Why Invitation Homes Inc (NYSE: INVH) Stock Is Falling

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Invitation Homes Inc (NYSE: INVH) stock fell over 1.2% on 17th Feb, 2021 pre-market session (Source: Google finance) after the company posted lower than expected results for the fourth quarter of FY 20. Fourth quarter 2020 Same Store Core revenue rose only by 2% year over year on the back of a 3.3% increase in average monthly rent and a 210-basis point increase in average occupancy to 98.1%. Due to rise in the increase in average monthly rent and average occupancy, Same Store rental revenues grew 5.7% year over year on a gross basis before bad debt. The Same Store Core revenue growth was affected by an increase in bad debt from 0.3% of gross rental revenues in Q4 2019 to 2.5% of gross rental revenues in Q4 2020 and a 35.3% decline in other property income, net of resident recoveries, which was a 125 basis point drag on Same Store Core revenue growth, all else equal, mainly to non-enforcement and non-collection of almost all late fees in the quarter.

Moreover, in Q4 2020, Invitation Homes increased its pace of acquisitions to its highest level. The fourth quarter wholly-owned acquisitions were of total 1,057 homes for $316 million, including estimated renovation costs. 140 homes were purchased by the company for $45 million through the Company’s unconsolidated joint venture with Rockpoint Group (the “Rockpoint JV”), of which Invitation Homes owns 20%. The dispositions in the fourth quarter of 2020 were of total 277 wholly-owned homes for gross proceeds of $82 million.

INVH in the fourth quarter of FY 20 has reported the adjusted earnings per share of 12 cents, beating the analysts’ estimates for the adjusted earnings per share of 6 cents. The company had reported the adjusted revenue growth of 35.9 percent to $464 million in the fourth quarter of FY 20, beating the analysts’ estimates for revenue of $460.61 million. At the end of December, 2020, the Company had $1,213 million in available liquidity through a combination of unrestricted cash and undrawn capacity on its revolving credit facility. Year over year, AFFO per share in the fourth quarter of 2020 declined by 1.3% to $0.27.

Additionally, the company has declared a quarterly cash dividend of $0.17 per share of common stock, representing a 13.3% increase over the prior quarterly dividend of $0.15 per share.

For FY 21, the company expects diluted AFFO per share, in the range of $1.09 – $1.19, Same Store Core revenue growth is expected to be in the range of 3.5% – 4.5% and Same Store Core operating expense growth is expected to be in the range of 4.5% – 5.5%.

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