Invitation Homes Inc.

and welcome to the Invitation Home's third quarter 2020 earnings conference call. All participants are in listen-only mode at this time. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. As a reminder, this conference is being recorded. At this time, I would like to turn the conference over to Greg Van Winkle, Vice President of Corporate Strategy, Capital Markets, and Investor Relations. Please go ahead.

Thank you. Good morning and thank you for joining us for our third quarter 2020 earnings conference call. On today's call from Invitation Homes are Dallas Tanner, President and Chief Executive Officer, Ernie Friedman, Chief Financial Officer, and Charles Young, Chief Operating Officer. I'd like to point everyone to our third quarter 2020 earnings press release and supplemental information, which we may reference on today's call. This document can be found on the Investor Relations section of our website at www.invh.com. I'd also like to inform you that certain statements made during this call may include forward-looking statements relating to the future performance of our business, financial results, liquidity and capital resources, and other non-historical statements, which are subject to risks and uncertainties that could cause actual outcomes or results to differ materially from those indicated in any such statement. We describe some of these risks and uncertainties in our 2019 annual report on Form 10-K, our quarterly report on Form 10-Q for the period ended June 30, 2020, and other filings we make with the SEC from time to time. Invitation Homes does not update forward-looking statements and expressly disclaims any obligation to do so. During this call, we may also discuss certain non-GAAP financial measures. You can find additional information regarding these non-GAAP measures including reconciliations of these measures to the most comparable GAAP measures, and our earnings release and supplemental information, which are available on the investor relations section of our website. I'll now turn the call over to our president and chief executive officer, Dallas Tanner.

Thank you, Greg. We're thrilled to report yet another quarter of outstanding execution in a time when the need for high-quality single-family rental housing is greater than ever. I'm so proud of our team for consistently meeting that demand, with unparalleled resident service, which is also translating to strong results for our shareholders. There are three points I want to emphasize in my remarks today. The first is that we continue to perform extremely well during COVID, validating the strength and the stability of our business. The second is that we are more bullish than ever about the long term, due to the fundamental tailwinds for our sector and Invitation Homes' unique advantages. The third is is that because of our favorable position, we're staying on offense with respect to external growth. Leveraging the power of our platform, we're having great success in finding acquisitions with compelling expected returns that also add to our economies of scale. We are opportunistically increasing our acquisition pace, and we've diversified our capital sources with the joint venture to enhance and ensure our ability to remain opportunistic over a multi-year period. I'll now elaborate on our results that continue to strengthen through the pandemic. Same-store occupancy set another record high of 97.8% in the third quarter, up 190 basis points year-over-year and 30 basis points from last quarter. Rent growth has also accelerated, indicative of the fundamental strength in our markets. New lease rate growth of 5.5% in the quarter was 130 basis points better than last year. and up 280 basis points from last quarter. On this higher base of potential rents, we continued to collect through September at a rate of 98% of our historical average collection rates. The unique differentiators of our business also continue to be a benefit to expenses. As a result, we were able to deliver 3.6% same-store NOI growth in a period that continues to prove challenging for the broader economy and real estate sector. More importantly, we've continued to be a port in the storm for our residents, delivering exceptional service and genuine care that is resulting in an all-time high resident satisfaction scores. The self-show technology and virtual experience that we've been utilizing for years is allowing prospective residents to feel safe throughout the leasing process. The freestanding nature of our assets is also allowing us to safely serve residents and maintain homes with some tweaks to our protocols for extra safety. With these safety measures in place, we have now completely worked through our backlog of work orders that had previously been deferred during the springtime. To say that our associates have been exceptional in their care for residents would be an understatement. I could not be prouder of our associates' hard work and commitment under the circumstances, and we recently recognized their effort with a special bonus for all our frontline workers and non-executives in our corporate and field offices. We also continue to provide COVID-specific benefits and flexibility to associates designed to promote their health and also well-being. We believe the past several quarters have battle tested and demonstrated the durability of our business. And looking ahead, we continue to see a bright future. The millennial generation is only beginning to reach our average resident age of 39 years. And survey data indicates that COVID may be accelerating a shift in demand for denser urban housing to single-family alternatives. With limited supply of single-family homes available, we believe our sector is positioned to be a key part of housing solutions for years to come. Furthermore, we think the ease and flexibility of leasing from a professional property manager make the value proposition even more compelling for institutional single-family rental operators, who today own less than 2% of the overall single-family rental home market. With these tailwinds at our back, we ramped up acquisition activity in the third quarter and exceeded our expectations by deploying $175 million. The initial underwritten yield on these homes is consistent with where we were acquiring pre-COVID at 5.5% cap rates. After quarter end, we also closed a bulk acquisition in Dallas for $59 million at a 5.7% NOI cap rate on in-place rents, which we see upside to as we bring these homes onto our platform. Put simply, we feel very strongly that it continues to be a great time to invest in single-family rental homes, especially with our ability to leverage our proprietary acquisition IQ technology and local investment teams' relationships and experience in buying across multiple channels. To diversify our capital sources in pursuit of this external growth opportunity, we have formed a joint venture with a like-minded partner that is expected to provide over $1 billion of additional dry powder for the next couple years. This adds to the over $500 million of cash on our own balance sheet, in addition to strong operating cash flow, which we can use to grow our wholly owned portfolio. With these multiple capital sources available to fund our growth, we'll continue to have the opportunity to bring down our overall leverage at the same time we achieve our external growth goals. In sinking joint venture capital, Our industry-leading scale technology and experience as an operator positioned us well against the backdrop of substantial private investor demand wanting to enter the single-family rental space. We are thrilled to have partnered with a highly accomplished investor in a structure that makes great sense for our business. The structure allows for us to invest and manage properties for the JV identically to the way we invest and operate our wholly-owned portfolios. Acquisitions will be sourced by our investment team on an entity-blind basis and allocated automatically between Invitation Homes and the JV in accordance with predetermined ratios that enable both entities to simultaneously achieve their capital deployment goals. In addition, a ROFO structure makes the JV a potential pipeline for future on-balance sheet external growth when the JV reaches the end of its anticipated five to eight-year life. Along the way, We'll earn asset management and property management fees expected to be well in excess of any incremental costs. In closing, we are excited about what the future holds for Invitation Homes. We believe the single-family rental sector is favorably positioned within the housing market relative to other types of residential real estate. Within our uniquely positioned industry, we are differentiated from peers by three key advantages. The first is location of our homes, infill neighborhoods within high-growth markets, where the supply and demand are most in our favor. The second is our scale and market density with nearly 5,000 homes per market. The third is our local expertise and on the ground teams in our markets that enable us to better control the quality of our assets and the overall resident experience. We are committed to further enhancing that resident's experience in the years ahead as we grow and we thank you for your support as we pursue our mission. I'll now turn it over to Charles Young our Chief Operating Officer.