INVH Invitation Homes
SFR leader trading at discount; rate cuts and sticky rental demand unlock value.
The story
Largest institutional SFR operator with ~85k homes; demand driven by structural unaffordability of homeownership and demographic tailwinds. Balance sheet is investment-grade but carries floating-rate exposure that pressures AFFO in a higher-for-longer regime. Revenue grew 6.8% CAGR but margin volatility and rising property taxes/insurance create headwinds to AFFO conversion.
Trimming Y1 growth from 5.5% to 5% reflects margin compression from insurance/property tax escalation despite solid same-store revenue growth. AFFO ratio nudged to 0.83 as capex runs ~17% of FFO, consistent with aging single-family portfolio maintenance needs. Terminal growth at 3.5% stays below risk-free rate, acknowledging long-term rent growth constraints from wage inflation correlation.
Value drivers
| AFFO growth (Y1) | 5.0% |
| Terminal AFFO growth | 3.5% |
| AFFO / FFO ratio | 83.0% |
| Beta | 0.85 |
| Failure probability | 1.0% |
| Cost of equity | 8.6% |
Valuation bridge
| PV of AFFO (explicit) | 9.64B |
| PV of terminal value | 15.92B |
| Equity value | 25.31B |
| ÷ shares → per share | $42.61 |
News
neutral +0.15 · 8 articles
- Key Reasons to Add Invitation Homes Stock to Your Portfolio Now
- Why Is Invitation Home (INVH) Down 1.5% Since Last Earnings Report?
- Invitation Homes (INVH) Q2 2026 Earnings Call Transcript
- A High-Yield Dividend Bundle for Income Investors to Buy in August
- Is Invitation Homes (INVH) Cheap When Earnings Look Fair?
- Invitation Home Q2 Earnings Call Highlights
- Do Wall Street Analysts Like Invitation Homes Stock?
- Invitation Homes Inc (INVH) (Q2 2026) Earnings Call Highlights: Core FFO Grows 5%, Share ...
Projected AFFO
| Yr | FFO | AFFO | Growth | PV |
|---|---|---|---|---|
| 1 | 1.50B | 1.24B | 5.0% | 1.14B |
| 2 | 1.57B | 1.30B | 4.8% | 1.10B |
| 3 | 1.64B | 1.36B | 4.7% | 1.06B |
| 4 | 1.72B | 1.43B | 4.5% | 1.02B |
| 5 | 1.79B | 1.49B | 4.3% | 984.09M |
| 6 | 1.87B | 1.55B | 4.2% | 943.83M |
| 7 | 1.94B | 1.61B | 4.0% | 903.78M |
| 8 | 2.02B | 1.67B | 3.8% | 864.04M |
| 9 | 2.09B | 1.73B | 3.7% | 824.72M |
| 10 | 2.16B | 1.79B | 3.5% | 785.93M |
Key risks
- Persistent high rates pressure valuations and floating-rate debt costs
- Property insurance and tax escalation outpacing rent growth
- Single-family home supply growth in Sun Belt markets eroding pricing power
Catalysts
- Fed rate cuts would re-rate SFR cap rates and reduce interest expense
- Continued homeownership unaffordability sustaining rental demand
- Operational margin recovery as bad debt and turnover normalize