What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2023-02-22 compared with 2022-02-22 · 206 added, 234 removed, 507 unchanged (46% of the section changed)

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Capitalized terms used without definition have the meaning provided elsewhere in this Annual Report on Form 10-K.

Invitation Homes is a leading owner and operator of single-family homes for lease, offering residents high-quality homes in sought-after neighborhoods across America.

With over 80,000 homes for lease in 16 markets across the country as of December 31, 2021, we are meeting the needs of a growing share of Americans who prefer the ease of leasing over the burden of owning a home.

Invitation Homes is a leading owner and operator of single-family homes for lease, offering residents high-quality homes in sought-after neighborhoods across the United States.

With over 80,000 homes for lease in 16 markets across the country as of December 31, 2022, we are meeting the needs of a growing share of Americans who prefer the ease of a leasing lifestyle over the burden of owning a home.

We provide our residents access to updated homes with features they value, as well as close proximity to jobs and access to good schools.

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Each aspect of our operations — whether in our corporate headquarters or field offices located in our 16 markets — is driven by a resident-centric model.

Our associates take our values seriously and work hard every day to honor the trust our residents have placed in us to provide safe and secure homes for them and their loved ones.

In turn, we focus on ensuring our associates are fairly compensated and that we provide a diverse, equitable, and inclusive culture where they are appreciated for who they are and what they bring to the business.

We also place a strong emphasis on the impact we have in our communities and to the environment in general, and we continue to develop programs that will demonstrate that commitment.

Our associates take our values seriously and work hard every day to honor the trust our residents have placed in us to provide clean, safe, and functional homes for them and their loved ones.

In turn, we focus on ensuring that our associates are fairly compensated and that we provide a diverse, equitable, and inclusive culture where they are appreciated for who they are and what they bring to the business.

We also place a strong emphasis on the impact we have in our communities and to the environment in general, and we continue to develop programs that demonstrate that commitment.

In addition, we ensure that we operate under strong, well-defined governance practices and adhere to the highest ethical standards at all times.

The COVID-19 pandemic has spread rapidly, adversely affecting public health, economic activity, financial markets and employment.

The continued development and fast-changing nature of the COVID-19 pandemic creates many unknowns that impact our residents, associates, and suppliers.

The ultimate impacts remain unknown, but have included and could range from macroeconomic effects (such as continued strain on global and United States economic conditions and disruptions to, and volatility in, the credit and financial markets, consumer spending, supply chains, and the market for acquisition and disposition of single-family homes) to more industry-specific effects (such as depressed collection rates, higher or lower occupancy levels, and restrictions on evictions, collections, rent increases, and late fees), and other unanticipated consequences.

Throughout the COVID-19 pandemic, we have maintained continuity in business operations and have supported our residents and associates by implementing a host of measures and protocols that enable our teams to safely provide outstanding service to residents.

These protocols include:

(1) implementing a safety training program and providing personal protective equipment for all associates;

(2) creating flexible work schedules for our associates in terms of both location and hours of work;

(3) adhering to strict safety protocols for maintenance service trips;

(4) leveraging self-show and virtual-tour technology;

and (5) offering virtual options for resident move-in orientations and pre-move-out visits.

We also believe that we are in material compliance with federal, state, and local restrictions on items such as evictions, collections, rent increases, and late fees as appropriate.

Additionally, to act on our core values of "Genuine Care" and "Standout Citizenship," we offer flexible solutions for residents experiencing financial hardship when requested, including payment plans and late fee abatements.

We continue to work with residents experiencing financial hardship to find solutions that keep them in their homes.

This includes continuing to provide residents with information about rental assistance programs for which they may be eligible, application instructions, necessary documentation, and owner requirements.

We have helped thousands of residents apply for rental assistance programs and, as a result, they have received $48.0 million in rental assistance payments during the year ended December 31, 2021, and $50.5 million cumulatively since such programs were put in place.

Neither the aforementioned procedural adjustments nor the overall impact of the COVID-19 pandemic created significant disruptions to our business model during the years ended December 31, 2021 and 2020.

The situation surrounding the ongoing COVID-19 pandemic and its variants remains fluid, and we continue to actively monitor the effects of the pandemic and manage our response in collaboration with our residents and business partners and to assess potential impacts to our financial position and operating results, as well as potential adverse developments in our business.

For further discussion of risks related to the pandemic, see Part I.

“Risk Factors — Risks Related to Our Business and Industry — Our business, results of operations, financial condition, and cash flows may be adversely affected by pandemics and outbreaks of infectious disease, particularly the ongoing COVID-19 pandemic ” in our Annual Report on Form 10-K.

Other Matters

In July 2021, we received congressional inquiries requesting information and documentation about our eviction practices during the COVID-19 pandemic, including information relating to compliance with federal eviction moratorium requirements and cooperation with impacted residents to use federal assistance funds as an alternative to eviction.

In October 2021 and January 2022, we received additional congressional inquiries requesting information about our activities in the housing market.

We are in the process of responding to and cooperating with these inquiries and information requests.

In August 2021, we received a letter from the staff of the Federal Trade Commission requesting information as to how we conduct our business generally and during the COVID-19 pandemic specifically.

We are in the process of responding to and cooperating with this request.

As these inquiries are ongoing, we cannot currently predict their timing, outcome, or scope.

Impact of Macroeconomic Trends

Overall unfavorable global and United States economic conditions (including inflation and interest rates), uncertainty in financial markets, ongoing geopolitical tensions, and a general decline in business activity and/or consumer confidence could adversely affect (i) our ability to acquire or dispose of single-family homes, (ii) our access to financial markets on attractive terms, or at all, and (iii) the value of our homes and our business that could cause us to recognize impairments in value of our tangible assets or goodwill.

High levels of inflation and interest rates may also negatively impact consumer income, credit availability, and spending, among other factors, which may adversely impact our business, financial condition, cash flows, and results of operations, including the ability of our residents to pay rent.

These factors, which include supply chain disruptions, labor shortages, and inflationary increases in labor and material costs, have impacted and may continue to impact certain aspects of our business.

For example, we have experienced higher levels of bad debt expense, which we believe is driven in part by declining availability of rent assistance payments as many COVID-related programs begin to wind down, as well as ordinances in certain markets which restrict residential lease compliance options.

We expect that our bad debt expense will remain elevated compared to pre-COVID averages, as it continues to take longer to address residents who are not current with their rent.

To offset the impacts of increasing inflation, since March 2022 the Federal Open Market Committee has raised short-term interest rates a total of 425 bps to a target range of 4.25% to 4.50% as of December 31, 2022.

The committee has signaled that it expects to make additional rate increases.

For further discussion of risks related to general economic conditions, see Part I.

“Risk Factors — Risks Related to Our Business and Industry — Our operating results are subject to general economic conditions and risks associated with our real estate assets ” in this Annual Report on Form 10-K.

Climate Change

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Experiencing or addressing the various physical, regulatory, and adaptation/transition risks of climate change may affect our profitability.

Government authorities and various interest groups are promoting laws and regulations relating to climate change, including regulations aimed at limiting greenhouse gas emissions and the implementation of “green” building codes.

Government authorities, including the SEC, and various interest groups are promoting laws and regulations relating to climate change, including regulations aimed at drastically increasing reporting and governance related to climate change as well as focused on limiting greenhouse gas emissions and the implementation of “green” building codes.

These laws and regulations may require us to make costly improvements to our existing properties beyond our current plans to decrease the impact of our homes on the environment, resulting in increased operating costs.

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Alternatively, choosing not to enhance our homes’ resource efficiency could make our portfolio less attractive to residents and investors and/or increase the vulnerability of our residents to rising energy and water expenses and use restrictions.

As the climate continues to change, and with a portfolio located in a variety of United States markets that include coastal areas, we recognize the increased potential for acute weather events and other climate-related impacts to our business, operations, and homes.

We take a proactive approach to protect our properties against potential risks related to climate change and business interruptions, and we recognize that we must continue to adapt our policies, objectives, and processes to improve the resiliency of our physical properties and our business.

We may also incur additional expenses as a result of regulations requiring additional detailed climate-related disclosures, including regarding greenhouse gas emissions.

We recognize that climate change could have a significant impact on our portfolio of homes located in a variety of United States markets and that an increase in the number of acute weather events, natural disasters, and other climate-related events could significantly impact our business, operations, and homes.

We actively consider physical risks such as the potential for natural disasters such as hurricanes, floods, droughts, and wildfires when assessing our portfolio of homes and our business processes.

We take a proactive approach to protect our properties against potential risks related to climate change and business interruptions, and we recognize that we must continue to adapt our policies, objectives, and processes to prepare for such events and improve the resiliency of our physical properties and our business.

Our management and the Board of Directors are focused on managing our business risks, including climate change-related risks.

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For more information on risks related to climate change, see Part I.

“Risk Factors — Risks Related to Environmental, Social, and Governance Issues — Climate change, related legislative and regulatory responses to climate change, and the transition to a lower-carbon economy may adversely affect our business , and — We are subject to risks from natural disasters such as earthquakes and severe weather .”

“Risk Factors — Risks Related to Environmental, Social, and Governance Issues — Climate change and related environmental issues, related legislative and regulatory responses to climate change, and the transition to a lower-carbon economy may adversely affect our business , — We are subject to risks from natural disasters such as earthquakes, wildfires, and severe weather, and — We are subject to increasing scrutiny from investors and others regarding our environmental, social, governance, or sustainability responsibilities, which could result in additional costs or risks and adversely impact our reputation, associate retention, and ability to raise capital from such investors ” in this Annual Report on Form 10-K.

Other Matters

In October 2021 and January 2022, we received additional congressional inquiries requesting information about our activities in the housing market.

We have responded to and have cooperated with these inquiries and information requests.

In August 2021, we received a letter from the staff of the Federal Trade Commission requesting information as to how we conduct our business generally and during the COVID-19 pandemic specifically.

We are in the process of responding to and cooperating with this request.

In January 2023, we received an inquiry from the staff of the SEC requesting information relating to our compliance with building codes and permitting requirements, related policies and procedures, and other matters.

We are in the process of responding to and cooperating with this request.

We cannot currently predict the timing, outcome, or scope of the ongoing inquiries.

Our Portfolio

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3,636 96.9% 2,163 1.26 4.4 %

Announced Market-in-Exit:

Nashville (5)

3 N/A N/A N/A — %

Total / Average

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(4) Represents the percentage of rental revenues and other property income generated in each market for the year ended December 31, 2022.

(5) In December 2019, we announced a plan to fully exit the Nashville market.

As of December 31, 2021, we have three remaining homes in the market.

Factors That Affect Our Results of Operations and Financial Condition

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Key factors that impact our results of operations and financial condition include market fundamentals, rental rates and occupancy levels, collection rates, turnover rates and days to re-resident homes, property improvements and maintenance, property acquisitions and renovations, and financing arrangements.

Sensitivity to many of these factors has been heightened as a result of the ongoing and numerous adverse impacts of COVID-19.

Sensitivity to many of these factors has been heightened as a result of current macroeconomic conditions, including rapidly accelerating economic inflation and increasing interest rates.

Market Fundamentals:

Our results are impacted by housing market fundamentals and supply and demand conditions in our markets, particularly in the Western United States and Florida, which represented 71.7% of our rental revenues and other property income during the year ended December 31, 2022.

We actively monitor the impact of the COVID-19 outbreak and its resulting macroeconomic impacts on market fundamentals and quickly implement changes in pricing as market fundamentals shift.

We actively monitor the impact of macroeconomic conditions on market fundamentals and quickly implement changes in pricing as market fundamentals shift.

Rental Rates and Occupancy Levels:

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An important driver of rental rate growth is our ability to increase monthly rents from expiring leases, which typically have a term of one to two years.

The ongoing COVID-19 pandemic has negatively impacted our ability to increase rents in certain markets.

Collection Rates:

Our rental revenues and other property income is impacted by the rate at which we collect such revenues from our residents.

We routinely work with residents facing financial hardships who need flexibility to fulfill their lease obligations, but the ongoing COVID-19 pandemic has increased the number of such residents.

When requested, we work with these residents to create payment plans, without late fees, and then actively manage these receivables.

Additionally, we work with residents to identify and pursue rental assistance payments from various federal, state, and local government and other entities providing such assistance.

Despite these efforts, a portion of amounts receivable may not ultimately be collected.

Our rental revenues and other property income are impacted by the rate at which we collect such revenues from our residents.

Despite our efforts to assist residents facing financial hardships who need flexibility to fulfill their lease obligations, a portion of amounts receivable may not ultimately be collected.

We may also be constrained in our ability to collect resident receivables due to local ordinances restricting residential lease compliance options.

Any amounts billed to residents that have been deemed uncollectible along with our estimate of amounts that may ultimately be uncollectible decrease our rental revenues and other property income.

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Our operating results are also impacted by the amount of time it takes to market and lease a property, which is a component of the number of days a home is unoccupied between residents.

The period of time to market and lease a property can vary greatly and is impacted by local demand, our marketing techniques, the size of our available inventory, the ability of our suppliers and other business partners to carry out their assigned tasks and/or source labor or supply materials at ordinary levels of performance relative to the conduct of our business, and both current economic conditions and future economic outlook.

Many of these factors have been and continue to be impacted by the ongoing COVID-19 pandemic.

Additionally, our turnover rate may be affected by the current COVID-19 pandemic as a result of delayed eviction proceedings and/or move outs potentially being canceled by residents who have not secured their next housing plans.

Increases in turnover rates and the average number of days to re-resident reduce rental revenues as the homes are not generating income during this period of vacancy.

Property Improvements and Maintenance:

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We actively manage our homes on a total portfolio basis to determine what capital and maintenance needs may be required and what opportunities we may have to generate additional revenues or expense savings from such expenditures.

Due to our size and scale both nationally and locally, we believe we are able to purchase goods and services at favorable prices.

While the COVID-19 outbreak has required us to modify our property improvement and maintenance procedures to accommodate resident preferences, we complete all maintenance work orders in a timely manner unless a resident reports symptoms of or exposure to COVID-19.

As a result of current inflationary trends, we have experienced, and expect to continue to incur, increased costs for certain materials and services necessary to improve and maintain our homes.

We continue to actively manage the impact of inflation on these costs, and we believe we are able to purchase goods and services at favorable prices compared to other purchasers due to our size and scale both nationally and locally.

Property Acquisitions and Renovations:

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Our ability to identify and acquire single-family homes that meet our investment criteria is impacted by home prices in targeted acquisition locations, the inventory of homes available for sale through our acquisition channels, and competition for our target assets.

All of these factors may be negatively impacted by the ongoing COVID-19 pandemic, potentially reducing the number of homes we acquire.

All of these factors may be negatively impacted by current inflationary trends and rising interest rates, potentially reducing the number of homes we acquire.

The acquisition of homes involves expenditures in addition to payment of the purchase price, including payments for acquisition fees, property inspections, closing costs, title insurance, transfer taxes, recording fees, broker commissions, property taxes, and HOA fees (when applicable).

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The time and cost involved in accessing our homes and preparing them for rental can significantly impact our financial performance.

The time to renovate a newly acquired property can vary significantly among homes for several reasons, including the property’s acquisition channel, the condition of the property, whether the property was vacant when acquired, and whether there are any state or local restrictions on our ability to complete renovations as an essential business function.

to renovate a newly acquired property can vary significantly among homes for several reasons, including the property’s acquisition channel, the condition of the property, whether the property was vacant when acquired, and whether there are any state or local restrictions on our ability to complete renovations as an essential business function.

Additionally, the ability of our suppliers and other business partners to carry out their assigned tasks and/or source labor or supply materials at ordinary levels of performance relative to the conduct of our business have increased the time required to renovate our homes.

Due to our size and scale both nationally and locally, we believe we are able to purchase goods and services at favorable prices.

As a result of current inflationary trends, we have experienced, and expect to continue to incur, increased costs for certain materials and services necessary to renovate our homes.

We continue to actively manage the impact of inflation on the cost of renovations, and we believe we are able to purchase goods and services at favorable prices compared to other purchasers due to our size and scale both nationally and locally.

Financing Arrangements:

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We have historically utilized indebtedness to fund the acquisition and renovation of new homes.

Our current financing arrangements contain financial covenants, and certain financing arrangements contain variable interest rate terms.

Interest rates are impacted by market conditions and the terms of the underlying financing arrangements.

The COVID-19 pandemic has resulted in a widespread health crisis adversely affecting the economy and financial markets of many countries resulting in an economic downturn that could negatively affect our ability to access financial markets as well as our business, results of operations, and financial condition.

Our current financing arrangements contain financial covenants and other terms and conditions, including variable interest rates in some cases, that are impacted by market conditions.

Current macroeconomic conditions may continue to negatively affect volatility, availability of funds, and transaction costs (including interest rates) within financial markets.

These factors may also negatively affect our ability to access financial markets as well as our business, results of operations, and financial condition.

“Quantitative and Qualitative Disclosures about Market Risk” for further discussion regarding interest rate risk.

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and (iv) various other fees, including late fees and lease termination fees, among others.

Joint Venture Management Fees

Joint venture management fees consist of asset and property management fees from our unconsolidated joint ventures.

Management Fee Revenues

Management fee revenues consist of asset and property management fees from our unconsolidated joint ventures.

Property Operating and Maintenance

Once a property is available for its initial lease, which we refer to as “rent-ready,” we incur ongoing property-related expenses, which consist primarily of property taxes, insurance, HOA fees (when applicable), market-level personnel

expenses, utility expenses, repairs and maintenance, and property administration.

Prior to a property being “rent-ready,” certain of these expenses are capitalized as building and improvements.

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Share-Based Compensation Expense

All share-based compensation expense is recognized in our consolidated statements of operations as components of general and administrative expense and property management expense.

We issue share-based awards to align the interests of our associates with those of our investors.

We issue share-based awards to align the interests of our associates with those of our investors, and all share-based compensation expense is recognized in our consolidated statements of operations as components of general and administrative expense and property management expense.

Interest Expense

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Gains (Losses) on Investments in Equity Securities, net

Gains (losses) on investments in equity securities, net includes unrealized gains and losses resulting from mark to market adjustments and realized gains and losses resulting from the sale of such securities.

Gains (losses) on investments in equity securities, net includes unrealized gains and losses resulting from mark to market adjustments and realized gains and losses recognized upon the sale of such securities.

Other, net includes interest income and other miscellaneous income and expenses.

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Rental revenues and other property income $ 2,226,641 $ 1,991,722 $ 234,919 11.8 %

Joint venture management fees 4,893 — 4,893 N/M

Management fee revenues 11,480 4,893 6,587 134.6 %

Total revenues 2,238,121 1,996,615 241,506 12.1 %

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Depreciation and amortization 638,114 592,135 45,979 7.8 %

Impairment and other 8,676 696 7,980 N/M

Impairment and other 28,697 8,676 20,021 230.8 %

Total expenses 1,919,215 1,777,046 142,169 8.0 %

Gains (losses) on investments in equity securities, net (9,420) 29,723 (39,143) N/M

Other, net (5,835) (86) (5,749) N/M

Losses on investments in equity securities, net (3,939) (9,420) 5,481 58.2 %

Other, net (11,261) (5,835) (5,426) (93.0) %

Gain on sale of property, net of tax 90,699 60,008 30,691 51.1 %

Income (loss) from investments in unconsolidated joint ventures (1,546) — (1,546) N/M

Losses from investments in unconsolidated joint ventures (9,606) (1,546) (8,060) (521.3) %

Net income $ 384,799 $ 262,776 $ 122,023 46.4 %

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During the years ended December 31, 2022 and 2021, we acquired 1,423 and 2,938 homes, respectively, and sold 691 and 734 homes, respectively.

During the years ended December 31, 2021 and 2020, we owned an average of 80,901 and 79,530 single-family rental homes, respectively, in our total portfolio.

During the years ended December 31, 2022 and 2021, we owned an average of 82,929 and 80,901 single-family rental homes, respectively.

We believe presenting information about the portion of our total portfolio that has been fully operational for the entirety of both a given reporting period and its prior year comparison period provides investors with meaningful information about the performance of our comparable homes across periods, and about trends in our organic business.

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Set forth below is a discussion of changes in the individual components of total revenues.

For the years ended December 31, 2021 and 2020, total portfolio rental revenues and other property income totaled $1,991.7 million and $1,822.8 million, respectively, an increase of 9.3%, driven by an increase in average occupancy, an increase in average monthly rent per occupied home, and an 1,371 home increase between periods in the average number of homes owned.

For the years ended December 31, 2022 and 2021, total portfolio rental revenues and other property income totaled $2,226.6 million and $1,991.7 million, respectively, an increase of 11.8%, driven by an increase in average monthly rent per occupied home and a 2,028 home increase between periods in the average number of homes owned, partially offset by a 100 bps reduction in occupancy.

Average occupancy for the years ended December 31, 2022 and 2021 for the total portfolio was 96.0% and 97.0%, respectively.

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For the Same Store portfolio, an average home remained unoccupied for 37 and 27 days between residents for the years ended December 31, 2022 and 2021, respectively.

The decreases in these two metrics contributed to our increase in average occupancy on a year over year basis.

Our turnover rate may have been, and may continue to be, impacted by the effects of the COVID-19 pandemic (e.g., eviction moratoriums and residents who are not inclined to relocate during this period).

We cannot predict how long existing eviction moratoriums will remain in place, if new eviction moratoriums will be issued and/or reinstated, or when the general effects of the pandemic will subside and how those items may affect our turnover and occupancy rates.

The decrease in annual turnover only partially offset the increase in days to re-resident resulting in an overall decrease in average occupancy on a year over year basis.

During the years ended December 31, 2022 and 2021, our turnover rate may have been impacted by the effects of the COVID-19 pandemic (e.g., eviction moratoriums and residents who were not inclined to relocate during a pandemic).

These moratoriums have now generally been lifted in the vast majority of our markets.

To monitor prospective changes in average monthly rent per occupied home, we compare the monthly rent from an expiring lease to the monthly rent from the next lease for the same home, in each case, net of any amortized non-service concessions, to calculate net effective rental rate growth.

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For our Same Store portfolio, renewal lease net effective rental rate growth averaged 10.0% and 6.7% for the years ended December 31, 2022 and 2021, respectively, and new lease net effective rental rate growth averaged 13.5% and 14.4% for the years ended December 31, 2022 and 2021, respectively.

The COVID-19 pandemic has negatively impacted rental revenues and other property income since the onset of the pandemic in mid-March 2020 in two notable ways:

(1) collection rates have decreased from pre-pandemic levels which negatively impacts bad debt as a percentage of gross rental income;

and (2) a significant portion of all late fees typically enforced in accordance with our lease agreements were not enforced or collected for a significant period of time.

As of the third quarter of 2021, bad debt began to moderate compared to the year ended December 31, 2020.

Enforcement and collections of late fees generally re-commenced in all markets where permissible beginning in the second quarter of 2021.

While the effects of the COVID-19 pandemic and the ensuing jurisdictional restrictions on rental rates, late fees, collections, and evictions have decreased over time, they may continue to affect our future collection rates, ability to increase rental revenues in certain markets, and fees and other ancillary income charged to residents.

For the year ended December 31, 2021, joint venture management fees totaled $4.9 million.

Other property income for the year ended December 31, 2022 increased compared to December 31, 2021, primarily due to increased utility billbacks as new leases are entered into, increased collections of late fees, and enhanced ancillary revenue programs, among other things.

For the years ended December 31, 2022 and 2021, management fee revenues totaled $11.5 million and $4.9 million, respectively.

These fees increased as a result of the formation of new joint ventures and an increase in the number of homes generating revenues within our joint ventures.

For the years ended December 31, 2022 and 2021, total expenses were $1,919.2 million and $1,777.0 million, respectively.

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For the year ended December 31, 2022, property operating and maintenance expense increased to $786.4 million from $706.2 million for the year ended December 31, 2021.

In addition to an 1,371 home increase between periods in the average number of homes owned, increases in property taxes, utilities, personnel and other services costs, and HOA expenses, partially offset by decreases in repairs and maintenance and turnover costs, resulted in the overall 3.8% net increase in property operating and maintenance expense.

In addition to a 2,028 home increase between periods in the average number of homes owned, increases in property taxes, repairs and maintenance, utilities, and property administrative costs resulted in the overall 11.4% net increase in property operating and maintenance expense.

Property management expense and general and administrative expense increased to $162.0 million from $147.4 million for the years ended December 31, 2022 and 2021, respectively.

The increase is comprised primarily of a $10.1 million increase in share-based compensation expense due to changes in expected results for performance-based awards and a $9.7 million increase in short term incentive plan compensation based on estimated annual performance.

To date, the COVID-19 pandemic has not had a material impact on our property management and general and administrative expenses.

The increase is primarily due to increased property management expense, including personnel and technology costs related to expansion of our platform that provides services to both our wholly owned portfolio and our joint ventures .

Interest expense decreased from $322.7 million for the year ended December 31, 2021 to $304.1 million for the year ended December 31, 2022.

The decrease in interest expense was primarily due to refinancing activities since December 31, 2020 and the impact of the December 2020 amended and restated credit facility.

During the year ended December 31, 2021, we issued $1,950.0 million of newly issued unsecured notes, repaid $1,766.9 million of mortgage loan indebtedness, and converted $203.5 million of convertible debt into shares of our common stock.

These financing activities resulted in a 25 bps decrease in the weighted average interest rate on our outstanding debt between the respective period ends, inclusive of a 55 bps reduction in the spread on our term loan facility as a result of achieving an investment grade rating.

The decrease in interest expense was primarily due to refinancing activities since December 31, 2021.

The $228.7 million decrease in gross debt outstanding from December 31, 2021 to December 31, 2022 was partially offset by a 18 bps increase in our weighted average interest rate at each period end.

Depreciation and amortization expense increased to $638.1 million for the year ended December 31, 2022 from $592.1 million for the year ended December 31, 2021 due to an increase in cumulative capital expenditures and an increase in the average number of homes owned during the year ended December 31, 2022 compared to the year ended December 31, 2021.

Impairment and other expenses were $28.7 million and $8.7 million for the years ended December 31, 2022 and 2021, respectively.

During the year ended December 31, 2021, impairment and other expenses were comprised of impairment losses of $0.7 million on our single-family residential properties and net casualty losses of $8.0 million.

During the year ended December 31, 2020, impairment and other expenses were comprised of impairment losses of $4.6 million on our single-family residential properties, offset by net gains on casualty losses of $3.9 million.

The impairment costs recognized during the years ended December 31, 2021 and 2020 were not a direct result of the COVID-19 pandemic.

Gains (Losses) on Investments in Equity Securities, net

During the year ended December 31, 2022, impairment and other expenses were comprised of net casualty losses of $28.4 million, including the recognition of $24.0 million for estimated losses and damages related to Hurricanes Ian and Nicole, net of estimated insurance proceeds, and impairment losses of $0.3 million on our single-family residential properties.

During the year ended December 31, 2021, impairment and other expenses were comprised of net casualty losses of $8.0 million and impairment losses of $0.7 million on our single-family residential properties.

Losses on Investments in Equity Securities, net

For the year ended December 31, 2022, losses on investments in equity securities, net of $3.9 million was comprised of $7.2 million of unrealized losses from reversals of previously recorded unrealized gains on equity securities sold during the period and marking investments still held at period end to market, partially offset by a $3.3 million gain from the sale of equity securities compared to the actual amount originally invested.

For the year ended December 31, 2021, $9.4 million of losses on investments in equity securities, net was comprised of $5.5 million of net losses recognized on investments sold during the year, including the reversal of unrealized gains recognized during the year ended December 31, 2020, and $3.9 million net unrealized losses recognized on investments held as of December 31, 2021.

For the year ended December 31, 2020, $29.7 million of unrealized gains were recognized on investments held as of year end.

Other, net was $5.8 million for the year ended December 31, 2021, compared to $0.1 million for the year ended December 31, 2020, primarily due to lower interest income from our investments in debt securities and increases in transaction and administrative costs between those periods, partially offset by the non-recurrence of a $1.8 million ROU lease impairment during the year ended December 31, 2020.

Additionally, joint venture management fees and income (loss) from investments in unconsolidated joint ventures presented separately on our consolidated statement of operations for the year ended December 31, 2021 were included in other, net during the year ended December 31, 2020.

Other, net increased to $11.3 million for the year ended December 31, 2022 from $5.8 million for the year ended December 31, 2021, primarily due to a global settlement of a multistate putative class action regarding resident late fees in 2022 and other increases in administrative costs between those periods.

The global settlement remains subject to court approval.

Gain on Sale of Property, net of tax

Gain on sale of property, net of tax was $90.7 million and $60.0 million for the years ended December 31, 2022 and 2021, respectively.

The primary driver of the increase was an increase in disposition proceeds received per home between periods, offset by a decrease in the number of homes sold from 1,580 for the year ended December 31, 2020 to 734 for the year ended December 31, 2021.

Income (Loss) from Investments in Unconsolidated Joint Ventures

Income (loss) from investments in unconsolidated joint ventures was comprised of our equity in earnings and/or (losses) therefrom on a net basis.

The primary driver of the increase was an increase in disposition proceeds received per home between periods, partially offset by a decrease in the number of homes sold from 734 for the year ended December 31, 2021 to 691 for the year ended December 31, 2022.

Losses from Investments in Unconsolidated Joint Ventures

Our share of equity in earnings and/or losses from unconsolidated joint ventures was a loss of $9.6 million for the year ended December 31, 2022 compared to a loss of $1.5 million for the year ended December 31, 2021.

This change is a result of the formation of and commencement of operations in new joint ventures, an increase in the number of homes within our joint venture investments, and the incurrence of interest expense on new financing arrangements within the joint venture investments.

These increased costs, including a $4.5 million increase in our share of depreciation expense year over year, were partially offset by a non-cash increase in the fair value of underlying derivative instruments for certain of the joint ventures.

Our share of this fair value change was $2.7 million for the year ended December 31, 2022.

Year Ended December 31, 2021 Compared to Year Ended December 31, 2020

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Liquidity and Capital Resources

Our liquidity and capital resources as of December 31, 2021 and 2020 include unrestricted cash and cash equivalents of $610.2 million and $213.4 million, respectively, a 185.9% increase primarily due to the capital markets activity described below, net of cash used to fund acquisitions of single-family residential properties.

The following significant activity occurred during the year ended December 31, 2021:

• In May 2021, we issued and sold $300.0 million of unsecured notes in a private placement transaction.

We used the proceeds to repay $300.0 million of the highest-cost classes of various securitizations due to reach final maturity between December 2024 and January 2026.

• In August 2021, we issued and sold $650.0 million of unsecured notes in an underwritten public offering.

We used the proceeds to repay $635.3 million of the highest-cost classes of various securitizations due to reach final maturity between December 2024 and January 2026.

• In November 2021, we issued and sold $1,000.0 million of unsecured notes in an underwritten public offering.

We used the proceeds to repay $798.2 million of various securitizations, including full repayment of IH 2017-2 and partial repayment of IH 2018-3, and for general corporate purposes, including acquisitions.

• We completed an underwritten public offering to sell 14,375,000 shares of our common stock, including 1,875,000 shares sold pursuant to the underwriters’ full exercise of the option to purchase additional shares, and generated net proceeds of $571.2 million (the “2021 Public Offering”).

Proceeds were and will be used primarily for general corporate purposes, including acquisitions.

• We sold 9,008,528 shares of our common stock under our at the market equity program (“2019 ATM Equity Program”), generating net proceeds of $362.6 million after giving effect to agent commissions and other costs totaling $6.2 million.

We terminated the 2019 ATM Equity Program immediately after entering into the 2021 ATM Equity Program (defined below).

• In November 2021, we agreed to invest $250.0 million with Pathway Homes, a new real estate company that provides customers multiple options to purchase a home whereby they are able to first lease and then purchase the home in the future.

In addition to investing in the homes and technology platform for the startup and its real estate fund, we will provide maintenance and other services to all Pathway Homes properties, enabling us to broaden our third party property management services.

As of December 31, 2021, we have invested $25.0 million in the joint venture.

• In December 2021, we entered into a new at the market equity program (the "2021 ATM Equity Program") to sell, from time to time, shares of our common stock, with an aggregate sales price of up to $1,250.0 million through at the market and forward offerings.

No shares had been issued under the 2021 ATM Equity Program as of December 31, 2021.

• We settled $203.5 million of the 2022 Convertible Notes through the issuance of 8,943,374 shares of our common stock.

As of December 31, 2021, our $1,000.0 million revolving facility (the “Revolving Facility”) remains undrawn, and there are no restrictions on our ability to draw additional funds thereunder provided we remain in compliance with all covenants.

We have no debt reaching final maturity until March 2025, provided all extensions are exercised, with the exception of $141.5 million of 2022 Convertible Notes which matured on January 15, 2022.

On January 18, 2022, we settled the outstanding principal balance of the 2022 Convertible Notes with the issuance of 6,216,261 shares of our common stock and a cash payment of $0.3 million.

Our ability to access capital as well as to use cash from operations to continue to meet our liquidity needs, all of which are highly uncertain and cannot be predicted, could be affected by various risks and uncertainties, including, but not limited to, the effects of the COVID-19 pandemic and general economic conditions, as detailed in Part I.

Our liquidity and capital resources as of December 31, 2022 and 2021 include unrestricted cash and cash equivalents of $262.9 million and $610.2 million, respectively, a 56.9% decrease primarily due to the funding of acquisitions of single-family residential properties and investments in our joint ventures, partially offset by issuance of common stock as further described below.

In addition to our day-to-day business operations, including ongoing acquisitions of and investments in single-family residential properties, funding of commitments, and quarterly dividend and distribution payments, the following activity has occurred during the year ended December 31, 2022:

• In January 2022, we settled $141.5 million of the 2022 Convertible Notes through the issuance of 6,216,261 shares of our common stock and a cash payment of $0.3 million.

• In March 2022, we entered into an agreement with Rockpoint Group, L.L.C.

to form a joint venture that will acquire homes in premium locations and at higher price points relative to our other investments in single-family residential properties (the “2022 Rockpoint JV”).

As of December 31, 2022, we have funded $10.0 million to the 2022 Rockpoint JV, and our remaining equity commitment is $40.0 million.

• On April 5, 2022, in a public offering under our existing shelf registration statement, we issued $600.0 million aggregate principal amount of 4.15% Senior Notes which mature on April 15, 2032 (the “2032 Unsecured Notes”).

• On June 22, 2022, we entered into the 2022 Term Loan Facility that provided $725.0 million of borrowing capacity, consisting of a $150.0 million initial term loan (the “Initial Term Loan”) and delayed draw term loans totaling $575.0 million (the “Delayed Draw Term Loans”) which were fully drawn on December 8, 2022.

The Initial Term Loan and the Delayed Draw Term Loans (together, the “2022 Term Loans”) mature on June 22, 2029.

• During the year ended December 31, 2022, we used the proceeds from the 2032 Unsecured Notes and the 2022 Term Loans to make voluntary prepayments of the then-outstanding balances of IH 2018-1, IH 2018-2, and IH 2018-3, which resulted in a release of each loan’s collateral.

• During the year ended December 31, 2022, we sold 2,438,927 shares of our common stock under our 2021 ATM Equity Program, generating net proceeds of $98.4 million.

As of December 31, 2022, our $1,000.0 million revolving facility (the “Revolving Facility”) remains undrawn, and there are no restrictions on our ability to draw funds thereunder provided we remain in compliance with all covenants.

We have no debt reaching final maturity until January 2026, provided all extension options are exercised.

Our ability to access capital as well as to use cash from operations to continue to meet our liquidity needs, all of which are highly uncertain and cannot be predicted, could be affected by various risks and uncertainties, including, but not limited to, the effects of general economic conditions, including rising inflation and interest rates, as detailed in Part I.

“Risk Factors.”

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(Gross of Retained Certificates and Unamortized Discounts) Balance

(Net of Retained Certificates) Weighted Average Interest Rate Weighted Average Years to Maturity (2)

(Net of Retained Certificates) Weighted Average Interest Rate (2)

Weighted Average Years to Maturity (3)

Amount Freely Prepayable (Gross)

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661,029 627,965 L + 123 bps 3.0 661,029

IH 2018-2 (4)

629,237 597,769 L + 105 bps 3.4 629,237

IH 2018-3 (4)

204,637 194,405 L + 112 bps 3.5 204,637

IH 2018-4 (4)

669,548 636,069 L + 122 bps 4.0 669,548

Secured Term Loan (6)

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2,058,671 $ 1,970,107 4.08% 4.8 661,029

2022 Convertible Senior Notes (7)

141,490 3.50% 0.0 —

Term Loan Facility 2,500,000 L + 100 bps 4.1 2,500,000

Revolving Facility — L + 89 bps 4.1 —

2020 Term Loan Facility (8)

$ 2,500,000 L + 100 bps 3.1 $ 2,500,000

2022 Term Loan Facility (9)

725,000 S + 124 bps 6.5 —

Revolving Facility (8)

— L + 89 bps 3.1 —

Unsecured Notes — May 2028

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650,000 2.00% 8.6 —

Unsecured Notes — April 2032 600,000 4.15% 9.3 —

Unsecured Notes — January 2034

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7,833,671 3.63% 5.6 $ 3,161,029

Unamortized discounts and fair value adjustments (13,605)

Unamortized discounts (13,518)

Deferred financing costs, net (51,076)

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Deferred financing costs, net 51,076

Unamortized discounts and fair value adjustments 13,605

Unamortized discounts 13,518

Net debt $ 7,469,118

(1) For detailed information about and definition of each of our financing arrangements see Part IV.

“Exhibits and Financial Statements — Note 7 of Notes to Consolidated Financial Statements.” For information about our derivative instruments that hedge floating rate debt, see “Financial Statements — Note 8 of Notes to Consolidated Financial Statements.”

“Exhibits and Financial Statements — Note 7 of Notes to Consolidated Financial Statements.” For information about our derivative instruments that hedge floating rate debt, see Part IV.

“Exhibits and Financial Statements — Note 8 of Notes to Consolidated Financial Statements.”

(2) Variable interest rate loans are either LIBOR-based (“L” in the table above) or SOFR-based, including any adjustments provided for in the terms of the underlying agreement (“Adjusted SOFR,” or “S” in the table above).

(3) Weighted average years to maturity assumes all extension options are exercised, which are subject to certain conditions being met.

(4) IH 2017-1 bears interest at a fixed rate of 4.23% per annum, equal to the market determined pass-through rate payable on the certificates including applicable servicing fees.

(4) Interest rates are based on a weighted average spread over LIBOR (or a comparable or successor rate as provided for in our loan agreements), plus applicable servicing fees;

(5) Interest rate is based on the weighted average spread over LIBOR, or a comparable or successor rate as provided for in our loan agreement, plus applicable servicing fees;

as of December 31, 2022, LIBOR was 4.39%.

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Interest payments are made monthly.

(6) For secured debt, unsecured debt, and total debt, the weighted average interest rate is calculated based on LIBOR as of December 31, 2021, 0.10%, and includes the impact of interest rate swap agreements effective as of that date.

(7) Effective July 15, 2021, we notified note holders of our intent to settle conversions of the 2022 Convertible Notes in shares of common stock.

On January 18, 2022, we settled the outstanding principal balance of the 2022 Convertible Notes with the issuance of 6,216,261 shares of our common stock and a cash payment of $0.3 million.

As part of our long-term debt strategy, our goal is to improve our credit ratings, and, over time, we generally intend to target a reduction in our level of net debt to approximately 5.5 to 6.0 times trailing twelve months Adjusted EBITDA re (see “— Non-GAAP Measures — EBITDA, EBITDA re , and Adjusted EBITDAr e ”), a reduction in our level of secured debt to less than 20% of gross assets, and an increase in our level of unencumbered assets to greater than 70% of gross assets.

To facilitate our long-term debt strategy we expect to seek to, among other things, (a) refinance a significant portion of our secured debt maturing in 2025 through 2026 (assuming all extension options are exercised) with unsecured debt, including potential unsecured bond issuances and/or (b) repay a portion of such debt.

There can be no assurance that we will be successful in implementing our long-term debt strategy, improving our credit ratings, or achieving our targets in the short or medium term or at all, or that we will not change our strategy or targets in the future.

Even if we do achieve our targets, we may from time to time fall outside of our target ranges;

and there can be no assurance that we will continue to meet our targets.

(7) For secured debt, unsecured debt, and total debt, the weighted average interest rate is calculated based on December 31, 2022, LIBOR of 4.39% or Adjusted SOFR of 4.46% (inclusive of a 0.10% credit spread adjustment), as appropriate, and includes the impact of interest rate swap agreements effective as of that date.

(8) Interest rate is based on LIBOR plus an applicable margin.

As of December 31, 2022, LIBOR was 4.39%.

(9) Interest rate is based on Adjusted SOFR plus the applicable margin.

As of December 31, 2022, Adjusted SOFR was 4.46%.

As part of our long-term debt strategy, our goal is to improve our credit ratings, and, over time, we generally intend to target net debt that is approximately 5.5 to 6.0 times trailing twelve months Adjusted EBITDA re (see “— Non-GAAP Measures — EBITDA, EBITDA re , and Adjusted EBITDA re ”), secured debt that is less than 20% of gross assets, and unencumbered assets that are greater than 70% of gross assets.

To facilitate our long-term debt strategy we expect to seek to, among other things, (a) refinance a significant portion of our secured debt maturing in 2026 (assuming all extension options are exercised) with unsecured debt, including potential unsecured bond issuances and/or (b) repay a portion of such debt.

There can be no assurance that we will be successful in implementing our long-term debt strategy, improving our credit ratings, or adhering to our targets in the short or medium term or at all, or that we will not change our strategy or targets in the future.

We may from time to time fall outside of our target ranges.

In addition, we cannot assure you that we will be able to access the capital and credit markets to obtain additional unsecured debt financing or that we will be able to obtain financing on terms favorable to us.

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• renovation of newly-acquired homes;

• repairs of homes damaged by Hurricanes Ian and Nicole;

• HOA fees (as applicable), property taxes, insurance premiums, and the ongoing maintenance of our homes;

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• interest expense;

• dividend payments to our equity investors;

• dividend payments to our stockholders;

• required contributions to our joint ventures.

We believe our rental income, net of total expenses, will generally provide cash flow sufficient to fund operations and dividend payments on a near-term basis.

Additionally, we have guaranteed the funding of certain tax, insurance, and non-conforming property reserves related to the financing of one of our joint ventures.

We do not expect this guarantee to have a material current or future effect on our liquidity.

Additionally, we have guaranteed the funding of certain tax, insurance, and non-conforming property reserves related to the financing of certain of our joint ventures.

We do not expect these guarantees to have a material current or future effect on our liquidity.

“Exhibits and Financial Statements — Note 5 of Notes to Consolidated Financial Statements” for additional information about our investments in unconsolidated joint ventures.

However, the COVID-19 pandemic may negatively impact our operating cash flow such that we are unable to make required debt service payments, which would result in an event of default for any debt instrument under whose loan

agreement such payments were not made.

Overall macroeconomic conditions, including rising inflation and interest rates, may negatively impact our operating cash flow such that we are unable to make required debt service payments, which would result in an event of default for any debt instrument under whose loan agreement such payments were not made.

Specifically, the collateral within individual borrower entities may underperform, resulting in cash flow shortfalls for debt service while consolidated cash flows are sufficient to fund our operations.

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Our real estate assets are illiquid in nature.

A timely liquidation of assets may not be a viable source of short-term liquidity should a cash flow shortfall arise, and we may need to source liquidity from other financing sources, such as the Revolving Facility, which had an undrawn balance of $1,000.0 million as of December 31, 2021.

A timely liquidation of assets may not be a viable source of short-term liquidity should a cash flow shortfall arise, and we may need to source liquidity from other financing sources, such as the Revolving Facility which had undrawn balances of $1,000.0 million as of December 31, 2022.

Our long-term liquidity requirements consist primarily of funds necessary to pay for the acquisition of, and non-recurring capital expenditures for, our homes, and principal and interest payments of our indebtedness.

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Instead, we will need to meet these needs from external sources of capital and amounts, if any, by which our cash flow generated from operations exceeds taxable income.

Year Ended December 31, 2022 Compared to Year Ended December 31, 2021

The following table summarizes our cash flows for the years ended December 31, 2022 and 2021:

For the Years

Ended December 31,

($ in thousands) 2022 2021 $ Change % Change

Net cash provided by operating activities $ 1,023,587 $ 907,660 $ 115,927 12.8 %

Net cash used in investing activities (814,413) (1,159,558) 345,145 29.8 %

Net cash provided by (used in) financing activities (574,105) 658,988 (1,233,093) (187.1) %

Change in cash, cash equivalents, and restricted cash $ (364,931) $ 407,090 $ (772,021) (189.6) %

Operating Activities

Our cash flows provided by operating activities depend on numerous factors, including the occupancy level of our homes, the rental rates achieved on our leases, the collection of rent from our residents, and the amount of our operating and other expenses.

Net cash provided by operating activities was $1,023.6 million and $907.7 million for the years ended December 31, 2022 and 2021, respectively , an increase of 12.8%.

The increase in cash provided by operating activities is primarily due to (1) improved operational profitability, including a $161.3 million increase in total revenues net of property operating and maintenance expense from period to period, partially offset by (2) a net $35.1 million use of cash between periods from changes in operating assets and liabilities .

Investing Activities

Net cash used in investing activities consists primarily of the acquisition costs of homes, capital improvements, proceeds from property sales, and investments in our joint ventures.

Net cash used in investing activities was $814.4 million and $1,159.6 million for the years ended December 31, 2022 and 2021, respectively, a decrease of $345.1 million.

The decrease in net cash used in investing activities resulted primarily from the combined effect of the following significant changes in cash flows during the year ended December 31, 2022 compared to the year ended December 31, 2021:

(1) an increase in cash used for investments in joint ventures;

(2) a decrease in cash used for the acquisition of homes;

(3) an increase in cash used for initial renovations of homes;

and (4) an increase in cash used for other capital expenditures for our homes .

More specifically, investments in joint ventures increased $102.7 million as a result of the formation of new joint ventures and increased acquisition activity in our existing joint ventures during the year ended December 31, 2022 compared to the year

ended December 31, 2021.

Acquisition spen d decreased $562.1 million due to a decrease in the number of homes acquired from 2,938 during the year ended December 31, 2021 to 1,423 homes acquired during the year ended December 31, 2022.

Renovation spend increased by $45.0 million due to more renovations being completed during the year ended December 31, 2022 compared to the year ended December 31, 2021, and other capital expenditures for our homes increased by $45.2 million year over year due to increased average home count and other increases in costs to maintain per home, including the impact of inflation.

Financing Activities

Net cash provided by (used in) financing activities was $(574.1) million and $659.0 million for the years ended December 31, 2022 and 2021, respectively.

During the year ended December 31, 2022, issuances and sales of stock under our 2021 ATM Equity Program generated $98.4 million of net proceeds which were used primarily for acquisitions.

During that period, we also issued $598.4 million of unsecured notes and borrowed $725.0 million on a new term loan facility.

The proceeds from this financing activity along with cash from operations were used to repay $1,412.2 million of mortgage loans, including full repayments of IH 2018-1, IH 2018-2, and IH 2018-3.

During that period, we also made $541.4 million of dividend and distribution payments.

During the year ended December 31, 2021 , we received $1,938.0 million of net proceeds from the issuance and sale of unsecured notes which were used to repay $1,766.9 million of principal on our mortgage loans, including full repayment of IH 2017-2 and partial repayments of IH 2018-1, IH 2018-2, IH 2018-3, and IH 2018-4.

Issuances and sales of stock under our terminated 2019 ATM Equity Program and the 2021 Public Offering generated $933.8 million of net proceeds during the year ended December 31, 2021.

During that period, we also made $395.9 million of dividend and distribution payments.

Contractual Obligations

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3,177,603 70,960 141,920 141,920 2,822,803

Term Loan Facility (1)(2)(3)

Term Loan Facilities (1)(2)(3)(4)

3,918,355 178,546 357,581 2,595,376 786,852

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6,261 2,028 4,061 172 —

2022 Convertible Notes (1)(2)(5)

143,966 143,966 — — —

Derivative instruments (6)

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(1) For detailed information about each of our financing arrangements and derivative instruments see Part IV.

“Exhibits and Financial Statements — Note 7 of Notes to Consolidated Financial Statements.”

(2) Includes estimated interest payments through the extended maturity date based on the principal amount outstanding as of December 31, 2021.

Interest is calculated at rates in effect as of such date;

for LIBOR based loans, the December 31, 2021 LIBOR, or 0.10%, is held constant until the maturity date.

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

“Exhibits and Financial Statements — Note 7 of Notes to Consolidated Financial Statements” and “— Note 8 of Notes to Consolidated Financial Statements

(2) Includes estimated interest payments through the extended maturity date, as applicable, based on the principal amount outstanding as of December 31, 2022.

(3) Interest is calculated at rates in effect as of December 31, 2022, including the indexed rate and any applicable margin, and that rate is held constant until the maturity date.

As of December 31, 2022, LIBOR was 4.39%, and Adjusted SOFR was 4.46%.

(4) Calculated based on the maturity date if we exercise each of the remaining extension options available, which are subject to certain conditions being met.

“Exhibits and Financial Statements — Note 7 of Notes to Consolidated Financial Statements” for a description of maturity dates without consideration of extension options.

(4) Includes the related unused commitment fee.

(5) Represents the principal amount and interest obligation of the 2022 Convertible Notes which is calculated using the notes’ coupon rate.

The 2022 Convertible Notes principal amount of $141.5 million is included in 2022 maturities presented above.

On January 18, 2022, we settled the outstanding principal balance of the 2022 Convertible Notes with the issuance of 6,216,261 shares of our common stock and a cash payment of $0.3 million.

(6) Includes interest rate swap and interest rate cap obligations calculated using LIBOR as of December 31, 2021, or 0.10%.

(5) Includes the related unused commitment fee, as applicable.

(6) Includes payments (receipts) related to interest rate swap and interest rate cap obligations, calculated using LIBOR as of December 31, 2022, or 4.39%.

(7) Represents commitments to acquire 46 single-family rental homes.

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Estimated remaining commitments under these agreements total approximately $770.0 million as of December 31, 2022.

Additionally, we have a commitment, which is not reflected in the table above, to make additional capital contributions to our joint ventures.

Additionally, we have commitments, which are not reflected in the table above, to make additional capital contributions to our joint ventures.

As of December 31, 2022, our remaining equity commitments to the joint ventures total $128.3 million.

LIBOR Transition

Certain securitizations, the Secured Term Loan, the Term Loan Facility, and the Revolving Facility (collectively, the “LIBOR-Based Loans”) use the one month LIBOR as a benchmark for establishing interest rates.

Certain securitizations, the Secured Term Loan, the 2020 Term Loan Facility, and the Revolving Facility (collectively, the “LIBOR-Based Loans”) use one month LIBOR as a benchmark for establishing interest rates.

Our derivative instruments are also indexed to one month LIBOR.

On March 5, 2021, the Financial Conduct Authority of the United Kingdom, which has statutory powers to require panel banks to contribute to LIBOR, announced that it would cease publication of the one week and two month USD LIBOR immediately after December 31, 2021 and cease publication of the remaining tenors immediately after June 30, 2023.

Once one month LIBOR is phased out after June 30, 2023, the interest rates for our LIBOR-Based Loans will be based on a comparable or successor rate as provided for in our loan agreements.

We will work with the counterparties to our swap and cap agreements to adjust each floating rate to a comparable or successor rate.

The Financial Conduct Authority of the United Kingdom, which has statutory powers to require panel banks to contribute to LIBOR, has announced that it will cease publication of one month USD LIBOR immediately after June 30, 2023.

Further, on March 15, 2022, the Consolidated Appropriations Act of 2022, which includes the Adjustable Interest Rate (LIBOR) Act, was signed into law in the United States.

This legislation establishes a uniform benchmark replacement process for financial contracts that mature after June 30, 2023 which do not contain clearly defined or practicable fallback provisions.

The legislation also creates a safe harbor that shields lenders from litigation if they choose to utilize a replacement rate recommended by the Board of Governors of the Federal Reserve.

Once one month LIBOR is phased out on June 30, 2023, the interest rates for our LIBOR-Based Loans will be indexed to a comparable or successor rate as provided for in our loan agreements.

Although our existing variable rate debt and derivative agreements provide for a prescribed transition to an alternate rate (SOFR), we are engaging with each of the respective counterparties to modify the existing provisions to better align the application of the terms of these debt and derivative agreements with respect to the SOFR index.

We anticipate completing the transition to SOFR prior to the expiration of LIBOR on June 30, 2023.

Furthermore, we will continue to make the appropriate elections available within ASU 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting to ease the impact of transition from LIBOR to comparable or successor rates on hedge accounting.

As more fully described in Part IV.

“Exhibits and Financial Statements — Note 2 of Notes to Consolidated Financial Statements,” we have elected and may continue to elect to apply practical expedients related to contract modifications, changes in critical terms, and updates to the designated hedged risk(s) as qualifying changes are made to applicable debt and derivative instruments.

While we do not expect that the transition from LIBOR and risks related thereto will have a material adverse effect on our financing costs, the ultimate outcome of this change is uncertain at this time, and significant management time and attention may be required to transition to using the new benchmark rates and to implement necessary changes to our financial models.

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In addition, any such purchases made at prices below the “adjusted issue price” (as defined for United States federal income tax purposes) may result in taxable cancellation of indebtedness income to us, which amounts may be material, and in related adverse tax consequences to us.

Year Ended December 31, 2021 Compared to Year Ended December 31, 2020

The following table summarizes our cash flows for the years ended December 31, 2021 and 2020:

For the Years

Ended December 31,

($ in thousands) 2021 2020 $ Change % Change

Net cash provided by operating activities $ 907,660 $ 696,712 $ 210,948 30.3 %

Net cash used in investing activities (1,159,558) (425,156) (734,402) (172.7) %

Net cash provided by (used in) financing activities 658,988 (146,033) 805,021 551.3 %

Change in cash, cash equivalents, and restricted cash $ 407,090 $ 125,523 $ 281,567 224.3 %

Operating Activities

Net cash provided by operating activities was $907.7 million and $696.7 million for the years ended December 31, 2021 and 2020, respectively, an increase of 30.3%.

The increase in cash provided by operating activities was driven by improved operational profitability, including an $148.2 million increase in total revenues net of property operating and maintenance expense from period to period and a net $70.8 million source of cash from an increase in changes in operating assets and liabilities.

Investing Activities

Net cash used in investing activities consists primarily of the acquisition costs of homes, capital improvements, proceeds from property sales, and investments in our joint ventures.

Net cash used in investing activities was $1,159.6 million and $425.2 million for the years ended December 31, 2021 and 2020, respectively, an increase of $734.4 million.

The increase in net cash used in investing activities resulted primarily from the combined effect of the following significant changes in cash flows during the year ended December 31, 2021 compared to the year ended December 31, 2020:

(1) an increase in cash used for the acquisition of homes;

(2) a decrease in proceeds from the sale of homes;

(3) an increase in amounts deposited and held by others for acquisitions of homes;

and (4) an increase in cash used for investments in joint ventures.

More specifically, acquisition spend increased $505.1 million due to an increase in the number of homes acquired from 2,252 during the year ended December 31, 2020 to 2,938 homes acquired during the year ended December 31, 2021 and an increase in average cost per home.

Proceeds from sales of homes decreased $183.3 million from the year ended December 31, 2020 to the year ended December 31, 2021 due to a significant decrease in the number of homes sold from 1,580 to 734, respectively, partially offset by an increase in proceeds per home.

Cash deposited and held by others increased $59.2 million due to increased deposits made to homebuilders for the acquisition of new-build single-family residential properties.

Investments in joint ventures increased $48.7 million due to increased contributions to our joint ventures during year ended December 31, 2021 compared to the year ended December 31, 2020.

Financing Activities

Net cash provided by (used in) financing activities was $659.0 million and $(146.0) million for the years ended December 31, 2021 and 2020, respectively.

During the year ended December 31, 2021, we received $1,938.0 million of net proceeds from the issuance and sale of unsecured notes which were used to repay $1,766.9 million of principal on our mortgage loans, including full repayment of IH 2017-2 and partial repayments of IH 2018-1, IH 2018-2, IH 2018-3, and IH 2018-4.

Issuances and sales of stock under our terminated 2019 ATM Equity Program and the 2021 Public Offering generated $933.8 million of net proceeds during the year ended December 31, 2021.

During that period, we also made $395.9 million of dividend and distribution payments.

During the year ended December 31, 2020, proceeds from our new Term Loan Facility of $2,500.0 million and from issuances and sales of stock under our public offering and terminated ATM Equity Program of $686.7 million, along with proceeds from home sales, were used (1) to repay the $1,500.0 million outstanding balance of our 2017 term loan facility;

(2) to repay $1,434.6 million of our mortgage loans, including full

repayment of SWH 2017-1 and partial repayments of IH 2018-1, IH 2018-2, IH 2018-3, and IH 2018-4;

and (3) to fund $334.3 million of dividend and distribution payments.

Year Ended December 31, 2020 Compared to Year Ended December 31, 2019

For similar operating and financial data and discussion of our year ended December 31, 2020 results compared to our year ended December 31, 2019 results, refer to Part II.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2020 10-K .

Critical Accounting Policies and Estimates

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The capitalized costs are depreciated on a straight-line basis over their estimated useful lives, which are reviewed on an annual basis.

The weighted average useful lives range from 7 years to 28.5 years.

There have not been any significant changes in our estimate of useful lives during the current reporting period.

For additions to our single-family residential properties place in service after December 31, 2021, the weighted average useful lives range from 7 to 32 years.

Prior to that date, the weighted average useful lives ranged from 7 to 28.5 years.

If the useful lives for costs capitalized during the year ended December 31, 2022 were increased or decreased by 10%, our annualized depreciation expense would have changed by approximately $5.0 million.

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There have not been any significant process changes in our review for impairment during the current reporting period.

For those homes for which a change in an event or circumstance was identified in the most recent impairment analysis, a 10% decrease in the estimated fair value of those homes may have resulted in an increase in impairment expense of approximately $0.3 million.

• Single-Family Residential Properties Held for Sale:

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As of December 31, 2022, 131 homes, less than 0.2% of our portfolio, were held for sale, compared to 80 homes as of December 31, 2021.

If market values less disposal costs for our properties that were classified as held for sale as of December 31, 2021 were 10% lower, our impairment expense related to those properties would have increased by approximately $0.3 million.

If the market values less disposal costs were 10% higher, our impairment expense would not have changed.

If market values less disposal costs for our properties that were classified as held for sale as of December 31, 2022 were 10% lower or higher, our impairment expense related to those properties would have changed by approximately $0.1 million.

Segment Reporting

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The CODM utilizes NOI as the primary measure to evaluate performance of the total portfolio.

The aggregation of individual homes constitutes the total portfolio.

Decisions regarding acquisitions and dispositions of homes are made at the individual home level with a focus on accretive growth in high-growth locations where we have greater scale and density.

Non-GAAP Measures

13 unchanged sentences

share-based compensation expense;

merger and transaction-related expenses;

casualty (gains) losses, net;

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Depreciation and amortization of investments in unconsolidated joint ventures

5,838 1,304 —

EBITDA 1,336,424 1,180,085 1,103,902

5 unchanged sentences

28,962 27,170 17,090

Merger and transaction-related expenses (2)

Severance 314 1,057 601

Casualty (gains) losses, net (2)(3)

28,485 8,026 (3,882)

(Gains) losses on investments in equity securities, net 3,939 9,420 (29,723)

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(1) For the years ended December 31, 2022, 2021, and 2020, $6,493, $5,427, and $3,511 was recorded in property management expense, respectively, and $22,469, $21,743, and $13,579 was recorded in general and administrative expense, respectively.

(2) Includes merger and transaction-related expenses included within general and administrative.

(2) Includes $24,000 of net estimated losses and damages related to Hurricanes Ian and Nicole.

(3) Includes our share from unconsolidated joint ventures.

(4) Includes interest income and other miscellaneous income and expenses.

11 unchanged sentences

other income and expenses;

joint venture management fees;

and income (loss) from investments in unconsolidated joint ventures.

management fee revenues;

and losses from investments in unconsolidated joint ventures.

We consider NOI to be a meaningful supplemental financial measure of our performance when considered with the financial statements determined in accordance with GAAP.

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Impairment and other (3)

28,697 8,676 696

Gain on sale of property, net of tax (90,699) (60,008) (54,594)

2 unchanged sentences

11,261 5,835 86

Joint venture management fees (4,893) — —

(Income) loss from investments in unconsolidated joint ventures 1,546 — —

Management fee revenues (11,480) (4,893) —

Losses from investments in unconsolidated joint ventures 9,606 1,546 —

NOI (total portfolio)

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(2) Includes $22,469, $21,743, and $13,579 of share-based compensation expense for the years ended December 31, 2022, 2021, and 2020, respectively.

(3) Includes $24,000 of net estimated losses and damages related to Hurricanes Ian and Nicole.

(4) Includes interest income and other miscellaneous income and expenses.

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share-based compensation expense;

legal settlements;

severance expense;

merger and transaction-related expense;

casualty (gains) losses, net;

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Our Core FFO and Adjusted FFO may not be comparable to the Core FFO and Adjusted FFO of other companies due to the fact that not all companies use the same definition of Core FFO and Adjusted FFO.

No adjustments were made to the Core FFO and Adjusted FFO per common share — diluted computations for potential shares of common stock related to the Convertible Senior Notes.

No adjustments were made to the Core FFO and Adjusted FFO per common share — diluted computations for potential shares of common stock related to the Convertible Senior Notes during the periods the notes were outstanding.

Accordingly, there can be no assurance that our basis for computing this non-GAAP measures is comparable with that of other companies.

15 unchanged sentences

928,618 788,773 693,852

Non-cash interest expense related to amortization of deferred financing costs, loan discounts, and non-cash interest expense from derivatives, including our share from unconsolidated joint ventures 34,520 40,415 48,515

Non-cash interest expense related to amortization of deferred financing costs, loan discounts, and non-cash interest expense from derivatives (1)

24,326 34,520 40,415

Share-based compensation expense (2)

28,962 27,170 17,090

Offering related expenses (2)

Merger and transaction-related expenses (3)

Legal settlements (3)

Severance expense 314 1,057 601

Casualty (gains) losses, net (1)(4)

28,485 8,026 (3,882)

(Gains) losses on investments in equity securities, net 3,939 9,420 (29,723)

1,022,044 868,966 718,353

Recurring capital expenditures, including our share from unconsolidated joint ventures (123,405) (115,951) (118,988)

Recurring capital expenditures (1)

(156,147) (123,405) (115,951)

$ 865,897 $ 745,561 $ 602,402

Net income available to common stockholders

16 unchanged sentences

$ 1.41 $ 1.28 $ 1.08

(1) Includes our share from unconsolidated joint ventures.

(2) For the years ended December 31, 2022, 2021, and 2020, $6,493, $5,427, and $3,511 was recorded in property management expense, respectively, and $22,469, $21,743, and $13,579 was recorded in general and administrative expense, respectively.

(2) Includes expenses associated with secondary offerings of common stock completed during the year ended December 31, 2019 included within other, net.

(3) Includes merger and transaction-related expenses included within general and administrative.

(4) On July 1, 2019, we settled the full outstanding balance of the 2019 Convertible Notes with the issuance of 12,553,864 shares of common stock, and these shares of common stock are included within all net income (loss), FFO, Core FFO, and AFFO per common share calculations subsequent to that date.

Using the “if-converted” method, in the period prior to conversion for the year ended December 31, 2019, the 2019 Convertible Notes are excluded from net income (loss) per common share — diluted as they are anti-dilutive and are reflected in the FFO per common share — diluted computation above, consistent with Nareit’s guidance for calculating FFO per share.

For the year ended December 31, 2019, the numerator for FFO per common share — diluted is adjusted for $5,586 of interest expense on the 2019 Convertible Notes, including non-cash amortization of discounts.

For the year ended December 31, 2019, the denominator is adjusted for 6,225,341 potential shares of common stock for the 2019 Convertible Notes for the period prior to conversion.

No such adjustments were made to Core FFO and AFFO per common share — diluted.

(3) Represents the estimated cost of a global settlement of a multistate putative class action regarding resident late fees.

The settlement remains subject to court approval.

(4) Includes $24,000 of net estimated losses and damages related to Hurricanes Ian and Nicole.

(5) On January 18, 2022, we settled the $141,490 outstanding principal balance of the 2022 Convertible Notes with the issuance of 6,216,261 shares of our common stock.

For the year ended December 31, 2022, the shares of common stock issued with respect to this settlement are included within all net income, FFO, Core FFO, and AFFO per common share calculations subsequent to the conversion date.

With respect to the 2022 Convertible Notes, during the year ended December 31, 2021, at the election of the note holders, we settled $203,510 of principal outstanding for the 2022 Convertible Notes with the issuance of 8,943,374 shares of common stock.

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No such adjustments were made to Core FFO and AFFO per common share —diluted.

For the year ended December 31, 2019, 15,100,443 potential shares of common stock issuable upon the conversion of the 2022 Convertible Notes are excluded from the computation of net income or loss and FFO per common share — diluted as they are anti-dilutive, and are excluded from Core FFO and AFFO per common share — diluted.

(6) Incremental shares attributed to non-vested share-based awards totaling 1,341,786, 1,528,453, and 1,465,286 for the years ended December 31, 2022, 2021, and 2020, respectively, are included in weighted average common shares outstanding in the calculation of net income per common share — diluted.

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis