Invitation Homes Inc.

Greetings and welcome to the Invitations Home second quarter 2024 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, our Chief Executive Officer, Charles Young, President and Chief Operating Officer, John Olson, Chief Financial Officer, and Scott Eisen, Chief Investment 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 please 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 2024 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 2023 Annual Report on Form 10-K and other filings we make with the SEC from time to time. Except to the extent otherwise required by law, 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 this call. You can find additional information regarding these non-GAAP measures, including reconciliations to the most comparable GAAP measures, in yesterday's earnings release. With that, I'll now turn the call over to Dallas Tanner, our Chief Executive Officer.

Thanks, Scott, and good morning, everyone. We're a little over halfway through the year, and we're pleased with the results we've posted to date. Our residents continue to stay longer, with same-store average length of stay over three years. Our same-store portfolio remains effectively full, with average occupancy of 97.5% during the second quarter. And we're pleased with our financial performance for the year to date through June, with core FFO of 6.5%. It's an election year, and housing is once again a focus on both sides of the aisle. We encourage elective officials and policymakers to have a complete understanding of the facts so that effective and long-lasting solutions to today's housing challenges can be enacted. Like many others, we follow the great work of John Burns and his team closely. I'd therefore like to start off this morning by reviewing some of their latest housing data. There are roughly 133 million households in the United States today. About 66% of those own their own home, a rate that is above the historical average during the last 60 years. And the other 34% lease something. Of those who lease, roughly 64% rent an apartment, while 31% lease a single-family home. This means there are about 14 million single-family rental homes across the country. with our wholly owned portfolio accounting for just 0.6% of total single family rental supply. Against that backdrop, I'd like to focus on three topics during my prepared remarks today. First, we believe there has never been a more compelling time to lease a home than today. We've spoken a lot about the traditional reasons that millions of Americans choose to lease. These include flexibility and convenience, as well as the desire for additional spaces, privacy, and access to great schools. In addition to those, the past two years have opened an unprecedented affordability gap between homeownership and the cost of leasing. According to the Burns data, two years ago it was just under $700 a month more expensive to buy than to lease on average in our markets. Today, the cost of homeownership is nearly $1,200 a month more expensive than it is to lease. High cost of homeownership has many causes. Chief among them, according to most economists, is the lack of new housing supply. Add that to the steady increases in homeowners insurance and property taxes, among other costs of homeownership, and we believe the value proposition of leasing a home with us becomes even more attractive. Various experts estimate our nation's housing supply shortage is in the millions of units. So if we are to address these affordability challenges, It's imperative that the home builders continue to build more homes to meet that growing demand. That leads to my second point, which is that we're proud to be part of the solution by partnering with home builders to build new communities. We continue to expand our partnerships with some of the largest home builders in America, as well as with regional home builders focused within our markets. Our partners understand that supported by our appetite for growth, they can build larger and more diverse communities. and finish those communities faster than they otherwise might have alone. More homes delivered faster is a win for everyone, including the 133 million households in America who are looking to lease or buy their next home. Our current pipeline includes nearly 2,700 new homes that we plan to make available for lease over the next few years, in addition to around the 2,000 homes that we've already added since 2021. In total, that's nearly 5,000 newly constructed homes built or in our pipeline since we launched our Build to Rent efforts just three years ago. Furthermore, our attractive returns are leading the industry, with current opportunities being underwritten at a 6% or better yield on cost, while mitigating most of the risks and costs of on-balance sheet development. My third and final point is that doing right by our residents means doing right by all of our stakeholders. We've pioneered our professional service standards several years ago as a way to differentiate the worry-free lifestyle that we provide compared to the small landlords who make up the vast majority of this industry. In particular, we believe our 24-7 genuine care service and pro-care offerings remain unrivaled. To highlight this point, through June year to date, our market teams turned and released more than 11,500 homes to new residents. nearly all of whom received a pre-move-in orientation as well as a 45-day post-move-in visit. Both of these brand-exclusive customer touchpoints are performed in person with the resident by our associates. We believe this level of service is feasible, in part to our size and our scale, and that our resident-centric approach helps drive our strong occupancy, customer retention, and overall resident satisfaction. is also why some of the largest and most respected portfolio owners have chosen recently our growing third-party management business to care for their homes and for their residents. We also leverage the size and the scale for the greater good of our communities. I'll call out two more recent examples. First is our support of the American Red Cross, and more specifically their, quote, Sound the Alarm home fire and safety program. Our sponsorship helps the Red Cross install free smoke alarms and educate families on fire escape plans and home fire safety. Secondly, we continue to support local development and improvement of outdoor community spaces through our green spaces programming. This past spring, we funded two new grants, the Patch Community Garden in Dania Beach, Florida, and the Wellspring Women's Center in Sacramento, California. As a long-term neighbor and a supporter of our communities, We take great pride in empowering our local associates to make an impact where they live and where they work. To wrap up, I'd like to thank our residents for their trust and their loyalty and thank all of our associates who work hard every day to earn that trust. We proudly stand behind the work that our company and our associates are doing to ensure our residents have a great experience with us. And we're honored to be a part of the solution to today's housing challenges. While just a fraction of 1% of the 14 million Americans who lease a home choose to do so with us, we believe we remain the premier choice where individuals and families can thrive. I'll now pass the call on to Charles Young, our President and Chief Operating Officer.