Q1 2024 Invitation Homes Inc Earnings Call

Operator: Greetings and welcome to the Invitation Homes first 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.

Greetings and welcome to the invitation homes first 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 star 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.

Scott McLaughlin: Good morning and welcome. I'm here today from Invitation Homes with Dallas Tanner, Chief Executive Officer, Charles Young, President and Chief Operating Officer, John Olsen, Chief Financial Officer, and Scott Eisen, Chief Investment Officer.

Scott McLaughlin: Good morning, and welcome them.

Scott McLaughlin: Here today from invitation homes with Dallas, Tanner, Chief Executive Officer, Charles Young President and Chief operating Officer.

Scott McLaughlin: John Olson Chief Financial Officer.

And Scott Eisen, Chief investment Officer.

Scott McLaughlin: 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 limit yourselves to one question and then re-cue if you'd like to ask a follow-up question. During today's call, we may reference our first 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.

Scott McLaughlin: Following our prepared remarks, we'll conduct a question and answer session with our covering sell side analysts in.

In the interest of time, we ask that you limit yourselves to one question and then re queue, if you'd like to ask a follow up question.

Scott McLaughlin: During today's call we may reference our first quarter 2024 earnings release and supplemental information.

Scott McLaughlin: This document was issued yesterday after the market closed and is available on the Investor Relations section of our website at Www Dot I N V H Dot com.

Scott McLaughlin: 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 FCC from time to time.

Scott McLaughlin: 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.

Scott McLaughlin: 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.

Scott McLaughlin: 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 the call. You can find additional information regarding these non-GAAP measures, including reconciliations to the most comparable GAAP measures in yesterday's earnings release. I'll now turn the call over to Dallas Tanner, our Chief Executive Officer.

Scott McLaughlin: Except to the extent otherwise required by law invitation homes does not update forward looking statements and expressly disclaims any obligation to do so.

Scott McLaughlin: We may also discuss certain non-GAAP financial measures during the call.

Scott McLaughlin: You can find additional information regarding these non-GAAP measures, including reconciliations to the most comparable GAAP measures in Yesterdays earnings release.

Dallas B. Tanner: I'll now turn the call over to Dallas, Tanner, our Chief Executive Officer.

Dallas B. Tanner: Good morning, everyone, and thank you for joining us. Our teams kicked off 2024 with a great start to the year. In particular, our first quarter results reflect high same-store average occupancy, Accelerating Same-Store Rent Growth, and Strong Same-Store Core Revenue and NOI Growth. We believe this puts us in a great position as we begin our peak leasing. That being said, operating and leasing success is only one aspect of our anticipated growth this year.

Dallas B. Tanner: Good morning, everyone and thank you for joining us our team kicked off 2024 with the great start to the year in particular, our first quarter results reflect high same store average occupancy.

Dallas: Accelerating same store rent growth and.

Dallas: And strong same store core revenue and NOI growth. We believe this puts us in a great position as we begin our peak leasing season.

Dallas: That being said operating and leasing success is only one aspect of our anticipated growth this year.

Dallas B. Tanner: When we spoke to you in February, we told you that our 14,000 home property and asset management agreement with Starwood was just the beginning. Less than three months later, we've added over 7,000 more homes onto our management platform. Including through last night's announcement of our joint venture with Quartera, Centerbridge, and other high-quality investors, as well as our agreement with Nuveen that we signed in March. We are honored to work with each of these respected partners, who highly value our coast-to-coast SFR management expertise and best-in-class operating and management capabilities.

Dallas: When we spoke to you in February we told you that our 14000 home property and asset management agreement with Starwood was just the beginning.

Dallas: Less than three months later, we've added over 7000 more homes onto our management platform <unk>.

Scott McLaughlin: Including through last night's announcement of our joint venture with core Terra Centerbridge and other high quality investors as well as our agreement with <unk> that we signed in March.

Scott McLaughlin: We are honored to work with each of these respective partners, who highly value our coast to coast SF Our management expertise and best in class operating and management capabilities.

Dallas B. Tanner: We believe this is just the beginning of the journey to grow our professional management and services business, which, as a reminder, offers many benefits to Invitation Homes. First, we are an attractive property and asset management fee that is commensurate with our unmatched expertise and scale. Second, we're able to grow earnings in a capital-light manner, including through the opportunity to potentially acquire these homes at a later date. Third, we develop deeper insight via the operational data we collect, which helps us to better operate our own homes and markets.

Scott McLaughlin: We believe this is just the beginning of the journey to grow our professional management services business, which as a reminder offers many benefits to invitation homes.

Scott McLaughlin: First we are an attractive property and asset management fees that are commensurate with our unmatched expertise and scale.

Scott McLaughlin: Second we're able to grow earnings in a capital light manner, including through the opportunity potentially acquire these homes at a later date.

Scott McLaughlin: Third we developed deeper insight via the operational data, we collect which help us to better operate our own homes and markets.

Dallas B. Tanner: Fourth, we can further leverage the combined power of scale and density by spreading our costs across a larger number of homes, thereby improving our margin. We believe our partners and residents also benefit from choosing Invitation Homes as their manager. In addition to getting direct access to our operating, leasing, and asset management expertise, our partners can realize potential savings from utilizing our vast vendor network, our staffing optimization, and our advantageous pricing agreement.

Scott McLaughlin: Fourth we can further leverage the combined power of scale and density by spreading our costs across a larger number of homes, thereby improving our margins.

Scott McLaughlin: We believe our partners and residents also benefit from choosing invitation homes as their manager.

Scott McLaughlin: In addition to getting direct access to our operating leasing and asset management expertise.

Scott McLaughlin: Our partners can realize potential savings from utilizing our vast vendor network.

Scott McLaughlin: Staffing optimization and are advantageous pricing agreements.

Dallas B. Tanner: Residents, in turn, receive our signature genuine care and pro care services, along with the value-add amenities we offer, including, for example, our internet bundle that we buy in bulk in several of our markets and provide to residents at a discount to retail prices.

Scott McLaughlin: Residents in turn receive our signature genuine care and broker services.

Scott McLaughlin: Along with the value add amenities we offer.

Scott McLaughlin: Including for example, our Internet bundle that we buy in bulk and several of our markets and provides the residents at a discount to retail pricing.

Dallas B. Tanner: Another area of growth for us remains our new product, Pipeline. We announced last month that we added several large home builders to our growing list of relationships, including D.R. Horton, Maritage Homes, and Dream Finder Homes. We're under contract with them to build approximately 500 new homes, primarily in Charlotte, Jacksonville, and Nashville, with deliveries expected to start later this year. Underwritten cap rates on these acquisitions are in line with our previously stated targets of roughly a 6% yield on cost, which I will remind you is a return that's effectively free of any development risk to us today.

Scott McLaughlin: Another area of growth for US remains our new product pipeline, we announced last month that we added several large homebuilders to our growing list of relationships.

Scott McLaughlin: Including Dr. Horton Meritage homes and Dream finders homes.

Scott McLaughlin: Our contract with them to build approximately 500, new homes, primarily in Charlotte Jacksonville, and Nashville with deliveries expected to start later this year.

Scott McLaughlin: Underwritten cap rates on these acquisitions are in line with our previously stated targets of roughly a 6% yield on cost, which I'll remind you is a return that is effectively free of any development risk to us today.

Dallas B. Tanner: Given the dynamic environment we've seen in the last couple of years and the volatility in land pricing, the cost of materials, and interest in cap rates, our contracts are designed to protect us from the risks inherent in on-balance sheet development while achieving what we believe are far superior risk-adjusted total returns. We're proud of the growth we've delivered through partnering with the best and largest home builders in the country, while also helping to create much needed new housing supply in the communities we serve.

Scott McLaughlin: Given the dynamic environment, we've seen in the last couple of years and the volatility in land pricing cost of materials and interest in cap rates or contracts are designed to protect us from the risks inherent with on balance sheet development, while achieving what we believe are far superior risk adjusted total return.

Scott McLaughlin: We're proud of the growth we delivered through partnering with the best and largest homebuilders in the country. While also helping to create much needed new housing supply in the communities we serve.

Dallas B. Tanner: To wrap up, we're pleased with how our teams have started off this year. I extend my thanks to all of our associates for their hard work and seamlessly bringing thousands of new homes onto our platform, while at the same time continuing to deliver outstanding operating and leasing results. As we look ahead, we're excited by our ability to sustain this momentum as we leverage our strategic approach and operational excellence to drive continued growth for our stakeholders through the remainder of the year. With that, I'll pass the call on to Charles Young, our President and Chief Operating Officer.

Scott McLaughlin: To wrap up we're pleased with how our teams have started off this year.

Scott McLaughlin: And my thanks to all of our associates for their hard work and seamlessly, bringing thousands of new homes onto our platform. While at the same time continuing to deliver outstanding operating and leasing results. As we look ahead, we're excited by our ability to sustain this momentum as we leverage our strategic approach and operational excellence.

Scott McLaughlin: To drive continued growth for our stakeholders through the remainder of the year.

Scott McLaughlin: With that I'll pass the call on to Charles Young, our President and Chief operating Officer.

Charles D. Young: Thank you, Dallas. Our associates really shined during the first quarter, delivering great results and preparing the business for our peak leasing and maintenance, all while bringing 14,000 third-party managed homes into our operation. During the first quarter, we maintained high occupancy, accelerated lease rent growth, and continued to see our customers stay longer with us. We believe this is all part of a simple formula for sustainable NOI growth throughout the country. Now let's cover our first quarter same store operating results in more detail. Fundamentals remain strong.

Charles D. Young: Thank you Dallas, our associates really shine during the first quarter delivering great results and preparing our business for our peak leasing and maintenance season, all while bringing 14003rd party managed homes into our operations. During the first quarter, we maintained high occupancy accelerated lease rent growth and continue.

Charles D. Young: To see our customers stay longer with us.

Charles D. Young: We believe this is all part of a simple formula to sustainable NOI growth throughout the year.

Charles D. Young: Now, let's cover our first quarter same store operating results in more detail fundamentals remained strong and thanks to the great performance of our teams. We grew same store NOI by four 7% in the first quarter.

Charles D. Young: And thanks to the great performance of our teams, we grew same store NOI by 4.7% in the first quarter. Same store core revenues grew 5.6% year-over-year driven by average monthly rental rate growth of 4.6%. www.invitationhomesinc.com. Same store core operating expenses in the first quarter increased 7.4% year over year. This was the result of an 11.8% increase in fixed expenses and a 0.5% decrease in controllable costs For fixed expenses, the largest driver of the increase was property.

Charles D. Young: Same store core revenues grew five 6% year over year, driven by average monthly rental rate growth of four 6%, an 80 basis point year over year improvement in bad debt and a 15, 9% increase in other income primarily related to our value added offerings.

Charles D. Young: Same store core operating expenses in the first quarter increased seven 4% year over year. This was the result of an 11, 8% increase in fixed expenses and a <unk>, 5% decrease in controllable costs for.

Charles D. Young: Our fixed expenses the largest driver of the increase was property taxes.

Charles D. Young: As we anticipated and previously discussed, due to the under-accrual of property taxes in the first three quarters of last year, we expect property tax expense growth to be higher during the first three quarters of this year before normalizing in the fourth. Meanwhile, on the controllable side of expenses, we're pleased to see cost of goods continue to moderate, as well as a strong effort by our teams to control costs. This is reflected in our 0.5% reduction in controllable expenses year-over-year, as well as our 4.6% reduction in controllable costs from the fourth quarter of 2023 to the first quarter of 2025.

Charles D. Young: As we anticipated and previously discussed due to the under accrual of property taxes in the first three quarters of last year, we expect property tax expense growth to be higher during the first three quarters of this year before normalizing in the fourth quarter.

Charles D. Young: Yes.

Charles D. Young: Meanwhile, on the controllable side of expenses, we're pleased to see cost of goods continue to moderate as well as a strong effort by our teams to control costs. This is reflected in our half a percent reduction in controllable expenses year over year as well as our four 6% reduction in controllable costs from the fourth.

Charles D. Young: Quarter of 2023 to first quarter 2020 for a particular note. The first quarter same store turnover rate of five 2% was flat with last year's first quarter results yet turnover expense was down two 4% year over year. This is due in part to the progress we've made in working through our lease compliance backlog.

Charles D. Young: Of particular note, the first quarter same-store turnover rate of 5.2% was flat with last year's first quarter results, yet turnover expense was down 2.4% year-over-year. This is due in part to the progress we've made in working through our lease compliance background. In that regard, it's great to see more of our markets returning to pre-pandemic normal levels of bad debt.

Jonathan S. Olsen: As a reminder, the normal for us is approximately 40 to 60 basis points of bad debt as a percentage of gross rental revenue, which has historically been industry leading among our SFRP. Looking ahead, while we still have some work to do in a few of our markets, we remain encouraged by the continued high quality of our new properties, whose average household income over the last 12 months is now approximately $158,000 a year, bringing our average income-to-rent ratio to 5.6%.

Charles D. Young: In that regard, it's great to see more of our markets returning to pre pandemic normal levels of bad debt. As a reminder, normal for US is approximately 40% to 60 basis points of bad debt as a percentage of gross rental revenues.

Charles D. Young: Which has historically been industry, leading among our <unk> peers.

Charles D. Young: <unk> ahead, while we still have some work to do in a few of our markets. We remain encouraged by the continued high quality of our new residents, whose average household income over the last 12 months is now approximately $158000 a year, bringing our average income to rent ratio to five six times.

Jonathan S. Olsen: Now let's cover our same store leasing trends. First, renewals grew 5.8% and new leases increased 0.8% year over year. Distro blended rent growth was 4.4%. Average occupancy in the first quarter remained strong at 97.6%. Our preliminary April 2024 results show our peak leasing season has started off well. Renewal rent growth accelerated to 6%, while new lease rate growth accelerated to 3.1%, delivering blended rent growth of 5.2% in April. Average occupancy generally held steady at 97.5%.

Charles D. Young: Now, let's cover our same store leasing trends in the first quarter, where newest grew five 8% and new leases increased <unk>, 8% year over year. This drove blended rent growth to four 4% average occupancy in the first quarter remained strong at 97, 6%.

Charles D. Young: Our preliminary April 2024 results show our peak leasing season has started off well.

Charles D. Young: Renewal rent growth accelerated to 6%, while new lease rate growth accelerated to three 1% delivering blended rent growth of five 2% in April average occupancy generally held steady at 97, 5%.

Jonathan S. Olsen: With occupancy in a strong position and fundamentals remaining in our favor, we believe we're in great shape to capture the demand we're seeing in our markets and continue the great momentum our teams have built. I'd like to thank them again for their focus on resident service and operational excellence along with their diligent efforts as we plan and prepare for the future. With that, I'll now turn the call over to John Olsen, our Chief Financial Officer. Thanks, Charles.

Charles D. Young: With occupancy in a strong position in fundamentals remaining in our favor. We believe we're in great shape to capture the demand we're seeing in our markets and continue the great momentum our teams have built.

Charles D. Young: I'd like to thank them again for their focus on resident service and operational excellence along with their diligent efforts as we plan and prepare for future growth.

Charles D. Young: With that I'll now turn the call over to Jon Olson, our Chief Financial Officer.

Jonathan S. Olsen: Thanks, Charles, and good morning, everyone. Today, I'll cover our financial results for the first quarter of 2024, followed by an update on our investment grade rated balance sheet before opening the line for questions. I'll start with our first quarter 2024 financial results. Core FFO increased 5.7% year-over-year to $0.47 per share, primarily due to an increase in NOI. These results also reflect the first quarter of contribution from the 14,000 home portfolio we started managing in mid-January.

Jonathan S. Olsen: Thanks, Charles and good morning, everyone today I'll cover our financial results for the first quarter 2024, followed by an update on our investment grade rated balance sheet before opening the line for questions.

Jonathan S. Olsen: The fees we earned were partially offset by investments we made in resources and support to help prepare for anticipated future growth. These items are included on our income statement under Management Fee, Revenues, and Property Management Expense, respectively.

Jonathan S. Olsen: I'll start with our first quarter 2020 for our financial results.

Jonathan S. Olsen: Core <unk> increased five 7% year over year to <unk> 47 per share primarily due to an increase in NOI.

Charles D. Young: These results also reflect the first quarter of contribution from the 14000 home portfolio, we started managing in mid January.

Charles D. Young: The fees, we earned were partially offset by investments we made in resources and support to help prepare for anticipated future growth.

Charles D. Young: These items are included on our income statement under management fee revenues and property management expense respectively.

Jonathan S. Olsen: Meanwhile, higher core FFO drove our 6.8% year-over-year increase in AFFO to $0.41 per share. We're pleased with these results and appreciate the considerable efforts of our associates to help us begin the year strong. Turning now to our Investment Grade rated balance sheet, we had over $1.7 billion in available liquidity at the end of the first quarter through a combination of unrestricted cash and undrawn capacity on our revolving credit facility. Our net debt to trailing 12-month adjusted EBITDA ratio was 5.4 times at March 31, 2024, down slightly from 5.5 times as of December 31, and just below our 5.5 to 6 times targeted. We have no In addition, 99.5% of our total debt is fixed rate or swapped to fixed rate, and over 76% of our total debt is unsecured.

Charles D. Young: Meanwhile, higher core <unk> drove our six 8% year over year increase in <unk> to <unk> 41 per share. We're pleased with these results and appreciate the considerable efforts of our associates to help us begin the year strong.

Charles D. Young: Turning now to our investment grade rated balance sheet.

Charles D. Young: We had over $1 7 billion in available liquidity at the end of the first quarter through a combination of unrestricted cash and undrawn capacity on our revolving credit facility.

Charles D. Young: Our net debt to trailing 12 month adjusted EBITDA ratio was five four times at March 31, 2024 down slightly from five five times as of December 31, and.

Charles D. Young: And just below our five 5% to six times targeted range.

Charles D. Young: We have no debt, reaching final maturity until 2026 and.

Charles D. Young: In addition, 99, 5% of our total debt is fixed rate or swapped to fixed rate and over 76% of our total debt is unsecured.

Jonathan S. Olsen: This week, we received further validation of the strength of our balance sheet. Specifically, I'm referring to our announcement that Moody's recently upgraded the company to BAA2 from BAA3, joining both S&P and Fitch with a BBB flat investment grade rating. Looking forward, we believe this ratings upgrade further enhances our positioning for when compelling opportunities arise. In summary, we believe Invitation Homes is at the beginning of a new phase of our business in which exciting opportunities could become more actionable, and the quality of our balance sheet systems and talent are the best they've ever been.

Charles D. Young: This week, we received further validation of the strength of our balance sheet, specifically I'm, referring to our announcement that Moody's recently upgraded the company to be <unk>, two from <unk> III, joining both S&P and Fitch with Triple B flat investment grade ratings.

Charles D. Young: Looking forward, we believe this ratings upgrade further enhances our positioning for when compelling opportunities arise.

Charles D. Young: In summary, we believe invitation homes is at the beginning of a new phase of our business and which exciting opportunities could become more actionable and the quality of our balance sheet systems and talent are the best they've ever been.

Jonathan S. Olsen: All of this puts us on a path from which we believe we can continue to deliver outsized results for our stockholders and the best possible experience for our residents. That concludes our prepared remarks. Operator, please open the line for questions.

Charles D. Young: All of this puts us on a path from which we believe we can continue to deliver outsized results for our stockholders and the best possible experience for our residents.

Speaker Change: That concludes our prepared remarks, operator, please open the line for questions.

Operator: We will now begin our question and answer session. To ask a question, please press star then 1 on your telephone keypad. To withdraw your question, please press star 1 again. If you are using a speakerphone, please pick up your handset before pressing. In the interest of time, we ask that participants limit themselves to one question, then re-queue by pressing star 1 to ask a follow-up question. Our first question will come from Michael Goldsmith from UBS. Please go ahead. Your line is open.

Speaker Change: We will now begin our question and answer session to ask a question. Please press Star then one on your telephone keypad.

Speaker Change: Your question. Please press star one again.

Charles D. Young: If youre using a speakerphone please pick up your handset before pressing the keys.

Charles D. Young: In the interest of time, we ask that participants limit themselves to one question that re queue by pressing star one to ask a follow up question.

Charles D. Young: Our first question will come from Michael Goldsmith from UBS. Please go ahead. Your line is open.

Michael Goldsmith: Good morning. Thanks a lot for taking my question. In the past, you've talked about starting to push right around the Super Bowl, so mid-February. So it seems like this year, it kind of maybe took a step back. New lease rents kind of took a step back in March before your recent comment that they accelerated in April. So do you kind of get a sense of the sequential trajectory of the new lease rents during the quarter and into April? And if there were any factors that were influencing maybe some of the choppiness? And where it is now, it seems kind of on pace. Sure.

Michael Goldsmith: Good morning, Thanks, a lot for taking my question in the past you've talked about starting to push rate around the Super Bowl. So mid February so it seems like just this year it kind of may.

Speaker Change: Maybe took a step back.

Michael Goldsmith: Let's take a step back in March before your recent commentary.

Michael Goldsmith: Accelerated into April so just trying to get a sense of kind of the sequential trajectory.

Michael Goldsmith: These rent spreads during the during the quarter and into April and if there was any factors that was influencing maybe some of the choppiness, which has resulted in where it is now it seems to us.

Charles D. Young: Sure, this is Charles. I appreciate the question. Look, we've seen really healthy acceleration through the quarter. As we talked about last quarter, we had solved for occupancy coming out of last year as we had some lease compliance turnover that spiked. We did exactly what we said we were going to do.

Charles D. Young: Sure. This is Charles I. Appreciate the question look we've seen really healthy acceleration through the quarter.

Charles D. Young: As we talked about last quarter, we had solved for occupancy coming out of last year as we had some lease compliance turnover that spiked we did exactly what we said we're going to do we've got occupancy up from 97, 1% to $97 six for the quarter, which is really healthy and then we started pushing.

Charles D. Young: We got occupancy up from 97.1 to 97.6 for the quarter, which is really healthy. And then we started pushing rates in January in anticipation, as you're talking about, for February to jump. So from January to February, we went up over 300 basis points, and continued to push into March into the high twos. And looking at April here in the high threes, that's all new lease rent growth. The blend has also accelerated in the last three, four months, as we anticipated.

Charles D. Young: Rates in January in anticipation as Youre talking about for February to jumped so from January to February we went up over 300 basis points continue to push into March to the high twos and looking at April here in the high threes Thats, all new lease rent growth to blend has also accelerated.

Charles D. Young: The last three four months as we anticipated what's really great. Though is we're still 97 five occupied and we're seeing further acceleration in the <unk>. So we set ourselves up really nicely to capture the demand that comes at this time of year in peak season, So really haven't seen.

Charles D. Young: What's really great, though, is we're still 97.5 occupied, and we're seeing further acceleration into May. So we have set ourselves up really nicely to capture the demand that comes this time of year. So, we really haven't seen any kind of dislocation from what is the typical seasonality that we expected, and, you know, if there was anything, it was just us setting ourselves up to take advantage of the demand that's in front of us by getting our

Charles D. Young: Any kind of dislocation from what is the typical seasonality that we expected.

Charles D. Young: And if there was anything that was just offsetting ourselves up to take advantage of the demand that's in front of us by giving occupied.

Eric Wolfe: Our next question comes from Eric Wolfe from Citi. Please go ahead; your line is open.

Charles D. Young: Our next question comes from Eric Wolfe from Citi. Please go ahead. Your line is open.

Dallas B. Tanner: Hey, thanks. I know you get asked this question a lot, but the Wall Street Journal article the other day brought up regulatory risk again and generated some more questions. So I was just curious, from your perspective, what you're advocating for that you think would help the housing affordability issues? If it's not limits on ownership or rent control, what do you think would improve housing affordability? And what role are you going to play in that? Yeah,

Eric Wolfe: Hey, thanks.

Eric Wolfe: And then you get asked this question a lot, but the Wall Street Journal article the other day, the product regulatory risk again and generated some more questions. So I was just curious from your perspective, what you are advocating for that you think would help.

Eric Wolfe: Housing affordability issues, it's not limits on ownership of rent control. What do you think with improved housing affordability and what role are you going to play in that.

Dallas B. Tanner: Yeah, we really appreciate the question. You know, clearly, the cost of housing in the country is a bit high, generally. And it keeps getting worse, particularly due to, you know, higher mortgage rates and a lack of supply. Now, what we can do is our best to encourage that new supply coming into the market, which is why we're working with so many of our home builder partners, helping them start large new communities that often include a mix of for sale and for lease housing. And you have to remember, there are 47 million households in the U.S. that rent something somewhere. It's about a third of the country, and it's been that way really for decades.

Speaker Change: Really appreciate the question.

Speaker Change: Clearly the cost of housing in the country is a bit high generally.

Speaker Change: It is getting worse, particularly due to higher mortgage rates and lack of supply now what we can do is our best encourage that new supply coming into the market, which is why we're working with so many of our homebuilder partners, helping them to start large new communities that often include a mix of for sale and for lease housing and you have to remember there are 47 million household.

Speaker Change: In the U S that rent something somewhere it's about a third of the country and it's been that way really for decades and so.

Dallas B. Tanner: And so, you know, it's also important to remember that, you know, we learned this from our residents. They tell us time and time again that they want choice and flexibility of leasing a home. And it's at a significantly lower cost than owning. If you look at our West Coast markets today, it's upwards of almost $2,000 a month cheaper to lease a home in markets like Seattle and Southern California than it would be to own.

Speaker Change: It's also important to remember that we learned this from our residents. They tell us time and time again that they want choice and flexibility of leasing out and it's at a significantly lower cost to <unk>. If you look at our west coast markets today, it's upwards of almost $2000 a month cheaper to lease at home in markets like Seattle, and Southern California, then it would be.

Speaker Change: One.

Dallas B. Tanner: So, you know, John Burns covers a lot of this data really well, but attempts to restrict companies like ours for being, you know, a need or desired option for consumers seem sort of misguided. It's also counterproductive. I think that's why, as noted in that article that you mentioned, none of the anti-leasing and anti-professional management bills have actually gotten very far to date at both national and state levels. So regardless of the narrative that it's a populist thing to try to point fingers at companies that are providing housing solutions, we're going to continue to work with our trade associations.

Speaker Change: So.

Speaker Change: John Burns covers a lot of this data really well, but attempts to restrict companies like ours for being a need or desire to option for consumers seems sort of to be misguided. It's also counterproductive I think thats why as noted in that article that you mentioned, none of the anti leasing and anti professional management bills actually get very far.

Speaker Change: Year to date at both National and state levels, So regardless of the narrative that kind of it's a popular thing to try to point fingers.

Speaker Change: Companies that are providing housing solutions, we're going to continue to work with our trade associations, we work at the state and local levels very effectively and candidly <unk> seen some really positive legislation go through in the states that are much more proactive and as housing debate and trying to create access for private capital to come in to the housing market.

Dallas B. Tanner: We work at the state and local levels very effectively. And, candidly, you've seen some really positive legislation go through in the states that are much more proactive in this housing debate and trying to create, you know, access for private capital to come into the housing market and to provide additional dwelling units. So that's our goal is to be part of that narrative, which would be to bring new supply into the market over and over and over.

Speaker Change: And to provide additional dwelling units. So thats. Our goal is to be part of that narrative, which would be to bring new supply into the market over and over and over and we're not going to stop there and as we've announced in our script, we're working with some of the best and brightest in the country doing that.

Dallas B. Tanner: And we're not going to stop. And as we've announced in our script, we're working with some of the best and brightest in the country to do that. Our next question comes from Brad Heffern from RBC Capital Markets. Please go ahead.

Speaker Change: Okay.

Bradley Barrett Heffern: Our next question comes from Brad Heffern from RBC Capital Markets. Please go ahead. Your line is open. Yeah.

Speaker Change: Our next question comes from Brad Heffern from RBC Capital markets. Please go ahead. Your line is open.

Bradley Barrett Heffern: Yes. Thanks, John is there any context, you can give for the incremental contribution from the new third party management agreements to earnings I know, you're obviously not changing the guidance, but just some sort of scale and that would be great.

Jonathan S. Olsen: Sure. So I think it's important to note that, as you point out, we had guided to $0.02 of earnings contribution from third-party management. Included in that guide were both the Starwood and the Nuveen agreements. The Upwards America agreement that we announced yesterday is not in there.

John: Sure so.

John: It's important to note.

Bradley Barrett Heffern: You point out we had guided to two cents of earnings contribution from third Party management included in that guide, where both the Starwood and the nuveen agreements.

Speaker Change: The upwards America.

John: Agreement that we announced yesterday is not in there I think it's also important to note. However that only one of those three portfolios has been on boarded at this stage just the starwood portfolio. The <unk> portfolio is scheduled to be onboard in mid may.

Stephen Thomas Sakwa: I think it's also important to note, however, that only one of those three portfolios has been onboarded at this stage, just the Starwood portfolio. The Nuveen portfolio is scheduled to be onboarded in mid-May, and then Upward America sometime in the third quarter. So I think as we approach those onboarding dates, we'll get better and better visibility into the operating metrics specific to those portfolios of homes, and we'll have better insight into what we think the potential is.

John: Then upward America sometime in the third quarter. So I think as we approach those onboarding dates.

John: Get better and better visibility into the operating metrics specific to those portfolios of homes and we will have better insight into what we think the potential is so I think time will tell we're still very early on.

Speaker Change: But as we approach those onboarding dates and we get more time under our belt actually managing those portfolios will see if there is some upside to what we've guided thus far.

unknown: Great

Stephen Thomas Sakwa: So I think time will tell, we're still very early on. But as we approach those onboarding dates, and we get more time under our belts, actually managing those portfolios, we'll see if there's some upside to what we've guided thus far. Our next question comes from Steve Sakwa from Evercore ISI. Please go ahead. Your line is open.

Speaker Change: Our next question comes from Steve Sochua from Evercore ISI. Please go ahead. Your line is open.

Unknown Executive: Great. Thanks, Good morning, Charles I don't know if you had touched on the renewal increases that had maybe gone out for.

Unknown Executive: The April May June and maybe even July period, so any commentary around that would be great. Yes I.

Austin Todd Wurschmidt: www.invitationhomesinc.com So, still healthy if you look back on any historical data. Our next question comes from Austin Wurschmidt from KeyBank Capital Markets. Please go ahead, your line is open. Yeah, hi, good morning. I just have a question.

Unknown Executive: I hadn't mentioned it we went out for May and June in the mid Sevens.

Unknown Executive: Which was similar maybe slightly lower from what we did with April and we ended up April at six O, which was accelerating from all of Q1. So it's still healthy as you look back on any historical means.

Speaker Change: Yeah.

Austin Todd Wurschmidt: Our next question comes from Austin Wurschmidt from KeyBank Capital Markets. Please go ahead; your line is open.

Speaker Change: Our next question comes from Austin <unk> from Keybanc capital markets. Please go ahead. Your line is open.

Austin: Yeah, Hi, good morning, just have a question related to transaction activity and I was hoping you could provide some additional comments around the more significant entrants into Nashville, whether or not you are looking at other new markets to enter and then just more broadly about activity in the transaction market and whether you think there is enough in the pipeline.

Austin: Kind of hit that full year acquisition guidance.

Dallas B. Tanner: Yeah, hey, this is Dallas. I'll start, and then I'll, I'll have Scott add anything that he'd like to it. But, you know, first and foremost, we went back into Nashville as part of a transaction last summer that allowed us to get, you know, a significant amount of more scale in that marketplace. I think Scott can give you more color on the ground with what we're seeing in real time in terms of the opportunities.

Austin: Yes.

Austin: As Dallas I'll start and then ill have Scott add anything that he'd like to.

Dallas: First and foremost we went back and our Nashville as part of the transaction last summer that allowed us to get a significant amount of more scale in that marketplace. I think Scott can give you more color on the ground with what we're seeing real time in terms of the opportunity. So I think we feel very good about our guidance ranges no change there.

Austin: And remember with the new construction that we're building it's lumpy. It comes in at different times of the year and we certainly are looking at some M&A and having discussions and I think <unk> seen we have been extremely active in the last six months with the 20000 units that we brought on one thing I just want to highlight and then I'll hand, it over to Scott.

Dallas B. Tanner: I think we feel very good about our guidance ranges, no change there. And remember, with the new construction that we're building, it's lumpy, it comes in at different times of the year. And you know, we certainly are looking at some M&A and having discussions. And I think you've seen we've been extremely active in the last six months, with the 20,000 units that we brought on.

Scott: I think what's really exciting about the three PM business for US is that if you look at the first three transactions we've done they've all been very different in nature. One is a pure play third party management with maybe an option for a take out down the road.

Dallas B. Tanner: One thing I just want to highlight, and then I'll hand it over to Scott, is that if you look at the first three transactions we've done, they've all been very different in nature. One is a pure play third-party management with maybe an option for a takeout down the road. The other was us actually acquiring management contracts and thinking about, you know, further expansion of that relationship with that particular capital partner.

Scott: Other was us actually acquiring management contracts and thinking about further expansion of that relationship with that particular capital partner and then the last situation, we bought into a new home construction portfolio with both professional capital and a professional homebuilders and so in <unk> and participating in the <unk>.

Austin: <unk> stack so to speak it gives us obviously align incentives, but also clear.

Austin: A clear view on how to grow that business in that particular portfolio of some period of time, Scott do you want to maybe get a little bit more color on what we're seeing in and just sort of from a scale perspective sharing and just to address your questions about markets. Nashville is a good example, where we're adding new homes in that market. Both through third party management agreements and also some communities that we are buying as well.

Dallas B. Tanner: And in the last situation, we bought into a new home construction portfolio with both professional capital and a professional home builder. And so, participating in the equity stack, so to speak, it gives us, you know, obviously, aligned incentives, but also a clear view of how to grow that business in that particular portfolio over some period of time. Scott, do you want to maybe give a little bit more color on what we're seeing, and just sort of from a scale perspective?

Scott G. Eisen: Sure. And just to address your questions about markets, Nashville is a good example where we're adding new homes in that market, both through third-party management agreements and also some communities that we are buying as well. And so that's just an example of something that we're trying to, you know, take a market where we were undersized before, but clearly, we're getting some good scale in the near run, and we hope to grow there more over time.

Speaker Change: And so that's just an example of something that we're trying to.

Speaker Change: Take a market, where we were undersized before but clearly we're getting some good scale in the near Ron and we hope to grow there more overtime. We have other markets that we are also eyeing that and we're going to get exposed to three in the third party management contracts and <unk> contracts and we're hoping to see more like in Austin and San Antonio for example, as markets. In addition, one thing that I would add is that we continue to.

Speaker Change: Expand our dialogue with the homebuilders, obviously, we've done a lot historically with <unk>, but we're also adding more.

Speaker Change: National and midsized milliner relationships to the stable here, we're doing some deals with Horton and we're doing some deals with maritime we've got some other mid sized builders that we're adding to the stable and we continue to add more of the build for rent product, where we're helping create supply in Dallas, Dallas talked about earlier and working with the homebuilders to give them confidence.

Scott G. Eisen: We're doing some deals with Horton. We're doing some deals with Meritage. We've got some other midsize builders that we're adding to the stable. And we continue to add more of the built-for-rent product where we're helping create supply, as Dallas talked about earlier, and working with the homebuilders to give them, you know, confidence to start new communities and know that we can buy some of the homes and have some of those homes be purchased by retail customers. So we continue to do our part to create more supply, and obviously, it's adding to our acquisitions backlog and pipeline.

Speaker Change: Vince to start new communities and know that we can buy some of the homes and have some of those homes be purchased by retail customers. So we continue to do our part to create more supply and obviously, it's adding to our acquisition of backlog and pipeline.

Juan Carlos Sanabria: Our next question comes from Juan Sanabria from BMO Capital Markets. Please go ahead. Your line is open.

Speaker Change: Our next question comes from Juan Sanabria from BMO Capital markets. Please go ahead. Your line is open.

Juan Carlos Sanabria: Hi, good morning. Just taking on the 3 p.m. theme, just curious about how you think about the overall size of the opportunity is there any basic math you could share on what the accretion would be if you had let's say 10,000 homes or just [inaudible] Metric or you'd like to talk to you and and just going back to the previous question about regulation we've obviously seen some negative headlines for the industry about you know.

Juan Carlos Sanabria: Hi, Good morning, just sticking on the <unk> theme I'm, just curious about how you think about the overall size of the opportunity.

Juan Carlos Sanabria: Is there any basic math you could share on.

Juan Carlos Sanabria: What the accretion would be if you're at let's say 10000 homes or just.

Juan Carlos Sanabria: Whatever met.

Speaker Change: The metrics are.

Juan Carlos Sanabria: You'd like to talk to you then and just going back to the previous question about regulation, we've obviously seen some negative headlines for the industry about.

Juan Carlos Sanabria: No.

Juan Carlos Sanabria: Collusion or whatever I'm pricing. Is there any concern for you guys that as you take on more responsibility, and you manage third-party assets, and it's all in one system, that you could come under the threat there are risks around pricing for the industry?

Juan Carlos Sanabria: Collusion or whatever on pricing is there any concern for you guys that as you take on more responsibility that and you manage third party assets and it's all in one system that you could be.

Juan Carlos Sanabria: Under that.

Juan Carlos Sanabria: Threats there are risks around <unk>.

Juan Carlos Sanabria: Pricing for the industry.

Dallas B. Tanner: Juan, thanks for your questions. I'm going to try to answer them in a few different ways.

Speaker Change: Well thanks for your questions I'm going to try to hit them in a few different ways and then I would say John feel free to add anything on the economics.

John: Look I think and we talked about this over and over and over you have to remember the size and scale of the U S housing footprint, we have about 147 million households that owner lease something in the USA I mentioned earlier $47 million of those lease if you look at the single family rental.

Dallas B. Tanner: And then I would say, John, feel free to add anything on economics. Look, I think, and we talk about this over and over and over. You have to remember the size and scale of the US housing footprint. We have about 147 million households that own or lease something in the United States. I mentioned earlier 47 million of those are leases. If you look at the single family rental dynamic in the U.S., there's somewhere between, call it, 15 million-ish homes that are for lease.

John: Dynamic in the U S. There is somewhere between call it $15 million ish homes that are for lease roughly about 3% of those are probably.

Dallas B. Tanner: Roughly about 3% of those are probably operated by what we call professional capital that might total maybe 500,000 units, and those are spread amongst at least 60 different companies that I'm aware of. So the data actually on the other 97% of single-family rentals that are out there is sort of in a universe that nobody has access to that information. So no, I think it's actually the opposite one.

Speaker Change: Operator by what we call professional capital that might total maybe 500000 units and those are spread amongst at least 60 different companies that I'm aware of.

Speaker Change: So the data actually on the other 97%.

Speaker Change: Family rentals that are out there is sort of in a universe that nobody has access to that information. So no I think it's actually the opposite one.

Dallas B. Tanner: As a company, we have our own data. We look at all the public information on the listing data, and that has informed our thinking around rents and prices of homes and things like that for the last decade, just using publicly available information. Second, in terms of the sizing of what we're calling 3PM internally, but really, it's the additional scale we can bring onto the platform by being a service provider for other owners of single-family rental homes. It's still early.

Speaker Change: As a company we have our own data.

Juan Carlos Sanabria: We look at all the public information on the listing data and that has informed our thinking around rents and pricing of homes and things like that for the last decade, just publicly available information.

Juan Carlos Sanabria: Second in terms of the.

Juan Carlos Sanabria: The sizing of what we're calling three PM internally, but really it's.

Juan Carlos Sanabria: The additional scale, we can bring out of the platform by being a service provider for other for other owners of single family rental.

Dallas B. Tanner: And like I mentioned, there are about 500,000 units that we can identify as being sort of professionally owned out of the 15 million. So it's about, you know, plus or minus 3% of that. We would love to stay active and keep growing our business. I will tell you, think about the strength of the platform. Adding 20,000 units over a six or nine month period is going to give us a tremendous amount of horsepower.

Juan Carlos Sanabria: It's still early.

Juan Carlos Sanabria: I mentioned Theres about 500000 units that we can identify as being sort of professionally one out of the $15 million. So it's about plus or minus 3% of that.

Juan Carlos Sanabria: We would love to stay active and keep growing our business I will tell you think about like the strength of the platform, adding 20000 units over a six or nine month period is going to give us tremendous amount of horsepower even in our own portfolio you start to think about.

Dallas B. Tanner: Even in our own portfolio, you start to think about RFPs that we have out where we're working on getting more efficient with our own costs and our spend. That's going to give us additional capacity there to lean in and give our vendors more work, but at the same time, try to get better prices for our customers. We're really excited about what that means. We see the landscape currently being tens of thousands or maybe 100,000 plus units, but we expect the SFR industry to keep growing.

Juan Carlos Sanabria: <unk> that we have out where we're working on getting more efficient with our own costs and our spend that's going to give us additional capacity there to lean in and to give our vendors more work, but at the same time try to get better pricing for our customers and so we're really excited about what that means we see the landscapes currently being tens of thousands are.

Juan Carlos Sanabria: Maybe 100000 plus units, but we expect the SF our industry to keep growing and we expect that over time and maybe the next decade that 97% could come in a little bit at much like you've seen in multifamily over the last 30 years, where if you look at multifamily and numbers are sort of similar about 15% of the multifamily industry.

Dallas B. Tanner: We expect that over time and maybe the next decade, that 97% could come in a little bit, much like you've seen in multifamily over the last 30 years, where if you look at multifamily, the numbers are similar. About 15% of the multifamily industry is owned by professional capital, where 85% is owned by small family offices and people that have one-off investments. We would expect SFR, over the next couple of decades, to hopefully grow in a much better professional manner. John, do you want to add anything to that?

Juan Carlos Sanabria: Is owned by professional capital, where 85% is owned by small family office and people that have one offs investments. So we would expect SSR over the next couple of decades to hopefully grow in a much better professional manner. John do you want to add anything to that yes, I think I think the other part of your question is is the right question. The answer is.

Jonathan S. Olsen: Yeah, I think the other part of your question is the right question. The answer is, at this stage of the game, we don't have a shorthand rubric that we can share in terms of how to think about, you know, every X thousand homes brought on the platform through third-party management. I think over time, as we onboard the two portfolios that we're looking forward to, the law of large numbers suggests that we ought to be able to do that.

John: At this stage of the game, we don't have a <unk>.

John: Short hand, rubric that we can share in terms of how to think about every X thousand homes brought on the platform through third party management.

John: I think over time as we onboard the two portfolios that were looking forward to the law of large numbers suggest that we ought to be able to do that but I think it's also important to remember that there are a lot of variables that make a simplification a little bit challenging market mix is very price points vary.

Juan Carlos Sanabria: Sort of degree of upfront renovation done varies.

Jonathan S. Olsen: And so I think as we, through our asset management exercises, help shape these portfolios to perform as best they can, and as we get more homes on the platform and have more sort of actual operating and financial results we can look at, we'll be in a much better position to share what we think is a smart way to think about, you know, how much those opportunities can potentially add to the bottom line over time.

Juan Carlos Sanabria: And so I think as we through our asset management exercises helped shape. These portfolios to perform as best they can and as we get more homes on the platform and have more sort of actual operating and financial results. We can look at I think we'll be in a much better position to.

Juan Carlos Sanabria: To share what we think is a smart way to think about how much those opportunities can potentially add to the bottom line over time.

John Joseph Pawlowski: Our next question comes from John Pawlowski from Green Street. Please go ahead; your line is open.

Juan Carlos Sanabria: Our next question comes from John Pawlowski from Green Street. Please go ahead. Your line is open.

Dallas B. Tanner: Charles or Dallas, do you have an internal view of, I know you guys are prioritizing occupancy, but this is a question about market rents, and so do you have an internal view of why market rents aren't growing at a much, much faster clip than they are given the affordability gap you referenced in some of your markets, Dallas? Is supply more than we think, or is immigration into the Sunbelt slower than we think? Just curious what you think the culprit is.

John Joseph Pawlowski: Hey, Thanks for the time, Charles or Dallas.

John Joseph Pawlowski: Do you have a internal view.

John Joseph Pawlowski: You guys are prioritizing occupancy, but this is a question on market rents and so do you have an internal view of why if market rents aren't growing at a much much faster clip than they are given the affordability gap you referenced in some of your markets. Dallas is supplied more than we think or as in migration to the sunbelt slower than we think just curious.

Juan Carlos Sanabria: What you think the culprit is.

Dallas B. Tanner: Yeah, I think I would look at it as a culprit. If you go back outside of the COVID years, we're trending above where we've been historically on both new lease and renewal. So on a blended rate, we're more occupied than we ever have been, and people underestimate the value of that occupancy to our NOI growth. And so, look, I think we're just seeing back to normal kind of seasonality, and coming off of COVID, it feels like it's a slowdown. But the reality is, it's still really healthy.

Speaker Change: Yes, I think I would look at it as a culprit. If you go back outside of the Covid years were trending above where we've been historically on on both new lease and renewals on a blended rate and we're more occupied than we ever been and people underestimate the value of that occupancy to our NOI growth and so.

Speaker Change: Look I think we're just seeing back to normal kind of seasonality and coming off of Covid. It feels like it's a slowdown but the reality is it's still really healthy to your point, though there are certain markets that were really humming.

Dallas B. Tanner: To your point, though, there are certain markets that were really humming during the pandemic, and, you know, they're coming back to earth a little bit, Phoenix and Vegas being a couple of those that we've talked about. I expect that we'll start to see them move kind of more positively on the new lease rate side in the near future, as we've gotten them occupied now and things are settling down. Florida has been humming for a long time.

Speaker Change: The pandemic.

Speaker Change: And they're coming back to Earth, a little bit Phoenix and Vegas being a couple of those that we've talked about.

Speaker Change: I expect that we'll start to see them move kind of more positive on the new lease rate side in the near future as we've gotten them occupied now and things are settling down Florida has been humming for a long time, South Florida is still really strong right. Now if you look at our rates, but Tampa and Orlando are seeing a little bit of a slowdown relative to what we saw over the last.

Dallas B. Tanner: South Florida is still really strong right now, if you look at our rates. But Tampa and Orlando are seeing a little bit of a slowdown relative to what, you know, we saw over the last couple of years. So, generally, it's really strong. There are not a lot of demographic changes that are material, but we saw a lot of people moving to Florida and Texas and other markets that slowed down. And so that's taken away a little bit of the edge.

Speaker Change: Couple of years. So generally it's really strong there's not a lot of demographic changes that are material, but we saw a lot of people moving to Florida, and Texas and other markets that slowed down and so that's taken away a little bit of the edge, but that's again just takes us back to where we think we are which is kind of a normal seasonality in normal kind of <unk>.

Dallas B. Tanner: But that, again, just takes us back to where we think we are, which is kind of a normal seasonality and a normal kind of under supply of homes. If you look at us relative to multifamily, we know we're in a good position. Tailwinds are in our favor. We've been able to grow occupancy in the slow season, get occupied, and now we're going to capture that demand going forward. So feel like we're in good shape. There's some dynamics in individual markets we can get into if you have more further questions, but generally, we're in good shape. Yeah, John. This is Dallas.

Speaker Change: <unk> supply of homes, if you look at us relative to multifamily we know we're in a good position tail winds are in our favor we've been able to grow occupancy and a slow season hit occupied and now we're going to capture that demand going forward. So feel like we're in healthy shape. There are some dynamics in individual markets. We can get into if you have further questions, but generally.

Dallas B. Tanner: I just want to add a couple of things that are just sort of anecdotal that I know you're aware of. You know, with new home construction making up about 30% of the overall kind of home transaction market, people are just staying put a little bit longer, too. And I think you're seeing some of that even in our peers' information. And then we also, I think Charles sort of mentioned this in a different way, but we just, we don't have as much lost revenue, at least as some of the other books of business that might be out there.

Speaker Change: We're in good shape, yes, John just Dallas, They just wanted to add a couple of things that were just sort of anecdotal, but I know you're aware of.

John: With new home construction, making up about 30%.

John: Of the overall kind of home transaction market people are just staying put a little bit longer to and I think youre seeing some of that even in our peers information and then we also I think Charles sort of mentioned this in a different way, but we just we also don't have as much loss to lease as some of the other books of business that might be out there we had quite a.

Dallas B. Tanner: We had quite a bit of rate growth, which to Charles' point puts it as a much better denominator. The other thing I would add is that in that denominator, our customer is now ticked over three years on average length of stay. So I think, you know, what Charles and I will kind of solve for with the teams from an optimization perspective will be making sure that in our renewal business, we're always capturing as much share of the rate that's out there.

John: A rate growth, which controls as point puts it is much better denominator. The other thing I would add is in that denominator. Our customer is now ticked over three years on average length of stay so I think what Charles and I will kind of solve for with the teams from an optimization perspective, we'll be making sure that on our renewal business, we're always capturing as much.

Dallas B. Tanner: We obviously want to get as much new lease growth as we can, but I think a bigger portion of our business is going to be renewals than we sort of historically thought of when we started the company 12 years ago. It just feels like the customer is going to stay longer and longer until we get into a cheaper rate environment where maybe there's more home transaction availability. Our next question comes from Jamie Feldman from Wells Fargo. Please go ahead. Your line is open. Great, thank you for taking the question. So I just wanted to shift gears a little and just talk about the balance sheet and debt strategy.

John: Share of rates out there, but we obviously want to get as much new lease growth as we can but I think a bigger portion of our business is going to be renewals and we sort of ever historically thought of from when we started the company 12 years ago. It just feels like the customer is going to stay longer and longer until we get into a cheaper rate environment, where maybe there's more home transaction.

John: Availability.

James Colin Feldman: Our next question comes from Jamie Feldman from Wells Fargo. Please go ahead; your line is open.

John: Our next question comes from Jamie Feldman from Wells Fargo. Please go ahead. Your line is open.

James Colin Feldman: Great. Thank you for taking the question. So I just wanted to shift gears, a little and just talk about the balance sheet in that strategy.

James Colin Feldman: Can you just talk through your plans for the rest of the year and then as you think about next year with the $3 5 billion of interest rate swaps coming due.

James Colin Feldman: What are you thinking about planning for those and just how should we think about potential earnings accretion dilution as we look through the rest of the year and into next year just based on how you're currently thinking about your strategy and rates being higher for longer.

Jonathan S. Olsen: Yeah, thanks for the question. Look, we have about $3.1 billion of debt maturing in 2026. That, as we talked about, I think, on the last call, is comprised of two debt instruments. It's $610 million of our last remaining floating rate securitization, IH 2018-4, and the $2.5 billion term loan component of our five-year bank. We are sitting on, you know, the remaining cash from our August 2023 bond deal. That cash is available to either grow the business or to pay off debt.

Speaker Change: Yes, thanks for the question.

Speaker Change: Look we have.

Speaker Change: About $3 $1 billion of debt maturing in 2026 that as we've talked about I think on the last call is comprised of two debt instruments, it's $610 million of our last remaining floating rate securitization IH 2018, four and the $2 $5 billion term loan component of our five year Bank facility.

Speaker Change: We are sitting on.

Speaker Change: The remaining cash from our August 2023 bond deal that cash is available to either grow the business or to pay off debt.

Jonathan S. Olsen: Today, if we look at where that 2018-4 securitization is swapped to, that is swapped at a rate of about 415, 4.2%. Compare that to what we're earning on the cash sitting on our balance sheet, which is around five and a half, right? So we're not in a rush to pay that debt off, despite the fact that we have ample unrestricted cash sitting on the balance sheet to do so. With respect to the bank facility, we have begun dialogue with our lender partners. You know, we are going to focus on a recast of that facility here over the coming months. We'll obviously keep you posted as that process progresses.

Speaker Change: Today.

Speaker Change: We look at where that 2018 for securitization is swapped to that.

Speaker Change: That is swapped to a rate of about $4 15, 442%.

Speaker Change: Compare that to what we're earning on the cash sitting on our balance sheet, which is around $5 five right. So so we're not in a rush to pay that debt off. Despite the fact that we have ample unrestricted cash sitting on the balance sheet to do so with respect to the bank facility, we have begun dialogue with our lender partners.

Speaker Change: We are going to focus on.

Speaker Change: A recast of that facility here over the coming months, we'll obviously keep you posted as that process progresses, but I would say that we feel very comfortable with our access to capital and feel very comfortable with the balance sheet.

Jonathan S. Olsen: But I would say that, you know, we feel very comfortable with our access to capital, feel very comfortable with the balance sheet. You know, and I think it's important to remember that we have plenty of time left. We've shown that we typically aren't going to wait until the last minute to do something. But I think we have also, you know, bought ourselves the ability to be patient, which is helpful.

Speaker Change: And I think it's important to remember we have we have plenty of time left we've shown that we typically arent going to wait till the last minute to do something but I think we also have bought ourselves.

Speaker Change: The ability to be patient, which is helpful with respect to the swap book.

Jonathan S. Olsen: With respect to the swap book, there are some swaps expiring in November of this year. I would point out that those correspond pretty well to that 2018-4 floating-rate securitization. So if we assume that, you know, that swap expiry potentially aligns with a debt repayment, that probably makes sense. And I don't anticipate that we would replace that floating-rate debt with anything other than fixed-rate debt. Our next.

Speaker Change: There are some swaps expiring in November of this year I would point out that those correspond pretty well to that 2018 for floating rate securitization.

Speaker Change: So if we assume that that swap expiry potentially aligns with the debt repayment that probably makes sense and I don't anticipate that we would replace that floating rate debt with anything other than fixed rate debt.

Haendel Emmanuel St. Juste: Our next question comes from Haendel St. Juste from Mizuho Securities. Please go ahead; your line is open.

Speaker Change: Our next question comes from Handel St Juste from Mizuho Securities. Please go ahead. Your line is open.

Speaker Change: Okay.

Dallas B. Tanner: Hey guys, good morning.

Speaker Change: Hey, guys good morning.

Dallas B. Tanner: So, Dallas, sorry, one more on third-party management. I guess I appreciate your comments earlier on the state of housing in the U.S. and the roles that SFRs have historically played.

Speaker Change: Dallas, Sorry, one more on third party management here.

Dallas B. Tanner: I guess I appreciate your comments earlier on the state of housing in the U S and the role that as far as has historically played but what's different in the latest.

Dallas B. Tanner: But what's different in the latest article from the Wall Street Journal is that it's coming from the Republican governor of Texas, a large and deep red state calling for, you know, legislative action – some things to be added to the legislative agenda in Texas to protect families. You guys are based in Texas. I'm curious what you're hearing and potentially expecting on that front and how it might impact your plans to potentially add to your portfolio in Texas, which is still only about 6 percent of your total revenue. Thanks.

Dallas B. Tanner: Article from the Wall Street Journal is that it's coming from the Republican Governor.

Dallas Tanner: Texas is a large and deep red state calling for.

Dallas B. Tanner: Let's.

Dallas B. Tanner: Legislative.

Speaker Change: Some things have you added to the legislative agenda in Texas to protect families. So you guys are based in Texas Im curious, what youre hearing potentially expecting on that front and how it might impact.

Speaker Change: Your plans to potentially add to your portfolio in Texas, which is still only about 6% of your total revenue. Thanks.

Dallas B. Tanner: Thanks, Haendel. You're right in that Texas doesn't represent a very big portion of our business. Look, I hate to speculate on any comment that I don't have sort of the full context of. We're active at both state and local levels in Texas and other markets, and everything we're hearing on the ground is pretty pro-housing and pretty friendly in terms of where state legislatures are and things that they want to focus on.

Speaker Change: Thanks, and Youre right that Texas doesn't represent a very big portion of our business.

Speaker Change: I hate to speculate on any comment that I don't have sort of the full context of.

Dallas B. Tanner: We're active with both state and local levels in Texas and other markets.

Dallas B. Tanner: And everything we're hearing on the ground is pretty pro housing and pretty friendly in terms of where our state legislatures are in things that they want to focus on we've had none.

Speaker Change: Wins in Georgia, and Florida, North Carolina over the last year, we've even seen some of that.

Speaker Change: I would call really crazy bills in California, It gets shelved in the last little bit and it feels like there's sort of a little bit of a pendulum swing to moderation.

Dallas B. Tanner: Look, the tricky part about housing generally in the country is going to be that it's a social issue over and over and over, and the affordability issues that have been plaguing the country for the last decade since the GFC are largely supply-driven in nature. SFR represents about 10 bips of that at the end of the day, and so those 10 bips in the way that we behave, I think, are the only things that we can control in real time, which is just a great business that offers flexibility and service.

Dallas B. Tanner: Look the tricky part about housing generally and the country is going to be that it's a social issue over and over and over and the affordability issues that have been in the country really for the last decade since the GSE are largely.

Speaker Change: Supply driven.

Speaker Change: <unk>.

Speaker Change: Not an expert on political matters.

Dallas B. Tanner: Or where people are going to fall on any one particular issue I have become well versed in that.

Speaker Change: We see a lot of headlines all the time and Theres Clickbait and we live in a 24 hour news cycle, where things can also get taken out of context very quickly and so our focus is.

Speaker Change: As a provider of housing to be consistent both in the things that Charles and John Sheridan Scott around deliveries execution, how we view the customer experience and creating this kind of lifestyle flexibility for a massive subset of consumers.

Dallas B. Tanner: That are nearly 47 million household steep.

Dallas B. Tanner: <unk> represents about 10 bps of that at the end of the day and so those 10 bps and the way that we behave I think are the only things that we can control.

Speaker Change: In the real time, which is just be a great business that offers flexibility and service and by the way have the conversations with state and local levels as we continued to build out our thesis.

Dallas B. Tanner: And by the way, have the conversations at state and local levels as we continue to build out our thesis around housing to make sure that we're part of the solutions and that the facts are actually understood. And I think that particular article was disappointing. The headline reads one way, and as you get into the article deeper, you realize that a lot of the facts in the subset suggest that a lot of this stuff isn't gaining traction. Because I think as you get into the data, you start to figure out that we need many different types of solutions to combat this problem. So we'll be one part of a subset of many, but the question makes sense. I can't tell you what any particular politician is thinking at any given time.

Speaker Change: Pieces around housing to make sure that were part of the solutions and that the facts are actually understood and I think that particular article was disappointing the headline range, one way and as you get into the article deeper you realize that a lot of the facts and the subset suggests that that a lot of this stuff isn't gaining traction because I think as you get into the data you start to figure out that we need many different type.

Dallas B. Tanner: The solutions to combat this problem. So it will be one part of a subset of any but the question makes sense I know Kent.

Speaker Change: Can't tell you what any particular politicians thinking at any given time.

Joshua Dennerlein: Our next question comes from Josh Dennerlein from Bank of America. Please go ahead. Your line is open. Yeah, hey everyone, thanks for the time.

Joshua Dennerlein: Our next question comes from Josh Dennerlein from Bank of America. Please go ahead, your line is open. Yeah. Hey, everyone.

Speaker Change: Our next question comes from Josh <unk> from Bank of America. Please go ahead. Your line is open yes.

Jonathan S. Olsen: Yeah, look, I think as we onboard these portfolios, obviously, we need to add some heads in the field, we need to add some heads in the back office, and we need to make some technology investments. I don't anticipate that we're going to be perfect at this coming out of the gate.

Josh: Yeah, Hey, everyone. Thanks for the time, John just wanted to follow up on a comment you made on the fees you're receiving from the management contracts are being offset by some investments.

Josh: <unk> spend how should we think about the duration of that investment spend and could you elaborate on maybe just what that investment spend entails.

Jonathan S. Olsen: The good news is, as we've talked about, this is a really attractive, high-margin business for us. But you know, just as we spent years optimizing our balance sheet, optimizing our operating platform, you know, iterating towards a better outcome and sort of a better structure, we're going to be doing the same with respect to the third-party property management business. So, you know, some of these incremental costs that show up in property management expenses are, you know, upfront and one-time in nature, and will spread across the majority of these new agreements.

Speaker Change: Yes look I think as we onboard these portfolios.

Jonathan S. Olsen: Obviously, we need to add some heads in the field, we need to add some heads in the back office and we need to make some technology investments.

Jonathan S. Olsen: I don't anticipate that we're going to be perfect at this coming out of the gate. The good news is as we've talked about this is really attractive high margin business for us.

Jonathan S. Olsen: But just as we spent years optimizing our balance sheet optimizing our operating platform.

Jonathan S. Olsen: Rating towards.

Jonathan S. Olsen: Better outcome than sort of a better structure, we're going to be doing the same with respect to the third party property management business. So some of these <unk>.

Jonathan S. Olsen: Incremental costs that show up in property management expense are upfront and onetime in nature and will spread across the majority of the.

Speaker Change: These new agreements some of them are more variable and are going to correlate more strongly to the number of homes that come online.

Jonathan S. Olsen: But I think big picture.

Speaker Change: This is a really attractive business from.

Speaker Change: From an earnings contribution perspective, and our expectation is that we should be able to make those margins higher for us as we get more and more efficient in terms of how we manage.

Adam Kramer: Our next question comes from Adam Kramer from Morgan Stanley. Please go ahead; your line is open.

Jonathan S. Olsen: Some of them are more variable and are going to correlate more strongly to the number of homes that come online. But I think, big picture, this is a really attractive business from an earnings contribution perspective. And our expectation is that we should be able to make those margins higher for us as we get more and more efficient in terms of how we manage. Our next question comes from Adam Kramer from Morgan Stanley. Please go ahead. Your line is open. Hey, guys, thanks for the question. One, a little bit earlier, we should ask in a different way to ask about maybe your expectations for new and renewal.

Speaker Change: Our next question comes from Adam Kramer from Morgan Stanley. Please go ahead. Your line is open.

Adam Kramer: Hey, guys. Thanks for the question.

Jonathan S. Olsen: One.

It was asked a little bit earlier, but let me try to ask in a different way just wanted to ask about maybe how your expectations for new and renewal growth for 2024 compared to your expectation philosophy, which added roughly three months ago and I know you didn't provide you with specific numbers at that point, maybe just walk us through given you've now had four months.

Adam Kramer: And any additional visibility.

Adam Kramer: For the next few months.

Josh Dennerlein: How do your expectations for new and renewal growth steady compared to what you provided three months ago.

Jonathan S. Olsen: Yeah, thanks for the question. I think, you know, obviously, we have not revised guidance. We continue to feel very comfortable with our expectations for where blended rate growth will shake out over the course of the year. What we've said is we expect the blend to be high 4s, low 5s.

Speaker Change: Yes, thanks for the question I think.

Jonathan S. Olsen: Obviously, we have not revised guidance, we continue to feel very comfortable with our expectations for where blended rate growth will shake out over the course of the year. What we said is we expect the blend to be high fours low fives.

Jonathan S. Olsen: Look, we're sitting here on May 1st. We feel really good about the results we saw in the first quarter. We feel really good about the fact that it's aligning very, very closely with how we sort of shaped guidance and our view for how the year would likely progress. So, I'm not sure that there's really much, if any, change. I think, you know, the May blend of 5.2% that Charles alluded to earlier is reflective of things kind of falling in line the way we expected them to. Sorry, April blame.

Jonathan S. Olsen: Look we're sitting here may 1st we feel really good about the results. We saw in the first quarter, we feel really good about the fact that it's aligning.

Jonathan S. Olsen: Very very closely with how we sort of shaped guidance and our view for how the year would likely progress.

Jonathan S. Olsen: So I'm not sure that there is.

Jonathan S. Olsen: Really.

Jonathan S. Olsen: Much if any change I think.

Jonathan S. Olsen: <unk> blend of five 2% that Charles alluded to earlier.

Jonathan S. Olsen: As reflective of things kind of falling in line the way we expected them to.

Jonathan S. Olsen: Sorry, I got an April blend of 5-2, just to clarify. Our next question comes from Daniel Tricarico from Scotiabank. Please go ahead. Your line is open.

Jonathan S. Olsen: Alright.

Jonathan S. Olsen: April blend of $5 two just to clarify thank you.

Daniel Peter Tricarico: Our next question comes from Daniel Tricarico from Scotiabank. Please go ahead; your line is open. Thank you.

Daniel Peter Tricarico: Our next question comes from Danielle <unk> from Scotiabank. Please go ahead. Your line is open.

Daniel Peter Tricarico: Thank you on the acquisitions in the quarter you quoted a six one cap rate and the sub curious if you could break down what percentage of those are from homebuilder pipeline versus the traditional MLS and what the spread on cap rates looks like today between those two channels.

Scott G. Eisen: Yeah, I would say that, Hey, this is Scott Eisen. Great question. From our perspective, a majority of what we're doing right now is with home builder direct purchasing. You know, we're doing very little on the MLS right now; we've focused most of our efforts on growing our third party management business and also focusing on doing more deals with our home builder partners. And look, we are still, as we've said before, targeting these home builder acquisitions in and around a six cap in terms of what our yield on cost expectations are for these transactions.

Daniel Peter Tricarico: Yes, I would say that this is Scott great question from our perspective, a majority of what we're doing right now is with the homebuilder direct purchasing.

Scott G. Eisen: We're doing very little on the MLS right now we focus most of our efforts on growing our third party management business and also focusing on doing more deals with our homebuilder partners and look we are still as we've said before targeting these homebuilder acquisitions in and around a six cap.

Scott G. Eisen: In terms of what our yield on cost expectation is for these transactions and in terms of dispositions I think we are still in the market disposing as we had said we would and are still in that range of the forest cap or so in terms of the discount rate.

Scott G. Eisen: And in terms of dispositions, I think we're still in the market disposing as we had said we would, and it's still in that range of, you know, the fourish cap or so in terms of the dispo rate. And I don't think anything has changed materially in terms of what we're seeing in terms of that acquisition.

Scott G. Eisen: I don't think anything has changed materially in terms of what we're seeing in terms of that acquisition yield.

Scott G. Eisen: Okay.

Jesse T. Lederman: Our next question comes from Jesse Lederman from Zellman & Associates. Please go ahead; your line is open.

Scott G. Eisen: Our next question comes from Jesse Letterman from Zelman <unk> Associates. Please go ahead. Your line is open.

Charles D. Young: Thanks for taking my question, and nice job during the quarter. As you noted at a recent conference, you expect the new move in rent growth to exceed renewal rent growth this summer, consistent with your typical trajectory, maybe pre-COVID. Can you discuss what you're seeing in the market that gives you confidence the new move in rent growth will accelerate roughly 300 basis points from April and how that 300 basis points relates to the typical, call it, April to summer peak acceleration? Thank you. Yeah, we're seeing each other.

Jesse T. Lederman: Thanks for taking my question and nice job during the quarter.

Charles D. Young: We noted at a recent conference and expect new move in rent growth to exceed renewal rent growth. This summer consistent with your.

Charles D. Young: Typical trajectory, maybe pre Covid can you discuss what youre seeing in the market that gives you confidence new move in rent growth will accelerate roughly 300 basis points from April and how that 300 basis points relates to the typical call. It April the summer peak acceleration. Thank you.

Charles D. Young: I don't think I've said that, but we typically see that you're going to see new lease acceleration, peak in the summer, and renewals will stay steady throughout the year. I could see renewals moderating slightly in the summer. As Dallas mentioned, the loss to lease is a little lower over the summer. That cohort we've kind of pushed on demand, so that might bring it down. So we'll see how it goes. I think, as we've talked about, we're in a really kind of healthy and or typical season, and where it works out for the summer will be determined.

Charles D. Young: Yeah, we're seeing that typical kind of acceleration on the new lease side into the summer, and we usually peak somewhere in June, maybe July. It varies year by year whether new leases will overtake renewals, but I can't predict that this year.

Speaker Change: Yes, we're seeing that typical kind of acceleration into on the new lease side into the summer and we usually peak somewhere in June maybe July.

Charles D. Young: It varies year by year, whether new lease will overtake renewals.

Charles D. Young: Can't predict that this year I don't think I said that but we typically see that youre going to see new lease.

Charles D. Young: Accelerate peak in the summer and renewals will stay steady throughout the year I could see renewals moderating slightly in the summer as Dallas mentioned the loss to lease is a little lower over the summer that cohort, we've kind of pushed on demand.

Charles D. Young: That might bring it down so we'll see how it how it goes I think.

Charles D. Young: As we've talked about we're in a really healthy <unk> typical.

Charles D. Young: Season in.

Charles D. Young: It worked out for the summer.

Charles D. Young: Be determined that said we are seeing the acceleration that we expected to see from the start of the year. We started January as we're building up the occupancy negative new lease.

Charles D. Young: That said, we are seeing the acceleration that we expected to see from the start of the year. We started January as we were building up the occupancy, and negative new lease rate growth, and now in April at 3-1 and accelerating into May, we'll see where it takes us for the summer. We're right where we want to be.

Charles D. Young: Rate growth and now in April at three one and accelerating into me, we'll see where it takes us for the summer, we're right where we wanted to be.

Charles D. Young: Okay.

Michael Patrick Gorman: Our next question comes from Michael Gorman from BTIG. Please go ahead; your line is open.

Charles D. Young: Our next question comes from Michael Gorman from BTG. Please go ahead. Your line is open.

Jonathan S. Olsen: Yeah, thanks. Apologies if I missed this, but could you spend a little bit of time talking about the insurance renewal that you mentioned in the SUP and maybe just talk about if there's any change in coverage levels or any other terms that allow for the execution of there on the pricing? And then I guess just, I know you left guidance unchanged, but is there anything left that could potentially push insurance back up to the initial guidance range of mid to high teens growth from the 7.5% that's implied? Thank you. Yeah, so great questions. Thank you.

Michael Patrick Gorman: Yes, Thanks, I apologize if I missed this but could you just spend a little bit of time talking about the insurance renewal that you mentioned in the sup and maybe just talk about if theres any change in coverage levels or any other terms that allowed for the execution. There on the pricing and then I guess, just I know you left guidance unchanged, but it is there is there anything left that would put.

Jonathan S. Olsen: <unk> push insurance back up to the initial guidance range of mid to high teens growth from from the seven 5% that's implied thank you.

Jonathan S. Olsen: There is nothing left that would cause insurance to come in higher. You know, we, working with our insurance broker, sort of formed an early view. And that was reflected in our initial guidance over the course of, you know, our annual trips to London and Bermuda to meet with underwriters and sort of help explain all the reasons why our business has a number of really attractive risk mitigants built in, coupled with the fact that we insurance treaties came in much more constructive than last year. We were really pleased with the outcome there. I think, at the end of the day, however, insurance is a relatively small line item for us. So, you know, there's not a ton of it.

Speaker Change: Yes so.

Jonathan S. Olsen: Questions. Thank you there is nothing left that would cause insurance.

Jonathan S. Olsen: To come in higher.

Jonathan S. Olsen: Working with our insurance brokers sort of formed an early view.

Jonathan S. Olsen: And that was reflected in our initial guidance over the course of kind of our annual trips to London, and Bermuda to meet with underwriters and sort of help explain all of the reasons why our business has a number of really attractive risk built in risk mitigates coupled with the fact that reinsurance treaties came in much more constructive than last year.

Jonathan S. Olsen: What's going to be much more impactful, obviously, is property tax. As we talked about, the fact that expenses were sort of as elevated as they were year over year here in the first quarter is largely attributable to the fact that we were under-accrued on property tax in each of the first three quarters last year. So, you know, when people see the expense growth numbers, that is, you know, sort of expected.

Jonathan S. Olsen: We were really pleased with the outcome there.

Jonathan S. Olsen: I think at the end of the day, However, insurance is a relatively small line item for us so.

Jonathan S. Olsen: So.

Jonathan S. Olsen: There's not a ton in it.

Jonathan S. Olsen: It's going to be much more impactful obviously is property taxes talked about the fact that expenses were sort of as elevated as they were a year over year here in the first quarter is largely attributable to the fact that we were under accrued on property tax in each of the first three quarters last year. So when people see the expense growth numbers that is.

Jonathan S. Olsen: And that was also baked into our guidance. You know, specifically, what caused our insurance renewal to be so positive? I think a lot of it is driven by the market environment. But, you know, there are also some nice things about our business that benefit us. We're not coastal; we have the ability to asset manage on a house by house basis. And I think, you know, it's a nice reminder of the scale of our business.

Jonathan S. Olsen: Sort of to be expected and that was also baked into our guidance.

Jonathan S. Olsen: Specifically, what caused our insurance renewal to be so positive I think a lot of it is driven by the market environment.

Jonathan S. Olsen: There are also some nice things about our business that benefit us we're not coastal we have the ability to asset manage on a house by house basis, and I think.

Jonathan S. Olsen: It's a nice reminder of the scale of our business.

Jonathan S. Olsen: You know, on average, our insurance costs per home in the state of Florida, for example, are less than $1,000. For a homeowner, that's probably between, you know, five and $6,000 annually at the price points where we operate. So I think that's, that's a really nice sort of testament to the benefits of scale. And then, to answer the first part of your question last, just to round it out, we made no changes to our policy structure or limits or anything of that. Our next question comes from Linda Tsai from Jeffreys. Please go ahead; your line is open.

Jonathan S. Olsen: On average our insurance cost per home in the state of Florida. For example are less than a $1000 for a homeowner that's probably between five and $6000 annually at the price points, where we operate so I think thats.

Linda Tsai: That's a really nice sort of testament to the benefits of scale and then to answer the first part of your question last just to round. It out we made no changes to our policy structure or limits or anything of that nature.

Jonathan S. Olsen: Our next question comes from Linda Tsai from Jefferies. Please go ahead. Your line is open yes.

Linda Tsai: Yes, hi.

Linda Tsai: Yes, hi, if renewals are a bigger part of your business going forward how much more does this expand your margins over time.

Linda Tsai: How do we quantify how much less churn quarter reduces opex.

Charles D. Young: I'll let John answer anything in terms of the kind of margin expansion. But, you know, for us, if you go back and look at our business pre-pandemic, we were moving turnover down year over year. It really kind of bottomed out during the pandemic, but we're back on that track where we're just really healthy turnover. And a lot of that is driven by having high renewal rates. And, you know, it's a balance of some of the tailwinds that we've talked about in the industry, but also a big part of genuine care and how we serve the residents.

Linda Tsai: I'll, let John answer or anything in terms of kind of margin expansion, but for us. If you go back and look at our business pre pandemic.

Charles D. Young: We were moving turnover down.

Charles D. Young: Year over year.

Charles D. Young: It really kind of bottomed out during the pandemic, but we're back on that track, where we're just really healthy turnover.

Charles D. Young: A lot of that is driven by having high renewals and.

Charles D. Young: It's a balance of some of the tailwind that we've talked about in the industry, but also a big part of our genuine care and how we serve the resident and people want to stay with us longer getting.

Charles D. Young: If people want to stay with us longer, getting, you know, over three years now, with California getting closer to five, you know, it's just a really healthy position. And that shows up in our occupancy. You take that low turnover plus the good days to re-resident that we've been operating at and keeps the occupancy high. And from there, I think, you know, given, as Dallas said, it's a really nice opportunity and lifestyle that we see that people have moving out reasons to buy homes as low as it's ever been in the last few years, it's leading to really kind of strong, low turnover and strong renewals.

Charles D. Young: Over three years, now, where California getting closer to five.

Charles D. Young: It's a really healthy position and Thats what shows up in our occupancy you take that low turnover plus.

Charles D. Young: Plus good days to re resident that we've been operating at and keeps.

Charles D. Young: The occupancy high and from there I think given as Dallas said.

Charles D. Young: It's a really nice opportunity in lifestyle, yes, we see that people for moving out.

Charles D. Young: <unk> to buy home is lower is as low as it's ever been in the last few years, it's leading to really kind of a strong.

Charles D. Young: Low turnover and strong renewals and as Dallas said, we expect it will be a strong part of a big part of our business going forward.

Charles D. Young: And as Dallas said, we expect it will be a strong part of a big part of our business going forward. Our next question comes from Connor Peeks from Deutsche Bank. Please go ahead; your line is open.

Charles D. Young: Our next question comes from Connor peaks from Deutsche Bank. Please go ahead. Your line is open.

Connor Peeks: Hi, Thank you.

Connor Peeks: I think you've touched on this a little bit earlier, but if we could discuss the economics around the homebuilders.

Connor Peeks: And maybe specifically why invitation can get higher yields versus the homebuilders are selling to individual buyers.

Connor Peeks: Hi, this is Dallas, and anything I don't cover Scott, if you'd like to add anything, please do. I think, you know, taking a step back, one thing that's come full circle and been evident to us as we've The way that we started growing a lot of these relationships over the last several years has been sort of the following. One, I think, you know, the home builder industry recognizes a need for a four lease product.

Charles D. Young: Hi, This is Dallas enough anything I don't cover Scott if you'd like to add anything. Please do I think taking a step back one thing that's come full circle and been evident to us as we've started growing a lot of these relationships over the last several years has been sort of the following one.

Connor Peeks: The homebuilder industry recognizes our need for for lease product. They have a number of customers that come through that can't qualify for mortgage but they want to be in great communities with access to good schools et cetera, I think they view partners like us.

Connor Peeks: They have a number of customers that come through that can't qualify for a mortgage, but they want to be in great communities with access to good schools, etc. They view partners like us as a more fleet side of their business where we can do significant amounts of scalability to get together at a reduced cost. And I would add, I believe on their end, it's a much easier efficiency.

Connor Peeks: As a more fleet side of their business, where we can do significant amounts of scales to get together at reduced costs and I would add I believe on their end.

Connor Peeks: It's a much easier efficiency, we know exactly what we want to have inside our homes and we're happy to take multiple different elevations on the exterior, but theyre building is the same product over and over and over.

Dallas B. Tanner: We know exactly what we want to have inside our homes, and we're happy to take multiple different elevations on the exterior, but they're building us the same product over and over and over, so we can also help with the way that we structure those transactions to help alleviate the burden of cost. And I think there is just a natural market that exists somewhere in the middle. The second piece of it is, and I can't speak for homebuilders, but I think they view the retail business as a terrific business for them.

Dallas B. Tanner: Two we can also help with the way that we structure those transactions to help alleviate burden of cost and I think there is just a natural market that exists somewhere in the middle.

Dallas B. Tanner: The second piece of it is I can't speak for Homebuilders I think they view the retail business is a terrific business for them and they've been able to kind of work through even a higher rate environment, but I also think that we help derisk a portion of their future thinking and so I think there is a natural symmetry between professional capital that wants to operate in there for lease business much.

Dallas B. Tanner: And they've been able to kind of work through even a higher rate environment. But I also think that we help mitigate a portion of their future thinking. And so I think there is a natural symmetry between professional capital that wants to operate in the four lease business, much like you see in multifamily, versus maybe an owner operator or a just purely fee simple builder. And then, at the regional level, we can actually, I think, help some of these smaller builders in ways that a lot of regional banks have not been able to facilitate over the last, say, year or so, where we can also So there's just, it makes sense.

Dallas B. Tanner: Like you see in multifamily versus maybe an owner operator or a just purely fee simple builder and then at the regional levels. We can actually I think help some of the smaller builders in ways that a lot of regional banks have not been able to facilitate over the last say year or so where we can also help derisk some of the cost there and create some.

Dallas B. Tanner: Sir certainty around the production of new housing is so there's just it makes sense. It's a lot like the car business, where you pick any big car manufacturer in the U S. A massive portion of their business is retail and they have a system outlined to be successful in that category, but then they also sell to the hertz and the progressives.

Dallas B. Tanner: It's a lot like the car business, where, you know, pick any big car manufacturer in the US, and a massive portion of their business is retail. And they have a system in place to be successful in that category. But then they also sell to Hertz and the progressives and the 24 hour rental companies that we all lease from at different airports around the country. I think our business can evolve in a way with homebuilders.

Dallas B. Tanner: And the 24 hour rental companies that we all lease from that different airports around the country I think our business can evolve in a way with homebuilders.

Dallas B. Tanner: And I would say that in the plural sense in a way that it is a very commercial relationship over time and distance, where we are a small part of what they do but we do it in such a meaningful way and we try to be a great partner that it's a no brainer that we should try to do as much as we can together and head count are Scott is the only other thing I would add here as Luke.

Scott G. Eisen: Hey, Connor, it's Scott Eisen. The only other thing I would add here is that builders have confidence to take on a larger project and create more homes when they know that Invitation Homes is going to be buying a portion of that project. And so, as a result, maybe they might only start a 200-home community, but with us as their partner, they might start a 300-home community. Also, as you asked about the relative pricing, remember, they're saving on things like sales and marketing costs when they work with us because they're not actually having to go out on the market and market those homes themselves.

Dallas B. Tanner: And I say that in the plural sense, in a way that it is a very commercial relationship over time and distance where we are a small part of what they do, but we do it in such a meaningful way. And we try to be a great partners, so it's a no brainer that we should try to do as much as we can together. And hey, Connor, Scott,

Dallas B. Tanner: Build or it gives them confidence to take on a larger project and create more homes. When they know the invitation homes is going to be buying a portion of that project and so as a result, maybe they might only started 200 home community, but with us as their partner they might start at 300 home community also as you asked about the relative pricing remember, they're saving on things like sales and marketing costs.

Dallas B. Tanner: When they work with us because they are not actually having to go out in the market and market those homes themselves.

Scott G. Eisen: And then lastly, I think I would add that, in terms of when we get deliveries, we get deliveries on average between 8 and 10 homes a month from a builder when, normally, they might only be selling 3 to 5 homes a month through the retail market.

Dallas B. Tanner: And then lastly, I think I would add that in terms of when we get deliveries we get deliveries on average between eight and 10 homes a month from a builder when normally they might when we'd be selling three to five homes a month from the retail market. So you put all those three things together. It's a reason why what we're doing is accretive to the builders and frankly supplements what they tried to do in terms of selling to individual retail.

Scott G. Eisen: Customers.

Buck Horne: Our last question today will come from Buck Horne from Raymond James. Please go ahead. Your line is open.

Scott G. Eisen: Our last question today will come from Buck Horne from Raymond James. Please go ahead. Your line is open.

Buck Horne: Yeah. Thanks, guys I just wanted to follow up on that a little bit here, because I guess.

Dallas B. Tanner: The question on my mind on this topic is that, you know, you're not the only one in the market trying to negotiate deals with builders. And it's obviously a really hot topic. And so there's a lot of capital chasing deals with builders. But I guess, you know, you're talking about still being able to negotiate those 6% yield on cost numbers when everyone else is kind of saying maybe those numbers are in the fours. I guess what's the secret sauce? Or is there a secret sauce other than what you guys have described so far to achieving those kinds of numbers? Transcribed by https://otter.ai

Buck Horne: The question for my mind on this topic is that youre not the only one in the market trying to negotiate deals with builders and it's obviously really hot.

Dallas B. Tanner: Topic, and so theres a lot of capital chasing deals with builders.

Dallas B. Tanner: But I guess, you're talking about still being able to negotiate those 6% yield on cost numbers. When everyone else is kind of thing maybe those numbers are in the fours.

Dallas B. Tanner: I guess, what's the secret sauce or either a secret sauce other than what you guys have described so far to achieving those kinds of numbers.

Dallas B. Tanner: Really good question, and I appreciate you following up, Buck, because maybe I didn't answer this very well in the question before. It centers around predictability. We have predictability in our operating margins. We have predictability in showing up and closing. We have a really great track record in the market for M&A and with the ability to close when asked to. Our operating margins, which, by the way, I think would add to a lot of the inbound interest we've had in 3PM, are an attractive thing for investors, and I think they're an attractive thing for operators in the marketplace. We see very quickly in just some of the transactions we've looked at and are doing in 3PM an immediate margin pickup for our partners just by doing a couple of things differently.

Speaker Change: Really good question.

Dallas B. Tanner: Appreciate you following up because maybe I didn't answer this very well in the question before.

Dallas B. Tanner: It centers around predictability, we have predictability in our operating margins, we have predictability and showing up in closing we have a really great track record in the market with M&A and with the ability to close when when asked too.

Dallas B. Tanner: Our operating margins, which by the way I think would add to a lot of the inbound interest. We've had in three PM are an attractive thing for investors I think they are an attractive thing for operators in the marketplace.

Dallas B. Tanner: We see very quickly and just some of the transactions we've looked at and are doing in <unk> immediately margin pickup for our partners just by doing a couple of things differently and so and a lot of that as you know, but it has to do with scale. When you have a business. That's 97, 5% occupied growing revenue in the mid fives.

Dallas B. Tanner: And a lot of that, as you know, Buck, has to do with scale. When you have a business that's 97.5% occupied, growing revenue in the mid-fives, and we're now in a decelerating cost environment as we view property tax and cost of goods sold and all these things like, we could not have a better blue sky situation for our business. As we think about the next couple of years, we're positioned very nicely; we're just getting started in our access to these home builder relationships.

Dallas B. Tanner: And we're now in a decelerating cost environment as we view property tax and cost of goods sold and all these things like we could not have.

Dallas B. Tanner: Like anything professionally that we've done in the first 12 years, these things develop over time. And as you build trust, and I think for us, the same way we approach our opportunities with the home building industry, it's the same way we're going to approach risk in 3pm. We want to work with the best and the most professional capital that's out there. Because those expectations we have of each other matter, and that will show up and do the things that we said we'd do equally.

Dallas B. Tanner: Better Blue Sky situation for our business as we think about the next couple of years, we're positioned very nicely. We're just getting started and our and our access to these homebuilder relationships like anything professionally that we've done in the first 12 years. These things develop over time and as you build trust and I think for us.

Dallas B. Tanner: It's the same way we approach our opportunities with the homebuilding industry. It's the same way, we're going to approach risk in <unk>, we want to work with the best and the most professional capital that's out there because those expectations. We have of each other matter and that will show up and do the things that we said we will do equally matter.

Dallas B. Tanner: I think that's going to lend itself to conditional outperformance, as you look at that buck in relation to your question specifically, relative to maybe other operators that are in the space that don't have the scale or the capacity or the ability to close on this kind of scale and to seamlessly integrate it. So I give Charles and the team in the field and John in the back office all the kudos. As you know, Scott and his team are out there developing these relationships and trying to build what will be the next decade of growth for invitation homes that the SFR industry is going to be about bringing new housing supply into the marketplace.

Dallas B. Tanner: I think thats going to lend itself to.

Dallas B. Tanner: Conditional outperformance as you look at that back to your question specifically relative to maybe other operators that are in the space that don't have the scale or the capacity or the ability to.

Dallas B. Tanner: To close on this kind of scale.

Dallas B. Tanner: Seamlessly integrated so I give charles.

Dallas B. Tanner: And in the field and John and the back office, all the kudos as Scott and his team are out there developing these relationships and trying to build what will be the next decade of growth for invitation homes. The <unk> industry is going to be about bringing new housing supply into the marketplace.

Dallas B. Tanner: That is the narrative, as I see it for the next several years, it's going to be about creating new products, bringing new products into these markets and doing it at yields. But to your point, that makes sense. And on a risk-adjusted basis, a total return profile that makes sense for us and our shareholders.

Dallas B. Tanner: That is the narrative as I see it for the next several years, it's going to be about creating new product, bringing new product into these markets and doing it at yields but to your point that makes sense and on a risk adjusted basis. A total return profile that makes sense for us and our shareholders.

Dallas B. Tanner: This concludes our question and answer session. I would now like to turn the conference back over to Dallas Tanner for any closing remarks.

Dallas B. Tanner: This concludes our question and answer session I would now like to turn the conference back over to Dallas Tanner for any closing remarks.

Dallas B. Tanner: We thank everyone for attending our call. We're grateful for your participation. We look forward to seeing everybody at NARIT in June. Thank you for your time today.

Dallas B. Tanner: We thank everyone for attending our call were grateful for your participation. We look forward to seeing everybody at NAREIT in June. Thank you for your time today.

Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.

Speaker Change: This concludes today's conference call. Thank you for your participation you may now disconnect.

Speaker Change: Please wait the conference will begin shortly.

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