Invitation Homes Reports Third Quarter 2017 Results

DALLAS, Nov. 8, 2017 /PRNewswire/ -- Invitation Homes Inc. (NYSE: INVH) ("Invitation Homes" or the "Company"), a leading owner and operator of single-family homes for lease in the United States, today announced its third quarter 2017 financial and operating results.

 Third Quarter 2017 Highlights

• Year-over-year, total revenues increased 4.5% to $244 million, total property operating and maintenance expenses decreased 1.0% to $93 million, net loss increased to $23 million, and total NOI increased 8.3% to $150 million.
• Same Store NOI grew 8.1% year-over-year on 4.7% Same Store revenue growth and a 0.3% decrease in Same Store operating expenses.
• Same Store Core NOI margin increased to 62.7% in the third quarter of 2017 from 60.4% in the third quarter of 2016.
• Same Store blended net effective rental rate growth was 4.3% on leases signed in the third quarter of 2017.
• Same Store average occupancy was 95.4%, down 10 basis points from the prior year.
• Same Store period-end occupancy was 95.8% at September 30, 2017.
• Same Store other property income grew 17.8% year-over-year.
• Same Store total cost to maintain declined 1.9% year-over-year.
• As previously announced, Invitation Homes reached a definitive agreement to combine with Starwood Waypoint Homes in a 100% stock-for-stock merger of equals transaction. The transaction is expected to close in the fourth quarter of 2017.

Chief Executive Officer John Bartling comments:  "Same Store NOI growth continued to accelerate in the third quarter of 2017, keeping us on track to achieve our targeted full year 2017 Same Store NOI growth of 6.8%-7.2%.  Fundamentals in our markets remain supportive, and the value of our product and services continues to be well-received, allowing us to achieve another quarter of 5% renewal rate growth, with lower turnover rates than last year.  We also continue to become more efficient on the cost side of the business, driving controllable expenses approximately 3% lower year-over-year in the third quarter."

"We are excited to finish strong on what has been a very active 2017.  This has been a year of many milestones, from our IPO, to the industry's first Fannie Mae financing, to a strong year of operational performance, all of which we expect to cap off with the closing of our transformational merger with Starwood Waypoint Homes in the fourth quarter.  Teams at both Invitation Homes and Starwood Waypoint Homes are energized and building strong momentum behind an advanced integration plan.  We continue to believe this merger will create the premier single-family rental portfolio in the United States, and an unparalleled ability to deliver enhanced service to our residents more efficiently than ever before, as well as enhanced liquidity to our shareholders."

Financial Results

Net Loss
Net loss for the three months ended September 30, 2017 was $22.5 million, an increase of $0.6 million from the prior year.  The increase in net loss was primarily due to higher general and administrative, property management, and impairment and other expenses, partially offset by higher revenues and lower interest expense.  The increase in general and administrative and property management expenses included a $7.8 million increase in non-recurring expenses related to share-based compensation, IPO costs, merger costs, and severance.  The increase in impairment and other expense was due primarily to a $16.0 million accrual for Hurricane Irma damage.  Exclusive of the non-recurring G&A and property management items and the Hurricane Irma damage accrual, net income (loss) improved by $23.2 million from the prior year.

Net loss for the nine months ended September 30, 2017 was $59.4 million, an increase of $7.8 million from the prior year.  The increase in net loss was primarily due to higher general and administrative, property management, and impairment and other expenses, partially offset by higher revenues, lower interest expense, and higher net gain on sale of property.  The increase in general and administrative and property management expenses included a $58.7 million increase in non-recurring expenses related to share-based compensation, IPO costs, merger costs, and severance.  The increase in impairment and other expense was due primarily to a $16.0 million accrual for Hurricane Irma damage.  Exclusive of the non-recurring G&A and property management items and the Hurricane Irma damage accrual, net income (loss) improved by $66.9 million from the prior year.  For details, see the Condensed Consolidated Statements of Operations in this press release.

Core FFO
Year-over-year, Core FFO for the three months ended September 30, 2017 increased 20.3% to $75.4 million, primarily due to an increase in NOI, driven by higher revenues.  Revenue growth was driven by an increase in average rental rate per home and higher occupancy that more than offset a slight decline in home count.  Lower interest expense, net of non-cash interest, also contributed to the increase in Core FFO.

Core FFO for the nine months ended September 30, 2017 increased 19.9% to $230.8 million, primarily due to an increase in NOI, driven by higher revenues.  Revenue growth was driven by an increase in average rental rate per home and higher occupancy that more than offset a slight decline in home count.  Lower interest expense, net of non-cash interest, also contributed to the increase in Core FFO.  For a reconciliation of net loss to Core FFO, see the Glossary and Reconciliations section of this press release.

AFFO
Year-over-year, AFFO for the three months ended September 30, 2017 increased 28.3% to $62.0 million, primarily driven by the increase in Core FFO described above, as well as a 6.5% decline in recurring capital expenditures.

AFFO for the nine months ended September 30, 2017 increased 26.6% to $196.5 million, primarily driven by the increase in Core FFO described above, as well as an 8.1% decline in recurring capital expenditures.  For a reconciliation of net loss to AFFO per share, see the Glossary and Reconciliations section of this press release.

Operating Results

Same Store NOI
For the Same Store portfolio of 42,795 homes, third quarter 2017 Same Store NOI increased 8.1% year-over-year on Same Store revenue growth of 4.7% and a 0.3% decrease in Same Store expenses.  As a result, Core NOI margin increased to 62.7% in the third quarter of 2017 from 60.4% in the third quarter of 2016.

YTD 2017 Same Store NOI increased 6.7% year-over-year on Same Store revenue growth of 4.7% and Same Store expense growth of 1.5%.  As a result, Core NOI margin increased to 63.3% in YTD 2017 from 61.8% in YTD 2016.

Same Store Revenues
Third quarter 2017 Same Store revenue growth of 4.7% was driven by a 4.2% increase in average monthly rent and a 17.8% increase in other property income, partially offset by a 0.1% decline in average occupancy to 95.4%.

YTD 2017 Same Store revenue growth of 4.7% was driven by a 4.3% increase in average monthly rent and a 20.7% increase in other property income, partially offset by a 0.3% decline in average occupancy to 95.8%.

Same Store Expenses
Third quarter 2017 Same Store expenses decreased 0.3% year-over-year, driven by 15.4% lower personnel expense, 9.1% lower turnover expense, 7.4% lower insurance expense, and 7.4% lower leasing & marketing expense.

YTD 2017 Same Store expenses increased 1.5% year-over-year, driven primarily by 6.9% higher property taxes, including a 20.1% increase in California property taxes resulting primarily from accruals for estimated Prop 13-related reassessments triggered by the Company's IPO.  Controllable expenses were 2.2% lower year-over-year, driven by a 16.6% decline in personnel expense and a 12.1% decline in leasing & marketing expense.  Insurance expense was also lower by 14.6% year-over-year.

Investment Management Activity
In the third quarter of 2017, the Company acquired 270 homes for $77.3 million, including estimated renovation cost, and sold 128 homes for gross proceeds of $25.4 million, resulting in total portfolio home count at September 30, 2017 of 47,867 homes.  Dispositions in the third quarter of 2017 resulted in a gain on sale, net of tax, of approximately $3.8 million.

Year-to-date, the Company acquired 620 homes for $172.6 million, including estimated renovation cost, and sold 1,051 homes for gross proceeds of $161.8 million.  Dispositions year-to-date resulted in a gain on sale, net of tax, of approximately $28.2 million.

Update on Hurricane Irma Impact
In the third quarter of 2017, the Company's Florida and Atlanta markets experienced primarily minor wind damage as a result of Hurricane Irma.  Fortunately, no injuries to residents or associates were reported, and the Company responded quickly to provide assistance to residents and impacted communities.

Damage was primarily limited to roofing, fencing, and landscaping issues.  In line with its initial assessment, the Company accrued $16 million of casualty loss expense in the third quarter of 2017, a portion of which may be recoverable through insurance policies that provide coverage for wind, flood, and business interruption, subject to deductibles and limits.

Proposed Merger with Starwood Waypoint Homes
On August 10, 2017, Invitation Homes and Starwood Waypoint Homes announced the signing of a definitive agreement to combine in a 100% stock-for-stock merger-of-equals transaction.  The combined company, which will operate under the name "Invitation Homes," will bring together the best practices, technology, and personnel from both firms to create the premier single-family rental company in the United States.  The combination of these two industry innovators will produce a company with an unparalleled ability to deliver enhanced service offerings to residents more efficiently, continue investing in local communities, and generate substantial value for stockholders.

Under the terms of the agreement, each Starwood Waypoint Homes share will be converted into 1.614 Invitation Homes shares, based on a fixed exchange ratio.  The all-stock merger is intended to be a tax-free transaction.  Upon the closing of the transaction, Invitation Homes stockholders will own approximately 59% of the combined company's stock, while Starwood Waypoint Homes stockholders will own approximately 41% of the combined company's stock.  The combined company's shares are expected to continue trading on the New York Stock Exchange under the ticker symbol for Invitation Homes (NYSE: INVH).

The combined company is expected to generate projected annual run-rate cost synergies of $45-50 million, with potential additional upside from the implementation of best practices to optimize operating efficiency.  The transaction is expected to be accretive to core FFO and AFFO on a run-rate basis.  The combined company is also expected to benefit from a flexible balance sheet with lower long-term cost of capital and a continued path towards deleveraging.  The transaction will also significantly increase the free float of Invitation Homes' shares and reduce Blackstone's ownership stake in the combined company to approximately 41% from approximately 70% in the current, stand-alone Invitation Homes.  The quarterly dividend is expected to be $0.11 per share post-close.

The transaction has been unanimously approved by the boards of both Starwood Waypoint Homes and Invitation Homes. Following the execution of the definitive merger agreement, Blackstone, the majority stockholder of Invitation Homes, delivered a written consent approving the issuance of Invitation Homes common stock in the merger and the other transactions contemplated by the merger agreement.  Starwood Waypoint Homes has scheduled a special meeting of its shareholders on Tuesday, November 14, 2017 starting at 8:00 a.m., Central Time to vote on a proposal to approve the proposed merger.  The transaction is expected to close by year-end 2017, subject to approval by Starwood Waypoint Homes stockholders and other customary closing conditions.

Balance Sheet and Capital Markets Activity
At September 30, 2017, the Company had $1,134 million in availability through a combination of unrestricted cash and undrawn capacity on its credit facility.  The Company's total indebtedness at September 30, 2017 was $5,677 million, consisting of $4,177 million of secured debt and $1,500 million of unsecured debt.

Subsequent to quarter end, the Company priced a seven-year (inclusive of extension options), floating rate securitization loan with total principal amount of $865 million, of which the Company will retain $43 million to comply with risk retention requirements.  The transaction is expected to close in November 2017.  Total cost of funds for the loan is expected to be Libor + 144 basis points.  Net proceeds are expected to be used to repay IH 2014-2 and IH 2014-3, to fund certain reserves, and for general corporate purposes.  The securitization transaction and associated repayments are expected to result in net annual interest expense savings of $4.8 million.

After giving effect to the pending securitization and associated repayment activity, weighted average years to maturity at September 30, 2017 would have been 5.1 years, with no debt scheduled to mature before March 2020.  82% of debt would have been fixed rate or swapped to fixed rate, and the weighted average interest rate on total debt during the quarter would have been 3.65%.

Full Year 2017 Guidance

The Company has updated its FY 2017 Same Store revenue growth guidance to 4.7% - 4.9% from 4.75 - 5.25% previously.  The majority of the decrease at the midpoint is attributable to Hurricane Irma's temporary interruption of leasing activity in Florida during the third quarter of 2017.

Note:  The Company does not provide guidance for the most comparable GAAP financial measures of net income (loss), total revenues, and property operating and maintenance, or a reconciliation of the forward-looking non-GAAP financial measures of Core FFO per share, AFFO per share, Same Store revenue growth, Same Store operating expense growth, Same Store NOI growth, and Same Store Core NOI margin to the comparable GAAP financial measures because it is unable to reasonably predict certain items contained in the GAAP measures, including non-recurring and infrequent items that are not indicative of the Company's ongoing operations.  Such items include, but are not limited to, impairment on depreciated real estate assets, net (gain)/loss on sale of previously depreciated real estate assets, share-based compensation, casualty loss, non-Same Store revenues, and non-Same Store operating expenses.  These items are uncertain, depend on various factors, and could have a material impact on our GAAP results for the guidance period.

Earnings Conference Call Information
Invitation Homes has scheduled a conference call at 11:00 a.m. Eastern Time on Thursday, November 9, 2017 to discuss results for the three months ended September 30, 2017.  The domestic dial-in number is 1-888-317-6003, and the international dial-in number is 1-412-317-6061.  The passcode is 4736703.  An audio webcast may be accessed at www.invh.com.  A replay of the call will be available through December 9, 2017, and can be accessed by calling 1-877-344-7529 (domestic) or 1-412-317-0088 (international) and using the replay passcode 10113181, or by using the link at www.invh.com.

Supplemental Information
The full text of the Earnings Release and Supplemental Information referenced in this release are available on Invitation Homes' Investor Relations website at www.invh.com.

Glossary & Reconciliations of Non-GAAP Financial Operating Measures
Financial and operating measures found in the Earnings Release and Supplemental Information include certain measures used by Invitation Homes management that are measures not defined under accounting principles generally accepted in the United States ("GAAP").  These measures are defined in the Glossary and Reconciliations section of this press release and the Supplemental Information, and as applicable, reconciled to the most comparable GAAP measures.

About Invitation Homes
Invitation Homes is a leading owner and operator of single-family homes for lease, offering residents high-quality homes in desirable neighborhoods across America. With nearly 50,000 homes for lease in 13 markets across the country, Invitation Homes is meeting changing lifestyle demands by providing residents access to updated homes with features they value, such as close proximity to jobs and access to good schools.  The company's mission, "Together with you, we make a house a home," reflects its commitment to high-touch service that continuously enhances residents' living experiences and provides homes where individuals and families can thrive.

Investor Relations Contact

Greg Van Winkle
Phone: 844.456.INVH (4684)
Email: IR@InvitationHomes.com

Media Relations Contact

Claire Parker
Phone: 202.257.2329
Email: Media@InvitationHomes.com

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which include, but are not limited to, statements related to the Company's expectations regarding the anticipated benefits of the proposed merger with Starwood Waypoint Homes, the performance of the Company's business, its financial results, its liquidity and capital resources, and other non-historical statements.  In some cases, you can identify these forward-looking statements by the use of words such as "outlook," "believes," "expects," "potential," "continues," "may," "will," "should," "could," "seeks," "projects," "predicts," "intends," "plans," "estimates," "anticipates" or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties, including, among others, risks associated with our ability to consummate the merger and the timing of the closing of the merger, risks associated with achieving expected revenue synergies or cost savings, risks inherent to the single-family rental industry sector and the Company's business model, macroeconomic factors beyond the Company's  control, competition in identifying and acquiring the Company's properties, competition in the leasing market for quality residents, increasing property taxes, homeowners' association fees and insurance costs, the Company's dependence on third parties for key services, risks related to evaluation of properties, poor resident selection and defaults and non-renewals by the Company's residents, performance of the Company's information technology systems, and risks related to the Company's indebtedness. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements.  Additional factors that could cause the Company's results to differ materially from those described in the forward-looking statements can be found under (i) the section entitled "Part I-Item 1A. Risk Factors," of the Annual Report on Form 10-K for the fiscal year ended December 31, 2016, filed with the Securities and Exchange Commission (the "SEC") and (ii) the caption entitled "Risk Factors" in the Company's definitive joint proxy statement/information statement and prospectus filed with the SEC under Rule 424(b)(3), as such factors may be updated from time to time in the Company's periodic filings with the SEC, which are accessible on the SEC's website at http://www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release and in the Company's filings with the SEC. The forward-looking statements speak only as of the date of this press release, and we expressly disclaim any obligation or undertaking to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except to the extent otherwise required by law.

Additional Information about the Proposed Transaction and Where to Find It
This communication relates to the Merger.

In connection with the Merger, INVH has filed with the SEC a registration statement on Form S-4 (File No. 333- 220543) that includes a joint proxy statement of SFR and information statement of INVH that also constitutes a prospectus, which joint proxy statement/information statement and prospectus was first mailed or otherwise disseminated to INVH stockholders and SFR shareholders on October 16, 2017. INVH and SFR have each filed a joint proxy statement/information statement and prospectus and also plan to file other relevant documents with the SEC regarding the Merger. INVESTORS ARE URGED TO READ THE JOINT PROXY STATEMENT/INFORMATION STATEMENT AND PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC BECAUSE THEY CONTAIN IMPORTANT INFORMATION. You may obtain a free copy of the joint proxy statement/information statement and prospectus and other relevant documents (if and when they become available) filed by INVH and SFR with the SEC at the SEC's website at www.sec.gov. Copies of the documents filed by INVH with the SEC will be available free of charge on INVH's website at www.invitiationhomes.com or by emailing INVH Investor Relations at ir@invitationhomes.com or at 844-456-4684. Copies of the documents filed by SFR with the SEC will be available free of charge on SFR's website at www.starwoodwaypoint.com or by contacting SFR Investor Relations at ir@colonystarwood.com or at 480-800-3490.

Certain Information Regarding Participants in the Solicitation
INVH and SFR and certain of their respective trustees, directors and executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies in respect of the Merger. You can find information about INVH's executive officers and directors in INVH's Annual Report on Form 10-K for the year ended December 31, 2016, its Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2017 and its Current Reports of Form 8-K filed with the SEC on February 6, 2017, March 20, 2017, June 29, 2017, August 14, 2017, September 19, 2017 and November 6, 2017. You can find information about SFR's executive officers and trustees in SFR's Annual Report on Form 10-K for the year ended December 31, 2016, its Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2017 and June 30, 2017, and its Definitive Proxy Statement on Schedule 14A filed with the SEC on March 31, 2017 in connection with its 2017 annual meeting of shareholders. Additional information regarding the interests of such potential participants is included in the joint proxy statement/information statement and prospectus and other relevant documents filed or to be filed with the SEC. You may obtain free copies of these documents from INVH or SFR using the sources indicated above.

No Offer or Solicitation
This document shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended.

Glossary and Reconciliations

Glossary:

Average Estimated Invested Basis
Average estimated cost basis on acquisition represents the sum of purchase price, any closing adjustments, and estimated upfront renovation expense for an acquired home or population of homes.

Average Monthly Rent
Average monthly rent represents the average of the contracted monthly rent for occupied properties in an identified population of homes for the relevant period and reflects rent concessions amortized over the life of the related lease.

Average Occupancy
Average occupancy for an identified population of homes represents (i) the number of days that the homes available for lease in such population were occupied, divided by (ii) the total number of available days in the measurement period for the homes in that population.

Core NOI Margin
Core NOI margin for an identified population of homes is calculated by dividing NOI by total revenues, net of resident recoveries attributable to such population.

EBITDA and Adjusted EBITDA
EBITDA and Adjusted EBITDA 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; and depreciation and amortization. Adjusted EBITDA is defined as EBITDA before the following items: share-based compensation expense; IPO related expenses, merger and transaction-related costs, impairment and other; acquisition costs; gain (loss) on sale of property, net of tax; and interest income and other miscellaneous income and expenses. EBITDA and Adjusted EBITDA 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 and Adjusted EBITDA as measures of performance.

The GAAP measure most directly comparable to EBITDA and Adjusted EBITDA is net income or loss. EBITDA and Adjusted EBITDA 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 and Adjusted EBITDA may not be comparable to the EBITDA and Adjusted EBITDA of other companies due to the fact that not all companies use the same definitions of EBITDA and Adjusted EBITDA. Accordingly, there can be no assurance that our basis for computing these non-GAAP measures is comparable with that of other companies.

See "Reconciliation of Non-GAAP Measures" below for a reconciliation of GAAP net income (loss) to EBITDA and Adjusted EBITDA.

Funds from Operations (FFO), Core Funds from Operations (Core FFO), and Adjusted Funds from Operations (AFFO)
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 the National Association of Real Estate Investment Trusts ("NAREIT") as net income or loss (computed in accordance with GAAP) excluding net gains or losses from sales of previously depreciated real estate assets, plus depreciation, amortization and impairment of real estate assets, and adjustments for unconsolidated partnerships and 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, as well as gains or losses related to sales of previously depreciated homes, from GAAP net income or loss.

The GAAP measure most directly comparable to FFO is net income or loss. FFO is not used as a measure of our liquidity and should not be considered an alternative to net income or loss or any other measure of financial performance presented in accordance with GAAP. Our FFO may not be comparable to the FFO of other companies due to the fact that not all companies use the same definition of FFO. Accordingly, there can be no assurance that our basis for computing this non-GAAP measures is comparable with that of other companies.

We believe that Core FFO and Adjusted FFO are also meaningful supplemental measures of our operating performance for the same reasons as FFO and are further helpful to investors as they provides 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 noncash interest expense related to amortization of deferred financing costs and discounts related to our financing arrangements, noncash interest expense for derivatives, share-based compensation expense, IPO related expenses, merger and transaction-related costs, severance expenses, casualty losses, net, and acquisition costs, as applicable. We define Adjusted FFO as Core FFO less recurring capital expenditures that are necessary to help preserve the value of and maintain 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 this non-GAAP measures is comparable with that of other companies.

Please see "Reconciliation of Non-GAAP measures" below for a reconciliation of GAAP net income (loss) to FFO, Core FFO, and Adjusted FFO.

Net Effective Rental Rate Growth
Net effective rental rate growth for any home represents the difference between the monthly rent from an expiring lease and the monthly rent from the next lease, in each case, net of any amortized concessions. Leases are either renewal leases, where our current resident chooses to stay for a subsequent lease term, or a new lease, where our previous resident moves out and a new resident signs a lease to occupy the same home.  Blended net effective rental rate growth represents the blended average of net effective rental rate growth for both new and renewal leases.

Net Operating Income (NOI)
NOI is a non-GAAP measure often used to evaluate the performance of real estate companies. We define NOI for an identified population of homes as rental revenues and other property income less property operating and maintenance expense (which consists primarily of property taxes, insurance, HOA fees (when applicable), market-level personnel expenses, repairs and maintenance, leasing costs and marketing). NOI excludes: interest expense; depreciation and amortization; general and administrative expense; property management expense; impairment and other; acquisition costs; (gain) loss on sale of property, net of tax; and interest income and other miscellaneous income and expenses.

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.

See "Reconciliation of Non-GAAP Measures" below for a reconciliation of GAAP net income (loss) to NOI for our total portfolio and NOI for our Same Store portfolio.

Northern California
Northern California includes Modesto, CA, Napa, CA, Oakland-Fremont-Hayward, CA, Sacramento-Arden-Arcade-Roseville, CA, San Jose-Sunnyvale-Santa Clara, CA, Stockton-Lodi, CA, Vallejo-Fairfield, CA and Yuba City, CA.

PSF
PSF means per square foot.

Same Store / Same Store Portfolio
Same Store or Same Store portfolio includes, for a given reporting period, homes that have been stabilized (defined as homes that have (i) completed an upfront renovation and (ii) entered into at least one post-renovation Invitation Homes lease) for at least 90 days prior to the first day of the prior-year measurement period and excludes homes that have been sold and homes that have been designated for sale but have not yet entered into a written sale agreement during such reporting period. Same Store portfolios are established as of January 1st of each calendar year. Therefore, any home included in the Same Store portfolio will have satisfied the conditions described in clauses (i) and (ii) above prior to October 3rd of the year prior to the first year of the comparison period. We believe presenting information about the portion of our portfolio that has been fully operational for the entirety of a given reporting period and its prior year comparison period provides investors with meaningful information about the performance of our comparable homes across periods and about trends in our organic business.

South Florida
South Florida includes Fort Lauderdale-Pompano Beach-Deerfield Beach, FL, Key West, FL, Miami-Miami Beach-Kendall, FL and West Palm Beach-Boca Raton-Delray Beach, FL.

Southern California
Southern California includes Anaheim-Santa Ana-Irvine, CA, Los Angeles-Long Beach-Glendale, CA, Oxnard-Thousand Oaks-Ventura, CA, Riverside-San Bernardino-Ontario, CA and San Diego-Carlsbad-San Marcos, CA.

Total Cost to Maintain
Total cost to maintain a home represents the sum of average maintenance and turnover expense per home (gross) and average capital expenditures per home, in each case before giving effect to any offsetting income received directly from residents or withheld out of resident security deposits.

Total Homes / Total Portfolio
Total homes or total portfolio refers to the total number of homes we own, whether or not stabilized, and excludes any properties previously acquired in purchases that have been subsequently rescinded or vacated.

Turnover Rate
Turnover rate represents the number of instances that homes in an identified population become unoccupied in a given period, divided by the number of homes in such population. To the extent the measurement period shown is less than 12 months, the turnover rate will be reflected on an annualized basis.

Reconciliation of Non-GAAP Measures:

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SOURCE Invitation Homes