Invitation Homes misses Q4 AFFO estimates as fixed expenses rise

By Thomson Reuters Feb 13, 2024 | 4:01 PM

(Reuters) – Invitation Homes missed Wall Street estimates for fourth-quarter adjusted funds from operation (AFFO) per share on Tuesday, as fixed expenses, including property tax, rose year-on-year.

Fourth-quarter AFFO per share of 38 cents came in below analysts’ estimates of 44 cents per share, according to LSEG data.

While the company has hiked rental rates due to high demand for single-family rentals in a high-interest environment, fixed costs have also risen in an inflationary environment.

The real estate investment trust (REIT), which has about 80,000 homes for lease in 16 markets across the U.S., reported revenue of $624.3 million for the quarter that ended December, 7.7% higher than last year, beating analysts’ estimate of $623.6 million.

Meanwhile, the company is experiencing higher same-store property tax rates in its key markets of Florida and Georgia, further putting pressure on profits.

Same store core operating expenses, however, increased 6.6% in the quarter, due to a 7.9% increase in fixed expenses and a 4.2% increase in controllable expenses.

The Dallas, Texas-based REIT reported flat growth in same-store new lease rent growth, which is the rental hike offered to new tenants.

Shares of the company were up 1.7% at $32.8 in extended trading.

(Reporting by Ananta Agarwal and Kannaki Deka in Bengaluru; Editing by Tasim Zahid)