Invitation Homes Reports First Quarter 2017 Results, Sets 2017 Guidance

2017-05-12

DALLAS, May 11, 2017 — Invitation Homes Inc. (NYSE: INVH) (“Invitation Homes” or the “Company”), a leading owner and operator of single-family homes for lease in the United States, today announced its first quarter 2017 financial and operating results and set full year 2017 guidance.

First Quarter 2017 Highlights

Total revenues increased 6.3% to $239 million, total property operating and maintenance expenses increased 3.8% to $88 million, net loss increased to $42 million, and total NOI increased 7.9% to $151 million. Same Store NOI grew 5.7% year-over-year on 4.7% Same Store revenue growth and a 3.0% increase in Same Store operating expenses. Same Store Core NOI margin increased to 64.3% in the first quarter of 2017 from 63.4% in the first quarter of 2016. Same Store blended net effective rental rate growth was 4.5% on leases signed in the first quarter of 2017. Same Store average occupancy was 95.8%. Same Store other property income grew 22.3% year-over-year. Raised gross proceeds of $1.8 billion in an initial public offering of common stock, and raised $1.5 billion through a five-year unsecured Term Loan. Proceeds were used to repay all $2.3 billion outstanding on existing credit facilities, and $1.0 billion of mortgage debt. In addition, the Company entered into a new revolving credit facility with capacity of $1.0 billion, which was undrawn throughout the first quarter. Subsequent to quarter end, closed a $1.0 billion, ten-year fixed rate mortgage loan, with principal and interest payments guaranteed by Fannie Mae. Net proceeds were used to repay mortgage debt.

Chief Executive Officer John Bartling comments:  “We are excited to report our first results as a public company after executing a successful initial public offering in the first quarter of 2017.  We achieved strong internal NOI growth in the quarter, leveraging our local operating platform to translate favorable supply/demand fundamentals into attractive rent growth and drive incremental efficiencies on the expense side of the business.

Looking ahead, we expect the location and scale of our portfolio to position us for another year of significant internal growth in 2017.  We believe that limited new supply and favorable demand trends should drive continued rent growth in our markets for the foreseeable future, and that our portfolio and operating model offer an attractive opportunity for residents to lease high quality homes in in-fill neighborhoods while enjoying a resident-centric service experience.  In addition to these rent growth tailwinds, we are excited about our opportunity to capture further NOI growth and margin expansion through strategic initiatives related to revenue management, ancillary income, and operating cost efficiency.”

Financial Results

Net Loss, FFO, Core FFO, and AFFO Per Share – Diluted

Q1 2017

Net loss (1)

$

(0.08)

FFO (2)

0.04

Core FFO (2)

0.25

AFFO (2)

0.22

(1)

No shares of common stock were outstanding prior to the close of the Company’s initial public offering.  As such, net loss per share has been calculated based on operating results for the period February 1, 2017 through March 31, 2017, and the weighted average number of shares outstanding during that period, in accordance with GAAP.

(2)

FFO, Core FFO, and AFFO per share have been calculated based on operating results for the full quarter from January 1, 2017 through March 31, 2017, and as if weighted average shares outstanding from February 1, 2017 through March 31, 2017 were outstanding for the full quarter.

Net Loss – Year-over-year, net loss for the three months ended March 31, 2017 was $42.4 million, an increase of $32.4 million from the prior year.  The increase in net loss was primarily due to a $40.0 million increase in share-based compensation related to our initial public offering and $7.6 million of other non-recurring general and administrative cost associated with our initial public offering.  Exclusive of these two items, results improved by $15.3 million from the prior year, primarily due to higher revenues.  For details, see the Condensed Consolidated Statement of Operations in this press release.

Core FFO – Year-over-year, Core FFO for the three months ended March 31, 2017 increased 21.6% to $78.2 million, primarily due to an increase in NOI, driven by higher revenues.  Revenue growth was driven by an increase in average rental rate per home and higher occupancy that more than offset a slight decline in home count.  Lower interest expense, net of non-cash interest, also contributed to the increase in Core FFO.  For a reconciliation of Net Loss to Core FFO, see Schedule 1 of the Supplemental Financial Information.

AFFO – Year-over-year, AFFO for the three months ended March 31, 2017 increased 30.4% to $69.0 million, primarily driven by the increase in Core FFO described above, as well as a 19.1% decline in recurring capex.  For a reconciliation of net loss to AFFO per share, see Schedule 1 of the Supplemental Financial Information.

Operating Results

Same Store Operating Results Snapshot

Number of homes in Same Store portfolio:

43,224

Q1 2017

Q1 2016

Revenue growth (year-over-year) (1)

4.7

%

5.1

%

Operating Expense Growth (year-over-year) (1)

3.0

%

2.7

%

NOI growth (year-over-year) (1)

5.7

%

6.5

%

Core NOI margin

64.3

%

63.4

%

Average occupancy (2)

95.8

%

96.4

%

Turnover rate (annualized)

31.8

%

31.1

%

Net effective rental rate growth (lease-over-lease):

New leases

3.3

%

4.7

%

Renewals

5.3

%

5.3

%

Blended

4.5

%

5.1

%

(1)

Same Store revenue, operating expense, and NOI growth for Q1 2016 are for the prior year’s same store pool of 36,469 homes.

(2)

For the total portfolio, occupancy increased to 94.9% in Q1 2017 from 94.5% in Q1 2016.

Same Store NOI – For the Same Store portfolio of 43,224 homes, first quarter 2017 Same Store NOI increased 5.7% year-over-year on Same Store revenue growth of 4.7% and Same Store expense growth of 3.0%.  As a result, Core NOI margin increased to 64.3% in the first quarter of 2017 from 63.4% in the first quarter of 2016.

Same Store Revenues – Same Store revenue growth of 4.7% was driven by a 4.5% increase in average monthly rent and a 22.3% increase in other property income, partially offset by a 0.6% decline in average occupancy to 95.8%.

Same Store Expenses – Same Store expenses increased 3.0% year-over-year, driven primarily by 7.1% higher property taxes.  Personnel, leasing & marketing, and insurance costs were lower year-over-year by 15.9%, 17.3%, and 10.7%, respectively.

Investment Management Activity

In the first quarter of 2017, the Company acquired 121 homes for $31.2 million, including estimated renovation cost, and sold 501 homes for gross proceeds of $77.7 million, resulting in total portfolio home count at March 31, 2017 of 47,918 homes.  Dispositions in the first quarter of 2017 resulted in a gain on sale, net of tax of approximately $14.3 million.

Balance Sheet and Capital Markets Activity

At March 31, 2017, the Company had $1,192 million in availability through a combination of unrestricted cash and undrawn capacity on its credit facility.  The Company’s total indebtedness at March 31, 2017 was $5,734 million, consisting of $4,234 million of secured debt and $1,500 million of unsecured debt.

During the quarter, as previously announced, the Company completed an initial public offering of 88,550,000 shares of its common stock at a price of $20.00 per share, resulting in net proceeds of $1,667 million after deducting underwriting discounts and offering expenses payable by the Company.  In addition, the Company entered into a $1,500 million Term Loan Facility with a five-year term, and a $1,000 million revolving credit facility.  With the proceeds from the initial public offering and the Term Loan Facility, and cash on hand, the Company repaid $3,336 million of debt, consisting of the full amount outstanding on its existing credit facilities and IH1 2013-1 securitization, and a portion of its IH1 2014-1 securitization.

In addition, as previously announced, the Company entered into three interest rate swap agreements during the quarter with a combined notional amount of $2,020 million.  Together with two interest rate swap agreements entered into during the fourth quarter of 2016, the aggregate amount of debt that has been swapped from floating rate to fixed rate is $3,520 million.  All of the Company’s interest rate swaps became effective on February 28, 2017.

Subsequent to quarter end, the Company closed a ten-year fixed rate securitization loan with a total principal amount of $1,000 million.  The securitization loan is comprised of two components.  Class A certificates representing an indirect interest in the Class A component of the loan, which totaled $944.5 million and represented the entirety of the gross proceeds to the Company, were offered to investors, and feature principal and interest payments that benefit from a guaranty by Fannie Mae.  Class B certificates representing an interest in the Class B component of the loan, which totaled $55.5 million, were retained by the Company to comply with the United States risk retention requirements.  The total cost of funds for the loan is fixed at 4.23%.  Structural features of the transaction include the right to substitute properties (subject to certain loan to value, debt service coverage, and geographic concentration tests being met), as well as the right to release properties from the loan by prepaying the loan in an amount equal to 105% to 120% of the allocated loan amount associated with any properties released (subject to certain loan to value, debt service coverage, and geographic concentration tests being met, as well as the payment of any yield maintenance amounts required).  Additionally, twice during the term of the loan the Company will have the ability to exercise special release rights to release properties from the collateral pool (without any prepayment of the underlying loan) to reset the size of the collateral pool based on asset appreciation and cash flow growth.  Following any such special release, the allocated loan amounts related to the remaining homes in the collateral pool will be resized based on loan-level loan to value and debt service coverage tests, and the remaining collateral pool must continue to meet certain geographic concentration tests.  Net proceeds of approximately $930 million were used to repay the remaining outstanding balance of the IH1 2014-1 securitization and to voluntarily prepay $510 million of the IH1 2014-3 securitization.

After giving effect to the Fannie Mae mortgage loan and associated repayment activity, weighted average years to maturity at March 31, 2017 would have been 4.7 years, with no debt scheduled to mature before September 2019.  78% of debt would have been fixed rate or swapped to fixed rate, and the weighted average interest rate on total debt would have been 3.7%.

Full Year 2017 Guidance

2017 Guidance

FY 2017

Guidance

Core FFO per share – diluted (1)

$0.96 – $1.04

AFFO per share – diluted (1)

$0.80 – $0.88

Same Store revenue growth

4.75% – 5.25%

Same Store operating expense growth

1.50% – 2.00%

Same Store NOI growth

6.50% – 7.50%

Same Store Core NOI margin

63.0% – 64.0%

(1)

Core FFO and AFFO guidance is for operating results for the full year from January 1, 2017 through December 31, 2017, and assumes that estimated weighted average shares outstanding from February 1, 2017 through December 31, 2017 were outstanding for the full year 2017.

Note:  The Company does not provide guidance for the most comparable GAAP financial measures of net loss, total revenues, and property operating and maintenance, or a reconciliation of the forward-looking non-GAAP financial measures of Core FFO per share, AFFO per share, Same Store revenue growth, Same Store operating expense growth, Same Store NOI growth, and Same Store Core NOI margin to the comparable GAAP financial measures because it is unable to reasonably predict certain items contained in the GAAP measures, including non-recurring and infrequent items that are not indicative of the Company’s ongoing operations.  Such items include, but are not limited to, impairment on depreciated real estate assets, net (gain)/loss on sale of previously depreciated real estate assets, share-based compensation, casualty loss, non-Same Store revenues, and non-Same Store operating expenses.  These items are uncertain, depend on various factors, and could have a material impact on our GAAP results for the guidance period.

Earnings Conference Call Information

Invitation Homes has scheduled a conference call at 11:00 a.m. Eastern Time on May 12, 2017 to discuss results for the three months ended March 31, 2017.  The domestic dial-in number is 1-888-317-6016, and the international dial-in number is 1-412-317-6016.  The passcode is 5027416.  An audio webcast may be accessed at ir.invitationhomes.com.  A replay of the call will be available through June 12, 2017, and can be accessed by calling 1-877-344-7529 (domestic) or 1-412-317-0088 (international) and using the replay passcode 10105700, or by using the link at ir.invitationhomes.com.

Supplemental Information

The full text of the Earnings Release and Supplemental Information referenced in this release are available on Invitation Homes’ Investor Relations website at ir.invitationhomes.com.

Glossary & Reconciliations of Non-GAAP Financial Operating Measures

Financial and operating measures found in the Earnings Release and the Supplemental Information include certain measures used by Invitation Homes management that are measures not defined under accounting principles generally accepted in the United States (“GAAP”).  These measures are defined in the Glossary in the Supplemental Information and, as applicable, reconciled to the most comparable GAAP measures.

About Invitation Homes

Invitation Homes is a leading owner and operator of single-family homes for lease, offering residents high-quality homes in desirable neighborhoods across America. With nearly 50,000 homes for lease in 13 markets across the country, Invitation Homes is meeting changing lifestyle demands by providing residents access to updated homes with features they value, such as close proximity to jobs and access to good schools.  The company’s mission, “Together with you, we make a house a home,” reflects its commitment to high-touch service that continuously enhances residents’ living experiences and provides homes where individuals and families can thrive.

Investor Relations Contact

Greg Van WinklePhone: 844.456.INVH (4684)Email: [email protected]

Media Relations Contact

Claire ParkerPhone: 202.257.2329Email: [email protected] 

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which include, but are not limited to, statements related to the Company’s expectations regarding the performance of the Company’s business, its financial results, its liquidity and capital resources, and other non-historical statements.  In some cases, you can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties, including, among others, risks inherent to the single-family rental industry sector and the Company’s business model, macroeconomic factors beyond the Company’s  control, competition in identifying and acquiring the Company’s properties, competition in the leasing market for quality residents, increasing property taxes, homeowners’ association fees and insurance costs, the Company’s dependence on third parties for key services, risks related to evaluation of properties, poor resident selection and defaults and non-renewals by the Company’s residents, performance of the Company’s information technology systems, and risks related to the Company’s indebtedness. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements.  Additional factors that could cause the Company’s results to differ materially from those described in the forward-looking statements can be found under the section entitled “Part I-Item 1A. Risk Factors,” of the Annual Report on Form 10-K for the fiscal year ended December 31, 2016, filed with the Securities and Exchange Commission (the “SEC”), as such factors may be updated from time to time in the Company’s periodic filings with the SEC, which are accessible on the SEC’s website at http://www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release and in the Company’s filings with the SEC. The forward-looking statements speak only as of the date of this press release, and we expressly disclaim any obligation or undertaking to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except to the extent otherwise required by law.

Condensed Consolidated Balance Sheets

($ in thousands, except per share amounts)

March 31,

December 31,

2017

2016

(unaudited)

Assets:

Investments in single-family residential properties:

Land

$

2,701,437

$

2,703,388

Building and improvements

7,078,678

7,091,457

9,780,115

9,794,845

Less: accumulated depreciation

(853,399)

(792,330)

Investments in single-family residential properties, net

8,926,716

9,002,515

Cash and cash equivalents

192,450

198,119

Restricted cash

144,169

222,092

Other assets, net

324,826

309,625

Total assets

$

9,588,161

$

9,732,351

Liabilities:

Mortgage loans, net

$

4,228,525

$

5,254,738

Term loan facility, net

1,485,866

Credit facilities, net

2,315,541

Accounts payable and accrued expenses

101,347

88,052

Resident security deposits

87,792

86,513

Other liabilities

26,589

30,084

Total liabilities

5,930,119

7,774,928

Equity:

Shareholders’ equity

Preferred stock, $0.01 par value per share, 900,000,000 shares authorized, none outstanding at March 31, 2017

Common stock, $0.01 par value per share, 900,000,000 shares authorized, 310,376,634 outstanding at March 31, 2017

3,104

Additional paid-in-capital

3,667,178

Accumulated deficit

(25,512)

Accumulated other comprehensive income

13,272

Total shareholders’ equity

3,658,042

Combined equity

1,957,423

Total equity

3,658,042

1,957,423

Total liabilities and equity

$

9,588,161

$

9,732,351

Condensed Consolidated Statements of Operations

($ in thousands, except per share amounts) (unaudited)

Q1 2017

Q1 2016

Revenues:

Rental revenues

$

226,096

$

214,323

Other property income

12,654

10,179

Total revenues

238,750

224,502

Operating expenses:

Property operating and maintenance

88,168

84,967

Property management expense

11,449

7,393

General and administrative

58,266

15,360

Depreciation and amortization

67,577

65,702

Impairment and other

1,204

(183)

Total operating expenses

226,664

173,239

Operating income

12,086

51,263

Other income (expenses):

Interest expense

(68,572)

(70,277)

Other, net

(226)

(153)

Total other income (expenses)

(68,798)

(70,430)

Loss from continuing operations

(56,712)

(19,167)

Gain on sale of property, net of tax

14,321

9,192

Net loss

$

(42,391)

$

(9,975)

February 1, 2017

through

March 31, 2017

Net loss attributable to common shares — basic and diluted

$

(25,512)

Weighted average common shares outstanding — basic and diluted

311,651,082

Net loss per common share — basic and diluted

$

(0.08)

Supplemental Schedule 1

Reconciliation of FFO, Core FFO, and AFFO

($ in thousands, except per share amounts) (unaudited)

FFO Reconciliation

Q1 2017

Q1 2016

Net loss

$

(42,391)

$

(9,975)

Depreciation and amortization on real estate assets

66,653

64,409

Impairment on depreciated real estate investments

1,037

Net gain on sale of previously depreciated investments in real estate

(14,321)

(9,192)

FFO

$

10,978

$

45,242

Core FFO Reconciliation

Q1 2017

Q1 2016

FFO

$

10,978

$

45,242

Noncash interest expense

15,134

14,194

Share-based compensation expense related to IPO and pre-IPO grants

44,244

4,206

Offering related expenses

7,631

Severance expense

45

806

Casualty losses, net

167

(183)

Acquisition costs

35

Core FFO

$

78,199

$

64,300

AFFO Reconciliation

Q1 2017

Q1 2016

Core FFO

$

78,199

$

64,300

Recurring capital expenditures

(9,229)

(11,412)

AFFO

$

68,970

$

52,888

Weighted average common shares outstanding — diluted (1)

311,948,259

N/A

FFO per share — diluted (1)

$

0.04

N/A

Core FFO per share — diluted (1)

$

0.25

N/A

AFFO per share — diluted (1)

$

0.22

N/A

(1)

No shares of common stock were outstanding prior to the close of the Company’s initial public offering.  FFO, Core FFO, and AFFO per share have been calculated based on operating results for the full quarter from January 1, 2017 through March 31, 2017, and as if weighted average shares outstanding from February 1, 2017 through March 31, 2017 were outstanding for the full quarter.

Note:  Refer to “Glossary and Reconciliations” for metric definitions and reconciliations of non-GAAP financial measures. 

Supplemental Schedule 2(a)

Diluted Shares Outstanding

(unaudited)

Total Shares of Common Stock and Equivalents – Diluted

Q1 2017

Weighted average amounts for net loss (1)

311,651,082

Weighted average amounts for FFO, Core FFO, and AFFO (1)

311,948,259

Period end amounts for FFO, Core FFO, and AFFO

312,134,875

(1)

No shares of common stock were outstanding prior to the close of the Company’s initial public offering.  As such, Q1 2017 weighted average shares outstanding are for the period February 1, 2017 through March 31, 2017.

Note:  Refer to “Glossary and Reconciliations” for metric definitions and reconciliations of non-GAAP financial measures. 

Supplemental Schedule 2(b)

Debt Structure and Leverage Ratios — March 31, 2017 (1)

($ in thousands) (unaudited)

Wtd Avg

Wtd Avg

Interest

Years

Debt Structure

Balance

% of Total

Rate

to Maturity

Secured:

Fixed

$

%

%

Floating — swapped to fixed

2,020,000

35.2

%

3.7

%

3.2

Floating

2,213,578

38.6

%

3.1

%

2.6

Total secured

4,233,578

73.8

%

3.4

%

2.9

Unsecured:

Floating — swapped to fixed

1,500,000

26.2

%

3.8

%

4.9

Total unsecured

1,500,000

26.2

%

3.8

%

4.9

Total Debt:

Fixed + floating swapped to fixed

$

3,520,000

61.4

%

3.8

%

3.9

Floating

2,213,578

38.6

%

3.1

%

2.6

Total debt

5,733,578

100.0

%

3.5

%

3.4

Deferred financing costs

(19,187)

Total debt per Balance Sheet

5,714,391

Retained and repurchased certificates

(209,468)

Cash, ex-security deposits (2)

(245,167)

Deferred financing costs

19,187

Net debt

$

5,278,943

Leverage Ratios

Q1 2017

Fixed charge coverage ratio

2.5

x

Net debt / annualized Adjusted EBITDA

9.9

x

(1)

Numbers in this table do not take into account the impact of the Fannie Mae loan and associated repayment activity that occurred in April and May 2017.  On a basis that gives effect to the Fannie Mae loan and associated repayment activity, 78% of debt would have been fixed rate at March 31, 2017, weighted average interest rate would have been 3.7%, and weighted average years to maturity would have been 4.7 years.

(2)

Represents cash and cash equivalents and the non-security deposit portion of restricted cash.

Note:  Refer to “Glossary and Reconciliations” for metric definitions and reconciliations of non-GAAP financial measures. 

Supplemental Schedule 2(c)

Debt Maturity Schedule — March 31, 2017 (1)

($ in thousands) (unaudited)

Revolving

Wtd Avg

Secured

Unsecured

Credit

% of

Interest

Debt Maturities, with Extensions (2)

Debt

Debt

Facilities

Balance

Total

Rate (3)

2017

$

$

$

$

%

%

2018

%

%

2019

1,888,942

1,888,942

32.9

%

3.0

%

2020

2,344,636

2,344,636

40.9

%

3.7

%

2021

%

%

2022

1,500,000

1,500,000

26.2

%

3.8

%

2023

%

%

2024

%

%

2025

%

%

2026

%

%

2027

%

%

4,233,578

1,500,000

5,733,578

100.0

%

3.5

%

Deferred financing costs

(5,053)

(14,134)

(19,187)

Total per Balance Sheet

$

4,228,525

$

1,485,866

$

$

5,714,391

(1)

Debt maturities in this table do not take into account the impact of the Fannie Mae loan and associated repayment activity that occurred in April and May 2017.

(2)

Assumes all extension options are exercised.

(3)

Net of the impact of interest rate swaps.

Note:  Refer to “Glossary and Reconciliations” for metric definitions and reconciliations of non-GAAP financial measures. 

Supplemental Schedule 3(a)

Summary of Property Operations by Home Portfolio

($ in thousands) (unaudited)

Number of Homes, period-end

Q1 2017

Q1 2016

Same Store portfolio

43,224

43,224

Non-Same Store portfolio

4,694

4,790

Total

47,918

48,014

Revenues

Q1 2017

Q1 2016

Change YoY

Same Store portfolio

$

216,870

$

207,128

4.7

%

Non-Same Store portfolio

21,880

17,374

25.9

%

Total

$

238,750

$

224,502

6.3

%

Operating expenses

Q1 2017

Q1 2016

Change YoY

Same Store portfolio

$

79,668

$

77,365

3.0

%

Non-Same Store portfolio

8,500

7,602

11.8

%

Total

$

88,168

$

84,967

3.8

%

Net Operating Income

Q1 2017

Q1 2016

Change YoY

Same Store portfolio

$

137,202

$

129,763

5.7

%

Non-Same Store portfolio

13,380

9,772

36.9

%

Total

$

150,582

$

139,535

7.9

%

Note:  Refer to “Glossary and Reconciliations” for metric definitions and reconciliations of non-GAAP financial measures. 

Supplemental Schedule 3(b)

Same Store Portfolio Operating Detail

($ in thousands) (unaudited)

Change

Change

Q1 2017

Q1 2016

YoY

Q4 2016

Seq

Revenues:

Rental revenues

$

205,535

$

197,857

3.9

%

$

202,908

1.3

%

Other property income

11,335

9,271

22.3

%

10,227

10.8

%

Total revenues

216,870

207,128

4.7

%

213,135

1.8

%

Less:  Resident recoveries

(3,476)

(2,438)

42.6

%

(2,527)

37.6

%

Core revenues

213,394

204,690

4.3

%

210,608

1.3

%

Fixed Expenses:

Property taxes

36,702

34,253

7.1

%

35,508

3.4

%

Insurance expenses

4,233

4,739

(10.7)

%

4,297

(1.5)

%

HOA expenses

5,221

5,005

4.3

%

5,094

2.5

%

Controllable Expenses:

Repairs and maintenance

8,830

7,850

12.5

%

9,596

(8.0)

%

Personnel

9,703

11,540

(15.9)

%

10,553

(8.1)

%

Turnover

5,697

5,084

12.1

%

5,388

5.7

%

Utilities

4,296

3,381

27.1

%

4,079

5.3

%

Leasing and marketing (1)

3,458

4,183

(17.3)

%

4,018

(13.9)

%

Property administrative

1,528

1,330

14.9

%

1,963

(22.2)

%

Property operating and maintenance expenses

79,668

77,365

3.0

%

80,496

(1.0)

%

Less:  Resident recoveries

(3,476)

(2,438)

42.6

%

(2,527)

37.6

%

Core operating expenses

76,192

74,927

1.7

%

77,969

(2.3)

%

Net Operating Income

$

137,202

$

129,763

5.7

%

$

132,639

3.4

%

Same Store Metrics:

Core NOI margin

64.3

%

63.4

%

63.0

%

Average occupancy

95.8

%

96.4

%

95.3

%

Turnover rate (annualized)

31.8

%

31.1

%

29.6

%

(1)

Leasing and marketing expense includes amortization of leasing commissions of $2,711, $3,449, and $2,778 for Q1 2017, Q1 2016, and Q4 2016, respectively.

Note:  Refer to “Glossary and Reconciliations” for metric definitions and reconciliations of non-GAAP financial measures. 

Supplemental Schedule 4

Portfolio Characteristics – As of and for the quarter ended March 31, 2017 (1)

(unaudited)

Average

Number of

Average

Average

Monthly

Percent of

Homes

Occupancy

Monthly Rent

Rent PSF

Revenue

Western United States:

Southern California

4,610

95.5

%

$

2,214

$

1.30

12.5

%

Northern California

2,866

96.1

%

1,732

1.10

6.7

%

Seattle

3,185

95.7

%

1,907

1.00

8.1

%

Phoenix

5,407

95.5

%

1,153

0.73

8.3

%

Las Vegas

950

94.4

%

1,441

0.75

1.7

%

Western US Subtotal

17,018

95.6

%

1,692

1.00

37.3

%

Florida:

South Florida

5,598

93.8

%

2,159

1.12

14.7

%

Tampa

4,915

94.6

%

1,571

0.80

9.6

%

Orlando

3,714

95.7

%

1,499

0.78

7.0

%

Jacksonville

1,964

93.4

%

1,550

0.78

3.8

%

Florida Subtotal

16,191

94.4

%

1,753

0.90

35.1

%

Southeast United States:

Atlanta

7,483

95.2

%

1,363

0.67

12.6

%

Charlotte

3,104

93.7

%

1,364

0.68

5.2

%

Southeast US Subtotal

10,587

94.7

%

1,363

0.67

17.8

%

Midwest United States:

Chicago

2,939

93.2

%

2,011

1.19

7.1

%

Minneapolis

1,183

95.9

%

1,747

0.87

2.7

%

Midwest US Subtotal

4,122

94.0

%

1,934

1.09

9.8

%

Total / Average

47,918

94.9

%

$

1,661

$

0.89

100.0

%

Same Store Total / Average

43,224

95.8

%

$

1,664

$

0.90

90.8

%

(1)

All data is for the total portfolio, unless otherwise noted.

Note:  Refer to “Glossary and Reconciliations” for metric definitions and reconciliations of non-GAAP financial measures. 

Supplemental Schedule 5(a)

Same Store Revenue Growth Summary, YoY Quarter

($ in thousands, except avg. monthly rent) (unaudited)

Avg. Monthly Rent

Avg. Occupancy

Total Revenue

YoY, Q1 2017

# Homes

Q1 2017

Q1 2016

Change

Q1 2017

Q1 2016

Change

Q1 2017

Q1 2016

Change

Western United States:

Southern California

4,128

$

2,197

$

2,083

5.5

%

96.3

%

96.5

%

(0.2)

%

$

26,764

$

25,374

5.5

%

Northern California

2,446

1,712

1,597

7.2

%

97.3

%

97.9

%

(0.6)

%

13,652

12,680

7.7

%

Seattle

2,779

1,907

1,785

6.8

%

96.5

%

96.8

%

(0.3)

%

17,103

15,929

7.4

%

Phoenix

4,598

1,150

1,084

6.1

%

96.6

%

97.2

%

(0.6)

%

16,698

15,684

6.5

%

Las Vegas

871

1,442

1,381

4.4

%

95.3

%

96.0

%

(0.7)

%

3,856

3,650

5.6

%

Western US Subtotal

14,822

1,693

1,595

6.1

%

96.6

%

97.0

%

(0.4)

%

78,073

73,317

6.5

%

Florida:

South Florida

5,224

2,169

2,092

3.7

%

94.4

%

96.4

%

(2.0)

%

32,956

32,108

2.6

%

Tampa

4,494

1,566

1,509

3.8

%

95.6

%

96.5

%

(0.9)

%

21,112

20,236

4.3

%

Orlando

3,334

1,487

1,423

4.5

%

96.8

%

96.9

%

(0.1)

%

15,046

14,277

5.4

%

Jacksonville

1,880

1,557

1,522

2.3

%

93.8

%

95.9

%

(2.1)

%

8,652

8,510

1.7

%

Florida Subtotal

14,932

1,756

1,695

3.6

%

95.2

%

96.5

%

(1.3)

%

77,766

75,131

3.5

%

Southeast United States:

Atlanta

6,724

1,363

1,309

4.1

%

95.8

%

96.8

%

(1.0)

%

27,219

26,186

3.9

%

Charlotte

2,741

1,344

1,302

3.2

%

95.1

%

96.0

%

(0.9)

%

10,991

10,655

3.2

%

Southeast US Subtotal

9,465

1,358

1,307

3.9

%

95.6

%

96.6

%

(1.0)

%

38,210

36,841

3.7

%

Midwest United States:

Chicago

2,829

2,013

1,965

2.4

%

94.8

%

93.7

%

1.1

%

16,483

15,847

4.0

%

Minneapolis

1,176

1,747

1,685

3.7

%

96.2

%

94.9

%

1.3

%

6,338

5,992

5.8

%

Midwest US Subtotal

4,005

1,934

1,882

2.8

%

95.2

%

94.0

%

1.2

%

22,821

21,839

4.5

%

Same Store Total / Average

43,224

$

1,664

$

1,592

4.5

%

95.8

%

96.4

%

(0.6)

%

$

216,870

$

207,128

4.7

%

Note:  Refer to “Glossary and Reconciliations” for metric definitions and reconciliations of non-GAAP financial measures. 

Supplemental Schedule 5(a) (Continued)

Same Store Revenue Growth Summary – Sequential Quarter

($ in thousands, except avg. monthly rent) (unaudited)

Avg. Monthly Rent

Avg. Occupancy

Total Revenue

Seq, Q1 2017

# Homes

Q1 2017

Q4 2016

Change

Q1 2017

Q4 2016

Change

Q1 2017

Q4 2016

Change

Western United States:

Southern California

4,128

$

2,197

$

2,171

1.2

%

96.3

%

96.4

%

(0.1)

%

$

26,764

$

26,398

1.4

%

Northern California

2,446

1,712

1,691

1.2

%

97.3

%

97.4

%

(0.1)

%

13,652

13,449

1.5

%

Seattle

2,779

1,907

1,876

1.7

%

96.5

%

95.9

%

0.6

%

17,103

16,591

3.1

%

Phoenix

4,598

1,150

1,138

1.1

%

96.6

%

95.5

%

1.1

%

16,698

16,252

2.7

%

Las Vegas

871

1,442

1,428

1.0

%

95.3

%

95.7

%

(0.4)

%

3,856

3,786

1.8

%

Western US Subtotal

14,822

1,693

1,674

1.1

%

96.6

%

96.2

%

0.4

%

78,073

76,476

2.1

%

Florida:

South Florida

5,224

2,169

2,157

0.6

%

94.4

%

94.5

%

(0.1)

%

32,956

32,563

1.2

%

Tampa

4,494

1,566

1,554

0.8

%

95.6

%

95.3

%

0.3

%

21,112

20,902

1.0

%

Orlando

3,334

1,487

1,469

1.2

%

96.8

%

96.4

%

0.4

%

15,046

14,702

2.3

%

Jacksonville

1,880

1,557

1,554

0.2

%

93.8

%

93.2

%

0.6

%

8,652

8,523

1.5

%

Florida Subtotal

14,932

1,756

1,745

0.6

%

95.2

%

95.0

%

0.2

%

77,766

76,690

1.4

%

Southeast United States:

Atlanta

6,724

1,363

1,356

0.5

%

95.8

%

95.9

%

(0.1)

%

27,219

26,975

0.9

%

Charlotte

2,741

1,344

1,341

0.2

%

95.1

%

94.1

%

1.0

%

10,991

10,729

2.4

%

Southeast US Subtotal

9,465

1,358

1,352

0.4

%

95.6

%

95.4

%

0.2

%

38,210

37,704

1.3

%

Midwest United States:

Chicago

2,829

2,013

2,011

0.1

%

94.8

%

92.7

%

2.1

%

16,483

16,060

2.6

%

Minneapolis

1,176

1,747

1,749

(0.1)

%

96.2

%

94.9

%

1.3

%

6,338

6,205

2.1

%

Midwest US Subtotal

4,005

1,934

1,933

0.1

%

95.2

%

93.4

%

1.8

%

22,821

22,265

2.5

%

Same Store Total / Average

43,224

$

1,664

$

1,651

0.8

%

95.8

%

95.3

%

0.5

%

$

216,870

$

213,135

1.8

%

Note:  Refer to “Glossary and Reconciliations” for metric definitions and reconciliations of non-GAAP financial measures. 

Supplemental Schedule 5(b)

Same Store NOI Growth and Margin Summary – YoY Quarter

($ in thousands) (unaudited)

Total Revenue

Operating Expenses

Net Operating Income

Core NOI Margin

YoY, Q1 2017

Q1 2017

Q1 2016

Change

Q1 2017

Q1 2016

Change

Q1 2017

Q1 2016

Change

Q1 2017

Q1 2016

Western United States:

Southern California

$

26,764

$

25,374

5.5

%

$

8,309

$

8,109

2.5

%

$

18,455

$

17,265

6.9

%

69.6

%

68.1

%

Northern California

13,652

12,680

7.7

%

4,697

4,203

11.8

%

8,955

8,477

5.6

%

71.0

%

72.3

%

Seattle

17,103

15,929

7.4

%

6,361

6,293

1.1

%

10,742

9,636

11.5

%

67.6

%

64.8

%

Phoenix

16,698

15,684

6.5

%

4,576

4,429

3.3

%

12,122

11,255

7.7

%

73.1

%

71.8

%

Las Vegas

3,856

3,650

5.6

%

1,065

1,094

(2.7)

%

2,791

2,556

9.2

%

74.3

%

71.2

%

Western US Subtotal

78,073

73,317

6.5

%

25,008

24,128

3.6

%

53,065

49,189

7.9

%

70.4

%

69.1

%

Florida:

South Florida

32,956

32,108

2.6

%

14,762

14,878

(0.8)

%

18,194

17,230

5.6

%

55.3

%

53.7

%

Tampa

21,112

20,236

4.3

%

8,232

8,244

(0.1)

%

12,880

11,992

7.4

%

61.4

%

59.3

%

Orlando

15,046

14,277

5.4

%

5,786

5,654

2.3

%

9,260

8,623

7.4

%

61.8

%

60.4

%

Jacksonville

8,652

8,510

1.7

%

3,278

3,219

1.8

%

5,374

5,291

1.6

%

62.4

%

62.2

%

Florida Subtotal

77,766

75,131

3.5

%

32,058

31,995

0.2

%

45,708

43,136

6.0

%

59.0

%

57.4

%

Southeast United States:

Atlanta

27,219

26,186

3.9

%

9,295

9,242

0.6

%

17,924

16,944

5.8

%

66.1

%

64.7

%

Charlotte

10,991

10,655

3.2

%

3,493

3,447

1.3

%

7,498

7,208

4.0

%

68.5

%

67.7

%

Southeast US Subtotal

38,210

36,841

3.7

%

12,788

12,689

0.8

%

25,422

24,152

5.3

%

66.8

%

65.6

%

Midwest United States:

Chicago

16,483

15,847

4.0

%

7,681

6,539

17.5

%

8,802

9,308

(5.4)

%

53.8

%

58.9

%

Minneapolis

6,338

5,992

5.8

%

2,133

2,014

5.9

%

4,205

3,978

5.7

%

68.5

%

68.9

%

Midwest US Subtotal

22,821

21,839

4.5

%

9,814

8,553

14.7

%

13,007

13,286

(2.1)

%

57.8

%

61.6

%

Same Store Total / Average

$

216,870

$

207,128

4.7

%

$

79,668

$

77,365

3.0

%

$

137,202

$

129,763

5.7

%

64.3

%

63.4

%

Note:  Refer to “Glossary and Reconciliations” for metric definitions and reconciliations of non-GAAP financial measures. 

Supplemental Schedule 5(b) (Continued)

Same Store NOI Growth and Margin Summary – Sequential Quarter

($ in thousands) (unaudited)

Total Revenue

Operating Expenses

Net Operating Income

Core NOI Margin

Seq, Q1 2017

Q1 2017

Q4 2016

Change

Q1 2017

Q4 2016

Change

Q1 2017

Q4 2016

Change

Q1 2017

Q4 2016

Western United States:

Southern California

$

26,764

$

26,398

1.4

%

$

8,309

$

8,278

0.4

%

$

18,455

$

18,120

1.8

%

69.6

%

68.8

%

Northern California

13,652

13,449

1.5

%

4,697

4,592

2.3

%

8,955

8,857

1.1

%

71.0

%

71.2

%

Seattle

17,103

16,591

3.1

%

6,361

6,191

2.7

%

10,742

10,400

3.3

%

67.6

%

67.0

%

Phoenix

16,698

16,252

2.7

%

4,576

4,918

(7.0)

%

12,122

11,334

7.0

%

73.1

%

69.8

%

Las Vegas

3,856

3,786

1.8

%

1,065

1,149

(7.3)

%

2,791

2,637

5.8

%

74.3

%

70.9

%

Western US Subtotal

78,073

76,476

2.1

%

25,008

25,128

(0.5)

%

53,065

51,348

3.3

%

70.4

%

69.2

%

Florida:

South Florida

32,956

32,563

1.2

%

14,762

15,265

(3.3)

%

18,194

17,298

5.2

%

55.3

%

53.1

%

Tampa

21,112

20,902

1.0

%

8,232

8,438

(2.4)

%

12,880

12,464

3.3

%

61.4

%

59.7

%

Orlando

15,046

14,702

2.3

%

5,786

5,468

5.8

%

9,260

9,234

0.3

%

61.8

%

62.8

%

Jacksonville

8,652

8,523

1.5

%

3,278

3,418

(4.1)

%

5,374

5,105

5.3

%

62.4

%

59.9

%

Florida Subtotal

77,766

76,690

1.4

%

32,058

32,589

(1.6)

%

45,708

44,101

3.6

%

59.0

%

57.5

%

Southeast United States:

Atlanta

27,219

26,975

0.9

%

9,295

8,725

6.5

%

17,924

18,250

(1.8)

%

66.1

%

67.7

%

Charlotte

10,991

10,729

2.4

%

3,493

3,466

0.8

%

7,498

7,263

3.2

%

68.5

%

67.7

%

Southeast US Subtotal

38,210

37,704

1.3

%

12,788

12,191

4.9

%

25,422

25,513

(0.4)

%

66.8

%

67.7

%

Midwest United States:

Chicago

16,483

16,060

2.6

%

7,681

8,405

(8.6)

%

8,802

7,655

15.0

%

53.8

%

47.8

%

Minneapolis

6,338

6,205

2.1

%

2,133

2,183

(2.3)

%

4,205

4,022

4.5

%

68.5

%

67.0

%

Midwest US Subtotal

22,821

22,265

2.5

%

9,814

10,588

(7.3)

%

13,007

11,677

11.4

%

57.8

%

53.0

%

Same Store Total / Average

$

216,870

$

213,135

1.8

%

$

79,668

$

80,496

(1.0)

%

$

137,202

$

132,639

3.4

%

64.3

%

63.0

%

Note:  Refer to “Glossary and Reconciliations” for metric definitions and reconciliations of non-GAAP financial measures. 

Supplemental Schedule 5(c)

Same Store Lease-Over-Lease Rent Growth

(unaudited)

Net Effective Rental Rate Growth – Q1 2017

Renewal

New

Blended

Leases

Leases

Average

Western United States:

Southern California

6.5

%

5.3

%

6.3

%

Northern California

7.5

%

9.2

%

8.0

%

Seattle

7.9

%

7.5

%

7.9

%

Phoenix

5.7

%

8.2

%

6.5

%

Las Vegas

4.4

%

4.4

%

4.3

%

Western US Average

6.8

%

7.1

%

6.9

%

Florida:

South Florida

4.3

%

1.4

%

3.3

%

Tampa

4.9

%

1.1

%

3.3

%

Orlando

5.3

%

5.0

%

5.3

%

Jacksonville

3.1

%

(0.5)

%

1.4

%

Florida Average

4.5

%

1.7

%

3.4

%

Southeast United States:

Atlanta

4.9

%

3.9

%

4.5

%

Charlotte

3.3

%

1.3

%

2.3

%

Southeast US Average

4.5

%

2.9

%

3.8

%

Midwest United States:

Chicago

3.7

%

(2.6)

%

1.2

%

Minneapolis

6.0

%

1.8

%

4.6

%

Midwest US Average

4.4

%

(1.6)

%

2.1

%

Same Store Total / Average

5.3

%

3.3

%

4.5

%

Note:  Refer to “Glossary and Reconciliations” for metric definitions and reconciliations of non-GAAP financial measures. 

Supplemental Schedule 6

Normalized Property Management and G&A Reconciliation

($ in thousands) (unaudited)

Normalized Property Management Expense

Q1 2017

Q1 2016

Property management expense (GAAP)

$

11,449

$

7,393

Non-recurring expenses included in property management:

Share-based compensation related to IPO and pre-IPO grants

(3,973)

(155)

Normalized property management expense

$

7,476

$

7,238

Normalized G&A Expense

Q1 2017

Q1 2016

G&A expense (GAAP)

$

58,266

$

15,360

Non-recurring expenses included in G&A:

Share-based compensation related to IPO and pre-IPO grants

(40,271)

(4,051)

IPO costs

(7,631)

Severance expense

(45)

(806)

Normalized G&A expense

$

10,319

$

10,503

Note:  Refer to “Glossary and Reconciliations” for metric definitions and reconciliations of non-GAAP financial measures. 

Supplemental Schedule 7

Acquisitions and Dispositions – Q1 2017

(unaudited)

As of

As of

12/31/2016

Q1 2017 Acquisitions (1)

Q1 2017 Dispositions (2)

3/31/2017

Homes

Homes

Avg. Estimated

Homes

Average

Homes

Owned

Acq.

Invested Basis

Sold

Sales Price

Owned

Western United States:

Southern California

4,630

9

$

505,937

29

$

224,307

4,610

Northern California

2,879

2

324,619

15

253,000

2,866

Seattle

3,184

13

289,945

12

320,925

3,185

Phoenix

5,649

20

193,609

262

128,904

5,407

Las Vegas

944

8

238,420

2

152,000

950

Western US Subtotal

17,286

52

283,683

320

150,712

17,018

Florida:

South Florida

5,582

25

283,996

9

187,544

5,598

Tampa

4,952

5

228,723

42

177,652

4,915

Orlando

3,719

20

210,901

25

179,630

3,714

Jacksonville

1,984

20

170,270

1,964

Florida Subtotal

16,237

50

249,231

96

177,557

16,191

Southeast United States:

Atlanta

7,517

5

176,650

39

106,444

7,483

Charlotte

3,119

14

221,247

29

147,630

3,104

Southeast US Subtotal

10,636

19

209,511

68

124,009

10,587

Midwest United States:

Chicago

2,956

17

233,981

2,939

Minneapolis

1,183

1,183

Midwest US Subtotal

4,139

17

233,981

4,122

Total / Average

48,298

121

$

257,800

501

$

155,057

47,918

(1)

Estimated stabilized cap rates on acquisitions during the quarter averaged 5.5%.  Stabilized cap rate represents forecast nominal NOI for the twelve months following stabilization, divided by estimated invested basis.

(2)

Cap rates on dispositions during the quarter averaged 3.4%.  Disposition cap rate represents actual NOI recognized in the twelve months prior to the month of disposition, divided by sales price.

Note:  Refer to “Glossary and Reconciliations” for metric definitions and reconciliations of non-GAAP financial measures. 

Supplemental Schedule 8

History of Same Store Total Cost to Maintain (Gross)

($ in thousands, except per home amounts) (unaudited)

Total ($ 000)

Q1 2017

Q4 2016

Q3 2016

Q2 2016

Q1 2016

Operating expense (gross):

R&M OpEx

$

8,830

$

9,596

$

10,910

$

10,009

$

7,850

Turn OpEx

5,697

5,388

7,529

6,697

5,084

Total operating expense

14,527

14,984

18,439

16,706

12,934

Capital expenditure:

R&M CapEx

5,635

6,393

9,748

7,359

7,529

Turn CapEx

2,707

2,918

3,489

3,347

2,898

Total capital expenditure

8,342

9,311

13,237

10,706

10,427

Total cost to maintain (gross):

R&M OpEx + CapEx

14,465

15,989

20,658

17,368

15,379

Turn OpEx + CapEx

8,404

8,306

11,018

10,044

7,982

Total cost to maintain

$

22,869

$

24,295

$

31,676

$

27,412

$

23,361

Per Home ($)

Q1 2017

Q4 2016

Q3 2016

Q2 2016

Q1 2016

Operating expense (gross):

R&M OpEx

$

204

$

222

$

252

$

232

$

182

Turn OpEx

132

125

174

155

118

Total operating expense

336

347

426

387

300

Capital expenditure:

R&M CapEx

130

148

226

170

174

Turn CapEx

63

68

81

77

67

Total capital expenditure

193

216

307

247

241

Total cost to maintain (gross):

R&M OpEx + CapEx

334

370

478

402

356

Turn OpEx + CapEx

195

193

255

232

185

Total cost to maintain

$

529

$

563

$

733

$

634

$

541

Per Turn Spend ($, Gross)

Q1 2017

Q4 2016

Q3 2016

Q2 2016

Q1 2016

Avg. OpEx per turn

$

1,757

$

1,612

$

1,726

$

1,667

$

1,583

Avg. CapEx per turn

835

873

800

833

902

Avg. total spend per turn

$

2,592

$

2,485

$

2,526

$

2,500

$

2,485

Note:  Refer to “Glossary and Reconciliations” for metric definitions and reconciliations of non-GAAP financial measures. 

Supplemental Schedule 9

2017 Guidance

(unaudited)

FY 2017

Net Loss, Core FFO, and AFFO per Share Guidance (1)

Guidance

Core FFO per share – diluted

$0.96 – $1.04

AFFO per share – diluted

$0.80 – $0.88

FY 2017

Same Store Guidance

Guidance

Revenue Growth

4.75% – 5.25%

Operating Expense Growth

1.50% – 2.00%

NOI Growth

6.50% – 7.50%

Core NOI margin

63.0% – 64.0%

(1)

Core FFO and AFFO guidance is for operating results for the full year from January 1, 2017 through December 31, 2017, and assumes that estimated weighted average shares outstanding from February 1, 2017 through December 31, 2017 were outstanding for the full year 2017.

Note:  The Company does not provide guidance for the most comparable GAAP financial measures of net loss, total revenues, and property operating and maintenance, or a reconciliation of the forward-looking non-GAAP financial measures of Core FFO per share, AFFO per share, Same Store revenue growth, Same Store operating expense growth, Same Store NOI growth, and Same Store Core NOI margin to the comparable GAAP financial measures because it is unable to reasonably predict certain items contained in the GAAP measures, including non-recurring and infrequent items that are not indicative of the Company’s ongoing operations.  Such items include, but are not limited to, impairment on depreciated real estate assets, net (gain)/loss on sale of previously depreciated real estate assets, share-based compensation, casualty loss, non-Same Store revenues, and non-Same Store operating expenses.  These items are uncertain, depend on various factors, and could have a material impact on our GAAP results for the guidance period.

Note:  Refer to “Glossary and Reconciliations” for metric definitions and reconciliations of non-GAAP financial measures. 

Glossary and Reconciliations

Glossary:

Average Estimated Invested Basis

Average estimated cost basis on acquisition represents the sum of purchase price, any closing adjustments, and estimated upfront renovation expense for an acquired home or population of homes.

Average Monthly Rent

Average monthly rent represents the average of the contracted monthly rent for occupied properties in an identified population of homes for the relevant period and reflects rent concessions amortized over the life of the related lease.

Average Occupancy

Average occupancy for an identified population of homes represents (i) the number of days that the homes available for lease in such population were occupied, divided by (ii) the total number of available days in the measurement period for the homes in that population.

Core NOI Margin

Core NOI margin for an identified population of homes is calculated by dividing NOI by total revenues, net of resident recoveries attributable to such population.

Days to Re-resident

Days to re-resident for an individual home represents the number of days a home is unoccupied between residents, calculated as the number of days between (i) the date the prior resident moves out of a home, and (ii) the date the next resident is granted access to the same home, which is deemed to be the earlier of (x) the next resident’s contractual lease start date and (y) the next resident’s move-in date.

EBITDA and Adjusted EBITDA

EBITDA and Adjusted EBITDA are supplemental, non-GAAP measures often utilized to evaluate the performance of real estate companies. We define EBITDA as net income or loss (computed in accordance with GAAP) before the following items: interest expense; income tax expense; and depreciation and amortization. Adjusted EBITDA is defined as EBITDA before the following items: share-based compensation expense; offering related expenses, impairment and other; acquisition costs; gain (loss) on sale of property, net of tax; and interest income and other miscellaneous income and expenses. EBITDA and Adjusted EBITDA are used as supplemental financial performance measures by management and by external users of our financial statements, such as investors and commercial banks. Set forth below is additional detail on how management uses EBITDA and Adjusted EBITDA as measures of performance.

The GAAP measure most directly comparable to EBITDA and Adjusted EBITDA is net income or loss. EBITDA and Adjusted EBITDA are not used as measures of our liquidity and should not be considered alternatives to net income or loss or any other measure of financial performance presented in accordance with GAAP. Our EBITDA and Adjusted EBITDA may not be comparable to the EBITDA and Adjusted EBITDA of other companies due to the fact that not all companies use the same definitions of EBITDA and Adjusted EBITDA. Accordingly, there can be no assurance that our basis for computing these non-GAAP measures is comparable with that of other companies.

See “Reconciliation of Non-GAAP Measures” below for a reconciliation of net loss to EBITDA and Adjusted EBITDA as determined in accordance with GAAP.

Funds from Operations (FFO), Core Funds from Operations (Core FFO), and Adjusted Funds from Operations (AFFO)

FFO, Core FFO, and Adjusted FFO are supplemental, non-GAAP measures often utilized to evaluate the performance of real estate companies. FFO is defined by the National Association of Real Estate Investment Trusts (“NAREIT”) as net income or loss (computed in accordance with GAAP) excluding net gains or losses from sales of previously depreciated real estate assets, plus depreciation, amortization and impairment of real estate assets, and adjustments for unconsolidated partnerships and joint ventures.

We believe that FFO is a meaningful supplemental measure of the operating performance of our business because historical cost accounting for real estate assets in accordance with GAAP assumes that the value of real estate assets diminishes predictably over time, as reflected through depreciation and amortization. Because real estate values have historically risen or fallen with market conditions, management considers FFO an appropriate supplemental performance measure as it excludes historical cost depreciation and amortization, impairment on depreciated real estate investments, as well as gains or losses related to sales of previously depreciated homes, from GAAP net income or loss.

The GAAP measure most directly comparable to FFO is net income or loss. FFO is not used as a measure of our liquidity and should not be considered an alternative to net income or loss or any other measure of financial performance presented in accordance with GAAP. Our FFO may not be comparable to the FFO of other companies due to the fact that not all companies use the same definition of FFO. Accordingly, there can be no assurance that our basis for computing this non-GAAP measures is comparable with that of other companies.

We believe that Core FFO and Adjusted FFO are also meaningful supplemental measures of our operating performance for the same reasons as FFO and are further helpful to investors as they provides a more consistent measurement of our performance across reporting periods by removing the impact of certain items that are not comparable from period to period. We define Core FFO as FFO adjusted for noncash interest expense related to amortization of deferred financing costs and discounts related to our financing arrangements, noncash interest expense for derivatives, share-based compensation expense, offering related expenses, severance expenses, casualty losses, net, and acquisition costs, as applicable. We define Adjusted FFO as Core FFO less recurring capital expenditures that are necessary to help preserve the value of and maintain functionality of our homes.

The GAAP measure most directly comparable to Core FFO and Adjusted FFO is net income or loss. Core FFO and Adjusted FFO are not used as measures of our liquidity and should not be considered alternatives to net income or loss or any other measure of financial performance presented in accordance with GAAP. Our Core FFO and Adjusted FFO may not be comparable to the Core FFO and Adjusted FFO of other companies due to the fact that not all companies use the same definition of Core FFO and Adjusted FFO. Accordingly, there can be no assurance that our basis for computing this non-GAAP measures is comparable with that of other companies.

Please see Supplemental Schedule 1 for a reconciliation of net loss to FFO, Core FFO, and Adjusted FFO as determined in accordance with GAAP.

Net Effective Rental Rate Growth

Net effective rental rate growth for any home represents the difference between the monthly rent from an expiring lease and the monthly rent from the next lease, in each case, net of any amortized concessions. Leases are either renewal leases, where our current resident chooses to stay for a subsequent lease term, or a new lease, where our previous resident moves out and a new resident signs a lease to occupy the same home.  Blended net effective rental rate growth represents the blended average of net effective rental rate growth for both new and renewal leases.

Net Operating Income (NOI)

NOI is a non-GAAP measure often used to evaluate the performance of real estate companies. We define NOI for an identified population of homes as rental revenues and other property income less property operating and maintenance expense (which consists primarily of property taxes, insurance, HOA fees (when applicable), market-level personnel expenses, repairs and maintenance, leasing costs and marketing). NOI excludes: interest expense; depreciation and amortization; general and administrative expense; property management expense; impairment and other; acquisition costs; (gain) loss on sale of property, net of tax; and interest income and other miscellaneous income and expenses.

The GAAP measure most directly comparable to NOI is net income or loss. NOI is not used as a measure of liquidity and should not be considered as an alternative to net income or loss or any other measure of financial performance presented in accordance with GAAP. Our NOI may not be comparable to the NOI of other companies due to the fact that not all companies use the same definition of NOI. Accordingly, there can be no assurance that our basis for computing this non-GAAP measure is comparable with that of other companies.

We believe that Same Store NOI is also a meaningful supplemental measure of our operating performance for the same reasons as NOI and is further helpful to investors as it provides a more consistent measurement of our performance across reporting periods by reflecting NOI for homes in our Same Store portfolio.

See “Reconciliation of Non-GAAP Measures” below for a reconciliation of net loss to NOI for our total portfolio and NOI for our Same Store portfolio as determined in accordance with GAAP.

Northern California

Northern California includes Modesto, CA, Napa, CA, Oakland–Fremont–Hayward, CA, Sacramento-Arden-Arcade-Roseville, CA, San Jose–Sunnyvale–Santa Clara, CA, Stockton–Lodi, CA, Vallejo–Fairfield, CA and Yuba City, CA.

PSF

PSF means per square foot.

Same Store / Same Store Portfolio

Same Store or Same Store portfolio includes, for a given reporting period, homes that have been stabilized (defined as homes that have (i) completed an upfront renovation and (ii) entered into at least one post-renovation Invitation Homes lease) for at least 90 days prior to the first day of the prior-year measurement period and excludes homes that have been sold and homes that have been designated for sale but have not yet entered into a written sale agreement during such reporting period. Same Store portfolios are established as of January 1st of each calendar year. Therefore, any home included in the Same Store portfolio will have satisfied the conditions described in clauses (i) and (ii) above prior to October 3rd of the year prior to the first year of the comparison period. We believe presenting information about the portion of our portfolio that has been fully operational for the entirety of a given reporting period and its prior year comparison period provides investors with meaningful information about the performance of our comparable homes across periods and about trends in our organic business.

South Florida

South Florida includes Fort Lauderdale–Pompano Beach–Deerfield Beach, FL, Key West, FL, Miami–Miami Beach-Kendall, FL and West Palm Beach–Boca Raton–Delray Beach, FL.

Southern California

Southern California includes Anaheim–Santa Ana–Irvine, CA, Los Angeles-Long Beach–Glendale, CA, Oxnard–Thousand Oaks–Ventura, CA, Riverside–San Bernardino–Ontario, CA and San Diego–Carlsbad–San Marcos, CA.

Total Cost to Maintain

Total cost to maintain a home represents the sum of average maintenance and turnover expense per home (gross) and average capital expenditures per home, in each case before giving effect to any offsetting income received directly from residents or withheld out of resident security deposits.

Total Homes / Total Portfolio

Total homes or total portfolio refers to the total number of homes we own, whether or not stabilized, and excludes any properties previously acquired in purchases that have been subsequently rescinded or vacated.

Turnover Rate

Turnover rate represents the number of instances that homes in an identified population become unoccupied in a given period, divided by the number of homes in such population. To the extent the measurement period shown is less than 12 months, the turnover rate will be reflected on an annualized basis.

Reconciliation of Non-GAAP Measures:

Reconciliation of Total Revenues to Same Store Total Revenues and Same Store Core Revenues

(in thousands) (unaudited)

Q1 2017

Q1 2016

% Change

Total revenues (total portfolio)

$

238,750

$

224,502

6.3

%

Non-Same Store total revenues

(21,880)

(17,374)

Total revenues (Same Store portfolio)

216,870

207,128

4.7

%

Resident recoveries (Same Store portfolio)

(3,476)

(2,438)

Core revenues (Same Store portfolio)

$

213,394

$

204,690

4.3

%

Reconciliation of Property Operating and Maintenance to Same Store Operating Expenses and Same Store Core Operating Expenses

(in thousands) (unaudited)

Q1 2017

Q1 2016

% Change

Property operating and maintenance expenses (total portfolio)

$

88,168

$

84,967

3.8

%

Non-Same Store operating expenses

(8,500)

(7,602)

Operating expenses (Same Store portfolio)

79,668

77,365

3.0

%

Resident recoveries (Same Store portfolio)

(3,476)

(2,438)

Core operating expenses (Same Store portfolio)

$

76,192

$

74,927

1.7

%

Reconciliation of Net Loss to NOI, Same Store NOI, and Same Store Core NOI Margin

(in thousands) (unaudited)

Q1 2017

Q1 2016

% Change

Net loss

$

(42,391)

$

(9,975)

Interest expense

68,572

70,277

Depreciation and amortization

67,577

65,702

General and administrative

58,266

15,360

Property management expense

11,449

7,393

Impairment and other

1,204

(183)

Acquisition costs

35

Gain on sale of property, net of tax

(14,321)

(9,192)

Other

226

118

NOI (total portfolio)

150,582

139,535

7.9

%

Non-Same Store NOI

(13,380)

(9,772)

NOI (Same Store portfolio)

$

137,202

$

129,763

5.7

%

Core revenues (Same Store portfolio)

$

213,394

$

204,690

Core NOI margin (Same Store portfolio)

64.3%

63.4%

Reconciliation of Net Loss to EBITDA and Adjusted EBITDA

(in thousands) (unaudited)

Q1 2017

Q1 2016

% Change

Net loss

$

(42,391)

$

(9,975)

Interest expense

68,572

70,277

Depreciation and amortization

67,577

65,702

EBITDA

93,758

126,004

Share-based compensation related to IPO and pre-IPO grants

44,244

4,206

Offering related expenses

7,631

Impairment and other

1,204

(183)

Acquisition costs

35

Gain on sale of property, net of tax

(14,321)

(9,192)

Other

226

118

Adjusted EBITDA

$

132,742

$

120,988

9.7

%

Reconciliation of Net Debt / Annualized Adjusted EBITDA

(in thousands, except for ratio) (unaudited)

As of

March 31, 2017

Mortgage loans, net

$

4,228,525

Term loan facility, net

1,485,866

Total debt per Balance Sheet

5,714,391

Retained and repurchased certificates

(209,468)

Cash, ex-security deposits (1)

(245,167)

Deferred financing costs

19,187

Net Debt (A)

$

5,278,943

For the Three

Months Ended

March 31, 2017

Adjusted EBITDA (B)

$

132,742

Annualized Adjusted EBITDA (C = B x 4)

$

530,968

Net debt / annualized Adjusted EBITDA (A / C)

9.9

x

(1)

Represents cash and cash equivalents and the non-security deposit portion of restricted cash.

Reconciliation of Fixed Charge Coverage Ratio

(in thousands, except for ratio) (unaudited)

For the Three

Months Ended

March 31, 2017

Interest expense

$

68,572

Noncash interest expense

(15,134)

Fixed charges (A)

$

53,438

Adjusted EBITDA (B)

$

132,742

Fixed charge coverage ratio (B / A)

2.5

x

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