Item 1. FINANCIAL STATEMENTS

210K characters. Original on sec.gov · Markdown

Item 1. FINANCIAL STATEMENTS

INVITATION HOMES INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except shares and per share data)



	September 30, 2021		December 31, 2020
	(unaudited)
Assets:
Investments in single-family residential properties:
Land	$	4,664,892	$	4,539,796
Building and improvements	14,919,417		14,261,954
	19,584,309		18,801,750
Less: accumulated depreciation	(2,930,862)		(2,513,057)
Investments in single-family residential properties, net	16,653,447		16,288,693
Cash and cash equivalents	569,663		213,422
Restricted cash	251,487		198,346
Goodwill	258,207		258,207
Investments in unconsolidated joint ventures	93,096		69,267
Other assets, net	424,666		478,287
Total assets	$	18,250,566	$	17,506,222

Liabilities:
Mortgage loans, net	$	3,857,863	$	4,820,098
Secured term loan, net	401,258		401,095
Unsecured notes, net	931,889		—
Term loan facility, net	2,476,309		2,470,907
Revolving facility	—		—
Convertible senior notes, net	145,818		339,404
Accounts payable and accrued expenses	297,073		149,299
Resident security deposits	163,663		157,936
Other liabilities	453,448		611,410
Total liabilities	8,727,321		8,950,149
Commitments and contingencies (Note 14)

Equity:
Stockholders' equity
Preferred stock, $0.01 par value per share, 900,000,000 shares authorized, none outstanding as of September 30, 2021 and December 31, 2020	—		—
Common stock, $0.01 par value per share, 9,000,000,000 shares authorized, 594,893,674 and 567,117,666 outstanding as of September 30, 2021 and December 31, 2020, respectively	5,949		5,671
Additional paid-in capital	10,622,691		9,707,258
Accumulated deficit	(767,232)		(661,162)
Accumulated other comprehensive loss	(378,428)		(546,942)
Total stockholders' equity	9,482,980		8,504,825
Non-controlling interests	40,265		51,248
Total equity	9,523,245		8,556,073
Total liabilities and equity	$	18,250,566	$	17,506,222

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

INVITATION HOMES INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except shares and per share data)

(unaudited)



	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
Revenues:
Rental revenues and other property income	$	508,178	$	459,184	$	1,473,250	$	1,358,728
Joint venture management fees	1,354		—		3,140		—
Total revenues	509,532		459,184		1,476,390		1,358,728

Expenses:
Property operating and maintenance	184,484		177,997		528,279		511,915
Property management expense	17,886		14,824		51,424		43,725
General and administrative	19,369		17,972		56,147		46,626
Interest expense	79,370		87,713		243,540		258,541
Depreciation and amortization	150,694		138,147		440,475		410,440
Impairment and other	4,294		1,723		5,630		4,670
Total expenses	456,097		438,376		1,325,495		1,275,917

Gains (losses) on investments in equity securities, net	4,319		—		(5,823)		34
Other, net	(1,508)		(3,049)		(3,181)		2,001
Gain on sale of property, net of tax	13,047		15,106		45,450		41,473
Income from investments in unconsolidated joint ventures	202		—		564		—

Net income	69,495		32,865		187,905		126,319
Net income attributable to non-controlling interests	(318)		(211)		(1,023)		(806)

Net income attributable to common stockholders	69,177		32,654		186,882		125,513
Net income available to participating securities	(69)		(114)		(260)		(335)


Net income available to common stockholders — basic and diluted (Note 12)	$	69,108	$	32,540	$	186,622	$	125,178



Weighted average common shares outstanding — basic	577,011,178		560,598,995		570,808,028		550,722,684
Weighted average common shares outstanding — diluted	578,571,392		561,871,373		572,262,198		551,947,278

Net income per common share — basic	$	0.12	$	0.06	$	0.33	$	0.23
Net income per common share — diluted	$	0.12	$	0.06	$	0.33	$	0.23

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

INVITATION HOMES INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

(unaudited)



	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
Net income	$	69,495	$	32,865	$	187,905	$	126,319

Other comprehensive income (loss)
Unrealized gains (losses) on interest rate swaps	(1,586)		(4,171)		57,283		(398,426)
Losses from interest rate swaps reclassified into earnings from accumulated other comprehensive loss	37,074		37,557		112,973		74,166
Other comprehensive income (loss)	35,488		33,386		170,256		(324,260)
Comprehensive income (loss)	104,983		66,251		358,161		(197,941)
Comprehensive (income) loss attributable to non-controlling interests	(550)		(415)		(2,216)		1,088

Comprehensive income (loss) attributable to common stockholders	$	104,433	$	65,836	$	355,945	$	(196,853)

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

INVITATION HOMES INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

For the Three and Nine Months Ended September 30, 2021

(in thousands, except share and per share data)

(unaudited)


	Common Stock
	Number of Shares	Amount		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders' Equity		Non-Controlling Interests		Total Equity












































Balance as of June 30, 2021	568,718,544	$	5,687	$	9,725,480	$	(737,444)	$	(413,684)	$	8,580,039	$	39,637	$	8,619,676
Capital distributions	—	—		—		—		—		—		(448)		(448)
Net income	—	—		—		69,177		—		69,177		318		69,495
Dividends and dividend equivalents declared ($0.17 per share)	—	—		—		(98,965)		—		(98,965)		—		(98,965)

Issuance of common stock — settlement of 2022 Convertible Notes	8,723,161	87		198,415		—		—		198,502		—		198,502
Issuance of common stock, net	17,451,969	175		693,270		—		—		693,445		—		693,445
Share-based compensation expense	—	—		5,526		—		—		5,526		526		6,052
Total other comprehensive income	—	—		—		—		35,256		35,256		232		35,488

Balance as of September 30, 2021	594,893,674	$	5,949	$	10,622,691	$	(767,232)	$	(378,428)	$	9,482,980	$	40,265	$	9,523,245


	Common Stock
	Number of Shares	Amount		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders' Equity		Non-Controlling Interests		Total Equity












































Balance as of December 31, 2020	567,117,666	$	5,671	$	9,707,258	$	(661,162)	$	(546,942)	$	8,504,825	$	51,248	$	8,556,073
Capital distributions	—	—		—		—		—		—		(1,659)		(1,659)
Net income	—	—		—		186,882		—		186,882		1,023		187,905
Dividends and dividend equivalents declared ($0.51 per share)	—	—		—		(292,952)		—		(292,952)		—		(292,952)
Issuance of common stock — settlement of RSUs, net of tax	675,618	7		(9,410)		—		—		(9,403)		—		(9,403)
Issuance of common stock — settlement of 2022 Convertible Notes	8,723,421	87		198,421		—		—		198,508		—		198,508
Issuance of common stock, net	17,451,969	175		693,270		—		—		693,445		—		693,445
Share-based compensation expense	—	—		19,495		—		—		19,495		1,577		21,072
Total other comprehensive income	—	—		—		—		169,063		169,063		1,193		170,256
Redemption of OP Units for common stock	925,000	9		13,657		—		(549)		13,117		(13,117)		—
Balance as of September 30, 2021	594,893,674	$	5,949	$	10,622,691	$	(767,232)	$	(378,428)	$	9,482,980	$	40,265	$	9,523,245

INVITATION HOMES INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (continued)

For the Three and Nine Months Ended September 30, 2020

(in thousands, except share and per share data)

(unaudited)


	Common Stock
	Number of Shares	Amount		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders' Equity		Non-Controlling Interests		Total Equity












































Balance as of June 30, 2020	560,532,679	$	5,605	$	9,515,625	$	(595,318)	$	(632,148)	$	8,293,764	$	50,109	$	8,343,873
Capital distributions	—	—		—		—		—		—		(535)		(535)
Net income	—	—		—		32,654		—		32,654		211		32,865
Dividends and dividend equivalents declared ($0.15 per share)	—	—		—		(84,286)		—		(84,286)		—		(84,286)
Issuance of common stock — settlement of RSUs, net of tax	1,353	—		(12)		—		—		(12)		—		(12)


Share-based compensation expense	—	—		5,566		—		—		5,566		520		6,086
Total other comprehensive income	—	—		—		—		33,182		33,182		204		33,386

Balance as of September 30, 2020	560,534,032	$	5,605	$	9,521,179	$	(646,950)	$	(598,966)	$	8,280,868	$	50,509	$	8,331,377


	Common Stock
	Number of Shares	Amount		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders' Equity		Non-Controlling Interests		Total Equity












































Balance as of December 31, 2019	541,642,725	$	5,416	$	9,010,194	$	(524,588)	$	(276,600)	$	8,214,422	$	51,656	$	8,266,078
Capital distributions	—	—		—		—		—		—		(1,603)		(1,603)
Net income	—	—		—		125,513		—		125,513		806		126,319
Dividends and dividend equivalents declared ($0.45 per share)	—	—		—		(247,875)		—		(247,875)		—		(247,875)
Issuance of common stock — settlement of RSUs, net of tax	328,841	3		(3,376)		—		—		(3,373)		—		(3,373)

Issuance of common stock, net	18,562,466	186		503,612		—		—		503,798		—		503,798
Share-based compensation expense	—	—		10,749		—		—		10,749		1,544		12,293
Total other comprehensive loss	—	—		—		—		(322,366)		(322,366)		(1,894)		(324,260)

Balance as of September 30, 2020	560,534,032	$	5,605	$	9,521,179	$	(646,950)	$	(598,966)	$	8,280,868	$	50,509	$	8,331,377

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

INVITATION HOMES INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)



	For the Nine Months Ended September 30,
	2021		2020
Operating Activities:
Net income	$	187,905	$	126,319

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	440,475		410,440
Share-based compensation expense	21,072		12,293
Amortization of deferred leasing costs	8,227		8,830
Amortization of deferred financing costs	9,739		18,153
Amortization of debt discounts	5,309		4,077
Provisions for impairment	650		4,202
(Gains) losses on investments in equity securities, net	5,823		(34)
Gain on sale of property, net of tax	(45,450)		(41,473)
Change in fair value of derivative instruments	10,391		4,410
Income from investments in unconsolidated joint ventures, net of operating distributions	(214)		—
Other non-cash amounts included in net income	3,136		1,848
Changes in operating assets and liabilities:
Other assets, net	(9,950)		(22,300)
Accounts payable and accrued expenses	136,989		82,971
Resident security deposits	5,727		8,084
Other liabilities	2,485		7,852
Net cash provided by operating activities	782,314		625,672

Investing Activities:
Deposits for acquisition of single-family residential properties	(33,658)		(4,046)
Acquisition of single-family residential properties	(743,797)		(337,415)
Initial renovations to single-family residential properties	(52,576)		(71,666)
Other capital expenditures for single-family residential properties	(117,324)		(127,702)
Proceeds from sale of single-family residential properties	187,230		338,486

Repayment proceeds from retained debt securities	48,246		8,133
Proceeds from sale of investments in equity securities	22,267		—
Investments in unconsolidated joint ventures	(25,000)		—
Non-operating distributions from unconsolidated joint ventures	1,385		—
Other investing activities	(15,083)		(165)
Net cash used in investing activities	(728,310)		(194,375)

Financing Activities:
Payment of dividends and dividend equivalents	(292,110)		(247,651)
Distributions to non-controlling interests	(1,659)		(1,603)
Payment of taxes related to net share settlement of RSUs	(9,403)		(3,373)

Payments on mortgage loans	(964,318)		(157,791)

Payments on secured term loan	—		(101)
Proceeds from unsecured notes	939,574		—



Proceeds from revolving facility	400,000		320,000

INVITATION HOMES INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(in thousands)

(unaudited)



	For the Nine Months Ended September 30,
	2021		2020
Payments on revolving facility	(400,000)		(320,000)
Proceeds from issuance of common stock, net	693,445		503,798
Deferred financing costs paid	(8,002)		—
Other financing activities	(2,149)		(1,913)
Net cash provided by financing activities	355,378		91,366

Change in cash, cash equivalents, and restricted cash	409,382		522,663
Cash, cash equivalents, and restricted cash, beginning of period (Note 4)	411,768		286,245
Cash, cash equivalents, and restricted cash, end of period (Note 4)	$	821,150	$	808,908

Supplemental cash flow disclosures:
Interest paid, net of amounts capitalized	$	221,284	$	236,714
Cash paid for income taxes	607		1,284
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	4,524		4,117
Financing cash flows from finance leases	2,043		1,714

Non-cash investing and financing activities:
Accrued renovation improvements at period end	$	11,342	$	6,273
Accrued residential property capital improvements at period end	13,096		10,677
Transfer of residential property, net to other assets, net for held for sale assets	67,337		134,361
Change in other comprehensive gain (loss) from cash flow hedges	159,971		(328,472)
ROU assets obtained in exchange for operating lease liabilities	1,452		4,617
ROU assets obtained in exchange for finance lease liabilities	115		9,484

Net settlement of 2022 Convertible Notes in shares of common stock	198,508		—

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

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

Note 1—Organization and Formation

Invitation Homes Inc. (“INVH”) is a real estate investment trust (“REIT”) that conducts its operations through Invitation Homes Operating Partnership LP (“INVH LP”). INVH LP was formed for the purpose of owning, renovating, leasing, and operating single-family residential properties. Through THR Property Management L.P., a wholly owned subsidiary of INVH LP (the “Manager”), we provide all management and other administrative services with respect to the properties we own.

On February 6, 2017, INVH completed an initial public offering (“IPO”), changed its jurisdiction of incorporation to Maryland, and amended its charter to provide for the issuance of up to 9,000,000,000 shares of common stock and 900,000,000 shares of preferred stock, in each case $0.01 par value per share. In connection with certain pre-IPO reorganization transactions, INVH LP became (1) owned by INVH directly and through Invitation Homes OP LLC, a wholly owned subsidiary of INVH, and (2) the owner of all of the assets, liabilities, and operations of certain pre-IPO ownership entities. These transactions were accounted for as a reorganization of entities under common control utilizing historical cost basis.

On November 16, 2017 (the “Merger Date”), INVH and certain of its affiliates entered into a series of transactions with Starwood Waypoint Homes (“SWH”) and certain SWH affiliates which resulted in SWH and its operating partnership being merged into INVH and INVH LP, respectively, with INVH and INVH LP being the surviving entities (the “Mergers”). The Mergers were accounted for as a business combination in accordance with ASC 805, Business Combinations, and INVH was designated as the accounting acquirer.

The limited partnership interests of INVH LP consist of common units and other classes of limited partnership interests that may be issued (the “OP Units”). As of September 30, 2021, INVH owns 99.6% of the common OP Units and has the full, exclusive, and complete responsibility for and discretion over the day to day management and control of INVH LP.

Our organizational structure includes several wholly owned subsidiaries of INVH LP that were formed to facilitate certain of our financing arrangements (the “Borrower Entities”). These Borrower Entities are used to align the ownership of our single-family residential properties with certain of our debt instruments. Collateral for certain of our 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 7).

References to “Invitation Homes,” the “Company,” “we,” “our,” and “us” refer, collectively, to INVH, INVH LP, and the consolidated subsidiaries of INVH LP.

Note 2—Significant Accounting Policies

Basis of Presentation

The accompanying interim condensed consolidated financial statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and with the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with our audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2020.

These condensed consolidated financial statements include the accounts of INVH and its consolidated subsidiaries. All intercompany accounts and transactions have been eliminated in the condensed consolidated financial statements. In the opinion of management, all adjustments that are of a normal recurring nature considered necessary for a fair presentation of our interim financial statements have been included in these condensed consolidated financial statements. Operating results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2021.

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

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 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, we invested in joint ventures with Rockpoint Group, L.L.C. (“Rockpoint”) and the Federal National Mortgage Association (“FNMA”), both of which are voting interest entities. We do not hold a controlling financial interest in either joint venture but have significant influence over the operating and financial policies of each joint venture. Additionally, both Rockpoint and FNMA hold certain substantive participating rights that preclude the presumption of control by us of either joint venture; as such, we account for each investment using the equity method. Our investment in the Rockpoint joint venture is recorded at cost, and our investment in the FNMA joint venture was initially recorded at fair value in connection with purchase accounting for the Mergers. The investments in these joint ventures are 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 ventures 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 represent the OP Units not owned by INVH, including any vested OP Units granted in connection with certain share-based compensation awards. Non-controlling interests are presented as a separate component of equity on the condensed consolidated balance sheets as of September 30, 2021 and December 31, 2020, and the condensed consolidated statements of operations for the three and nine months ended September 30, 2021 and 2020 include an allocation of the net income attributable to the non-controlling interest holders. Vested OP Units are redeemable for shares of our common stock on a one-for-one basis or, in our sole discretion, cash, and redemptions of OP Units are accounted for as a reduction in non-controlling interests with an offset to stockholders’ equity based on the pro rata number of OP Units redeemed.

Significant Risks and Uncertainties

One of the most significant risks and uncertainties to our financial condition and results of operations continues to be the adverse effect of the ongoing pandemic resulting from the coronavirus, or COVID-19, and its variants. We are closely monitoring the impact of the pandemic on all aspects of our business.

Since the outbreak, a number of our residents have requested rent deferral and/or late fee relief, and components of our rental revenues and other property income have been impacted by the pandemic. We continue to offer flexible solutions for residents experiencing financial hardship when requested, including payment plans and late fee abatements. In addition, entities directed by, or notionally affiliated with, the Federal government as well as some state and local jurisdictions across the United States have imposed temporary eviction moratoriums if certain criteria are met by residents, have permitted residents to defer missed rent payments without incurring late fees, and have prohibited rent increases. We comply with all applicable Federal, state, and local laws, regulations, and ordinances, and we adhere to restrictions on evictions, collections, rent increases, and late fees as appropriate. We also work with our residents experiencing financial hardship to try to find solutions that keep them in their homes. This includes providing residents with information about rental assistance programs for which they may be eligible, application instructions, necessary documentation, and owner requirements. We cannot predict if states, municipalities, local, and/or national authorities will modify existing restrictions, if additional states or municipalities will implement similar restrictions, or when restrictions currently in place will expire. While none of the current and previous restrictions have materially impacted our ability to provide services to our residents or homes, additional or modified measures may negatively impact our ability to access our homes, complete service requests, or make our homes ready for new residents.

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

The COVID-19 pandemic could have material and adverse effects on our financial condition, results of operations, and cash flows in the near term due to, but not limited to, the following: (1) reduced economic activity that impacts the earnings or health of our residents, thereby causing them to be unable to fully meet their obligations to us and resulting in increases in uncollectible revenues and thus reductions in rental revenues and other property income; (2) governmental regulations, restrictions, and moratoriums that negatively impact our ability to charge and collect rental revenues and other property income or impose restrictions on our ability to provide services to our residents and homes; (3) negative financial impact of the pandemic that could impact our ability to access funds available under our Revolving Facility (as defined in Note 7) or affect future compliance with financial covenants of our Credit Facility (as defined in Note 7) and other debt agreements; and (4) weaker economic conditions that could cause us to recognize impairments in value of our tangible assets or goodwill.

On March 11, 2021, the American Rescue Plan Act (the “ARPA”), a $1.9 trillion COVID-19 relief package authorizing additional federal spending and an increase in anti-poverty programs to help millions of families still struggling amid the pandemic, was signed into law. The ARPA includes nearly $50 billion in housing and homelessness resources and provides over $27 billion for rental assistance. We continue to examine the impacts that the ARPA, as well as any future economic relief legislation, may have on our business. It is uncertain if the ARPA’s housing and rental assistance resources will enable longer term housing stability for some of our residents and/or reduce rent receivable balances accrued during the pandemic.

The extent to which the ongoing COVID-19 pandemic ultimately impacts our operations depends on ongoing developments, which remain highly uncertain and cannot be predicted with confidence, including the scope, severity, and duration of the pandemic, the extent and duration of actions taken to contain the pandemic or mitigate its impact, the availability, distribution, acceptance, and efficacy of vaccines, the proliferation of variants, development and availability of effective therapeutic drugs, and the direct and indirect economic effects of the pandemic, containment measures, monetary and/or fiscal policies implemented to provide support or relief to businesses and/or residents, and other government, regulatory, and/or legislative changes precipitated by the ongoing COVID-19 pandemic, among others. While we have taken steps to mitigate the impact of the pandemic on our results of operations, there can be no assurance that these efforts will be successful.

Reclassifications

We reclassified $34 of unrealized gains on investments in equity securities from other, net into gains (losses) on investments in equity securities, net on our condensed consolidated statement of operations for the nine months ended September 30, 2020 to conform to our current presentation. There were no reclassifications for the three months ended September 30, 2020. We also reclassified $34 of unrealized gains on investments in equity securities from other non-cash amounts included in net income into (gains) losses on investments in equity securities, net on our condensed consolidated statement of cash flows for the nine months ended September 30, 2020 to conform to our current presentation. These reclassifications had no effect on the total reported net income on the condensed consolidated statement of operations for the three and nine months ended September 30, 2020, or on the total net cash provided by operating activities on the condensed consolidated statement of cash flows for the nine months ended September 30, 2020.

Use of Estimates

The preparation of the condensed 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 condensed 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.

Accounting Policies

There have been no changes to our significant accounting policies that have had a material impact on our condensed consolidated financial statements and related notes, compared to those policies disclosed in our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020.

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

Recent Accounting Pronouncements

In August 2020, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”), which simplifies an issuer’s accounting for convertible instruments and contracts in its own equity. The guidance reduces the number of accounting models for convertible instruments, requires entities to use the “if-converted” method in diluted earnings (loss) per share (“EPS”), and requires that the effect of potential share settlement be included in the diluted EPS calculation when an instrument may be settled in cash or shares. The new standard will be effective for annual reporting periods beginning after December 15, 2021, and interim periods within that reporting period, with early adoption permitted beginning after December 15, 2020 and interim periods within that reporting period. The only new application of ASU 2020-06 relates to our 2022 Convertible Notes (as defined in Note 7), and these notes mature on January 15, 2022. As such, ASU 2020-06 will not materially affect our condensed consolidated financial statements.

Note 3—Investments in Single-Family Residential Properties

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


	September 30, 2021		December 31, 2020
Land	$	4,664,892	$	4,539,796
Single-family residential property	14,275,196		13,631,859
Capital improvements	526,784		515,479
Equipment	117,437		114,616
Total gross investments in the properties	19,584,309		18,801,750
Less: accumulated depreciation	(2,930,862)		(2,513,057)
Investments in single-family residential properties, net	$	16,653,447	$	16,288,693

As of September 30, 2021 and December 31, 2020, the carrying amount of the residential properties above includes $123,187 and $119,929, respectively, of capitalized acquisition costs (excluding purchase price), along with $69,315 and $68,197, respectively, of capitalized interest, $27,683 and $26,899, respectively, of capitalized property taxes, $4,698 and $4,654, respectively, of capitalized insurance, and $3,209 and $3,090, respectively, of capitalized homeowners’ association (“HOA”) fees.

During the three months ended September 30, 2021 and 2020, we recognized $148,957 and $136,517, respectively, of depreciation expense related to the components of the properties, and $1,737 and $1,630, respectively, of depreciation and amortization related to corporate furniture and equipment. These amounts are included in depreciation and amortization in the condensed consolidated statements of operations. Further, during the three months ended September 30, 2021 and 2020, impairments totaling $126 and $289, respectively, have been recognized and are included in impairment and other in the condensed consolidated statements of operations. See Note 11 for additional information regarding these impairments.

During the nine months ended September 30, 2021 and 2020, we recognized $435,348 and $406,078, respectively, of depreciation expense related to the components of the properties, and $5,127 and $4,362, respectively, of depreciation and amortization related to corporate furniture and equipment. These amounts are included in depreciation and amortization in the condensed consolidated statements of operations. Further, during the nine months ended September 30, 2021 and 2020, impairments totaling $650 and $4,202, respectively, have been recognized and are included in impairment and other in the condensed consolidated statements of operations. See Note 11 for additional information regarding these impairments.

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

Note 4—Cash, Cash Equivalents, and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported on the condensed consolidated balance sheets that sum to the total of such amounts shown in the condensed consolidated statements of cash flows:


	September 30, 2021		December 31, 2020
Cash and cash equivalents	$	569,663	$	213,422
Restricted cash	251,487		198,346
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows	$	821,150	$	411,768

Pursuant to the terms of the mortgage loans and Secured Term Loan (as defined in Note 7), 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) property tax reserves; (ii) insurance reserves; (iii) capital expenditure reserves; and (iv) HOA reserves. The reserve accounts associated with our mortgage loans and Secured Term Loan are under the sole control of the loan servicer. Additionally, we hold security deposits pursuant to resident lease agreements that we are required to segregate. We are also required to hold letters of credit by certain of our insurance policies. Accordingly, amounts funded to these reserve accounts, security deposit accounts, and other restricted accounts have been classified on our condensed consolidated balance sheets as restricted cash.

The amounts funded, and to be funded, to the reserve accounts are subject to formulae included in the mortgage loan and Secured Term Loan agreements and are to be released to us subject to certain conditions specified in the loan agreements being met. To the extent that an event of default were to occur, the loan servicer 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.

The balances of our restricted cash accounts, as of September 30, 2021 and December 31, 2020, are set forth in the table below. As of September 30, 2021 and December 31, 2020, no amounts were funded to the insurance accounts as the conditions specified in the mortgage loan and Secured Term Loan agreements that require such funding did not exist.


	September 30, 2021		December 31, 2020
Resident security deposits	$	163,888	$	158,244
Property taxes	53,548		7,511
Collections	23,969		22,978
Capital expenditures	4,921		4,919
Letters of credit	3,787		3,320
Special and other reserves	1,374		1,374
Total	$	251,487	$	198,346

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

Note 5—Investments In Unconsolidated Joint Ventures

We have invested in two joint ventures which are accounted for using the equity method model of accounting. The following table summarizes our investments in unconsolidated joint ventures as of September 30, 2021 and December 31, 2020:


			Number of Properties		Carrying Value
	Ownership Percentage		September 30, 2021	December 31, 2020	September 30, 2021		December 31, 2020
FNMA(1)	10	%	532	571	$	53,009	$	53,678
Rockpoint(2)	20	%	1,422	140	40,087		15,589
Total					$	93,096	$	69,267

(1)Contains homes primarily located in Arizona, California, and Nevada.

(2)Contains homes in markets within the Western United States, Southeast United States, Florida, and Texas.

In October 2020, we entered into an agreement with Rockpoint to form a joint venture that will acquire homes in markets where we already own homes. As of February 2021, the joint venture is funded with a combination of debt and equity, and we have guaranteed the funding of certain tax, insurance, and non-conforming property reserves related to the joint venture’s financing. As of September 30, 2021, our remaining equity commitment to the joint venture is $34,400.

For the three and nine months ended September 30, 2021, we recorded $202 and $564, respectively, of income from investments in unconsolidated joint ventures which is included in income from investments in unconsolidated joint ventures in the condensed consolidated statements of operations. For the three and nine months ended September 30, 2020, we recorded $390 and $1,112, respectively, of income from investments in unconsolidated joint ventures which is included in other, net in the condensed consolidated statements of operations.

The administrative member of Rockpoint and the managing member of FNMA are wholly owned subsidiaries of INVH LP and are responsible for the operations and management of the properties, subject to Rockpoint and FNMA’s respective approval of major decisions. The subsidiaries earn asset and property management fees from our joint ventures, which are considered to be related parties. For the three and nine months ended September 30, 2021, we earned $1,354 and $3,140, respectively, of management fees which are included in joint venture management fees in the condensed consolidated statements of operations. For the three and nine months ended September 30, 2020, we earned $636 and $1,945, respectively, of management fees which are included in other, net in the condensed consolidated statements of operations.

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

Note 6—Other Assets

As of September 30, 2021 and December 31, 2020, the balances in other assets, net are as follows:


	September 30, 2021		December 31, 2020
Investments in debt securities, net	$	197,255	$	245,237
Prepaid expenses	37,880		41,347
Rent and other receivables, net	37,118		35,256
Amounts deposited and held by others	35,918		2,852
Investments in equity securities	28,072		47,189
Held for sale assets(1)	27,298		44,163
ROU lease assets — operating and finance, net	18,312		21,705
Corporate fixed assets, net	13,137		9,995
Deferred financing costs, net	9,477		11,637
Deferred leasing costs, net	6,773		7,631
Derivative instruments (Note 8)	—		1
Other	13,426		11,274
Total	$	424,666	$	478,287

(1)As of September 30, 2021 and December 31, 2020, 107 and 179 properties, respectively, are classified as held for sale.

Investments in Debt Securities, net

In connection with certain of our Securitizations (as defined in Note 7), we have retained and purchased certificates totaling $197,255, net of unamortized discounts of $2,025, as of September 30, 2021. These investments in debt securities are classified as held to maturity investments. As of September 30, 2021, we have not recognized any credit losses with respect to these investments in debt securities, and our retained certificates are scheduled to mature over the next three months to six years.

Amounts Deposited and Held by Others

Amounts deposited and held by others consists of earnest money deposits for the acquisition of single-family residential properties, including deposits made to homebuilders, and amounts owed to us for sold homes.

Investments in Equity Securities

We hold investments in equity securities both with and without a readily determinable fair value. Investments with a readily determinable fair value are measured at fair value, and those without a readily determinable fair value are measured at cost, less any impairment, plus or minus changes resulting from observable price changes for identical or similar investments in the same issuer. As of September 30, 2021 and December 31, 2020, the values of our investments in equity securities are as follows:


	September 30, 2021		December 31, 2020
Investments with a readily determinable fair value	$	23,332	$	46,339
Investments without a readily determinable fair value	4,740		850
Total	$	28,072	$	47,189

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

The components of gains (losses) on investments in equity securities, net for the three and nine months ended September 30, 2021 and 2020 are as follows:


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
Realized gains on investments with a readily determinable fair value	$	14,173	$	—	$	16,061	$	—
Unrealized losses on investments with a readily determinable fair value	(9,854)		—		(21,884)		—
Unrealized gains on investments without a readily determinable fair value	—		—		—		34
Total	$	4,319	$	—	$	(5,823)	$	34

Rent and Other Receivables

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. Rental revenues and other property income and the corresponding rent and other receivables are recorded net of any concessions and bad debt (including actual write-offs, credit reserves, and uncollectible amounts) for all periods presented.

Variable lease payments consist of resident reimbursements for utilities, and various other fees, including late fees and lease termination fees, among others. Variable lease payments are charged based on the terms and conditions included in the resident leases. For the three months ended September 30, 2021 and 2020, rental revenues and other property income includes $30,243 and $23,762 of variable lease payments, respectively. For the nine months ended September 30, 2021 and 2020, rental revenues and other property income includes $82,890 and $68,422 of variable lease payments, respectively.

Future minimum rental revenues and other property income under leases existing on our single-family residential properties as of September 30, 2021 are as follows:


Year	Lease Payments to be Received
Remainder of 2021	$	436,559
2022	783,358
2023	89,981
2024	—
2025	—
Thereafter	—
Total	$	1,309,898

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

Right-of-Use (“ROU”) Lease Assets — Operating and Finance, net

The following table presents supplemental information related to leases into which we have entered as a lessee as of September 30, 2021 and December 31, 2020:


	September 30, 2021						December 31, 2020
	Operating Leases			Finance Leases			Operating Leases			Finance Leases
Other assets	$	11,593		$	6,719		$	12,942		$	8,763
Other liabilities (Note 14)	14,262			6,461			15,988			8,389
Weighted average remaining lease term	3.8 years			2.4 years			4.0 years			3.1 years
Weighted average discount rate	3.3		%	4.0		%	3.5		%	4.0		%

Deferred Financing Costs, net

In connection with the amended and restated Revolving Facility (see Note 7), we incurred $11,846 of financing costs, which have been deferred as other assets, net on our condensed consolidated balance sheets. We amortize deferred financing costs as interest expense on a straight-line basis over the term of the Revolving Facility and accelerate amortization if debt is retired before the maturity date. As of September 30, 2021 and December 31, 2020, the unamortized balances of these deferred financing costs are $9,477 and $11,637, respectively.

Note 7—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; (ii) initial deposits into Securitization reserve accounts; (iii) closing costs in connection with the mortgage loans; and (iv) general costs associated with our operations.

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

The following table sets forth a summary of our mortgage loan indebtedness as of September 30, 2021 and December 31, 2020:


						Outstanding Principal Balance(5)
	Origination Date	Maturity Date(1)	Maturity Date if Fully Extended(2)	Interest Rate(3)	Range of Spreads(4)	September 30, 2021		December 31, 2020
IH 2017-1(6)	April 28, 2017	June 9, 2027	June 9, 2027	4.23%	N/A	$	993,723	$	994,787
IH 2017-2(7)(8)	November 9, 2017	December 9, 2021	December 9, 2024	1.15%	91-151 bps	184,400		612,506
IH 2018-1(7)	February 8, 2018	March 9, 2022	March 9, 2025	0.96%	76-131 bps	570,134		646,021
IH 2018-2(7)	May 8, 2018	June 9, 2022	June 9, 2025	1.13%	95-133 bps	629,863		693,988
IH 2018-3(7)	June 28, 2018	July 9, 2022	July 9, 2025	1.20%	105-135 bps	819,039		1,036,561
IH 2018-4(7)(9)	November 7, 2018	January 9, 2022	January 9, 2026	1.30%	115-145 bps	670,920		848,270
Total Securitizations						3,868,079		4,832,133
Less: deferred financing costs, net						(10,216)		(12,035)
Total						$	3,857,863	$	4,820,098

(1)The maturity dates above reflect all extension options that have been exercised.

(2)Represents the maturity date if we exercise each of the remaining one year extension options available, which are subject to certain conditions being met.

(3)Except for IH 2017-1, interest rates are based on a weighted average spread over the London Interbank Offer Rate (“LIBOR”) (or a comparable or successor rate as provided for in our loan agreements), plus applicable servicing fees; as of September 30, 2021, LIBOR was 0.08%. 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.

(4)Range of spreads is based on outstanding principal balances as of September 30, 2021.

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

(6)Net of unamortized discount of $2,025 and $2,289 as of September 30, 2021 and December 31, 2020, respectively.

(7)The initial maturity term of each of these mortgage loans is two years, individually subject to three to five, one year extension options at the Borrower Entity’s discretion (provided that there is no continuing event of default under the mortgage loan agreement and the Borrower Entity obtains and delivers to the lender a replacement interest rate cap agreement from an approved counterparty within the required timeframe). Our IH 2018-4 mortgage loan has exercised the first extension option, and our IH 2017-2, IH 2018-1, IH 2018-2, and IH 2018-3 mortgage loans have exercised the second extension option. The maturity dates above reflect all extensions that have been exercised.

(8)On September 13, 2021, we submitted a notification to exercise an extension of the maturity date of the IH 2017-2 mortgage loan from December 9, 2021 to December 9, 2022.

(9)On October 12, 2021, we submitted a notification to exercise an extension of the maturity date of the IH 2018-4 mortgage loan from January 9, 2022 to January 9, 2023 (see Note 15).

Securitization Transactions

For each Securitization transaction, the Borrower Entity executed a loan agreement with a third party lender. Except for IH 2017-1, each outstanding mortgage loan originally consisted of six floating rate components. The two year initial terms are individually subject to three 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 mortgage loan agreement and the Borrower Entity obtains and delivers a replacement interest rate cap agreement from an approved counterparty within the required timeframe to the lender. IH 2017-1 is a 10 year, fixed rate mortgage loan comprised of two components. Certificates issued

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

by the trust in connection with Component A of IH 2017-1 benefit from FNMA’s guaranty of timely payment of principal and interest.

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 September 30, 2021 and December 31, 2020, a total of 31,160 and 31,316 homes, respectively, with a gross book value of $6,901,695 and $6,888,308, respectively, and a net book value of $5,621,481 and $5,761,551, respectively, are pledged pursuant to the mortgage loans. Each Borrower Entity has the right, subject to certain requirements and limitations outlined in the respective loan agreements, to substitute properties. We are obligated to make monthly payments of interest for each mortgage loan.

Transactions with Trusts

Concurrent with the execution of each mortgage 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 for our currently outstanding Securitizations are wholly owned subsidiaries. We accounted for the transfers of the individual Securitizations from the wholly owned Depositor Entities to the respective Trusts as sales under ASC 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 classes of certificates which mirror the components of the individual loans (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 and used the proceeds as consideration for the loans sold to the Depositor Entities by the lenders. These transactions had no effect on our condensed consolidated financial statements other than with respect to Certificates we retained in connection with Securitizations or purchased at a later date.

The Trusts are structured as pass-through entities that receive interest 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 condensed 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 activities that could impact the Trusts’ economic performance. Therefore, we do not consolidate the Trusts.

Retained Certificates

As the Trusts made Certificates available for sale to both domestic and foreign investors, sponsors of the mortgage loans are required to retain a portion of the risk that represents a material net economic interest in each loan pursuant to Regulation RR (the “Risk Retention Rules”) under the Securities Exchange Act of 1934, as amended. As such, loan sponsors are 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.

IH 2017-1 issued Class B certificates, which 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.

For IH 2017-2, IH 2018-1, IH 2018-2, IH 2018-3, and IH 2018-4, we retain 5% of each class of certificates to meet the Risk Retention Rules. These retained certificates accrue interest at a floating rate of LIBOR plus a spread ranging from 0.76% to 1.51%.

The retained certificates total $197,255 and $245,237 as of September 30, 2021 and December 31, 2020, respectively, and are classified as held to maturity investments and recorded in other assets, net on the condensed consolidated balance sheets (see Note 6).

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

Loan Covenants

The general terms that apply to all of the mortgage loans require each Borrower Entity to maintain compliance with certain affirmative and negative covenants. Affirmative covenants include each Borrower Entity’s, and certain of their respective affiliates’, compliance with (i) licensing, permitting and legal requirements specified in the mortgage loan agreements, (ii) organizational requirements of the jurisdictions in which they are organized, (iii) federal and state tax laws, and (iv) books and records requirements specified in the respective mortgage loan agreements. Negative covenants include each Borrower Entity’s, and certain of their affiliates’, compliance with limitations surrounding (i) the amount of each Borrower Entity’s indebtedness and the nature of their investments, (ii) the execution of transactions with affiliates, (iii) the Manager, (iv) the nature of each Borrower Entity’s business activities, and (v) the required maintenance of specified cash reserves. As of September 30, 2021, and through the date our condensed consolidated financial statements were issued, we believe each Borrower Entity is in compliance with all affirmative and negative covenants for the mortgage loans.

Prepayments

For the mortgage loans, prepayments of amounts owed by us are generally not permitted under the terms of the respective mortgage loan agreements unless such prepayments are made pursuant to the voluntary election or 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 nine months ended September 30, 2021 and 2020, we made voluntary and mandatory prepayments of $964,318 and $157,791, respectively, under the terms of the mortgage loan agreements.

Secured Term Loan

On June 7, 2019, 2019-1 IH Borrower LP, a consolidated subsidiary (“2019-1 IH Borrower” and one of our Borrower Entities), entered into a 12 year loan agreement with a life insurance company (the “Secured Term Loan”). The Secured Term Loan bears interest at a fixed rate of 3.59%, including applicable servicing fees, for the first 11 years and bears interest at a floating rate based on a spread of 147 bps, including applicable servicing fees, over one month LIBOR (subject to certain adjustments as outlined in the loan agreement) for the twelfth year. The Secured Term Loan is secured by first priority mortgages on a portfolio of single-family rental properties as well as a first priority pledge of the equity interests of 2019-1 IH Borrower. We utilized the proceeds from the Secured Term Loan to fund: (i) repayments of then-outstanding indebtedness; (ii) initial deposits into the Secured Term Loan’s reserve accounts; (iii) transaction costs related to the closing of the Secured Term Loan; and (iv) general corporate purposes.

The following table sets forth a summary of our Secured Term Loan indebtedness as of September 30, 2021 and December 31, 2020:


	Maturity Date	Interest Rate(1)	September 30, 2021		December 31, 2020
Secured Term Loan	June 9, 2031	3.59%	$	403,363	$	403,363
Deferred financing costs, net			(2,105)		(2,268)
Secured Term Loan, net			$	401,258	$	401,095

(1)The Secured Term Loan bears interest at a fixed rate of 3.59% per annum including applicable servicing fees for the first 11 years and for the twelfth year bears interest at a floating rate based on a spread of 147 bps over one month LIBOR (or a comparable or successor rate as provided for in our loan agreement), including applicable servicing fees, subject to certain adjustments as outlined in the loan agreement. Interest payments are made monthly.

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

Collateral

The Secured Term Loan’s collateral pool contains 3,334 and 3,332 homes as of September 30, 2021 and December 31, 2020, respectively, with a gross book value of $799,188 and $791,860, respectively, and a net book value of $707,913 and $719,762, respectively. 2019-1 IH Borrower has the right, subject to certain requirements and limitations outlined in the loan agreement, to substitute properties representing up to 20% of the collateral pool annually, and to substitute properties representing up to 100% of the collateral pool over the life of the Secured Term Loan. In addition, four times after the first anniversary of the closing date, 2019-1 IH Borrower has the right, subject to certain requirements and limitations outlined in the loan agreement, to execute a special release of collateral representing up to 15% of the then-outstanding principal balance of the Secured Term Loan in order to bring the loan-to-value ratio back in line with the Secured Term Loan’s loan-to-value ratio as of the closing date. Any such special release of collateral would not change the then-outstanding principal balance of the Secured Term Loan, but rather would reduce the number of single-family rental homes included in the collateral pool.

Loan Covenants

The Secured Term Loan requires 2019-1 IH Borrower to maintain compliance with certain affirmative and negative covenants. Affirmative covenants include 2019-1 IH Borrower’s, and certain of its affiliates’, compliance with (i) licensing, permitting and legal requirements specified in the loan agreement, (ii) organizational requirements of the jurisdictions in which they are organized, (iii) federal and state tax laws, and (iv) books and records requirements specified in the loan agreement. Negative covenants include 2019-1 IH Borrower’s, and certain of its affiliates’, compliance with limitations surrounding (i) the amount of 2019-1 IH Borrower’s indebtedness and the nature of its investments, (ii) the execution of transactions with affiliates, (iii) the Manager, (iv) the nature of 2019-1 IH Borrower’s business activities, and (v) the required maintenance of specified cash reserves. As of September 30, 2021, and through the date our condensed consolidated financial statements were issued, we believe 2019-1 IH Borrower is in compliance with all affirmative and negative covenants for the Secured Term Loan.

Prepayments

Prepayments of the Secured Term Loan are generally not permitted unless such prepayments are made pursuant to the voluntary election or mandatory provisions specified in the loan agreement. 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 yield maintenance premium if prepayment occurs before June 9, 2030. For the nine months ended September 30, 2020, we made mandatory prepayments of $101. No such prepayments were made during the nine months ended September 30, 2021.

Unsecured Notes

Our unsecured notes are issued in connection with either an underwritten public offering pursuant to our existing shelf registration statement that automatically became effective upon filing with the SEC in July 2021 and expires in July 2024 or in connection with a private placement transaction with certain institutional investors (collectively, the “Unsecured Notes”). We utilize proceeds from the Unsecured Notes to fund: (i) repayments of then-outstanding indebtedness, including the securitizations; (ii) closing costs in connection with the Unsecured Notes; and (iii) general costs associated with our operations and other corporate purposes, including acquisitions. Interest on the Unsecured Notes is payable semi-annually in arrears.

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

The following table sets forth a summary of our Unsecured Notes as of September 30, 2021 and December 31, 2020:


	September 30, 2021		December 31, 2020
Total Unsecured Notes, net (1)	$	939,696	$	—
Deferred financing costs, net	(7,807)		—
Total	$	931,889	$	—

(1)Net of unamortized discount of $10,304 as of September 30, 2021.

Current Year Activity

The following activity occurred during the nine months ended September 30, 2021 with respect to the Unsecured Notes:

On May 25, 2021, in a private placement transaction, we issued (1) $150,000 aggregate principal amount of 2.46% Senior Notes, Series A due May 25, 2028 and (2) $150,000 aggregate principal amount of 3.18% Senior Notes, Series B which mature on May 25, 2036.
On August 6, 2021, in a public offering under our existing shelf registration statement, we issued $650,000 aggregate principal amount of 2.00% Senior Notes which mature on August 15, 2031.

Prepayments

The Unsecured Notes are redeemable in whole at any time or in part from time to time, at our option, at a redemption price equal to (i) 100% of the principal amount to be redeemed plus accrued and unpaid interest and (ii) a make-whole premium calculated in accordance with the respective loan agreements. The privately placed Unsecured Notes require any prepayment to be an amount not less than 5% of the aggregate principal amount then outstanding. If any of the Unsecured Notes issued publicly under our registration statement are redeemed on or after the date that is three months prior to the maturity date, the redemption price will not include a make-whole premium.

Guarantees

The Unsecured Notes are fully and unconditionally guaranteed, jointly and severally, by INVH and two of its wholly owned subsidiaries, Invitation Homes OP GP LLC (the “General Partner”) and IH Merger Sub, LLC (“IH Merger Sub”). Prior to the September 17, 2021 execution of a parent guaranty agreement, the privately placed Unsecured Notes were not guaranteed.

Loan Covenants

The Unsecured Notes issued publicly under our registration statement contain customary covenants, including, among others, limitations on the incurrence of debt; and they include the following financial covenants related to the incurrence of debt: (i) an aggregate debt test; (ii) a debt service test; (iii) a maintenance of total unencumbered assets; and (iv) a secured debt test.

The privately placed Unsecured Notes contain customary covenants, including, among others, limitations on distributions, fundamental changes, and transactions with affiliates; and they include the following financial covenants, subject to certain qualifications: (i) a maximum total leverage ratio; (ii) a maximum secured leverage ratio; (iii) a maximum unencumbered leverage ratio; (iv) a minimum fixed charge coverage ratio; and (v) a minimum unsecured interest coverage ratio.

The Unsecured Notes contain customary events of default (subject in certain cases to specified cure periods), the occurrence of which would allow the holders of notes to take various actions, including the acceleration of amounts due under the Unsecured Notes. As of September 30, 2021, and through the date our condensed consolidated financial statements were issued, we believe we were in compliance with all affirmative and negative covenants for the Unsecured Notes.

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

Term Loan Facility and Revolving Facility

On December 8, 2020, we entered into an Amended and Restated Revolving Credit and Term Loan Agreement with a syndicate of banks, financial institutions, and institutional lenders for a new credit facility (the “Credit Facility”). The Credit Facility provides $3,500,000 of borrowing capacity and consists of a $1,000,000 revolving facility (the “Revolving Facility”) and a $2,500,000 term loan facility (the “Term Loan Facility”), both of which mature on January 31, 2025, with two six month extension options available. The Revolving Facility also includes borrowing capacity for letters of credit. The 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 such that the aggregate amount does not exceed $4,000,000 at any time), subject to certain limitations.

The Credit Facility replaced a credit facility that consisted of a $1,000,000 revolving facility (the “2017 Revolving Facility”) and a $1,500,000 term loan facility (the “2017 Term Loan Facility” and together with the 2017 Revolving Facility, the “2017 Credit Facility”). The terms and conditions of the Credit Facility are consistent with those of the 2017 Credit Facility unless otherwise noted below. Proceeds from the Term Loan Facility were used to repay then-outstanding indebtedness, including the 2017 Term Loan Facility. Proceeds from the Revolving Facility are used for general corporate purposes.

The following table sets forth a summary of the outstanding principal amounts under the Credit Facility as of September 30, 2021 and December 31, 2020, respectively:


	Maturity Date	Interest Rate(1)	September 30, 2021		December 31, 2020
Term Loan Facility(2)	January 31, 2025	1.08%	$	2,500,000	$	2,500,000
Deferred financing costs, net			(23,691)		(29,093)
Term Loan Facility, net			$	2,476,309	$	2,470,907

Revolving Facility(2)	January 31, 2025	0.98%	$	—	$	—

(1)Interest rates for the Term Loan Facility and the Revolving Facility are based on LIBOR plus an applicable margin. As of September 30, 2021, the applicable margins were 1.00% and 0.90%,respectively, and LIBOR was 0.08%.

(2)If we exercise the two six month extension options, the maturity date will be January 31, 2026.

Interest Rate and Fees

Borrowings under the 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 a comparable or successor rate as provided for in our loan agreement) 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%. After obtaining the requisite rating on our non-credit enhanced, senior unsecured long term debt as defined in the Credit Facility agreement (the “Investment Grade Rating”), we elected to convert to a credit rating based pricing grid (the “Pricing Grid Conversion”)

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

effective April 22, 2021. The margins for the Term Loan Facility and Revolving Facility under the credit rating based pricing grid are as follows:


	Base Rate Loans				LIBOR Rate Loans
Term Loan Facility	0.00	%	—	0.65%	0.80%	—	1.65%
Revolving Facility	0.00	%	—	0.45%	0.75%	—	1.45%

Prior to the Pricing Grid Conversion, the margins were based on a total leverage based grid. The margins for the Term Loan Facility, Revolving Facility, 2017 Term Loan Facility, and 2017 Revolving Facility under the total leverage based grid were as follows:


	Base Rate Loans			LIBOR Rate Loans
Term Loan Facility	0.45%	—	1.15%	1.45%	—	2.15%
Revolving Facility	0.50%	—	1.15%	1.50%	—	2.15%
2017 Term Loan Facility	0.70%	—	1.30%	1.70%	—	2.30%
2017 Revolving Facility	0.75%	—	1.30%	1.75%	—	2.30%

The Credit Facility also includes a sustainability component whereby the Revolving Facility pricing can improve upon the Company’s achievement of certain sustainability ratings, determined via an independent third party evaluation. This sustainability feature was not included in the 2017 Revolving Facility.

In addition to paying interest on outstanding principal under the Credit Facility, we are required to pay a facility fee ranging from 0.10% to 0.30%. We are also required to pay customary letter of credit fees. Prior to the Pricing Grid Conversion, instead of a facility fee, we were required to pay an unused facility fee to the lenders under the Revolving Facility and the 2017 Revolving Facility in respect of the unused commitments thereunder. The unused facility fee rate was either 0.30% or 0.20% per annum for the Revolving Facility and 0.35% or 0.20% per annum for the 2017 Revolving Facility.

Prepayments and Amortization

No principal reductions are required under the 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 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 our fiscal year, (v) make changes in the nature of our business and our subsidiaries, and (vi) enter into certain burdensome agreements.

The 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, and (v) minimum unsecured interest coverage ratio. Prior to obtaining an Investment Grade Rating, we were also required to maintain a maximum secured recourse leverage ratio. If an event of default occurs, the lenders under the Credit Facility are entitled to take various actions, including the acceleration of amounts due under the Credit Facility. As of September 30, 2021, and through the date our condensed consolidated financial statements were issued, we believe we were in compliance with all affirmative and negative covenants for the Credit Facility.

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

Guarantees and Security

After we obtained the requisite Investment Grade Rating, our direct and indirect wholly owned subsidiaries that directly own unencumbered assets (the “Subsidiary Guarantors”) were released from their previous guarantee requirements under the Credit Facility (the “Investment Grade Release”) effective May 5, 2021. Prior to the Investment Grade Release, the obligations under the Credit Facility were guaranteed on a joint and several basis by each Subsidiary Guarantor, subject to certain exceptions.

On September 17, 2021, as a result of the execution of a parent guaranty agreement, the obligations under the Credit Facility became guaranteed on a joint and several basis by INVH and two of its wholly owned subsidiaries, the General Partner and IH Merger Sub.

Although the 2017 Credit Facility was secured, such security interests have been released and the Credit Facility is unsecured.

Convertible Senior Notes

In connection with the Mergers, we assumed SWH’s convertible senior notes. In January 2017, SWH issued $345,000 in aggregate principal amount of 3.50% convertible senior notes due 2022 (the “2022 Convertible Notes” or 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 September 30, 2021 and December 31, 2020:


						Principal Amount
	Coupon Rate	Effective Rate(1)	Conversion Rate(2)	Maturity Date	Remaining Amortization Period	September 30, 2021		December 31, 2020
2022 Convertible Notes	3.50%	5.12%	43.9819	January 15, 2022	0.29 years	$	146,491	$	345,000
Net unamortized fair value adjustment						(673)		(5,596)
Total						$	145,818	$	339,404

(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 $324,252 for the 2022 Convertible Notes.

(2)The conversion rate as of September 30, 2021 represents the number of shares of common stock issuable per $1,000 principal amount (actual $) of the 2022 Convertible Notes converted on such date, as adjusted in accordance with the indenture as a result of cash dividend payments and the effects of previous mergers. Effective July 15, 2021, we notified note holders of our intent to settle conversions of the 2022 Convertible Notes in shares of common stock.

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

Terms of Conversion

As of September 30, 2021, the conversion rate applicable to the 2022 Convertible Notes is 43.9819 shares of our common stock per $1,000 principal amount (actual $) of the 2022 Convertible Notes (equivalent to a conversion price of approximately $22.74 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 adjust 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 were able to 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 our trustee, Wilmington Trust National Association (the “Convertible Notes Trustee”). On or after July 15, 2021 and until maturity, holders may convert all or any portion of the 2022 Convertible Notes at any time. Effective July 15, 2021, we notified note holders of our intent to settle conversions of the 2022 Convertible Notes in shares of common stock. For the three and nine months ended September 30, 2021, we settled $198,503 and $198,509, respectively, of principal balance outstanding of the 2022 Convertible Notes with the issuance of 8,723,161 and 8,723,421 shares of our common stock, respectively. The “if-converted” value of the 2022 Convertible Notes exceeds the principal amount by $100,467 as of September 30, 2021 as the closing market price of our common stock of $38.33 per common share (actual $) exceeds the implicit conversion price. For the three months ended September 30, 2021 and 2020, interest expense for the 2022 Convertible Notes, including non-cash amortization of discounts, was $3,843 and $4,311, respectively. For the nine months ended September 30, 2021 and 2020, interest expense for the 2022 Convertible Notes, including non-cash amortization of discounts, was $12,531 and $12,869, respectively.

General Terms

We may not redeem the 2022 Convertible Notes prior to their maturity date except to the extent necessary to preserve our status as a REIT for United States federal income tax purposes, as further described in the indenture. If we undergo a fundamental change as defined in the indenture, holders may require us to repurchase for cash all or any portion of their 2022 Convertible Notes at a fundamental change repurchase price equal to 100% of the principal amount of the 2022 Convertible Notes to be repurchased, plus accrued and unpaid interest up to, but excluding, the fundamental change repurchase date.

The indenture contains 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 2022 Convertible 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 2022 Convertible 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 indenture), 100% of the principal of and accrued and unpaid interest on the 2022 Convertible Notes will automatically become due and payable.

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

Debt Maturities Schedule

The following table summarizes the contractual maturities of our debt as of September 30, 2021:


Year	Mortgage Loans(1)(2)		Secured Term Loan		Unsecured Notes		Term Loan Facility(3)		Revolving Facility(3)		Convertible Senior Notes		Total
Remainder of 2021	$	184,400	$	—	$	—	$	—	$	—	$	—	$	184,400
2022	2,689,956		—		—		—		—		146,491		2,836,447
2023	—		—		—		—		—		—		—
2024	—		—		—		—		—		—		—
2025	—		—		—		2,500,000		—		—		2,500,000
Thereafter	995,748		403,363		950,000		—		—		—		2,349,111
Total	3,870,104		403,363		950,000		2,500,000		—		146,491		7,869,958
Less: deferred financing costs, net	(10,216)		(2,105)		(7,807)		(23,691)		—		—		(43,819)
Less: unamortized fair value adjustment	—		—		—		—		—		(673)		(673)
Less: unamortized debt discount	(2,025)		—		(10,304)		—		—		—		(12,329)
Total	$	3,857,863	$	401,258	$	931,889	$	2,476,309	$	—	$	145,818	$	7,813,137

(1)The maturity dates of the obligations are reflective of all extensions that have been exercised as of September 30, 2021. If fully extended, we would have no mortgage loans maturing before 2024. Such extensions are available provided there is no continuing event of default under the respective mortgage loan agreement and the Borrower Entity obtains and delivers to the lender a replacement interest rate cap agreement from an approved counterparty within the required timeframe.

(2)On September 13, 2021, we submitted a notification to exercise an extension of the maturity date of the IH 2017-2 mortgage loan from December 9, 2021 to December 9, 2022. On October 12, 2021, we submitted a notification to exercise an extension of the maturity date of the IH 2018-4 mortgage loan from January 9, 2022 to January 9, 2023 (see Note 15).

(3)If we exercise the two six month extension options, the maturity date will be January 31, 2026.

Note 8—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 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 did not elect to designate as 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. Currently, each of our swap agreements is indexed to one month LIBOR and is designated for hedge accounting purposes. One month LIBOR is set to expire after June 30, 2023, and we will work with the counterparties to our swap agreements to adjust each floating rate to a comparable or successor rate. 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.

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

The table below summarizes our interest rate swap instruments as of September 30, 2021:


Agreement Date	Forward Effective Date	Maturity Date	Strike Rate	Index	Notional Amount
December 11, 2019	February 28, 2017	December 31, 2024	1.74%	One month LIBOR	$	750,000
April 19, 2018	January 31, 2019	January 31, 2025	2.86%	One month LIBOR	400,000
February 15, 2019	March 15, 2019	March 15, 2022	2.23%	One month LIBOR	800,000
April 19, 2018	March 15, 2019	November 30, 2024	2.85%	One month LIBOR	400,000
April 19, 2018	March 15, 2019	February 28, 2025	2.86%	One month LIBOR	400,000
May 8, 2018	March 9, 2020	June 9, 2025	2.99%	One month LIBOR	325,000
May 8, 2018	June 9, 2020	June 9, 2025	2.99%	One month LIBOR	595,000
June 28, 2018	August 7, 2020	July 9, 2025	2.90%	One month LIBOR	1,100,000
December 9, 2019	July 15, 2021	November 30, 2024	2.90%	One month LIBOR	400,000
November 7, 2018	March 15, 2022	July 31, 2025	3.14%	One month LIBOR	400,000
November 7, 2018	March 15, 2022	July 31, 2025	3.16%	One month LIBOR	400,000

During the three and nine months ended September 30, 2021 and 2020, 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 $138,119 will be reclassified to earnings as an increase in interest expense.

Non-Designated Hedges

Concurrent with entering into certain of the mortgage loan agreements and in connection with previous 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 mortgage loans made by the third party lenders. Currently, each of our cap agreements is indexed to one month LIBOR, which is set to expire on June 30, 2023. We will work with the counterparties to our cap agreements to adjust each floating rate to a comparable or successor rate. To the extent that the maturity date of one or more of the mortgage loans is extended through an exercise of one or more 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 interest rate cap strike price 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 counterparties and all other rights, have been pledged as additional collateral for the mortgage loans. Additionally, in certain instances, in order to minimize the cash impact of purchasing required interest rate caps, we simultaneously sell interest rate caps (which have identical terms and notional amounts) such that the purchase price and sales proceeds of the related interest rate caps are intended to offset each other. The purchased and sold interest rate caps have strike prices ranging from approximately 3.75% to 7.03%.

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

Fair Values of Derivative Instruments on the Condensed Consolidated Balance Sheets

The table below presents the fair value of our derivative financial instruments as well as their classification on the condensed consolidated balance sheets as of September 30, 2021 and December 31, 2020:


	Asset Derivatives					Liability Derivatives
		Fair Value as of					Fair Value as of
	Balance Sheet Location	September 30, 2021		December 31, 2020		Balance Sheet Location	September 30, 2021		December 31, 2020
Derivatives designated as hedging instruments:
Interest rate swaps	Other assets	$	—	$	—	Other liabilities	$	379,589	$	539,560

Derivatives not designated as hedging instruments:
Interest rate caps	Other assets	—		1		Other liabilities	—		—
Total		$	—	$	1		$	379,589	$	539,560

Offsetting Derivatives

We enter into master netting arrangements, which reduce risk by permitting net settlement of transactions with the same counterparty. The tables below present a gross presentation, the effects of offsetting, and a net presentation of our derivatives as of September 30, 2021 and December 31, 2020:


	September 30, 2021
							Gross Amounts Not Offset in the Statement of Financial Position
	Gross Amounts of Recognized Assets/ Liabilities		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Assets/ Liabilities Presented in the Statement of Financial Position		Financial Instruments		Cash Collateral Received		Net Amount
Offsetting assets:
Derivatives	$	—	$	—	$	—	$	—	$	—	$	—
Offsetting liabilities:
Derivatives	$	379,589	$	—	$	379,589	$	—	$	—	$	379,589


	December 31, 2020
							Gross Amounts Not Offset in the Statement of Financial Position
	Gross Amounts of Recognized Assets/ Liabilities		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Assets/ Liabilities Presented in the Statement of Financial Position		Financial Instruments		Cash Collateral Received		Net Amount
Offsetting assets:
Derivatives	$	1	$	—	$	1	$	—	$	—	$	1
Offsetting liabilities:
Derivatives	$	539,560	$	—	$	539,560	$	—	$	—	$	539,560

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

Effect of Derivative Instruments on the Condensed Consolidated Statements of Comprehensive Income (Loss) and the Condensed Consolidated Statements of Operations

The tables below present the effect of our derivative financial instruments in the condensed consolidated statements of comprehensive income (loss) and the condensed consolidated statements of operations for the three months ended September 30, 2021 and 2020:


	Amount of Loss Recognized in OCI on Derivative				Location of Loss Reclassified from Accumulated OCI into Net Income		Amount of Loss Reclassified from Accumulated OCI into Net Income						Total Amount of Interest Expense Presented in the Condensed Consolidated Statements of Operations

	For the Three Months Ended September 30,					For the Three Months Ended September 30,						For the Three Months Ended September 30,
	2021		2020			2021			2020			2021			2020
Derivatives in cash flow hedging relationships:
Interest rate swaps	$	(1,586)	$	(4,171)	Interest expense		$	(37,074)		$	(37,557)		$	79,370		$	87,713


	Location of Loss Recognized in Net Income on Derivative		Amount of Loss Recognized in Net Income on Derivative

		For the Three Months Ended September 30,
		2021			2020
Derivatives not designated as hedging instruments:

Interest rate caps	Interest expense		$	1		$	146


	Amount of Gain (Loss) Recognized in OCI on Derivative				Location of Loss Reclassified from Accumulated OCI into Net Income	Amount of Loss Reclassified from Accumulated OCI into Net Income					Total Amount of Interest Expense Presented in the Condensed Consolidated Statements of Operations

	For the Nine Months Ended September 30,						For the Nine Months Ended September 30,						For the Nine Months Ended September 30,
	2021		2020				2021			2020			2021			2020
Derivatives in cash flow hedging relationships:
Interest rate swaps	$	57,283	$	(398,426)		Interest expense		$	(112,973)		$	(74,166)		$	243,540		$	258,541


	Location of Loss Recognized in Net Income on Derivative		Amount of Loss Recognized in Net Income on Derivative

		For the Nine Months Ended September 30,
		2021			2020
Derivatives not designated as hedging instruments:

Interest rate caps	Interest expense		$	106		$	198

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

Credit-Risk-Related Contingent Features

The agreements with our derivative counterparties which govern our interest rate swap agreements 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 September 30, 2021, the fair value of certain derivatives in a net liability position was $379,589. If we had breached any of these provisions at September 30, 2021, we could have been required to settle the obligations under the agreements at their termination value, which includes accrued interest and excludes the nonperformance risk related to these agreements, of $389,540.

Note 9—Stockholders' Equity

As of September 30, 2021, we have issued 594,893,674 shares of common stock. In addition, we issue OP Units from time to time which, upon vesting, 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 condensed consolidated balance sheets and statements of equity. As of September 30, 2021, 2,538,285 outstanding OP Units are redeemable.

During the three and nine months ended September 30, 2021, we issued 26,175,130 and 27,776,008 shares of common stock, respectively. During the three and nine months ended September 30, 2020, we issued 1,353 and 18,891,307 shares of common stock, respectively.

2021 Public Offering

On September 28, 2021, we completed an underwritten public offering of 12,500,000 shares of our common stock. During the three and nine months ended September 30, 2021, this offering generated net proceeds of $496,667, after giving effect to commissions and other costs totaling $3,333. On October 21, 2021, we sold 1,875,000 shares of our common stock pursuant to the underwriters’ full exercise of the option to purchase additional shares, generating net proceeds of $74,534, after giving effect to commissions and other costs totaling $466 (see Note 15).

2020 Public Offering

On June 4, 2020, we completed an underwritten public offering of 16,675,000 shares of our common stock, including 2,175,000 shares sold pursuant to the underwriters’ full exercise of the option to purchase additional shares. During the nine months ended September 30, 2020, this offering generated net proceeds of $447,533, after giving effect to commissions and other costs totaling $6,861.

At the Market Equity Program

On August 22, 2019, we entered into distribution agreements with a syndicate of banks (the “Agents”), pursuant to which we may sell, from time to time, up to an aggregate sales price of $800,000 of our common stock through the Agents (the “ATM Equity Program”). During the three and nine months ended September 30, 2021, we sold 4,951,969 shares of our common stock under our ATM Equity Program, generating net proceeds of $196,778 after giving effect to Agent commissions and other costs totaling $3,167. During the nine months ended September 30, 2020, we sold 1,887,466 shares of our common stock under our ATM Equity Program generating net proceeds of $56,265 after giving effect to Agent commissions and other costs totaling $977. We did not sell any shares of common stock under the ATM Equity Program during the three months ended September 30, 2020. As of September 30, 2021 $300,055 remains available for future offerings under the ATM Equity Program.

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 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.

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

The timing, form, and amount of distributions, if any, to our stockholders, will be at the sole discretion of our board of directors.

The following table summarizes our dividends declared from January 1, 2020 through September 30, 2021:


	Record Date	Amount per Share		Pay Date	Total Amount Declared
Q3-2021	August 10, 2021	$	0.17	August 27, 2021	$	98,965
Q2-2021	May 11, 2021	0.17		May 28, 2021	97,054
Q1-2021	January 28, 2021	0.17		February 26, 2021	96,933
Q4-2020	November 10, 2020	0.15		November 25, 2020	84,911
Q3-2020	August 12, 2020	0.15		August 28, 2020	84,286
Q2-2020	May 13, 2020	0.15		May 29, 2020	81,916
Q1-2020	February 12, 2020	0.15		February 28, 2020	81,673

On October 20, 2021, our board of directors declared a dividend of $0.17 per share to stockholders of record on November 9, 2021, which is payable on November 24, 2021. (see Note 15).

Note 10—Share-Based Compensation

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, associates, 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 of common stock.

Our share-based awards consist of time-vesting restricted stock units (“RSUs”), performance and market based vesting RSUs (“PRSUs”), and Outperformance Awards (defined below). Time-vesting RSUs are participating securities for EPS purposes, and PRSUs and Outperformance Awards are not. For detailed discussion of RSUs and PRSUs issued prior to January 1, 2021, refer to our Annual Report on Form 10-K for the year ended December 31, 2020.

Share-Based Awards

The following summarizes our share-based award activity during the nine months ended September 30, 2021.

Annual Long Term Incentive Plan (“LTIP”):

*•*Annual LTIP Awards Granted: During the nine months ended September 30, 2021, we granted 675,627 RSUs pursuant to LTIP awards (together with previously granted annual LTIP awards, “LTIP Awards”). Each award includes components which vest based on time-vesting conditions, market based vesting conditions, and performance based vesting conditions, each of which is subject to continued employment through the applicable vesting date. The time-vesting RSUs granted during the nine months ended September 30, 2021 vest in three equal annual installments based on an anniversary date of March 1, 2021. The PRSUs granted during the nine months ended September 30, 2021 may be earned based on the achievement of certain measures over a three year performance period that ends December 31, 2023. The number of PRSUs earned will be determined based on performance achieved during the performance period for each measure at certain threshold, target, or maximum levels and corresponding payout ranges. In general, the LTIP PRSUs are earned after the end of the performance period on the date on which the performance results are certified by our compensation and management development committee (the “Compensation Committee”).

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

*•*PRSU Results: During the nine months ended September 30, 2021, the Compensation Committee certified performance achievement with respect to our 2018 LTIP Awards. Certain PRSUs vested and achieved performance in excess of the target level, resulting in the issuance of an additional 159,180 shares of common stock. Such awards

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

are reflected as an increase in the number of awards granted and vested in the table below. Certain other PRSUs did not achieve performance criteria, resulting in the cancellation of 47,145 awards. Such awards are reflected as an increase in the number of awards forfeited/canceled in the table below.

Director Awards

During the nine months ended September 30, 2021, we granted 43,767 time-vesting RSUs to members of our board of directors, which awards will fully vest on the date of INVH’s 2022 annual stockholders meeting, subject to continued service on the board of directors through such date.

Outperformance Awards

On May 1, 2019, the Compensation Committee approved one-time equity based awards with market based vesting conditions in the form of PRSUs and OP Units (the “Outperformance Awards”). The Outperformance Awards may be earned based on the achievement of rigorous absolute total shareholder return and relative total shareholder return thresholds over a three year performance period ending on March 31, 2022. Upon completion of the performance period, the dollar value of the awards earned under the absolute and relative total shareholder return components will be separately calculated, and the number of earned Outperformance Awards will be determined based on the earned dollar value of the awards and the stock price at the performance certification date. Earned awards will vest 50% on March 31, 2022 and 25% on each of the first and second anniversaries of such date, subject to continued employment. The current aggregate $12,160 grant-date fair value of the Outperformance Awards still outstanding was determined based on Monte-Carlo option pricing models which estimate the probability of the vesting conditions being satisfied.

Summary of Total Share-Based Awards

The following table summarizes activity related to non-vested time-vesting RSUs and PRSUs, other than Outperformance Awards, during the nine months ended September 30, 2021:


	Time-Vesting Awards			PRSUs			Total Share-Based Awards(1)
	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, December 31, 2020	560,123	$	24.54	975,811	$	26.36	1,535,934	$	25.70
Granted	252,249	30.30		626,325	27.44		878,574	28.26
Vested(2)	(395,851)	(23.43)		(436,493)	(23.31)		(832,344)	(23.37)
Forfeited / canceled	(18,034)	(29.93)		(66,355)	(23.19)		(84,389)	(24.63)
Balance, September 30, 2021	398,487	$	29.05	1,099,288	$	28.38	1,497,775	$	28.56

(1)Total share-based awards excludes Outperformance Awards.

(2)All vested share-based awards are included in basic EPS for the periods after each award’s vesting date. The estimated fair value of share-based awards that fully vested during the nine months ended September 30, 2021 was $18,204. During the nine months ended September 30, 2021, 1,033 RSUs were accelerated pursuant to the terms and conditions of the Omnibus Incentive Plan and related award agreements.

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

Grant-Date Fair Values

The grant-date fair values of the time-vesting RSUs and PRSUs with performance condition vesting criteria are generally based on the closing price of our common stock on the grant date. However, the grant-date fair values for share-based awards with market condition vesting criteria are based on Monte-Carlo option pricing models. The following table summarizes the significant inputs utilized in these models for such awards granted during the nine months ended September 30, 2021:



						For the Nine Months Ended September 30, 2021

Expected volatility(1)						33.2%
Risk-free rate						0.31%
Expected holding period (years)						2.84

(1)Expected volatility was estimated based on the historical volatility of INVH’s realized returns and the applicable index.

Summary of Total Share-Based Compensation Expense

During the three and nine months ended September 30, 2021 and 2020, we recognized share-based compensation expense as follows:



	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
General and administrative	$	4,775	$	4,833	$	16,918	$	9,760
Property management expense	1,277		1,253		4,154		2,533
Total	$	6,052	$	6,086	$	21,072	$	12,293

As of September 30, 2021, there is $31,024 of unrecognized share-based compensation expense related to non-vested share-based awards which is expected to be recognized over a weighted average period of 1.83 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 certain components of other liabilities approximate fair value due to the short maturity of these amounts. Our interest rate swap agreements, interest rate cap agreements, and investments in equity securities with a readily determinable fair value are recorded at fair value on a recurring basis within our condensed 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 8 for the details of the condensed consolidated balance sheet classification and the fair values for the interest rate caps and swaps. The fair values of our investments in equity securities with a readily determinable fair value are classified as Level 1 in the fair value hierarchy. For additional information related to our investments in equity securities as of September 30, 2021 and December 31, 2020, refer to Note 6.

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

Recurring Fair Value Measurements

The following table displays the carrying values and fair values of financial instruments as of September 30, 2021 and December 31, 2020:


		September 30, 2021				December 31, 2020
		Carrying Value		Fair Value		Carrying Value		Fair Value
Assets carried at historical cost on the condensed consolidated balance sheets:
Investments in debt securities(1)	Level 2	$	197,255	$	200,781	$	245,237	$	249,736

Liabilities carried at historical cost on the condensed consolidated balance sheets:
Mortgage loans(2)	Level 2	$	3,868,079	$	3,939,289	$	4,832,133	$	4,923,107
Unsecured Notes — public offering(3)	Level 2	639,696		622,733		—		—
Secured Term Loan(4)	Level 3	403,363		423,471		403,363		447,190
Unsecured Notes — private placement(5)	Level 3	300,000		301,885		—		—
Term Loan Facility(6)	Level 3	2,500,000		2,505,623		2,500,000		2,514,623

Convertible Senior Notes(7)	Level 3	145,818		147,521		339,404		351,166

(1)The carrying values of investments in debt securities are shown net of discount.

(2)The carrying values of the mortgage loans are shown net of discount and excludes $10,216 and $12,035 of deferred financing costs as of September 30, 2021 and December 31, 2020, respectively.

(3)The carrying value of the Unsecured Notes — public offering includes unamortized discount of $10,304 and excludes $6,248 of deferred financing costs as of September 30, 2021.

(4)The carrying value of the Secured Term Loan excludes $2,105 and $2,268 of deferred financing costs as of September 30, 2021 and December 31, 2020, respectively.

(5)The carrying value of the Unsecured Notes — private placement excludes $1,559 of deferred financing costs as of September 30, 2021.

(6)The carrying values of the Term Loan Facility excludes $23,691 and $29,093 of deferred financing costs as of September 30, 2021 and December 31, 2020, respectively.

(7)The carrying values of the Convertible Senior Notes include unamortized discounts of $673 and $5,596 as of September 30, 2021 and December 31, 2020, respectively.

The fair values of our investments 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 following table displays the significant unobservable inputs used to develop our Level 3 fair value measurements as of September 30, 2021:


	Quantitative Information about Level 3 Fair Value Measurement(1)
	Fair Value		Valuation Technique	Unobservable Input	Rate
Secured Term Loan	$	423,471	Discounted Cash Flow	Effective Rate	2.99%
Unsecured Notes — private placement	301,885		Discounted Cash Flow	Effective Rate	2.46%	—	3.07%
Term Loan Facility	2,505,623		Discounted Cash Flow	Effective Rate	1.08%	—	2.62%

Convertible Senior Notes	147,521		Discounted Cash Flow	Effective Rate	1.09%

(1)Our Level 3 fair value instruments require interest only monthly payments.

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

Nonrecurring Fair Value Measurements

Our assets measured at fair value on a nonrecurring basis are those assets for which we have recorded impairments.

Single-Family Residential Properties

The single-family residential properties for which we have recorded impairments, measured at fair value on a nonrecurring basis, are summarized below:


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,

	2021		2020		2021		2020
Investments in single-family residential properties, net held for use (Level 3):
Pre-impairment amount	$	—	$	—	$	—	$	451
Total impairments	—		—		—		(89)
Fair value	$	—	$	—	$	—	$	362


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,

	2021		2020		2021		2020
Investments in single-family residential properties, net held for sale (Level 3):
Pre-impairment amount	$	629	$	1,800	$	3,582	$	19,594
Total impairments	(126)		(289)		(650)		(4,113)
Fair value	$	503	$	1,511	$	2,932	$	15,481

For additional information related to our single-family residential properties as of September 30, 2021 and December 31, 2020, refer to Note 3.

ROU Lease Assets

During the three months ended September 30, 2020, we relocated one of our corporate offices and vacated the former location. As of September 30, 2020, the expected undiscounted sublease payments through the remaining original lease term of the vacated office space no longer exceeded the carrying value of the related ROU lease asset, and we concluded that the ROU lease asset was not fully recoverable. During the three and nine months ended September 30, 2020, we recorded impairment of $1,750 in other, net in the condensed consolidated statements of operations. The fair value of the ROU lease asset measured at fair value on a nonrecurring basis, which is classified as Level 3 in the fair value hierarchy, was determined based on a discounted cash flow analysis reflective of the income expected from a sublease. We did not record any impairment of our ROU lease assets during the three and nine months ended September 30, 2021. For additional information related to our ROU lease assets as of September 30, 2021 and December 31, 2020, refer to Note 6.

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

Note 12—Earnings per Share

Basic and diluted EPS are calculated as follows:



	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
(in thousands, except share and per share data)
Numerator:





Net income available to common stockholders — basic and diluted	$	69,108	$	32,540	$	186,622	$	125,178

Denominator:
Weighted average common shares outstanding — basic	577,011,178		560,598,995		570,808,028		550,722,684
Effect of dilutive securities:
Incremental shares attributed to non-vested share-based awards	1,560,214		1,272,378		1,454,170		1,224,594
Weighted average common shares outstanding — diluted	578,571,392		561,871,373		572,262,198		551,947,278

Net income per common share — basic	$	0.12	$	0.06	$	0.33	$	0.23
Net income per common share — diluted	$	0.12	$	0.06	$	0.33	$	0.23

Incremental shares attributed to non-vested share-based awards are excluded from the computation of diluted EPS when they are anti-dilutive. Because their inclusion would have been anti-dilutive, the following number of incremental shares attributed to non-vested share-based awards are excluded from the denominator: for the three months ended September 30, 2020, 153,114; and for the nine months ended September 30, 2021 and 2020, 22,585 and 120,835, respectively. There are not any anti-dilutive incremental shares attributed to non-vested share-based awards for the three months ended September 30, 2021.

For the three and nine months ended September 30, 2021 and 2020, vested OP Units have been excluded from the computation of EPS because all income attributable to such vested OP Units has been recorded as non-controlling interest and thus excluded from net income available to common stockholders.

For the three and nine months ended September 30, 2021, using the “if-converted” method, 8,632,132 and 12,964,322 potential shares of common stock issuable upon the conversion of the 2022 Convertible Notes, respectively, are excluded from the computation of diluted EPS as they are anti-dilutive. For the three and nine months ended September 30, 2020, using the “if-converted” method, 15,100,443 potential shares of common stock issuable upon the conversion of the 2022 Convertible Notes are excluded from the computation of diluted EPS as they are anti-dilutive. Additionally, no adjustment to the numerator is required for interest expense related to the 2022 Convertible Notes for the three and nine months ended September 30, 2021 and 2020. See Note 7 for further discussion about the 2022 Convertible Notes.

Note 13—Income Tax

We account for income taxes under the asset and liability method. For our taxable REIT subsidiaries (“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 September 30, 2021 and December 31, 2020, we have not recorded any deferred tax assets and liabilities or unrecognized tax benefits. We do not anticipate a significant change in unrecognized tax benefits within the next 12 months.

We have sold assets that were either subject to Section 337(d) of the Internal Revenue Code of 1986, as amended, or were held by TRSs. These transactions resulted in $81 and $293 of current income tax expense for the three months ended September 30, 2021 and 2020, respectively, and $464 and $722 of current income tax expense for the nine months ended September 30, 2021 and 2020, respectively, which has been recorded in gain on sale of property, net of tax in the condensed consolidated statements of operations.

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

Note 14—Commitments and Contingencies

Lease Commitments

The following table sets forth our fixed lease payment commitments as a lessee as of September 30, 2021, for the periods below:


Year	Operating Leases		Finance Leases
Remainder of 2021	$	1,268	$	921
2022	4,445		2,598
2023	3,516		2,510
2024	3,178		757
2025	1,718		19
Thereafter	1,035		—
Total lease payments	15,160		6,805
Less: imputed interest	(898)		(344)
Total lease liability	$	14,262	$	6,461

The components of lease expense for the three and nine months ended September 30, 2021 and 2020 are as follows:



	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
Operating lease cost:
Fixed lease cost	$	991	$	1,106	$	3,105	$	3,257
Variable lease cost	364		263		968		860
Total operating lease cost	$	1,355	$	1,369	$	4,073	$	4,117

Finance lease cost:
Amortization of ROU assets	$	699	$	707	$	2,115	$	1,628
Interest on lease liabilities	64		101		220		371
Total finance lease cost	$	763	$	808	$	2,335	$	1,999

Insurance Policies

Pursuant to the terms of certain of our loan agreements (see Note 7), 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. As of September 30, 2021, there are no material contingent liabilities related to uninsured losses with respect to our properties.

Legal Matters

We are subject to various legal proceedings and claims that arise in the ordinary course of our business as well as congressional and regulatory inquiries and engagements. 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 proceedings or matters will have a material adverse effect on our condensed consolidated financial statements.

INVITATION HOMES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar amounts in thousands)

(unaudited)

Note 15—Subsequent Events

In connection with the preparation of the accompanying condensed consolidated financial statements, we have evaluated events and transactions occurring after September 30, 2021, for potential recognition or disclosure.

Extension of Existing Mortgage Loan

On October 12, 2021, we submitted a notification to exercise an extension of the maturity date of the IH 2018-4 mortgage loan from January 9, 2022 to January 9, 2023.

2021 Public Offering

On October 21, 2021, we sold 1,875,000 shares of our common stock pursuant to the underwriters’ full exercise of the option to purchase additional shares, generating net proceeds of $74,534, after giving effect to commissions and other costs totaling $466.

Dividend Declaration

On October 20, 2021, our board of directors declared a dividend of $0.17 per share to stockholders of record on November 9, 2021, which is payable on November 24, 2021.

Previous: Cover and table of contents · Next: Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS