Invitation Homes Inc ($INVH) Q1 2026 Earnings Call

Thank you, Scott. Good morning, everyone. Thanks for joining us. I want to start by thanking our associates for another quarter of strong execution in a dynamic environment and our residents for continuing to choose Invitation Homes. We delivered first quarter results in line with our expectations, accelerated average occupancy to the mid 96% range, and entered April with improving leasing momentum. I'll let Tim walk through the details, but this positions us really well in the early part of the peak leasing season. We are in the business of providing high-quality, professionally managed homes in neighborhoods where families want to live, and the value proposition for our residents has never been clearer. In our markets, leasing one of our homes saves residents on average almost $1,000 per month compared to owning, according to data from John Burns. That is not a temporary dislocation. It reflects higher mortgage rates, increased home prices, and the structural cost of home ownership. For millions of American families, leasing a single family home is simply the most financially responsible housing choice. We are proud to be part of that solution, and we take that responsibility seriously. In recent months, I've spent a lot of time working with other industry leaders in Washington DC to advocate on behalf of our industry and our residents. I've met frequently with policy makers at the White House, Treasury, and Capitol Hill on both sides of the aisle. Everyone is focused on the same objective of making housing more affordable in this country. And I'm encouraged by the constructive dialogue and confident we're moving in the right direction for our industry and the residents we serve. This responsibility shows up in everything we do. We maintain and improve almost 110,000 homes across 16 core markets. We create new housing supply through development and strategic partnerships. And we provide residents the flexibility, space, and access to school districts they want without the financial burdens of home ownership. For our residents, these are intentional housing choices, not stop gaps. And that is reflected in our strong retention rates and the length of time our residents choose to stay. Those resident behaviors underpin the resilience of our business. During periods of uncertainty, we tend to see residents stay longer, occupancy to remain stable, and cash flows hold up really well. In the first quarter, our same store average resident tenure was over 40 months with resident renewals remaining very high at over 78%. That resilience gives us flexibility in how we think about allocating capital. While the share price has not been where we want it to be, we've been deliberate about addressing that. During the quarter, we completed the full $500 million share repurchase authorization approved by our board last October, including $400 million of buybacks since our February earnings call. Our board has also just approved a new $500 million repurchase authorization and we will continue to evaluate the best uses of capital as conditions evolve. We also continue to support and advance our third party homebuilder partnerships. Our forward pipeline today stands at just over $200 million, reduced roughly two-thirds from where it was a year ago. We value these relationships because they serve a dual purpose. They generate attractive risk-adjusted returns for our shareholders and they contribute new housing supply to the markets where we operate. Meanwhile, the ResiBuilt acquisition as we closed in January has moved quickly from integration to production, delivering over 300 homes to third party buyers during the quarter. Our plan remains to continue using ResiBuilt primarily as a fee builder as we evaluate the right pace of building for ourselves. In addition, our construction lending business has grown to $279 million of commitments as of today, generating attractive returns. To date, we've funded just under $20 million against those lending commitments, and we expect that number to grow through 2026 as the development progresses. Together, ResiBuilt and construction lending represent a differentiated and capital efficient way of bringing new housing supply to the markets. Looking ahead, we feel good about where we stand. Occupancy is climbing as we enter peak leasing season. New lease rent growth turned positive in April. We have a clear view of where our capital can create the most value. The thesis is really straightforward. Durable demand, disciplined operations, and capital allocation that rewards shareholders. We are executing on all three. At our November investor day, I laid out exactly what this management team is focused on. Running the best operated single family rental company in the country. I'm confident we are moving in the right direction. With that, I'll turn it over to Tim.

Hi Steve, this is Dallas and I'll defer on the tax piece of this to John. He can jump in and sort of address that. Look, Scott and the team have done a really nice job of thinking ahead on a lot of this. This dates back to last year as we thought about our asset management strategies, what we were going to do with the business as we continue to see sort of an unsupportive share price. We've always been a good seller. I think up to this point in time, we've sold almost like 20,000 homes back into the marketplace in the history of our business. We know how to do it. We know how to do it if the market's there. That's a really important point. And as you look at just like what we sold in the quarter, like I would bet close to 100% of those went to homeowners generally. So there's also a mortgage market factor here that allows us to sort of think about pricing and things like that. That being said, our assets are primarily infill assets, higher desirable locations. So there's a bid there generally as we've gone to market to sell these homes. Scott and the team are looking for ways to, you know, be good capital allocators at the end of the day. So we recognize the spread that's there. We're going to continue to use it as a measured lever like we have in the past, albeit it's a far more attractive sort of cycle when you're buying back shares at the prices that we were buying them back at. But it's a balanced approach. So, we don't want to necessarily signal one way or the other. We're going to continue to watch it through Q2, look for opportunities to continue to recycle capital accretively and then, you know, put that capital into whichever lever makes the most sense at the time. Could be buybacks, could be, you know, opportunities, things, etc. So, I'll hand it over to John. Maybe John, you want to talk a little bit about tax?

Hi, good question. Generally speaking, you know, we get inquiries about opportunities to manage. Like we've said in the past, you know, we're highly selective about when, how, and who in terms of how we want to operate because we really just want to run our operating playbook, generally speaking, as a rule of thumb. You know, that being said, there will be some noise that comes out of some of the legislative discussion that's been going on, and it certainly could create some opportunities. It's I think it's a bit too early to sort of tell or try to put a handicap on that in terms of the opportunity set. I would just say that the team here both with our own portfolio metrics and I think hopefully from what our customers see is just really consistent operations at the end of the day and I think that has probably lent itself to Scott and the group being able to, you know, pursue or look at some other opportunities.

Yeah, happy to, you know, provide some color as I can. At this point, look, it's been a very active quarter in terms of advocacy work. And we've obviously been on the front lines with some of our peers in spending a lot of time on the Hill. And as I shared in my opening remarks, you know, to be candid, I think there's sort of two or three things that have come out of this process thus far. First is I think policy makers and I think the media are much better educated as to what the industry does now versus maybe some of the taboo that has sort of been written about the industry for the last 10 years. I view that as an incredibly net positive. I thought the coverage has been fair. I think people are pointing out the fact that Invitation Homes, some of our peers are adding a lot of new supply and creating services that people want. That's the first stop. I just think there's a better understood point in the marketplace about who we are and what it is that we do. The second piece that I would sort of say is that I have been totally impressed by the amount of collaborative conversation we've had on both sides of the aisle in Washington DC. And I would also share that we've had really good conversations with both, you know, the administration, Treasury, and elected officials that are trying to solve some of these housing supply issues. And I truly do believe that it's done in earnest that people are trying to address the fact that we know we need more housing supply in the marketplace. That being said, the conversations are dynamic. I think people understand that you want to create regulatory framework that provides clarity to capital and I think over the last 90 days that's been a little murky and that's created some noise and I think everybody has appreciated it to your point that we don't want to do things that stunt housing supply generally. Sounds like some of these provisions that are currently in its current form of being drafted are being reviewed and thought through to see if there can be effective what I would call change or revision maybe to try to land this in a safer place for both capital for our residents and for the opportunities to sort of provide these services. And that leads me to my last point is that, you know, people that rent are voters and they're residents and they matter. And I think that message has resonated very well on the hill as well that we have, you know, 47 million households in this country that lease something and there should be rights associated with those households as well. So I don't think it's a simple solution whenever, you know, housing bills and draft a lot of work has gone into that I think by both sides. We've tried to stay as collaborative as we can with everyone through this process. We want to be viewed as a productive partner in housing. So that's been the approach we've taken as an industry. While legislation is never perfect, I think the goal here is that over time this lands in the right place so that everyone can have clarity, residents, capital and most importantly the housing market so they can continue to evolve and create new supply.

Yeah. So, listen, couple of things. One is there's, to use a golf analogy, there's a lot of grass between here and the hole to know where this thing sort of finally lands. I want to be really clear about that. We are glass half full guys generally and we're always trying to think about ways that we can work with what we have. And I even say with the bill in its current form, I think Scott and I are comfortable and so are John that there's a lot of ways to still bring new housing supply to the market. It's not perfect. And we hope it gets fixed but the reality is like we think we can operate within the framework. I think as it relates to ResiBuilt, set the bill aside, you know, our goal has been to get smarter and smarter as homebuilders in all of the strategic partnerships that we have and will continue to maintain but also at some point in time to be able to control a little bit of our own destiny and that can come in a variety of shapes and sizes. Scott's looking at a lot of very interesting opportunities real time. I think it still weighs out in our earlier comments around how do we allocate capital in this environment. So, you know, development opportunities may not be high at some best use right now all the time, but there's certainly some things that are starting to look more and more palpable as we look for some of these opportunities. And then how you design these communities, the standards with which they are, are they town home? You know, how do you make sure that you operate within whatever potential framework is or isn't there in the future? And so maybe I hand it over to Scott just to talk, maybe Scott give a little bit broader sort of what we're seeing right now and what our learnings are early days on the ResiBuilt transaction.

Hey, this is Dallas and I'll also let Scott chime in on this one as well. Look, I mean, we've actually seen sort of overall supply in the resale market be pretty steady. We haven't seen much movement in cap rates. I mean, you've certainly seen some opportunities maybe on finished spec inventory where there might be some, you know, call it interesting scattered sort of approaches but I think with sort of the murky outlook for the last 90 days of where the market is I think capital's being very cautious in terms of how to think about one-off purchasing or anything like that. Now, that being said, too, remember the end-user market is very mortgage market driven, generally speaking, especially if you're kind of in suburbs or tertiary outliers. We see less of that with our infill portfolio, as we talked about in our disposition program earlier. So, we haven't seen a whole heck of a lot that seems all that compelling.

Hi, this is Dallas and Tim, feel free to add any comment. Look, we've been for the last year about having 16 to 17% of our moveouts be part of a home purchase opportunity. It's been I would call it very consistent and a little bit low for the last four quarters. I would also say that we basically see like 25% of our moveouts are tied to some sort of a transition in life like a moving event, trying a new schools, etc. Those numbers have been for the last four quarters incredibly consistent. Tim, you want to add anything?

Okay, thanks for the question.

We want to thank everyone for their support. Thanks for being on the call today. Look forward to seeing people at upcoming conferences. Thank you.