Real-time Form 4 intelligence. Smarter insider tracking.
YoY shift: Neutral
Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is 0.11pp more bullish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
+0.08pp
Flat
Net-tone change vs last year's 10-K.
MD&A
+0.14pp
Flat
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
Language change vs prior 10-K
Risk Factors (Item 1A) - words with the biggest YoY frequency increase
Negative rising
adversely+13
delays+7
exposes+6
adverse+5
unable+3
Positive rising
opportunities+10
favorable+5
able+4
successfully+3
efficiency+3
Risk Factors (Item 1A)
25,419 words
ITEM 1A. RISK FACTORS
The risk factors noted in this section and other factors noted throughout this Annual Report on Form 10-K, describe certain risks and uncertainties that could cause our actual results to differ materially from those contained in any forward-looking statement and should be considered carefully in evaluating our company and our business. Additional risks not presently known to us or that we currently deem immaterial may also impair our business operations.
Risks Related to Our Business Environment and Industry
Our operating results are subject to general economic conditions and risks associated with our real estate assets.
Our operating results are subject to risks generally incident to the ownership and rental of residential real estate, many of which are beyond our control, including, without limitation:
• fluctuating global and United States economic conditions, uncertainty in financial markets, and geopolitical tensions;
• changes in national, regional, or local economic, demographic, or real estate market conditions;
• changes in job markets and employment levels on a national, regional, and local basis;
• declines in the value of residential real estate;
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
volatility+4
scrutiny+2
adversely+1
litigation+1
decline+1
Positive rising
leading+2
opportunities+2
efficiency+1
profitability+1
strengthen+1
MD&A (Item 7)
12,933 words
ITEM 7. 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 together with Part I. Item 1. “Business” and the consolidated financial statements, including the notes thereto, that are included elsewhere in this 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,” “Forward-Looking Statements,” or in other parts of this report.
For similar operating and financial data and discussion of our results for the year ended December 31, 2024 compared to the year ended December 31, 2023, refer to Part II. Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K which was filed with the SEC on February 27, 2025 (the “2024 10-K”). The sections entitled “Result of Operations — Year Ended December 31, 2024 Compared to Year Ended December 31, 2023” and “Cash Flows — Year Ended December 31, 2024 Compared to Year Ended December 31, 2023” in Part II. Item 7. “Management’s Discussion and Analysis of Financial Condition and Result of Operations” of our 202 4 10-K are incorporated herein by reference.
Capitalized terms used without definition have the meaning provided elsewhere in this Annual Report on Form 10-K.
• overall conditions in the housing market, including:
• executive actions and proposed federal and state legislation or regulations aimed at limiting institutional institutional ownership and acquisition of single-family homes;
• macroeconomic shifts in demand for rental homes;
• inability to lease or re-lease homes to residents on a timely basis, on attractive terms or at all;
• failure of residents to pay rent when due or otherwise perform their lease obligations;
• unanticipated repairs, capital expenditures, weather related damages, or other costs;
• uninsureddamages; and
• increases in property taxes, HOA fees, and insurance costs;
• level of competition for suitable rental homes;
• terms and conditions of purchase contracts;
• costs and time period required to convert acquisitions to rental homes;
• changes in the terms or availability of financing that may render the acquisition of any homes difficult or unattractive;
• the liquidity of real estate investments, generally;
• the short-term nature of most residential leases and the costs and potential delays in re-leasing;
• changes in laws and regulations, including those that increase operating expenses or limit our ability to increase rental rates. See “Legal and Regulatory Related Risks — Eviction, tenant rights, rent control, and rent stabilization laws, and other similar laws and/or regulations that limit our ability to collect rent, enforce remedies for failure to pay rent, or increase rental rates may negatively impact our rental income and profitability ; ”
• the impact of potential reforms relating to government-sponsored enterprises involved in the home finance and mortgage markets;
• rules, regulations and/or policy initiatives by government and private actors, including HOAs, to discourage or restrict the purchase or operation of single-family properties by entities owned or controlled by institutional investors;
• the potential effects of climate change, related regulatory policies, legislation, and/or investor responses and expectations, and the transition to a lower-carbon economy;
• disputes and potential negative publicity in connection with eviction proceedings;
• construction of new supply;
• costs resulting from the clean-up of, and liability to third parties for damages resulting from, environmental problems, such as indoor mold;
• fraud by borrowers, originators, and/or sellers of secured debt;
• undetecteddeficiencies and/or inaccuracies in underlying mortgage loan documentation and calculations;
• casualty or condemnationlosses;
• the geographic mix of our properties;
• the cost, quality, and condition of the properties we are able to acquire;
• our development activities which expose us to execution, integration, cost, regulatory, permitting, and land acquisition risks, as well as potential delays, construction challenges, and lower-than-expected returns;
• our developer lending program which exposes us to heightened credit, construction, valuation, and execution risks that could result in cost overruns, project delays, insufficient collateral value, or loan losses; and
• our ability to provide adequate management, maintenance, and insurance.
Any one or more of these factors could adversely affect our business, financial condition, and results of operations.
Many factors impact the single-family rental market; and if rents in our markets do not increase sufficiently to keep pace with rising costs of operations, our income and distributable cash could decline.
The success of our business model depends, in part, on conditions in the single-family rental market in which we operate. One of the possible impacts on our results of operations and key operating metrics due to limitations on our ability to increase rental rates could be a decrease in gross rental revenues and other property income. In addition, executive actions and federal and state legislative, regulatory, or policy initiatives, particularly those focused on institutional ownership and acquisition of single-family homes, could limit our ability to acquire properties, impose additional compliance or operating requirements, or constrain pricing flexibility in certain markets. Our investment strategy is based on assumptions about occupancy levels, rental rates, interest rates, and other factors; and if those assumptions prove to be inaccurate, our cash flows may be reduced. Multiple economic and demographic factors may contribute to increases or decreases in homeownership rates resulting in fluctuating rental rates and average occupancy levels. Revenues earned from our property and asset management services are sensitive to macroeconomic conditions that negatively impact rent collections and the performance of the properties we manage. In addition, we expect that if investors like us increasingly seek to capitalize on opportunities to purchase housing assets and convert them to productive uses, competition in the market for the supply of single-family rental properties may increase and could result in a higher cost to acquire those properties. A softening of the rental market in our core areas would reduce our rental revenue and profitability.
Inflation and other macroeconomic factors could adversely affect our business and financial results.
General economic conditions in the United States have continued to fluctuate in recent quarters, and concernspersist regarding adverse macroeconomic conditions, such as fluctuating global and United States economic conditions (including interest rate volatility, political dissension, and labor market conditions). While inflationary pressures have moderated from prior peaks, they remain above historical norms and have adversely affected us by increasing the costs of products, materials, and labor needed to operate our business and could continue to adversely affect us in future periods. The effects of inflation on our financial condition and results of operations over the past few years are primarily related to increased operating costs for the procurement of goods and services, compensation of our associates, including benefits, and financing costs in the form
of interest expense. Continued inflationary pressures could have a material impact on our results of operations in the future. In an inflationary environment, we may not be able to raise rents sufficiently to keep up with the rate of inflation. High levels of inflation may also negatively impact consumer income and spending, among other factors, which may adversely impact our business, financial condition, cash flows, and results of operations. Actions by the government to stimulate the economy may increase the risk of significant inflation, which may also have an adverse impact on our business or financial results.
Additionally, volatility in the financial markets and elevated interest rates could affect our ability to access the capital markets at a time when we desire, or need, to do so which could have an impact on our flexibility to pursue additional growth opportunities and maintain our desired level of revenue growth in the future.
Mandated and proposed tariffs to be imposed by the United States on imports from certain countries and potential counter-tariffs in response could lead to increased costs and supply chain disruptions. If we are not able to navigate any such changes, they could have a material adverse effect on our business and results of operations, as well as on the price of our common stock.
Increasing property taxes, insurance costs, and HOA fees may negatively affect our financial results.
As a result of our substantial real estate holdings, the cost of property taxes and insuring our properties is a significant component of our expenses. Our properties are subject to real and personal property taxes that may increase as tax rates change and as the real properties are assessed or reassessed by taxing authorities. As the owner of our properties, we are responsible for payment of the taxes to the applicable government authorities. If real property taxes increase, our expenses will increase. If we fail to pay any such taxes, the applicable taxing authority may place a lien on the real property and the real property may be subject to a tax sale.
Current and potential impacts of climate change along with the increased risk of extreme weather events and natural disasters have caused significant increases in our property insurance premiums and may adversely affect the availability and terms of coverage in the future. See “Risks Related to our Business and Operations — We may sufferlosses that are not covered by insurance. ” Additionally, “social inflation” caused the cost of general liability claims to rise at a rate above general economic inflation, primarily due to a trend in increasing litigation costs related to unpredictable jury verdicts for plaintiffs seeking large monetary relief for their injuries. In general, these factors have put pressure on insurance premiums and made it more challenging to obtain appropriate insurance coverage at reasonable rates without the assumption of increasingly higher levels of self-retained risk.
In addition, a significant portion of our properties are located within HOAs, and we are subject to HOA rules and regulations. HOAs have the power to increase monthly charges and make assessments for capital improvements and common area repairs and maintenance.
Property taxes, insurance costs, and HOA fees may be subject to significant increases, which can be outside of our control. If the costs associated with property taxes, insurance, or HOA fees and assessments rise significantly and we are unable to increase rental rates due to current market conditions, rent control laws, or other regulations to offset such increases, our results of operations would be negatively affected.
Our business, results of operations, financial condition, and cash flows may be adversely affected by pandemics and outbreaks of infectious disease.
A significant outbreak of infectious disease, medical epidemic, or a pandemic may result in a widespread health crisis and may lead to an economic downturn that could negatively affect our business, results of operations, and financial condition. To the extent our current or prospective residents experience unemployment, deteriorating financial conditions, and declines in household income, resulting from medical epidemics or pandemics, they may be unwilling or unable to pay rent in full on a timely basis or renew or enter into new leases for our homes, and our revenues and operating results could be negatively affected.
Measures put in place in response to a pandemic such as temporary evictionmoratoriums if certain criteria are met by residents, deferral of missed rent payments without incurring late fees, and restrictions on rent increases may impose restrictions on our ability to enforce residents’ contractual rental obligations and limit our ability to collect and increase rents.
The resulting impact from a future pandemic or outbreak of infectious disease on rental revenues and other property income could impact our ability to make all required debt service payments and to continue paying dividends to our stockholders at expected levels or at all.
Additionally, the lingering impact of a pandemic and related containment measures may interfere with the ability of our suppliers and other business partners to carry out their assigned tasks or supply materials, products, services, or funding (in the case of our revolving credit facility) at ordinary levels of performance relative to the conduct of our business.
A general decline in business activity and demand for real estate transactions resulting from a pandemic could adversely affect (1) our ability to build, acquire, or dispose of single-family homes on terms that are attractive or at all and (2) the value of our homes and our business such that we may recognize impairment on the carrying value of our investments in single-family residential properties and other assets subject to impairment review, including, but not limited to, goodwill.
An economic downturn resulting from a pandemic, and a disruption of, and/or instability in, the global financial markets or deteriorations in credit and financing conditions may affect our access to capital necessary to fund business operations, including construction and acquisitions, or address maturing liabilities on a timely basis.
Disease outbreaks, epidemics, pandemics, or similar widespread public health concerns and the volatile regional and global economic conditions stemming therefrom, as well as reactions to future pandemics, could also precipitate or aggravate the other risk factors set forth in this Annual Report on Form 10-K, which in turn could materially adversely affect our business, financial condition, and results of operations.
Risks Related to our Business and Operations
We may not be able to effectively manage our growth, and any failure to do so may have an adverse effect on our business and operating results.
We have grown rapidly, assembling a portfolio of 86,192 owned homes as of December 31, 2025, providing property and asset management services to portfolio owners of single-family residential properties, and beginning to construct homes for ourselves and third parties. Our future operating results may depend on our ability to effectively manage our growth, which is dependent, in part, upon our ability to:
• stabilize and manage an increasing number of properties and resident relationships across our geographically dispersed portfolio while maintaining a high level of resident satisfaction and building and enhancing our brand;
• identify and supervise a number of suitable third parties on which we rely to provide certain services outside of property management to our properties;
• attract, integrate, and retain new management and operations associates; and
• continue to improve our operational and financial controls and reporting procedures and systems.
We can provide no assurance that we will be able to manage our properties or grow our business efficiently or effectively, or without incurring significant additional expenses. Any failure to do so may have an adverse effect on our business and operating results.
A significant portion of our costs and expenses are fixed, and we may not be able to adapt our cost structure to offset declines in our revenue.
Many of the expenses associated with our business, such as property taxes, insurance, HOA fees, utilities, construction, acquisition, renovation and maintenance costs, and other general corporate expenses are relatively inflexible and will not necessarily decrease with a reduction in revenue from our business. Some components of our fixed assets depreciate more rapidly and require ongoing capital expenditures. Our expenses and ongoing capital expenditures are also affected by continued inflationary pressures, and certain of our cost increases may exceed the rate of inflation in any given period or market. Our rental income is affected by many factors beyond our control, such as the availability of alternative rental housing and economic conditions in our markets. In addition, state and local regulations may require us to maintain properties that we own, even if the cost of maintenance is greater than the value of the property or any potential benefit from renting the property, or pass regulations that limit our ability to increase rental rates. As a result, we may not be able to fully offset rising
costs and capital spending by increasing rental rates, which could have a material adverse effect on our results of operations and cash available for distribution.
We recorded net losses in the past and we may experience net losses in the future.
We have recorded consolidated net losses in the past. These net losses were inclusive in each period of significant non-cash charges, consisting primarily of depreciation and amortization expense. We expect such non-cash charges to continue to be significant in future periods and, as a result, we may record net losses in future periods.
We are dependent on our executive officers and dedicated associates, and the departure of any of our key associates could materially and adversely affect us. We also face intense competition for the employment of highly skilled managerial, investment, financial, and operational associates. Additionally, our results of operations can be adversely affected by labor shortages, turnover, and labor cost increases.
We rely on a small number of persons to carry out our business and investment strategies, and the loss of the services of any of our key management associates, or our inability to recruit and retain qualified associates in the future, could have an adverse effect on our business and financial results.
In addition, the implementation of our business plan may require that we employ additional qualified associates. Competition for highly skilled managerial, investment, financial, and operational associates is intense. As additional large real estate investors enter into and expand their scale within the single-family rental business, we have faced increased challenges in hiring and retaining associates, and we cannot assure our stockholders that we will be successful in attracting and retaining such skilled associates. If we are unable to hire and retain qualified associates as required, our growth and operating results could be adversely affected.
Our ability to meet our labor needs while controlling our labor costs is subject to numerous external factors, including unemployment levels, prevailing wage rates, persisting inflation, changing demographics, and changes in employment legislation. High unemployment levels and federal unemployment subsidies may adversely affect the labor force available to us or increased labor costs. In addition, we continue to experience disruptions from workforce turnover due to a scarcity of talent, as businesses compete for personnel, and rising labor costs. Many of our positions require specialized skill sets resulting in a longer than average time period to fill vacant positions. We are also experiencing and may continue to experience additional pressure due to labor shortages associated with the impact of continued elevated demand. If we are unable to retain qualified associates or our labor costs increase significantly, our business operations and our financial performance could be adversely impacted.
Our investments are and may continue to be concentrated in our markets and in the single-family properties sector of the real estate industry, which exposes us to seasonal fluctuations in rental demand and downturns in our markets or in the single-family properties sector.
Our investments in real estate assets and the investments we manage on behalf of others are and may continue to be concentrated in our markets and in the single-family properties sector of the real estate industry. A downturn or slowdown in the rental demand for single-family housing caused by adverse economic, regulatory, or environmental conditions, or other events, in our markets may have a greater impact on the value of our owned and managed properties or our operating results than if we had more fully diversified our investments. We believe that there are seasonal fluctuations in rental demand with demand higher in the spring and summer than in the late fall and winter. Such seasonal fluctuations may impact our operating results.
In addition to global and United States economic conditions, our operating performance will be impacted by the economic conditions in our markets. We base a substantial part of our business plan on our belief that property values and operating fundamentals for single-family properties in our markets will continue to improve over the near to intermediate term. However, these markets have experienced substantial economic downturns in the past and could experience similar or worse economic downturns in the future. We can provide no assurance as to the extent property values and operating fundamentals in these markets will improve, if at all. If an economic downturn in these markets occurs or if we fail to accurately predict the timing of economic improvement in these markets, the value of our properties could decline and our ability to execute our business plan may be adversely affected to a greater extent than if we owned and managed real estate portfolios that were more geographically diversified, which could adversely affect our financial condition, operating results, and ability to make distributions to our stockholders and cause the value of our common stock to decline.
We may not be able to effectively control the timing and costs relating to the renovation and maintenance of our properties, which may adversely affect our operating results and ability to make distributions to our stockholders.
Most of our properties require some level of renovation either immediately upon their acquisition or in the future following expiration of a lease or otherwise. We may acquire properties that we plan to renovate extensively. We may also acquire properties that we expect to be in good condition only to discover unforeseendefects and problems that require extensive renovation and capital expenditures. To the extent properties are leased to existing residents, renovations may be postponed until the resident vacates the premises at which time the costs of renovating will be incurred. In addition, from time to time, we may perform ongoing maintenance or make ongoing capital improvements and replacements and perform significant renovations and repairs that resident deposits and insurance may not cover. Because the portfolio of homes we own and manage consists of geographically dispersed properties, our ability to adequately monitor or manage any such renovations or maintenance may be more limited or subject to greaterinefficiencies than if our properties were more geographically concentrated.
Our properties have infrastructure and appliances of varying ages and conditions. Consequently, we routinely retain independent contractors and trade professionals to perform physical repair work and are exposed to all of the risks inherent in property renovation and maintenance, including potential cost overruns, increases in labor and materials costs, delays by contractors in completing work, delays in the timing of receiving necessary work permits, delays in receiving materials, fixtures, or appliances, certificates of occupancy, and poor workmanship. Labor shortages and supply chain disruptions, among other challenges, continue to affect the ability of our associates, suppliers, and other business partners to carry out their assigned tasks, provide services, or supply materials at ordinary levels of performance relative to the conduct of our business. In addition, we are experiencing disruptions from workforce turnover, affecting the renovation and maintenance of our properties, as businesses emerging from the pandemic compete for personnel. Many of our positions require specialized skill sets resulting in a longer than average time period to fill position vacancies. If our assumptions regarding the costs or timing of renovation and maintenance across our properties prove to be materially inaccurate, our operating results and ability to make distributions to our stockholders may be adversely affected.
We face significant competition in the leasing market for quality residents, which may limit our ability to lease the single-family homes we own and manage on favorable terms.
We depend on rental income from residents for substantially all of our revenues. As a result, our success depends in large part upon our ability to attract and retain qualified residents for our owned and managed properties. We face competition for residents from other lessors of single-family properties, apartment buildings, and condominium units. Competing properties may be newer, better located, and more attractive to residents. Potential competitors may have lower rates of occupancy than we do or may have superior access to capital and other resources, which may result in competing owners more easily locating residents and leasing available housing at lower rental rates than we might offer at our homes. Many of these competitors may successfully attract residents with better incentives and amenities, which could adversely affect our ability to obtain quality residents and lease our single-family properties on favorable terms. Additionally, we may fail to receive certain government subsidies or assistance that we have received in the past, and federal and state legislative or regulatory initiatives could limit or restrict the availability of such subsidies or assistance for our properties, while some competing housing options may qualify for such government subsidies or assistance, which could make the properties of our competitors more accessible and attractive to potential residents than our properties. This competition may affect our ability to attract and retain residents and may reduce the rental rates we are able to charge.
In addition, increases in unemployment levels and other adverse changes in economic conditions in our markets may adversely affect the creditworthiness of potential residents, which may decrease the overall number of qualified residents for our properties within such markets. Fluctuating global and United States economic conditions, uncertainty in financial markets, and elevated interest rates may materially negatively impact our residents, and our business could be negatively impacted.
We could also be adversely affected by overbuilding or high vacancy rates of homes in our markets, which could result in an excess supply of homes and reduce occupancy and rental rates. Continuing development of apartment buildings, condominium units, and single-family rental communities in many of our markets will increase the supply of housing and exacerbate competition for residents.
In addition, laudable government sponsored programs to promote home ownership or executive, legislative, or regulatory initiatives on the federal and state levels that disproportionately affect large institutional owners may encourage potential renters to purchase residences or lease from smaller investors or partnerships rather than from us, thereby causing a decline in the number and quality of potential residents available to us.
No assurance can be given that we will be able to attract and retain suitable residents. If we are unable to lease our homes to suitable residents, we would be adversely affected and the value of our common stock could decline.
We intend to acquire properties and to engage in development and construction activities from time to time consistent with our investment strategy even if the rental and housing markets are not as favorable as they have been in the recent past, which could adversely impact anticipated yields and returns on our development investments.
We intend to continue to acquire properties and pursue development opportunities, including build-to-rent development and third-party fee-building arrangements from time to time consistent with our investment strategy, even if the rental and housing markets are not as favorable as they have been in the recent past. Future acquisitions of properties and development projects may be more costly and have lower yield characteristics than recent past and present opportunities. The following factors, among others, may make acquisitions or development activities more expensive:
• improvements in overall economic conditions and employment levels;
• greater availability of consumer credit;
• improvements in the pricing and terms of mortgages;
• the emergence of increased competition for single-family properties and developable land from private investors and entities with similar investment objectives to ours;
• tax or other government incentives that encourage homeownership; and
• increases in construction costs, including labor, materials, and supplies or delays in construction timelines.
A general decline in business activity and demand for real estate transactions could adversely affect our ability to acquire or dispose of single-family homes or to successfully complete and lease development projects on terms that are attractive or at all, which may be impacted in periods of elevated interest rates.
We plan to continue acquiring properties and pursuing development opportunities as long as we believe such properties offer an attractive total return opportunity. Accordingly, future acquisitions and development projects may have lower yield characteristics than recent past and present opportunities and, if such future acquisitions or development activities are funded through equity issuances, the yield and distributable cash per share may be reduced, and the value of our common stock may decline. For additional information regarding risks related to our development and construction activities, see — “ Our expansion into land development and home construction activities exposes us to additional operational and real estate risks, which may adversely affect our financial condition, cash flows, and operating results.”
Competition in identifying and acquiring our properties and in pursuing development opportunities could adversely affect our ability to implement our business and growth strategies, which could materially and adversely affect us.
In acquiring our properties and pursuing development opportunities, we compete with a variety of institutional investors, including other REITs, specialty finance companies, public and private funds, savings and loan associations, banks, mortgage bankers, insurance companies, institutional investors, investment banking firms, financial institutions, governmental bodies,
and other entities. On a limited basis, when acquiring existing homes through retail channels, we may also compete with individual home buyers and small-scale investors. With respect to our development and construction activities, we also compete with national and regional homebuilders, land developers, and other build-to-rent operators for the acquisition of developable land, finished lots, and lot option contracts, as well as for construction labor, materials, and subcontractor services.
Certain of our competitors may be larger in certain of our markets and may have greater financial or other resources than we do. Some competitors may have a lower cost of funds and access to funding sources that may not be available to us. In addition, any potential competitor may have higher risk tolerances or different risk assessments and may not be subject to the operating constraints associated with qualification for taxation as a REIT, which could allow them to consider a wider variety of investments or development opportunities. Competition may result in fewer investments, higher prices for both existing homes and developable land, a broadly dispersed portfolio of properties that does not lend itself to efficiencies of concentration, acceptance of greater risk, lower yields and a narrower spread of yields over our financing costs. In addition, competition for desirable investments and development sites could delay the investment of our capital, which could adversely affect our results of operations and cash flows. As a result, there can be no assurance that we will be able to identify and finance investments or development opportunities that are consistent with our investment objectives or to achievepositive investment results, and our failure to accomplish any of the foregoing could have a material adverse effect on us and cause the value of our common stock to decline.
We depend on our residents and their willingness to meet their lease obligations and renew their leases for substantially all of our revenues. Poor resident selection, defaults, and non-renewals by our residents may adversely affect our reputation, financial performance, and ability to make distributions to our stockholders.
We depend on rental income from residents for substantially all of our revenues. As a result, our success depends in large part upon our ability to attract and retain qualified residents for our owned and managed properties. Our reputation, financial performance, and ability to make distributions to our stockholders would be adversely affected if a significant number of our residents fail to meet their lease obligations or fail to renew their leases. For example, residents may default on rent payments, make unreasonable and repeated demands for service or improvements, make unsupported or unjustifiedcomplaints to regulatory or political authorities, use our properties for illegal purposes, damage or make unauthorized structural changes to our properties that are not covered by security deposits, refuse to leave the property upon termination of the lease, engage in domestic violence or similar disturbances, disturb nearby residents with noise, trash, odors, or eyesores, fail to comply with HOA regulations, sublet to less desirable individuals in violation of our lease, or permit unauthorized persons to live with them. Although collections from residents have improved over the past year compared to recent periods, they have not returned to historical levels and may never fully do so. We may also experience higher resident turnover.
Damage to our properties may delay re-leasing, necessitate expensive repairs, or impair the rental income or value of the property resulting in a lower than expected rate of return. Increases in unemployment levels and other adverse changes in economic conditions in our markets could result in substantial resident defaults. In the event of a resident default or bankruptcy, we may experience delays in enforcing our rights as landlord at that property and will incur costs in protecting our investment and re-leasing the property.
Furthermore, we rely on information supplied by prospective residents in making resident selections, which may in some cases be false. See “— We rely on information supplied by prospective residents in managing our business. ”
Our evaluation of properties and development projects involves a number of assumptions that may prove inaccurate, which could result in us paying too much for properties we acquire or development projects we undertake and/or overvaluing our properties or development projects, or our properties or development projects failing to perform as we expect.
We are authorized to follow a broad investment policy established by our board of directors and subject to implementation by our management. Our board of directors periodically reviews and updates the investment policy and also reviews our portfolio of residential real estate, but it generally does not review or approve specific property acquisitions or development projects. Our success depends on our ability to acquire properties that can be quickly possessed, renovated, repaired, upgraded, and rented with minimal expense and maintained in quality condition, as well as our ability to successfully manage land acquisition strategies, construction processes, and development timelines for our development
activities. In determining whether a particular property or development project meets our investment criteria, we also make a number of assumptions, including, among other things, assumptions related to estimated time of possession and estimated renovation costs and time frames, annual operating costs, market rental rates and potential rent amounts, time from purchase to leasing, and resident default rates. With respect to our development and construction activities, we make additional assumptions, including assumptions related to land acquisition and lot costs, construction cost estimates, availability and cost of labor, materials, and subcontractor services, permitting and entitlement timelines, construction schedules, and projected rental rates and lease-up timing at the time of project completion. These assumptions may prove inaccurate, particularly since the properties that we acquire and the development projects that we undertake vary materially in terms of time to possession, renovation, quality and type of construction, geographic location, and hazards and since development projects are subject to market conditions and cost fluctuations over extended time horizons. As a result, we may pay too much for properties we acquire or land and lots for development and/or overvalue our properties or development projects, or our properties or development projects may fail to perform as anticipated. Adjustments to the assumptions we make in evaluating potential purchases may result in fewer properties or development opportunities qualifying under our investment criteria, including assumptions related to our ability to lease properties we have purchased or developed.
Our dependence upon third parties for key services may have an adverse effect on our operating results or reputation if the third parties fail to perform.
Though we are internally managed, we use local and national third-party vendors and service providers to provide certain services for our properties and development projects. For example, we typically engage third-party home improvement professionals with respect to certain maintenance and specialty services, such as HVAC, roofing, painting, and floor installations. With respect to our development and construction activities, we rely on general contractors, subcontractors, and other third-party service providers to perform land development, site work, and home construction. Selecting, managing, and supervising these third-party service providers requires significant resources and expertise, and because our portfolio consists of geographically dispersed properties and our development activities occur across multiple markets, our ability to adequately select, manage, and supervise such third parties may be more limited or subject to greaterinefficiencies than if our properties and development projects were more geographically concentrated.
An overall labor shortage experienced by our vendors, general contractors, subcontractors, and other third-party service providers, lack of skilled labor, increased turnover, or labor inflation, including as a result of general macroeconomic factors, could have a material adverse impact on our business, financial condition, or operating results. We have entered into a multi-year contract with a third-party vendor to provide certain services for our properties. Because of the large volume of services under this contract, only a limited number of companies are capable of servicing our needs on this scale. Accordingly, the inability or unwillingness of this vendor to continue to provide these services on acceptable terms or at all could have a material adverse effect on our business.
We generally do not have exclusive or long-term contractual relationships with third-party providers, and we can provide no assurance that we will have uninterrupted or unlimited access to their services. If we do not select, manage, and supervise appropriate third parties to provide these services, our reputation and financial results may suffer.
We rely on the systems of our third-party service providers, their ability to perform key operations on our behalf in a timely manner and in accordance with agreed levels of service, and their ability to attract and retain sufficient qualified associates to perform our work. A failure in the systems of one of our third-party service providers, or their inability to perform in accordance with the terms of our contracts or to retain sufficient qualified associates, could have a material adverse effect on our business, results of operations, and financial condition.
Notwithstanding our efforts to implement and enforce strong policies and practices regarding service providers, we may not successfully detect and prevent fraud, misconduct, incompetence, or theft by our third-party service providers. In addition, any removal or termination of third-party service providers would require us to seek new vendors or providers, which would create delays and adversely affect our operations. Poor performance by such third-party service providers may reflect poorly on us and could significantly damage our reputation among desirable residents. In the event of fraud or misconduct by a third party, we could also be exposed to material liability and be held responsible for damages, fines, or penalties and our reputation may suffer. In the event of failure by our general contractors to pay their subcontractors, our properties may be subject to filings of mechanics or materialmen liens, which we may need to resolve to remain in compliance with certain debt covenants, and for which indemnification from the general contractors may not be available.
Our reliance on a limited number of third-party digital marketing and lead-generation platforms, including a single dominant platform, exposes us to significant business, financial, and operational risk.
We rely heavily on third-party digital marketing and residential listing platforms to generate leasing leads for our homes. A substantial portion of prospective residents are introduced to our properties through a single, widely used third-party platform that plays a significant role in resident search behavior and lead origination. As a result, our ability to attract residents, maintain occupancy levels, and efficiently lease our homes is materially dependent on the continued effectiveness, availability, and commercial terms of that platform.
Our reliance on this platform subjects us to risks largely outside of our control, including changes in pricing, algorithms, listing prioritization, data access, advertising formats, contractual terms, or policies governing the display or distribution of our listings. Any adverse changes to these factors could reduce lead volume or quality, increase our marketing and customer acquisition costs, or impair our ability to convert prospects into residents, any of which could materially and adversely affect our operating results and cash flows.
In addition, the platform may prioritize its own interests or those of competitors, including by favoring certain listings, business models, or service offerings, or by entering into strategic relationships that disadvantage us. We generally do not control how prospective residents interact with or are directed by the platform, and we may have limited ability to influence changes that negatively impact our visibility or performance.
Our dependence on this platform also exposes us to operational and reputational risks arising from service disruptions, system outages, cybersecurity incidents, data integrity issues, or reputational harmsuffered by the platform itself. Any interruption in the platform’s operations or loss of consumer trust could materially reduce leasing activity for our homes.
While we seek to diversify our marketing channels and invest in alternative lead-generation strategies, there can be no assurance that we will be able to do so effectively or on commercially reasonable terms, or that alternative channels would generate comparable lead volume or efficiency. If our relationship with this platform were terminated, materially altered, or became significantly more costly or less effective, we may not be able to replace the lost leads in a timely or cost-effective manner, which could have a material adverse effect on our business, financial condition, results of operations, and ability to execute our growth strategy.
We are subject to certain risks associated with bulk portfolio acquisitions and dispositions.
We have acquired and disposed of, and may continue to acquire and dispose of, properties we acquire or sell in bulk from or to other owners of single-family homes, banks, and loan servicers. When we purchase properties in bulk, or if we were to acquire properties through an auction process, we often do not have the opportunity to conduct interior inspections or conduct more than cursory exterior inspections on a portion of the properties, if at all. Such inspection processes may fail to reveal major defects associated with such properties, which may cause the amount of time and cost required to renovate and/or maintain such properties to substantially exceed our estimates. The costs involved in locating and performing due diligence (when feasible) on portfolios of homes as well as negotiating and entering into transactions with potential portfolio sellers could be significant, and there is a risk that either the seller may withdraw from the entire transaction for failure to come to an agreement or the seller may not be willing to sell us the bulk portfolio on terms that we view as favorable. In addition, a seller may require that a group of homes be purchased as a package even though we may not want to purchase certain individual assets in the bulk portfolio.
Bulk portfolio acquisitions are also more complex than single-family home acquisitions, and we may not be able to implement this strategy successfully. Upon acquiring a new home, we may have to evict residents who are in unlawful possession before we can secure possession and control of the home.
Moreover, to the extent the management and leasing of such properties has not been consistent with our property management and leasing standards, we may be subject to a variety of risks, including risks relating to the condition of the properties, the credit quality and employment stability of the residents, and compliance with applicable laws, among others. In addition, financial and other information provided to us regarding such portfolios during our due diligence may be inaccurate, and we may not discover such inaccuracies until it is too late to seek remedies against such sellers. To the extent we pursue such remedies, we may not be able to successfully prevail against the seller in an action seeking damages for such inaccuracies. If we conclude that certain individual properties purchased in bulk portfolio sales do not fit our target
investment criteria, we may decide to sell, rather than renovate and lease, such properties, which could take an extended period of time and may not result in a sale at an attractive price.
From time to time we engage in bulk portfolio dispositions of properties consistent with our business and investment strategy. With respect to any such disposition, the purchaser may default on payment or otherwise breach the terms of the relevant purchase agreement, and it may be difficult for us to pursue remedies against such purchaser or retain or resume possession of the relevant properties. To the extent we pursue such remedies, we may not be able to successfully prevail against the purchaser.
Our expansion into land development and home construction activities exposes us to additional operational and real estate risks, which may adversely affect our financial condition, cash flows, and operating results.
As part of our growth strategy, we completed the acquisition of ResiBuilt and expanded our platform to engage in the development and construction of single-family rental homes and communities, including through build-to-rent development and third-party fee-building arrangements. These activities involve substantial up-front costs, operational complexity, and execution risk, and require us to successfully manage land acquisition strategies, construction processes, and development timelines before homes are available for rent and to generate income. Our development and construction strategy may also be restricted by governmental regulations and zoning requirements that limit the locations, density, or types of homes we are able to build. Building rental homes and rental communities also involves significant risks to our business, such as delays or cost increases due to changes in or failure to meet regulatory requirements, including permitting and zoning regulations, failure of lease rentals on newly-constructed properties to achieve anticipated investment returns, inclement weather, adverse site selection, unforeseen site conditions or shortages of suitable land, construction materials, and labor, and other risks. We may be unable to build new rental homes and rental communities that generate acceptable returns, and, as a result, our growth and results of operations may be adversely impacted.
The successful integration of ResiBuilt’s operations, personnel, systems, and development pipeline into our organization is subject to execution risk. We may encounter challenges in retaining key personnel, aligning development standards and processes, managing increased operational scale, or realizing anticipated benefits from the acquisition. If we are unable to effectively integrate these operations or manage expanded development activities, our growth strategy, results of operations, and cash flows could be adversely affected.
Although the ResiBuilt acquisition includes options to acquire approximately 1,500 lots, no land was acquired in the transaction, and there can be no assurance that we will exercise these options on favorable terms, if at all. The availability, timing, and economics of future lot acquisitions remain subject to market conditions, entitlement risk, competition with other homebuilders and land buyers, inflation in land prices, zoning and density restrictions, and other regulatory approvals, many of which are outside of our control. If we are unable to secure suitable lots at acceptable prices, exercise lot options on favorable terms, or experience delays in land acquisition or development, the number of homes we are able to construct and lease, or the scale of our development activities, could be limited, which could adversely affect our growth, financial condition, cash flows, and results of operations.
Our developer lending program exposes us to additional credit, construction, operational, and valuation risks that could adversely affect our financial condition, cash flows, and operating results .
We have launched a developer lending program pursuant to which we provide financing to experienced homebuilders for the development of single-family rental communities that may serve as future acquisition opportunities. Construction and development lending subjects us to risks that differ from those associated with our traditional acquisition activities, including the risk that borrowers may be unable to complete projects on schedule or within budget, experience financial distress, or default on their obligations. We are dependent on the financial strength, operational capacity, and performance of third-party developers, and our exposure may be concentrated among a limited number of borrowers, amplifying these risks.
Construction and development financing presents inherent uncertainty in estimating project costs, timelines, and values upon completion. Projects may be delayed, exceed budget, or fail to achieve expected performance due to changes in housing demand, labor and material costs, permitting requirements, weather conditions, or other factors beyond our control. Loans on land under development pose additional risk because of the lack of income being produced by the property and the potential illiquid nature of the collateral. These risks can be significantly impacted by supply and demand. Construction loans also require active and ongoing monitoring, including cost reviews and on-site inspections, which are complex and costly.
Additionally, there can be no assurance that we will acquire any financed communities on favorable terms or at all. If these risks materialize, we may experience loan losses, reduced returns, or adverse effects on our financial condition, cash flows, and operating results.
Our strategy to acquire homes from third-party homebuilders could subject us to significant risks that could adversely affect our financial condition, cash flows, and operating results, and the strategy may be restricted by governmental regulations and zoning requirements.
We expect to continue entering into contracts with homebuilder counterparties for the acquisition of new homes. Pursuant to these contracts, homes will be delivered to us pursuant to a negotiated delivery schedule. We have made commitments for future fundings, and there can be no assurance that funding will be available to us for such purposes. Additionally, if home values decline subsequent to when we entered into contracts with homebuilder counterparties, we may not be able to adjust our contractual acquisition prices to reflect the decreased home values.
This strategy depends on the performance of our counterparties and the ability of homebuilders to develop new homes specifically for our purchase. We rely on builder counterparties to acquire land suitable for residential building in our markets and to deliver quality homes at reasonable prices in a timely manner, in accordance with agreed to specifications. A failure of builder counterparties to perform in accordance with the terms of our agreements, could have a material adverse effect on our business. Additionally, homebuilder counterparties may experience financial distress, insolvency, or bankruptcy, which could result in failure to deliver contracted homes, delays in construction, loss of deposits, or our inability to realize anticipated returns on committed capital. Further, poor performance by homebuilder counterparties may reflect poorly on us and could damage our reputation. Governmental laws, regulations, and zoning requirements may be imposed that restrict our ability to purchase homes from third-party homebuilders that are intended for rental purposes in areas where we would like to invest.
Managing newly constructed communities presents specific risks to our business, such as the inability to lease newly-constructed rental homes at anticipated rates, resulting in underperformance of investment returns. Factors such as adverse site selection, inclement weather delaying construction or occupancy, and other risks can exacerbate these challenges. Failure to achieve occupancy or rental income targets for newly constructed communities may adversely impact our growth and results of operations.
Unoccupied homes could be difficult to lease, which could adversely affect our revenues.
Newly constructed homes acquired through our homebuilder partnerships or built through our ResiBuilt platform are typically delivered without residents in place. These properties, as well as existing unoccupied homes we acquire, may remain vacant longer than anticipated, and we may own multiple unoccupied homes in close geographic proximity to one another. We may not be successful in locating residents to lease the individual properties that we acquire or build as quickly as we had expected, or at all. Even if we are able to place residents as quickly as we had expected, we may incur vacancies in the future and may not be able to re-lease those properties without longer than assumed delays, which may result in increased renovation and maintenance costs and opportunity costs from lost revenues.
Unoccupied homes may also be at risk for fraudulent activity which could impact our ability to lease a home. As a result, if vacancies continue for a longer period of time than we expect or indefinitely, we may suffer reduced revenues, incur additional operating expenses and capital expenditures, and our homes could be substantially impaired, all of which may have a material adverse effect on us.
We rely on information supplied by prospective residents in managing our business.
We evaluate prospective residents in a standardized manner through the use of a third-party resident screening vendor partners. Our resident screening process includes obtaining appropriate identification, a thorough evaluation of credit history and household income, a review of the applicant’s rental history, and a background check for criminal activity. We make leasing decisions based on information in rental applications completed by a prospective resident and screened by our third-party partners, and we cannot be certain that this information is accurate. Additionally, these applications are submitted to us at the time we evaluate a prospective resident, and we do not require residents to provide us with updated information during the terms of their leases, notwithstanding the fact that this information can, and frequently does, change over time. For example, increases in unemployment levels or adverse economic conditions in certain of our markets may adversely affect
the creditworthiness of our residents in such markets. Even though this information is not updated, we will use it to evaluate the characteristics of our portfolio over time. If resident-supplied information is inaccurate or our residents’ creditworthiness declines over time, we may make poor or imperfect leasing decisions and our portfolio may contain more risk than we believe.
Our leases are relatively short-term, exposing us to the risk that we may have to re-lease our properties frequently, which we may be unable to do on attractive terms, on a timely basis, or at all.
Substantially all of our new leases have a duration of one to two years. As such leases permit the residents to leave at the end of the lease term, we anticipate our rental revenues may be affected by declines in market rental rates more quickly than if our leases were for longer terms. Short-term leases may result in high turnover, which involves costs such as restoring the properties, marketing costs, and lower occupancy levels. Our resident turnover rate and related cost estimates may be less accurate than if we had more operating data upon which to base such estimates. If the rental rates for our properties decrease or our residents do not renew their leases, our operating results and ability to make distributions to our stockholders could be adversely affected. In addition, a portion of our potential residents are represented by leasing agents and we may need to pay all or a portion of any related agent commissions, which will reduce the revenue from a particular rental home. Alternatively, to the extent that a lease term exceeds one year, we may lose the opportunity to raise rents in an appreciating market and be locked into a lower rent until such lease expires.
We may not have control over timing and costs arising from renovating our properties, and the cost of maintaining rental properties can be higher than the cost of maintaining owner-occupied homes, which will affect our results of operations and may adversely impact our ability to make distributions to our stockholders.
Renters impose additional risks to owning real property. Renters do not have the same interest as an owner in maintaining a property and its contents and generally do not participate in any appreciation of the property. Accordingly, renters may damage a property and its contents, and may not be forthright in reporting damages or amenable to repairing them completely, or at all. A rental property may need repairs and/or improvements after each resident vacates the premises, the costs of which may exceed any security deposit provided to us by the resident when the rental property was originally leased. Accordingly, the cost of maintaining rental properties can be higher than the cost of maintaining owner-occupied homes, which will affect our results of operations and may adversely impact our ability to make distributions to our stockholders.
Declining real estate valuations and impairment charges could adversely affect our financial condition and operating results.
We periodically review the value of our properties to determine whether their value, based on market factors, projected income, and generally accepted accounting principles in the United States (“GAAP”), has permanently decreased such that it is necessary or appropriate to take an impairmentloss in the relevant accounting period. Such a loss would cause an immediate reduction of net income in the applicable accounting period and would be reflected in a decrease in our balance sheet assets. Even if we do not determine that it is necessary or appropriate to record an impairmentloss, a reduction in the intrinsic value of a property would become manifest over time through reduced income from the property and would therefore affect our earnings and financial condition.
Our participation in joint venture investments may limit our ability to invest in certain markets, and we may be adversely affected by our lack of sole decision-making authority, our reliance on joint venture partners’ financial condition, and disputes between us and our joint venture partners.
We currently, and may in the future, co-invest with third parties through partnerships, joint ventures, or other entities, acquiring non-controlling interests in or sharing responsibility for managing the affairs of a property, partnership, joint venture, or other entity. These joint ventures may be subject to restrictions that prohibit us from making other investments in certain markets until all of the funds in such partnership, joint venture, or other entity are invested or committed. In addition, we may also not be in a position to exercise sole decision-making authority regarding the property, partnership, joint venture, or other entity, and our joint venture partners could take actions that are not within our control. Such actions could, among other things, impact our ability to maintain our status as a REIT. Further, investments in partnerships, joint ventures, or other
entities may, under certain circumstances, involve risks not present were a third party not involved, including the possibility that joint venture partners might become bankrupt or fail to fund their share of required capital contributions. Joint venture partners may have economic or other business interests or goals that are inconsistent with our business interests or goals and may be in a position to take actions contrary to our policies or objectives. Such investments also may have the potential risk of impasses on decisions, such as a sale, because neither we nor our partners would have full control over the partnership or joint venture. Disputes between us and our partners may result in litigation or arbitration that would increase our expenses and prevent our officers and/or directors from focusing their time and effort on our business. Consequently, actions by, or disputes with, any of our joint venture partners might result in subjecting properties owned by the partnership or joint venture to additional risk. In addition, we may in certain circumstances be liable for the actions of any of our third-party partners or co-venturers.
We provide property management and other services on a contractual basis to co-investors in certain of our joint ventures that invest in single-family rental properties. These services include marketing, leasing, maintenance, renovation, accounting, transaction management, and financial markets services. Our exposure to liabilities in connection with such property management activities could have an adverse effect on our business and financial results.
We may sufferlosses that are not covered by insurance.
We attempt to ensure that our properties are adequately insured to cover casualty losses. However, there are certain losses, including losses from floods, fires, earthquakes, wind, hail, pollution, acts of war, acts of terrorism or riots, certain environmental hazards, and security breaches for which we may self-insure or which may not always or generally be insured against because it may not be deemed economically feasible or prudent to do so. Changes in the cost or availability of insurance could expose us to uninsured casualty losses. In particular, a number of our properties are located in areas that are known to be subject to increased earthquake activity, fires, or wind and/or flood risk. For example, in 2024, various parts of the United States and our properties in Texas, Florida, Atlanta, and the Carolinas were impacted by Hurricanes Beryl, Debby, Helene, and Milton, as well as by wildfires in California and other geographies. Any and all such severe weather events may be exacerbated by global climate change, resulting in increased insurance premiums and deductibles, or a decrease in the availability of coverage. See “Risks Related to Sustainability, Corporate Responsibility, and Governance — We are subject to risks from natural disasters such as earthquakes, wildfires, and severe weather .” While we have annual policies for earthquakes, hurricane, and/or flood risk, our properties may nonetheless incur casualty losses that are not fully covered by insurance. In such an event, the value of the affected properties would be reduced by the amount of any such uninsuredloss, and we could experience a significant loss of capital invested and potential revenues in such properties and could potentially remain obligated under any recourse debt associated with such properties. Inflation, changes in building codes and ordinances, environmental considerations, and other factors might also keep us from using insurance proceeds to replace or renovate a particular property after it has been damaged or destroyed. Under those circumstances, the insurance proceeds we receive might be inadequate to restore our economic position in the damaged or destroyed property. Any such losses could adversely affect us and cause the value of our common stock to decline. There can be no assurance that we are adequately insured to protect against potential casualty losses and liabilities, and we may elect to self-insure against certain potential losses, accept higher deductibles, utilize an insurance captive, or reduce the amount of coverage in response to excessive insurance premium increases.
In addition, we may have no source of funding to repair or reconstruct the damaged home, and we cannot assure that any such sources of funding will be available to us for such purposes in the future.
We may have difficulty selling our real estate investments, and our ability to distribute all or a portion of the net proceeds from any such sale to our stockholders may be limited.
Real estate investments are relatively illiquid and, as a result, we may have a limited ability to sell our properties. When we sell any of our properties, we may recognize a loss on such sale. We may elect not to distribute any proceeds from the sale of properties to our stockholders. Instead, we may use such proceeds for other purposes, including:
• purchasing additional properties;
• repaying debt or buying back stock;
• creating working capital reserves; or
• making repairs, maintenance, or other capital improvements or expenditures to our remaining properties.
Our ability to sell our properties may also be limited by our need to avoid the 100% prohibited transactions tax that is imposed on gain recognized by a REIT from the sale of property characterized as dealer property. For example, we may be required to hold our properties for a minimum period of time and comply with certain other requirements in the Internal Revenue Code of 1986, as amended (the “Code”), or dispose of our properties through a taxable REIT subsidiary (“TRS”), in which case we will incur corporate level tax on any net gains from such dispositions.
We may encounter challenges in effectively providing the professional property and asset management services we offer to owners of single-family home portfolios on a contractual basis. Our failure to effectively perform professional property and asset management functions or to effectively manage the expanded portfolio of properties we manage could materially and adversely affect us.
There can be no assurance that we will be able to effectively manage a significant increase in the number of properties we manage. The potential difficulties we may encounter in providing professional property and asset management services may include, without limitation:
• our inability to effectively perform the property and asset management services at the level and/or the cost that we anticipate or as a result of a failure to allocate sufficient resources to meet those needs;
• our inability to manage the complexities associated with hiring and retaining key personnel required to provide property and asset management services to the increased number of properties we manage as we grow;
• integrating additional regulatory and legal compliance controls and financial reporting practices and controls into our business;
• failure to have received comprehensive diligence regarding the properties or existing tenants that we manage, which may have impaired our assessment of the engagement;
• potential unknown liabilities and unforeseen increased expenses associated with property and asset management; and
• performance shortfalls as a result of the diversion of management’s attention caused by a significant increase in the number of properties we manage.
For all these reasons, it is possible that providing professional property and asset management services could result in the distraction of our management or inconsistencies in our operations, services, standards, controls, policies, and procedures, any of which could adversely affect our business and financial results.
We may not be able to operate our business successfully or generate sufficient cash flows to make or sustain distributions to our stockholders.
If we are unable to operate our business successfully, we would not be able to generate sufficient cash flow to make or sustain distributions to our stockholders, and stockholders could lose all or a portion of the value of their ownership in our common stock. Our ability to successfully operate our business and implement our operating policies and investment strategy depends on many factors, including:
• our ability to effectively manage construction, renovation, maintenance, marketing, and other operating costs for our properties, or delays in construction timelines;
• economic conditions in our markets, including changes in employment and household earnings and expenses, as well as the condition of the financial and real estate markets and the economy, in general;
• our ability to maintain high occupancy rates and target rent levels;
• the availability of, and our ability to identify, attractive acquisition or land development opportunities consistent with our investment strategy;
• our ability to compete with other investors entering the single-family rental industry and other developers of single-family rental homes and communities;
• costs that are beyond our control, including title litigation, litigation with residents or tenant organizations, legal compliance, property taxes, insurance, HOA fees, and construction and renovation costs, including labor, materials, and supplies;
• executive actions and legislative, regulatory, or policy initiatives, particularly those focused on institutional ownership and acquisition of single-family homes, that could limit our ability to acquire properties, impose additional compliance or operating requirements, or constrain pricing flexibility in certain markets;
• judicial and regulatory developments affecting landlord-tenant relations that may affect or delay our ability to dispossess or evict occupants or increase rental rates;
• reversal of population, employment, or homeownership trends in our markets; and
• interest rate levels and volatility, which may affect the accessibility of short-term and long-term financing on desirable terms.
In addition, we face significant competition in acquiring attractive properties on advantageous terms, and the value of the properties that we acquire may decline substantially after we purchase them.
Legal and Regulatory Related Risks
Executive actions and proposed federal and state legislation or regulations aimed at limiting institutional ownership and acquisition of single-family homes could materially adversely affect our business, growth strategy, and results of operations.
Federal, state, and local policymakers have increasingly focused on housing supply and availability, including scrutiny of institutional ownership of single-family residential properties. Recent executive actions and policy initiatives reflect increased federal and state focus on this area and direct the development of legislative, regulatory, or executive measures on the federal and state levels that could restrict, discourage, or prohibit large institutional investors from acquiring or owning single-family homes or financing the acquisition or the operation of single-family homes with federal or government-sponsored enterprises and impose additional reporting obligations, financing limitations, or operational restrictions. These actions and initiatives include a recent executive order directing federal agencies and government-sponsored enterprises to define the attributes of an “institutional investor” (potentially including attributes that we are likely to exhibit) and to take actions that could limit or condition institutional participation in the acquisition or financing of certain single-family homes (with potential narrowly-tailored exceptions for single-family homes developed or acquired through build-to-rent channels), restrict the use of federal or government-sponsored funds to finance such single-family home acquisitions or operations, increase disclosure and compliance requirements, and subject institutional ownership, acquisition, and operating practices for local single-family rental markets to enhanced regulatory review. The administration has also indicated its intent to pursue legislation that could codify or expand such measures.
If enacted or expanded, such measures could limit our ability to acquire additional homes, require us to modify our growth, investment, capital deployment, development, and/or disposition strategies, reduce the scale or efficiency of our operations, increase compliance costs, subject us to increased regulatory scrutiny, or otherwise adversely affect our business model. Even if such proposals are not fully implemented or are later modified, the policy landscape in this area continues to evolve. Although we are committed to working constructively with policymakers at all levels to support housing supply and availability, there can be no assurance that such engagement will result in favorable policy outcomes or prevent the adoption of measures that could adversely affect our business. The introduction of executive actions, federal and state legislation, or regulatory initiatives affecting large institutional investors and the additional regulatory scrutiny could create uncertainty, affect market dynamics, reduce the availability of acquisition opportunities on economically favorable terms or at all, adversely affect investor sentiment, increase volatility in our common stock, or otherwise negatively impact our business.
Any limitations on our ability to acquire, finance, own, or operate single-family rental properties, increased regulatory or disclosure obligations, or adverse enforcement outcomes could materially and adversely affect our business, results of operations, financial condition, cash flows, and the value of our common stock.
Compliance with existing governmental laws, regulations, and covenants (or those that may be enacted in the future) that are applicable to the properties we own and manage on behalf of others, including affordability covenants, permit, license, and zoning requirements, and federal executive actions and potential federal and state legislation aimed at limiting institutional ownership and acquisition of single-family homes may adversely affect our ability to make future acquisitions, renovations, or dispositions, result in significant costs, delays, or losses, and adversely affect our growth strategy.
Rental homes are subject to various federal, state, and local laws and regulatory requirements, including permitting, licensing, and zoning requirements, some of which may conflict with one another or have limited judicial or regulatory interpretations. In light of continuing federal, state, and local attention on housing supply and availability, there is considerable uncertainty regarding how executive actions, policy initiatives, and potential legislation, along with existing laws, judicial orders, and regulatory frameworks, could affect large institutional investors in single-family rental markets. Additionally, disparity between federal and state regulations increases the likelihood of heightened state regulatory risk, as compliance with federal standards may not fully align with more stringent or divergent state-level requirements.
Brokerage of real estate leasing transactions and the provision of property management services require us and certain of our associates to maintain applicable licenses in each state in which we perform these services. If we and our associates fail to maintain our licenses, conduct these activities without a license, or violate any of the regulations covering our licenses, we may be required to pay fines or return commissions received or have our licenses suspended or revoked. Local regulations, including municipal or local ordinances, restrictions, and restrictive covenants imposed by community developers may restrict our or the use of our properties and may require us to obtain approval from local officials or community standards organizations at any time with respect to our properties, including prior to acquiring any of our properties or when undertaking renovations of any of our existing properties. Among other things, these restrictions may relate to fire and safety, seismic, asbestos-cleanup, or hazardous material abatement requirements. Such local regulations may cause us to incur additional costs to renovate or maintain our properties in accordance with the particular rules and regulations. Additionally, state and local agencies may place affordability covenants on certain properties to ensure that they are used to provide affordable housing for persons or families of lower income. If any of our properties contain affordability covenants recorded in their chains of title, we will be forced to sell such properties at a maximum price limit as calculated per the applicable affordable housing covenant, which will likely result in us having to sell such properties below their market values. Our properties are also subject to federal, state, and local accessibility requirements, including and in addition to those imposed by the Americans with Disabilities Act and the Fair Housing Act.
Any violation by us of the laws and regulations we are subject to could lead to significant fines or penalties and could limit our ability to conduct business. We cannot assure you that existing regulatory policies will not adversely affect us or the timing or cost of any future acquisitions, dispositions, renovations, and land development and construction, or that additional regulations will not be adopted that would increase such delays or result in additional costs or losses. Our business and growth strategies may also be materially and adversely affected by federal executive actions or proposed legislation or regulations aimed at limiting institutional ownership and acquisition of single-family homes. Our inability to obtain permits, licenses, and approvals could have a material adverse effect on us and cause the value of our common stock to decline.
Eviction, tenant rights, rent control, and rent stabilization laws, and other similar laws and/or regulations that limit our ability to collect rent, enforce remedies for failure to pay rent, or increase rental rates may negatively impact our rental income and profitability.
While acting as the landlord for the numerous properties we own and manage on behalf of others, we are involved from time to time in evicting residents who are not paying their rent or who are otherwise in material violation of the terms of their lease. Eviction activities impose legal and managerial expenses that raise costs and expose us to potential negative publicity. The eviction process is typically subject to legal barriers, mandatory “cure” policies, our internal policies and procedures, and other sources of expense and delay, each of which may delay our ability to gain possession and stabilize the property. Federal, state, and local governments and courts have continued to increase restrictions and other regulations regarding evictions and to expand tenant rights, resulting in additional legal and regulatory hurdles to the eviction process. Additionally, eviction proceedings by owners and operators of single-family homes for lease have been the focus of negative media attention, which damages our reputation.
State and local landlord-tenant laws may impose legal duties to assist residents in relocating to new housing, or restrict the landlord’s ability to remove the resident on a timely basis or to recover certain costs or charge residents for damage residents cause to the landlord’s premises. Because such laws vary by state and locality, we must be familiar with and take all appropriate steps to comply with all applicable landlord-tenant laws and need to incur supervisory and legal expenses to ensure such compliance.
Furthermore, state and local governmental agencies may introduce rent control laws or other regulations that limit our ability to increase rental rates, which may affect our rental income. Especially in times of recession and economic slowdown, rent control initiatives can amass significant political support. If rent controls unexpectedly became applicable to certain of our properties, our revenue from and the value of such properties could be adversely affected.
For example, the California Tenant Protection Act of 2019, a rent control law, limits our ability to increase rental rates for existing residents and puts into place protections for the terminations of tenancies.
To the extent that we do not comply with laws and regulations regarding eviction, tenant rights, rent control, rent stabilization, and similar matters, we may be subjected to civil litigation filed by individuals (including class actions) or actions by federal, state, or local law enforcement and, as a result, our reputation and financial results may suffer. We may be required to modify or cease existing business practices, pay fines and/or our adversaries’ litigation fees and expenses if judgment is entered against us in such litigation or if we settle such litigation.
Given increasing political support for these types of laws and regulations, we believe these conditions will continue to negatively impact our business and results of operations.
We are subject to regulatory proceedings and litigation (including class actions) and may become a target of legal demands and/or negative publicity from tenant and consumer advocacy organizations, which could directly limit and constrain our operations and may result in significant litigation expenses and reputational harm.
We are involved in a range of legal and regulatory proceedings, claims, actions, inquiries, and investigations in the ordinary course of business. These legal and regulatory proceedings may include, among others, eviction proceedings and other landlord-tenant disputes, challenges to title and ownership rights, Fair Housing or other discrimination claims, disputes arising over potential violations of HOA rules and regulations, issues with local housing officials arising from the condition or maintenance of the property, outside vendor disputes, and trademark infringement and other intellectual property claims. Additionally, we may attract attention and become a target of legal demands, litigation, and negative publicity from tenant and consumer advocacy organizations. Such organizations may lobby federal, state, and local legislatures to pass new laws and regulations to constrain or limit our business operations, adversely impact our business, or may generate negative publicity for our business and harm our reputation.
Our industry is under increasing political and regulatory scrutiny, resulting in governmental inquiries relating to the conduct of our business. These actions or inquiries may be costly to comply with, result in negative publicity and reputational damage, require significant management time and attention, and subject us to expenses and remedies that may harm our business, including fines or demands or orders that we modify or cease existing business practices.
Additionally, we may become subject to legal claimsagainst us (including on a class action basis) for damages or injunctive relief and to seek to publicize our activities in a negative light. We cannot anticipate what form such legal actions might take or what remedies they may seek.
In 2024, we resolved an investigation by the Federal Trade Commission (“FTC”) into certain business practices during the COVID-19 pandemic and settled the litigation City of San Diego et al v. Invitation Homes, Inc . Both matters were resolved without any admission of liability, resulting in aggregate monetary relief of $68.0 million.
While we are not currently involved in any legal or regulatory proceedings that we expect to have a material adverse effect on our business, results of operations, or financial condition, such proceedings have imposed, and may in the future impose, on us significant litigation expenses, including settlements to avoid continued litigation or judgments for damages or injunctions.
Contingent or unknown liabilities could adversely affect our financial condition, cash flows, and operating results.
Assets and entities that we have acquired or may acquire in the future may be subject to unknown or contingent liabilities for which we may have limited or no recourse against the sellers. Unknown or contingent liabilities might include liabilities for, or with respect to, liens attached to properties, unpaid property tax, utilities, or HOA charges for which a subsequent owner remains liable, clean-up or remediation of environmental conditions or code violations, claims of customers, vendors, or other persons dealing with the acquired entities, and tax liabilities. Purchases of single-family properties acquired at auction, in short sales, from lenders, or in portfolio purchases typically involve few or no representations or warranties with respect to the properties and may allow us limited or no recourse against the sellers. Such properties also often have unpaid tax, utility, and HOA liabilities which we may be obligated to pay but fail to anticipate. As a result, the total amount of costs and expenses that we may incur with respect to liabilities associated with acquired properties and entities may exceed our expectations, which may adversely affect our operating results and financial condition. Additionally, such properties may be subject to covenants, conditions, or restrictions that restrict the use or ownership of such properties, including prohibitions on leasing. We may not discover such restrictions during the acquisition process and such restrictions may adversely affect our ability to operate such properties as we intend.
In particular, under a Florida statutory framework implemented by certain Florida jurisdictions, a violation of the relevant building codes, zoning codes, or other similar regulations applicable to a property may result in a lien on that property and all other properties owned by the same violator and located in the same county as the property with the code violation, even though the other properties might not be in violation of any code. Until a municipal inspector verifies that the violation has been remedied and any applicable fines have been paid, additional fines accrue on the amount of the lien and the lien may not be released, in each case even at those properties that are not in violation. As a practical matter, it might be possible to obtain a release of these liens without remedying the property in violation through other methods, such as payment of an amount to the relevant county, although no assurance can be given that this option will necessarily be available or how long such a process would take.
Title defects could lead to material losses on our investments in our properties.
Our title to a property may be challenged for a variety of reasons, and in such instances title insurance may not prove adequate. For example, while we do not lend to homeowners and accordingly do not foreclose on a home, our title to properties we acquire at foreclosure may be subject to challenge based on allegations of defects in the foreclosure process undertaken by other parties. In addition, we have in the past, and may from time to time in the future, acquire a number of our properties on an “as is” basis. When acquiring properties on an “as is” basis, title commitments are often not available prior to purchase and title reports or title information may not reflect all senior liens, which may increase the possibility of acquiring houses outside predetermined acquisition and price parameters, purchasing residences with title defects and deed restrictions, HOA restrictions on leasing, or purchasing the wrong residence without the benefit of title insurance prior to closing. Although we use various policies, procedures, and practices to assess the state of title prior to purchase and obtain title insurance if an acquired property is placed into a securitization facility in connection with a mortgage loan financing, there can be no assurance that these policies and procedures will be effective, which could lead to a material if not complete loss on our investment in such properties.
If we were to acquire properties through an auction process, we similarly may not obtain title insurance prior to purchase, and we are not able to perform the type of title review that is customary in acquisitions of real property. As a result, our knowledge of potential title issues will be limited, and title insurance protection may not be in place. This lack of title knowledge and insurance protection may result in third parties having claimsagainst our title to such properties that may materially and adversely affect the values of the properties or call into question the validity of our title to such properties. Without title insurance, we are fully exposed to, and would have to defend ourselves against, such claims. Further, if any such claims are superior to our title to the property we acquired, we risk loss of the property purchased.
Increased scrutiny of title matters could lead to legal challenges with respect to the validity of the sale. In the absence of title insurance, the sale may be rescinded, and we may be unable to recover our purchase price, resulting in a complete loss. Title insurance obtained subsequent to purchase offers little protection against discoverable defects because they are typically excluded from such policies. In addition, any title insurance on a property, even if acquired, may not cover all defects or the significant legal costs associated with obtaining clear title.
Any of these risks could adversely affect our operating results, cash flows, and ability to make distributions to our stockholders.
A significant number of the single-family residential properties we own and manage on behalf of others are part of HOAs, and we and our residents are subject to the rules and regulations of such HOAs, which are subject to change and which may be arbitrary or restrictive, and violations of such rules may subject us to additional fees and penalties and litigation with such HOAs, which would be costly.
A significant number of the properties we own and manage on behalf of others are located within HOAs, which are private entities that regulate the activities of owners and occupants of, and levy assessments on, properties in a residential subdivision. The HOAs of which our properties are part may have enacted or may from time to time enact onerous or arbitrary rules that restrict our ability to restore, market, lease, or operate properties in accordance with our investment strategy, or require us to restore or maintain such properties at standards or costs that are in excess of our planned budgets. Some HOAs impose limits on the number of property owners who may lease their homes, which, if met or exceeded, would cause us to incur additional costs to sell the property and opportunity costs from lost rental revenue. Furthermore, residents may violate HOA rules and incur fines for which the owner of the property may be liable and for which we may not, on behalf of the owner, be able to obtain reimbursement from the resident. Additionally, the governing bodies of the HOAs in which we own property may not make important disclosures about the properties or may block our access to HOA records, initiate litigation, restrict our ability to sell our properties, impose assessments, or arbitrarily change the HOA rules. We may be unaware of or unable to review or comply with HOA rules before purchasing a property, and any such excessively restrictive or arbitrary regulations may cause us to sell such property at a loss, prevent us from leasing such property, or otherwise reduce our cash flow from such property, which would have an adverse effect on our returns on these properties. Several states have enacted laws that provide that a lien for unpaid monies owed to an HOA may be senior to or extinguish mortgage liens on properties. Such actions, if not cured, may give rise to events of default under certain of our indebtedness, which could have a material adverse impact on us.
Leasing fraud could adversely affect our business, financial condition, and results of operations.
Criminals are using increasingly sophisticated methods to engage in illegal activities such as leasing fraud. As we make more of our services available over the internet and through mobile applications, we subject ourselves to new types of leasing fraud risk. Unrelated third parties have developed “fake landlord” scams posing as Invitation Homes and fraudulently collecting rent on properties they do not own. Furthermore, increases in fraudulent applications lead to a higher rate of delinquency, and coupled with legal and regulatory barriers to the eviction process, it allows for unqualified residents to remain in our homes for longer periods of time. We devote significant resources to discover and discouragefraudulent activities, and we use a variety of tools to protect againstfraud; however, these tools may not always be successful. Fraudulent activities could result in lost revenue and increased expenses, including costs related to damages to the homes we own and manage on behalf of others from occupants who do not maintain them, diversion of time from our personnel, and development of measures to combat these activities, or otherwise disrupt our operations. Allegations of fraud may further result in fines, settlements, litigation expenses, and reputational damage.
Eminent domain could lead to material losses on our investments in our properties.
Governmental authorities may exercise eminent domain to acquire the land on which our properties are built in order to build roads and other infrastructure. Any such exercise of eminent domain would allow us to recover only the fair value of the affected properties. In addition, “fair value” could be substantially less than the real market value of the property for a number of years, and we could effectively have no profit potential from properties acquired by the government through eminent domain.
Risks Related to Information Technology, Cybersecurity, and Data Protection
We are highly dependent on information systems, and system failures could significantly disrupt our business, which may, in turn, negatively affect our operating results and the value of our common stock.
Our operations are dependent upon our information systems that support our business processes, including marketing, leasing, vendor communications, finance, intercompany communications, our resident portals, and property management service platforms, which include certain automated processes that require access to telecommunications or the Internet, each of which is subject to system security risks. Certain critical components of our platform are dependent upon third-party service providers, and a significant portion of our business operations is conducted online or via mobile applications. As a result, we could be severely impacted by a catastrophic occurrence, such as a natural disaster or a terrorist attack, or a circumstance that disrupted access to telecommunications, the Internet, or operations at our third-party service providers, including viruses that could penetrate network security defenses and cause system failures and disruptions of operations. Even though we believe we have appropriate duplication and redundancy procedures, a significant outage in telecommunications, the Internet, or at our third-party service providers could negatively impact our operations.
If we are unable to effectively execute or maintain our information technology strategies or adopt new technologies and processes relevant to our service platform, our ability to deliver high-quality services to our residents may be materially impaired. In addition, we make investment in new systems and tools to gain competitive advantage and improveefficiency. Implementation of such information technology investments could exceed estimated budgets, and we may experience challenges that prevent new strategies or technologies from being realized. If we are unable to maintain current information technology and processes or encounter delays, or fail to exploit new technologies, then the execution of our business plans may be disrupted. Similarly, our associates require effective tools and techniques to perform functions integral to our business.
We currently use traditional and generative AI solutions for certain marketing, operational, administrative, and other functions. We may incorporate additional generative AI solutions into our information systems in the future and these solutions may become important in our operations over time. The ever-increasing use and evolution of technology, including cloud-based computing and generative AI, creates opportunities for the potential loss or misuse of personal data that we use in our business operations. Unintentional dissemination or intentionaldestruction of confidential information stored in our or our third-party providers' systems, portable media, or storage devices may result in significantly increased business and security costs, a damaged reputation, administrative penalties, or costs related to defending legal claims. Generative AI programs may be costly and require significant expertise to develop, may be difficult to set up and manage, and require periodic upgrades. Our competitors or other third parties may incorporate generative AI into their information systems and operations more quickly or more successfully than us, which could impair our ability to compete effectively and adversely affect our results of operations.
Security breaches and other disruptions could compromise our information systems and expose us to liability, which would cause our business and reputation to suffer.
Information security risks have generally increased in recent years due to the rise in new technologies and the increased sophistication and activities of perpetrators of cyberattacks. In the ordinary course of our business, we acquire and store sensitive data, including intellectual property, our proprietary business information, and personally identifiable information of our prospective and current residents, associates, and third-party service providers. The secure processing and maintenance of such information is critical to our operations and business strategy. Despite our security measures, our information technology and infrastructure are subject to ongoing threats and attacks and may be vulnerable to attacks by malicious third parties or breached due to employee error, malfeasance, or other disruptions. Due to the nature of some attacks, there is a risk that they may remain undetected for a period of time. Since the techniques used to obtain unauthorized access to systems, or to otherwise sabotage them, change frequently and are often not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. While we have invested in the protection of data and information technology and implemented processes, procedures, and internal controls that are designed to mitigate cybersecurity risks and cyber intrusions, there can be no assurance that our efforts will prevent cyber incidents or security breaches. Any such breach could compromise our networks, and the information stored therein could be accessed, publicly disclosed, misused, lost, or stolen. Any such access, disclosure or other loss of information could result in legal claims or proceedings, misstated or unreliable financial data, liability under laws that protect the privacy of personal information,
regulatory penalties, disruption to our operations and the services we provide to customers, including our residents, or damage our reputation, any of which could adversely affect our results of operations, reputation, and competitive position. We maintain cyber liability insurance; however, this insurance may not be sufficient to cover the financial, legal, business, or reputational losses that may result from an interruption or breach of our systems. In connection with our flexible work arrangements, a significant number of our associates work remotely on a recurring basis. An extended period of remote work arrangements could strain our business continuity plans, introduce operational risk, including, but not limited to cybersecurity risks, and impair our ability to manage our business.
United States regulators have also increased their focus on cyber security vulnerabilities and risks. Compliance with laws and regulations concerning cyber security, such as SEC rules requiring disclosure of material cybersecurity incidents, data governance, and data protection could result in significant expense, and any failure to comply could result in proceedings against us by regulatory authorities or other third parties. See “— Our business is subject to laws and regulations regarding privacy, data protection, consumer protection, and other matters. Many of these laws and regulations are subject to change and uncertain interpretation, and could result in claims, changes to our business practices, monetary penalties, or otherwise harm our business. ”
Our business is subject to laws and regulations regarding privacy, data protection, consumer protection, and other matters. Many of these laws and regulations are subject to change and uncertain interpretation, and could result in claims, changes to our business practices, monetary penalties, or otherwise harm our business.
We are subject to a variety of laws and regulations that involve matters such as: privacy; data protection; personal information; rights of publicity; content; marketing; distribution; data security; data retention and deletion; electronic contracts and other communications; consumer protection; and online payment services. These laws and regulations are constantly evolving and can be subject to significant change. As a result, the application, interpretation, and enforcement of these laws and regulations are often uncertain and may be interpreted and applied inconsistently. Additionally, as we depend on third parties for key services (see “Risks Related to Our Business and Operations — Our dependence upon third parties for key services may have an adverse effect on our operating results or reputation if the third parties fail to perform ”), we rely on such third-party service providers’ compliance with laws and regulations regarding privacy, data protection, consumer protection, and other matters relating to our customers.
There are a number of legislative proposals at both the federal and state level, as well as other jurisdictions that could impose new obligations in areas affecting our business. We are subject to numerous, complex, and frequently changing laws, regulations, and contractual obligations designed to protect personal information. Various continuously evolving and new federal and state privacy and data security laws, such as the California Consumer Privacy Act, further expanded by the California Privacy Rights Act, Nevada Privacy Law, the Colorado Privacy Act, the Utah Consumer Privacy Act, and the Texas Data Privacy and Security Act, or other legal and regulatory standards create data privacy rights for users, including more ability to control how their data is shared with third parties. These laws and regulations, as well as any associated inquiries or investigations or any other government actions, may be costly to comply with, require significant management time and attention, and subject us to remedies that may harm our business, including fines and other sanctions resulting from any related breaches of data privacy regulations or demands or orders that we modify or cease existing business practices.
Accidental or willful security breaches or other unauthorized access to our information systems or the systems of our service providers, suppliers, or other third parties, or the existence of computer viruses or malware (such as ransomware) in our or their data or software could expose us to a risk of information loss, business disruption, and misappropriation of proprietary and confidential information, including information relating to our residents and the personal information of our associates or third parties. Such an event could disrupt our business and result in, among other things, unfavorable publicity, damage to our reputation, loss of our competitive information, litigation by affected parties and possible financial obligations for liabilities and damages related to the theft or misuse of such information, significant remediation costs, disruption of key business operations and significant diversion of our resources, as well as, any of which could have a material adverse effect on our business, profitability and financial condition. See “— Security breaches and other disruptions could compromise our information systems and expose us to liability, which would cause our business and reputation to suffer. ”
Risks Related to Sustainability, Corporate Responsibility, and Governance
Climate change and related environmental issues, related legislative and regulatory responses to climate change, and the transition to a lower-carbon economy may adversely affect our business.
There is increasing concern that a gradual rise in global average temperatures due to increased concentration of carbon dioxide and other greenhouse gases in the atmosphere will cause significant changes in weather patterns around the globe, an increase in the frequency, severity, and duration of extreme weather conditions and natural disasters, and water scarcity and poor water quality. These events could also compound adverse economic conditions. To the extent that significant changes in the climate occur in areas where our properties are located, we may experience extreme weather and/or changes in precipitation and temperature, all of which may result in physical damage to, or a decrease in demand for, properties located in these areas or affected by these conditions and our financial condition or results of operations may be adversely affected. See “ — We are subject to risks from natural disasters such as earthquakes, wildfires, and severe weather .”
Growing public concern about climate change has resulted in the increased focus of local, state, regional, national, and international regulatory bodies on greenhouse gas emissions and climate change issues. Policy changes and changes in federal, state, and local legislation and regulation based on concerns about climate change, including regulations aimed at limiting greenhouse gas emissions and the implementation of “green” building codes, could result in increased capital expenditures on our existing properties (for example, to improve their energy efficiency and/or resistance to inclement weather) without a corresponding increase in revenue, resulting in adverse impacts to our results of operations. Experiencing or addressing the various physical, regulatory, and transition risks from climate change may significantly reduce our revenues and profitability or cause us to generate losses.
We are subject to evolving, complex, and sometimes, inconsistent disclosure obligations promulgated by governmental and regulatory organizations relating to sustainability which could significantly increase compliance burdens and associated regulatory costs and complexity. We are continuously assessing the effect of such legal and regulatory developments on our consolidated financial statements and related disclosures.
Regulatory requirements related to sustainability matters continue to evolve and any assessment of the potential impact of future climate change legislation, regulations, or industry standards, as well as any international treaties and accords, is uncertain given the wide scope of potential regulatory change.
We are subject to risks from natural disasters such as earthquakes, wildfires, and severe weather.
Natural disasters, severe weather such as earthquakes, tornadoes, hurricanes, wind, floods, droughts, and wildfires may result in significant damage to our properties. The extent of our casualty losses and loss of income in connection with such events is a function of the severity of the event and the total amount of exposure in the affected area. Additional consequences of severe weather could include increased insurance premiums and deductibles or a decrease in the availability of coverage. See “Risks Related to Our Business and Operations — We may sufferlosses that are not covered by insurance. ”
We are subject to risks from events such as natural disasters, severe weather, and wildfires, which may have a significant negative effect on our financial condition and results of operations. Similarly, significant changes in precipitation could lead to increases in droughts or wildfires that could adversely impact demand for our properties. The increases in property damage due to these events may also contribute to increased insurance premiums and deductibles or a decrease in the availability of coverage. See “Risks Related to Our Business and Operations — We may sufferlosses that are not covered by insurance. ” As a result, our operating and financial results may vary significantly from one period to the next. We have in the past and may in the future incur losses arising from natural disasters or severe weather. While we seek to mitigate our business risks associated with climate change, we recognize that there are inherent climate related risks regardless of where we conduct our business. For example, a catastrophic natural disaster could negatively impact any of our markets. Accordingly, a natural disaster has the potential to disrupt our businesses and could have a material adverse impact on our financial condition and results of operations, including increased insurance costs or loss of coverage, legal liability, and reputational losses. See “— Climate change and related environmental issues, related legislative and regulatory responses to climate change, and the transition to a lower-carbon economy may adversely affect our business. ”
Environmentally hazardous conditions may adversely affect us.
Under various federal, state, and local environmental laws, a current or previous owner or operator of real property may be liable for the cost of removing or remediating hazardous or toxic substances on such property. Such laws often impose liability whether or not the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances. Even if more than one person may have been responsible for the contamination, each person covered by applicable environmental laws may be held responsible for all of the clean-up costs incurred. In addition, third parties may sue the owner or operator of a site for damages based on personal injury, natural resources, or property damage or other costs, including investigation and clean-up costs, resulting from the environmental contamination. The presence of hazardous or toxic substances on one of our properties, or the failure to properly remediate a contaminated property, could give rise to a lien in favor of the government for costs it may incur to address the contamination or otherwise adversely affect our ability to sell or lease the property or borrow using the property as collateral. Environmental laws also may impose restrictions on the manner in which property may be used or businesses may be operated. A property owner who violates environmental laws may be subject to sanctions which may be enforced by governmental agencies or, in certain circumstances, private parties. In connection with the acquisition and ownership of our properties, we may be exposed to such costs. The cost of defendingagainst environmental claims, of compliance with environmental regulatory requirements, or of remediating any contaminated property could materially and adversely affect us.
Compliance with evolving environmental laws or regulations or stricter interpretation of such laws may require material expenditures by us. We are subject to environmental laws or regulations relating to our properties, such as those concerning lead-based paint, mold, asbestos, proximity to power lines, or other issues. We cannot assure you that future laws, ordinances, or regulations will not impose any material environmental liability or that the current environmental condition of our properties will not be affected by the activities of residents, existing conditions of the land, operations in the vicinity of the properties, or the activities of unrelated third parties. In addition, we may be required to comply with various local, state, and federal fire, health, life-safety, and similar regulations. Failure to comply with applicable laws and regulations could result in fines and/or damages, suspension of personnel, civil liability, or other sanctions.
We are subject to increasing scrutiny from investors and others regarding our sustainability responsibilities, which could result in additional costs or risks and adversely impact our reputation, associate attraction and retention, and ability to raise capital.
Investor advocacy groups, certain institutional investors, investment funds, other market participants, and stakeholders have focused increasingly on sustainability practices of companies, including those associated with climate change. These parties have placed increased importance on the implications of the social cost of their investments. If our sustainability practices do not meet investor or other industry stakeholder expectations and standards (including any third-party ratings used by stakeholders), which continue to evolve, our reputation, our ability to attract or retain associates, our ability to access capital, and our attractiveness as an investment or business partner could be negatively affected. Any sustainability disclosures we make may include our policies and practices on a variety of social and ethical matters, including corporate governance, environmental initiatives, associate health and safety practices, human capital management, product quality, and supply chain management. If our sustainability practices do not meet investor or other stakeholder expectations and standards, we could also incur additional costs and require additional resources to monitor, report, and comply with various sustainability practices.
Conversely, “anti-ESG” sentiment has gained momentum across the United States. We could be criticized by “anti-ESG” stakeholders for our sustainability initiatives or become the subject of adverse media campaigns. Moreover, several states have enacted or proposed “anti-ESG” policies or legislation. For example, boycott bills in certain states target financial institutions that are perceived as “boycotting” or “discriminating against” companies in certain industries and prohibit state entities from doing business with such institutions and/or investing the state’s assets (including pension plan assets) through such institutions. In addition, certain states now require that relevant state entities or managers/administrators of state investments make investments based solely on pecuniary factors without consideration of environmental, social, and governance factors. Failure to successfully manage divergent expectations across stakeholders could erode stakeholder trust, impact our reputation, and adversely affect our business.
Risks Related to Our Indebtedness
Our cash flows and operating results could be adversely affected by required payments of debt or related interest and other risks of our debt financing.
We are generally subject to risks associated with debt financing. These risks include: (1) our cash flow may not be sufficient to satisfy required payments of principal and interest; (2) we may not be able to refinance existing indebtedness or the terms of any refinancing may be less favorable to us than the terms of existing debt (including as a result of changes in laws, regulations, executive orders, or agency or government guidance that limit approvals, guarantees, insurance, securitizations, purchases, or other facilitation of single‑family rental debt); (3) required debt payments are not reduced if the economic performance of any property declines; (4) debt service obligations could reduce funds available for distribution to our stockholders and funds available for capital investment; (5) any default on our indebtedness could result in acceleration of those obligations and possible loss of property to foreclosure; (6) the risk that necessary capital expenditures cannot be financed on favorable terms; (7) the value of the collateral securing our indebtedness may fluctuate and fall below the amount of indebtedness it secures; and (8) changes in, or new, laws, regulations, executive orders, or related agency or government policies or programs could reduce the availability of, restrict eligibility for, delay access to, or increase the cost of debt capital (including securitizations, warehouse or term facilities, guarantees, insurance, or purchases) used to finance or refinance our assets. If the income from a property is pledged to secure payment of indebtedness and we cannot make the applicable debt payments, we may have to surrender the property to the lender with a consequent loss of any prospective income and equity value from such property. Any of these risks could place strains on our cash flows, reduce our ability to grow, and adversely affect our results of operations. In particular, restrictions on, or withdrawal of, participation by agency or government-sponsored enterprises in transactions secured by our homes, or in securitizations backed by such assets, could limit our refinancing alternatives at or near maturities, require us to use more expensive or less flexible sources of capital, or necessitate asset sales on unfavorable terms. See “Risks Related to Our Business Environment and Industry — Executive actions and proposed federal and state legislation or regulations aimed at limiting institutional ownership and acquisition of single-family homes could materially adversely affect our business, growth strategy, and results of operations.” Natural disasters, geopolitical turmoil, medical epidemics and pandemics, economic instability, or other causes could have material and adverse effect on our residents’ ability to meet their lease obligations and our ability to collect rent or enforce remedies for failure to pay rent thereby reducing our cash flows, and the resulting impact on rental and other property income could impact our ability to make all required debt service payments and to continue paying dividends to our stockholders at expected levels or at all. See “Risks Related to Our Business Environment and Industry — Our business, results of operations, financial condition, and cash flows may be adversely affected by pandemics and outbreaks of infectious disease. ”
We utilize a significant amount of indebtedness in the operation of our business.
As of December 31, 2025 we had $8,458.4 million aggregate principal amount of indebtedness outstanding. Our leverage could have important consequences to us. For example, it could: (1) result in the acceleration of a significant amount of debt for non-compliance with the terms of such debt or, if such debt contains cross-default or cross-acceleration provisions, other debt; (2) result in the loss of assets, including individual properties or portfolios, due to foreclosure or sale on unfavorable terms, which could create taxable income without accompanying cash proceeds; (3) materially impair our ability to borrow unused amounts under existing financing arrangements or to obtain additional financing or refinancing on favorable terms, or at all; (4) require us to dedicate a substantial portion of our cash flow to paying principal and interest on our indebtedness, reducing the cash flow available to fund our business, to pay dividends, including those necessary to maintain our REIT qualification, or to use for other purposes; (5) increase our vulnerability to an economic downturn; (6) limit our ability to withstand competitive pressures; or (7) reduce our flexibility to respond to changing business and economic conditions.
If any of the foregoing occurs, our business, financial condition, liquidity, results of operations, and prospects could be materially and adversely affected, and the trading price of our common stock could decline significantly.
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.
We cannot assure you that we will be able to access the capital and credit markets to obtain additional debt or equity financing or that we will be able to obtain financing on terms favorable to us. Our inability to obtain financing could have
negative effects on our business. Among other things, we could have difficulty acquiring, re-developing or maintaining, our properties, which would materially and adversely affect our business strategy and portfolio, and may result in our: (1) liquidity being adversely affected; (2) inability to repay or refinance our indebtedness on or before its maturity; (3) making higher interest and principal payments or selling some of our assets on terms unfavorable to us to service our indebtedness; or (4) issuing additional capital stock, which could further dilute the ownership of our existing stockholders.
Our access to additional third-party sources of financing will depend, in part, on:
• fluctuating global and United States economic conditions, uncertainty in financial markets, and geopolitical tensions;
• the market’s perception of our growth potential;
• with respect to acquisition financing, the market’s perception of the value of the homes to be acquired;
• our current debt levels;
• our current and expected future earnings;
• our cash flow and cash distributions; and
• the market price of our common stock.
Potential lenders may be unwilling or unable to provide us with financing that is attractive to us or may charge us prohibitively high fees in order to obtain financing. Consequently, there is uncertainty regarding our ability to access the credit markets in order to attract financing on reasonable terms. Investment returns on our assets and our ability to make acquisitions could be adversely affected by our inability to secure financing on reasonable terms, if at all.
A downgrade in our credit ratings could adversely affect our financing ability .
Our credit ratings affect the amount and type of capital, as well as the terms and pricing of any financing we may obtain. If we are unable to maintain our current credit ratings, we would likely incur higher borrowing costs, and it would make it more difficult or expensive to obtain additional financing or refinance existing obligations and commitments, which could have a material adverse impact on our financial condition, results of operations, cash flows, and liquidity.
Secured indebtedness exposes us to the possibility of foreclosure on our ownership interests in our rental homes.
Incurring secured mortgage indebtedness increases our risk of loss of our ownership interests in our rental homes because defaults thereunder, and/or the inability to refinance such indebtedness, may result in foreclosure action initiated by lenders. For tax purposes, a foreclosure of any of our rental homes would be treated as a sale of the home for a purchase price equal to the outstanding balance of the indebtedness secured by such rental home. If the outstanding balance of the indebtedness secured by such rental home exceeds our tax basis in the rental home, we would recognize taxable income on foreclosure without receiving any cash proceeds.
Covenants in our debt agreements may restrict our operating activities and adversely affect our financial condition.
Our existing debt agreements contain, and future debt agreements may contain, financial and/or operating covenants including, among other things, certain coverage ratios, as well as limitations on the ability to incur additional secured and unsecured debt, and/or otherwise affect our distribution and operating policies. These covenants may limit our operational flexibility and acquisition and disposition activities. Moreover, if any of the covenants in these debt agreements are breached and not cured within the applicable cure period, we could be required to repay the debt immediately, even in the absence of a payment default. A default under one of our debt agreements could result in a cross-default under other debt agreements, and our lenders could elect to declare outstanding amounts due and payable, terminate their commitments, require the posting of additional collateral, and enforce their respective interests against existing collateral. As a result, a default under applicable debt covenants could have an adverse effect on our financial condition or results of operations. Additionally, borrowing base requirements associated with our financing arrangements may prevent us from drawing upon our total maximum capacity under these financing arrangements if sufficient collateral, in accordance with our facility agreements, is not available.
For example, our secured debt requires, among other things, that a cash management account controlled by the lender collect all rents and cash generated by the properties securing the portfolio. Upon the occurrence of an event of default or failure to satisfy the required minimum debt yield or debt service coverage ratio, the lender may apply any excess cash in such cash management account as the lender elects, including prepayment of principal and amounts due under the loans.
These covenants may restrict our ability to engage in transactions that we believe would otherwise be in the best interests of our stockholders. Further, such restrictions could make it difficult for us to satisfy the requirements necessary to maintain our qualification as a REIT for United States federal income tax purposes.
We have and may continue to utilize non-recourse long-term secured debt, and such structures may expose us to certain risks not prevalent in other debt financings, which could affect the availability and attractiveness of this financing option or otherwise result in losses to us.
We have and may continue to utilize non-recourse long-term secured debt relating to pools of homes which we own, if and when they become available and to the extent consistent with the maintenance of our REIT qualification. Secured debt may expose us to certain risks not prevalent in other debt financings. Moreover, we cannot be assured that we will be able to access the securitization market in the future, or be able to do so at favorable rates. Current fluctuating macroeconomic conditions, including inflation, elevated interest rates, slower growth, economic uncertainty, and a general decline in business activity, have caused dislocations, il liquidity, and volatility in the market for asset-backed securities and mortgage-backed securities, as well as disruption in the wider global financial markets, including a significant reduction of investor demand for, and purchases of, asset-backed securities and structured financial products. Disruptions of the securitization market could preclude our ability to use secured debt as a financing source or could render it an inefficient source of financing, making us more dependent on alternative sourcing of financing that might not be as favorable as secured debt in otherwise favorable markets. In addition, in the United States and elsewhere, there is now increased political and regulatory scrutiny of the asset-backed securities industry. This has resulted in a raft of measures for increased regulation which are currently at various stages of implementation and which may have an adverse impact on the regulatory capital charge to certain investors in securitization exposures or the incentives for certain investors to hold asset-backed securities, and may thereby affect the liquidity of such securities. Any of these factors could limit our access to secured debt as a source of financing. The inability to consummate secured debt to finance our investments on a long-term basis could require us to seek other forms of potentially less attractive financing or to liquidate assets at an inopportune time or price, which could adversely affect our performance and our ability to grow our business.
Offerings of additional debt securities or equity securities that rank senior to our common stock may adversely affect the market price of our common stock.
If we decide to issue additional debt securities or equity securities that rank senior to our common stock in the future, it is likely that they will be governed by an indenture or other instrument containing covenants restricting our operating flexibility. Any additional debt or equity securities that we issue in the future may have rights, preferences, and privileges more favorable than those of our common stock and, if such securities are convertible or exchangeable, the issuance of such securities may result in dilution to owners of our common stock. We and, indirectly, our stockholders, will bear the cost of issuing and servicing such securities. Because our decision to issue debt or equity securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing, or nature of our future offerings. Thus, holders of our common stock will bear the risk of our future offerings reducing the market price of our common stock and diluting the value of their stock holdings in us.
Failure to hedge effectively against interest rate increases may adversely affect our results of operations and our ability to make distributions to our stockholders.
Borrowings under our debt instruments totaling $2,620.0 million as of December 31, 2025, bear interest at variable rates and expose us to interest rate risk. Long-term interest rates remain elevated, driven by broader market factors. Elevated interest rates could lead to increases in debt service obligations on our variable rate indebtedness even though the amount borrowed remained the same, and our earnings and cash flows could correspondingly decrease. After giving effect to our interest rate swap agreements (see Part II. Item 7. “Management’s Discussion and Analysis of Financial Condition and
Results of Operations — Liquidity and Capital Resources” for more information), each 100 bps increase or decrease on our floating rate indebtedness would result in an estimated increase or decrease of $5.2 million in annual interest expense.
In connection with our debt instruments, we have obtained interest rate caps and swaps, and subject to complying with the requirements for REIT qualification, we may obtain in the future one or more additional forms of interest rate protection (in the form of swap agreements, interest rate cap contracts, or similar agreements) to hedge against the possible negative effects of interest rate fluctuations. However, we cannot assure you that any hedging will adequately relieve the adverse effects of interest rate increases or that counterparties under these agreements will honor their obligations thereunder. In addition, we may be subject to risks of default by hedging counterparties. Adverse economic conditions could also cause the terms on which we borrow to be unfavorable. We could be required to liquidate one or more of our investments at times which may not permit us to receive an attractive return on our investments in order to meet our debt service obligations.
The REIT provisions of the Code may also limit our ability to hedge effectively. See “Risks Related to our REIT Status and Certain Other Tax Items — Complying with REIT requirements may limit our ability to hedge effectively and may cause us to incur tax liabilities. ”
Risks Related to Our Organization, Structure, and Ownership of Our Common Stock
Provisions of Maryland law may limit the ability of a third party to acquire control of us by requiring our board of directors or stockholders to approve proposals to acquire our company or effect a change in control.
Certain provisions of the Maryland General Corporation Law (the “MGCL”) may have the effect of inhibiting a third party from making a proposal to acquire us or of impeding a change in control under circumstances that otherwise could provide our stockholders with the opportunity to realize a premium over the then-prevailing market price of their shares of common stock, including:
• “business combination” provisions that, subject to certain exceptions and limitations, prohibit certain business combinations between a Maryland corporation and an “interested stockholder” (defined generally as any person who beneficially owns 10% or more of the voting power of our outstanding voting stock or an affiliate or associate of ours who, at any time within the two-year period immediately prior to the date in question, was the beneficial owner of 10% or more of the voting power of our then outstanding shares of stock) or an affiliate of any interested stockholder for five years after the most recent date on which the stockholder becomes an interested stockholder, and thereafter imposes two super-majority stockholder voting requirements on these combinations, unless, among other conditions, our common stockholders receive a minimum price, as defined in the MGCL, for their shares of stock and the consideration is received in cash or in the same form as previously paid by the interested stockholder for its shares of stock; and
• “control share” provisions that provide that, subject to certain exceptions, holders of “control shares” (defined as voting shares that, when aggregated with all other shares controlled by the stockholder, entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of issued and outstanding “control shares”) have no voting rights except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding shares owned by the acquirer, by our officers, or by our employees who are also directors of our company.
We have opted out of the business combination provisions of the MGCL and any business combination between us and any other person is exempt from the business combination provisions of the MGCL. In addition, pursuant to a provision in our bylaws, we opted out of the control share provisions of the MGCL. Provisions of our bylaws will prohibit our board of directors from revoking, altering, or amending its resolution exempting any business combination from the business combination provisions of the MGCL or amending our bylaws to opt in to the control share provisions of the MGCL, in each case, without the affirmative vote of a majority of the votes cast on the matter by our stockholders entitled to vote generally in the election of directors.
In addition, the “unsolicited takeover” provisions of Title 3, Subtitle 8 of the MGCL permit our board of directors, without stockholder approval and regardless of what is provided in our charter or bylaws, to implement certain takeover defenses, including adopting a classified board or increasing the vote required to remove a director. Such takeover defenses
may have the effect of inhibiting a third party from making an acquisition proposal for us or of delaying, deferring, or preventing a change in control of us under the circumstances that otherwise could provide our common stockholders with the opportunity to realize a premium over the then-current market price. Our charter provides that, without the affirmative vote of a majority of the votes cast on the matter by our stockholders entitled to vote generally in the election of directors, we may not elect to be subject to certain provisions of Subtitle 8, including the provisions relating to adopting a classified board or increasing the vote required to remove a director.
Our board of directors may approve the issuance of stock, including preferred stock, with terms that may discourage a third party from acquiring us.
Our charter permits our board of directors, without any action by our stockholders, to authorize the issuance of stock in one or more classes or series. Our board of directors may also classify or reclassify any unissued stock and set or change the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, and terms and conditions of redemption of any such stock, which rights may be superior to those of our common stock. Thus, our board of directors could authorize the issuance of shares of a class or series of stock with terms and conditions which could have the effect of discouraging a takeover or other transaction in which holders of some or a majority of our outstanding common stock might receive a premium for their shares of stock over the then current market price of our common stock.
Our rights and the rights of our stockholders to take action against our directors and officers are limited.
Our charter eliminates the liability of our directors and officers to us and our stockholders for money damages to the maximum extent permitted under Maryland law. Under current Maryland law and our charter, our directors and officers do not have any liability to us or our stockholders for money damages other than liability resulting from:
• actual receipt of an improperbenefit or profit in money, property, or services; or
• active and deliberatedishonesty by the director or officer that was established by a final judgment and is material to the cause of action adjudicated.
Our charter authorizes us and our bylaws obligate us to indemnify each of our directors or officers who is or is threatened to be made a party to or witness in a proceeding by reason of his or her service in those or certain other capacities, to the maximum extent permitted by Maryland law, from and against any claim or liability to which such person may become subject or which such person may incur by reason of his or her status as a present or former director or officer of us or serving in such other capacities. In addition, we may be obligated to pay or reimburse the expenses incurred by our present and former directors and officers without requiring a preliminary determination of their ultimate entitlement to indemnification. As a result, we and our stockholders may have more limited rights to recover money damages from our directors and officers than might otherwise exist absent these provisions in our charter and bylaws or that might exist with other companies, which could limit your recourse in the event of actions that are not in our best interests.
Our charter contains a provision that expressly permits our non-employee directors and their affiliates to compete with us.
Our charter provides that, to the maximum extent permitted from time to time by Maryland law, we renounce any interest or expectancy that we have in, or any right to be offered an opportunity to participate in, any business opportunities that are from time to time presented to or developed by our directors or their affiliates, other than to those directors who are employed by us or our subsidiaries, unless the business opportunity is expressly offered or made known to such person in his or her capacity as our director, or any of his or her affiliates, or any director who is not employed by us or any of his or her affiliates, will have any duty to refrain from engaging, directly or indirectly, in the same business activities or similar business activities or lines of business in which we or our affiliates engage or propose to engage or to refrain from otherwise competing with us or our affiliates.
Our charter provides that, to the maximum extent permitted from time to time by Maryland law, each of our non-employee directors, and any of their affiliates, may:
• acquire, hold, and dispose of interests in us and/or our subsidiaries, including shares of our stock or common units of partnership interest in INVH LP for his, her or its own account or for the account of others, and exercise all of the
rights of a stockholder of Invitation Homes Inc., or a limited partner of INVH LP, to the same extent and in the same manner as if he, she, or it were not our director or stockholder; and
• in his, her, or its personal capacity or in his, her, or its capacity, as applicable, as a director, officer, trustee, stockholder, partner, member, equity owner, manager, advisor, or employee of any other person, have business interests and engage, directly or indirectly, in business activities that are similar to ours or compete with us, that involve a business opportunity that we could seize and develop or that include the acquisition, syndication, holding, management, development, operation, or disposition of interests in mortgages, real property or persons engaged in the real estate business.
Our charter also provides that, to the maximum extent permitted from time to time by Maryland law, in the event that any of our non-employee directors, or any of their respective affiliates, acquires knowledge of a potential transaction or other business opportunity, such person will have no duty to communicate or offer such transaction or business opportunity to us or any of our affiliates and may take any such opportunity for itself, himself, or herself or offer it to another person or entity unless the business opportunity is expressly offered to such person in his or her capacity as our director. These provisions may limit our ability to pursue business or investment opportunities that we might otherwise have had the opportunity to pursue, which could have an adverse effect on our financial condition, our results of operations, our cash flow, the per share trading price of our common stock, and our ability to satisfy our debt service obligations and to pay dividends to our stockholders.
Risks Related to our REIT Status and Certain Other Tax Items
If we do not maintain our qualification as a REIT, we will be subject to tax as a regular domestic corporation and could face a substantial tax liability.
We believe that we have been organized and have operated in conformity with the requirements for qualification and taxation as a REIT and that our current organization and proposed method of operation enable us to continue to qualify as a REIT. However, qualification as a REIT involves the application of highly technical and complex Code provisions for which only a limited number of judicial or administrative interpretations exist, and we cannot assure you that we qualify or that we will remain qualified as a REIT. Our qualification as a REIT depends upon our satisfaction of certain asset, income, organizational, distribution, stockholder ownership, and other requirements on a continuing basis, and even a technical or inadvertentviolation of these requirements could jeopardize our REIT qualification. In addition, our qualification as a REIT may depend upon the qualification as a REIT of certain subsidiary entities of our investments in unconsolidated joint ventures that have also elected to be treated as a REIT. Furthermore, new tax legislation, administrative guidance, or court decisions, in each instance potentially with retroactive effect, could make it more difficult or impossible for us to qualify as a REIT including proposals and potential legislative initiatives targeted at institutional owners of single-family rental housing that could limit, condition, or eliminate tax benefits integral to REIT qualification or operations, such as depreciation or the deductibility of interest, or otherwise alter the tax treatment or requirements applicable to REITs.
If we fail to qualify as a REIT in any tax year, and we do not qualify for relief under applicable statutory provisions, then:
• we would be taxed as a regular domestic corporation (a “C corporation”), which under current laws means, among other things, being unable to deduct distributions to stockholders in computing taxable income and being subject to United States federal income tax on our taxable income at regular corporate income tax rates;
• any resulting tax liability could be substantial and could have a material adverse effect on our book value;
• we would be required to pay taxes, and thus, our cash available for distribution to stockholders would be reduced for each of the years during which we did not qualify as a REIT and for which we had taxable income;
• we could be subject to increased state and local taxes; and
• we generally would not be eligible to requalify as a REIT for the subsequent four full taxable years.
REITs, in certain circumstances, may incur tax liabilities that would reduce our cash flows.
Even if we qualify and maintain our status as a REIT, we may be subject to certain United States federal, state, and local taxes on our income and assets, including taxes on any undistributed income, tax on income from some activities conducted as a result of a foreclosure, and state or local income, property, and transfer taxes. In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we distribute to our stockholders in a calendar year is less than a minimum amount specified under the Code, and we could, in certain circumstances, be required to pay an excise or penalty tax (which could be significant in amount) in order to utilize one or more relief provisions under the Code to maintain our qualification as a REIT. Furthermore, in order to meet the REIT qualification requirements, or to avert the imposition of a 100% tax that applies to certain gains derived by a REIT from dealer property or inventory, we conduct some of our operations and hold some of our assets through a TRS or other subsidiary corporations that are subject to United States federal, state, and local corporate taxes. Any of the aforementioned taxes we pay directly or indirectly will reduce our cash available for distribution to our stockholders.
Complying with REIT requirements may cause us to forgo otherwise attractiveopportunities, limit our expansion opportunities, and/or force us to liquidate or restructure otherwise attractive investments.
To qualify as a REIT, we must continually satisfy tests concerning, among other things, our sources of income, the nature and diversification of our assets, the amounts we distribute to our stockholders, and the ownership of our stock.
For instance, at the end of each calendar quarter, at least 75% of the value of our assets must consist of cash, cash items, government securities, and qualified REIT real estate assets. The remainder of our investments in securities (other than qualified real estate assets and government securities) generally cannot include more than 10% of the outstanding voting securities of any one issuer or 10% of the total value of the outstanding securities of any one issuer unless we and such issuer jointly elect for such issuer to be treated as a TRS under the Code. The total value of all of our investments in TRSs cannot exceed 20% of the value of our total assets. In addition, no more than 5% of the value of our assets (other than qualified real estate assets and government securities) can consist of the securities of any one issuer other than a TRS. If we fail to comply with these requirements, we must dispose of a portion of our assets within 30 days after the end of the calendar quarter in order to avoid losing our REIT status and sufferingadverse tax consequences. In addition to the quarterly asset test requirements, we must annually satisfy two income test requirements (the “75% and 95% gross income tests”).
As a result of complying with these REIT requirements, we may be required to take or forgo taking actions that we would otherwise consider advantageous. For instance, in order to satisfy the gross income or asset tests applicable to REITs under the Code, we may be required to forgo investments that we otherwise would make. Furthermore, we may be required to liquidate from our portfolio, or contribute to a TRS, otherwise attractive investments. These actions could reduce our income and amounts available for distribution to our stockholders. In addition, we may also be required to make distributions to stockholders at disadvantageous times or when we do not have funds readily available for distribution.
Thus, compliance with REIT requirements may hinder our ability to operate solely on the basis of maximizing profits.
The 100% prohibited transactions tax may limit our ability to engage in sale transactions.
“Prohibited transactions” are sales or other dispositions of property other than foreclosure property, held primarily for sale to customers in the ordinary course of a trade or business. Dispositions of real property that are deemed to be prohibited transactions may be subject to the prohibited transactions tax equal to 100% of net gain upon a disposition of real property that we hold. Although a safe harbor is available, for which certain sales of property by a REIT are not subject to the 100% prohibited transaction tax, we cannot assure you that we can comply with the safe harbor or that we will avoid owning property that may be characterized as held primarily for sale to customers in the ordinary course of a trade or business. Consequently, we may choose not to engage in certain sales of our properties, or we may conduct such sales through our TRS, which would be subject to United States federal and state income taxation. In addition, we may have to sell numerous properties to a single or a few purchasers, which could cause us to be less profitable than would be the case if we sold properties on a property-by-property basis. For example, if we decide to acquire properties opportunistically to renovate in anticipation of immediate resale, we will need to conduct that activity through a TRS to avoid the 100% prohibited transactions tax.
The 100% prohibited transactions tax may limit our ability to enter into transactions that would otherwise be beneficial to us. For example, if circumstances make it not profitable or otherwise uneconomical for us to remain in certain states or geographical markets, the 100% prohibited transactions tax could delay our ability to exit those states or markets by selling our assets in those states or markets other than through a TRS, which could harm our operating profits and the trading price of our stock. In addition, in order to avoid the 100% prohibited transactions tax, we may be required to limit the structures we utilize for our securitization transactions, even though the sales or structures might otherwise be beneficial to us.
Complying with REIT requirements may limit our ability to hedge effectively and may cause us to incur tax liabilities.
The REIT provisions of the Code may limit our ability to hedge liabilities. Income from hedging transactions that do not meet the specific requirements of these provisions will generally constitute nonqualifying income for purposes of the 75% and 95% gross income tests. As a result of these rules, we may have to limit our use of advantageous hedging techniques or, subject to the limitations on the value of and income from our TRSs, implement those hedges through a domestic TRS. This could increase the cost of our hedging activities because our TRS would be subject to tax on gains, for which losses may not be available or allowed to offset, or expose us to greater risks associated with changes in interest rates than we would otherwise want to bear.
Our charter does not permit any person to own more than 9.8% of our outstanding common stock or of our outstanding stock of all classes or series, and attempts to acquire our common stock or our stock of all other classes or series in excess of these 9.8% limits would not be effective without an exemption from these limits by our board of directors.
For us to qualify as a REIT under the Code, not more than 50% of the value of our outstanding stock may be owned directly or indirectly by five or fewer individuals (including certain entities treated as individuals for this purpose) during the last half of a taxable year. For the purpose of assisting our qualification as a REIT for United States federal income tax purposes, among other purposes, our charter prohibits beneficial or constructive ownership by any person of more than a certain percentage, currently 9.8%, in value or by number of shares of stock, whichever is more restrictive, of the outstanding shares of our common stock or 9.8% in value of the outstanding shares of our stock, which we refer to as the “ownership limit.” The constructive ownership rules under the Code and our charter are complex and may cause shares of the outstanding common stock owned by a group of related persons to be deemed to be constructively owned by one person. As a result, the acquisition of less than 9.8% of our outstanding common stock or our stock by a person could cause a person to own constructively in excess of 9.8% of our outstanding common stock or our stock, respectively, and thus violate the ownership limit. There can be no assurance that our board of directors, as permitted in the charter, will not decrease this ownership limit in the future, and any decision to grant a waiver from the ownership limit in any particular instance is at the sole discretion of our board of directors. Any attempt to own or transfer shares of our common stock in excess of the ownership limit without the consent of our board of directors will result either in the shares of stock in excess of the limit being transferred by operation of the charter to a charitable trust, and the person who attempted to acquire such excess shares of stock will not have any rights in such excess shares of stock, or in the transfer being void. The ownership limit may have the effect of precluding a change in control of us by a third party, even if such change in control would be in the best interests of our stockholders or would result in receipt of a premium to the price of our common stock (and even if such change in control would not reasonably jeopardize our REIT status).
The cash available for distribution to stockholders may not be sufficient to pay dividends at expected levels, nor can we assure you of our ability to make distributions in the future. We may use borrowed funds or our own funds to make distributions.
The Code generally requires that a REIT annually distribute at least 90% of its REIT taxable income, determined without regard to the deduction for dividends paid and excluding any net capital gain, and imposes tax on any REIT taxable income retained by a REIT, including capital gains. We anticipate making quarterly distributions to our stockholders. We expect that the cash required to fund our dividends will be covered by cash generated by operations. However, our ability to make distributions to our stockholders will depend upon the performance of our asset portfolio. If our operations do not generate sufficient cash flow to allow us to satisfy the REIT distribution requirements, we may be required to fund distributions from working capital, borrow funds, raise additional equity capital, sell assets, issue distributions in our own stock, or reduce our distributions.
Furthermore, if such cash available for distribution decreases in future periods from expected levels, our inability to make the expected distributions could result in a decrease in the market price of our common stock. In addition, our charter allows us to issue preferred stock that could have a preference over our common stock as to distributions. All distributions will be made at the sole discretion of our board of directors and will depend upon a number of factors, including our actual and projected results of operations, financial condition, cash flows and liquidity, maintenance of our REIT qualification and other tax considerations, capital expenditure and other obligations, debt covenants, contractual prohibitions or other limitations, and applicable law and such other matters as our board of directors may deem relevant from time to time.
We may not be able to make distributions in the future. In addition, some of our distributions may include a return of capital. To the extent that we decide to make distributions in excess of our current and accumulated earnings and profits, such distributions would generally be considered a return of capital for United States federal income tax purposes to the extent of the holder’s adjusted tax basis in their stock. A return of capital is not taxable, but it has the effect of reducing the holder’s adjusted tax basis in its investment. To the extent that distributions exceed the adjusted tax basis of a holder’s stock, they will be treated as gain from the sale or exchange of such stock. If we borrow to fund distributions, our future interest costs would increase, thereby reducing our earnings and cash available for distribution from what they otherwise would have been.
We may choose to make distributions in our own stock that require you to pay income taxes in excess of any cash distributions.
We may make distributions to our stockholders that are payable in cash and/or shares of our common stock. As a result, stockholders may be required to pay income taxes with respect to such distributions in excess of any cash portion of the distribution received, and it may be necessary to sell stocks received in such distribution at a time that may be disadvantageous, in order to satisfy any tax imposed on such distribution. Furthermore, with respect to certain non-United States holders, we may be required to withhold United States tax with respect to such distribution, including in respect of all or a portion of such distribution that is payable in stock, by withholding or disposing of part of the stock included in such distribution and using the proceeds of such disposition to satisfy the withholding tax imposed. In addition, if a significant number of our stockholders determine to sell shares of our common stock in order to pay taxes owed on dividend income, such sale may put downward pressure on the market price of our common stock.
We may be subject to adverse legislative or regulatory tax changes that could increase our tax liability, reduce our operating flexibility, and reduce the price of our common stock.
The Internal Revenue Service, the United States Treasury Department, Congress, and state and local taxing authorities frequently review and may modify tax legislation, regulations, and other guidance. We cannot predict whether, when or to what extent new United States federal, state, or local tax laws, regulations, interpretations, or rulings will be adopted. Any such action may prospectively or retroactively modify our tax treatment and, therefore, may adversely affect our taxation or our stockholders. Changes in state or local tax laws, including property taxes, income or franchise taxes, transfer taxes, or other taxes applicable to real estate owners and REITs, could also increase our tax liability or operating costs. Any of these changes could have an adverse effect on an investment in our stock or on the market value or the resale potential of our assets. You are urged to consult with your tax advisor with respect to the status of legislative, regulatory, or administrative developments and proposals and their potential effect on an investment in our stock. Although REITs generally receive certain tax advantages compared to entities taxed as C corporations, it is possible that future legislation would result in a REIT having fewer tax advantages, and it could become more advantageous for a company that invests in real estate to elect to be treated for United States federal income tax purposes as a C corporation. As a result, our charter provides our board of directors with the power, under certain circumstances, to revoke or otherwise terminate our REIT election and cause us to be taxed as a C corporation, without the approval of our stockholders.
Our ownership of TRSs is subject to limitations, and our transactions with our TRSs will cause us to be subject to a 100% excise tax on certain income or deductions if those transactions are not conducted on arm’s-length terms.
The Code provides that no more than 20% of the value of a REIT’s assets, or no more than 25% of the value of a REIT’s assets beginning with the 2026 tax year, may consist of stock or securities of one or more TRSs. Our TRSs earn income that would not be qualifying income if earned directly by the parent REIT and may also be used to hold certain properties the sale of which may not qualify for the safe harbor for prohibited transactions. These limitations on ownership of TRS stock could limit the extent to which we can conduct these activities and other activities through our TRSs. In addition, the tax rules may
limit the deductibility of interest paid or accrued by a TRS to its parent REIT. The rules also impose a 100% excise tax on certain transactions between a TRS and its parent REIT that are not conducted on an arm’s-length basis. There can be no assurance that we will be able to comply with the TRS limitations or avoid application of the 100% excise tax.
We may face risks in connection with Section 1031 exchanges.
We may dispose of real property in a transaction intended to qualify as a like-kind exchange under Section 1031 of the Code (“Section 1031 Exchange”). As a result, we may not have immediate access to the cash proceeds that are required to be held by an intermediary. In addition, if a transaction intended to qualify as a Section 1031 Exchange is later determined to be taxable, we may face adverse consequences, and if the laws applicable to such transactions are amended or repealed, we may not be able to dispose of real property on a tax-deferred basis.
Invitation Homes is a leading owner and operator of single-family homes for lease, offering residents high-quality homes in sought-after neighborhoods across the United States. As of December 31, 2025, we wholly own 86,192 homes for lease, jointly own 8,006 homes for lease, and provide professional third-party property and asset management services for an additional 15,866 homes, all of which are primarily located in 16 core markets across the country. These homes help meet the needs of a growing share of Americans who count on the ease, flexibility, and savings of leasing. We provide our residents
access to updated homes with features they value, as well as close proximity to jobs and good schools. The continued demand for our product proves that the choice and flexibility we offer are attractive to many people.
We operate in markets with strong demand drivers, high barriers to entry, and high rent growth potential, primarily in the Western United States, Florida, and the Southeast United States. Through disciplined market and asset selection, as well as through strategic mergers and acquisitions, we designed our wholly and jointly owned portfolios to capture the operating benefits of local density as well as economies of scale that we believe cannot be readily replicated. Since our founding in 2012, we have built a proven, vertically integrated operating platform that enables us to effectively and efficiently acquire, renovate, lease, maintain, and manage both the homes we own and those we manage on behalf of others.
The portfolio of homes we own average approximately 1,880 square feet with three to four bedrooms and two bathrooms, appealing to a resident base that we believe is less transitory than a typical multifamily resident. We invest in the upfront renovation of homes in our portfolio in order to address capital needs, reduce ongoing maintenance costs, and drive resident demand.
On January 14, 2026, we acquired ResiBuilt, a leading fee homebuilder specializing in single-family rental communities with expertise in land development and construction general contracting across high-growth Southeast markets. The acquisition is a natural extension of our business and supports our growth strategy by adding home building capabilities to our platform. By bringing land development and construction expertise in-house, we gaingreater operational control over the development process, enhance cost efficiency, and strengthen our ability to execute on growth opportunities in strategically important markets. We believe this internal development capacity will support our long-term growth strategy by providing a reliable pipeline of purpose-built rental homes tailored to our operational and quality standards.
At Invitation Homes, we are committed to creating a better way to live and to being a force for positive change, which is underscored by our company purpose to Unlock the Power of Home™. Our Genuine CARE™ values serve as the foundation for our work, and the underlying principles of clear communication, integrity, responsibility, innovation, adaptability, and a welcoming workplace are designed to create an authentic experience for our residents, shareholders, and associates. We also work to advance sustainability, which is an important part of our strategic business objectives and is critical to our long-term success.
Our commitment to high-touch customer service continuously enhances residents’ living experiences and provides an environment where individuals and families can thrive. Many of our residents are first responders, healthcare workers, teachers, and other essential members of their communities, people who dedicate themselves to serving others every day. We are honored to serve them in return, and we work hard to ensure they come home to a place of comfort and security. Each aspect of our operations — whether in our corporate headquarters or field offices located in our 16 core markets — is driven by a resident-centric model. Our associates take our values seriously and work hard every day to honor the trust our residents have placed in us to provide clean, safe, and functional homes for them and their loved ones. In turn, we focus on ensuring that our associates are fairly compensated and that we provide a culture that values respect, opportunity, and belonging. We also place a strong emphasis on the impact we have in our communities and on the environment in general, and we continue to support programs that demonstrate those commitments. In addition, we operate under strong, well-defined governance practices and are dedicated to adhering to the highest ethical standards at all times.
Impact of Macroeconomic Trends
General economic conditions in the United States have continued to fluctuate in recent quarters. While inflationary pressures have moderated from prior peaks, they remain elevated, and interest rates remain subject to volatility and uncertainty. These factors, together with ongoing uncertainty in financial and capital markets, geopolitical tensions, evolving trade and tariff policies, labor market conditions, and a general decline in consumer confidence could adversely affect (i) our occupancy levels, rental rates, and collections, (ii) our ability to acquire or dispose of properties on economically favorable terms, (iii) our access to financial markets on attractive terms, or at all, and (iv) the value of our homes and our business that could cause us to recognize impairments in the value of our tangible assets or goodwill. Such macroeconomic conditions, and geopolitical events, may also negatively impact consumer income, credit availability, and spending, which may adversely impact our business, financial condition, cash flows, and results of operations, including the ability of our residents to pay rent. In addition, consumer confidence and spending may decline in response to changes in fiscal and monetary policy, reductions in income or asset values, and other macroeconomic factors. Labor shortages and inflationary increases in labor and material costs have impacted and may continue to impact certain aspects of our business. Imposition or increase of tariffs and trade restrictions by the United States on imports from certain countries and counter-tariffs in response could lead to increased costs and supply chain disruptions. Any of these factors could have a material adverse effect on our business and results of operations, as well as on the price of our common stock.
The regulatory landscape affecting institutional ownership and acquisition of single-family rental properties continues to evolve. Executive actions, and potential federal and state legislation or regulations, aimed at limiting institutional ownership and acquisition of single-family homes could limit our ability to acquire additional homes, require us to modify our growth, investment, development, or disposition strategies, reduce the scale or efficiency of our operations, increase compliance costs, subject us to increased regulatory scrutiny, or otherwise adversely affect market dynamics, our business, and results of operations.
While the degree to which we may continue to be affected by these macroeconomic challenges largely depends on the nature and duration of uncertain and unpredictable events, we believe that we are well suited to endure a shifting macroeconomic environment due to our diversification and resiliency. For further discussion of risks related to general economic conditions, see Part I. Item 1A. “Risk Factors — Risks Related to Our Business Environment and Industry — Our operating results are subject to general economic conditions and risks associated with our real estate assets. ”
Climate Change
Potential consequences of global climate change may range from more frequent extreme weather events to governmental policy developments and shifts in consumer preferences, which have the potential individually or collectively to disrupt our business as well as negatively affect our suppliers, contractors, and residents. Physical, regulatory, and transition risks from climate change may significantly reduce our revenues and profitability or cause us to generate losses. We are subject to evolving laws and regulations relating to climate change, including regulations aimed at drastically increasing reporting and governance related to climate change as well as focused on limiting greenhouse gas emissions.
Evolving laws and regulations or any changed interpretation of such laws and regulations may require us to make costlyimprovements to our properties resulting in increased operating costs and compliance burdens. Choosing not to enhance our homes’ resource efficiency could make our portfolio less attractive to residents and investors. If we fail to manage transition risks effectively, our profitability and cash flow could suffer.
We recognize that climate change could have a significant impact on our portfolio of homes and that an increase in the number of acute weather events, natural disasters, and other climate-related events could significantly impact our business, operations, and homes. We consider physical risks, including the potential for natural disasters such as hurricanes, floods, and wildfires, when assessing our portfolio of homes and our business processes.
Our management and the board of directors are focused on managing our business risks, including climate change-related risks. The process to identify, manage, and integrate climate-change risk is part of our comprehensive enterprise risk management program. Our board of directors, through its Audit Committee and Nominating and Corporate Governance Committee, is responsible for oversight of our management of risks related to environmental issues, climate related risks, and social issues. For more information on risks related to climate change, see Part I. Item 1A. “Risk Factors — Risks Related to Sustainability, Corporate Responsibility, and Governance — Climate change and related environmental issues, related legislative and regulatory responses to climate change, and the transition to a lower-carbon economy may adversely affect our business , — We are subject to risks from natural disasters such as earthquakes, wildfires, and severe weather, and — We are subject to increasing scrutiny from investors and others regarding our sustainability responsibilities, which could result in additional costs or risks and adversely impact our reputation, associate attraction and retention, and ability to raise capital. ”
Other Matters
In January 2023, we received an inquiry from the staff of the SEC requesting information relating to our compliance with building codes and permitting requirements, related policies and procedures, and other matters. In December 2025, the SEC notified us that it had concluded this inquiry and did not intend to recommend any enforcement action.
Our Portfolio
The following table provides summary information regarding our total and Same Store portfolios as of and for the year ended December 31, 2025 as noted below:
Market
Number of Homes (1)
Average Occupancy (2)
Average Monthly
Rent (3)
Average Monthly
Rent PSF (3)
Revenue (4)
Western United States:
Southern California
Northern California
Seattle
Phoenix
Las Vegas
Denver
Western United States Subtotal
Florida:
South Florida
Tampa
Orlando
Jacksonville
Florida Subtotal
Southeast United States:
Atlanta
Carolinas
Southeast United States Subtotal
Texas:
Houston
Dallas
Texas Subtotal
Midwest United States:
Chicago
Minneapolis
Midwest United States Subtotal
Other (5) :
Total / Average
Same Store Total / Average
(1) As of December 31, 2025.
(2) Represents average occupancy for the year ended December 31, 2025.
(3) Represents average monthly rent for the year ended December 31, 2025.
(4) Represents the percentage of rental revenues and other property income generated in each market for the year ended December 31, 2025.
(5) As of December 31, 2025, represents homes located in San Antonio, Salt Lake City, Austin, or Nashville, outside of our 16 core markets.
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” 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 current macroeconomic conditions, including inflation, interest rate volatility, political dissension, labor market conditions, evolving regulatory landscape affecting institutional ownership and acquisition of single-family rental properties, and adverse global economic conditions. Additionally, each of these factors may also impact the results of operations and financial condition of our joint venture investments and those of third parties for whom we perform property and asset management services, which would impact the amount of management fee revenues and income (losses) from investments in unconsolidated joint ventures that we earn.
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 71.2% of our rental revenues and other property income during the year ended December 31, 2025. We actively monitor the impact of macroeconomic conditions on market fundamentals and quickly implement changes in pricing as market fundamentals shift.
Rental Rates and Occupancy Levels: 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.
Collection Rates: Our rental revenues and other property income are impacted by the rate at which we collect such revenues from our residents. Despite our efforts to assist residents facing financial hardships who need flexibility to fulfill their lease obligations, a portion of amounts receivable may not ultimately be collected. We may also be constrained in our ability to collect resident receivables due to local ordinances restricting residential lease compliance options. Any amounts billed to residents that have been deemed uncollectible along with our estimate of amounts that may ultimately be uncollectible decrease our rental revenues and other property income.
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, the ability of our suppliers and other business partners to carry out their assigned tasks and/or source labor or supply materials at ordinary levels of performance relative to the conduct of our business, and both current economic conditions and future economic outlook, including the impact of inflation, elevated interest rates, political dissension, and labor shortfalls which could adversely affect demand for our properties.
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. As a result of inflationary trends and/or imposition of or increases in tariffs, we may experience, as we have in the past, increased costs for certain materials and services necessary to improve and maintain our homes. We continue to actively manage the impact of these factors on these costs, and we believe we are able to purchase goods and services at favorable prices compared to other purchasers due to our size and scale both nationally and locally.
Property Development, Acquisitions, and Renovations: Future growth in rental revenues and other property income may be impacted by our ability to and the pace at which we identify and build or acquire homes and the time and cost required to renovate and lease those homes. We are also developing build-to-rent homes through third-party homebuilders and our ResiBuilt business, acquired in January 2026. Opportunities from these new construction channels are impacted by the availability of vacant developed lots, development land assets, and inventory of homes currently under construction or newly developed. 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 current inflationary trends and elevated interest rates, potentially reducing the number of homes we acquire. The evolving regulatory landscape affecting institutional ownership and acquisition of single-family rental properties could also limit our ability to acquire additional homes.
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 incur costs to renovate acquired homes to prepare them for rent. The time and cost involved in preparing acquired homes for rent can significantly impact our financial performance. As a result of inflationary trends and/or imposition of or increases in tariffs, we may experience, as we have in the past, increased costs for certain materials and services necessary to renovate our homes. We continue to actively manage the cost of renovations, and we believe we are able to purchase goods and services at favorable prices compared to other purchasers due to our size and scale both nationally and locally.
Financing Arrangements: 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 other terms and conditions, including variable interest rates in some cases, that are impacted by market conditions. Current macroeconomic conditions may continue to negatively affect volatility, availability of funds, and transaction costs (including interest rates) within financial markets. These factors may also negatively affect our ability to access financial markets as well as our business, results of operations, and financial condition. See Part II. Item 7A. “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.
Macroeconomics Conditions: Inflation, interest rate volatility, political dissension, labor market conditions, the evolving regulatory landscape affecting institutional ownership and acquisition of single-family rental properties, and adverse global economic conditions could negatively affect our business and financial condition. Imposition of, increases in, and changing policies around tariffs by the United States on imports from certain countries and potential counter-tariffs in response could lead to increased costs and supply chain disruptions. If we are not able to navigate any such changes, they could have a material adverse effect on our business and results of operations, as well as on the price of our common stock.
Regulatory and Policy Risks : Executive actions, and potential federal and state legislation or regulations, aimed at limiting institutional ownership and acquisition of single-family homes could limit our ability to acquire additional homes, require us to modify our growth, investment, development, or disposition strategies, reduce the scale or efficiency of our operations, increase compliance costs, subject us to increased regulatory scrutiny, or otherwise adversely affect market dynamics, our business, and results of operations. As this policy landscape continues to evolve, we remain committed to working constructively with policymakers at all levels to support housing supply and availability, and we believe that well-managed, professionally operated rental housing serves an important role in expanding access to quality homes for American families.
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) revenues from value-add services such as smart homes, internet and media packages, home liability insurance, and HVAC replacement filters; (iii) various other fees, including late fees and lease termination fees, among others; and (iv) rent and non-refundable deposits associated with pets.
Management Fee Revenues
Management fee revenues consist of fees from property and asset management services provided to portfolio owners of single-family homes for lease, including investments in our unconsolidated joint ventures.
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, 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 for which we provide property and asset management services on behalf of others 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
We issue share-based awards to align the interests of our associates with those of our investors, and all share-based compensation expense is recognized in our consolidated statements of operations as components of general and administrative expense and property management expense.
Interest Expense
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.
Casualty Losses, Impairment, and Other
Casualty losses, impairment, and other represents casualty (gains) losses, net of any insurance recoveries, and provisions for impairment when the carrying amount of our single-family residential properties is not recoverable.
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.
Income (Losses) from Investments in Unconsolidated Joint Ventures
Income (losses) 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.
Other, net
Other, net includes settlement and other costs related to certain litigation and regulatory matters, interest income, gains (losses) resulting from investments in equity securities, and other miscellaneous income and expenses.
Results of Operations
Year Ended December 31, 2025 Compared to Year Ended December 31, 2024
The following table sets forth a comparison of the results of operations for the years ended December 31, 2025 and 2024:
For the Years
Ended December 31,
($ in thousands)
$ Change
% Change
Revenues:
Rental revenues and other property income
Management fee revenues
Total revenues
Expenses:
Property operating and maintenance
Property management expense
General and administrative
Interest expense
Depreciation and amortization
Casualty losses, impairment, and other
Total expenses
Gain on sale of property, net of tax
Losses from investments in unconsolidated joint ventures
Other, net
Net income
Portfolio Information
As of December 31, 2025 and 2024, we owned 86,192 and 85,138 single-family rental homes, respectively, in our total portfolio. During the years ended December 31, 2025 and 2024, we acquired 2,410 and 2,072 homes, respectively, and sold 1,356 and 1,501 homes, respectively. During the years ended December 31, 2025 and 2024, we owned an average of 85,717 and 84,718 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 December 31, 2025, our Same Store portfolio consisted of 76,819 single-family rental homes.
Revenues
For the years ended December 31, 2025 and 2024, total revenues were $2,729.3 million and $2,618.9 million, respectively. Set forth below is a discussion of changes in the individual components of total revenues.
For the years ended December 31, 2025 and 2024, total portfolio rental revenues and other property income totaled $2,642.0 million and $2,549.0 million, respectively, an increase of 3.6%, driven by an increase in average monthly rent per occupied home and a 999 home increase between periods in the average number of homes owned, partially offset by an 80 bps reduction in average occupancy.
Average occupancy for the years ended December 31, 2025 and 2024 for the total portfolio was 95.0% and 95.8%, respectively. Average monthly rent per occupied home for the total portfolio for the years ended December 31, 2025 and 2024 was $2,439 and $2,387, respectively, a 2.2% increase. For our Same Store portfolio, average occupancy was 96.8% and 97.3% for the years ended December 31, 2025 and 2024, respectively, and average monthly rent per occupied home for the years ended December 31, 2025 and 2024 was $2,450 and $2,386, respectively, a 2.7% increase.
The annual turnover rate for the Same Store portfolio was 22.8% for each of the years ended December 31, 2025 and 2024. For the Same Store portfolio, a home remained unoccupied on average for 47 and 40 days between residents for the years ended December 31, 2025 and 2024, respectively.
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 4.6% and 4.9% for the years ended December 31, 2025 and 2024, respectively, and new lease net effective rental rate growth for the total portfolio averaged (0.8)% and 1.0% for the years ended December 31, 2025 and 2024, respectively. For our Same Store portfolio, renewal lease net effective rental rate growth averaged 4.6% and 4.9% for the years ended December 31, 2025 and 2024, respectively, and new lease net effective rental rate growth averaged (0.6)% and 0.9% for the years ended December 31, 2025 and 2024, respectively.
Other property income for the year ended December 31, 2025 increased compared to December 31, 2024, primarily due to enhanced value-add revenue programs and increased utility recoveries as new leases are entered into, among other things.
For the years ended December 31, 2025 and 2024, management fee revenues totaled $87.3 million and $70.0 million, respectively. The 24.8% increase is primarily due to an increase in the average number of homes for which we provide property and asset management services from 20,971 homes for the year ended December 31, 2024 to 24,521 homes for the year ended December 31, 2025.
Expenses
For the years ended December 31, 2025 and 2024, total expenses were $2,341.7 million and $2,326.7 million, respectively. Set forth below is a discussion of changes in the individual components of total expenses.
For the year ended December 31, 2025, property operating and maintenance expense increased to $985.6 million from $935.3 million for the year ended December 31, 2024. The 5.4% increase in property operating and maintenance expense is primarily attributable to a 999 home increase in the average number of homes owned between periods, as well as increases in utilities and property taxes.
Property management expense and general and administrative expense increased to $244.4 million from $228.1 million for the years ended December 31, 2025 and 2024, respectively, primarily due to increased personnel and other costs related to our property and asset management platform, including costs to manage a 16.9% increase in the average number of homes managed between periods.
Interest expense decreased to $353.3 million for the year ended December 31, 2025 from $366.1 million for the year ended December 31, 2024. The decrease was primarily due to the amendment of certain of our interest rate swap agreements during 2024, which reduced related non-cash fair value amortization by $17.4 million for the year ended December 31, 2025 compared to the year ended December 31, 2024, partially offset by an increase in the debt balance outstanding between periods.
Depreciation and amortization expense increased to $746.9 million for the year ended December 31, 2025 from $714.3 million for the year ended December 31, 2024 due to an increase in cumulative capital expenditures and a 999 home increase in the average number of homes owned during the year ended December 31, 2025 compared to the year ended December 31, 2024.
Casualty losses, impairment, and other expenses were $11.4 million and $82.9 million for the years ended December 31, 2025 and 2024, respectively. During the year ended December 31, 2025, we incurred $10.8 million of net casualty losses and $0.6 million of impairmentlosses on our single-family residential properties. D uring the year ended December 31, 2024 , casualty losses, impairment, and other expenses were comprised of net casualty losses of $82.4 million, including the recognition of $55.1 million for estimated losses and damages related to Hurricanes Milton, Beryl, Debby, and Helene, net of estimated insurance proceeds, additional storm activity unrelated to hurricanes during the year, and impairmentlosses of $0.5 million on our single-family residential properties.
Gain on Sale of Property, net of tax
Gain on sale of property, net of tax was $218.2 million and $244.6 million for the years ended December 31, 2025 and 2024, respectively. A decrease in the number of homes sold from 1,501 for the year ended December 31, 2024 to 1,356 for the year ended December 31, 2025 was the primary driver of the decrease.
Losses from Investments in Unconsolidated Joint Ventures
Our share of losses from unconsolidated joint ventures was $11.6 million and $28.4 million for the years ended December 31, 2025 and 2024, respectively. The change was primarily driven by an increase in our share of income and distributions from the FNMA joint venture from 10.0% to 50.0% as a result of achieving a promote interest threshold pursuant to the terms of the joint venture agreement and gains on dispositions of homes within that portfolio.
Other, net
Other, net decreased to $4.3 million of expense for the year ended December 31, 2025 from $53.0 million of expense for the year ended December 31, 2024, primarily due to settlement and other costs incurred in connection with the resolution of an inquiry from the FTC and the legal dispute entitled City of San Diego et al v. Invitation Homes, Inc. that was settled during the third quarter of 2024. This reduction in expense is partially offset by a decrease in interest earnings on cash balances.
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023
For similar operating and financial data and discussion of our results for the year ended December 31, 2024 compared to the year ended December 31, 2023, refer to Part II. Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 202 4 10-K .
Liquidity and Capital Resources
Our liquidity and capital resources as of December 31, 2025 and 2024 include unrestricted cash and cash equivalents of $130.0 million and $174.5 million, respectively, a 25.5% decrease primarily due to acquisitions of homes . As of December 31, 2025, $1,605.0 million of our revolving facility (the “Revolving Facility”) is undrawn, and there are no restrictions on our ability to draw funds thereunder provided we remain in compliance with all covenants. We have no debt reaching final maturity until June 2027.
Share Repurchase Program
On October 28, 2025, our board of directors authorized the Share Repurchase Program pursuant to which we may acquire shares of our common stock up to an aggregate purchase price of $500.0 million in the open market or negotiated transactions, including through Rule 10b5-1 plans. The Share Repurchase Program does not have an expiration date. During the year ended December 31, 2025, we repurchased 2,232,685 shares of our common stock for a total cost of $61.3 million, including legal fees and commissions. During January 2026, we repurchased an additional 1,402,639 shares of our common stock for a total cost of $38.8 million, including legal fees and commissions, leaving $400.0 million available for future repurchases under the Share Repurchase Program.
Repurchases under the Share Repurchase Program will be made at our discretion and are not required or guaranteed. The timing and actual number of shares repurchased will depend on a variety of factors, including price, corporate and regulatory requirements, market conditions, and other liquidity needs and priorities.
Acquisition of ResiBuilt
On January 14, 2026, we acquired ResiBuilt, a leading fee homebuilder specializing in single-family rental communities with expertise in land development and construction general contracting across high-growth Southeast markets.
Amendment of 2022 Term Loan Facility
On April 28, 2025, we entered into an amendment to the 2022 Term Loan Facility that (1) amends the initial maturity date from June 22, 2029 to April 28, 2028, with two one year extension options at our election, provided we are in compliance with the loan agreement and pay a 12.5 bps extension fee and (2) adjusts the margin applicable to borrowings.
Public Offering
On August 15, 2025, in a public offering under our shelf registration statement, we issued $600.0 million aggregate principal amount of 4.95% Senior Notes which mature on January 15, 2033.
Interest Rate Swap Transactions
During the second quarter of 2025, we entered into two new interest rate swap agreements with a total notional amount of $400.0 million which became active on May 8, 2025 and June 20, 2025. As of December 31, 2025, our active swaps have a weighted average strike rate of 3.07%.
Other
Our ability to access capital as well as to use cash from operations to continue to meet our liquidity needs, all of which are highly uncertain and cannot be predicted, could be affected by various risks and uncertainties, including, but not limited to, the effects of general economic conditions, including inflation and interest rates, as detailed in Part I. Item 1A. “Risk Factors.”
Long-Term Debt Strategy
The following table summarizes certain information about our debt obligations as of December 31, 2025 ($ in thousands):
Debt Instruments (1)
Balance
(Gross of Retained Certificates and Unamortized Discounts)
Balance
(Net of Retained Certificates)
Weighted Average Interest Rate (2)
Weighted Average Years to Maturity (3)
Amount Freely Prepayable (Gross)
Secured:
Total secured
Unsecured:
2024 Term Loan Facility (6)
S + 85 bps
2022 Term Loan Facility (6)(7)
S + 85 bps
Revolving Facility (6)
S + 78 bps
Unsecured Notes — May 2028
Unsecured Notes — November 2028
Unsecured Notes — August 2030
Unsecured Notes — August 2031
Unsecured Notes — April 2032
Unsecured Notes — January 2033
Unsecured Notes — August 2033
Unsecured Notes — January 2034
Unsecured Notes — February 2035
Unsecured Notes — May 2036
Total unsecured (8)
Total debt (8)
Unamortized discounts
Deferred financing costs, net
Total debt per balance sheet
Retained certificates
Cash and restricted cash, excluding security deposits and letters of credit
Deferred financing costs, net
Unamortized discounts
Net debt
(1) For detailed information about and definition of each of our financing arrangements, see Part IV. Item 15. “Financial Statements — Note 7 of Notes to Consolidated Financial Statements.” For information about our derivative instruments that hedge floating rate debt, see Part IV. Item 15. “Financial Statements — Note 8 of Notes to Consolidated Financial Statements.”
(2) Variable interest rate loans are indexed to a Secured Overnight Financing Rate (“SOFR”) index rate determined by reference to a published forward-looking SOFR rate for the interest period relevant to such borrowing (“Term SOFR”), including any credit spread adjustments provided for in the terms of the underlying agreement (“Adjusted SOFR”), reflected as “S” in the table above.
(3) Weighted average years to maturity assumes all extension options are exercised, which are subject to certain conditions being met.
(4) IH 2017-1 bears interest at a fixed rate of 4.23% per annum, equal to the market determined pass-through rate payable on the certificates including applicable servicing fees.
(5) IH 2019-1 bears interest at a fixed rate of 3.59% per annum including applicable servicing fees for the first 11 years and for the twelfth year bears interest at a floating rate based on a spread of 147 bps over a comparable or successor rate to the one month London Interbank Offer Rate as provided for in the loan agreement, including applicable servicing fees, subject to certain adjustments as outlined in the loan agreement.
(6) As of December 31, 2025, interest rate is based on Term SOFR of 3.69% plus the applicable margin as well as a 0.10% credit spread adjustment for the 2024 Term Loan and the Revolving Facility.
(7) If we exercise the two one year extension options, the maturity date for the 2022 Term Loan Facility will be April 28, 2030.
(8) For unsecured debt and total debt, the weighted average interest rate is calculated based on December 31, 2025 Term SOFR of 3.69% adjusted for a 0.10% credit spread adjustment (Adjusted SOFR), where appropriate, and includes the impact of interest rate swap agreements effective as of that date.
As part of our long-term debt strategy, our goal is to maintain or improve our credit ratings, and, over time, we generally intend to be a predominantly unsecured borrower with a target net debt of approximately 5.5 to 6.0 times trailing twelve months Adjusted EBITDA re (see “— Non-GAAP Measures — EBITDA, EBITDA re , and Adjusted EBITDA re ”). 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 2027 with unsecured debt, including potential unsecured bond issuances and/or (b) repay a portion of such debt. There can be no assurance that we will be successful in implementing our long-term debt strategy, improving our credit ratings, or adhering to our targets in the short or medium term or at all, or that we will not change our strategy or targets in the future. We may from time to time fall outside of our target ranges. In addition, we cannot assure you that we will be able to access the capital and credit markets to obtain additional unsecured debt financing or that we will be able to obtain financing on terms favorable to us. 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 Related 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. ”
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 short-term liquidity requirements consist primarily of:
• commitments for the development or acquisition of homes;
• renovation of newly-acquired homes;
• funding commitments for construction and development loans made to homebuilders;
• HOA fees (as applicable), property taxes, insurance premiums, and the ongoing maintenance of our homes;
• property management, general and administrative, and other entity-level commitments and expenses;
• interest expense;
• dividend payments to our stockholders; and
• required contributions to our joint ventures.
We believe our rental income, net of total expenses, will generally provide cash flow sufficient to fund operations and dividend payments on a short-term basis. Additionally, we have guaranteed the funding of certain tax, insurance, and non-conforming property reserves related to the financing of one of our joint ventures. We do not expect these guarantees to have a material current or future effect on our liquidity. See Part IV. Item 15. “Exhibits and Financial Statements of — Note 5 of Notes to Consolidated Financial Statements” for additional information about our investments in unconsolidated joint ventures.
General economic conditions in the United States have continued to fluctuate in recent quarters, and concernspersist regarding adverse macroeconomic conditions, such as inflation, interest rate volatility, political dissension, and labor market conditions. Fluctuating economic conditions and uncertainty in financial markets may negatively impact our operating cash flow such that we are unable to make required debt service payments, which would result in an event of default for any debt instrument under whose loan agreement such payments were not made. Specifically, the collateral within individual borrower
entities may underperform, resulting in cash flow shortfalls for debt service while consolidated cash flows are sufficient to fund our operations. If an event of default occurs for our secured debt, 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 $1,605.0 million as of December 31, 2025.
Our long-term liquidity requirements consist primarily of funds necessary to pay for the acquisition of, and non-recurring capital expenditures for, our homes and principal and interest payments of our indebtedness. We intend to satisfy our long-term liquidity needs through cash provided by operations, long-term secured and unsecured borrowings, the issuance of debt and equity securities, and property dispositions. As a REIT, we are required to distribute to our stockholders at least 90% of our taxable income, excluding net capital gain, on an annual basis. Therefore, as a general matter, it is unlikely that we will be able to retain substantial cash balances from our annual taxable income that could be used to meet our liquidity needs. Instead, we will need to meet these needs from external sources of capital and amounts, if any, by which our cash flow generated from operations exceeds taxable income.
Cash Flows
Year Ended December 31, 2025 Compared to Year Ended December 31, 2024
The following table summarizes our cash flows for the years ended December 31, 2025 and 2024:
For the Years
Ended December 31,
($ in thousands)
$ Change
% Change
Net cash provided by operating activities
Net cash used in investing activities
Net cash used in financing activities
Change in cash, cash equivalents, and restricted cash
Operating Activities
Our cash flows provided by operating activities depend on numerous factors, including the occupancy level of our homes, the rental rates achieved on our leases, the collection of rent from our residents, and the amount of our operating and other expenses. Net cash provided by operating activities was $1,206.2 million and $1,081.8 million for the years ended December 31, 2025 and 2024, respectively , an increase of 11.5%. The increase in cash provided by operating activities is primarily due to improved operational profitability, including a $110.4 million increase in total revenues and a reduction of cash used for settlement of litigation and regulatory matters, partially offset by changes in operating assets and liabilities between periods.
Investing Activities
Net cash used in investing activities consists primarily of the acquisition costs in and capital improvements to homes, proceeds from property sales, and investments in unconsolidated joint ventures and land held for development. Net cash used in investing activities was $652.6 million and $465.9 million for the years ended December 31, 2025 and 2024, respectively, an increase of $186.7 million. The net increase in cash used in investing activities resulted primarily from the combined effect of the following significant changes in cash flows during the year ended December 31, 2025 compared to the year ended December 31, 2024: (1) a decrease in cash proceeds received from the sale of single-family homes; (2) a decrease in cash from repayment proceeds from retained debt securities; (3) an increase in cash used for other capital expenditures for our homes; and (4) an increase in cash used for investments in land held for development. More specifically, proceeds from the sale of single-family homes decreased $87.1 million due to a decrease in the number of homes sold from 1,501 during the year ended December 31, 2024 to 1,356 homes sold during the year ended December 31, 2025, as well as a decrease in average net proceeds per home. Repayment proceeds from retained debt securities totaled $32.2 million during year ended December 31, 2024 d ue to the full repayment of IH 2018-4, and there were no such repayments during the year ended December 31, 2025. O ther capital expenditures for our homes increased by $23.4 million year over year due to a 999 home
increase in average home count and other increases in costs to maintain our homes. During the year ended December 31, 2025, we began investing in land held for future development and acquired $20.2 million of land.
Financing Activities
Net cash used in financing activities was $618.5 million for the year ended December 31, 2025 compared to $1,093.7 million for the year ended December 31, 2024. The change between periods is primarily due to the following financing transactions. During the year ended December 31, 2025, w e issued $596.9 million of unsecured notes, net of discount, and used the proceeds to repay the then-outstanding balance on our revolving credit facility. We subsequently drew $145.0 million on the revolving credit facility. During the year ended December 31, 2024, we issued $494.3 million of unsecured notes, net of discount, and entered into a replacement credit facility. The proceeds from this refinancing were used to repay the existing credit facility and $645.7 million of secured debt, including the voluntary prepayment of the IH 2018-4 debt, and to fund $54.2 million of financing costs. W e made dividend and distribution payments totaling $715.4 million during the year ended December 31, 2025 compared to $692.6 million during the year ended December 31, 2024, which were funded by cash flows from operations. Additionally, during the year ended December 31, 2025, we completed the repurchase of $53.2 million of shares of our common stock under the Share Repurchase Program. No such repurchases occurred during the year ended December 31, 2024.
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023
For similar operating and financial data and discussion of our results for the year ended December 31, 2024 compared to the year ended December 31, 2023, refer to Part II. Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operation — Cash Flows” of our 2024 10-K .
Contractual Obligations
Our contractual obligations as of December 31, 2025, consist of the following:
($ in thousands)
Total
Thereafter
Secured Debt (1)(2)(3)
Unsecured Notes (1)(2)(3)
Term Loan Facilities (1)(2)(3)(4)
Revolving Facility (1)(2)(3)(4)(5)
Derivative instruments (1)(6)
Purchase commitments (7)
Operating leases
Finance leases
Total
(1) For detailed information about each of our financing arrangements and derivative instruments see Part IV. Item 15. “Exhibits and Financial Statements — Note 7 of Notes to Consolidated Financial Statements” and “— Note 8 of Notes to Consolidated Financial Statements.”
(2) Includes estimated interest payments through the extended maturity date, as applicable, based on the principal amount outstanding as of December 31, 2025.
(3) Interest is calculated at rates in effect as of December 31, 2025, including the indexed rate, any credit spread adjustment, and any applicable margin, and that rate is held constant until the maturity date. As of December 31, 2025, Term SOFR was 3.69%.
(4) Calculated based on the maturity date if we exercise each of the remaining extension options available, which are subject to certain conditions being met. See Part IV. Item 15. “Exhibits and Financial Statements — Note 7 of Notes to Consolidated Financial Statements” for a description of maturity dates without consideration of extension options.
(5) Includes the related facility fee, as applicable.
(6) Includes payments (receipts) related to interest rate swap obligations calculated using Term SOFR. As of December 31, 2025, Term SOFR was 3.69%.
(7) Represents commitments, net of previously funded deposits, to acquire 841 homes, including commitments totaling $220.0 million to acquire 809 homes pursuant to binding development and purchase agreements with certain homebuilders as of December 31, 2025.
Additionally, we have commitments, which are not reflected in the table above, to make additional capital contributions to our joint ventures. As of December 31, 2025, our remaining equity commitments to our joint ventures total $137.9 million.
Supplemental Guarantor Information
INVH, INVH LP, 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. Pursuant 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 consolidated financial statements, and management believes such summarized financial information would be repetitive and would not provide incremental value to investors.
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 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.
Critical Accounting Policies and Estimates
Our discussion and analysis of our historical financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with GAAP and in conjunction with the rules and regulations of the SEC. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions about the effect of matters that are inherently uncertain and that affect the amounts reported on the consolidated financial statements and accompanying notes. Actual results could ultimately differ from those estimates. For a discussion of recently-issued and adopted accounting standards, see Part IV. Item 15. “Exhibits and Financial Statement Schedules — Note 2 of Notes to Consolidated Financial Statements.”
Critical accounting policies are those accounting estimates that management believes are important to the portrayal of our financial condition and results of operations 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.
Investments in Single-Family Residential Properties
The following significant accounting policies affect the acquisition, disposition, recognition, classification, and fair value measurements (on a nonrecurring basis) related to our owned portfolio of 86,192 single-family residentia l properties located primarily in 16 core markets across the United States as of December 31, 2025. For a complete discussion of our accounting policy and other factors related to each category below, see Part IV. Item 15. “Exhibits and Financial Statement Schedules — Note 2 of Notes to Consolidated Financial Statements.”
• Acquisition of Real Estate Assets: Our purchases of homes are generally treated as asset acquisitions unless acquired in connection with a business combination. For asset acquisitions, homes are recorded at their purchase price, which is allocated between land, building and improvements, and in-place lease intangibles (when a resident is in place at the acquisition date) based upon their relative fair values at the date of acquisition. The purchase price for purposes of this allocation is inclusive of acquisition costs which typically include legal fees, bidding service and title fees, payments made to cure tax, utility, HOA, and other mechanic’s and miscellaneous liens, as well as other closing costs. The attributes and location of each home acquired are considered at the individual home level when determining the percentage of purchase price allocated to building and improvements versus land. As such, these allocation percentages vary based on the homes acquired during each reporting period. If the percentage allocated to buildings and improvements versus land for the homes acquired during the year ended December 31, 2025 was increased or decreased by 500 bps, our annualized depreciation expense would have changed by approximately $1.2 million.
• Cost Capitalization: We incur costs to acquire, stabilize, and prepare our single-family residential properties to be leased. We capitalize these costs as a component of our investment in each single-family residential property, using specific identification and relative allocation methodologies. The capitalization period associated with our stabilization activities begins at the time that such activities commence and concludes at the time that a single-family residential property is available to be leased.
Once a property is ready for its intended use, expenditures for ordinary maintenance and repairs thereafter are expensed to operations as incurred. We capitalize expenditures that improve or extend the life of a home and for certain furniture and fixtures additions.
The capitalized costs are depreciated on a straight-line basis over their estimated useful lives, which are reviewed on an annual basis. The weighted average useful lives range from 7 to 32 years. If the useful lives for costs capitalized during the year ended December 31, 2025 were increased or decreased by 10%, our annualized depreciation expense would have changed by approximately $6.0 million.
• Provisions for Impairment: We continuously evaluate, by property, whether there are any events or changes in circumstances indicating that the carrying amount of our single-family residential properties may not be recoverable. To the extent an event or change in circumstance is identified, a residential property is considered to be impaired only if its carrying value cannot be recovered through estimated future undiscounted cash flows from the use and eventual disposition of the property. To the extent an impairment has occurred, the carrying amount of our investment in a property is adjusted to its estimated fair value. The process to assess our single-family residential properties for impairment requires significant judgment and assessment of factors that are, at times, subject to significant uncertainty. We evaluate multiple information sources and perform a number of internal analyses, each of which are important components of our process with no single information source or analysis being necessarily determinative. There have not been any significant process changes in our review for impairment during the current reporting period. For those homes for which a change in an event or circumstance was identified in the most recent impairment analysis, a 10% decrease in the estimated fair value of those homes may have resulted in an increase in impairment expense of $1.0 million.
• Single-Family Residential Properties Held for Sale: From time to time, we may identify single-family residential properties to be sold. Once we identify a property to be sold, pursuant to GAAP requirements, we cease depreciating the property, measure the property at the lower of its carrying amount or its fair value less estimated costs to sell, and present the property separately within other assets, net on our consolidated balance sheets. As of December 31, 2025, 278 homes, approximately 0.3% of our portfolio, were held for sale. If market values less disposal costs for our properties that were classified as held for sale as of December 31, 2025 were 10% lower or higher, our impairment expense related to those properties would not have been material.
Segment Reporting
Our principal business is acquiring, renovating, leasing, operating, and managing single-family residential properties. Under the provisions of ASC 280, Segment Reporting , we have determined that we currently operate in one reportable segment.
Our Chief Executive Officer is our chief operating decision maker (“CODM”). We concluded that we have one reportable segment based on the way our CODM regularly reviews internally reported financial information to evaluate performance, make operating decisions, and allocate resources at a consolidated level. Net income as reported on our consolidated statements of operations is a primary metric utilized by the CODM to analyze the performance of the segment, including budget versus actual performance, and to allocate resources.
Non-GAAP Measures
EBITDA, EBITDAre, and Adjusted EBITDAre
EBITDA, EBITDA re , and Adjusted EBITDA re are 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 EBITDA re . Consistent with the Nareit definition, we define EBITDA re as EBITDA, further adjusted for the following: gain on sale of property, net of tax; and impairment on depreciated real estate investments. Adjusted EBITDA re is defined as EBITDA re before the following items: share-based compensation expense; severance; casualty (gains) losses and reserves, net; and other income and expenses.
EBITDA, EBITDA re , and Adjusted EBITDA re are used as supplemental financial performance measures by management and by external users of our financial statements, such as investors and commercial banks. Set forth below is additional detail on how management uses EBITDA, EBITDA re , and Adjusted EBITDA re as measures of performance.
Our management uses EBITDA, EBITDA re , and Adjusted EBITDA re in a number of ways to assess our consolidated financial and operating performance, and we believe these measures are helpful to management and external users in identifying trends in our performance. EBITDA, EBITDA re , and Adjusted EBITDA re help 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, EBITDA re , and Adjusted EBITDA re provides information useful to investors in assessing our financial condition and results of operations. The GAAP measure most directly comparable to EBITDA, EBITDA re , and Adjusted EBITDA re is net income or loss. EBITDA, EBITDA re , and Adjusted EBITDA re 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 EBITDA, EBITDA re , and Adjusted EBITDA re may not be comparable to the EBITDA, EBITDA re , and Adjusted EBITDA re of other companies due to the fact that not all companies use the same definitions of EBITDA, EBITDA re , and Adjusted EBITDA re . 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, EBITDA re , and Adjusted EBITDA re for each of the periods indicated:
For the Years Ended December 31,
($ in thousands)
Net income available to common stockholders
Net income available to participating securities
Non-controlling interests
Interest expense
Interest expense in unconsolidated joint ventures
Depreciation and amortization
Depreciation and amortization of investments in unconsolidated joint ventures
EBITDA
Gain on sale of property, net of tax
Impairment on depreciated real estate investments
Net (gain) loss on sale of investments in unconsolidated joint ventures
EBITDA re
Share-based compensation expense (1)
Severance expense
Casualty losses and reserves, net (2)
Other, net (3)
Adjusted EBITDA re
(1) For the years ended December 31, 2025, 2024, and 2023, $6,419, $5,830, and $6,963, was recorded in property management expense, respectively, and $21,411, $22,088, and $22,540, was recorded in general and administrative expense, respectively.
(2) The year ended December 31, 2024 included $55,100 of estimated losses and damages related to Hurricanes Milton, Beryl, Debby, and Helene.
(3) Includes settlement and other costs related to certain litigation and regulatory matters, interest income, gains and losses resulting from investments in equity securities, 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, utility expenses, repairs and maintenance, and property administration). NOI excludes: interest expense; depreciation and amortization; property management expense; general and administrative expense; casualty losses, impairment, and other; gain on sale of property, net of tax; other income and expenses; management fee revenues; and (income) losses from investments in unconsolidated joint ventures.
We consider NOI to be a meaningful supplemental financial measure of our performance when considered with the financial statements determined in accordance with GAAP. 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:
Losses from investments in unconsolidated joint ventures
NOI (total portfolio)
Non-Same Store NOI
NOI (Same Store portfolio) (5)
(1) Includes $6,419, $5,830, and $6,963 of share-based compensation expense for the years ended December 31, 2025, 2024, and 2023, respectively.
(2) Includes $21,411, $22,088, and $22,540 of share-based compensation expense for the years ended December 31, 2025, 2024, and 2023, respectively.
(3) The year ended December 31, 2024 included $55,100 of estimated losses and damages related to Hurricanes Milton, Beryl, Debby, and Helene.
(4) Includes settlement and other costs related to certain litigation and regulatory matters, interest income, gains and losses resulting from investments in equity securities, and other miscellaneous income and expenses.
(5) The Same Store portfolio totaled 76,819 homes for the years ended December 31, 2025 and 2024.
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.
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 measure 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 (including adjustments for unconsolidated joint ventures, as applicable): non-cash interest expense related to amortization of deferred financing costs, loan discounts, and non-cash interest expense from derivatives; share-based compensation expense; legal settlements; severance expense; casualty (gains) losses and reserves, net; and (gains) losses on investments in equity and other 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. 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 FFO, Core FFO, and Adjusted FFO for each of the periods indicated:
For the Years Ended December 31,
(in thousands, except shares and per share data)
Net income available to common stockholders
Net income available to participating securities
Non-controlling interests
Depreciation and amortization of real estate assets
Impairment on depreciated real estate investments
Net gain on sale of previously depreciated investments in real estate
Depreciation and net gain on sale of investments in unconsolidated joint ventures
FFO
Non-cash interest expense related to amortization of deferred financing costs, loan discounts, and non-cash interest expense from derivatives (1)
Share-based compensation expense (2)
Legal settlements (3)
Severance expense
Casualty losses and reserves, net (1)(4)
Gains on investments in equity and other securities, net
Core FFO
Recurring capital expenditures (1)
Adjusted FFO
Net income available to common stockholders
Weighted average common shares outstanding — diluted (5)(6)
Net income per common share — diluted (5)(6)
FFO, Core FFO, and Adjusted FFO
Weighted average common shares and OP Units outstanding — diluted (5)(6)
FFO per common share — diluted (5)(6)
Core FFO per common share — diluted (5)(6)
AFFO per common share — diluted (5)(6)
(1) Includes our share from unconsolidated joint ventures.
(2) For the years ended December 31, 2025, 2024, and 2023, $6,419, $5,830, and $6,963, was recorded in property management expense, respectively, and $21,411, $22,088, and $22,540, was recorded in general and administrative expense, respectively.
(3) The year ended December 31, 2024 included $77,000 of settlement costs that resolved an inquiry from the FTC and the legal dispute entitled City of San Diego et al v. Invitation Homes, Inc., inclusive of associated costs.
(4) The year ended December 31, 2024 included $55,100 of estimated losses and damages related to Hurricanes Milton, Beryl, Debby, and Helene.
(5) Incremental shares attributed to non-vested share-based awards totaling 229,485, 1,080,300 and 1,394,924 for the years ended December 31, 2025, 2024, and 2023, 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 626,263, 1,376,141 and 1,638,264 for the years ended December 31, 2025, 2024, and 2023, respectively, related to incremental shares attributed to non-vested share-based awards are included in the denominator.
(6) 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 2,068,892, 1,954,212 and 1,835,686 for the years ended December 31, 2025, 2024, and 2023, respectively, are included in the denominator for the computations of FFO, Core FFO, and AFFO per common share — diluted.
