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Invitation Homes Inc. INVH is poised to benefit from its portfolio of single-family rental units in high-growth markets. Its asset-light model offers healthy yields with limited risk. Efforts to leverage technological enhancements and a strong balance sheet position are encouraging. However, the elevated supply of residential rental units in some markets and high interest expenses are concerns.
Last month, INVH reported fourth-quarter 2024 core funds from operations (FFO) per share of 47 cents, meeting the Zacks Consensus Estimate. Results reflected higher same-store net operating income (NOI) and same-store blended rent. However, lower occupancy marred the performance to an extent.
Over the past three months, shares of this Zacks Rank #3 (Hold) company have risen 6.1%, outperforming the industry's growth of 0.5%.
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What’s Supporting INVH Stock?
Invitation Homes is poised to benefit from a high-quality portfolio of single-family rental units in infill locations in the Western United States, Sunbelt and Florida. Solid demand for such rental units in the high-growth markets with favorable demographic trends is likely to benefit the company in the upcoming quarters.
INVH operates on an asset-light model by building relationships for built-to-rent units with top homebuilders like D.R. Horton, Lennar, Pulte, Meritage and many others who develop homes and deliver them to the company. It aims to drive profitability through a value-added platform and minimal capital investments.
Invitation Homes is leveraging technological initiatives and process enhancements through the ProCare application for enhanced customer experience and margin expansion. Such efforts are likely to capture additional NOI, driving long-term profitability. The company estimates around $80 million in value-added revenues for 2025.
Invitation Homes continues to focus on its strategic priorities, such as disciplined capital distribution and maintaining an investment-grade balance sheet. As of Dec. 31, 2024, the company had $1.35 billion of liquidity through a combination of unrestricted cash and undrawn capacity on its revolving credit facility. The company’s Net debt/TTM adjusted EBITDAre was 5.3X, and it has no debt maturing before 2027. A healthy balance sheet position enables it to procure debt financing at a favorable rate.
Solid dividend payouts are arguably the biggest enticement for REIT investors, and INVH remains committed to that. The company has increased its dividend five times in the last five years, and the five-year annualized dividend growth rate is 18%, which is encouraging. Given Invitation Homes’ operating platform and solid financial position, its dividend seems sustainable and well-covered by cash flow from operations.