Invitation Homes Earnings: High Revenue and Expense Growth Should Decelerate Through Course of 2023

First-quarter results for no-moat Invitation Homes were slightly better than we anticipated, leading us to reaffirm our $40 fair value estimate. Same-store occupancy improved 50 basis points sequentially to 97.8%, better than our estimate of flat growth. Average rental rates were up 8.5% year over year, leading to same-store revenue growth of 7.7% that was just slightly ahead of our 7.2% estimate. However, same-store operating expenses were up 14.0%, in line with our estimate, with real estate taxes up 11.3%, personnel costs up 18.4%, costs related to turning over units up 45.7%, and utility costs up 64.5%. As a result, same-store net operating income was up 5.0%, which is less than the revenue increase but beat our 4.1% same-store NOI growth estimate. Core funds from operations came in at $0.44 per share in the first quarter, which is a penny better than our $0.43 estimate and 9.5% higher than the $0.40 figure reported in the first quarter of 2022.