Invitation Homes Earnings: Expense Growth Remains Elevated While Company Completes Major Acquisition

Third-quarter results for Invitation Homes were in line with our expectations, leading us to reaffirm our $41 fair value estimate for the no-moat company. Same-store occupancy fell 70 basis points sequentially to 96.9%, relatively in line with our estimate of 97.0%. Meanwhile, average rents increased 6.2% year over year, close to our estimate of 5.9% growth for the third quarter, which led to same-store revenue growth of 6.0%. Same-store operating expenses remain elevated with the company reporting 10.2% year-over-year growth, though expense growth has been decelerating each quarter since the company reported what appears to be the peak of 16.3% growth in the fourth quarter of 2022. As a result, same-store net operating income grew 4.0% in the third quarter, which is below our estimate of 5.8% growth. Still, Invitation Homes reported core funds from operations of $0.44 per share in the third quarter that matched our estimate and is up $0.02 from the $0.42 figure the company reported in the third quarter of 2022.