Item 16. FORM 10-K SUMMARY

Not applicable.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in Dallas, Texas, on the 29th day of March 2018.

Invitation Homes Inc.
By:	/s/ Frederick C. Tuomi
	Name: Frederick C. Tuomi
	Title: President and Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1934, this report has been signed by the following persons in the capacities indicated on the 29th day of March 2018.

Signature		Title
/s/ Frederick C. Tuomi		President, Chief Executive Officer and Director
Frederick C. Tuomi		(Principal Executive Officer)
/s/ Ernest M. Freedman		Executive Vice President and Chief Financial Officer
Ernest M. Freedman		(Principal Financial Officer)
/s/ Kimberly K. Norrell		Senior Vice President and Chief Accounting Officer
Kimberly K. Norrell		(Principal Accounting Officer)
/s/ Bryce Blair		Chairman and Director
Bryce Blair
/s/ Richard D. Bronson		Director
Richard D. Bronson
/s/ Michael D. Fascitelli		Director
Michael D. Fascitelli
/s/ Jonathan D. Gray		Director
Jonathan D. Gray
/s/ Robert G. Harper		Director
Robert G. Harper

Signature		Title
/s/ Jeffrey E. Kelter		Director
Jeffrey E. Kelter
/s/ John B. Rhea		Director
John B. Rhea
/s/ Janice L. Sears		Director
Janice L. Sears
/s/ William J. Stein		Director
William J. Stein
/s/ Barry S. Sternlicht		Director
Barry S. Sternlicht

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the Board of Directors of

Invitation Homes Inc.

Opinion on the Financial Statements

We have audited the accompanying balance sheets of Invitation Homes Inc. and subsidiaries (the "Company") as of December 31, 2017 and 2016, and the related statements of operations, other comprehensive income (loss), equity, and cash flows, for each of the three years in the period ended December 31, 2017, and the related notes and the financial statement schedule listed in the Index at Item 15 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Deloitte & Touche LLP

Dallas, Texas

March 29, 2018

We have served as the Company's auditor since 2013.

F-1

INVITATION HOMES INC.

CONSOLIDATED BALANCE SHEETS

As of December 31, 2017 and 2016

(in thousands, except shares and per share data)

		2017				2016
Assets:
Investments in single-family residential properties:
Land		$	4,646,917			$	2,703,388
Building and improvements		13,740,981				7,091,457
		18,387,898				9,794,845
Less: accumulated depreciation		(1,075,634		)		(792,330		)
Investments in single-family residential properties, net		17,312,264				9,002,515
Cash and cash equivalents		179,878				198,119
Restricted cash		236,684				222,092
Goodwill		258,207				—
Other assets, net		696,605				309,625
Total assets		$	18,683,638			$	9,732,351
Liabilities:
Mortgage loans, net		$	7,580,153			$	5,254,738
Term loan facility, net		1,487,973				—
Revolving facility		35,000				—
Credit facilities, net		—				2,315,541
Convertible senior notes, net		548,536				—
Accounts payable and accrued expenses		193,413				88,052
Resident security deposits		146,689				86,513
Other liabilities		41,999				30,084
Total liabilities		10,033,763				7,774,928
Equity:
Shareholders' equity
Preferred stock, $0.01 par value per share, 900,000,000 shares authorized, none outstanding at December 31, 2017		—				—
Common stock, $0.01 par value per share, 9,000,000,000 shares authorized, 519,173,142 outstanding at December 31, 2017		5,192				—
Additional paid-in capital		8,602,603				—
Accumulated deficit		(157,595		)		—
Accumulated other comprehensive income		47,885				—
Total shareholders' equity		8,498,085				—
Non-controlling interests		151,790				—
Combined equity		—				1,957,423
Total equity		8,649,875				1,957,423
Total liabilities and equity		$	18,683,638			$	9,732,351

The accompanying notes are an integral part of these consolidated financial statements.

F-2

INVITATION HOMES INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except shares and per share data)

		For the Years Ended December 31,
		2017				2016				2015
Revenues:
Rental revenues		$	994,921			$	877,991			$	800,210
Other property income		59,535				44,596				35,839
Total revenues		1,054,456				922,587				836,049
Operating expenses:
Property operating and maintenance		391,495				360,327				347,962
Property management expense		43,344				30,493				39,459
General and administrative		167,739				69,102				79,428
Depreciation and amortization		309,578				267,681				250,239
Impairment and other		24,093				4,207				4,584
Total operating expenses		936,249				731,810				721,672
Operating income		118,207				190,777				114,377
Other expenses:
Interest expense		(256,970		)		(286,048		)		(273,736		)
Other, net		(959		)		(1,558		)		(3,121		)
Total other expenses		(257,929		)		(287,606		)		(276,857		)
Loss from continuing operations		(139,722		)		(96,829		)		(162,480		)
Gain on sale of property, net of tax		33,896				18,590				2,272
Net loss		(105,826		)		(78,239		)		(160,208		)
Net loss attributable to non-controlling interests		489				—				—
Net loss attributable to common shareholders		$	(105,337	)		$	(78,239	)		$	(160,208	)
		February 1, 2017 through December 31, 2017
Net loss available to common shareholders — basic and diluted (Note 12)		$	(89,073	)
Weighted average common shares outstanding — basic and diluted		339,423,442
Net loss per common share — basic and diluted		$	(0.26	)
Dividends declared per common share		$	0.22

The accompanying notes are an integral part of these consolidated financial statements.

F-3

INVITATION HOMES INC.

CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE LOSS

(in thousands)

		For the Years Ended December 31,
		2017				2016				2015
Net loss		$	(105,826	)		$	(78,239	)		$	(160,208	)
Other comprehensive loss
Unrealized gains on interest rate swaps		31,636				—				—
Losses from interest rate swaps reclassified into earnings from accumulated other comprehensive income		16,708				—				—
Other comprehensive income		48,344				—				—
Comprehensive loss		(57,482		)		(78,239		)		(160,208		)
Comprehensive loss attributable to non-controlling interests		30				—				—
Comprehensive loss attributable to common shareholders		$	(57,452	)		$	(78,239	)		$	(160,208	)

The accompanying notes are an integral part of these consolidated financial statements.

F-4

INVITATION HOMES INC.

CONSOLIDATED STATEMENTS OF EQUITY

For the Years Ended December 31, 2017, 2016 and 2015

(in thousands, except share and per share data)

						Common Stock
		Combined Equity				Number of Shares			Amount				Additional Paid-in Capital				Accumulated Deficit				Accumulated Other Comprehensive Income				Total Shareholders' Equity				Non-Controlling Interests				Total Equity
Balance as of December 31, 2014		$	2,456,601			—			$	—			$	—			$	—			$	—			$	2,456,601			$	—			$	2,456,601
Net loss		(160,208		)		—			—				—				—				—				(160,208		)		—				(160,208		)
Contributions		246,820				—			—				—				—				—				246,820				—				246,820
Note receivable issued to Class B unitholders		(1,500		)		—			—				—				—				—				(1,500		)		—				(1,500		)
Distributions and dividends		(682,470		)		—			—				—				—				—				(682,470		)		—				(682,470		)
Series A Preferred Stock dividends		(136		)		—			—				—				—				—				(136		)		—				(136		)
Share-based compensation expense		27,924				—			—				—				—				—				27,924				—				27,924
Balance as of December 31, 2015		1,887,031				—			—				—				—				—				1,887,031				—				1,887,031
Net loss		(78,239		)		—			—				—				—				—				(78,239		)		—				(78,239		)
Contributions		138,002				—			—				—				—				—				138,002				—				138,002
Accrued interest on Class B notes		(972		)		—			—				—				—				—				(972		)		—				(972		)
Notes receivable repaid by Class B unitholders		1,527				—			—				—				—				—				1,527				—				1,527
Series A Preferred Stock dividends		(136		)		—			—				—				—				—				(136		)		—				(136		)
Share-based compensation expense		10,210				—			—				—				—				—				10,210				—				10,210
Balance as of December 31, 2016		1,957,423				—			—				—				—				—				1,957,423				—				1,957,423
Net loss		(16,879		)		—			—				—				—				—				(16,879		)		—				(16,879		)
Redemption of Series A Preferred Stock		(1,153		)		—			—				—				—				—				(1,153		)		—				(1,153		)
Distribution of Class B notes receivable		(19,686		)		—			—				—				—				—				(19,686		)		—				(19,686		)
Cancellation/distribution of Class B notes receivable		19,686				—			—				—				—				—				19,686				—				19,686
Share-based compensation expense		12,001				—			—				—				—				—				12,001				—				12,001
Accrued interest on Class B notes		15				—			—				—				—				—				15				—				15
Balance as of January 31, 2017		1,951,407				—			—				—				—				—				1,951,407				—				1,951,407
Pre-IPO Transactions (Note 1)		(1,951,407		)		221,826,634			2,218				1,949,189				—				—				—				—				—
Issuance of common stock — IPO		—				88,550,000			886				1,691,172				—				—				1,692,058				—				1,692,058
Stock issuance costs — IPO		—				—			—				(5,726		)		—				—				(5,726		)		—				(5,726		)
Issuance of common stock and INVH LP units — Mergers		—				207,448,958			2,075				4,918,459				—				—				4,920,534				151,881				5,072,415
Stock issuance costs — Mergers		—				—			—				(3,796		)		—				—				(3,796		)		—				(3,796		)
Capital distributions		—				—			—				—				—				—				—				(61		)		(61		)
Net loss		—				—			—				—				(88,458		)		—				(88,458		)		(489		)		(88,947		)
Dividends and dividend equivalents declared ($0.22 per share)		—				—			—				—				(69,137		)		—				(69,137		)		—				(69,137		)
Issuance of common stock — settlement of RSUs, net of tax		—				1,347,550			13				(15,897		)		—				—				(15,884		)		—				(15,884		)
Share-based compensation expense		—				—			—				69,202				—				—				69,202				—				69,202
Total other comprehensive income		—				—			—				—				—				47,885				47,885				459				48,344
Balance as of December 31, 2017		$	—			519,173,142			$	5,192			$	8,602,603			$	(157,595	)		$	47,885			$	8,498,085			$	151,790			$	8,649,875

The accompanying notes are an integral part of these consolidated financial statements.

F-5

INVITATION HOMES INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

		For the Years Ended December 31,
		2017				2016				2015
Operating Activities:
Net loss		$	(105,826	)		$	(78,239	)		$	(160,208	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		309,578				267,681				250,239
Share-based compensation expense		81,203				10,210				27,924
Amortization of deferred leasing costs		12,143				13,756				20,003
Amortization of deferred financing costs		22,271				45,819				64,186
Amortization of discount on mortgage loans		1,390				4,900				5,663
Provisions for impairment		2,231				2,282				1,448
Gain on sale of property, net of tax		(33,896		)		(18,590		)		(2,272		)
Change in fair value of derivative instruments		5,845				9,260				2,110
Other noncash amounts included in net loss		(2,940		)		(682		)		2,687
Changes in operating assets and liabilities:
Restricted cash related to security deposits		(4,181		)		(5,928		)		(9,600		)
Restricted cash related to derivative collateral		1,000				—				—
Other assets, net		(10,605		)		(14,531		)		(18,407		)
Accounts payable and accrued expenses		(10,294		)		6,936				(1,097		)
Resident security deposits		3,281				5,344				10,061
Other liabilities		(11,411		)		1,908				4,737
Net cash provided by operating activities		259,789				250,126				197,474
Investing Activities:
Cash acquired in the Mergers (Note 15)		84,952				—				—
Change in amounts deposited and held by others		2,513				5,718				10,275
Acquisition of single-family residential properties		(228,499		)		(284,224		)		(790,583		)
Initial renovations to single-family residential properties		(42,625		)		(56,802		)		(111,260		)
Other capital expenditures for single-family residential properties		(58,456		)		(45,936		)		(49,773		)
Corporate capital expenditures		(4,086		)		(3,857		)		(2,031		)
Proceeds from sale of residential properties		205,980				143,090				135,570
Purchases of investments in debt securities		(95,174		)		(16,036		)		(118,576		)
Repayment proceeds from retained debt securities		79,292				—				—
Change in restricted cash		107,145				3,010				66,545
Other investing activities		2,240				—				—
Net cash provided by (used in) investing activities		53,282				(255,037		)		(859,833		)
Financing Activities:
Proceeds from IPO, net of underwriting discounts		1,692,058				—				—
IPO costs paid		(2,757		)		(2,969		)		—
Merger costs paid		(3,796		)		—				—
Payment of dividends, dividend equivalents, and distributions		(68,997		)		—				(682,470		)
Distributions to non-controlling interests		(61		)		—				—
Payment of taxes related to net share settlement of RSUs		(15,884		)		—				—

F-6

INVITATION HOMES INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(in thousands)

		For the Years Ended December 31,
		2017				2016				2015
Contributions		—				138,002				246,792
Notes receivable repaid by (issued to) Class B unitholders		—				1,527				(1,500		)
Redemption of and dividends paid with respect to Series A Preferred Stock		(1,153		)		(136		)		(136		)
Proceeds from credit facilities		—				184,682				901,572
Payments on credit facilities		(2,321,585		)		(219,045		)		(1,955,018		)
Proceeds from mortgage loans		1,861,447				—				2,370,867
Payments on mortgage loans		(2,951,008		)		(46,817		)		(17,964		)
Proceeds from term loan facility		1,500,000				—				—
Proceeds from revolving facility		135,000				—				—
Payments on revolving facility		(100,000		)		—				—
Proceeds from warehouse loans		—				—				144,698
Payments on warehouse loans		—				(115,261		)		(305,129		)
Purchase of interest rate caps		—				(577		)		(2,189		)
Deferred financing costs paid		(54,576		)		(11,194		)		(47,942		)
Net cash (used in) provided by financing activities		(331,312		)		(71,788		)		651,581
Change in cash and cash equivalents		(18,241		)		(76,699		)		(10,778		)
Cash and cash equivalents, beginning of period		198,119				274,818				285,596
Cash and cash equivalents, end of period		$	179,878			$	198,119			$	274,818
Supplemental cash flow disclosures:
Interest paid, net of amounts capitalized		$	226,306			$	223,237			$	203,694
Cash paid for income taxes		2,525				—				—
Noncash investing and financing activities (see Note 15 for noncash activity related to the Mergers):
Accrued renovation improvements at period end		$	8,715			$	4,962			$	8,582
Accrued residential property capital improvements at period end		7,282				3,847				1,906
Accrued acquisition costs at period end		—				—				22
Transfer of residential property, net to other assets, net for held for sale assets		76,801				45,062				—
Reclassification of IPO costs from other assets to additional paid-in capital		2,969				—				—
Reclassification of deferred financing costs upon loan funding		—				—				3,398
Change in other comprehensive income from cash flow hedges		46,624				—				—

The accompanying notes are an integral part of these consolidated financial statements.

F-7

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

Note 1—Organization and Formation

Invitation Homes Inc. (“INVH”) was formed for the purpose of owning, renovating, leasing, and operating single-family residential properties. On February 6, 2017, INVH completed an initial public offering (“IPO”) of 88,550,000 shares of common stock at a price to the public of $20.00 per share. An additional 221,826,634 shares of common stock were issued to the Pre-IPO Owners (as defined below) on January 31, 2017. On November 16, 2017, INVH merged with Starwood Waypoint Homes (“SWH”) as more fully described below resulting in the issuance of an additional 207,448,958 shares of common stock.

Prior to the IPO, we conducted our business through a combination of entities formed by Blackstone Real Estate Partners VII L.P. (“BREP VII”), an investment fund sponsored by The Blackstone Group L.P., along with BREP VII’s affiliated side-by-side funds and co-investment vehicles (“BREP VII and Affiliates”). The first Invitation Homes partnership was formed on June 12, 2012, through the establishment of Invitation Homes L.P. (“IH1”) and its wholly-owned subsidiary, THR Property Management L.P. (the “Manager”). Preeminent Holdings, Inc. (“IH2”) was created on February 14, 2013, Invitation Homes 3 L.P. (“IH3”) on August 8, 2013, Invitation Homes 4 L.P. (“IH4”) on January 10, 2014, Invitation Homes 5 L.P. (“IH5”) on August 22, 2014, and Invitation Homes 6 L.P. (“IH6”) on June 15, 2015 (collectively with IH1, the “Invitation Homes Partnerships”). Through the Manager, we provide all management and other administrative services with respect to the properties we own. The collective owners of the Invitation Homes Partnerships prior to the IPO are referred to as the “Pre-IPO Owners.”

Invitation Homes Operating Partnership LP (“INVH LP”) and its general partner, Invitation Homes OP GP LLC (the “OP General Partner”), were formed by one of our Pre-IPO Owners on December 14, 2016. INVH LP began negotiating and entering into certain debt and hedge instruments upon its inception in anticipation of our IPO.

Prior to the IPO, the Invitation Homes Partnerships and INVH LP were under the common control of BREP VII and Affiliates. BREP VII and Affiliates had the ability to control each of the Invitation Homes Partnerships and manage and operate the Invitation Homes Partnerships through the Manager and a common board of directors. As such prior to the IPO, our historical financial statements include assets, liabilities and results of operations of INVH LP and the Invitation Homes Partnerships and their consolidated subsidiaries on a combined and consolidated basis.

As a result of the Pre-IPO Transactions described below, IH2 was effectively merged into INVH (and the assets and liabilities of IH2 were contributed to INVH LP), and the remaining Invitation Homes Partnerships became wholly-owned subsidiaries of INVH through INVH LP.

On October 4, 2016, INVH was incorporated in the State of Delaware and was capitalized as of that date by an investment from one of our Pre-IPO Owners. Since inception, and through the date of the Pre-IPO Transactions (as described below), INVH did not engage in any business or activity. On February 6, 2017, INVH changed its jurisdiction of incorporation to Maryland. The Pre-IPO Transactions also included amendments to the INVH charter which provide for the issuance of up to 9,000,000,000 shares of common stock and 900,000,000 shares of preferred stock, $0.01 par value per share.

Our organizational structure includes several wholly-owned subsidiaries that were formed to facilitate our financing arrangements (the “Borrower Entities”). These Borrower Entities are used to align the ownership of our single-family residential properties with individual debt instruments. Collateral for the individual debt instruments may be in the form of equity interests in the Borrower Entities or in pools of single-family residential properties owned either directly by the Borrower Entities or indirectly by their wholly-owned subsidiaries (see Note 6).

References to “Invitation Homes,” the “Company,” “we,” “our,” and “us” refer, collectively, to INVH, INVH LP, and the consolidated subsidiaries of INVH LP, including the Manager. References to “SWH” refer to Starwood Waypoint Homes and its subsidiaries.

Pre-IPO Transactions

On January 31, 2017, we effected certain transactions (the “Pre-IPO Transactions”) that resulted in INVH LP holding, directly or indirectly, all of the assets, liabilities, and results of operations of the Invitation Homes Partnerships, including the

F-8

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

full portfolio of homes held by the Invitation Homes Partnerships. As a result of the Pre-IPO Transactions, INVH LP was wholly-owned by INVH directly and through its wholly-owned subsidiary, the OP General Partner. More specifically:

•	INVH acquired all of the assets, liabilities, and operations held directly or indirectly by IH2 through certain mergers and related transactions as follows:

•	IH2 Property Holdings Inc., a parent entity of IH2, merged with and into INVH, with INVH as the entity surviving the merger (the “IH2 Property Holdings Merger”), and the issued and outstanding shares of IH2 Property Holdings Inc., all of which were held by certain of the Pre-IPO Owners, were converted into newly issued shares of common stock of INVH; and

•

following the IH2 Property Holdings Merger, IH2 merged with and into INVH, with INVH as the entity surviving the merger (the “IH2 Merger”). In the IH2 Merger, all of the shares of common stock of IH2 issued and outstanding immediately prior to such merger, other than the shares held by INVH, were converted into shares of newly issued common stock of INVH. As a result of the IH2 Merger, INVH holds all of the assets and operations held directly or indirectly by IH2 prior to such merger;

•	prior to the IH2 Merger, our Pre-IPO Owners contributed to INVH their interests in each of the other Invitation Homes Partnerships (other than IH2) in exchange for newly-issued shares of INVH; and

•	INVH contributed to INVH LP all of the interests in the Invitation Homes Partnerships (other than IH2, the assets, liabilities and operations of which were contributed to INVH LP).

The Pre-IPO Transactions were accounted for as a reorganization of entities under common control utilizing historical cost basis.

Merger with Starwood Waypoint Homes

On November 16, 2017 (the “Merger Date”), pursuant to an Agreement and Plan of Merger, dated as of August 9, 2017 (the “Merger Agreement”), by and among INVH, INVH LP, IH Merger Sub, LLC, a Delaware limited liability company and a direct wholly-owned subsidiary of INVH (“REIT Merger Sub”), SWH and Starwood Waypoint Homes Partnership, L.P., a Delaware limited partnership and a subsidiary of SWH (“SWH Partnership”), SWH merged with and into REIT Merger Sub, with REIT Merger Sub surviving as our subsidiary (the “REIT Merger”). Immediately after the REIT Merger, SWH Partnership merged with and into INVH LP, with INVH LP surviving as our subsidiary (the “Partnership Merger,” and together with the REIT Merger, the “Mergers”).

Under the terms of the Merger Agreement, each outstanding SWH common share was converted into 1.6140 shares of our common stock (the “Exchange Ratio”), and each outstanding unit of SWH Partnership was converted into 1.6140 common units, representing limited partner interests, in INVH LP. Further, each outstanding restricted share unit of SWH (an “SWH RSU”) that vested as a result of the Mergers was automatically converted into the right to receive our common stock based on the Exchange Ratio, plus any accrued but unpaid dividends (if any) and less certain taxes (if any). After giving effect to the Mergers, as of December 31, 2017, INVH owns a 98.2% partnership interest in INVH LP and has the full, exclusive and complete responsibility for and discretion over the day to day management and control of INVH LP. See Note 15 for additional information regarding the accounting treatment for the Mergers.

The REIT Merger is intended to qualify as a reorganization for United States federal income tax purposes, and the Partnership Merger is intended to be treated as a transaction that is generally tax free to the holders of units of SWH Partnership for United States federal income tax purposes.

Note 2—Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and in conjunction with the rules and regulations of the Securities and Exchange Commission (“SEC”). Subsequent to the date of the Pre-IPO Transactions, these consolidated financial statements include the accounts of INVH and its consolidated subsidiaries. Prior to the date of the Pre-IPO Transactions, these

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

consolidated financial statements include the combined accounts of INVH LP and the Invitation Homes Partnerships and their wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in the consolidated financial statements.

We consolidate entities when we own, directly or indirectly, a majority interest in the entity or are otherwise able to control the entity. We consolidate variable interest entities (“VIEs”) in accordance with Accounting Standards Codification (“ASC”) 810, Consolidation, if we are the primary beneficiary of the VIE as determined by our power to direct the VIE’s activities and the obligation to absorb its losses or the right to receive its benefits, which are potentially significant to the VIE. A VIE is broadly defined as an entity with one or more of the following characteristics: (a) the total equity investment at risk is insufficient to finance the entity’s activities without additional subordinated financial support; (b) as a group, the holders of the equity investment at risk lack (i) the ability to make decisions about the entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; or (c) the equity investors have voting rights that are not proportional to their economic interests, and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights.

As described in Note 5, as a result of the Mergers we acquired an investment in a joint venture with the Federal National Mortgage Association (“FNMA”), which is a voting interest entity. We do not hold a controlling financial interest in the joint venture but have significant influence over its operating and financial policies. Additionally, FNMA held certain substantive participating rights that preclude the presumption of control by us; as such, we account for our investment using the equity method. In connection with the Mergers, we initially recorded this investment at fair value in connection with purchase accounting as described in Note 15 and have subsequently adjusted for our proportionate share of net earnings or losses and other comprehensive income or loss, cash contributions made and distributions received, and other adjustments, as appropriate. Distributions of operating profit from the joint venture are reported as part of operating cash flows while distributions related to a capital transaction, such as a refinancing transaction or sale, are reported as investing activities.

Non-controlling interests primarily represent the interests in INVH LP held by a third party as a result of the Partnership Merger. Non-controlling interests are presented as a separate component of equity in the consolidated balance sheet as of December 31, 2017, and the consolidated statement of operations for the year ended December 31, 2017 includes an allocation of the net loss attributable to the non-controlling interest holders.

Adoption of New Accounting Standards

In August 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities (Topic 815). The purpose of this updated guidance is to better align a company’s financial reporting for hedging activities with the economic objectives of those activities. Effective October 1, 2017, we adopted ASU 2017-12, and the adoption of this standard had no material impact on our consolidated financial statements for any period presented.

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which clarifies the definition of a business with the objective of evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Effective January 1, 2017, we adopted ASU 2017-1, and the adoption of this standard had no material impact on our consolidated financial statements for any period presented.

In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which simplifies several aspects of the accounting for share-based payment transaction, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. Effective January 1, 2017, we adopted ASU 2016-09, and the adoption of this standard had no material impact on our consolidated financial statements for any period presented.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. These estimates are inherently subjective in nature and actual results could differ from those estimates.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

Investments in Single-Family Residential Properties

Upon acquisition, we evaluate our acquired single-family residential properties for purposes of determining whether a transaction should be accounted for as an asset acquisition or business combination. Upon adoption of ASU 2017-01, our purchases of homes are treated as asset acquisitions and are recorded at their purchase price, which is allocated between land, building and improvements, and in-place lease intangibles (when a tenant is in place at the acquisition date) based upon their relative fair values at the date of acquisition. The purchase price for purposes of this allocation is inclusive of acquisition costs which typically include legal fees, bidding service and title fees, payments made to cure tax, utility, homeowners’ association (“HOA”), and other mechanic’s and miscellaneous liens, as well as other closing costs. Properties acquired in the Mergers were recorded at fair value (see Note 15). The fair values of acquired in-place lease intangibles, if any, are based on the costs to execute similar leases, including commissions and other related costs. The origination value of in-place lease intangibles also includes an estimate of lost rent revenue at in-place rental rates during the estimated time required to lease the property. The in-place lease intangibles are amortized over the life of the leases and are recorded in other assets, net in our consolidated balance sheets (see Note 5). Prior to our adoption of ASU 2017-01 effective January 1, 2017, acquisition costs for transactions accounted for as business combinations were expensed in the period in which they were incurred and were reflected in other expenses in the consolidated statements of operations.

Cost Capitalization

We incur costs to acquire, stabilize and prepare our single-family residential properties to be rented. We capitalize these costs as a component of our investment in each single-family residential property, using specific identification and relative allocation methodologies, including renovation costs and other costs associated with activities that are directly related to preparing our properties for use as rental real estate. Other costs include interest costs, property taxes, property insurance, utilities, HOA fees, and the salaries and benefits of the Manager’s employees who are directly responsible for the execution of our stabilization activities. The capitalization period associated with our stabilization activities begins at such time that activities commence and concludes at the time that a single-family residential property is available to be leased.

Once a property is ready for its intended use, expenditures for ordinary maintenance and repairs thereafter are expensed to operations as incurred, and we capitalize expenditures that improve or extend the life of a home and for certain furniture and fixtures additions. The determination of which costs to capitalize requires significant judgment. Accordingly, many factors are considered as part of our evaluation processes with no one factor necessarily determinative.

Depreciation

Costs capitalized in connection with single-family residential property acquisitions, stabilization activities, and on an ongoing basis are depreciated over their estimated useful lives on a straight line basis. The depreciation period commences upon the cessation of stabilization related activities or upon the completion of improvements made on an ongoing basis. For those costs capitalized in connection with residential property acquisitions and stabilization activities and those capitalized on an ongoing basis, the weighted average useful lives range from 7 years to 28.5 years.

Provisions for Impairment

We continuously evaluate, by property, whether there are any events or changes in circumstances indicating that the carrying amount of our single-family residential properties may not be recoverable. Examples of such events and changes in circumstances that we consider include significant and persistent declines in an individual property’s net operating income, regional changes in home price appreciation as measured by certain independently developed indices, change in expected use of the property, significant adverse legal factors, substantive damage to the individual property as a result of natural disasters and other risks inherent in our business not covered by insurance proceeds, or a current expectation that a property will be disposed of prior to the end of its estimated useful life.

To the extent an event or change in circumstance is identified, a residential property is considered to be impaired only if its carrying value cannot be recovered through estimated future undiscounted cash flows from the use and eventual disposition of the property. Cash flow projections are prepared using internal analyses based on current rental, renewal, and occupancy rates, operating expenses, and inputs from our annual planning process that give consideration to each property’s historical results, current operating trends, and current market conditions. To the extent an impairment has occurred, the carrying amount of our investment in a property is adjusted to its estimated fair value. To determine the estimated fair value,

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

we consider local broker price opinions (“BPOs”) and automated valuation model (“AVM”) data, each of which are important components of our process with no one information source being necessarily determinative. In order to validate the BPOs and AVM data received and used in our assessment of fair value of real estate, we perform an internal review to determine if an acceptable valuation approach was used to estimate fair value in compliance with guidance provided by ASC 820, Fair Value Measurements. Additionally, we undertake an internal review to assess the relevance and appropriateness of comparable transactions that have been used and any adjustments to comparable transactions made in reaching the value opinions.

The process whereby we assess our single-family residential properties for impairment requires significant judgment and assessment of factors that are, at times, subject to significant uncertainty. We evaluate multiple information sources and perform a number of internal analyses, each of which are important components of our process with no one information source or analysis being necessarily determinative.

Single-Family Residential Properties Held for Sale and Discontinued Operations

From time to time we may identify single-family residential properties to be sold. At the time that any such properties are identified, we perform an evaluation to determine whether or not such properties should be classified as held for sale or presented as discontinued operations in accordance with GAAP.

Factors considered as part of our held for sale evaluation process include whether the following conditions have been met: (i) we have committed to a plan to sell a property that is immediately available for sale in its present condition;(ii) an active program to locate a buyer and other actions required to complete the plan to sell a property have been initiated; (iii) the sale of a property is probable within one year (generally determined based upon listing for sale); (iv) the property is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and (v) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. To the extent that these factors are all present, we discontinue depreciating the property, measure the property at the lower of its carrying amount or its fair value less estimated costs to sell, and present the property separately within other assets, net on our consolidated balance sheets.

In connection with the held for sale evaluation described above, we also perform an evaluation to determine whether the results of operations associated with such property, or properties, should be classified as discontinued operations within our consolidated statements of operations. Factors considered as part of our discontinued operations evaluation process include whether a property or a group of properties that are disposed of or classified as held for sale represent a strategic shift that has or will have a major effect on our financial results. As of December 31, 2017 and 2016, we classified $46,814 and $45,062, respectively, as held for sale assets in our consolidated balance sheets (see Note 5). As of and for the years ended December 31, 2017, 2016, and 2015, no properties have been classified as discontinued operations in our consolidated financial statements.

Cash and Cash Equivalents

For purposes of presentation on both the consolidated balance sheets and statements of cash flows, we consider financial instruments with an original maturity of three months or less to be cash and cash equivalents. We maintain our cash and cash equivalents in multiple financial institutions and, at times, these balances exceed federally insurable limits. As a result, there is a concentration of credit risk related to amounts on deposit. We believe any risks are mitigated through the size of the financial institution at which our cash balances are held.

Restricted Cash

Restricted cash represents cash deposited in accounts related to rent deposits and collections, security deposits, property taxes, insurance premiums and deductibles, capital expenditures, prepayments and cash collateral held by the counterparties to certain of our interest rate swap contracts (see Note 4). Amounts deposited in these accounts can only be used as provided for in the mortgage loan agreements (see Note 6) and, therefore, are separately presented within our consolidated balance sheets. For purposes of classification within the consolidated statements of cash flows, amounts deposited in these accounts are classified as investing activities other than those related to resident security deposits, which are classified as operating activities.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

Held to Maturity Investments

Investments in debt securities that we have a positive intent and ability to hold to maturity are classified as held to maturity and are presented within other assets, net on our consolidated balance sheets (see Note 5). These investments are recorded at amortized cost. Investments are reviewed at each reporting period for declines in fair value below the amortized cost basis that are other than temporary. Interest income, including amortization of any premium or discount, is classified as other in the consolidated statements of operations. For purposes of classification within the consolidated statements of cash flows, purchases of and repayments from these securities are classified as investing activities.

Deferred Financing Costs

Costs incurred that are directly attributable to procuring external financing are deferred and amortized over the term of the related financing arrangement as interest expense in the consolidated statements of operations. Costs that are deferred for the procurement of such financing are presented either as an asset in other assets, net when associated with a revolving debt instrument and prior to funding of a loan or as a liability in term loan facility, net, mortgage loans, net, or credit facilities, net when associated with other indebtedness. Unamortized financing costs are charged to earnings when debt is retired before the maturity date.

Convertible Senior Notes

ASC Topic 470-20, Debt with Conversion and Other Options, requires that the liability and equity components of convertible debt instruments that may be settled in cash upon conversion, including partial cash settlement, be separately accounted for in a manner that reflects the issuer’s nonconvertible debt borrowing rate. The initial proceeds from the issuance of convertible notes are allocated between a liability component and an equity component in a manner that reflects interest expense at the rate of similar nonconvertible debt that could have been issued at such time. The equity component represents the excess initial proceeds received over the fair value of the liability component of the notes as of the date of issuance. We measure the fair value of the debt component of our convertible senior notes as of the issuance date based on our nonconvertible debt borrowing rate. In connection with Mergers, we assumed convertible senior notes that were recorded at their estimated fair value based on our nonconvertible debt borrowing rate as of the Merger Date (see Note 6). The resulting discount from the outstanding principal balance of the convertible senior notes is being amortized using the effective interest rate method over the periods to maturity. Amortization of this discount is recorded as interest expense in the consolidated statement of operations for the year ended December 31, 2017.

Revenue Recognition and Resident Receivables

Rental revenue, net of any concessions, is recognized monthly as it is earned on a straight-line basis over the term of the lease. Other property income is recognized when earned and realized or realizable.

We maintain an allowance for doubtful accounts for estimated losses that may result from the inability of residents to make required rent or other payments. This allowance is estimated based on, among other considerations, payment histories, and overall delinquencies. The provision for doubtful accounts is recorded as a reduction of rental revenues and other property income in our consolidated statements of operations.

Deferred Leasing Costs

Costs associated with leasing our single-family residential properties, which consist primarily of commissions paid to leasing agents, are deferred in the period in which they are incurred as a component of deferred leasing costs and are subsequently amortized over the lease term. Deferred leasing costs are included as a component of other assets, net within our consolidated balance sheets and their amortization is classified as property operating and maintenance within the consolidated statements of operations (see Note 5). Costs incurred in connection with our leasing activities that do not result in the execution of a lease are expensed in the period incurred.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

Goodwill

In connection with the Mergers, we recorded goodwill (see Note 15), which is not amortized. We will test for impairment on an annual basis effective October 31, 2018, or more frequently if circumstances indicate that the goodwill carrying value may exceed its fair value.

Fair Value Measurements

The fair value of a financial instrument is the amount at which the instrument could be exchanged in an orderly transaction between two willing parties. This amount is determined based on an exit price approach, which contemplates the price that would be received to sell an asset (or paid to transfer a liability) in an orderly transaction between market participants at the measurement date. GAAP has established a valuation hierarchy based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels are defined as follows:

Level 1—Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets;

Level 2—Inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument; and

Level 3—Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

See Note 11 for further information related to our fair value measurements.

Earnings Per Share

We use the two-class method to compute basic and diluted earnings (loss) per common share (“EPS”) because certain of our restricted stock units (“RSUs”) and restricted shares of our common stock (“RSAs”) (see Share-Based Compensation Expense below) are participating securities as defined by GAAP. We compute basic EPS by dividing net income (loss) available to common shareholders for the period by the weighted-average number of common shares outstanding for the period, adjusted to exclude non-vested RSUs and RSAs. Diluted EPS is similar to computing basic EPS, except that the denominator is increased to include the dilutive effects of non-vested RSUs and RSAs except when doing so would be anti-dilutive. Prior to the IPO, our business was conducted through the Invitation Homes Partnerships, which did not have a common capital structure upon which to compute historical EPS. Accordingly, EPS has not been presented for historical periods prior to the IPO.

Derivatives

We enter into interest rate swap and interest rate cap agreements (collectively, “Hedging Derivatives”) for interest rate risk management purposes. We do not enter into Hedging Derivatives for trading or other speculative purposes, and all of our Hedging Derivatives are carried at fair value in our consolidated balance sheets. Designated hedges are derivatives that meet the criteria for hedge accounting and that we have elected to designate as hedges. Non-designated hedges are derivatives that do not meet the criteria for hedge accounting or that we have not elected to designate as hedges.

Pursuant to the terms of certain of our mortgage loans, we are required to maintain interest rate caps. We have elected not to designate these interest cap agreements for hedge accounting (collectively, the “Non-Designated Hedges”). We enter into interest rate swap agreements to hedge the risk arising from changes in our interest payments on variable-rate debt due to changes in the one-month London Interbank Offered Rate (“LIBOR”). In connection with the Pre-IPO Transactions and the Mergers we have elected to account for our interest rate swap agreements as effective cash flow hedges (collectively, the “Designated Hedges”). We assess the effectiveness of these interest rate swap cash flow hedging relationships on an ongoing basis. The effect of these interest rate cap agreements and interest rate swap agreements is to reduce the variability of interest payments due to changes in LIBOR.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

The fair value of Hedging Derivatives that are in an asset position are included in other assets, net and those in a liability position are included in other liabilities in our consolidated balance sheets. For Non-Designated Hedges, the related changes in fair value are reflected within interest expense in the consolidated statements of operations. For Designated Hedges, the changes in fair value are reported as a component of other comprehensive income (loss) in our consolidated balance sheets and reclassified into earnings as interest expense in our consolidated statements of operations when the hedged transactions affect earnings. See Note 7 for further discussion of derivative financial instruments.

Share-Based Compensation Expense

Prior to the IPO, we recognized share-based compensation expense for incentive compensation units granted by the Invitation Homes Partnerships (the “Class B Units”). In connection with and subsequent to the IPO, we issued RSUs that settle in shares of common stock and RSAs for which share-based compensation expense is recognized.

We recognized share-based compensation expense for the Class B Units based on the estimated fair value of the Class B Units and vesting conditions of the related incentive unit agreements. Since the Class B Units granted by IH1 were granted to employees of the Manager, a wholly-owned subsidiary of IH1, the related share-based compensation expense was based on the grant-date fair value of the units and recognized in expense over the service period. Because units in IH2, IH3, IH4, IH5, and IH6 were granted to non-employees of those respective partnerships, fair value was remeasured for non-vested units at the end of each reporting period. The fair value of the Class B Units was determined based on a valuation model that took into account discounted cash flows and a market approach based on comparable companies and transactions.

We recognize share-based compensation expense for the RSUs and RSAs based on their grant-date fair value, net of expected forfeitures, over the service period from the grant date to vest date for each tranche or when any applicable performance or market conditions are met in accordance with the related RSU and RSA agreements. The grant-date fair value of RSUs and RSAs is generally based on the closing price of our common stock on the grant date except for market based RSU grant‑date fair values, which are based on Monte-Carlo option pricing models.

Additional compensation expense is recognized if modifications to existing incentive compensation unit, RSU, or RSA agreements result in an increase in the post-modification fair value of the units that exceeds their pre-modification fair value. Share-based compensation expense is presented as components of general and administrative expense and property management expense in our consolidated statements of operations. See Note 10 for further discussion of share-based compensation expense.

Income Taxes

As a result of the Pre-IPO Transactions more fully described in Note 1, the Invitation Homes Partnerships transferred all assets, liabilities, and operations to INVH through certain mergers and related transactions, including the IH2 Property Holdings Merger. IH2 Property Holdings Inc. had previously elected to qualify as a Real Estate Investment Trust (“REIT”) for United States federal income tax purposes commencing with its taxable year ended December 31, 2013. Effective upon consummation of the IH2 Property Holdings Merger, INVH became subject to such REIT election. Following the Mergers on November 16, 2017, the assets and income derived from the assets acquired from SWH became the assets and income of INVH.

We intend to continue to operate as a REIT, and our current and continuing qualification as a REIT depends on our ability to meet the various requirements imposed by the Internal Revenue Code of 1986, as amended (the “Code”), which are related to organizational structure, distribution levels, diversity of stock ownership and certain restrictions with regard to owned assets and categories of income. If we qualify for taxation as a REIT, we will generally not be subject to United States federal corporate income tax on our taxable income that is currently distributed to stockholders. This treatment substantially eliminates the “double taxation” (at the corporate and stockholder levels) that generally results from an investment in a corporation. If we fail to qualify as a REIT in any taxable year, we will be subject to United States federal income taxes at regular corporate rates (including, for taxable years beginning prior to January 1, 2018, any applicable alternative minimum tax) and may not be able to qualify as a REIT for subsequent taxable years.

Even if we qualify as a REIT, we may be subject to United States federal income and excise taxes in various situations, such as on our undistributed income. We also will be required to pay a 100% tax on any net income on non-arm’s length transactions between us and a TRS, defined below, and on any net income from sales of assets that were held for sale to customers in the ordinary course. In addition, for taxable years beginning prior to January 1, 2018, we could also be subject

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INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

to the alternative minimum tax on items of tax preference. State and local tax laws may not conform to the United States federal income tax treatment, and we may be subject to state or local taxation in various state or local jurisdictions, including those in which we transact business. Any taxes imposed on us reduce our operating cash flow and net income.

As part of the formation of INVH, each of the Invitation Homes Partnerships (other than IH2) transferred assets into INVH solely in exchange for shares of common stock. Certain of the assets contributed contained built-in gains. Prior to the Pre-IPO Transactions, the contributing partnerships had indirect C corporation partners to which a portion of the built-in gain would be allocated. As a result, if we dispose of any such assets during the five-year period following the date the REIT acquired such assets, we will be subject to the regulations under Section 337(d) of the Code. In general terms, such regulations subject the REIT to the maximum corporate level tax rate on the lesser of (i) such built-in gains and (ii) the gain recognized by the REIT upon a taxable disposition of the contributed assets. We may, however, choose not to sell such assets during such five-year period or to sell them in a non-taxable transaction. As such, the potential taxes associated with these built-in gains are not estimable.

Certain of our operations, or a portion thereof, are conducted through taxable REIT subsidiaries, each of which we refer to as a TRS. A TRS is a subsidiary C corporation that has not elected REIT status and as such is subject to United States federal and state corporate income tax. We use TRS entities to facilitate our ability to perform non-real estate related activities and/or perform non-customary services for residents that cannot be offered directly by a REIT.

For our TRS entities, deferred income taxes result from temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for United States federal income tax purposes and are measured using the enacted tax rates and laws that are expected to be in effect when the differences reverse. We reduce deferred tax assets by recording a valuation allowance when we determine, based on available evidence, that it is more likely than not that the assets will not be realized. We recognize the tax consequences associated with intercompany transfers between the REIT and TRS entities when the related assets affect our GAAP net income or loss, generally through depreciation, impairment losses, or sales to third-party entities.

Tax benefits associated with uncertain tax positions are recognized only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position.

We file income tax returns in the United States federal jurisdiction as well as various state and local jurisdictions. Our filings are subject to normal reviews by regulatory agencies until the related statute of limitations expires, with open tax years varying based upon the date of incorporation of the specific entity. The years open to examination range from 2014 to present.

Segment Reporting

Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance. Our CODM is the Chief Executive Officer.

Under the provision of ASC 280, Segment Reporting, we have determined that we have one reportable segment related to acquiring, renovating, leasing, and operating single-family homes as rental properties, including single-family homes in planned unit developments. The CODM evaluates operating performance and allocates resources on a total portfolio basis. The CODM utilizes net operating income as the primary measure to evaluate performance of the total portfolio. The aggregation of individual homes constitutes the total portfolio. Decisions regarding acquisitions and dispositions of homes are made at the individual home level.

Recent Accounting Pronouncements

In September 2017, the FASB issued ASU No. 2017-13, Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments. The purpose of this pronouncement is to update the guidance in the SEC paragraphs of the Accounting Standards Codification to align with ASU No. 2014-09. This new standard will be effective at the same time an entity adopts the new revenue guidance in ASU No. 2014-09, Revenue from Contracts with Customer (Topic 606) (“ASU 2014-09”), which is

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(dollar amounts in thousands)

effective on January 1, 2018. We have determined that the adoption of this standard will not have a material impact on our consolidated financial statements.

In May 2017, the FASB issued ASU No. 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting, which clarifies the definition of modification with the objective of evaluating whether modification accounting should be applied when there are changes to the terms or conditions of a share-based payment award. The guidance will be effective for us for annual reporting periods beginning after December 15, 2017, and for interim periods within those annual periods with early adoption permitted. We do not anticipate that the adoption of this standard will have a material impact on our consolidated financial statements.

In February 2017, the FASB issued ASU 2017-05, Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets. The new guidance clarifies that ASC 610-20 applies to the derecognition of nonfinancial assets and in substance nonfinancial assets unless other specific guidance applies. As a result, it will not apply to the derecognition of businesses, nonprofit activities, or financial assets (including equity method investments), or to revenue transactions (contracts with customers). The new guidance also clarifies that an in substance nonfinancial asset is an asset or group of assets for which substantially all of the fair value consists of nonfinancial assets and the group or subsidiary is not a business. In addition, transfers of nonfinancial assets to another entity in exchange for a non-controlling ownership interest in that entity will be accounted for under ASC 610-20, removing specific guidance on such partial exchanges from ASC 845, Nonmonetary Transactions. As a result of the new guidance, the guidance specific to real estate sales in ASC 360-20, Real Estate Sales, will be eliminated. As such, sales and partial sales of real estate assets will now be subject to the same derecognition model as all other nonfinancial assets. This new standard will be effective at the same time an entity adopts the new revenue guidance in ASU 2014-09, which is effective on January 1, 2018. We do not anticipate that the adoption of this standard will have a material impact on our consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, to simplify the accounting for goodwill impairment by removing step two of the goodwill impairment test, which had involved determining the fair value of individual assets and liabilities of a reporting unit to measure goodwill. Instead, goodwill impairment will be determined as the excess of a reporting unit’s carrying value over its fair value, not to exceed the carrying amount of goodwill. The guidance will be effective for us for annual reporting periods beginning after December 15, 2017, and for interim periods within that reporting period. Effective January 1, 2018, we will adopt ASU 2017-4, which will impact our goodwill impairment testing process. We do not anticipate that the adoption of this standard will have a material impact on our consolidated financial statements.

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires that period changes in the total of cash, cash equivalents, and amounts generally described as restricted cash or cash equivalents are explained in the statement of cash flows. Thus, amounts generally described as restricted cash and restricted cash equivalents will be included with cash and cash equivalents when reconciling the beginning and ending balances shown in the statement of cash flows. The guidance will be effective for us for annual reporting periods beginning after December 15, 2017, and for interim periods within that reporting period. The adoption of this standard will modify our current disclosures and classifications within the consolidated statements of cash flows.

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. This new guidance will require the current and deferred tax effects of intercompany transactions, except for those involving inventory, to be recognized currently. Under current GAAP, the tax effects of intra-entity asset transfers are deferred until the transferred asset is sold to a third party or otherwise recovered through use. This new standard will be effective for annual reporting periods beginning after December 15, 2017 and interim periods within that reporting period. We do not anticipate that the adoption of this standard will have a material impact on our consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which clarifies the classification of certain cash receipts and cash payments including debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, proceeds from the settlement of insurance claims, and beneficial interests in securitization transactions. The new standard will be effective for us for annual reporting periods beginning after December 15, 2017, and for interim periods within those annual periods. The adoption of this standard will modify our current disclosures and classifications within the consolidated statements of cash flows, but is not expected to have a material effect on our consolidated financial statements.

F-17

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which changes how companies will measure credit losses for certain financial assets. This guidance requires an entity to estimate its expected credit loss and record an allowance based on this estimate so that it is presented at the net amount expected to be collected on the financial asset. This new standard will be effective for annual reporting periods beginning after December 15, 2019 and interim periods within that reporting period with early adoption permitted beginning after December 15, 2018 and interim periods within that reporting period. We do not anticipate that the adoption of this standard will have a material impact on our consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which will require lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by all leases with terms of more than one year. Lessor accounting will remain similar to lessor accounting under current GAAP, while aligning with the FASB’s new revenue recognition guidance. The new standard will be effective for us for annual reporting periods beginning after December 15, 2018, and for interim periods within those annual periods, with early adoption permitted. We expect that the adoption of this standard will result in an increase in assets and liabilities in our consolidated balance sheets related to our leased office space.

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments — Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, which amends certain aspects of recognition, measurement, presentation and disclosure of financial instruments, including the requirement to measure certain equity investments at fair value with changes in fair value recognized in net income. The new standard will be effective for us for annual reporting periods beginning after December 15, 2017, and for interim periods within those annual periods. We do not anticipate that the adoption of this standard will have a material impact on our consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, which provides guidance on revenue recognition and supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, most industry-specific guidance and some cost guidance included in Subtopic 605-35, Revenue Recognition—Construction-Type and Production-Type Contracts. The standard’s core principle is that a company recognizes revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under current guidance. These judgments may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to fulfill a contract. The guidance will be effective for us for annual reporting periods beginning after December 15, 2017, and for interim periods within those annual periods. At that time, we may adopt the full retrospective approach or the modified retrospective approach. We anticipate selecting the modified retrospective transition method with any cumulative effect recognized as of the date of adoption and will adopt the new standard effective January 1, 2018 as required. We have determined that its adoption will not have a significant impact on our consolidated financial statements, as more than 90% of our total revenues consist of rental income from leasing arrangements, which is specifically excluded from the standard. In addition, we have determined that there will not be a material impact on our other property income.

F-18

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

Note 3—Investments in Single-Family Residential Properties

The following table sets forth the net carrying amount associated with our properties by component:

		December 31, 2017				December 31, 2016
Land		$	4,646,917			$	2,703,388
Single-family residential property		13,084,156				6,829,579
Capital improvements		536,297				229,890
Equipment		120,528				31,988
Total gross investments in the properties		18,387,898				9,794,845
Less: accumulated depreciation		(1,075,634		)		(792,330		)
Investments in single-family residential properties, net		$	17,312,264			$	9,002,515

As of December 31, 2017 and 2016, the carrying amount of the residential properties above included $125,903 and $122,009, respectively, of capitalized acquisition costs (excluding purchase price), along with $62,938 and $62,169, respectively, of capitalized interest, $25,966 and $26,050, respectively, of capitalized property taxes, $4,727 and $4,764, respectively, of capitalized insurance, and $2,818 and $2,890, respectively, of capitalized HOA fees.

During the years ended December 31, 2017, 2016, and 2015, we recognized $297,627, $263,093, and $245,065 respectively, of depreciation expense related to the components of the properties, $8,223, $0, and $601 respectively, of amortization related to in-place lease intangible assets, and $3,728, $4,588, and $4,573 respectively, of depreciation and amortization related to corporate furniture and equipment. These amounts are included in depreciation and amortization in the consolidated statements of operations. Further, during the years ended December 31, 2017, 2016, and 2015, impairments totaling $2,231, $2,282, and $1,448, respectively, have been recognized and are included in impairment and other in the consolidated statements of operations.

Note 4—Restricted Cash

Pursuant to the terms of the credit facility agreements and the mortgage loans described in Note 6, we are required to establish, maintain, and fund from time to time (generally either monthly or at the time borrowings are funded) certain specified reserve accounts. These reserve accounts include, but are not limited to, the following types of accounts: (i) completion reserves; (ii) renovation reserves; (iii) leasing commission reserves; (iv) debt service reserves; (v) property tax reserves; (vi) insurance premium and deductible reserves; (vii) standing reserves; (viii) special reserves; (ix) termination fee reserves; (x) eligibility reserves; (xi) collections; and (xii) non-conforming property reserves. In February 2017, the credit facilities were repaid in full and all related reserve accounts were released. Prior to that time, the credit facility reserve accounts were under the sole control of the Administrative Agent, as defined in the credit facility agreements. The reserve accounts associated with the mortgage loans are under the sole control of the loan servicer. Additionally, we hold security deposits pursuant to resident lease agreements that are required to be segregated. We also are required to post collateral related to certain of our interest rate swap agreements and to hold letters of credit as required by certain of our insurance policies. Accordingly, amounts funded to these reserve accounts, security deposit accounts, and other restricted accounts have been classified within our consolidated balance sheets as restricted cash.

The amounts funded, and to be funded, to the reserve accounts are subject to formulae included in the credit facility agreements and mortgage loan agreements and are to be released to us subject to certain conditions specified therein being met. To the extent that an event of default were to occur, the loan servicer (as it relates to the mortgage loans) has discretion to use such funds to either settle the applicable operating expenses to which such reserves relate or reduce the allocated loan amount associated with a residential property of ours.

F-19

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

As of December 31, 2017 and 2016, the balances in our restricted cash accounts are as set forth in the table below. As of December 31, 2016, no amounts were funded to the completion, renovation, leasing commission, debt service, termination fee, and nonconforming property reserve accounts as the conditions specified in the credit facility agreements that require such funding did not exist, and none are required at December 31, 2017 as the credit facilities had been repaid in full.

		December 31, 2017				December 31, 2016
Resident security deposits		$	147,098			$	86,239
Collections		40,607				42,767
Property taxes		20,785				52,256
Derivative collateral		15,120				—
Standing and capital expenditure reserves		5,257				24,409
Insurance premium and deductible		4,250				4,432
Letters of credit		2,994				2,681
Eligibility reserves		573				9,274
Special reserves		—				34
Total		$	236,684			$	222,092

Note 5—Other Assets

As of December 31, 2017 and 2016, the balances in other assets, net are as follows:

		December 31, 2017				December 31, 2016
Investments in debt securities, net		$	378,545			$	209,337
Interest rate swaps (Note 7)		57,612				—
Investment in unconsolidated joint venture		57,078				—
Held for sale assets(1)		46,814				45,062
Prepaid expenses		37,869				21,883
In-place leases, net		37,517				—
Rent and other receivables, net		24,525				11,604
Corporate fixed assets, net		16,595				6,247
Amounts deposited and held by others		12,598				1,260
Deferred financing costs, net		7,504				—
Deferred leasing costs, net		7,018				7,710
Other		12,930				6,522
Total		$	696,605			$	309,625

(1)	As of December 31, 2017 and 2016, 236 and 391 properties were classified as held for sale.

Investments in Debt Securities, net

Prior to the Mergers, in connection with certain of our Securitizations, as defined in Note 6, we retained and purchased certificates totaling $225,430, net of unamortized discounts of $3,345 as of December 31, 2017. In connection with the Mergers, we acquired certificates totaling $153,115 in connection with certain SWH securitization transactions. These

F-20

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

investments in debt securities are classified as held to maturity investments. As of December 31, 2017 and 2016, there were no gross unrecognized holding gains or losses, and there were no other than temporary impairments recognized in accumulated other comprehensive income. As of December 31, 2017, our retained certificates are scheduled to mature over the next six months to nine years.

Investment in Unconsolidated Joint Venture

In connection with the Mergers, we acquired a 10% interest in a joint venture with FNMA to operate, lease, and manage a portfolio of properties primarily located in Arizona, California, and Nevada. A wholly-owned subsidiary of INVH LP is the managing member of the joint venture and is responsible for the operation and management of the properties, subject to FNMA’s approval on major decisions. As of December 31, 2017, the joint venture owned 776 properties.

In-Place Leases, net

In connection with the Mergers, we acquired in-place leases with a fair value of $45,740. The amortization period assigned at the Merger Date was approximately eight months, which represents the weighted-average remaining lease period, and amortization expense of $8,223 is included in depreciation and amortization expense in the consolidated statement of operations for the year ended December 31, 2017. As of December 31, 2017, our unamortized balance was $37,517, which will be fully amortized in the year ended December 31, 2018.

Rent and Other Receivables, net

We lease our properties to residents pursuant to leases that generally have an initial contractual term of at least 12 months, provide for monthly payments, and are cancelable by the resident and us under certain conditions specified in the related lease agreements.

Included in other assets, net within the consolidated balance sheets, is an allowance for doubtful accounts of $4,094 and $1,183, as of December 31, 2017 and 2016, respectively.

Deferred Financing Costs, net

In connection with our Revolving Facility (as defined in Note 6), we incurred $9,673 of financing costs during the year ended December 31, 2017, which have been deferred as other assets, net in our consolidated balance sheet due to the line of credit features of the Revolving Facility. These deferred financing costs are being amortized as interest expense on a straight line basis over the term of the Revolving Facility. As of December 31, 2017, our unamortized balance was $7,504.

Note 6—Debt

Mortgage Loans

Our securitization transactions (the “Securitizations” or the “mortgage loans”) are collateralized by certain homes owned by the respective Borrower Entities. We utilize the proceeds from our securitizations to fund (i) repayments of then-outstanding indebtedness, including credit facilities and prior securitization transactions, (ii) initial deposits into Securitization reserve accounts, (iii) closing costs in connection with the mortgage loans, (iv) general costs associated with our operations, and (v) distributions and dividends. In addition to the Securitization transactions we initiated, we assumed certain mortgage loans from SWH in connection with the Mergers.

F-21

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

The following table sets forth a summary of our mortgage loan indebtedness as of December 31, 2017 and 2016:

										Outstanding Principal Balance(2)
		Origination Date		Maturity Date		Interest Rate(1)		Range of Spreads		December 31, 2017				December 31, 2016
IH1 2013-1		N/A		N/A		—%		125-375 bps		$	—			$	462,431
IH1 2014-1		N/A		N/A		—%		107-382 bps		—				978,231
IH1 2014-2, net		N/A		N/A		—%		117-407 bps		—				710,664
IH1 2014-3, net		N/A		N/A		—%		126-506 bps		—				766,753
IH2 2015-1, net(3)(4)		January 29, 2015		March 9, 2019		3.99%		152-437 bps		528,795				531,318
IH2 2015-2(3)		April 10, 2015		June 9, 2018		3.57%		142-377 bps		627,259				630,283
IH2 2015-3(3)		June 25, 2015		August 9, 2018		3.80%		136-481 bps		1,165,886				1,184,314
IH1 2017-1(5)		April 28, 2017		June 9, 2027		4.23%		N/A		996,453				—
IH1 2017-2(3)		November 9, 2017		December 9, 2019		3.06%		91-306 bps		863,413				—
CAH 2014-1(3)(6)		April 10, 2014		May 9, 2018		3.28%		125-290 bps		473,384				—
CAH 2014-2(3)(6)		June 30, 2014		July 9, 2018		3.32%		105-345 bps		385,401				—
CAH 2015-1(3)		June 11, 2015		July 9, 2018		3.45%		128-373 bps		656,551				—
CSH 2016-1(3)		June 7, 2016		July 9, 2018		3.87%		158-508 bps		531,517				—
CSH 2016-2(3)		November 3, 2016		December 9, 2018		3.41%		133-423 bps		609,815				—
SWH 2017-1(3)		September 29, 2017		October 9, 2019		3.11%		102-347 bps		769,754				—
Total Securitizations										7,608,228				5,263,994
Less deferred financing costs, net										(28,075		)		(9,256		)
Total										$	7,580,153			$	5,254,738

(1)	Except for IH 2017-1, interest rates are based on a weighted average spread over LIBOR, plus applicable servicing fees; as of December 31, 2017, LIBOR was 1.56%. Our IH 2017-1 mortgage loan bears interest at a fixed rate of 4.23% per annum, equal to the market determined pass-through rate payable on the certificates including applicable servicing fees

(2)	Outstanding principal balance is net of discounts and does not include deferred financing costs, net.

(3)

The initial maturity term of each of these mortgage loans is two to three years, individually subject to two to five, one‑year extension options at the borrower’s discretion (provided that there is no continuing event of default under the loan agreement and the borrower obtains a replacement interest rate cap agreement in a form reasonably acceptable to the lender). Our IH2 2015-2, IH2 2015-3, CAH 2014-1 and CAH 2015-1 mortgage loans have exercised the first extension option; and IH2 2015-1, and CAH 2014-2 have exercised the second extension option. The maturity dates above are reflective of all extensions that have been exercised.

(4)	Net of unamortized discount of $0 and $55 as of December 31, 2017 and 2016, respectively.

(5)	Net of unamortized discount of $3,345 as of December 31, 2017.

(6)	On February 8, 2018, the outstanding balances of CAH 2014-1 and CAH 2014-2 were repaid in full with proceeds from IH 2018-1, a new securitization transaction (see Note 17).

Securitization Transactions

For each Securitization transaction, the Borrower Entity executed a loan agreement with a third‑party lender. Except for IH 2017-1, each mortgage loan consists of five to seven components. The components are floating rate except with respect to certain components we were required to retain in connection with risk retention rules. The two to three year initial terms are individually subject to two to five, one-year extension options at the Borrower Entity’s discretion. Such extensions are available provided there is no continuing event of default under the respective loan agreement and the Borrower Entity obtains a replacement interest rate cap agreement in a form reasonably acceptable the lender. IH 2017-1 is a 10-year, fixed

F-22

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

rate mortgage loan comprised of two components. Certificates issued by the trust in connection with Component A of IH 2017-1 benefit from FNMA’s guaranty of timely payment of principal and interest.

Certain components were sold at a discount, and $3,345 and $55 of unamortized discount are included in mortgage loans, net in our consolidated balance sheets as of December 31, 2017 and 2016, respectively.

Each mortgage loan is secured by a pledge of the equity in the assets of the respective Borrower Entities, as well as first-priority mortgages on the underlying properties and a grant of security interests in all of the related personal property. As of December 31, 2017 and 2016, a total of 47,616 and 30,900 homes (unaudited), respectively, were pledged pursuant to the mortgage loans. We are obligated to make monthly payments of interest for each mortgage loan, and IH 2013-1 and CAH 2014-1 also required monthly payments of principal.

Transactions with Trusts

Concurrent with the execution of each loan agreement, the respective third-party lender sold each loan it originated to individual depositor entities (the “Depositor Entities”) who subsequently transferred each loan to Securitization-specific trust entities (the “Trusts”). The Depositor Entities are wholly-owned subsidiaries, except for the IH 2013-1 and IH 2014-1 Depositor Entities which were wholly-owned by unaffiliated third parties. We accounted for the transfer of the individual Securitizations from the wholly-owned Depositor Entities to the respective Trusts as sales under ASC Topic 860, Transfers and Servicing, with no resulting gain or loss as the Securitizations were both originated by the lender and immediately transferred at the same fair market value.

As consideration for the transfer of each loan to the Trusts, the Trusts issued certificate classes which mirror the components of the individual loan agreements (collectively, the “Certificates”) to the Depositor Entities, except that Class R certificates do not have related loan components as they represent residual interests in the Trusts. The Certificates represent the entire beneficial interest in the Trusts. Following receipt of the Certificates, the Depositor Entities sold the Certificates to investors using the proceeds as consideration for the loans sold to the Depositor Entities by the lenders. These transactions had no effect on our consolidated financial statements other than with respect to Certificates we retained in connection with a Securitization or purchased at a later date.

The Trusts are structured as pass-through entities that receive interest, and in the case of IH1 2013-1 and CAH 2014-1 principal payments, from the Securitizations and distribute those payments to the holders of the Certificates. The assets held by the Trusts are restricted and can only be used to fulfill the obligations of those entities. The obligations of the Trusts do not have any recourse to the general credit of any entities in these consolidated financial statements. We have evaluated our interests in certain certificates of the Trusts held by us (discussed below) and determined that they do not create a more than insignificant variable interest in the Trusts. Additionally, the retained certificates do not provide us with any ability to direct the activities that could impact the Trusts’ economic performance. Therefore, we do not consolidate the Trusts.

Retained Certificates

Beginning in April 2014, the Trusts made Certificates available for sale to both domestic and foreign investors. With the introduction of foreign investment, sponsors of the mortgage loans are required to retain a portion of the risk that represents a material net economic interest in each loan. These requirements were further refined in December 2016 pursuant to Regulation RR (the “Risk Retention Rules”) under the Securities Exchange Act of 1934 as amended (the “Exchange Act”). As such, loan sponsors are now required to retain a portion of the credit risk that represents not less than 5% of the aggregate fair value of the loan as of the closing date.

To fulfill these requirements, Class G certificates for IH1 2014-2, IH1 2014-3, IH2 2015-1, IH2 2015-2, IH2 2015-3, CAH 2015-1, CSH 2016-1, and CSH 2016-2 are equal to 5% of the original principal amount of the loans. Per the terms of the mortgage loan agreements, the Class G certificates are restricted certificates that were made available exclusively to the sponsor, as applicable. We retained these Class G certificates at the time of the related Securitizations, and they are principal only, bearing a stated interest rate of 0.0005%. Additionally, in certain instances, we have elected to purchase certain Class F certificates, which bear a stated annual interest rate of LIBOR plus a spread ranging from 4.80% to 5.08%.

For IH 2017-1, the Class B certificates are restricted certificates that were made available exclusively to INVH LP in order to comply with the Risk Retention Rules. The Class B certificates bear a stated annual interest rate of 4.23%, including applicable servicing fees.

F-23

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

For IH 2017-2 and SWH 2017-1, we retained a portion of each certificate class to meet the Risk Retention Rules. These retained certificates accrue interest at a floating rate of LIBOR plus a spread ranging from 0.91% to 3.47%.

The retained certificates total $378,545 and $209,337 as of December 31, 2017 and 2016, respectively, are classified as held to maturity investments, and are recorded in other assets, net in the consolidated balance sheets (see Note 5).

Loan Covenants

The general terms that apply to all of the mortgage loans require us to maintain compliance with certain affirmative and negative covenants. Affirmative covenants with which we must comply include our, and certain of our affiliates’, compliance with (i) licensing, permitting and legal requirements specified in the loan agreement, (ii) organizational requirements of the jurisdictions in which we, and certain of our affiliates, are organized, (iii) federal and state tax laws, and (iv) books and records requirements specified in the respective loan agreements. Negative covenants with which we must comply include our, and certain of our affiliates’, compliance with limitations surrounding (i) the amount of our indebtedness and the nature of our investments, (ii) the execution of transactions with affiliates, (iii) the Manager, and (iv) the nature of our business activities. At December 31, 2017, and through the date our consolidated financial statements were issued, we believe we were in compliance with all affirmative and negative covenants.

Prepayments

For the mortgage loans, prepayments of amounts owed are generally not permitted by us under the terms of the respective loan agreements unless such prepayments are made pursuant to the voluntary election and mandatory provisions specified in such agreements. The specified mandatory provisions become effective to the extent that a property becomes characterized as a disqualified property, a property is sold, and/or upon the occurrence of a condemnation or casualty event associated with a property. To the extent either a voluntary election is made, or a mandatory prepayment condition exists, in addition to paying all interest and principal, we must also pay certain breakage costs as determined by the loan servicer and a spread maintenance premium if prepayment occurs before the month following the one or two year anniversary of the closing dates of each of the mortgage loans except for IH 2017-1. For IH 2017-1, prepayments on or before December 2026 will require a yield maintenance premium. For the years ended December 31, 2017, 2016, and 2015, we made voluntary and mandatory prepayments of $2,951,008, $42,099, and $13,173, respectively, under the terms of the loan agreements.

Term Loan Facility and Revolving Facility

On February 6, 2017, we entered into a loan agreement with a syndicate of banks, financial institutions and institutional lenders for a new credit facility (the “New Credit Facility”), which was amended on December 18, 2017 to include entities and homes acquired in the Mergers. The New Credit Facility provides $2,500,000 of borrowing capacity and consists of a $1,000,000 revolving facility (the “Revolving Facility”), which will mature on February 6, 2021, with a one-year extension option, and a $1,500,000 term loan facility (the “Term Loan Facility”), which will mature on February 6, 2022. The Revolving Facility also includes borrowing capacity available for letters of credit and for short-term borrowings referred to as swing line borrowings, in each case subject to certain sublimits. The New Credit Facility provides us with the option to enter into additional incremental credit facilities (including an uncommitted incremental facility that provides us with the option to increase the size of the Revolving Facility and/or the Term Loan Facility by an aggregate amount of up to $1,500,000), subject to certain limitations. Proceeds from the Term Loan Facility were used to repay existing indebtedness and for general corporate purposes. Proceeds from the Revolving Facility were used for general corporate purposes.

F-24

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

The following table sets forth a summary of the outstanding principal amounts under such loans as of December 31, 2017:

		Maturity Date		Interest Rate(1)		December 31, 2017
Term loan facility		February 6, 2022		3.26%		$	1,500,000
Deferred financing costs, net						(12,027		)
Term Loan Facility, net						$	1,487,973
Revolving Facility		February 6, 2021		3.31%		$	35,000

(1)	Interest rates for the Term Loan Facility and the Revolving Facility are based on LIBOR plus an applicable margin of 1.70% and 1.75%, respectively; as of December 31, 2017, LIBOR was 1.56%.

Interest Rate and Fees

Borrowings under the New Credit Facility bear interest, at our option, at a rate equal to a margin over either (a) a LIBOR rate determined by reference to the Bloomberg LIBOR rate (or comparable or successor rate) for the interest period relevant to such borrowing, or (b) a base rate determined by reference to the highest of (1) the administrative agent’s prime lending rate, (2) the federal funds effective rate plus 0.50%, and (3) the LIBOR rate that would be payable on such day for a LIBOR rate loan with a one-month interest period plus 1.00%. The margin is based on a total leverage based grid. The margin for the Revolving Facility ranges from 0.75% to 1.30%, in the case of base rate loans, and 1.75% to 2.30%, in the case of LIBOR rate loans. The margin for the Term Loan Facility ranges from 0.70% to 1.30%, in the case of base rate loans, and 1.70% to 2.30%, in the case of LIBOR rate loans. In addition, the New Credit Facility provides that, upon receiving an investment grade rating on its non-credit enhanced, senior unsecured long term debt of BBB- or better from Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies, Inc., or Baa3 or better from Moody’s Investors Service, Inc. (an “Investment Grade Rating Event”), we may elect to convert to a credit rating based pricing grid.

In addition to paying interest on outstanding principal under the New Credit Facility, we are required to pay a facility fee to the lenders under the Revolving Facility in respect of the unused commitments thereunder. The facility fee rate is based on the daily unused amount of the Revolving Facility and is either 0.35% or 0.20% per annum based on the unused facility amount. Upon converting to a credit rating pricing based grid, the unused facility fee will no longer apply; and we will be required to pay a facility fee ranging from 0.125% to 0.300%. We are also required to pay customary letter of credit fees.

Prepayments and Amortization

No principal reductions are required under the New Credit Facility. We are permitted to voluntarily repay amounts outstanding under the Term Loan Facility at any time without premium or penalty, subject to certain minimum amounts and the payment of customary “breakage” costs with respect to LIBOR loans. Once repaid, no further borrowings will be permitted under the Term Loan Facility.

Loan Covenants

The New Credit Facility contains certain customary affirmative and negative covenants and events of default. Such covenants will, among other things, restrict, subject to certain exceptions, our ability and that of the Subsidiary Guarantors (as defined below) and their respective subsidiaries to (i) engage in certain mergers, consolidations or liquidations, (ii) sell, lease or transfer all or substantially all of their respective assets, (iii) engage in certain transactions with affiliates, (iv) make changes to the our fiscal year, (v) make changes in the nature of our business and our subsidiaries, and (vi) incur additional indebtedness that is secured on a pari passu basis with the New Credit Facility.

The New Credit Facility also requires us, on a consolidated basis with our subsidiaries, to maintain a (i) maximum total leverage ratio, (ii) maximum secured leverage ratio, (iii) maximum unencumbered leverage ratio, (iv) minimum fixed charge coverage ratio, (v) minimum unencumbered fixed charge coverage ratio, and (vi) minimum tangible net worth. If an event of default occurs, the lenders under the New Credit Facility are entitled to take various actions, including the acceleration of

F-25

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

amounts due under the New Credit Facility and all actions permitted to be taken by a secured creditor. At December 31, 2017, and through the date our consolidated financial statements were issued, we believe we were in compliance with all affirmative and negative covenants.

Guarantees and Security

The obligations under the New Credit Facility are guaranteed on a joint and several basis by each of our direct and indirect domestic wholly-owned subsidiaries that own, directly or indirectly, unencumbered assets (the “Subsidiary Guarantors”), subject to certain exceptions. The guarantee provided by any Subsidiary Guarantor will be automatically released upon the occurrence of certain events, including if it no longer has a direct or indirect interest in an unencumbered asset or as a result of certain non-recourse refinancing transactions pursuant to which such Subsidiary Guarantor becomes contractually prohibited from providing its guaranty of the New Credit Facility. In addition, INVH may be required to provide a guarantee of the New Credit Facility under certain circumstances, including if INVH does not maintain its qualification as a REIT.

The New Credit Facility is collateralized by first priority or equivalent security interests in all the capital stock of, or other equity interests in, any Subsidiary Guarantor held by us and each of the Subsidiary Guarantors. The security interests granted under the New Credit Facility will be automatically released upon the occurrence of certain events, including upon an Investment Grade Rating Event or if the total net leverage ratio is less than or equal to 8.00:1.00 for four consecutive fiscal quarters.

Convertible Senior Notes

In connection with the Mergers, we assumed SWH’s convertible senior notes. In July 2014, SWH issued $230,000 in aggregate principal amount of 3.00% convertible senior notes due 2019 (the “2019 Convertible Notes”). Interest on the 2019 Convertible Notes is payable semiannually in arrears on January 1st and July 1st of each year. The 2019 Convertible Notes will mature on July 1, 2019.

In January 2017, SWH issued $345,000 in aggregate principal amount of 3.50% convertible senior notes due 2022 (the “2022 Convertible Notes” and together with the 2019 Convertible Notes, the “Convertible Senior Notes”). Interest on the 2022 Convertible Notes is payable semiannually in arrears on January 15th and July 15th of each year. The 2022 Convertible Notes will mature on January 15, 2022.

The following table summarizes the terms of the Convertible Senior Notes outstanding as of December 31, 2017:

		Coupon Rate			Effective Rate(1)			Conversion Rate(2)			Maturity Date		Amortization Period		Principal Amount
2019 Convertible Notes		3.00	%		4.92	%		53.0969			7/1/2019		1.50 years		$	230,000
2022 Convertible Notes		3.50	%		5.12	%		43.7694			1/15/2022		4.04 years		345,000
Total															575,000
Net unamortized fair value adjustment															(26,464		)
Total															$	548,536

(1)	Effective rate includes the effect of the adjustment to the fair value of the debt as of the Merger Date, the value of which reduced the initial liability recorded to $223,185 and $324,252 for each of the 2019 Convertible Notes and 2022 Convertible Notes, respectively.

(2)

We generally have the option to settle any conversions in cash, common stock or a combination thereof. The conversion rate represents the number of shares of common stock issuable per $1,000 principal amount (actual $) of Convertible Senior Notes converted at December 31, 2017, as adjusted in accordance with the applicable indentures as a result of cash dividend payments and the effects of the Mergers. The Convertible Senior Notes did not meet the criteria for conversion as of December 31, 2017, except as noted below in connection with the completion of the Mergers.

F-26

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

Terms of Conversion

As of December 31, 2017, the conversion rate applicable to the 2019 Convertible Notes was 53.0969 common shares per $1,000 principal amount (actual $) of the 2019 Convertible Notes (equivalent to a conversion price of approximately $18.83 per common share – actual $). The conversion rate for the 2019 Convertible Notes is subject to adjustment in some events, but will not be adjusted for any accrued and unpaid interest. In addition, following certain events that occur prior to the maturity date, we will increase the conversion rate for a holder who elects to convert its 2019 Convertible Notes in connection with such an event in certain circumstances. At any time prior to January 1, 2019, holders may convert the 2019 Convertible Notes at their option only under specific circumstances as defined in the indenture agreement, dated as of July 7, 2014, between us and our trustee, Wilmington Trust, National Association (“the Convertible Notes Trustee”). As a result of the completion of the Mergers, the 2019 Convertible Notes were convertible for a 35 trading day period, which expired January 8, 2018. On or after January 1, 2019 and until maturity, holders may convert all or any portion of the 2019 Convertible Notes at any time. Upon conversion, we will pay or deliver, as the case may be, cash, common stock, or a combination of cash and common stock, at our election.

As of December 31, 2017, the conversion rate applicable to the 2022 Convertible Notes was 43.7694 common shares per $1,000 principal amount (actual $) of the 2022 Convertible Notes (equivalent to a conversion price of approximately $22.85 per common share – actual $). The conversion rate for the 2022 Convertible Notes is subject to adjustment in some events, but will not be adjusted for any accrued and unpaid interest. In addition, following certain events that occur prior to the maturity date, we will increase the conversion rate for a holder who elects to convert its 2022 Convertible Notes in connection with such an event in certain circumstances. At any time prior to July 15, 2021, holders may convert the 2022 Convertible Notes at their option only under specific circumstances as defined in the indenture agreement, dated as of January 10, 2017, between us and the Convertible Notes Trustee. As a result of the completion of the Mergers, the 2022 Convertible Notes were convertible for a 35 trading day period, which expired January 8, 2018. On or after July 15, 2021 and until maturity, holders may convert all or any portion of the 2022 Convertible Notes at any time. Upon conversion, we will pay or deliver, as the case may be, cash, common stock, or a combination of cash and common stock, at our election.

General Terms

We may not redeem the Convertible Senior Notes prior to their maturity dates except to the extent necessary to preserve our status as a REIT for United States federal income tax purposes, as further described in the indentures. If we undergo a fundamental change as defined in the indentures, holders may require us to repurchase for cash all or any portion of their Convertible Senior Notes at a fundamental change repurchase price equal to 100% of the principal amount of the Convertible Senior Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

The indentures contain customary terms and covenants and events of default. If an event of default occurs and is continuing, the Convertible Notes Trustee, by notice to us, or the holders of at least 25% in aggregate principal amount of the outstanding Convertible Senior Notes, by notice to us and the Convertible Notes Trustee, may, and the Convertible Notes Trustee at the request of such holders shall, declare 100% of the principal of and accrued and unpaid interest on all the Convertible Senior Notes to be due and payable. In the case of an event of default arising out of certain events of bankruptcy, insolvency or reorganization in respect to us (as set forth in the indentures), 100% of the principal of and accrued and unpaid interest on the Convertible Senior Notes will automatically become due and payable.

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INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

Prior Credit Facilities

On February 6, 2017, all of the then-existing credit facilities were paid in full, in connection with the closing of our IPO. The following table sets forth a summary of the outstanding principal amounts of these credit facilities as of December 31, 2017 and 2016:

						Outstanding Principal Balance(1)
		Origination Date		Range of Spreads		December 31, 2017				December 31, 2016
IH1 2015		April 3, 2015		325 bps		$	—			$	85,492
IH2 2015		September 29, 2015		275 bps		—				43,859
IH3 2013		December 19, 2013		300-425 bps		—				932,583
IH4 2014		May 5, 2014		300-425 bps		—				529,866
IH5 2014		December 5, 2014		275-400 bps		—				564,348
IH6 2016		April 13, 2016		250-375 bps		—				165,437
Total						—				2,321,585
Less deferred financing costs, net						—				(6,044		)
Total						$	—			$	2,315,541

(1)	Outstanding principal balance does not include deferred financing costs, net.

Debt Maturities Schedule

The following table summarizes the contractual maturities of our debt as of December 31, 2017:

Year		Mortgage Loans(1)(2)				Term Loan Facility				Revolving Facility				Convertible Senior Notes				Total
2018		$	4,449,813			$	—			$	—			$	—			$	4,449,813
2019		2,161,962				—				—				230,000				2,391,962
2020		—				—				—				—				—
2021		—				—				35,000				—				35,000
2022		—				1,500,000								345,000				1,845,000
2023 and thereafter		996,453				—				—				—				996,453
Total		7,608,228				1,500,000				35,000				575,000				9,718,228
Less deferred financing costs, net		(28,075		)		(12,027		)		—				—				(40,102		)
Less unamortized fair value adjustment		—				—				—				(26,464		)		(26,464		)
Total		$	7,580,153			$	1,487,973			$	35,000			$	548,536			$	9,651,662

(1)	On February 8, 2018, the outstanding balances of CAH 2014-1 and CAH 2014-2 were repaid in full with proceeds from IH 2018-1, a new securitization transaction (see Note 17). The net result of the repayments and new securitization will be to reduce 2018 obligations by $858,785, to be replaced with obligations totaling $916,571 due in 2020.

(2)	The maturity dates of the obligations are reflective of all extensions that have been exercised.

Note 7—Derivative Instruments

From time to time, we enter into derivative instruments to manage the economic risk of changes in interest rates. We do not enter into derivative transactions for speculative or trading purposes. Designated hedges are derivatives that meet the

F-28

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

criteria for hedge accounting and for which we have elected to designate them as hedges. Non-designated hedges are derivatives that do not meet the criteria for hedge accounting or which we did not elect to designate as accounting hedges.

Designated Hedges

We have entered into various interest rate swap agreements, which are used to hedge the variable cash flows associated with variable-rate interest payments. Certain of the Invitation Homes Partnerships and certain Borrower Entities guaranteed the obligations under each of the interest rate swaps from the date the swaps were entered into through the date of the IPO. Each of these swaps was accounted for as a non-designated hedge until January 31, 2017, when the criteria for hedge accounting were met as a result of the Pre-IPO Transactions described in Note 1. At that time, we designated these swaps for hedge accounting purposes. Subsequent to that date, changes in the fair value of these swaps are recorded in other comprehensive income and are subsequently reclassified into earnings in the period in which the hedged forecasted transactions affect earnings.

In addition, in connection with the Mergers, we acquired various interest rate swap instruments, which we designated for hedge accounting purposes. We recorded these interest rate swaps at their aggregate estimated fair value of $21,135 (see Note 15). Over the terms of each swap, an amount equal to the Merger Date fair value will be amortized and recorded as an increase in interest expense and accumulated other comprehensive income.

The table below summarizes our interest rate swap instruments as of December 31, 2017:

Agreement Date		Forward Effective Date		Maturity Date		Strike Rate		Index		Notional Amount
February 23, 2016		March 15, 2017		March 15, 2018		0.85%		One-month LIBOR		$	800,000
February 23, 2016		March 15, 2017		March 15, 2018		0.80%		One-month LIBOR		800,000
February 23, 2016		March 15, 2018		March 15, 2019		1.10%		One-month LIBOR		800,000
February 23, 2016		March 15, 2018		March 15, 2019		1.06%		One-month LIBOR		800,000
June 3, 2016		July 15, 2017		July 15, 2018		0.93%		One-month LIBOR		450,000
June 3, 2016		July 15, 2018		July 15, 2019		1.12%		One-month LIBOR		450,000
June 3, 2016		July 15, 2019		July 15, 2020		1.30%		One-month LIBOR		450,000
June 3, 2016		July 15, 2020		July 15, 2021		1.47%		One-month LIBOR		450,000
December 21, 2016		February 28, 2017		January 31, 2022		1.97%		One-month LIBOR		750,000
December 21, 2016		February 28, 2017		January 31, 2022		1.97%		One-month LIBOR		750,000
January 10, 2017		January 15, 2017		January 15, 2018		1.04%		One-month LIBOR		550,000
January 10, 2017		January 15, 2018		January 15, 2019		1.58%		One-month LIBOR		550,000
January 10, 2017		January 15, 2019		January 15, 2020		1.93%		One-month LIBOR		550,000
January 10, 2017		January 15, 2020		January 15, 2021		2.13%		One-month LIBOR		550,000
January 10, 2017		January 15, 2021		July 15, 2021		2.23%		One-month LIBOR		550,000
January 12, 2017		February 28, 2017		August 7, 2020		1.59%		One-month LIBOR		1,100,000
January 13, 2017		February 28, 2017		June 9, 2020		1.63%		One-month LIBOR		595,000
January 20, 2017		February 28, 2017		March 9, 2020		1.60%		One-month LIBOR		325,000
March 29, 2017		March 15, 2019		March 15, 2022		2.21%		One-month LIBOR		800,000

During the year ended December 31, 2017, such derivatives were used to hedge the variable cash flows associated with existing variable-rate interest payments. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on our variable-rate debt. During the next 12 months, we estimate that $5,324 will be reclassified to earnings as a decrease in interest expense.

There were no interest rate swap agreements designated as hedges outstanding during the year ended December 31, 2016.

F-29

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

Non-Designated Hedges

Concurrent with entering into certain of the mortgage loan agreements and in connection with the Mergers, we entered into or acquired and maintain interest rate cap agreements with terms and notional amounts equivalent to the terms and amounts of the loans made by the third-party lenders and strike prices ranging from approximately 2.63% to 4.43% (collectively, the “Strike Prices”). To the extent that the maturity date of one or more of the mortgage loans is extended through an exercise of one or more of the extension options, replacement or extension interest rate cap agreements must be executed with terms similar to those associated with the initial interest rate cap agreements and strike prices equal to the greater of the Strike Prices and the interest rate at which the debt service coverage ratio (as defined) is not less than 1.2 to 1.0. The interest rate cap agreements, including all of our rights to payments owed by the counterparty and all other rights, have been pledged as additional collateral for the loans.

Tabular Disclosure of Fair Values of Derivative Instruments on the Consolidated Balance Sheets

The table below presents the fair value of our derivative financial instruments as well as their classification in the consolidated balance sheets as of December 31, 2017 and 2016:

		Asset Derivatives										Liability Derivatives
				Fair Value as of										Fair Value as of
		Balance Sheet Location		December 31, 2017				December 31, 2016				Balance Sheet Location		December 31, 2017				December 31, 2016
Derivatives designated as hedging instruments:
Interest rate swaps		Other assets		$	57,612			$	—			Other liabilities		$	—			$	—
Derivatives not designated as hedging instruments:
Interest rate caps		Other assets		27				29				Other liabilities		—				—
Interest rate swaps		Other assets		—				—				Other liabilities		—				8,683
Total				$	57,639			$	29					$	—			$	8,683

F-30

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

Tabular Disclosure of the Effect of Derivative Instruments on the Consolidated Statements of Operations

The tables below present the effect of our derivative financial instruments in the consolidated statements of operations for the years ended December 31, 2017, 2016 and 2015:

		Amount of Gain (Loss) Recognized in OCI on Derivative												Location of Gain (Loss) Reclassified from Accumulated OCI into Net Loss		Amount of Gain (Loss) Reclassified from Accumulated OCI into Net Loss												Total Amount of Interest Expense Presented in the Consolidated Statements of Operations
		Year Ended December 31,													Year Ended December 31,												Year Ended December 31,
		2017				2016				2015					2017				2016				2015				2017				2016				2015
Derivatives in cash flow hedging relationships
Interest rate swaps		$	31,636			$	—			$	—			Interest expense		$	(16,708	)		$	—			$	—			$	256,970			$	286,048			$	273,736

	Location of Gain (Loss) Recognized in Net Loss on Derivative		Amount of Gain (Loss) Recognized in Net Loss on Derivative
		Year Ended December 31,
		2017				2016				2015
Derivatives not designated as hedging instruments:
Interest rate caps	Interest expense		$	(364	)		$	(577	)		$	(2,110	)
Interest rate swaps	Interest expense		(3,674		)		(8,683		)		—
Total			$	(4,038	)		$	(9,260	)		$	(2,110	)

Credit-Risk-Related Contingent Features

We have agreements with certain of our derivative counterparties for our interest rate swap agreements that contain a provision where we could be declared in default on our derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to our default on the indebtedness.

As of December 31, 2017, we had no interest rate swap derivatives with a fair value in a net liability position. As of December 31, 2017, we have posted collateral amounting to $15,120 related to certain of these agreements (see Note 4).

Note 8—Equity

Shareholders’ Equity

In connection with our IPO, we issued 310,376,634 shares of common stock to the public and the Pre-IPO Owners and 3,290,126 RSUs (see Note 10), and our IPO raised $1,692,058, net of underwriting discount, and before IPO costs of $5,726. During the year ended December 31, 2017, we issued 1,347,550 shares of common stock in net settlement of 2,072,716 fully vested RSUs.

Starwood Waypoint Homes Merger

In connection with the Mergers (see Note 1), SWH stockholders received an aggregate of 207,448,958 shares of our common stock in exchange for all outstanding SWH common shares. In addition, we issued 9,441,615 units, representing limited partner interests in INVH LP, which are redeemable for shares of our common stock on a one-for-one basis or, in our sole discretion, cash and are reflected as non-controlling interests on our balance sheet as of December 31, 2017.

Dividends

To qualify as a REIT, we are required to distribute annually to our stockholders at least 90% of our REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains, and to pay tax at regular corporate rates to

F-31

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

the extent that we annually distribute less than 100% of our net taxable income. We intend to pay quarterly dividends to our stockholders, which in the aggregate are approximately equal to or exceed our net taxable income in the relevant year.

The following table summarizes our dividends declared from January 1, 2017 through December 31, 2017:

		Record Date		Amount per Share(1)				Pay Date		Total Amount Declared
Q4-2017		October 24, 2017		$	0.08			November 7, 2017		$	25,139
Q3-2017		August 15, 2017		0.08				August 31, 2017		25,200
Q2-2017		May 15, 2017		0.06				May 31, 2017		18,800

(1)	Amounts are displayed in actual dollars and are paid on a per share basis.

On February 2, 2018, our board of directors declared a dividend of $0.11 per share to stockholders of record on February 13, 2018, which was paid on February 28, 2018.

Combined Equity

Prior to the IPO, our business was conducted through the Invitation Homes Partnerships which did not have a common capital structure. As described in Note 1, IH1, IH3, IH4, IH5, and IH6 are partnerships. These entities each had limited partners and a general partner (the “Class A Partners”), along with a board of directors designated in the respective limited partnership agreements. IH2 was a Delaware corporation and had issued 1,000 shares of common stock and 113 shares of Series A Preferred Stock. IH2 had a board of directors elected by the common stockholders. The same board of directors was responsible for directing the significant activities of the Invitation Homes Partnerships and INVH LP on a combined basis.

The IH2 Series A Preferred Stock ranked, in respect of rights to the payment of dividends and the distribution of assets in the event of any liquidation or dissolution, senior to the IH2 common stock. Holders of such IH2 Series A Preferred Stock shares were entitled to receive cumulative cash dividends at the rate of 12.0% per annum of the total of a liquidation preference. On January 31, 2017, in connection with the Pre-IPO Transactions, the Series A Preferred Stock was redeemed for $1,153, inclusive of the redemption premium and accrued and unpaid dividends to that date. As of December 31, 2017 and 2016, there were no dividend amounts declared and outstanding related to the 12.0% per annum dividend requirements of the Series A Preferred Stock.

Profits and losses, and cash distributions were allocated in accordance with the terms of the respective entity’s organizational documents. We made no distributions to our equity investors, and we received $138,002 of contributions during the year ended December 31, 2016.

As further described in Note 10, we granted certain individuals incentive compensation units in IH1, IH2, IH3, IH4, IH5, and IH6, which consisted of Class B units that were accounted for as a substantive class of equity due to the terms of the agreements and rights of the holders. We previously made distributions to certain Class B unitholders in the form of non-recourse cash advances totaling $11,023. Any amounts distributed to the holders of the Class B units whose Class B units were converted in connection with the Pre-IPO Transactions (see Note 10), reduced the number of converted shares common stock received by amounts previously paid to such Class B unitholders as advance distributions. As a result of the Pre-IPO Transactions, there are no longer any Class B Units outstanding.

We previously executed notes receivables with certain Class B unitholders (the “Class B Notes”) and funded $20,228 pursuant to those note agreements, of which $1,527, including accrued interest had been repaid as of December 31, 2016. On January 5, 2017, $7,723 of Class B Notes, including accrued interest, were canceled, and the transaction was accounted for as a distribution to the underlying unitholder. As part of the Pre-IPO Transactions, IH1 assigned $11,963, including accrued interest, of Class B Notes to a wholly-owned subsidiary of the Pre-IPO Owners that was formed in connection with the reorganization described in Note 1, and the transaction was accounted for as a distribution. The Class B Notes were secured by certain of the Class B units of the makers of the Class B Notes and were otherwise non-recourse to the makers. The Class B Notes matured at the earlier of a liquidation event or defined dates in 2024 and bore interest of 1.57% to 1.97% per annum. As such, the Class B Notes were recorded as a component of combined equity on our consolidated balance sheet as of December 31, 2016.

F-32

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

Note 9—Related Party Transactions

Management Services

One of our wholly-owned subsidiaries, as the managing member of a joint venture with FNMA (see Note 5), earns a management fee based upon the venture’s gross receipts. For the year ended December 31, 2017, we earned $385 of management fees which are included in other, net in the accompanying consolidated statement of operations.

Other Transactions

Through December 31, 2014, certain related parties provided us with consulting services for which we recorded payables. We also made offsetting income tax payments related to distributions on behalf of these related parties. During the year ended December 31, 2016, we repaid the $1,959 outstanding as of December 31, 2015.

Note 10—Share-Based Compensation

We have share-based compensation programs for the purpose of retaining certain key employees and directors as more fully described below. Prior to the IPO, the program consisted of incentive compensation units, the Class B Units, granted in the form of profits interests in the Invitation Homes Partnerships. In connection with and subsequent to the IPO, we granted awards in the form of RSUs that settle in shares of common stock of INVH and RSAs that are restricted shares of common stock of INVH.

Profits Interests — Class B Units

Prior to the IPO, the Invitation Homes Partnerships granted incentive compensation units to certain key employees and directors, which were profits interests for United States federal income tax purposes. The Class B Units were accounted for as a substantive class of equity and contained both service based and performance based vesting criteria. Recognition of compensation expense was recorded based on whether or not the award recipient was an employee of the Manager, a wholly-owned subsidiary of IH1, resulting in some awards being recognized based on grant-date fair value and others being remeasured at each reporting period until the actual vesting date as required for non-employee awards. Prior to the IPO, none of the performance based vesting criteria had been achieved, and as such through the date of the IPO, no compensation expense had been recorded for performance based Class B Units. However, the IPO triggered achievement of the performance based criteria and effectively converted all such awards into service based awards.

2017 New Class B Unit Awards: Pursuant to an amended and restated partnership agreement, on January 5, 2017, IH6 issued certain individuals a total of 9,650 Class B Units that were expected to vest based on terms and conditions similar to all other Class B Units. In January 2017, an additional 188 Class B Units in total were issued from IH1, IH2, and IH3.

2017 Class B Unit Conversion: The Pre-IPO Transactions described in Note 1 resulted in accelerated vesting of 7,520 Class B Units held by certain unitholders which resulted in additional share-based compensation expense of $11,601 as of the date of the IPO. On January 31, 2017, in connection with the IPO, all of the Class B Units held by current employees of the Manager and certain directors (except for 3,878 fully vested Class B Units awarded to a certain unitholder) were either converted into shares of INVH common stock or canceled based on the value of the Class B Units implied by the per share price of common stock sold to the public in the IPO. As such, a total of 730 Class B Units were converted into 62,529 RSAs, and 17,669 Class B Units were canceled for no consideration. For the Class B Units converted into RSAs, vesting and other terms of the RSAs delivered in the conversion have the same vesting and other terms applicable to the corresponding Class B Units converted.

Additionally, the obligations under the remaining 40,992 fully vested Class B Units, including those of the unitholders who are not current employees of the Manager, certain directors, and the one employee unitholder noted above that did not convert, were converted into similar fully vested units of newly formed subsidiaries of the Pre-IPO Owners.

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INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

The following table summarizes the activity related to the Class B Units for the period from December 31, 2016 through January 31, 2017, the date at which they were all canceled or converted:

		Class B Units
		Employee							Non-employee							Total Class B Units
		Number of Units			Weighted Average Fair Value				Number of Units			Weighted Average Fair Value				Number of Units			Weighted Average Fair Value
Balance, December 31, 2016		9,915			$	4.2			39,638			$	2.5			49,553			$	2.9
Granted		85			14.0				9,753			—				9,838			0.1
Converted to RSAs		(245	)		(3.4		)		(485	)		(0.8		)		(730	)		(1.7		)
Canceled		(555	)		(8.2		)		(17,114	)		(0.4		)		(17,669	)		(0.6		)
Converted to Units of affiliated entities		(9,200	)		(4.0		)		(31,792	)		(2.9		)		(40,992	)		(3.2		)
Balance, January 31, 2017		—			$	—			—			$	—			—			$	—

As of January 31, 2017, no Class B Units were outstanding.

INVH RSAs and RSUs

Prior to completion of the IPO, our board of directors adopted, and our stockholders approved, the Invitation Homes Inc. 2017 Omnibus Incentive Plan (the “Omnibus Incentive Plan”) to provide a means through which to attract and retain key personnel and to provide a means whereby our directors, officers, employees, consultants and advisors can acquire and maintain an equity interest in us, or be paid incentive compensation, including incentive compensation measured by reference to the value of our common stock, and to align their interests with those of our stockholders. Under the Omnibus Incentive Plan, we may issue up to 16,000,000 shares, and as of December 31, 2017, we have awarded 4,631,909 shares thereunder. Time-vesting RSUs are participating securities for EPS purposes, and performance or market based vesting RSUs are not.

IPO-Related: In connection with the IPO, we issued the following RSAs and RSUs:

•	Conversion Pre-IPO Awards: The January 2017 Class B Unit conversion resulted in the issuance of 62,529 RSAs, of which the remaining 6,111 non-vested RSAs will vest in accordance with the original terms of the Class B Unit award agreements.

Recipients of the Class B Units granted by IH6 to certain individuals were also granted bonus awards (the “IH6 Bonus Awards”) entitling the recipients to receive bonus payments in connection with an IPO or exit event. Upon completion of the INVH IPO, the $4,825 of IH6 Bonus Awards were settled in the form of 241,250 RSUs that were fully vested upon issuance.

•

Supplemental Bonus Plan: In October 2016, we established a supplemental bonus plan for certain key executives and employees (the “Supplemental Bonus Plan”). Pursuant to the Supplemental Bonus Plan, the awards became payable and the payment amount became determinable upon the completion of the IPO. In January 2017, the $59,797 of awards were converted into 2,988,120 time-vesting RSUs that will generally vest in three equal annual installments, commencing on the completion of the INVH IPO and on the first and second anniversaries thereafter, unless modified in connection with the Mergers or the resulting integration.

Annual Long Term Incentive Plan (“LTIP”):

•

2017 Annual Awards: During the year ended December 31, 2017, we granted 874,410 RSUs pursuant to LTIP awards (the “LTIP Awards”) each of which award is divided into three tranches (“Tranche 1,” “Tranche 2,” and “Tranche 3”). Within each tranche, 25% of the RSUs subject to the award vest based on time-vesting conditions, approximately 25% vest based on market based vesting conditions, and approximately 50% vest based on performance based vesting conditions.

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INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

The time-vesting RSUs vest in installments based on anniversary dates of March 1, 2017 subject to continued employment through the applicable vesting date as follows: Tranche 1 on the first anniversary; Tranche 2 in two equal installments on each of the first and second anniversaries; and Tranche 3 in four equal installments on each of the first four anniversaries.

The market and performance based RSUs may be earned based on the achievement of certain measures over an approximate one-, two-, or three-year performance period, which performance periods correspond, respectively, to the Tranche 1, Tranche 2, and Tranche 3 LTIP Awards. The number of RSUs earned will be determined based on performance achieved during the specified performance period for each measure at certain threshold, target, or maximum levels and corresponding payout ranges. In general, the market and performance based RSUs are earned on the date after the end of the performance period on which the performance results are certified (the “Certification Date”) by our compensation and management development committee (the “Compensation Committee”). The Tranche 1 and Tranche 2 market and performance based RSUs will vest on the Certification Date subject to continued employment through such date. The Tranche 3 market and performance based RSUs will vest in two equal installments, on the related Certification Date and December 31, 2020, subject to continued employment through such vesting dates.

All of the LTIP Awards are subject to certain change in control and retirement eligibility provisions that may impact these vesting schedules.

•

Other Awards: During the year ended December 31, 2017, we granted 307,327 RSUs (the “Retention Awards”) each of which award is a time-vesting award with service periods, as amended, ranging from two to four years. In connection with the Mergers, INVH issued 150,927 time-vesting awards with a three year service period. Additionally, during the year ended December 31, 2017, INVH issued $1,398 of awards, or 69,875 RSUs, to directors who are not our employees or employees of BREP VII. These director awards will fully vest on the date scheduled for INVH’s 2018 annual stockholders meeting, subject to the director’s continued service on the board of directors through such date, unless otherwise modified.

Assumed Awards

In connection with the Mergers, we assumed the terms of award agreements governing 949,698 non-vested RSUs (as converted pursuant to the Exchange Ratio) granted prior to the Mergers under SWH’s equity incentive plans. Each assumed award is a time-vesting award that was issued with service periods ranging from three to four years, unless accelerated pursuant to the original agreement or otherwise modified in connection with the Mergers or the resulting integration.

The following table summarizes the status of non-vested RSUs and RSAs as of December 31, 2017 and changes during the period from January 31, 2017 through December 31, 2017:

		RSUs							RSAs							Total Share-Based Awards
		Number			Weighted Average Grant-Date Fair Value (Actual $)				Number			Weighted Average Grant-Date Fair Value (Actual $)				Number			Weighted Average Grant-Date Fair Value (Actual $)
Balance, January 1, 2017		—			$	—			—			$	—			—			$	—
Granted		4,631,909			20.62				62,529			15.50				4,694,438			20.56
Assumed in the Mergers		949,698			23.01				—			—				949,698			23.01
Vested(1)		(2,192,584	)		(20.16		)		(56,418	)		(15.64		)		(2,249,002	)		(20.04		)
Forfeited		(291,130	)		(21.28		)		—			—				(291,130	)		(21.28		)
Balance, December 31, 2017		3,097,893			$	21.62			6,111			$	14.19			3,104,004			$	20.79

(1)	All vested RSAs and RSUs are included in basic EPS for the period during which they are outstanding.

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INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

During the period from January 31, 2017 through December 31, 2017, 56,418 RSAs and 2,192,584 RSUs with an estimated fair value of $45,528 fully vested. As of December 31, 2017, 408,102 RSUs included performance and market based criteria. The grant-date fair value of the RSAs, time-vesting RSUs, and RSUs with performance condition vesting criteria is generally based on the closing price of our common stock on the grant date. However, for the awards granted in connection with the IPO, the grant-date fair value is the opening offering price per common share, and the grant-date fair values for RSUs with market condition vesting criteria are based on Monte-Carlo option pricing models. The following table summarizes the significant inputs utilized in these models at the grant date:

		June 23, 2017
Expected volatility(1)		25%
Risk-free rate		1.40%
Expected holding period (years)		0.52-2.52

(1)	Expected volatility is estimated based on the leverage adjusted historical volatility of certain of our peer companies over a historical term commensurate with the remaining expected holding period.

Summary of Total Share-Based Compensation Expense

During the years ended December 31, 2017, 2016, and 2015, we recognized $81,203, $10,210, and $27,924 respectively, of share-based compensation expense, comprised of the following:

		Share-Based Compensation Expense for the Years Ended December 31,
		2017								2016								2015
		General and Administrative				Property Management Expense				General and Administrative				Property Management Expense				General and Administrative				Property Management Expense				Unrecognized Expense at December 31, 2017
Class B Units		$	11,998			$	3			$	10,014			$	196			$	23,758			$	4,166			$	—
RSUs		59,086				10,337				—				—				—				—				33,804
RSAs		(178		)		(43		)		—				—				—				—				7
Total		$	70,906			$	10,297			$	10,014			$	196			$	23,758			$	4,166			$	33,811

As of December 31, 2017, there was $33,811 of unrecognized share-based compensation expense related to non-vested RSUs and RSAs which is expected to be recognized over a weighted-average period of 1.76 years.

Note 11—Fair Value Measurements

The carrying amounts of restricted cash, certain components of other assets, accounts payable and accrued expenses, resident security deposits, and other liabilities approximate fair value due to the short maturity of these amounts. Our interest rate swap agreements are the only financial instruments recorded at fair value on a recurring basis within our consolidated financial statements. The fair values of our interest rate caps and swaps, which are classified as Level 2 in the fair value hierarchy, are estimated using market values of instruments with similar attributes and maturities. See Note 7 for the details of the balance sheet classification and the fair values for the interest rate caps and swaps.

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INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

The following table displays the carrying values and fair values of financial instruments as of December 31, 2017 and 2016:

				December 31, 2017								December 31, 2016
				Carrying Value				Fair Value				Carrying Value				Fair Value
Assets carried at historical cost on the consolidated balance sheets
Investments in debt securities(1)		Level 2		$	378,545			$	379,500			$	209,337			$	209,390
Liabilities carried at historical cost on the consolidated balance sheets
Mortgage loans(2)		Level 2		$	7,608,228			$	7,627,423			$	5,263,994			$	5,265,180
Term loan facility(3)		Level 3		1,500,000				1,494,494				—				—
Revolving facility		Level 3		35,000				35,007				—				—
Convertible senior notes(4)		Level 3		548,536				557,179				—				—
Credit facilities(5)		Level 3		—				—				2,321,585				2,329,551

(1)	The carrying values of debt securities are shown net of discount as of December 31, 2017.

(2)	The carrying values of the mortgage loans are shown net of discount and exclude $28,075 and $9,256 of deferred financing costs as of December 31, 2017 and 2016, respectively.

(3)	The carrying value of the Term Loan Facility excludes $12,027 of deferred financing costs as of December 31, 2017.

(4)	The carrying values of the Convertible Senior Notes include unamortized discounts of $26,464 as of December 31, 2017.

(5)	The carrying values of the credit facilities exclude $6,044 of deferred financing costs as of December 31, 2016.

The fair values of our investment in debt securities and mortgage loans, which are classified as Level 2 in the fair value hierarchy, are estimated based on market bid prices of comparable instruments at the end of the period. The fair values of our Term Loan Facility, Revolving Facility, and credit facilities, which are classified as Level 3 in the fair value hierarchy, are estimated using a discounted cash flow methodology based on market interest rate data and other market factors available at the end of the period. Fair value of convertible notes are estimated by discounting contractual cash flows at the interest rate we estimate the notes would bear if sold in the current market.

F-37

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

Our assets measured at fair value on a nonrecurring basis are those assets for which we have recorded impairments. The assets for which we have recorded impairments, measured at fair value on a nonrecurring basis, are summarized below:

		Year Ended December 31,
		2017				2016				2015
Investments in single-family residential properties, net held for use (Level 3)
Pre-impairment amount		$	2,942			$	3,066			$	2,230
Total impairments		(861		)		(955		)		(1,448		)
Fair value		$	2,081			$	2,111			$	782

		Year Ended December 31,
		2017				2016				2015
Investments in single-family residential properties, net held for sale (Level 3)
Pre-impairment amount		$	13,112			$	6,938			$	—
Total impairments		(1,370		)		(1,327		)		—
Fair value		$	11,742			$	5,611			$	—

For additional information related to our single-family residential properties as of the years ended December 31, 2017 and 2016, refer to Note 3.

Note 12—Earnings per Share

We compute EPS only for the period our common stock was outstanding during 2017, referred to as the Post-IPO period. We have defined the Post-IPO period as commencing February 1, 2017, the date our shares began trading on the New York Stock Exchange, through December 31, 2017, or 334 days of activity during the year ended December 31, 2017. Basic EPS is computed by dividing the net loss available to common shareholders for the Post-IPO period by the weighted average number of shares outstanding during the Post-IPO period, adjusted for non-vested shares of RSUs and RSAs. Diluted EPS is similar to computing basic EPS, except that the denominator is increased to include the dilutive effects of non-vested RSUs and RSAs except when doing so would be anti-dilutive.

All outstanding non-vested RSUs and RSAs that have nonforfeitable rights to dividends or dividend equivalents that participate in undistributed earnings with common stock are considered participating securities and are included in computing EPS pursuant to the two-class method. The two-class method is an earnings allocation formula that determines EPS for each class of common stock and participating securities according to dividends or dividend equivalents and participation rights in undistributed earnings in periods when we have net income. Certain of our non-vested RSUs and RSAs, as identified in Note 10, are considered participating securities as are our redeemable INVH LP units.

F-38

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

Basic and diluted EPS are calculated as follows:

(in thousands, except share and per share data)		February 1, 2017 through December 31, 2017
Numerator:
Net loss available to common shareholders — basic and diluted		$	(89,073	)
Denominator:
Weighted average common shares outstanding — basic and diluted		339,423,442
Net loss per common share — basic and diluted		$	(0.26	)

For the period from February 1, 2017 through December 31, 2017, incremental shares attributed to non-vested RSUs and RSAs and redeemable limited partner interests in INVH LP of 896,993 were excluded from the computation of diluted EPS because we had a net loss for the period. For the period from February 1, 2017 through December 31, 2017, the potential shares of common stock contingently issuable upon the conversion of the Convertible Senior Notes were also excluded from the computation of diluted EPS as we have the intent and ability to settle the obligations in cash.

Note 13—Income Tax

We account for income taxes under the asset and liability method. For the TRSs, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. We provide a valuation allowance, from time to time, for deferred tax assets for which we do not consider realization of such assets to be more likely than not.

As of December 31, 2017, we had no deferred tax assets and liabilities or unrecognized tax benefits recorded. On December 22, 2017, the Tax Cuts and Jobs Act (the “TCJA”) was signed into law. The TCJA makes major changes to the Code, including lowering the statutory United States federal income tax rate from 35% to 21% effective January 1, 2018. We have completed an assessment of the impact of the TCJA on us and do not believe it will have a material impact on our financial position or results of operations. We do not anticipate a significant change in unrecognized tax benefits within the next 12 months.

During the year ended December 31, 2017, we sold assets that were either subject to Section 337(d) of the Code (see additional discussion in Note 2) or were held by TRSs. These transactions resulted in $3,195 of current income tax expense which has been recorded in gain on sale of property, net of tax in the consolidated statement of operations.

F-39

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

Note 14—Commitments and Contingencies

Leasing Commitments

From time to time, the Manager enters into lease agreements with third parties for purposes of obtaining office and other administrative space. During the years ended December 31, 2017, 2016, and 2015, we incurred rent and other related occupancy expenses of $5,203, $4,883, and $4,510, respectively. Annual base rental commitments associated with these leases, excluding operating expense reimbursements, month-to-month lease payments and other related fees and expenses during the remaining lease terms are as follows:

Year		Payments
2018		$	5,943
2019		4,863
2020		4,297
2021		3,829
2022		2,139
Thereafter		2,319
Total		$	23,390

Insurance Policies

Pursuant to the terms of our New Credit Facility agreement and the mortgage loan agreements (see Note 6), laws and regulations of the jurisdictions in which our properties are located, and general business practices, we are required to procure insurance on our properties. For the years ended December 31, 2017, 2016, and 2015, no material uninsured losses have been incurred with respect to our properties except as described below.

Hurricane-Related Charges

During the third quarter of 2017, hurricanes Harvey and Irma damaged certain of our properties in Texas and the Southeastern United States. As of December 31, 2017, we have recorded $9,200 of receivables for the portion of the damages we believe will be recoverable through our property and casualty insurance policies which provide coverage for wind and flood damage, as well as business interruption costs during the period of remediation and repairs, subject to specified deductibles and limits. Additionally, as of December 31, 2017, the accounts payable and accrued expenses balance in our consolidated balance sheet includes an estimated $11,500 of remaining damages caused by the hurricanes.

Purchase Commitments

As of December 31, 2017, we had executed multiple agreements to purchase a total of 303 properties for an aggregate purchase price of $75,368.

Legal Matters

We are subject to various legal proceedings and claims that arise in the ordinary course of our business. We accrue a liability when we believe that it is both probable that a liability has been incurred and that we can reasonably estimate the amount of the loss. We do not believe that the final outcome of these proceeding or matters will have a material adverse effect on our consolidated financial statements.

F-40

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

Other Matters

SEC Investigation “In the Matter of Certain Single Family Rental Securitizations”

Radian Group Inc. (“Radian”), the indirect parent company of Green River Capital LLC (“GRC”), which is a service provider that provides certain broker price opinions (“BPO”) to the Company, disclosed in its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2017 that GRC had received a letter in March 2017 from the staff of the SEC stating that it is conducting an investigation captioned “In the Matter of Certain Single Family Rental Securitizations” and requesting information from market participants. Radian disclosed that the letter asked GRC to provide information regarding BPOs that GRC provided on properties included in single family rental securitization transactions.

In September 2017, we received a letter from the staff of the SEC stating that it is conducting an investigation captioned “In the Matter of Certain Single Family Rental Securitizations.” The letter enclosed a subpoena that requests the production of certain documents and communications related to our Securitizations, including, without limitation, those related to BPOs provided on our properties included in our Securitizations. The SEC letter indicates that its investigation is a fact-finding inquiry and does not mean that the SEC has a negative opinion of any person or security. We are cooperating with the SEC and have provided information requested in the subpoena. We understand that other transaction parties in securitizations have received requests in this matter. As the SEC’s investigation is ongoing, we cannot currently predict the timing, outcome or scope of such investigation.

Severance and Retention

In June 2017, our board of directors, upon recommendation of our Compensation Committee, approved and adopted our Invitation Homes Inc. Executive Severance Plan (the “Executive Severance Plan”); and, in September 2017, adopted severance guidelines for those not covered by the Executive Severance Plan (the “Severance Guidelines” and, together with the Executive Severance Plan, the “Severance Plans”). The Severance Plans provide all qualified employees specified benefits following such person’s qualifying termination of employment.

Note 15—Business Combinations

On November 16, 2017, we completed the Mergers with SWH. We believe that the Mergers provide a number of significant potential strategic benefits and opportunities that will be in the best interests of our stockholders. More specifically, we believe that the Mergers created a diversified and high-quality portfolio of homes in high-growth markets. Potential benefits from economies of scale and the market overlap of INVH’s and SWH’s complementary portfolios may be derived from optimization of operations, reduction of operating costs and other anticipated synergies.

The Mergers were accounted for as a business combination in accordance with ASC Topic 805, Business Combinations. INVH was designated as the accounting acquirer. The assets (including identifiable intangible assets) and liabilities (including executory contracts and other commitments) of SWH were recorded at their respective fair values at the Merger Date. The estimated fair value of the consideration transferred was $4,920,534, which was based upon (i) the observable public closing share price of $23.01 on November 15, 2017 for the 207,448,958 shares of INVH common stock issued to SWH stockholders in exchange for their SWH common shares, (ii) the equity component of the Convertible Senior Notes, which was valued at $135,520, and (iii) the recognition of $11,614 of precombination service related to the exchange of SWH RSUs for INVH RSUs. Subsequent to the Merger Date, our consolidated financial statements reflect these fair value adjustments and include the combined results of operations. Because INVH was designated as the accounting acquirer, our historical financial statements for periods prior to November 16, 2017 represent only the historical financial information of INVH and its consolidated subsidiaries.

Purchase Price Allocation

The total purchase price has been allocated based upon (1) the amounts reported in the SWH historical financial statements for any assets that were reported at fair value in accordance with SWH’s historical accounting policies or (2) management’s estimates of fair value.

F-41

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

Management’s preliminary estimates of fair value for SWH’s investments in real estate properties were based upon a progressive method that incorporated three value sources: AVM data, BPOs and internal desktop valuations (Level 3 measurements).

The fair value of our investment in the unconsolidated joint venture represents the estimated fair value of our equity interest in the joint venture with FNMA. We determined the fair value based on the estimated fair value of the underlying investments in single-family residential properties after giving consideration to the terms and conditions of the related joint venture agreement (Level 3 measurement).

The fair value of other assets includes the estimated fair value of in-place leases in the amount of $45,740, which was estimated based on lost rent and avoidable costs over an assumed vacancy period (Level 3 measurements). Also included in other assets is the estimated fair value of interest rate swap agreements in the aggregate amount of $21,135.

The fair value of SWH’s debt was determined by comparison of contractual terms of SWH’s existing debt obligations to the current market rates on a risk-adjusted basis as of the Merger Date. The associated future debt cash flows were then discounted back to present value to arrive at an estimated fair value of SWH’s debt (Level 3 measurements).

The allocation of the total purchase price to SWH’s tangible and intangible assets and liabilities under this methodology is as follows:

Consideration transferred		$	4,920,534
Assets acquired:
Land		1,920,400
Buildings and improvements		6,487,505
Cash and cash equivalents		84,952
Restricted cash		118,556
Other assets		389,449
Liabilities assumed:
Mortgage loans, net		(3,433,506		)
Convertible senior notes, net		(547,437		)
Accounts payable and accrued expenses		(112,505		)
Resident security deposits		(56,895		)
Other liabilities		(36,311		)
Non-controlling interests		(151,881		)
Net assets acquired		4,662,327
Goodwill		$	258,207

These allocations are management’s estimates of fair value, which are preliminary as of December 31, 2017 and are subject to change. The goodwill recorded is primarily attributable to the synergies expected to arise after the Mergers.

Merger and Transaction-Related Expenses

We incurred $29,802 of merger and transaction-related expenses related to the Mergers during the year ended December 31, 2017, included in general and administrative expenses in the consolidated statement of operations. Merger and transaction-related expenses are expensed as incurred and are comprised primarily of transaction fees and direct acquisition costs, including legal, finance, consulting, professional fees and other third-party costs. The costs that were obligations of SWH and expensed by SWH prior to the Merger Date are not included in our consolidated financial statements.

In addition, and in connection with the Mergers and the resulting integration, we have incurred severance costs for terminated and transitional employees, and such costs are accrued over the related remaining service periods. More specifically, in August 2017, we entered into agreements with several of our executives, which provide the executives, as

F-42

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

applicable, with benefits upon the consummation of the Mergers and/or where the executive experiences a qualifying termination within a specified period of time following such consummation. After the consummation of the Mergers, if a participant under either a Severance Plan or an executive agreement experiences a qualifying termination, such person will be entitled to specified benefits. For the year ended December 31, 2017, we paid or accrued a total of $11,631 of employee severance pursuant to the Severance Plans and the executive agreements, and these costs are included in general and administrative expenses in the consolidated statement of operations.

Pro Forma Information

SWH contributed revenues of $84,702 and net loss of $8,262 for the period from November 16, 2017 to December 31, 2017. The following table provides the pro forma consolidated operational data as if the Mergers had occurred on January 1, 2016 (unaudited):

		Year Ended December 31,
		2017				2016
Total revenue		$	1,608,574			$	1,489,196
Net loss		(142,816		)		(293,121		)

Pro forma net loss includes transaction costs related to the Mergers of $49,973 for the year ended December 31, 2016.

The pro forma consolidated operational data is based on assumptions and estimates considered appropriate by our management; however, these pro forma results are not necessarily indicative of the results of operations that would have been obtained had the Mergers occurred at the beginning of the period presented, nor do they purport to represent the consolidated results of operations for future periods. The pro forma consolidated operational data does not include the impact of any synergies that may be achieved from the Mergers or any strategies that management may consider in order to continue to efficiently manage operations.

F-43

INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

Note 16—Summarized Quarterly Financial Data (Unaudited)

On November 16, 2017, we consummated the Mergers with SWH which contributed to the growth in results of operations and the change in the diluted number of shares outstanding beginning in the fourth quarter of 2018. The following tables present summarized consolidated quarterly financial data for each of the eight quarters in the two year period ended December 31, 2017.

(in thousands, except share and per share data)	Quarter
2017	First				Second				Third				Fourth
Total revenues	$	238,750			$	242,216			$	243,536			$	329,954
Net income (loss)	(42,391		)		5,529				(22,510		)		(46,454		)
Net income (loss) available to common stockholders	(25,512		)		5,420				(22,745		)		(46,236		)
Net income (loss) per share — basic and diluted	(0.08		)		0.02				(0.07		)		(0.11		)
Shares used in calculation — diluted	311,651,082				312,271,578				311,559,780				415,276,026

(in thousands, except share and per share data)	Quarter
2016	First				Second				Third				Fourth
Total revenues	$	224,502			$	230,496			$	233,038			$	234,551
Net loss	(9,975		)		(19,666		)		(21,949		)		(26,649		)
Net loss attributable to common stockholders	(9,975		)		(19,666		)		(21,949		)		(26,649		)
Net loss per share — basic and diluted	N/A				N/A				N/A				N/A
Shares used in calculation — basic and diluted	N/A				N/A				N/A				N/A

Note 17—Subsequent Events

In connection with the preparation of the accompanying consolidated financial statements, we have evaluated events and transactions occurring after December 31, 2017, for potential recognition or disclosure.

IH 2018-1 Securitization

On February 8, 2018, we completed a securitization transaction pursuant to which we entered into a loan agreement with a third-party lender, providing for a new mortgage loan comprised of six components with a total principal balance of $916,571 (“IH 2018-1”). IH 2018-1 has a stated maturity of March 9, 2020, with five one-year extension options, and is secured by first priority mortgages on a portfolio of homes. Each of the six components of IH 2018-1 bears interest at a floating rate equal to LIBOR plus an applicable spread that ranges from 76 to 256 bps, with a weighted average spread to LIBOR of 124 bps. IH 2018-1 was subsequently transferred to a trust in exchange for pass-through certificates issued by the trust. In connection with IH 2018-1, we purchased and will retain 5% of each class of certificates for risk-retention purposes, totaling $45,832.

We used proceeds from IH 2018-1 to repay CAH 2014-1 and CAH 2014-2, to fund certain reserves, and for general corporate purposes.

Extensions of Existing Mortgage Loans

On March 9, 2018, we exercised our second extension option on the IH2 2015-1 mortgage loan, extending the maturity date from March 9, 2018 to March 9, 2019.

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INVITATION HOMES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

Dividend Declaration

On February 2, 2018, our board of directors declared a dividend of $0.11 per share to stockholders of record on February 13, 2018, which was paid on February 28, 2018.

Issuance of RSU Awards

As part of its February 28, 2018 meeting and the annual compensation review and award process, the Compensation Committee approved and we granted approximately 755,000 RSUs pursuant to the Omnibus Incentive Plan. The Compensation Committee also established performance based and market based vesting conditions for an additional 168,164 RSUs that had previously been granted but for which a grant date had not yet been established. Each of these awards vest over a three year period.

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INVITATION HOMES INC.

Schedule III Real Estate and Accumulated Depreciation

As of December 31, 2017

(dollar amounts in thousands)

												Initial Cost to Company								Cost Capitalized Subsequent to Acquisition								Gross Amount at Which Carried at Close of Period
Market		Number of Properties(1)			Number of Encumbered Properties(2)			Encumbrances(2)				Land				Depreciable Properties				Land				Depreciable Properties				Land				Depreciable Properties				Total(3)				Accumulated Depreciation				Date of Construction		Date Acquired		Depreciable Period
Atlanta		12,401			6,896			$	840,150			$	318,729			$	1,545,863			$	—			$	194,339			$	318,729			$	1,740,202			$	2,058,931			$	(140,315	)		1920-2017		2012-2017		7 - 28.5 years
Charlotte		4,891			2,845			395,003				170,345				685,160				—				73,719				170,345				758,879				929,224				(52,761		)		1900-2017		2012-2017		7 - 28.5 years
Chicago		4,002			1,447			284,055				205,554				500,961				—				148,607				205,554				649,568				855,122				(72,427		)		1869-2017		2012-2017		7 - 28.5 years
Dallas		2,269			1,630			219,919				98,011				392,444				—				1,509				98,011				393,953				491,964				(1,721		)		1952-2017		2017		7 - 28.5 years
Denver		2,193			1,664			281,645				172,921				495,166				—				1,799				172,921				496,965				669,886				(2,172		)		1885-2012		2017		7 - 28.5 years
Houston		2,557			1,436			153,325				76,264				371,661				—				1,217				76,264				372,878				449,142				(1,630		)		1951-2015		2017		7 - 28.5 years
Jacksonville		1,939			1,118			184,557				89,853				227,346				—				46,213				89,853				273,559				363,412				(40,435		)		1932-2014		2012-2016		7 - 28.5 years
Las Vegas		2,708			2,429			367,925				114,027				500,042				—				21,409				114,027				521,451				635,478				(22,578		)		1953-2013		2012-2017		7 - 28.5 years
Minneapolis		1,174			813			154,755				71,259				146,591				—				50,303				71,259				196,894				268,153				(28,730		)		1886-2015		2013-2015		7 - 28.5 years
Nashville		761			387			78,991				33,918				183,504				—				1,035				33,918				184,539				218,457				(799		)		1891-2017		2017		7 - 28.5 years
Northern California		4,599			2,739			565,245				372,256				783,549				—				84,029				372,256				867,578				1,239,834				(73,332		)		1900-2012		2012-2017		7 - 28.5 years
Orlando		5,655			3,922			517,485				197,483				760,478				—				101,521				197,483				861,999				1,059,482				(77,699		)		1947-2016		2012-2017		7 - 28.5 years
Phoenix		7,423			4,663			577,673				253,309				813,846				—				115,679				253,309				929,525				1,182,834				(97,534		)		1925-2017		2012-2017		7 - 28.5 years
Seattle		3,268			1,492			310,497				260,041				439,451				—				123,367				260,041				562,818				822,859				(67,922		)		1890-2016		2012-2017		7 - 28.5 years
South Florida		9,309			3,322			677,246				787,775				1,648,412				—				169,479				787,775				1,817,891				2,605,666				(149,148		)		1922-2014		2012-2017		7 - 28.5 years
Southern California		8,351			4,895			1,167,087				1,085,570				1,596,255				—				183,749				1,085,570				1,780,004				2,865,574				(139,632		)		1887-2014		2012-2017		7 - 28.5 years
Tampa		8,834			5,856			826,440				339,602				1,210,818				—				121,460				339,602				1,332,278				1,671,880				(106,799		)		1923-2016		2012-2017		7 - 28.5 years
Total		82,334			47,554			$	7,601,998			$	4,646,917			$	12,301,547			$	—			$	1,439,434			$	4,646,917			$	13,740,981			$	18,387,898			$	(1,075,634	)

(1)	Number of properties represents 82,570 total properties owned less 236 properties classified in other assets, net on the consolidated balance sheets.

(2)	Encumbrances include the number of properties secured by first priority mortgages under the mortgage loans, as well as the aggregate value of outstanding debt attributable to such properties. Excluded from this is the original issue discount, deferred financing costs, and 62 held for sale properties with an encumbered balance of $9,575.

(3)	The gross aggregate cost of total real estate including real estate held for sale for federal income tax purposes was approximately $17,026,896 (unaudited) as of December 31, 2017.

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INVITATION HOMES INC.

Schedule III Real Estate and Accumulated Depreciation

(dollar amounts in thousands)

		Year Ended December 31,
		2017				2016				2015
Residential Real Estate
Balance at beginning of period		$	9,794,845			$	9,596,399			$	8,796,708
Additions during the period
Acquisitions related to the Mergers		8,407,905				—				—
Acquisitions		228,499				284,202				790,467
Initial renovations		44,371				53,182				103,765
Other capital expenditures		59,111				47,877				49,261
Deductions during the period
Dispositions and other		(189,351		)		(136,956		)		(143,802		)
Reclassifications
Properties held for sale, net of dispositions		42,518				(49,859		)		—
Balance at close of period		$	18,387,898			$	9,794,845			$	9,596,399
Accumulated Depreciation
Balance at beginning of period		$	(792,330	)		$	(543,698	)		$	(308,155	)
Depreciation expense		(297,627		)		(263,093		)		(245,065		)
Dispositions and other		16,264				9,664				9,522
Reclassifications
Properties held for sale, net of dispositions		(1,941		)		4,797				—
Balance at close of period		$	(1,075,634	)		$	(792,330	)		$	(543,698	)

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