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Dallas Tanner

Good morning, everyone, and thank you for joining us today.
I'm pleased to report that Invitation Homes delivered another strong quarter of operational and financial results to close out 2024.
Our full year results demonstrated solid execution across our platform, including core FFO per share growth of 6.4% and AFFO per share growth of 6.7%. I extend my thanks to our dedicated teams and for the continued loyalty of our residents.
On the latter point, we're proud that our residents continue to choose Invitation Homes for the long term. During the fourth quarter, average length of stay was approximately 38 months. We also achieved a renewal rate of 80% with same-store rental rate growth on renewals of 4.2% year over year.
We believe this underscores the value proposition that our industry and our platform offer, and the strong relationships we're able to maintain with our residents over time. It's also a testament to the continued demand for our high quality homes in desirable neighborhoods located in some of the fastest growing areas of the country and delivered with our trademark Genuine Care.
During 2024, we emerged as the professional manager of choice for partners seeking premium service and performance. We grew our JV and third-party managed home count by more than 6.5 times last year to over 25,000 homes. We expect this business to continue to have opportunities to grow in the future.
At the same time, we further optimized our wholly owned portfolio, recycling capital from older assets into newly constructed growth enhancing investments. This was possible in part through our innovative builder partnerships, helping us welcome over 1,800 individuals and families into newly built homes during 2024.
In the meantime, our pipeline remains robust, with more than 2,000 homes under development by our homebuilder partners at the start of this year. Since we launched our homebuilder partnerships nearly four years ago, we have continued to broaden and refine the traditional build to rent model.
In doing so, we've moved beyond the binary view of either on balance sheet development or completed home purchases. Rather, our unique broad spectrum approach considers everything from early stage builder partnerships to the acquisition of stabilized communities.
As the market has further evolved and our approach has become more sophisticated, we're continuing to evaluate new opportunities and structures to strengthen our growth profile by thinking outside of the traditional SFR box.
Combined, our strategic growth initiatives allow us to enhance our scale and density within our core markets and potentially expand our existing footprint by evaluating new markets with attractive growth profiles. As we've learned, improved scale and density support better OpEx and CapEx management across the entire portfolio, setting the stage for overall margin expansion.
In that regard, our same-store NOI margin returned to over 68% last year, and we believe we can continue to see improvement as we further execute on our growth and efficiency objectives.
Turning now to current market conditions. Last summer, we were among the first to call out the moderating impact that new home deliveries were having in some of our markets. We continue to work through this and are seeing some early signs of improvement.
At the same time, we are taking a measured approach with our initial expectations for 2025 and remaining vigilant as we seek better clarity throughout the year including with regard to new supply for the year ahead, the impact of potential tariffs and the chance for prolonged higher mortgage rates, and the effect that builder spec inventory and buyer incentives may have on the market.
Nevertheless, we believe the tailwinds for our business remain supported by the demographics. As a reminder, there are 46 million American households who lease their primary residence. And among those, nearly one in three choose to lease a single-family home.
With our average resident age of 38 years old, this includes many millennials and young families who desire the flexibility and convenience of leasing a single-family home. It also includes those who appreciate the compelling value of leasing, with the average cost of leasing a single family home nearly $1,100 a month cheaper than owning in our markets, according to John Burns' research.
As we look ahead, we remain confident in our ability to capitalize on opportunities while maintaining a disciplined approach to capital allocation. With our dedicated teams, strategic approach to external growth and operational excellence, we believe we are well-positioned to create value for our stakeholders while delivering on our mission to provide high-quality homes and superior service to our residents.
Charles, over to you.

Charles Young

Thank you, Dallas.
I'm proud to begin by highlighting our team's outstanding response to the recent wildfires in Los Angeles. Our local team showcased the very best of Invitation Homes, demonstrating extraordinary dedication and caring for our residents.
We lost only two homes to the fires, which was thanks in part to the scattered nature of our portfolio that provides a built-in risk mitigant. Yet the more important victory was ensuring all of our residents and associates remain safe. And I extend my deepest gratitude to our LA-based team, first responders, and all those who worked tirelessly during this challenging time.
Moving on now to same-store results. I'm happy to report strong fourth quarter performance with NOI growth of 4.7% year over year. This result was driven by core revenue growth of 2.7% and a 1.5% reduction in core operating expenses, demonstrating our continued focus on operational efficiency.
For the full year 2024, we delivered NOI growth of 4.6% based on core revenue growth of 4.3% and core operating expense growth of 3.7%. Notably, our property tax expense growth of 5.8% year over year was in line with our latest expectations and brought a welcome return to a more normal growth rate following two years of larger increases.
Overall, our results underscore our differentiated performance within the residential REIT sector that we believe our resident-focused approach helps to provide. During 2024, that included annual turnover of just 22.6%, average length of stay of approximately 38 months, same-store average occupancy above 97%, and a full year blended rent growth of 3.9%.
Turning now to our leasing performance. For the fourth quarter, we achieved same-store blended rent growth of 2.3% year over year based on a 4.2% renewal rate growth and a negative 2.2% new lease rate growth.
As Dallas mentioned earlier, we've seen a healthy improvement in same-store leasing as we moved into 2025 and more recently kicked off our spring leasing season. As we would expect this time of year, new lease rent growth has re accelerated and was positive here in February while renewal rent growth has remained strong in the mid-5s for the past couple of months.
Quarter to date, including January and preliminary February results, average occupancy rose to 97% and blended lease rate growth climbed to 3.5%. While Jon will discuss more details of our 2025 guidance with you in a moment, I'd like to share some color around our leasing expectations for the year.
We anticipate our same-store new lease rent growth will continue to accelerate through April or May with renewals and average occupancy moderating somewhat as we enter the summer months before improving again towards the last few months of the year.
Overall, we expect full year same-store blended rent growth in the mid-3s and average occupancy of 96.5% at the midpoint, effectively finalizing our return to a more normal pre-pandemic levels.
Before I close, I'd like to take a moment to congratulate Tim Lobner on his promotion to Chief Operating Officer. Tim joined Invitation Home shortly after it was founded in 2012, most recently serving as Executive Vice President and Head of Field Operations.
Many of you have met Tim at recent investor conferences and know he's a seasoned leader with unmatched talent for customer care, operations management, and efficiency. Following Tim's promotion to COO next week, I'll remain in my role as President, allowing me to focus even more on our strategic plans for growth.
Together with Tim and the entire leadership team, we're excited for the year ahead with great appreciation for our outstanding associates in the field who remain focused on leasing execution, disciplined cost management, and providing the exceptional service that our residents expect.
This is truly fundamental to our success in the achievement of our goals.
Thank you for bringing your best every day.
With that, I'll turn it over to Jon to discuss our financial results in more detail.

Jonathan Olsen

Thanks, Charles.
Today, I'll cover the following three topics. First, an update on our balance sheet and liquidity. Second, our fourth quarter and full year 2024 financial results. And third, the introduction of our 2025 guidance and assumptions.
I'll start with our balance sheet. At year end 2024, we had a robust liquidity position of nearly $1.4 billion comprised of unrestricted cash on the balance sheet and undrawn revolver capacity. Our year end net debt to adjusted EBITDA ratio was 5.3 times, just below our targeted range of 5.5 times to 6 times.
Over the last several years, we've made substantial progress in optimizing our debt structure. Today, over 83% of our total debt is unsecured. Nearly 90% of our wholly owned homes are unencumbered, and over 91% of our total debt is either fixed rate or swapped to fixed rate.
I'm also pleased to note enhanced transparency regarding our swap book through a new addition to our supplemental, which is posted to the Investor Relations section of our website. Our new Schedule 2D provides detail around our active swaps as of year end, as well as forward starting swaps through 2026, along with our swaps weighted average strike rates.
We believe our swap book positions us well for the foreseeable future with the vast majority of our floating rate debt locked in at attractive fixed rates for the next several years. Next, I'll cover our fourth quarter results. Total revenues grew 5.6% to $659 million in the fourth quarter, and property operating costs were slightly lower year over year at $228 million, a testament to our team's cost controls.
This translated into strong year over year growth in our fourth quarter results, with core FFO per share up 5.9% and AFFO per share up 8.9%. For the full year 2024, we delivered 6.4% core FFO growth per share and 6.7% AFFO growth per share.
Looking ahead now to 2025, we've introduced our full year guidance ranges with core FFO in a range of $1.88 to $1.94 per share, AFFO between $1.58 and $1.64 per share, and same-store NOI growth in a range of 1% to 3%.
Our guidance also anticipates $600 million in wholly owned acquisitions at the midpoint, primarily funded through dispositions of $500 million at the midpoint. The complete details of our 2025 guidance and core FFO bridge from 2024 to our 2025 guidance midpoint are available in last night's release.
In summary, we enter 2025 in a very healthy financial position with a strong balance sheet, compelling operating metrics, and a clear strategic vision focused on growth. Our strong liquidity position and largely unencumbered asset base provide us with tremendous flexibility to pursue compelling growth opportunities while maintaining our disciplined approach to capital allocation.
More than ever, we're focused on providing genuine care to our residents and delivering superior value for our shareholders.
Operator, we're now ready to open the line for questions.

Question and Answer Session

Operator

(Operator Instructions)
Eric Wolfe, Citibank.

Eric Wolfe

I think you said that your blended spreads were already in the mid-3s in February. So I was just curious why you're not expecting that to accelerate a bit further since I think your guidance is based on a similar level throughout the year.
And I think Dallas also mentioned that you're taking sort of a cautious approach to guidance. So I don't know if that's sort of what you meant by that or he was referring to something else.

Jonathan Olsen

Yeah. Thanks, Eric.
We are anticipating blended rent growth for 2025 in the mid-3s. So as you recall, the typical seasonal curve is we see acceleration and new lease rent growth here in the first part of the year. As turnover picks up in the summer months, we see a little bit of a step back.
And then sort of in the back part of the year, some moderation, potentially some re-acceleration. We do feel good that we've seen acceleration each month since December. And I think overall, we're just trying to take a very measured approach to 2025.
The reality is there are some supply pressures. There is some supply out there that needs to be absorbed. We anticipate that the absorption of that supply will have a flow through impact on occupancy. So as you saw, midpoint of our range is 96.5%. That assumes that turnover for 2025 is generally similar to 2024, maybe a skosh higher.
But that the biggest impact on occupancy comes from slightly longer days on market as we go out and try to achieve the best rate growth we can.

Operator

Michael Goldsmith, UBS.

Michael Goldsmith

Dallas, in your opening remarks, you talked about how new home deliveries were impacting last year, but you're starting to see some early signs of improvement. So can you walk us through what you're seeing right now? And then also what you're expecting from the new home deliveries through 2025?

Dallas Tanner

Yeah. Hey, great question.
To double click on something that Jon said, we're certainly seeing some re-acceleration as we head into the spring leasing season. We've seen supplies start to moderate coming off sort of peaks last summer, as we called out when we started to see some of these real supply pressures coming into the market.
Now there is some variability amongst markets. We'd expect that there's still some pressures in Florida and Phoenix and some of those markets that had sort of easier barrier to entry in terms of new development with a lot of the starts in '20 and '21 sort of feeding into the system.
We're optimistic as we pay attention to both deliveries and starts that this number probably most likely continues to get better for us. But we've even listened to some of our counterparts with the public homebuilders and some of their calls as well as our discussion with regionals that we would just expect that there may be a bit more of spec inventory as mortgage rates stay elevated.
Now all this is slight headwinds for a new lease, but it's terrific for our renewals business. So we'll continue to anchor on the renewal side of the house, which has been close to 80% of our leasing volume for last year. And be as aggressive as we can on rate on the new lease side.
We sort of have to take what the market's giving us, but the skies are a little bit more clearer now than they were, say, last summer.

Operator

Daniel Tricarico, Scotiabank.

Daniel Tricarico

For either Dallas or Scott, I wanted to ask about your West Coast markets. First, have you seen any increase in activity in SoCal since the fires earlier in the year? And is there any incremental impact from that on your guidance that you can quantify?
And second with the West Coast being -- you're seeing stronger growth today, there seems to be an increase in confidence in the demand recovery out there as well, potentially better business backdrop too. So have you re-evaluated being a net seller?

Charles Young

So this is Charles. I'll take it.
In terms of your initial question around the impact on guidance for SoCal, really no material impact. If you look at our NorCal and SoCal markets, we run really high occupancy. The fires are very unfortunate, but for us, we only had two homes that were lost.
You got to remember our book is a little further away from where the fires were located. And at the time when we were running high 97 occupancy in SoCal, there were only 50 homes that were available on the market at the time.
And so while yeah, there was a little bit more demand, it didn't really have a huge impact on how we're running.
That book generally runs at a high occupancy because there's a lack of supply in that market. And we're also doing really well on rate there on both the new lease and the renewal side.
So it's been really solid.
I don't know if you want to discuss, Dallas going into the dispositions.

Dallas Tanner

Look, it's a really great question on how to think about accretively recycling capital. Scott and I spent a lot of time looking at ways to create, call it highest and best use cost of capital for the company. And we've certainly had a successful year in '24 selling roughly call it 1,500 homes on balance sheet for proceeds of around $600 million.
And those are typically sort of priced around a [4] cap in today's market. And then Scott's done a nice job of accretively reinvesting that capital closer to a [6]. And so I think as you think about Southern California specifically to your question, there will likely always be opportunities for us to continue to refine that portfolio.
But it's really at our discretion based on a total return model as we look at the higher expected rents that Charles just talked about in a business that's pretty automatic in terms of our expectations around renewals and new lease and weighing that out with where we see sort of appetite on a risk adjusted basis.
And so for us, we're a total return investor. It's important to remember that we don't look at things in just a binary bubble all the time, either on yield or on total value, but we're looking to accretively kind of grab both over time in distance.

Operator

Jana Galan, Bank of America.

Jana Galan

I was hoping if we could -- Dallas, following up on that, talk a little bit more about the capital allocation and the transaction market, kind of what you're seeing right now? Is it primarily portfolios or BTR communities, or is there a little bit more of an opportunity and kind of like the one off MLS sales?

Dallas Tanner

I'll take it. This is Dallas. Let me take the first part of this and I'll ask Scott to provide some color.
From a high level, we're absolutely focused on bringing more and more new product into the portfolio through these builder partnerships and structures that we're seeing, candidly evolve and get better and even create ways for us on a risk adjusted basis to have less capital out the door early but to lock ourselves into some really good opportunities over time.
You'll see that even in the fourth quarter, we backed off of a few opportunities because we felt some market dynamic shifting. And that was at basically little to no risk to the company. We love the fact that we're kind of asset light in this model, but driving towards called untrended sixes.
I'll ask Scott to provide more color on what he's seeing on the ground right now between sort of stabilized transactions, bulk, and what really is nothing in market in terms of one-off acquisitions.

Scott Eisen

And obviously, in terms of where we are sourcing deal flow right now, as Dallas said, we're not really seeing very much on the single asset MLS market. We absolutely are evaluating bulk portfolios. We have obviously institutional sellers with whom we've engaged.
Obviously, in terms of where we see that market, we've seen some opportunities on small scale to buy small pieces of bulk portfolios. But we absolutely are seeing deal flow there. We've actually seen a very nice deal flow of kind of end of month or end of quarter tapes from the builders in terms of opportunities.
I think we see some yield there that we like, albeit the hit rate is obviously very low on a percentage win basis. But in selective areas and selective communities, we've seen opportunity. We're absolutely seeing deal flow in terms of stabilized BTR communities.
We're being very selective in terms of locations and yields that we're targeting. But we're definitely seeing institutional sellers and financials sponsors to build product in the 2021 time frame that want to get liquidity. And then we continue to engage in strategic dialogue with our national builder partners in terms of targeting and executing forward purchase build projects.
As Dallas said, we've got about 2,000 in the pipeline on a forward basis. And we'd like to add more. So we continue to look at all of these channels and we're trying to pick the right channels where we think there's the best risk adjusted return for us as a publicly traded company.

Operator

Jamie Feldman, Wells Fargo.

James Feldman

So Dallas, at the outset, you talked about looking for new and innovative structures for growth, entering possibly new markets. You guys added Tim to the C-suite. I think Charles commented that he's going to be focused on growth. Scott obviously is focused on growth too.
Can you just help us better understand the management changes? Exactly the different roles of everyone on the team now? And then also do you expect to see more changes ahead for the team?

Dallas Tanner

Yeah. Happy to answer those questions. Thanks for asking.
First of all, it's going to be a luxury of riches for me to have Charles freed up to work on a few more strategic things and areas of the business that we see are going to continue to grow for the company over time. Scott's doing a really nice job in building out sort of our new product pipelines and everything that centers around call it traditional SFR growth.
Charles and I have our eye on a number of opportunities, including ones we're already doing like 3PM and and sort of our strategies around how to make the platform more efficient over time that both Charles and I will get the opportunity to work on together.
Secondly, Tim's been in the weeds on the business for a long time on the cost side of our house, really rehab, turn and maintenance for basically a decade. Last year, Charles made the decision in concert with me and the rest of management to give Tim a little bit more flexibility to get more involved on the property management and leasing side of the house.
And it just makes more sense because so much of our business is sort of a sweet combination between being centralized and the boots on the ground part of our organization that is high touch in the field. And that transition went really seamless, I would say through most of last year.
I think for Charles and I, the goal is how do we widen the breadth of the organization without having to reinvent the wheel. And you saw, we did last year in adding 20,000 plus new units to our 3PM business. We're excited about what that business is not only because it adds itself to extra efficiencies for our partners, but it creates better margin enhancing profile for our business.
We see some opportunities there. We're looking at some things around AI and technology that we'd like to implement with a little bit more of pace and scale and focus. And candidly, I think having Charles as a partner to work on some of these things with me will allow us to go quicker, create more innovation, and lend another set of senior strategic thinking around the things that we're working on.
I have no plans of going anywhere, nor does Charles. And so the goal is to just keep our heads down and keep trying to find ways to create alpha for both our shareholders and better opportunities for our residents.

Operator

Austin Wurschmidt, KeyBanc Capital Markets.

Austin Wurschmidt

Just expanding I guess a little bit on the last question. I mean I guess how meaningful and growth enhancing do you think some of these projects that you're pursuing and kind of adding outside the SFR box?
And then separately, you hit on I think for the first time in your prepared remarks about evaluating some new markets. And so just curious if you can share any additional detail about your ability to gain immediate scale if you were to enter a new market similar to what we saw you do in Nashville last year.

Jonathan Olsen

Yeah. This is Jon.
I'll start off by just I think framing up how substantial some of these opportunities have already been for us. So in 2024, our third-party management businesses contributed about $0.09 per share to core FFO and AFFO.
And for 2025, we anticipate that between our JVs and our third-party management business, that'll contribute an incremental $0.02 a share. So I think very clearly that the third-party management business has been a really solid contributor to capital light earnings growth, enhanced scale, better efficiencies, which I think you'll continue to see in terms of the cost related to managing our book.
So we think that has been absolutely a needle mover and we're eager to try to find new opportunities that will continue to move the needle.

Dallas Tanner

I'll jump in on the second part of your question.
This is Dallas, and I don't want to put Scott on the hot seat on a quarterly call, but we're definitely doing work on how to expand our current markets. How to think about new markets. You've heard us talk about markets in the past that we love, that we aren't in today, like Salt Lake City.
We talked about San Antonio in the past. Nashville getting a little bit more scale. And we've done the latter too. I think we would like to find ways to both widen and extend our advantage of scale in the markets that we're currently in, I would say generally almost all of them.
And then there's probably a market or two over the next year to five that we could see ourselves making a strategic investment. And we don't take it lightly if we go into the market because we want to offer the same services.
And I think some of the things that we talked about a second ago around AI, automation, we've already seen that in some of our new leasing business. We're implementing some of that in our renewals business today is allowing us to leverage our leadership team, in example of Charles, to be able to start to think about some different things in ways that we can grow our company over time.
So all of the benefits of technology and the move to digital automation to Jon's point, being able to flex and extend the infrastructure of the platform are going to allow Invitation Homes over a long run rate to create more efficient returns on our own capital and those of our partners.

Operator

Haendel St. Juste, Mizuho.

Haendel St. Juste

Dallas, I guess I'm curious how you're thinking about the sustainable long term same-store revenue run rate for this business. Seems to me that we could be nearing a low point for new lease pricing this year, especially if supply pressures could be abating.
So if renewal pricing can stay sticky here around 4% this year could potentially be a trough year for same-store revenue in your blend. So I'd love to hear how you are thinking about this year's same-store revenue outlook in context of a longer term core growth opportunity for the portfolio.

Dallas Tanner

Great question, Haendel. And I'll emphasize something Jon said earlier on, which is we're taking a measured approach as we go into the year. Just knowing that there are some supply, I would say some soft kind of headwinds around supply that we flagged six months ago.
But to your point, we're seeing good velocity. And we also know that it's probably unrealistic to stay in the 97%-plus occupancy sort of run rate forever. So we have rational expectations that sort of comes in and moderates a bit and you see that in our guide as well.
I think as you go back, Handel, and you think about the business since we went public in 2017, renewals have generally been outside of the COVID years pretty sticky at around 4% to 5% as you think about it on a blend.
We've had an unbelievable run in terms of rate in this country which is driven by a lot of different things, as you know. And new lease is always going to be sort of a story around supply and expectations around future deliveries and how you optimize optimize your lease expiration curve.
We've done some really great work over the last six months on our lease expiration curve. We feel like we're in a pretty defendable position going into the year this summer.
And so we'd expect that we can lean a little harder on rate hopefully. But we got to see what the market's willing to give it. It's different environment than it was pre-pandemic. It was a lot more predictable in terms of deliveries. And I do think as the deliveries come down and all the data that we follow, it suggest that deliveries are going to be somewhere between 50% and say, 70% down this year versus last.
But that doesn't take into consideration starts. And while there's still a relatively low cost of capital in the environment, there certainly are developers and operators to the point that Scott made earlier that are bringing product to the market, that are fighting to get full and do create some tougher operating environments, particularly in the Sun Belt right now.
But I would just take a step back. And as much as we're impressed with our rate of growth in the Midwest right now, we're still very long on our fundamental beliefs around the Sun Belt in the Southeast. All the demographic information suggests that we're going to see prolonged tenure of demand.
We know that there's something like 12,000 to 13,000 people a day turning age 35. Our average customer today is right around 38 years old. All the profile of that customer has been pretty resilient over the last five to seven years.
So there's nothing in our business today that suggests that we need to change course, rethink our strategy, or invest in different parts of the country. In fact, maybe the opposite. While things are a little bit soft, we may actually look to extend our lead and scale and density in some of these markets while pricing softens so that we can be in a position to really capture a bull run as the supply side sort of works through itself.

Operator

Rich Hightower, Barclays.

Rich Hightower

Obviously, you covered a lot of ground today. But maybe just to pick up on a point that you just made, Dallas, in terms of the core renter demographic and maybe drawing a contrast between multi-family and single family.
I think there's kind of this emerging thesis that the core multi-family cohort is expanding for all sorts of socioeconomic reasons. And so one, do you agree with that thesis? And second, do you think that it makes it a little more of a zero-sum proposition between multi and single than maybe we had earlier appreciated or do you think it's -- the pie is big enough for everybody kind of to enjoy it for the next several years in that sense?

Charles Young

Yeah. This is Charles.
Thanks for the question.
If I'm understanding the question, look, we think we're serving a unique part of the market that we have this opportunity. It's $1,000 more affordable to rent a home than it is to buy in today's market. We are three, four, five bedrooms. So we're serving families.
The majority of our families, 60% have kids, have pets. And our portfolio whether it's our scattered portfolio or build to rent, it's around safe neighborhoods and good school districts. And so we have an opportunity to continue to serve that group, that demographic.
We're seeing really good demand there. People are staying for 38 months and rising each quarter. The demand is healthy. We talked a little bit about the book, but we built back occupancy in Q4. And looking at where we are in January and February, we're seeing good absorption and good demand.
And I think it really comes down to that we have some markets that are working through absorption. But our turnover is low, our renewal is high. And I think that's the differentiation of our product relative to multi-family.
And we like where we are and we're serving an ecosystem that's part of the business. And when you really look at it and compare it to multi-family on a price per square foot given that you're getting more space, bigger houses in and around school districts and job growth and demographics with the yard that the family goes in, there really is value that we are offering.
And it's showing up given our occupancy. Yes, we're working through a little bit on the new lease rate. But when you think about renewals and how we're renewing right now, even in a period that is typically slower in Q4, we're seeing really good demand as we go in.
So we're working through it and we like our product and where we stand long term relative to multi.

Operator

Adam Kramer, Morgan Stanley.

Derrick Metzler

This is Derrick Metzler on for Adam.
Maybe if we could just double click on the same-store revenue growth assumptions a little bit. I don't know if you gave new and renewal leased expectations in that blended rate in the mid 3% range. And then it looks like your bad debt has been turning around 1% in 3Q and 4Q.
So just curious about the confidence in the improvement to 60 basis points, 90 basis points in '25.

Jonathan Olsen

Hey. It's Jon. Thanks for the question.
I think I'll start with bad debt. Our bad debt range reflects our expectation that we'll continue to see improvement in bad debt expense. But a degree of cautiousness about the rate at which that improvement will continue.
As you correctly noted, 2024 was sort of a tale of two halves. We saw a real material improvement in the first half of last year. Then a little bit of a backup in the second half. I think the first half improvement was down to a number of markets where timelines in the court system started to shrink.
And then I think what we're seeing today is we still have a couple of free markets where the timelines remain elongated. Markets like Atlanta, the Carolinas, specifically Mecklenburg County, Chicago. It still takes quite a while to get some of these situations worked through the system.
And so we just want to be cautious. So we do believe we'll continue to see improvement. We're really focused on collections. We're really focused on being as efficient as we can be. But we want to be mindful of kind of what that second half experience was last year.
We did not give a guide around new versus renewal rate growth for 2025. And we're not going to do that, but feel very comfortable that the mid-3 blended guide incorporates sort of our expectation for renewal rate growth.
That continues to remain sticky sort of in that 4% to 5% range that Dallas talked about, high renewal rate. And then a typical seasonality curve that maybe looks a little bit different than it did pre-pandemic. But I think the pattern in terms of the quarterly trends really remains the same.
I would also note that as you look at 2025, I would expect that core revenue growth and NOI growth will be a little bit higher in the second half of the year than the first half of the year primarily due to how our quarterly comps shake out.
But as we said, at the outset, we think that this -- that our guidance and our sort of outlook on 2025 is appropriately measured given the supply backdrop. We feel good about the trends we're seeing on the ground here in the very early part of 2025.
But it's really early in the year. A lot of things can happen. So we just want to be mindful of that.

Operator

Jesse Lederman, Zelman & Associates.

Jesse Lederman

It sounds like you're expecting a pretty nice contribution from third party management in '25. Just looking under the hood in the fourth quarter. It looks like revenue and expenses for 3PM increased sequentially. And units under management actually inched lower sequentially.
So can you talk about the moving pieces there? And embedded within the $0.02 of incremental for '25, do you expect that to come mostly from units or expanding margin?

Jonathan Olsen

Hey, Jesse. It's Jon.
Yeah. I'll just say this. I mean I think the third party managed portfolio is going to ebb and flow a little bit. Hopefully, we'll be looking to find new accounts to add. But our customers do periodically want to prune their own portfolio. That's an important part of our role as asset manager is sort of sharing with them our perspective on which assets make sense from a risk adjusted total return perspective, which assets would allow them to improve the overall growth and margin profile of their own book by sort of shedding those assets.
And so look, we feel very good. The contribution, as I noted at the outset to 2025 earnings will be about $0.02 incremental from our third party management business and our JV business. That reflects sort of a full year earn-in this year as well as the various structures in terms of how we receive income over time.
But look, as I said, I think it's a great business. We have, and I think you sort of implicitly suggested, we have seen higher PME expenses as we've had to scale to absorb that that new line of business.
I think as you look at 2025, our run rate in terms of PME and G&A will probably be skosh lower than it was here in the fourth quarter as we continue to extract efficiencies. When we first introduced this new line of business, we noted that we were going to need to scale up, make some investments in the platform, make some investments in people.
And that over time in distance, we would understand kind of what was the appropriate structure to efficiently manage that business together with our wholly owned business. I think we have much greater insight into what that looks like now.
And so as Dallas said, we're really focused on getting as efficient as we can be in terms of how we manage the totality of the properties, whether we own them, manage them, or whatever the case may be.

Operator

John Pawlowski, Green Street.

John Pawlowski

And it's a two part question around your comments on external growth. One, are you actively considering expansion into international markets? And two, Dallas, when I hear we're exploring avenues outside of traditional SFR, my mind goes to new property sectors.
So more detail around the non-traditional avenues of growth would be appreciated.

Dallas Tanner

On the first question, no. We're not currently contemplating an office in Rio de Janeiro or anything like that.
All jokes aside, we see a great opportunity here in the US to continue to look for ways to meaningfully add scale. As I mentioned earlier, both, as we mentioned in our prepared remarks, our NOI margin continues to enhance. And we get better at offering our services in a more cost effective way over scale.
But we -- I guess you could, never say never but that's not in the cards right now. Secondly, as we think about stuff that's outside of traditional SFR, there's sort of two ways to think about that. One is, Scott and I are looking at a number of opportunities where we can lend strength to regional operators or builders in a way that might help sort of lower their cost of capital, create meaningful opportunities for us to close on those assets at the end of maybe a construction or delivery cycle.
So those are things that we're looking at. We've done more townhome projects candidly in the last year. Looked at more opportunities of where candidly, single family rental units, but maybe they share a common wall, but they have all the aspects and characteristics of our business.
Typically, on the townhome product, we're looking at stuff that's much more infill. So higher gross economic pricing, higher gross economic rents, and ability to sort of compress costs across that scale. And I think lastly, we're going to pay attention. Is there a convergence at some point where you see more multi-family and SFR in operating structures?
We certainly see that with smaller companies today. But it's not something we're currently thinking about. But we are keeping our eyes open to look for opportunities to add meaningful scale in parts of markets that we're already in and/or maybe new markets, as I mentioned before.

Operator

Juan Sanabria, BMO Capital Markets.

Juan Sanabria

Just hoping you could talk a little bit about G&A and kind of what we should be modeling for '25. You noted some step ups with regards to 3PM in the joint venture business. And also just give us some color on the expectations around CapEx for homes that has been pretty flat and how that may or may not be impacted by tariffs that are out there.

Jonathan Olsen

Sure. Thanks, Juan. It's Jon.
I think in the fourth quarter, PME and G&A on a combined basis was around $54 million-ish, $56 million, I think. And as I noted a couple questions ago, we think that the the run rate on that is going to be a skosh lower.
So kind of $51 million, $52 million quarterly as we have sort of rationalized some of our cost and figured out how to maximize the efficiency with which we operate our business. Our hope is that we'll continue to extract additional efficiency gains over time, but that is not baked into our guide.
Juan, can you remind me the second part of your question?

Juan Sanabria

Spending for home.

Jonathan Olsen

Yeah. Look, I think part of the reason that you've seen a flattening there honestly is we have been investing the majority of our external growth opportunities into new product. Additionally, as we've talked about in the past, we have a unique ability in the real estate landscape to asset manage on a unit by unit basis.
So to the extent that certain homes within the portfolio start to exhibit patterns of materially higher sort of capital reinvestment need, we can go ahead and dispose of those assets and recycle the capital into newer homes and locations that we feel good about that are going to have a lower long-term cost to maintain.

Operator

Julien Blouin, Goldman Sachs.

Julien Blouin

Dallas, you gave some really helpful color on the supply dynamics, and you mentioned that you expect a bit more spec inventory maybe based on comments from publics and regional builders. Can you help frame sort of how large that spec supply impact could be?
And also what's your sense of how the quality, maybe the features and the locations of those homes in that spec inventory compares to your own portfolio?

Dallas Tanner

Great question.
I'll add a little bit of commentary on top of what Scott said earlier. I mean we are seeing with some of partners and people that we do a lot of business with, every month, every quarter, just sort of getting to see opportunities on spec that sort of fit the profile of our traditional products.
We love -- candidly, we love the product quality that both the public and the private builders generally have in place. We're not seeing anything that alarms us in terms of builders both at a big scale or maybe at regional scale that are putting so much product out in the pipeline that it causes us to be fearful.
I think we're just recognizing the fact that there is a bid-ask spread in the market right now between where mortgage rates are and maybe where deliveries are coming in. And so with that, I would expect that Scott and the team will be a little bit more aggressive in buying both scattered in those opportunities and also in our strategic thinking around when we do a development, remember, we're pretty agnostic.
We're fine taking development bets on large sections of master plans. We're also find sprinkling within a community over scale and density. It looks and feels like 80,000 of our current home business. So I don't see anything on the horizon that suggests that there's such a major tilt that it's a problem.
Just recognizing that we're seeing a little bit more deal flow. And this stuff tends to change quarter to quarter based on the market dynamics. And right now, those dynamics, as you guys know, is mortgage rates are elevated, people still want access to good quality products.
It's about $1,100 a month cheaper to lease a home from us than it would be to buy that similar home in that market. So we're taking advantage of that dislocation.

Operator

Linda Tsai, Jefferies.

Linda Tsai

You were over 97% in occupancy for most of last year and are guiding to 96.5%. Which markets are you expecting a bigger shift to blend to the slower rate?

Charles Young

Yeah. This is Charles. Good question.
Look, this time of year, we've set ourselves up well to capitalize on spring leasing season and building occupancy kind of across the board. But as we mentioned, last year, we're starting to see some supply challenges in Central Florida, Texas, Phoenix. Those are the markets that we're just being thoughtful about that may not build back occupancy as high as we have in California or Seattle or maybe the Carolinas.
So as we look at our ability to lease those homes when they turn over, we're having to compete a bit more on price in a number of those markets. And we just want to be thoughtful to try to capture as much of that rate as possible and understand that it may have an impact on occupancy.
I think the other thing to think about is turnover is remaining really low. So that's really great. And I think on the renewal side, we're seeing really healthy numbers. And overall, turnover is staying where we think it's healthy.
So it's really about the numbers coming in based on how long we're having to stay on the market. And certain markets have more supply than others. Across the board, we're seeing a little bit of an uptick on supply, which is normal coming off of COVID.
But that's not material in most markets. It's in the markets that we're talking about that I think we'll see a little less occupancy.

Operator

Jade Rahmani, KBW.

Jason Sabshon

This is Jason Sabshon on for Jade.
Are you guys seeing any increased interest in third parties and partnering or taking an interest in the portfolio? Because SFR certainly remains a high interest sector for institutional investors.

Dallas Tanner

Scott and I get inbounds all the time with people that are curious. Like what's our program? How do we think about 3PM? Could we help operating margins be more efficient for perspective partners? I want to emphasize sort of two broad points and then Scott, feel free to add any color.
One is that we're only really interested in partners that have scale and that have pretty similar market overlap. That's the first point. And two, that we want to operate their portfolios in a manner that's very in line with how we run our own business.
So leaning in on the areas that scale and efficiency give you.
Scott, there's nothing really of color to note, but just generally, that we're definitely on people's radar, I would think so.

Scott Eisen

Yeah. I mean we get on inbounds frequently. And I think for us, it's really as, Dallas said about finding, LPs or prospective partners that we think are sophisticated, institutional, and like-minded. And also for people, we also want to look at portfolios that sort of are in our buy box in terms of the types of homes that we manage today.
There are some people that come to us where markets where we don't operate. There are people that come to us with a different business segment that's not necessarily where we're trying to pay. And so we try to be focused on that.
But clearly, this is, in terms of, and obviously, when we look at our potential partnerships, these partners are obviously holders of assets. But we'll explore selling or pruning some or all of those portfolios over time. And clearly, when our partners decide if they want to prune a little bit or a lot, we get a first look at those assets.
And every single time a partner would like to sell assets out of the portfolio, we evaluate the acquisition and we have an early look in a discussion with them on whether it's an opportunity for us to wholly own it within our portfolio.
And this is part of our regular dialogue. And we view all of our third party and joint venture partners as being opportunities for future growth for us.

Operator

Jamie Feldman, Wells Fargo.

James Feldman

I think you've covered a bit of it in the last question. But we've now seen Welltower raise their fund. Obviously, promotes just is a pretty robust fund business. Just what is your appetite for whether they're finite, infinite life funds or even larger single investor JVs?
And if -- I'll ask a follow-up question now since I can't do it regularly. So and if that's the case, how would you think about what would go on balance sheet versus into the third party structures? And if we could see down the road you adding promotes to your either business model or your comp structure.

Dallas Tanner

Thanks for the questions, [promotes].
I'll try to make sure that I tackle, basically just broad strokes around how we think about our JVs and what we're focused on.
As we mentioned and as we reconfirmed in the earnings transcript, we were successful in raising another joint venture with what we think is a very high quality partner here in the US. That gives us added flexibility as we come across opportunities primarily probably in the new construction space.
But it'll land itself to lots of creative thinking together as we look to maximize returns both for our shareholders, and for theirs. Right now, our focus has been, and this is our third joint venture that we've announced in the history of the business.
And really probably the third in the last four to five years. It gives us an extra layer of creative capital to go after opportunities that may warrant different structures, different leverage structures as well. And so we're finishing deploying one other venture right now while looking at opportunities to invest in this new venture.
And we have a very matter of fact, clear and transparent structure on how we rotate those opportunities. They don't all fit into the same buckets, which makes it easy for us as well. And we certainly are looking for ways to protect the REITs. So that we can grow on balance sheet as much as possible.
And what's nice about these joint venture partners, and I would argue that they are partners, is that we can work collectively to be smart around how we think about deploying the capital, what those structures are in relationship to your question around promotes, but we don't get any detail of that publicly unless we get to a point that we think that we need to.
And so at this point in time, I think what I would just say is we have excellent partners that give us added flexibility. It's making us more opportunistic and allowing us to look at more opportunities for growth, knowing that we've got that added layer of flexibility.

Operator

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

Dallas Tanner

We want to thank everyone again for joining us today. These are really exciting times for our company, Invitation Homes. And we feel privileged to work alongside such a talented team. I also want to extend gratitude and appreciation to Charles and join him in congratulating Tim.
Both are exceptional leaders. They both play pivotal roles in driving Invitation Homes forward in the future and helping us achieve our long-term goals.
We look forward to seeing everybody at the Citi Conference. Thanks.

Operator

That concludes today's call. Thank you all for joining. You may now disconnect.