Hedgeye Cartoon of the Day: Sh*tshow
It is 7.28.22, and Active Short Medical Properties Trust (MPW) is overvalued by approximately ~$16.81/share. Studio day today at 10am ET. We think the equity is very likely worthless. If they try to sell you guys an equity offering, demand a ~20% VIG. You're sending them money, which will be sent to Steward, which will be sent back to MPW as rent, which will be sent back to you as a dividend. Until its cut... and then you will be left holding the bag. The management team and the bankers are the only winners in this circular arrangement.
Ticker: INVH
Subsector: Single-Family Rentals
Headline: We think Active Short INVH's margins are unsustainable and peaking
- Active Short INVH 2Q22 Core FFO of $0.42/share, while exceeding FactSet by +$0.01/share, missed Hedgeye by -$0.02/share. The top line was essentially right on top of our model (see Figure 1 below), with the delta driven by -$0.01/share from higher opex and -$0.01/share from higher prop. management expense plus rounding.
- The initial focus will probably be on the top line (backwards looking) and spreads (which we think are in the process of topping), but we think something more important is happening under the surface re: margins. In our view anyone modeling this company correctly should have already been there on 2Q top-line numbers anyway.
- Look at some of these expense numbers:
- SS turnover / turned home: +14% y/y vs. +2.8% in 1Q despite a tougher base effect
- SS R&M: +15.2% y/y absolute and +15.7% y/y on a per occupied home basis following +19% absolute in 1Q
- SS utilities: +25.7% y/y
- Core prop. mgmt. (excl. stock-based comp.): +25.2% y/y
- And property taxes are still increasing sub-5% per year! What happens when that number shifts to 6-7% annual growth?
- The point is that with top-line growth likely peaking amidst a stressed consumer + efforts to push rate creating additional vacancy + turnover costs rising + opex accelerating BEFORE property taxes really start to bite = margins are structurally high and poised to decline. We do not think too many people are underwriting that. Our guess is that 4Q22 (and perhaps 3Q22) numbers are too high setting up a miss, and FY23 numbers for sure need to come down.
- Keep in mind too that INVH, similar to ESS, was the beneficiary of "CA helicopter money."
- With all of that said, separately we are awaiting the judge's decision in the qui tam lawsuit - we think 60/40 it is allowed to proceed and the MTD is denied. Discovery can both commence and continue during the intervening period, depending on how long the court takes to "rule on paper."
Figure 1: INVH 2Q22 Earnings Variances
Source: Company Reports, Hedgeye
Prior Notes:
7.26.22 - HIGH QUALITY 2Q22 BEAT OUT OF EQR | 7.26.22 | (EQR)
7.26.22 - REITS DAILY BRIEF | 7.26.22 | (NXRT 2Q22 RESULTS)
7.25.22 - EVENT INVITE | MEDICAL PROPERTIES TRUST (MPW) FLASH CALL | THURSDAY, 7/28 @ 10:00AM ET
7.24.22 - SUNDAY NIGHT REIT READ | 7.24.22 | (NXRT, POSITION MONITOR CHANGES)
7.22.22 - REITS WEEKLY VALUATION HANDBOOK | 7.22.22
7.21.22 - REITS DAILY BRIEF | (MPW, REXR 2Q22 RESULTS)
7.19.22 - REITS DAILY BRIEF | POSITION MONITOR UPDATE | 7.19.22 | (INVH, PLD)
7.18.22 - IS MPW RUNNING AFOUL OF SEC TOPIC 2, SECTION 2340? | 7.18.22 | (MPW)
7.17.22 - SUNDAY NIGHT REIT READ | 7.17.22 | (FINANCIAL STRAIN INDEX)
7.16.22 - CORRECTION: IS MPW MANAGEMENT GETTING DESPERATE? | 7.16.22 | (MPW)
7.15.22 - REITS WEEKLY VALUATION HANDBOOK | 7.15.22
7.14.22 - REITS DAILY BRIEF | POSITION MONITOR UPDATE | 7.14.22 | (AVB, CTRE, IHS TCN)
7.13.22 - SELL INVITATION HOMES | 7.13.22 | (INVH)
7.10.22 - SUNDAY NIGHT REIT READ | 7.10.22 | (HR, HTA, INVH)
7.8.22 - REITS WEEKLY VALUATION HANDBOOK | 7.8.22
7.8.22 - REITS DAILY BRIEF | 7.8.22 | (INVH - TWO CITIES OPPOSE MOTION TO DISMISS, STILL MORE MPW)
7.6.22 - REITS DAILY BRIEF | 7.6.22 | (STEWARD'S LIQUIDITY & MPW'S OPTIONS)
7.3.22 - SUNDAY NIGHT REIT READ | 7.3.22 | (HR, HTA, WELL, MPW, NXRT)
7.1.22 - REITS WEEKLY VALUATION HANDBOOK | 7.1.22
6.30.22 - REITS DAILY BRIEF | 6.30.22 | (APARTMENT RENTS, MPW)
6.28.22 - REITS DAILY BRIEF | 6.28.22 | (INVH) | PLAINTIFF FILES RESPONSE
6.26.22 - SUNDAY NIGHT REIT READ | 6.26.22 | (COLD)
6.24.22 - REITS WEEKLY VALUATION HANDBOOK | 6.24.22
6.23.22 - REITS DAILY BRIEF | 6.23.22 | (PGRE)
6.22.22 - REITS DAILY BRIEF | 6.22.22 | (PGRE)
6.20.22 - REITS DAILY BRIEF | 6.20.22 | (POSITION MONITOR UPDATE)
6.17.22 - REITS DAILY BRIEF | 6.17.22 | (MPW - MORE BAD NEWS)
6.17.22 - REITS WEEKLY VALUATION HANDBOOK | 6.17.22
6.16.22 - REITS DAILY BRIEF | 6.16.22 | EXPLORING MPW'S PRIORY TRANSACTION (MPW)
6.12.22 - SUNDAY NIGHT REIT READ | 6.12.22 | (FR, PGRE, NXRT)
6.10.22 - REITS WEEKLY VALUATION HANDBOOK | 6.10.22
6.8.22 - REITS DAILY BRIEF | 6.8.22 | (NAREIT, POSITION MONITOR UPDATE)
6.6.22 - REITS DAILY BRIEF | 6.6.22 | (MPW)
6.5.22 - SUNDAY NIGHT REIT READ | 6.5.22 | (JUNE NAREIT PRESENTATIONS HITTING)
6.3.22 - REITS WEEKLY VALUATION HANDBOOK | 6.3.22
6.3.22 - REITS DAILY BRIEF | 6.3.22 | (ANOTHER ONE ON MPW)
6.2.22 - REITS DAILY BRIEF | 6.2.22 | (MPW)
6.1.22 - REITS DAILY BRIEF | 6.1.22 | (CPT TO BEST IDEA SHORT LIST)
5.30.22 - SUNDAY NIGHT REIT READ (ON MONDAY) | 5.30.22 | (UHAL, FIRST WEEKLY VALUATION HANDBOOK)
5.26.22 - UHAL F4Q22 RESULTS - BIG OOF ON DIY | 5.26.22 | (UHAL)
5.25.22 - REITS DAILY BRIEF | 5.25.22 | (MPW MUST LIVE ON ANOTHER PLANET)
5.24.22 - REITS DAILY BRIEF | 5.24.22 | (REMOVING COLD FROM BEST IDEA SHORT)
5.22.22 - SUNDAY NIGHT REIT READ | 5.22.22 | (OFC, STYLE FACTORS)
5.20.22 - REITS DAILY BRIEF | 5.20.22 | (MPW)
5.18.22 - REITS DAILY BRIEF | 5.18.22 | (POSITION MONITOR UPDATE)
5.17.22 - REITS DAILY BRIEF | 5.17.22 | (MPW)
5.16.22 - SUNDAY NIGHT REIT READ, A LITTLE LATE | 5.16.22 | (CUBE, PSA, EXR, LSI, UHAL)
5.12.22 - REITS DAILY BRIEF | 5.12.22 | (APARTMENT RENT TRACKER)
5.10.22 - RADI 1Q22 RESULTS | TIMING IMPACT DRAG; POTENTIAL DEAL ALL THAT MATTERS | 5.10.22 | (RADI)
5.8.22 - SUNDAY NIGHT REIT READ | 5.8.22 | (RADI)
5.6.22 - COLD 1Q22 RESULTS | SETTING UP ANOTHER GUIDANCE CUT? | 5.6.22 | (COLD)
5.5.22 - REITS DAILY BRIEF | 5.5.22 | (HR/HTA/WELL, LSI, NSA)
5.4.22 - REITS DAILY BRIEF | 5.4.22 | (EXR/PSA 1Q22 RESULTS)
5.3.22 - REITS DAILY BRIEF | 5.3.22 | (HR, HTA)
5.1.22 - SUNDAY NIGHT REIT READ | 5.1.22 | (AMH, MPW)
4.29.22 - MPW HEARING FOOTSTEPS? | 4.29.22 | (MPW)
4.28.22 - AVB 1Q22 RESULTS | BIG BEAT DIDN'T HAPPEN, BUT FY22 OUTLOOK RAISED | 4.28.22 | (AVB)
4.27.22 - INVH 1Q22 RESULTS | ROC ROLLING OVER EVERYWHERE | 4.27.22 | (INVH, AMH)
4.26.22 - EQR 1Q22 RESULTS | DISAPPOINTING QUARTER | 4.26.22 | (EQR)
4.26.22 - REITS DAILY BRIEF | 4.26.22 | (AVB 1Q22 PREVIEW)
4.25.22 - REITS DAILY BRIEF | 4.25.22 | (EQR 1Q22 PREVIEW)
4.24.22 - SUNDAY NIGHT REIT READ | 4.24.22 | (AMH, INVH, TCN)
4.22.22 - EVENT REPLAY: MPW BEST IDEA SHORT BLACK BOOK (MPW)
4.21.22 - REITS DAILY BRIEF - LATE EDITION | 4.21.22 | (MPW)
4.19.22 - REITS DAILY BRIEF | 4.19.22 | (PLD 1Q22 RESULTS)
4.17.22 - SUNDAY NIGHT REIT READ | 4.17.22 | (MPW)
4.13.22 - REITS DAILY BRIEF | 4.13.22 | (OFFICE UTILIZATION)
4.12.22 - EVENT INVITE | MEDICAL PROPERTIES TRUST (MPW) BLACK BOOK | THURSDAY, 4/21 @ 10:00AM ET
4.10.22 - SUNDAY NIGHT REIT READ | 4.10.22 | (MACRO STYLE FACTORS)
4.8.22 - REITS DAILY BRIEF | 4.8.22 | (PLD)
4.7.22 - REITS DAILY BRIEF | 4.7.22 | (OFFICE UTILIZATION, PGRE)
4.5.22 - REITS DAILY BRIEF | POSITION MONITOR UPDATE | 4.5.22 | (AMH, MAA, MPW)
4.3.22 - SUNDAY NIGHT REIT READ | 4.3.22 | (CXW)
4.1.22 - REITS DAILY BRIEF | 4.1.22 | (CPT, INVH)
3.31.22 - REITS DAILY BRIEF | 3.31.22 | (APARTMENT RENT TRACKER)
3.30.22 - REITS DAILY BRIEF | SELF-STORAGE ASSUMPTIONS | 3.30.22 | (CUBE, EXR, LSI, NSA, PSA)
3.27.22 - SUNDAY NIGHT REIT READ | 3.27.22 | (CXW, INVH, ONL, WE)
3.22.22 - REITS DAILY BRIEF | PGRE REJECTS MONARCH OFFER | 3.22.22 | (PGRE)
3.20.22 - SUNDAY NIGHT REIT READ | 3.20.22 | (INVH)
3.18.22 - REITS DAILY BRIEF | COLD REMAINS TOP SHORT IDEA | 3.18.22 | (COLD)
3.16.22 - REITS DAILY BRIEF | SFR ASSUMPTIONS SHEET | 3.16.22 | (AMH, INVH)
3.15.22 - REITS DAILY BRIEF | POSITION MONITOR UPDATE | 3.15.22 | (SUI)
3.13.22 - SUNDAY NIGHT REIT READ | 3.13.22 | (INVH)
3.11.22 - REITS DAILY BRIEF | POSITION MONITOR UPDATE | 3.11.22 | (WE)
3.9.22 - REITS DAILY BRIEF | 3.9.22 | (OFFICE UTILIZATION)
3.8.22 - REITS DAILY BRIEF | 3.8.22 | (APARTMENT RENT TRACKER, AMH, INVH, TCN, ILPT)
3.6.22 - SUNDAY NIGHT REIT READ | 3.6.22 | (WE)
3.4.22 - REITS DAILY BRIEF | POSITION MONITOR UPDATE | 3.4.22 | (WE)
3.4.22 - REITS DAILY BRIEF | 3.4.22 | (RADI MODEL UPDATE)
3.1.22 - REITS DAILY BRIEF | 3.1.22 | (WE)
3.1.22 - FOLLOWING UP W/ ADDITIONAL THOUGHTS ON HR | 2.28.22 | (HR, HTA)
2.28.22 - REITS DAILY BRIEF | POSITION MONITOR UPDATE | 2.28.22 | (HR, HTA)
2.27.22 - SUNDAY NIGHT REIT READ | 2.27.22 | (HR, HTA)
2.26.22 - UPDATE FOLLOWING MONARCH BID | POSITION MONITOR UPDATE | 2.26.22 | (PGRE)
2.24.22 - REITS DAILY BRIEF | 2.24.22 | (COLD 4Q21 RESULTS)
2.24.22 - UPDATE ON INVH COURT CASE | 2.24.22 | (INVH)
2.24.22 - REITS DAILY BRIEF | 2.24.22 | (PGRE)
2.23.22 - REITS DAILY BRIEF | POSITION MONITOR UPDATE | 2.23.22 | (INVH, COLD)
2.20.22 - SUNDAY NIGHT REIT READ (A LITTLE EARLY FOR FUN!) | 2.20.22 | (INVH SHORT)
2.17.22 - REITS DAILY BRIEF | POSITION MONITOR UPDATE | 2.17.22 | (INVH)
2.16.22 - REITS DAILY BRIEF | POSITION MONITOR UPDATE | 2.16.22 | (UHAL)
2.15.22 - INVH 4Q21 RESULTS | JUST NOT ENOUGH | 2.15.22 | (INVH)
2.13.22 - SUNDAY NIGHT REIT READ - SUPER BOWL EDITION | 2.13.22 | (UHAL)
2.11.22 - REITS DAILY BRIEF | 2.11.22 | (OFC 4Q21 RESULTS)
2.10.22 - REITS DAILY BRIEF | 2.10.22 | (REXR 4Q21 FOLLOW-UP)
2.9.22 - REXR'S FY22 OUTLOOK DISAPPOINTING | 2.9.22 | (REXR)
2.9.22 - REITS DAILY BRIEF | 2.9.22 | (EGP)
2.8.22 - REITS DAILY BRIEF | 2.8.22 | (REXR, APARTMENT RENT TRACKER)
2.6.22 - SUNDAY NIGHT REIT READ | 2.6.22 | (RADI)
2.4.22 - EVENT REPLAY | RADIUS GLOBAL INFRASRUCTURE (RADI) BLACK BOOK
2.2.22 - AVB FY22 GUIDANCE CONSERVATIVE | 2.2.22 | (AVB)
2.1.22 - EQR 4Q21 EARNINGS BEAT | 2.1.22 | (EQR)
1.31.22 - POSITION MONITOR UPDATE | 1.31.22 | (O, NNN, WY, CUBE, LSI)
1.30.22 - SUNDAY NIGHT REIT READ | 1.30.22 (AVB, EQR, WE)
1.27.22 - EVENT INVITE | RADIUS GLOBAL INFRASRUCTURE (RADI) BLACK BOOK | FRIDAY, 2/4 @ 10:00AM ET
1.27.22 - REITS DAILY BRIEF | 1.27.22 | (OFC)
1.26.22: REITS DAILY BRIEF PART II | 1.26.22 | (RADI)
1.26.22 - REITS DAILY BRIEF | 1.26.22 | (COLD)
1.25.22 - REITS DAILY BRIEF | 1.25.22 | (APARTMENTS, OFFICE UTILIZATION)
1.25.22 - Will $MSTR Be Forced To Sell Their Bitcoin? (Bonus)
1.23.22 - SUNDAY NIGHT REIT READ | 1.23.22
1.22.22 - REITS DAILY BRIEF | 1.21.22 | (COLD)
1.21.22 - REITS DAILY BRIEF | 1.19.22 | (AMH, WE)
1.19.22 - REITS DAILY BRIEF | 1.19.22 | (PLD, COLD)
1.17.22 - MONDAY NIGHT HOLIDAY REIT READ | 1.17.22 (RADI, PLD)
1.12.22 - REITS DAILY BRIEF | 1.12.22 | (APARTMENT RENT TRACKER)
1.11.22 - REITS DAILY BRIEF | 1.11.22 | (POSITION MONITOR UPDATE)
1.10.22 - REITS DAILY BRIEF | 1.10.22 | (WE, REXR)
1.9.22 - SUNDAY NIGHT REIT READ | 1.9.22
1.6.22 - REITS DAILY BRIEF | 1.6.22 | (PSA, POSITION MONITOR)
1.5.22 - ESRT <--> PGRE: A WIN-WIN ALL AROUND? | 1.5.22 | (ESRT, PGRE)
1.4.22 - REITS DAILY BRIEF | 1.4.22 | (PGRE)
1.3.22 - REITS DAILY BRIEF | 1.3.22 | (POSITION MONITOR UPDATE, PGRE)
12.29.21 - REITS DAILY BRIEF | 12.29.21 | (Position Monitor, TCN, DLR, EQIX, ELS, SUI)
12.23.21 - REITS DAILY BRIEF | 12.23.21 | (AVB, CPT, EQR, MAA)
12.21.21 - REITS DAILY BRIEF | 12.21.21 | (BRG, U.S. OFFICE UTILIZATION)
12.19.21 - SUNDAY NIGHT REIT READ | 12.19.21 | (PSA)
12.17.21 - REITS DAILY BRIEF | 12.17.21 | (Storage, Manhattan Office)
12.16.21 - REITS DAILY BRIEF | 12.16.21 | (FR)
12.15.21 - EVENT REPLAY | FIRESIDE CHAT W/ WEWORK CEO SANDEEP MATHRANI
12.14.21 - REITS DAILY BRIEF | 12.14.21 | (U.S. OFFICE UTILIZATION)
12.12.21 - SUNDAY NIGHT REIT READ | 12.12.21 | (WE)
12.11.21 - EVENT REMINDER | FIRESIDE CHAT W/ WEWORK CEO SANDEEP MATHRANI
12.10.21 - REITS DAILY BRIEF | 12.10.21 | (ESRT)
12.8.21 - REITS DAILY BRIEF | 12.8.21 | (APARTMENT RENT TRACKER, U.S. OFFICE UTILIZATION)
12.7.21 - REITS DAILY BRIEF | 12.7.21 | (SLG)
12.6.21 - REITS DAILY BRIEF | 12.6.21 | (WE NOVEMBER OPERATIONS UPDATE)
12.5.21 - SUNDAY NIGHT REIT READ | 12.5.21 | (PGRE, EGP, PLYM, MAA, CPT, O, EPR)
12.2.21 - REITS DAILY BRIEF | 12.2.21 | (WE)
12.1.21 - IGNORE CNBC RE: WEWORK RESTATEMENT | 12.1.21 | (WE)
12.1.21 - REITS DAILY BRIEF | 12.1.21 | (U.S. OFFICE UTILIZATION, WE)
11.30.21 - REITS DAILY BRIEF | 11.30.21 | (AMH)
11.28.21 - SUNDAY NIGHT REIT READ | 11.28.21 | (COLD)
11.23.21 - REITS DAILY BRIEF | 11.23.21 | (U.S. OFFICE UTILIZATION, WE)
11.21.21 - SUNDAY NIGHT REIT READ | 11.21.21 | (WE)
11.19.21 - REITS DAILY BRIEF | 11.19.21 | (CUBE)
11.17.21 - REITS DAILY BRIEF | 11.17.21 | (STYLE FACTOR WORK)
11.16.21 - REITS DAILY BRIEF | 11.16.21 | (U.S. OFFICE UTILIZATION)
11.15.21 - CUBE ANNOUNCES STABILIZED ACQUISITION | 11.15.21
11.15.21 - REITS DAILY BRIEF | 11.15.21 | (WE, ILPT)
11.14.21 - SUNDAY NIGHT REIT READ | 11.14.21 | (CUBE, EXR, LSI, NSA)
11.11.21 - REITS DAILY BRIEF | 11.11.21 | (LSI, NYC CBD OFFICE)
11.10.21 - REITS DAILY BRIEF | 11.10.21 | (UHAL, CONE, COR, NSA, PSA)
11.9.21 - REITS DAILY BRIEF | 11.9.21 | (U.S. OFFICE UTILIZATION, SFR)
11.7.21 - SUNDAY NIGHT REIT READ | 11.7.21 | (APARTMENT RENTAL RATE TRACKER, POSITION MONITOR UPDATE)
11.4.21 - REIT RECAP | 11.4.21 | AMH 3Q21 RESULTS
11.4.21 - REIT RECAP | 11.4.21 | CUBE 3Q21 RESULTS
11.4.21 - REITS DAILY BRIEF | 11.4.21 | (COLD, IRM, EARNINGS SURPRISE MONITOR)
11.3.21 - REITS DAILY BRIEF | 11.2.21 | (LSI, POSITION MONITOR UPDATE)
11.2.21 - REITS DAILY BRIEF | 11.2.21 | (PSA, U.S. OFFICE UTILIZATION)
11.1.21 - REIT RECAP | 11.1.21 | PSA 3Q21 RESULTS
10.31.21 - SUNDAY NIGHT REIT READ | 10.31.21 | (3Q21 EARNINGS SURPRISES, POSITION MONITOR)
10.28.21 - REIT RECAP | 10.28.21 | CPT 3Q21 RESULTS
10.28.21 - REITS DAILY BRIEF | 10.28.21 | (EXR)
10.28.21 - REIT RECAP | 10/28/21 | INVH 3Q21 RESULTS
10.28.21 - REIT RECAP | 10/27/21 | AVB 3Q21 RESULTS
10.27.21 - REITS DAILY BRIEF | 10.27.21 | (3Q21 Earnings, AVB, EXR, Office)
10.26.21 - REIT RECAP | 10/26/21 | EXR 3Q21 RESULTS
10.26.21 - REITS DAILY BRIEF | 10.26.21 | (EQR, REXR)
10.25.21 - SUNDAY NIGHT REIT READ | 10.24.21 | (POSITION MONITOR)
10.21.21. - REIT RECAP | 10/21/21 | REXR 3Q21 RESULTS
10.20.21 - REITS DAILY BRIEF | 10.20.21 | (EGP, PLYM, REXR, ILPT)
10.19.21 - VIDEO | American Homes 4 Rent (AMH) Thesis
10.19.21 - REITS DAILY BRIEF | 10.19.21 | (COLD, SLG, VNO, AMH, U.S. Office Utilization)
10.18.21 - REITS DAILY BRIEF | 10.18.21 | (PLD)
10.17.21 - SUNDAY NIGHT REIT READ | 10.17.21 | (PLD, POSITION MONITOR)
10.15.21 - REIT RECAP | 10/15/21 | PLD 3Q21 RESULTS
10.13.21 - REITS DAILY BRIEF | 10.13.21 | (PLD)
10.10.21 - SUNDAY NIGHT REIT READ | 10.10.21 | (POSITION MONITOR UPDATE)
10.8.21 - BLACK BOOK ROUND-UP | AMERCO (UHAL)
10.7.21 - BEST IDEA ROUND-UP | AMERICOLD REALTY TRUST (COLD)
Please e-mail with any questions.
Rob Simone, CFA
Managing Director
Twitter: @HedgeyeREITs
