Priced as of 03/22/19 Market 90D Avg 52-Week Range Price Change FFO Estimates Valuation Price Share Cap Div. Volume % Off % Off BTIG BTIG BTIG Cons Cons Cons Name Ticker Rating Target Price $M Yield (000s) High Low High Low FY18 YTD LTM NTM FY19 FY20 NTM FY19 FY20 NAV P/FFO American Homes 4 Rent AMH Buy $24.00 $22.59 $7,939.7 0.9% 2,029 $23.34 $18.91 -3.2% 19.5% -9.1% 13.8% 16.6% $1.10 $1.10 $1.16 $1.11 $1.11 $1.20 $27.00 20.4x Invitation Homes Inc. INVH Buy $26.00 $24.02 $12,742.6 2.2% 2,888 $24.09 $19.21 -0.3% 25.0% -14.8% 19.6% 8.8% $1.25 $1.25 $1.30 $1.24 $1.24 $1.30 $28.00 19.4x Note: P/FFO is calculated as consensus forward 12 month FFOPS / current share price Source: Bloomberg, Company Filings, BTIG Research BTIG Single Family Rental Marketing Presentation 03/22/2019 2
▪ We cover 2 companies in the single family rental industry with a positive outlook ▪ American Homes 4 Rent (AMH): Buy $24 PT (7% total return); Portfolio size: 52K units ▪ Invitation Homes Inc. (INVH): Buy $26 PT (10% total return); Portfolio size: 82K units ▪ Current valuation, 20X forward core FFOPS, reflects the market’s view that the growth story is over… ▪ But we believe the companies are well positioned to generate on average 4% core FFOPS growth in 2019 (6% pro forma), with upside potential, driven by: ▪ (1) Increasing demand from aging Millennials, who have a higher propensity to rent than prior generations did when aged below 35 ▪ (2) Limited competition from for-sale supply, as inventories are thin and new supply additions, on average, are too large to compete with SFRs ▪ (3) accretive external portfolio growth opportunities from 3 channels: single asset acquisitions, new construction, and portfolio consolidation ▪ We expect SSREV to decelerate in 2019 as for-sale inventory increases and SFRs tactically prioritize occupancy over rent growth acceleration ▪ Nevertheless, we still expect SSNOI to expand in 2019 as cost pressures abate ▪ We believe core FFOPS multiples will expand in 2019 as investors gain confidence in the secular growth drivers and companies convincingly demonstrate expenses are under control BTIG Single Family Rental Marketing Presentation 03/22/2019 3
Distribution of the US Housing Stock Cumulative Change in the US Housing Stock (000s) 10,000 100.0% 4.5% 6.2% 9,000 5.4% 90.0% 2,873 Rental Stock 8,000 5.8% 36.1% 80.0% 7,000 2,999 70.0% 2,982 61.1% 6,000 60.0% 2,412 5,000 1,940 50.0% 3,582 1,759 82.6% 4,000 40.0% 1,390 Owned Stock 3,890 759 63.9% 6.4% 30.0% 3,000 3,849 450 3,888 20.0% 3,123 3,587 2,000 1,873 2,511 874 1,506 28.1% 212 3,056 10.0% 1,000 64 1,513 1,344 1,295 1,082 905 908 744 0.0% 621 567 455 325 0 (59) (195) (122) Total Stock: 120.0 million units Owned Stock: 76.6 million units Rental Stock: 43.4 million units 1, Detached 1, Attached 2+ Units Mobile (1,000) 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Single Family Owner Multifamily Owner Single Family Renter Multifamily Renter ▪ 68M units of occupied owned single family units, an increase of 3.1M households since 2005 ▪ 15M units of occupied single family rentals, an increase of 3.6M households since 2005 ▪ 12% of total occupied housing stock in 2017, up from 10% in 2005 Sources: Census, BTIG Research BTIG Single Family Rental Marketing Presentation 03/22/2019 4
▪ SF SFRs s ar are op operatin ing in in a a favorable le econ onomic Net Additions to the 35-44 Age Cohort envir ironment, on one tha hat is is lik likely ly to o con ontin inue ue over r the he 550 600 452 448 463 416 449 475 480 next few years ne 500 390 344 400 324 ▪ Millennials will add at least 4.5M people to the 35-44 300 216 204 200 age cohort over the next decade 49 28 100 0 ▪ Households switch from multifamily shelter to single -100 (48) (26) (33) (106) -200 family in their early and mid 30s We are here! -300 ▪ -400 (331) Millennia Millen ials ls ha have a a highe higher r pr prope pensi sity to o rent than han 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 pr previou ious s gene neratio ions s did did whe hen n ag aged be belo low 35 35 ▪ Income: 25-34 year old unemployment at overall Percent of Total Households Living in Single Family Units rate, used to be 50-100 bp below 80.0% 77.0% 76.2% ▪ 75.1% Balance Sheet: 30-39 year old student debt up 72.7% 70.9% 258% from 2004 70.0% 59.9% ▪ 60.0% Lifestyle: Age of first marriage up 17%, first birth up 16% from 1980 50.0% 48.1% 40.0% 34.9% 30.0% 20.0% Under 25 25 to 29 years 30 to 34 years 35 to 44 years 45 to 54 years 55 to 64 years 65 to 74 years 75 years old Sources: Census, BTIG Research years old old old old old old old and over BTIG Single Family Rental Marketing Presentation 03/22/2019 5
▪ Competition from for-sale supply is limited due to years Single Family Housing Starts 1,800.0 of low production. Single Family Starts Single Family Starts - Long Term Average 1,600.0 ▪ LTM Single family housing starts are 14% below the 1,400.0 long term average 1,200.0 ▪ 1,000.0 New inventory 0.3% of total housing stock, resale inventory 1.3%, near all time lows 800.0 600.0 ▪ However, inventory is beginning to move higher: new 400.0 inventory is +14% yoy, resale inventory +5% yoy 200.0 ▪ Homebuilders are building homes that are not competing 0.0 1961 1963 1965 1967 1969 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 1959 1971 1973 1975 1977 1979 with SFRs on average SFR Average Square Footage vs New Single Family ▪ Single family starts on average are 30% larger than Completions the homes in SFR portfolios 2,677 2,700 2,530 ▪ Production of homes <2,400 SF down 51% from 1999, 2,360 2,201 3,000+ SF production up 27% 2,190 1,980 2,020 ▪ Recently, product mix has begun to slowly shift to 1,850 1,850 smaller houses due to deteriorating move-up demand 1,680 1,510 1,340 1,170 1,000 INVH AMH Average Completed Average Completed Sources: Census, Company Filings, BTIG Research Home - FHA Home - Total BTIG Single Family Rental Marketing Presentation 03/22/2019 6
We see three opportunities to grow the portfolio Single Family Rental Properties by Ownership Entity (000s), 2015 externally at yields that are accretive to NAV: 18,000.0 ▪ (1) Single-asset acquisitions: We see sufficient 16,000.0 15,340 2001 opportunities from foreclosure auctions and the 14,000.0 2015 MLS 12,000.0 10,000.0 ▪ 23.5K foreclosures in Oct 2018, almost 3X 8,154 8,000.0 2017 SFR acq volume and 10X 2018 volume 6,000.0 ▪ 4,000.0 All- cash “instant offer” competitive 2,668 2,000.0 advantage for MLS listings 597 487 468 434 252 226 163 104 104 87 53 0.0 Individual / Limited Coop / TIC / Other REIT General Corporation ▪ Trustee Partnership / Non-profit Partnership (2) Continued portfolio consolidation: 3.6M Joint Venture single family rental units owned by limited Single Family Housing Starts Built for Rent partnerships, general partnerships, corporations, 50 7.0% or trustees. Built for Rent SF Starts, LTM 45 (000s, LHS) 6.0% 40 Built for Rent, % of SF Starts ▪ (3) New construction: 5% of single family starts (RHS) 5.0% 35 30 are already built for rent, the opportunity set 4.0% 25 being discussed by SFRs is a drop in the bucket 3.0% 20 compared to total homebuilding production 15 2.0% 10 1.0% 5 ▪ Initial yields on acquisitions are averaging 5-6%+, 0 0.0% 1Q75 4Q76 3Q78 2Q80 1Q82 4Q83 3Q85 2Q87 1Q89 4Q90 3Q92 2Q94 1Q96 4Q97 3Q99 2Q01 1Q03 4Q04 3Q06 2Q08 1Q10 4Q11 3Q13 2Q15 1Q17 4Q18 above implied cap rates and accretive to NAV Sources: Census, BTIG Research BTIG Single Family Rental Marketing Presentation 03/22/2019 7
▪ AMH and INVH have amassed considerable scale across Single Family Rental Portfolios (Single Family REITS + Tricon + Progress Residential) two waves of consolidation, an important competitive advantage RESI 160,000 SBY (Tricon) 140,000 ▪ Tricon Scale enabled the companies to develop efficient CAH (Starwood) 120,000 Starwood operating platforms INVH 100,000 ARPI (AMH) ▪ AMH: Efficiency through the centralization of key AMH 80,000 leasing and maintenance functions 60,000 ▪ 40,000 INVH: Deep local scale enables a robust field level operation 20,000 0 ▪ 2012 2013 2014 2015 2016 NOI margins are comparing well to multifamily and are SFR NOI Margins Relative to Apartment REITs improving MAA CPT AMH SFR EQR AVB UDR ESS 70.0% ▪ SFR NOI margins improved 280 bps on avg in 2016 and 120 bps in 2017 65.0% ▪ Cost to replicate these portfolios prohibitive due to low inventory and home price appreciation (HPA), helps 60.0% insulate companies from new competition 55.0% 50.0% Sources: Census, Company Filings, BTIG Research 2014 2015 2016 2017 BTIG Single Family Rental Marketing Presentation 03/22/2019 8
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