Invitation Homes : Gives Notice of Intent for Physical Settlement of 2019 Convertible Notes

DALLAS, Jan. 3, 2019 /PRNewswire/ -- Invitation Homes Inc. (NYSE: INVH) ("Invitation Homes" or the "Company") today announced that on December 28, 2018 the Company notified holders of its 3.00% Convertible Senior Notes due 2019 (the "Notes"), which mature on July 1, 2019, of the Company's intent to settle conversions of the Notes with common shares.  The par value of the Notes outstanding is $230 million.

Invitation Homes has the option to settle conversions of the Notes in cash, common shares, or a combination thereof.  The Company believes that a common share settlement is the option most aligned with its stated balance sheet strategy of reducing leverage and pursuing an investment grade rating.

For all note holders electing conversion on or before June 27, 2019, the Notes will be exchanged for common shares according to a prescribed conversion ratio.  As of September 30, 2018, the conversion ratio was 53.7294 shares per $1,000 principal amount of Notes.  This conversion ratio is subject to adjustment, through the date of maturity, for cash dividends paid to common stockholders and other potential transactions as described in Section 10.04(d) of the indenture for the Notes.  In the event that note holder(s) do not elect conversion by June 27, 2019, such Notes would be repaid in cash at the par value of the Notes on the maturity date.

Assuming the September 30, 2018 conversion ratio of 53.7294 shares per $1,000 principal amount of Notes, settlement of the $230 million (par value) of Notes would result in the issuance of approximately 12.4 million common shares and a reduction in cash interest expense of approximately $6.9 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 / annualized Adjusted EBITDAre at September 30, 2018 would have been 9.1x, versus 9.4x as reported by the Company in its third quarter 2018 Earnings Release and Supplemental Information.

Reconciliation of Net Debt / Annualized Adjusted EBITDAre
(in thousands, except for ratio) (unaudited)
	9/30/2018		Pro Forma		9/30/2018
	As Reported		Adjustments(1)		Pro Forma
Mortgage loans, net	$7,409,700		-		$7,409,700
Term loan facility, net	1,490,138		-		1,490,138
Convertible senior notes, net	555,081		(226,804)		328,277
Total Debt per Balance Sheet	9,454,919		(226,804)		9,228,115
Retained and repurchased certificates	(395,941)		-		(395,941)
Cash, ex-security deposits	(230,148)		-		(230,148)
Deferred financing costs	66,544		-		66,544
Unamortized discounts on note payable	22,993		(3,189)		19,804
Net Debt (A)	$8,918,367		($229,993)		$8,688,374
	Q3 2018		Pro Forma		Q3 2018
	As Reported		Adjustments(1)		Pro Forma
Net income available to common shareholders(2)	$824		$2,777		$3,601
Net income available to participating
securities	196		-		196
Non-controlling interests	21		-		21
Interest expense(2)	97,564		(2,777)		94,787
Depreciation and amortization	139,371		-		139,371
EBITDA	237,976		-		237,976
Gain on sale of property, net of tax	(11,512)		-		(11,512)
Impairment on depreciated real estate
investments	1,296		-		1,296
EBITDAre	227,760		-		227,760
Share-based compensation expense	6,068		-		6,068
Merger and transaction-related expenses	3,339		-		3,339
Severance	1,952		-		1,952
Casualty losses, net	1,956		-		1,956
Other, net	(3,330)		-		(3,330)
Adjusted EBITDAre	$237,745		-		$237,745
Annualized Adjusted EBITDAre (C = B x 4)	$950,980				$950,980
Net debt / annualized Adjusted EBITDAre
(A / C)	9.4x				9.1x

(1)	Does not include adjustments for refinancing or voluntary prepayments of securitized loans after 9/30/2018.
(2)	Pro forma adjustment for $2,777 of Q3 2018 interest expense associated with the Notes includes $1,052 of non-cash amortization of fair value discount.  Q3 2018 cash interest expense associated with the Notes was $1,725.

About Invitation Homes:

Invitation Homes is a leading owner and operator of single-family homes for lease, offering residents high-quality homes across America. With more than 80,000 homes for lease in 17 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: [e-mail]

Media Relations Contacts:
Kristi DesJarlais
Phone: [phone]
Email: [e-mail]

Claire Parker
Phone: [phone]
Email: [e-mail]

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SOURCE Invitation Homes