Invitation Homes, Inc. Stock

Welcome to the Invitation Homes Second Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. At this time, I would like to turn the conference over to Scott McLaughlin, Senior Vice President of Investor Relations. Please go ahead.

Thank you, operator, and good morning. Joining me today from Invitation Homes are Dallas Tanner, our President and Chief Executive Officer; Tim Lobner, our Chief Operating Officer; Jon Olsen, our Chief Financial Officer; and Scott Eisen, our Chief Investment Officer.

Following our prepared remarks, we'll open the line for questions from our covering sell-side analysts. During today's call, we may reference our second quarter 2026 earnings release and supplemental information. We issued this document yesterday afternoon after the market closed, and it is available on the Investor Relations section of our website at www.invh.com.

Certain statements we make during this call may include forward-looking statements relating to the future performance of our business, financial results, liquidity and capital resources and other nonhistorical statements, which are subject to risks and uncertainties that could cause actual outcomes or results to differ materially from those indicated. We describe some of these risks and uncertainties in our 2025 annual report on Form 10-K and other filings we make with the SEC from time to time.

Except to the extent otherwise required by law, we do not update forward-looking statements and expressly disclaim any obligation to do so. We may also discuss certain non-GAAP financial measures during the call. You can find additional information regarding these non-GAAP measures, including reconciliations to the most comparable GAAP measures in yesterday's earnings release. With that, I'll turn the call over to Dallas Tanner. Go ahead, Dallas.

Thanks, Scott, and good morning, everyone. It's been a busy peak season for us. Before getting into the quarter, I want to thank our residents for the trust they keep placing in us and our field teams for how they've handled the pace. Together, we delivered a strong second quarter. Average occupancy held above 97%. New lease rate growth accelerated for the 6 month in a row, and we grew core FFO per share by 5% and AFFO per share by just under 6%.

Tim and Jon will get into the details, but it's a great foundation heading into the second half of the year. I'll kick off my comments by talking about the 21st Century ROAD to Housing Act. The law was enacted earlier this month, providing greater clarity for our business and the broader housing industry. Among other things, the act includes some meaningful provisions aimed at speeding up and encouraging new construction.

That's the goal we fully support since we've long known that better housing affordability is achieved by increasing new supply. In fact, that's been precisely our approach at Invitation Homes, growing through new construction and homebuilder partnerships. We're pleased that the law lets us keep doing what we do best, offering a valuable housing solution to the millions of Americans who choose to lease while helping deliver the new supply this country needs. And that commitment goes well beyond supply.

For our residents, that means continuing free positive credit reporting, helping them build credit simply by paying their rent on time. For policymakers, it means staying closely engaged with Treasury and HUD and others as these new regulatory guidances take further shape. Beyond the legislative backdrop, demand for our homes remains healthy. According to the latest data from John Burns, on average, it's over $1,000 per month cheaper to lease today than to own a similar house in our markets.

Based on our average resident tenure of just now over 40 months, that adds up to more than $40,000 in total savings for a typical family. That is a compelling value proposition, along with favorable demographics and the convenience of leasing will continue to support our demand. Turning now to capital allocation. The story during the second quarter was similar to the first quarter. Stock repurchases remained among the most attractive uses of our capital.

During the second quarter, we bought back another $100 million of stock, which brings us to $600 million in stock repurchased since December at an average price of a little over $26 per share. This share repurchases have been funded in large part by home sales priced well above where the public market is valuing our assets. We are also starting to see early signs of a thaw on the acquisition side. Deal flow has been relatively stagnant over the first 6 months of 2026, thanks to the legislative uncertainty.

But with the ROAD to Housing Act now settled, more sellers are coming to market, including some attractive smaller portfolios. It's still early but encouraging since it gives us another lever for accretive capital deployment. Similarly, we see opportunities in our development and our lending channels. ResiBuilt's pipeline has reaccelerated following some disruption earlier this year when the bill was still in flux.

And on the lending side, construction loan commitments, including some still in diligence, now total just under $350 million, with about 10% of that funded so far. As a reminder, these loans typically yield in the high single digits and give us the opportunity to purchase the community once they're built. Zooming out, at our Investor Day last November, we talked about building the best-run SFR platform in the country. It's disciplined on costs and capital, also focused on the resident experience.

That discipline has been on full display in 3 ways so far this year. First, capital allocation, selling homes at a premium and redeploying that capital into accretive opportunities. Second, growth, supporting our platform through the acquisition of ResiBuilt and the expansion of our construction lending business. And third, in resident satisfaction, reflected in the renewal and retention numbers, Tim will walk through shortly. In short, we're doing exactly what we said we were going to do.

Combined with what Tim and Jon are about to cover, our first half performance gave us confidence to raise our full year's guidance. I'll let Jon cover the specifics here. But the takeaway is that Invitation Homes continues to generate strong and stable cash flows, selling homes at a premium to where the market is valuing our assets and recycling that capital accretively to create value for our shareholders. Tim, over to you.

Thanks, Dallas, and good morning, everyone. I'll start with the headline. New lease rate growth accelerated every month from January through June, capping off peak leasing season on a high note, our second quarter same-store renewal rate was approximately 77% and average length of stay for our residents remained over 40 months. The data points reflect high level of resident satisfaction with both our homes and our service.

Turning now to our second quarter same-store results. NOI grew 1.5% year-over-year, driven by 1.6% core revenue growth, core operating expense growth of just 1.9%, I'll touch on a few more details behind each of those items. On the revenue side, renewal rent growth rose through the quarter from just over 3% in April and May to 3.7% in June, averaging 3.3% for the second quarter. Second quarter new lease rent growth was 1.1%, combined, that resulted in second quarter blended lease rent growth of 2.7%.

Turnover improved 50 basis points year-over-year to 5.7% and average occupancy for the quarter landed at 97.1%, both strong results for the summer season. On the expense side, the best news is on the controllables, where expenses we manage on a day-to-day basis were down 1% year-over-year. It's a really good reflection of how our teams are running the business. Fixed costs, including property taxes and insurance increased by only 3.5% year-over-year.

We're pleased to see both controllable and fixed expenses tracking in line with our expectations year-to-date. The supply backdrop across our markets is telling a similar story. Build-to-rent deliveries have continued to decline. And while SFR listings remain elevated, the pace of new supply growth has slowed sharply since the start of this year. In addition, according to John Burns, the markets that were the most oversupplied are now seeing the sharpest drops in unsold inventory of new homes.

Still a bit of supply to work through in some markets, but the trend has clearly been moving in the right direction. We'll continue to keep a close eye on this as we move through late summer and into the fall. This slower supply growth, the steady demand that Dallas described and strong execution from our teams are all showing up directly in our numbers.

New lease rate growth picked up every month through this year through June before easing as we'd expect for late summer, 1.2% in July. Renewals followed their own path, staying in the low 3% range for April and May before accelerating to 3.7% in June and 4.3% in July. That brings our preliminary blended lease rate growth for July to 3.4%, while average occupancy for July was 96.5%, reflecting normal seasonality from summer move-outs.

Taken together, this was a strong operating quarter. We headed into the back half of the year with real momentum on renewals, well-managed expenses, a healthy demand and improving supply backdrop. Proud of how our teams have shown up for our residents this year and how their efforts have made results like these possible. Jon, I'll hand it over to you.

Thanks, Tim. Today, I'll cover our second quarter financial results, capital allocation activity, the balance sheet and our updated guidance. Starting with our results. Second quarter core FFO per share was $0.51, up 5% year-over-year, and AFFO per share was $0.44, up nearly 6% year-over-year. On the capital side, during the second quarter, we sold 657 wholly owned homes primarily to end users for gross proceeds of about $309 million. And we bought 196 homes, all from our homebuilder partners for about $74 million.

Combined with our first quarter activity, this pace of disposition has run well ahead of our original expectations, which is why we increased our full year disposition guidance for wholly owned homes by $300 million at the midpoint to $850 million. Our acquisitions guidance remains unchanged with midpoints of $250 million for wholly owned homes from our homebuilder partners and $100 million through our joint ventures.

We also deployed another $100 million for stock repurchases in the second quarter for a total of $600 million of share repurchases since we started the program late last year. Since that time, we've repurchased approximately 22.8 million shares at an average price of $26.30 per share. For reference, this average repurchase price represents an implied value of just over $270,000 per wholly owned home.

That's a significant discount compared to our year-to-date actual average sale price of $450,000 per home. We used proceeds from this quarter's asset sales, along with free cash flow to reduce our revolver balance from $560 million as of March 31 to $280 million as of June 30. As a result, we ended the second quarter with a net debt to trailing 12-month adjusted EBITDA ratio of 5.4x or just below our 5.5x to 6x target range.

Turning to the balance sheet more broadly. It remains in great shape. We ended the quarter with over $1.5 billion of available liquidity. Substantially all of our debt was at fixed rates or swapped to fixed rates and approximately 90% of our wholly owned homes were unencumbered.

We also took steps to strengthen that balance sheet profile even further, taking advantage of favorable market conditions earlier this month to issue $500 million of senior notes maturing in 2032 at a 4.95% coupon. We used the net proceeds to prepay approximately half of our 2017-1 securitization, which had a $988 million balance outstanding as of June 30 that matures next summer. Because the offering and prepayments both occurred in July, their impact isn't reflected in our June 30 financial statements or supplemental schedules, and we've provided the pro forma impact on certain metrics in a footnote to supplemental schedules 2B and 2C.

Reflecting on our year-to-date operating results and the benefit of this year's stock buyback activity, we raised full-year core FFO and AFFO per share guidance this quarter with midpoints of $0.01 each to $1.95 and $1.65, respectively, alongside the disposition guidance increase I mentioned earlier.

With the first half of the year now behind us, we also narrowed our same-store core revenue and NOI growth guidance ranges around unchanged midpoints, reflecting improved visibility into the balance of the year. All told, we have a strong balance sheet, good operating momentum, and multiple ways to keep creating value for our shareholders. This concludes our prepared remarks. Operator, please open the line for questions.

[Operator Instructions] Your first question comes from the line of Eric Wolfe with Citi.

You mentioned that you were starting to see some smaller portfolios come to market. Could you talk about how you think those portfolios will price from a cap rate and unlevered IRR perspective? Assuming you take part in any of these deals, how would you fund them?

Thanks for the question. This is Scott. Yes, in terms of the market right now, we're not seeing any large transactions at this point. We've probably seen some smaller portfolios in the sub-$100 million, maybe slightly bigger than $100 million size range. I think it's too early to really talk about price guidance and returns on it because we really haven't seen a lot of transaction activity.

But I would say that post ROAD to Housing Act, for the first 6 months of the year, things were really quiet just because people were waiting to see where the legislation turned out. I think now that the act has been passed, I think we're seeing some capital start to open up again and start to test the waters and see where the market is. So it's too really -- it's too soon to say exactly where we think transactions are going to price. But I would definitely say that, that activity has sort of picked up since the legislation got passed.

And your next question comes from the line of Jamie Feldman with Wells Fargo.

You've got Conor on with Jamie. Could you provide an update on July new renewal and blended lease rate growth? And as we think about the second half of this year, what are you assuming for those metrics and especially with the seasonal moderation in new lease, particularly given the easier comps and more first half weighted expiration schedule?

Conor, great question. Thank you. This is Tim speaking. As prepared or as discussed in our prepared remarks, let me run through what we had in July. July, our renewals were at 4.3%, really happy with that. That accelerated out of our Q2 number, which was 3.3%. On the new lease side, we were at 1.2%. That's coming off of 1.8% in June. We saw a nice acceleration through Q2. And then on the blended side, that was 3.4%.

And as I shared also in the prepared remarks, we were really pleased with how the year has progressed and continues to progress. Every month on the blended side, we've seen favorable upward movement. And look, as you think about the back half of the year, as we share at several of the investor conferences, there's a regular cadence to how the industry moves, right? Let's just talk -- start with occupancy because that also informs us on how we go about our rent rate.

Occupancy, like you start the year and you continue to grow into peak season. During peak season, you see a lot of households move out, typical time for families to move out of houses. So you see occupancy moderate a bit. And then towards the very end of the year, you see it pick up and then that puts us back into the new year. As it relates to rent growth, let me break it down.

Obviously, the blend is really just a reflection like a 75% reflection of the renewal side of the house and about a 25% reflection of the new lease. New lease, you guys saw our numbers from Q1. We started out negative. That kind of picks up as you go through the year. That positive number held out. We saw it go and actually plateaued in June, which was really strong. It's later in the year than we saw in 2025.

And we expect that to moderate through to the balance of the year. On the renewal side, that's probably the most consistent part of our business. We typically see over the course of the year, it varies between 3.5% to 4.5% which, again, is really important because that's 75% to 80% of the book of business.

So that's how we expect to see it for the balance of the year. And we're really liking how we've seen the year shape up so far. And as for August, obviously, we don't know what new lease growth will be for August, but renewals in August are shaping up much like July. So we're really happy with how the portfolio is performing and how the teams are executing.

Your next question comes from the line of Steve Sakwa with Evercore ISI.

Yes. I appreciate all the comments on the revenue side. Maybe just touching on expenses, which I think moderated a bit, Q1 to Q2. Maybe just what are some of the puts and takes as you look in the back half of the year? And as you think about kind of your overall '26 number and we sort of start to think about next year, I guess, what are the puts and takes we should be thinking about to next year's expense growth?

Yes, Steve, I think the big one is obviously always property tax. We have probably 3, 4 weeks before we start to get preliminary views on value and then maybe another 30 days, 1.5 months before we start to get actual bills in the door. So that's always a big consideration.

But I think what's really striking to me is how effective the focus on cost controls around the controllable side of the house has been. I think the team has been making really thoughtful decisions about how they approach the service side of the house. I think we're really pleased that total turn costs are looking quite favorable.

So as I think about puts and takes, I mean, to me, the big question mark at this point in the year is always property tax. I think vis-a-vis the rest of the expense line items, we are really happy with what we're seeing, and we're really pleased with where we are in the year, recognizing there's still a good bit of the year yet to go.

Your next question comes from Jana Galan with Bank of America.

Jon, on the guidance increase, can you speak to any one-timers that may have benefited the second quarter or any offsets you expect in the second half of the year that caused the FFO run rate to come down?

I think with respect to the guide, I guess I'd point out a couple of things. As I just said, firstly, we have half a year to go. And the second half of the year presents potentially a higher degree of execution risk, just based on the fact that, as Tim outlined, this is normally the seasonal period where you see turnover tick up a little bit.

The quantum of homes that we're taking back, that we need to get turned and back out into the market and released, is something we're going to be really focused on, as we think about defending occupancy in the second half of the year. Secondly, as we've talked about, a lot of times, higher turnover in the second half of the year has the potential to impact on both the revenue and expense side of the P&L.

Obviously, any turnover we experience in the second half does create some degree of execution risk, given that the supply backdrop, while improving, remains elevated. So we want to be mindful of that. Thirdly, as I just outlined with Steve, at this point in the year, property taxes are still largely unknown. As a reminder, the three largest states are California, Georgia and Florida.

California and Georgia are both around 14% of total property tax. Florida is about 41%. So that -- those three states are 70% of a line item that represents about 55% of our total OpEx. So that is always going to be a consideration when that's still kind of waiting for further clarity. Lastly, and I think what's maybe most notable is given the disruption that some of the earlier versions of the ROAD to Housing Act caused, we do expect the ResiBuilt contribution to 2026 earnings is going to come in a bit behind our original expectations.

Projects that were in flight continued, but there were a number of projects that were scheduled to start in the first half that were delayed, and in some cases even canceled. So we're going to have a little bit of a shortfall that we want to try to overcome there. I think the good news is the team is doing a really great job of refilling that pipeline now that the uncertainty overhang has been removed.

But it remains to be seen how much of that benefit can be recouped in the second half of '26 versus rolling into '27. So when we put all those considerations together, we think our guidance continues to reflect cautious optimism, while at the same time acknowledging that there are some unknowns and some execution risks and a decent chunk of the year yet to go.

Your next question comes from Buck Horne with Raymond James.

Congrats, guys. I just got a question from a higher level. One of your multifamily peers in the Sunbelt highlighted that in quarter-over-quarter, they saw a big in-migration of new leases coming from out of market. I was wondering if you guys might have detected or tracked anything similar in terms of new lease demand, kind of migrating into some of your Sunbelt markets from out of market.

Insightful question, Buck. This is Dallas, and Tim, if you have anything to add, feel free to add in. It's interesting. We survey going in and going out, and in our second quarter surveys, roughly 85% of our move-ins were in-state move-ins in the second quarter based on that survey data. So it's not like we're seeing any major dislocation or out-of-state folks coming in.

It's usually about 50% of those, by the way, are moving sort of city to city. So they're trying out a new area. They want to be close to job corridors, transportation corridors. They're testing out a neighborhood before they buy. So we haven't seen anything that's sort of dramatic in terms of, call it, net migration shifts. Tim, would you add anything to that?

I wouldn't add anything specific to our survey data as it relates to our residents. But I think there is a good story here that we see in third-party data regarding migratory patterns. And if you look at about 65%, 70% of our markets, we are seeing projected net favorable migration into our markets, and those are primarily Sunbelt markets, which I think is favorable for the long-term prospects of our portfolio. So I think you touched on the IH decision-making that goes into where people are living, but I think the broader macroeconomic migratory patterns are favorable as well.

Your next question comes from the line of Ami Probandt with UBS.

Other core revenue declined in the quarter after being up over 10% in the last quarter. So I was wondering, what are the moving pieces within this line item, and how do you expect it to trend for the remainder of the year?

Hey, it's Jon. Thanks for the question. I think it's important to remember that other property income is comprised of both lease fees and value-add service revenue. So the decrease this quarter was driven primarily by lower lease fees, including lower late fees and other administrative charges. Value-add service income was actually up about 9% year-over-year, and we continue to see that as an area of growth for us. So year to date, other property income has increased almost 5%, and we do expect to continue to see strong growth from that line item the rest of the year.

The next question comes from Brad Heffern with RBC.

Yeah. Hey, everybody. Just a follow-up question on the blends. You almost always see third quarter lower than second quarter, just given new lease pricing falls off. This year, the July blends are obviously up. It sounds like renewals will continue to be strong and above second quarter level. So just wondering if we should expect blends to buck the normal seasonal trend and increase in the third quarter.

Yeah, look, we generally don't give too much of our projection numbers before it happens, right? But as I mentioned earlier, our renewal numbers that we're seeing in August look much like our July numbers. So we're really happy with the strength of what we're seeing in the marketplace.

Typically, you do see the blended rate come down in Q4. You see that kind of taper off. But that's a function also of filling the portfolio. So again, we're really happy with how the market is continuing to find its footing. I think the year's shaping up as we expected, and to be honest with you, we're liking how it's going to set up for 2027.

The next question comes from John Pawlowski with Green Street.

Jon, can you speak to the third-party management business as well as construction lending? Are those business lines and the contribution to earnings trending better or worse than you expected? Any color as to the drivers would be appreciated.

Sure. Yeah. That's a good question, John. I think they're trending generally in line with our expectations. We are seeing, I think year to date, about $4 million lower on 3PM fee income. That's driven primarily by the fact that we sold a number of homes on behalf of Starwood. And so it's really just a function of a lower average home count, as well as the fact that we had about $2.8 million of non-recurring disposition fees in 2025. And so that is also coloring kind of the year-over-year comp.

As far as the lending business goes, and Scott should chime in with anything he thinks I've overlooked, we're actually really pleased with how that is going. Things got pretty quiet while the ROAD to Housing Act was underway. But similar to what we're seeing on the acquisition side, since clarity has been sort of realized, I think there's a lot more interest and inbound activity.

The team continues to originate what we think are really interesting deals on real estate that we have a high degree of conviction around. So it continues to be, I think, a really compelling area of growth for us. And we're actually a little bit ahead of where we thought we would be at this point in the year, which is great considering that we had about 6 months of kind of dislocation in the marketplace.

Yeah, the only thing I'd add to that is, look, the program is going according to plan, right? And as Dallas said in his introduction, we're on track for, based upon what's either closed or under commitment right now, call it approximately $350 million of loans. Again, first principles are still the same. We want strong sponsors with BTR development in communities where we have boots on the ground, we have local market knowledge of those areas and communities that potentially we could purchase upon stabilization.

So nothing has changed in terms of the design of the program. Nothing's changed in terms of the buyback. We're going to do the right deals in the right markets. We're being measured in our pace. And we're going to do the right loans with the right counterparties when the time is right. But we're on track, and we're pleased with the program.

Your next question comes from Haendel St. Juste with Mizuho Securities.

I wanted to go back to Eric's earlier question about portfolios. I know that you're not seeing any larger portfolios out there today just yet, but I'm curious how you are weighing those opportunities potentially against other capital allocation options on the menu today?

Where would pricing for some of these portfolios need to be for you to be interested? I think a few years back, pricing for larger portfolios was in the low to mid 5s. I think you did your last larger portfolio deal back in 2023 with Starwood. So curious overall how you're thinking, assessing the opportunity, and where it kind of stacks up versus the other options.

Yeah, good question, Haendel, this is something that we debate internally and with our board as we think about capital allocation sources and uses. If you look at the first part of the year, we've been pretty clear about the fact that we saw highest and best use of capital really in the share repurchase program. If these discounts continue to proceed, we're not going to be afraid to continue to purchase shares.

That being said, Scott is starting to see unique opportunities where maybe going in cap rates are sort of similar or in the same ZIP code of where we may have a view on where share prices could be trading. So it is an ongoing discussion, something that we'll evaluate. It has to be accretive is sort of the simple answer at the end of the day, right? We're not looking to grow for the sake of growing. We certainly want to grow.

We're doing a really nice job of harvesting gains off of assets that we don't view as maybe core to our portfolio over a long period of time. We can continue to do some of that in the foreseeable future if needed, and I think that we'll just balance it out, in terms of sort of growth opportunities, things Scott is seeing on the development side. We are starting to see some things that could make sense there that can compete with sort of a share repurchase sort of cost of capital.

We're also seeing, and I think Scott was really smart to say this, like it's really early. Like we don't want to say that we're seeing big opportunities in M&A or any of these other sort of scenarios, but we're starting to see sellers poke their eyes up from above the 21st Century ROAD to Housing Act and sort of say, what should I be doing here?

Has my cost of capital changed? Are my opportunities for growth a little bit different than maybe they were? Excuse me, I think Scott's taking some of those calls. Look, I think we'll keep you guys posted. There is nothing to talk about yet. And my guess is this will drip out pretty slowly throughout the year.

Your next question comes from the line of Austin Wurschmidt with KeyBanc Capital Markets.

Yeah, thanks. Jon, Tim, just curious, so lease rate growth is tracking low- to mid-single-digit range for the first half of the year, I think around 2.3%. At the start of the year, you were targeting around a mid-single-digit growth. Any changes to the composition of same-store revenue growth? And if so, just how are you thinking about that balance between occupancy and rate growth?

Yeah, it's a good question. I would say no real change. We continue to be focused on the trade-off between rate and occupancy. I think what's been really striking to me and something that I feel really good about is I do think that the operations team is striking a better balance between how much occupancy we give up in the course of going out to capture rate.

I think the execution continues to improve, and I think it's reflected in kind of the re-acceleration we've seen in renewal rate growth, which has been really strong these last couple of months and, as Tim mentioned, is trending favorably as we look forward to August. So we are continuing to focus on making sure we drive to sort of an optimized balance between rate and occupancy.

Recognizing that at this point in the year, the occupancy impact is likely to swamp the impact of blended rate growth. But that does not change the fact that we are focused on trying to capture as much rate as is available in the market, while sort of defending occupancy by making thoughtful decisions on how we negotiate on renewals. The good news is, despite kind of striking those trade-offs, we continue to see really strong renewal rent growth, which is obviously the primary driver of revenue growth for us.

Your next question comes from Peter Abramowitz with Deutsche Bank.

I just wanted to ask about Northern California in general. The Bay Area has kind of been on fire from a multifamily standpoint, but it's actually lagging Southern California in your portfolio from a revenue growth standpoint. So just kind of curious, could you talk through trends you're seeing there, how AI tailwinds and job formation are kind of impacting renter dynamics? Is it maybe a different demographic that's causing lower growth there versus some of the multifamily peers?

Great question and really an important differentiator between us and when, I think, multifamily talks about Bay Area demographics or performance trends. Remember, our Northern California portfolio is largely Sacramento and some of those bedroom communities that sit outside of Sacramento. So Vallejo, some of those sorts of burbs that are kind of as you move towards the Bay. We do not have a Bay Area presence. We have a Sacramento presence.

So Sacramento, I think even for multifamily, behaves very different than, say, Bay Area sort of performance. So our Northern California book is operating as we would sort of expect it, very strong renewals. I would tell you that on the new lease side, it tends to be a bit trickier than maybe our Southern California business, but very steady, nonetheless. It's a good customer. It's a great book of business. When we go to sell homes in that part of the country, they sell very quickly. So -- but just please don't confuse that with Bay Area multifamily. They're very different portfolios.

Your next question comes from Adam Kramer with Morgan Stanley.

Great. Thanks. When you look at some of the softer new lease markets, thinking of some of the Florida markets, Phoenix, Texas, are there sort of unifying themes, factors sort of across these markets, sort of driving a little bit of a softer performance relative to maybe the Midwest, right? Is it elevated supply still? Is it consumer uncertainty? Maybe some of the migration stats that you guys walked through earlier. But just sort of wondering why? If there's a sort of unifying theme across these softer new lease markets.

Yeah. This is Tim. Good question. We track this topic closely, right? Pricing always is a function of supply and demand. And on the supply side, the recovery that Dallas talked about, the moderating higher supply levels year-over-year, it hits markets -- different markets in different ways. And there are certain markets that are recovering faster. We're seeing some really nice supply reductions in markets like Tampa, Orlando, Phoenix.

There are other markets that are a bit slower, and the market's not perfectly efficient in terms of how you capture that rent growth as that supply eases, but we are taking advantage of that when we can. The good news is that demand stays -- has stayed in really healthy shape this year. If you look at the overall gross number of leads, we're seeing really healthy volume.

If you look at the external funnel, we use Google Analytics, we use Google search terms like 'houses for lease.' That's actually up a hair year-over-year. So we know that there's a lot of people that are still looking for single-family rental homes, especially in our markets. One of the things that we're happy about on the internal side is that we're able to convert a lot of these people.

We're seeing better conversion rates year-over-year, and I think that's in large part due to two things. One, our teams are, I think, better equipped with technology that we're providing. We're launching right now and have launched in a couple of our markets a new customer relationship management platform. It's allowing us to really provide better service on the front end of the business as people are searching.

And then we're also making some really nice enhancements to our digital shopping experience, and it's allowing people to self-select, and we're getting higher quality leads that we can work more effectively. So we like what we're seeing on the demand side. We like what we're seeing on the supply side.

Cautiously optimistic that we continue to see the supply levels moderate over the course of the year. And you're going to see variability across markets as it shows up in the form of new lease and renewal lease rent growth. So appreciate the question. We're deadly focused on it.

Your next question comes from Julien Blouin with Goldman Sachs.

Maybe digging into that last answer a little bit more and specifically looking at your Florida markets, it really looks like from some of the data we look at that the headwind from rental home listings has eased meaningfully over recent months, which I think you referenced, and it does look like market rent growth has started to inflect in your Florida markets.

I guess, can you dig into the drivers of that? How much of that is driven by home builders pulling back on deliveries versus how much of it is demand on the for lease or the for-sale side starting to clear the available product? And then how sustainable do you think that sort of rent growth improvement we started to see will end up being?

Look, it's a number of different factors. There's no single driver of it. It's a good question. I think if you look at some of the migration data, we use Oxford Economics as our source, but you look at some of their projections from 2026 and you take it, for example, like a market like Orlando, really nice numbers there. You take a look at Tampa, another market with really nice numbers there projected for 2026. You look at John Burns' data that we reference frequently.

Most recently, the June numbers show that -- continue to validate that build-to-rent deliveries are in the rearview mirror. So you look at those factors along with the various components of what constitutes supply in the market. And what you'll see in our data shows, its third-party data showing what are the listings of homes for lease. We're seeing the mom-and-pop number, again, non-institutional, which drove the big buildup in supply over the last, call it, 24 months.

That's also where we're seeing the supply easing, if you were to assign or ascribe value to certain cohorts. We're continuing to watch that. We don't have a projection for the future, so I can't tell you exactly where we think supply goes over the next 6 months. I think all the drivers of the market or our operating fundamentals are looking pretty strong. We like it. Again, cautiously optimistic as we navigate the back half of the year.

Your next question comes from the line of Jesse Lederman with Zelman & Associates.

A question here for Scott. Looks like there's only about 100 homes left in the forward purchase pipeline for 2027. So I'd love to get your thoughts on maybe discussions you're having with builders, either on forward purchase agreements or what you're seeing on builder takes, and what we should expect in terms of the composition of your external growth moving forward from your various end channels. And also like a slight 2-parter, slightly related, any timing on self-performance from ResiBuilt?

Sure. Great question, Jesse. Thank you. In terms of what we're seeing from the builders, obviously, you've seen, I think at its peak, our builder's backlog on forward purchases was at about 2,700 homes. And that's down now to about 300 for what's in the backlog. And again, those are forward purchase commitments that we have done over the last 2 to 3 years that have taken time to essentially be delivered where the pace was 10 a month.

We obviously haven't made any new commitments year to date, which is why that backlog has declined as quickly and meaningfully as it has. I think where we're seeing the most interesting opportunity is, we talked about this on our Investor Day in November, where we continue to get monthly takes from the builders on standing inventory of homes that can be delivered in a 60-day, 90-day timeframe instead of a 12-month to 18-month timeframe.

We're still seeing opportunities that we talked about previously that are super interesting to us in the, call it, 20% discount, 6% cap rate range. We've not meaningfully leaned into that, but we're starting to see some interesting opportunities that we're evaluating again. But I think in terms of that near-term composition, you'll probably more likely see us do short-term acquisitions from builder takes in the short run, as opposed to the long-term forward commitments. We still see forwards.

I think the valuation and pricing just hasn't been as attractive, and we're more attracted to the short-term builder take stuff. In addition on ResiBuilt, it's now been about 6 months since the integration. They're out in the market looking for new opportunities for us. As Dallas said earlier, we're evaluating some things as we speak. We're not really ready to sort of talk about where we are in that process, but I think generally speaking, we've seen some great opportunities.

Their market presence, as you probably know and we've discussed previously, is in Georgia, North Carolina, and Florida. I think we've seen some interesting opportunities that we're evaluating in the Carolinas and Atlanta. And when we look at these investments with ResiBuilt, we would be doing them both for ourselves and for our joint venture partners, of which we have 2 today, and they are in constant dialogue with us on opportunities. So we're still looking at opportunities, evaluating it, and we're trying to figure out what makes most sense. Thanks, Jesse.

Your next question comes from the line of Rich Hightower with Barclays.

Back to sort of the fallout or the pro forma coming out of Road to Housing. You've got a lot of these sorts of in-betweener, more than the 350 threshold, but people that don't own tens of thousands of homes along the scale of Invitation and the largest players in the sector.

So just broadly speaking, what's your outlook for those in-betweeners in terms of competition, lacking the scale that you do operationally? As it's been referenced, does it eventually become more of a consolidation opportunity in your opinion? Just what are your general thoughts there?

Yeah. Rich, Dallas here. Look, generally, we line up with what you said there at the very end. Like we just believe there'll be sort of an evolution here where you'll see more consolidation. And particularly, I think you'll see a lot more of it around BTR. BTR had sort of a healthy pipeline of new entrants and capital formation kind of going into it pre the ROAD to Housing Act. I think we mentioned it in our remarks like it definitely froze capital.

And I don't want to give the impression that capital is thawed, but it's starting to poke its eyes up and sort of say, okay, how can we participate in this sector? How could we be meaningfully committed to creating new supply? Which all lines up with our business plan of what we laid out in November at our Investor Day.

Like we definitely want to be, if not the largest, the best operator of built-to-rent communities in the country. That's definitely a goal of ours. We now, I think between what we operate and own and in JVs, are probably getting close to almost 100 communities. We have expertise here in a similar way that we're doing it on the scattered site.

So I think as these smaller operators, these small portfolios, smaller pools of capital are looking for sort of a way to either enhance returns through third-party management or look for an exit partner, I think Invitation Homes could fit that bill nicely. It'll still come down to cost of capital and where we think our cost of capital is. Scott talked about being active with JVs and in partnerships.

That's easier for us in this environment right now. It requires less out-of-pocket costs, and we make actually a better ROI for our shareholders when you consider the fees and the structures that are in place in those agreements. I think as it relates to the balance sheet, we'll weigh it out relative share repurchase and other things that we're looking at. The lending business has been really accretive, and we're pleased with what that's doing.

It's also a conduit for new activity for the company, both in the build-to-rent space and in the 3PM, sort of, what I would say ecosphere. And so Scott and the team are doing a really good job of just balancing it. I think if there's anything we want people to take away from the call, is that our approach on capital allocation, how we think about growth, the word is balance.

Like just having really sophisticated balance in how we think about both deploying capital, whether it was through M&A or growth in lending, or in share repurchase. We're just going to be really disciplined capital allocators. I think the Street sort of respected what we've done over the last 6, 7, 8 months. We've been smart about when to do it and why, and our approach and our conversations both in our management investment committees and with our board will continue to be the same.

Your next question comes from Jade Rahmani with KBW.

This is Jason Sabshon in for Jade. So just out of curiosity, how much of the new lease rate growth do you think is seasonal versus improvement in underlying conditions? Because the typical cadence is for there to be an uplift from 1Q to 2Q.

Yes. Great question. Our perspective is that we are seeing improving market conditions. Obviously, we know that there's a degree of seasonality to new lease growth, and we talked about that at investor conferences and on past calls. But if you look at the supply data, again, the unique listings in each market of 4 leased properties, that number's coming down.

And remember, pricing is a direct reflection of supply and demand. Demand for remaining healthy, supply coming down. So we believe that the fundamentals are actually in our favor right now. Again, we're cautiously optimistic about how the rest of the year proceeds, but again, it is panning out as we expected. And as I mentioned earlier, we're liking the setup for 2027.

We do have a follow-up question coming from Ami Probandt with UBS.

Following the resolution on the ROAD to Housing, do you think that your scattered-site infill portfolio becomes relatively more valuable given that it can't really be replicated at this point? And if so, does that change your view on capital recycling from those scattered-site homes?

Look, I think our view on all of the grandfathered assets as it relates to the new legislation obviously have sort of a premium valuation tied to it in the sense that you're an operator operating those assets. I wouldn't say it's absolute in terms of how you think about your asset management strategies, what you want to sell versus what you want to hold, what you want to reinvest in.

But there certainly is value to it, and I think it's smart to recognize that there are a number of operators that are going to have a grandfathered sort of edge right to the portfolios. Look, taking another step back, the bill certainly, in our understanding, allows for growth in a scattered sense, so long as you're doing it with builders going forward, and its new product or newer product, as it's called in the bill.

Now there's still rule making and things like that, but what Scott's doing right now in participating in these communities with a number of both private, regional, and public builders is another way that we'll enhance our scattered footprint. We're huge believers in the scattered footprint thesis in terms of both how it works for the families and the residents that live there.

They love being in communities where their neighbors are homeowners and there's stability, and kids are growing up in similar neighborhoods with other families. And we also like it from an operational perspective because it's part of our edge. We're really good at operating a scattered-site. And so I think both the value of our legacy portfolios we'll look at in the future and how we will design our aggregation of capital and how we will invest capital in the foreseeable future, scattered will be a large part of it.

Our last question comes from Brad Heffern with RBC.

Can you talk about on ResiBuilt, what sort of NOI we can expect that to generate? Looks like it was about $12 million in the first half. I'm sure it'll bounce around just given the nature of the business, but is that a good run rate or is there a different way we should think about it as it potentially transitions to more development specifically for Invitation?

Yeah, I mean, it's a good question. I think it's a little early to answer. As I mentioned earlier in some of my Q&A responses, the disruption in the market, sort of the chilling effect on capital formation that we saw for about five of the first 6 months of the year is going to cause us to have to overcome a little bit of a gap in terms of what we expected to come off ResiBuilt.

As we look to the future, look, to be clear, we view that as a strategic acquisition that provides us a lever to continue to grow via a channel and a capability that we didn't possess previously. So I'm not prepared to say what I think the earnings contribution may be over time. But I would say that we are really excited about what we're seeing. Fee building is going to continue to be a big part of our strategy going forward.

That is a very accretive, profitable business, and the ResiBuilt team is exceptionally good at that. And then as Dallas mentioned earlier, we are looking at more opportunities. Scott's seeing more things with the ResiBuilt team that may eventually make sense to do either on balance sheet or with joint venture partners. But our expectation is that this is going to be a growth engine for our business over time and distance.

Thank you. That concludes our question-and-answer session. I would like to hand it back to the President and CEO, Dallas Tanner, for closing remarks.

We want to thank everyone for participating today. We look forward to seeing everybody this fall. Thank you.

Thank you, presenters. Ladies and gentlemen, this concludes today's conference call. Thank you all for joining. You may now disconnect.

Hello, everyone. Thank you for joining us today for a Q&A with the executive management team of Invitation Homes. For those of you who might not know me, my name is John Paul Flangos, and I'm the residential and self-storage REIT analyst at BNP Paribas.

Today, we are joined by CIO, Scott Eisen; CFO, Jon Olsen; CEO, Dallas Tanner; and COO, Tim Lobner. Before we jump into the Q&A, I'd like to turn the table over to Dallas for any opening remarks.

Thanks again. It's good to be with everyone. There's sort of 3 major themes we've been hitting in a majority of our meetings. First, on the fundamentals, our spring leasing season is tracking well. Same-store occupancy and blended lease rate growth accelerated nearly 100 basis points from the first quarter of this year until May quarter-to-date to 97.2% from an occupancy perspective and 2.5% from a blended rate perspective. That you could sort of deduct is April, as we talked about, at 2.3% with May getting to 2.8% on our blends. We're seeing a nice acceleration.

New lease rate growth was also positive in both of those months, and we continue to see strong demand for our homes. We're anxiously looking forward to the rest of our summer leasing season. On capital allocation, we've been able to be deliberate as capital allocators. As you know and as we mentioned on our earnings call, we repurchased nearly $500 million of our shares back in the first quarter.

And in addition to that, our disposition program continues to be robust. In the second quarter, our dispos will likely look a lot like our first quarter, and we'll continue to be prudent and judicious in our use of capital when and where we allocate. On regulation, we've also been emphasizing that we've been closely watching the ROAD to Housing Act and are encouraged by what came out of the House of Representatives. Current bill is a materially improved outcome relative to the earlier versions that we had seen.

Whatever path this takes in the Senate, we are confident in our ability to continue to operate effectively, and we provide a housing option that's not only needed but wanted and desired to create genuinely affordable homes for American families. And nothing about this legislation would change that with or without the legislation.

And with that, I'll turn it back over to you for questions and answers.

Yes. Thanks for the update, Dallas. That was helpful color. Maybe to just zoom out a little bit and set the stage for any generalists or individuals who are not super familiar with the story. Could you kind of just give a quick version as to what makes SFR structurally different from other residential real estate assets? And then maybe as you look over the next several years, how do you parse out the demand drivers between the structural tailwinds and then the more cyclical ones?

Yes. Great question. So just taking a step back, we own and operate roughly 90,000 homes, and then we have another 20,000 plus or minus that we operate in JVs and in third-party management. Our scale is, for the most part, unmatched in the country in terms of what a single-family residential offering offers. From a risk perspective, as you think about investing in the space, one of the really unique things about SFR is the bespoke nature of our portfolio.

Now in the early days, as we were kind of building this business and figuring out how to manage it, it created quite a bit of complication because we don't have the same floor plan really anywhere. But at the end of the day, the bespoke nature of our assets actually allows us a pretty meaningful differentiator in that our homes are in neighborhoods where people want to live. And so our average length of stay is pushing close to 4 years, 5 years in California.

The customer renews probably 75% to 80% of the time. So you have an inherently strong customer that tends to renew quite a bit. Second, most of our customers today have a credit score of close to 700. Rent-to-income ratio is between 4x and 5x. And so on a weighted basis, they're spending about plus or minus 20% of their monthly wages on our, call it, cost to rent. That is about $1,000 a month in terms of a meaningful difference between the cost to own versus the cost to lease that same home in the neighborhood.

So structurally, to your question, we are very different than maybe multifamily or some of the other housing sectors. As you sort of break up demand, just taking a step back, we had a pretty epic bull run in terms of housing values and value creation, home price appreciation and rent growth from really 2012 through about 2023, plus or minus. And we've basically been in, call it, 4 to 6 quarters of sort of a reset. And I think Tim would tell you the same thing here is that we actually see a little bit better fundamentals this year than we did last year going into the summer leasing cycle.

But cyclically, it feels like we're probably in the beginnings of hopefully, what is a reset for both the residential space and also for the housing market in aggregate. Home prices were unsustainable for some period of time in terms of the amount of growth that they were receiving on a year-over-year basis, and the pandemic actually added to some of that problem and created an even wider gap in the cost to lease versus the cost to own.

Going forward, I think there are also some things that make retention and renewals pretty favorable for our business. With mortgage rates in the mid- to high 6s, the path to ownership is a bit trickier. And so the value proposition we offer is not only one that's just effective from a cost perspective, but just for consideration, about 80% of our customers come to us because they have rented a single-family home before. So it's not a newness to it. It's not like we're necessarily pulling from multifamily. There's just a huge segment of this country that prefers to lease. They want a yard, they want a garage. They want all those common spaces.

And so I think that's sort of the setup. And I think just taking a step back, about 1/3 of the country have leased something going back to LBJ to the mid-60s. And it's about the same today. Homeownership rate is about 67%. So we're in a really healthy sort of normal setup with hopefully a cycle that's starting to reset, and we're starting to see green shoots of that in our own portfolio.

Got it. That's helpful. And then in terms of supply, new BTR deliveries have been a source of pressure over the past few years. Could you kind of speak to where we are in the current cycle, how impactful the lease-up overhang currently is and then expectations on a go-forward basis?

Tim, do you want to talk about supply?

Sure. Yes. The question comes up a lot about build-to-rent supply, but that's only a portion of the story. Look, there's a couple of different components to supply. There's scattered single-family, there's build-to-rent, there's mom-and-pop owned properties, then there's institutional owned properties. And so there's a lot of different cohorts in that supply.

One of the things that we've been talking with investors about and we covered on our Q1 earnings call was how supply at the beginning of the year was extremely elevated over 2025. So if you think about January 2026 versus January 2025, pretty large volume of homes year-over-year on the market for lease.

And what I mean by that is on the Internet listing services, when you aggregate what is available through Zillow, Realtor.com, Apartments.com and then you kind of disaggregate that, you come up with a number year-over-year, pretty high. That number has come down. We saw that over Q1. So that year-over-year growth is down, and we continue to see it stay down. It's right on top of what we saw last year.

The largest cohort of houses that have come down in terms of that inventory is really the scattered site properties owned by mom-and-pops. And I think that's a contributing factor to why we're seeing better pricing power as we move deeper into peak leasing season. I think it's hard to talk about supply without also talking about demand. Your setup was good about why the fundamentals of the business long term makes sense. But the reality is we're seeing demand on a gross lead basis year-over-year stronger in 2026 than we saw in 2025. Obviously, that's spread out over more homes that have been on the market.

So on a normalized basis, it's a little bit lower year-over-year. I think the major takeaway or headline that I think is worth calling out is that there is still a strong demand for single-family rental houses, especially those managed by professional operators. So again, supply coming down, the build-to-rent component, if you look at John Burns data, the build-to-rent peak delivery time is in the rearview mirror in all markets. So the fundamentals are lining up nicely, and we've seen that in our operational performance year-to-date.

Got it. And before moving into the operational update, I just wanted to touch on one more supply point. There's been conversations about shadow supply emerging in some markets, which is for-sale housing converting to rentals. Could you kind of speak to the pressures you're seeing on that front? Is it meaningful? Immaterial? And then what kind of channel checks you guys use for that?

Sure. So when you look at the industry, institutional owners and operators account for about 2% to 3% of all inventory. So that other 97%, that's mom-and-pops. So it's a meaningful portion of the market. Over the last 3 years, if you were to look at those supply numbers that I was referencing a moment ago, the largest growth that we saw was in mom-and-pop owned properties.

Over the last 3 to 4 months, maybe 5 months, the largest area where we've seen a decline in on the market available rental housing product is also in the mom-and-pops. So we're seeing that number tail off. We don't know exactly why. I mean we don't have exit surveys or surveys from all those -- the owners and operators of those 97% of houses that make up the market.

But our thought is that, that product is getting leased. What we're also seeing is that we really look at our markets. That's not a broader commentary on the entire U.S. housing market. But you look at the demographics and the migratory patterns of people, of consumers, although it's not quite what it was in the pandemic, we continue to see favorable net migration to Sunbelt markets like ours. And so that, we believe, is a contributing factor to why that mom-and-pop supply continues to erode in the marketplace.

Got it. And then sticking with you here, the portfolio update showed solid occupancy and new leases accelerating into April and May, like Dallas mentioned. Tim, just can you give us more commentary on top-of-funnel demand? What are you seeing in terms of traffic, leads, applications? Any commentary on the tenant decision-making? Any color there?

That's a lot, but I'll try to hit it all. Our funnel really starts outside, right? We look at people that look on Google or search on Google using search words like home for rent, house for lease, a variety of different terms. That's really the top of the funnel externally, and those numbers are healthy year-over-year. They're in line with last year, which aligns with our lead volume.

As I mentioned earlier, it's very healthy year-over-year. As you get through the funnel, it's interesting, not every lead is a good lead, right? Just like any consumer walking into a bricks-and-mortar store, not everybody is going to buy something. So our goal is to make sure that our leads or at least try to position the application process such that only the leads that really are going to make it through, make it through.

For example, we introduced a rent calculator at the very front end of our leasing process so that people can type in their household income to see whether or not they're going to qualify for that house before actually going through the application process. That's been very helpful for us. We'd like to see people self-select out. That's reduced the number of leads to a better number of leads to, I'd say, a higher strike rate cohort of leads.

We're also looking at other ways of making the application process much, I guess, easier to navigate. And so I think the overall metrics as it comes to the funnel are very strong. Our operating fundamentals are good. Our teams in the field are doing a great job. I talked a little bit at our Investor Day back in November about how we're really trying to not shift our lens away from our asset-centric approach because we're a REIT, we understand we always have to think about things in terms of asset centricity, but also layering in a degree of customer centricity.

And one of the things that we're implementing right now is a CRM platform, customer relationship management. That's going to help us even more with that process as you navigate the funnel, really being able to target our efforts on leads that matter. So the dynamics are changing, but they're healthy right now.

Got it. And then on rent growth, renewals have been a bright spot while the team has been able to keep retention high. I'm just curious how sustainable is that going forward? And specifically, what metrics do you guys look at that kind of tells you you can lean into renewals a little bit more now or you have to pull back?

Look, I'll start with the second part of your question. I think occupancy -- one of the things you're always trying to balance is occupancy and rent growth, rent growth being made up of 75% on the renewal side, 25% on the new lease growth side. But you really have to -- not balance because you don't want a perfect balance in terms of occupancy and rent growth. You just want to know when you've got enough occupancy that you can start to really test on the renewal growth and new lease growth for that matter.

And so look, we're always trying to be really nimble in terms of how we price, how we negotiate on renewals. And we don't make the market. I mean the 97% mom-and-pop, 3% us, and we're a small part of that 3%, we've got to be nimble in the marketplace. In terms of how long is the pricing power there, look, on the renewal side, rent growth, it generally stays I'm not going to say flat, but within 100, 150 basis points year round. You kind of mid-3s, low 3s all the way up to mid-4s, high 4s depending on the time of year and depending on the cohort of homes and existing rent prices in the homes that are turning over during a specific period.

But that's -- it's a pretty stable part of our business. It's 75%, 80% of our book, and it performs well. And I'd also say, look, our 75%, 80%, somewhere in that range, I think, is a reflection of the service that we offer, the product that we offer, good location, good value. Our value-add services program is something that differentiates. We offer Internet in homes for a very discounted rate. We're now offering washers and dryers in several of our markets. So we're trying to make it about the whole leasing experience, not just renting a house.

There's more to it than just renting a house. We want people to be sticky. And look, people often compare the multifamily to single-family. You look at the makeup, we have -- generally, it's a household that's got 2 incomes. You've got kids, likely a pet. These people are sticky. And so we believe the renewal side of the business will remain strong.

I add 2 points. Just real quick, 2 things on fundamentals. So one is on the new lease side relative to last year, Tim, we mentioned this in my earlier remarks, we peaked a lot earlier last year from where our new lease perspective is, and we still see that accelerating. And then while we'll give a more robust update in our July call, we certainly see renewals accelerating in the summer as well.

Got it. And then, Tim, you mentioned Internet services. I kind of wanted to touch on the non-lease-related revenue. The team has done a great job at growing that through value-add services like Internet, the third-party property management income and then most recently, fee build income. How is the team thinking about the growth of this bucket over the next several years? And how much more penetration remains on the value-add front?

I can talk about value add, but then I'll turn it over to Scott. On the value-add side, look, we believe that the value-add number continues to grow. Our number that we're targeting for this year on a gross basis is about $100 million, and that number still has room to grow after that. The makeup of our growth, it's about half of our -- half of that growth is from existing programs that are already well received by our resident. We just need to earn into them. I'll give you an example in the Internet service package.

We only have about 40% of our houses on that program today. We've expanded our offering. So now we're including Spectrum AT&T and Comcast. They've got different footprints, but we're able to offer it to more and more of our houses. So we're excited about the earn-in there. And then that's about half of the future growth going all the way into 2028. The other half is on new programs that we feel confident based upon our surveying of residents in terms of what they're looking for that it will land well with them. But I'll let Scott talk about the other aspect of our noncore revenue.

Right. And then on the other 2 aspects you mentioned were the third-party property management business and also our recent acquisition of ResiBuilt. Just to be clear, those aren't counted in the value-add services bucket from a reporting perspective. But on the third-party property management business, we now have 24,000 homes that we manage 2 joint ventures and 3 different institutional third-party management contracts. That's a business we got into about 3 years ago.

That's a business where we wanted to be able to work with external clients that could be part of the Invitation Homes system and operate homes for third-party fees in markets where we already had an operational presence and economies of scale. It's a business that we've continued to get more sophisticated in terms of our reporting and how we work with our customers. And it's a business that we are out every day talking to potential partners and looking for ways to grow that business.

I think for us, we're looking for an institutional customer, someone who's got at least 1,000 homes, someone that we could be in multiple markets with and that we could have growth potential with. We haven't necessarily targeted the smaller investor that might only have 100 or 200 homes, but we're looking for sophisticated institutions. And sometimes we're approached by the LP who'd like to make a change in manager and sometimes we're approached by a GP that might be at a point in their life cycle where they may not have the margins or growth capabilities that they thought they might have had.

Obviously, with what's been going on, on the political front for the last 4 or 5 months here, I think there are some people that maybe have not been able to grow the platforms as ambitiously as they might have originally thought, and those are the types of folks who we would like to target for the third-party management growth. The other business that you referred to was in January, we announced that we were buying a build-to-rent developer called ResiBuilt that's based in Atlanta. They are a platform that operates in 3 states. They operate in Georgia -- actually 4 states, Georgia, North Carolina, South Carolina and Florida.

They had both a business where they would be a GP in terms of developing build-to-rent communities for themselves and a joint venture partner. And then they also have a third-party fee build business where they act as a general contractor on behalf of other smaller developers. That is now part of Invitation Homes, and we're hoping to grow both sides of that business. We've started to evaluate opportunities. It's early days, and it's only been 4 months since we closed, but it's early days in terms of evaluating opportunities for us to invest with them.

And at the same time, we continue to have existing third-party clients that we're building for, and we intend to continue to do that on a going-forward basis. And so we'd like to build both for ourselves and for others. And so that's how we manage through both of those business lines.

Got it. And then just sticking with you, Scott the construction lending platform has grown to close to $300 million in commitments. Is the current strategy simply an opportunity to step in given the current financing environment? Or is this a platform that the team would like to scale over time?

I don't think anything has really changed since what we discussed at our November Investor Day. This is a business where as we talk to people in the market, we've had a number of people that we've talked to over the years where we could potentially buy homes from them. They wanted us to be potentially an equity partner with them. And we realized about 15 months ago that there was an opportunity for us to be a construction lender on communities that are the same exact types of communities that we either want to own or build for ourselves.

It's the same product. It's a 3-bed, 2-bath, 2-car garage, townhome or detached single-family home, 4-bed, 2.5-bath, et cetera. So it's the same buy box that we invest in. It's markets we know, it's product we know, it's rents we know how to underwrite. And so for us, those same people in the market that in the past they tried to sell us stabilized communities, we thought there would be an opportunity for us to be a lender. So our loan book has grown to about $280 million of loans across 6 different projects.

It's in 5 different states -- I'm sorry, 5 different cities with 5 different counterparties. So we've gotten some nice diversification to both counterparty risk and also market risk. And again, I don't think our plans have changed materially from what we outlined at Investor Day, where the goal was to get to up to $1 billion of this. But look, the average construction loan we're doing is $30 million to $50 million, and it's a business product that we underwrite every day.

And I think it's, again, something where we're leveraging the cross-sell on our platform. One of the other interesting cross-sells that we discovered since we closed on ResiBuilt is that we think there could be a synergy between our third-party business, our fee build business and the construction lending business. We've had some borrowers come to us that don't have a general contractor, and we even introduced them to ResiBuilt as a potential contractor. We've had some ResiBuilt fee build clients that needed a construction loan. Ultimately, I think we could also be in the third-party property management business on behalf of all of those customers. So we're very, very early days in terms of truly understanding the synergies of that flywheel, but I think it's something we're excited about as a growth going forward.

Got it. And then, Jon, one for you. The stock has been trading at a meaningful discount to its long-term historical averages. And at the current share price, it implies the underlying real estate is cheaper than where homes are trading in the private market. How do you think about that disconnect? And how does that shape capital allocation going forward?

Yes, that's -- I mean, we talked about this at length, as you can imagine, today and on our last earnings call. We have been very deliberate about how we are allocating capital. As you note, there is a significant dislocation between how the public markets are valuing our assets and what the private market is valuing our assets at. And we talked about that on the last earnings call. We tried to illustrate that by pointing out that on average, in the first quarter, we were selling homes in the neighborhood of $425,000 per door and the public markets at the share price at the time was valuing them around, I think it was $275,000 per door.

That's a very marked dislocation. And so from our perspective, if we can prune from the bottom x percent of our portfolio, homes that are maybe less well located, operationally just don't perform as well as some of the other homes in the same submarket, homes that have experienced material appreciation in the underlying assets and therefore, maybe don't make sense to continue on as long-term holds. Well, if we can sell those assets into the end user market, recycle that capital into something that is accretive, well, we're going to do that.

And I would also note that I'm obviously biased, but I think we have the best single-family rental portfolio in the United States. It's the most infill in nature. I think it's the most well located that there is. And if the public market is going to value those homes to say nothing of the platform we've developed over time at a level that we think is sort of divorced from reality, then we want to reinvest in that portfolio at a really attractive valuation.

Now we don't want to, over time and distance, have just one sort of avenue of capital deployment. We want to make sure that we're constantly evaluating the whole opportunity set. And so we will, as always, be looking to create shareholder value by redeploying capital accretively into opportunities that are going to drive growth and margin improvement over time and distance. There are points in time, however, where the highest and best use of any excess capital is self-evident, and that was our experience in the first quarter.

That's helpful. Dallas or Tim, beyond the AI-enabled leasing engine that was mentioned at the November Investor Day, where else does the team see opportunity to implement AI? And how much could it move the needle?

Yes, I'll take that. I think there's applications of AI in a lot of different places. I think that a lot of people actually get the opportunity set a little bit wrong in that I think the first thing you look for is just automation. A lot of people confuse automation for AI. So I think where we're going to start is looking for simple automation of processes and workflow.

We are using it, as you pointed out, in our leasing operations. We also use it in renewals now as well. I do see application of it in a couple of different other places, one being delinquency management in terms of people that don't pay on time. Fortunately, that's not a huge problem. You saw our bad debt numbers. They were about 60 basis points. So it's not a huge area. But it's certainly an area where there's follow-up when there are nonpaying residents.

Another area is HOA management when we have -- homes and HOAs, where we have to pay assessments, we receive a lot of mail and so processing that mail, processing if there's ever an infraction that we need to follow up on or enforce with a resident to remain compliant. I think AI can play a huge role there. I think any time that you engage with a resident via any form of communication, you can overlay AI. We're right now building a CRM platform, as I mentioned earlier, there's going to be an AI component to that at some point where we'll be able to consolidate all historical communication with that resident, makes the jobs a whole lot easier of associates as they navigate conversations and communications with residents.

So I do think that there's lots of opportunity as we go forward. The other area that we're focused on is not just technology enablement, and I talked about this at Investor Day, we're also looking at how we optimize our workflow through centralization. We're centralizing some of these functions right now. That's really important because running a business with 16 different market offices, you have 16 teams with 16 leaders no matter what the workflow is. It's hard to sometimes ensure like accuracy and easy training and shifts if we have a process shift by consolidating that in a single location, we certainly get a better, I think, experience for our resident, better experience for our associates and more consistent service at the bottom line. So there's a lot of change that we're driving in the business right now.

Got it. And then it looks like we're coming up on time. Dallas, do you have any closing remarks?

Well, look, I've got a great team up here, but we've got an even better team behind us. And there's so much blue sky in our business. I think we're at a really interesting sort of inflection point where fundamentals are starting to reset, reading through a lot of the supply. Year-over-year, the homebuilders are building less and less from a permitting perspective. So we've probably got future tailwinds in our space, both from an asset appreciation perspective and also in all likelihood where rents go.

So I think just making sure we execute at a high level consistently that we roll out a lot of that road map Tim just talked about in terms of what we're doing with AI and centralization and then just continually pushing into that sort of flywheel that Scott talked about. I mean there's a lot of synergistic opportunities between what we do operationally, our ability to allocate capital, ultimately to build for both ourselves and third parties. And so I think the opportunity set in front of us is pretty wide. We just need to execute on it. That's how we feel about the business today.

Got it. Thanks.

Welcome to the Invitation Homes First Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

At this time, I would like to turn the conference over to Scott McLaughlin, Senior Vice President of Investor Relations. Please go ahead.

Thank you, operator, and good morning. Joining me today from Invitation Homes are Dallas Tanner, our President and Chief Executive Officer; Tim Lobner, our Chief Operating Officer; Jon Olsen, our Chief Financial Officer; and Scott Eisen, our Chief Investment Officer. Following our prepared remarks, we'll open the line for questions from our covering sell-side analysts.

During today's call, we may reference our first quarter 2026 earnings release and supplemental information. We issued this document yesterday afternoon after the market closed, and it is available on the Investor Relations section of our website at www.invh.com.

Certain statements we make during this call may include forward-looking statements relating to the future performance of our business, financial results, liquidity and capital resources and other non-historical statements, which are subject to risks and uncertainties that could cause actual outcomes or results to differ materially from those indicated. We describe some of these risks and uncertainties in our 2025 annual report on Form 10-K and other filings we make with the SEC from time to time. Except to the extent otherwise required by law, we do not update forward-looking statements and expressly disclaim any obligation to do so.

We may also discuss certain non-GAAP financial measures during the call. You can find additional information regarding these non-GAAP measures, including reconciliations to the most comparable GAAP measures in yesterday's earnings release.

With that, I'll now turn the call over to Dallas Tanner. Go ahead, Dallas.

Thank you, Scott. Good morning, everyone. Thanks for joining us. I want to start by thanking our associates for another quarter of strong execution in a dynamic environment, and our residents for continuing to choose Invitation Homes.

We delivered first quarter results in line with our expectations, accelerated average occupancy to the mid-96% range and entered April with improving leasing momentum. I'll let Tim walk through the details, but this positions us really well in the early part of the peak leasing season.

We are in the business of providing high-quality, professionally managed homes in neighborhoods where families want to live. And the value proposition for our residents has never been clear. In our markets, leasing one of our homes saves residents on average almost $1,000 per month compared to owning, according to data from John Burns. That is not a temporary dislocation. It reflects higher mortgage rates, increased home prices and the structural cost of homeownership.

For millions of American families, leasing a single-family home is simply the most financially responsible housing choice. We are proud to be part of that solution, and we take that responsibility seriously. In recent months, I've spent a lot of time working with other industry leaders in Washington, D.C. to advocate on behalf of our industry and our residents. I've met frequently with policymakers at the White House, Treasury and Capitol Hill on both sides of the aisle. Everyone is focused on the same objective of making housing more affordable in this country. And I'm encouraged by the constructive dialogue and confident we're moving in the right direction for our industry and the residents we serve.

This responsibility shows up in everything we do. We maintain and improve almost 110,000 homes across 16 core markets. We create new housing supply through development and strategic partnerships, and we provide residents the flexibility, space and access to school districts they want without the financial burdens of homeownership. For our residents, these are intentional housing choices, not stopgaps, and that is reflected in our strong retention rates and the length of time our residents choose to stay. Those resident behaviors underpin the resilience of our business. During periods of uncertainty, we tend to see residents stay longer, occupancy to remain stable and cash flows hold up really well.

In the first quarter, our same-store average resident tenure was over 40 months with resident renewals remaining very high at over 78%. That resilience gives us flexibility in how we think about allocating capital. While the share price has not been where we want it to be, we've been deliberate about addressing that. During the quarter, we completed the full $500 million share repurchase authorization approved by our Board last October, including $400 million of buybacks since our February earnings call. Our Board has also just approved a new $500 million repurchase authorization, and we will continue to evaluate the best uses of capital as conditions evolve.

We also continue to support and advance our third-party homebuilder partnerships. Our forward pipeline today stands at just over $200 million, reduced roughly 2/3 from where it was a year ago. We value these relationships because they serve a dual purpose: they generate attractive risk-adjusted returns for our shareholders, and they contribute new housing supply to the markets where we operate.

Meanwhile, the ResiBuilt acquisition we closed in January has moved quickly from integration to production, delivering over 300 homes to third-party buyers during the quarter. Our plan remains to continue using ResiBuilt primarily as a fee builder, as we evaluate the right pace of building for ourselves.

In addition, our construction lending business has grown to $279 million of commitments as of today, generating attractive returns. To date, we funded just under $20 million against those lending commitments, and we expect that number to grow through 2026 as the development progresses. Together, ResiBuilt and construction lending represent a differentiated and capital-efficient way of bringing new housing supply to the markets.

Looking ahead, we feel good about where we stand. Occupancy is climbing as we enter peak leasing season. New lease rent growth turned positive in April. We have a clear view of where our capital can create the most value. The thesis is really straightforward: durable demand, disciplined operations, and capital allocation that rewards shareholders, we are executing all of 3. At our November Investor Day, I laid out exactly what this management team is focused on running the best operated single-family rental company in the country. I'm confident we are moving in the right direction.

With that, I'll turn it over to Tim.

Thanks, Dallas, and good morning, everyone. In my prepared remarks today, I will walk through our first quarter operating results, provide some context on the year-over-year comparisons and then share our preliminary April leasing trends. But first, I want to thank our teams in the field for their continued dedication and our residents for choosing Invitation Homes.

Starting with the headline numbers. Same-store core revenue grew 1.6% year-over-year. Core operating expenses grew 5.7% and same-store NOI was down 0.3%. Regarding revenue, renewal rent growth was a healthy 3.7%, while new lease rent growth was negative 3.0%, resulting in a blended rent growth of 1.6%. New lease rent growth reflected elevated supply conditions that continue to weigh on pricing in a number of our markets during the quarter. The good news is that our West Coast and Midwest markets all held positive new lease rent growth. And as I will discuss in a moment, the picture improved considerably in April.

Same-store occupancy averaged 96.3% for the quarter. While that's a strong result relative to historic norms, it reflects a normalization from the 97.2% occupancy we achieved in the first quarter of 2025. That 90 basis point year-over-year reduction created a comparable headwind to our same-store revenue growth this quarter. We've talked about this normalization during the last few quarters, and it has played out right where we expected and where we want to be as we head deeper into peak leasing season.

Encouragingly, occupancy improved every month this year, moving from 96% at the start of the year to 97% by quarter end. Meanwhile, bad debt remained low and stable during the first quarter at 60 basis points, flat with a year ago, which speaks to the financial health of our resident base. That financial health shows up in other ways too. To date, over 160,000 residents have joined our no cost positive credit reporting program through Esusu, with the majority improving their average credit score by nearly 50 points since enrolling.

Turning now to first quarter same-store expenses. The 5.7% year-over-year growth looks elevated relative to our full year guidance, and the reason is straightforward. As you'll recall, first quarter of 2025 expenses were unusually low due to a combination of factors, including abnormally mild weather that suppressed R&M costs and exceptionally low turnover. These factors created a tough year-over-year comparison. We expect the year-over-year expense comparisons to normalize as we move through the year. And our full year expense guidance of 3% to 4% remains intact.

On the broader supply picture, third-party data tracking single-family for-lease listings across our key markets reflects continued moderation to date this year. While listings are still elevated year-over-year, the level has notably improved in recent months, which is consistent with what we are beginning to see in our own leasing activity, which brings me to April, where the preliminary trends are encouraging. Average occupancy accelerated to 97.1%, up 80 basis points from first quarter. Renewal rent growth was in the low 3% range, and new lease rent growth returned to positive territory at just under 0.5% or a 230 basis point acceleration from March. Together, this brought April blended rent growth to 2.3%.

In summary, we came into this year knowing the first quarter comparisons would be challenging, and our teams executed well through them. Occupancy is climbing. New lease rent growth has turned positive, and the majority of peak leasing season is in front of us. We feel good about where we stand.

With that, I'll turn it over to Jon.

Thanks, Tim. Today, I'll start with our earnings results then cover capital allocation, the balance sheet and guidance. For the first quarter, core FFO per share was generally flat year-over-year, and AFFO per share was down 2.6%, consistent with our expectations. As Tim noted, the first quarter of 2025 was an exceptionally strong quarter. Occupancy was at a post-pandemic high, expense growth was notably low and recurring capital expenditures came in below trend. While our performance was solid, our per share metrics this quarter reflect that difficult comparison as anticipated.

Additionally, I would note that the weighted average share count used in our per share metrics for this quarter does not yet fully reflect the denominator impact of our robust share repurchase activity.

Turning to capital allocation. As Dallas mentioned, we had an active quarter. We have achieved very strong traction with our disposition strategy. In Q1, we sold 483 wholly owned homes for $206 million, well ahead of our expectations. Sales prices and days on market continue to beat our underwriting, and we are achieving pro forma stabilized cap rates in the low 4s. This strong momentum on dispositions enabled us to lean in confidently on share repurchases.

In Q1, we repurchased approximately 17 million shares for roughly $439 million. Combined with share repurchases completed in the fourth quarter of 2025, we have fully utilized the $500 million authorization our Board approved last October, retiring a total of over 19 million shares at an average price of $25.86. To put that in context, during the first quarter, our average sale price was $427,000 per home, and we bought back our stock at an implied price of $270,000 per home. With the original $500 million share repurchase authorization now fully complete, our Board has approved a new $500 million repurchase authorization so that we may continue to have that tool in our toolkit.

As always, we'll remain disciplined capital allocators, balancing liquidity and conservative balance sheet management with the opportunity to create value for our shareholders across the many levers available to us, including share repurchases.

Moving now to our balance sheet, which remains in excellent shape. At quarter end, we had $1.3 billion in available liquidity through unrestricted cash and undrawn revolver capacity, while total indebtedness stood at approximately $8.9 billion with no debt reaching final maturity before June 2027.

Our net debt to adjusted EBITDA ratio was 5.6x, well within our long-term target range of 5.5x to 6x. That leverage profile, combined with 89.5% of our debt being fixed rate or swapped to fixed rate, and approximately 90% of our wholly owned homes unencumbered, leaves us well positioned to navigate the current environment.

Turning now to guidance. We are maintaining the full year outlook we provided in February. As I mentioned earlier, disposition volume is tracking ahead of our initial expectations, which accelerated our stock buyback pace, and our insurance renewal came in favorable relative to our assumptions. We view these as encouraging early reads, and we expect to have more to say once the majority of peak leasing season is behind us.

In closing, the balance sheet is strong, the business is operating as expected, and we have the financial flexibility to keep doing what we said we would do, return capital to shareholders at these prices while maintaining the operational discipline that has defined how we manage this company.

With that, operator, we're ready to begin the question-and-answer session.

[Operator Instructions] The first question comes from the line of Jana Galan with Bank of America.

Congrats on the nice start to the year. Just a question on the renewals, where you're sending them out for kind of spring and summer, and what kind of strategy you're using there during this leasing season?

Jana, this is Tim. I appreciate your question. We generally don't provide details on what we're going out at for renewals. We are seeing a strong market out there. We believe that May will look a lot like April. And if you think about our general renewal rate trends throughout the year, there's not a whole lot of seasonality. There's a little bit of it, but generally, you kind of see that kind of mid-3s to mid-4% rate growth throughout the year. It's nice we're seeing good acceleration in our new lease rent growth. So we believe we're on track, and we're liking the fundamentals that we're seeing out there right now.

Next question comes from the line of Jamie Feldman with Wells Fargo.

There's a pretty meaningful spread between your renewal rate growth and your new lease rate growth in some of the heavier construction markets, some of the Sunbelt markets. Can you just talk about whether you think that narrows over time? Or as we just continue to see more supply, just continue to think that new lease will remain much more pressured than new -- than, renewal, I'm sorry.

Yes. Thanks, Jamie. Tim here again. I appreciate the question. This is one that comes up from time to time. Look, spreads, generally speaking, tend to narrow as we work through our peak season, right? You see the renewal rates tend to stay flat, like I answered in the previous question, whereas the new lease growth, generally, what you see is you see a trend upward from Q1 towards the end of Q2, essentially closes the gap.

Look, there are some markets, to your point, where there is a little bit of outsized year-over-year growth. There are a number of contributing factors, build-to-rent is one of them. But if you look at the data provided by outside folks that track build-to-rent deliveries, we feel good about peak deliveries being in the past, that volume or that inventory starting to come down. We've also seen over the last, call it, 2 years, the mom-and-pop inventory has grown, but we're seeing that moderate really nicely as well. And each market is a little bit different, but we are starting to see some moderation in some of our larger markets.

One thing on the supply side that I'll point out is that the year-over-year number at the start of the first quarter, it was large. We know that it's up year-over-year. A lot of outside people talking about this, lot of ways of tracking it. But we've seen that number moderate over the course of Q1, so that year-over-year number is actually much smaller than it was in January. So we really like the fundamentals right now that we're seeing. We hope to continue to see that absorption of product out there across the markets as peak season continues.

Next question comes from the line of Austin Wurschmidt with KeyBanc Capital Markets.

Maybe, Tim, going back to that last comment around inventory. I mean you've seen occupancy improve pretty significantly in recent months, but last year, that seasonal ramp seemed to peak a bit early. I guess just based on leading indicators you're seeing and maybe just what's assumed in guidance, do you think -- do you expect things will drop off similarly? Or was last year more of an anomaly? And given your comment about inventory improving a bit, does it feel a little bit better this year?

Yes. Great question. We're cautiously optimistic about as we head deeper into peak leasing season, no year is exactly the same as the prior year. What gives us confidence is what we're seeing on the demand side. Look, demand in Q1 was generally quite healthy, although it's down from peak pandemic era demand. What we saw in our external funnel, we saw at Google Search, people asking about homes for rent, that was up slightly year-over-year. So you know that, that demand for single-family residence is there.

On our internal funnel, we're seeing a really stable top of funnel. Our gross lead volume was actually up year-over-year. Obviously, it's spread across a bigger denominator in terms of inventory, but it really shows health in the demand side. We're seeing a nice conversion on our leads to showing in our portfolio.

And I'd also point to the net migration that we see towards the Sunbelt. We look at Oxford Economics data. We continue to see nice numbers, although down from the pandemic numbers, they're certainly still strong in the DFW Metroplex, in Phoenix, in Charlotte, in Orlando, those are all strong migratory patterns that we're seeing there. So we feel good about where we are.

Again, you typically see growth in the occupancy number as you head deeper into peak season and you see the effect of move-outs, peak season ends and you kind of see that occupancy go down a little bit towards the end of the very back of the year in December, you see it kind of pop back up as we head into the new year for the new cycle. So again, we're pretty happy with the fundamentals we're seeing, cautiously optimistic at this point.

Next question comes from the line of Steve Sakwa with Evercore ISI.

Given the, I guess, activity you've had on the disposition program, is that something that you would consider sort of ramping? And I guess, what are the tax implications around that? And if you were to kind of ramp that up, might that entail something like a special dividend as opposed to buybacks? Just given the dislocation, it just seems like the sales environment is pretty good for you.

Steve, this is Dallas. And I'll defer on the tax piece of this to Jon. He can jump in and sort of address that. Look, Scott and the team have done a really nice job of thinking ahead on a lot of this. This dates back to last year as we thought about our asset management strategies, what we're going to do with the business as we continue to see sort of an unsupportive share price.

We've always been a good seller. I think up to this point in time, we sold almost like 20,000 homes back into the marketplace in the history of our business. We know how to do it. We know how to do it if the market is there. That's a really important point. And as you look at just like what we sold in the quarter, like I would bet close to 100% of those went to homeowners generally. So there's also a mortgage market factor here that allows us to sort of think about pricing and things like that.

That being said, our assets are primarily infill assets, higher desirable locations. So there's a bid there. Generally, as we've gone to market to sell these homes. Scott and the team are looking for ways to be good capital allocators at the end of the day. So we recognize the spread that's there. We're going to continue to use it as a measured lever like we have in the past, albeit it's a far more attractive sort of cycle when you're buying back shares at the prices that we were buying them back at, but it's a balanced approach.

So we don't want to necessarily signal one way or the other. We're going to continue to watch it through Q2, look for opportunities to continue to recycle capital accretively, and then put that capital into whichever lever makes the most sense of the time. It could be buybacks, it could be opportunities, things, et cetera.

So I'll hand it over to Jon. Maybe, Jon, you want to talk a little bit about tax.

Sure. Yes, Steve, I think if I'm understanding your question correctly, you're sort of asking whether tax is a governor. Clearly, we have to adhere to the tax rules, the REIT rules, and that does impose some degree of limitation on what we can sell. But generally speaking, we have to distribute all our taxable income to stockholders and the homes that we are selling as a general rule have a lower tax basis. And so we are triggering a decent tax gain recognition.

I think that the real governor is the fact that we renew about 80% of our leases, and so the pool of homes available for sale at any given point in time is a pretty small subset of what we own. The great news is, as Dallas mentioned, we've had a lot of experience selling homes into the end user market. I think we're really quite good at that. And to the extent that market conditions allow us to, we'll continue to lean in. I think that's evidenced by the fact that we are ahead of where we expected to be from a disposition perspective, and that has allowed us to lean in and be as aggressive as we were with share repurchases.

Next question comes from the line of John Pawlowski with Green Street.

A follow-up on the dispositions in recent months. Obviously, we can see which markets you're selling out of, but curious for more qualitative color. Within a given market, have the dispositions been tilted towards what you consider lower cap rate assets? Or are they more tilted towards higher cap rate assets that might have higher CapEx and/or lower forward growth?

Yes. I think when you look at kind of where we've been disposing assets in the market, I mean, we have a list of homes that we pre-identified for sale, and it is, frankly, a combination of factors, John. and so there's a lot of different things we look at. Some of the homes are in submarkets where we don't want to have a long-term presence, some are high CapEx homes, et cetera.

When you look at the way we look at the disposition cap rates, it's been roughly in the low 4% if you annualize the income in place on those homes. You can see that year-to-date, it's been about, call it, 40-ish percent has been Florida, 25% has been in California. But it really depends on which homes become vacant. We already know ahead of time which homes we've identified for sale, but we're really dependent upon knowing when those homes become vacant. And so look, it's a combination of, generally speaking, we're selling the lower quality homes. We're not selling the highest quality homes in our portfolio.

But again, from an asset management and capital allocation, we have pre-identified those homes that are not long-term holds for us in the bottom percentage of the portfolio, and we're going to continue to target those homes as they become vacant and as we see opportunities to sell.

Next question comes from the line of Juan Sanabria with BMO.

This is Robin Haneland, I'm sitting in for Juan. I was curious about how market concessions impacted new leases in the first quarter in April and how you expect concessions to trend for the remainder of the leasing season?

Robin, this is Tim. I appreciate your question here on concessions. As we shared at the Citi conference, we actually have no same-store concessions in place today. We generally don't use concessions during peak season. And that's just something we tend to use late in the year. It's a tool in the toolbox. I will add that we do offer concessions on our build-to-rent communities during lease-up. And that is a pretty standard tool that developers use in the toolbox, especially in light of the fact that you're moving people in, essentially to a construction zone as you're building the product. And so it's pretty standard to offer a concession on those.

But again, that's not on our same-store portfolio. And we don't feel the need to use concessions right now at this point. We are liking up what we're seeing in terms of the fundamentals of this peak leasing season.

Next question comes from the line of Brad Heffern with RBC Capital Markets.

Yes. On guidance, I know you don't normally change it with the first quarter earnings, but you also don't normally have this very large repurchase number, and that's obviously a known quantity at this point. So I'm wondering should we view this guidance as just not being updated and not incorporating the benefit from the repurchases? Or is there some sort of offset that's also being incorporated?

Brad, it's Jon. We did anticipate leaning in and being aggressive on share repurchases when we put our budget together for the year. We did get through it a little bit faster than I think we anticipated. But relative to guidance, I would say that there is not a hugely material benefit from that. And so I think that factored into the thinking as does the fact that there's still a lot of year ahead of us. The last couple of years, there's been some patterns of behavior in the operating environment that have changed. And so we just want to be cognizant of the fact that it's still early in the year.

We're really pleased with where we are. I would say that big picture, we're right where we expected to be. We're ahead of where we expected to be on dispositions. But in terms of operating performance, in terms of revenue growth, expense growth, NOI growth, we're tracking very closely to our internal numbers. And so we're going to watch and wait and see. Feel good about where we are. As Tim said, we're cautiously optimistic, but not seeing anything that would cause us to revise guidance at this point.

Next question comes from the line of Michael Goldsmith with UBS.

This is Ami on for Michael. I'm curious, have you seen any change in demand for your third-party management platform or for development funding opportunities given some of the uncertainty for SFRs within the ROAD to Housing Act?

Good question. Generally speaking, we get inquiries about opportunities to manage. Like we've said in the past, we're highly selective about when, how and who -- in terms of how we want to operate because we really just want to run our operating playbook, generally speaking, as a rule of thumb. That being said, there will be some noise that comes out of some of the legislative discussion that's been going on, and it certainly could create some opportunities. I think it's a bit too early to sort of tell or try to put a handicap on that in terms of the opportunity set.

I would just say that the team here, both with our own portfolio metrics, and I think, hopefully, from what our customers see is just really consistent operations at the end of the day. And I think that has probably lent itself to Scott and the group being able to pursue or look at some other opportunities.

Next question comes from the line of Eric Wolfe with Citi.

Maybe I missed this in the prior answers, but now that your occupancy is at a very strong level, above 97%. I guess are you starting to get more aggressive on new leases? Or just given your experience with occupancy in last couple of years, are you just trying to kind of keep it protected going into the third quarter? Just curious whether the sort of the higher occupancy number is changing your strategy on pricing?

Eric, great question. This is Tim. Look, while occupancy, we said our April number was at 97.1%. That is something that we don't know exactly where it's going to go. We anticipate, like I mentioned earlier, that occupancy is going to kind of trend upwards as we head through peak season into late Q2 that tends to come down following move-in, move-out season. We price based on what the market will bear. We're constantly looking at supply and demand. And so we're cautiously optimistic that we'll be able to continue to show good numbers on the rent growth side, both on new and renewal. But again, it's a bit too early to predict that number at this point, Eric.

Next question comes from the line of Rich Hightower with Barclays.

So I know last quarter, you mentioned vis-a-vis your conversations, I guess, directed to Dallas, with policymakers and so forth, you expressed some level of optimism about the talks. And obviously, since then, I think the news flow has generally been better, not worse for the single-family industry. But maybe just update us on the tone and the tenor and maybe some substance from those conversations the people seem to get it, some of the problematic elements of the legislation as it's currently kind of been publicized. Just help us understand where we are in that.

Yes. Happy to provide some color as I can at this point. Look, it's been a very active quarter in terms of advocacy work and we've obviously been on the front lines with some of our peers in spending a lot of time on the Hill. And as I shared in my opening remarks, to be candid, I think there's sort of 2 or 3 things that have come out of this process thus far. First is, I think policymakers and I think the media are much better educated as to what the industry does now versus maybe some of the taboo that has sort of been written about the industry for the last 10 years. I view that as an incredibly net positive.

I thought the coverage has been fair. I think people are pointing out the fact that Invitation Homes, some of our peers are adding a lot of new supply and creating services that people want. That's the first stop. I just think there's a better understood point in the marketplace about who we are and what it is that we do.

The second piece that I would sort of say is that I have been totally impressed by the amount of collaborative conversation we've had on both sides of the aisle in Washington, D.C. And I would also share that we've had really good conversations with both the administration, Treasury, and elected officials that are trying to solve some of these housing supply issues. And I truly do believe that it's done in earnest, that people are trying to address the fact that we know we need more housing supply in the marketplace.

That being said, the conversations are dynamic. I think people understand that you want to create regulatory framework that provides clarity to capital. And I think over the last 90 days, that's been a little murky. And that's created some noise, and I think everybody has appreciated to your point that we don't want to do things that stunt housing supply generally.

It sounds like some of these provisions that are currently in its -- in its current form of being drafted or being reviewed and thought through to see if there can be effective, what I would call, change or revision maybe to try to land this in a safer place for both capital, for our residents, and for the opportunities to sort of provide these services.

And that leads me to my last point, is that people that rent are voters and their residents and they matter. And I think that message has resonated very well on the Hill as well that we have 47 million households in this country that lease something and there should be rights associated with those households as well. So I don't think it's a simple solution whenever housing bills are drafted. A lot of work has gone into that, I think, by both sides.

We've tried to stay as collaborative as we can with everyone through this process. We want to be viewed as a productive partner in housing. So that's been the approach we've taken as an industry. While legislation is never perfect, I think the goal here is that over time, this lands in the right place, so that everyone can have clarity, residents, capital and most importantly, the housing market so they can continue to evolve and create new supply.

Next question comes from the line of Adam Kramer with Morgan Stanley.

Dallas, really appreciate all the comments there, sort of the update on the legislation. Maybe just piggybacking off of that, as you sort of think back to Invitation, to the business and I think specifically with ResiBuilt, how are you thinking about sort of range of outcomes in terms of policy and sort of what that means for the different parts of the business. I guess from internal growth and then from external growth and ResiBuilt perspective?

Yes. So listen, a couple of things. One is there's -- to use a golf analogy, there's a lot of grass between here and the hole to know where this thing sort of finally lands. I want to be really clear about that. We are glass half full guys generally, and we're always trying to think about ways that we can work with what we have. And I would even say with the bill in its current form, I think Scott and I are comfortable and so is Jon that there's a lot of ways to still bring new housing supply to the market. It's not perfect. And we hope it gets fixed, but the reality is like we think we can operate within the framework.

I think as it relates to ResiBuilt, set the bill aside, our goal has been to get smarter and smarter as homebuilders in all of the strategic partnerships that we have and we'll continue to maintain, but also at some point in time to be able to control a little bit of our own destiny. And that can come in a variety of shapes and sizes. Scott's looking at a lot of very interesting opportunities real time.

I think it still weighs out in our earlier comments around how do we allocate capital in this environment. So development opportunities may not be highest and best use right now, all the time. But there are certainly some things that are starting to look more and more palpable as we look for some of these opportunities. And then how you design these communities, the standards with which they are or are they townhome, how do you make sure that you operate within whatever potential framework is or isn't there in the future.

And so maybe I'll hand it over to Scott just talk -- maybe Scott, give a little bit broader sort of what we're seeing right now and what you -- what our learnings are early days on the ResiBuilt transaction.

Yes. And thanks, Dallas. It's now 3 months since we closed the acquisition of ResiBuilt. We're really pleased with the integration of their platform into Invitation Homes. ResiBuilt is executing on their existing midstream customer contracts that we took over as part of the acquisition. We continue to build a backlog of partners for future fee build opportunities. Obviously, some projects have been put on hold until we have further clarity with the legislation in Washington. But at the end of the day, we're evaluating new opportunities. We're taking our time.

And as we originally said when we made the acquisition, we look to grow the fee build side of the business, we look to grow the side of the business that we'll build for our joint venture partners and eventually for ourselves. And so nothing's changed from that game plan.

Next question comes from the line of Buck Horne with Raymond James.

My question has already been asked and answered. I appreciate that.

Next question comes from the line of Jesse Lederman with Zelman & Associates.

Another one for Scott. It looks like the company pared back some of its forward purchase agreements during the quarter of 76 net cancellations. So I'd love if you can provide some color on the thought process behind that? Because it seems like, if anything, overall industry fundamentals are improving relative to kind of where you were 3 months ago when you had about 200 net additions. So is it fair to assume the pullback was driven by kind of incremental legislative uncertainty since then? Or just would love to get your thoughts on that.

I mean, look, we just -- thanks, Jesse, good question. We've been following the signals we've seen in the capital markets in terms of our capital allocation strategy. Just as a reminder, we disclosed in the quarter that our current forward backlog is 556, which is around $200 million. This is down from almost 2,700 homes we had in the backlog at our peak in Q2 2024. And let's just as a reminder, Jesse, these homes that we have in the backlog, this is really the tail end of forward commitments that we had with the homebuilders where we started taking deliveries in 2025, and we're getting final deliveries over the next few quarters. And so we've really sort of dialed back on our acquisitions and forward commitments. We've really dialed up our dispositions.

We've recognized the signals we've received in terms of our cost of capital and how we're allocating our capital. And so I think a lot of this is just driven by cost of capital and kind of where we go from there. So I think we're taking a cautious view of the market towards acquisitions at this point, and we'll see where we go from here, Jesse.

Next question comes from the line of Jade Rahmani with KBW.

This is Jason Sabshon on for Jade. So in the higher for longer rate environment and with the regulatory uncertainty, have you seen any movement in pricing from sellers? And is that something that you lead into or kind of more just wait and see on the regulation front?

This is Dallas. And I'll also let Scott chime in on this one as well. Look, I mean, we've actually seen sort of overall supply in the resale market be pretty steady. We haven't seen much movement in cap rates. I mean, you've certainly seen some opportunities maybe on finished spec inventory where there might be some, call it, interesting scattered sort of approaches. But I think with sort of the murky outlook for the last 90 days of where the market is, I think capital is being very cautious in terms of how to think about one-off purchasing or anything like that.

Now that being said, too, remember, the end-user market is very mortgage market driven, generally speaking, especially if you're kind of in suburbs or tertiary outliers. We see less of that with our infill portfolio, as we talked about in our disposition program earlier. So we haven't seen a whole heck of a lot that seems all that compelling.

Next question comes from the line of John Pawlowski with Green Street.

Jon, a question on expenses. You mentioned insurance costs are trending favorably. Are there any other line items surprising positively or negatively as 2026 unfolds?

John, thanks for the question. I would say not yet. On insurance, when we introduced guidance, we were sort of on the cusp of completing our renewal. At that time, our expectation was that the property renewal would be slightly favorable, but it would be a materially harder renewal for general liability, workers' comp, auto, et cetera. I would say that outlook was directionally correct, but ultimately, we were able to do slightly better on those nonproperty lines of coverage.

The difference between the original midpoint we articulated in the updated midpoint in last night's release is a little less than $2 million. So ultimately not a hugely material change. As I noted earlier, I think at this stage of the year, things are tracking very closely to how we expected the early part of the year to unfold. But I would stress that it's still early, and so we're going to continue to watch expenses like a hawk.

And our last question comes from the line of Michael Goldsmith with UBS.

It's Ami. With turnover ticking slightly higher over the last couple of quarters, we were wondering if you were seeing any changes in reasons for move out that could be driving this? Or if it's just normalization off of the very low COVID era turnover levels?

This is Dallas. And Tim, feel free to add any comments. Look, we've been, for the last year about having 16% to 17% of our move-outs be part of a home purchase opportunity. It's been I would call it very consistent and a little bit low for the last 4 quarters. I would also say that we basically see, like 25% of our move-outs are tied to some sort of a transition in life, like a moving event, trying a new schools, et cetera. Those numbers have been for the last 4 quarters, incredibly consistent.

Tim, do you want to add anything?

No, I think you covered it.

Okay. Thanks for the question.

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

We want to thank everyone for their support. Thanks for being on the call today. I look forward to seeing people at upcoming conferences. Thank you.

Ladies and gentlemen, that concludes today's call. Thank you all for joining in. You may now disconnect.

Global Property CEO Conference. I'm Nick Joseph here with Eric Wolfe for Citi Research. Pleased to have with us Invitation Homes and CEO, Dallas Tanner. This session is for Citi clients only and disclosures have been made available at the corporate access desk. [Operator Instructions]

Dallas, we'll turn it over to you to introduce the company and team, provide any opening remarks, tell the audience the top reasons that investors should buy your stock today and then we'll get into Q&A.

Nick, thank you to you and your team for hosting us today. We're grateful to be here. We appreciate all the support we've had in the level of investor meetings. To my right is Scott Eisen, our Chief Investment Officer. To my left is John Olsen, our Chief Financial Officer; and Tim Lobner, our Chief Operating Officer.

We'll start today with just a high level kind of hitting 3 points: first, that our business continues to remain healthy, performing in line with our expectations as we enter our peak leasing season, which is typically from now to I call it the middle part of summer. We continue to see actually pretty healthy demand, I would say, really strong retention -- and I would call it solid traffic as it comes into the business. I think naturally, there's a little bit of some stagnation between sort of home buying and selling activity which probably is what you see impacted in the new lease numbers as well as some of the additional supply that we're still working through, we talked about for the last several quarters. The platform has been continuously, I would say, executing at a pretty high level. Expense controls are totally in check. We feel like we have pretty good tailwinds with property taxes and the like.

I think the second point that we want to talk about is that the political overhang is creating real opportunities as an entry point for long-term investors. While the headlines have put some temporary pressure on valuation. We feel encouraged by the discussions that we're having with both sides of the aisle. In Washington, I've spent a lot of time there over the last month. I'm encouraged by what I would call the productive conversations we're having with both sides of the aisle and the administration as well as a whole. While there's no guarantees, my expectation is that this will work itself through over the coming months. And we continue to reinforce, and I think what's been a net benefit of the moment has been that there's been really healthy dialogue about the industry, and I think people have a better understanding of who we are, who we serve and what the businesses actually do. And so that moment has created real clarity.

And then I think the third point, and we can talk more about this, is our acquisition of ResiBuilt will continue to strengthen our growth engine. It will give us another level of optionality as we think about the balance of how we want to grow in the future. We would add to that we think about these things side by side, obviously, with share repurchase and additional investments or things that we would do. We look at all things sort of in a view of what is our highest and best use of capital in the moment.

And with that, Nick, I think I turn it over to the room for questions.

Great. So you mentioned that you've been spending a lot of time in Washington. I guess what are you hoping to see? Like what are you pushing for maybe we'll start there. And I guess what do you -- I guess, I get on the other side of that, what don't you want to see from this legislation and then I guess last, I'll add on to it because you love 3 partners is where is the industry right now? Is it things just sort of like frozen, are people just holding on to what they have or things still transacting business as usual or people just sort of said, until we see some clarity here, we're just not going to do much.

Let me start with the last part of what you said there is that -- it definitely feels like since the tweet and the corresponding executive order, capital flow has been stymied to say the least. And I think you see it in our public valuation. You see it in the private conversations we're having with private operators that there are a lot of deals sitting on an investment committee desk that aren't sure what to do. And so part of the argument that we've had as we spent time with policymakers and with the administration and their teams, has been, guys, you want capital flow to come into housing and we get the head nod in the affirmative. This has had the opposite effect in the near-term, which is to be expected. And there's sort of 3 or 4 major areas we want to focus on.

One is you need to understand fundamentally what it is the single-family rental is in the overall housing ecosystem. And guys, we're starting in a lot of these conversations, the very basic points. But if you go back to LBJ in 1962 or 1963, home ownership has been between basically 62% and at the lowest and 69% at the highest. And that basically 1/3 of the country is leased for the last 40 or 50 years. And that's okay. And we talk about upward mobility and social contract and things that different housing providers provide at different times in that housing continuum. Then we are able to clearly identify where we fit and what our customer profile looks like in that category. And I'd add, guys, I'm not up there by myself. I'm with the 4 or 5 CEOs of the bigger companies. We're represented by the National Rental Housing Council, and we have the right consultants and lobbyists helping us through this process.

I would just say that everybody gets it. I think they understand that we're a valued part of the upward mobility cycle. They love the fact that we have 150,000 people enrolled in positive credit reporting and that we've seen those credit scores go up by almost 50 points over the last 18 months. Those kind of facts are very helpful as we described the industry as a whole and what we are. What we've helped them understand is also what we aren't. We aren't home flippers. We're not in and out of a market. We're not calling your uncle 30 times in a week to say, sell us your home so we can put a can of paint on it and flip it. Like that's who we aren't. And so that process is as painful as sort of the last 6 weeks have been from a perspective and an outsider's view of the industry, it's actually been really good because it's forced conversation. And the conversation, I would say, has been very fair and very objective. I've been encouraged actually by the process.

I think what we're hoping for is that potential policy could land in a place that's reasonable that it solves sort of the issues around affordability that the administration is currently focused on. And look, we by and large agree with them that there's an affordability challenge in the country and that we fit into a very specific segment of that. And then as we walk people through the basic sort of rubric that when people come into our business, probably plus or minus 10% of them could afford to own a home real time. When they leave, we know this buyer survey is about 20% to 30% end up owning a home along the way. And that is natural. And there's a lot of different versions of right for families in this country, but they shouldn't be excluded in being a renter isn't necessarily a bad word, of which they all agree with, right?

And so the key thing is helping them understand who we aren't. We -- our companies bought less than 200 homes, 1 off on the MLS in the last 3 years, okay? We've been growing through our partnerships with builders the extension of what we're going to do with ResiBuilt and obviously, occasionally on opportunities, there's some M&A in terms of existing portfolios.

And I think creating those lines of clarification have been very helpful in the conversation. So I go back to what I'd say, like, I can't tell you with any certainty that the discussions and the part of the process that we've been with is guaranteed to land in X or Y. I would tell you that I'm growing increasingly confident that this will land in a reasonable place for the industry and I think for the administration in terms of their focus on affordability.

And let's -- I mean my voice here, so about that. And let's say that there's a ban on forward purchases. So whatever your portfolio is at today, you're sort of at that level. The only way to sort of grow it is through development or some kind of agreement on development. Do you think capital withdraws from the industry in that case? Or do you think so much more capital then goes towards the supply side? And I'd add on to that, is there a risk that if you're taking all this capital that was focused on acquiring and putting it out towards supply and development that there's an overbuild, especially in certain areas like Atlanta, Phoenix and other places that have tended to see some of those problems.

Well, I think on the latter point, just remember, you guys -- everyone in this room is really smart. Developers are generally really smart. So if they don't think the bid is there right from the demand side, especially in a softer environment like right now, just because, say, BTR in all its forms were to end up being excluded. And that, that is viewed as a good thing, which I think is where it will land personally. I don't think that there's a flush run of capital into an environment where the absorption has been a little bit slower over the last year or 2. I think it takes a minute to -- people are going to have the same lines of defenses and thinking around their returns on their own capital that we would -- and so if you see that new lease growth is a little bit slower or you see that absorption in the BTR space has been a little bit slower last year to my guess is there'll be measured expectations around returns. So I would expect normal market dynamics to sort of step in there.

What I would also add is that as you think about sort of what are the exclusions, at least in the discussions we've been having, it feels really rational. I think they want to protect this concept of boxing out homebuyers, which we'd be fully for 100% full stop. And I think there's a lot of ways that you can protect homeowners or potential homeowners in a resale environment, which they all understand the numbers, too, right? There's 1 million more resales in the market today than there was last year. We're not seeing home buying pickup. We have more of a mortgage affordability issue at the moment. The spreads between existing mortgages of homeowners and where kind of the market is today is probably lending to the dislocation more than anything. And I think that view might be commonly shared sort of generally speaking.

But at the same time, I think you want to create lanes that sort of protect those that are an FHA 3% down buyer, right or something like that, which we, again, the industry would be fully supportive of. And I think that there is sort of a common ground there. I think probably a focus on how much CapEx is going into these homes is something they might care about in our conversations. So that seems pretty rational and something that we generally always supported. And then I think pathways to ownership are things that probably can incentivize capital to come in, in a way where if you have an off-ramp for folks that they can get into homeownership show should they choose, I thought that would be viewed favorably.

And you mentioned in your opening remarks that you've seen, I think, fairly consistent demand. I think what people are trying to figure out is, at this time last year, sort of really kind of off to the races in terms of occupancy and blended rate. I know we probably make way too much ahead of every single month of data. When we hear that things have softened, it's usually because of sort of supply. But I guess my question is, is there a demand component, right? I mean clearly, in apartments and other areas, you're seeing lower demand. It doesn't sound like you feel like that's the case, but maybe tell us why, like what do you -- how are you measuring demand. And is it truly not lower? And if not, why not, given the fact that you've seen such a degradation in job growth over the last 9 months?

I'll take the demand question. It's a good one. We get a lot of questions about supply, good to hear questions about demand. We look at the demand funnel in 2 parts, just kind of the digital external part of demand, and that starts with people that are looking online on a Google -- searching on Google, people looking on Zillow that then translates into access to our website. People go and a number of times people land on our website. That then transitions over the second bucket, which is actual lead generation, followed by showings, followed by gross applications that get submitted, and then net applications that get approved ultimately move in. What we're seeing is really strong numbers there. We're seeing that there's an ongoing demand for single-family housing.

We're seeing a healthy customer profile and what we look at for customer financial health is, first, the credit score that's still sticking right around 700. That hasn't changed for us. And so that's a good sign. The other sign is our application approval rate, I talked about going from gross apps to NetApps, sticking around 65%, 70%. So people that are applying for our houses, their financial health is strong. The same is true of our customers that are in our houses. We're seeing really strong rent collection saw in our numbers from 2024 to 2025. Bad debt improved. We're back in a territory that we saw pre-pandemic, and we expect that to stay the same. We are watching, nothing certain for long, we are watching 30- and 90-day credit card delinquencies. We're watching mortgage rate delinquencies. We're also watching student housing debt delinquencies, all as kind of canaries in the coal mine for what could impact financial health of our customer in the future.

So demand side looks good. Supply side, you've heard -- we talked about it on the earnings call. The supply side is a little bit higher than what we've seen in the past. But look, the reality is -- there is a big gap between where the multifamily space ends, right? You've got 2 bedroom units. You've got a very small percentage of 3-bedroom plus units. It's a single-digit number. And then the next step over here is homeownership. And so there's 35% as Dallas mentioned since the formation of HUD in 1965, homeownership has not gone more than 400 basis points either direction. So there is clearly demand for single-family housing for professionally well-maintained single-family homes and there's a lot of people that are -- we continue to see more people choosing to rent.

So we don't anticipate, especially with the wave of people turning 35 every single year that number, depending on which report you look at, it's 10,000, 12,000, somewhere in there every single day turning 35. We haven't even hit our sweet spot yet, average age of 38, 39 of people moving into to our homes. So we feel pretty strongly about the long-term demand for the product.

And you mentioned on the call that the inventory of homes on your books was a bit high. Is that only in sort of markets where you have that supply impact? And I guess, if not, why is that the case in other markets where you see this good demand? Why is it taking people longer to make a decision to move into a home?

Yes. The pronounced areas where we're seeing higher supply are areas that were focal points for builders, right? You've got North Florida, not so much where we are right now in South Florida. The Texas markets, Houston and Dallas as well as Phoenix. Look, in terms of the amount of time you talked about people taking longer to lease, when there is more supply, just like when you go to the grocery store, any sort of retailer, when there's more product to look at, people generally take a little bit longer. They're a bit more discerning. That's where I believe and we believe collectively as a management team that the quality of our product, the quality of our experience, it will stand up to that test really well as people look at what the offering is. So yes, a little bit elongated time lines for the Day resident, and that's kind of normal with more supply.

Got it. And you said earlier that you're really kind of kicking off your big peak leasing season sort of after the Super Bowl I think as part of your revenue management system, you do have a pretty good understanding of sort of what's going to happen over the next 30 to 60 days. Obviously, we got the update in terms of what happened in February and January, so we see that. But maybe just help us understand how the forward indicators are looking. What are you seeing in terms of retention your ability to send out renewals and sort of transact without much negotiation. Just sort of any type of commentary on the strength of the early part of the peak leasing season?

Okay. We don't have a crystal ball in terms of how many leads we're going to get tomorrow or the next day, but everything we're seeing in the pipeline is strong. On the renewal side of the business, which I'm glad you brought up, 75% of our book, that continues to be really healthy. We do not see degradation right now in the decision-making of the consumer to stay in place. Obviously, we do use lease negotiations to make sure that we're landing the plane in terms of renewals. But generally, it's such a healthy part of our business, runs between 3.5% and 4.5% in terms of the renewal growth rate. But we anticipate continuing to see 75% up to 80% renewal rates going forward. Remember, like people move into single-family houses, they need more space. They have more stuff. They're generally stickier. The average family or the average household is 2 incomes, they have a child, they have a pet. They're coming from a single-family home, so they know what they're looking for. They know kind of what they leased the product.

It's not like it's something different, and they're not accustomed to it. So we feel pretty good about the renewal side of the business, it's healthy right now.

So that you're saying like the low 4% range for the next couple of months?

Generally, 3.5% to 4.5% kind of mid-3s to mid-4s is typically what we see.

Got it. And occupancy should just trend higher as you kind of get into the more peak March, April strength timing.

Yes. Typically, that's right. You see it go to kind of midyear and then in the fall season, you see it come down a little bit, but that's pretty much the normal curve that we see for occupancy.

We have some questions here. We can switch over to capital allocation. But I guess, with regard to capital application, you haven't done as much buybacks despite trading at a very large discount relative to where your homes trade. Why? Why haven't you bought back more, I guess, is the question.

Well, I think at a high level, we shared what we shared on the earnings call, I think we did $100 million between the call that we did in fall or the late fall into the end of the year. We have certain windows, and we also have certain sources and uses with cash. I think we're pretty clear about it on our guide this year that we expect probably share repurchase to be a bigger part of our programming. But that will be relative to where we sit with capital allocation decisions. We think we have a pretty good line of sight for most of the year, but I'll let Jon add any commentary that he'd like on this topic.

Yes, sure. I think on Dallas' point about open windows, we had our Investor Day in November. We were planning to talk about that value creation road map. And so gain that to be the type of nonpublic information that we wanted to be sensitive to. So look, I think we were pleased that we were able to do $100 million of repurchases between the tail end of the fourth quarter and early in the first quarter. I think looking at our capital deployment guide, it is, I hope, clear that we anticipate being a net seller this year. And I would say that looking at where the shares are trading today, pick your metric that you want to use to measure, but give or take, $275,000, $280,000 implied valuation per wholly owned home I would contrast that with the fact that in 2025, we sold around 1,400 homes at an average disposition price of around $400,000. And where the shares are trading today is an implied cap rate that starts with a 7 handle.

We haven't been able to buy assets at a 7% plus yield since 2014 that is a mid-6% AFFO yield and a mid 4% dividend yield. So I think by any metric you choose to look at -- it's hard to argue that the highest and best use of surplus capital isn't buying back shares. And so I will say that if we had the opportunity to deploy capital, acquiring assets at a 7% plus yield, we would be backing up the truck right now. And so we are keenly aware that this is a compelling valuation. I'm biased, but I think we have the most attractive single-family rental portfolio in the U.S. I think we have the most concentrated, the most scaled, the most infill, the most defensive portfolio there is. And so if you tell me, I have an opportunity to reinvest in that portfolio, some of the metrics that I just outlined. -- clearly, that is compelling.

I guess we get the question all the time. Obviously, the single-family market is the largest and most liquid there is, but at the same time, it's very granular. There's transaction costs, there's other considerations, liquidity costs in terms of selling a bunch of homes in an individual market to end users. How do you think about the ability to actually sell in size, particularly if maybe the institutional side is maybe paused with some of the regulatory uncertainty.

I think you're right on the last point. Like I don't think it's the time to go out and market a $1 billion sale. I don't think you get the price you want, first and foremost, and second, I don't know that you want the scrutiny until you have clear visibility as to what's going on. Look, we run a business where we're in the business of housing families, and we have a lot of families as you know, that have been with us 4 or 5 years. So it's also not our intention to go to these families and say, it's time to get out. But we definitely have 25% of our book that revolves every year. And so there are markets where the spread, for example, in California, it is incredibly efficient as we sell California homes and then either reinvest in new assets or share repurchase to Jon's point. And we've been more of a net seller in California for years. So could we be more of a seller in California, Perhaps.

I think it sort of depends on how the business sort of works and flows. And then again, in the back of our minds, too, we're always -- we want to be a great capital allocator. We want to make decisions when we can, where things make sense. At the same time, we're also building business for the long haul. And what happens with dispositions in California isn't exactly how it works in Charlotte. that market could be softer. And so you may not get the exact same sort of cap rates. So it's all a balancing act. We have a really strong asset management group that looks at this under Scott's leadership, and we're constantly evaluating what on the turn we should be selling versus what should be keeping.

That's a good point, and it's something that people ask us frequently as well as just selling to the existing renter. And I know you've piloted and tried these different programs. Is there just not the uptake for it?

You'd be surprised, I mean, it's about a 5% to 10% hit rate when you go out and scale with like a big tape and again, it goes back to our earliest points like we're meeting families where they want to be met for the most part. And many of them in a position from a down payment perspective to just lean in nor should they, the cost of property taxes and insurance and the like. And we handle pretty much everything, right? And so I think people get sort of used to the fact that it's plug and play with a professional operator.

Is there an ability -- you mentioned selling assets to fund buybacks I guess, what's the limit on that from a tax perspective? And how should we think about the cap rate on, say, the $550 million of dispositions you're doing this year?

Look, I don't think we're going to guide to the cap rate, but my expectation would be that it should probably align with what our most recent historical experience has been. From a tax perspective, we are comfortable with the level of dispositions we've guided to. We have a variety of tools in the toolkit to manage through that, whether it be some NOLs that we continue to have, 1031 exchanges and the like. So I don't view tax to be a governor on our ability to sell assets near-term.

Got it. And then could you talk a little bit about ResiBuilt. Obviously, you said on the call, it's going to be a fee builder for the near-term. But how are you thinking long-term about the ability to develop on balance sheet. And then as you transition to something like that, will it involve increased G&A, increased costs? Or are the costs that are there in place today fairly scalable.

Look, we're really excited about the ResiBuilt acquisition. We've always said that we're a location-specific and channel agnostic. Over the last 3 or 4 years, I think we bought our first new construction sort of forward purchase communities in 2022, as we talked about on our Investor Day in November. We've been looking for ways to build up our new construction capabilities. We did our forward purchases. We've built out our operating model. And now obviously, we have the ResiBuilt platform as part of Invitation Homes. We've known this team a long time. Jay Byce and his team, Jay has been around since the beginning in terms of the space. He started the ResiBuilt platform in the 2018 time frame. I think it's a management team and a platform we're very comfortable with. I think one of the most interesting parts of the acquisition is not only do they have a team in place that's experienced with the general contracting work, but they have an existing book of business of doing fee build on behalf of third-party customers.

And so in the near run, as we think about where we want to take the platform over the medium and long-term, we've got the benefit of other customer relationships that we're working with in terms of acting as their general contractor in the markets where they have a presence. The main presence for ResiBuilt is in, the Georgia market, the Carolinas market in North Florida, and those are markets where they have their boots on the ground and continue to operate. I think over time, as we think about the platform and where we'll take it, we'll continue to build on behalf of others. We intend to build on behalf of existing and future joint venture partners. I mean, at some point, we'll also do it for the benefit of the balance sheet as well. But I think in the near-term, we've got a business that's cash flow positive from an expense and revenue perspective. And over time, we'll incorporate that into our overall plan.

It's really an important point you made around G&A creep. We wouldn't anticipate any in area. In fact, we'd probably appreciate some point some synergies between the size of his team and the size of our investment and asset management group. And I think the more important part that sort of the follow-up question is, what other markets would you be in? And we would expect that over the coming years, we'll add a handful of markets, right, to where we want deeper concentration or have an ability to also perform within our JVs or our third-party partners.

What is the current -- what are you expecting to spend on that this year?

Yes. I think implicit in the $0.02 of contribution that was included in our bridge is the G&A load I think that's something that we're still evaluating as we sort of integrate and we'll have more to say about that on our next earnings call.

Okay. So I mean what would be the part that needs to be figured out from here?

Well, I think the blend of activity in terms of -- on behalf of third parties versus on behalf of something that's going to go on our balance sheet or the balance sheet of a joint venture, I mean, that's going to be significant determinant. I think we've had some questions in our one-on-ones about the way we might scale that platform and expand that platform into new markets over time. But I think above all, we are going to remain laser-focused on making sure that this is accretive and creating value for our shareholders. And so we're going to, I think, take a fair measured approach, continuing to focus for the immediate term on the third-party fee build business and then over the intermediate and longer term that focus will likely shift to our joint ventures and the balance sheet.

And I guess what are the most attractive markets for you going forward? I mean it seems like there's so much development in Atlanta, Phoenix, parts of Florida. And I don't know, maybe you can tell me whether that's sort of lightening up if we're sort of at the tail end of that. But are there certain markets that you think are more interesting from a development perspective that aren't seeing that sort of same level of supply?

We can both take some of this. So I'd just say, look, at a high level, we've seen some green shoots in North Florida and some things that appear a little bit more compelling. I'm not saying that necessarily with the development minus lens. But I think as we think about the total equation, we're seeing demand. It's pretty healthy right now in Orlando. We'd like to see Tampa get a little bit stronger, so maybe it takes a little bit longer there. But I would say, look, by and large, could you see us going into markets like Nashville or some of these markets as we work our way west. Could we be at a place where we had 3 to 5 years from now, 6 or 7 markets that we want to be long in where we'd like additional scale, we'd like the opportunity to build. We see compelling fundamentals, like I think that's how we think about this.

Yes. And the only thing I would add is we closed on this acquisition 6 weeks ago. So we are working closely with the team on evaluating opportunities in markets where they have experience over the last 7 or 8 years of building historically 4,000 homes in those markets. So we're focused on the markets where they have the boots on the ground and the experience. And we are now having discussions about future markets and where we might go over the next couple of years, but I think it's too soon to identify market #4, 5 and 6.

Dallas, I feel like the single-family rental business probably was built on technology, right? Being able to manage all these disparate homes at the time. I guess as we think about the ability to deploy AI internally at Invitation Homes, where are you seeing the opportunity, I guess, maybe near, medium, longer-term? And then how are you thinking about actually doing that? Is it building yourself, partnering, buying.

I would say like we're taking a very measured approach. And we've done a little bit around leasing and sort of the funnel and kind of customer interface, that will continue to get better and expand. I think we see some areas around centralization. As tech forward, as we like to say we were when we started the business in '12 because we did have to solve problems with technology that hadn't existed. We still have a long way to go. And Tim and the team have a number of centralization efforts going on right now where we've gotten smarter just in the last 5 years about where we should operate certain parts of our business from a centralized perspective. There's a cost of sort of labor and things like that, too, where you can be pretty wise about how you do this. I mean we were still running multiple call centers last year. And we're still figuring out ways to consolidate and do things in a much more efficient, robust way.

I think you're going to see and again, we're not an early adopter yet, but in data and analytics and how you sort of backcast and look at your performance over history and time, a lot of these cloud bots and things that are starting to work on different things as an idea, take a lot of the work out of some of the consulting structures you have as you think through some of these ideas as well. So I think you can go a variety of ways. Look, the 1 thing that I love about our business, and this is sort of a hot like buzzword right now, there's halo companies, right, like heavy assets, low obsolescence. We are a halo company. And there's going to be a reversion to the mean in terms of sticking with businesses and profiles that aren't going to become obsolete overnight. And obviously, the asset side of our business isn't going to change all that dramatically. How we integrate with customers, how we digest the data, what that leads us to do strategically as a company and to create a better merchandising experience for our customer or all things that we're super focused on at the moment.

And look, the cool thing about AI is I feel like real time for start-ups and new companies that are evaluating kind of areas of opportunity, they can use AI quickly. Now bolting that into a bigger ecosystem and our data lake and our architecture, a little trickier, right? And you got to be careful about when you make these decisions and why? So I think we'll be measured in our approach, but we're certainly excited about adding some of these tools into our business plan on a year-by-year basis.

I guess for your third-party management platform, what are your partners telling you right now? I mean there's sort of not of the same size that you are, they're sort of midsize, like if they are prevented from growing going forward, do they stay at their current size, do they decide to exit? What are the sort of the message they're sending you?

I think our third-party customers, they are looking to operate their portfolios with us and continue to earn cash flow and grow the value of their platforms. I think a lot of our partners have been in kind of a status quo mode of it's an investment. They're getting a nice return for their I don't think I've seen any sort of positive or negative change in terms of the direction there. And I think there's just a little bit of a wait and see to see where we end up with the current government relations environment.

And on the -- I guess, I don't know, for lack of a better word, like the lending, bridge lending and side, does this potentially make that a maybe even a bigger business for you because if there's certain capital that is not going to be involved in this space that allows you to sort of fill that void or TBD on that.

No, I'd say we've definitely gotten an uptick in some of the inbound phone calls we've gotten since the tweet in terms of just potential developers out there that are interested in engaging with us on the construction lending business. Again, I think we're evaluating the right opportunities in the right markets where we have boots on the ground. We have our own view on rents and expenses relative to what any developer has when we underwrite a new construction loan. We closed our third loan last month. So I think we're up to about $115 million of balance with a couple more signed term sheets in the backlog. So I think we're being measured in our approach, but we've seen some interesting opportunities, and we're continuing to try to grow this segment of our business.

And just on the rapid fire questions. What will same-store NOI growth be for the single-family rental sector overall next year in 2027.

Sorry, I always have a hard time with this one because it's just 2 of us. But look, we think the setup this year is more or less like last year to some degree, right? And we obviously have some noise in our business with the policy stuff and we talked about that on our earnings call. So I think that's the only part of our budget that's a little TBD. We want to see how many dollars have to go into those kind of work.

Excluding those dollars, what is it?

Yes. Low single digits, call it.

Perfect. And then more fewer the same number of public companies in single-family next year?

I think it's probably a very easy bet to say the same.

Great. Thank you very much.

Thank you.

Welcome to the Invitation Homes Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

At this time, I would like to turn the conference over to Scott McLaughlin, Senior Vice President of Investor Relations.

Please go ahead.

Thank you, operator, and good morning. Joining me today from Invitation Homes are Dallas Tanner, our President and Chief Executive Officer; Scott Eisen, our Chief Investment Officer; Tim Lobner, our Chief Operating Officer; and Jon Olsen, our Chief Financial Officer. Following our prepared remarks, we'll open the line for questions from our covering sell-side analysts.

During today's call, we may reference our fourth quarter 2025 earnings release and supplemental information. We issued this document yesterday afternoon after the market closed, and it is available on the Investor Relations section of our website at www.invh.com.

Certain statements we make during this call may include forward-looking statements relating to the future performance of our business, financial results, liquidity and capital resources and other nonhistorical statements, which are subject to risks and uncertainties that could cause actual outcomes or results to differ materially from those indicated. We describe some of these risks and uncertainties in our 2024 annual report on Form 10-K and other filings we make with the SEC from time to time. Except to the extent otherwise required by law, we do not update forward-looking statements and expressly disclaim any obligation to do so.

We may also discuss certain non-GAAP financial measures during the call. You can find additional information regarding these non-GAAP measures, including reconciliations to the most comparable GAAP measures in yesterday's earnings release.

With that, I'll now turn the call over to Dallas Tanner. Go ahead, Dallas.

Good morning, everyone, and thanks for joining us today. I want to start by thanking our residents for the trust they place in us. That trust is central to our business, and we work every day to earn it through strong service, clear communication and a better resident experience.

This morning, I'd like to spend a few minutes on 3 areas: First, housing affordability; second, our recent acquisition of ResiBuilt Homes, which gives us in-house development capability; and third, our long-term objectives as we head further into 2026.

Let me begin with housing affordability, an issue that continues to draw significant attention and represents a significant challenge for many Americans. Renting provides an attractive alternative for many households, which is why since 1965, about 1/3 of all Americans have rented their home. Yet with only 10% of multifamily apartments offering 3 bedrooms or more, there is a clear gap in family-oriented rental options. This is where we're proud to lead, providing homes for growing families seeking value, services and convenience in the neighborhoods they care about. As a result of this focus, we have a clear view of the needs of our customer base, including many first responders, health care workers, teachers, veterans and other vital community members.

We are committed to providing them with well-maintained, high-quality homes. And that commitment matters even more today as higher home prices, elevated interest rates and large upfront costs have put buying a home out of reach for many households. According to data from John Burns, residents in our markets save nearly $12,000 a year on average by renting their homes, helping families manage their budgets, build savings and access schools and neighborhoods that might otherwise be out of reach.

And for residents ready to take the next step, we help them prepare for it. Historically, more than 20% of our move-outs have been residents who purchased their own home. One way we support that journey is by offering a free company-funded credit building program that reports positive rent payments to the credit bureaus. This allows our residents to build credit from the rent they already pay with us, a benefit most smaller landlords don't or can't offer. We have more than 160,000 residents today currently enrolled, with residents having seen an average credit score increase of 50 points. This strengthens their financial foundation, lowers borrowing costs and improves their ability to qualify for a mortgage when the time is right.

Of course, housing affordability is fundamentally a supply issue, which brings me to my second point. One of the most constructive ways we can help is by adding more homes to the markets we serve. While our homebuilder partnerships have supported that effort for years, our acquisition of ResiBuilt expands it even further and improves our control over cost, product quality and delivery pace. ResiBuilt is already delivering homes at a pace of over 1,000 homes per year in its Fee-Built business. We expect to grow on that foundation over time to add even more high-quality homes for Americans where demand remains strong.

And that leads me to the third topic I outlined this morning, which is our long-term objectives. We laid these out at our November Investor Day, and they continue to guide how we're going to operate in the future. They include: first, delivering attractive same-store NOI growth; second, allocating capital thoughtfully across accretive growth opportunities and share repurchases; third, using our scale and technology to drive efficiencies and elevate the resident experience; and fourth, maintaining a strong balance sheet.

Looking back over the past year, we made meaningful progress on each of these priorities. We continue to strengthen our platform and improve the resident experience. We took an important step toward expanding future housing options with the ResiBuilt acquisition. As we move further into 2026, we are reaffirming these objectives with a focus on controlling what we can control. That discipline will continue to guide our decisions as we work to deliver value for residents and shareholders, while expanding housing choice and flexibility in our communities. At the center of our work is a commitment to the people we serve and the people who make our progress possible. To our residents, associates and shareholders, thank you for your continued trust and partnership.

Now before we turn the call over to Tim to discuss our operating results, I've asked Scott Eisen to share a few more details on the ResiBuilt acquisition. Scott?

Thanks, Dallas. We're excited to welcome the ResiBuilt team to Invitation Homes. This acquisition accelerates our in-house development capabilities while keeping our upfront approach asset and capital light. ResiBuilt is a best-in-class builder of single-family rental homes, having delivered over 4,000 homes since 2018 in Georgia, Florida and the Carolinas. Around 70 ResiBuilt employees have joined us, and the team will continue operating under the award-winning ResiBuilt brand. Leading the platform is Jay Byce, a highly respected leader in the build-to-rent development space. Jay will continue serving as President of ResiBuilt and report directly to me.

Today, ResiBuilt has 23 active fee built contracts with over 2,000 home starts planned for 2026 and beyond. We expect nearly all near-term activity to remain third-party fee-based, generating capital-light earnings and providing modest accretion to 2026 AFFO. Beyond this currently contracted work, ResiBuilt offers opportunities to develop around 1,500 lots in Atlanta, Charlotte and Orlando. Over time, we expect to selectively develop homes for the Invitation Homes balance sheet and for our JV partners.

Together, ResiBuilt capabilities elevate our long-term supply strategy by giving us greater command over product, location and timing. We expect to unlock new operational efficiencies, achieve more seamless integration and gain stronger control and foresight across our growth pipeline. These capabilities also provide additional flexibility while complementing the strong relationships we maintain with our national homebuilder and joint venture partners. In short, ResiBuilt strengthens our foundation for future growth and expands the housing options available to families across our markets.

With that, I'll turn it over to Tim to walk through our fourth quarter and full year operating results.

Thank you, Scott, and good morning, everyone. Our fourth quarter and full year operating results highlight the strength of our platform, the dedication of our associates and the trust our residents place in us. For the full year 2025, we delivered solid same-store performance with same-store NOI growth of 2.3%, finishing above the midpoint of our guidance range. This was driven by 2.4% core revenue growth and 2.6% core expense growth. In the fourth quarter, same-store NOI grew 0.7% year-over-year, supported by 1.7% growth in core revenues and a 4% increase in core expenses.

Resident satisfaction continues to be a central focus and a differentiator for Invitation Homes. Turnover remained low during 2025 at 22.8%, consistent with the prior year and average length of stay remained well over 3 years. In addition, same-store average occupancy for the year was 96.8%, landing at the high end of our 2025 guidance. These metrics all underscore the stability of our resident base and the quality of the service we provide.

Turning now to same-store leasing performance. Fourth quarter blended rent growth was 1.8%. This reflected strong renewal rent growth of 4.2%, which more than offset a 4.1% decline in new lease rates, given that renewals account for about 75% of our total lease book. In January, occupancy held just under 96% and blended lease rate growth improved by 30 basis points from the prior month to 1.5%. Renewal growth was roughly flat with December at about 4%, while new lease rates were down 4.2%.

Performance over the past few winter months was broadly in line with our expectations for this time of year and reflects the effect of targeted specials in some of our slower markets where supply has exceeded near-term demand. These concessions helped support steadier occupancy through the softer seasonal period, which should better position us as we move into the spring leasing season.

Looking ahead, we remain fully committed to achieving the $0.14 to $0.20 of incremental AFFO per share growth over the next 3 years that we expect on top of our baseline growth as we outlined at our Investor Day. Operational enhancements are expected to provide roughly half of the projected AFFO growth, and our team remains focused on executing the initiatives to unlock this incremental value. In the meantime, our mission of elevating the customer experience continues to guide our decisions and our daily execution. We are making steady progress modernizing our service model, expanding the use of centralized functions where they can improve speed, consistency and quality and giving our teams better tools to serve our residents more effectively.

These efforts also tied directly into how we control the controllables across the business. There's still more work to do, but we continue to believe our initiatives will drive higher satisfaction and stronger long-term operating performance over the next few years. I'd like to thank all of our teams for their commitment to this work and for the progress they're delivering.

With that, I'll turn the call over to Jon.

Thanks, Tim. This morning, I'll cover 3 topics: First, our balance sheet and liquidity position; second, our fourth quarter and full year financial performance; and third, our 2026 guidance. Starting with the balance sheet, we continue to maintain a conservative leverage profile that supports our investment-grade ratings. We ended the year with $1.7 billion in total liquidity, including unrestricted cash and undrawn capacity on our revolving credit facility. In addition, our year-end net debt to adjusted EBITDA ratio remained at 5.3x. Approximately 94% of our total debt was either fixed rate or swapped to fixed rate and approximately 90% of our wholly owned homes were unencumbered. We have no debt reaching final maturity before June 2027.

As previously announced, in October, our Board of Directors authorized a $500 million share repurchase program. Since that time, we've repurchased 3.6 million shares totaling approximately $100 million. We see meaningful value in our shares and expect to continue repurchasing as opportunities permit.

Turning now to our financial results. Core FFO for the fourth quarter increased 1.3% year-over-year to $0.48 per share, while core FFO for the full year was up 1.7% to $1.91 per share, primarily due to NOI growth. AFFO for the fourth quarter was generally flat year-over-year at $0.41 per share, while AFFO for the full year grew by 1.8% to $1.63 per share.

The last thing I'll discuss is our full year 2026 guidance. This includes our expectation for same-store NOI growth in a range between 0.3% and 2%, driven by expected same-store core revenue growth in a range between 1.3% and 2.5% and same-store core expense growth in the range between 3% and 4%. Our same-store core revenue growth guidance assumes average occupancy of 96.3% at the midpoint, while we expect same-store blended rent growth in the mid-2% range.

In addition, our outlook incorporates approximately $550 million of dispositions at the midpoint, which we expect to serve as the primary funding source for additional share repurchases and $250 million of anticipated wholly owned new home deliveries at the midpoint. Together, these assumptions result in full year 2026 core FFO guidance of $1.90 to $1.98 per share and AFFO of $1.60 to $1.68 per share. For complete details of our 2026 guidance assumptions, including a bridge from 2025 core FFO to our 2026 guidance midpoint, please refer to last night's earnings release.

As we embark further into the new year, we believe our operating discipline, capital allocation strategy and strengthened development capabilities support our ability to remain nimble and focused while continuing to serve residents with quality and genuine care. Combined with a solid balance sheet, clear priorities and steady progress across the business, we believe we are well positioned to deliver long-term value for our shareholders and the families who call our homes their own.

That concludes our prepared remarks. Operator, please open the line for questions.

[Operator Instructions] Your first question comes from the line of Jana Galan with Bank of America.

Thinking about your expectations for same-store blended rent growth in the mid-2% range. Just curious kind of the kind of quarter-to-date. It sounded like you said 1.5% so far for blended lease growth. Just how does that track? And then how are you kind of anticipating the peak leasing season to play out this year?

Jana, it's Jon. I'll take the first part and then see if Tim wants to add any color. I think the mid-2% blend aligns with where our guidance is coming out. I think 6, 7 weeks into the year, we've only just gotten into peak leasing season. So I think it's a little bit premature to draw any conclusions based on what we've seen thus far. I would note that in terms of top of funnel demand, lead volume feels very healthy compared to last year. I think the challenge for us at the moment, and this was true in the fourth quarter as well, was just the amount of available inventory on our book and in some of the markets where we operate.

So I think time will tell. We'll know a lot more about how peak season shapes up the next time we get together. But I would note that each of the last few years, the nature, timing and kind of shape of the demand curve in peak season has changed. So we just want to be we want to be judicious in terms of the assumptions we make about the blend.

Thanks, Jon. And I'll add, look, supply and demand dictates our pricing. Supply, we talked about this on past calls, has been slightly elevated in a few of our core markets, namely Florida, Texas and Arizona. But we are seeing those supply levels come down. And as Jon mentioned, our peak season really starts right after Super Bowl, goes into mid-summer. We're seeing healthy demand, and we look at that through a variety of different metrics, but our lead volume remains strong, clearly a strong indicator that there is demand for single-family housing. We will continue to see over the next couple of months, our spreads between renewal growth and new lease growth narrow as our new lease growth expands.

Right now, I'll add that we don't have any concessions on our scatter site product. We use that tool as we have in years past to incentivize residents during our slower season. Right now, the only specials that we have going are on our build-to-rent communities, and that's pretty customary for developers and investors during lease-up to achieve stabilization. So we're really happy with the supply and demand fundamentals as they're heading into peak season right now.

Your next question comes from the line of Eric Wolfe with Citi.

I think some drafts of the institutional investor ban have been circulating through Congress. I was just curious if you could comment on sort of what you would like to not see in that bill versus what you're advocating for, sort of how you hope the legislation ultimately looks?

Eric, this is Dallas. Thanks for your question. We're certainly all over it, as you'd expect. And I'd just, at a high level, say that we've been encouraged by the discussions with policymakers on both sides of the aisle through this process. Obviously, the well, the tweet, I should say, and then the EO was something that I don't think the industry really expected. That being said, we have a sensitivity and appreciative nature of the focus being on this issue around affordability. I believe through the trade association, also the work that we've been doing with the companies in the NRHC, I believe we've been able to highlight appropriately where SFR and more importantly, professionally operated single-family rental lives in this -- in the broader ecosystem.

That being said, I think it's a little too early to speculate on what we what we do or don't want to see. In some regards, I think the industry is hoping for clarity. I think we like the idea of having some clarity of what you're able to do versus maybe what you're not able to do. It certainly feels like BTR and the production of new product is something that feels pretty favorable based on the conversations we've been having. So we view that as a positive. We're excited about that and what it means for both the way we work with our current builder partners and also what we can do now with our own platform and ResiBuilt.

During these conversations, the focus has certainly just been on affordability, path to homeownership and to create sort of lanes for folks that want to transition into homeownership over time. And as you guys are well aware, we've been hyper focused on that latter point really for a couple of years now and making sure that we have positive credit reporting. We have currently about 160,000 residents enrolled in positive credit reporting. We've seen credit scores go up by 50 basis points. So I think all these facts have also been very helpful as we've been talking with policymakers around how SFR can fit into the broader ecosystem.

And I think the important part here is that we want to meet customers where they are. And there's certainly a number of customers, we see it in our business day in and day out that transition from rental to homeownership. I think in the last quarter, it was around 16% or 17%. Traditionally, it's been between 20% and 25%. We view that as normal. But with the differential in costs being about $1,000 a month cheaper to rent than to own, not including the down payment burden and then the other things that go into homeownership, we know we offer a pretty attractive value to customers, and they continue to tell us that, both in our surveys and as we work for ways to refine and improve our processes.

So I think that's all I can say from a legislative perspective. We're certainly engaged. We're having great discussions, and I feel like it's been candidly pretty collaborative.

Your next question comes from the line of Austin Wurschmidt with KeyBanc Capital Markets.

So I appreciate kind of the decision to step in and buy your shares here and comments around being a net seller and using some of those proceeds to buy back shares. But I guess, Dallas, given your comments about being encouraged with what's happening on the regulatory front, Tim mentioned you're starting to see supply moderate. What would it take for you to really ramp up the buyback even further given that meaningful value that you referenced you see in shares today?

Thanks for the question, Austin. I want to echo what Jon said in his prepared remarks. I mean we see real value there in terms of where the shares are currently trading. We are clear about that at Nareit at the end of the year. Now we certainly have limited windows where you can sort of operate. And then at the end of the day, and I think you guys know us about us, from a capital allocation perspective, we also want to be moderate. We know that we have opportunities on the horizon, both with external growth and some of the opportunities that we'll look at over the coming year.

But I think for us, it will be about when the opportunities are available to us, as Jon said, with always thinking about where our current cost of capital is and highest best use on a risk-adjusted basis for economic returns that make sense for our shareholders. So you can certainly argue that if the shares continue to trade in this range that on a risk-adjusted basis, it can make sense to continue to be active there.

Your next question comes from the line of Steve Sakwa with Evercore ISI.

I was wondering if you could provide a little more commentary around your expense growth assumptions. I know that you guys did a very good job containing expenses and I think handily beat your initial expense outlook for '25. I know you put a few assumptions around taxes and insurance for '26. But maybe just speak to some of those numbers, and they seem a little bit elevated, but maybe there's some tough comps going on. So any clarity around expense growth would be helpful.

Yes, Steve, thanks. I think a couple of things going on there. With property taxes, obviously, the outcome in 2025 was pretty favorable relative to our guidance. I think it's worth pointing out that we had a fairly sizable good guy in Texas last year. And absent that, property tax growth would have been closer to the mid-4s. So the range we've articulated in our guidance, I think, is generally consistent year-over-year.

With respect to insurance, a couple of things going on there. 2025 was a very favorable year for us. It creates a bit of a tougher comp. I think if you look at the property market, we think that, that is going to be a very constructive renewal. It's in the general liability, excess casualty and auto market that has become materially harder and where we think we'll see some outsized increases year-over-year. So when you put it together, that's the driver around the insurance expense growth. Now our policy year runs from March 1 to March 1. So we'll be buttoning that up in the next 1.5 weeks, and we'll have more information that we can share. Certainly looking at all the levers we can pull to try to drive a better outcome, but we're not going to change the way our program is constructed. We want to make sure that we are well insured. And the insurance market has sort of ebbs and flows similar to other markets.

If you look at what that implies for overall controllable expense growth or all other expense growth, I guess, I should say, it's really in the range of 1% to 2%. So we think our cost controls continue to be effective. We continue to be laser-focused on trying to make sure that we are being as efficient as we can be. I think the other thing I would call out with respect to expenses is something that we included in our earnings bridge. I think several of you noted it, but I would just point out that we have incorporated in our bridge an estimate of $0.02 per share related to advocacy and other costs.

I want to be clear that, that is an estimate. We've incurred some limited costs to date and the timing and magnitude of any additional costs we incur is a bit of an open question. But we wanted to include something there in the bridge just to be transparent about the likelihood that there will be costs associated with navigating the current regulatory backdrop.

Your next question comes from the line of Brad Heffern with RBC.

On the repurchase, I was wondering if you could talk about what the rough maximum amount is that you can accomplish in any given year without running into tax issues or needing to issue a special. I know it varies based on what exactly you're selling with the gains on sale, et cetera. But I'm kind of wondering if the guidance assumes a number that's sort of close to what the annual maximum might be or if there's upside to that?

Thanks. I would just point out that we're not going to get into any specifics about the quantum of share repurchase embedded in guidance. But I would say that as Dallas noted and as I think I touched on in my prepared remarks, when we see a material disconnect between where our shares are trading and what that implies as far as the value of our portfolio and what we view the actual value of our assets to be, we have to evaluate that as an opportunity for capital deployment, right? And if we look at the relative risk-adjusted returns of the various alternatives available to us, it is hard to conclude that share repurchases aren't a very, very compelling use of funds.

So I think what we've outlined in our guidance in terms of capital allocation activity sort of suggests that there will be excess disposition proceeds that should the shares continue to trade at a level that is meaningfully dislocated from the value of our assets, suggest that we'll be active in the market buying back shares.

Your next question comes from the line of Haendel St. Juste with Mizuho.

I wanted to follow up on Jana's question on blend. I appreciate the color, Jon, but I'm still having trouble, I guess, getting to the mid-2% that you mentioned. So maybe some more color on what you're implicitly expecting for turnover, renewal, new lease rates? And then while you're at it, maybe some color on bad debt and ancillary as well.

Sure. Thanks, Haendel. We are assuming turnover at the midpoint that is slightly higher than last year. We expect our renewal rate will remain healthy given the favorable value proposition that we talked about in our prepared remarks. But I think the guide also acknowledges that there is a larger volume of rental product competing on the basis of price, and we anticipate that will lead to slightly higher turnover year-over-year.

As far as days to re-resident, I would note, again, the supply pressures we're facing in certain of our markets are likely to have a flow-through occupancy impact primarily through longer days on market. We have done a very good job, I think, and tip of the cap to Tim's team in keeping days and turn pretty consistent. But the days in market number has certainly elongated. I think we did about 48 days to re-resident in '25. And my expectation is that in 2026, it will take us a few days longer on average over the course of the year to get new residents into homes and getting them cash flowing.

With respect to sort of the components of the revenue growth guide, I would just point out that I think the earn-in from '25 will represent about 105 basis points. Blended rent growth this year is about another 105 basis points. And then the increase in other income contributes about 20 basis points. And so then if you net against that about a 40 basis point deduct for lower occupancy year-over-year, that's how you get to the 190 basis points at the midpoint.

Your next question comes from the line of Juan Sanabria with BMO Capital Markets.

This is [ Emily ] on behalf of Juan. I wanted to ask if you could talk about what you've seen so far in January across the new lease renewal and blended rates as well as occupancy.

Yes. This is Tim. That's a great question. Yes, we've seen what we would expect to see in early February heading into the new year. Typically, you start to see a higher demand, higher lead volume across the assets. And so we're seeing that materialize in a stronger new lease rent growth.

On the renewal side, look, the renewal side of the business is a very consistent part of our business. It represents 75% of the book. The renewal rates continue to remain very firm. And I think residents are generally very satisfied with what they're experiencing. We do expect to see, as I mentioned earlier on the call, we do expect to see our spreads start to narrow as we get deeper into spring, and we expect to see that continue until mid-summer. So you can expect to see that blend continue to pick up in these next couple of months.

Your next question comes from the line of John Pawlowski with Green Street.

Jon, a follow-up question on property taxes. Just given a lot of markets are seeing flat to declining home prices now. Outside of the Texas kind of tough comps associated with Texas, are you seeing signs where municipalities are assessing property taxes more aggressively on investor-owned homes versus owner-occupied because I still think the 4% to 5% guide strikes us is really high given home prices are declining, not really rising that fast.

Yes, Jon, it's the right question. Thankfully, we are not seeing a differential treatment of investor-owned homes versus owner-occupant-owned homes. I think any approach to "property tax relief" that benefits owner occupants at the expense of SFR operators effectively transfers costs from the families that own their homes to families that choose to rent. Our hope is that the folks making those decisions recognize that renters are voters, too.

I think with property tax overall, Jon, we just want to be cautious. I think as we've talked about at length, Florida and Georgia are 2 of our 3 biggest markets. and we have seen a continuing catch-up in terms of assessed values relative to what we view true market value to be. Just as a reminder, from '22 to '25 in Florida, we saw over 22% home price appreciation. And in Georgia, over that same period, it's over 23%. And so the ability of assessed values to catch up to that market value when it has expanded as rapidly as it has is somewhat limited. In Florida, in particular, a portion of property tax bills are capped such that assessed values on a percentage of the total tax bill can only go up 10%.

So structurally, it sets up a multiyear catch-up. And so I think as I take it all together and we look at property taxes, certainly, we're hopeful that we will do better than that. I think, as you know, we've had some nasty surprises if you go back enough years, and that's something that we want to make sure we avoid by just being thoughtful about what is likely to happen at that line item.

Your next question comes from the line of Jamie Feldman with Wells Fargo.

I guess, first, thinking about development with the ResiBuilt platform, do you think you'll need to buy more platforms if you're going to grow your development platform across the country? Or do you think ResiBuilt -- you'll stay within the ResiBuilt platform to expand into other markets? And maybe a little bit more color on where you think you can be building going forward.

Jamie, thanks for the question. This is Dallas. And I'll also let Scott add anything he wants to add to this. I think at a high level, we feel really comfortable about the capability we just brought in-house. Jay is a seasoned operator in the space. We've known him for over a decade. We've been impressed with the work they've done. They've built out a really remarkable platform in terms of both capability and scale. Scott talked about the 20-plus existing projects they have ongoing, which, by the way, we didn't underwrite this initially, but has led to a lot of great synergies with our lending efforts in terms of opportunity sets and things we're getting an opportunity to look at on that perspective.

I don't know that you necessarily have to go out and acquire other platforms to try and grow your development business. I think we've got the capability in-house. It's just a question around which markets do we want to be in and why. And we have a ton of experience prior to the ResiBuilt acquisition of understanding sort of what our costs are in particular parts of the country as we build with partners and the like. And so I think for us, we feel pretty confident that we don't really need to do much outside of manage the mature organization we just brought on and find ways to sort of blend and extend in the right parts of the country over time and over distance.

The nice thing about this is this is really accretive in terms of how we think about it. They have a cash flow positive business that does great work in the marketplace with multiple parties. And we can start to look at opportunities, as Scott mentioned in his earlier remarks, that are already sort of in front of us, and we can also sit on the sidelines if we want to until we decide that a particular opportunity makes sense.

Scott, anything you want to add to that?

No. Thanks, Dallas. Thanks, Jamie. This is Scott. I think at our Investor Day in November, we shared our long-term vision to create value through our BTR growth strategy that combines construction lending and development. And our announcement of buying the ResiBuilt platform was months of thoughtful planning to advance that vision. The acquisition of Resi is a great step forward for us. They're a best-in-class developer that enhances our execution capabilities, expands our capacity to address the nation's most pressing challenges on housing affordability. We're focused on adding supply in desirable markets and creating communities that families are proud to call home. They're currently focused in the Carolinas and Florida and Georgia, and we're going to continue to leverage their capabilities and boots on the ground in those markets. And that's really where our efforts are going to be focused for the foreseeable future.

Your next question comes from the line of Michael Goldsmith with UBS.

This is Ami on with Michael. The homebuilder partnership pipeline has been moderating and cap rates on acquisitions have also been slowly ticking down. So I was wondering how have your relationships with the homebuilders evolved? And what factors are leading to the slower pipeline and potentially maybe a little bit lower growth from this avenue?

Thanks. Great question. As far as the homebuilder dialogue, it continues very strong, right? We have great relationships with both the national builders and the regional builders. But given our cost of capital, we have been less aggressive in terms of committing to future transactions with the builders, mainly as a signal because of our cost of capital. I will tell you, we continue to receive substantial opportunities, in particular, the end of month tape from the builders. For the first 2 months of this year, we've received a lot of deal flow from them. So there's still opportunities out there, but we're trying to be a little less aggressive and obviously listening to the signal in terms of our cost of capital and the balancing act between acquisitions and share repurchases.

And so I think -- but that being said, I think our relationship continues to be strong. We obviously purchased more than 2,000 homes last year from the homebuilders. We continue to have a daily dialogue. We're very selective. We are looking at opportunities for our joint venture partners. But again, given our cost of capital right now, I think we've just been less aggressive in terms of acquiring from that pipeline.

Your next question comes from the line of Jason Wayne with Barclays.

The release mentioned that ResiBuilt could serve as an in-house development contractor. Can you just give some more color around how their team will assist in the process as you're growing out the build-to-rent platform? And then just the longer-term growth profile of the ResiBuilt fee-based business specifically?

Sure. This is Scott. Great question. Look, this platform, the ResiBuilt, we've known these guys for a long time. They commenced operations 6 or 7 years ago in terms of building up their platform. And they're essentially a general contractor that has the capabilities to source land and do construction management oversight of projects. They have a business that historically had built for one particular institutional partner where they acted as a GP. But they also have acted as a fee builder on behalf of other third parties where they've done general contracting work and receive payment for performing services on behalf of other equity investors and developers.

We will continue to have them work in that business and generate revenue by working with third parties. And over time, they're going to explore opportunities to also perform work both for our joint venture partners and eventually for ourselves when our cost of capital improves. And so I think that they're a full-service GC developer, and they're going to continue to do what they've been doing.

Your next question comes from the line of Linda Tsai with Jefferies.

Just on ResiBuilt delivering 1,000 homes per year, and I know you're going to grow that more over time. But how long would it take to, say, doubling it to maybe like 2,000 homes per year?

I think it's too soon really for us to be speculating on that. These guys have a platform and boots on the ground in place that gives them the ability to perform at least 1,000 home starts a year on behalf of their joint venture partners and customers. And over time, we'll kind of see where the business goes. But I think it's just too soon. We closed on this acquisition 5 weeks ago. We're still working on integration of them into the platform. I think it's too soon for us to be speculating on things like that.

Your next question comes from the line of Jade Rahmani with KBW.

This is Jason on for Jade. So homebuilders are offering rates below 4% in markets such as Phoenix. Can you comment on the supply-demand balance in key Sunbelt markets and whether you're seeing an increase in move-outs to buy?

Jason, thanks for the question. This is Dallas. As I mentioned earlier, we're only seeing about somewhere between 16% and 17% of our move-outs say that the reason they're doing so is because of homeownership opportunity. Now that being said, and we're not mortgage experts, we clearly follow it. There's plenty of supply on the market for sale today. There certainly feels like there's a bid-ask spread between where homes are selling, where a home can be financed at. And you're certainly right in highlighting that builders have had an opportunity to buy down rate, which has helped candidly, probably keep home prices somewhat stable over the last couple of years.

That being said, on a seasonally adjusted rate, we're still seeing somewhere, I think, just less than 4 million total transactions in a given year. That's really low. Like most economists would tell you that we should probably see somewhere between 5 million, 5.5 million transactions. The amount of inventory in the MLS is almost 2x this year of what it was last year. So all of these fundamentals sort of suggest a couple of things to us as we look at the macros. One, there is just a cost of ownership that is pretty egregious at the moment when you consider all things being loaded in. And we pick on mortgage quite a bit, but I think we need to be honest about property tax and insurance. Jon just talked about it. Property tax has been egregious in most states over the last 4 or 5 years as it's caught up with the inflationary pressures put on housing prices.

And then on the insurance side of the equation, it's been equally as tough, I think, as people think about that fully loaded cost. So that probably has something to do that. And then you -- the fourth multiplier here is at what price can you finance this. And so you're right in the highlight that the builders have an advantage in terms of how they're buying down rate. But it feels like with the 30-year being around 6 or low 6s, it's got some room to go probably to peak enough curiosity. But let's see how the spring and summer play out.

Your next question comes from the line of Jesse Lederman with Zelman.

Can you talk through what you're seeing on the supply side of things? Now of course, new move-in rent growth of negative 4% during the quarter, coupled with a sequential decline in occupancy. We know development starts for BFR down, multifamily has also come down. What are you seeing from a supply perspective in terms of those pressures alleviating?

Yes. This is Tim. Great question. Look, supply in a lot of markets is higher than we've seen in the history of this industry. And there's a couple of different factors, right? And you mentioned some of them, right? There's build-to-rent product that has come online. Most of the peak deliveries in our markets are in the rearview mirror. And so it's a matter of time before the demand kind of eats that up. You're also seeing scatter site SFR, both institutionally owned and mom-and-pop SFR that's out there. We're seeing slightly higher levels of mom-and-pop SFR as people choose not to sell, they enter that product into the rental market. And there also is, as Dallas talked about earlier, there's the market for newly built products.

So there is a supply -- a slight oversupply right now. We're not seeing that grow right now. What we are seeing is that kind of chip away based upon the demand. Everybody talks about homeownership as being kind of the end. There's a lot of people, and we see this in our data with our residents, they choose to rent. And so we believe that there is a long-term healthy demand for our product across our markets. And again, we talked earlier about the specific markets where we do see higher supply, namely the Sunbelt, you've got Florida, you've got the Texas markets in Arizona, and we do see that in our numbers. But at the same time, lead volume is still there. A lot of people entering that age. Our average age of residents is about 38, 39 years old. So there is just a wave of demand for our product.

And when you look at our renewal rates at 75% of -- renewal rate of 75% roughly of our book of business, it's pretty obvious that people who are renting want to continue to rent. And so does the supply backdrop concern us? Well, it's there, and I think it's a little bit of a cycle. It's transitory in nature, and we're going to let demand continue to gobble that up over the coming months and quarters.

Your final question comes from the line of John Pawlowski with Green Street.

I have a 2-parter, forgive the 2-part question. Tim, your comments that there are 0 concessions on your scattered site portfolio, does that represent a meaningful improvement from this time last year? And then secondly, for renewals that have already gone out for, I guess, March and April, are we expecting the achieved renewal rate to still hover in this 4% plus or minus range? Or should it be worse or better?

John, great questions. I'll tackle each of them. The first question on concessions. Look, we offer specials through the winter months historically. And that ranges depending on kind of what we're seeing in the marketplace in terms of the supply and demand fundamentals. We're very nimble. Our pricing structure allows us to do that to target those specials. And our specials are not significant. They're really around -- historically, this cycle, we've offered $500 off. And then for a 2-year lease, we've thrown an extra $250. Those specials are off. We are seeing demand tick up. And so there's not the reason to deploy tools like that right now. But again, we've offered them in years past.

And then on your second question, can you remind me the second question?

Yes. Again, maybe a clarification on the first one. Again, are concessions a lot lower than this time last year across your platform? The second question is on achieved renewals that are for renewals that are due, that become effective in March and April? Do we expect effective renewal increases still in the 4% range? Or should it be better or worse?

I think it will hover around the 4% range in answer to your renewal question. It could go a little bit low, it could go high, but 4% has been very consistent for us, and we continue to see about 75% of the book, maybe a little bit more renew. And getting back to your concession question, look, it's not any more or less than last year. This is typical for what we do, and we take it off this time of the year as we see the market return into our peak leasing season.

That concludes our question-and-answer session. I will now turn the call back over to Dallas Tanner for closing remarks.

We want to thank everyone for their participation today, and we look forward to seeing everyone at the upcoming investor conference. Talk soon.

Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.

Good afternoon, everyone, and welcome to Invitation Homes' 2025 Investor Day. I'm Scott McLaughlin, Head of Investor Relations.

It's great to see many of you again, including many of our largest stockholders, along with our esteemed sell-side community. Today is about transparency, engagement and execution giving you a clear view of where we're headed and how we plan to get there.

Before we dive into all that, let's just take a quick look at some of our required disclosures. This presentation includes forward-looking statements and non-GAAP financials. Please review the disclaimers on this page, along with the appendix at the back of our presentation for additional details.

With that, let's set today in our purpose. Our purpose at Invitation Homes is simple: Unlock the Power of Home. We do that by delivering quality living solutions and genuine care for the family and search of better schools or a nurse who needs a shorter commute and the couple who wants a yard without the maintenance surprises. That's the power of home.

Think of today as a guided tour through one of our homes with each room representing a key aspect of our business. Here's a look at our agenda. Dallas will kick things off in the living room with a review of our business and strategy. Followed by Tim, who will take us into the kitchen to talk about operational excellence and the resident experience. Next up, Virginia is in the den to share how we're unlocking the future of home through innovation and technology. We'll then do our first of two Q&A sessions. Followed by a short break. After that, Scott Eisen will take us into the garage to discuss external growth opportunities. And we'll then join John in the home office to walk through how we plan to unlock shareholder value. Finally, Dallas will return to meet us on the front porch to summarize our plans and send us off with some closing thoughts. We'll then hold our second Q&A session and conclude by around 4:00 p.m. Following that, we hope those of you here in the room can stay and be our guests at an open house reception immediately afterward and connect with our leadership team who's here today throughout the room.

So before we sit down with Dallas in the living room, let's start our home tour with a quick look around through the walls, up the stairs and into the heart of what makes this home special.

[Presentation]

Thank you. We really are grateful to have everyone in attendance today. Thank you for spending the day with us, trying to figure out how we can Unlock the Power of Home for our residents, our stockholders and our associates together.

Why now? We feel like we're on a path to create incredible efficiencies in our business through automation, AI, centralized processes. We feel like we're in the early innings of where the industry is going, and we're basically only a decade plus into our story. And it's exciting to be with everyone today to be able to kind of go deeper under the hood with key members of our team to really look at what we're focused on in real time that's going to lend itself to outperformance over time.

We also acknowledge that this setup is a little bit interesting right now. There's a little bit of headwinds around supply in that backdrop that people have been talking about. But in our company, we have a culture of controlling the controllables. It's something we talk about all the time. It's actually kind of fun that we saw that we were able to put those on some of our patches today. But like always taking accountability and try to make sure that we can not only control the pieces and the inputs that go into our business that are within our reach but also holding us accountable to that control and making sure that we sort of share with you guys the work we've been doing to set the mark for the next couple of years in our business.

I want to set the table today really around three key concepts. One is Innovation, how we are focused on getting more efficient, some of the early wins we've seen in our business and where the puck is going to go for us over the next couple of years. Growth, what are those different channels? We've talked about a couple of new things just within the last year around our lending program and [ 3PM ]. And what does that look like for us going forward? And what the kind of avenues of Possibility are going to be for our company. How are we going to continue to define the SFR space going forward? And how is Invitation Homes going to continue to lead and set the bar where the single-family rental living experience should be. These three areas we fundamentally believe are going to lead to outperformance for a company that will also complement the normal growth we're going to see in our business year in and year out.

First, let's talk about Innovation. How are we imagining the resin experience through the use of AI, centralized services how do we decrease our cost structure over time and maximize revenues? How do we continue to kind of lead in that category, whether it's talking about our employees, who are wonderful, the tools that they have how efficient can we get on our current headcount. There's just a number of things that we're going to talk about there.

Second is Growth. The opportunities that are in front of us in our ordinary course channels, things that we see that potentially could be on the horizon and our ability to expand because of the efficiency of our platform and deliver sustainable returns for shareholders.

Third is Possibility, which is sort of the fun stuff. This is like where we get to dream a little bit as entrepreneurs and builders. What is the long-term vision for Invitation Homes and what role will we continue to play in shaping that narrative.

Today, we're going to explain how we expect these teams basically to deliver another $0.20 per share of AFFO over the next few years as we implement some of these processes into our company. But before we get into that, let's take a quick look back at how we've grown, sort of set the table for our discussion. And at each phase of our foundation, the company has evolved.

We started the company with a really simple concept, right? It was how do we make flexible living and leasing, efficient, friendly and full of genuine care, which you heard Scott talk about when you kick things off. And really, our first phase, which you guys are all familiar with this asset aggregation phase coming in 2012 when we started the business. We're able to assemble basically 50,000 homes, one off over a 3- or 4-year period and then start to standardize what that business should look like. Those early days, the margins were nowhere near where they are today.

Then we had our second -- our first big consolidation opportunity, we call it the second chapter in our story, which was our merger and integration with [ Starwood Waypoint ]. That took a bit of digestion, as you can imagine. And we, I think prove to the Street and also to ourselves over time that those efficiency gains were there. We saw it in really unprecedented NOI growth for a period of 4 to 5 years.

This third chapter, which we call opening the aperture for our company is really where the puck is going. So we have this baseline now of 110,000 units between wholly owned and our third-party businesses that set the stage for us to invest in technologies, processes, people, efficiencies in a way that will continue to drive and lead an outperformance, both in metrics we want to hold ourselves accountable to as an organization. But I think more importantly, how the resident feels living in our home and experiencing an Invitation Homes experience.

Throughout this journey, we're proud of how Invitation Homes has been a leader within the SFR sector. Over the 14 years that we've been in the business, we've consistently led the way, and we talk about that internally. What standard are we going to hold ourselves to as a company and as a leadership team and how do we measure the success of that standard. From being one of the founding members of the [ NRHC ], to doing the first securitization in the bond market, to being the first S&P 500 company invited in, in the SFR category. We've been a company that's continually sort of led the way and done things in what we would call first of its kind.

But we're really just getting started. And being a leader and a leader in the space as a company is kind of -- is really only part of the story or part of what we really want to focus on. What matters most is how these milestones translate into real results. And let's take a little bit closer look.

Since our 2017 IPO, we've basically led the residential REIT sector in NOI growth. And that story obviously came through those few chapters that we had or the first three chapters of our book. or the story that we're trying to tell as a company and an organization. But the most important thing about like the performance, it's great. And we -- it's really set us up with the confidence that as we look ahead, we know that we can adjust our thinking based on the opportunity set which is in front of us. We've always had an ability to react and to sort of see where the puck is going and put ourselves in a position to try to capture that in a meaningful way, both for our shareholders and also for our residents. And this will lay a strong foundation for us as we prepare for what's next in our journey.

For us, performance always starts with location. So just taking a step back, let's sum into where we operate and why we believe our markets give us a very durable edge as a company. We're long-term investors pursuing growth and risk-adjusted returns in areas of the country that we believe will lend themselves to outperformance over time. 96% of our wholly owned portfolio is in what we would call high-growth markets.

Our homes are primarily located in infill neighborhoods near great jobs, good school districts. Schools are really important to our customer. They're close to job growth, where companies are moving and relocating southern markets, et cetera. School -- and then we're also -- we've always had this ideology of making sure that we lean in to infill locations. And why is that? We're less exposed to competition. We serve the residents in a way in a neighborhood that they actually want to be today and over time. That's important when we talk about retention and our ability to continue to set a bar that's pretty high for us in terms of our customers renewing with this time and time again. Our customers have proven over time that they're extremely sticky.

And then the other piece of being infill is that you have higher gross economic rents, which also equals basically better margin expansion over time. It helps you actually against the cost structure of OpEx and CapEx. If you're lower gross economic rents as a percentage of the overall revenue, it creates a bigger dent when things don't go right. It's not just about being in the right markets. It's also about having sector-leading scale and density.

On the map in front of us is Atlanta is a good example. Today, we own and operate over 18,000 homes in this market, okay? To optimize staffing, routing customer service. We've organized Atlanta today, and this is adapted over time and it's very different from where we started into four pods. The average pod today in Atlanta manages 4,600 units. Most companies don't have 4,600 units in any market. We have four sets of those in Atlanta alone. Each pod today is now almost double what it was just a few years ago in terms of the efficiency, by and large, due to technology, processes and procedures, which we're going to get into a little bit later. This means we just haven't grown. We haven't just like put more homes on a map or try to just create scale for the sake of scale. We try to be very deliberate about where we've invested capital, why we have invested capital and having the right geographic concentrations that will lend itself to outperformance.

This unmatched scale and density actually translates into real advantages, as I mentioned before, faster turns, more efficient operations on a per head basis, better service for our customers, all of which drive higher satisfaction scores, which we can hold ourselves accountable to and ultimately lead to greater retention and ultimately, better risk-adjusted returns on our capital. It also builds a moat around our business that competitors find increasingly difficult to replicate or breach.

The operational excellence doesn't go unnoticed. We've been recognized time and time again, and we hold ourselves accountable to some of these very metrics internally as we think about the types of efficiencies in our operations that we're trying to build. The real proof of success is in this experience that we deliver for the customer. We have the strongest renewal rates in the residential sector, best in our industry, invest from what we can tell across our SFR peers. Long duration of stay will continue to confirm our own strategies that are centered around locations and service like key principles of how we think about the customer. Tim is going to get into this a little bit deeper and in greater detail. But once we have a customer with us, we want them to want to stay for long periods of time. You're going to see these outcomes reflected through today's story and also through some of the strategy discussion we're going to talk about together.

Now let's bring this to life. We've talked about our purpose Unlocking the Power of Home. The short video captures what we think it means for our residents, our communities and our key stakeholders. Let's go ahead and just roll the video.

[Presentation]

There are four major forces that are converging to create a powerful setup for single-family rental today. First, it's the structural demand. demographics are on our side with millennials expected to drive household formation for years to come.

The second, which you can't go a day without reading about in the news anywhere is affordability. Leasing remains far more cost effective than owning in any of our markets.

Third, the fragmented ownership. Roughly 97% of single-family rental homes today are owned and operated by mom-and-pop landlords. It's a totally different experience than leasing from Invitation Homes. Our technology and the areas that we're going to focus on and get a little deeper in today are only going to expand that lead. Virginia is going to spend some time letting you under the hood so you can see exactly what we're cooking up in some of the areas of efficiency that are going to make that resident experience that much better.

Fourth, the improving supply trends. While some markets have experienced some near-term supply pressures, we've talked about this for the last few quarters, the broader picture is that there is an ongoing housing shortage. Build rent deliveries and new starts from our nation's homebuilders are expected to decline significantly over the next year. And while SFR supply coming in and out on the for sale to for rent could be a little bit transient versus a cell decision, these metrics aren't grossly out of balance today.

Let's take a closer look at what some of these demographics and these demand demographics are starting to tell us. Our average new resident was born in 1986. It's a late millennial who value space, access to great schools and even greater access to flexibility. They're often part of a dual income household or need some sort of approach or balance with hybrid work. They've got kids, they have pets. They probably have multiple cars. They want a simple yard, they want a garage where they can source stuff and space to live in without a 30-year debt anchor or a down payment. Or -- and I think for those of us who own in here can test the maintenance surprises of homeownership, I literally have somebody looking at a Waterlake in my house today.

They also want value. on a cost per square foot basis, single-family rental delivers that substantially over multifamily options in similar neighborhoods, making it a clear choice for families who are seeking space at a reasonable price. Our residents also tend to stay longer, too. I talked about that earlier. They're stickier. They're remaining with a significantly longer than an average multifamily resident and a sign of stability and satisfaction in our communities with some of the metrics I shared before.

The pipeline is strong. There's roughly 13,000 people turning 35 every day with our key millennial today being 39 in our portfolio, fueling household formation for the next decade to come. There's a steady stream of future residents, and we're excited to show them what an Invitation Homes leasing lifestyle is all about.

So where are they headed? Our markets really continue to be magnets for this demand. Net migration patterns continue to support housing demand across a variety of samples and metrics. While most growth has normalized coming off extraordinary pandemic eras, most of our key markets actually remain very net positive. Even in markets where we've seen a little bit of a softening in migration, the Sunbelt remains one of the most compelling reasons for all the long-term growth metrics that you guys watch and follow as well, job growth, lifestyle appeal, warm weather. But I think Beyond all of that, it's affordability.

Let's talk about affordability. Leasing a home through Invitation is more affordable than owning in nearly every one of our markets, which I talked about earlier. As those of you who also own a home kind of test, the cost of ownership keeps getting more expensive well beyond the mortgage. We see it in homeowners insurance rates. We see them in property taxes. We see them in maintenance surcharges. That cost can be very burdensome for a young family or somebody that's truly looking for flexibility or for a period of time.

According to the Burns data, which we share pretty frequently, on average in our markets, it's $900 a month cheaper to rent than it is to own. It's almost a saving of $11,000 or $12,000 a year. Let's take a little closer look now at the housing landscape, the opportunity that sits in front of us for professionally managed rentals.

According to U.S., the data, it's split in a few different areas. There's roughly somewhere between 14 million and 15 million single-family homes for rent in the U.S. As I mentioned before, the interesting metric here is 97% of these SFR homes are traditionally managed by mom-and-pops, with 77% of those being somebody that owns and operates 10 homes or less. The fragmentation is a pretty powerful setup, not only for our company but the industry as there is a massive need for professionalized services in this category.

As an industry, and if we're being honest, we're really proud about the progress we've made of the company over the last 14 years. But we are literally just barely scratching the surface of what a flexible leasing experience can be like. We've seen how fragmented ownership creates opportunity. We saw that in our first chapter. We've seen it in some of the consolidation that's currently going on.

Another critical factor in shaping housing supply will be the opportunities to professionalize and standardize some of these services. And here, the story is pretty clear. As a reminder, we're somewhere under supply between, let's call it, 2 million and 4 million units, depending on which data set you gravitate towards. Permits as a percentage of household tells the story pretty well. Basically, going back to the GFC, we sort of consistently undersupplied. And while some of the more pro-growth markets have experienced some of that near-term supply imbalance that I talked about, the broader shortage isn't going to go anyway time. Anyway, any -- isn't going to go away anytime soon. The setup is really strong. in terms of the demand profile for this sort of product.

Why is it so hard? None of this will surprise anyone in the room, zoning restrictions, rent control laws, nimbyism, layers of blue, red tape, state and local regulation of all constrained new development. It's the topic of mine and almost every housing article I read is just how hard. And we know because of our development business and the stuff that we're doing with our national partners, how hard it is to get through the municipalities, new communities. The structural imbalance will continue to underscore the enduring need for not only great located product but well-served product that are professionally managed and reinforce some of these essential principles we are talking about today.

Within SFR specifically, the newest supply stream is actually starting to roll over. I want to touch on this for a second. Build-to-rent has emerged as a distinct asset class in its own. But the surge that we saw in like '22 and '23 is starting to clearly moderate, likely supported by cheaper cost of capital from '19 to '22, really put a lot of new product in the system.

Quarterly starts have peaked nationwide at roughly 24,000 homes in 2023. And Today, deliveries are down to about 12,000 homes per quarter and the forward pipelines that we follow all suggest that we're going to have less than about 5,000 per quarter as projects continue to cycle through. That's an expected 73% drop from peak levels, some of those levels that we started to talk about last summer.

What's driving it? Higher financing costs, tighter capital markets, rising construction expenses, some of the regulatory environment that I've talked about. Many developers are starting to hit pause as they consider new projects.

For disciplined operators such as us with infill portfolio locations, this creates an extremely constructive backdrop for us, not in just the real estate that we own and the natural demand you'll have for that product. but also in the services that we can provide that can truly delineate and experience between us and a smaller operator.

This favorable trend is also true for the four markets I feel like we've been talking about on every earnings call for the last 4 quarters. The good news is that these deliveries start to come in, they're projected to decline meaningfully from those prior peak levels that I talked about.

Now these markets aren't fully normalized yet. Quality and location will still sort of carry the day and continue to what matters most to us as an organization. These fundamentals will consistently drive performance over the long haul. Regardless of these sort of short-term fluctuations we see from time to time.

Now I want to take a step back and look at the bigger picture of why Invitation Homes is built to outperform and why now is the right time to own invitation. First, the power of our platform. This is where we're going to get a little deeper today. Tim is going to get really in the weeds on this topic. Our unmatched scale density, data-driven operations, proprietary technology stack. We're proud to be continually setting the standard for what innovation in the for lease housing space should be.

Second will be the diversity of our growth channels. Scott is going to spend a ton of time talking through everything from organic rent growth to accretive acquisitions. Strategic partnerships, third-party management, our new lending vertical that we've stood up in the last year, what that's leading to from an opportunity set and talk about that compounding growth. We're excited to have Scott really unearth a lot of what we're working on there.

And then third, our premier customer experience. We're not just providing homes. We're delivering a lifestyle. Our commitment to resident satisfaction and value ad offerings and premier service, we'll continue to open the door for new possibilities, new partnerships, new things that we can start to merchandise with our customer. We know that these adoption rates are highly sought after, and we just are barely scratching the surface of how to provide additional value. We'll spend some time on that as well.

And if there's a bonus, it's probably the setup. The stock is really cheap right now. We believe in the value of our business so strongly that our Board recently authorized a $500 million stock repurchase program. We view this tool as another tool in our toolbox that will help us demonstrate our own confidence in our long-term value and alignment with you, our stockholders. You're going to hear a lot about more of each of these today during the presentation.

In short, and I think this is simply how to sum it up and why we felt like today was meaningful. We want to show you guys how we think we can drive another $0.14 to $0.20 of AFFO alongside our normal baseline growth assumption over the next several years. We're excited to show you all the different things that we're working on that are going to drive to that metric, and they're the same metrics we're going to hold ourselves accountable to internally. And it takes the best team to make this all possible. As you know, the innovators, the builders, the entrepreneurs and the people that are in the room today that we're going to hear from in much greater detail than just the setup that I've been laying out for you this afternoon.

Let's start with our speakers. First, we're going to hear from Tim Lobner, following what you're going to hear from Virginia Suliman, Scott Eisen and then Jon Olson. Each of these partners in mind bring decades of experience across technology, investments and finance. We also have a deep bench here. And I hope some of you get an opportunity to meet many of them. From -- I want to thank each of them for being here and also being available to answer questions. This team is the engine that turns strategy and the execution, and you'll see many of them here today as we present our plans and please, again, don't hesitate to ask any questions in the Q&A.

And with that, let's move from strategy to execution. Please join me in welcoming Tim Lobner to the stage to take us into his kitchen.

Thank you, Dallas. And thank you, everybody, for being here. I am Tim Lobner, and I'm the Chief Operating Officer here at Invitation Homes. I've been with the company for 13 years and in my current role for just over 6 months, it's hard to believe how time flies. In fact, John, you and I were chatting briefly and you said, "Can you believe it's been almost a decade since our first property tour in Southern California". And the answer is, "I can't believe it's been that long".

In my time at the company, I've realized that operations department does a few things. It's fairly straightforward. First thing we do maximize revenue. The second thing we do manage our expenses. And the third thing we do is important as the first two is elevate the experience of our customers in an effort to build longevity of tenancy, build brand loyalty and to build trust. That what's this game is all about.

It's interesting. I was speaking with [ Handel ] earlier today when you came in and you said, "Wait a second. Back in 2019, wasn't your theme Ready to Run"? And the answer is, "yes, it was Ready to Run". And it's amazing over 6 years how the theme of running still has great applicability.

I'm curious by a show of hands, I'm not asking anybody to run here, but how many you've run 1 mile before by a show of hands. I'm not going to ask you how fast you run it. Okay. So a lot of people have run 1 mile. So it's a good reference point. What you see up here on the right is the record-breaking time for the mile run since the inception of the mile run being recorded officially. It's interesting. I did some research prior to our presentation. And the mile was first time in the 1850s, although it wasn't really official. The first time it was officially time was in 1913, and the time was 4 minutes and 15 seconds. Over time, over the next -- really, the next 4 decades, 40 years, the holy grail of running was the 4-minute mile. So in 1954, Roger Bannister broke that record ran a 4-minute mile, actually a sub 4-minute mile. And since then, as you can see by the curve, times keep getting faster and faster and faster.

What does that have to do with us today? Well, I'd say that at this moment in time, our industry and specifically Invitation Homes, we're sitting somewhere on the left side of that chart. I don't even think we've broken the equivalent of the form in a mile yet. We're continuing to get faster. We're continuing to get better, and that's what I'm excited to tell you about from an operations perspective over the next 20 minutes.

So over the next 20 minutes, I'm going to break my presentation into two parts. The first part is where we are today and what makes us different? Second part of the presentation is where are we going? And why should you, as analysts and investors care?

So to carry that running analogy forward. ever watched runners you look out, you see people on a race, and you say, "Well, that's a fast runner". Generally, they've got long legs. They've got lean torsos. They probably have a loan capacity, a lot larger than ours in this room, and that's one of the things that makes them a good runner. They have these natural advantages that we can't compete with or at least I can't compete with.

Our natural advantage is our scale and density. No one can say that they have the scale and density that we have. Why is that important? Well, as investors and analysts, I'll tell you why it's important. There's a couple of benefits that come from that. First, it enhances our revenue. There's a couple of things I'll point out. We know more about every neighborhood where we operate than anybody else. Therefore, we can price better. Pricing better means better revenue.

Second, on the revenue side, we have a value-add services program that allows us to diversify our revenue stream. And when you think about programs like the Internet package that we offer, Internet service providers think about Charter, Spectrum, AT&T, they search us out because they see us as an opportunity for them to scale their business. We can offer that to residents and enhance our revenue profile through diversified streams.

Lastly, on the enhancing the revenue front, our density end markets allows us to get to residents faster and solve their problems faster. Speed is important from this game. Speed is service. Good service drives renewal, good renewals, drive revenue.

Let me talk about lowering expenses. That same density that helps us get to residents faster also really makes our maintenance platform highly efficient. On the average day, our maintenance technicians can visit five houses and work on 9 to 10 service requests. And don't want that for you. It's not at the cost of a great experience. Our average service scores of 4.74 out of 5 stars. So we're not cutting corners here. We're just efficient because we're leveraging our density at scale.

Also on the expense front, we buy more than just about anybody out there. When you think about HVAC systems, when you think about appliances, when you think about flooring, manufacturers reward us for what we buy. We get better point-of-sale discounts, we get better back-end rebates. So every dollar we spend goes further than others.

The third point I'll point out under benefits is this unlocking of technology and data opportunities. When you think about when we spend money on technology, meaning integrated workflows, new tech enablement of people's jobs, AI integration, data infrastructure, we're spending that money and spreading it across 110,000 homes. So on a per home basis, that cost is much more reasonable. And so we can do things that others can't when it comes to technology. And you'll hear Virginia talk about that later today. It's really important because that's the future of the business is leveraging data and technology to become better.

The last thing I'll point out is that our scale and density allows us to diversify risk. And I'm going to point out two things. Are -- is there any other asset class in real estate where the loss -- the entire loss of a single asset has a de minimis impact on revenue? God forbid we have a fire in one of our houses, takes the house offline, but it has almost a negligible impact on our returns. Other asset classes cannot say that.

The second point I'd make about risk diversification is how we communicate and when we communicate with insurers, they look at our portfolio and they see tens and tens of thousands of houses across multiple geographies exposed to a variety of different types of risks. But nothing consolidated in one body of risk. And so our insurance prices are more favorable because our insurance premiums are more favorable because the insurance carriers recognize how we diversify risk.

But look, I think it's even more interesting when you look at it on a market level on how we operate the business. I'd like to use our Phoenix market as a case study. And I'm pointing out Phoenix which isn't even our largest market. You heard Dallas talk about Atlanta earlier, so I'm not poaching the most efficient market. I'm just showing you one of our larger markets.

Here's the case study. From 2022 to 2025, a 3-year period, we went from 9,700 homes to about 12,500 homes. That's an increase of nearly 30% in terms of our homes under management. You'd think that we'd see the same amount of increase in the number of staff numbers in order to accommodate the management, but that's not true. During that same period, we went from 115 associates to 130 associates. It's only a 13% increase, again, compared to a nearly 30% increase in assets under management. And I draw your attention at the director and above level, which is kind of our management layer in the market, we didn't have to hire anybody at that expensive higher overhead. Our only hires were at the distillate of the business where we can afford to hire more people at a lower cost point, the people that are actually serving the residents, again at the distal into the business.

So what does this mean in terms of overall efficiency? On a homes per associate basis, we went from 84 homes per associate to 96 homes per associate. It's a 13.4% improvement. From a total payroll on a dollar per home basis, we reduced that by 13.5%. So again, this is a great example, a great case study of how we scale efficiently in individual markets.

Look, we talked briefly about the natural advantages of runners. I'm going to pull that analogy again, the natural advantages of runners write long legs, lean torsos, higher uptake of oxygen as they run, but that's not the only thing that makes good runners, good runners. Some people are just really good runners. They have great running mechanics, they train better, they eat better, they sleep better. That's also what makes them better. Similarly, how we operate is an advantage that's unique to us, and we operate in a unique way.

It's funny. The most common question that I get. In fact, I got it probably half a dozen times last week at a conference at the [ NRHC ] conference. They say, "Tim, how do you guys manage 110,000 houses"? What's funny is my answer always confuses them. I say, "well, we don't really think about managing 110,000 houses. Instead, we focus on how to manage one house and care for one resident or the group of residents that live in that one house and then and only then do we think about how to do that 110,000 times". That's the way to run this business.

So we look at the customer journey in a series of five distinct phases. First, we attract our customer when we convert them into residents, then our goal is to retain them and then renew them. And unfortunately, sometimes people move out. We see that. And so we have to have a good move out process.

Look, the most important part of this journey, though, is really the retain. We're really proud of our renewal rate our book of business on the renewal side is around 75% to 80%. And so we focus maniacally on the retain.

Think about it. We're not like a hotel stay or an airplane ride or a meal at a restaurant where you need to be good for like an hour or 3 hours or 24 hours. Our residents stay with us for 1 year, for 2 years, for 3 years, for 5 years, for 10 years, our average resident right now stays with us nearly 41 months. So we need to get it right every single day. We need to get it right when they move in. We need to get it right when there's when they're paying their rent, we need to get it right every time something breaks in the house. And so we focus on the retain a lot.

Over the next couple of minutes, I'm going to tell you a little bit about a few areas of our business, I think you'll find interesting. It's how we price, how we offer lease term flexibility how we offer a unique package of value-add services. And lastly, I'm going to touch upon what I believe is best in industry maintenance.

So let's get started. But pricing is interesting. Pricing is complicated. We're not like an automobile manufacturer or a clothing manufacturer where there's like a finite number of product SKUs that you need to price. We have 110,000 unique products and 110,000 unique locations that we're trying to price in an environment that's constantly changing with supply and demand fundamentals that are evolving real time.

Let me walk you through how we price because I think it's a little bit different than others because it's a proprietary platform that we use.

First, we take public rental listing data, emphasis on public. We get all the [ ILS ] data. We absorb that. We've then our proprietary platform, compare each individual asset in our portfolio to the entirety of available homes in the market. We're looking at location and quality of the inside quality of the outside and other factors that differentiate each house. We then compare that to our house to the larger set, and we come up with this estimated market clearing price, but that's only half the problem, right? The other part of the problem is demand.

And so we're constantly listening to the demand signals out there. Think about the number of times people say home for rent in Google. So Google search data, Apartment.com data, Zillow data. Then we look at our own data and people, how often they're coming to our website, how often we are generating leads in our platform, how often people are going to show. And so we use that data along with our boots on the ground, experts in each market to evaluate those prices. And in real time, we are changing those to make sure that we are meeting the market in an efficient manner. So that's how we price. But look, let me get to the next one.

This is the second of the four that I was going to tell you about just because it's complicated how we price using our proprietary platform, it doesn't mean we need to make it hard for our residents. It doesn't need to be complicated for them. We offer them 13 different options every time they lease with us or renew with us. Those 13 options have prices that are unique, and we incentivize them to pick certain lease terms that line up with where we think the supply and demand is going to -- where the supply and demand relationship is most important.

So what we've learned over the last decade plus is that most people actually are lease in quarters 1 and 2. From the Super Bowl weekend until early summer is the best time for us to be bringing product on the market. And so what we're doing is, again, we're incentivizing residents through flexibility, through transparency to really drive more leases into the first half of the year, and you can see that we're able to manage that lease expiration curve a very important part of our business.

The third of the four topics I'm going to present in terms of how we operate differently is our value-add services program. We believe we offer more than just a home by a show of hands, how many of you have Internet at your home or apartment. All right. So basically, everybody. Well, you know what, our residents are not unlike you. They want Internet in their house. And so we offer them a great package bundled Internet along with 200-plus channels of streaming television. We also offer them a smart home system. The smart home system includes remote access through door set or lock set at the door. It includes a thermostat that allows our residents to control their temperatures and manage their utility bills. And lastly, it also includes a Ring video doorbell for video for looking out and seeing who's at their house. Premise awareness is what we call it.

We also have an air filter delivery program where we're delivering air filters to houses on a quarterly basis. who enjoys shopping for an air filter. All right, not as many hands I see. Well, our residents feel the same way, and so we deliver air filters to their house on a quarterly basis. This area of our business, we believe, over the next 3 years will generate an additional $0.04 to $0.05 of incremental AFFO. This is a great program for investors. And it's a great program for residents. There's a saying that you can do well by doing good. This is a great example of that.

The last topic in terms of how we operate that I think is different is our maintenance program. We don't look at maintenance just as a service. We actually look at it as a loyalty strategy. It is the single biggest pain point in anybody's experience. Dallas talked about it earlier. I'm sure you experienced maintenance needs in your homes or apartments. And so this is an area of the business that we have to get right. We have to get this right.

So how do we do that? Well, we're super proud of how we communicate with residents. Communication is the #1 things that residents want when it comes to maintenance. They want to know what's going on. We offer an omnichannel solution that people can call our 24/7 call center. They can contact us through our online portal. Most importantly, they can contact us through our mobile app.

Our mobile app is really interesting. So world where all digital experiences are being compared to Uber and DoorDash. I think that the maintenance experience that we offer through our mobile app is phenomenal. But don't take my word for it. right now, if you were to go online, you see on the app.

[Presentation]

All right. What you were seeing there, so I'll get back to what I was saying, what you're seeing there is interactive videos that are self-help for residents. So when somebody has something that they're submitting and we have a self-help video, it helps them solve the resident before we submit.

But the AI-powered platform, again, I don't want you to just have to believe me. We have 1.2 million work orders that have been completed on this platform. 300,000 unique users have submitted and completed a work order through this. And if you were to go on to the App Store, there are 13,000 unique user reviews and has an average score of 4.8 stars. So it's really good. Again, this is a highlight of our experience, and we want to continue to make it so. All right.

So first half of my presentations over second half, I'm talking about where we're going and why should you as investors and analysts care. I think this is the exciting part of the presentation.

All right. We're embarking on a journey right now to revolutionize our business. We're only 13 years in, but we're finding that there's tremendous opportunity to leverage technology and deliver centralization to make the business move faster and to provide an even better experience for our residents.

So as part of our efforts to modernize our service model, we're looking at every activity of every role in our field organization. And we're looking at it through an interesting framework.

The first thing we're doing is we're taking a look and evaluating whether there are activities that people are doing that they just don't need to do. You hear about it all the time, where people realize, wow, I'm doing something that someone else is doing or swivel chair from one system to another. There's things in our business that we don't need to be doing anymore. So we're going to get rid of those.

The next thing we're going to do is we're going to leverage technology. We're going to find ways to automate workflow, integrate systems because we've got a lot of opportunity there and leverage AI.

So again, if you start with, hey, we're not going to do the stuff we don't need to do. Then if needs to be done if technology can do it, we're going to leverage technology. The next thing is, is it possible that someone else should be doing it and not us, maybe somebody either a resident or a vendor should be doing something because they could do it better than us. And if that's not the case, then the last thing we can do is like, does the work need to be done in our local office? Do we need to be paying prices for Los Angeles workers or Miami workers when we could probably centralize that in somewhere like Dallas or Phoenix under a single manager and get things done more effectively, more efficiently and be able to measure it more accurately. And so the last part is centralizing or outsourcing for efficiency.

So over the next couple of slides, I'm going to talk about three case studies where there's real savings that are either underway or we see in the future.

The first one is this call center consolidation. One of the things we found is we had a bunch of call centers. We didn't need a bunch of call centers. It doesn't sound very efficient, does it. You would think that as we grew the portfolio of houses under management that we would have more phone calls that the quality of the phone calls would go down that our cost of service would go up. Let me tell you what happened over the last year. From 2024 to 2025, our home count increased by just over 4%. Our call volume though shrunk by 22%. Our answer rate quality of the resident experience increased by 11%, our answer rate. And lastly, our cost improved by about $1 million. You might say, well, how is that possible? That doesn't seem like the right direction for all of these numbers. Well, the reality is we consolidated call centers, first of all, and we also started looking at how the call center agents were using their time and look specifically at tasks and identified whether or not they could resolve those issues instead of sending them to the field organization. And the answer was there was lots of opportunities.

So that's what we did. We conducted significant training with our call centers, and we empowered them to solve more problems on the first call. So first call resolution was driving this. What we're excited about is that there's more savings here, and we're confident we're going to realize that over the coming year or so.

All right. Case Study 2. We call this digital home care hub. It's interesting when you think about the cost to maintain a house, there's three things that really drive it. The first is the price that we pay for stuff, right? The price we pay for flooring, the price we pay for appliances. The second thing is the decisions we make around what we're going to do when something is wrong. Do you repair something, do you refresh something, do you replace something, you renew something? There's lots of different options. So making the right decision as part of how we maintain cost. The last one and the most important one is the condition of the home. So again, you got pricing, you've got scoping and decision. The most important one is the condition of the house. and who drives the condition of the house, the resident.

So most people talk about property management in terms of tenants and landlords. We talk about it. Obviously, there's legal terms, but we talk about it as a partnership. A partnership where the resident plays an important role in helping maintain the condition of the house. And so what we envision in the future is this technology-enabled home care hub where it starts with moving where the resident documents the condition of the house, not just us and the resident verifies it, but the resident documents that they scan it with their phone. That way, there's a sense of ownership and it will drive a sense of accountability because that's what's needed when you don't have on-site property management. So if you do that at the beginning of a lease turn and upon move out, you create, again, a sense of ownership and accountability.

We also view HOA violations, municipal violations as well as periodic just home scans as ways to drive this accountability where we don't have to always be there. We're still there because we're going to visit the house to take care of maintenance issues. But prior to somebody renewing having them scan the house, brings us closer it collapses time and distance, and we believe that this will help us reduce our cost to maintain.

The third case study that I'd like to tell you about is this service -- self-service mobile check, I remember I talked about self-service. One of the least efficient parts of our process of the customer journey is when somebody moves out, it's really interesting. Obviously, we want to get to the house as soon as someone moves out so that the superintendent can scope it and we can award that work to a contractor to get that turn started and reduce our days to re-resident. The one thing that we've found is that people sometimes move out before their last day. In fact, that number is as high as 35% to 40% of residents that move out before their last day to the 2 to 2.5 days. And instead of us tracking them down by phone, by e-mail or by text, asking when are you going to leave? Have you left. We believe we can pull a page out of the hotel industry and have a mobile checkout using our mobile app. That will allow us to deploy a superintendent faster to the house and start that turn to reduce days to resident.

In total, I touch to talk about these three case studies. There's lots more here. But I would tell you that we believe that there's an additional $0.02 to $0.03 of incremental AFFO by implementing these over the next 2 to 3 years. So we're really excited about that.

The last theme I want to talk with you about is this overarching theme of centralization. So I talked about the three case studies, but then there's this huge opportunity to centralize. As we've embarked on this study of each of the roles in our offices, we've realized that there's a lot of work that's being done at the distilled of the business, meaning, when you look at the local framework there, you've got a market leader, you've got a turn and maintenance team, you've got a property management team and you've got a leasing and renewal team that's supported by the central national support team that focuses on policy process, procedure, technology enablement in partnership with Virginia's team. But the reality is a lot of the work that's being done at the distal end of the business are routine and repeatable processes high-volume administrative tasks, things that don't require any specific market knowledge and they generally are aligned with support-focused activities. Now it doesn't make sense to be doing these locally.

So we believe that there's an opportunity to create a central operations team. This is something that the multifamily industry has done in the past, but we're now just unlocking it. And we believe that by moving those processes centrally, we can unlock further savings to the tune of $0.01 to $0.02 of incremental AFFO. So you might say, well, what are those areas of opportunity? Well, here they are. It's rent collection and delinquency management. It's security deposit accounting. It's leasing and renewal administrative work, HOA and municipal compliance. Obviously, there's a component that would stay local, but there's a lot of just basic administrative work that can be centralized. Resident events scheduling. And lastly, just general resident inquiries. Again, we believe we can do those more cost effectively and provide a better experience if we do it locally.

So this brings me to the end of my portion of the presentation. I want to leave you with just a couple of thoughts. Look, I've talked about our scale and density. That's our unique inherent advantage. I've talked about how we operate the business. That's our operating advantage. There's so much more here in terms of the growth of our value-add services, in terms of how we optimize our workflow and in technology to make it more efficient and how we centralize, we believe that in total, there's $0.07 to $0.10 a of incremental AFFO that we're going to unlock over the next 3 years.

Look, if our theme 6 years ago at the 2019 Investor Day was Ready to Run. I would tell you today, folks that we are running, and we invite you to run with us because we're going places, and it's going to be really exciting.

With that, I'm going to turn it over to Virginia Suliman, who's going to talk about where we're going with technology.

Thank you, Tim. As Tim said, I'm Virginia Suliman, I'm the Chief Information and Digital Officer. And I am going to provide you with a little bit of a musical interlude in between the rest of the presentations, and we're going to do that in the den. But it is a real pleasure to be here today to share with you some of the things that we're focused on in technology at Invitation Homes.

As you heard from both Dallas and Tim, technology is foundational to -- one of the foundational elements of how we grow revenue, how we improve satisfaction. And as you'll hear from Scott in just a little bit how we support sustainable growth.

Today, though, while I have a broad remit for technology overall, I'm going to focus in specifically to share our thoughts and vision on the customer experience including some of the work that we're doing with AI and cybersecurity. Our technology has truly evolved. Historically, apartments, REITs and other real estate sectors have optimized around the asset and not the resident. As a result, our customer experience was somewhat fractured and generic.

I joined 6 years ago, actually tomorrow is my 6-year anniversary, what a place to celebrate with you all. Six years ago, we did not have a clear and direct vision for how we were going to own the experience for the customer. Residents were pushed through white label platforms like rent cafe by yard and they often had to juggle up to seven different logins, just to manage their lease and their homes.

We also recognize that we had a limited view of our customer information without a centralized CRM. And our associates who are swivel chairing way too often between disconnected systems, creating inefficiency and frustration on both sides, associate and customer moving from fragmented to focus, improved all of the items that you see here on the screen, but it also allows us to take a much more opportunity-based approach to what we automate and where we use AI. In addition, this intense focus on customer needs, demands that I look at both best industry technology, but also best-in-class AI advancements from our partners like cursor or Salesforce, Microsoft, ServiceNow, et cetera, et cetera. And of course, we will continue to innovate internally using traditional technology development, including AI.

And I would be remiss if I stood up here and didn't share a perspective with you and how I'm viewing the technology landscape overall. I think that the days of technology settling in, like we saw with the last technical revolution, which is digital transformation. In some cases, people are dragging that went out on a few decades to long. We used to see these large technical tranches of work, followed by these valleys of business implementation. And I really don't think that, that works anymore. Our fast-paced world demands fast-paced changes in order to support the business.

And as I'm certain you know, technologists rarely agree. We often sort of heads amongst ourselves. But it's been amazing to see across the board, all technologists agree that AI is changing the landscape at a pace and scale that's just never been seen before. And I'm really seeing two different paths that companies are taking. You might perhaps see a very large company both path happening. But by and large, the first path real business problems being solved intelligently using a whole host of technology solutions, but with AI at the center. On the other side, the second side, I'm seeing overspending on shiny innovations that frankly complicate the business and minimize customer experience at the same time. At Invitation Homes we clearly want to stay in bucket #1, but we also believe strongly that we want to run the marathon of AI, not just the sprint. And to do that, we're going to focus on managing our pace being driven by a solid understanding of what problems we really are trying to solve.

And we really have come a long way. We -- in the last 6 years, we've been doing more and more focusing -- excuse me, more importantly, we're building for the future. I got so excited. I got tied up there. For our customers at the center of our approach. And we're using technology to unlock opportunities for our customers and our associates at every touch point.

I believe in the domino effect of well-designed technology. And so if we are enabling our associates to optimize their day around the customer, much like what Tim spoke of, and what we'll see is improved efficiency, which will, in turn, improve customer experience and satisfaction, which will ultimately drive more revenue. And we see that through greater retention, customer advocacy and sustainable growth. So let's talk a little bit more about what we're doing at each step of the journey.

Customers are the name of the game. Without them. I'm not sure what we'd be doing. In order to attract more customers, we're connecting the dots of attraction through both communication and technology. In the past, leasing was largely one dimensional. Customers had to come to us through third-party solutions. Today, we're flipping that model on its head, by meeting customers where they are. We're using targeted e-mails and improving text messaging to reach prospects with the right message at the right time. We also have AI chatbots that provide instant answers, 24 hours a day, 7 days a week. And a centralized customer mailbox that's accessible both on the website and in the app. This gives customers the freedom to engage on their terms, whether that's a quick chat and e-mail follow-up or full self-service.

And since the introduction of our AI chatbot, 46% of our interactions happen outside of office hours. And that unlocks 79% of our applications to be submitted without human intervention. We believe a great home plus the right location and price, coupled with a superior digital shopping experience is a customer win-win. We know when you lease choice and control really matter. It can shorten the leasing process and give our customers back what is most valuable to them, their time. We've replaced the rigid one-size-fits-all leasing workflow with the industry's first proprietary online leasing platform. This streamlines the leasing process for our customers to allow Invitation Homes to control future enhancements, which really aligns with the innovation and the possibility pillars that Dallas spoke of earlier.

This mobile-first experience reduces application abandonment and accelerates time to lease. It has resulted in a 35% reduction in time to decision for all new lease applications. And we're not stopping there. We're also focused on data to drive optimization for the things that we've already built. By using A/B testing tools, we continuously refine the customer experience. And industry benchmarks tell us that A/B testing can lift conversion rates by 10% to 15%, and that's definitely in line with the experiences I've had in my career.

As you can see here, we're implementing a modern payment experience. Customers will be able to complete all needed payments from either our website or their mobile app. This offers more payment flexibility which helps us drive down friction, improve satisfaction and ultimately speed up cash flow. We are truly setting the standard for the industry -- excuse me, setting the standard in the industry for digital leasing conversion through API-First technologies, data-driven user experience and frictionless payments. Together, these help us boost occupancy, shorten our vacancy loss and expand our margins.

Now let's talk about retention and renewal. Creating easy home management by offering self-service from our mobile-first resident portal unlocks the power of retention. Invitation Homes is rolling out a central hub for our residents where they will be able to manage maintenance orders or property issues. They will be able to engage with us in real-time conversations, control their smart home technology and enjoy self-service throughout their residency, including renewal and move-outs.

Centralized self-service puts the resident in control, which research tells us is really imperative to success. This is intuitive to all of us because we are all customers in the digital age, and we all want self-service. But it's also intuitive as a business increased resident self-service equals higher efficiency for the company. [ McKinsey ] Research tells us that 80% of value creation amongst high-growth customers comes from improving the experience for your existing customers. And [ Forrester ] Research also shares that being customer obsessed, increases retention by 51%.

At Invitation Homes, we deeply understand that retaining our best residents requires a focus both physically in the home and digital in the palm of their hand. Our vision, our customer-centric vision is unified, intelligent and seamless. This allows Tim and I to really focus in on what matters most to our customers. And when we do that well, the renewal experience can truly right itself.

Simply put, we envision a future where customers connect with our associates by choice, not requirements. This really comes to life in our new resident portal, enabling key moments like finding a home, making a payment or requesting maintenance. And what ties this together will be its simplicity, one app, one login, one experience. For us, that means real-time data, brilliant service and a direct line to people living in our homes. For resident, it means control and convenience.

Customer centricity at Invitation Homes isn't about technology for its own sake. It's about building trust reducing that friction and creating loyalty with our customers. Moreover, focusing on the customer experience accelerates growth in lower-cost channels drives efficiency for operations and strengthen the performance of our assets. We know satisfaction and revenue growth go hand in hand. And we believe that our focus on customer-centric solutions will give us a $0.02 incremental AFFO growth by 2028.

Now of course, I must do all of this with security at the foundation. We can't just have fun creating cool mobile has. The cyber landscape is one of way more peaks than valleys. And unfortunately, the bad guys are really some of the most brilliant technology minds in the world. So everything we do is on a secure by design architecture. We also ensure best-in-class cyber approaches. This includes things like our cloud-first environment, repeated penetration testing, recurrent engineering training and external cyber validation with our partner, [ Optiv ].

But I'd like to say go back to customer experience for a moment. And I'd like us to have a look at a video that shows how we're putting the power of technology into our residents' hands. I hope you enjoy seeing our vision come to life.

[Presentation]

All right. We're ready now to begin the first of two Q&A sessions. Joining us on stage, please. Let's have Dallas, Tim and Virginia to address your questions. For those here in the room, please raise your hand and wait for a microphone to be brought to you. [Operator Instructions] We encourage questions relating to the topics covered in the first half of today's presentation, including our business fundamentals, operations and technology initiatives. Who would like to ask our first question? Haendel. .

Fantastic presentations. Thank you. Question -- may not be fair, but I'm going to try anyway. Do you expect and when do you expect these enhancements and optimization, the $0.14 to $0.20 of AFFO you laid out to allow you to sustainably generate 70% operating margin, something that your apartment peers seem to have been able to do. So curious on kind of how you're feeling about the optimization tailwinds. And if that will help you get to 70% margins.

Why don't I start, if you want to add anything, feel free to jump in. So taking a step back, margin is different by market, right, because of the property tax load, like we get lower margins in Florida but higher growth. We get really good margins in California, and we have capped sort of fundamentals on growth, right, with renewals and things like that. So it will definitely be a market mix that sort of plays into whether we ever hit 70% or not. We feel, I think, really comfortable saying that we know we're in the high 60s, and we've been there for a while, and we think we can maintain that. Some will have to do with the way we asset manage the portfolio over time. .

As far as like the earn in the $0.14 to $0.20, look, I wouldn't expect a lot of it to be next year, but a lot of it will start to come in towards the end of the year and into '27, but we think we can be on this run rate by '28. That's the goal. That's the target that we're setting for ourselves.

Ultimately, there'll be puts and takes along the way. We'll probably unlock some things that seem like higher priorities as well, maybe not, or we could hopefully accelerate some things or so out some things. If we see an opportunity the strategic around M&A or things like that. So we're really good at like piloting, getting it right, working it through a market or 2 and then rolling out. And so I don't know, Tim, would you add anything else to that from a field perspective?

Yes. I think you look at $0.07 to $0.10 over the $0.14 to $0.20, it's coming from some of the stuff I presented process optimization being one, centralization being other and then value-add services being the third. The bulk of it is coming from value-added services. And we feel really confident because there's a lot of earn-in that's left on the programs have in place, meaning the Internet, smart home as well as some other programs. We're also -- so that's earning and then we've got some other programs that we're working on right now. So if the bulk of that $0.07 to $0.10 is from those value-add services. We feel really good about those. I don't want to tell you we're at the early innings of our process optimization and centralization, we just see a ton of opportunity as we look around. We just haven't gotten to it. Historically, we've run a decentralized model primarily for speed, right, as we accumulated the portfolio, executed the business. Now we're shifting over to this centralized for efficiency and for control. And so we feel good about the path we're on.

Would you add anything to that?

I think the only other thing I would add is that we do continuously look at the short and long. So it's important, especially in technology and with customer experience on the digital side that you're looking really long term. You've got big CRMs and building that. But if we only do that, then we're missing the short. And so I think to your point, some of the optimizations will be long term, but we're smartly looking at. So what are the short-term ones we can do, whether that's directed by customer feedback, whether that's optimization for operations. the balance of those two things, I think, is creating some real magic and power for us right now.

Great. Next question. I think we've got Steve. And just if you don't mind, say your name and firm, please.

Sure. Steve Sakwa, Evercore ISI. Can you maybe talk about the capital costs that need to be invested to kind of get to this $0.14 to $0.20, how much of that's been invested already? How much of that is to come? And then what's sort of the ongoing cost to sort of keep driving that efficiency.

Try to think how to best answer that. Some of it's already in the can, that was part of this year's spend and prior year spend. Some of it is in our strategic planning for next year and the year after.

I would say that -- and I want to be careful because I know John wants to give like a full guide in February the right way. And he's like, right now biting his lips saying here he goes. I would just say -- it's nothing that has shock value to it in terms of what we got to spend. We have so many processes that are ongoing. We have things we're doing with lease automation right now that will be kind of a Q1 lift that we're trying to work through that could create massive efficiencies that we could see next year. But I'll let John -- in his Q&A, he can revisit this question, if you want, I'll give you a little bit better answer. But it's nothing out of ordinary course sort of CapEx and how we're thinking about things.

Okay. Tony, upfront.

Tony Pallone, JPMorgan. 2-parter. First one, just more of a clarifying item since you're talking about AFFO pennies throughout the presentation. Is there any difference between that and core FFO? Is there a reason it's AFFO, just as a clarifying point?

Do you want to you want to...

I can tackle that. We typically guide to both core FFO and FFO. We feel as a company that AFFO is really the best measure that's most reflective of our performance. But in these -- with these measurements, I think they're more or less the same for this purpose.

All right. I just wanted to check that. And then just my real question, Dallas, you started on one of your earlier slides about build-to-rent supply coming down about 73%. But I noticed in some of those markets, they started to come down a few years ago, and then it popped right back up, and now it's down again. I guess what gives you confidence that that's going to come down a bit more sustainably? Or what are you seeing in terms of the folks building these out there, their access to capital returns and so forth.

It's a really good question. I was actually -- one of the markets up there, Tampa has that little kind of secondary spike and then it's come back down. I was there last week. I was touring product some of our own and then looking at some new community opportunities in Daytona Beach of all places. And I spent time with two different master plan developers that are groups we don't do business with today. Just to sort of gauge market intel, it was totally in line with everything I hear from our own partners, which are -- so like in Florida, or call it Central Florida, starts are probably going to be down 20% to 30% this year versus last year. And all the data that we see on the delivery piece of it, we've been hyper focused on it since last summer. So can't say it's 100% perfect, but I would -- with a high degree of confidence to tell you that when we say peak deliveries were about 24,000 units and come down to 12, and we expect those to be at 5,000 in the coming quarters. I feel really confident that generally, the BTR that we can see that we track their burns and other sources of information, it all checks the boxes and has been consistent with what we've seen over the past few quarters.

Now that being said, if there was a bull run out of nowhere right now and people wanted to build a bunch of which we're not seeing that. We're not seeing it in the permits to the point I made earlier, we're actually seeing sort of the opposite. I think the centimes is actually pretty favorable at about 1 year, 1.5 years from now, we're going to feel a real pitch in terms of new supply probably. You've seen what they're doing in multi has a much clearer line of sight and kind of chugging through some of that in my opinion. SFR is always going to be a blend, I think, between the BTR piece of it, what we see out of the publics and the regionals in terms of starts and deliveries. That all feels like it's a real setting up to be a tail end.

I said this on the earnings call, I'm not ready to call a bottom on some of the supply noise that we've had over the last 4 or 5 quarters, but it definitely feels a little bit better in a few markets. We're seeing that Jackson Orlando. Southern Florida, specifically, Tampa and Phoenix, I still think have a little bit of time. And so those are kind of our big 4 or 5, where we have obviously a lot of supply, and we've been active, and we want to continually building there at the right price points and at the right time.

Rich, I think I saw you had a question.

Rich Hightower Barclays. Thank you guys for putting this together. Going back to Tim's commentary, I think you stop short of calling something algorithmic pricing kind of in the midst of your presentation, but I think you do call it sort of proprietary pricing comp model. So what are the limitations around how you price the product? And then maybe from a regulatory perspective, if anybody else wants to comment, what's the latest potential set of risks as far as that goes?

Yes. It's not algorithmic. It is really just a proprietary pricing model. that uses public data. I want to emphasize that point. It's public data. We're looking at listings that are on the ILS and we're using all of the characteristics of those homes and then we're looking at the home that we are marketing and basically looking at those characteristics. But then also, like I said, layering in the demand fundamentals that we're seeing kind of keeping an open ear for home search on Google, home search on Zillow, home search data from Apartments.com and blending that together, leveraging real-time feedback from our offices in each of the markets where we operate. So again, totally above board, how we're operating using public data.

Let me just jump on that, too. I mean you do have -- it's important to remember, in SFR, you have fair housing rules. So we can't offer a home in Orlando at a different price to somebody in L.A. that we offer to in somebody in L.A.. You can do that in other industries, not in housing. So it's totally transparent at the end of the day, like if the homes listed too high or the market's a little soft, like we talked about this on our earnings call, it sits on the market, right? And so we've actually -- we've talked about this, like we're being a little bit more aggressive in Q4. We figured let's try to lease some product versus just sit and watching it sit days on market.

So as much as like it's people think there's some algorithmic ninja that figures out pricing for rental properties in the U.S., I promise it's not that way. It's pretty simple. If you're overpriced, it sits, if you underprice, it goes too quick. It's basically that.

It's the speed of looking at any individual asset compared to and constantly staying in tune with the data you're seeing and being able to do that at scale. That's where it gets hard, and that's what our system allows us to do because the market is efficient, as Dallas said.

Great. upfront. John?

John Pawlowski with Green Street. I have a question on the value-add revenues. So the chart on Page 34, $20 million in gross add -- gross value-add, services revenue growing to $80 million. If you double-clicked on those bars, are there any services where you're seeing basically retention issues and so that the air filter deliveries, et cetera, people adopt it. And then 3 years later, you have declines in revenue. So are there any holes in the bucket in that ramp up, we're going to see restrain the growth going forward? And then things that are more capital intensive Smart Home. Is there like a CapEx cycle to come to basically update the software, et cetera?

There's not really a leakage. We do allow our renewal specialists and our leasing specialists to negotiate where they need to. We're trying to obviously keeping the portfolio occupied is really important and renewal rates are very important for our business, too. But when you look at the different services, you mentioned like air filter, I get a random question, how many people know their air filter size?

A bunch of analysts.

Right we're wrong group to ask that, but it was less than half, right? And so a lot of people actually value the service that we provide because it's regular, it's recurring. It takes the hassle out of renting and out of shelter in general. So we don't see people like opting out at any rate of concern.

On the Internet service, our package is great. Our package is phenomenal. We've partnered with Charter, which is Spectrum. We've partnered with AT&T. We've partnered with Cox. We're expanding that to other programs. And right now, yes, that's got a lot of earn-in left where about 35% of the portfolio has Internet right now. So we've got kind of 65% to go.

And then on the smart home, yes, there is an upfront cost, but residents really appreciate the peace of mind that, that program brings from an ability to allow family members into house into their homes remotely through the locks, remote locked. They really value the ring video doorbell. It's not security, but it's certainly what we refer to as premise awareness, so peace of mind. And then with expenses the way they are, people are mindful of how they're spending money and utility expenses are top of mind. And so the ability to control your temperature using the remote thermostat controllers is very valuable. So we actually see people -- and the feedback we get is that they really like the program. So we're not seeing any concerns on that. John.

By the way, if anyone has more particulars on that, Paul and Bill, maybe raise your hand. Dick sort of lives in your guys as universal in ancillary some of the brakes.

And I'll just add one more thing on the software. So all of the software in the firm is updated remotely through WiFi. So we don't have to do any major events to maintain that.

Yes. Michael, on the back.

Mike Gorman, BTIG. You talked a lot about resident retention and the customer experience. When you look at 78%, as you think over the next 3 years, implementing some of these new programs and technologies, do you expect to drive that higher? What does the average resident tenure look like in what does the average resident retention look like in '28? Is there upside there? Or maybe that even normalize a little bit?

It's funny. I'll start, feel free you guys. When we underwrote the business back in 12 weeks, we underwrote 36 months. would be sort of average length of stay. I think we're just at 41 months based on things we're measuring as people who hear inside that, right, Scott? 40, 41 months.

Yes.

California is much longer, much stickier there, people to move out. as frequently because the spread between ownership and lease is much more dramatic in California. I would say my own view on this with the customer is the stuff Virginia and Tim talked about, if we nail that like -- I mean, guys, like the app-based stuff that we have, like we even have that 36 months ago, like the fact that we can respond that much quicker. The fact that people are doing mobile checkout themselves, we learned a ton during the pandemic. About using -- I actually had the same thought yesterday, we're getting on American flight to come over here. And the lady who scans your ticket is just using your iPhone now, not even some big bulky machine, right? And like that's where we see the business going as to where this just gets so mobile and so fast and so convenient that there's likelihood that people retain longer.

Now we saw last year, we had many months that were 81%, 82% in terms of renewals. And so there will probably always be a flavor of like whatever is happening in the world, like we built the business in a super low mortgage rate environment. So we know that if mortgage rates go to 2% or 3%, people retain mid-70s. We've seen that act before. But I think as the service gets better as the merchandising, as Bill talks to us about this as a business, if we merchandise beyond just the home better in a way that makes it convenient. And we've been talking about this for a couple of years now driving down the cost categories for people. whether it's Internet or some of these other things, there's no reason not to be stickier in mind, unless you have a life event, which is totally fine. I mean we still have 15% to 25% of our customers move out to buy a home. We totally support it. We think it's great. Because there's people wind up that location and want that product.

So our goal is to make it as convenient, flexible and easy. We talk about easy all the time. Tim said, we're not that easy yet. Even though we're pretty good, we can get a lot easier. Like we've got to make this simpler over time and make it to where somebody goes, I really only want to move if I'm going to go buy a home.

The other thing I'll add is you sort of asked the question around based off of where we're at today. I come from an industry that's much older before I came into Invitation Homes. 100-year-old hospitality plus company, what I learned there is the cycle of these cohorts. And as people age and move on, the next cohort, the next generation coming through, the behavior is slightly different. And so it's both a defensive thing to do customer experience in the way that we're doing it to insure the current customers retain with us. But we're also looking forward to what is the next cohort coming through? What are they going to demand.

And we all know they're all digital natives. Every -- the next generation that's coming through is a 100% digital native. So if we don't have these things in place, we don't want to see a decline in all the things we do well. And so it's really to ensure both. We're driving for innovation and pushing forward, but also a defensive mode to ensure that we are maintaining what we have today.

Buck?

Buck Horne at Raymond James. I want to go back to the BTR question for just a little bit. Specifically, I think the [ Burnes data ] you cited really focuses on purpose-built BTR communities, large master plan type structures. How do you think about the accidental BTR supply this year as homebuilders we know have basically overshot the demand levels for this year. They're in inventory clearance into year-end. How much of that are you seeing potentially come back as accidental rental supply from various builders. You've got Lennar kind of really leaning in with this Lennar marketplace, marketing to mom-and-pop investors. How do you think about that going into next year's leasing season?

Yes. I mean, we pay attention to all the listing data. Tim and I talk about this all the time, like I think four lease listings are up like what we 8% year-over-year or something like that, U.S.-wise. And then it's obviously fragmented bigger in some of our rent market.

But I would say it's sort of a tale of two or three different types of product. And I don't want to steal too much of Scott Eisen's thunder, but he'll hit some of this, I think when he talks about BTR.

There are two transactions we've been looking at that somebody is trying to sell in the marketplace right now. One of which is probably going to trade at a low five cap, it's super stabilized, really infill. It feels a little toppy on price for us. We couldn't be that competitive. Then there's another group that has a number of communities that are trying to package it. They can't move the at the cap rate, they can't get a high 5 cap right now because of location. So I think you have to lock in on where you want to be and why long term because in maybe a little slower market but to your point, if there's a lot of homes for sale in that part of the wherever it is, that geography, and they're not moving. I don't think your pricing power is as effective.

We've been pretty active on the one-off sort of stuff. As long as it's kind of anchored in on that strategy of what we call more infill. Now we're not buying downtown New York. I mean, we know that. But we don't want to be an hour outside of Atlanta, either, right, buying scattered shot stuff in a community that may take a while to build out. We want to sort of find that sweet spot, be inside the ring but not too far outside.

So I think there's a balance. I also think that, that will fluctuate. That will sort of pendulum swing from time to time, right? Like 1.5 years ago, they weren't setting up websites to sell the mom-and-pop owners. There was a reason for that, right? They could still buy down a mortgage to a really cheap rate. There's plenty of healthy demand, maybe things are a little bit slower. They want to move some imagery. It's a great off ramp if it makes sense. Now people better be good at how they underwrite rents and how you think about that sort of we've done well on that, and we've been burned on that in the past, right, as a company. So you have to be pretty judicious about how you think about what market rent is on any particular product. And then how are you going to serve and meet the needs of the customer.

If that -- if we can't run the Invitation Homes operating playbook, then we're probably not interested in that location or that market. And Scott will get a little bit more into that. But we are clustering some things and seeing some good opportunities where we can take scattered -- it basically just adds to our own scattered business, which we love.

So we've got time for one or two more. And a reminder, we will have a second Q&A session as well. I know we'll do Jamie, and then Eric.

Jamie Feldman with Wells Fargo. So you talked a lot about the structural demand tailwind, sticky tenant base, but we do have an administration that's focused on, whether it's mortgage rates or getting the cost of for-sale housing down. I think there's generally an overhang on the sector, people worried about what does happen if mortgage rates move or housing costs decline. What can you say to give people comfort that you still will have a very sticky tenant base? Or what are some of the data points that you can point to that could give people comfort even if we do some of those changes or maybe you don't think those changes are happening, and that's a fair answer, too.

Look, it's hard to predict the weather, right, in terms of what could happen what happen. I'd tell you this, like we're fans like we have no problem saying this publicly. We're fans of cheaper mortgage rates and more home transaction volume. It's a good thing for the business. It's a good thing for overall housing health. I think right now, what we have is a little bit of a challenge, a huge percentage of the country is locked at like a sub-6% mortgage rate with no real intention to really do anything because if you move from this house to that house and your mortgage rates at 100 and something basis points higher, it's a big payment change.

By the way, tax, insurance, all that stuff has gone up pretty dramatically since 2020. I would argue that we see -- we would like to see more homes transacting generally, just like macros, the way we think about housing health 4 million, 4.5 million transaction a year isn't enough. We'd like to see that at 5.5, kind of 6, where it sort of was steady state from, call it, 2016 to probably 2020. And then it got totally thrown out of whack and on every earnings call, I felt like we kept saying like trees won't grow to the sky. And I think right now, we're having that moment where you kind of come off and things get back to normal and there's some uncertainty and nobody can really sort of play it out. But we still have a couple of years left of pretty good mortgage security for a lot of homeowners. It's like 60% or 70%, I can't remember the number, but it's our sub-6 and then even smaller, like 50% or sub 5%. I mean it's really healthy in terms of your current mortgage rate.

I think Secretary [ Turner Hud ] is doing some really good things. I've been a fan of things he said publicly in and around sort of housing and how to think about it. As a company, we have no problem if mortgage rates get cheaper in our view. We think cheaper mortgage rates, equal more transaction volume, the impetus to create more housing units, which the country needs generally. And ultimately, home price appreciation, which is a proxy for where rents typically go. And so that gives better pricing power.

I think that's how we think about it broadly. In terms of regulation, it's fell a lot better candidly with this administration than maybe the last. And that's not to pick side, it just felt more intense in the last version.

Okay. Eric, do you want to take the last question for the session? Get your mic here.

Eric Wolfe, Citi. It was actually related to what you just said there a second ago about HPA being a good leading indicator for rents. If you look at that chart that you had in there, the cost to rent and the cost to own were pretty much on top of each other for a long period of time. And then it's really separated a lot lately. So curious why do you think it's separated so much? And do you think that cost a rent can kind of accelerate a bit to bridge the gap between cost to own?

Yes. Look, when they were sort of -- I remember in some of our earnings calls, kind of right after we went public, we would -- I feel like -- and Scott and Greg might have to keep me honest here, but a few of our earnings transcripts, we were like -- the difference is $300, $400, like there were some -- it was much narrower to your point. Still had excellent rent growth in our portfolio, and it was because was sort of more in line with our home price it. If you could just look at the kind of the elasticity that happened in the pandemic with values. And then we had a couple of years of pretty intense rent growth. We saw it multifamily, we saw it in single family. That feels like it sort of moderated back to some normal levels, but there is still a delta that's pretty significant. It's not just home prices, though, let's be clear. It's insurance, homeowners insurance is totally different from where it was 3 or 4 years ago. It has nothing to do with home prices. I mean maybe to some degree, has more to do with fires, wind and storm and some of these other things. [ Melero ], HOA issues, like there's just some stuff that makes that cost to own that much more sort of painful on that side of it.

And look, your rents can't go to the moon every year. But I do think we have a lot of room in terms of that differential between ownership and lease. We've got quite a bit of cushion in terms of where you can see natural rent demand.

And there are markets, Scott may talk about this in a second with Salt Lake City. But there's markets where you've had insane home price appreciation over the last several years, and you haven't seen rents really move yet. And you have to believe that rents are going to come off the floor kind of where they've been for a while is the cost to live in some of these other pockets that gets that much more expensive.

All right. Thanks, everyone. That wraps up our first Q&A session. We'll now take a short 15-minute break. Refreshments are available to your right, and swag can be picked up to your left. If you haven't already, restrooms are out the door and on the right, please return by 2:55 so we can start on time for the second discussion. Thank you .

[Break]

So listen, put you guys had a moment to recharge here. We're kicking off the next segment here. We're calling this the garage. Here, we have an example of a house where we have a 500 square foot house with a 500 square foot garage. I'm not entirely sure if this house is on our disposition list, but I'm glad that the IR team found this house, so we can emphasize the garage for this part of the presentation.

Why the garage? It's because this is where our ideas are built, tested and tuned. And in our business, it's where our engine drives external growth. We unlock new investment channels, new markets and new opportunities. It's growing with discipline, generating long-term value for our shareholders. So let's buckle up and open the garage door, queue the engine revving in the background for everyone in the room here.

All right. So as a reminder, I joined Invitation Homes 2 years ago. I've worked closely with the team to execute our growth plans while staying true to our mission of owning great homes in attractive markets with first-rate customer service. I'm going to cover three aspects of our investment strategies today. First of all, I want to talk about portfolio optimization. We're going to discuss our disciplined data-driven investment framework and our capital allocation process. Secondly, we're going to talk about external growth. We can grow through multiple investment channels and pivot our investment strategy depending on where we are in the housing cycle. And lastly, we're going to talk about our third-party management platform as an engine for capital-light earnings growth and a way to enter new markets. So with that, let's move on.

Portfolio optimization. We optimize our portfolio through a rigorous analytical framework. We have three types of data we look at when we go through our investment process. We look at economic market data like GDP growth, income growth, population growth and employment growth. We look at housing market data like home price appreciation, the cost of renting versus owning new permits, BTR, supply, et cetera. And then obviously, we have our own Invitation Homes proprietary data on the 110,000 homes that we own or operate today.

We analyze this data. We establish our out capital allocation plan, and we ultimately optimize our portfolio to make an investment decision, whether to buy, hold, reinvest or sell a home. We have a disciplined investment framework. It starts when that investment is sourced through the originations in the single asset transaction team. We then assign that acquisition, whether it's a community, a bulk deal or an individual house to our underwriting team to go through key assumptions and returns. It's next to sign to the due diligence team who then works with the underwriting team to approve and close the acquisition.

We are very experienced at closing individual homes. We have reviewed millions of homes since the inception of this company. Ultimately, we have either bought or sold 130,000 homes since we started this company. Post closing, when we close on an acquisition, we move it to our rehab [indiscernible] team, who brings that home up to the Invitation Home standard. It then goes through our marketing and leasing team, where we secure a long-term resident. Through a combination of both boots on the ground and our data analytics were set up to drive strategic and accretive growth.

Let's talk about where we're allocating capital today. We allocate capital to long-term high-growth markets. We think about our markets as core growth markets, new growth markets and core established markets. So for example, we're long-term believers in some of our core growth markets like Dallas, Phoenix, Atlanta and Florida. At the same time, we're increasing our allocation to some new markets for us, like Nashville and Salt Lake, which we'll talk about at the end of the presentation.

At the same time, we're also invested in our core markets like Seattle, California, Chicago and Minneapolis. We've not been allocating capital to those markets recently because we've been challenged to find investment opportunities that met meet our returns and our cost of capital.

Over the next three runs, our capital allocation plan is to approximately attempt to allocate capital 30% to Western markets, 20% to central markets, 20% to the Southeast and 20% to Florida. We consistently reevaluate market conditions and pivot our capital allocation plan to reflect the on-the-ground market realities. We're also reinvesting in our portfolio through our RevEx program.

Like a lot of other residential REITs, we have a program to renovate existing homes. We typically do interior upgrades that will generate attractive risk-adjusted returns and drive higher values. We typically invest about $7,500 a home in revenue-enhancing upgrades like new appliances, countertops, cabinets, et cetera. These are homes that we could lease as is. But we believe that these investments we make can enhance long-term returns. We've consistently done between 4,600 and 6,000 homes a year. And we've achieved a return on investment of somewhere between 10% and 15% on the RevEx program. These are high risk-adjusted returns, and we expect to continue this reinvestment over time.

We are also optimizing our portfolio through dispositions to end users. We have a unique ability to sell individual homes into the end user market at a premium to institutional SFR pricing. Our reasons for disposition include a couple of different things: noncore submarkets, high rehab costs, selling homes where we want to derisk environmental exposure. And honestly, homes where we just think the low long-term risk-adjusted returns.

More than 30% of our dispositions in 2025 will be in California, with the balance of those sales in Florida and Atlanta. We're on track to sell more than 1,400 homes this year for $500 million of proceeds in a mid-5 cap rate.

So let's move to our external growth strategy. Our external growth currently is focused on three primary strategies: First, we've developed great relationships with our national and regional homebuilder partners to purchase BTR communities. Second, we're really excited, as Dallas talked about earlier, with our recent success buying scattered site new construction homes from the same homebuilders off of their inventory tapes. And third, we recently launched our construction lending program that is broadening our relationships with developers and giving us access to future acquisition opportunities. Lastly, we are also evaluating alternatives to add development as another growth channel, whether through merchant build partnerships or in-house development capabilities.

A quick note on our MLS channel. We're not buying significant volume on the MLS right now. We're closely monitoring resale home pricing. We're very attuned to where the resale market is. We're standing by to see if this market becomes actionable and accretive to our cost of capital, but volumes have not increased materially and we haven't seen a move in cap rates yet, but we're watching this closely.

The rise of homebuilder supply is leading to acquisition opportunities for us. As you can see here, homebuilder standing inventory per community has risen to 2.5 homes per community, which is the highest level of inventory you've seen with the homebuilders since 2011. With mortgage rates at 6% with a high cost of insurance, the cost of ownership to own a home is still unaffordable.

Homebuilders today, as we said, they're working through excess inventory. They're slowing down their future commitments. We are acting as a liquidity provider to the homebuilders. The same way we act as a liquidity provider to the resale market 10 years ago.

The current market is providing some very attractive entry points for us to deploy capital at strong risk-adjusted returns.

We have multiple acquisition channels where we can pivot with the cycles. Here's a chart that shows the new home price premium versus resale pricing since 2010. You'll notice from 2010 until about 2020, there was a 25% to 40% premium of new home prices relative to resale prices. Starting in about 2020, that gap shrank to 5% to 10%. And today is around 0%.

Now let's discuss our acquisition strategy over the last 10-plus years. During our first 8 years in business, we bought resale homes when they were trading at discounts to replacement cost. This included buying auction purchases and also buying homes off the MLS. Then in 2020, when new home prices became more attractive on a relative basis, that's when we started buying new construction homes. 2021, that's when the team did our first forward purchases with [ Pulte]. And since then, we've expanded it to 10 different homebuilders with whom we've done forward purchase agreements.

In the last 12 months, as that gap has gotten tighter and tighter, we've also expanded our new home investment strategy to purchase homebuilder inventory and recently launched our construction lending program. We've built an agile investment platform that evolves with the cycles, and we can pivot to different strategies to capitalizing on changing market conditions.

Our first growth strategy is to partner with national and regional homebuilders to buy build-to-rent communities. Again, in 2021, we launched this program. Since then, we bought 3,000 homes in BTR communities that have been purchased from national builders, regional builders and our development partners. Our focus is finding the right homes and the right communities where we already have an operational presence.

Typically, we buy these homes on a forward purchase basis. We try to buy them 6 to 12 months before for its delivery. Our goal is to take down somewhere between 8 and 12 homes a month and try to get aggregate homes somewhere between 50 and 200 homes in any given community.

So let's talk about the benefits, benefits for the homebuilders predictable deliveries and earnings for them. They can supplement their sales to end users with an institutional counterpart so that they can have sales in both strong and weak markets. And they get cost savings on marketing and sales. The benefits for Invitation Homes, discounts to retail home pricing, control over product design and delivery pace and an ability to purchase within a master plan community. And obviously, the benefits to our residents are the ability to live in a new home in a master-planned community with a garage with a yard with more living space, close to schools, close to great retail. The approach is a win, win, win.

Through our purchases of BTR communities, we have also expanded the scattered site operating model to also begin to manage BTR communities. Three years ago, we had about 1,000 homes that we would call BTR. Since then, through acquisitions and growth of our third-party management platform, we've taken ourselves to 8,000 homes that we either own or operate with about another 1,000 in the backlog here. This is about 7% of our home count today. Over time, we have built the Invitation Homes community operating model as an enhancement to our existing SFR operating model. This includes adding leasing -- in-person leasing during lease-up when appropriate, an eyes on asset program to monitor community area maintenance and enhance physical and digital marketing. Our scattered site operating model enhances our ability to operate BTR communities.

I often get asked, what is a BTR community? What does it look like? What is it shape like? People are a little confused on how to define these things. Tim earlier talked about our power of scale. Our power of scale enables us to have a differentiated operating model for BTR communities.

We define BTR communities three different ways. You've got scattered site communities, right? This is literally we own some scattered throughout the master plan, all right? The second type of community, we call it a pod. And a pod is where we might have anywhere from 50 to 200 homes within a master plan, but it might be five contiguous blocks. It might be the Northeast quadrant of the master plan community. So we're part of a broader community where you have owners and renters together, but it's not a separate and distinct community. And then third, you have full stand-alone communities with at least 100 homes where we would control the HOA and the amenities.

Let's be clear. We compete head on with multifamily operators for full communities in the BTR space, okay? The typical multifamily operator runs the multifamily playbook. They've got four to six people on site. They tend to gravitate towards these full stand-alone communities and they are operating it with their model. But in our model, our competitive advantage is to be able to operate diverse community types with a lower expense model from things like maintenance. We can leverage our mobile maintenance text, we can have off-site personnel who simultaneously service our SFR homes and our BTR homes. Leasing, we can utilize the central call centers that Tim talked about earlier, to take leasing staff offsite for the new and renewal process. And we are just starting to scratch the surface on the upside to our BTR operating model.

We just launched the is on assets program for common area maintenance. We're developing capabilities to cross-market leads between BTR and SFR. We are very early in our revenue management process. to refine the pricing model and to try to manage rate on premium floor plans within any given community. More to come.

Here's a case study of a BTR acquisition that we did with [ Pulte ] where we were uniquely positioned to outperform. In 2021, we purchased 150 homes from [ Pulte ] at a 10% to 15% discount to market. Our disciplined underwriting focused on both yield and long-term value creation. We were drawn at Westfield for its location. It was close to grocery scores. It was grocery stores. It was close to schools, had an easy access to major transportation nodes. We love the community amenities, the pool, the cabana, the playground. The surrounding area had 175,000 people in a 10-mile radius. And we already owned -- we already operated 1,100 homes in that area. It provided meaningful scale and efficiencies for us when we bought this community.

We also like that we were acquiring a pod, so we were part of a master plan that allowed for seamless integration into the Invitation Homes platform. Deliveries began in 2023. We took down about six to eight homes per month in this community. Given the strong performance of the community, we actually expanded our commitment with [ Pulte ] in 2024 to take down another 56 homes, bringing the total community to 206 homes. Here we are today, we've got about $2,200 a month, and we've got a 6% yield on cost on this community. Our flexibility towards community design allowed us to buy a well-located community in a format that might not have worked for other operators.

Now let's bring our community operating model to life with the following video. Our BTR model is designed to elevate the resident experience while driving greater efficiency across our communities. We're excited about the progress to date, and we look forward to expanding this approach to deliver even more value for our residents. So let's take a closer look at this video.

[Presentation]

I always want to rent the model home. They always look so good in all these videos every time I visit one. So listen, as we refine our community operating model, we will continue to grow through other acquisition channels.

Second growth strategy we're highlighting today is one that gained real traction in 2025, homebuilder inventory. By homebuilder inventory, we mean scattered site, new construction homes purchased directly from builder inventory. We've always received these tapes. When I started 2.5 years ago, we were getting these tapes. We didn't really see anything at the time that was attractive to us. The prices weren't right that, frankly, the builders weren't willing to deal with us. To date, we've seen tapes and standing inventory of 160,000 homes.

Now let's be clear. Those homes, they're not in IH markets. They're not in the IH buy box. That's the entire universe that we see. What we really did is we took those tapes of 160,000 homes. We narrowed it down to about 19,000 homes that were actually in our buy box. Then there are about 6,000 homes where we made offers. And this year, we will close on 525 homes for more than $180 million of invested capital. We are purchasing these zones at 20% discounts and a cap rate underwritten around 6%. We typically make bids on anywhere from 2 to 15 homes per community. These homes are delivered in under 30 days. They're rent ready and we got to have a tenant in place in 60 to 90 days. So we get an instant feedback loop on pricing. We get an instant feedback loop on the purchase. And so we're much closer to where the current market is in terms of both underwriting the house, sizing the rents and getting it leased up as quickly as we can. Buying scattered site new construction homes is plug and play for our existing operating model. Our operating platform was just built for this.

Our third growth channel is the construction lending platform that we announced in June. Over the last 2 years, we met with a lot of developers about trying to put in place forward purchase agreements for BTR communities. When we met with those builders, what we realized is they -- of course, wanted to work with us on forward purchases. But what they really wanted was equity and debt from us. And we realized that there was a scarcity in the market of construction lending. These builders are building in the same markets where we had an operational presence and we had a good understanding of the market fundamentals.

I think to date, since we launched this program, we've probably received over 200 opportunities from developers, whether it was directly from a developer or through the brokerage network. There was probably about 85 transactions to date we've looked at that really kind of fit within our buy box. And where we stand today is we've either closed or in final negotiations on three loans totaling more than $100 million. We're targeting yields on these loads somewhere between 8% to 10%. And we're hoping that these loans could when they become stabilized communities, could become future acquisitions as we have options to purchase many of these communities upon stabilization. We're hoping to grow this program to around $1 billion over the next 3 to 4 years. and we think we can achieve $0.03 to $0.04 per share of incremental AFFO by 2028 from this program.

Lastly, we are exploring opportunities to add homebuilding capabilities to our platform. We entered the build to rent space in 2021 with our first investments with [ Pulte ]. Since then, we've purchased 3,000 homes. We now operate 8,000 homes. We are enhancing our construction management capabilities through our construction lending program. We are evaluating next steps, which may include buying or building, development and general contracting capabilities. We believe that controlling our own destiny on product design and delivery pace location, pre-leasing, et cetera, will enhance our investment capabilities and return objectives.

So let's address the obvious question. Why now? Builders are reducing home starts. Finished lot prices are becoming more attractive. Construction cost inflation is moderated, and we can lower our base is 10% to 15% through something like this. We're exploring alternatives, we'll share more specifics when we're in a position to do so. For now, we see development as a natural extension of our growth strategy, another arrow in our quiver and a way to further leverage the power of scale of our operating platform.

Our joint venture and third-party management platform is what I want to close with today. It's a best-in-class engine for capitalized earnings growth. We launched a program in 2024. We added three major new customer contracts last year. We're up to 24,000 homes that are joint ventures and managed homes in our program.

As Tim discussed earlier, our power of scale enhances our operational capabilities as we add more homes to the platform. [ 3:00 p.m. ] also creates a future pipeline of acquisition opportunities. We had some of our customers this year, wanted to lighten up a little on some of their homes. They thought about selling them in the market to end users. We actually made a bid. We actually closed on 70 homes this year directly by having discussions and purchasing them directly from our partners.

We currently generate revenue from this program from several sources, asset management fees, property management fees, performance fees in disposition fees. This year, we're on track to generate run rate revenue of approximately $85 million from our third-party management platform.

There are also opportunities to grow this platform over time. We obviously onboarded a lot in 2024, right? As we build up our capabilities in terms of how to service and perform for our third-party customers, we look at where we are in the market today. There are more than 35 subscale operators who are currently operating SFR homes. These operators manage more than 125,000 homes that could be consolidation opportunities for Invitation Homes. Our current property management customers have actually enhanced -- they're operating margins by 300 basis points on average since coming on to the Invitation Homes platform. In the future, we expect that every 3,000 homes we can add to the platform can add a $0.01 per share of AFFO and $0.02 to $0.04 by 2028. We will also work with our third-party management customers to enter new markets, which we'll cover now.

Our reentry into the Nashville market. I.s insight into our [ 3 p.m. ] growth. You may recall that we actually originally were invested in the Nashville market after we did the merger with [ Starwood Waypoint ]. We always like the market, but we kind of just didn't own the right homes in the right submarkets at the time. We exited the market. But then in 2024, we had the opportunity to reentry Nashville as a result of some of our new third-party management customers.

Since then, again, we had some new third-party management customers we added 600 [ 3 p.m. ] homes. Since then, we've purchased 200 homes directly from builders and developers and another 100 homes through our joint ventures. We're at nearly 1,000 homes in Nashville and growing. As we evaluate new [ 3PM ] opportunities, this is also an opportunity for us to enter new markets.

I'm also excited to announce our entry into the Salt Lake City market. Here's another example of how we're expanding into new markets through [ 3PM ]. We're currently managing about 100 homes for [ 3PM ] customer in Salt Lake and now taking a larger foothold. We're excited about Salt Lake as a growth market. 2.6 million population in the MSA, 11th largest GDP. Look at the cost of ownership, $1,600. Dallas talked earlier for the rest of our company, it's about $900. So it's obviously a market where renting is attractive relative to cost of ownership. Look at new job growth in that market, 5.7x new jobs for single-family permits, right? We've actually met with the top 10 homebuilders in that market. We've been evaluating several opportunities over the last 12 months. We've committed to three projects on a forward basis for about 147 homes for $50 million of committed capital with deliveries over the next 12 to 18 months. We hope to allocate $100 million to Salt Lake over the next 3 to 4 years as we expand our presence.

So in conclusion, we have three segments to our investment strategy. We're optimizing our portfolio through a disciplined, data-driven investment framework. We're growing externally through multiple channels, whether through BTR forward purchases, homebuilder inventory purchases and our construction lending program, we're evaluating expansion opportunities through development, and we're going to continue to grow our capital-light third-party management platform.

As the largest owner-operator of SFR, we are uniquely positioned to deliver on all these growth strategies over time. We think for all this combined, we can generate $0.05 to $0.08 of incremental AFFO growth between now and 2028. And from these initiatives. We will continue to optimize returns and create value for our shareholders. Thank you for your time. And now on to John Olson for the home office.

Hi, everyone. Appreciate you being here. I'm excited for you to join me here in the home office, but I'm going to warn you, similar to real life, what goes on in the home office is nowhere near as exciting as what happens in the rest of the house. But it's important to remember that it's what goes on in the home office that facilitates and makes possible the exciting vision that Tim, Virginia and Scott just walked you through. .

So I'm going to focus on a few specific areas of our business. and highlight a few thoughts that I want to make sure you walk away from today's session with. First, the strength, quality and flexibility of our balance sheet. Second, the variety and quantum of funding sources available to us; third, property taxes, including some big picture thoughts on where we are versus where we've been. Fourth, how we think about key revenue drivers and how those interplay with NOI and some of the operating metrics that we talk about pretty frequently on our earnings calls. And lastly, I'll wrap up by recapping some more details on the opportunities that Tim, Virginia and Scott walked you through.

Let's start with the balance sheet. Today, we have a fortress balance sheet. But not too long ago, it was a very different story. In March 2017, at the end of our first quarter as a public company, our net debt to EBITDA was 9.9x. Almost 60% of the homes we owned were included in the collateral pool for one secured debt instrument or another. And 75% of our debt was maturing in the next 3 years. Fast forward to our last Investor Day 6 years ago, we've made pretty good progress on addressing our maturity profile and unencumbering assets. but our net debt to EBITDA was still 8.5x. Today, net debt-to-EBITDA is 5.2x. Over 90% of our assets are unencumbered and less than 21% of our debt is maturing in the next 3 years.

On top of that, in 2021, we received investment-grade corporate credit ratings. And we've subsequently been upgraded at least once by all three of the rating agencies that cover us. So why do we spend so much time talking about our balance sheet? Why did we spend so much time and energy and focus on completely reshaping our debt structure and working down our leverage profile. There are three reasons: First and most obviously, to improve our access to and cost of capital long term. Second, to maximize asset management flexibility. Why is that important? A portfolio of single-family rental assets is unlike any other real estate property type out there. The granularity, geographic dispersion and diversity of our assets simply doesn't exist elsewhere in commercial real estate. The ability to raise debt in the unsecured market is hugely beneficial from an asset management perspective. When you contrast that with the collateral restrictions that exist in various secured debt instruments. Third reason, to maintain and maximize optionality. By reducing and then operating at lower leverage, we leave ourselves capacity to increase leverage if a compelling point in time buying opportunity presents itself. Why is that important? Think back to how this company and this industry were born. Additionally, by bringing leverage down that gives us the flexibility and the conviction that we can use excess operating cash flow and disposition proceeds to repurchase our shares if our share price is trading at a level that is materially dislocated from underlying asset values.

So if those types of interesting opportunities do present themselves, what then? Let's talk about funding. We are very fortunate to have a variety of sources of capital available to us to pursue whatever type of opportunity may arise. First, we have a large revolving credit facility. Our revolver, which was undrawn at the end of the third quarter, has capacity of $1.75 billion, and it bears interest at SOFR plus 87.5 basis points or roughly 4.8% today. Having a large attractively priced revolver gives us a lot of flexibility to quickly access capital and fund our growth and other strategic initiatives. Second, we have the ability to sell between $400 million and $600 million of noncore assets each year. We believe that our ability to sell noncore assets into a highly liquid end-user market at cap rates well inside where we can either deploy capital or where our stock is trading is a unique capability within the real estate sector.

Third, our portfolio generates between $250 million and $300 million of operating cash flow year in, year out after the dividend. That cash flow is available to fund capital reinvestment, technology initiatives, share repurchases or external growth opportunities.

Fourth, we have a number of existing joint ventures that are not yet fully deployed. Those joint ventures have approximately $380 million of committed but uncalled equity capital. With leverage, that gives us another $1 billion of buying capacity on top of what we can do on balance sheet.

Lastly, let's talk about low probability, high impact scenarios. Now these are hypothetical, but what if meaningful fractures emerge in the housing market? We certainly don't root for that scenario. But again, it is important to remember how this company and how this industry came into being. We were born at a point in time distress in the housing market. And by bringing down leverage and maintaining great access to capital, we put ourselves in a fantastic position to take advantage of whatever opportunity presents itself. If history repeats itself, and we see a meaningful opportunity to buy assets at values and yields materially better than today's, we have the capacity to add approximately $2 billion of incremental debt before we start to bump up against 6x net debt to EBITDA, which is the upper end of our stated leverage target profile and the rating agencies stated downgrade triggers.

So taken together, our current liquidity position and access to capital put us in a great position to be opportunistic and take advantage of whatever opportunities present themselves.

Now let's shift gears from the balance sheet and talk a little bit about the P&L. All right. Let's start with the largest expense line item on our P&L. Property tax makes up more than half of our same-store operating expenses, 3 states, Florida, California and Georgia account for more than 70% of our total same-store property tax expense.

Now the bad news is the magnitude of this line item, coupled with the fact that 2 of those 3 largest states I just went through, Florida and Georgia, typically don't mail out property tax bills until late in the third quarter or early in the fourth quarter. What that means is we often don't have a clear picture into our property tax expense outcomes until pretty late in the year. And that does create potential for some nasty surprises late in the year. We saw that in 2022 and 2023.

The good news, we continue to see moderation in the rate of increase of property tax growth. We now expect that to be no more than 5% in 2025, which is the best we've seen since 2021. We're obviously thrilled to see that.

So what is driving that moderation? Let's start with what we're seeing today. First, the rate of home price appreciation in our markets has moderated somewhat, right? That's good news for property taxes, but I think it's important to point out that assessed values and market values do not move in lockstep. In fact, assess values track what happens with market values and the change over time, but with a lag, and there are some jurisdictions where that lag can be longer than others.

Second, homeowners are voting with their pocketbooks. Affordability is top of mind. Legislators and policymakers are increasingly sensitive to that, and we're seeing that pocketbook issue stimulate discussion of interesting property tax policy initiatives in a number of states where we operate.

Third, moderating inflation means that there's less pressure on counties to increase tax revenues to keep pace with cost increases.

So what does that all mean as we look to the future? There are no crystal balls, but we do feel much more confident that the worst is behind us. As we get farther away from the frothiest days of pandemic era bidding wars, we expect to see more moderate rates of growth in assessed values.

Now at the same time, we're also conscious of the fact, and I think I've talked about this on a few earnings calls, that assessors have become more willing to use millage rates as a plug to achieve their revenue objectives. That said, going forward, while we'll continue to be conservative in how we budget for property tax, our expectation is that the rate of increase does continue to decelerate.

All right. So that's property taxes. Let's take a minute and talk about some other elements of our P&L. I'm going to preface everything I'm about to say by pointing out something that's fairly obvious, I think, the majority of our cost structure is noncontrollable in nature. Noncontrollable expenses make up approximately 65% of our total cost structure. And as I just talked about a minute ago, property taxes make up between 50% and 55% of our total cost structure.

So when you have a large noncontrollable cost structure, what do you do? Well, we spend a lot of time thinking about how to optimize revenue growth in order to maximize NOI. Now we often talk on earnings calls and at conferences about the trade-off between rate and occupancy. So I thought it'd probably be worth spending a few minutes to talk about the relationship between NOI and a number of the operating metrics that we referenced pretty frequently.

First off, let's talk about occupancy. Now as you all know, occupancy is a function of 2 variables: turnover rate and days to re-resident. Interestingly, every 1-day change in days to re-resident has about the same occupancy effect as a 50 basis point change in turnover rate. However, when you think about the NOI impact, turnover rate has a materially greater impact on NOI because unlike days to re-resident, it impacts both occupancy and our turn costs, right? So there's a revenue and an expense impact. So from an operational perspective, it becomes clear why we place so much emphasis on maintaining a resident experience and a high renewal rate, right? In a market where new lease rate growth is challenging, the benefit of keeping existing customers in place becomes even more pronounced.

All right. Let's talk about collections. We have had good success in reducing bad debt over the last couple of years, primarily because Tim and the field team have ratcheted up their focus on collections. Every 1 basis point change in bad debt has roughly the same revenue impact as an equivalent change in occupancy. So we can benefit simply by focusing efforts on collecting that which our residents owe us. It's pretty simple.

All right. Lastly, let's talk about rate growth. As we've discussed with most of you, renewal rate growth is materially more impactful than new lease rate growth for us, and that's because we renew approximately 75% of our leases. Taken together, what do these little factoids suggest for NOI optimization?

A few things. One, we're almost always better off avoiding a turn. So that being the case, there's always going to be some degree of bias towards negotiating with existing residents on a renewal, especially when new lease rate growth is more challenging.

Two, if we're taking an NOI maximizing approach, we're almost always better off trading some amount of new lease rate growth for shorter days to re-resident. The 1-day decrease in days to re-resident more than swaps the effect of a 10 basis point decrease in new lease rate growth.

So optimizing revenue growth to maximize NOI is a big part of how we approach maximizing value for our shareholders. But what are some other ways that we're trying to maximize value? Let's wrap up by recapping some of the other value creation opportunities that Tim, Virginia and Scott have already walked you through.

Okay. As I mentioned at the outset, what goes on in the Rest of the House is more exciting than the Home Office. So I'm going to spend a lot of time talking about what we spent time in the Rest of the House too. We started off in the Kitchen with Tim, where we heard about the first 3 initiatives you see up on the screen. First, how we think our value-add service offerings can grow over time and add to the resident experience while at the same time contributing an incremental $0.04 to $0.05 of AFFO per share, simply by providing the services that our residents tell us they want and care about. We think that our value-added service offering is a true brand differentiator, and we're excited about what it can do over time.

Next, Tim talked about process improvements. By consolidating certain activities, leveraging technology and constantly refining our property management playbook, we believe we can unlock another $0.02 to $0.03 of incremental AFFO on just through an unswerving commitment to continuous improvements and driving efficiencies by getting better at what we do, right? It's the technique piece of his running analogy.

Lastly, Tim talked about centralization. By centralizing certain tasks and functions currently dispersed through the field, we think we can improve consistency and manage routine, high-volume administrative tasks more efficiently. And in the course of so dealing drive an incremental $0.01 to $0.02 of AFFO per share.

Next, we spent some time in the Den with Virginia. Virginia talked about how we're leveraging technology to improve the resident experience by addressing pain points, reducing friction and driving continued high retention rates while also improving the efficiency with which we operate. It seems pretty straightforward, but we believe that by continuing to focus on elevating that customer experience, we can drive another $0.02 of incremental AFFO per share over time.

Next up in the Garage, Scott outlined how we go about optimizing our portfolio and how and where we think about investing it and how we're opening the aperture to find new exciting opportunities. Scott walked through the ways we're seeking to drive capital-light earnings growth in our third-party property management business, as well as why the size of that opportunity and the value proposition we offer leads us to believe that we can drive another $0.02 to $0.04 of incremental AFFO by growing that business over the next 18 to 36 months.

Scott also talked about how we can leverage our cost of capital to supplement our growth strategies in partnership with developers. We believe we can grow our loan book substantially over time and anticipate that, that development lending business can contribute an incremental $0.03 to $0.04 of AFFO.

Together, we believe the growth in our third-party property management and developer lending programs can contribute an incremental $0.05 to $0.08 of AFFO by 2028.

Taken together, the opportunities Tim, Virginia and Scott have walked you through represent $0.14 to $0.20 per share of incremental AFFO on top of the growth from our core portfolio. Let that sink in. We spent a lot of time talking about our core business. What we wanted to do today was talk about the things that are on top of.

Now I want to be clear that some of this incremental growth is back-end loaded, and it won't earn in ratably over time. But nonetheless, we think this is incredibly exciting.

Now I know that was a very quick recap, and we're going to have time for some more questions in our next Q&A session. But before we wrap up, I want to walk everyone back out to the front porch and hand things over to Dallas for some closing thoughts.

It's a tall drink right there, isn't it? You did a really nice job. Thank you, Jon. Thank you, Scott, for your comments. Thank you for staying with us today as we get into the conversation. We've covered a lot of ground. Our goal is to demonstrate our commitment to staying best-in-class.

But before we wrap up, let's just remember the 3 things we really want people to take away today. Innovation, we're going to continue to do the hard things that make our business more efficient, help create enhanced margins and ultimately better returns.

Growth, the multichannel approach that Scott talked about, especially lining on capital-light initiatives, and the possibility. Some of the other things that I know the teams are actively working on that we believe are also going to lend to this outperformance. They're not just ideas for us. We put them to practice. Everything I talked about at the beginning of the presentation, we feel like we've delivered on in terms of setting a mark for ourselves as a business and an organization. We're doing it once again by saying this is where we are currently, this is where we want to go, and we're going to hold ourselves and we hope you hold us accountable to this as well. This is the foundation of how we plan on continuing to evolve, lead and ultimately win in the front.

Innovation will keep us best in class, growth will continue to drive that disciplined expansion that we all want and possibility will ensure that we're continually leaning in on the future.

Today, you heard from Tim, Virginia, Scott and Jon and sort of all of these categories. And I think we've enjoyed really thematically understanding the things that the company is focused on.

At the heart of what's next is continuing our effort around genuine care. We talked about connecting the dots, aiming true, raising the roof and embracing the journey. As a company, these aren't just statements for us. We actually try to live by them, both in how we approach our resident, how we think about operating our business. But rather than just talk about it, I thought it would be fun, why don't we close hearing directly from our residents on what an Invitation Home has meant to them.

[Presentation]

These are the voices that remind us why we do what we do. And with that, we're going to close and I'm going to hand it over to Scott McLaughlin, for our next Q&A. Thanks.

All right. Thanks, Dallas. We're ready now to begin our second and final Q&A session. The same guidelines apply as before. Joining us on stage are Dallas, Scott and Jon to address questions regarding growth, financial results and our future outlook. Volunteer for the first question, let's go to Jana, please.

A question on the external growth. Curious if you think there's potential for the industry to kind of go back into the consolidation phase, maybe with some of the 35-plus portfolios you laid out as potential candidates for third-party management. And would you expect those to trade at premiums or discounts, given the importance of scale?

Yes. When we talk about those consolidation opportunities, the way we look at it is, look, there are a number of LPs that put capital to work with various operators over the last 10 years. But very few people have the size and scale that we platform. And so I think we look at these opportunities as opportunities for us to -- whether we're entering as a third-party manager in a capital-light way, maybe we make a very small investment in the portfolio, could it lead to consolidation over time. Obviously, there's a bid ask in the market right now to -- obviously, where our stock price trades where we see portfolios trading. So it's hard to say that there is a consolidation opportunity in some of those cap rates. But I think we definitely see an opportunity where we can add value to an LP out there, where maybe they're partnered with a subscale operator today, but there's an opportunity to partner with us instead from a management perspective. And I think that could potentially lead to consolidation over time.

But I think we really see the opportunity for us is more taking over some more third-party management opportunities, and then could that lead to consolidation over time. So it's just like we did with our 3 new partners last year, and we think there's opportunities to do more of that over time.

All right. Next question, middle of the room.

Jason Sabshon from KBW. You've laid out these process improvements and top line expansion opportunities as incremental to baseline growth in AFFO. So I'm curious, what do you view as a reasonable baseline growth assumption?

I knew someone was going to ask the 2026 guidance. Look, I'll say this. We've been very clear that we think the renewals portion of our business should be able to generate consistent rent growth in, call it, the high 3%, 4% range to the low 5% range, right? And so if we can do 3/4 of our book at, call it, a 4% plus renewal rate growth profile, I mean, that sets us up really nicely to continue to drive blends in the mid-3s, which in a market where growth is not setting anyone's hair on fire, that feels pretty steady eddy.

Now the good news is, the absorption backdrop that we're experiencing now and some of the softness that we're experiencing, just based on new supply, those are temporary scenarios. That product will get absorbed over time, better pricing power will return. But for those looking for a view on 2026, I'd say it's still a little bit early. This is a dynamic environment in which we find ourselves. We are going to wait and see kind of what our jump-off point is going to be for 2026.

But I would say that while 2026 certainly has some potential to feel a little bit better than 2025. I don't know that I think it's going to be a massive sea change in terms of growth year-over-year. I just think '26 is setting up to look more similar to '25 than if you turn back the clock a few years before that.

All right. Adam?

Adam Kramer from Morgan Stanley. Thank you very much for having us today. I wanted to ask a little bit about the -- I think, Scott, you sort of mentioned maybe getting into in-house development and I don't want to put words in your mouth necessarily, but it seemed like that was something maybe under consideration, whereas in the past, I don't think it necessarily was. I guess what would you sort of have to see or not see to maybe drive that decision about getting more into in-house development? Could an acquisition of a homebuilder sort of achieve whatever goals you guys have? Could that be sort of the avenue that you go about this? Maybe just unpacking a little bit that decision tree around the development?

Yes, of course. Yes. I mean, look, as we've talked to market participants, I mean, I think we clearly see 2 ways to do it, right? First is there's a potential for us to partner with people that are developers, that they have their own merchant build capabilities, and we could be a capital allocator to folks like that. The other way of doing it is obviously in a similar way to our competitor that has in-house construction management and general contracting capabilities. And so we kind of are in the process of evaluating both of those alternatives for us.

Clearly, we've looked at this as a basis play, right? And I think we've bought a lot of BTR and a lot of new construction homes at a very attractive basis. But any way you look at it through self-performance, we do get a lower basis and a lower basis leads to higher shareholder returns.

I think since I joined 2.5 years ago, we've talked about where we are on the spectrum. And when we bought our first homes from Pulte in 2021, we were on 1 side of the spectrum, which was a forward purchase, right? We took denominator risk, right? We locked in the price of the home. We took numerator risk in terms of where we would be able to set rents when we bought a home. And so that was on 1 side of the risk spectrum. And as we've gotten more comfortable with the build-to-rent product, as we've gotten more comfortable operating build-to-rent communities, I think we have a much better understanding of what projects look like, how we should be underwriting them, what the right costs are. Through our construction lending program now, we have line of sight into other people's budgets and other people construction costs. Every time a deal comes to committee, I can see construction cost budgets for 20 different transactions that are in market.

So I think as we build out our in-house knowledge, our in-house expertise, as the team has gotten more reps in understanding different parts of the spectrum, I feel like we've built the in-house capabilities to at least understand this a lot better than we had in place 3 or 4 years ago. And so any process we go through to decide to enter the development business, whether it's through merchant building or in-house GC, it's building all of these building blocks that we spent the last 4 years doing. And I think we're now at the point where I think we've got a little more view on where we can take it from here. Thanks for the question.

Great. Yes. Michael. In the end.

Michael Goldsmith, UBS. We touched on a lot today. The biggest bucket of the incremental AFFO per share comes from the value-add services bucket. So does that come predominantly from additional services? Was that an opportunity to push price on the existing services that you're offering?

Yes. I think the majority of that comes from continued penetration of our existing offerings. There is a little bit of potentially adjusting pricing there. We haven't done that in a number of years. And there are a couple of new things, but the vast majority of that is simply by continuing to roll out the services we're offering more broadly, and that's what we think is so exciting. You don't really have to buy into some sort of grand vision, it's really just a function of us continuing to do what we're doing and continuing to build on what we've learned so far.

Front. Austin.

Austin Wurschmidt with KeyBanc. Just curious, Jon, the $2 billion of debt capacity you have today, when are you thinking about the right time to tap into that? You've got the dispositions kind of funding, the various other initiatives. So how does that $2 billion to you kind of -- how are you thinking about using that?

Well, to be clear, I'm not thinking about using it. What I was illustrating was that there is potential for us if large-scale opportunities present themselves to take advantage of them, right? That the backdrop was why were we so focused on bringing down leverage? Why are we so focused on remaining unencumbered, giving ourselves maximum flexibility? It's because in the back of our minds, we are always conscious of how we got here and wanting to make sure that when opportunities present themselves, we're able to take advantage.

So let me be crystal clear. I have no intention of layering on an incremental $2 billion of debt onto the balance sheet. My point was, we have that capacity, and we have that headroom if a really compelling opportunity comes.

Jon, maybe talk about how we think about using cash generally?

Yes. So I mean, 1 of the great things, again, about sort of bringing leverage down over time and operating at lower leverage is we know -- for a period of some number of years, every free dollar of disposition proceeds or operating cash flow was applied to paying down debt, right? We were hyper focused on bringing in leverage, getting to...

Investment-grade.

Thank you. An investment-grade crediting. Today, like that's all done, right? So those disposition proceeds, that operating cash flow is available for either compelling growth opportunities, right? And by that, I mean a growth opportunity with a yield that is really going to be accretive to sort of NOI and earnings growth or alternatively, if the shares continue to trade at a place that we don't think makes sense relative to underlying asset values, we can apply that cash to share repurchases. And so the way I think about it is about $200 million of share repurchases at $30 just for easy math, works out to about $0.005 of accretion to earnings.

We've got time for maybe 1 or 2 more. Yes, Sanket, in the back.

Sanket Agarwal with Evercore ISI. We had a question around value-enhancing CapEx. I think it was up about 50% in the first 9 months of this year. So is it like all the expenses that are related to innovation initiatives flowing through that line item? And how should we think about that going forward like over the next 3 years or 4 years?

Yes. So within that line item is both value-enhancing CapEx designed to bring assets up to our sort of uniform standard as well as something that Scott talked about a little bit, which was revenue-enhancing CapEx, where we are focused on, okay, how can we better align an asset to demand drivers in that particular submarket. Sometimes it's hard surface flooring, sometimes it's a kitchen or bath upgrade. The idea being, okay, how do we either bring our expenses down or drive a more premium rent. And as Scott talked about, it's a pretty attractive return on investment there. The issue is not so much the return profile as the quantum of homes that sort of fit that bill, right, where there is an opportunity to go in and apply some additional capital reinvestment to drive better outcomes.

Great. Yes, go ahead.

Just want to ask about jobs. Like before COVID was job -- were jobs like a key demand driver for SFR rent? And has that relationship kind of changed now where the demographic change or the housing affordability become like a bigger driver?

I would say that -- I mean, to our earlier point, I think affordability is probably only helping for our business model today, right? This gap between the cost owned and the cost of lease. We haven't seen anything too fundamental change in our current customers. So those that are going through an application and getting approved, it's been pretty steady, almost the same numbers for the last year or 2.

That being said, we have seen less quantum, but that sort of makes sense with migration patterns and everything else.

I would say there's nothing on the jobs front that we directly see in our data. We're obviously paying attention to it and looking at all the headlines and just trying to understand if the immigration and some of these things could create some challenges. So far, we haven't seen too much flow through in any of our sort of customer underwriting.

Great. Well, thank you, everyone. This concludes the Invitation Homes Investor Day. Thanks to everyone here in person as well as our folks online, along with the New York Stock Exchange for being a wonderful host today. We look forward to seeing many of you next month in our hometown of Dallas, Texas at NAREIT. I will end the live stream now. Thank you.

Welcome to the Invitation Homes Third Quarter 2025 Earnings Conference Call.

[Operator Instructions] As a reminder, this conference is being recorded. At this time, I would like to turn the conference over to Scott McLaughlin, Senior Vice President of Investor Relations. Please go ahead.

Thank you, operator, and good morning. Joining me today from Invitation Homes are Dallas Tanner, our President and Chief Executive Officer; Tim Lobner, our Chief Operating Officer; John Olsen, our Chief Financial Officer; and Scott Eisen, our Chief Investment Officer.

Following our prepared remarks, we'll open the line for questions from our covering sell-side analysts. During today's call, we may reference our third quarter 2025 earnings release and supplemental information. We issued this document yesterday afternoon after the market closed, and it is available on the Investor Relations section of our website at www.invh.com. Certain statements we make during our call may include forward-looking statements relating to the future performance of our business, financial results, liquidity and capital resources and other nonhistorical statements that are subject to risks and uncertainties that could cause actual outcomes or results to differ materially from those indicated.

We describe some of these risks and uncertainties in our 2024 annual report on Form 10-K and other filings we make with the SEC from time to time. Except to the extent otherwise required by law, we do not update forward-looking statements and expressly disclaim any obligation to do so. We may also discuss certain non-GAAP financial measures during the call. You can find additional information regarding these non-GAAP measures, including reconciliations to the most comparable GAAP measures in yesterday's earnings release.

With that, I'll now turn the call over to Dallas Tanner. Go ahead, Dallas.

Thank you, Scott, and good morning, everyone. I'll start by recognizing our exceptional teams across the country. Their dedication to our residents and to operational excellence continues to drive performance and reinforces our leadership in single-family rental housing. Stepping back, our business is built on a simple but powerful value proposition, choice, flexibility and high-quality single-family living without the long-term financial and maintenance commitment of homeownership. That value proposition is resonating broadly from families seeking space and schools to professionals who value mobility. Today's housing dynamics continue to support steady demand for SFR. Even as mortgage rates move around, overall affordability remains stretched and transaction activity has been muted, partly because 70% of homeowners are still locked in at mortgage rates below 5%.

For many households, the all-in monthly cost of owning a home, including mortgage, tax, insurance and maintenance remain more expensive than leasing a comparable home. Based on the latest John Burns data weighted to our markets, those who choose to lease save an average of almost $900 per month compared to owning. Against that backdrop, our third quarter results reflect the strength and the resilience of our platform. Demand remains consistent. And while new lease growth continues to be an opportunity, our renewal performance is outstanding. During the third quarter, we delivered same-store renewal rate growth of 4.5% or 30 basis points higher than our third quarter result last year. At the same time, our average resident tenure further increased to 41 months. among the best in the industry.

These outcomes speak to the stability, quality and location of our portfolio, the professional service we provide and the value our customers place on staying with Invitation Homes. That stability gives us the confidence and flexibility to invest for the future, and it underpins our disciplined approach to growth. Today, we're pursuing channel-agnostic location-specific growth focused on long-term total returns, primarily through the following 4 channels.

First, our homebuilder partnerships that cultivate reliable and predictable forward purchases of full and partial new communities; second, homebuilder month-end inventory or list of homes shared by regional and national builders that we've carefully screened to identify those that meet our location and pricing criteria. Third, our construction lending program, which is gaining traction as a strategic way for us to deepen our relationships with smaller developers and facilitate delivery of much needed new housing supply. And fourth, our third-party management business, which represents a capital light way to leverage our platform and grow our scale and earnings.

In the meantime, our capital allocation framework remains unchanged to fund organic growth invest where long-term total returns are most compelling and maintain a strong balance sheet, so we're able to capitalize on opportunities when they arise. Naturally, we'll weigh the relative attractiveness of external growth, internal investment, and now share repurchases with a clear focus on long-term value creation.

In summary, we remain confident in the durability of demand for well-located single-family rentals in our ability to operate efficiently at scale, and our capacity to grow prudently. Our markets continue to benefit from strong long-term fundamentals supported by healthy demographics and sustained desirability. Even if lower mortgage rates become more prevalent, we believe that will be a strong positive for our business. as greater liquidity and transaction volumes should benefit the housing market broadly, and we're well positioned to perform and capture opportunity across these cycles.

Before I hand it over to Tim, 1 last note. We'll be hosting our Investor Day and Analyst Day on November 17. This event will provide a deeper look into our strategy, growth initiatives and our long-term outlook. Look for the live stream webcast details to be shared on our website about a week or so prior to the event.

With that, I'll pass the call over to Tim Lobner, our Chief Operating Officer.

Thank you, Dallas, and good morning, everyone. I'm pleased to walk through our third quarter operating results, including our same-store renewal and leasing performance as well as our controllable expense management.

But before I do that, I want to recognize the strength of our portfolio, the exceptional execution of our associates across every market we serve and most importantly, the trust and loyalty of our residents. Their confidence in Invitation Homes is what allows us to deliver on our mission every day. Together, these relationships and efforts from the foundation of our success.

Since this is my first earnings call speaking with you directly, I'd also like to share a few thoughts on the road ahead. The current landscape brings both opportunities and challenges, what I see is a proven ground for our team and the vision I have for leading it. That vision is rooted in relentless execution, operational excellence and a customer-centric mindset. We will pursue every opportunity, engage every prospect and deliver service that sets the standard in our industry. Through disciplined oversight, accountability and the culture of hard work will continue to drive strong results. and I look forward to sharing more on that at our Investor Day on November 17.

The commitment I just mentioned is already beginning to show in our performance. In a dynamic operating environment, our teams continue to deliver solid same-store results. This included third quarter average occupancy of 96.5%, consistent with our expectations. In addition, our renewal business, which accounts for over 75% of our book continue to be a reliable source of strength, demonstrating both the durability of our model and the value residents place on the product and service we provide. We achieved renewal rent growth of 4.5% in the third quarter, underscoring our pricing power with existing residents and reinforcing the quality and appeal of our homes.

Shifting to the new lease side of our business. As expected, third quarter new lease rent growth was slightly negative, driven by elevated supply in select markets that is amplifying typical seasonal patterns. Taken together, blended rent growth for the quarter was 3%. Looking more broadly at the components of same-store core revenue growth, we saw solid contributions across key areas. Other property income grew 7.7%, driven by continued adoption of value-add services that our residents desire such as our Internet bundle, our smart home features and other resident offerings.

In addition, bad debt improved by 20 basis points year-over-year, reflecting the quality of our resident base and the sustained rigor of our screening and collection processes. Together, these factors contributed to core revenue growth of 2.3% for the quarter. On the expense side, our teams continue to manage cost effectively while maintaining high service standards. Same-store core expenses increased 4.9% year-over-year with fixed expense growth, showing some welcome moderation this year compared to recent years. The overall result was same-store NOI growth of 1.1% for the third quarter, which is typically our most modest growth period due to elevated seasonal turnover and other transitory factors.

Turning to October, preliminary same-store results were generally in line with expectations. New lease rates were down 2.9% year-over-year reflecting the impact of targeted specials we ran to drive traffic and strength in occupancy, which averaged approximately 96% in October. Importantly, October renewal spreads remained strong at 4.3%, supporting blended rent growth of 2.3% for the month. That represents a notable acceleration in blended lease spreads of 20 basis points compared to this time last year.

To close, I want to once again thank our associates for their continued focus and commitment. Their efforts have helped to enable our growth while ensuring that our residents feel safe, supported and at home. We have the right team in place to finish the year strong and continue executing on our strategic priorities.

With that, I'll turn the call over to Jon Olsen, our Chief Financial Officer.

Thanks, Tim. Today, I'll provide an update on our strong balance sheet position, recent capital markets activities and third quarter financial performance. I'll then wrap up with an update on our full year guidance revisions outlined in yesterday's earnings release. We ended the quarter with total available liquidity of $1.9 billion, which combines unrestricted cash on hand with the undrawn capacity on our revolving credit facility. This substantial liquidity position provides us with the financial capacity and flexibility to pursue growth opportunities, manage operations and navigate market volatility with confidence.

In addition, our debt structure continues to reflect the high-quality investment grade profile we've worked diligently to build. As we've discussed in the past, over 83% of our debt is unsecured, over 95% of our debt is either fixed rate or swapped to fixed rate and approximately 90% of our wholly-owned homes are unencumbered. We have a well-laddered maturity profile with no debt reaching final maturity prior to 2027, and our net debt-to-EBITDA ratio was 5.2x at quarter end. Combined, these attributes provide meaningful cushion for both operational flexibility and future growth investments.

A highlight of our third quarter capital markets activity was the successful completion of a $600 million bond offering in August. The unsecured notes mature in January 2033 and have a coupon of 4.95%, which represents an attractive long-term cost of funds. The deal also extends our maturity profile and frees up capacity on our revolving credit facility. The offering received a strong reception from investors, reflecting the market's confidence in our credit quality and business fundamentals.

Also included in yesterday's earnings release was our announcement that our Board of Directors has authorized a share repurchase program of up to $500 million. We view this as a tool that is part of our disciplined capital allocation plan and an ordinary course approach to enhancing shareholder value.

Turning now to our third quarter financial results. For the third quarter of 2025, we delivered core FFO per share of $0.47 and AFFO per share of $0.38. Tim already covered our third quarter same-store results, but I want to provide a bit more detail on 2 items. First, property taxes were up 6.3% year-over-year in the quarter, largely due to the benefit we realized this time last year from favorable developments in Florida and Georgia. This year, builds from those 2 states, which together represent more than half of our property tax expense, have so far come in slightly better than expected.

Second, we received a favorable premium adjustment related to what is effectively a rebate structure built into our insurance program. This contributed to a 21.1% decrease in insurance expense year-over-year. As a result of our year-to-date performance, we are raising our full year 2025 guidance. We have increased the midpoint for core FFO and AFFO by $0.01 each to $1.92 per share and $1.62 per share, respectively. Additionally, we have raised our same-store NOI growth expectations by 25 basis points at the midpoint, now 2.25%. This was comprised of narrowed core revenue growth guidance in the range of 2% to 3% and improved core expense growth guidance in the range of 2% to 3.5%. Further details of our revised guidance are included in yesterday's earnings release.

As we near the end of the year, I want to acknowledge the great progress we've made in the first 10 months. These achievements are a testament to the hard work and discipline of our associates, and I'm thankful for what we've accomplished in a dynamic operating environment. That said, we know we need to remain focused and agile as we approach the remainder of the year, and I have every confidence we'll deliver on that front.

This concludes our prepared remarks. Operator, please open the line for questions.

[Operator Instructions] Your first question comes from Jana Galan with Bank of America.

Congrats on a great quarter. I was wondering if you could spend a little time talking about your supply outlook for 2026 with both kind of the BTR deliveries that are expected to deliver next year relative to this year? And then also how you kind of think about that more shadow supply of whether it's an owner-occupied householder becomes a renter household.

Thanks, Jana, for the question. This is Dallas. It's been interesting as we've sort of looked at the supply backdrop, it sort of fits into a few categories, right? First is, and we called this out sort of last fall third quarter call, this BTR delivery that we were starting to see show up in our markets, create a little bit of noise on the supply side. The second piece of it is also -- and it's a fairly small percentage, but some of the sale product that maybe isn't moving in the market that may convert to single-family rental from a listing perspective. And then lastly, as we kind of follow and cover some of the professional operators is the amount of supply and scale that we see even in those books of businesses that compete in some of our similar markets.

Generally speaking, it's nuanced by market. What we've seen so far is that through the most of this year, it's gone pretty much as we expected and what we laid out at the beginning part of the year. We expected new lease to sort of tick up and get a bit better as we kind of went through peak leasing season and into the summer. But we expected that towards the end of summer, things would likely be a little softer just given the lack of homeowner velocity, buying and selling and also just some of that shadow supply that we had called out last year. The good news is there are certainly markets like Florida and Atlanta, where we're seeing some of that supply and delivery schedule now kind of get over the hump and come into our favor. The unknowns are still what's going to happen sort of in the one-off kind of single-family rental market.

And so we'll continue to monitor supply as it comes through. we're actually pretty encouraged by some of the signs we've seen both in the starts that we're hearing from some of the builder partners and things like that. But ultimately, we've probably got a couple more quarters of supply, specifically in some of the Sunbelt markets where there will be a bit more supply as we've called out for the last couple of quarters.

Your next question comes from Eric Wolfe with Citi Group.

I think you said in your remarks that October was like 96% occupancy, which I think is kind of like down sort of 50 basis points from the third quarter, and then you gave the new lease down, I think, 2.9% and renewals 4.3%. I guess what I'm sort of putting that all together, I guess it's a little bit tough for you to get to that sort of fourth quarter number that you need to hit guidance. And so I didn't know if there's something in the fourth quarter like lower bad debt or improving fees or something that gets you to that sort of positive sequential growth to hit the midpoint. And apologies if I'm just missing something on those numbers, those are just what I've heard in the remarks.

This is Tim. Thanks for the question. Look, the occupancy dip that you referenced down in the 96.5% range, that was expected. If you recall, going back to the beginning of the year, we talked about that we'd be taking a more measured approach. We anticipated that occupancy would come in a bit as the year progressed, get to a healthy level in the mid-96% range, which it has. We also anticipated that the new supply would create some pressure on new lease growth, which it also has.

The good news is as you look at the fourth quarter, our renewal book of business, which accounts for about 75% of the book is super healthy. Our Q3 renewal rates grew to 4.5% year-over-year, about 30 basis points higher in the same period in 2024. October, as you pointed out, renewal rate was 4.3%. That's an important part of the Invitation Homes story. Our customer is very healthy from a financial standpoint, Pleased with the Invitation Homes leasing experience. They are staying for 41 months. I think that's the most important thing to point out as we head into Q4.

Remember, Q4 you don't see a lot of people leaving. Turnover tends to be low. And so we feel like we're in a really healthy spot and the year is progressing as expected.

Your next question comes from Michael Goldsmith with UBS.

This is Ami, with Michael. I was wondering, do you kind of tend to look to negotiate more on renewals and assets in BTR communities where they can see competitive pricing on units and really have a market comparison.

Look, I think -- this is Tim. Thanks for the question. Look, the consumer does negotiate on renewal. They do see the open market. And we do negotiate as needed to maintain the occupancy targets that we're looking for. So yes, we don't see a difference between build-to-rent and our same-store scattered site portfolio, consumers tend to behave similarly across asset types with the portfolio.

Your next question comes from Steve Sakwa with Evercore.

Dallas, there's been a lot of rhetoric out of Washington between the Trump administration, Bill Pulte, just out trying to bring down house prices and make things more affordable. I'm just curious, what are you hearing in your discussions with the homebuilders, how do you think this might impact your business either good or bad?

Interesting question, Steve. And it's one that we've had kind of a couple of different ways. Let me just take a step back, speaking broadly to the homebuilders, and we've obviously paid attention to some of their calls over the last week or 2, they're certainly seeing a little bit of softening demand. It sounds like. Now it sounds like they're managing inventory a little bit better as well. Yet some of these guys have done a really nice job of leaning out and trying to put more production into the market in 2025 specifically. And they've talked about that as they put that production out, they've actually had a lower pricing because the bid-ask spread has been a little wide.

In our one-on-ones, which I always want to protect and be careful about talking about what anybody says. It feels like they're hearing the message that from a Fed perspective, they'd like to see a bit more production. I think that being said, if we're being fair, there's plenty of supply in the marketplace right now. I think for sale listings are up over 1 million units this year. The challenge is, on an annualized basis, we're only seeing something like 4 million to 4.5 million sales nationally. And that just doesn't work. Like we need to get back to a place where we're seeing 5 million to 5.5 million sales a year in this country.

And I think a lot of that has to do more with the liquidity around mortgage and mortgage rate. There's still something like 70% of mortgage holders in the U.S. are at 5% or better. 80% are 6% or better. So that spread back to our earlier comments around total cost to own versus the total cost of lease is still really wide. I think that's why we're seeing the pickup in our renewals business is one example of why in a year where maybe there is actually more product on the market, we're actually renewing at a higher rental rate than we were at the same time last year. And I think it's indicative of the fact that if you have location already solved, you're not looking to absorb future costs right now.

And so I think I would expect that the builders are probably weighing that out as well. And we've certainly seen that, and Scott can talk more about this later in some of the opportunities we've seen over the last couple of quarters. There's been some really good opportunities on newer product because inventory is sitting.

Your next question comes from Haendel St. Juste with Mizuho.

Dallas, I wanted to ask a question on capital allocation. I guess, first, maybe can you talk about the increasing acquisitions guide? I'm assuming that's coming from your builder relationships and some of the dynamics you were talking about earlier, but I'm also curious on the yields you're seeing there and how that compares to stock buybacks. I think a lot of us were hoping or maybe expecting to see you act on buying back the stock a bit sooner.

Thanks, Haendel, for the question. First and foremost, our capital allocation through, call it, the first half of this year, we've had many things in flight from a delivery perspective. They were part of our BTR programming, that are just ordinary course and they were kind of built into our thinking. There's been a little bit more opportunistic buying. Scott can give some color on this as I -- when I finish here around things that we've seen in the last 1.5 quarters or so in some of these end of month, end of quarter, end of cycle opportunities with some of our both regional and national builders.

In terms of stock buyback, look, this is something we started to think about this summer going into our fall Board meeting, and it was 1 of the items that we put together to talk about with our Board we wanted to be in a position that if the volatility was going to exist in the stock price, that if or when appropriate and on a measured kind of basis, as we think about how to use our capital allocation disposition proceeds, we certainly want to have this be 1 of the tools in our tool belt if stock price is going to kind of stay in these ranges for some period of time. So we'll obviously look for opportunities to use it. We just hadn't had the plan in place. We never set 1 out.

So we're in a good spot now. We feel like it's an added tool to the tool belt, and we'll use it appropriately and in discussion with our Board.

Scott, anything to add on deliveries?

No. I think the only other thing I would address Haendel, is that -- when you look at our acquisitions for the quarter, probably about 70% of it was, as Dallas said, forward purchase deliveries where we're sort of on the back half of community deliveries that we started in last year, and we're getting towards the tail end of that. And about 30% or so of what we did this quarter was really opportunistically buying homes on a one-off basis from the homebuilders off their tapes. I think it's been widely reported that the homebuilders have had a lot of inventory, and they've been trying to sell homes that have deliveries in 30 days. And so I think for us, it's been a great opportunistic way for us not only to pick up homes that 20-plus percent discount to market value, but also get a home for almost immediate delivery that we can put into the market and hopefully get leased within 60, 90 days. So I think we feel good about what we've done, and we've been smart and opportunistic, I think, about where we've allocated.

Your next question comes from Austin Wurschmidt with KeyBanc Capital Markets.

Just going back to an earlier question, you guys affirmed the same-store revenue guidance, but you did keep a wider range late in the year. So I guess despite kind of Tim, your comments on trends being largely as expected, why not tighten the range this late in the year? And then also curious, are you continuing to offer similar concessions that you referenced in October to hold that occupancy at 96%?

Thanks for the question. It's Jon. I'll chat briefly about the revenue range, just to be clear, we did tighten that range. I think if it strikes the U.S. particularly wide late in the year, I would just point out that this is sort of a dynamic environment, and we want to be mindful of that. We continue to feel good about the way the year is shaping up. And I would remind folks that really from the first part of the year, we've been talking about rate and occupancy in terms of our overall expectations for 2025. In the first part of the year, I think repeatedly, we said we were running a little bit ahead of where we expected to be. And I think what we're seeing is that results are sort of aligning around what our full year expectations were. And so I still feel very good about our full year occupancy guide.

I think with respect to some of the other items, time will tell. We feel good about where we're coming in from a tax perspective. recall our original range was 5% to 6%. We expect we'll be around the bottom end of that range and hopefully do a little bit better than we anticipated with respect to insurance expense and some of the controllables. But I think from a revenue perspective, we want to be mindful of the fact that -- this is an environment where we have to be nimble, and we have to really pursue every lead, every opportunity because it's just a little bit softer than it's been.

Anything you want to...

Yes, I can touch on the specials. Look, on the specials that we're offering, we typically run targeted specials in October and November. It's a great tool in the toolbox. Our goal when we present these to the market is to boost traffic and generate leasing momentum ahead of the holiday season when when the market tends to slow down a little bit. We're pleased with the results we're seeing, and we'll continue to evaluate the need to keep those in place.

Your next question comes from Brad Heffern with RBC Capital Markets.

Another 1 on the repurchase. Do you see that as an attractive use of capital as we sit here today? And then can you talk through what the governor on that activity is, I would think, using dispositions to fund it might get complicated just because homes have appreciated so much. But is that an issue? And is there anything else you would call out on the philosophy there?

Look, the 1 governor just to remind everyone is that we're subject to the same blackout periods that we traditionally have. In terms of it, an interesting price in the spot. There certainly are times where if we have excess capital or an ability to deploy accretively and a share buyback could fit into that category, it's something we consider. I'd hate to say what we are going to do or not going to do. And just remember, there's always sort of a spread between where -- what the market thinks you can do at any given time as you balance out sort of deliveries and cost of capital and things that are going on in the business. So we'll use it judiciously, we'll be smart about it. We'll do it in concert with our Board investments and finance committee, and that's how we're going to approach it going into the end of the year.

Your next question comes from Jamie Feldman with Wells Fargo.

Great. I guess, kind of sticking with some policy questions here. What do you think the impacts have been on immigration policy changes in your markets, whether it's construction costs with labor or overall demand? And are you seeing any difference across different regions or markets?

Look, I'll handle the first part on the immigration. We've asked the same question of homebuilders, and we paid attention to some of the commentary, I mean look, it has to have some effect, right? I mean we're not seeing anything from an occupancy perspective we're sort of in the sweet spot of our range, as Jon and Tim mentioned. Our expectations go into the year were that we had run kind of in the low to mid '97s as an average occupancy in '24. We just knew that wasn't sustainable. It was going to kind of come in to the kind of the mid-'96s. We're not seeing anything in terms of lead volume or customer profile. In fact, our FICO scores are basically in the same range they've been for several quarters in a row.

As far as what we're seeing with labor costs and land costs and input costs, Scott, do you want to provide a little color there?

Yes. I mean for a broader question, Jamie, I think as it relates to what we're seeing on construction costs with the homebuilders I think so far so good. I think finished lot prices have kind of slowed down there at their rising pricing, and I think there's been a decline in lot buying by the builders. I think construction costs have moderated and are generally under control. I think the data we've seen says that maybe there's a little bit of a labor cost rising in terms of total production for homes. But I think in general, like in terms of the purchase prices that we're seeing and the construction costs that the homebuilders are passing on us, I think we're seeing it kind of in line with what we expected in a pretty decent place.

Your next question comes from Jesse Lederman with Zelman & Associates.

Curious what you're seeing from a front-end demand perspective that gives you confidence that the headwind from a pricing power perspective, is supply-related and demand related, maybe some commentary surrounding the reception to the new move-in specials or any other way that you quantified demand would be great.

Yes. Great question. This is Tim here. Look, on the demand side, we are continuing to see a healthy demand for single-family homes. Our website traffic remains very consistent. Obviously, there's more product out on the market, as Dallas talked about earlier, the couple of different channels that has produced that supply. So that demand is being spread across more homes on the market. But look, we like our position. The Invitation Homes promise is a good one. We -- we try to differentiate our brand through our ProCare through our value-add services. So we think we're going to still capture our fair share of the marketplace. So obviously, heading into the fourth quarter, demand does go down a little bit, but that's a seasonal component, but we like our position as we head into the end of the year.

Your next question comes from Juan Sanabria with BMO Capital Markets.

Just a question on the loss to lease. Where do you see that presently? And then kind of a Part B turnover, it seems to finally be kind of inching up -- do you think we've kind of bottomed out there? And do you expect to see more turnover going forward given some of the competing factors both on the supply and demand side.

Juana, it's Jon. Thanks for the question. With respect to loss to lease, I would say that's kind of low to mid-single digits. I think it's important to remember with respect to loss to lease that, that is not consistent across every home in every market, right? You can create cohorts of homes that have varying degrees of loss to lease. And so over time and distance, as our expectation would be that 70%, 75% of those are going to renew, you're going to extract what you can, but recognize that, that loss to lease number relative to what we actually achieve, sort of depends on a number of variables.

I think overall -- sorry, remind me the second part of your question, Juan.

Turnover and how you guys think about that going forward?

I mean, I think turnover obviously, is certainly seasonal. We expect to see turnover pick up in the second and third quarters and then moderate in the first and fourth. -- do expect that turnover will return to something closer to a long-term average, kind of closer to 25% than the 22% that we were seeing. But we continue to see a high propensity to renew. We continue to see the affordability gap really drive demand for single-family rental product and feel good that even at a somewhat higher level of turnover going forward, this is a really, really sticky customer. They appreciate the product and the service that we deliver and they continue to stay with us longer and longer. So we feel really good about the setup and think that single-family rentals in particular, are well positioned in the residential market.

Your next question comes from Adam Kramer with Morgan Stanley.

Maybe a little bit of a higher level, bigger picture one. I think our view has been that the apartments have underperformed of late. I think a lot of that has been driven by sort of slowing job growth and concerns around job growth from here. I think our view has been that SFR should be a little bit more insulated from that or given I think some demographic reasons. I'm wondering, so when you guys think about your own business, how you sort of think about the demand drivers. Obviously, there's the housing market and sort of what's happening there on the for-sale side. But when you think about job growth and sort of the path forward there? How much do you think that sort of matters or doesn't matter for your business? And as we look to next year, I guess, how would you think about demand next year maybe versus what you've had this year?

It's hard to tell the weather perfectly when it's that far out. But I would just say our setup coming into this year, we felt very confident that we could renew sort of in that 75% to 77% of the time with our current customer that we don't see anything that suggests that changes going into next year. So it feels like the renewals from that perspective, have kind of done what we thought. I want to be careful on any guide, and Jon will get frustrated with me if I say anything prior to our February call. But look, we're not seeing any degradation of our customer. Tim talked about leads and leads coming in, it's still pretty healthy. Our actual conversion efforts on leads is a bit higher than what we've typically seen. And our collections have been actually quite better than what we've seen historically.

So there's nothing in the customer profile in our current customer base that suggests big changes that are on the horizon. I think it has more to do, the only kind of variable that we keep working through is this new lease supply issue. It's really the only thing in our business that we feel like is something that is sort of hard to forecast perfectly. And a lot of that has to do with what the housing market does generally to your point. We'd like to see more -- candidly, we like to see more homes selling on the market. That transaction volume is a good proxy for home price appreciation, obviously, but also a good proxy for rent growth. going forward. And so we'll continue to just keep our back door as efficiently close as we have. John talked about that. We're not seeing anything there. our FICO scores look great from our customers coming in our collections and our bad debt are exactly where we want it to be. So just keep grinding on the opportunity set that's in front of us from a new lease and a supply perspective. Outside of that, the business is doing pretty much what we thought it would do.

Your next question comes from John Pawlowski with Green Street.

Just a quick question on -- essentially, I'm trying to get around get at the performance of the non-same-store pool. So can you help frame like the 23 vintages of acquisitions and 24 vintages of acquisitions how NOI has performed relative to your underwriting to date?

Yes, John, I'm probably going to have to come back to you with more of that detail as a follow-up. But I would say that homes that we bought in kind of the '22, '23 time frame, we're basically sort of when the market had the most froth. And when underwriting was arguably more likely to anticipate continued strong rent growth. So I think that vintage of homes, probably has a little more wood to chop to get itself in line from a margin perspective. But we feel really good about the product we have bought. We feel really good about the way we are approaching, investing in this marketplace. I think right now, it's just a function, as Dallas said, of getting this new supply absorbed and hopefully seeing the resale market get to a healthier, more liquid place.

Your next question comes from Julien Blouin with Goldman Sachs.

Thank you for the question. Dallas, I wonder what you make of the current public versus private market valuation disconnect reflected in your stock today. And maybe to an earlier question on capital allocation. Do you feel like just executing your strategy and starting to be aggressive on the share repurchase front, can sort of help narrow that? Or at some point, are there sort of additional strategic options you and the Board sort of start to look at to drive shareholder value?

Thanks for the question. On the strategic side of it, obviously, we're going to sort of keep that in-house in terms of the things we think about. But I would -- I feel comfortable saying that our disposition strategy where we can continue to sell homes between a 4 and a 4.5% cap and accretively reinvest either in share buyback or new acquisitions that are in the, call it, 6 cap range with really good revenue growth profiles in front of them, will continue to be accretive way to create shareholder value.

We've been obviously, as frustrated as probably most of our residential peers have been in terms of the dislocation between public values and private values. It's hard when REIT outflows, are moving in the way that they have and where 80% of the S&P is sort of been lifted by AI or anything tech induced. It's just an interesting environment for real estate businesses at the moment in the public sector. We're certainly seeing private transactions trade at much lower implied cap rates than where public market valuations sit today. But we're also -- we've been in this business long enough and in and around real estate long enough to know that there are cycles to it. And sometimes at times, things don't make sense, specifically in the public space. And so we just keep our heads down and we'll keep recycling capital in a way that's meaningful. And we'll certainly look for some of those other opportunities in our tool belt when they present themselves.

Your next question comes from Rich Hightower with Barclays.

Just a quick clarifying question. Dallas, I want to go back to the sort of the different buckets of potential competitive supply you referenced earlier on the call. And I think last quarter, the forecast was for BTR specifically to drop pretty significantly in 2026. And so I'm just kind of piecing that together with what you said earlier. So does that imply that those other buckets that are sort of non-BTR would be maybe bigger question marks or growing at a more rapid rate? Just help us understand maybe some of the dynamics there.

Yes. No, it's a fair question. On the latter point, there isn't anything suggesting we're seeing like an acceleration in terms of supply. In fact, as I mentioned before, there are some markets where we're actually cautiously optimistic. I don't call it bottom yet, but we're seeing some good signs in Florida, then there's markets like Phoenix, where it's still pretty tough from a new lease perspective. There's just more inventory on the market. And those are the markets where we obviously have the biggest exposure.

And so we spend a lot of time looking at these markets and sort of dissecting those 3 different buckets, which is what are we seeing in BTR. And actually, we've seen better velocity in our own book of business on the BTR leasing side. There seems to be like a pickup in demand there, which has been pretty helpful. We've spent a lot of time with our partners and data out there to try to understand what's going on in the listing universe and how much of that is maybe Joe homeowner converting to a lease. You see more of that in the summer. We'd expect some of that to wane here as we get into Q4 and Q1 to John's point. So no, it feels like it's sort of flattened out. It's kind of right where we expected it would have been, albeit there's just -- it's just a pair more competitive if you're vacant in those markets right now. and you're competing for the customer.

You got to be on your game. You have to be priced appropriate. And as Tim mentioned before, there are times and we've done this in normal markets October, November, where you got to be a little bit more aggressive. And so our philosophy right now is versus having something sit on the market for an extra 3 or 4 weeks, we might be a little bit more aggressive and fill it up here in Q4.

Your last question comes from Jade Rahmani with KBW.

Just to touch on geographies. It'd be helpful to hear if there are any markets that you were surprised with either their outperformance or underperformance relative to your expectations?

It's an interesting question, and we probably all have different views on different things in our business. I would just say generally, and this -- I really should say this just kudos to our team, like maintains, they've done a wonderful job. -- in terms of managing the turnover and cost and the way that we're managing sort of some of those expenses I think on the renewal side of the house, we've been very pleased with the things that we've even seen in markets like Miami, -- some of the Florida markets are still really, really strong on the renewals, while maybe it's a different story on the new lease side of things.

And Atlanta has been a generally strong market. I think what we've sort of acknowledged over the last couple of calls is that Chicago and Minneapolis have both been outperforming now for 4 to 6 quarters. I'm not sure that, that can go on forever in terms of what the Midwest does, but that has been a very good bright spot for us over the last year, 1.5 years, where those markets has basically had no new supply over the last 10 years, and you're seeing it in some of the data.

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

Thank you, guys, for joining us today. We're looking forward to seeing many of you at our upcoming Investor Day and looking forward to sharing more of our story broadly through the webcast. Thanks for all your support and for listening. We'll see you soon. .

The conference has now concluded. You may now disconnect.