What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-02-21 compared with 2023-02-22 · 151 added, 150 removed, 563 unchanged (35% of the section changed)

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“Risk Factors,” “Forward-Looking Statements,” or in other parts of this report.

For similar operating and financial data and discussion of our year ended December 31, 2021 results compared to our year ended December 31, 2020 results, refer to Part II.

For similar operating and financial data and discussion of our results for the year ended December 31, 2022 compared to the year ended December 31, 2021, refer to Part II.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K which was filed with the SEC on February 22, 2023 (the “2022 10-K”).

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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.

As of December 31, 2023, we own approximately 85,000 homes for lease which are located primarily in 16 core markets across the country.

These homes help meet 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.

The continued demand for our product proves that the choice and flexibility we offer is attractive to many prospective residents.

The continued demand for our product proves that the choice and flexibility we offer are attractive to many people.

We operate in markets with strong demand drivers, high barriers to entry, and high rent growth potential, primarily in the Western United States, Florida, and the Southeast United States.

Through disciplined market and asset selection, as well as through strategic mergers and acquisitions, we designed our portfolio to capture the operating benefits of local density as well as economies of scale that we believe cannot be readily replicated.

Since our founding in 2012, we have built a proven, vertically integrated operating platform that enables us to effectively and efficiently acquire, renovate, lease, maintain, and manage our homes.

Our homes average approximately 1,870 square feet with three bedrooms and two bathrooms, appealing to a resident base that we believe is less transitory than a typical multifamily resident.

Through disciplined market and asset selection, as well as through strategic mergers and acquisitions, we designed our owned portfolio to capture the operating benefits of local density as well as economies of scale that we believe cannot be readily replicated.

Since our founding in 2012, we have built a proven, vertically integrated operating platform that enables us to effectively and efficiently acquire, renovate, lease, maintain, and manage both the homes we own and those we manage on behalf of others.

The portfolio of homes we own average approximately 1,880 square feet with three bedrooms and two bathrooms, appealing to a resident base that we believe is less transitory than a typical multifamily resident.

We invest in the upfront renovation of homes in our portfolio in order to address capital needs, reduce ongoing maintenance costs, and drive resident demand.

At Invitation Homes, we are committed to creating a better way to live and to being a force for positive change, while at the same time advancing efforts that make our company more innovative and our processes more sustainable.

ESG initiatives are an important part of our strategic business objectives and are critical to our long-term success.

Environmental, Social, and Governance initiatives are an important part of our strategic business objectives and are critical to our long-term success.

Our mission statement, “Together with you, we make a house a home,” reflects our commitment to high-touch customer service that continuously enhances residents’ living experiences and provides homes where individuals and families can thrive.

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.

Each aspect of our operations — whether in our corporate headquarters or field offices located in our 16 core 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 clean, safe, and functional homes for them and their loved ones.

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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.

While we have not experienced significant disruptions in our operations during fiscal year 2023, continuing unfavorable global and United States economic conditions (including inflation and rising interest rates), higher unemployment levels, uncertainty in financial markets (including as a result of events affecting financial institutions, such as recent bank failures), 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, bank failures, and rising 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 labor shortages and inflationary increases in labor and material costs, have impacted and may continue to impact certain aspects of our business.

In addition, consumer confidence and spending can be materially adversely affected in response to changes in fiscal and monetary policy, declines in income or asset values, and other economic factors.

For example, we have experienced and continue to expect higher levels of bad debt expense compared to pre-COVID averages, as it continues to take longer to address residents who are not current with their rent.

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.

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

Climate Change

Climate change continues to attract considerable public, political, and scientific attention.

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

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.

Consequences of global climate change range from more frequent extreme weather events to extensive governmental policy developments and shifts in consumer preferences, which have the potential individually or collectively to disrupt our business as well as negatively affect our suppliers, contractors, and residents.

Experiencing or addressing the various physical, regulatory, and transition risks from climate change may significantly reduce our revenues and profitability or cause us to generate losses.

Government authorities 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 GHG emissions and the implementation of “green” building codes.

The State of California recently passed the Climate Corporate Data Accountability Act and the Climate-Related Financial Risk Act that will impose broad climate-related disclosure obligations on certain companies doing business in California, including us, starting in 2026, unless the laws are modified prior to such date.

The SEC has included in its regulatory agenda potential rulemaking on climate change disclosures that, if adopted, could significantly increase compliance burdens and associated regulatory costs and complexity.

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.

Implementation of any voluntary improvements requires consideration of multiple factors, including whether such elections would raise our costs to maintain our homes.

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.

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

Incorporating greater resource efficiency into our homes, whether to comply with upgraded building codes or recommended practices given a region’s particular exposure to climate conditions, or undertaken to satisfy demand from increasingly environmentally conscious residents or to meet our own sustainability goals, could raise our costs to maintain our homes.

In evaluating whether to implement voluntary improvements, we also consider that choosing not to enhance our homes’ resource efficiency can make them less attractive to municipalities and increase the vulnerability of residents in our communities to rising energy and water expenses and use restrictions.

Additionally, choosing not to enhance our homes’ resource efficiency could make our portfolio less attractive to residents and investors.

If we fail to manage transition risks effectively, our profitability and cash flow could suffer.

We intend to continue to research, evaluate and utilize new or improved products and business practices consistent with our sustainability commitment, and believe our initiatives in this area can help put us in a better position to comply with evolving regulations directed at addressing climate change and similar environmental concerns, and to meet growing resident demand for resource-efficient homes, as further discussed in Part I.

“Business — Environmental, Social, and Governance.”

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 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.

Such extreme climate related events are driving changes in market dynamics and stakeholder expectations and could result in disruptions to us, our suppliers, vendors, and residents.

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.

Furthermore, climate change may reduce the availability or increase the cost of insurance for these negative impacts of natural disasters and adverse weather conditions by contributing to an increase in the incidence and severity of such natural disasters.

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 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 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.

In 2021 and 2022, 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, cooperation with impacted residents to use federal assistance funds as an alternative to eviction, and our activities in the housing market.

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

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3,565 96.8% 2,273 1.33 4.1 %

120 77.7% 1,954 0.95 0.2 %

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, 2023.

(5) Represents homes located outside of our 16 core markets, including those acquired as part of our July 2023 portfolio acquisition that are generally being held for sale or evaluated for disposition once they become vacant.

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 current macroeconomic conditions, including rapidly accelerating economic inflation and increasing interest rates.

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

Additionally, each of these factors may also impact the results of operations and financial condition of our joint venture investments and those of third parties for whom we perform property and asset management services, which would impact the amount of management fee revenues and income (loss) from investments in unconsolidated joint ventures that we earn.

Market Fundamentals:

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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, including the impact of rising inflation and interest rates which could adversely affect demand for our properties.

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, including the impact of rising inflation, bank failures, and interest rates which could adversely affect demand for our properties.

Property Improvements and Maintenance:

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Additionally, we typically incur costs to renovate a home to prepare it for rental.

The scope of renovation work varies, but may include paint, flooring, carpeting, cabinetry, appliances, plumbing hardware, roof replacement, HVAC replacement, and other items required to prepare the home for rental.

The scope of renovation work varies, but may include paint, flooring, carpeting, cabinetry, appliances, plumbing

hardware, roof replacement, HVAC replacement, and other items required to prepare the home for rental.

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

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.

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.

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.

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(ii) rent and non-refundable deposits associated with pets;

(iii) revenues from ancillary services such as smart homes and HVAC replacement filters;

(iii) revenues from value-add services such as smart homes and HVAC replacement filters;

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

Management Fee Revenues

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

Management fee revenues consist of fees from property and asset management services provided to portfolio owners of single-family homes for lease, including investments in our unconsolidated joint ventures.

Property Operating and Maintenance

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Property Management Expense

Property management expense represents personnel and other costs associated with the oversight and management of our portfolio of homes, including those within our unconsolidated joint ventures.

All of our homes are managed through our internal property manager.

Property management expense represents personnel and other costs associated with the oversight and management of our portfolio of homes, including those for which we provide property and asset management services through our internal property manager.

General and Administrative

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Total expenses 2,074,828 1,919,215 155,613 8.1 %

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

Gains (losses) on investments in equity securities, net 350 (3,939) 4,289 108.9 %

Other, net (2,435) (11,261) 8,826 78.4 %

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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, 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.

For the years ended December 31, 2023 and 2022, total portfolio rental revenues and other property income totaled $2,418.6 million and $2,226.6 million, respectively, an increase of 8.6%, driven by an increase in average monthly rent per occupied home, a 60 bps increase in occupancy, and a 793 home increase between periods in the average number of homes owned.

Average occupancy for the years ended December 31, 2023 and 2022 for the total portfolio was 96.6% and 96.0%, respectively.

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The annual turnover rate for the Same Store portfolio for the years ended December 31, 2023 and 2022 was 23.9% and 22.3%, respectively.

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 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.

For the Same Store portfolio, a home remained unoccupied on average for 39 and 37 days between residents for the years ended December 31, 2023 and 2022, respectively.

The increase in annual turnover and days to re-resident resulted in an overall decrease in average Same Store occupancy on a year over year basis.

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 7.0% and 10.0% for the years ended December 31, 2023 and 2022, respectively, and new lease net effective rental rate growth averaged 4.5% and 13.1% for the years ended December 31, 2023 and 2022, respectively.

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.

Other property income for the year ended December 31, 2023 increased compared to December 31, 2022, primarily due to enhanced value-add revenue programs and increased utility billbacks as new leases are entered into, among other things.

For the years ended December 31, 2023 and 2022, management fee revenues totaled $13.6 million and $11.5 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.

These fees increased as a result of an increase in the number of homes generating revenues within our joint venture investments.

For the years ended December 31, 2023 and 2022, total expenses were $2,074.8 million and $1,919.2 million, respectively.

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For the year ended December 31, 2023, property operating and maintenance expense increased to $880.3 million from $786.4 million for the year ended December 31, 2022.

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 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, 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.

In addition to a 793 home increase between periods in the average number of homes owned, increases in property taxes, property administrative costs, utilities, and turnover expense costs resulted in the overall 12.0% net increase in property operating and maintenance expense.

Property management expense and general and administrative expense increased to $178.2 million from $162.0 million for the years ended December 31, 2023 and 2022, respectively, primarily due to increased personnel costs related to expansion of our property management platform.

Interest expense increased to $333.5 million for the year ended December 31, 2023 from $304.1 million for the year ended December 31, 2022.

The increase in interest expense was primarily due to (1) a $779.3 million increase in gross debt outstanding and a 19 bps increase in our weighted average interest rate in each case as of December 31, 2023 compared to December 31, 2022 and (2) a $4.1 million reduction in capitalized interest during the year ended December 31, 2023 compared to the year ended December 31, 2022 due to a decrease in the number of homes undergoing an initial renovation.

Depreciation and amortization expense increased to $674.3 million for the year ended December 31, 2023 from $638.1 million for the year ended December 31, 2022 due to an increase in cumulative capital expenditures and a 793 home increase in the average number of homes owned during the year ended December 31, 2023 compared to the year ended December 31, 2022.

Impairment and other expenses were $8.6 million and $28.7 million for the years ended December 31, 2023 and 2022, respectively.

During the year ended December 31, 2023, impairment and other expenses were comprised of $8.2 million of net casualty losses and $0.4 million of impairment losses on our single-family residential properties.

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

Gains (losses) on Investments in Equity Securities, net

For the year ended December 31, 2023, gain on investments in equity securities, net of $0.4 million was comprised of net unrealized gains recognized since December 31, 2022 on investments held as of December 31, 2023.

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.

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.

Other, net decreased to $2.4 million for the year ended December 31, 2023 from $11.3 million for the year ended December 31, 2022, primarily due to an increase in interest income on cash balances, partially offset by increases in administrative costs between those periods.

Gain on Sale of Property, net of tax

Gain on sale of property, net of tax was $183.5 million and $90.7 million for the years ended December 31, 2023 and 2022, respectively.

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.

An increase in the number of homes sold from 691 for the year ended December 31, 2022 to 1,423 for the year ended December 31, 2023 was the primary driver of the increase.

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.

Our share of equity in earnings and/or losses from unconsolidated joint ventures was a net loss of $17.9 million and $9.6 million for the years ended December 31, 2023 and 2022, respectively.

The increase in loss is primarily driven by a $10.3 million increase in non-cash interest expense, including the impact of changes in the fair value of underlying derivative instruments for certain of our joint ventures, during the year ended December 31, 2023 compared to the year ended December 31, 2022, partially offset by increased operating profits due to an increase in the number of homes within our joint venture investments.

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

For similar operating and financial data and discussion of our year ended December 31, 2021 results compared to our year ended December 31, 2020 results, refer to Part II.

For similar operating and financial data and discussion of our results for the year ended December 31, 2022 compared to the year ended December 31, 2021, refer to Part II.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2022 10-K .

Liquidity and Capital Resources

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.

Our liquidity and capital resources as of December 31, 2023 and 2022 include unrestricted cash and cash equivalents of $700.6 million and $262.9 million, respectively, a 166.5% increase primarily due to proceeds from the issuance of unsecured notes, as discussed below, during the year ended December 31, 2023.

As of December 31, 2023, our $1,000.0 million revolving facility (the “Revolving Facility”) is 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.

Public Offerings

On August 2, 2023, in a public offering under our existing shelf registration statement, we issued (1) $450,000 aggregate principal amount of 5.45% Senior Notes which mature on August 15, 2030 and (2) $350,000 aggregate principal amount of 5.50% Senior Notes which mature on August 15, 2033.

A portion of the proceeds from these public offerings were used to pay down $150.0 million of then-outstanding indebtedness on our Revolving Facility, and the remaining net proceeds will be used for general corporate purposes, including, without limitation, repayment of other indebtedness including secured debt, working capital, acquisitions, and renovations of single-family properties.

Acquisition of Single-family Residential Properties

During the third quarter of 2023, we completed the purchase of a portfolio of 1,870 single-family residential homes with an aggregate purchase price of approximately $646.6 million.

SOFR Transition

On April 18, 2023, we amended the 2020 Term Loan and Revolving Facilities (the “Credit Facility”) to convert the applicable interest rate from a London Interbank Offered Rate-based (“LIBOR”) index to a Secured Overnight Financing Rate-based (“SOFR”) index rate determined by reference to a published forward-looking SOFR rate for the interest period relevant to such borrowing (“Term SOFR”) and converted the variable rate on our interest rate swap agreements from a LIBOR-based index to a Term SOFR-based index.

Effective July 3, 2023, one of our mortgage loans, IH 2018-4, was amended to transition to a Term SOFR-based index from a LIBOR-based index.

The related interest rate cap agreement was amended effective July 15, 2023 to transition to a Term SOFR-based index from a LIBOR-based index.

These modifications did not have a material impact on our consolidated financial statements.

These transactions completed the conversion of all LIBOR-based agreements to Term SOFR.

Property Management

In January 2024, we entered into an agreement with a third-party portfolio owner of single-family residential homes to provide property and asset management services for approximately 14,000 homes.

Substantially all of the homes are located within our 16 existing core markets.

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.

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IH 2018-4 (5)

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

643,030 610,827 S + 123 bps 2.0 643,030

Secured Term Loan (6)

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2020 Term Loan Facility (8)

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

$ 2,500,000 S + 100 bps 2.1 $ 2,500,000

2022 Term Loan Facility (8)

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Revolving Facility (8)

— L + 89 bps 3.1 —

Unsecured Notes — May 2028

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Unsecured Notes — August 2030 450,000 5.45% 6.6 —

Unsecured Notes — August 2031

650,000 2.00% 7.6 —

Unsecured Notes — April 2032 600,000 4.15% 8.3 —

Unsecured Notes — August 2033 350,000 5.50% 9.6 —

Unsecured Notes — January 2034

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“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).

(2) Variable interest rate loans are Term SOFR-based, including any credit spread adjustments provided for in the terms of the underlying agreement (“Adjusted SOFR”), reflected as “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.

(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%.

(6) The Secured Term Loan bears interest at a fixed rate of 3.59% per annum including applicable servicing fees for the first 11 years and for the twelfth year bears interest at a floating rate based on a spread of 147 bps over one month LIBOR (or a comparable or successor rate as provided for in our loan agreement), including applicable servicing fees, subject to certain adjustments as outlined in the loan agreement.

Interest payments are made monthly.

(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%.

(5) Effective July 3, 2023, the interest rate for IH 2018-4 is based on the weighted average spread over Term SOFR adjusted for an 0.11% credit spread adjustment.

As of December 31, 2023, Term SOFR was 5.35%.

(6) The Secured Term Loan bears interest at a fixed rate of 3.59% per annum including applicable servicing fees for the first 11 years and for the twelfth year bears interest at a floating rate based on a spread of 147 bps over a comparable or successor rate to one month LIBOR as provided for in our loan agreement, including applicable servicing fees, subject to certain adjustments as outlined in the loan agreement.

(7) For secured debt, unsecured debt, and total debt, the weighted average interest rate is calculated based on December 31, 2023, Term SOFR of 5.35% adjusted for either a 0.11% or a 0.10% credit spread adjustment (Adjusted SOFR), as appropriate, and includes the impact of interest rate swap agreements effective as of that date.

(8) Interest rate is based on Term SOFR of 5.35% plus the applicable margin and a 0.10% credit spread adjustment.

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.

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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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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.

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.

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

Overall macroeconomic conditions, including rising inflation, bank failures, 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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Net cash provided by operating activities was $1,107.1 million and $1,023.6 million for the years ended December 31, 2023 and 2022, respectively , an increase of 8.2%.

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 .

The increase in cash provided by operating activities is primarily due to improved operational profitability, including a $100.2 million increase in total revenues net of property operating and maintenance expense from period to period.

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 consists primarily of the acquisition costs of homes, capital improvements, and proceeds from property sales.

Net cash used in investing activities was $773.6 million and $814.4 million for the years ended December 31, 2023 and 2022, respectively, a decrease of $40.9 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, 2023 compared to the year ended December 31, 2022:

(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.

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

(2) a decrease in cash used for investments in joint ventures ;

(3) an increase in cash from the proceeds from sale of single-family homes;

(4) a decrease in cash used for initial renovations of homes;

and (5) a decrease in cash from repayment proceeds from retained debt securities .

Acquisition spen d increased by $405.0 million from period to period due to an increase in the number of homes acquired from 1,423 during the year ended December 31, 2022 to 2,877 homes acquired during the year ended December 31, 2023.

Cash invested in joint ventures decreased $167.3 million due to reduced acquisition activity in existing joint ventures during the year ended December 31, 2023 compared to the year ended December 31, 2022.

Proceeds from the sale of single-family homes increased $248.0 million due to an increase in the number of homes sold from 691 during the year ended December 31, 2022 to 1,423 homes sold during the year ended December 31, 2023.

Renovation spend decreased by $92.2 million due to a decrease in the number of unoccupied homes acquired between periods, resulting in fewer renovations being completed during the year ended December 31, 2023 compared to the year ended December 31, 2022.

In connection with the full prepayments of the IH 2018-2 and IH 2018-3 mortgage loans and partial repayments on mortgage loans related to the sale of homes during the year ended December 31, 2022, $70.5 million of

repayments of the related retained certificates were received.

There were no such full prepayments of mortgage loans during the year ended December 31, 2023.

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.

Net cash provided by financing activities was $110.0 million for the year ended December 31, 2023 compared to net cash used in financing activities of $574.1 million for the year ended December 31, 2022.

During the years ended December 31, 2023 and 2022, we made dividend and distribution payments totaling $640.5 million and $541.4 million, respectively, which were funded by cash flows from operations.

We issued $790.1 million of unsecured notes, net of discount, during the year ended December 31, 2023 compared to $598.4 million of unsecured notes issued and $725.0 million borrowed on a new term loan facility during the year ended December 31, 2022.

During the year ended December 31, 2022, proceeds from financing activity along with cash from operations were used to repay $1,412.2 million of mortgage loans, and issuances and sales of stock under our 2021 ATM Equity Program generated $98.4 million of net proceeds which were used primarily for acquisitions.

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

For similar operating and financial data and discussion of our results for the year ended December 31, 2022 compared to the year ended December 31, 2021, refer to Part II.

“Management’s Discussion and Analysis of Financial Condition and Results of Operation — Cash Flows” of our 2022 10-K .

Contractual Obligations

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(2) Includes estimated interest payments through the extended maturity date, as applicable, based on the principal amount outstanding as of December 31, 2023.

(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%.

(3) Interest is calculated at rates in effect as of December 31, 2023, including the indexed rate, any credit spread adjustment, and any applicable margin, and that rate is held constant until the maturity date.

As of December 31, 2023, Term SOFR was 5.35%.

(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.

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(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.

The amounts above do not include commitments pursuant to binding purchase agreements with certain homebuilders for the purchase of 2,370 homes over the next six years.

(6) Includes payments (receipts) related to interest rate swap and interest rate cap obligations calculated using Term SOFR.

As of December 31, 2023, Term SOFR was 5.35%.

(7) Represents commitments, net of previously funded deposits, to acquire 18 single-family rental homes.

The amounts above do not include commitments pursuant to binding purchase agreements with certain homebuilders for the purchase of 1,789 homes over the next four years.

Estimated remaining commitments under these agreements total approximately $630.0 million as of December 31, 2023.

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.

As of December 31, 2023, our remaining equity commitments to our joint ventures total $127.9 million.

LIBOR Transition

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.

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.

The Financial Conduct Authority of the United Kingdom, which has statutory powers to require panel banks to contribute to LIBOR, ceased publication of one month USD LIBOR effective 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.

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

The legislation also created 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.

On April 18, 2023, we completed a series of transactions related to certain of our variable rate debt and derivative agreements that were originally indexed to LIBOR to effectuate a transition to Term SOFR.

While the original agreements provided for a prescribed transition to an alternate rate, this series of transactions amended or modified our Credit Facility and all of our LIBOR-indexed interest rate swap agreements such that each agreement is now indexed to Term SOFR.

Effective July 3, 2023, one of our mortgage loans, IH 2018-4, was amended to transition to Term SOFR from LIBOR.

The related interest rate cap agreement was amended effective July 15, 2023 to transition to Term SOFR from LIBOR.

These transactions completed the conversion of all LIBOR-based agreements to Term SOFR.

Furthermore, we made the appropriate elections available within Accounting Standard Update 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2022-04”) 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.

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

Specifically, in connection with the April 18, 2023 modifications, we elected to apply the optional expedients in ASU 2020-04 that enable us to consider the new swaps a continuation of the existing contracts and to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives.

As a result, the transition from LIBOR for these financial instruments did not impact our hedge accounting or have a material impact on our consolidated financial statements.

Supplemental Guarantor Information

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Investments in Single-Family Residential Properties

The following significant accounting policies affect the acquisition, disposition, recognition, classification, and fair value measurements (on a nonrecurring basis) related to our portfolio of over 80,000 single-family residentia l properties in 16 markets across the United States.

The following significant accounting policies affect the acquisition, disposition, recognition, classification, and fair value measurements (on a nonrecurring basis) related to our owned portfolio of approximately 85,000 single-family residentia l properties located primarily in 16 markets across the United States.

For a complete discussion of our accounting policy and other factors related to each category below, see Part IV.

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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.

If the useful lives for costs capitalized during the year ended December 31, 2023 were

increased or decreased by 10%, our annualized depreciation expense would have changed by approximately $6.0 million.

• Provisions for Impairment:

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Once we identify a property to be sold pursuant to GAAP requirements, we cease depreciating the property, measure the property at the lower of its carrying amount or its fair value less estimated costs to sell, and present the property separately within other assets, net on our consolidated balance sheets.

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.

As of December 31, 2023, 189 homes, approximately 0.2% of our portfolio, were held for sale, compared to 131 homes as of December 31, 2022.

If market values less disposal costs for our properties that were classified as held for sale as of December 31, 2023 were 10% lower or higher, our impairment expense related to those properties would have changed by approximately $0.5 million.

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gain on sale of property, net of tax;

impairment on depreciated real estate investments;

and adjustments for unconsolidated joint ventures.

and impairment on depreciated real estate investments.

Adjusted EBITDA re is defined as EBITDA re before the following items:

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EBITDA, EBITDA re , and Adjusted EBITDA re are used as supplemental financial performance measures by management and by external users of our financial statements, such as investors and commercial banks.

Where appropriate, EBITDA, EBITDA re , and Adjusted EBITDA re are adjusted for our share of investments in unconsolidated joint ventures.

Set forth below is additional detail on how management uses EBITDA, EBITDA re , and Adjusted EBITDA re as measures of performance.

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Severance 977 314 1,057

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

Casualty losses, net (2)

8,200 28,485 8,026

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(1) For the years ended December 31, 2023, 2022, and 2021, $6,963, $6,493, and $5,427, was recorded in property management expense, respectively, and $22,540, $22,469, and $21,743, was recorded in general and administrative expense, respectively.

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

(2) Includes our share from unconsolidated joint ventures.

The year ended December 31, 2022 includes $24,000 of net estimated losses and damages related to Hurricanes Ian and Nicole .

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

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($ in thousands) 2023 2022 2021

2022 2021 2020

Net income available to common stockholders $ 518,774 $ 382,668 $ 261,098

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NOI (total portfolio) 1,538,296 1,440,290 1,285,560

1,440,290 1,285,560 $ 1,142,285

Non-Same Store NOI (132,676) (98,612)

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(2) Includes $22,540, $22,469, and $21,743, of share-based compensation expense for the years ended December 31, 2023, 2022, and 2021, respectively.

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

(3) The year ended December 31, 2022 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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Funds From Operations (“FFO”), Core FFO, and Adjusted FFO are supplemental, non-GAAP measures often utilized to evaluate the performance of real estate companies.

FFO is defined by Nareit as net income or loss (computed in accordance with GAAP) excluding gains or losses from sales of previously depreciated real estate assets, plus depreciation, amortization and impairment of real estate assets, and adjustments for unconsolidated joint ventures.

We believe that FFO is a meaningful supplemental measure of the operating performance of our business because historical cost accounting for real estate assets in accordance with GAAP assumes that the value of real estate assets diminishes predictably over time, as reflected through depreciation and amortization.

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By excluding depreciation and amortization and gains or losses on sales of real estate, management uses FFO to measure returns on its investments in homes.

However, because FFO excludes depreciation and amortization and captures neither the changes in the value of the homes that result from use or market conditions nor the level of capital expenditures to maintain the operating performance of the homes, all of which have real economic effect and could materially affect our results from operations, the utility of FFO as a measure of our performance is limited.

However, because FFO excludes depreciation and amortization and captures neither the changes in the value of the homes that result from use or market conditions nor the level of capital expenditures to maintain the operating performance of the homes, all of which have real economic effects and could materially affect our results from operations, the utility of FFO as a measure of our performance is limited.

Management also believes that FFO, combined with the required GAAP presentations, is useful to investors in providing more meaningful comparisons of the operating performance of a company’s real estate between periods or as compared to other companies.

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and (gains) losses on investments in equity securities, net, as applicable.

We define Adjusted FFO as Core FFO less recurring capital expenditures, including adjustments for unconsolidated joint ventures, that are necessary to help preserve the value, and maintain the functionality, of our homes.

We define Adjusted FFO as Core FFO less recurring capital expenditures that are necessary to help preserve the value, and maintain the functionality, of our homes.

Where appropriate, FFO, Core FFO, and Adjusted FFO are adjusted for our share of investments in unconsolidated joint ventures.

The GAAP measure most directly comparable to Core FFO and Adjusted FFO is net income or loss.

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(in thousands, except shares and per share data) 2023 2022 2021

2022 2021 2020

Net income available to common stockholders $ 518,774 $ 382,668 $ 261,098

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Non-controlling interests 1,558 1,470 1,351

1,470 1,351 1,237

Depreciation and amortization on real estate assets 663,398 629,301 585,101

629,301 585,101 546,419

Impairment on depreciated real estate investments 427 310 650

310 650 4,578

Net gain on sale of previously depreciated investments in real estate (183,540) (90,699) (60,008)

Depreciation and net gain on sale of investments in unconsolidated joint ventures 8,704 4,907 254

928,618 788,773 693,852

FFO 1,010,017 928,618 788,773

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

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Severance expense 977 314 1,057

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

Casualty losses, net (1)(3)

8,200 28,485 8,026

(Gains) losses on investments in equity securities, net (350) 3,939 9,420

1,022,044 868,966 718,353

Core FFO 1,086,416 1,022,044 868,966

Recurring capital expenditures (1)

(163,051) (156,147) (123,405)

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

Adjusted FFO $ 923,365 $ 865,897 $ 745,561

Net income available to common stockholders

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(2) For the years ended December 31, 2023, 2022, and 2021, $6,963, $6,493, and $5,427, was recorded in property management expense, respectively, and $22,540, $22,469, and $21,743, was recorded in general and administrative expense, respectively.

(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.

(3) The year ended December 31, 2022 includes $24,000 of net estimated losses and damages related to Hurricanes Ian and Nicole .

(4) 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.

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These issued shares of common stock are included within all net income, FFO, Core FFO, and AFFO per common share calculations subsequent to the conversion date.

For the years ended December 31, 2021 and 2020, the numerator for FFO per common share — diluted is adjusted for interest expense on the 2022 Convertible Notes, including non-cash amortization of discounts, totaling $14,364 and $17,181, respectively, and the denominator is adjusted for 11,293,203 and 15,100,443 potential shares of common stock issuable upon the conversion of the 2022 Convertible Notes, respectively.

For the year ended December 31, 2021, the numerator for FFO per common share — diluted is adjusted for interest expense on the 2022 Convertible Notes, including non-cash amortization of discounts, totaling $14,364, and the denominator is adjusted for 11,293,203 potential shares of common stock issuable upon the conversion of the 2022 Convertible Notes.

No such adjustments were made to 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.

(5) Incremental shares attributed to non-vested share-based awards 1,394,924, 1,341,786, and 1,528,453 for the years ended December 31, 2023, 2022, and 2021, respectively, are included in weighted average common shares outstanding in the calculation of net income per common share — diluted.

For the computations of FFO, Core FFO, and AFFO per common share — diluted, common share equivalents of 1,638,264, 1,559,524 and 1,822,015 for the years ended December 31, 2023, 2022, and 2021, respectively, related to incremental shares attributed to non-vested share-based awards are included in the denominator.

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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