This morning Long Bias INVH announced an encouraging further acceleration in leasing spreads, as well as receipt of a letter from the FTC requesting information on its business, in addition to participation in several industry conferences:
- In the interest of saving time, Figure 1 below lays out the trend in leasing spreads from the press release. The key point here is that the acceleration in growth for both renewals and new leases increases the probability that 2H21 rental rate growth in the same store pools for BOTH AMH & INVH surpasses the mid-single-digit level into the high-single digit range
- There is zero chance that Street estimates capture that degree of rental rate growth acceleration, particularly in FY22 capturing the flow-through from higher base level rates
- The math continues to indicate that consensus FY23 estimates are perhaps ~12-15% too low for AMH and approaching ~10% for INVH
- Additionally, INVH disclosed that the FTC sent the company a letter recently requesting information on "how the Company conducts business generally and during the pandemic specifically." We spoke and wrote recently about how there would likely be political pushback and/or headline risk amidst this unprecedented acceleration in apartment and SFR rental rates nationally. We remain Long SFR and view any share price weakness as an opportunity to accumulate, as both the fundamentals and signals say these stocks are headed higher. AMH remains the fastest horse
Figure 1: INVH 3Q21 Leasing Update
Please call or e-mail with any questions.
Rob Simone, CFA
Managing Director
Twitter: @HedgeyeREITs
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