Invitation Homes (INVH) Earnings Call Transcript

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DATE

Thursday, Oct. 30, 2025, at 11 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Dallas Tanner
• Chief Operating Officer — Tim Loechner
• Chief Financial Officer — John Olson
• Executive Vice President and Chief Investment Officer — Scott Eisen

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TAKEAWAYS

• Same-store renewal rent growth -- 4.5%, representing a 30 basis point increase over the third quarter of 2024.
• Average resident tenure -- Increased to 41 months, stated as among the best in the industry.
• Average occupancy -- 96.5% in the third quarter, described as within management’s expectations.
• Blended rent growth -- 3%, reflecting combined impact of renewal and new leases.
• New lease rent growth -- Slightly negative during the third quarter, attributable to higher supply in select markets.
• Other property income -- Grew 7.7% year over year, attributed to adoption of value-add services.
• Bad debt -- Improved by 20 basis points year over year, reflecting the quality of our resident base and the sustained rigor of our screening and collection processes.
• Same-store core revenue growth -- 2.3%, driven by multiple operational factors.
• Same-store core expense growth -- Same-store core expenses increased 4.9% year over year, with fixed expense growth moderating relative to prior years.
• Same-store NOI growth -- 1.1% for the third quarter, consistent with seasonal turnover patterns.
• October new lease rent growth -- Down 2.9% year over year, due to targeted specials for occupancy support.
• October blended rent growth -- 2.3% with renewal spreads at 4.3%, representing a 20 basis point acceleration in blended lease spreads compared to October 2024.
• Liquidity -- $1.9 billion in available liquidity, combining cash and undrawn revolver capacity.
• Net debt to EBITDA -- Net debt to EBITDA ratio was 5.2 times.
• Unsecured debt proportion -- Over 83% of debt unsecured; 95% of debt fixed or swapped to fixed; about 90% of homes unencumbered.
• Bond issuance -- Completed a $600 million unsecured notes offering in August, with a 4.95% coupon and January 2033 maturity.
• Share repurchase authorization -- Up to $500 million, newly announced as part of capital allocation plan.
• Core FFO per share -- $0.47 per share.
• AFFO per share -- $0.38 per share.
• Property tax expense -- Increased 6.3% year over year, reflecting normalization after prior-year benefits.
• Insurance expense -- Decreased 21.1% year over year. due to a favorable premium adjustment.
• Full-year 2025 guidance -- Raised midpoints to $1.92 per share for core FFO and $1.62 per share for AFFO.
• Same-store NOI growth guidance -- Increased by 25 basis points at midpoint to 2.25%.
• Core revenue growth guidance -- Narrowed to a 2%-3% range; core expense growth range improved to 2%-3.5%.
• Renewal business proportion -- Over 75% of book comprised of renewals, described as a key business strength.
• Acquisition mix for the quarter -- Approximately 70% of acquisitions were from forward-purchase deliveries and 30% via opportunistic one-off homebuilder purchases.
• Average acquisition discount -- "discounts to market value," realized on these opportunistic builder acquisitions, according to Eisen.
• Turnover expectations -- Management expects turnover to return toward a long-term average of about 25%.
• Average customer renewal rate -- Projected in the 75%-77% range, with no change expected near term.
• Loss-to-lease -- Currently described as "low to mid-single digits," according to John Olson, with variations by market and cohort.
• Markets with continued renewal strength -- Miami and several Florida markets cited as positive on renewal side; Chicago and Minneapolis have both outperformed for four to six quarters.

SUMMARY

Invitation Homes (NYSE: INVH) delivered higher same-store renewal rate growth of 4.5% and increased average resident tenure, which management described as among the best in the industry, reflecting the stability, quality, and location of its portfolio. Operational leverage was evident through increased other property income and improved bad debt collection, supporting raised guidance for core FFO, AFFO, and same-store NOI growth. Fiscal discipline was reinforced by cost moderation in key line items, while liquidity and leverage metrics underscore financial flexibility for future investments and capital returns. Integration of value-add services and new revenue streams contributed to a more resilient same-store revenue base, as the company tightened guidance ranges in response to late-year environmental variability.

• Management articulated a multi-channel growth approach, with explicit focus on homebuilder partnerships, inventory-driven sourcing, construction lending, and a capital-light third-party management segment.
• The majority of the debt portfolio remains fixed or hedged, with no maturities prior to 2027, indicating low near-term refinancing risk.
• Operational headwinds were limited to specific markets with elevated supply impacting new lease growth, particularly within the Sunbelt and Phoenix regions, but renewal pricing power remained intact.
• Direct feedback from the call indicated share repurchases will be used judiciously, emphasizing opportunistic execution and alignment with overall capital allocation priorities.
• Management clarified that turnover is expected to rise modestly but will remain at healthy levels, supported by high renewal intent and stable resident financials, as evidenced by FICO scores and collection performance.
• Chicago and Minneapolis have outperformed due to limited new supply over the past decade; Miami and several Florida locations continue to deliver strong renewal metrics.

INDUSTRY GLOSSARY

• Same-store: Portfolio metric concerning operationally comparable homes for measurement across periods, isolating organic growth from external acquisitions.
• Blended rent growth: Weighted average of renewal and new lease rent change, providing a composite measure of rent performance.
• Loss to lease: Difference between in-place rents and current market rents, indicating embedded rental growth potential on renewal or re-leasing.
• BTR: Build-to-rent; purpose-built single-family rental home communities, typically sourced from homebuilder and institutional channels.
• NOI: Net operating income, calculated as core rental revenue minus operating expenses directly attributable to properties.
• Core FFO: Core funds from operations, standard REIT measure reflecting normalized cash earnings available to equity holders.
• AFFO: Adjusted funds from operations, core FFO minus recurring capex and certain adjustments, serving as a proxy for sustainable cash distributions.
• Cap rate: Capitalization rate; annual net operating income divided by property value, representing yield and valuation benchmark commonly cited in real estate investment.

Full Conference Call Transcript

Dallas Tanner: Thank you, Scott, and good morning, everyone. I'll start by recognizing our exceptional teams across the country. Their dedication to our residents and to operational excellence continues to drive performance and reinforces our leadership in single-family rental housing. Stepping back, our business is built on a simple but powerful value proposition: choice, flexibility, and high-quality single-family living without the long-term financial maintenance commitment of homeownership. That value proposition is resonating broadly, from families seeking space and schools to professionals who value mobility. Today's housing dynamics continue to support steady demand for SFR.

Even as mortgage rates move around, overall affordability remains stretched, and transaction activity has been muted, partly because 70% of homeowners are still locked in at mortgage rates below 5%. For many households, the all-in monthly cost of owning a home, including mortgage, tax, insurance, and maintenance, remains more expensive than leasing a comparable home. Based on the latest John Burns data weighted to our markets, those who choose to lease save an average of almost $900 per month compared to owning. Against that backdrop, our third-quarter results reflect the strength and resilience of our platform. Demand remains consistent, and while new lease growth continues to be an opportunity, our renewal performance is outstanding.

During the third quarter, we delivered same-store renewal rate growth of 4.5%, or 30 basis points higher than our third-quarter result last year. At the same time, our average resident tenure further increased to forty-one months, among the best in the industry. These outcomes speak to the stability, quality, and location of our portfolio, the professional service we provide, and the value our customers place on staying with Invitation Homes. That stability gives us the confidence and flexibility to invest for the future, and it underpins our disciplined approach to growth. Today, we're pursuing channel-agnostic, location-specific growth focused on long-term total returns, primarily through the following four channels.

First, our homebuilder partnerships that cultivate reliable and predictable forward purchases of full and partial new communities. Second, homebuilder month-end inventory or list of homes shared by regional and national builders that we've carefully screened to identify those that meet our location and pricing criteria. Third, our construction lending program, which is gaining traction as a strategic way for us to deepen our relationships with smaller developers and facilitate the delivery of much-needed new housing supply. And fourth, our third-party management business, which represents a capital-light way to leverage our platform and grow our scale and earnings.

In the meantime, our capital allocation framework remains unchanged: to fund organic growth, invest where long-term total returns are most compelling, and maintain a strong balance sheet so we're able to capitalize on opportunities when they arise. Naturally, we'll weigh the relative attractiveness of external growth, internal investment, and now share repurchases with a clear focus on long-term value creation. In summary, we remain confident in the durability of demand for well-located single-family rentals, our ability to operate efficiently at scale, and our capacity to grow prudently. Our markets continue to benefit from strong long-term fundamentals supported by healthy demographics and sustained desirability.

Even if lower mortgage rates become more prevalent, we believe that will be a strong positive for our business, as greater liquidity and transaction volumes should benefit the housing market broadly. And we're well-positioned to perform and capture opportunity across these cycles. Before I hand it over to Tim, one last note. We'll be hosting our Investor Day and Analyst Day on November 17. This event will provide a deeper look into our strategy, growth initiatives, and our long-term outlook. Look for the live stream webcast details to be shared on our website about a week or so prior to the event. With that, I'll pass the call over to Tim Loechner, our Chief Operating Officer.

Tim Loechner: Thank you, Dallas, and good morning, everyone. I'm pleased to walk through our third-quarter operating results, including our same-store renewal and leasing performance, as well as our controllable expense management. But before I do that, I want to recognize the strength of our portfolio, the exceptional execution of our associates across every market we serve, and most importantly, the trust and loyalty of our residents. Their confidence in Invitation Homes is what allows us to deliver on our mission every day. Together, these relationships and efforts form the foundation of our success. Since this is my first earnings call speaking with you directly, I'd also like to share a few thoughts on the road ahead.

The current landscape brings both opportunities and challenges, which I see as a proving ground for our team and the vision I have for leading it. That vision is rooted in relentless execution, operational excellence, and a customer-centric mindset. We will pursue every opportunity, engage every prospect, and deliver service that sets the standard in our industry. Through disciplined oversight, accountability, and a culture of hard work, we will continue to drive strong results. And I look forward to sharing more on that at our Investor Day on November 17. The commitment I just mentioned is already beginning to show in our performance. In a dynamic operating environment, our teams continue to deliver solid same-store results.

This included third-quarter average occupancy of 96.5%, consistent with our expectations. In addition, our renewal business, which accounts for over 75% of our book, continues to be a reliable source of strength, demonstrating both the durability of our model and the value residents place on the product and service we provide. We achieved renewal rent growth of 4.5% in the third quarter, underscoring our pricing power with existing residents and reinforcing the quality and appeal of our homes. Shifting to the new lease side of our business, as expected, third-quarter new lease rent growth was slightly negative, driven by elevated supply in select markets that is amplifying typical seasonal patterns. Taken together, blended rent growth for the quarter was 3%.

Looking more broadly at the components of same-store core revenue growth, we saw solid contributions across key areas. Other property income grew 7.7%, driven by continued adoption of value-add services that our residents desire, such as our Internet bundle, our smart home features, and other resident offerings. In addition, bad debt improved by 20 basis points year over year, reflecting the quality of our resident base and the sustained rigor of our screening and collection processes. Together, these factors contributed to core revenue growth of 2.3% for the quarter. On the expense side, our teams continue to manage costs effectively while maintaining high service standards.

Same-store core expenses increased 4.9% year over year, with fixed expense growth showing some welcome moderation this year compared to recent years. The overall result was same-store NOI growth of 1.1% for the third quarter, which is typically our most modest growth period due to elevated seasonal turnover and other transitory factors. Turning to October, our preliminary same-store results were generally in line with expectations. New lease rates were down 2.9% year over year, reflecting the impact of targeted specials we ran to drive traffic and strengthen occupancy, which averaged approximately 96% in October. Importantly, October renewal spreads remained strong at 4.3%, supporting blended rent growth of 2.3% for the month.

That represents a notable acceleration in blended lease spreads of 20 basis points compared to this time last year. To close, I want to once again thank our associates for their continued focus and commitment. Their efforts have helped to enable our growth while ensuring that our residents feel safe, supported, and at home. We have the right team in place to finish the year strong and continue executing on our strategic priorities. With that, I'll turn the call over to John Olson, our Chief Financial Officer.

John Olson: Thanks, Tim. Today, I'll provide an update on our strong balance sheet position, recent capital markets activities, and third-quarter financial performance. I'll then wrap up with an update on our full-year guidance revisions outlined in yesterday's earnings release. We ended the quarter with total available liquidity of $1.9 billion, which combines unrestricted cash on hand with the undrawn capacity on our revolving credit facility. This substantial liquidity position provides us with the financial capacity and flexibility to pursue growth opportunities, manage operations, and navigate market volatility with confidence. In addition, our debt structure continues to reflect the high-quality investment-grade profile we've worked diligently to build.

As we've discussed in the past, over 83% of our debt is unsecured, over 95% of our debt is either fixed rate or swapped to fixed rate, and approximately 90% of our wholly-owned homes are unencumbered. We have a well-laddered maturity profile with no debt reaching final maturity prior to 2027, and our net debt to EBITDA ratio was 5.2 times at quarter-end. Combined, these attributes provide meaningful cushion for both operational flexibility and future growth investments. A highlight of our third-quarter capital markets activity was the successful completion of a $600 million bond offering in August. The unsecured notes mature in January 2033 and have a coupon of 4.95%, which represents an attractive long-term cost of funds.

The deal also extends our maturity profile and frees up capacity on our revolving credit facility. The offering received a strong reception from investors, reflecting the market's confidence in our credit quality and business fundamentals. Also included in yesterday's earnings release was our announcement that our Board of Directors has authorized a share repurchase program of up to $500 million. We view this as a tool that is part of our disciplined capital allocation plan and an ordinary course approach to enhancing shareholder value. Turning now to our third-quarter financial results. For 2025, we delivered core FFO per share of $0.47 and AFFO per share of $0.38.

Tim already covered our third-quarter same-store results, but I want to provide a bit more detail on two items. First, property taxes were up 6.3% year over year in the quarter, largely due to the benefit we realized this time last year from favorable developments in Florida and Georgia. This year, bills from those two states, together representing more than half of our property tax expense, have so far come in slightly better than expected. Second, we received a favorable premium adjustment related to what is effectively a rebate structure built into our insurance program. This contributed to a 21.1% decrease in insurance expense year over year.

As a result of our year-to-date performance, we are raising our full-year 2025 guidance. We have increased the midpoints for core FFO and AFFO by $0.01 each to $1.92 per share and $1.62 per share, respectively. Additionally, we have raised our same-store NOI growth expectation by 25 basis points at the midpoint, now 2.25%. This was comprised of narrowed core revenue growth guidance in the range of 2% to 3% and improved core expense growth guidance in the range of 2% to 3.5%. Further details of our revised guidance are included in yesterday's earnings release. As we near the end of the year, I want to acknowledge the great progress we've made in the first ten months.

These achievements are a testament to the hard work and discipline of our associates, and I'm thankful for what we've accomplished in a dynamic operating environment. That said, we know we need to remain focused and agile as we approach the remainder of the year, and I have every confidence we'll deliver on that front. This concludes our prepared remarks. Operator, please open the line for questions.

Operator: We will now begin our question and answer session. Press 1 again. If you are using a speakerphone, please pick up your handset before pressing the keys. In the interest of time, we ask the participants limit themselves to one question and then re-queue by pressing 1 to ask a follow-up question. One moment while we... Your first question comes from Yana Gowan with Bank of America.

Yana Gowan: Thank you. Good morning. Congrats on a great quarter. I was wondering if you could spend a little time talking about your supply outlook for 2026 with both kind of the BTR deliveries that are expected to deliver next year relative to this year and then also how you kind of think about that more shadow supply of whether it's owner-occupied household or becomes a renter household?

Dallas Tanner: Thanks, Shana, for the question. This is Dallas. It's been interesting as we've sort of looked at the supply backdrop, it sort of fits into a few categories, right? First is, and we called this out sort of last fall, in our third-quarter call this BTR delivery that we were starting to see show up in our markets create a little bit of noise on the supply side. The second piece of it is also, and it's a fairly small percentage, but some of the for-sale product that maybe isn't moving in the market that may convert to single-family rental from a listing perspective.

And then lastly, as we kind of follow and cover some of the professional operators is the amount of supply and scale that we see even in those books of businesses that compete in some of our similar markets. Generally speaking, it's nuanced by market. What we've seen so far is that through most of this year, it's gone pretty much as we expected and what we laid out at the beginning part of the year. We expected new lease to sort of tick up and get a bit better as we kind of went through peak leasing season and into the summer.

But we expected that towards the end of summer, things would likely be a little softer just given the lack of homeowner velocity buying and selling and also just some of that shadow supply that we had called out last year. The good news is there are certainly markets like Florida and Atlanta where we're seeing some of that supply and delivery schedule now kind of get over the hump and come into our favor. The unknowns are still what's going to happen sort of in the one-off kind of single-family rental market. And so we'll continue to monitor supply as it comes through.

We're actually pretty encouraged by some of the signs we've seen both in the starts that we're hearing from some of the builder partners and things like that. But ultimately, we've probably got a couple more quarters of supply specifically in some of these Sunbelt markets where there'll be a bit more supply as we've called out for the last couple of quarters.

Operator: Your next question comes from Eric Wolf with Citigroup.

Eric Wolf: Hey, thanks for taking my question. I think you said in your remarks that October was like 90% occupancy, which I think is kinda, like, down, you know, sort of 50 basis points from the third quarter and then you gave the new lease down, I think, 2.9% and renewals three point four point three. I guess when I'm sort of putting that all together, you know, I guess it's a little bit tough for me to get to that sort of fourth-quarter number that you need. So to hit guidance.

And so I didn't know if there's something in the fourth quarter like lower bad debt or improving fees or something that gets you to that sort of positive sequential growth to hit the midpoint? And apologies if I'm just missing something on those numbers. Those are just what I've heard from the remarks.

Tim Loechner: Yeah. Hey. This is Tim. Thanks for the question. Look, the occupancy dip that you referenced down in the 96.5% range, that was expected. If you recall going back to the beginning of the year, we talked about there we'd be taking a more measured approach. We anticipated that occupancy would come in a bit as the year progressed, get to a healthy level in the mid-96% range, which it has. We also anticipated that the new supply would create some pressure on new lease growth, which it also has. The good news is as you look at the fourth quarter, our renewal book of business, which accounts for about 75% of the book, is super healthy.

Our Q3 renewal rates grew to 4.5% year over year, about 30 basis points higher than the same period in 2024. October, as you pointed out, renewal rate was 4.3%. That's an important part of the Invitation Homes story. Our customers are very healthy from a financial standpoint, pleased with the Invitation Homes leasing experience. They're staying for forty-one months. I think that's the most important thing to point out as we head into Q4. Remember Q4, you don't see a lot of people leaving. Turnover tends to be low, and so we feel like we're in a really healthy spot and the year is progressing as expected.

Operator: Your next question comes from Michael Goldsmith with UBS.

Amy Probandt: Hi. This is Amy. I'm with Michael. I was wondering, do tenants tend to look to negotiate more on renewals and assets in BTR communities where they can see competitive pricing on units and really have a market comparison?

Tim Loechner: Look, I think this is Tim. Thanks for the question. Look, consumers do negotiate on renewal. They do see the open market. And we do negotiate as needed to maintain the occupancy targets that we're looking for. So yes, we don't see a difference between build-to-rent and our same-store scattered site portfolio. Consumers tend to behave similarly across asset types within the portfolio.

Operator: Your next question comes from Steve Sakwa with Evercore.

Steve Sakwa: Dallas, there's been a lot of rhetoric out of Washington between the Trump administration, Bill Pulte, just about trying to bring down house prices and make things affordable. I'm just curious, what are you hearing in your discussions with the homebuilders? How do you think this might impact your business either good or bad?

Dallas Tanner: Thank you. Interesting question, Steve. And it's one that we've had kind of a couple of different ways. Let me just take a step back. Speaking broadly to the homebuilders, and we've obviously paid attention to some of their calls over the last week or two. They're certainly seeing a little bit of softening demand, sounds like. Now it sounds like they're managing inventory a little bit better as well. Yet some of these guys have done a really nice job of leaning out and trying to put more production into the market in 2025 specifically.

And they've talked about that as they put that production out, they've actually had a lower pricing because the bid-ask spread has been a little wide. In our one-on-ones, which I always want to protect and be careful about talking about what anybody says, it feels like they're hearing the message that from a federal perspective they'd like to see a bit more production. I think that being said, we're being fair, there's plenty of supply in the marketplace right now. I think for-sale listings are up over 1,000,000 units this year. The challenge is on an annualized basis, only seeing something like 4,000,000 to 4,500,000 sales nationally, and that just doesn't work.

Like we need to get back to a place where we're seeing 5,000,000 to 5,500,000 sales a year in this country. I think a lot of that has to do more with the liquidity around mortgage and mortgage rates. There's still something like 70% of mortgage holders in the U.S. are at 5% or better. 80% are at 6% or better. So that spread back to our earlier comments around the total cost to own versus the total cost to lease is still really wide.

I think that's why we're seeing the pickup in our renewals business is one example of why in a year where maybe there is actually more product on the market, we're actually renewing at a higher rental rate than we were at the same time last year. And I think it's indicative of the fact that if you have location already solved, not looking to absorb future costs right now. And so I think I would expect that the builders are probably weighing that out as well. And we've certainly seen that in Scott and talk more about this later, some of the opportunities we've seen over the last couple of quarters.

There's been some really good opportunities on newer products because inventory is sitting.

Operator: Your next question comes from Haendel St. Juste with Mizuho.

Haendel St. Juste: Hey, guys. Good morning. Thanks for taking the question. Dallas, I wanted to ask a question on allocation. I guess first, maybe can you talk about the increasing acquisitions guide assuming that's coming from your builder relationships and some of the dynamics you're talking about earlier. I'm also curious about the yields you're seeing there and how that compares to stock buybacks. I think a lot of us were hoping or maybe expecting to see you act on buying back the stock a bit sooner.

Dallas Tanner: Thanks, Haendel, for the question. First and foremost on our capital allocation through it, the first half of this year, we've had many things in flight from a delivery perspective that were part of our BTR programming that are just ordinary course and they were kind of built into our thinking. There's been a little bit of more opportunistic buying. Scott can give some color on this. When I finish here around things that we've seen in the last quarter and a half or so in some of these end-of-month, end-of-quarter, end-of-cycle opportunities with some of our both regional and national builders. In terms of stock buyback, look, this is something we started to think about this summer.

Going into our fall board meeting, and it was one of the items that we'd put together to talk about with our board that we wanted to be in a position that if the volatility was going to exist in the stock price that if or when appropriate and on a measured kind of basis as we think about how to use our capital, capital allocation, proceeds, we certainly want to have this be one of the tools in our tool belt. If stock price is going to kind of stay in these ranges some period of time. So we'll obviously look for opportunities to use it. We just hadn't had the plan in place. We never set one up.

So we're in a good spot now. We feel like it's an added tool to the tool belt. And we'll use it appropriately and in discussion with our Board. Scott, anything to add on deliveries?

Scott Eisen: No. Think the only other thing I would address, Haendel, is that when you look at our acquisitions for the quarter, probably about 70% of it was, as Dallas said, forward purchase deliveries where we're sort of on the back half of community deliveries that we started last year and we're getting towards the tail end of that. And about 30% or so of what we did this quarter was really opportunistically buying homes on a one-off basis from the homebuilders off their tapes. Think it's been widely reported that the homebuilders have had a lot of inventory and they've been trying to sell homes that have deliveries in thirty days.

And so I think for us, it's been a great opportunistic way for us not only to pick up homes at 20 plus percent discounts to market value, but also get a home for almost immediate delivery that we can put into the market and hopefully get leased within sixty, ninety days. So I think we feel good about what we've done and been smart and opportunistic I think about where we've allocated.

Operator: Your next question comes from Austin Wurschmidt with KeyBanc Capital Markets.

Austin Wurschmidt: Morning, everybody. Just going back to an earlier question you guys affirm the same-store revenue guidance, but you did keep a wider range late in the year. So I guess despite kind of Tim your comments on trends being largely as expected, why not tighten the range this late in the year? And then also curious are you continuing to offer similar concessions that you referenced in October to hold that occupancy at 96%? Thanks.

John Olson: Hey, thanks for the question. It's John. I'll chat briefly about the revenue range. Just to be clear, we did tighten that range. I think if it strikes you as particularly wide late in the year, I would just point out that this is sort of a dynamic environment. And we want to be mindful of that. We continue to feel good about the way the year is shaping up. And I would remind folks that really from the first part of the year, we've been talking about rate and occupancy in terms of our overall expectations for 2025.

In the first part of the year, I think repeatedly, we said we were running a little bit ahead of where we expected to be. And I think what we're seeing is that results are sort of aligning around what our full-year expectations were. And so still feel very good about our full-year occupancy guide. I think with respect to some of the other items, time will tell. We feel good about where we're coming in from a tax perspective. Recall our original range was 5% to 6%. We expect we'll be around the bottom end of that range and hopefully do a little bit better than we anticipated with respect to insurance expense and some of the controllable.

But I think from a revenue perspective, we want to be mindful of the fact that this is an environment where we have to be nimble and we have to really pursue every lead, every opportunity because it's just a little bit softer than it's been.

Tim Loechner: Anything you want to add? Yes. Thanks, John. Yeah. I can touch on the specials. Look, on the specials that we're offering, we typically run targeted specials in October and November. It's a great tool in the toolbox. Our goal when we present these to the market is to boost traffic and generate leasing momentum ahead of the holiday season when the market tends to slow down a little bit. We're pleased with the results we're seeing and we'll continue to evaluate the need to keep those in place.

Operator: Your next question comes from Brad Heffern with RBC Capital Markets.

Brad Heffern: Another one on the repurchase. Do you see that as an attractive use of capital as we sit here today? And then can you talk through what the governor on that activity is? I would think using dispositions to fund it might get complicated just because ZOMS have appreciated so much. But is that an issue? And is there anything else you would call out on the philosophy there?

Dallas Tanner: Look, the one governor, just to remind everyone, is that we're subject to the same blackout periods that we traditionally have. In terms of it being an interesting price in the spot, there certainly are times where if we have excess capital or an ability to deploy accretively and a share buyback could fit into that category, it's something we consider. I hate to say what we are going to do or not to do, and just remember, there's always sort of a spread between what the market thinks you can do at any given time as you balance out sort of deliveries and cost of capital and things that are going on in the business.

So we'll use it judiciously, we'll be smart about it, we'll do it in concert with our Board Investments and Finance Committee. How we're going to approach it going into the end of year.

Operator: Your next question comes from Jamie Feldman with Wells Fargo.

Jamie Feldman: Great. Thank you. Guess, kinda sticking with some policy questions here. What do you think the impacts have been on immigration policy changes in your markets, whether it's on construction costs with labor or overall demand? And are you seeing any difference across different regions or markets?

Dallas Tanner: Look. I'll handle the first part on immigration. You know, we'd ask the same question of homebuilders and we paid attention to some of the commentary. Mean, look, has to have some effect, right? I mean, we're not seeing anything from an occupancy perspective. We're sort of in the sweet spot of our range as John and Tim mentioned. Our expectations going into the year were that we had run kind of in the low to mid-97s an average occupancy in 2024. We just knew that wasn't sustainable. It was to kind of come into the kind of the mid-96s. We're not seeing anything in terms of lead volume or customer profile.

In fact, our FICO scores are basically in the same range they've been for several quarters in a row. As far as what we're seeing with labor costs and land costs and input costs, Scott, you want to provide a little color?

Scott Eisen: Yes. I mean for a broader question Jamie, I think as it relates to what we're seeing on construction costs with the homebuilders, I think so far so good. I think finished lot prices have kind of slowed down there. They're rising pricing and I think there's been a decline in lot buying by the builders. Think construction costs have moderated and are generally under control. Think the data we've seen says that maybe there's a little bit of a labor cost rising in terms of the total production for homes.

But I think in general like in terms of the purchase prices that we're seeing and the construction costs that the homebuilders are passing on us, I think we're seeing it kind of in line with what we expected and in a pretty decent place.

Operator: Next question comes from Jesse Letterman with Zelman and Associates.

Jesse Lederman: Hey, good morning. Thanks for taking the question. Curious what you're seeing from a front-end demand perspective that gives you confidence that the headwind from a pricing power perspective is supply-related and not demand-related, maybe some commentary surrounding the reception to the new move-in specials or any other way that you quantify demand would be great. Thank you.

Tim Loechner: Yeah. Great question. This is Tim here. Look, on the demand side, we are continuing to see a healthy demand for single-family homes. Our website traffic remains very consistent. Obviously, there's more product out on the market as Dallas talked about earlier, a couple of different channels that have produced that supply. So that demand is being spread across more homes on the market, but look, we like our position. The Invitation Homes promise is a good one. We try to differentiate our brand through our ProCare, through our value-add services. So we think we're going to still capture our fair share of the marketplace.

So obviously, heading into the fourth quarter, demand does go down a little bit, but that's a seasonal component. But we like our position as we head into the end of the year.

Operator: Your next question comes from Juan Sanabria with BMO Capital Markets.

Juan Sanabria: Hi. Good morning and thanks for the time. Just a question on the loss to lease. Where do you see that presently? And then kind of a part b turnover, it seems to finally be kinda inching up. Do you think we've kinda bottomed out there and do you expect to see more turnover going forward given some of the competing factors both on the supply and demand side?

John Olson: Hey, Juan. It's John. Thanks for the question. With respect to loss to lease, I would say that's kind of low to mid-single digits. I think it's important to remember with respect to loss to lease that is not consistent across every home in every market, right? You can create cohorts of homes that have varying degrees of loss to lease. And so over time and distance, as our expectation would be that 70%, 75% of those are going to renew, you're going to extract what you can, but recognize that loss to lease number relative to what we actually achieve depends on a number of variables. I think overall, sorry, remind me the second part of your question, Juan.

Juan Sanabria: Turnover and how you guys think about that going forward with the decline?

John Olson: I mean, think turnover obviously is certainly seasonal. We expect to see turnover pick up in the second and third quarters and then moderate in the first and fourth. Do expect that turnover will return to something closer to a long-term average kind of closer to 25% than the 22% that we were seeing. But we continue to see a high propensity to renew. We continue to see the affordability gap really drive demand for single-family rental products. And feel good that even at a somewhat higher level of turnover going forward, this is a really, really sticky customer. They appreciate the product and the service that we deliver, and they continue to stay with us longer and longer.

So we feel really good about the setup and think that single-family rentals in particular are well-positioned in the residential market.

Operator: Your next question comes from Adam Kramer with Morgan Stanley.

Adam Kramer: Hey, for the here. Maybe a little bit of a higher level bigger picture one. I think our view has been that the apartments have underperformed of late. I think a lot of that has been driven by sort of slowing job growth and concerns around job growth from here. I think our view has been that SFR should be a little bit more insulated from that, right, given I think some demographic reasons. Wondering when you guys think about your own business, how you sort of think about the demand drivers? Obviously, there's the housing market. And sort of what's happening there in the force side.

But when you think about job growth, and sort of the path forward there, how much do you think that sort of matters or doesn't matter for your business? As we look to next year, I guess, how would you think about demand next year maybe versus what you've had this year?

Dallas Tanner: It's hard to tell the weather perfectly when it's that far out. But I would just say our setup coming into this year, we felt very confident that we could renew sort of in that 75% to 77% of the time with our current customer. That we don't see anything that suggests that changes going into next year. So it feels like the renewals from that perspective have kind of done what we thought. I want to be careful on any guide John will get frustrated with me if I say anything prior to our February call. But look, we're not seeing any degradation of our customer. Tim talked about leads and leads coming in. It's still pretty healthy.

Our actual conversion efforts on leads is a bit higher than what we've typically seen and our collections have been actually quite better than what we've seen historically. So there's nothing in the customer profile or our current customer base that suggests big changes are on the horizon. I think it has more to do with the only kind of variable that we keep working through is this new lease supply issue. It's really the only thing in our business that we feel like is something that is sort of hard to forecast perfectly. A lot of that has to do with what the housing market does generally to your point.

We'd like to see more Canada, we'd like to see more homes selling on the market. That transaction volume is a good proxy for home price appreciation obviously, but also a good proxy for rent growth going forward. And so we'll continue to just keep our backdoor as efficiently closed as we have. John talked about that. Not seeing anything there. Our FICO scores look great from our customers coming in, collections and our bad debt are exactly where we want them to be. So just keep grinding on the opportunity set that's in front of us from a new lease and a supply perspective. Outside of that, the business is doing pretty much what we thought it would do.

Operator: Your next question comes from John Pawlowski with Green Street.

John Pawlowski: Hey. Thanks for the time. Just a quick question on essentially, I'm trying to get around or get at the performance of the non-same-store pool. So can you help frame, like, the 23 vintages of acquisition and 24 vintages of acquisitions how NOI has performed relative to your underwriting? To date?

John Olson: Yes, John, I'm probably going to have to come back to you with more of that detail as a follow-up. But I would say that homes that we bought in kind of the 2022, 2023 timeframe were basically sort of when the market had the most froth and when underwriting was arguably more likely to anticipate continued strong rent growth. So I think that vintage of homes probably has a little more wood to chop to get itself in line from a margin perspective. But we feel really good about the product we have bought. We feel really good about the way we are approaching investing in this marketplace.

I think right now, it's just a function, as Dallas said, of getting this new supply absorbed and hopefully seeing the resale market get to a healthier, more liquid place.

Operator: Your next question comes from Julien Blowne with Goldman Sachs.

Julien Blouin: Thank you for the question. Dallas, I wonder what you make of the current public versus private market valuation disconnect reflected in your stock today. And maybe to an earlier question on capital allocation, do you feel like just executing your strategy and starting to be aggressive on the share repurchase front can sort of help narrow that? Or at some point, are there sort of additional strategic options you and the Board sort of start to look at to drive shareholder value?

Dallas Tanner: Thanks for the question. On the strategic side of it, obviously, going to sort of keep that in-house in terms of the things we think about. But I would feel comfortable saying that our disposition strategy where we can continue to sell homes between a 4% and a 4.5% cap and accretively reinvest either in share buyback or new acquisitions that are in the call it six cap range with really good revenue growth profiles in front of them. Will continue to be a creative way to create shareholder value. We've been obviously as frustrated as probably most of our residential peers have been.

It's hard when REIT outflows in terms of the dislocation between public values and private values are moving in the way that they have and where 80% of the S&P is sort of been lifted by AI or anything tech-induced. It's just an interesting environment for real estate businesses at the moment in the public sector. We're certainly seeing private transactions trade at much lower implied cap rates than where public market valuations sit today. But we're also been in this long enough and in and around real estate long enough to know that there are cycles to it. And sometimes at times things don't make sense, specifically in the public space.

So we just keep our heads down and we'll keep recycling capital in a way that's meaningful. And we'll certainly look for some of those other opportunities in our tool belt when they present themselves.

Operator: Your next question comes from Rich Hightower with Barclays.

Rich Hightower: Hey, morning guys. Just a quick clarifying question. Dallas, I want to go back to the sort of the different buckets of potential competitive supply you referenced earlier on the call. And I think last quarter, the forecast is for BTR specifically to drop significantly in 2026. And so I'm just kind of piecing that together with what you said earlier. So does that imply that those other buckets that are sort of the non-VTR would be maybe bigger question marks growing at a more rapid rate? Just help us understand maybe some of the dynamics there.

Dallas Tanner: Yeah. No. It's a fair question. On the latter point, there isn't anything suggesting we're seeing like an acceleration in terms of supply. In fact, I mentioned before, there are some markets where we're actually cautiously optimistic. I don't want to call a bottom yet, but we're seeing some good signs in Florida. There's markets like Phoenix where it's still pretty tough from a new lease. There's just more inventory on the market. And those are the markets where we obviously have the biggest exposure. And so we spend a lot of time looking at these markets and sort of dissecting those three different buckets, which is what are we seeing in VTR and actually we've seen better velocity.

Our own book of business on the BTR leasing side. There seems to be like a pickup in demand there, which has been pretty helpful. We've spent a lot of time with our partners and data out there to try to understand what's going on in the listing universe and how much of that is maybe Joe homeowner converting to a lease. You see more of that in the summer. We'd expect some of that to wane here as we get into Q4 and Q1 to John's point. So no, it feels like it's sort of flattened out. It's kind of right where we expected it would have been.

Albeit there's just it's just a pair more competitive if you're vacant in those markets right now and you're competing for the customer. You got to be on your game, you have to be priced appropriate and as Tim mentioned before, there are times we've done this in normal markets October, November where you got to be a little bit more aggressive. And so our philosophy right now is versus having something sit on the market for an extra three or four weeks, we might be a little bit more aggressive and fill it up here in Q4.

Operator: Your last question comes from Jade Rahmani with KBW.

Jade Rahmani: Thanks for taking my question. Just to touch on geographies, it'd be helpful to hear if there are any markets that you were surprised with either their outperformance or underperformance relative to your expectations. Thanks.

Dallas Tanner: It's an interesting question, and we probably all have different views on different things in our business. I would just say generally, and this I really should say this, kudos to our team, Costa maintains, they've done a wonderful job in terms of managing the turnover and cost and the way that we're managing sort of some of those expenses. I think on the renewal side of the house, we've been very pleased with the things that we've even seen in markets like Miami. Some of the Florida markets are still really, really strong in the renewals, while maybe it's a different story on the new lease side of things. And Atlanta has been a generally pretty strong market.

I think what we've sort of acknowledged over the last couple of calls is that Chicago and Minneapolis have both been outperforming now for four to six quarters. I'm not sure that can go on forever in terms of what the Midwest does, but that has been a very good bright spot for us over the last year, year and a half. Where those markets had basically had no new supply over the last ten years. And you're seeing it in some of the data.

Operator: That completes our question and answer session. I would now like to turn the conference back over to Dallas Tanner for any closing remarks.

Dallas Tanner: Thank you, guys, for joining us today. We're looking forward to seeing many of you at our upcoming Investor Day. And looking forward to sharing more of our story broadly through the webcast. Thanks for all your support and for listening. We'll see you soon.

Operator: The conference has now concluded. You may now disconnect.

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