Invitation Homes Inc.

Greetings and welcome to the Invitation Home fourth quarter 2022 earnings conference call. All participants are in a 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 call is being recorded. At this time, I would like to turn the conference over to Scott McLaughlin, Vice President of Investor Relations, So, please go ahead.

Good morning and welcome. Today we'll hear remarks from Dallas Tanner, President and Chief Executive Officer, Charles Young, Chief Operating Officer, and Ernie Friedman, Chief Financial Officer. Following these remarks, we'll conduct a question and answer session with our covering sales side analysts. In the interest of time, we ask that you limit yourself to one question and then re-queue if you'd like to ask a follow-up question. During today's call, we may reference our fourth quarter 2022 earnings release and supplemental information. This document was issued yesterday after the market closed and is available on the investor relations section of our website at www.invh.com. Certain statements we make 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. We describe some of these risks and uncertainties in our 2021 Annual Report on Form 10-K 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. We may also discuss certain non-GAAP financial measures during the call. You can find additional information regarding these non-GAAP measures, including reconciliation to the most comparable GAAP measures in yesterday's earnings release. I'll now turn the call over to Dallas.

Thanks for joining us this morning. I'd like to start by thanking all of our teams for the hard work last year. Yesterday, we posted 2022 year-over-year core FFO growth of 11.6% and same-store NOI growth of 9.1%. Strong demand for our business continued throughout the year. And despite some headwinds from inflation and an evolving regulatory environment, we believe our business continues to stand on solid footing. As you all know, Ernie recently announced that he'll be stepping down as CFO in a few months. I'd like to thank him for his extraordinary vision and strategic insight over the past seven years. And I look forward to celebrating his achievements later this year. At the same time, I'm excited for John Olson, who joins us here in the room this morning. to lead our finance team beginning in June. John's been part of Invitation Homes from the beginning with deep involvement in all of our strategic and financial activities. We expect this to be a seamless transition. Before turning it over to Charles and Ernie to provide more details about our 2022 performance and our expectations for 2023, I wanted to take a few moments to discuss the current housing environment in the United States and how we believe Invitation Homes is well positioned to help support the country's housing needs. It has been reported that the U.S. needs to add more than 13 million housing units over the next seven years in order to accommodate new household formation and address the undersupply of the past decade. Today, however, it remains challenging to deliver new supply in desirable locations because of state and local restriction, as well as labor and material shortages. In addition, today's macroeconomic environment of higher inflation and higher interest rates may discourage investment in new supply. On top of these supply pressures, the largest demographic group, the millennial generation, is now aging to the life stage of needing more space to accommodate their families and their lifestyles. Add to all of that the increased flexibility of many to work part-time or full-time from home, and we believe demand for single-family housing should remain strong for many years to come. At the core of our business is a straightforward yet critical goal. We seek to be a meaningful part of the solution for high-quality and flexible housing options. We provide quality homes for lease in desirable locations with access to great schools and employment centers. We offer best-in-class service, allowing residents to focus on their lives, and we're proud that we partner with 150 public housing authorities in serving thousands of our residents who participate in a housing assistance program, including HUD's Housing Choice Voucher Program. and we're delivering new homes to marketplace through our previously announced builder relationships. Today, that builder pipeline exceeds 2,300 homes that we expect to deliver over the next few years, and our plans are to continue investing in new construction in the future. As a reminder, our approach to bringing new housing to the marketplace keeps development risk off of our balance sheet and avoids any related G&A burden, while also allowing us to partner with some of the best home builders in the business to select and buy new homes in great locations. We think this approach is a real differentiator and it allows us to maximize flexibility and optionality while remaining opportunistic and minimizing risk. All this is important because the lack of available supply of single family housing and the strong demand from those who wish to live in a single family home have made home ownership much more expensive today. This supply and demand imbalance is further aggravated by inflation, and elevated interest rates, leading to the widest dislocation we've seen between the cost of home ownership and the cost of leasing since starting this business. We're therefore very proud to provide our residents the opportunity to live in neighborhoods and school districts that might not otherwise be accessible at a cost that is often significantly more affordable than any other housing option. Let me pull on that string a little bit further. Based on the John Burns December data, leasing a home costs nearly $900 less each month than owning a home across our markets. This means that leasing a home can save a family nearly 30% a month on their housing costs on average. These savings are even more compelling on a per square foot basis where single family rental homes currently come out as the most cost effective housing option compared to not only home ownership costs but also apartment rent. That being the case, we believe today's macroeconomic environment and the current supply and demand fundamentals make the invitation homes value proposition compelling for both our residents and our shareholders. This is on top of several differentiators of our business that we have noticed in the past. For residents, these benefits include a recently renovated, refreshed, or newly built home in a desirable location, ProCare, which is our resident service model that provides for consistent interactions with our residents throughout their time with us, best-in-class technology tools of the most recent example being our mobile maintenance app, offering residents an even more efficient process to submit service requests, and a growing list of resident services designed to elevate their living experience. For our shareholders, we believe there are numerous absolute and relative advantages to the single-family rental industry, including single-family homes are the most liquid real estate sector within the United States. There's typically much lower turnover in single-family rental than in multifamily, with residents often staying much longer. And there's a long track record of rent growth within SFR, even during recessionary periods. With a nod again to the Burns data, national average single-family rent growth has never had a meaningful decline in nearly 40 years of tracking that data. Lastly, we believe there are numerous advantages to the Invitation Homes way, including our hallmark scale, location, and eyes in markets. overseen by the best operators in the space, as evidenced by our 46.6% cumulative same-store NOI growth rate from 2017 to 2022, nearly 2,500 basis points greater than the average of our residential peers, our strong balance sheet with no debt coming due until 2026, and our builder partner growth pipeline that maximizes flexibility and contributes to new housing supply while also avoiding big investments in land and a large G&A load. In closing, we couldn't be more excited about our real estate, our teams, and the underlying fundamentals here in 2023, a year with some uncertainty and also a year we believe full of opportunity to continue delivering a premier resident experience to anyone who chooses to live a more flexible and worry-free lifestyle. With that, I'll pass it on to Charles, our Chief Operating Officer.