Invitation Homes Inc.

Greetings and welcome to the Invitation Homes first quarter 2023 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 conference is being recorded. At this time, I would like to turn the conference over to Scott McLaughlin, Senior Vice President of Investor Relations. Please go ahead.

Good morning and welcome. I'm here today from Invitation Homes with Dallas Tanner, Chief Executive Officer, Charles Young, President and Chief Operating Officer, Ernie Friedman, Chief Financial Officer, and John Olson, EVP of Corporate Strategy and Finance, and as previously announced, the company's CFO beginning June 1st. Following our prepared remarks, we'll conduct a question and answer session with our covering sell-side analysts. In the interest of time, We ask that you limit yourselves 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 first quarter 2023 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 2022 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 reconciliations to the most comparable GAAP measures, in yesterday's earnings release. I'll now turn the call over to Dallas, our Chief Executive Officer.

Good morning and thank you for joining us. We were pleased to report a strong first quarter result yesterday afternoon, reflecting a great start for a year. Average same store occupancy improved 50 basis points over the fourth quarter to 97.8% and new lease rent growth has accelerated sequentially every month so far this year. We're encouraged by the execution of our teams and remain bullish on our industry and our business. As long-term fundamentals continue to be favorable, bolstered by our superior balance sheet and liquidity, and backed by our best-in-class platform, we will seek to continue to deliver sector-leading NOI growth as we've done for the past five years. Since our inception, we've matured and performed through a variety of operating and macroeconomic environments, including a global pandemic and record high inflation. Throughout this time, we've witnessed the resilience and the relative strength of our business, This is illustrated by a great chart from John Burns Research and Consulting that we included in our March investor deck. This data shows that over the past 40 years, national SFR rent growth has historically stayed positive even during recessions. In addition, in a recessionary period, we would expect that our business could see a reduction in move outs and a benefit to occupancy, and that external growth opportunities could become more attractive. For these reasons and more, we believe single-family leasing is one of the most stable property types in real estate. And that Invitation Homes offers one of the best risk-adjusted return propositions compared to other commercial real estate sectors. To start, supply and demand fundamentals continue to favor our business. On the demand side, this includes the demographic surge of the millennial generation who have begun reaching our average resident age of 39 years old. But it also includes individuals and families of all ages who desire the flexibility, and convenience of leasing a single-family home. Like all of us on the call today, our residents value great schools, proximity to growing job centers, access to transportation corridors, and desirable neighborhoods for their families. They usually need or want more space, with a garage and a yard to better fit their growing household, and to have more room for a home office, a kid's playroom, and their pets. And more importantly, today's residents are requesting flexibility and choice, along with the appeal of a down payment light lifestyle. Further driving the demand for single family home leasing is the rising costs of home ownership, as well as the lack of inventory of for sale housing. According to John Burns March data and weighted by our markets, the monthly cost of owning a single family home remain on average over $900 more expensive than leasing that same home. Others have calculated an even higher cost of average for ownership versus leasing. On the supply side, the U.S. continues to suffer from a shortage of housing, with the shortfall in supply relative to demand estimated to be in the millions of units. Like most economists, we think the best way to improve housing affordability is to grow the U.S. housing stock, and more specifically, by encouraging development of new housing supply. This important work really needs to begin at the state and local levels including planning and zoning boards, and we stand in strong support of those who want to bring positive change in this regard. In fact, we see ourselves as part of the solution to increasing housing supply through our new product pipeline that is now approaching $1 billion. We will continue to seek out responsible opportunities to add supply, and as a result, help improve housing availability and affordability. In consideration of these fundamentals, We believe leasing a home is a great option for anyone who wants all the benefits of living in a home without the hassle or expense of home ownership. And we believe Invitation Homes offers the best service, platform, and locations for residents to choose from. One reason for this relates to the core belief we've held since the early days of our business, that we could revolutionize the single-family resident experience by professionalizing resident service. In short, we took a decades-old, antiquated, mom and pop model and transform that based on the needs and desires of a 21st century resident. As part of that approach, we continue to expand our service offerings and look for new and better ways to enhance the simplicity and convenience of the leasing lifestyle. At the same time, we continue to explore ways to improve efficiency through size and scale. We also remain focused on growing our portfolio creatively over the long term. And more importantly, in locations where we would expect the most favorable long-term fundamentals. With regards to growth, we're committed to being prudent capital allocators through all real estate cycles. For the first quarter of 2023, this meant being a net seller of homes, disposing of 284 wholly owned homes for gross proceeds of $95 million and buying 181 wholly owned homes for $62 million. For the most part, we've recycled capital out of less desirable homes and into brand new, well-located homes. as part of our new product pipeline. We believe our strategy of partnering with the best homebuilders is a superior approach to investing on a risk-adjusted basis, as it keeps development and its associated risks, including an expensive land bank and high G&A load, off of our balance sheet. At the same time, our strong balance sheet and current liquidity, including JV capital, allows us to remain nimble, and as opportunities arise, we will be ready. Before I close, I want to speak to the continued dislocation between the retail pricing of single-family homes and public market valuations. Strong demand for housing continues to support home prices in our markets and in our price points, while the lock-in effect, which existing homeowners are discouraged from giving up their lower mortgage rates, is keeping resale supply relatively low. We're seeing evidence of this supply and demand imbalance when we list our homes for sale and receive multiple competing offers at great prices. We believe the resilience of the U.S. housing market in the current cycle has been underestimated over the past year and that the protracted supply and demand imbalance for single-family housing continues to provide good structural support for home prices, just as it does for rent growth. Lastly, on the topic of sustainability, I hope you've taken a moment to read our new progress overview, which we published last month. It's available on our sustainability webpage It includes information about our efforts to increase the quantity and the quality of our ESG disclosures. This includes new greenhouse gas emission disclosures and an opportunity for engaged stakeholders to participate in an online survey to share their thoughts and their ideas with us. We welcome this feedback. My thanks again to all of our teams for their hard work, dedication, and commitment this past quarter and for the remainder of the year ahead. Our associates are the heart and soul of Invitation Homes. and we appreciate how they embrace the responsibility to deliver the highest level of service to our residents and strong results for our shareholders. Our plan is to keep pushing to be great here. With that, I'll pass it on to Charles, our President and Chief Operating Officer.