Invitation Homes Inc.

10/28/2021 | Press release | Distributed by Public on 10/28/2021 11:23

Quarterly Report (Form 10-Q)

invh-20210930

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-Q
☑
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number
001-38004
Invitation Homes Inc.
(Exact name of registrant as specified in its charter)
Maryland
90-0939055
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
1717 Main Street,
Suite 2000
75201
Dallas,
Texas
(Address of principal executive offices) (Zip Code)
(972)
421-3600
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common stock, $0.01 par value
INVH
New York Stock Exchange
Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes
☑
No
☐
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).
Yes
☑
No
☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer
☑
Accelerated Filer
☐
Non-Accelerated Filer
☐
Smaller Reporting Company
☐
Emerging Growth Company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes
☐
No
☑
As of October 26, 2021, there were 596,768,674 shares of common stock, par value $0.01 per share, outstanding.



INVITATION HOMES INC.
Page
PART I
Item 1.
Financial Statements
6
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
44
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
76
Item 4.
Controls and Procedures
77
PART II
Item 1.
Legal Proceedings
79
Item 1A.
Risk Factors
79
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
79
Item 3.
Defaults Upon Senior Securities
79
Item 4.
Mine Safety Disclosures
79
Item 5.
Other Information
79
Item 6.
Exhibits
80
Signatures
82


FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which include, but are not limited to, statements related to our expectations regarding the performance of our business, our financial results, our liquidity and capital resources, and other non-historical statements. In some cases, you can identify these forward-looking statements by the use of words such as "outlook," "believes," "expects," "potential," "continues," "may," "will," "should," "could," "seeks," "projects," "predicts," "intends," "plans," "estimates," "anticipates," or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties, including, among others, risks inherent to the single-family rental industry and our business model, macroeconomic factors beyond our control, competition in identifying and acquiring properties, competition in the leasing market for quality residents, increasing property taxes, homeowners' association ("HOA") fees, and insurance costs, our dependence on third parties for key services, risks related to the evaluation of properties, poor resident selection and defaults and non-renewals by our residents, performance of our information technology systems, risks related to our indebtedness, and risks related to the potential negative impact of the ongoing COVID-19 pandemic on our financial condition, results of operations, cash flows, business, associates, and residents. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. Moreover, many of these factors have been heightened as a result of the ongoing and numerous adverse impacts of COVID-19. We believe these factors include but are not limited to, those described under Part I. Item 1A. "Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2020 (the "Annual Report on Form 10-K") as such factors may be updated from time to time in our periodic filings with the Securities and Exchange Commission (the "SEC"), which are accessible on the SEC's website at https://www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this Quarterly Report on Form 10-Q, in the Annual Report on Form 10-K, and in our other periodic filings. The forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q, and we expressly disclaim any obligation or undertaking to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except to the extent otherwise required by law.
3


DEFINED TERMS
Invitation Homes Inc. ("INVH"), a real estate investment trust ("REIT"), conducts its operations through Invitation Homes Operating Partnership LP ("INVH LP"). THR Property Management L.P., a wholly owned subsidiary of INVH LP (the "Manager"), provides all management and other administrative services with respect to the properties we own. On November 16, 2017 (the "Merger Date"), INVH and certain of its affiliates entered into a series of transactions with Starwood Waypoint Homes ("SWH") and certain SWH affiliates which resulted in SWH and its operating partnership being merged into INVH and INVH LP, respectively, with INVH and INVH LP being the surviving entities (the "Mergers").
Unless the context suggests otherwise, references in this Quarterly Report on Form 10-Q to "Invitation Homes," the "Company," "we," "our," and "us" refer to INVH and its consolidated subsidiaries.
In this Quarterly Report on Form 10-Q:
•"average monthly rent" represents average monthly rental income per home for occupied properties in an identified population of homes over the measurement period and reflects the impact of non-service rent concessions and contractual rent increases amortized over the life of the related lease. We believe average monthly rent reflects pricing trends that significantly impact rental revenues over time, making average monthly rent useful to management and external stakeholders as a means of evaluating changes in rental revenues across periods;
•"average occupancy" for an identified population of homes represents (i) the total number of days that the homes in such population were occupied during the measurement period, divided by (ii) the total number of days that the homes in such population were owned during the measurement period. We believe average occupancy significantly impacts rental revenues in a given period, making comparisons of average occupancy across different periods helpful to management and external stakeholders in evaluating changes in rental revenues across periods;
•"Carolinas" includes Charlotte, NC, Greensboro, NC, Raleigh, NC, and Fort Mill, SC;
•"days to re-resident" for an individual home represents the number of days between (i) the date the prior resident moves out of a home, and (ii) the date the next resident is granted access to the same home, which is deemed to be the earlier of the next resident's contractual lease start date and the next resident's move-in date. Days to re-resident impacts our average occupancy and thus our rental revenues, making comparisons of days to re-resident helpful to management and external stakeholders in evaluating changes in rental revenues across periods;
•"in-fill" refers to markets, MSAs, submarkets, neighborhoods or other geographic areas that are typified by significant population densities and low availability of land suitable for development into competitive properties, resulting in limited opportunities for new construction;
•"historical average" is the simple average of each of the six months beginning October 2019 and to and including March 2020;
•"Metropolitan Statistical Area" or "MSA" is defined by the United States Office of Management and Budget as a region associated with at least one urbanized area that has a population of at least 50,000 and comprises the central county or counties containing the core, plus adjacent outlying counties having a high degree of social and economic integration with the central county or counties as measured through commuting;
•"net effective rental rate growth" for any home represents the percentage difference between the monthly rent from an expiring lease and the monthly rent from the next lease and, in each case, reflects the impact of non-service rent concessions and contractual rent increases amortized over the life of the related lease. Leases are either renewal leases, where our current resident chooses to stay for a subsequent lease term, or a new lease, where our previous resident moves out and a new resident signs a lease to occupy the same home. Net effective rental rate growth drives changes in our average monthly rent, making net effective rental rate growth useful to management and external stakeholders as a means of evaluating changes in rental revenues across periods;
•"Northern California" includes Sacramento-Arden-Arcade-Roseville, CA, San Francisco-Oakland-Hayward, CA, Stockton-Lodi, CA, Vallejo-Fairfield, CA, and Yuba City, CA;
4

•"PSF" means per square foot. When comparing homes or cohorts of homes, we believe PSF calculations help management and external stakeholders normalize metrics for differences in property size, enabling more meaningful comparisons based on characteristics other than property size;
•"revenue collections as a percentage of billings" represents the total cash received in a given period for rental revenues and other property income (including receipt of late payments that were billed in prior months) divided by the total amounts billed in that period. When a payment plan is in place with a resident, amounts are considered to be billed at the time they would have been billed based on the terms of the original lease, not the terms of the payment plan. We believe this provides management and external stakeholders with meaningful information about our success in collecting amounts due under our lease agreements;
•"Same Store" or "Same Store portfolio" includes, for a given reporting period, wholly owned homes that have been stabilized and seasoned, excluding homes that have been sold, homes that have been identified for sale to an owner occupant and have become vacant, homes that have been deemed inoperable or significantly impaired by casualty loss events or force majeure, homes acquired in portfolio transactions that are deemed not to have undergone renovations of sufficiently similar quality and characteristics as the existing Invitation Homes Same Store portfolio, and homes in markets that we have announced an intent to exit where we no longer operate a significant number of homes for the primary purpose of income generation. Homes are considered stabilized if they have (i) completed an initial renovation and (ii) entered into at least one post-initial renovation lease. An acquired portfolio that is both leased and deemed to be of sufficiently similar quality and characteristics as the existing Invitation Homes Same Store portfolio may be considered stabilized at the time of acquisition. Homes are considered to be seasoned once they have been stabilized for at least 15 months prior to January 1st of the year in which the Same Store portfolio was established. We believe information about the portion of our portfolio that has been fully operational for the entirety of a given reporting period and its prior year comparison period provides management and external stakeholders with meaningful information about the performance of our comparable homes across periods and about trends in our organic business;
•"Southeast United States" includes our Atlanta and Carolinas markets;
•"South Florida" includes Miami-Fort Lauderdale-West Palm Beach, FL, and Port St. Lucie, FL;
•"Southern California" includes Los Angeles-Long Beach-Anaheim, CA, Oxnard-Thousand Oaks-Ventura, CA, Riverside-San Bernardino-Ontario, CA, and San Diego-Carlsbad, CA;
•"total homes" or "total portfolio" refers to the total number of homes we own, whether or not stabilized, and excludes any properties previously acquired in purchases that have been subsequently rescinded or vacated. Unless otherwise indicated, total homes or total portfolio refers to the wholly owned homes and excludes homes owned in joint ventures. Additionally, unless the context otherwise requires, all measures in this Quarterly Report on Form 10-Q are presented on a total portfolio basis;
•"turnover rate" represents the number of instances that homes in an identified population become unoccupied in a given period, divided by the number of homes in such population. To the extent the measurement period shown is less than 12 months, the turnover rate may be reflected on an annualized basis. We believe turnover rate impacts average occupancy and thus our rental revenues, making comparisons of turnover rate helpful to management and external stakeholders in evaluating changes in rental revenues across periods. In addition, turnover can impact our cost to maintain homes, making changes in turnover rate useful to management and external stakeholders in evaluating changes in our property operating and maintenance expenses across periods; and
•"Western United States" includes our Southern California, Northern California, Seattle, Phoenix, Las Vegas, and Denver markets.
5
PART I
ITEM 1. FINANCIAL STATEMENTS
INVITATION HOMES INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except shares and per share data)

September 30,
2021 		December 31,
2020
(unaudited)
Assets:
Investments in single-family residential properties:
Land
$ 4,664,892 $ 4,539,796
Building and improvements
14,919,417 14,261,954
19,584,309 18,801,750
Less: accumulated depreciation
(2,930,862) (2,513,057)
Investments in single-family residential properties, net
16,653,447 16,288,693
Cash and cash equivalents
569,663 213,422
Restricted cash
251,487 198,346
Goodwill
258,207 258,207
Investments in unconsolidated joint ventures 93,096 69,267
Other assets, net
424,666 478,287
Total assets $ 18,250,566 $ 17,506,222
Liabilities:
Mortgage loans, net
$ 3,857,863 $ 4,820,098
Secured term loan, net
401,258 401,095
Unsecured notes, net 931,889 -
Term loan facility, net
2,476,309 2,470,907
Revolving facility
- -
Convertible senior notes, net
145,818 339,404
Accounts payable and accrued expenses
297,073 149,299
Resident security deposits
163,663 157,936
Other liabilities
453,448 611,410
Total liabilities 8,727,321 8,950,149
Commitments and contingencies (Note 14)
Equity:
Stockholders' equity
Preferred stock, $0.01 par value per share, 900,000,000 shares authorized, none outstanding as of September 30, 2021 and December 31, 2020
- -
Common stock, $0.01 par value per share, 9,000,000,000 shares authorized, 594,893,674 and 567,117,666 outstanding as of September 30, 2021 and December 31, 2020, respectively
5,949 5,671
Additional paid-in capital
10,622,691 9,707,258
Accumulated deficit
(767,232) (661,162)
Accumulated other comprehensive loss
(378,428) (546,942)
Total stockholders' equity
9,482,980 8,504,825
Non-controlling interests
40,265 51,248
Total equity 9,523,245 8,556,073
Total liabilities and equity $ 18,250,566 $ 17,506,222

The accompanying notes are an integral part of these condensed consolidated financial statements.
6

INVITATION HOMES INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except shares and per share data)
(unaudited)

For the Three Months
Ended September 30,
For the Nine Months
Ended September 30,
2021 2020 2021 2020
Revenues:
Rental revenues and other property income $ 508,178 $ 459,184 $ 1,473,250 $ 1,358,728
Joint venture management fees 1,354 - 3,140 -
Total revenues 509,532 459,184 1,476,390 1,358,728
Expenses:
Property operating and maintenance 184,484 177,997 528,279 511,915
Property management expense 17,886 14,824 51,424 43,725
General and administrative 19,369 17,972 56,147 46,626
Interest expense 79,370 87,713 243,540 258,541
Depreciation and amortization 150,694 138,147 440,475 410,440
Impairment and other 4,294 1,723 5,630 4,670
Total expenses 456,097 438,376 1,325,495 1,275,917
Gains (losses) on investments in equity securities, net 4,319 - (5,823) 34
Other, net (1,508) (3,049) (3,181) 2,001
Gain on sale of property, net of tax 13,047 15,106 45,450 41,473
Income from investments in unconsolidated joint ventures 202 - 564 -
Net income 69,495 32,865 187,905 126,319
Net income attributable to non-controlling interests (318) (211) (1,023) (806)
Net income attributable to common stockholders 69,177 32,654 186,882 125,513
Net income available to participating securities
(69) (114) (260) (335)
Net income available to common stockholders - basic and diluted (Note 12)
$ 69,108 $ 32,540 $ 186,622 $ 125,178
Weighted average common shares outstanding - basic
577,011,178 560,598,995 570,808,028 550,722,684
Weighted average common shares outstanding - diluted
578,571,392 561,871,373 572,262,198 551,947,278
Net income per common share - basic $ 0.12 $ 0.06 $ 0.33 $ 0.23
Net income per common share - diluted $ 0.12 $ 0.06 $ 0.33 $ 0.23

The accompanying notes are an integral part of these condensed consolidated financial statements.

7

INVITATION HOMES INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands)
(unaudited)

For the Three Months
Ended September 30, 		For the Nine Months
Ended September 30,
2021 2020 2021 2020
Net income $ 69,495 $ 32,865 $ 187,905 $ 126,319
Other comprehensive income (loss)
Unrealized gains (losses) on interest rate swaps (1,586) (4,171) 57,283 (398,426)
Losses from interest rate swaps reclassified into earnings from accumulated other comprehensive loss 37,074 37,557 112,973 74,166
Other comprehensive income (loss) 35,488 33,386 170,256 (324,260)
Comprehensive income (loss) 104,983 66,251 358,161 (197,941)
Comprehensive (income) loss attributable to non-controlling interests (550) (415) (2,216) 1,088
Comprehensive income (loss) attributable to common stockholders $ 104,433 $ 65,836 $ 355,945 $ (196,853)

The accompanying notes are an integral part of these condensed consolidated financial statements.

8

INVITATION HOMES INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
For the Three and Nine Months Ended September 30, 2021
(in thousands, except share and per share data)
(unaudited)

Common Stock
Number of Shares
Amount
Additional
Paid-in Capital
Accumulated Deficit
Accumulated Other Comprehensive Loss
Total Stockholders' Equity
Non-Controlling Interests
Total Equity
Balance as of June 30, 2021 568,718,544 $ 5,687 $ 9,725,480 $ (737,444) $ (413,684) $ 8,580,039 $ 39,637 $ 8,619,676
Capital distributions
- - - - - - (448) (448)
Net income
- - - 69,177 - 69,177 318 69,495
Dividends and dividend equivalents declared ($0.17 per share)
- - - (98,965) - (98,965) - (98,965)
Issuance of common stock - settlement of 2022 Convertible Notes
8,723,161 87 198,415 - - 198,502 - 198,502
Issuance of common stock, net
17,451,969 175 693,270 - - 693,445 - 693,445
Share-based compensation expense
- - 5,526 - - 5,526 526 6,052
Total other comprehensive income - - - - 35,256 35,256 232 35,488
Balance as of September 30, 2021
594,893,674 $ 5,949 $ 10,622,691 $ (767,232) $ (378,428) $ 9,482,980 $ 40,265 $ 9,523,245
Common Stock
Number of Shares
Amount
Additional
Paid-in Capital
Accumulated Deficit
Accumulated Other Comprehensive Loss
Total Stockholders' Equity
Non-Controlling Interests
Total Equity
Balance as of December 31, 2020 567,117,666 $ 5,671 $ 9,707,258 $ (661,162) $ (546,942) $ 8,504,825 $ 51,248 $ 8,556,073
Capital distributions
- - - - - - (1,659) (1,659)
Net income
- - - 186,882 - 186,882 1,023 187,905
Dividends and dividend equivalents declared ($0.51 per share)
- - - (292,952) - (292,952) - (292,952)
Issuance of common stock - settlement of RSUs, net of tax
675,618 7 (9,410) - - (9,403) - (9,403)
Issuance of common stock - settlement of 2022 Convertible Notes
8,723,421 87 198,421 - - 198,508 - 198,508
Issuance of common stock, net
17,451,969 175 693,270 - - 693,445 - 693,445
Share-based compensation expense
- - 19,495 - - 19,495 1,577 21,072
Total other comprehensive income - - - - 169,063 169,063 1,193 170,256
Redemption of OP Units for common stock
925,000 9 13,657 - (549) 13,117 (13,117) -
Balance as of September 30, 2021
594,893,674 $ 5,949 $ 10,622,691 $ (767,232) $ (378,428) $ 9,482,980 $ 40,265 $ 9,523,245



9

INVITATION HOMES INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (continued)
For the Three and Nine Months Ended September 30, 2020
(in thousands, except share and per share data)
(unaudited)

Common Stock
Number of Shares
Amount
Additional
Paid-in Capital
Accumulated Deficit
Accumulated Other Comprehensive Loss
Total Stockholders' Equity
Non-Controlling Interests
Total Equity
Balance as of June 30, 2020 560,532,679 $ 5,605 $ 9,515,625 $ (595,318) $ (632,148) $ 8,293,764 $ 50,109 $ 8,343,873
Capital distributions
- - - - - - (535) (535)
Net income
- - - 32,654 - 32,654 211 32,865
Dividends and dividend equivalents declared ($0.15 per share)
- - - (84,286) - (84,286) - (84,286)
Issuance of common stock - settlement of RSUs, net of tax
1,353 - (12) - - (12) - (12)
Share-based compensation expense
- - 5,566 - - 5,566 520 6,086
Total other comprehensive income - - - - 33,182 33,182 204 33,386
Balance as of September 30, 2020 560,534,032 $ 5,605 $ 9,521,179 $ (646,950) $ (598,966) $ 8,280,868 $ 50,509 $ 8,331,377
Common Stock
Number of Shares
Amount
Additional
Paid-in Capital
Accumulated Deficit
Accumulated Other Comprehensive Loss
Total Stockholders' Equity
Non-Controlling Interests
Total Equity
Balance as of December 31, 2019 541,642,725 $ 5,416 $ 9,010,194 $ (524,588) $ (276,600) $ 8,214,422 $ 51,656 $ 8,266,078
Capital distributions
- - - - - - (1,603) (1,603)
Net income
- - - 125,513 - 125,513 806 126,319
Dividends and dividend equivalents declared ($0.45 per share)
- - - (247,875) - (247,875) - (247,875)
Issuance of common stock - settlement of RSUs, net of tax
328,841 3 (3,376) - - (3,373) - (3,373)
Issuance of common stock, net
18,562,466 186 503,612 - - 503,798 - 503,798
Share-based compensation expense
- - 10,749 - - 10,749 1,544 12,293
Total other comprehensive loss - - - - (322,366) (322,366) (1,894) (324,260)
Balance as of September 30, 2020 560,534,032 $ 5,605 $ 9,521,179 $ (646,950) $ (598,966) $ 8,280,868 $ 50,509 $ 8,331,377

The accompanying notes are an integral part of these condensed consolidated financial statements.
10

INVITATION HOMES INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

For the Nine Months
Ended September 30,
2021 2020
Operating Activities:
Net income $ 187,905 $ 126,319
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 440,475 410,440
Share-based compensation expense 21,072 12,293
Amortization of deferred leasing costs 8,227 8,830
Amortization of deferred financing costs 9,739 18,153
Amortization of debt discounts 5,309 4,077
Provisions for impairment 650 4,202
(Gains) losses on investments in equity securities, net 5,823 (34)
Gain on sale of property, net of tax (45,450) (41,473)
Change in fair value of derivative instruments 10,391 4,410
Income from investments in unconsolidated joint ventures, net of operating distributions (214) -
Other non-cash amounts included in net income 3,136 1,848
Changes in operating assets and liabilities:
Other assets, net (9,950) (22,300)
Accounts payable and accrued expenses 136,989 82,971
Resident security deposits 5,727 8,084
Other liabilities 2,485 7,852
Net cash provided by operating activities 782,314 625,672
Investing Activities:
Deposits for acquisition of single-family residential properties (33,658) (4,046)
Acquisition of single-family residential properties (743,797) (337,415)
Initial renovations to single-family residential properties (52,576) (71,666)
Other capital expenditures for single-family residential properties (117,324) (127,702)
Proceeds from sale of single-family residential properties 187,230 338,486
Repayment proceeds from retained debt securities 48,246 8,133
Proceeds from sale of investments in equity securities 22,267 -
Investments in unconsolidated joint ventures (25,000) -
Non-operating distributions from unconsolidated joint ventures 1,385 -
Other investing activities (15,083) (165)
Net cash used in investing activities (728,310) (194,375)
Financing Activities:
Payment of dividends and dividend equivalents (292,110) (247,651)
Distributions to non-controlling interests (1,659) (1,603)
Payment of taxes related to net share settlement of RSUs (9,403) (3,373)
Payments on mortgage loans (964,318) (157,791)
Payments on secured term loan - (101)
Proceeds from unsecured notes 939,574 -
Proceeds from revolving facility 400,000 320,000
11

INVITATION HOMES INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(in thousands)
(unaudited)
For the Nine Months
Ended September 30,
2021 2020
Payments on revolving facility (400,000) (320,000)
Proceeds from issuance of common stock, net 693,445 503,798
Deferred financing costs paid (8,002) -
Other financing activities (2,149) (1,913)
Net cash provided by financing activities 355,378 91,366

Change in cash, cash equivalents, and restricted cash 409,382 522,663
Cash, cash equivalents, and restricted cash, beginning of period (Note 4)
411,768 286,245
Cash, cash equivalents, and restricted cash, end of period (Note 4)
$ 821,150 $ 808,908
Supplemental cash flow disclosures:
Interest paid, net of amounts capitalized $ 221,284 $ 236,714
Cash paid for income taxes 607 1,284
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases 4,524 4,117
Financing cash flows from finance leases 2,043 1,714
Non-cash investing and financing activities:
Accrued renovation improvements at period end $ 11,342 $ 6,273
Accrued residential property capital improvements at period end 13,096 10,677
Transfer of residential property, net to other assets, net for held for sale assets 67,337 134,361
Change in other comprehensive gain (loss) from cash flow hedges 159,971 (328,472)
ROU assets obtained in exchange for operating lease liabilities 1,452 4,617
ROU assets obtained in exchange for finance lease liabilities 115 9,484
Net settlement of 2022 Convertible Notes in shares of common stock 198,508 -

The accompanying notes are an integral part of these condensed consolidated financial statements.

12

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
Note 1-Organization and Formation
Invitation Homes Inc. ("INVH") is a real estate investment trust ("REIT") that conducts its operations through Invitation Homes Operating Partnership LP ("INVH LP"). INVH LP was formed for the purpose of owning, renovating, leasing, and operating single-family residential properties. Through THR Property Management L.P., a wholly owned subsidiary of INVH LP (the "Manager"), we provide all management and other administrative services with respect to the properties we own.
On February 6, 2017, INVH completed an initial public offering ("IPO"), changed its jurisdiction of incorporation to Maryland, and amended its charter to provide for the issuance of up to 9,000,000,000 shares of common stock and 900,000,000 shares of preferred stock, in each case $0.01 par value per share. In connection with certain pre-IPO reorganization transactions, INVH LP became (1) owned by INVH directly and through Invitation Homes OP LLC, a wholly owned subsidiary of INVH, and (2) the owner of all of the assets, liabilities, and operations of certain pre-IPO ownership entities. These transactions were accounted for as a reorganization of entities under common control utilizing historical cost basis.
On November 16, 2017 (the "Merger Date"), INVH and certain of its affiliates entered into a series of transactions with Starwood Waypoint Homes ("SWH") and certain SWH affiliates which resulted in SWH and its operating partnership being merged into INVH and INVH LP, respectively, with INVH and INVH LP being the surviving entities (the "Mergers"). The Mergers were accounted for as a business combination in accordance with ASC 805,Business Combinations, and INVH was designated as the accounting acquirer.
The limited partnership interests of INVH LP consist of common units and other classes of limited partnership interests that may be issued (the "OP Units"). As of September 30, 2021, INVH owns 99.6% of the common OP Units and has the full, exclusive, and complete responsibility for and discretion over the day to day management and control of INVH LP.
Our organizational structure includes several wholly owned subsidiaries of INVH LP that were formed to facilitate certain of our financing arrangements (the "Borrower Entities"). These Borrower Entities are used to align the ownership of our single-family residential properties with certain of our debt instruments. Collateral for certain of our individual debt instruments may be in the form of equity interests in the Borrower Entities or in pools of single-family residential properties owned either directly by the Borrower Entities or indirectly by their wholly owned subsidiaries (see Note 7).
References to "Invitation Homes," the "Company," "we," "our," and "us" refer, collectively, to INVH, INVH LP, and the consolidated subsidiaries of INVH LP.
Note 2-Significant Accounting Policies
Basis of Presentation
The accompanying interim condensed consolidated financial statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") and with the rules and regulations of the Securities and Exchange Commission (the "SEC") for interim financial information and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with our audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2020.
These condensed consolidated financial statements include the accounts of INVH and its consolidated subsidiaries. All intercompany accounts and transactions have been eliminated in the condensed consolidated financial statements. In the opinion of management, all adjustments that are of a normal recurring nature considered necessary for a fair presentation of our interim financial statements have been included in these condensed consolidated financial statements. Operating results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2021.
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INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
We consolidate entities when we own, directly or indirectly, a majority interest in the entity or are otherwise able to control the entity. We consolidate variable interest entities ("VIEs") in accordance with ASC 810, Consolidation, if we are the primary beneficiary of the VIE as determined by our power to direct the VIE's activities and the obligation to absorb its losses or the right to receive its benefits, which are potentially significant to the VIE. A VIE is broadly defined as an entity with one or more of the following characteristics: (a) the total equity investment at risk is insufficient to finance the entity's activities without additional subordinated financial support; (b) as a group, the holders of the equity investment at risk lack (i) the ability to make decisions about the entity's activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; or (c) the equity investors have voting rights that are not proportional to their economic interests, and substantially all of the entity's activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights.
As described in Note 5, we invested in joint ventures with Rockpoint Group, L.L.C. ("Rockpoint") and the Federal National Mortgage Association ("FNMA"), both of which are voting interest entities. We do not hold a controlling financial interest in either joint venture but have significant influence over the operating and financial policies of each joint venture. Additionally, both Rockpoint and FNMA hold certain substantive participating rights that preclude the presumption of control by us of either joint venture; as such, we account for each investment using the equity method. Our investment in the Rockpoint joint venture is recorded at cost, and our investment in the FNMA joint venture was initially recorded at fair value in connection with purchase accounting for the Mergers. The investments in these joint ventures are subsequently adjusted for our proportionate share of net earnings or losses and other comprehensive income or loss, cash contributions made and distributions received, and other adjustments, as appropriate. Distributions of operating profit from the joint ventures are reported as part of operating cash flows while distributions related to a capital transaction, such as a refinancing transaction or sale, are reported as investing activities.
Non-controlling interests represent the OP Units not owned by INVH, including any vested OP Units granted in connection with certain share-based compensation awards. Non-controlling interests are presented as a separate component of equity on the condensed consolidated balance sheets as of September 30, 2021 and December 31, 2020, and the condensed consolidated statements of operations for the three and nine months ended September 30, 2021 and 2020 include an allocation of the net income attributable to the non-controlling interest holders. Vested OP Units are redeemable for shares of our common stock on a one-for-one basis or, in our sole discretion, cash, and redemptions of OP Units are accounted for as a reduction in non-controlling interests with an offset to stockholders' equity based on the pro rata number of OP Units redeemed.
Significant Risks and Uncertainties
One of the most significant risks and uncertainties to our financial condition and results of operations continues to be the adverse effect of the ongoing pandemic resulting from the coronavirus, or COVID-19, and its variants. We are closely monitoring the impact of the pandemic on all aspects of our business.
Since the outbreak, a number of our residents have requested rent deferral and/or late fee relief, and components of our rental revenues and other property income have been impacted by the pandemic. We continue to offer flexible solutions for residents experiencing financial hardship when requested, including payment plans and late fee abatements. In addition, entities directed by, or notionally affiliated with, the Federal government as well as some state and local jurisdictions across the United States have imposed temporary eviction moratoriums if certain criteria are met by residents, have permitted residents to defer missed rent payments without incurring late fees, and have prohibited rent increases. We comply with all applicable Federal, state, and local laws, regulations, and ordinances, and we adhere to restrictions on evictions, collections, rent increases, and late fees as appropriate. We also work with our residents experiencing financial hardship to try to find solutions that keep them in their homes. This includes providing residents with information about rental assistance programs for which they may be eligible, application instructions, necessary documentation, and owner requirements. We cannot predict if states, municipalities, local, and/or national authorities will modify existing restrictions, if additional states or municipalities will implement similar restrictions, or when restrictions currently in place will expire. While none of the current and previous restrictions have materially impacted our ability to provide services to our residents or homes, additional or modified measures may negatively impact our ability to access our homes, complete service requests, or make our homes ready for new residents.
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INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
The COVID-19 pandemic could have material and adverse effects on our financial condition, results of operations, and cash flows in the near term due to, but not limited to, the following: (1) reduced economic activity that impacts the earnings or health of our residents, thereby causing them to be unable to fully meet their obligations to us and resulting in increases in uncollectible revenues and thus reductions in rental revenues and other property income; (2) governmental regulations, restrictions, and moratoriums that negatively impact our ability to charge and collect rental revenues and other property income or impose restrictions on our ability to provide services to our residents and homes; (3) negative financial impact of the pandemic that could impact our ability to access funds available under our Revolving Facility (as defined in Note 7) or affect future compliance with financial covenants of our Credit Facility (as defined in Note 7) and other debt agreements; and (4) weaker economic conditions that could cause us to recognize impairments in value of our tangible assets or goodwill.
On March 11, 2021, the American Rescue Plan Act (the "ARPA"), a $1.9 trillion COVID-19 relief package authorizing additional federal spending and an increase in anti-poverty programs to help millions of families still struggling amid the pandemic, was signed into law. The ARPA includes nearly $50 billion in housing and homelessness resources and provides over $27 billion for rental assistance. We continue to examine the impacts that the ARPA, as well as any future economic relief legislation, may have on our business. It is uncertain if the ARPA's housing and rental assistance resources will enable longer term housing stability for some of our residents and/or reduce rent receivable balances accrued during the pandemic.
The extent to which the ongoing COVID-19 pandemic ultimately impacts our operations depends on ongoing developments, which remain highly uncertain and cannot be predicted with confidence, including the scope, severity, and duration of the pandemic, the extent and duration of actions taken to contain the pandemic or mitigate its impact, the availability, distribution, acceptance, and efficacy of vaccines, the proliferation of variants, development and availability of effective therapeutic drugs, and the direct and indirect economic effects of the pandemic, containment measures, monetary and/or fiscal policies implemented to provide support or relief to businesses and/or residents, and other government, regulatory, and/or legislative changes precipitated by the ongoing COVID-19 pandemic, among others. While we have taken steps to mitigate the impact of the pandemic on our results of operations, there can be no assurance that these efforts will be successful.
Reclassifications
We reclassified $34 of unrealized gains on investments in equity securities from other, net into gains (losses) on investments in equity securities, net on our condensed consolidated statement of operations for the nine months ended September 30, 2020 to conform to our current presentation. There were no reclassifications for the three months ended September 30, 2020. We also reclassified $34 of unrealized gains on investments in equity securities from other non-cash amounts included in net income into (gains) losses on investments in equity securities, net on our condensed consolidated statement of cash flows for the nine months ended September 30, 2020 to conform to our current presentation. These reclassifications had no effect on the total reported net income on the condensed consolidated statement of operations for the three and nine months ended September 30, 2020, or on the total net cash provided by operating activities on the condensed consolidated statement of cash flows for the nine months ended September 30, 2020.
Use of Estimates
The preparation of the condensed consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. These estimates are inherently subjective in nature and actual results could differ from those estimates.
Accounting Policies
There have been no changes to our significant accounting policies that have had a material impact on our condensed consolidated financial statements and related notes, compared to those policies disclosed in our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020.
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INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
Recent Accounting Pronouncements
In August 2020, the Financial Accounting Standards Board issued Accounting Standards Update ("ASU") 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40) ("ASU 2020-06"), which simplifies an issuer's accounting for convertible instruments and contracts in its own equity. The guidance reduces the number of accounting models for convertible instruments, requires entities to use the "if-converted" method in diluted earnings (loss) per share ("EPS"), and requires that the effect of potential share settlement be included in the diluted EPS calculation when an instrument may be settled in cash or shares. The new standard will be effective for annual reporting periods beginning after December 15, 2021, and interim periods within that reporting period, with early adoption permitted beginning after December 15, 2020 and interim periods within that reporting period. The only new application of ASU 2020-06 relates to our 2022 Convertible Notes (as defined in Note 7), and these notes mature on January 15, 2022. As such, ASU 2020-06 will not materially affect our condensed consolidated financial statements.
Note 3-Investments in Single-Family Residential Properties
The following table sets forth the net carrying amount associated with our properties by component:
September 30,
2021 		December 31,
2020
Land $ 4,664,892 $ 4,539,796
Single-family residential property 14,275,196 13,631,859
Capital improvements 526,784 515,479
Equipment 117,437 114,616
Total gross investments in the properties 19,584,309 18,801,750
Less: accumulated depreciation (2,930,862) (2,513,057)
Investments in single-family residential properties, net $ 16,653,447 $ 16,288,693
As of September 30, 2021 and December 31, 2020, the carrying amount of the residential properties above includes $123,187 and $119,929, respectively, of capitalized acquisition costs (excluding purchase price), along with $69,315 and $68,197, respectively, of capitalized interest, $27,683 and $26,899, respectively, of capitalized property taxes, $4,698 and $4,654, respectively, of capitalized insurance, and $3,209 and $3,090, respectively, of capitalized homeowners' association ("HOA") fees.
During the three months ended September 30, 2021 and 2020, we recognized $148,957 and $136,517, respectively, of depreciation expense related to the components of the properties, and $1,737 and $1,630, respectively, of depreciation and amortization related to corporate furniture and equipment. These amounts are included in depreciation and amortization in the condensed consolidated statements of operations. Further, during the three months ended September 30, 2021 and 2020, impairments totaling $126 and $289, respectively, have been recognized and are included in impairment and other in the condensed consolidated statements of operations. See Note 11 for additional information regarding these impairments.
During the nine months ended September 30, 2021 and 2020, we recognized $435,348 and $406,078, respectively, of depreciation expense related to the components of the properties, and $5,127 and $4,362, respectively, of depreciation and amortization related to corporate furniture and equipment. These amounts are included in depreciation and amortization in the condensed consolidated statements of operations. Further, during the nine months ended September 30, 2021 and 2020, impairments totaling $650 and $4,202, respectively, have been recognized and are included in impairment and other in the condensed consolidated statements of operations. See Note 11 for additional information regarding these impairments.
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INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
Note 4-Cash, Cash Equivalents, and Restricted Cash
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported on the condensed consolidated balance sheets that sum to the total of such amounts shown in the condensed consolidated statements of cash flows:
September 30,
2021 		December 31,
2020
Cash and cash equivalents
$ 569,663 $ 213,422
Restricted cash
251,487 198,346
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows
$ 821,150 $ 411,768
Pursuant to the terms of the mortgage loans and Secured Term Loan (as defined in Note 7), we are required to establish, maintain, and fund from time to time (generally, either monthly or at the time borrowings are funded) certain specified reserve accounts. These reserve accounts include, but are not limited to, the following types of accounts: (i) property tax reserves; (ii) insurance reserves; (iii) capital expenditure reserves; and (iv) HOA reserves. The reserve accounts associated with our mortgage loans and Secured Term Loan are under the sole control of the loan servicer. Additionally, we hold security deposits pursuant to resident lease agreements that we are required to segregate. We are also required to hold letters of credit by certain of our insurance policies. Accordingly, amounts funded to these reserve accounts, security deposit accounts, and other restricted accounts have been classified on our condensed consolidated balance sheets as restricted cash.
The amounts funded, and to be funded, to the reserve accounts are subject to formulae included in the mortgage loan and Secured Term Loan agreements and are to be released to us subject to certain conditions specified in the loan agreements being met. To the extent that an event of default were to occur, the loan servicer has discretion to use such funds to either settle the applicable operating expenses to which such reserves relate or reduce the allocated loan amount associated with a residential property of ours.
The balances of our restricted cash accounts, as of September 30, 2021 and December 31, 2020, are set forth in the table below. As of September 30, 2021 and December 31, 2020, no amounts were funded to the insurance accounts as the conditions specified in the mortgage loan and Secured Term Loan agreements that require such funding did not exist.
September 30,
2021 		December 31,
2020
Resident security deposits $ 163,888 $ 158,244
Property taxes 53,548 7,511
Collections 23,969 22,978
Capital expenditures 4,921 4,919
Letters of credit 3,787 3,320
Special and other reserves 1,374 1,374
Total $ 251,487 $ 198,346
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INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
Note 5-Investments In Unconsolidated Joint Ventures
We have invested in two joint ventures which are accounted for using the equity method model of accounting. The following table summarizes our investments in unconsolidated joint ventures as of September 30, 2021 and December 31, 2020:
Number of Properties Carrying Value
Ownership Percentage September 30,
2021 		December 31, 2020 September 30,
2021 		December 31,
2020
FNMA(1)
10 % 532 571 $ 53,009 $ 53,678
Rockpoint(2)
20 % 1,422 140 40,087 15,589
Total $ 93,096 $ 69,267
(1)Contains homes primarily located in Arizona, California, and Nevada.
(2)Contains homes in markets within the Western United States, Southeast United States, Florida, and Texas.

In October 2020, we entered into an agreement with Rockpoint to form a joint venture that will acquire homes in markets where we already own homes. As of February 2021, the joint venture is funded with a combination of debt and equity, and we have guaranteed the funding of certain tax, insurance, and non-conforming property reserves related to the joint venture's financing. As of September 30, 2021, our remaining equity commitment to the joint venture is $34,400.
For the three and nine months ended September 30, 2021, we recorded $202 and $564, respectively, of income from investments in unconsolidated joint ventures which is included in income from investments in unconsolidated joint ventures in the condensed consolidated statements of operations. For the three and nine months ended September 30, 2020, we recorded $390 and $1,112, respectively, of income from investments in unconsolidated joint ventures which is included in other, net in the condensed consolidated statements of operations.
The administrative member of Rockpoint and the managing member of FNMA are wholly owned subsidiaries of INVH LP and are responsible for the operations and management of the properties, subject to Rockpoint and FNMA's respective approval of major decisions. The subsidiaries earn asset and property management fees from our joint ventures, which are considered to be related parties. For the three and nine months ended September 30, 2021, we earned $1,354 and $3,140, respectively, of management fees which are included in joint venture management fees in the condensed consolidated statements of operations. For the three and nine months ended September 30, 2020, we earned $636 and $1,945, respectively, of management fees which are included in other, net in the condensed consolidated statements of operations.
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INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
Note 6-Other Assets
As of September 30, 2021 and December 31, 2020, the balances in other assets, net are as follows:
September 30,
2021 		December 31,
2020
Investments in debt securities, net $ 197,255 $ 245,237
Prepaid expenses 37,880 41,347
Rent and other receivables, net 37,118 35,256
Amounts deposited and held by others 35,918 2,852
Investments in equity securities 28,072 47,189
Held for sale assets(1)
27,298 44,163
ROU lease assets - operating and finance, net 18,312 21,705
Corporate fixed assets, net 13,137 9,995
Deferred financing costs, net 9,477 11,637
Deferred leasing costs, net 6,773 7,631
Derivative instruments (Note 8) - 1
Other 13,426 11,274
Total $ 424,666 $ 478,287
(1)As of September 30, 2021 and December 31, 2020, 107 and 179 properties, respectively, are classified as held for sale.
Investments in Debt Securities, net
In connection with certain of our Securitizations (as defined in Note 7), we have retained and purchased certificates totaling $197,255, net of unamortized discounts of $2,025, as of September 30, 2021. These investments in debt securities are classified as held to maturity investments. As of September 30, 2021, we have not recognized any credit losses with respect to these investments in debt securities, and our retained certificates are scheduled to mature over the next three months to six years.
Amounts Deposited and Held by Others
Amounts deposited and held by others consists of earnest money deposits for the acquisition of single-family residential properties, including deposits made to homebuilders, and amounts owed to us for sold homes.
Investments in Equity Securities
We hold investments in equity securities both with and without a readily determinable fair value. Investments with a readily determinable fair value are measured at fair value, and those without a readily determinable fair value are measured at cost, less any impairment, plus or minus changes resulting from observable price changes for identical or similar investments in the same issuer. As of September 30, 2021 and December 31, 2020, the values of our investments in equity securities are as follows:
September 30,
2021 		December 31,
2020
Investments with a readily determinable fair value $ 23,332 $ 46,339
Investments without a readily determinable fair value 4,740 850
Total $ 28,072 $ 47,189


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INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
The components of gains (losses) on investments in equity securities, net for the three and nine months ended September 30, 2021 and 2020 are as follows:
For the Three Months
Ended September 30, 		For the Nine Months
Ended September 30,
2021 2020 2021 2020
Realized gains on investments with a readily determinable fair value $ 14,173 $ - $ 16,061 $ -
Unrealized losses on investments with a readily determinable fair value (9,854) - (21,884) -
Unrealized gains on investments without a readily determinable fair value - - - 34
Total $ 4,319 $ - $ (5,823) $ 34
Rent and Other Receivables
We lease our properties to residents pursuant to leases that generally have an initial contractual term of at least 12 months, provide for monthly payments, and are cancelable by the resident and us under certain conditions specified in the related lease agreements. Rental revenues and other property income and the corresponding rent and other receivables are recorded net of any concessions and bad debt (including actual write-offs, credit reserves, and uncollectible amounts) for all periods presented.
Variable lease payments consist of resident reimbursements for utilities, and various other fees, including late fees and lease termination fees, among others. Variable lease payments are charged based on the terms and conditions included in the residentleases. For the three months ended September 30, 2021 and 2020, rental revenues and other property income includes $30,243and $23,762 of variable lease payments, respectively. For the nine months ended September 30, 2021 and 2020, rental revenues and other property income includes $82,890 and $68,422 of variable lease payments, respectively.
Future minimum rental revenues and other property income under leases existing on our single-family residential properties as of September 30, 2021 are as follows:
Year Lease Payments to be Received
Remainder of 2021 $ 436,559
2022 783,358
2023 89,981
2024 -
2025 -
Thereafter -
Total $ 1,309,898

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INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
Right-of-Use ("ROU")Lease Assets - Operating and Finance, net
The following table presents supplemental information related to leases into which we have entered as a lessee as of September 30, 2021 and December 31, 2020:
September 30, 2021 December 31, 2020
Operating
Leases
Finance
Leases
Operating
Leases
Finance
Leases
Other assets $ 11,593 $ 6,719 $ 12,942 $ 8,763
Other liabilities (Note 14) 14,262 6,461 15,988 8,389
Weighted average remaining lease term 3.8 years 2.4 years 4.0 years 3.1 years
Weighted average discount rate 3.3 % 4.0 % 3.5 % 4.0 %
Deferred Financing Costs, net
In connection with the amended and restated Revolving Facility (see Note 7), we incurred $11,846 of financing costs, which have been deferred as other assets, net on our condensed consolidated balance sheets. We amortize deferred financing costs as interest expense on a straight-line basis over the term of the Revolving Facility and accelerate amortization if debt is retired before the maturity date. As of September 30, 2021 and December 31, 2020, the unamortized balances of these deferred financing costs are $9,477 and $11,637, respectively.
Note 7-Debt
Mortgage Loans
Our securitization transactions (the "Securitizations" or the "mortgage loans") are collateralized by certain homes owned by the respective Borrower Entities. We utilize the proceeds from our securitizations to fund: (i) repayments of then-outstanding indebtedness; (ii) initial deposits into Securitization reserve accounts; (iii) closing costs in connection with the mortgage loans; and (iv) general costs associated with our operations.
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INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
The following table sets forth a summary of our mortgage loan indebtedness as of September 30, 2021 and December 31, 2020:
Outstanding Principal
Balance(5)
Origination
Date
Maturity
Date(1)
Maturity Date
if Fully Extended(2)
Interest
Rate(3)
Range of Spreads(4)
September 30,
2021 		December 31,
2020
IH 2017-1(6)
April 28,
2017 		June 9,
2027 		June 9,
2027 		4.23% N/A $ 993,723 $ 994,787
IH 2017-2(7)(8)
November 9,
2017 		December 9,
2021 		December 9,
2024 		1.15% 91-151 bps 184,400 612,506
IH 2018-1(7)
February 8,
2018 		March 9,
2022 		March 9,
2025 		0.96% 76-131 bps 570,134 646,021
IH 2018-2(7)
May 8,
2018 		June 9,
2022 		June 9,
2025 		1.13% 95-133 bps 629,863 693,988
IH 2018-3(7)
June 28,
2018 		July 9,
2022 		July 9,
2025 		1.20% 105-135 bps 819,039 1,036,561
IH 2018-4(7)(9)
November 7,
2018 		January 9,
2022 		January 9,
2026 		1.30% 115-145 bps 670,920 848,270
Total Securitizations 3,868,079 4,832,133
Less: deferred financing costs, net
(10,216) (12,035)
Total $ 3,857,863 $ 4,820,098
(1)The maturity dates above reflect all extension options that have been exercised.
(2)Represents the maturity date if we exercise each of the remaining one year extension options available, which are subject to certain conditions being met.
(3)Except for IH 2017-1, interest rates are based on a weighted average spread over the London Interbank Offer Rate ("LIBOR") (or a comparable or successor rate as provided for in our loan agreements), plus applicable servicing fees; as of September 30, 2021, LIBOR was 0.08%. Our IH 2017-1 mortgage loan 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)Range of spreads is based on outstanding principal balances as of September 30, 2021.
(5)Outstanding principal balance is net of discounts and does not include deferred financing costs, net.
(6)Net of unamortized discount of $2,025 and $2,289 as of September 30, 2021 and December 31, 2020, respectively.
(7)The initial maturity term of each of these mortgage loans is two years, individually subject to three to five, one year extension options at the Borrower Entity's discretion (provided that there is no continuing event of default under the mortgage loan agreement and the Borrower Entity obtains and delivers to the lender a replacement interest rate cap agreement from an approved counterparty within the required timeframe). Our IH 2018-4 mortgage loan has exercised the first extension option, and our IH 2017-2, IH 2018-1, IH 2018-2, and IH 2018-3 mortgage loans have exercised the second extension option. The maturity dates above reflect all extensions that have been exercised.
(8)On September 13, 2021, we submitted a notification to exercise an extension of the maturity date of the IH 2017-2 mortgage loan from December 9, 2021 to December 9, 2022.
(9)On October 12, 2021, we submitted a notification to exercise an extension of the maturity date of the IH 2018-4 mortgage loan from January 9, 2022 to January 9, 2023 (see Note 15).
Securitization Transactions
For each Securitization transaction, the Borrower Entity executed a loan agreement with a third party lender. Except for IH 2017-1, each outstanding mortgage loan originally consisted of six floating rate components. The two year initial terms are individually subject to three to five, one year extension options at the Borrower Entity's discretion. Such extensions are available provided there is no continuing event of default under the respective mortgage loan agreement and the Borrower Entity obtains and delivers a replacement interest rate cap agreement from an approved counterparty within the required timeframe to the lender. IH 2017-1 is a 10 year, fixed rate mortgage loan comprised of two components. Certificates issued
22

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
by the trust in connection with Component A of IH 2017-1 benefit from FNMA's guaranty of timely payment of principal and interest.
Each mortgage loan is secured by a pledge of the equity in the assets of the respective Borrower Entities, as well as first-priority mortgages on the underlying properties and a grant of security interests in all of the related personal property. As of September 30, 2021 and December 31, 2020, a total of 31,160 and 31,316 homes, respectively, with a gross book value of $6,901,695 and $6,888,308, respectively, and a net book value of $5,621,481 and $5,761,551, respectively, are pledged pursuant to the mortgage loans. Each Borrower Entity has the right, subject to certain requirements and limitations outlined in the respective loan agreements, to substitute properties. We are obligated to make monthly payments of interest for each mortgage loan.
Transactions with Trusts
Concurrent with the execution of each mortgage loan agreement, the respective third party lender sold each loan it originated to individual depositor entities (the "Depositor Entities") who subsequently transferred each loan to Securitization-specific trust entities (the "Trusts"). The Depositor Entities for our currently outstanding Securitizations are wholly owned subsidiaries. We accounted for the transfers of the individual Securitizations from the wholly owned Depositor Entities to the respective Trusts as sales under ASC 860, Transfers and Servicing, with no resulting gain or loss as the Securitizations were both originated by the lender and immediately transferred at the same fair market value.
As consideration for the transfer of each loan to the Trusts, the Trusts issued classes of certificates which mirror the components of the individual loans (collectively, the "Certificates") to the Depositor Entities, except that Class R certificates do not have related loan components as they represent residual interests in the Trusts. The Certificates represent the entire beneficial interest in the Trusts. Following receipt of the Certificates, the Depositor Entities sold the Certificates to investors and used the proceeds as consideration for the loans sold to the Depositor Entities by the lenders. These transactions had no effect on our condensed consolidated financial statements other than with respect to Certificates we retained in connection with Securitizations or purchased at a later date.
The Trusts are structured as pass-through entities that receive interest payments from the Securitizations and distribute those payments to the holders of the Certificates. The assets held by the Trusts are restricted and can only be used to fulfill the obligations of those entities. The obligations of the Trusts do not have any recourse to the general credit of any entities in these condensed consolidated financial statements. We have evaluated our interests in certain certificates of the Trusts held by us (discussed below) and determined that they do not create a more than insignificant variable interest in the Trusts. Additionally, the retained certificates do not provide us with any ability to direct activities that could impact the Trusts' economic performance. Therefore, we do not consolidate the Trusts.
Retained Certificates
As the Trusts made Certificates available for sale to both domestic and foreign investors, sponsors of the mortgage loans are required to retain a portion of the risk that represents a material net economic interest in each loan pursuant to Regulation RR (the "Risk Retention Rules") under the Securities Exchange Act of 1934, as amended. As such, loan sponsors are required to retain a portion of the credit risk that represents not less than 5% of the aggregate fair value of the loan as of the closing date.
IH 2017-1 issued Class B certificates, which are restricted certificates that were made available exclusively to INVH LP in order to comply with the Risk Retention Rules. The Class B certificates bear a stated annual interest rate of 4.23%, including applicable servicing fees.
For IH 2017-2, IH 2018-1, IH 2018-2, IH 2018-3, and IH 2018-4, we retain 5% of each class of certificates to meet the Risk Retention Rules. These retained certificates accrue interest at a floating rate of LIBOR plus a spread ranging from 0.76% to 1.51%.
The retained certificates total $197,255 and $245,237 as of September 30, 2021 and December 31, 2020, respectively, and are classified as held to maturity investments and recorded in other assets, net on the condensed consolidated balance sheets (see Note 6).
23

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
Loan Covenants
The general terms that apply to all of the mortgage loans require each Borrower Entity to maintain compliance with certain affirmative and negative covenants. Affirmative covenants include each Borrower Entity's, and certain of their respective affiliates', compliance with (i) licensing, permitting and legal requirements specified in the mortgage loan agreements, (ii) organizational requirements of the jurisdictions in which they are organized, (iii) federal and state tax laws, and (iv) books and records requirements specified in the respective mortgage loan agreements. Negative covenants include each Borrower Entity's, and certain of their affiliates', compliance with limitations surrounding (i) the amount of each Borrower Entity's indebtedness and the nature of their investments, (ii) the execution of transactions with affiliates, (iii) the Manager, (iv) the nature of each Borrower Entity's business activities, and (v) the required maintenance of specified cash reserves. As of September 30, 2021, and through the date our condensed consolidated financial statements were issued, we believe each Borrower Entity is in compliance with all affirmative and negative covenants for the mortgage loans.
Prepayments
For the mortgage loans, prepayments of amounts owed by us are generally not permitted under the terms of the respective mortgage loan agreements unless such prepayments are made pursuant to the voluntary election or mandatory provisions specified in such agreements. The specified mandatory provisions become effective to the extent that a property becomes characterized as a disqualified property, a property is sold, and/or upon the occurrence of a condemnation or casualty event associated with a property. To the extent either a voluntary election is made, or a mandatory prepayment condition exists, in addition to paying all interest and principal, we must also pay certain breakage costs as determined by the loan servicer and a spread maintenance premium if prepayment occurs before the month following the one or two year anniversary of the closing dates of each of the mortgage loans except for IH 2017-1. For IH 2017-1, prepayments on or before December 2026 will require a yield maintenance premium. For the nine months ended September 30, 2021 and 2020, we made voluntary and mandatory prepayments of $964,318 and $157,791, respectively, under the terms of the mortgage loan agreements.
Secured Term Loan
On June 7, 2019, 2019-1 IH Borrower LP, a consolidated subsidiary ("2019-1 IH Borrower" and one of our Borrower Entities), entered into a 12 year loan agreement with a life insurance company (the "Secured Term Loan"). The Secured Term Loan bears interest at a fixed rate of 3.59%, including applicable servicing fees, for the first 11 years and bears interest at a floating rate based on a spread of 147 bps, including applicable servicing fees, over one month LIBOR (subject to certain adjustments as outlined in the loan agreement) for the twelfth year. The Secured Term Loan is secured by first priority mortgages on a portfolio of single-family rental properties as well as a first priority pledge of the equity interests of 2019-1 IH Borrower. We utilized the proceeds from the Secured Term Loan to fund: (i) repayments of then-outstanding indebtedness; (ii) initial deposits into the Secured Term Loan's reserve accounts; (iii) transaction costs related to the closing of the Secured Term Loan; and (iv) general corporate purposes.
The following table sets forth a summary of our Secured Term Loan indebtedness as of September 30, 2021 and December 31, 2020:
Maturity
Date
Interest
Rate(1)
September 30,
2021 		December 31,
2020
Secured Term Loan
June 9, 2031 3.59% $ 403,363 $ 403,363
Deferred financing costs, net
(2,105) (2,268)
Secured Term Loan, net
$ 401,258 $ 401,095
(1)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.
24

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
Collateral
The Secured Term Loan's collateral pool contains 3,334 and 3,332 homes as of September 30, 2021 and December 31, 2020, respectively, with a gross book value of $799,188 and $791,860, respectively, and a net book value of $707,913 and $719,762, respectively. 2019-1 IH Borrower has the right, subject to certain requirements and limitations outlined in the loan agreement, to substitute properties representing up to 20% of the collateral pool annually, and to substitute properties representing up to 100% of the collateral pool over the life of the Secured Term Loan. In addition, four times after the first anniversary of the closing date, 2019-1 IH Borrower has the right, subject to certain requirements and limitations outlined in the loan agreement, to execute a special release of collateral representing up to 15% of the then-outstanding principal balance of the Secured Term Loan in order to bring the loan-to-value ratio back in line with the Secured Term Loan's loan-to-value ratio as of the closing date. Any such special release of collateral would not change the then-outstanding principal balance of the Secured Term Loan, but rather would reduce the number of single-family rental homes included in the collateral pool.
Loan Covenants
The Secured Term Loan requires 2019-1 IH Borrower to maintain compliance with certain affirmative and negative covenants. Affirmative covenants include 2019-1 IH Borrower's, and certain of its affiliates', compliance with (i) licensing, permitting and legal requirements specified in the loan agreement, (ii) organizational requirements of the jurisdictions in which they are organized, (iii) federal and state tax laws, and (iv) books and records requirements specified in the loan agreement. Negative covenants include 2019-1 IH Borrower's, and certain of its affiliates', compliance with limitations surrounding (i) the amount of 2019-1 IH Borrower's indebtedness and the nature of its investments, (ii) the execution of transactions with affiliates, (iii) the Manager, (iv) the nature of 2019-1 IH Borrower's business activities, and (v) the required maintenance of specified cash reserves. As of September 30, 2021, and through the date our condensed consolidated financial statements were issued, we believe 2019-1 IH Borrower is in compliance with all affirmative and negative covenants for the Secured Term Loan.
Prepayments
Prepayments of the Secured Term Loan are generally not permitted unless such prepayments are made pursuant to the voluntary election or mandatory provisions specified in the loan agreement. The specified mandatory provisions become effective to the extent that a property becomes characterized as a disqualified property, a property is sold, and/or upon the occurrence of a condemnation or casualty event associated with a property. To the extent either a voluntary election is made, or a mandatory prepayment condition exists, in addition to paying all interest and principal, we must also pay certain breakage costs as determined by the loan servicer and a yield maintenance premium if prepayment occurs before June 9, 2030. For the nine months ended September 30, 2020, we made mandatory prepayments of $101. No such prepayments were made during the nine months ended September 30, 2021.
Unsecured Notes
Our unsecured notes are issued in connection with either an underwritten public offering pursuant to our existing shelf registration statement that automatically became effective upon filing with the SEC in July 2021 and expires in July 2024 or in connection with a private placement transaction with certain institutional investors (collectively, the "Unsecured Notes"). We utilize proceeds from the Unsecured Notes to fund: (i) repayments of then-outstanding indebtedness, including the securitizations; (ii) closing costs in connection with the Unsecured Notes; and (iii) general costs associated with our operations and other corporate purposes, including acquisitions. Interest on the Unsecured Notes is payable semi-annually in arrears.
25

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
The following table sets forth a summary of our Unsecured Notes as of September 30, 2021 and December 31, 2020:
September 30,
2021 		December 31,
2020
Total Unsecured Notes, net(1)
$ 939,696 $ -
Deferred financing costs, net
(7,807) -
Total
$ 931,889 $ -
(1)Net of unamortized discount of $10,304 as of September 30, 2021.

Current Year Activity
The following activity occurred during the nine months ended September 30, 2021 with respect to the Unsecured Notes:
•On May 25, 2021, in a private placement transaction, we issued (1) $150,000 aggregate principal amount of 2.46% Senior Notes, Series A due May 25, 2028 and (2) $150,000 aggregate principal amount of 3.18% Senior Notes, Series B which mature on May 25, 2036.
•On August 6, 2021, in a public offering under our existing shelf registration statement, we issued $650,000 aggregate principal amount of 2.00% Senior Notes which mature on August 15, 2031.
Prepayments
The Unsecured Notes are redeemable in whole at any time or in part from time to time, at our option, at a redemption price equal to (i) 100% of the principal amount to be redeemed plus accrued and unpaid interest and (ii) a make-whole premium calculated in accordance with the respective loan agreements. The privately placed Unsecured Notes require any prepayment to be an amount not less than 5% of the aggregate principal amount then outstanding. If any of the Unsecured Notes issued publicly under our registration statement are redeemed on or after the date that is three months prior to the maturity date, the redemption price will not include a make-whole premium.
Guarantees
The Unsecured Notes are fully and unconditionally guaranteed, jointly and severally, by INVH and two of its wholly owned subsidiaries, Invitation Homes OP GP LLC (the "General Partner") and IH Merger Sub, LLC ("IH Merger Sub"). Prior to the September 17, 2021 execution of a parent guaranty agreement, the privately placed Unsecured Notes were not guaranteed.
Loan Covenants
The Unsecured Notes issued publicly under our registration statement contain customary covenants, including, among others, limitations on the incurrence of debt; and they include the following financial covenants related to the incurrence of debt: (i) an aggregate debt test; (ii) a debt service test; (iii) a maintenance of total unencumbered assets; and (iv) a secured debt test.
The privately placed Unsecured Notes contain customary covenants, including, among others, limitations on distributions, fundamental changes, and transactions with affiliates; and they include the following financial covenants, subject to certain qualifications: (i) a maximum total leverage ratio; (ii) a maximum secured leverage ratio; (iii) a maximum unencumbered leverage ratio; (iv) a minimum fixed charge coverage ratio; and (v) a minimum unsecured interest coverage ratio.
The Unsecured Notes contain customary events of default (subject in certain cases to specified cure periods), the occurrence of which would allow the holders of notes to take various actions, including the acceleration of amounts due under the Unsecured Notes. As of September 30, 2021, and through the date our condensed consolidated financial statements were issued, we believe we were in compliance with all affirmative and negative covenants for the Unsecured Notes.
26

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
Term Loan Facility and Revolving Facility
On December 8, 2020, we entered into an Amended and Restated Revolving Credit and Term Loan Agreement with a syndicate of banks, financial institutions, and institutional lenders for a new credit facility (the "Credit Facility"). The Credit Facility provides $3,500,000 of borrowing capacity and consists of a $1,000,000 revolving facility (the "Revolving Facility") and a $2,500,000 term loan facility (the "Term Loan Facility"), both of which mature on January 31, 2025, with two six month extension options available. The Revolving Facility also includes borrowing capacity for letters of credit. The Credit Facility provides us with the option to enter into additional incremental credit facilities (including an uncommitted incremental facility that provides us with the option to increase the size of the Revolving Facility and/or the Term Loan Facility such that the aggregate amount does not exceed $4,000,000 at any time), subject to certain limitations.
The Credit Facility replaced a credit facility that consisted of a $1,000,000 revolving facility (the "2017 Revolving Facility") and a $1,500,000 term loan facility (the "2017 Term Loan Facility" and together with the 2017 Revolving Facility, the "2017 Credit Facility"). The terms and conditions of the Credit Facility are consistent with those of the 2017 Credit Facility unless otherwise noted below. Proceeds from the Term Loan Facility were used to repay then-outstanding indebtedness, including the 2017 Term Loan Facility. Proceeds from the Revolving Facility are used for general corporate purposes.
The following table sets forth a summary of the outstanding principal amounts under the Credit Facility as of September 30, 2021 and December 31, 2020, respectively:
Maturity
Date
Interest
Rate(1)
September 30,
2021 		December 31,
2020
Term Loan Facility(2)
January 31, 2025 1.08% $ 2,500,000 $ 2,500,000
Deferred financing costs, net
(23,691) (29,093)
Term Loan Facility, net $ 2,476,309 $ 2,470,907
Revolving Facility(2)
January 31, 2025 0.98% $ - $ -
(1)Interest rates for the Term Loan Facility and the Revolving Facility are based on LIBOR plus an applicable margin. As of September 30, 2021, the applicable margins were 1.00% and 0.90%,respectively, and LIBOR was 0.08%.
(2)If we exercise the two six month extension options, the maturity date will be January 31, 2026.
Interest Rate and Fees
Borrowings under the Credit Facility bear interest, at our option, at a rate equal to a margin over either (a) a LIBOR rate determined by reference to the Bloomberg LIBOR rate (or a comparable or successor rate as provided for in our loan agreement) for the interest period relevant to such borrowing, or (b) a base rate determined by reference to the highest of (1) the administrative agent's prime lending rate, (2) the federal funds effective rate plus 0.50%, and (3) the LIBOR rate that would be payable on such day for a LIBOR rate loan with a one month interest period plus 1.00%. After obtaining the requisite rating on our non-credit enhanced, senior unsecured long term debt as defined in the Credit Facility agreement (the "Investment Grade Rating"), we elected to convert to a credit rating based pricing grid (the "Pricing Grid Conversion")
27

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
effective April 22, 2021. The margins for the Term Loan Facility and Revolving Facility under the credit rating based pricing grid are as follows:
Base Rate Loans LIBOR Rate Loans
Term Loan Facility 0.00 % - 0.65% 0.80% - 1.65%
Revolving Facility 0.00 % - 0.45% 0.75% - 1.45%
Prior to the Pricing Grid Conversion, the margins were based on a total leverage based grid. The margins for the Term Loan Facility, Revolving Facility, 2017 Term Loan Facility, and 2017 Revolving Facility under the total leverage based grid were as follows:
Base Rate Loans LIBOR Rate Loans
Term Loan Facility 0.45% - 1.15% 1.45% - 2.15%
Revolving Facility 0.50% - 1.15% 1.50% - 2.15%
2017 Term Loan Facility 0.70% - 1.30% 1.70% - 2.30%
2017 Revolving Facility 0.75% - 1.30% 1.75% - 2.30%

The Credit Facility also includes a sustainability component whereby the Revolving Facility pricing can improve upon the Company's achievement of certain sustainability ratings, determined via an independent third party evaluation. This sustainability feature was not included in the 2017 Revolving Facility.
In addition to paying interest on outstanding principal under the Credit Facility, we are required to pay a facility fee ranging from 0.10% to 0.30%. We are also required to pay customary letter of credit fees. Prior to the Pricing Grid Conversion, instead of a facility fee, we were required to pay an unused facility fee to the lenders under the Revolving Facility and the 2017 Revolving Facility in respect of the unused commitments thereunder. The unused facility fee rate was either 0.30% or 0.20% per annum for the Revolving Facility and 0.35% or 0.20% per annum for the 2017 Revolving Facility.
Prepayments and Amortization
No principal reductions are required under the Credit Facility. We are permitted to voluntarily repay amounts outstanding under the Term Loan Facility at any time without premium or penalty, subject to certain minimum amounts and the payment of customary "breakage" costs with respect to LIBOR loans. Once repaid, no further borrowings will be permitted under the Term Loan Facility.
Loan Covenants
The Credit Facility contains certain customary affirmative and negative covenants and events of default. Such covenants will, among other things, restrict, subject to certain exceptions, our ability and that of the Subsidiary Guarantors (as defined below) and their respective subsidiaries to (i) engage in certain mergers, consolidations or liquidations, (ii) sell, lease or transfer all or substantially all of their respective assets, (iii) engage in certain transactions with affiliates, (iv) make changes to our fiscal year, (v) make changes in the nature of our business and our subsidiaries, and (vi) enter into certain burdensome agreements.
The Credit Facility also requires us, on a consolidated basis with our subsidiaries, to maintain a (i) maximum total leverage ratio, (ii) maximum secured leverage ratio, (iii) maximum unencumbered leverage ratio, (iv) minimum fixed charge coverage ratio, and (v) minimum unsecured interest coverage ratio. Prior to obtaining an Investment Grade Rating, we were also required to maintain a maximum secured recourse leverage ratio. If an event of default occurs, the lenders under the Credit Facility are entitled to take various actions, including the acceleration of amounts due under the Credit Facility. As of September 30, 2021, and through the date our condensed consolidated financial statements were issued, we believe we were in compliance with all affirmative and negative covenants for the Credit Facility.
28

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
Guarantees and Security
After we obtained the requisite Investment Grade Rating, our direct and indirect wholly owned subsidiaries that directly own unencumbered assets (the "Subsidiary Guarantors") were released from their previous guarantee requirements under the Credit Facility (the "Investment Grade Release") effective May 5, 2021. Prior to the Investment Grade Release, the obligations under the Credit Facility were guaranteed on a joint and several basis by each Subsidiary Guarantor, subject to certain exceptions.
On September 17, 2021, as a result of the execution of a parent guaranty agreement, the obligations under the Credit Facility became guaranteed on a joint and several basis by INVH and two of its wholly owned subsidiaries, the General Partner and IH Merger Sub.
Although the 2017 Credit Facility was secured, such security interests have been released and the Credit Facility is unsecured.
Convertible Senior Notes
In connection with the Mergers, we assumed SWH's convertible senior notes. In January 2017, SWH issued $345,000 in aggregate principal amount of 3.50% convertible senior notes due 2022 (the "2022 Convertible Notes" or the "Convertible Senior Notes"). Interest on the 2022 Convertible Notes is payable semiannually in arrears on January 15th and July 15th of each year. The 2022 Convertible Notes will mature on January 15, 2022.
The following table summarizes the terms of the Convertible Senior Notes outstanding as of September 30, 2021 and December 31, 2020:
Principal Amount
Coupon
Rate
Effective
Rate(1)
Conversion
Rate(2)
Maturity
Date
Remaining Amortization
Period
September 30,
2021 		December 31,
2020
2022 Convertible Notes
3.50% 5.12% 43.9819 January 15, 2022 0.29 years $ 146,491 $ 345,000
Net unamortized fair value adjustment
(673) (5,596)
Total
$ 145,818 $ 339,404
(1)Effective rate includes the effect of the adjustment to the fair value of the debt as of the Merger Date, the value of which reduced the initial liability recorded to $324,252 for the 2022 Convertible Notes.
(2)The conversion rate as of September 30, 2021 represents the number of shares of common stock issuable per $1,000 principal amount (actual $) of the 2022 Convertible Notes converted on such date, as adjusted in accordance with the indenture as a result of cash dividend payments and the effects of previous mergers. Effective July 15, 2021, we notified note holders of our intent to settle conversions of the 2022 Convertible Notes in shares of common stock.
29

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
Terms of Conversion
As of September 30, 2021, the conversion rate applicable to the 2022 Convertible Notes is 43.9819 shares of our common stock per $1,000 principal amount (actual $) of the 2022 Convertible Notes (equivalent to a conversion price of approximately $22.74 per common share - actual $). The conversion rate for the 2022 Convertible Notes is subject to adjustment in some events, but will not be adjusted for any accrued and unpaid interest. In addition, following certain events that occur prior to the maturity date, we will adjust the conversion rate for a holder who elects to convert its 2022 Convertible Notes in connection with such an event in certain circumstances. At any time prior to July 15, 2021, holders were able to convert the 2022 Convertible Notes at their option only under specific circumstances as defined in the indenture agreement, dated as of January 10, 2017, between us and our trustee, Wilmington Trust National Association (the "Convertible Notes Trustee"). On or after July 15, 2021 and until maturity, holders may convert all or any portion of the 2022 Convertible Notes at any time. Effective July 15, 2021, we notified note holders of our intent to settle conversions of the 2022 Convertible Notes in shares of common stock. For the three and nine months ended September 30, 2021, we settled $198,503 and $198,509, respectively, of principal balance outstanding of the 2022 Convertible Notes with the issuance of 8,723,161 and 8,723,421 shares of our common stock, respectively. The "if-converted" value of the 2022 Convertible Notes exceeds the principal amount by $100,467 as of September 30, 2021 as the closing market price of our common stock of $38.33 per common share (actual $) exceeds the implicit conversion price. For the three months ended September 30, 2021 and 2020, interest expense for the 2022 Convertible Notes, including non-cash amortization of discounts, was $3,843 and $4,311, respectively. For the nine months ended September 30, 2021 and 2020, interest expense for the 2022 Convertible Notes, including non-cash amortization of discounts, was $12,531 and $12,869, respectively.
General Terms
We may not redeem the 2022 Convertible Notes prior to their maturity date except to the extent necessary to preserve our status as a REIT for United States federal income tax purposes, as further described in the indenture. If we undergo a fundamental change as defined in the indenture, holders may require us to repurchase for cash all or any portion of their 2022 Convertible Notes at a fundamental change repurchase price equal to 100% of the principal amount of the 2022 Convertible Notes to be repurchased, plus accrued and unpaid interest up to, but excluding, the fundamental change repurchase date.
The indenture contains customary terms and covenants and events of default. If an event of default occurs and is continuing, the Convertible Notes Trustee, by notice to us, or the holders of at least 25% in aggregate principal amount of the outstanding 2022 Convertible Notes, by notice to us and the Convertible Notes Trustee, may, and the Convertible Notes Trustee at the request of such holders shall, declare 100% of the principal of and accrued and unpaid interest on all the 2022 Convertible Notes to be due and payable. In the case of an event of default arising out of certain events of bankruptcy, insolvency or reorganization in respect to us (as set forth in the indenture), 100% of the principal of and accrued and unpaid interest on the 2022 Convertible Notes will automatically become due and payable.
30

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
Debt Maturities Schedule
The following table summarizes the contractual maturities of our debt as of September 30, 2021:
Year
Mortgage
Loans(1)(2)
Secured Term Loan Unsecured Notes
Term Loan Facility(3)
Revolving Facility(3)
Convertible Senior Notes Total
Remainder of 2021 $ 184,400 $ - $ - $ - $ - $ - $ 184,400
2022 2,689,956 - - - - 146,491 2,836,447
2023 - - - - - - -
2024 - - - - - - -
2025 - - - 2,500,000 - - 2,500,000
Thereafter
995,748 403,363 950,000 - - - 2,349,111
Total 3,870,104 403,363 950,000 2,500,000 - 146,491 7,869,958
Less: deferred financing costs, net
(10,216) (2,105) (7,807) (23,691) - - (43,819)
Less: unamortized fair value adjustment - - - - - (673) (673)
Less: unamortized debt discount (2,025) - (10,304) - - - (12,329)
Total
$ 3,857,863 $ 401,258 $ 931,889 $ 2,476,309 $ - $ 145,818 $ 7,813,137
(1)The maturity dates of the obligations are reflective of all extensions that have been exercised as of September 30, 2021. If fully extended, we would have no mortgage loans maturing before 2024. Such extensions are available provided there is no continuing event of default under the respective mortgage loan agreement and the Borrower Entity obtains and delivers to the lender a replacement interest rate cap agreement from an approved counterparty within the required timeframe.
(2)On September 13, 2021, we submitted a notification to exercise an extension of the maturity date of the IH 2017-2 mortgage loan from December 9, 2021 to December 9, 2022. On October 12, 2021, we submitted a notification to exercise an extension of the maturity date of the IH 2018-4 mortgage loan from January 9, 2022 to January 9, 2023 (see Note 15).
(3)If we exercise the two six month extension options, the maturity date will be January 31, 2026.
Note 8-Derivative Instruments
From time to time, we enter into derivative instruments to manage the economic risk of changes in interest rates. We do not enter into derivative transactions for speculative or trading purposes. Designated hedges are derivatives that meet the criteria for hedge accounting and that we have elected to designate as hedges. Non-designated hedges are derivatives that do not meet the criteria for hedge accounting or that we did not elect to designate as hedges.
Designated Hedges
We have entered into various interest rate swap agreements, which are used to hedge the variable cash flows associated with variable-rate interest payments. Currently, each of our swap agreements is indexed to one month LIBOR and is designated for hedge accounting purposes. One month LIBOR is set to expire after June 30, 2023, and we will work with the counterparties to our swap agreements to adjust each floating rate to a comparable or successor rate. Changes in the fair value of these swaps are recorded in other comprehensive income and are subsequently reclassified into earnings in the period in which the hedged forecasted transactions affect earnings.
31

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
The table below summarizes our interest rate swap instruments as of September 30, 2021:
Agreement Date
Forward
Effective Date
Maturity
Date 		Strike
Rate 		Index Notional
Amount
December 11, 2019 February 28, 2017 December 31, 2024 1.74% One month LIBOR $ 750,000
April 19, 2018 January 31, 2019 January 31, 2025 2.86% One month LIBOR 400,000
February 15, 2019 March 15, 2019 March 15, 2022 2.23% One month LIBOR 800,000
April 19, 2018 March 15, 2019 November 30, 2024 2.85% One month LIBOR 400,000
April 19, 2018 March 15, 2019 February 28, 2025 2.86% One month LIBOR 400,000
May 8, 2018 March 9, 2020 June 9, 2025 2.99% One month LIBOR 325,000
May 8, 2018 June 9, 2020 June 9, 2025 2.99% One month LIBOR 595,000
June 28, 2018 August 7, 2020 July 9, 2025 2.90% One month LIBOR 1,100,000
December 9, 2019 July 15, 2021 November 30, 2024 2.90% One month LIBOR 400,000
November 7, 2018 March 15, 2022 July 31, 2025 3.14% One month LIBOR 400,000
November 7, 2018 March 15, 2022 July 31, 2025 3.16% One month LIBOR 400,000

During the three and nine months ended September 30, 2021 and 2020, such derivatives were used to hedge the variable cash flows associated with existing variable-rate interest payments. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on our variable-rate debt. During the next 12 months, we estimate that $138,119 will be reclassified to earnings as an increase in interest expense.
Non-Designated Hedges
Concurrent with entering into certain of the mortgage loan agreements and in connection with previous mergers, we entered into or acquired and maintain interest rate cap agreements with terms and notional amounts equivalent to the terms and amounts of the mortgage loans made by the third party lenders. Currently, each of our cap agreements is indexed to one month LIBOR, which is set to expire on June 30, 2023. We will work with the counterparties to our cap agreements to adjust each floating rate to a comparable or successor rate. To the extent that the maturity date of one or more of the mortgage loans is extended through an exercise of one or more extension options, replacement or extension interest rate cap agreements must be executed with terms similar to those associated with the initial interest rate cap agreements and strike prices equal to the greater of the interest rate cap strike price and the interest rate at which the debt service coverage ratio (as defined) is not less than 1.2 to 1.0. The interest rate cap agreements, including all of our rights to payments owed by the counterparties and all other rights, have been pledged as additional collateral for the mortgage loans. Additionally, in certain instances, in order to minimize the cash impact of purchasing required interest rate caps, we simultaneously sell interest rate caps (which have identical terms and notional amounts) such that the purchase price and sales proceeds of the related interest rate caps are intended to offset each other. The purchased and sold interest rate caps have strike prices ranging from approximately 3.75% to 7.03%.
32

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
Fair Values of Derivative Instruments on the Condensed Consolidated Balance Sheets
The table below presents the fair value of our derivative financial instruments as well as their classification on the condensed consolidated balance sheets as of September 30, 2021 and December 31, 2020:
Asset Derivatives Liability Derivatives
Fair Value as of Fair Value as of
Balance
Sheet Location 		September 30,
2021 		December 31,
2020 		Balance
Sheet Location 		September 30,
2021 		December 31,
2020
Derivatives designated as hedging instruments:
Interest rate swaps Other assets $ - $ - Other liabilities $ 379,589 $ 539,560
Derivatives not designated as hedging instruments:
Interest rate caps Other assets - 1 Other liabilities - -
Total $ - $ 1 $ 379,589 $ 539,560
Offsetting Derivatives
We enter into master netting arrangements, which reduce risk by permitting net settlement of transactions with the same counterparty. The tables below present a gross presentation, the effects of offsetting, and a net presentation of our derivatives as of September 30, 2021 and December 31, 2020:
September 30, 2021
Gross Amounts Not Offset in the Statement of Financial Position
Gross Amounts of Recognized Assets/ Liabilities Gross Amounts Offset in the Statement of Financial Position Net Amounts of Assets/ Liabilities Presented in the Statement of Financial Position Financial Instruments Cash Collateral Received Net
Amount
Offsetting assets:
Derivatives $ - $ - $ - $ - $ - $ -
Offsetting liabilities:
Derivatives $ 379,589 $ - $ 379,589 $ - $ - $ 379,589

December 31, 2020
Gross Amounts Not Offset in the Statement of Financial Position
Gross Amounts of Recognized Assets/ Liabilities Gross Amounts Offset in the Statement of Financial Position Net Amounts of Assets/ Liabilities Presented in the Statement of Financial Position Financial Instruments Cash Collateral Received Net
Amount
Offsetting assets:
Derivatives $ 1 $ - $ 1 $ - $ - $ 1
Offsetting liabilities:
Derivatives $ 539,560 $ - $ 539,560 $ - $ - $ 539,560
33

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
Effect of Derivative Instruments on the Condensed Consolidated Statements of Comprehensive Income (Loss) and the Condensed Consolidated Statements of Operations
The tables below present the effect of our derivative financial instruments in the condensed consolidated statements of comprehensive income (loss) and the condensed consolidated statements of operations for the three months ended September 30, 2021 and 2020:
Amount of Loss Recognized in OCI on Derivative Location of Loss Reclassified from Accumulated OCI into Net Income Amount of Loss Reclassified from Accumulated OCI into Net Income
Total Amount of Interest Expense Presented in the Condensed Consolidated Statements of Operations
For the Three Months
Ended September 30, 		For the Three Months
Ended September 30, 		For the Three Months
Ended September 30,
2021 2020 2021 2020 2021 2020
Derivatives in cash flow hedging relationships:
Interest rate swaps $ (1,586) $ (4,171) Interest expense $ (37,074) $ (37,557) $ 79,370 $ 87,713

Location of
Loss
Recognized in
Net Income on Derivative 		Amount of Loss Recognized in Net Income on Derivative
For the Three Months
Ended September 30,
2021 2020
Derivatives not designated as hedging instruments:
Interest rate caps Interest expense $ 1 $ 146
The tables below present the effect of our derivative financial instruments in the condensed consolidated statements of comprehensive income (loss) and the condensed consolidated statements of operations for the nine months ended September 30, 2021 and 2020:
Amount of Gain (Loss) Recognized
in OCI on Derivative 		Location of Loss Reclassified from Accumulated OCI into Net Income Amount of Loss Reclassified from Accumulated OCI into Net Income
Total Amount of Interest Expense Presented in the Condensed Consolidated Statements of Operations
For the Nine Months
Ended September 30,
For the Nine Months
Ended September 30,
For the Nine Months
Ended September 30,
2021 2020 2021 2020 2021 2020
Derivatives in cash flow hedging relationships:
Interest rate swaps $ 57,283 $ (398,426) Interest expense $ (112,973) $ (74,166) $ 243,540 $ 258,541

Location of
Loss
Recognized in
Net Income on Derivative 		Amount of Loss Recognized in Net Income on Derivative
For the Nine Months
Ended September 30,
2021 2020
Derivatives not designated as hedging instruments:
Interest rate caps Interest expense $ 106 $ 198

34

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
Credit-Risk-Related Contingent Features
The agreements with our derivative counterparties which govern our interest rate swap agreements contain a provision where we could be declared in default on our derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to our default on the indebtedness.
As of September 30, 2021, the fair value of certain derivatives in a net liability position was $379,589. If we had breached any of these provisions at September 30, 2021, we could have been required to settle the obligations under the agreements at their termination value, which includes accrued interest and excludes the nonperformance risk related to these agreements, of $389,540.
Note 9-Stockholders' Equity
As of September 30, 2021, we have issued 594,893,674 shares of common stock. In addition, we issue OP Units from time to time which, upon vesting, are redeemable for shares of our common stock on a one-for-one basis or, in our sole discretion, cash and are reflected as non-controlling interests on our condensed consolidated balance sheets and statements of equity. As of September 30, 2021, 2,538,285 outstanding OP Units are redeemable.
During the three and nine months ended September 30, 2021, we issued 26,175,130 and 27,776,008 shares of common stock, respectively. During the three and nine months ended September 30, 2020, we issued 1,353 and 18,891,307 shares of common stock, respectively.
2021 Public Offering
On September 28, 2021, we completed an underwritten public offering of 12,500,000 shares of our common stock. During the three and nine months ended September 30, 2021, this offering generated net proceeds of $496,667, after giving effect to commissions and other costs totaling $3,333. On October 21, 2021, we sold 1,875,000 shares of our common stock pursuant to the underwriters' full exercise of the option to purchase additional shares, generating net proceeds of $74,534, after giving effect to commissions and other costs totaling $466 (see Note 15).
2020 Public Offering
On June 4, 2020, we completed an underwritten public offering of 16,675,000 shares of our common stock, including 2,175,000 shares sold pursuant to the underwriters' full exercise of the option to purchase additional shares. During the nine months ended September 30, 2020, this offering generated net proceeds of $447,533, after giving effect to commissions and other costs totaling $6,861.
At the Market Equity Program
On August 22, 2019, we entered into distribution agreements with a syndicate of banks (the "Agents"), pursuant to which we may sell, from time to time, up to an aggregate sales price of $800,000 of our common stock through the Agents (the "ATM Equity Program"). During the three and nine months ended September 30, 2021, we sold 4,951,969 shares of our common stock under our ATM Equity Program, generating net proceeds of $196,778 after giving effect to Agent commissions and other costs totaling $3,167. During the nine months ended September 30, 2020, we sold 1,887,466 shares of our common stock under our ATM Equity Program generating net proceeds of $56,265 after giving effect to Agent commissions and other costs totaling $977. We did not sell any shares of common stock under the ATM Equity Program during the three months ended September 30, 2020. As of September 30, 2021 $300,055 remains available for future offerings under the ATM Equity Program.
Dividends
To qualify as a REIT, we are required to distribute annually to our stockholders at least 90% of our REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains, and to pay tax at regular corporate rates to the extent that we annually distribute less than 100% of our net taxable income. We intend to pay quarterly dividends to our stockholders, which in the aggregate are approximately equal to or exceed our net taxable income in the relevant year.
35

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
The timing, form, and amount of distributions, if any, to our stockholders, will be at the sole discretion of our board of directors.
The following table summarizes our dividends declared from January 1, 2020 through September 30, 2021:
Record Date
Amount
per Share
Pay Date Total Amount Declared
Q3-2021 August 10, 2021 $ 0.17 August 27, 2021 $ 98,965
Q2-2021 May 11, 2021 0.17 May 28, 2021 97,054
Q1-2021 January 28, 2021 0.17 February 26, 2021 96,933
Q4-2020 November 10, 2020 0.15 November 25, 2020 84,911
Q3-2020 August 12, 2020 0.15 August 28, 2020 84,286
Q2-2020 May 13, 2020 0.15 May 29, 2020 81,916
Q1-2020 February 12, 2020 0.15 February 28, 2020 81,673
On October 20, 2021, our board of directors declared a dividend of $0.17 per share to stockholders of record on November 9, 2021, which is payable on November 24, 2021. (see Note 15).
Note 10-Share-Based Compensation
Prior to completion of the IPO, our board of directors adopted, and our stockholders approved, the Invitation Homes Inc. 2017 Omnibus Incentive Plan (the "Omnibus Incentive Plan") to provide a means through which to attract and retain key personnel and to provide a means whereby our directors, officers, associates, consultants, and advisors can acquire and maintain an equity interest in us, or be paid incentive compensation, including incentive compensation measured by reference to the value of our common stock, and to align their interests with those of our stockholders. Under the Omnibus Incentive Plan, we may issue up to 16,000,000 shares of common stock.
Our share-based awards consist of time-vesting restricted stock units ("RSUs"), performance and market based vesting RSUs ("PRSUs"), and Outperformance Awards (defined below). Time-vesting RSUs are participating securities for EPS purposes, and PRSUs and Outperformance Awards are not. For detailed discussion of RSUs and PRSUs issued prior to January 1, 2021, refer to our Annual Report on Form 10-K for the year ended December 31, 2020.
Share-Based Awards
The following summarizes our share-based award activity during the nine months ended September 30, 2021.
Annual Long Term Incentive Plan ("LTIP"):
•Annual LTIP Awards Granted: During the nine months ended September 30, 2021, we granted 675,627 RSUs pursuant to LTIP awards (together with previously granted annual LTIP awards, "LTIP Awards"). Each award includes components which vest based on time-vesting conditions, market based vesting conditions, and performance based vesting conditions, each of which is subject to continued employment through the applicable vesting date. The time-vesting RSUs granted during the nine months ended September 30, 2021 vest in three equal annual installments based on an anniversary date of March 1, 2021. The PRSUs granted during the nine months ended September 30, 2021 may be earned based on the achievement of certain measures over a three year performance period that ends December 31, 2023. The number of PRSUs earned will be determined based on performance achieved during the performance period for each measure at certain threshold, target, or maximum levels and corresponding payout ranges. In general, the LTIP PRSUs are earned after the end of the performance period on the date on which the performance results are certified by our compensation and management development committee (the "Compensation Committee").
All of the LTIP Awards are subject to certain change in control and retirement eligibility provisions that may impact these vesting schedules.
•PRSU Results: During the nine months ended September 30, 2021, the Compensation Committee certified performance achievement with respect to our 2018 LTIP Awards. Certain PRSUs vested and achieved performance in excess of the target level, resulting in the issuance of an additional 159,180 shares of common stock. Such awards
36

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
are reflected as an increase in the number of awards granted and vested in the table below. Certain other PRSUs did not achieve performance criteria, resulting in the cancellation of 47,145 awards. Such awards are reflected as an increase in the number of awards forfeited/canceled in the table below.
Director Awards
During the nine months ended September 30, 2021, we granted 43,767 time-vesting RSUs to members of our board of directors, which awards will fully vest on the date of INVH's 2022 annual stockholders meeting, subject to continued service on the board of directors through such date.
Outperformance Awards
On May 1, 2019, the Compensation Committee approved one-time equity based awards with market based vesting conditions in the form of PRSUs and OP Units (the "Outperformance Awards"). The Outperformance Awards may be earned based on the achievement of rigorous absolute total shareholder return and relative total shareholder return thresholds over a three year performance period ending on March 31, 2022. Upon completion of the performance period, the dollar value of the awards earned under the absolute and relative total shareholder return components will be separately calculated, and the number of earned Outperformance Awards will be determined based on the earned dollar value of the awards and the stock price at the performance certification date. Earned awards will vest 50% on March 31, 2022 and 25% on each of the first and second anniversaries of such date, subject to continued employment. The current aggregate $12,160 grant-date fair value of the Outperformance Awards still outstanding was determined based on Monte-Carlo option pricing models which estimate the probability of the vesting conditions being satisfied.
Summary of Total Share-Based Awards
The following table summarizes activity related to non-vested time-vesting RSUs and PRSUs, other than Outperformance Awards, during the nine months ended September 30, 2021:
Time-Vesting Awards PRSUs
Total Share-Based Awards(1)
Number Weighted
Average Grant
Date Fair Value
(Actual $) 		Number Weighted
Average Grant
Date Fair Value
(Actual $) 		Number Weighted
Average Grant
Date Fair Value
(Actual $)
Balance, December 31, 2020 560,123 $ 24.54 975,811 $ 26.36 1,535,934 $ 25.70
Granted
252,249 30.30 626,325 27.44 878,574 28.26
Vested(2)
(395,851) (23.43) (436,493) (23.31) (832,344) (23.37)
Forfeited / canceled
(18,034) (29.93) (66,355) (23.19) (84,389) (24.63)
Balance, September 30, 2021
398,487 $ 29.05 1,099,288 $ 28.38 1,497,775 $ 28.56
(1)Total share-based awards excludes Outperformance Awards.
(2)All vested share-based awards are included in basic EPS for the periods after each award's vesting date. The estimated fair value of share-based awards that fully vested during the nine months ended September 30, 2021 was $18,204. During the nine months ended September 30, 2021, 1,033 RSUs were accelerated pursuant to the terms and conditions of the Omnibus Incentive Plan and related award agreements.
37

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
Grant-Date Fair Values
The grant-date fair values of the time-vesting RSUs and PRSUs with performance condition vesting criteria are generally based on the closing price of our common stock on the grant date. However, the grant-date fair values for share-based awards with market condition vesting criteria are based on Monte-Carlo option pricing models. The following table summarizes the significant inputs utilized in these models for such awards granted during the nine months ended September 30, 2021:
For the Nine Months
Ended September 30, 2021
Expected volatility(1)
33.2%
Risk-free rate 0.31%
Expected holding period (years) 2.84
(1)Expected volatility was estimated based on the historical volatility of INVH's realized returns and the applicable index.
Summary of Total Share-Based Compensation Expense
During the three and nine months ended September 30, 2021 and 2020, we recognized share-based compensation expense as follows:
For the Three Months
Ended September 30, 		For the Nine Months
Ended September 30,
2021 2020 2021 2020
General and administrative $ 4,775 $ 4,833 $ 16,918 $ 9,760
Property management expense
1,277 1,253 4,154 2,533
Total $ 6,052 $ 6,086 $ 21,072 $ 12,293
As of September 30, 2021, there is $31,024 of unrecognized share-based compensation expense related to non-vested share-based awards which is expected to be recognized over a weighted average period of 1.83 years.
Note 11-Fair Value Measurements
The carrying amounts of restricted cash, certain components of other assets, accounts payable and accrued expenses, resident security deposits, and certain components of other liabilities approximate fair value due to the short maturity of these amounts. Our interest rate swap agreements, interest rate cap agreements, and investments in equity securities with a readily determinable fair value are recorded at fair value on a recurring basis within our condensed consolidated financial statements. The fair values of our interest rate caps and swaps, which are classified as Level 2 in the fair value hierarchy, are estimated using market values of instruments with similar attributes and maturities. See Note 8 for the details of the condensed consolidated balance sheet classification and the fair values for the interest rate caps and swaps. The fair values of our investments in equity securities with a readily determinable fair value are classified as Level 1 in the fair value hierarchy. For additional information related to our investments in equity securities as of September 30, 2021 and December 31, 2020, refer to Note 6.
38

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
Recurring Fair Value Measurements
The following table displays the carrying values and fair values of financial instruments as of September 30, 2021 and December 31, 2020:
September 30, 2021 December 31, 2020
Carrying
Value 		Fair
Value 		Carrying
Value 		Fair
Value
Assets carried at historical cost on the condensed consolidated balance sheets:
Investments in debt securities(1)
Level 2 $ 197,255 $ 200,781 $ 245,237 $ 249,736
Liabilities carried at historical cost on the condensed consolidated balance sheets:
Mortgage loans(2)
Level 2 $ 3,868,079 $ 3,939,289 $ 4,832,133 $ 4,923,107
Unsecured Notes - public offering(3)
Level 2 639,696 622,733 - -
Secured Term Loan(4)
Level 3 403,363 423,471 403,363 447,190
Unsecured Notes - private placement(5)
Level 3 300,000 301,885 - -
Term Loan Facility(6)
Level 3 2,500,000 2,505,623 2,500,000 2,514,623
Convertible Senior Notes(7)
Level 3 145,818 147,521 339,404 351,166
(1)The carrying values of investments in debt securities are shown net of discount.
(2)The carrying values of the mortgage loans are shown net of discount and excludes $10,216 and $12,035 of deferred financing costs as of September 30, 2021 and December 31, 2020, respectively.
(3)The carrying value of the Unsecured Notes - public offering includes unamortized discount of $10,304 and excludes $6,248 of deferred financing costs as of September 30, 2021.
(4)The carrying value of the Secured Term Loan excludes $2,105 and $2,268 of deferred financing costs as of September 30, 2021 and December 31, 2020, respectively.
(5)The carrying value of the Unsecured Notes - private placement excludes $1,559 of deferred financing costs as of September 30, 2021.
(6)The carrying values of the Term Loan Facility excludes $23,691 and $29,093 of deferred financing costs as of September 30, 2021 and December 31, 2020, respectively.
(7)The carrying values of the Convertible Senior Notes include unamortized discounts of $673 and $5,596 as of September 30, 2021 and December 31, 2020, respectively.

The fair values of our investments in debt securities and mortgage loans, which are classified as Level 2 in the fair value hierarchy, are estimated based on market bid prices of comparable instruments at the end of the period. The following table displays the significant unobservable inputs used to develop our Level 3 fair value measurements as of September 30, 2021:
Quantitative Information about Level 3 Fair Value Measurement(1)
Fair Value Valuation Technique Unobservable Input Rate
Secured Term Loan $ 423,471
Discounted Cash Flow
Effective Rate 2.99%
Unsecured Notes - private placement
301,885
Discounted Cash Flow
Effective Rate 2.46% - 3.07%
Term Loan Facility 2,505,623
Discounted Cash Flow
Effective Rate 1.08% - 2.62%
Convertible Senior Notes 147,521
Discounted Cash Flow
Effective Rate 1.09%
(1)Our Level 3 fair value instruments require interest only monthly payments.

39

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
Nonrecurring Fair Value Measurements
Our assets measured at fair value on a nonrecurring basis are those assets for which we have recorded impairments.
Single-Family Residential Properties
The single-family residential properties for which we have recorded impairments, measured at fair value on a nonrecurring basis, are summarized below:

For the Three Months
Ended September 30, 		For the Nine Months
Ended September 30,
2021 2020 2021 2020
Investments in single-family residential properties, net held for use (Level 3):
Pre-impairment amount $ - $ - $ - $ 451
Total impairments - - - (89)
Fair value $ - $ - $ - $ 362
For the Three Months
Ended September 30, 		For the Nine Months
Ended September 30,
2021 2020 2021 2020
Investments in single-family residential properties, net held for sale (Level 3):
Pre-impairment amount $ 629 $ 1,800 $ 3,582 $ 19,594
Total impairments (126) (289) (650) (4,113)
Fair value $ 503 $ 1,511 $ 2,932 $ 15,481
For additional information related to our single-family residential properties as of September 30, 2021 and December 31, 2020, refer to Note 3.
ROU Lease Assets
During the three months ended September 30, 2020, we relocated one of our corporate offices and vacated the former location. As of September 30, 2020, the expected undiscounted sublease payments through the remaining original lease term of the vacated office space no longer exceeded the carrying value of the related ROU lease asset, and we concluded that the ROU lease asset was not fully recoverable. During the three and nine months ended September 30, 2020, we recorded impairment of $1,750 in other, net in the condensed consolidated statements of operations. The fair value of the ROU lease asset measured at fair value on a nonrecurring basis, which is classified as Level 3 in the fair value hierarchy, was determined based on a discounted cash flow analysis reflective of the income expected from a sublease. We did not record any impairment of our ROU lease assets during the three and nine months ended September 30, 2021. For additional information related to our ROU lease assets as of September 30, 2021 and December 31, 2020, refer to Note 6.
40

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
Note 12-Earnings per Share
Basic and diluted EPS are calculated as follows:
For the Three Months
Ended September 30, 		For the Nine Months
Ended September 30,
2021 2020 2021 2020
(in thousands, except share and per share data)
Numerator:
Net income available to common stockholders - basic and diluted $ 69,108 $ 32,540 $ 186,622 $ 125,178
Denominator:
Weighted average common shares outstanding - basic 577,011,178 560,598,995 570,808,028 550,722,684
Effect of dilutive securities:
Incremental shares attributed to non-vested share-based awards 1,560,214 1,272,378 1,454,170 1,224,594
Weighted average common shares outstanding - diluted 578,571,392 561,871,373 572,262,198 551,947,278
Net income per common share - basic $ 0.12 $ 0.06 $ 0.33 $ 0.23
Net income per common share - diluted $ 0.12 $ 0.06 $ 0.33 $ 0.23
Incremental shares attributed to non-vested share-based awards are excluded from the computation of diluted EPS when they are anti-dilutive. Because their inclusion would have been anti-dilutive, the following number of incremental shares attributed to non-vested share-based awards are excluded from the denominator: for the three months ended September 30, 2020, 153,114; and for the nine months ended September 30, 2021 and 2020, 22,585 and 120,835, respectively. There are not any anti-dilutive incremental shares attributed to non-vested share-based awards for the three months ended September 30, 2021.
For the three and nine months ended September 30, 2021 and 2020, vested OP Units have been excluded from the computation of EPS because all income attributable to such vested OP Units has been recorded as non-controlling interest and thus excluded from net income available to common stockholders.
For the three and nine months ended September 30, 2021, using the "if-converted" method, 8,632,132 and 12,964,322 potential shares of common stock issuable upon the conversion of the 2022 Convertible Notes, respectively, are excluded from the computation of diluted EPS as they are anti-dilutive. For the three and nine months ended September 30, 2020, using the "if-converted" method, 15,100,443 potential shares of common stock issuable upon the conversion of the 2022 Convertible Notes are excluded from the computation of diluted EPS as they are anti-dilutive. Additionally, no adjustment to the numerator is required for interest expense related to the 2022 Convertible Notes for the three and nine months ended September 30, 2021 and 2020. See Note 7 for further discussion about the 2022 Convertible Notes.
Note 13-Income Tax
We account for income taxes under the asset and liability method. For our taxable REIT subsidiaries ("TRSs"), deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. We provide a valuation allowance, from time to time, for deferred tax assets for which we do not consider realization of such assets to be more likely than not.
As of September 30, 2021 and December 31, 2020, we have not recorded any deferred tax assets and liabilities or unrecognized tax benefits. We do not anticipate a significant change in unrecognized tax benefits within the next 12 months.
We have sold assets that were either subject to Section 337(d) of the Internal Revenue Code of 1986, as amended, or were held by TRSs. These transactions resulted in $81 and $293 of current income tax expense for the three months ended September 30, 2021 and 2020, respectively, and $464 and $722 of current income tax expense for the nine months ended September 30, 2021 and 2020, respectively, which has been recorded in gain on sale of property, net of tax in the condensed consolidated statements of operations.
41

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
Note 14-Commitments and Contingencies
Lease Commitments
The following table sets forth our fixed lease payment commitments as a lessee as of September 30, 2021, for the periods below:
Year
Operating
Leases
Finance
Leases
Remainder of 2021 $ 1,268 $ 921
2022 4,445 2,598
2023 3,516 2,510
2024 3,178 757
2025 1,718 19
Thereafter
1,035 -
Total lease payments 15,160 6,805
Less: imputed interest (898) (344)
Total lease liability $ 14,262 $ 6,461
The components of lease expense for the three and nine months ended September 30, 2021 and 2020 are as follows:
For the Three Months
Ended September 30, 		For the Nine Months
Ended September 30,
2021 2020 2021 2020
Operating lease cost:
Fixed lease cost $ 991 $ 1,106 $ 3,105 $ 3,257
Variable lease cost 364 263 968 860
Total operating lease cost $ 1,355 $ 1,369 $ 4,073 $ 4,117
Finance lease cost:
Amortization of ROU assets $ 699 $ 707 $ 2,115 $ 1,628
Interest on lease liabilities 64 101 220 371
Total finance lease cost $ 763 $ 808 $ 2,335 $ 1,999

Insurance Policies
Pursuant to the terms of certain of our loan agreements (see Note 7), laws and regulations of the jurisdictions in which our properties are located, and general business practices, we are required to procure insurance on our properties. As of September 30, 2021, there are no material contingent liabilities related to uninsured losses with respect to our properties.
Legal Matters
We are subject to various legal proceedings and claims that arise in the ordinary course of our business as well as congressional and regulatory inquiries and engagements. We accrue a liability when we believe that it is both probable that a liability has been incurred and that we can reasonably estimate the amount of the loss. We do not believe that the final outcome of these proceedings or matters will have a material adverse effect on our condensed consolidated financial statements.
42

INVITATION HOMES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
Note 15-Subsequent Events
In connection with the preparation of the accompanying condensed consolidated financial statements, we have evaluated events and transactions occurring after September 30, 2021, for potential recognition or disclosure.
Extension of Existing Mortgage Loan
On October 12, 2021, we submitted a notification to exercise an extension of the maturity date of the IH 2018-4 mortgage loan from January 9, 2022 to January 9, 2023.
2021 Public Offering
On October 21, 2021, we sold 1,875,000 shares of our common stock pursuant to the underwriters' full exercise of the option to purchase additional shares, generating net proceeds of $74,534, after giving effect to commissions and other costs totaling $466.
Dividend Declaration
On October 20, 2021, our board of directors declared a dividend of $0.17 per share to stockholders of record on November 9, 2021, which is payable on November 24, 2021.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the information appearing elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K. This discussion and analysis contains forward-looking statements based upon our current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under Part I. Item 1A. "Risk Factors" of our Annual Report on Form 10-K.
Capitalized terms used without definition have the meaning provided elsewhere in this Quarterly Report on Form 10-Q.
Overview
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 September 30, 2021, Invitation Homes is meeting changing lifestyle demands by providing residents access to updated homes with features they value, such as close proximity to jobs and access to good schools. Our mission statement, "Together with you, we make a house a home," reflects our commitment to high-touch service that continuously enhances residents' living experiences and provides homes where individuals and families can thrive.
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.
We invest in markets that we expect will exhibit lower new supply, stronger job and household formation growth, and superior net operating income ("NOI") growth relative to the broader United States housing and rental markets. Within our 16 markets, we target attractive neighborhoods in in-fill locations with multiple demand drivers, such as proximity to major employment centers, desirable schools, and transportation corridors. 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 the 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. The in-fill locations and high quality of our homes and service further differentiate our resident experience, which we continue to refine.
COVID-19
The ongoing COVID-19 pandemic has had a significant adverse impact on global and United States economic activity and has contributed to significant volatility and disruption in financial markets. 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. As such, we continue to closely monitor the impact of the ongoing COVID-19 pandemic on all aspects of our business and actively manage our response thereto in collaboration with our residents and business partners.
With the safety and well-being of our residents and associates being our highest priority during the ongoing COVID-19 pandemic, we implemented a host of measures and continue to follow protocols that enable 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 including a supply of masks, gloves, shoe covers, and hand sanitizer for field teams; (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.
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We also continue to adhere to 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 work with our residents experiencing financial hardship to try to find solutions that keep them in their homes. This includes providing 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 $23.0 million in rental assistance payments during the nine months ended September 30, 2021, and $25.5 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 three and nine months ended September 30, 2021.
Our overall revenue collections as a percentage of monthly billings was 97% for the three months ended September 30, 2021, or approximately 98% of our historical average.
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. Item 1A. "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. We are in the process of 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 cooperating with this request.
As these inquiries are ongoing, we cannot currently predict their timing, outcome, or scope.
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Our Portfolio
The following table provides summary information regarding our total and Same Store portfolios as of and for the three months ended September 30, 2021 as noted below:
Market
Number of Homes(1)
Average Occupancy(2)
Average Monthly
Rent(3)
Average Monthly
Rent PSF(3)
% of
Revenue(4)
Western United States:
Southern California
7,894 98.3% $2,670 $1.57 12.6 %
Northern California
4,322 96.5% 2,333 1.50 6.1 %
Seattle
3,908 95.3% 2,392 1.24 5.5 %
Phoenix
8,626 96.3% 1,647 0.99 8.8 %
Las Vegas
3,021 97.7% 1,855 0.93 3.6 %
Denver
2,598 90.6% 2,241 1.23 3.4 %
Western United States Subtotal
30,369 96.4% 2,181 1.26 40.0 %
Florida:
South Florida
8,239 97.6% 2,355 1.26 12.1 %
Tampa
8,336 97.8% 1,831 0.98 9.7 %
Orlando
6,310 97.3% 1,830 0.98 7.3 %
Jacksonville
1,880 98.2% 1,832 0.92 2.2 %
Florida Subtotal
24,765 97.6% 2,006 1.07 31.3 %
Southeast United States:
Atlanta
12,619 97.4% 1,671 0.81 13.2 %
Carolinas
5,132 96.5% 1,736 0.81 5.4 %
Southeast United States Subtotal
17,751 97.1% 1,690 0.81 18.6 %
Texas:
Houston
2,139 96.7% 1,647 0.85 2.2 %
Dallas
2,827 96.7% 1,915 0.93 3.3 %
Texas Subtotal
4,966 96.7% 1,799 0.90 5.5 %
Midwest United States:
Chicago
2,573 97.7% 2,068 1.28 3.2 %
Minneapolis
1,122 96.0% 2,036 1.04 1.4 %
Midwest United States Subtotal
3,695 97.2% 2,058 1.20 4.6 %
Announced Market-in-Exit:
Nashville(5)
3 33.7% 3,694 1.06 - %
Total / Average
81,549 97.0% $1,991 $1.06 100.0 %
Same Store Total / Average
72,423 98.1% $1,989 $1.07 90.2 %
(1)As of September 30, 2021.
(2)Represents average occupancy for the three months ended September 30, 2021.
(3)Represents average monthly rent for the three months ended September 30, 2021.
(4)Represents the percentage of rental revenues and other property income generated in each market for the three months ended September 30, 2021.
(5)In December 2019, we announced a plan to fully exit the Nashville market. As of September 30, 2021, we have three remaining homes in the market.
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Factors That Affect Our Results of Operations and Financial Condition
Our results of operations and financial condition are affected by numerous factors, many of which are beyond our control. See Part I. Item 1A. "Risk Factors" of our Annual Report on Form 10-K for more information regarding factors that could materially adversely affect our results of operations and financial condition. 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.
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 71.3% of our rental revenues and other property income during the three months ended September 30, 2021. We actively monitor the impact of the COVID-19 outbreak on market fundamentals and quickly implement changes in pricing as market fundamentals shift.
Rental Rates and Occupancy Levels:Rental rates and occupancy levels are primary drivers of rental revenues and other property income. Our rental rates and occupancy levels are affected by macroeconomic factors and local and property-level factors, including market conditions, seasonality, resident defaults, and the amount of time it takes to prepare a home for its next resident and re-lease homes when residents vacate. 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 and may impact our ability to maintain occupancy levels.
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. 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.
Turnover Rates and Days to Re-Resident:Other drivers of rental revenues and property operating and maintenance expense include the length of stay of our residents, resident turnover rates, and the number of days a home is unoccupied between residents. 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, and both current economic conditions and future economic outlook, both of which are impacted by the ongoing COVID-19 pandemic. Days to re-resident may be negatively affected by homes potentially remaining vacant while prospective residents remain in their current housing. 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:Property improvements and maintenance impact capital expenditures, property operating and maintenance expense, and rental revenues. 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.
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Property Acquisitions and Renovations:Future growth in rental revenues and other property income may be impacted by our ability to identify and acquire homes, our pace of property acquisitions, and the time and cost required to renovate and lease a newly acquired home. 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.
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). 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 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. Additionally, COVID-19 and related containment measures may interfere with 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. Due to our size and scale both nationally and locally, we believe we are able to purchase goods and services at favorable prices.
Financing Arrangements:Financing arrangements directly impact our interest expense, our various debt instruments, and our ability to acquire and renovate homes. 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. See Part I. Item 3. "Quantitative and Qualitative Disclosures about Market Risk" for further discussion regarding interest rate risk. Our future financing arrangements may not have similar terms with respect to amounts, interest rates, financial covenants, and durations.
Components of Revenues and Expenses
The following is a description of the components of our revenues and expenses.
Revenues
Rental Revenues and Other Property Income
Rental revenues, net of any concessions and bad debt (including write-offs, credit reserves, and uncollectible amounts), consist of rents collected under lease agreements related to our single-family homes for lease. We enter into leases directly with our residents, and the leases typically have a term of one to two years.
Other property income is comprised of: (i) resident reimbursements for utilities, HOA fines, and other charge-backs; (ii) rent and non-refundable deposits associated with pets; (iii) revenues from ancillary services such as smart homes and HVAC replacement filters; and (iv) various other fees, including late fees, 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.
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Expenses
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, leasing costs, marketing expenses, and property administration. Prior to a property being "rent-ready," certain of these expenses are capitalized as building and improvements. Once a property is "rent-ready," expenditures for ordinary repairs and maintenance thereafter are expensed as incurred, and we capitalize expenditures that improve or extend the life of a home.
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.
General and Administrative
General and administrative expense represents personnel costs, professional fees, and other costs associated with our day-to-day activities. General and administrative expense may also include expenses that are of a non-recurring nature, such as severance.
Share-Based Compensation Expense
All share-based compensation expense is recognized in our condensed 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.
Interest Expense
Interest expense includes interest payable on our debt instruments, payments and receipts related to our interest rate swap agreements, amortization of discounts and deferred financing costs, unrealized gains (losses) on non-designated hedging instruments, and non-cash interest expense related to our interest rate swap agreements.
Depreciation and Amortization
We recognize depreciation and amortization expense associated with our homes and other capital expenditures over the expected useful lives of the assets.
Impairment and Other
Impairment and other represents provisions for impairment when the carrying amount of our single-family residential properties is not recoverable and casualty (gains) losses, net of any insurance recoveries.
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.
Other, net
Other, net includes interest income and other miscellaneous income and expenses.
Gain on Sale of Property, net of tax
Gain on sale of property, net of tax consists of net gains and losses resulting from sales of our homes.
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Income from Investments in Unconsolidated Joint Ventures
Income from investments in unconsolidated joint ventures consists of our share of net earnings and losses from investments in unconsolidated joint ventures accounted for using the equity method.
Results of Operations
Portfolio Information
As of September 30, 2021 and 2020, we owned 81,549 and 79,397 single-family rental homes, respectively, in our total portfolio. During the three months ended September 30, 2021 and 2020, we acquired 1,082 and 544 homes, respectively, and sold 145 and 403 homes, respectively. During the three months ended September 30, 2021 and 2020, we owned an average of 81,007 and 79,285 single-family rental homes, respectively. During the nine months ended September 30, 2021 and 2020, we acquired 1,977 and 1,195 homes, respectively, and sold 605 and 1,303 homes, respectively. During the nine months ended September 30, 2021 and 2020, we owned an average of 80,547 and 79,412 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. To do so, we provide information regarding the performance of our Same Store portfolio.
As of September 30, 2021, our Same Store portfolio consisted of 72,423 single-family rental homes.
Three Months Ended September 30, 2021 Compared to Three Months Ended September 30, 2020
The following table sets forth a comparison of the results of operations for the three months ended September 30, 2021 and 2020:
For the Three Months
Ended September 30,
($ in thousands) 2021 2020 $ Change % Change
Revenues:
Rental revenues and other property income $ 508,178 $ 459,184 $ 48,994 10.7 %
Joint venture management fees 1,354 - 1,354 N/M
Total revenues 509,532 459,184 50,348 11.0 %
Expenses:
Property operating and maintenance 184,484 177,997 6,487 3.6 %
Property management expense 17,886 14,824 3,062 20.7 %
General and administrative 19,369 17,972 1,397 7.8 %
Interest expense 79,370 87,713 (8,343) (9.5) %
Depreciation and amortization 150,694 138,147 12,547 9.1 %
Impairment and other 4,294 1,723 2,571 149.2 %
Total expenses 456,097 438,376 17,721 4.0 %
Gains (losses) on investments in equity securities, net 4,319 - 4,319 N/M
Other, net (1,508) (3,049) 1,541 50.5 %
Gain on sale of property, net of tax 13,047 15,106 (2,059) (13.6) %
Income from investments in unconsolidated joint ventures 202 - 202 N/M
Net income $ 69,495 $ 32,865 $ 36,630 111.5 %
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Revenues
For the three months ended September 30, 2021 and 2020, total revenues were $509.5 million and $459.2 million, respectively. Set forth below is a discussion of changes in the individual components of total revenues.
For the three months ended September 30, 2021 and 2020, total portfolio rental revenues and other property income totaled $508.2 million and $459.2 million, respectively, an increase of 10.7%, driven by an increase in average monthly rent per occupied home and a 1,722 home increase between periods in the average number of homes owned.
Average occupancy for the three months ended September 30, 2021 and 2020 for the total portfolio was 97.0% and 96.9%, respectively. Average monthly rent per occupied home for the total portfolio for the three months ended September 30, 2021 and 2020 was $1,991 and $1,881, respectively, a 5.8% increase. For our Same Store portfolio, average occupancy was 98.1% and 97.8% for the three months ended September 30, 2021 and 2020, respectively, and average monthly rent per occupied home for the three months ended September 30, 2021 and 2020 was $1,989 and $1,880, respectively, a 5.8% increase.
The annualized turnover rate for the Same Store portfolio for the three months ended September 30, 2021 and 2020 was 25.1% and 29.7%, respectively. For the Same Store portfolio, an average home remained unoccupied for 25 and 26 days between residents for the three months ended September 30, 2021 and 2020, 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 a pandemic). 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.
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. Leases are either renewal leases, where our current resident stays for a subsequent lease term, or new leases, where our previous resident moves out and a new resident signs a lease to occupy the same home.
Renewal lease net effective rental rate growth for the total portfolio averaged 7.7% and 3.3% for the three months ended September 30, 2021 and 2020, respectively, and new lease net effective rental rate growth for the total portfolio averaged 18.3% and 5.7% for the three months ended September 30, 2021 and 2020, respectively. For our Same Store portfolio, renewal lease net effective rental rate growth averaged 7.8% and 3.2% for the three months ended September 30, 2021 and 2020, respectively, and new lease net effective rental rate growth averaged 18.4% and 5.6% for the three months ended September 30, 2021 and 2020, respectively.
During the three months ended September 30, 2020, almost all late fees typically enforced in accordance with our lease agreements were not enforced or collected. During the three months ended September 30, 2021, enforcement and collection of late fees generally occurred in all markets where permissible. While the effects of the COVID-19 pandemic and the ensuing jurisdictional restrictions on rental rates, late fees, collections, and evictions have decreased substantially 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 three months ended September 30, 2021, joint venture management fees totaled $1.4 million.
Expenses
For the three months ended September 30, 2021 and 2020, total expenses were $456.1 million and $438.4 million, respectively. Set forth below is a discussion of changes in the individual components of total expenses.
For the three months ended September 30, 2021, property operating and maintenance expense increased to $184.5 million from $178.0 million for the three months ended September 30, 2020. In addition to a 1,722 home increase in the average number of homes owned between periods, increases in property taxes, personnel and other services costs, utilities, and HOA expenses contributed to the overall 3.6% net increase in property operating and maintenance expense. During the three months ended September 30, 2020, as a result of the COVID-19 pandemic, controllable expenses such as
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turnover and property administrative costs declined significantly. We also believe HOA expenses were lower due to stay-at-home orders that reduced the number of fines and violations we received.
Property management expense and general and administrative expense increased to $37.3 million from $32.8 million for the three months ended September 30, 2021 and 2020, respectively. The increase was primarily due to a $2.4 million increase in short term incentive plan compensation based on estimated annual performance and increased spend for projects intended to improve the resident and associate experiences. To date, the COVID-19 pandemic has not had a material impact on our property management and general and administrative expenses.
Interest expense decreased from $87.7 million for the three months ended September 30, 2020 to $79.4 million for the three months ended September 30, 2021. The decrease in interest expense was primarily due to refinancing activities since September 30, 2020, including the December 2020 amended and restated credit facility which increased the balance of the term loan by $1,000.0 million, $950.0 million of newly issued unsecured notes, repayment of $2,241.2 million of mortgage loan indebtedness, and conversion of $198.5 million of convertible debt to shares of our common stock. This activity resulted in the following net impacts: (1) a 37 bps decrease in the weighted average interest rate on our outstanding debt at each respective period end and (2) a decrease in our average debt outstanding, from $8,372.7 million for the three months ended September 30, 2020 to $7,964.7 million for the three months ended September 30, 2021 due to various prepayments made subsequent to September 30, 2020.
Depreciation and amortization expense increased to $150.7 million for the three months ended September 30, 2021 from $138.1 million for the three months ended September 30, 2020 due to an increase in cumulative capital expenditures and an increase in the average number of homes owned during the three months ended September 30, 2021 compared to the three months ended September 30, 2020.
Impairment and other expenses were $4.3 million and $1.7 million for the three months ended September 30, 2021 and 2020, respectively. During the three months ended September 30, 2021, impairment and other expenses were comprised of impairment losses of $0.1 million on our single-family residential properties and net casualty losses of $4.2 million. During the three months ended September 30, 2020, impairment and other expenses were comprised of impairment losses of $0.3 million on our single-family residential properties and net casualty losses of $1.4 million. The impairment costs recognized during the three months ended September 30, 2021 and 2020 were not a direct result of the COVID-19 pandemic.
Gains (Losses) on Investments in Equity Securities, net
For the three months ended September 30, 2021, $4.3 million of gains (losses) on investments in equity securities, net was comprised of $14.2 million of realized gains from the sale of equity securities, net of $(9.9) million of unrealized losses from reversals of previously recorded unrealized gains on the sold equity securities and marking investments that have a readily determinable fair value to market as of September 30, 2021. There were no gains (losses) on investments in equity securities, net during the three months ended September 30, 2020.
Other, net
Other, net was $(1.5) million for the three months ended September 30, 2021 compared to $(3.0) million for the three months ended September 30, 2020. The change is primarily due to the non-recurrence of a $1.8 million ROU lease impairment during the three months ended September 30, 2020 and lower interest income from our investments in debt securities. Additionally, joint venture management fees and income from investments in unconsolidated joint ventures presented separately on our condensed consolidated statement of operations for the three months ended September 30, 2021 were included in other, net during the three months ended September 30, 2020.
Gain on Sale of Property, net of tax
Gain on sale of property, net of tax was $13.0 million and $15.1 million for the three months ended September 30, 2021 and 2020, respectively. The primary driver of the decrease was a decrease in the number of homes sold from 403 for the three months ended September 30, 2020 to 145 for the three months ended September 30, 2021, offset by an increase in disposition proceeds received per home between periods.
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Income from Investments in Unconsolidated Joint Ventures
Income from investments in unconsolidated joint ventures was comprised of our equity in earnings and/or (losses) therefrom on a net basis.
Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020
The following table sets forth a comparison of the results of operations for the nine months ended September 30, 2021 and 2020:
For the Nine Months
Ended September 30,
($ in thousands) 2021 2020 $ Change % Change
Revenues:
Rental revenues and other property income $ 1,473,250 $ 1,358,728 $ 114,522 8.4 %
Joint venture management fees 3,140 - 3,140 N/M
Total revenues 1,476,390 1,358,728 117,662 8.7 %
Expenses:
Property operating and maintenance 528,279 511,915 16,364 3.2 %
Property management expense 51,424 43,725 7,699 17.6 %
General and administrative 56,147 46,626 9,521 20.4 %
Interest expense 243,540 258,541 (15,001) (5.8) %
Depreciation and amortization 440,475 410,440 30,035 7.3 %
Impairment and other 5,630 4,670 960 20.6 %
Total expenses 1,325,495 1,275,917 49,578 3.9 %
Gains (losses) on investments in equity securities, net (5,823) 34 (5,857) N/M
Other, net (3,181) 2,001 (5,182) (259.0) %
Gain on sale of property, net of tax 45,450 41,473 3,977 9.6 %
Income from investments in unconsolidated joint ventures 564 - 564 N/M
Net income $ 187,905 $ 126,319 $ 61,586 48.8 %
Revenues
For the nine months ended September 30, 2021 and 2020, total revenues were $1,476.4 million and $1,358.7 million, respectively. Set forth below is a discussion of changes in the individual components of total revenues.
For the nine months ended September 30, 2021 and 2020, total portfolio rental revenues and other property income totaled $1,473.3 million and $1,358.7 million, respectively, an increase of 8.4%, driven by an increase in average occupancy, an increase in average monthly rent per occupied home, and an 1,135 home increase between periods in the average number of homes owned, partially offset by an increase in bad debt.
Average occupancy for the nine months ended September 30, 2021 and 2020 for the total portfolio was 97.3% and 95.8%, respectively. Average monthly rent per occupied home for the total portfolio for the nine months ended September 30, 2021 and 2020 was $1,950 and $1,867, respectively, a 4.4% increase. For our Same Store portfolio, average occupancy was 98.3% and 97.3% for the nine months ended September 30, 2021 and 2020, respectively, and average monthly rent per occupied home for the nine months ended September 30, 2021 and 2020 was $1,948 and $1,866, respectively, a 4.4% increase.
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The annualized turnover rate for the Same Store portfolio for the nine months ended September 30, 2021 and 2020 was 24.3% and 27.7%, respectively. For the Same Store portfolio, an average home remained unoccupied for 26 and 38 days between residents for the nine months ended September 30, 2021 and 2020, 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.
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. Leases are either renewal leases, where our current resident stays for a subsequent lease term, or new leases, where our previous resident moves out and a new resident signs a lease to occupy the same home.
Renewal lease net effective rental rate growth for the total portfolio averaged 6.0% and 3.7% for the nine months ended September 30, 2021 and 2020, respectively, and new lease net effective rental rate growth for the total portfolio averaged 13.6% and 3.6% for the nine months ended September 30, 2021 and 2020, respectively. For our Same Store portfolio, renewal lease net effective rental rate growth averaged 6.1% and 3.6% for the nine months ended September 30, 2021 and 2020, respectively, and new lease net effective rental rate growth averaged 13.6% and 3.5% for the nine months ended September 30, 2021 and 2020, 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) we experienced lower collection rates, which caused bad debt as a percentage of gross rental income to increase from 1.5% for the nine months ended September 30, 2020 to 1.7% for the nine months ended September 30, 2021; 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 second quarter of 2021, enforcement and collections of late fees generally re-commenced in all markets where permissible. 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 nine months ended September 30, 2021, joint venture management fees totaled $3.1 million.
Expenses
For the nine months ended September 30, 2021 and 2020, total expenses were $1,325.5 million and $1,275.9 million, respectively. Set forth below is a discussion of changes in the individual components of total expenses.
For the nine months ended September 30, 2021, property operating and maintenance expense increased to $528.3 million from $511.9 million for the nine months ended September 30, 2020. In addition to an 1,135 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 3.2% net increase in property operating and maintenance expense.
Property management expense and general and administrative expense increased to $107.6 million from $90.4 million for the nine months ended September 30, 2021 and 2020, respectively. The increase is comprised primarily of a $8.8 million increase in share-based compensation expense due to changes in expected results for performance-based awards and a $6.6 million increase in short term incentive plan compensation based on estimated annual performance. Other than the impact on share-based compensation expense, to date, the COVID-19 pandemic has not had a material impact on our property management and general and administrative expenses.
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Interest expense decreased from $258.5 million for the nine months ended September 30, 2020 to $243.5 million for the nine months ended September 30, 2021. The decrease in interest expense was primarily due to refinancing activities since September 30, 2020, including the December 2020 amended and restated credit facility which increased the balance of the term loan by $1,000.0 million, $950.0 million of newly issued unsecured notes, repayment of $2,241.2 million of mortgage loan indebtedness, and conversion of $198.5 million of convertible debt to shares of our common stock. This activity resulted in the following net impacts: (1) a 37 bps decrease in the weighted average interest rate on our outstanding debt at each respective period end and (2) a decrease in our average debt outstanding, from $8,485.7 million for the nine months ended September 30, 2020 to $8,020.5 million for the nine months ended September 30, 2021 due to various prepayments made subsequent to September 30, 2020.
Depreciation and amortization expense increased to $440.5 million for the nine months ended September 30, 2021 from $410.4 million for the nine months ended September 30, 2020 due to an increase in cumulative capital expenditures and an increase in the average number of homes owned during the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020.
Impairment and other expenses were $5.6 million and $4.7 million for the nine months ended September 30, 2021 and 2020, respectively. During the nine months ended September 30, 2021, impairment and other expenses were comprised of impairment losses of $0.6 million on our single-family residential properties and net casualty losses of $5.0 million. During the nine months ended September 30, 2020, impairment and other expenses were comprised of impairment losses of $4.2 million on our single-family residential properties and net casualty losses of $0.5 million. The impairment costs recognized during the nine months ended September 30, 2021 and 2020 were not a direct result of the COVID-19 pandemic.
Gains (Losses) on Investments in Equity Securities, net
For the nine months ended September 30, 2021, $(5.8) million of gains (losses) on investments in equity securities, net was comprised of $21.9 million of unrealized losses from reversals of previously recorded unrealized gains on sold equity securities and marking investments that have a readily determinable fair value to market as of September 30, 2021, net of $16.1 million of realized gains from the sale of equity securities.
Other, net
Other, net was $(3.2) million for the nine months ended September 30, 2021 compared to $2.0 million for the nine months ended September 30, 2020, primarily due to lower interest income from our investments in debt securities and increases in debt and transaction costs between those periods, partially offset by the non-recurrence of a $1.8 million ROU lease impairment during the nine months ended September 30, 2020. Additionally, joint venture management fees and income from investments in unconsolidated joint ventures presented separately on our condensed consolidated statement of operations for the nine months ended September 30, 2021 were included in other, net during the nine months ended September 30, 2020.
Gain on Sale of Property, net of tax
Gain on sale of property, net of tax was $45.5 million and $41.5 million for the nine months ended September 30, 2021 and 2020, 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 1,303 for the nine months ended September 30, 2020 to 605 for the nine months ended September 30, 2021.
Income from Investments in Unconsolidated Joint Ventures
Income from investments in unconsolidated joint ventures was comprised of our equity in earnings and/or (losses) therefrom on a net basis.
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Liquidity and Capital Resources
Our liquidity and capital resources as of September 30, 2021 and December 31, 2020 include unrestricted cash and cash equivalents of $569.7 million and $213.4 million, respectively, a 166.9% 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 nine months ended September 30, 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 September 2021, we completed an underwritten public offering to sell 12,500,000 shares of our common stock and generated net proceeds of $496.7 million (the "2021 Public Offering"). On October 21, 2021, we sold 1,875,000 shares of our common stock pursuant to the underwriters' full exercise of the option to purchase additional shares, generating net proceeds of $74.5 million. Proceeds were and will be used primarily for general corporate purposes, including acquisitions.
•We sold 4,951,969 shares of our common stock under our at the market equity program ("ATM Equity Program"), generating net proceeds of $196.8 million after giving effect to agent commissions and other costs totaling $3.2 million. As of September 30, 2021, $300.1 million remains available for future offerings under the ATM Equity Program.
•We settled $198.5 million of the 2022 Convertible Notes (defined below) through the issuance of 8,723,421 shares of our common stock.
As of September 30, 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 December 2024, provided all extensions are exercised, with the exception of $146.5 million of convertible notes maturing in January 2022 which we will settle with the issuance of shares of our common stock.
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, as detailed in Part I. Item 1A. "Risk Factors" of our Annual Report on Form 10-K.
Through September 30, 2021, disposition channels remained healthy in our markets, and we continue to sell homes that are designated for disposition. With a pipeline of acquisitions to which we are committed of $511.6 million as of September 30, 2021, we have limited cash commitments outside of acquisitions and debt service. However, the ongoing impact of the COVID-19 pandemic may impact the acquisition and disposition of single-family homes in ways that we are unable to predict.

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Long-Term Debt Strategy
The following table summarizes certain information about our debt obligations as of September 30, 2021 ($ in thousands):
Debt Instruments Balance
(Gross of Retained Certificates and Unamortized Discounts) 		Balance
(Net of Retained Certificates) 		Weighted Average Interest Rate
Weighted Average Years to Maturity(1)
Amount Freely Prepayable (Gross)
Secured:
IH 2017-1(2)
$ 995,748 $ 940,248 4.23% 5.7 $ -
IH 2017-2(2)
184,400 175,179 L + 107 bps 3.2 184,400
IH 2018-1(2)
570,134 541,606 L + 88 bps 3.4 570,134
IH 2018-2(2)
629,863 598,359 L + 105 bps 3.7 629,863
IH 2018-3(2)
819,039 778,071 L + 112 bps 3.8 819,039
IH 2018-4(2)
670,920 637,361 L + 122 bps 4.3 670,920
Secured Term Loan(3)(4)
403,363 403,363 3.59% 9.7 -
Total secured(5)
4,273,467 $ 4,074,187 3.79% 4.8 2,874,356
Unsecured:
2022 Convertible Senior Notes(6)
146,491 3.50% 0.3 -
Term Loan Facility(4)
2,500,000 L + 100 bps 4.3 2,500,000
Revolving Facility(4)
- L + 90 bps 4.3 -
Unsecured Notes(4)- May 2028
150,000 2.46% 6.7 -
Unsecured Notes(4)- August 2031
650,000 2.00% 9.9 -
Unsecured Notes(4)- May 2036
150,000 3.18% 14.7 -
Total unsecured(5)
3,596,491 3.15% 5.7 2,500,000
Total debt(5)
7,869,958 3.50% 5.2 $ 5,374,356
Unamortized discounts and fair value adjustments (13,002)
Deferred financing costs, net (43,819)
Total debt per balance sheet 7,813,137
Retained certificates (199,280)
Cash and restricted cash, excluding security deposits and letters of credit (653,475)
Deferred financing costs, net 43,819
Unamortized discounts and fair value adjustments 13,002
Net debt $ 7,017,203
(1)Weighted average years to maturity assumes all extension options are exercised, which are subject to certain conditions being met.
(2)Except for IH 2017-1, interest rates are based on a weighted average spread over the London Interbank Offer Rate ("LIBOR") (or a comparable or successor rate as provided for in our loan agreements), plus applicable servicing fees; as of September 30, 2021, LIBOR was 0.08%. Our IH 2017-1 mortgage loan 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.
(3)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.
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(4)Defined below.
(5)For secured debt, unsecured debt, and total debt, the weighted average interest rate is calculated based on LIBOR as of September 30, 2021, 0.08%, and includes the impact of interest rate swap agreements effective as of September 30, 2021.
(6)Effective July 15, 2021, we notified note holders of our intent to settle conversions of the 2022 Convertible Notes in shares of common stock.

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 EBITDAre(see "- Non-GAAP Measures - EBITDA, EBITDAre, and Adjusted EBITDAre"), 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 2024 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. 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. For further discussion of risks related to our indebtedness, see Part I. Item 1A. "Risk Factors - Risks Related to Our Indebtedness," including "Risk Factors - Risks Relating to Our Indebtedness - We may be unable to obtain financing through the debt and equity markets, which would have a material adverse effect on our growth strategy and our financial condition and results of operations" in our Annual Report on Form 10-K.
Short-Term and Long-Term Liquidity Needs
Liquidity is a measure of our ability to meet potential cash requirements, maintain our assets, fund our operations, make dividend payments to our stockholders, and meet other general requirements of our business. Our liquidity, to a certain extent, is subject to general economic, financial, competitive, and other factors beyond our control. Our near-term liquidity requirements consist primarily of: (i) renovating newly-acquired homes; (ii) funding HOA fees (as applicable), property taxes, insurance premiums, and the ongoing maintenance of our homes; (iii) interest expense; (iv) payment of dividends to our equity investors; and (v) required contributions to the Rockpoint Group, L.L.C. ("Rockpoint") joint venture. 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 Rockpoint joint venture's financing. We do not expect this guarantee to have a material current or future effect on our liquidity.
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 such loan agreement under which 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. If an event of default occurs for a specific mortgage loan or for our secured term loan, our loan agreements provide certain remedies, including our ability to fund shortfalls from consolidated cash flow; and such an event of default would not result in an immediate acceleration of the loan.
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 September 30, 2021.
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 payments on and maturities of our indebtedness. We intend to satisfy our long-term liquidity needs through cash provided by operations, long-term secured and unsecured borrowings, the issuance of debt and equity securities, and property dispositions. As a REIT, we are required to distribute to our stockholders at least 90% of our taxable income, excluding net capital gain, on an annual basis. Therefore, as a general matter, it is unlikely that we will be able to retain substantial cash balances from our annual taxable income that could be used to meet our liquidity needs.
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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.
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. 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. 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.
Supplemental Guarantor Information
In March 2020, the SEC adopted amendments to Rule 3-10 of Regulation S-X and created Rule 13-01 to simplify disclosure requirements related to certain registered securities. The amendments became effective on January 4, 2021. INVH, INVH LP, Invitation Homes OP GP LLC (the "General Partner"), and IH Merger Sub, LLC ("IH Merger Sub") have filed a registration statement on Form S-3 with the SEC registering, among other securities, debt securities of INVH LP, fully and unconditionally guaranteed, on a joint and several basis, by INVH, the General Partner, and/or IH Merger Sub. As a result of the amendments to Rule 3-10 of Regulation S-X, subsidiary issuers of obligations guaranteed by the parent are not required to provide separate financial statements, provided that the subsidiary obligor is consolidated into the parent company's consolidated financial statements, the parent guarantee is "full and unconditional" and, subject to certain exceptions as set forth below, the alternative disclosure required by Rule 13-01 is provided, which includes narrative disclosure and summarized financial information. Accordingly, separate consolidated financial statements of INVH LP, the General Partner, and IH Merger Sub have not been presented.
Furthermore, as permitted under Rule 13-01(a)(4)(vi) of Regulation S-X, we have excluded the summarized financial information for the INVH LP, the General Partner, and IH Merger Sub, because the combined assets, liabilities, and results of operations of INVH, INVH LP, the General Partner, and IH Merger Sub are not materially different than the corresponding amounts in our condensed consolidated financial statements, and management believes such summarized financial information would be repetitive and would not provide incremental value to investors.
The following describes the key terms of our current indebtedness.
Mortgage Loans
Our securitization transactions (the "Securitizations" or the "mortgage loans") are collateralized by certain homes owned by wholly owned subsidiaries of INVH LP that were formed to facilitate certain of our financing arrangements (the "Borrower Entities"). We utilize the proceeds from our securitizations to fund: (i) repayments of then-outstanding indebtedness; (ii) initial deposits into Securitization reserve accounts; (iii) closing costs in connection with the mortgage loans; and (iv) general costs associated with our operations.
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The following table sets forth a summary of our mortgage loan indebtedness as of September 30, 2021 and December 31, 2020:
Outstanding Principal Balance(5)
($ in thousands)
Maturity
Date(1)
Maturity Date if
Fully Extended(2)
Interest
Rate(3)
Range of Spreads(4)
September 30,
2021 		December 31,
2020
IH 2017-1(6)
June 9, 2027 June 9, 2027 4.23% N/A $ 993,723 $ 994,787
IH 2017-2(7)(8)
December 9, 2021 December 9, 2024 1.15% 91-151 bps 184,400 612,506
IH 2018-1(7)
March 9, 2022 March 9, 2025 0.96% 76-131 bps 570,134 646,021
IH 2018-2(7)
June 9, 2022 June 9, 2025 1.13% 95-133 bps 629,863 693,988
IH 2018-3(7)
July 9, 2022 July 9, 2025 1.20% 105-135 bps 819,039 1,036,561
IH 2018-4(7)(9)
January 9, 2022 January 9, 2026 1.30% 115-145 bps 670,920 848,270
Total Securitizations 3,868,079 4,832,133
Less: deferred financing costs, net (10,216) (12,035)
Total $ 3,857,863 $ 4,820,098
(1)The maturity dates above reflect all extension options that have been exercised.
(2)Represents the maturity date if we exercise each of the remaining one year extension options available, which are subject to certain conditions being met.
(3)Except for IH 2017-1, interest rates are based on a weighted average spread over the LIBOR, plus applicable servicing fees; as of September 30, 2021, LIBOR was 0.08%. Our IH 2017-1 mortgage loan 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)Range of spreads is based on outstanding principal balances as of September 30, 2021.
(5)Outstanding principal balance is net of discounts and does not include deferred financing costs, net.
(6)Net of unamortized discount of $2.0 million and $2.3 million as of September 30, 2021 and December 31, 2020, respectively.
(7)The initial maturity term of each of these mortgage loans is two years, individually subject to three to five, one year extension options at the Borrower Entity's discretion (provided that there is no continuing event of default under the mortgage loan agreement and the Borrower Entity obtains and delivers to the lender a replacement interest rate cap agreement from an approved counterparty within the required timeframe). Our IH 2018-4 mortgage loan has exercised the first extension option, and our IH 2017-2, IH 2018-1, IH 2018-2, and IH 2018-3 mortgage loans have exercised the second extension option. The maturity dates above reflect all extensions that have been exercised.
(8)On September 13, 2021, we submitted a notification to exercise an extension of the maturity date of the IH 2017-2 mortgage loan from December 9, 2021 to December 9, 2022.
(9)On October 12, 2021, we submitted a notification to exercise an extension of the maturity date of the IH 2018-4 mortgage loan from January 9, 2022 to January 9, 2023.
Securitization Transactions
For each Securitization transaction, the Borrower Entity executed a loan agreement with a third party lender. Except for IH 2017-1, each outstanding mortgage loan originally consisted of six floating rate components. The two year initial terms are individually subject to three to five, one year extension options at the Borrower Entity's discretion. Such extensions are available provided there is no continuing event of default under the respective mortgage loan agreement and the Borrower Entity obtains and delivers a replacement interest rate cap agreement from an approved counterparty within the required timeframe to the lender. IH 2017-1 is a 10 year, fixed rate mortgage loan comprised of two components. Certificates issued by the trust in connection with Component A of IH 2017-1 benefit from the Federal National Mortgage Association's guaranty of timely payment of principal and interest.
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Each mortgage loan is secured by a pledge of the equity in the assets of the respective Borrower Entities, as well as first-priority mortgages on the underlying properties and a grant of security interests in all of the related personal property. As of September 30, 2021 and December 31, 2020, a total of 31,160 and 31,316 homes, respectively, with a gross book value of $6,901.7 million and $6,888.3 million, respectively, and a net book value of $5,621.5 million and $5,761.6 million, respectively, are pledged pursuant to the mortgage loans. Each Borrower Entity has the right, subject to certain requirements and limitations outlined in the respective loan agreements, to substitute properties. We are obligated to make monthly payments of interest for each mortgage loan.
Transactions with Trusts
Concurrent with the execution of each mortgage loan agreement, the respective third party lender sold each loan it originated to individual depositor entities (the "Depositor Entities") who subsequently transferred each loan to Securitization-specific trust entities (the "Trusts"). The Depositor Entities for our currently outstanding Securitizations are wholly owned subsidiaries. We accounted for the transfers of the individual Securitizations from the wholly owned Depositor Entities to the respective Trusts as sales under ASC 860, Transfers and Servicing, with no resulting gain or loss as the Securitizations were both originated by the lender and immediately transferred at the same fair market value.
As consideration for the transfer of each loan to the Trusts, the Trusts issued classes of certificates which mirror the components of the individual loans (collectively, the "Certificates") to the Depositor Entities, except that Class R certificates do not have related loan components as they represent residual interests in the Trusts. The Certificates represent the entire beneficial interest in the Trusts. Following receipt of the Certificates, the Depositor Entities sold the Certificates to investors and used the proceeds as consideration for the loans sold to the Depositor Entities by the lenders. These transactions had no effect on our condensed consolidated financial statements other than with respect to Certificates we retained in connection with Securitizations or purchased at a later date.
The Trusts are structured as pass-through entities that receive interest payments from the Securitizations and distribute those payments to the holders of the Certificates. The assets held by the Trusts are restricted and can only be used to fulfill the obligations of those entities. The obligations of the Trusts do not have any recourse to the general credit of any entities in these condensed consolidated financial statements. We have evaluated our interests in certain certificates of the Trusts held by us (discussed below) and determined that they do not create a more than insignificant variable interest in the Trusts. Additionally, the retained certificates do not provide us with any ability to direct activities that could impact the Trusts' economic performance. Therefore, we do not consolidate the Trusts.
Retained Certificates
As the Trusts made Certificates available for sale to both domestic and foreign investors, sponsors of the mortgage loans are required to retain a portion of the risk that represents a material net economic interest in each loan pursuant to Regulation RR (the "Risk Retention Rules") under the Securities Exchange Act of 1934, as amended. As such, loan sponsors are required to retain a portion of the credit risk that represents not less than 5% of the aggregate fair value of the loan as of the closing date.
IH 2017-1 issued Class B certificates, which are restricted certificates that were made available exclusively to INVH LP in order to comply with the Risk Retention Rules. The Class B certificates bear a stated annual interest rate of 4.23%, including applicable servicing fees.
For IH 2017-2, IH 2018-1, IH 2018-2, IH 2018-3, and IH 2018-4, we retain 5% of each class of certificates to meet the Risk Retention Rules. These retained certificates accrue interest at a floating rate of LIBOR plus a spread ranging from 0.76% to 1.51%.
The retained certificates total $197.3 million and $245.2 million as of September 30, 2021 and December 31, 2020, respectively, and are classified as held to maturity investments and recorded in other assets, net on the condensed consolidated balance sheets.
Loan Covenants
The general terms that apply to all of the mortgage loans require each Borrower Entity to maintain compliance with certain affirmative and negative covenants. Affirmative covenants include each Borrower Entity's, and certain of their
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respective affiliates', compliance with (i) licensing, permitting and legal requirements specified in the mortgage loan agreements, (ii) organizational requirements of the jurisdictions in which they are organized, (iii) federal and state tax laws, and (iv) books and records requirements specified in the respective mortgage loan agreements. Negative covenants include each Borrower Entity's, and certain of their affiliates', compliance with limitations surrounding (i) the amount of each Borrower Entity's indebtedness and the nature of their investments, (ii) the execution of transactions with affiliates, (iii) the Manager, (iv) the nature of each Borrower Entity's business activities, and (v) the required maintenance of specified cash reserves. As of September 30, 2021, and through the date our condensed consolidated financial statements were issued, we believe each Borrower Entity is in compliance with all affirmative and negative covenants for the mortgage loans.
Prepayments
For the mortgage loans, prepayments of amounts owed by us are generally not permitted under the terms of the respective mortgage loan agreements unless such prepayments are made pursuant to the voluntary election or mandatory provisions specified in such agreements. The specified mandatory provisions become effective to the extent that a property becomes characterized as a disqualified property, a property is sold, and/or upon the occurrence of a condemnation or casualty event associated with a property. To the extent either a voluntary election is made, or a mandatory prepayment condition exists, in addition to paying all interest and principal, we must also pay certain breakage costs as determined by the loan servicer and a spread maintenance premium if prepayment occurs before the month following the one or two year anniversary of the closing dates of each of the mortgage loans except for IH 2017-1. For IH 2017-1, prepayments on or before December 2026 will require a yield maintenance premium. For the nine months ended September 30, 2021 and 2020, we made voluntary and mandatory prepayments of $964.3 million and $157.8 million, respectively, under the terms of the mortgage loan agreements.
Secured Term Loan
On June 7, 2019, 2019-1 IH Borrower LP, a consolidated subsidiary ("2019-1 IH Borrower" and one of our Borrower Entities), entered into a 12 year loan agreement with a life insurance company (the "Secured Term Loan"). The Secured Term Loan bears interest at a fixed rate of 3.59%, including applicable servicing fees, for the first 11 years and bears interest at a floating rate based on a spread of 147 bps, including applicable servicing fees, over one month LIBOR (subject to certain adjustments as outlined in the loan agreement) for the twelfth year. The Secured Term Loan is secured by first priority mortgages on a portfolio of single-family rental properties as well as a first priority pledge of the equity interests of 2019-1 IH Borrower. We utilized the proceeds from the Secured Term Loan to fund: (i) repayments of then-outstanding indebtedness; (ii) initial deposits into the Secured Term Loan's reserve accounts; (iii) transaction costs related to the closing of the Secured Term Loan; and (iv) general corporate purposes.
The following table sets forth a summary of our Secured Term Loan indebtedness as of September 30, 2021 and December 31, 2020:
($ in thousands)
Maturity
Date
Interest
Rate(1)
September 30,
2021 		December 31,
2020
Secured Term Loan
June 9, 2031 3.59% $ 403,363 $ 403,363
Deferred financing costs, net
(2,105) (2,268)
Secured Term Loan, net
$ 401,258 $ 401,095
(1)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.
Collateral
The Secured Term Loan's collateral pool contains 3,334 and 3,332 homes as of September 30, 2021 and December 31, 2020, respectively, with a gross book value of $799.2 million and $791.9 million, respectively, and a net book value of $707.9 million and $719.8 million, respectively. 2019-1 IH Borrower has the right, subject to certain requirements and
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limitations outlined in the loan agreement, to substitute properties representing up to 20% of the collateral pool annually, and to substitute properties representing up to 100% of the collateral pool over the life of the Secured Term Loan. In addition, four times after the first anniversary of the closing date, 2019-1 IH Borrower has the right, subject to certain requirements and limitations outlined in the loan agreement, to execute a special release of collateral representing up to 15% of the then-outstanding principal balance of the Secured Term Loan in order to bring the loan-to-value ratio back in line with the Secured Term Loan's loan-to-value ratio as of the closing date. Any such special release of collateral would not change the then-outstanding principal balance of the Secured Term Loan, but rather would reduce the number of single-family rental homes included in the collateral pool.
Loan Covenants
The Secured Term Loan requires 2019-1 IH Borrower to maintain compliance with certain affirmative and negative covenants. Affirmative covenants include 2019-1 IH Borrower's, and certain of its affiliates', compliance with (i) licensing, permitting and legal requirements specified in the loan agreement, (ii) organizational requirements of the jurisdictions in which they are organized, (iii) federal and state tax laws, and (iv) books and records requirements specified in the loan agreement. Negative covenants include 2019-1 IH Borrower's, and certain of its affiliates', compliance with limitations surrounding (i) the amount of 2019-1 IH Borrower's indebtedness and the nature of its investments, (ii) the execution of transactions with affiliates, (iii) the Manager, (iv) the nature of 2019-1 IH Borrower's business activities, and (v) the required maintenance of specified cash reserves. As of September 30, 2021, and through the date our condensed consolidated financial statements were issued, we believe 2019-1 IH Borrower is in compliance with all affirmative and negative covenants for the Secured Term Loan.
Prepayments
Prepayments of the Secured Term Loan are generally not permitted unless such prepayments are made pursuant to the voluntary election or mandatory provisions specified in the loan agreement. The specified mandatory provisions become effective to the extent that a property becomes characterized as a disqualified property, a property is sold, and/or upon the occurrence of a condemnation or casualty event associated with a property. To the extent either a voluntary election is made, or a mandatory prepayment condition exists, in addition to paying all interest and principal, we must also pay certain breakage costs as determined by the loan servicer and a yield maintenance premium if prepayment occurs before June 9, 2030. For the nine months ended September 30, 2020, we made mandatory prepayments of $0.1 million. No such prepayments were made during the nine months ended September 30, 2021.
Unsecured Notes
Our unsecured notes are issued in connection with either an underwritten public offering pursuant to our existing shelf registration statement that automatically became effective upon filing with the SEC in July 2021 and expires in July 2024 or in connection with a private placement transaction with certain institutional investors (collectively, the "Unsecured Notes"). We utilize proceeds from the Unsecured Notes to fund: (i) repayments of then-outstanding indebtedness, including the securitizations; (ii) closing costs in connection with the Unsecured Notes; and (iii) general costs associated with our operations and other corporate purposes, including acquisitions. Interest on the Unsecured Notes is payable semi-annually in arrears.
The following table sets forth a summary of our Unsecured Notes as of September 30, 2021 and December 31, 2020:
September 30,
2021 		December 31,
2020
Total Unsecured Notes, net(1)
$ 939,696 $ -
Deferred financing costs, net
(7,807) -
Total
$ 931,889 $ -
(1)Net of unamortized discount of $10.3 million as of September 30, 2021.
Current Year Activity
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The following activity occurred during the nine months ended September 30, 2021 with respect to the Unsecured Notes:
•On May 25, 2021, in a private placement transaction, we issued (1) $150.0 million aggregate principal amount of 2.46% Senior Notes, Series A due May 25, 2028 and (2) $150.0 million aggregate principal amount of 3.18% Senior Notes, Series B which mature on May 25, 2036.
•On August 6, 2021, in a public offering under our existing shelf registration statement, we issued $650.0 million aggregate principal amount of 2.00% Senior Notes which mature on August 15, 2031.
Prepayments
The Unsecured Notes are redeemable in whole at any time or in part from time to time, at our option, at a redemption price equal to (i) 100% of the principal amount to be redeemed plus accrued and unpaid interest and (ii) a make-whole premium calculated in accordance with the respective loan agreements. The privately placed Unsecured Notes require any prepayment to be an amount not less than 5% of the aggregate principal amount then outstanding. If any of the Unsecured Notes issued publicly under our registration statement are redeemed on or after the date that is three months prior to the maturity date, the redemption price will not include a make-whole premium.
Guarantees
The Unsecured Notes are fully and unconditionally guaranteed, jointly and severally, by INVH and two of its wholly owned subsidiaries, the General Partner, and IH Merger Sub. Prior to the September 17, 2021 execution of a parent guaranty agreement, the privately placed Unsecured Notes were not guaranteed.
Loan Covenants
The Unsecured Notes issued publicly under our registration statement contain customary covenants, including, among others, limitations on the incurrence of debt; and they include the following financial covenants related to the incurrence of debt: (i) an aggregate debt test; (ii) a debt service test; (iii) a maintenance of total unencumbered assets; and (iv) a secured debt test.
The privately placed Unsecured Notes contain customary covenants, including, among others, limitations on distributions, fundamental changes, and transactions with affiliates; and they include the following financial covenants, subject to certain qualifications: (i) a maximum total leverage ratio; (ii) a maximum secured leverage ratio; (iii) a maximum unencumbered leverage ratio; (iv) a minimum fixed charge coverage ratio; and (v) a minimum unsecured interest coverage ratio.
The Unsecured Notes contain customary events of default (subject in certain cases to specified cure periods), the occurrence of which would allow the holders of notes to take various actions, including the acceleration of amounts due under the Unsecured Notes. As of September 30, 2021, and through the date our condensed consolidated financial statements were issued, we believe we were in compliance with all affirmative and negative covenants for the Unsecured Notes.
Term Loan Facility and Revolving Facility
On December 8, 2020, we entered into an Amended and Restated Revolving Credit and Term Loan Agreement with a syndicate of banks, financial institutions, and institutional lenders for a new credit facility (the "Credit Facility"). The Credit Facility provides $3,500.0 million of borrowing capacity and consists of the $1,000.0 million Revolving Facility and a $2,500.0 million term loan facility (the "Term Loan Facility"), both of which mature on January 31, 2025, with two six month extension options available. The Revolving Facility also includes borrowing capacity for letters of credit. The Credit Facility provides us with the option to enter into additional incremental credit facilities (including an uncommitted incremental facility that provides us with the option to increase the size of the Revolving Facility and/or the Term Loan Facility such that the aggregate amount does not exceed $4,000.0 million at any time), subject to certain limitations.
The Credit Facility replaced a credit facility that consisted of a $1,000.0 million revolving facility (the "2017 Revolving Facility") and a $1,500.0 million term loan facility (the "2017 Term Loan Facility" and together with the 2017 Revolving Facility, the "2017 Credit Facility"). The terms and conditions of the Credit Facility are consistent with those of the 2017 Credit Facility unless otherwise noted below. Proceeds from the Term Loan Facility were used to repay then-outstanding
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indebtedness, including the 2017 Term Loan Facility. Proceeds from the Revolving Facility are used for general corporate purposes.
The following table sets forth a summary of the outstanding principal amounts under the Credit Facility as of September 30, 2021 and December 31, 2020, respectively:
($ in thousands)
Maturity
Date
Interest
Rate(1)
September 30,
2021 		December 31,
2020
Term Loan Facility(2)
January 31, 2025 1.08% $ 2,500,000 $ 2,500,000
Deferred financing costs, net
(23,691) (29,093)
Term Loan Facility, net
$ 2,476,309 $ 2,470,907
Revolving Facility(2)
January 31, 2025 0.98% $ - $ -
(1)Interest rates for the Term Loan Facility and the Revolving Facility are based on LIBOR plus an applicable margin. As of September 30, 2021, the applicable margins were 1.00% and 0.90%,respectively, and LIBOR was 0.08%.
(2)If we exercise the two six month extension options, the maturity date will be January 31, 2026.
Interest Rate and Fees
Borrowings under the Credit Facility bear interest, at our option, at a rate equal to a margin over either (a) a LIBOR rate determined by reference to the Bloomberg LIBOR rate (or a comparable or successor rate as provided for in our loan agreement) for the interest period relevant to such borrowing, or (b) a base rate determined by reference to the highest of (1) the administrative agent's prime lending rate, (2) the federal funds effective rate plus 0.50%, and (3) the LIBOR rate that would be payable on such day for a LIBOR rate loan with a one month interest period plus 1.00%. After obtaining the requisite rating on our non-credit enhanced, senior unsecured long term debt as defined in the Credit Facility agreement (the "Investment Grade Rating"), we elected to convert to a credit rating based pricing grid (the "Pricing Grid Conversion") effective April 22, 2021. The margins for the Term Loan Facility and Revolving Facility under the credit rating based pricing grid are as follows:
Base Rate Loans LIBOR Rate Loans
Term Loan Facility 0.00 % - 0.65% 0.80% - 1.65%
Revolving Facility 0.00 % - 0.45% 0.75% - 1.45%
Prior to the Pricing Grid Conversion, the margins were based on a total leverage based grid. The margins for the Term Loan Facility, Revolving Facility, 2017 Term Loan Facility, and 2017 Revolving Facility under the total leverage based grid were as follows:
Base Rate Loans LIBOR Rate Loans
Term Loan Facility 0.45% - 1.15% 1.45% - 2.15%
Revolving Facility 0.50% - 1.15% 1.50% - 2.15%
2017 Term Loan Facility 0.70% - 1.30% 1.70% - 2.30%
2017 Revolving Facility 0.75% - 1.30% 1.75% - 2.30%
The Credit Facility also includes a sustainability component whereby the Revolving Facility pricing can improve upon the Company's achievement of certain sustainability ratings, determined via an independent third party evaluation. This sustainability feature was not included in the 2017 Revolving Facility.
In addition to paying interest on outstanding principal under the Credit Facility, we are required to pay a facility fee ranging from 0.10% to 0.30%. We are also required to pay customary letter of credit fees. Prior to the Pricing Grid Conversion, instead of a facility fee, we were required to pay an unused facility fee to the lenders under the Revolving
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Facility and the 2017 Revolving Facility in respect of the unused commitments thereunder. The unused facility fee rate was either 0.30% or 0.20% per annum for the Revolving Facility and 0.35% or 0.20% per annum for the 2017 Revolving Facility.
Prepayments and Amortization
No principal reductions are required under the Credit Facility. We are permitted to voluntarily repay amounts outstanding under the Term Loan Facility at any time without premium or penalty, subject to certain minimum amounts and the payment of customary "breakage" costs with respect to LIBOR loans. Once repaid, no further borrowings will be permitted under the Term Loan Facility.
Loan Covenants
The Credit Facility contains certain customary affirmative and negative covenants and events of default. Such covenants will, among other things, restrict, subject to certain exceptions, our ability and that of the Subsidiary Guarantors (as defined below) and their respective subsidiaries to (i) engage in certain mergers, consolidations or liquidations, (ii) sell, lease or transfer all or substantially all of their respective assets, (iii) engage in certain transactions with affiliates, (iv) make changes to our fiscal year, (v) make changes in the nature of our business and our subsidiaries, and (vi) enter into certain burdensome agreements.
The Credit Facility also requires us, on a consolidated basis with our subsidiaries, to maintain a (i) maximum total leverage ratio, (ii) maximum secured leverage ratio, (iii) maximum unencumbered leverage ratio, (iv) minimum fixed charge coverage ratio, and (v) minimum unsecured interest coverage ratio. Prior to obtaining an Investment Grade Rating, we were also required to maintain a maximum secured recourse leverage ratio. If an event of default occurs, the lenders under the Credit Facility are entitled to take various actions, including the acceleration of amounts due under the Credit Facility. As of September 30, 2021, and through the date our condensed consolidated financial statements were issued, we believe we were in compliance with all affirmative and negative covenants for the Credit Facility.
Guarantees and Security
After we obtained the requisite Investment Grade Rating, our direct and indirect wholly owned subsidiaries that directly own unencumbered assets (the "Subsidiary Guarantors") were released from their previous guarantee requirements under the Credit Facility (the "Investment Grade Release") effective May 5, 2021. Prior to the Investment Grade Release, the obligations under the Credit Facility were guaranteed on a joint and several basis by each Subsidiary Guarantor, subject to certain exceptions.
On September 17, 2021, as a result of the execution of a parent guaranty agreement, the obligations under the Credit Facility became guaranteed on a joint and several basis by INVH and two of its wholly owned subsidiaries, the General Partner and IH Merger Sub.
Although the 2017 Credit Facility was secured, such security interests have been released and the Credit Facility is unsecured.
Convertible Senior Notes
In connection with the Mergers, we assumed SWH's convertible senior notes. In January 2017, SWH issued $345.0 million in aggregate principal amount of 3.50% convertible senior notes due 2022 (the "2022 Convertible Notes" or the "Convertible Senior Notes"). Interest on the 2022 Convertible Notes is payable semiannually in arrears on January 15th and July 15th of each year. The 2022 Convertible Notes will mature on January 15, 2022.
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The following table summarizes the terms of the Convertible Senior Notes outstanding as of September 30, 2021 and December 31, 2020:
Principal Amount
($ in thousands)
Coupon
Rate
Effective
Rate(1)
Conversion
Rate(2)
Maturity
Date
Remaining Amortization
Period
September 30,
2021 		December 31,
2020
2022 Convertible Notes
3.50% 5.12% 43.9819 January 15, 2022 0.29 years $ 146,491 $ 345,000
Net unamortized fair value adjustment
(673) (5,596)
Total
$ 145,818 $ 339,404
(1)Effective rate includes the effect of the adjustment to the fair value of the debt as of the Merger Date, the value of which reduced the initial liability recorded to $324.3 million for the 2022 Convertible Notes.
(2)The conversion rate as of September 30, 2021 represents the number of shares of common stock issuable per $1,000 principal amount (actual $) of the 2022 Convertible Notes converted on such date, as adjusted in accordance with the indenture as a result of cash dividend payments and the effects of previous mergers. Effective July 15, 2021, we notified note holders of our intent to settle conversions of the 2022 Convertible Notes in shares of common stock.
Terms of Conversion
As of September 30, 2021, the conversion rate applicable to the 2022 Convertible Notes is 43.9819 shares of our common stock per $1,000 principal amount (actual $) of the 2022 Convertible Notes (equivalent to a conversion price of approximately $22.74 per common share - actual $). The conversion rate for the 2022 Convertible Notes is subject to adjustment in some events, but will not be adjusted for any accrued and unpaid interest. In addition, following certain events that occur prior to the maturity date, we will adjust the conversion rate for a holder who elects to convert its 2022 Convertible Notes in connection with such an event in certain circumstances. At any time prior to July 15, 2021, holders were able to convert the 2022 Convertible Notes at their option only under specific circumstances as defined in the indenture agreement, dated as of January 10, 2017, between us and our trustee, Wilmington Trust National Association (the "Convertible Notes Trustee"). On or after July 15, 2021 and until maturity, holders may convert all or any portion of the 2022 Convertible Notes at any time. Effective July 15, 2021, we notified note holders of our intent to settle conversions of the 2022 Convertible Notes in shares of common stock. For the three and nine months ended September 30, 2021, we settled $198.5 million and $198.5 million, respectively, of principal balance outstanding of the 2022 Convertible Notes with the issuance of 8,723,161 and 8,723,421 shares of our common stock, respectively. The "if-converted" value of the 2022 Convertible Notes exceeds the principal amount by $100.5 million as of September 30, 2021 as the closing market price of our common stock of $38.33 per common share (actual $) exceeds the implicit conversion price. For the three months ended September 30, 2021 and 2020, interest expense for the 2022 Convertible Notes, including non-cash amortization of discounts, was $3.8 million and $4.3 million, respectively. For the nine months ended September 30, 2021 and 2020, interest expense for the 2022 Convertible Notes, including non-cash amortization of discounts, was $12.5 million and $12.9 million, respectively.
General Terms
We may not redeem the 2022 Convertible Notes prior to their maturity date except to the extent necessary to preserve our status as a REIT for United States federal income tax purposes, as further described in the indenture. If we undergo a fundamental change as defined in the indenture, holders may require us to repurchase for cash all or any portion of their 2022 Convertible Notes at a fundamental change repurchase price equal to 100% of the principal amount of the 2022 Convertible Notes to be repurchased, plus accrued and unpaid interest up to, but excluding, the fundamental change repurchase date.
The indenture contains customary terms and covenants and events of default. If an event of default occurs and is continuing, the Convertible Notes Trustee, by notice to us, or the holders of at least 25% in aggregate principal amount of the outstanding 2022 Convertible Notes, by notice to us and the Convertible Notes Trustee, may, and the Convertible Notes Trustee at the request of such holders shall, declare 100% of the principal of and accrued and unpaid interest on all the 2022 Convertible Notes to be due and payable. In the case of an event of default arising out of certain events of bankruptcy, insolvency or reorganization in respect to us (as set forth in the indenture), 100% of the principal of and accrued and unpaid interest on the 2022 Convertible Notes will automatically become due and payable.
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Certain Hedging Arrangements
From time to time, we enter into derivative instruments to manage the economic risk of changes in interest rates. We do not enter into derivative transactions for speculative or trading purposes. Designated hedges are derivatives that meet the criteria for hedge accounting and that we have elected to designate as hedges. Non-designated hedges are derivatives that do not meet the criteria for hedge accounting or that we did not elect to designate as hedges.
Designated Hedges
We have entered into various interest rate swap agreements, which are used to hedge the variable cash flows associated with variable-rate interest payments. Currently, each of our swap agreements is indexed to one month LIBOR and is designated for hedge accounting purposes. One month LIBOR is set to expire after June 30, 2023, and we will work with the counterparties to our swap agreements to adjust each floating rate to a comparable or successor rate. Changes in the fair value of these swaps are recorded in other comprehensive income and are subsequently reclassified into earnings in the period in which the hedged forecasted transactions affect earnings.
The table below summarizes our interest rate swap instruments as of September 30, 2021 ($ in thousands):
Agreement Date
Forward
Effective Date
Maturity
Date 		Strike
Rate 		Index Notional
Amount
December 11, 2019 February 28, 2017 December 31, 2024 1.74% One month LIBOR $ 750,000
April 19, 2018 January 31, 2019 January 31, 2025 2.86% One month LIBOR 400,000
February 15, 2019 March 15, 2019 March 15, 2022 2.23% One month LIBOR 800,000
April 19, 2018 March 15, 2019 November 30, 2024 2.85% One month LIBOR 400,000
April 19, 2018 March 15, 2019 February 28, 2025 2.86% One month LIBOR 400,000
May 8, 2018 March 9, 2020 June 9, 2025 2.99% One month LIBOR 325,000
May 8, 2018 June 9, 2020 June 9, 2025 2.99% One month LIBOR 595,000
June 28, 2018 August 7, 2020 July 9, 2025 2.90% One month LIBOR 1,100,000
December 9, 2019 July 15, 2021 November 30, 2024 2.90% One month LIBOR 400,000
November 7, 2018 March 15, 2022 July 31, 2025 3.14% One month LIBOR 400,000
November 7, 2018 March 15, 2022 July 31, 2025 3.16% One month LIBOR 400,000

During the three and nine months ended September 30, 2021 and 2020, such derivatives were used to hedge the variable cash flows associated with existing variable-rate interest payments. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on our variable-rate debt. During the next 12 months, we estimate that $138.1 million will be reclassified to earnings as an increase in interest expense.
Non-Designated Hedges
Concurrent with entering into certain of the mortgage loan agreements and in connection with previous mergers, we entered into or acquired and maintain interest rate cap agreements with terms and notional amounts equivalent to the terms and amounts of the mortgage loans made by the third party lenders. Currently, each of our cap agreements is indexed to one month LIBOR, which is set to expire on June 30, 2023. We will work with the counterparties to our cap agreements to adjust each floating rate to a comparable or successor rate. To the extent that the maturity date of one or more of the mortgage loans is extended through an exercise of one or more extension options, replacement or extension interest rate cap agreements must be executed with terms similar to those associated with the initial interest rate cap agreements and strike prices equal to the greater of the interest rate cap strike price and the interest rate at which the debt service coverage ratio (as defined) is not less than 1.2 to 1.0. The interest rate cap agreements, including all of our rights to payments owed by the counterparties and all other rights, have been pledged as additional collateral for the mortgage loans. Additionally, in certain instances, in order to minimize the cash impact of purchasing required interest rate caps, we simultaneously sell interest rate caps (which have identical terms and notional amounts) such that the purchase price and sales proceeds of the related interest rate caps are intended to offset each other. The purchased and sold interest rate caps have strike prices ranging from approximately 3.75% to 7.03%.
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Purchase of Outstanding Debt Securities or Loans
As market conditions warrant, we may from time to time seek to purchase our outstanding debt or debt securities that we may issue in the future, in privately negotiated or open market transactions, by tender offer or otherwise. Subject to any applicable limitations contained in the agreements governing our indebtedness, any purchases made by us may be funded by the use of cash on our condensed consolidated balance sheet or the incurrence of new secured or unsecured debt, including borrowings under our credit facility. The amounts involved in any such purchase transactions, individually or in the aggregate, may be material. Any such purchases may be with respect to a substantial amount of a particular class or series of debt, with the attendant reduction in the trading liquidity of such class or series. 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.
Cash Flows
Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020
The following table summarizes our cash flows for the nine months ended September 30, 2021 and 2020:
For the Nine Months
Ended September 30,
($ in thousands) 2021 2020 $ Change % Change
Net cash provided by operating activities $ 782,314 $ 625,672 $ 156,642 25.0 %
Net cash used in investing activities (728,310) (194,375) (533,935) (274.7) %
Net cash provided by financing activities 355,378 91,366 264,012 289.0 %
Change in cash, cash equivalents, and restricted cash $ 409,382 $ 522,663 $ (113,281) (21.7) %
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 $782.3 million and $625.7 million for the nine months ended September 30, 2021 and 2020, respectively, an increase of 25.0%. The increase in cash provided by operating activities was driven by improved operational profitability, including a $101.3 million increase in total revenues net of property operating and maintenance expense from period to period and a net $58.6 million source of cash 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, and proceeds from property sales. Net cash used in investing activities was $728.3 million and $194.4 million for the nine months ended September 30, 2021 and 2020, respectively, an increase of $533.9 million. The increase in net cash used in investing activities resulted from the combined effect of the following significant changes in cash flows during the nine months ended September 30, 2021 compared to the nine months ended September 30, 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 cash provided by repayment proceeds from retained debt securities; (4) an increase in amounts deposited and held by others; and (5) an increase in cash used for investments in joint ventures. More specifically, acquisition spend increased $406.4 million due to an increase in the number of homes acquired from 1,195 during the nine months ended September 30, 2020 to 1,977 homes during the nine months ended September 30, 2021, respectively, and an increase in cost per home. Proceeds from sales of homes decreased $151.3 million from the nine months ended September 30, 2020 to the nine months ended September 30, 2021 due to a significant decrease in the number of homes sold from 1,303 to 605, respectively, partially offset by an increase in proceeds per home. Cash provided by repayment proceeds from retained debt securities increased by $40.1 million primarily due to the use of proceeds from the issuance and sale of the Unsecured Notes to repay a portion of our mortgage loans. Cash deposited and held by others increased $29.6 million due to increased placement of earnest money deposits for the acquisition of single-family residential properties, including deposits made to homebuilders. Investments in joint ventures spend increased
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$25.0 million due to contributions to the Rockpoint joint venture that did not occur during the nine months ended September 30, 2020.
Financing Activities
Net cash provided by financing activities was $355.4 million and $91.4 million for the nine months ended September 30, 2021 and 2020, respectively. During the nine months ended September 30, 2021, we received $939.6 million of proceeds from the issuance and sale of the Unsecured Notes which along with available cash and proceeds from sales of homes were used to repay $964.3 million of principal on our mortgage loans, including partial repayments of IH 2017-2, IH 2018-1, IH 2018-2, IH 2018-3, and IH 2018-4. Issuances and sales of stock under our ATM Equity Program and the 2021 Public Offering generated $693.4 million of net proceeds during the nine months ended September 30, 2021. During that period, we also made $293.8 million of dividend and distribution payments. During the nine months ended September 30, 2020, issuances and sales of stock under a public offering and proceeds from our ATM Equity Program resulted in $503.8 million of proceeds, and we repaid $157.8 million of our mortgage loans, including partial repayments of IH 2018-2 and IH 2018-3. During that period, we also made $249.3 million of dividend and distribution payments.
Contractual Obligations
Our contractual obligations as of September 30, 2021, consist of the following:
($ in thousands) Total
2021(1)
2022-2023 2024-2026 Thereafter
Mortgage loans(2)(3)
$ 4,237,783 $ 19,032 $ 151,699 $ 2,339,604 $ 1,727,448
Secured Term Loan(2)
543,571 3,618 28,944 28,944 482,065
Unsecured Notes(2)
1,172,754 5,365 42,920 42,920 1,081,549
Term Loan Facility(2)(3)
2,618,800 6,900 54,750 54,825 2,502,325
Revolving Facility(2)(3)(4)
8,800 511 4,056 4,061 172
2022 Convertible Notes(2)(5)
149,055 - 149,055 - -
Derivative instruments(6)
500,157 33,732 281,128 185,297 -
Purchase commitments(7)
511,635 307,335 114,628 76,147 13,525
Operating leases 15,160 1,268 7,961 4,896 1,035
Finance leases 6,805 921 5,108 776 -
Total $ 9,764,520 $ 378,682 $ 840,249 $ 2,737,470 $ 5,808,119
(1)Includes estimated payments for the remaining three months of 2021.
(2)Includes estimated interest payments through the extended maturity date based on the principal amount outstanding as of September 30, 2021. Interest is calculated at rates in effect as of such date; for LIBOR based loans, the September 30, 2021 LIBOR, or 0.08%, 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. See Part I. Item 1. "Financial Statements - Note 7 of Notes to Condensed 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 $146.5 million is included in 2022 maturities presented above. Effective July 15, 2021, we notified note holders of our intent to settle conversions of the 2022 Convertible Notes in shares of common stock.
(6)Includes interest rate swap and interest rate cap obligations calculated using LIBOR as of September 30, 2021, or 0.08%.
(7)Represents commitments to acquire 1,414 single-family rental homes, of which 520 are part of agreements with homebuilders to purchase homes with expected completion dates ranging from 2022 to 2025.

We have a commitment, which is not reflected in the table above, to make additional capital contributions to a joint venture. As of September 30, 2021, our remaining equity commitment to the joint venture is $34.4 million.
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Critical Accounting Policies and Estimates
Critical accounting policies are those accounting policies that management believes are important to the portrayal of our financial condition and results and require management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. We believe that our critical accounting policies pertain to our investments in single-family residential properties, including acquisition of real estate assets, related cost capitalization, provisions for impairment, and single-family residential properties held for sale. These critical policies and estimates are summarized in Part II. Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K. There were no material changes to our critical accounting policies during the nine months ended September 30, 2021.
For a discussion of recently adopted accounting standards, if any, see Part I. Item 1. "Financial Statements - Note 2 of Notes to Condensed Consolidated Financial Statements."
Segment Reporting
Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the chief operating decision maker ("CODM") in deciding how to allocate resources and in assessing performance. Our CODM is the Chief Executive Officer.
Under the provisions of ASC 280, Segment Reporting, we have determined that we have one reportable segment related to acquiring, renovating, leasing, and operating single-family homes as rental properties. The CODM evaluates operating performance and allocates resources on a total portfolio basis. 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 growing accretively in high-growth locations where we have greater scale and density.
Non-GAAP Measures
EBITDA, EBITDAre, and Adjusted EBITDAre
EBITDA, EBITDAre, and Adjusted EBITDAreare supplemental, non-GAAP measures often utilized to evaluate the performance of real estate companies. We define EBITDA as net income or loss computed in accordance with GAAP before the following items: interest expense; income tax expense; depreciation and amortization; and adjustments for unconsolidated joint ventures. The National Association of Real Estate Investment Trusts ("Nareit") recommends as a best practice that REITs that report an EBITDA performance measure also report EBITDAre. We define EBITDAre, consistent with the Nareit definition, as EBITDA, further adjusted for the following: gain on sale of property, net of tax; impairment on depreciated real estate investments; and adjustments for unconsolidated joint ventures.
Adjusted EBITDAreis defined as EBITDArebefore the following items: share-based compensation expense; severance; casualty losses, net; (gains) losses on investments in equity securities, net; and other income and expenses. EBITDA, EBITDAre, and Adjusted EBITDAreare used as supplemental financial performance measures by management and by external users of our financial statements, such as investors and commercial banks. Set forth below is additional detail on how management uses EBITDA, EBITDAre, and Adjusted EBITDAreas measures of performance.
Our management uses EBITDA, EBITDAre, and Adjusted EBITDArein a number of ways to assess our condensed consolidated financial and operating performance, and we believe these measures are helpful to management and external users in identifying trends in our performance. EBITDA, EBITDAre, and Adjusted EBITDArehelp management identify controllable expenses and make decisions designed to help us meet our current financial goals and optimize our financial performance, while neutralizing the impact of capital structure on results. Accordingly, we believe these metrics measure our financial performance based on operational factors that management can impact in the short-term, namely our cost structure and expenses.
We believe that the presentation of EBITDA, EBITDAre, and Adjusted EBITDAreprovides information useful to investors in assessing our financial condition and results of operations. The GAAP measure most directly comparable to EBITDA, EBITDAre, and Adjusted EBITDAreis net income or loss. EBITDA, EBITDAre, and Adjusted EBITDAreare not
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used as measures of our liquidity and should not be considered alternatives to net income or loss or any other measure of financial performance presented in accordance with GAAP. Our EBITDA, EBITDAre, and Adjusted EBITDAremay not be comparable to the EBITDA, EBITDAre, and Adjusted EBITDAreof other companies due to the fact that not all companies use the same definitions of EBITDA, EBITDAre, and Adjusted EBITDAre. Accordingly, there can be no assurance that our basis for computing these non-GAAP measures is comparable with that of other companies.
The following table presents a reconciliation of net income (as determined in accordance with GAAP) to EBITDA, EBITDAre, and Adjusted EBITDArefor each of the periods indicated:
For the Three Months
Ended September 30, 		For the Nine Months
Ended September 30,
($ in thousands) 2021 2020 2021 2020
Net income available to common stockholders $ 69,108 $ 32,540 $ 186,622 $ 125,178
Net income available to participating securities 69 114 260 335
Non-controlling interests 318 211 1,023 806
Interest expense 79,370 87,713 243,540 258,541
Interest expense in unconsolidated joint ventures 370 - 669 -
Depreciation and amortization 150,694 138,147 440,475 410,440
Depreciation and amortization of investments in unconsolidated joint ventures
389 - 739 -
EBITDA 300,318 258,725 873,328 795,300
Gain on sale of property, net of tax (13,047) (15,106) (45,450) (41,473)
Impairment on depreciated real estate investments 126 289 650 4,202
Net gain on sale of investments in unconsolidated joint ventures (360) - (800) -
EBITDAre
287,037 243,908 827,728 758,029
Share-based compensation expense(1)
6,052 6,086 21,072 12,293
Severance 226 133 500 388
Casualty losses, net 4,168 1,434 4,980 468
(Gains) losses on investments in equity securities, net (4,319) - 5,823 (34)
Other, net(2)
1,508 3,049 3,181 (2,001)
Adjusted EBITDAre
$ 294,672 $ 254,610 $ 863,284 $ 769,143
(1)For the three months ended September 30, 2021 and 2020, $1,277 and $1,253 was recorded in property management expense, respectively, and $4,775 and $4,833 was recorded in general and administrative expense, respectively. For the nine months ended September 30, 2021 and 2020, $4,154 and $2,533 was recorded in property management expense, respectively, and $16,918 and $9,760 was recorded in general and administrative expense, respectively.
(2)Includes interest income and other miscellaneous income and expenses.
Net Operating Income
NOI is a non-GAAP measure often used to evaluate the performance of real estate companies. We define NOI for an identified population of homes as rental revenues and other property income less property operating and maintenance expense (which consists primarily of property taxes, insurance, HOA fees (when applicable), market-level personnel expenses, repairs and maintenance, leasing costs, and marketing expense). NOI excludes: interest expense; depreciation and amortization; property management expense; general and administrative expense; impairment and other; gain on sale of property, net of tax; (gains) losses on investments in equity securities, net; other income and expenses; joint venture management fees; and income from investments in unconsolidated joint ventures.
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We consider NOI to be a meaningful supplemental financial measure of our performance when considered with the financial statements determined in accordance with GAAP. We believe NOI is helpful to investors in understanding the core performance of our real estate operations. The GAAP measure most directly comparable to NOI is net income or loss. NOI is not used as a measure of liquidity and should not be considered as an alternative to net income or loss or any other measure of financial performance presented in accordance with GAAP. Our NOI may not be comparable to the NOI of other companies due to the fact that not all companies use the same definition of NOI. Accordingly, there can be no assurance that our basis for computing this non-GAAP measure is comparable with that of other companies.
We believe that Same Store NOI is also a meaningful supplemental measure of our operating performance for the same reasons as NOI and is further helpful to investors as it provides a more consistent measurement of our performance across reporting periods by reflecting NOI for homes in our Same Store portfolio.
The following table presents a reconciliation of net income (as determined in accordance with GAAP) to NOI for our total portfolio and NOI for our Same Store portfolio for each of the periods indicated:
For the Three Months
Ended September 30, 		For the Nine Months
Ended September 30,
($ in thousands)
2021 2020 2021 2020
Net income available to common stockholders $ 69,108 $ 32,540 $ 186,622 $ 125,178
Net income available to participating securities 69 114 260 335
Non-controlling interests 318 211 1,023 806
Interest expense 79,370 87,713 243,540 258,541
Depreciation and amortization 150,694 138,147 440,475 410,440
Property management expense(1)
17,886 14,824 51,424 43,725
General and administrative(2)
19,369 17,972 56,147 46,626
Impairment and other 4,294 1,723 5,630 4,670
Gain on sale of property, net of tax (13,047) (15,106) (45,450) (41,473)
(Gains) losses on investments in equity securities, net (4,319) - 5,823 (34)
Other, net(3)
1,508 3,049 3,181 (2,001)
Joint venture management fees (1,354) - (3,140) -
Income from investments in unconsolidated joint ventures (202) - (564) -
NOI (total portfolio)
323,694 281,187 944,971 846,813
Non-Same Store NOI (33,192) (21,676) (90,786) (57,994)
NOI (Same Store portfolio)(4)
$ 290,502 $ 259,511 $ 854,185 $ 788,819
(1)Includes $1,277 and $1,253 of share-based compensation expense for the three months ended September 30, 2021 and 2020, respectively. Includes $4,154 and $2,533 of share-based compensation expense for the nine months ended September 30, 2021 and 2020, respectively.
(2)Includes $4,775 and $4,833 of share-based compensation expense for the three months ended September 30, 2021 and 2020, respectively. Includes $16,918 and $9,760 of share-based compensation expense for the nine months ended September 30, 2021 and 2020, respectively.
(3)Includes interest income and other miscellaneous income and expenses.
(4)The Same Store portfolio totaled 72,423 homes for the nine months ended September 30, 2021 and 2020.
Funds from Operations, Core Funds from Operations, and Adjusted Funds from Operations
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.
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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. Because real estate values have historically risen or fallen with market conditions, management considers FFO an appropriate supplemental performance measure as it excludes historical cost depreciation and amortization, impairment on depreciated real estate investments, gains or losses related to sales of previously depreciated homes, as well non-controlling interests, from net income or loss (computed in accordance with GAAP). 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.
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. The GAAP measure most directly comparable to FFO is net income or loss. FFO is not used as a measure of our liquidity and should not be considered an alternative to net income or loss or any other measure of financial performance presented in accordance with GAAP. Our FFO may not be comparable to the FFO of other companies due to the fact that not all companies use the same definition of FFO. Accordingly, there can be no assurance that our basis for computing this non-GAAP measures is comparable with that of other companies.
We believe that Core FFO and Adjusted FFO are also meaningful supplemental measures of our operating performance for the same reasons as FFO and are further helpful to investors as they provide a more consistent measurement of our performance across reporting periods by removing the impact of certain items that are not comparable from period to period. We define Core FFO as FFO adjusted for the following: non-cash interest expense related to amortization of deferred financing costs, loan discounts, and non-cash interest expense from derivatives; share-based compensation expense; severance expense; casualty losses, net; 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. The GAAP measure most directly comparable to Core FFO and Adjusted FFO is net income or loss. Core FFO and Adjusted FFO are not used as measures of our liquidity and should not be considered alternatives to net income or loss or any other measure of financial performance presented in accordance with GAAP. 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. Accordingly, there can be no assurance that our basis for computing this non-GAAP measures is comparable with that of other companies.
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The following table presents a reconciliation of net income (as determined in accordance with GAAP) to FFO, Core FFO, and Adjusted FFO for each of the periods indicated:
For the Three Months
Ended September 30,
For the Nine Months
Ended September 30,
(in thousands, except shares and per share data)
2021 2020 2021 2020
Net income available to common stockholders $ 69,108 $ 32,540 $ 186,622 $ 125,178
Add (deduct) adjustments from net income to derive FFO:
Net income available to participating securities
69 114 260 335
Non-controlling interests
318 211 1,023 806
Depreciation and amortization on real estate assets
148,957 136,517 435,348 406,078
Impairment on depreciated real estate investments
126 289 650 4,202
Net gain on sale of previously depreciated investments in real estate (13,047) (15,106) (45,450) (41,473)
Depreciation and net gain on sale of investments in unconsolidated joint ventures 29 - (61) -
FFO
205,560 154,565 578,392 495,126
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 9,004 6,883 25,791 26,640
Share-based compensation expense(1)
6,052 6,086 21,072 12,293
Severance expense 226 133 500 388
Casualty losses, net 4,168 1,434 4,980 468
(Gains) losses on investments in equity securities, net (4,319) - 5,823 (34)
Core FFO
220,691 169,101 636,558 534,881
Recurring capital expenditures, including our share from unconsolidated joint ventures (36,248) (33,861) (89,437) (87,466)
Adjusted FFO
$ 184,443 $ 135,240 $ 547,121 $ 447,415
Net income available to common stockholders
Weighted average common shares outstanding - diluted(2)(3)(4)
578,571,392 561,871,373 572,262,198 551,947,278
Net income per common share - diluted(2)(3)(4)
$ 0.12 $ 0.06 $ 0.33 $ 0.23
FFO
Numerator for FFO per common share - diluted(2)
$ 205,560 $ 154,565 $ 590,923 $ 507,995
Weighted average common shares and OP Units outstanding - diluted(2)(3)(4)
581,333,229 565,655,768 588,603,771 570,851,976
FFO per common share - diluted(2)(3)(4)
$ 0.35 $ 0.27 $ 1.00 $ 0.89
Core FFO and Adjusted FFO
Weighted average common shares and OP Units outstanding - diluted(2)(3)(4)
581,333,229 565,655,768 575,639,449 555,751,533
Core FFO per common share - diluted(2)(3)(4)
$ 0.38 $ 0.30 $ 1.11 $ 0.96
AFFO per common share - diluted(2)(3)(4)
$ 0.32 $ 0.24 $ 0.95 $ 0.81
(1)For the three months ended September 30, 2021 and 2020, $1,277 and $1,253 was recorded in property management expense, respectively, and $4,775 and $4,833 was recorded in general and administrative expense, respectively. For the nine months ended September 30, 2021 and 2020, $4,154 and $2,533 was recorded in property management expense, respectively, and $16,918 and $9,760 was recorded in general and administrative expense, respectively.
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(2)During the three and nine months ended September 30, 2021, at the election of the noteholders, we settled $198,503 and $198,509, respectively, of principal outstanding for the 2022 Convertible Notes with the issuance of 8,723,161 and 8,723,421 shares of common stock, respectively. 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 three and nine months ended September 30, 2021, using the "if-converted" method, 8,632,132 and 12,964,322 potential shares of common stock issuable upon the conversion of the 2022 Convertible Notes, respectively, are excluded from the computation of net income per common share - diluted as they are anti-dilutive. For the three and nine months ended September 30, 2020, using the "if-converted" method, 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 per common share - diluted as they are anti-dilutive.

For the nine months ended September 30, 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 $12,531 and $12,869, respectively, and the denominator is adjusted for 12,964,322 and 15,100,443 potential shares of common stock issuable upon the conversion of the 2022 Convertible Notes, respectively. No such adjustments were made to Core FFO and AFFO per common share -diluted for the nine months ended September 30, 2021 and 2020.

For the three months ended September 30, 2021 and 2020, 8,632,132 and 15,100,443 potential shares of common stock issuable upon the conversion of the 2022 Convertible Notes, respectively, are excluded from the computation of FFO per common share - diluted as they are anti-dilutive and are excluded from Core FFO and AFFO per common share - diluted.
(3)Incremental shares attributed to non-vested share-based awards totaling 1,560,214 and 1,272,378 shares for the three months ended September 30, 2021 and 2020, respectively, and 1,454,170 and 1,224,594 for the nine months ended September 30, 2021 and 2020, 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 1,783,766 and 1,593,488 for the three months ended September 30, 2021 and 2020, respectively, and 1,756,872 and 1,565,564 for the nine months ended September 30, 2021 and 2020, respectively, related to incremental shares attributed to non-vested share-based awards are included in the denominator.
(4)Vested units of partnership interests in INVH LP ("OP Units") have been excluded from the computation of net income per common share - diluted for the periods above because all net income attributable to the vested OP Units has been recorded as non-controlling interest and thus excluded from net income available to common stockholders. Weighted average vested OP Units of 2,538,285 and 3,463,285 for the three months ended September 30, 2021 and 2020, respectively, and 3,074,549 and 3,463,285 for the nine months ended September 30, 2021 and 2020, respectively, are included in the denominator for the computations of FFO, Core FFO, and AFFO per common share - diluted.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our future income, cash flows, and fair values relevant to financial instruments are dependent upon prevalent market interest rates. Market risk refers to the risk of loss from adverse changes in interest rates, seasonality, market prices, commodity prices, and inflation. The primary market risks to which we are exposed are interest rate risk and seasonality. We may in the future use derivative financial instruments to manage, or hedge, interest rate risks related to any borrowings we may have. We may enter into such contracts only with major financial institutions based on their credit ratings and other factors.
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Interest Rate Risk
A primary market risk to which we believe we are exposed is interest rate risk, which may result from many factors, including government monetary and tax policies, domestic and international economic and political considerations, and other factors that are beyond our control. We may incur additional variable rate debt in the future, including additional amounts that we may borrow under the Credit Facility. In addition, decreases in interest rates may lead to additional competition for the acquisition of single-family homes, which may lead to future acquisitions being more costly and resulting in lower yields on single-family homes targeted for acquisition. Significant increases in interest rates may also have an adverse impact on our earnings if we are unable to increase rents on expired leases or acquire single-family homes with rental rates high enough to offset the increase in interest rates on our borrowings.
As of September 30, 2021, our outstanding variable-rate debt was comprised of borrowings on our mortgage loans of $2,874.4 million and Term Loan Facility of $2,500.0 million for a combined total of $5,374.4 million. We effectively converted 96.2% of these borrowings to a fixed rate through interest rate swap agreements. Additionally, all borrowings bear interest at LIBOR plus the applicable spread. Assuming no change in the outstanding balance of our existing debt, the projected effect of a 100 bps increase or decrease in LIBOR on our annual interest expense would be an estimated increase of $2.0 million or $21.0 million, respectively. This estimate considers the impact of our interest rate swap agreements, interest rate cap agreements, and any LIBOR floors or minimum interest rates stated in the agreements of the respective borrowings. A 100 bps decrease in LIBOR results in a negative LIBOR rate and additional interest expense for us. Our Credit Facility agreement contains LIBOR floors, and there is no reciprocal feature in our interest rate swap agreements.
This analysis does not consider the effects of the reduced level of overall economic activity that could exist in such an environment. Further, in the event of a change of such magnitude, we may consider taking actions to further mitigate our exposure to the change. However, because of the uncertainty of the specific actions that would be taken and their possible effects, the sensitivity analysis assumes no changes in our capital structure.
Seasonality
Our business and related operating results have been, and we believe that they will continue to be, impacted by seasonal factors throughout the year. In particular, we have experienced higher levels of resident move-outs during the summer months, which impacts both our rental revenues and related turnover costs. Further, our property operating costs are seasonally impacted in certain markets by increases in expenses such as HVAC repairs, costs to re-resident, and landscaping expenses during the summer season.

ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We maintain a set of disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) designed to ensure that information required to be disclosed in reports we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. The design of any disclosure controls and procedures is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its goals under all potential future conditions. Any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2021. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2021, the design and operation of our disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level.
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Changes in Internal Control
There has been no change in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II



ITEM 1. LEGAL PROCEEDINGS
We are not subject to any material litigation nor, to management's knowledge, is any material litigation currently threatened against us other than routine litigation and administrative proceedings arising in the ordinary course of business.

ITEM 1A. RISK FACTORS
For a discussion of our potential risks or uncertainties, you should carefully read and consider risk factors previously disclosed under Part I. Item 1A. "Risk Factors" of our Annual Report on Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.

ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.

ITEM 5. OTHER INFORMATION
None.
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EXHIBIT INDEX
Exhibit number
Description
3.1
3.2
4.1
4.2
10.1
Parent Guaranty Agreement dated as of September 17, 2021 re: 2.46% Senior Notes, Series A, due May 25, 2028 and 3.18% Senior Notes, Series B, due May 25, 2036 of Invitation Homes Inc., Invitation Homes GP LLC and IH Merger Sub, LLC.
10.2
Parent Guaranty dated as of September 17, 2021 by Invitation Homes Inc., Invitation Homes GP LLC and IH Merger Sub, LLC for the benefit of Bank of America, N.A., in its capacity as the administrative agent for the Lenders under that certain Amended and Restated Revolving Credit and Term Loan Agreement, dated as of December 8, 2020, for the benefit of itself and such Lenders.
31.1
Certificate of Dallas B. Tanner, President and Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
Certificate of Ernest M. Freedman, Executive Vice President and Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1
Certificate of Dallas B. Tanner, President and Chief Executive Officer, pursuant to Section 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
32.2
Certificate of Ernest M. Freedman, Executive Vice President and Chief Financial Officer, pursuant to Section 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
101.INS Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH Inline XBRL Taxonomy Extension Schema Document.
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document.
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Exhibit number
Description
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104 Cover page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

Certain agreements and other documents filed as exhibits to this Quarterly Report on Form 10-Q contain representations and warranties that the parties thereto made to each other. These representations and warranties have been made solely for the benefit of the other parties to such agreements and may have been qualified by certain information that has been disclosed to the other parties to such agreements and other documents and that may not be reflected in such agreements and other documents. In addition, these representations and warranties may be intended as a way of allocating risks among parties if the statements contained therein prove to be incorrect, rather than as actual statements of fact. Accordingly, there can be no reliance on any such representations and warranties as characterizations of the actual state of facts. Moreover, information concerning the subject matter of any such representations and warranties may have changed since the date of such agreements or other documents.
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SIGNATURES

Pursuant to the requirements of the Securities Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Invitation Homes Inc.
By: /s/ Ernest M. Freedman
Name: Ernest M. Freedman
Title: Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
Date: October 28, 2021
By: /s/ Kimberly K. Norrell
Name: Kimberly K. Norrell
Title: Executive Vice President and Chief Accounting Officer
(Principal Accounting Officer)
Date: October 28, 2021

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