Subjects: EARNINGS, Share Issue, Bond Issue
Invitation Homes Gives Notice of Intent for Physical Settlement of 2022 Convertible Notes
Invitation Homes Inc. (NYSE: INVH) ("Invitation Homes" or the "Company") today announced that the Company has notified holders of its 3.50% convertible senior notes due 2022 (the "Notes") of the Company's intent to settle conversions of the Notes with common stock. The Notes mature on January 15, 2022, and have a par value of $345 million.
For holders electing conversion on or before January 15, 2022, the Notes will be exchanged for common stock according to a prescribed conversion ratio. As of June 30, 2021, the conversion ratio was 43.9448 shares per $1,000 principal amount of Notes. The actual conversion ratio is subject to adjustment through the date of maturity for cash dividends paid to common stockholders and other potential transactions and certain circumstances.
Assuming the June 30, 2021, conversion ratio of 43.9448 shares per $1,000 principal amount of Notes, settlement of the $345 million (par value) of Notes would result in the issuance of approximately 15 million common shares and a reduction in cash interest expense of approximately $12 million on an annualized basis.
On a pro forma basis, whereby net debt is reduced for the impact of the conversion of the Notes, net debt / Trailing Twelve Months Adjusted EBITDAre at March 31, 2021, would have been 6.8x versus 7.1x as reported by the Company in its first quarter 2021 Earnings Release and Supplemental Information.
Reconciliation of Net Debt / Trailing Twelve Months Adjusted EBITDAre |
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(in thousands, unaudited) |
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3/31/21 |
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Pro Forma |
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3/31/21 |
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As Reported |
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Adjustments(1) |
|
Pro Forma |
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Mortgage loans, net |
|
$ |
4,808,085 |
|
|
|
$ |
? |
|
|
|
$ |
4,808,085 |
|
|
|
Secured term loan, net |
|
401,149 |
|
|
|
? |
|
|
|
401,149 |
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|
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|||
Term loan facility, net |
|
2,472,718 |
|
|
|
? |
|
|
|
2,472,718 |
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|
|
|||
Convertible senior notes, net |
|
340,730 |
|
|
|
(340,730 |
) |
|
|
? |
|
|
|
|||
Total Debt per Balance Sheet |
|
8,022,682 |
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|
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(340,730 |
) |
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7,681,952 |
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|
|
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Retained and repurchased certificates |
|
(246,798 |
) |
|
|
? |
|
|
|
(246,798 |
) |
|
|
|||
Cash, ex-security deposits and letters of credit |
|
(247,041 |
) |
|
|
? |
|
|
|
(247,041 |
) |
|
|
|||
Deferred financing costs, net |
|
40,610 |
|
|
|
? |
|
|
|
40,610 |
|
|
|
|||
Unamortized discounts on notes payable |
|
6,471 |
|
|
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(4,270 |
) |
|
|
2,201 |
|
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Net Debt (A) |
|
$ |
7,575,924 |
|
|
|
$ |
(345,000 |
) |
|
|
$ |
7,230,924 |
|
|
|
|
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|
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Trailing Twelve Months (TTM) Ended |
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|
3/31/21 |
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Pro Forma |
|
3/31/21 |
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As Reported |
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Adjustments |
|
Pro Forma |
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Net income available to common stockholders(2) |
|
$ |
203,182 |
|
|
|
$ |
17,246 |
|
|
|
$ |
220,428 |
|
|
|
Net income available to participating securities |
|
441 |
|
|
|
? |
|
|
|
441 |
|
|
|
|||
Non-controlling interests |
|
1,272 |
|
|
|
? |
|
|
|
1,272 |
|
|
|
|||
Interest expense |
|
352,572 |
|
|
|
(17,246 |
) |
|
|
335,326 |
|
|
|
|||
Interest expense in unconsolidated joint ventures |
|
74 |
|
|
|
? |
|
|
|
74 |
|
|
|
|||
Depreciation and amortization |
|
562,004 |
|
|
|
? |
|
|
|
562,004 |
|
|
|
|||
Depreciation and amortization of real estate assets in unconsolidated joint ventures |
|
104 |
|
|
|
? |
|
|
|
104 |
|
|
|
|||
EBITDA |
|
1,119,649 |
|
|
|
? |
|
|
|
1,119,649 |
|
|
|
|||
Gain on sale of property, net of tax |
|
(53,878 |
) |
|
|
? |
|
|
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(53,878 |
) |
|
|
|||
Impairment on depreciated real estate investments |
|
2,538 |
|
|
|
? |
|
|
|
2,538 |
|
|
|
|||
Net gain on sale of investments in unconsolidated joint ventures |
|
(336 |
) |
|
|
? |
|
|
|
(336 |
) |
|
|
|||
EBITDAre |
|
1,067,973 |
|
|
|
? |
|
|
|
1,067,973 |
|
|
|
|||
Share-based compensation expense |
|
18,803 |
|
|
|
? |
|
|
|
18,803 |
|
|
|
|||
Severance |
|
715 |
|
|
|
? |
|
|
|
715 |
|
|
|
|||
Casualty (gains) losses, net |
|
(4,613 |
) |
|
|
? |
|
|
|
(4,613 |
) |
|
|
|||
Unrealized (gains) losses on investments in equity securities |
|
(26,549 |
) |
|
|
? |
|
|
|
(26,549 |
) |
|
|
|||
Other, net |
|
3,536 |
|
|
|
? |
|
|
|
3,536 |
|
|
|
|||
Adjusted EBITDAre (B) |
|
1,059,865 |
|
|
|
$ |
? |
|
|
|
$ |
1,059,865 |
|
|
|
|
|
|
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Net debt / TTM Adjusted EBITDAre (A/B) |
|
7.1 |
|
x |
|
|
|
6.8 |
|
x |
|
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- Does not include adjustments for refinancing or voluntary prepayments of securitized loans after 3/31/2021.
- Pro forma adjustment for $17,246 of interest expense associated with the Notes for TTM ended 3/31/2021 includes $5,171 of non-cash amortization of fair value discount. Cash interest expense associated with the Notes for TTM ended 3/31/2021 was $12,075.
About Invitation Homes:
Invitation Homes is the nation's premier single-family home leasing company, meeting changing lifestyle demands by providing access to high-quality, updated homes with valued features 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 providing homes where individuals and families can thrive and high-touch service that continuously enhances residents' living experiences.
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