Invitation Homes Inc.

Greetings and welcome to the Invitation Homes second 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 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, and John Olson, Executive Vice President and Chief Financial Officer. 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 second 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 thanks for joining us. These continue to be exciting times, with Invitation Homes once again demonstrating our ability to deliver strong results. Fundamentals remain very favorable for our industry. and in particular, for our markets, product, and price points. Our teams are providing a great residence experience every day, and we continue to seek and to find fantastic value creation opportunities through our sound capital allocation strategy. I'd like to discuss a few of these in more detail during my prepared remarks with you today. First, let's begin with value creation and our recent purchase of nearly 1,900 single-family rental homes for approximately $650 million. As we've demonstrated over the last 11 years, we've approached external growth opportunities with a strategic, disciplined, and a creative focus. And I'm pleased to share with you why we believe this transaction continues in that approach. Essentially, this is a high growth portfolio of exceptionally well-located homes that we bought at a pretty attractive price. We believe our purchase price represents a meaningful discount to end user market values, giving us immediate benefits of scale value that would have been impossible to replicate through one-off buying in today's environment. Further, we expect our best-in-class platform to help us achieve enhanced returns, starting with a year one yield in the mid fives that we anticipate will grow quickly thereafter. In addition, the quality and location of the homes we acquired are right in line with the type of product we'd like to own more of. In particular, These are great homes within desirable infill neighborhoods that we believe will provide strong rent growth and value appreciation. Over 90% of these homes we purchased overlap with our existing Sunbelt footprint, including within our Florida and Texas markets, along with Las Vegas, Phoenix, Atlanta, and the Carolinas. Outside of this transaction, we continue to work with our outstanding home builder partners across the country. During the second quarter, we took delivery on 157 of these brand new homes. and added an additional 173 homes to our new product pipeline. Our expected future deliveries remained at just under $900 million at the end of the second quarter. Moving forward, we remain focused on smart external growth through our multi-channel acquisition strategy. And as we've previously announced, Scott Eisen joins us next week as our Chief Investment Officer, and we're excited to add his insight as we further explore disciplined growth opportunities, including additional bulk, purchasing from smaller operators, and an expansion of our home builder pipeline. At the same time, we will continue to keep our heads down and create more meaningful experiences for our residents, such as growing our ancillary services business and developing new ways for us to engage with our customers. The second topic I want to discuss is the ongoing fundamental tailwinds for our business. We expect these to continue to support our growth objectives for many years to come. Nearly one-fifth of the U.S. population, or almost 60 million people, are between the ages of 23 and 35 years old. We believe this to be a strong indicator of the future demand for our business as they form families and approach our average new resident age of 38 and a half years old. Demand for single-family homes for lease has been further enhanced by the rising costs and the burden of home ownership. According to the latest data from John Burns, leasing a home is nearly $1,000 cheaper per month on average than buying a home in one of our markets. This is a reflection of not only an increase in mortgage rates, but also the overall lack of new housing supply. In addition, for sale inventory remains well below demand, which continued to help support home prices. This in turn aids our ability to sell non-core or underperforming assets at attractive cap rates and use those proceeds for accretive capital recycling. Moving on now to my third topic, which is how we continue to improve the resident experience and reinforce our commitment to resident choice and flexibility. The most recent example of this is our partnership with Isuzu. We're proud to help our residents build good credit by offering positive credit reporting to all our residents using Isuzu's platform at no cost to our residents. This partnership helps to remove barriers to housing choice, allows our residents to improve their credit profile in order to achieve their financial goals faster. In closing, I'm excited by how we are executing and driving growth today. I would like to express my thanks to our dedicated associates for their hard work and commitment, which have been instrumental to our successes. We believe the increasing demand for single-family rentals, favorable demographic trends, and the flexibility and choice that we provide our residents position us well for both sustained growth and value creation, which we will continue to relentlessly pursue. With that, I'll pass it on to Charles, our President and Chief Operating Officer.