—	$	2,073	$	(2,073)	$	—	$	—	Derivatives	$	—	$	—	$	—	$	—	$	—	$	—


	December 31, 2021
							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	$	6	$	—	$	6	$	—	$	—	$	6
Offsetting liabilities:
Derivatives	$	271,156	$	—	$	271,156	$	—	$	—	$	271,156

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 Income (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 income (loss) and the condensed consolidated statements of operations for the three months ended ~~June~~September 30, 2022 and 2021:


		Amount of Gain (Loss) Recognized in OCI on Derivative				Location of Loss Reclassified from Accumulated OCI into Net Income		Amount of Loss Reclassified from Accumulated OCI into Net Income					Total Amount of Interest Expense Presented in the Condensed Consolidated Statements of Operations									Amount of Gain (Loss) Recognized in OCI on Derivative							Location of Loss Reclassified from Accumulated OCI into Net Income		Amount of Loss Reclassified from Accumulated OCI into Net Income				Total Amount of Interest Expense Presented in the Condensed Consolidated Statements of Operations
																Location of Loss Reclassified from Accumulated OCI into Net Income
		For the Three Months Ended June 30,					For the Three Months Ended June 30,				For the Three Months Ended June 30,								For the Three Months Ended September 30,									For the Three Months Ended September 30,				For the Three Months Ended September 30,
		2022		2021			2022		2021		2022			2021					2022				2021					2022			2021		2022		2021
Derivatives in cash flow hedging relationships:	Derivatives in cash flow hedging relationships:																			Derivatives in cash flow hedging relationships:
Interest rate swaps	Interest rate swaps	$	37,474	$	(21,190)		Interest expense		$	(23,018)	$	(38,256)		$	74,840		$	80,764			Interest rate swaps			$	102,940	$	(1,586)			Interest expense		$	(9,591)	$	(37,074)	$	76,454	$	79,370


		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
							Location of Loss Recognized in Net Income on Derivative
			For the Three Months Ended June 30,									For the Three Months Ended September 30,
			2022		2021							2022			2021
Derivatives not designated as hedging instruments:	Derivatives not designated as hedging instruments:

Interest rate caps	Interest rate caps		Interest expense		$	55		$	74	Interest rate caps			Interest expense			$	28	$	1

The tables below present the effect of our derivative financial instruments in the condensed consolidated statements of comprehensive income (loss) and the condensed consolidated statements of operations for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021:


		Amount of Gain Recognized in OCI on Derivative				Location of Loss Reclassified from Accumulated OCI into Net Income	Amount of Loss Reclassified from Accumulated OCI into Net Income					Total Amount of Interest Expense Presented in the Condensed Consolidated Statements of Operations						Amount of Gain Recognized in OCI on Derivative					Location of Loss Reclassified from Accumulated OCI into Net Income			Amount of Loss Reclassified from Accumulated OCI into Net Income						Total Amount of Interest Expense Presented in the Condensed Consolidated Statements of Operations
														Location of Loss Reclassified from Accumulated OCI into Net Income
		For the Six Months Ended June 30,						For the Six Months Ended June 30,							For the Six Months Ended June 30,										For the Nine Months Ended September 30,						Location of Loss Reclassified from Accumulated OCI into Net Income			For the Nine Months Ended September 30,						For the Nine Months Ended September 30,
		2022		2021				2022			2021				2022				2021						2022			2021					2022		2021				2022		2021
Derivatives in cash flow hedging relationships:	Derivatives in cash flow hedging relationships:																					Derivatives in cash flow hedging relationships:
Interest rate swaps	Interest rate swaps	$	213,539	$	58,869		Interest expense		$	(54,246)		$	(75,899)			$	149,229			$	164,170			Interest rate swaps		$	316,479		$	57,283			Interest expense		$	(63,837)	$	(112,973)			$	225,683	$	243,540


		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
							Location of Loss Recognized in Net Income on Derivative
			For the Six Months Ended Ended June 30,								For the Nine Months Ended September 30,
			2022		2021						Location of Loss Recognized in Net Income on Derivative		2022		2021
Derivatives not designated as hedging instruments:	Derivatives not designated as hedging instruments:											Derivatives not designated as hedging instruments:

Interest rate caps	Interest rate caps		Interest expense		$	35		$	105			Interest rate caps		$	63	$	106

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~~September 30, 2022, ~~the fair value of certain derivatives~~there were no derivative counterparties with whom we were in a net liability position was $2,073. If we had breached any of these provisions at June 30, 2022, 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 $2,737.position.

Note 9—Stockholders' Equity

As of ~~June~~September 30, 2022, we have issued ~~610,359,909~~611,409,909 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~~one-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~~September 30, 2022, ~~2,787,395~~1,737,395 outstanding OP Units are redeemable.

During the three and ~~six~~nine months ended ~~June~~September 30, 2022, we issued ~~515,448~~1,050,000 and ~~9,314,471~~10,364,471 shares of common stock, respectively. During the three and ~~six~~nine months ended ~~June~~September 30, 2021, we issued ~~1,068,110~~26,175,130 and ~~1,600,878~~27,776,008 shares of common stock, respectively.

2021 Public Offering

On September 28, 2021, we completed an underwritten public offering of 12,500,000 shares of our common stock. During the three and nine months ended September 30, 2021, this offering generated net proceeds of $496,667, after giving effect to commissions and other costs totaling $3,333. On October 21, 2021, we sold 1,875,000 shares of our common stock pursuant to the underwriters’ full exercise of the option to purchase additional shares, generating net proceeds of $74,534, after giving effect to commissions and other costs totaling $466.

At the Market Equity Program

On December 20, 2021, we entered into distribution agreements with a syndicate of banks (the “Agents” and the “Forward Sellers”), pursuant to which we may sell, from time to time, up to an aggregate sales price of $1,250,000 of our common stock through the Agents and the Forward Sellers (the “2021 ATM Equity Program”). In addition to the issuance of shares of our common stock, the distribution agreements permit us to enter into separate forward sale transactions with certain forward purchasers who may borrow shares from third parties and, through affiliated Forward Sellers, offer a number of shares of our common stock equal to the number of shares of our common stock underlying the particular forward transaction. During the ~~three and six~~nine months ended ~~June~~September 30, 2022, we sold ~~360,154 and~~ 2,438,927 shares of our common stock under our 2021 ATM Equity Program, ~~respectively,~~ generating net proceeds of ~~$14,408 and~~ $98,367, ~~respectively,~~ after giving effect to Agent commissions and other costs totaling ~~$320 and $1,633, respectively.~~$1,633. We did not sell any shares of our common stock under the 2021 ATM Equity Program during the three months ended September 30, 2022. As of ~~June~~September 30, 2022, $1,150,000 remains available for future offerings under the 2021 ATM Equity Program.

On August 22, 2019, we entered into distribution agreements with a syndicate of banks, pursuant to which we sold, from time to time, up to an aggregate sales price of $800,000 of our common stock (the “2019 ATM Equity Program”). During the three and nine months ended September 30, 2021, we sold 4,951,969 shares of our common stock under our 2019 ATM Equity Program, generating net proceeds of $196,778 after giving effect to agent commissions and other costs totaling $3,167. We terminated the 2019 ATM Equity Program immediately after entering into the 2021 ATM Equity ~~Program, and we did not sell any shares of common stock under the 2019 ATM Equity Program during the three and six months ended June 30, 2021.~~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 that 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.

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

The following table summarizes our dividends declared from January 1, 2021 through ~~June~~September 30, 2022:

Record Date

Amount
per Share

Pay Date

Total Amount Declared

Record Date

Amount
per Share

Pay Date

Total Amount Declared

Q3-2022

August 9, 2022

0.22

August 26, 2022

135,042

Q2-2022

May 10, 2022

0.22

May 27, 2022

134,744

Q2-2022

May 10, 2022

0.22

May 27, 2022

134,744

Q1-2022

February 14, 2022

0.22

February 28, 2022

134,240

Q1-2022

February 14, 2022

0.22

February 28, 2022

134,240

Q4-2021

November 9, 2021

0.17

November 24, 2021

102,180

Q4-2021

November 9, 2021

0.17

November 24, 2021

102,180

Q3-2021

August 10, 2021

0.17

August 27, 2021

98,965

Q3-2021

August 10, 2021

0.17

August 27, 2021

98,965

Q2-2021

May 11, 2021

0.17

May 28, 2021

97,054

Q2-2021

May 11, 2021

0.17

May 28, 2021

97,054

Q1-2021

February 10, 2021

0.17

February 26, 2021

96,933

Q1-2021

February 10, 2021

0.17

February 26, 2021

96,933

On ~~July 19,~~October 20, 2022, our board of directors declared a dividend of $0.22 per share to stockholders of record on ~~August 9,~~November 8, 2022, which is payable on ~~August 26,~~November 23, 2022 (see Note 15).

Note 10—Share-Based Compensation

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 associates and to provide a means whereby our directors, officers, 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 restricted stock units (“RSUs”), which may be time vesting, performance based vesting, or market based vesting, and Outperformance Awards (defined below). Time-vesting RSUs are participating securities for EPS purposes, and performance and market based RSUs (“PRSUs”) and Outperformance Awards are not. For detailed discussion of RSUs and PRSUs issued prior to January 1, 2022, refer to our Annual Report on Form 10-K for the year ended December 31, 2021.

Share-Based Awards

The following summarizes our share-based award activity during the ~~six~~nine months ended ~~June~~September 30, 2022.

Annual Long Term Incentive Plan (“LTIP”):

•Annual LTIP Awards Granted: During the ~~six~~nine months ended ~~June~~September 30, 2022, we granted ~~639,400~~640,107 RSUs, pursuant to 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.

LTIP time-vesting RSUs vest in 3three equal annual installments based on an anniversary date of March 1st. LTIP PRSUs may be earned based on the achievement of certain measures over a three year performance period. 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 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: During the ~~six~~nine months ended ~~June~~September 30, 2022, certain LTIP PRSUs vested and achieved performance in excess of the target level, resulting in the issuance of an additional 285,601 shares of common stock. Such awards are reflected as an increase in the number of awards granted and vested in the table below.

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

Other Awards

During the ~~six~~nine months ended ~~June~~September 30, 2022, we granted 106,975 time-vesting RSUs in the form of retention awards to certain associates which will fully vest on March 1, 2025, subject to continued employment through the vesting date.

~~INVITATION HOMES INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(dollar amounts in thousands)~~

~~(unaudited)~~

Director Awards

During the ~~six~~nine months ended ~~June~~September 30, 2022, we granted 36,912 time-vesting RSUs to members of our board of directors, which will fully vest on the date of INVH’s 2023 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 equity based awards in the form of PRSUs and OP Units (the “2019 Outperformance Awards”). The 2019 Outperformance Awards included rigorous market based vesting conditions related to absolute and relative total shareholder returns (“TSRs”) over a three year performance period that ended on March 31, 2022. In April 2022, the absolute TSR and the relative TSR were separately calculated, and the Compensation Committee certified achievement of each at maximum achievement. The number of earned 2019 Outperformance Awards was then determined based on the earned dollar value of the awards (at maximum) and the stock price at the performance certification date, resulting in 311,425 earned PRSUs and 498,224 earned OP Units. Earned awards vested 50% on the certification date in April 2022, and 25% will vest on each of the first and second anniversaries of March 31, 2022, subject to continued employment. The estimated fair value of 2019 Outperformance Awards that fully vested during the ~~six~~nine months ended ~~June~~September 30, 2022 was $6,134. The aggregate $12,160 grant-date fair value of the 2019 Outperformance Awards that were earned was determined based on Monte-Carlo option pricing models which estimated the probability of achievement of the TSR thresholds. The grant-date fair value is amortized ratably over each vesting period.

On April 1, 2022, the Compensation Committee granted equity based awards with market based vesting conditions in the form of PRSUs and OP Units (the “2022 Outperformance Awards” and together with the 2019 Outperformance Awards, the “Outperformance Awards”). The 2022 Outperformance Awards may be earned based on the achievement of rigorous absolute TSR and relative TSR return thresholds over a three year performance period ending March 31, 2025. The 2022 Outperformance Awards provide that upon completion of 75% of the performance period, or June 30, 2024 (the “Interim Measurement Date”), performance achieved as of the Interim Measurement Date will be calculated consistent with the award terms. To the extent performance through the Interim Measurement Date would result in a payout if the performance period had ended on that date, a minimum of 50% of such hypothetical payout amounts will be guaranteed as a minimum level payout for the full performance period, so long as certain minimum levels of relative TSR are achieved for the full performance period. The final award achievement will be equal to the greater of the payouts determined based on the Interim Measurement Date and performance through March 31, 2025. Upon completion of the performance period, the dollar value of the awards earned under the absolute and relative TSR components will be separately calculated, and the number of earned 2022 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 the certification date and 50% on March 31, 2026, subject to continued employment. ~~We issued~~ 2022 Outperformance Awards with an approximate aggregate ~~$20,900~~$20,800 grant-date fair value ashave been issued and remain outstanding. The grant-date fair value was determined based on Monte-Carlo option pricing models which estimate the probability of achievement of the TSR ~~thresholds. The grant-date fair value will be~~thresholds, and it is amortized ratably over each vesting period.

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

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~~nine months ended ~~June~~September 30, 2022:


		Time-Vesting Awards			PRSUs			Total Share-Based Awards(1)				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 $)			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, 2021	Balance, December 31, 2021	397,085	$	29.05	1,097,537	$	28.38	1,494,622	$	28.56	Balance, December 31, 2021	397,085	$	29.05	1,097,537	$	28.38	1,494,622	$	28.56
Granted	Granted	339,187	37.39		729,701	31.46		1,068,888	33.34		Granted	339,517	37.39		730,078	31.46		1,069,595	33.34
Vested(2)	Vested(2)	(211,815)	(28.79)		(602,994)	(24.67)		(814,809)	(25.74)		Vested(2)	(211,815)	(28.79)		(602,994)	(24.67)		(814,809)	(25.74)
Forfeited / canceled	Forfeited / canceled	(4,015)	(34.30)		(6,840)	(29.65)		(10,855)	(31.37)		Forfeited / canceled	(8,723)	(34.43)		(11,745)	(28.99)		(20,468)	(31.31)
Balance, June 30, 2022		520,442	$	34.55	1,217,404	$	32.06	1,737,846	$	32.81
Balance, September 30, 2022											Balance, September 30, 2022	516,064	$	34.56	1,212,876	$	32.08	1,728,940	$	32.82

(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~~nine months ended ~~June~~September 30, 2022 was $21,036. During the ~~six~~nine months ended ~~June~~September 30, 2022, 1,349 RSUs were accelerated pursuant to the terms and conditions of the Omnibus Incentive Plan and related award agreements.

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~~nine months ended ~~June~~September 30, 2022:


						For the ~~Six~~Nine Months Ended ~~June~~September 30,
Expected volatility(1)						28.9% — 33.6%
Risk-free rate						1.72% — 2.59%
Expected holding period (years)						2.84 — 3.00

(1)Expected volatility was estimated based on the historical volatility of INVH’s realized returns and of the applicable index.

Summary of Total Share-Based Compensation Expense

During the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, we recognized share-based compensation expense as follows:


		For the Three Months Ended June 30,				For the Six Months Ended June 30,					For the Three Months Ended September 30,				For the Nine Months Ended September 30,

		2022		2021		2022		2021			2022		2021		2022		2021
General and administrative	General and administrative	$	6,195	$	7,503	$	11,415	$	12,143	General and administrative	$	6,169	$	4,775	$	17,584	$	16,918
Property management expense	Property management expense	1,794		1,703		3,220		2,877		Property management expense	1,761		1,277		4,981		4,154
Total	Total	$	7,989	$	9,206	$	14,635	$	15,020	Total	$	7,930	$	6,052	$	22,565	$	21,072

As of ~~June~~September 30, 2022, there is ~~$57,118~~$49,346 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 ~~2.36~~2.19 years.

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

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, interest rate cap agreements, and investments in equity securities with a readily determinable fair value are 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 8 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~~September 30, 2022 and December 31, 2021, refer to Note 6.

Recurring Fair Value Measurements

The following table displays the carrying values and fair values of financial instruments as of ~~June~~September 30, 2022 and December 31, 2021:


			June 30, 2022				December 31, 2021						September 30, 2022				December 31, 2021
			Carrying Value		Fair Value		Carrying Value		Fair Value				Carrying Value		Fair Value		Carrying Value		Fair Value
Assets carried at historical cost on the condensed consolidated balance sheets:	Assets carried at historical cost on the condensed consolidated balance sheets:										Assets carried at historical cost on the condensed consolidated balance sheets:
Investments in debt securities(1)	Investments in debt securities(1)	Level 2	$	115,179	$	113,440	$	157,173	$	161,356	Investments in debt securities(1)	Level 2	$	115,034	$	111,754	$	157,173	$	161,356

Liabilities carried at historical cost on the condensed consolidated balance sheets:	Liabilities carried at historical cost on the condensed consolidated balance sheets:										Liabilities carried at historical cost on the condensed consolidated balance sheets:
Unsecured Notes — public offering(2)	Unsecured Notes — public offering(2)	Level 1	$	2,237,445	$	1,861,966	$	1,638,425	$	1,599,001	Unsecured Notes — public offering(2)	Level 1	$	2,237,755	$	1,736,081	$	1,638,425	$	1,599,001
Mortgage loans(3)	Mortgage loans(3)	Level 2	2,220,571		2,155,840		3,065,620		3,110,862		Mortgage loans(3)	Level 2	2,216,173		2,123,721		3,065,620		3,110,862
Unsecured Notes — private placement(4)	Unsecured Notes — private placement(4)	Level 2	300,000		240,521		300,000		298,822		Unsecured Notes — private placement(4)	Level 2	300,000		223,023		300,000		298,822
Secured Term Loan(5)	Secured Term Loan(5)	Level 3	403,363		375,972		403,363		422,519		Secured Term Loan(5)	Level 3	403,363		353,335		403,363		422,519
Term Loan Facilities(6)	Term Loan Facilities(6)	Level 3	2,650,000		2,655,317		2,500,000		2,506,159		Term Loan Facilities(6)	Level 3	2,650,000		2,652,496		2,500,000		2,506,159

Convertible Senior Notes(7)	Convertible Senior Notes(7)	Level 3	—		—		141,397		141,631		Convertible Senior Notes(7)	Level 3	—		—		141,397		141,631

(1)The carrying values of investments in debt securities are shown net of discount.

(2)The carrying value of the Unsecured Notes — public offering includes ~~$12,555~~$12,245 and $11,575 of unamortized discount and excludes ~~$19,654~~$19,093 and $14,934 of deferred financing costs as of ~~June~~September 30, 2022 and December 31, 2021, respectively.

(3)The carrying values of the mortgage loans are shown net of discount and exclude ~~$8,832~~$8,381 and $9,767 of deferred financing costs as of ~~June~~September 30, 2022 and December 31, 2021, respectively.

(4)The carrying value of the Unsecured Notes — private placement excludes ~~$1,432~~$1,390 and $1,517 of deferred financing costs as of ~~June~~September 30, 2022 and December 31, 2021, respectively.

(5)The carrying value of the Secured Term Loan excludes ~~$1,942~~$1,887 and $2,050 of deferred financing costs as of ~~June~~September 30, 2022 and December 31, 2021, respectively.

(6)The carrying values of the Term Loan Facilities exclude ~~$25,588~~$23,509 and $21,878 of deferred financing costs as of ~~June~~September 30, 2022 and December 31, 2021, respectively.

(7)On January 18, 2022, we settled the outstanding principal balance of the 2022 Convertible Notes with the issuance of 6,216,261 shares of our common stock and a cash payment of $271. The carrying value of the Convertible Senior Notes includes unamortized discounts of $93 as of December 31, 2021.

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

We value our Unsecured Notes — public offering using quoted market prices for each underlying issuance, a Level 1 price within the fair value hierarchy. The fair values of our investments in debt securities, Unsecured Notes — private placement, 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 period end.

~~INVITATION HOMES INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(dollar amounts in thousands)~~

~~(unaudited)~~

We review the fair value hierarchy classifications each reporting period. Changes in the observability of the valuation attributes may result in a reclassification of certain financial assets or liabilities. Such reclassifications are reported as transfers in and out of Level 3 at the beginning fair value for the reporting period in which the changes occur. Availability of secondary market activity and consistency of pricing from third-party sources impacts our ability to classify securities as Level 2 or Level 3.

The following table displays the significant unobservable inputs used to develop our Level 3 fair value measurements as of ~~June~~September 30, 2022:

Quantitative Information about Level 3 Fair Value Measurement(1)

Fair Value

Valuation Technique

Unobservable Input

Rate

Fair Value

Valuation Technique

Unobservable Input

Rate

Secured Term Loan

375,972

Discounted Cash Flow

Effective Rate

4.51%

Secured Term Loan

353,335

Discounted Cash Flow

Effective Rate

5.38%

Term Loan Facilities

2,655,317

Discounted Cash Flow

Effective Rate

2.80%

—

4.75%

Term Loan Facilities

2,652,496

Discounted Cash Flow

Effective Rate

4.14%

—

5.72%

(1)Our Level 3 fair value instruments require interest only payments.

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 single-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,				For the Three Months Ended September 30,		For the Nine Months Ended September 30,
		2022		2021		2022		2021				2022		2021		2022		2021
Investments in single-family residential properties, net held for sale (Level 3):	Investments in single-family residential properties, net held for sale (Level 3):										Investments in single-family residential properties, net held for sale (Level 3):
Pre-impairment amount	Pre-impairment amount	$	213	$	672	$	736	$	2,953		Pre-impairment amount	$	125	$	629	$	861	$	3,582
Total impairments	Total impairments	(36)		(93)		(137)		(524)			Total impairments	(101)		(126)		(238)		(650)
Fair value	Fair value	$	177	$	579	$	599	$	2,429		Fair value	$	24	$	503	$	623	$	2,932

We did not record any impairments for our investments in single-family residential properties, net held for use during the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021. For additional information related to our single-family residential properties as of ~~June~~September 30, 2022 and December 31, 2021, refer to Note 3.

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

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,				For the Three Months Ended September 30,		For the Nine Months Ended September 30,

		2022		2021		2022		2021				2022		2021		2022		2021
(in thousands, except share and per share data)	(in thousands, except share and per share data)										(in thousands, except share and per share data)
Numerator:	Numerator:										Numerator:
Net income available to common stockholders — basic and diluted	Net income available to common stockholders — basic and diluted	$	110,815	$	60,242	$	203,210	$	117,514		Net income available to common stockholders — basic and diluted	$	79,032	$	69,108	$	282,242	$	186,622

Denominator:	Denominator:										Denominator:
Weighted average common shares outstanding — basic	Weighted average common shares outstanding — basic	610,331,643		567,931,472		608,381,768		567,655,034			Weighted average common shares outstanding — basic	610,845,820		577,011,178		609,212,132		570,808,028
Effect of dilutive securities:	Effect of dilutive securities:										Effect of dilutive securities:
Incremental shares attributed to non-vested share-based awards	Incremental shares attributed to non-vested share-based awards	1,288,832		1,351,694		1,393,502		1,401,148			Incremental shares attributed to non-vested share-based awards	1,801,768		1,560,214		1,529,591		1,454,170
Weighted average common shares outstanding — diluted	Weighted average common shares outstanding — diluted	611,620,475		569,283,166		609,775,270		569,056,182			Weighted average common shares outstanding — diluted	612,647,588		578,571,392		610,741,723		572,262,198

Net income per common share — basic	Net income per common share — basic	$	0.18	$	0.11	$	0.33	$	0.21		Net income per common share — basic	$	0.13	$	0.12	$	0.46	$	0.33
Net income per common share — diluted	Net income per common share — diluted	$	0.18	$	0.11	$	0.33	$	0.21		Net income per common share — diluted	$	0.13	$	0.12	$	0.46	$	0.33

Incremental shares attributed to non-vested share-based awards are excluded from the computation of diluted EPS when they are anti-dilutive. Because their inclusion would have been anti-dilutive, ~~the following number of~~21,254 and 22,585 incremental shares attributed to non-vested share-based awards are excluded from the ~~denominator: for the~~ denominator~~three months ended June 30, 2022, 206;~~ for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, ~~31,881 and 33,877,~~ respectively. There were ~~not any~~no anti-dilutive incremental shares attributed to non-vested share-based awards for the three months ended ~~June~~September 30, 2022 and 2021.

For the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, vested OP Units have been excluded from the computation of EPS because all income attributable to such vested OP Units has been recorded as non-controlling interest and thus excluded from net income available to common stockholders.

For the ~~six~~nine months ended ~~June~~September 30, 2022, using the “if-converted” method, ~~584,966~~387,834 potential shares of common stock issuable upon the conversion of the 2022 Convertible Notes are excluded from the computation of diluted EPS as they are anti-dilutive. The outstanding balance of the 2022 Convertible Notes was settled in January 2022. As such, they had no effect on potential dilution for the three months ended ~~June~~September 30, 2022. For the three and ~~six~~nine months ended ~~June~~September 30, 2021, using the “if-converted” method, ~~15,160,692~~8,632,132 and 12,964,322 potential shares of common stock issuable upon the conversion of the 2022 Convertible Notes, respectively, are 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 Notes for the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021. See Note 7 for further discussion about the 2022 Convertible 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~~September 30, 2022 and December 31, 2021, 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.

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

We have sold assets that were either subject to state and local income taxes or Section 337(d) of the Internal Revenue Code of 1986, as amended, or were held by TRSs. These transactions resulted in ~~$83~~$73 and ~~$142~~$81 of current income tax expense for the three months ended ~~June~~September 30, 2022 and 2021, respectively, and resulted in ~~$162~~$235 and ~~$383~~$464 of current income tax expense for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, respectively, which has been recorded in gain on sale of property, net of tax in the condensed consolidated statements of operations.

~~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~~September 30, 2022, for the periods below:


Year	Year	Operating Leases		Finance Leases		Year	Operating Leases		Finance Leases
Remainder of 2022	Remainder of 2022	$	2,364	$	1,501	Remainder of 2022	$	1,188	$	671
2023	2023	3,885		2,563		2023	3,952		2,563
2024	2024	3,526		827		2024	3,675		857
2025	2025	2,110		109		2025	2,227		93
2026	2026	1,028		6		2026	1,117		6
Thereafter	Thereafter	500		—		Thereafter	500		—
Total lease payments	Total lease payments	13,413		5,006		Total lease payments	12,659		4,190
Less: imputed interest	Less: imputed interest	(676)		(315)		Less: imputed interest	(599)		(143)
Total lease liability	Total lease liability	$	12,737	$	4,691	Total lease liability	$	12,060	$	4,047

The components of lease expense for the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021 are as follows:


		For the Three Months Ended June 30,				For the Six Months Ended June 30,				For the Three Months Ended September 30,		For the Nine Months Ended September 30,

		2022		2021		2022		2021				2022		2021		2022		2021
Operating lease cost:	Operating lease cost:										Operating lease cost:
Fixed lease cost	Fixed lease cost	$	831	$	1,055	$	1,666	$	2,114		Fixed lease cost	$	800	$	991	$	2,466	$	3,105
Variable lease cost	Variable lease cost	377		261		749		604			Variable lease cost	384		364		1,133		968
Total operating lease cost	Total operating lease cost	$	1,208	$	1,316	$	2,415	$	2,718		Total operating lease cost	$	1,184	$	1,355	$	3,599	$	4,073

Finance lease cost:	Finance lease cost:										Finance lease cost:
Amortization of ROU assets	Amortization of ROU assets	$	695	$	712	$	1,380	$	1,416		Amortization of ROU assets	$	675	$	699	$	2,055	$	2,115
Interest on lease liabilities	Interest on lease liabilities	59		70		127		156			Interest on lease liabilities	51		64		178		220
Total finance lease cost	Total finance lease cost	$	754	$	782	$	1,507	$	1,572		Total finance lease cost	$	726	$	763	$	2,233	$	2,335

New-Build Commitments

We have entered into binding purchase agreements with certain homebuilders for the purchase of ~~2,029~~2,212 homes over the next five years. Estimated remaining commitments under these agreements total approximately ~~$620,000~~$700,000 as of ~~June~~September 30, 2022.

Insurance Policies

Pursuant to the terms of certain of our loan agreements (see Note 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~~September 30, 2022, there are no material contingent liabilities related to uninsured losses with respect to our properties.

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

Hurricane-Related Losses

During the third quarter of 2022, Hurricane Ian damaged certain of our properties in Florida and the Carolinas. We estimate that our homes incurred approximately $19,000 of hurricane damage which has been expensed as impairment and other on our condensed consolidated statements of operations for the three and nine months ended September 30, 2022 and is reflected in other liabilities on our condensed consolidated balance sheet as of September 30, 2022. Based on previous experience, we anticipate that additional damage, and thus costs, may be identified and incurred over the coming months. As such, our estimates will be adjusted as new information becomes available. Additionally, a portion of our losses may be recoverable through insurance policies that provide coverage for wind, flood, and business interruption, subject to deductibles and limits.

Legal Matters

We are subject to various legal proceedings and claims that arise in the ordinary course of our business as well as congressional and regulatory inquiries and engagements. 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.

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~~September 30, 2022, for potential recognition or disclosure.

Dividend Declaration

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” of our Annual Report on Form 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 over 80,000 homes for lease in 16 markets across the country as of ~~June~~September 30, 2022, we are meeting the needs of a growing share of Americans who prefer the ease of leasing over the burden of owning a home. We provide our residents access to updated homes with features they value, as well as close proximity to jobs and access to good schools. The continued demand for our product proves that the choice and flexibility we offer is attractive to many prospective residents.

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.

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 a 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.

At Invitation Homes, we are committed to creating a better way to live and to being a force for positive change, while at the same time advancing efforts that make our company more innovative and our processes more sustainable. Environmental, social, and governance initiatives are an important part of our strategic business objectives and are critical to our long-term success.

Our mission statement, “Together with you, we make a house a home,” reflects our commitment to high-touch customer service that continuously enhances residents’ living experiences and provides homes where individuals and families can thrive. Each aspect of our operations — whether in our corporate headquarters or field offices located in our 16 markets — is driven by a resident-centric model. Our associates take our values seriously and work hard every day to honor the trust our residents have placed in us to provide safe and secure homes for them and their loved ones. In turn, we focus on ensuring our associates are fairly compensated and that we provide a diverse, equitable, and inclusive culture where they are appreciated for who they are and what they bring to the business. We also place a strong emphasis on the impact we have in our communities and to the environment in general, and we continue to develop programs that ~~will~~ demonstrate that commitment. In addition, we ensure that we operate under strong, well-defined governance practices and adhere to the highest ethical standards at all times.

Impact of Macroeconomic Trends and COVID-19

In March2020, interest rates reached historically low levels, in large part driven by the impacts of COVID-19 on the United States economy. More recently, high consumer demand, low interest rates, global supply chain disruptions, and other factors have contributed to rapidly accelerating economic inflation to an annual inflation rate of ~~9.1%~~8.2% for the twelve months ended ~~June~~September 30, ~~2022, the largest annual increase since November 1981.~~2022. To offset the impacts of inflation, since March 2022, the Federal Open Market Committee has raised short-term interest rates a total of 300 bps to a target range of 3.00% to 3.25% as of September 30, 2022, and the committee may continue to doraise rates for some period of time.

Overall weaker economic conditions, ongoing geopolitical tensions, uncertainty in financial markets, including the impact of inflation and rising interest rates, and a general decline in business activity and/or consumer ~~confidence. These~~

~~factors~~confidence could adversely affect (i) our ability to acquire or dispose of single-family homes, (ii) our access to financial markets on attractive terms, or at all, and (iii) the value of our homes and our business that could cause us to recognize impairments in value of our tangible assets or goodwill. High levels of inflation and interest rates may also negatively impact consumer income, credit availability, and spending, among other factors, which may adversely impact our business, financial condition, cash flows, and results of ~~operations.~~

~~Continuing Impact~~operations, including the ability of ~~COVID-19~~our residents to pay rent. These factors, which include supply chain disruptions, labor shortages, and inflationary increases in labor and material costs, have impacted and may continue to impact certain aspects of our business.

The ongoing COVID-19 pandemic continues to create many unknowns that may impact our residents, associates, and suppliers. The ultimate impacts remain unknown, but ~~have included and could range from macroeconomic effects (such as continued strain on global and United States economic conditions and~~the overall impact of the pandemic has not created significant disruptions to our business model during the nine months ended September 30, 2022 and volatility in, the credit and financial markets, consumer spending, supply chains, and the market for acquisition and disposition of single-family homes) to more industry-specific effects (such as depressed collection rates, higher or lower occupancy levels, and restrictions on evictions, collections, rent increases, and late fees), and other unanticipated consequences. As such, we2021. We continue to closely monitor the impact of the pandemic on all aspects of our business and ~~actively~~ manage our response thereto in collaboration with our residents and business partners.

~~The overall impact of the ongoing COVID-19 pandemic has not created significant disruptions to our business model during the six months ended June 30, 2022 and 2021.~~

For further discussion of risks related to the 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.

~~Other Matters~~

In July 2021, we received congressional inquiries requesting information and documentation about our eviction practices during the COVID-19 pandemic, including information relating to compliance with federal eviction moratorium requirements and cooperation with impacted residents to use federal assistance funds as an alternative to eviction. In October 2021 and January 2022, we received additional congressional inquiries requesting information about our activities in the housing market. We are in the process of responding to and cooperating with these inquiries and information requests.

In August 2021, we received a letter from the staff of the Federal Trade Commission requesting information as to how we conduct our business generally and during the COVID-19 pandemic specifically. We are in the process of responding to and cooperating with this request.

~~As these inquiries are ongoing, we cannot currently predict their timing, outcome, or scope.~~

Climate Change

Climate change continues to attract considerable public, political, and scientific attention. Experiencing or addressing the various physical, regulatory, and adaptation/transition risks of climate change may affect our profitability. Government authorities, including the SEC, and various interest groups are promoting laws and regulations relating to climate change, including regulations aimed at drastically increasing reporting and governance related to climate change as well as focused on limiting greenhouse gas emissions and the implementation of “green” building codes. These laws and regulations may require us to make costly improvements to our existing properties beyond our current plans to decrease the impact of our homes on the environment, resulting in increased operating costs. Implementation of any voluntary improvements requires consideration of multiple factors, including whether such elections would raise our costs to maintain our homes. Alternatively, choosing not to enhance our homes’ resource efficiency could make our portfolio less attractive to residents and investors and/or increase the vulnerability of our residents to rising energy and water expenses and use restrictions.

As the climate continues to change, and with a portfolio located in a variety of United States markets that include coastal areas, we recognize the increased potential for acute weather events and other climate-related impacts to our business, operations, and homes. We take a proactive approach to protect our properties against potential risks related to climate

change and business interruptions, and we recognize that we must continue to adapt our policies, objectives, and processes to improve the resiliency of our physical properties and our business.

Our management and the Board of Directors are focused on managing our business risks, including climate change-related risks. The process to identify, manage, and integrate climate-change risk is part of our enterprise risk management program. For more information on risks related to climate change, see Part I. Item 1A. “Risk Factors — Risks Related to Environmental, Social, and Governance Issues — Climate change, related legislative and regulatory responses to climate change, and the transition to a lower-carbon economy may adversely affect our business, — We are subject to risks from natural disasters such as earthquakes and severe weather, and — We are subject to increasing scrutiny from investors and others regarding our environmental, social, or sustainability, responsibilities, which could result in additional costs or risks and adversely impact our reputation, associate retention, and ability to raise capital from such investors” in our Annual Report on Form 10-K.

Other Matters

In July 2021, we received congressional inquiries requesting information and documentation about our eviction practices during the COVID-19 pandemic, including information relating to compliance with federal eviction moratorium requirements and cooperation with impacted residents to use federal assistance funds as an alternative to eviction. In October 2021 and January 2022, we received additional congressional inquiries requesting information about our activities in the housing market. We have responded to and have cooperated with these inquiries and information requests.

We cannot currently predict the timing, outcome, or scope of the ongoing inquiries.

Our Portfolio

The following table provides summary information regarding our total and Same Store portfolios as of and for the three months ended ~~June~~September 30, 2022 as noted below:


Market	Market	Number of Homes(1)	Average Occupancy(2)	Average Monthly Rent(3)	Average Monthly Rent PSF(3)	% of Revenue(4)		Market	Number of Homes(1)	Average Occupancy(2)	Average Monthly Rent(3)	Average Monthly Rent PSF(3)	% of Revenue(4)
Western United States:	Western United States:							Western United States:
Southern California	Southern California	7,826	97.6%	$2,779	$1.64	12.0	%	Southern California	7,789	97.5%	$2,838	$1.67	11.8	%
Northern California	Northern California	4,467	94.6%	2,486	1.59	6.2	%	Northern California	4,454	95.4%	2,552	1.63	6.2	%
Seattle	Seattle	4,086	92.3%	2,602	1.35	5.8	%	Seattle	4,087	92.6%	2,655	1.38	5.8	%
Phoenix	Phoenix	8,885	95.4%	1,808	1.08	9.2	%	Phoenix	8,906	95.2%	1,869	1.12	9.3	%
Las Vegas	Las Vegas	3,176	95.2%	2,024	1.02	3.6	%	Las Vegas	3,179	95.9%	2,078	1.05	3.7	%
Denver	Denver	2,671	89.4%	2,360	1.29	3.4	%	Denver	2,678	90.1%	2,401	1.31	3.4	%
Western United States Subtotal	Western United States Subtotal	31,111	94.9%	2,326	1.34	40.2	%	Western United States Subtotal	31,093	95.1%	2,382	1.37	40.2	%

Florida:	Florida:							Florida:
South Florida	South Florida	8,346	97.8%	2,560	1.37	12.1	%	South Florida	8,380	96.8%	2,653	1.42	12.2	%
Tampa	Tampa	8,580	97.2%	1,995	1.07	9.9	%	Tampa	8,610	96.3%	2,070	1.11	10.0	%
Orlando	Orlando	6,446	97.3%	1,963	1.05	7.2	%	Orlando	6,458	96.4%	2,030	1.09	7.4	%
Jacksonville	Jacksonville	1,928	96.9%	1,967	0.99	2.2	%	Jacksonville	1,928	96.9%	2,022	1.02	2.2	%
Florida Subtotal	Florida Subtotal	25,300	97.4%	2,172	1.16	31.4	%	Florida Subtotal	25,376	96.5%	2,249	1.20	31.8	%

Southeast United States:	Southeast United States:							Southeast United States:
Atlanta	Atlanta	12,686	97.0%	1,793	0.87	13.1	%	Atlanta	12,676	96.8%	1,836	0.89	12.8	%
Carolinas	Carolinas	5,356	94.9%	1,844	0.86	5.5	%	Carolinas	5,368	96.1%	1,880	0.88	5.5	%
Southeast United States Subtotal	Southeast United States Subtotal	18,042	96.4%	1,808	0.87	18.6	%	Southeast United States Subtotal	18,044	96.6%	1,849	0.89	18.3	%

Texas:	Texas:							Texas:
Houston	Houston	2,119	96.7%	1,724	0.89	2.1	%	Houston	2,112	96.2%	1,757	0.91	2.1	%
Dallas	Dallas	2,857	95.7%	2,027	0.99	3.3	%	Dallas	2,869	95.9%	2,069	1.01	3.3	%
Texas Subtotal	Texas Subtotal	4,976	96.1%	1,897	0.95	5.4	%	Texas Subtotal	4,981	96.0%	1,936	0.97	5.4	%

Midwest United States:	Midwest United States:							Midwest United States:
Chicago	Chicago	2,548	97.6%	2,152	1.34	3.1	%	Chicago	2,541	96.8%	2,198	1.36	3.0	%
Minneapolis	Minneapolis	1,116	97.1%	2,129	1.09	1.3	%	Minneapolis	1,113	95.2%	2,168	1.11	1.3	%
Midwest United States Subtotal	Midwest United States Subtotal	3,664	97.4%	2,145	1.25	4.4	%	Midwest United States Subtotal	3,654	96.3%	2,189	1.28	4.3	%

Total / Average	Total / Average	83,093	96.2%	$2,132	$1.14	100.0	%	Total / Average	83,148	96.0%	$2,189	$1.17	100.0	%
Same Store Total / Average	Same Store Total / Average	75,215	98.0%	$2,124	$1.14	92.1	%	Same Store Total / Average	74,881	97.5%	$2,181	$1.17	91.0	%

(1)As of ~~June~~September 30, 2022.

(2)Represents average occupancy for the three months ended ~~June~~September 30, 2022.

(3)Represents average monthly rent for the three months ended ~~June~~September 30, 2022.

(4)Represents the percentage of rental revenues and other property income generated in each market for the three months ended ~~June~~September 30, 2022.

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” of our Annual Report on Form 10-K 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 current macroeconomic conditions, including rapidly accelerating economic inflation, and 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 ~~71.6%~~72.0% of our rental revenues and other property income during the three months ended ~~June~~September 30, 2022. We actively monitor the impact of macroeconomic conditions on market fundamentals and quickly implement 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.

Collection Rates: Our rental revenues and other property income are impacted by the rate at which we collect such revenues from our residents. Despite our efforts to assist residents facing financial hardships who need flexibility to fulfill their lease obligations, a portion of amounts receivable may not ultimately be collected. Any amounts billed to residents that have been deemed uncollectible along with our estimate of amounts that may ultimately be uncollectible decrease 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, 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, and both current economic conditions and future economic outlook, including the impact of rising inflation and interest rates which could adversely affect demand for our properties.

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. As a result of current inflationary trends, we have experienced, and expect to continue to incur, increased costs for certain materials and services necessary to improve and maintain our homes. We continue to actively manage the impact of inflation on these costs, and we believe we are able to purchase goods and services at favorable prices compared to other purchasers due to our size and scale both nationally and locally.

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 current inflationary trends and rising interest rates, 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, 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 have increased the time required to renovate our homes. As a result of current inflationary trends, we have experienced, and expect to continue to incur, increased costs for certain materials and services necessary to renovate our ~~homes.We~~homes. We continue to actively manage the impact of inflation on the cost of renovations, and we believe we are able to purchase goods and services at favorable prices compared to other purchasers due to our size and scale both nationally and locally.

Financing Arrangements: Financing arrangements directly impact our interest expense, our various debt instruments, and 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 other terms and conditions, including variable interest rates in some cases, that are impacted by market conditions. Current macroeconomic conditions may continue to negatively affect volatility, availability of funds, and transaction costs (including interest rates) within financial markets. These factors may also 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 HVAC replacement filters; and (iv) various other fees, including late fees and lease termination fees, among others.

Management Fee Revenues

Management fee revenues consist of asset and property management fees from our unconsolidated joint ventures.

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 expenses, utility expenses, repairs and maintenance, 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, 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 include expenses that are of a non-recurring 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 associates 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 the expected useful 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 recognized upon the sale of such securities.

Other, net

Other, net includes interest income 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.

Income (Loss) from Investments in Unconsolidated Joint Ventures

Income (loss) 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~~September 30, 2022 and 2021, we owned ~~83,093~~83,148 and ~~80,612~~81,549 single-family rental homes, respectively, in our total portfolio. During the three months ended ~~June~~September 30, 2022 and 2021, we acquired ~~511~~244 and ~~494~~1,082 homes, respectively, and sold ~~176~~189 and ~~212~~145 homes, respectively. During the three months ended ~~June~~September 30, 2022 and 2021, we owned an average of ~~82,877~~83,123 and ~~80,412~~81,007 single-family rental homes, respectively. During the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, we acquired ~~1,029~~1,273 and ~~895~~1,977 homes, respectively, and sold ~~317~~506 and ~~460~~605 homes, respectively. During the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, we owned an average of ~~82,726~~82,859 and ~~80,315~~80,547 single-family rental homes, respectively.

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~~September 30, 2022, our Same Store portfolio consisted of ~~75,215~~74,881 single-family rental homes.

Three Months Ended ~~June~~September 30, 2022 Compared to Three Months Ended ~~June~~September 30, 2021

The following table sets forth a comparison of the results of operations for the three months ended ~~June~~September 30, 2022 and 2021:


		For the Three Months Ended June 30,									For the Three Months Ended September 30,
($ in thousands)	($ in thousands)	2022		2021		$ Change		% Change		($ in thousands)	2022		2021		$ Change		% Change
Revenues:	Revenues:									Revenues:
Rental revenues and other property income	Rental revenues and other property income	$	554,541	$	490,618	$	63,923	13.0	%	Rental revenues and other property income	$	565,391	$	508,178	$	57,213	11.3	%
Management fee revenues	Management fee revenues	2,759		1,015		1,744		171.8	%	Management fee revenues	3,284		1,354		1,930		142.5	%
Total revenues	Total revenues	557,300		491,633		65,667		13.4	%	Total revenues	568,675		509,532		59,143		11.6	%

Expenses:	Expenses:									Expenses:
Property operating and maintenance	Property operating and maintenance	190,680		175,422		15,258		8.7	%	Property operating and maintenance	203,787		184,484		19,303		10.5	%
Property management expense	Property management expense	21,814		17,696		4,118		23.3	%	Property management expense	22,385		17,886		4,499		25.2	%
General and administrative	General and administrative	19,342		19,828		(486)		(2.5)	%	General and administrative	20,123		19,369		754		3.9	%
Interest expense	Interest expense	74,840		80,764		(5,924)		(7.3)	%	Interest expense	76,454		79,370		(2,916)		(3.7)	%
Depreciation and amortization	Depreciation and amortization	158,572		145,280		13,292		9.1	%	Depreciation and amortization	160,428		150,694		9,734		6.5	%
Impairment and other	Impairment and other	1,355		980		375		38.3	%	Impairment and other	20,004		4,294		15,710		365.9	%
Total expenses	Total expenses	466,603		439,970		26,633		6.1	%	Total expenses	503,181		456,097		47,084		10.3	%

Gains (losses) on investments in equity securities, net	Gains (losses) on investments in equity securities, net	(172)		(7,002)		6,830		97.5	%	Gains (losses) on investments in equity securities, net	(796)		4,319		(5,115)		(118.4)	%
Other, net	Other, net	(3,827)		(1,903)		(1,924)		(101.1)	%	Other, net	(8,372)		(1,508)		(6,864)		(455.2)	%
Gain on sale of property, net of tax	Gain on sale of property, net of tax	27,508		17,919		9,589		53.5	%	Gain on sale of property, net of tax	23,952		13,047		10,905		83.6	%
Income (loss) from investments in unconsolidated joint ventures	Income (loss) from investments in unconsolidated joint ventures	(2,701)		11		(2,712)		N/M		Income (loss) from investments in unconsolidated joint ventures	(849)		202		(1,051)		(520.3)	%

Net income	Net income	$	111,505	$	60,688	$	50,817	83.7	%	Net income	$	79,429	$	69,495	$	9,934	14.3	%

Revenues

For the three months ended ~~June~~September 30, 2022 and 2021, total revenues were ~~$557.3~~$568.7 million and ~~$491.6~~$509.5 million, respectively. Set forth below is a discussion of changes in the individual components of total revenues.

For the three months ended ~~June~~September 30, 2022 and 2021, total portfolio rental revenues and other property income totaled ~~$554.5~~$565.4 million and ~~$490.6~~$508.2 million, respectively, an increase of ~~13.0%~~11.3%, driven by an increase in average monthly rent per occupied home and a ~~2,465~~2,116 home increase between periods in the average number of homes owned, partially offset by a ~~140~~100 bps reduction in ~~occupancy.~~occupancy and a 70 bps increase in bad debt as a percentage of rental revenue between periods. The increase in bad debt is related to protracted time periods to address residents who are not current on their rent. We may continue to experience volatility in our bad debt rate due to the impact of macroeconomic factors and changes in rental assistance programs.

Average occupancy for the three months ended ~~June~~September 30, 2022 and 2021 for the total portfolio was ~~96.2%~~96.0% and ~~97.6%~~97.0%, respectively. Average monthly rent per occupied home for the total portfolio for the three months ended ~~June~~September 30, 2022 and 2021 was ~~$2,132~~$2,189 and ~~$1,943,~~$1,991, respectively, a ~~9.7%~~9.9% increase. For our Same Store portfolio, average occupancy was ~~98.0%~~97.5% and ~~98.4%~~98.1% for the three months ended ~~June~~September 30, 2022 and 2021, respectively, and average

monthly rent per occupied home for the three months ended ~~June~~September 30, 2022 and 2021 was ~~$2,124~~$2,181 and ~~$1,942,~~$1,989, respectively, a ~~9.4%~~9.7% increase.

The annualized turnover rate for the Same Store portfolio for the three months ended ~~June~~September 30, 2022 and 2021 was ~~23.3%~~24.8% and ~~27.0%~~25.2%, respectively. For the Same Store portfolio, an average home remained unoccupied for 3235 and 2325 days between residents for the three months ended ~~June~~September 30, 2022 and 2021, respectively. The decrease in annualized turnover rate only partially offset the increase in days to re-resident resulting in an overall decrease in average occupancy on a year over year basis.

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 10.2% and 7.7% for the three months ended September 30, 2022 and 2021, respectively, and new lease net effective rental rate growth for the total portfolio averaged 15.2% and 18.3% for the three months ended September 30, 2022 and 2021, respectively. For our Same Store portfolio, renewal lease net effective rental rate growth averaged 10.2% and 7.7% for the three months ended September 30, 2022 and 2021, respectively, and new lease net effective rental rate growth averaged 15.6% and 18.3% for the three months ended September 30, 2022 and 2021, respectively.

Other property income for the three months ended September 30, 2022 increased compared to September 30, 2021, primarily due to increased utility billbacks as new leases are entered into, increased collections of late fees, and enhanced ancillary revenue programs, among other things.

For the three months ended September 30, 2022 and 2021, management fee revenues totaled $3.3 million and $1.4 million, respectively. These fees increased as a result of the formation of new joint ventures and an increase in the number of homes generating revenues within our joint venture investments.

Expenses

For the three months ended September 30, 2022 and 2021, total expenses were $503.2 million and $456.1 million, respectively. Set forth below is a discussion of changes in the individual components of total expenses.

For the three months ended September 30, 2022, property operating and maintenance expense increased to $203.8 million from $184.5 million for the three months ended September 30, 2021. In addition to a 2,116 home increase in the average number of homes owned between periods, increases in property taxes, repairs and maintenance expense, utilities, and property administrative costs contributed to the overall 10.5% net increase in property operating and maintenance expense.

Property management expense and general and administrative expense increased to $42.5 million from $37.3 million for the three months ended September 30, 2022 and 2021, respectively. The increase is primarily due to increased property management expense, including personnel and technology costs related to expansion of our platform that provides services to both our wholly owned portfolio and our joint venture investments.

Interest expense decreased from $79.4 million for the three months ended September 30, 2021 to $76.5 million for the three months ended September 30, 2022. The decrease in interest expense was primarily due to refinancing activities since September 30, 2021. The decrease in gross debt outstanding of $48.8 million from September 30, 2021 to September 30, 2022 was partially offset by a 9 bps increase in our weighted average interest rate at each period end.

Depreciation and amortization expense increased to $160.4 million for the three months ended September 30, 2022 from $150.7 million for the three months ended September 30, 2021 due to an increase in cumulative capital expenditures and an increase in the average number of homes owned during the three months ended September 30, 2022 compared to the three months ended September 30, 2021.

Impairment and other expenses were $20.0 million and $4.3 million for the three months ended September 30, 2022 and 2021, respectively. During the three months ended ~~June~~September 30, 2022, impairment and other expenses were comprised of impairment losses of $0.1 million on our single-family residential properties and net casualty losses of $19.9 million which include an accrual of $19.0 million for estimated losses and damages related to Hurricane Ian. During the three months ended September 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 $4.2 million.

Gains (Losses) on Investments in Equity Securities, net

For the three months ended September 30, 2022, gains (losses) on investments in equity securities, net was comprised of net unrealized losses from marking investments still held at period end to market. For the three months ended September 30, 2021, $4.3 million of gains (losses) on investments in equity securities, net was comprised of $14.2 million of realized gains from the sale of equity securities, net of $9.9 million of unrealized losses from reversals of previously recorded unrealized gains on the sold equity securities and marking investments that have a readily determinable fair value to market as of September 30, 2021.

Other, net

Other, net was $8.4 million for the three months ended September 30, 2022 compared to $1.5 million for the three months ended September 30, 2021, primarily due to a global settlement of a multistate putative class action regarding resident late fees in 2022 and other increases in administrative costs between those periods. The global settlement remains subject to court approval.

Gain on Sale of Property, net of tax

Gain on sale of property, net of tax was $24.0 million and $13.0 million for the three months ended September 30, 2022 and 2021, respectively. The primary driver of the increase was an increase in disposition proceeds received per home between periods and an increase in the number of homes sold from 145 for the three months ended September 30, 2021 to 189 for the three months ended September 30, 2022.

Income (Loss) from Investments in Unconsolidated Joint Ventures

Our share of equity in earnings and/or (losses) from unconsolidated joint ventures was a loss of $0.8 million for the three months ended September 30, 2022 compared to a gain of $0.2 million for the three months ended September 30, 2021. This change is a result of the formation of and commencement of operations in new joint ventures, an increase in the number of homes within our joint venture investments, and the incurrence of interest expense on new financing arrangements within the joint venture investments. These increased costs, including a $1.3 million increase in our share of depreciation expense year over year, were partially offset by a non-cash increase in the fair value of underlying derivative instruments for certain of the joint ventures. Our share of this fair value change was $2.4 million for the three months ended September 30, 2022.

Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021

The following table sets forth a comparison of the results of operations for the nine months ended September 30, 2022 and 2021:


	For the Nine Months Ended September 30,

($ in thousands)	2022		2021		$ Change		% Change
Revenues:
Rental revenues and other property income	$	1,650,131	$	1,473,250	$	176,881	12.0	%
Management fee revenues	8,154		3,140		5,014		159.7	%
Total revenues	1,658,285		1,476,390		181,895		12.3	%

Expenses:
Property operating and maintenance	576,736		528,279		48,457		9.2	%
Property management expense	65,166		51,424		13,742		26.7	%
General and administrative	57,104		56,147		957		1.7	%
Interest expense	225,683		243,540		(17,857)		(7.3)	%
Depreciation and amortization	474,796		440,475		34,321		7.8	%
Impairment and other	22,874		5,630		17,244		306.3	%
Total expenses	1,422,359		1,325,495		96,864		7.3	%

Gains (losses) on investments in equity securities, net	(4,000)		(5,823)		1,823		31.3	%
Other, net	(11,605)		(3,181)		(8,424)		(264.8)	%
Gain on sale of property, net of tax	69,486		45,450		24,036		52.9	%
Income (loss) from investments in unconsolidated joint ventures	(5,870)		564		(6,434)		N/M

Net income	$	283,937	$	187,905	$	96,032	51.1	%

Revenues

For the nine months ended September 30, 2022 and 2021, total revenues were $1,658.3 million and $1,476.4 million, respectively. Set forth below is a discussion of changes in the individual components of total revenues.

For the nine months ended September 30, 2022 and 2021, total portfolio rental revenues and other property income totaled $1,650.1 million and $1,473.3 million, respectively, an increase of 12.0%, driven by an increase in average monthly rent per occupied home and a 2,312 home increase between periods in the average number of homes owned, partially offset by a 130 bps reduction in occupancy.

Average occupancy for the nine months ended September 30, 2022 and 2021 for the total portfolio was 96.0% and 97.3%, respectively. Average monthly rent per occupied home for the total portfolio for the nine months ended September 30, 2022 and 2021 was $2,133 and $1,950, respectively, a 9.4% increase. For our Same Store portfolio, average occupancy was 97.9% and 98.3% for the nine months ended September 30, 2022 and 2021, respectively, and average monthly rent per occupied home for the nine months ended September 30, 2022 and 2021 was $2,126 and $1,948, respectively, a 9.1% increase.

The annualized turnover rate for the Same Store portfolio for the nine months ended September 30, 2022 and 2021 was 22.1% and 24.6%, respectively. For the Same Store portfolio, an average home remained unoccupied for 35 and 25 days between residents for the nine months ended September 30, 2022 and 2021, respectively. The decrease in annualized turnover only partially offset the increase in days to re-resident resulting in an overall decrease in average occupancy on a year over year basis. During the nine months ended September 30, 2021, our turnover rate may have been impacted by the effects of the COVID-19 pandemic (e.g., eviction moratoriums and residents who were not inclined to relocate during a pandemic). These moratoriums have now generally been lifted in the vast majority of our markets.

Renewal lease net effective rental rate growth for the total portfolio averaged ~~10.2%~~10.0% and ~~5.8%~~6.0% for the ~~three~~nine months ended ~~June~~September 30, 2022 and 2021, respectively, and new lease net effective rental rate growth for the total portfolio averaged ~~16.3%~~15.4% and ~~13.8%~~13.6% for the ~~three~~nine months ended ~~June~~September 30, 2022 and 2021, respectively. For our Same Store portfolio, renewal lease net effective rental rate growth averaged ~~10.2%~~10.0% and ~~5.8%~~6.1% for the ~~three~~nine months ended ~~June~~September 30, 2022 and 2021, respectively, and new lease net effective rental rate growth averaged ~~16.7%~~15.7% and 13.7% for the ~~three~~nine months ended ~~June~~September 30, 2022 and 2021, respectively.

Other property income for the ~~three~~nine months ended ~~June~~September 30, 2022 increased compared to ~~June~~September 30, 2021, primarily due to ~~increased collections of late fees,~~ increased utility billbacks as new leases are entered into, increased collections of late fees, and enhanced ancillary revenue programs, among other things.

For the ~~three~~nine months ended ~~June~~September 30, 2022 and 2021, management fee revenues totaled ~~$2.8~~$8.2 million and ~~$1.0~~$3.1 million, respectively. These fees increased as a result of the formation of new joint ventures and an increase in the number of homes generating revenues within our joint venture investments.

Expenses

For the ~~three~~nine months ended ~~June~~September 30, 2022 and 2021, total expenses were ~~$466.6~~$1,422.4 million and ~~$440.0 million, respectively. Set forth below is a discussion of changes in the individual components of total expenses.~~

For the three months ended June 30, 2022, property operating and maintenance expense increased to $190.7 million from $175.4 million for the three months ended June 30, 2021. In addition to a 2,465 home increase in the average number of homes owned between periods, increases in property taxes, repairs and maintenance expense, utilities, and property administrative costs contributed to the overall 8.7% net increase in property operating and maintenance expense.

Property management expense and general and administrative expense increased to $41.2 million from $37.5 million for the three months ended June 30, 2022 and 2021, respectively. The increase is primarily due to increased property management expense, including personnel and technology costs related to expansion of our platform that provides services to both our wholly owned portfolio and our joint venture investments.

~~Interest expense~~ ~~decreased~~ ~~from $80.8 million for the three months ended June 30, 2021 to $74.8 million for the three months ended June 30, 2022. The decrease in interest expense was primarily~~ ~~due to refinancing activities since June 30, 2021. Gross debt outstanding decreased by $231.6 million from June 30, 2021 to June 30, 2022.~~

Depreciation and amortization expense increased to $158.6 million for the three months ended June 30, 2022 from $145.3 million for the three months ended June 30, 2021 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, 2022 compared to the three months ended June 30, 2021.

Impairment and other expenses were $1.4 million and $1.0 million for the three months ended June 30, 2022 and 2021, respectively. During the three months ended June 30, 2022, impairment and other expenses were comprised primarily of net casualty losses. 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.

~~Gains (Losses) on Investments in Equity Securities, net~~

For the three months ended June 30, 2022, gains (losses) on investments in equity securities, net was comprised of net unrealized losses from marking investments still held at period end to market. For the three months ended June 30, 2021, gains (losses) on investments in equity securities, net totaling $7.0 million was comprised of $8.9 million of unrealized losses from reversals of previously recorded unrealized gains on equity securities sold during the period and marking investments still held at period end to market offset by a $1.9 million gain from the sale of equity securities compared to the actual amount originally invested.

~~Other, net~~

Other, net was $3.8 million for the three months ended June 30, 2022 compared to $1.9 million for the three months ended June 30, 2021, due to increases in administrative costs between those periods.

~~Gain on Sale of Property, net of tax~~

~~Gain on sale of property, net of tax was $27.5 million and $17.9 million for the three months ended June 30, 2022 and 2021, respectively.~~ The primary driver of the increase was an increase in disposition proceeds received per home between periods, partially offset by a decrease in the number of homes sold from 212 for the three months ended June 30, 2021 to 176 for the three months ended June 30, 2022.

~~Income (Loss) from Investments in Unconsolidated Joint Ventures~~

Our share of equity in earnings and/or (losses) from unconsolidated joint ventures was a loss of $2.7 million for the three months ended June 30, 2022 compared to a de minimis balance for the three months ended June 30, 2021. This change is primarily due to commencement of operations in certain of our joint ventures, including a $0.9 million increase in our share of depreciation expense between periods and start up costs for recently formed joint ventures.

~~Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021~~

~~The following table sets forth a comparison of the results of operations for the six months ended June 30, 2022 and 2021:~~

For the Six Months
Ended June 30,
($ in thousands) 2022 2021 $ Change % Change
Revenues:
Rental revenues and other property income $ 1,084,740 $ 965,072 $ 119,668 12.4 %
Management fee revenues 4,870 1,786 3,084 172.7 %
Total revenues 1,089,610 966,858 122,752 12.7 %
Expenses:
Property operating and maintenance 372,949 343,795 29,154 8.5 %
Property management expense 42,781 33,538 9,243 27.6 %
General and administrative 36,981 36,778 203 0.6 %
Interest expense 149,229 164,170 (14,941) (9.1) %
Depreciation and amortization 314,368 289,781 24,587 8.5 %
Impairment and other 2,870 1,336 1,534 114.8 %
Total expenses 919,178 869,398 49,780 5.7 %
Gains (losses) on investments in equity securities, net (3,204) (10,142) 6,938 68.4 %
Other, net (3,233) (1,673) (1,560) (93.2) %
Gain on sale of property, net of tax 45,534 32,403 13,131 40.5 %
Income (loss) from investments in unconsolidated joint ventures (5,021) 362 (5,383) N/M
Net income $ 204,508 $ 118,410 $ 86,098 72.7 %

~~Revenues~~

For the six months ended June 30, 2022 and 2021, total revenues were $1,089.6 million and $966.9 million, respectively. Set forth below is a discussion of changes in the individual components of total revenues.

~~For the six months ended June 30, 2022 and 2021, total portfolio rental revenues and other property income totaled $1,084.7 million and $965.1 million, respectively,~~ ~~an increase~~ ~~of 12.4%, driven by an increase in average monthly rent per occupied home and a 2,411 home~~ ~~increase between periods in the average number of homes owned, partially offset by a 150 bps reduction in occupancy.~~

Average occupancy for the six months ended June 30, 2022 and 2021 for the total portfolio was 96.0% and 97.5%, respectively. Average monthly rent per occupied home for the total portfolio for the six months ended June 30, 2022 and 2021 was $2,105 and $1,930, respectively, a 9.1% increase. For our Same Store portfolio, average occupancy was 98.1% and 98.4% for the six months ended June 30, 2022 and 2021, respectively, and average monthly rent per occupied home for the six months ended June 30, 2022 and 2021 was $2,099 and $1,928, respectively, an 8.9% increase.

The annualized turnover rate for the Same Store portfolio for the six months ended June 30, 2022 and 2021 was 20.7% and 24.2%, respectively. For the Same Store portfolio, an average home remained unoccupied for 35 and 26 days between residents for the six months ended June 30, 2022 and 2021, respectively. The decrease in annualized turnover only partially offset the increase in days to re-resident resulting in an overall decrease in average occupancy on a year over year basis. During the three months ended June 30, 2021, our turnover rate may have been impacted by the effects of the COVID-19 pandemic (e.g., eviction moratoriums and residents who were not inclined to relocate during a pandemic). These moratoriums have now generally been lifted in the vast majority of our markets.

Renewal lease net effective rental rate growth for the total portfolio averaged 9.9% and 5.1% for the six months ended June 30, 2022 and 2021, respectively, and new lease net effective rental rate growth for the total portfolio averaged 15.6% and 11.2% for the six months ended June 30, 2022 and 2021, respectively. For our Same Store portfolio, renewal lease net effective rental rate growth averaged 10.0% and 5.1% for the six months ended June 30, 2022 and 2021, respectively, and new lease net effective rental rate growth averaged 15.8% and 11.1% for the six months ended June 30, 2022 and 2021, respectively.

Other property income for the six months ended June 30, 2022 increased compared to June 30, 2021, due to increased collections of late fees, increased utility billbacks as new leases are entered into, and enhanced ancillary revenue programs, among other things.

For the six months ended June 30, 2022 and 2021, management fee revenues totaled $4.9 million and $1.8 million, respectively. These fees increased as a result of the formation of new joint ventures and an increase in the number of homes generating revenues within our joint venture investments.

~~Expenses~~

~~For the six months ended June 30, 2022 and 2021, total expenses were $919.2 million and $869.4~~$1,325.5 million, respectively. Set forth below is a discussion of changes in the individual components of total expenses.

For the ~~six~~nine months ended ~~June~~September 30, 2022, property operating and maintenance expense increased to ~~$372.9~~$576.7 million from ~~$343.8~~$528.3 million for the ~~six~~nine months ended ~~June~~September 30, 2021. In addition to a ~~2,411~~2,312 home increase between periods in the average number of homes owned, increases in property taxes, repairs and maintenance, utilities, and property administrative costs resulted in the overall ~~8.5%~~9.2% net increase in property operating and maintenance expense.

Property management expense and general and administrative expense increased to ~~$79.8~~$122.3 million from ~~$70.3~~$107.6 million for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, respectively. The increase is primarily due to increased property management expense, including personnel and technology costs related to expansion of our platform that provides services to both our wholly owned portfolio and our joint venture investments.

Interest expense decreased from ~~$164.2~~$243.5 million for the ~~six~~nine months ended ~~June~~September 30, 2021 to ~~$149.2~~$225.7 million for the ~~six~~nine months ended ~~June~~September 30, 2022. The decrease in interest expense was primarily due to refinancing activities since ~~June~~September 30, 2021. ~~Gross~~The decrease in gross debt outstanding ~~decreased by~~ ~~$231.6~~of $48.8 million from ~~June~~September 30, 2021 to ~~June~~September 30, ~~2022. Additionally, the spread on~~2022 was partially offset by a 9 bps increase in our ~~2020 term loan facility decreased by 55 bps in April 2021 as a result of achieving an investment grade rating.~~weighted average interest rate at each period end.

Depreciation and amortization expense increased to ~~$314.4~~$474.8 million for the ~~six~~nine months ended ~~June~~September 30, 2022 from ~~$289.8~~$440.5 million for the ~~six~~nine months ended ~~June~~September 30, 2021 due to an increase in cumulative capital expenditures and an increase in the average number of homes owned during the ~~six~~nine months ended ~~June~~September 30, 2022 compared to the ~~six~~nine months ended ~~June~~September 30, 2021.

Impairment and other expenses were ~~$2.9~~$22.9 million and ~~$1.3~~$5.6 million for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, respectively. During the ~~six~~nine months ended ~~June~~September 30, 2022, impairment and other expenses were comprised of net casualty losses of ~~$2.7~~$22.6 million, which include an accrual of $19.0 million for estimated losses and damages related to Hurricane Ian, and impairment losses of ~~$0.1~~$0.2 million on our single-family residential properties. During the ~~six~~nine months ended ~~June~~September 30, 2021, impairment and other expenses were comprised of impairment losses of ~~$0.5~~$0.6 million on our single-family residential properties and net casualty losses of ~~$0.8~~$5.0 million.

Gains (Losses) on Investments in Equity Securities, net

For the ~~six~~nine months ended ~~June~~September 30, 2022, losses on investments in equity securities, net of ~~$3.2~~$4.0 million was comprised of ~~of $6.5~~$7.3 million of unrealized losses from reversals of previously recorded unrealized gains on equity securities sold during the period and marking investments still held at period end to market, partially offset by a $3.3 million gain from the sale of equity securities compared to the actual amount originally invested. For the ~~six~~nine months ended ~~June~~September 30, 2021, $5.8 million of losses on investments in equity securities, net ~~of $10.1 million~~ was comprised of ~~$12.0~~$21.9 million of unrealized losses from reversals of previously recorded unrealized gains on sold equity securities ~~sold during the period~~ and marking investments ~~still held at period end~~that have a readily determinable fair value to market as of September 30, 2021, partially offset by ~~a $1.9~~$16.1 million ~~gain~~of realized gains from the sale of equity ~~securities compared to the actual amount originally invested.~~securities.

Other, net

Other, net increased to $11.6 million for the nine months ended September 30, 2022 from $3.2 million for the ~~six~~nine months ended ~~June 30, 2022 from $1.7 million for the six months ended June~~September 30, 2021, primarily due to a global settlement of a multistate putative class action regarding resident late fees in 2022 and other increases in administrative costs between those periods. The global settlement remains subject to court approval.

Gain on Sale of Property, net of tax

Gain on sale of property, net of tax was ~~$45.5~~$69.5 million and ~~$32.4~~$45.5 million for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, respectively. The primary driver of the increase was an increase in disposition proceeds received per home between periods, partially offset by a decrease in the number of homes sold from ~~460~~605 for the ~~six~~nine months ended ~~June~~September 30, 2021 to ~~317~~506 for the ~~six~~nine months ended ~~June~~September 30, 2022.

Income (Loss) from Investments in Unconsolidated Joint Ventures

Our share of equity in earnings and/or (losses) from unconsolidated joint ventures was a loss of ~~$5.0~~$5.9 million for the ~~six~~nine months ended ~~June~~September 30, 2022 compared to income of ~~$0.4~~$0.6 million for the ~~six~~nine months ended ~~June~~September 30, 2021. This change is ~~primarily due to~~a result of the formation of and commencement of operations in ~~certain~~new joint ventures, an increase in the number of homes within our joint ~~ventures,~~venture investments, and the incurrence of interest expense on new financing arrangements within the joint venture investments. These increased costs, including a ~~$1.4~~$2.7 million increase in our share of depreciation expense ~~between periods~~year over year, were partially offset by a non-cash increase in the fair value of underlying derivative instruments for certain of the joint ventures. Our share of this fair value change was $2.5 million for the nine months ended September 30, 2022 and ~~start up costs for recently formed joint ventures.~~2021.

Liquidity and Capital Resources

Our liquidity and capital resources as of ~~June~~September 30, 2022 and December 31, 2021 include unrestricted cash and cash equivalents of ~~$272.7~~$300.3 million and $610.2 million, respectively, a ~~55.3%~~50.8% decrease primarily due to the funding of acquisitions of single-family residential properties and investments in our joint ventures and net repayments of indebtedness, partially offset by issuance of common stock as further described below.

In addition to our day-to-day business operations, including ongoing acquisitions of and investments in single-family residential properties, funding of commitments, and quarterly dividend and distribution payments, the following activity has occurred since December 31, 2021:

•Through ~~June~~September 30, 2022, we sold 2,438,927 shares of our common stock under our 2021 ATM Equity Program, ~~respectively,~~ generating net proceeds of $98.4 million.

•In March 2022, we entered into an agreement with Rockpoint Group, L.L.C. to form a joint venture that will acquire homes in premium locations and at higher price points relative to our other investments in single-family residential properties (the “2022 Rockpoint JV”). As of ~~June~~September 30, 2022, we have funded ~~$5.0~~$10.0 million to the 2022 Rockpoint JV, and our remaining equity commitment is ~~$45.0~~$40.0 million.

•In January 2022, we settled $141.5 million of the 2022 Convertible Notes through the issuance of 6,216,261 shares of our common stock and a cash payment of $0.3 million.

•On March 25, 2022, we priced a public offering of $600.0 million aggregate principal amount of 4.15% Senior Notes which mature in April 2032; and on April 5, 2022, we closed the offering and issued the related notes (the “2032 Unsecured Notes”).

•On June 22, 2022, we entered into the 2022 Term Loan Facility that provides $725.0 million of borrowing capacity, consisting of a $150.0 million initial term loan and up to three delayed draw term loans totaling $575.0 million which may be drawn during the six month period following the effective date of the 2022 Term Loan Agreement. The loans mature on June 22, 2029.

•During the ~~three months ended June 30,~~first half of 2022, we used the proceeds from the 2032 Unsecured Notes and the 2022 Term Loan Facility to make voluntary prepayments of the then-outstanding balances of IH 2018-2 and IH 2018-3, which resulted in a release of each loan’s collateral.

•As a result of Hurricane Ian's impact to some of our homes in Florida and the Carolinas, we recorded an estimated $19.0 million casualty loss expense for hurricane-related losses and damages during the three months ended September 30, 2022. A portion of our losses may be recoverable through insurance policies that provide coverage for wind, flood, and business interruption, subject to deductibles and limits.

As of ~~June~~September 30, 2022, our $1,000.0 million revolving facility (the “Revolving Facility”) remains undrawn, and there are no restrictions on our ability to draw additional funds thereunder provided we remain in compliance with all covenants. As of ~~June~~September 30, 2022, we also have $575.0 million of undrawn capacity on the 2022 Term Loan Facility. We have no debt reaching final maturity until March 2025, provided all extension options are exercised.

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 general economic conditions, including rising inflation and interest rates, as detailed in Part I. Item 1A. “Risk Factors” of our Annual Report on Form 10-K.

Long-Term Debt Strategy

The following table summarizes certain information about our debt obligations as of ~~June~~September 30, 2022 ($ in thousands):


Debt Instruments(1)	Debt Instruments(1)	Balance (Gross of Retained Certificates and Unamortized Discounts)		Balance (Net of Retained Certificates)		Weighted Average Interest Rate	Weighted Average Years to Maturity(2)	Amount Freely Prepayable (Gross)		Debt Instruments(1)	Balance (Gross of Retained Certificates and Unamortized Discounts)		Balance (Net of Retained Certificates)		Weighted Average Interest Rate	Weighted Average Years to Maturity(2)	Amount Freely Prepayable (Gross)
Secured:	Secured:									Secured:
IH 2017-1(3)	IH 2017-1(3)	$	994,650	$	939,150	4.23%	4.9	$	—	IH 2017-1(3)	$	994,538	$	939,038	4.23%	4.7	$	—
IH 2018-1(4)	IH 2018-1(4)	563,116		534,931		L + 88 bps	2.7	563,116		IH 2018-1(4)	560,459		532,419		L + 88 bps	2.4	560,459
IH 2018-4(4)	IH 2018-4(4)	664,566		631,311		L + 122 bps	3.5	664,566		IH 2018-4(4)	662,848		629,680		L + 123 bps	3.3	662,848
Secured Term Loan(5)	Secured Term Loan(5)	403,363		403,363		3.59%	8.9	—		Secured Term Loan(5)	403,363		403,363		3.59%	8.7	—
Total secured(6)	Total secured(6)	2,625,695		$	2,508,755	4.02%	4.7	1,227,682		Total secured(6)	2,621,208		$	2,504,500	4.02%	4.5	1,223,307

Unsecured:	Unsecured:									Unsecured:

2020 Term Loan Facility(7)	2020 Term Loan Facility(7)	$	2,500,000			L + 100 bps	3.6	$	2,500,000	2020 Term Loan Facility(7)	$	2,500,000			L + 100 bps	3.3	$	2,500,000
2022 Term Loan Facility(8)	2022 Term Loan Facility(8)	150,000				S + 124 bps	7.0	—		2022 Term Loan Facility(8)	150,000				S + 124 bps	6.7	—
Revolving Facility(7)	Revolving Facility(7)	—				L + 89 bps	3.6	—		Revolving Facility(7)	—				L + 89 bps	3.3	—
Unsecured Notes — May 2028	Unsecured Notes — May 2028	150,000				2.46%	5.9	—		Unsecured Notes — May 2028	150,000				2.46%	5.7	—
Unsecured Notes — November 2028	Unsecured Notes — November 2028	600,000				2.30%	6.4	—		Unsecured Notes — November 2028	600,000				2.30%	6.1	—
Unsecured Notes — August 2031	Unsecured Notes — August 2031	650,000				2.00%	9.1	—		Unsecured Notes — August 2031	650,000				2.00%	8.9	—
Unsecured Notes — April 2032	Unsecured Notes — April 2032	600,000				4.15%	9.8	—		Unsecured Notes — April 2032	600,000				4.15%	9.5	—
Unsecured Notes — January 2034	Unsecured Notes — January 2034	400,000				2.70%	11.6	—		Unsecured Notes — January 2034	400,000				2.70%	11.3	—
Unsecured Notes — May 2036	Unsecured Notes — May 2036	150,000				3.18%	13.9	—		Unsecured Notes — May 2036	150,000				3.18%	13.7	—
Total unsecured(6)	Total unsecured(6)	5,200,000				3.36%	6.4	2,500,000		Total unsecured(6)	5,200,000				3.37%	6.1	2,500,000

Total debt(6)	Total debt(6)	7,825,695				3.58%	5.8	$	3,727,682	Total debt(6)	7,821,208				3.59%	5.6	$	3,723,307
Unamortized discounts	Unamortized discounts	(14,316)								Unamortized discounts	(13,917)
Deferred financing costs, net	Deferred financing costs, net	(57,448)								Deferred financing costs, net	(54,260)
Total debt per balance sheet	Total debt per balance sheet	7,753,931								Total debt per balance sheet	7,753,031
Retained certificates	Retained certificates	(116,940)								Retained certificates	(116,706)
Cash and restricted cash, excluding security deposits and letters of credit	Cash and restricted cash, excluding security deposits and letters of credit	(306,049)								Cash and restricted cash, excluding security deposits and letters of credit	(340,301)
Deferred financing costs, net	Deferred financing costs, net	57,448								Deferred financing costs, net	54,260
Unamortized discounts	Unamortized discounts	14,316								Unamortized discounts	13,917
Net debt	Net debt	$	7,402,706							Net debt	$	7,364,201

(1)For detailed information about and definition of each of our financing arrangements see Part I. Item 1. “Financial Statements —Note 7 of Notes to Condensed Consolidated Financial Statements.” For information about our derivative instruments that hedge floating rate debt, see Part I. Item 1. “Financial Statements — Note 8 of Notes to Condensed Consolidated Financial Statements.”

(2)Weighted average years to maturity assumes all extension options are exercised, which are subject to certain conditions being met.

(3)IH 2017-1 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)Interest rates are based on a weighted average spread over ~~LIBOR (or~~the London Interbank Offer Rate (“LIBOR”), or a comparable or successor rate as provided for in our loan ~~agreements),~~agreements, plus applicable servicing fees; as of ~~June~~September 30, 2022, LIBOR was ~~1.79%~~3.14%.

(5)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.

(6)For secured debt, unsecured debt, and total debt, the weighted average interest rate is calculated based on ~~June~~September 30, 2022, LIBOR of ~~1.79%~~3.14% or the Secured Overnight Financing Rate (“SOFR”) adjusted for a 0.10% credit spread adjustment (“Adjusted ~~SOFR~~SOFR”) of ~~1.79%~~3.14%, as appropriate, and includes the impact of interest rate swap agreements effective as of that date.

(7)Interest rate is based on LIBOR plus an applicable margin. As of ~~June~~September 30, 2022, LIBOR was ~~1.79%~~3.14%.

(8)Interest rate is based on ~~SOFR, adjusted for a 0.10% credit spread adjustment (“~~Adjusted ~~SOFR”),~~SOFR plus the applicable margin. As of ~~June~~September 30, 2022, Adjusted SOFR was ~~1.79%~~3.14%.

As part of our long-term debt strategy, our goal is to improve our credit ratings, and, over time, we generally intend to target net debt that is approximately 5.5 to 6.0 times trailing twelve months Adjusted EBITDAre (see “— Non-GAAP Measures — EBITDA, ~~EBITDAre,~~EBITDAre, and Adjusted ~~EBITDAre”~~EBITDAre”), secured debt that is less than 20% of gross assets, and unencumbered assets that are 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 2025 and 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 adhering to our targets in the short or medium term or at all, or that we will not change our strategy or targets in the future. We may from time to time fall outside of our target ranges. 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 Related 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:

•acquisition of homes currently under contract;

•renovation of newly-acquired homes;

•repairs of homes damaged by Hurricane Ian;

•HOA fees (as applicable), property taxes, insurance premiums, and the ongoing maintenance of our homes;

•property management and general and administrative expenses;

•interest expense;

•dividend payments to our equity investors; and

•required contributions to our joint ventures.

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. Additionally, we have guaranteed the funding of certain tax, insurance, and non-conforming property reserves related to the financing of ~~one~~certain of our joint ventures. We do not expect this guarantee to have a material current or future effect on our liquidity. See Part I. Item 1. “Financial Statements — Note 5 of Notes to Consolidated Financial Statements” for additional information about our investments in unconsolidated joint ventures.

Overall macroeconomic conditions, including rising inflation and interest rates, and the ongoing 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 debt instrument under whose loan agreement such 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 or the 2022 Term Loan Facility, which had an undrawn ~~balance~~balances of $1,000.0 million and $575.0 million, respectively, as of ~~June~~September 30, 2022.

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 and interest payments 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.

Cash Flows

~~Six~~Nine Months Ended ~~June~~September 30, 2022 Compared to ~~Six~~Nine Months Ended ~~June~~September 30, 2021

The following table summarizes our cash flows for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021:


		For the Six Months Ended June 30,									For the Nine Months Ended September 30,

($ in thousands)	($ in thousands)	2022		2021		$ Change		% Change		($ in thousands)	2022		2021		$ Change		% Change
Net cash provided by operating activities	Net cash provided by operating activities	$	552,057	$	470,101	$	81,956	17.4	%	Net cash provided by operating activities	$	903,946	$	782,314	$	121,632	15.5	%
Net cash used in investing activities	Net cash used in investing activities	(580,684)		(282,875)		(297,809)		(105.3)	%	Net cash used in investing activities	(756,089)		(728,310)		(27,779)		(3.8)	%
Net cash used in financing activities		(310,635)		(230,850)		(79,785)		(34.6)	%
Net cash provided by (used in) financing activities										Net cash provided by (used in) financing activities	(450,819)		355,378		(806,197)		(226.9)	%
Change in cash, cash equivalents, and restricted cash	Change in cash, cash equivalents, and restricted cash	$	(339,262)	$	(43,624)	$	(295,638)	(677.7)	%	Change in cash, cash equivalents, and restricted cash	$	(302,962)	$	409,382	$	(712,344)	(174.0)	%

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 ~~$552.1~~$903.9 million and ~~$470.1~~$782.3 million for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, respectively, an increase of ~~17.4%~~15.5%. The increase in cash provided by operating activities is primarily due to (1) improved operational profitability, including a ~~$93.6~~$133.4 million increase in total revenues net of property operating and maintenance expense from period to period, partially offset by (2) a net ~~$6.9~~$20.0 million use of cash between periods from changes in operating assets and liabilities.

Investing Activities

Net cash used in investing activities consists primarily of the acquisition costs of homes, capital improvements, proceeds from property sales, and investments in our joint ventures. Net cash used in investing activities was ~~$580.7~~$756.1 million and ~~$282.9~~$728.3 million for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, respectively, an increase of ~~$297.8~~$27.8 million. The increase in net cash used in investing activities resulted primarily from the combined effect of the following significant changes in cash flows during the ~~six~~nine months ended ~~June~~September 30, 2022 compared to the ~~six~~nine months ended ~~June~~September 30, 2021: (1) an increase in cash used for investments in joint ventures; (2) ~~an increase~~a decrease in cash used for the acquisition ~~and~~of homes (3) an increase in initial renovations of homes; and ~~(3) a decrease~~(4) an increase in capital expenditures~~proceeds from the sale of homes.~~. More specifically, investments in joint ventures increased $~~112.6~~141.6 million as a result of the formation of new joint ventures and increased acquisition activity in our existing joint ventures during the ~~six~~nine months ended ~~June~~September 30, 2022 compared to the ~~six~~nine months ended ~~June~~September 30, 2021. Acquisition ~~and initial renovation~~ spend ~~increased $145.7~~decreased $234.6 million due to an increase in the number of homes acquired from 895 during the six months ended June 30, 2021 to 1,029 homes acquired during the six months ended June 30, 2022, an increase in average cost per home, and ongoing renovations of previously acquired homes. Proceeds from sales of homes decreased $22.1 million ~~from the six months ended June 30, 2021 to the six months ended June 30, 2022~~ due to a decrease in the number of homes ~~sold~~acquired from ~~460 to 317, respectively, partially offset by an increase in proceeds per home.~~

1,977 during the nine months ended September 30, 2021 to 1,273 homes acquired during the nine months ended September 30, 2022. Renovation spend increased by $52.4 million due to more renovations being completed in during the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021, and capital expenditures increased by $34.6 million year over year due to increased average home count and other increases in costs to maintain per home, including the impact of inflation.

Financing Activities

Net cash ~~used in~~provided by (used in) financing activities was ~~$310.6~~$(450.8) million and ~~$230.9~~$355.4 million for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, respectively. During the ~~six~~nine months ended ~~June~~September 30, 2022, issuances and sales of stock under our 2021 ATM Equity Program generated $98.4 million of net proceeds which were used primarily for acquisitions. During that period, we also issued $598.4 million of unsecured notes and borrowed $150.0 million on a new term loan facility. The proceeds from this financing activity along with cash from operations were used to repay ~~$845.2~~$849.7 million of mortgage loans. During that period, we also made ~~$271.3~~$406.4 million of dividend and distribution payments funded by cash flows from operations and proceeds from home sales. During the ~~six~~nine months ended ~~June~~September 30, 2021, ~~$300.0~~we received $939.6 million of proceeds from the issuance and sale of unsecured notes which along with available cash and proceeds from ~~operations~~sales of homes were used to repay ~~$323.4~~$964.3 million of principal on our mortgage ~~loans.~~ loans, including partial repayments of IH 2017-2, IH 2018-1, IH 2018-2, IH 2018-3, and IH 2018-4. Issuances and sales of stock under our 2019 ATM Equity Program and the 2021 Public Offering generated $693.4 million of net proceeds during the nine months ended September 30, 2021. During that period, we also made ~~$195.0~~$293.8 million of dividend and distribution ~~payments funded by cash flows from operations and proceeds from home sales.~~payments.

Contractual Obligations

Our contractual obligations as of ~~June~~September 30, 2022, consist of the following:


($ in thousands)	($ in thousands)	Total		2022(1)		2023-2024		2025-2026		Thereafter		($ in thousands)	Total		2022(1)		2023-2024		2025-2026		Thereafter
Mortgage loans(2)(3)(4)	Mortgage loans(2)(3)(4)	$	2,542,723	$	38,939	$	155,268	$	1,335,430	$	1,013,086	Mortgage loans(2)(3)(4)	$	2,567,104	$	23,677	$	188,701	$	1,341,753	$	1,012,973
Secured Term Loan(2)(3)	Secured Term Loan(2)(3)	532,717		7,236		28,944		28,944		467,593		Secured Term Loan(2)(3)	529,099		3,618		28,944		28,944		467,593
Unsecured Notes(2)(3)	Unsecured Notes(2)(3)	3,213,083		35,480		141,920		141,920		2,893,763		Unsecured Notes(2)(3)	3,195,343		17,740		141,920		141,920		2,893,763
Term Loan Facilities(2)(3)(4)(5)	Term Loan Facilities(2)(3)(4)(5)	2,943,988		38,516		153,016		2,588,170		164,286		Term Loan Facilities(2)(3)(4)(5)	3,053,403		28,441		225,983		2,629,586		169,393
Revolving Facility(2)(3)(4)(5)	Revolving Facility(2)(3)(4)(5)	7,283		1,022		4,061		2,200		—		Revolving Facility(2)(3)(4)(5)	6,772		511		4,061		2,200		—

Derivative instruments(6)	Derivative instruments(6)	123,380		22,136		87,195		14,049		—		Derivative instruments(6)	(21,543)		(2,169)		(17,053)		(2,321)		—
Purchase commitments(7)	Purchase commitments(7)	90,840		85,930		4,910		—		—		Purchase commitments(7)	52,941		44,433		8,508		—		—
Operating leases	Operating leases	13,413		2,364		7,411		3,138		500		Operating leases	12,659		1,188		7,627		3,344		500
Finance leases	Finance leases	5,006		1,501		3,390		115		—		Finance leases	4,190		671		3,420		99		—
Total	Total	$	9,472,433	$	233,124	$	586,115	$	4,113,966	$	4,539,228	Total	$	9,399,968	$	118,110	$	592,111	$	4,145,525	$	4,544,222

(1)Includes estimated payments for the remaining ~~six~~three months of 2022.

(2)Includes estimated interest payments through the extended maturity date, as applicable, based on the principal amount outstanding as of ~~June~~September 30, 2022.

(3)Interest is calculated at rates in effect as of ~~June~~September 30, 2022, including the indexed rate and any applicable margin, and that rate is held constant until the maturity date. As of ~~June~~September 30, 2022, LIBOR was ~~1.79%~~3.14%, and Adjusted SOFR was ~~1.79%~~3.14%.

(4)Calculated based on the maturity date if we exercise each of the remaining extension options available, which are subject to certain conditions being met. See Part I. Item 1. “Financial Statements — Note 7 of Notes to Consolidated Financial Statements” for a description of maturity dates without consideration of extension options.

(5)Includes the related unused commitment fee, as applicable.

(6)Includes payments (receipts) related to interest rate swap and interest rate cap obligations, calculated using LIBOR as of ~~June~~September 30, 2022, or ~~1.79%~~3.14%.

(7)Represents commitments to acquire ~~216~~125 single-family rental homes. The amounts above do not include commitments pursuant to binding purchase agreements with certain homebuilders for the purchase of ~~2,029~~2,212 homes over the next five years. Estimated remaining commitments under these agreements total approximately ~~$620.0~~$700.0 million as of ~~June~~September 30, 2022.

Additionally, we have commitments, which are not reflected in the table above, to make additional capital contributions to our joint ventures. As of ~~June~~September 30, 2022, our remaining equity commitments to the joint ventures total ~~$173.3~~$128.3 million.

LIBOR Transition

Certain securitizations, the Secured Term Loan, the 2020 Term Loan Facility, and the Revolving Facility (collectively, the “LIBOR-Based Loans”) use one month LIBOR as a benchmark for establishing interest rates. Our derivative instruments are also indexed to one month LIBOR. On March 5, 2021, the Financial Conduct Authority of the United Kingdom, which has statutory powers to require panel banks to contribute to LIBOR, announced that it would cease publication of the one week and two month USD LIBOR immediately after December 31, 2021 and cease publication of the remaining tenors immediately after June 30, 2023. Further, on March 15, 2022, the Consolidated Appropriations Act of 2022, which includes the Adjustable Interest Rate (LIBOR) Act, was signed into law in the United States. This legislation establishes a uniform benchmark replacement process for financial contracts that mature after June 30, 2023 which do not contain clearly defined or practicable fallback provisions. The legislation also creates a safe harbor that shields lenders from litigation if they choose to utilize a replacement rate recommended by the Board of Governors of the Federal Reserve.

Once one month LIBOR is phased out ~~after~~on June 30, 2023, the interest rates for our LIBOR-Based Loans will be indexed to a comparable or successor rate as provided for in our loan agreements. That said, we anticipate the need to work with our lenders to document and effectuate the necessary index changes via the terms of the underlying debt instruments. We will also work with the counterparties to our LIBOR-based swap and cap agreements to adjust each to a comparable or successor rate. Furthermore, we will continue to make the appropriate elections available within ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting to ease the impact of transition from LIBOR to comparable or successor rates on hedge accounting. As more fully described in Part I. Item 1. “Financial Statements —Note 2 of Notes to Condensed Consolidated Financial Statements,” we have and will continue to elect to apply practical expedients related to contract modifications, changes in critical terms, and updates to the designated hedged risk(s) as qualifying changes are made to applicable debt and derivative instruments. 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.

Supplemental Guarantor Information

In March 2020, the SEC adopted amendments to Rule 3-10 of Regulation S-X and created Rule 13-01 to simplify disclosure requirements related to certain registered securities. The amendments became effective on January 4, 2021. INVH, INVH LP, the General Partner, and IH Merger Sub, LLC (“IH Merger Sub”) have filed a registration statement on Form S-3 with the SEC registering, among other securities, debt securities of INVH LP, fully and unconditionally guaranteed, on a joint and several basis, by INVH, the General Partner, and/or IH Merger Sub. As a result of the amendments to Rule 3-10 of Regulation S-X, subsidiary issuers of obligations guaranteed by the parent are not required to provide separate financial statements, provided that the subsidiary obligor is consolidated into the parent company’s consolidated financial statements, the parent guarantee is “full and unconditional” and, subject to certain exceptions as set forth below, the alternative disclosure required by Rule 13-01 is provided, which includes narrative disclosure and summarized financial information. Accordingly, separate consolidated financial statements of INVH LP, the General Partner, and IH Merger Sub have not been presented.

Furthermore, as permitted under Rule 13-01(a)(4)(vi) of Regulation S-X, we have excluded the summarized financial information for the INVH LP, the General Partner, and IH Merger Sub, because the combined assets, liabilities, and results of operations of INVH, INVH LP, the General Partner, and IH Merger Sub are not materially different than the corresponding

amounts in our condensed consolidated financial statements, and management believes such summarized financial information would be repetitive and would not provide incremental value to investors.

Purchase of Outstanding Debt Securities or Loans

As market conditions warrant, we may from time to time seek to purchase our outstanding debt 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. 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.

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 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. 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. We periodically evaluate the appropriateness of our accounting policies in accordance with authoritative guidance. Based on a review of the useful lives of the components of our buildings and improvements, we extended the weighted average useful lives range for depreciation thereof from 7 to 28.5 years to 7 to 32 years. This change was implemented for additions to our single-family residential properties placed in service after January 1, 2022. There were no additional material changes to our critical accounting policies during the ~~six~~nine months ended ~~June~~September 30, 2022.

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 Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources and in assessing performance. Our CODM is the Chief Executive Officer.

Under the provisions 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 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 accretive growth 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; depreciation and 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. Consistent with the Nareit definition, we define EBITDAre as EBITDA, further adjusted for the following: gain on sale of property, net of tax; impairment on depreciated real estate investments; and adjustments for unconsolidated joint ventures.

Adjusted EBITDAre is defined as EBITDAre before the following items: share-based compensation expense; 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 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.

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,					For the Three Months Ended September 30,				For the Nine Months Ended September 30,

($ in thousands)	($ in thousands)	2022		2021		2022		2021		($ in thousands)	2022		2021		2022		2021
Net income available to common stockholders	Net income available to common stockholders	$	110,815	$	60,242	$	203,210	$	117,514	Net income available to common stockholders	$	79,032	$	69,108	$	282,242	$	186,622
Net income available to participating securities	Net income available to participating securities	148		96		368		191		Net income available to participating securities	147		69		515		260
Non-controlling interests	Non-controlling interests	542		350		930		705		Non-controlling interests	250		318		1,180		1,023
Interest expense	Interest expense	74,840		80,764		149,229		164,170		Interest expense	76,454		79,370		225,683		243,540
Interest expense in unconsolidated joint ventures	Interest expense in unconsolidated joint ventures	859		225		1,451		299		Interest expense in unconsolidated joint ventures	(613)		370		838		669
Depreciation and amortization	Depreciation and amortization	158,572		145,280		314,368		289,781		Depreciation and amortization	160,428		150,694		474,796		440,475
Depreciation and amortization of investments in unconsolidated joint ventures	Depreciation and amortization of investments in unconsolidated joint ventures	1,114		246		1,752		350		Depreciation and amortization of investments in unconsolidated joint ventures	1,714		389		3,466		739
EBITDA	EBITDA	346,890		287,203		671,308		573,010		EBITDA	317,412		300,318		988,720		873,328
Gain on sale of property, net of tax	Gain on sale of property, net of tax	(27,508)		(17,919)		(45,534)		(32,403)		Gain on sale of property, net of tax	(23,952)		(13,047)		(69,486)		(45,450)
Impairment on depreciated real estate investments	Impairment on depreciated real estate investments	36		93		137		524		Impairment on depreciated real estate investments	101		126		238		650
Net gain on sale of investments in unconsolidated joint ventures	Net gain on sale of investments in unconsolidated joint ventures	(186)		(104)		(316)		(440)		Net gain on sale of investments in unconsolidated joint ventures	(251)		(360)		(567)		(800)
EBITDAre	EBITDAre	319,232		269,273		625,595		540,691		EBITDAre	293,310		287,037		918,905		827,728
Share-based compensation expense(1)	Share-based compensation expense(1)	7,989		9,206		14,635		15,020		Share-based compensation expense(1)	7,930		6,052		22,565		21,072
Severance	Severance	189		160		207		274		Severance	46		226		253		500
Casualty (gains) losses, net		1,319		887		2,733		812
Losses on investments in equity securities, net		172		7,002		3,204		10,142
Casualty losses, net(2)										Casualty losses, net(2)	19,903		4,168		22,636		4,980
(Gains) losses on investments in equity securities, net										(Gains) losses on investments in equity securities, net	796		(4,319)		4,000		5,823
Other, net~~(2)~~(3)	Other, net~~(2)~~(3)	3,827		1,903		3,233		1,673		Other, net~~(2)~~(3)	8,372		1,508		11,605		3,181
Adjusted EBITDAre	Adjusted EBITDAre	$	332,728	$	288,431	$	649,607	$	568,612	Adjusted EBITDAre	$	330,357	$	294,672	$	979,964	$	863,284

(1)For the three months ended ~~June~~September 30, 2022 and 2021, ~~$1,794~~$1,761 and ~~$1,703~~$1,277 was recorded in property management expense, respectively, and ~~$6,195~~$6,169 and ~~$7,503~~$4,775 was recorded in general and administrative expense, respectively. For the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, ~~$3,220~~$4,981 and ~~$2,877~~$4,154 was recorded in property management expense, respectively, and ~~$11,415~~$17,584 and ~~$12,143~~$16,918 was recorded in general and administrative expense, respectively.

(2)Includes accrual of $19,000 for estimated losses and damages related to Hurricane Ian for the three and nine months ended September 30, 2022.

(3)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 consists primarily of property taxes, insurance, HOA fees (when applicable), market-level personnel expenses, utility expenses, repairs and maintenance, and property administration). 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; (gains) losses on investments in equity securities, net; other income and expenses; management fee revenues; and income (loss) 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.

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,					For the Three Months Ended September 30,				For the Nine Months Ended September 30,

($ in thousands)	($ in thousands)	2022		2021		2022		2021		($ in thousands)	2022		2021		2022		2021
Net income available to common stockholders	Net income available to common stockholders	$	110,815	$	60,242	$	203,210	$	117,514	Net income available to common stockholders	$	79,032	$	69,108	$	282,242	$	186,622
Net income available to participating securities	Net income available to participating securities	148		96		368		191		Net income available to participating securities	147		69		515		260
Non-controlling interests	Non-controlling interests	542		350		930		705		Non-controlling interests	250		318		1,180		1,023
Interest expense	Interest expense	74,840		80,764		149,229		164,170		Interest expense	76,454		79,370		225,683		243,540
Depreciation and amortization	Depreciation and amortization	158,572		145,280		314,368		289,781		Depreciation and amortization	160,428		150,694		474,796		440,475
Property management expense(1)	Property management expense(1)	21,814		17,696		42,781		33,538		Property management expense(1)	22,385		17,886		65,166		51,424
General and administrative(2)	General and administrative(2)	19,342		19,828		36,981		36,778		General and administrative(2)	20,123		19,369		57,104		56,147
Impairment and other(3)	Impairment and other(3)	1,355		980		2,870		1,336		Impairment and other(3)	20,004		4,294		22,874		5,630
Gain on sale of property, net of tax	Gain on sale of property, net of tax	(27,508)		(17,919)		(45,534)		(32,403)		Gain on sale of property, net of tax	(23,952)		(13,047)		(69,486)		(45,450)
Losses on investments in equity securities, net		172		7,002		3,204		10,142
(Gains) losses on investments in equity securities, net										(Gains) losses on investments in equity securities, net	796		(4,319)		4,000		5,823
Other, net~~(3)~~(4)	Other, net~~(3)~~(4)	3,827		1,903		3,233		1,673		Other, net~~(3)~~(4)	8,372		1,508		11,605		3,181
Management fee revenues	Management fee revenues	(2,759)		(1,015)		(4,870)		(1,786)		Management fee revenues	(3,284)		(1,354)		(8,154)		(3,140)
(Income) loss from investments in unconsolidated joint ventures	(Income) loss from investments in unconsolidated joint ventures	2,701		(11)		5,021		(362)		(Income) loss from investments in unconsolidated joint ventures	849		(202)		5,870		(564)
NOI (total portfolio)	NOI (total portfolio)	363,861		315,196		711,791		621,277		NOI (total portfolio)	361,604		323,694		1,073,395		944,971
Non-Same Store NOI	Non-Same Store NOI	(29,443)		(17,742)		(52,185)		(33,238)		Non-Same Store NOI	(33,229)		(21,315)		(87,818)		(56,935)
NOI (Same Store portfolio)~~(4)~~(5)	NOI (Same Store portfolio)~~(4)~~(5)	$	334,418	$	297,454	$	659,606	$	588,039	NOI (Same Store portfolio)~~(4)~~(5)	$	328,375	$	302,379	$	985,577	$	888,036

(1)Includes ~~$1,794~~$1,761 and ~~$1,703~~$1,277 of share-based compensation expense for the three months ended ~~June~~September 30, 2022 and 2021, respectively. Includes ~~$3,220~~$4,981 and ~~$2,877~~$4,154 of share-based compensation expense for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, respectively.

(2)Includes ~~$6,195~~$6,169 and ~~$7,503~~$4,775 of share-based compensation expense for the three months ended ~~June~~September 30, 2022 and 2021, respectively. Includes ~~$11,415~~$17,584 and ~~$12,143~~$16,918 of share-based compensation expense for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, respectively.

(3)

Includes accrual of $19,000 for estimated losses and damages related to Hurricane Ian for the three and nine months ended September 30, 2022.

~~(3)~~(4)Includes interest income and other miscellaneous income and expenses.

~~(4)~~(5)The Same Store portfolio totaled ~~75,215~~74,881 homes for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021.

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 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 from derivatives; share-based compensation expense; legal settlements; severance expense; casualty (gains) losses, net; and (gains) losses on investments in equity 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.

6465

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,					For the Three Months Ended September 30,				For the Nine Months Ended September 30,

(in thousands, except shares and per share data)	(in thousands, except shares and per share data)	2022		2021		2022		2021		(in thousands, except shares and per share data)	2022		2021		2022		2021
Net income available to common stockholders	Net income available to common stockholders	$	110,815	$	60,242	$	203,210	$	117,514	Net income available to common stockholders	$	79,032	$	69,108	$	282,242	$	186,622
Add (deduct) adjustments from net income to derive FFO:	Add (deduct) adjustments from net income to derive FFO:									Add (deduct) adjustments from net income to derive FFO:
Net income available to participating securities	Net income available to participating securities	148		96		368		191		Net income available to participating securities	147		69		515		260
Non-controlling interests	Non-controlling interests	542		350		930		705		Non-controlling interests	250		318		1,180		1,023
Depreciation and amortization on real estate assets	Depreciation and amortization on real estate assets	156,433		143,607		310,073		286,391		Depreciation and amortization on real estate assets	158,199		148,957		468,272		435,348
Impairment on depreciated real estate investments	Impairment on depreciated real estate investments	36		93		137		524		Impairment on depreciated real estate investments	101		126		238		650
Net gain on sale of previously depreciated investments in real estate	Net gain on sale of previously depreciated investments in real estate	(27,508)		(17,919)		(45,534)		(32,403)		Net gain on sale of previously depreciated investments in real estate	(23,952)		(13,047)		(69,486)		(45,450)
Depreciation and net gain on sale of investments in unconsolidated joint ventures	Depreciation and net gain on sale of investments in unconsolidated joint ventures	916		142		1,416		(90)		Depreciation and net gain on sale of investments in unconsolidated joint ventures	1,440		29		2,856		(61)
FFO	FFO	241,382		186,611		470,600		372,832		FFO	215,217		205,560		685,817		578,392
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 ventures	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 ventures	6,498		8,169		12,968		16,787		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 ventures	4,539		9,004		17,507		25,791
Share-based compensation expense(1)	Share-based compensation expense(1)	7,989		9,206		14,635		15,020		Share-based compensation expense(1)	7,930		6,052		22,565		21,072
Legal settlements(2)										Legal settlements(2)	7,400		—		7,400		—
Severance expense	Severance expense	189		160		207		274		Severance expense	46		226		253		500
Casualty (gains) losses, net		1,319		887		2,733		812
Losses on investments in equity securities, net		172		7,002		3,204		10,142
Casualty losses, net(3)										Casualty losses, net(3)	19,903		4,168		22,636		4,980
(Gains) losses on investments in equity securities, net										(Gains) losses on investments in equity securities, net	796		(4,319)		4,000		5,823
Core FFO	Core FFO	257,549		212,035		504,347		415,867		Core FFO	255,831		220,691		760,178		636,558
Recurring capital expenditures, including our share from unconsolidated joint ventures	Recurring capital expenditures, including our share from unconsolidated joint ventures	(37,544)		(28,714)		(70,374)		(53,189)		Recurring capital expenditures, including our share from unconsolidated joint ventures	(44,683)		(36,248)		(115,057)		(89,437)
Adjusted FFO	Adjusted FFO	$	220,005	$	183,321	$	433,973	$	362,678	Adjusted FFO	$	211,148	$	184,443	$	645,121	$	547,121

Net income available to common stockholders	Net income available to common stockholders									Net income available to common stockholders
Weighted average common shares outstanding — diluted(2)(3)(4)		611,620,475		569,283,166		609,775,270		569,056,182
Weighted average common shares outstanding — diluted(4)(5)(6)										Weighted average common shares outstanding — diluted(4)(5)(6)	612,647,588		578,571,392		610,741,723		572,262,198

Net income per common share — diluted(2)(3)(4)		$	0.18	$	0.11	$	0.33	$	0.21
Net income per common share — diluted(4)(5)(6)										Net income per common share — diluted(4)(5)(6)	$	0.13	$	0.12	$	0.46	$	0.33

FFO	FFO									FFO
Numerator for FFO per common share — diluted(2)		$	241,382	$	190,955	$	470,600	$	381,520
Weighted average common shares and OP Units outstanding — diluted(2)(3)(4)		614,569,431		587,982,707		612,648,238		587,906,276
Numerator for FFO per common share — diluted(4)										Numerator for FFO per common share — diluted(4)	$	215,217	$	205,560	$	685,817	$	590,923
Weighted average common shares and OP Units outstanding — diluted(4)(5)(6)										Weighted average common shares and OP Units outstanding — diluted(4)(5)(6)	615,172,460		581,333,229		613,497,425		588,603,771

FFO per common share — diluted(2)(3)(4)		$	0.39	$	0.32	$	0.77	$	0.65
FFO per common share — diluted(4)(5)(6)										FFO per common share — diluted(4)(5)(6)	$	0.35	$	0.35	$	1.12	$	1.00

Core FFO and Adjusted FFO	Core FFO and Adjusted FFO									Core FFO and Adjusted FFO
Weighted average common shares and OP Units outstanding — diluted(2)(3)(4)		614,569,431		572,822,015		612,648,238		572,745,584
Weighted average common shares and OP Units outstanding — diluted(4)(5)(6)										Weighted average common shares and OP Units outstanding — diluted(4)(5)(6)	615,172,460		581,333,229		613,497,425		575,639,449

Core FFO per common share — diluted(2)(3)(4)		$	0.42	$	0.37	$	0.82	$	0.73
AFFO per common share — diluted(2)(3)(4)		$	0.36	$	0.32	$	0.71	$	0.63
Core FFO per common share — diluted(4)(5)(6)										Core FFO per common share — diluted(4)(5)(6)	$	0.42	$	0.38	$	1.24	$	1.11
AFFO per common share — diluted(4)(5)(6)										AFFO per common share — diluted(4)(5)(6)	$	0.34	$	0.32	$	1.05	$	0.95

(2)Represents the estimated cost of a global settlement of a multistate putative class action regarding resident late fees. The settlement remains subject to court approval.

~~(2)~~(3)Includes accrual of $19,000 for estimated losses and damages related to Hurricane Ian for the three and nine months ended September 30, 2022.

(4)On January 18, 2022, we settled the $141,490 outstanding principal balance of the 2022 Convertible Notes with the issuance of 6,216,261 shares of our common stock. For the three and ~~six~~nine months ended ~~June~~September 30, 2022, the shares of common stock issued with respect to this settlement are included within all net income, FFO, Core FFO, and AFFO per common share calculations subsequent to the conversion date.

For the ~~three and six~~nine months ended ~~June~~September 30, 2021, the numerator for FFO per common share — diluted iswas adjusted for ~~$4,344 and $8,688, respectively, of~~ interest expense on the 2022 Convertible Notes, including non-cash amortization of ~~discounts. For the three~~discounts, totaling $12,531, and ~~six months ended June 30, 2021,~~ the denominator iswas adjusted for ~~15,160,692~~12,964,322 potential shares of common stock issuable upon the conversion of the 2022 Convertible Notes. For the three ~~and six~~ months ended ~~June~~September 30, 2021, 8,632,132 potential shares of common stock issuable upon the conversion of the 2022 Convertible Notes, are excluded from the computation of FFO per common share — diluted as they are anti-dilutive and are excluded from Core FFO and AFFO per common share — diluted. For the three and nine months ended September 30, 2021, no such adjustments were made to Core FFO and AFFO per common share —diluted.

~~(3)~~(5)Incremental shares attributed to non-vested share-based awards totaling ~~1,288,832~~1,801,768 and ~~1,351,694~~1,560,214 for the three months ended ~~June~~September 30, 2022 and 2021, respectively, and ~~1,393,502~~1,529,591 and ~~1,401,148~~1,454,170 for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, respectively, are included in weighted average common shares outstanding in the calculation of net income per common share — diluted. For the computations of FFO, Core FFO, and AFFO per common share — diluted, common share equivalents of ~~1,466,818~~2,008,267 and ~~1,658,302~~1,783,766 for the three months ended ~~June~~September 30, 2022 and 2021, respectively, and ~~1,611,200~~1,743,556 and ~~1,743,425~~1,756,872 for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, respectively, related to incremental shares attributed to non-vested share-based awards are included in the denominator.

~~(4)~~(6)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 ~~2,770,970~~2,318,373 and ~~3,232,241~~2,538,285 for the three months ended ~~June~~September 30, 2022 and 2021, respectively, and ~~2,655,270~~2,541,737 and ~~3,347,125~~3,074,549 for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, respectively, are included in the denominator for the computations of FFO, Core FFO, and AFFO per common share — diluted.

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 or the 2022 Term Loan 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.

As of ~~June~~September 30, 2022, our ~~$3,877.7~~$3,873.3 million of outstanding variable-rate debt was comprised of borrowings on our mortgage loans of ~~$1,227.7~~$1,223.3 million and Term Loan Facilities of $2,650.0 million. As of ~~June~~September 30, 2022, we had effectively converted ~~98.5%~~98.6% of these borrowings to a fixed rate through interest rate swap agreements. Our variable-rate borrowings bear interest at one month LIBOR or Adjusted SOFR 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 and Adjusted SOFR, collectively, on our annual interest expense would be an estimated increase or decrease of ~~$0.6~~$0.5 million. This estimate considers the impact of our interest rate swap agreements, interest rate cap agreements, and any LIBOR or SOFR floors or minimum interest rates stated in the agreements of the respective borrowings.

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 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 and costs to re-resident 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 Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of ~~June~~September 30, 2022. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of ~~June~~September 30, 2022, 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.

6768

PART II

ITEM 1. LEGAL PROCEEDINGS

We are not subject to any material litigation nor, to management’s knowledge, is any material litigation currently threatened against us 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.

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.

6869

EXHIBIT INDEX

Exhibit number

Description

3.1

Charter of Invitation Homes Inc., dated as of February 6, 2017 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 1-38004) filed on February 6, 2017).

3.2

Amended and Restated Bylaws of Invitation Homes Inc., dated as of February 2, 2022 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 1-38004) filed on February 2, ~~2022).~~

~~10.1~~

Term Loan Agreement, dated as of June 22, 2022, by and among Invitation Homes Operating Partnership LP, as borrower, the lenders party thereto, Capital One, National Association, as administrative agent and the other parties party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 1-38004) filed on June 22, 2022).

31.1

Certificate of Dallas B. Tanner, President and Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certificate of Ernest M. Freedman, Executive Vice President and Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

Certificate of Dallas B. Tanner, President and Chief Executive Officer, pursuant to Section 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).

32.2

Certificate of Ernest M. Freedman, Executive Vice President and Chief Financial Officer, pursuant to Section 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).

101.INS

Inline 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.SCH

Inline XBRL Taxonomy Extension Schema Document.

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104

Cover page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

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.

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.

By:			/s/ Ernest M. Freedman
			Name: Ernest M. Freedman
			Title: Executive Vice President and Chief Financial Officer
			(Principal Financial Officer)
			Date: ~~July 28,~~October 27, 2022

By:			/s/ Kimberly K. Norrell
			Name: Kimberly K. Norrell
			Title: Executive Vice President and Chief Accounting Officer
			(Principal Accounting Officer)
			Date: ~~July 28,~~October 27, 2022