---

---

---

•

“average monthly rent” represents average monthly rental income per home for occupied properties in an identified population of homes over the measurement period and reflects the impact of non-service rent concessions and contractual rent increases amortized over the life of the related lease. We believe average monthly rent reflects pricing trends that significantly impact rental revenues over time, making average monthly rent useful to management and external stakeholders as a means of evaluating changes in rental revenues across periods;

•

“average occupancy” for an identified population of homes represents (i) the total number of days that the homes in such population were occupied during the measurement period, divided by (ii) the total number of days that the homes in such population were owned during the measurement period. We believe average occupancy significantly impacts rental revenues in a given period, making comparisons of average occupancy across different periods helpful to management and external stakeholders in evaluating changes in rental revenues across periods;

•	“Carolinas” includes Charlotte, NC, Greensboro, NC, Raleigh, NC, and Fort Mill, SC;

•

“days to re-resident” for an individual home represents the number of days between (i) the date the prior resident moves out of a home, and (ii) the date the next resident is granted access to the same home, which is deemed to be the earlier of the next resident’s contractual lease start date and the next resident’s move-in date. Days to re-resident impacts our average occupancy and thus our rental revenues, making comparisons of days to re-resident helpful to management and external stakeholders in evaluating changes in rental revenues across periods;

•	“in-fill” refers to markets, MSAs, submarkets, neighborhoods or other geographic areas that are typified by significant population densities and low availability of land suitable for development into competitive properties, resulting in limited opportunities for new construction;

•	“historical average” is the simple average of each of the six months beginning October 2019 and to and including March 2020;

•

“Metropolitan Statistical Area” or “MSA” is defined by the United States Office of Management and Budget as a region associated with at least one urbanized area that has a population of at least 50,000 and comprises the central county or counties containing the core, plus adjacent outlying counties having a high degree of social and economic integration with the central county or counties as measured through commuting;

•

“net effective rental rate growth” for any home represents the percentage difference between the monthly rent from an expiring lease and the monthly rent from the next lease and, in each case, reflects the impact of non-service rent concessions and contractual rent increases amortized over the life of the related lease. Leases are either renewal leases, where our current resident chooses to stay for a subsequent lease term, or a new lease, where our previous resident moves out and a new resident signs a lease to occupy the same home. Net effective rental rate growth drives changes in our average monthly rent, making net effective rental rate growth useful to management and external stakeholders as a means of evaluating changes in rental revenues across periods;

•	“Northern California” includes Sacramento-Arden-Arcade-Roseville, CA, San Francisco-Oakland-Hayward, CA, Stockton-Lodi, CA, Vallejo-Fairfield, CA, and Yuba City, CA;

---

•	“PSF” means per square foot. When comparing homes or cohorts of homes, we believe PSF calculations help management and external stakeholders normalize metrics for differences in property size, enabling more meaningful comparisons based on characteristics other than property size;

•

“revenue collections as a percentage of monthly billings” represents the total cash received in a given monthly period for rental revenues and other property income (including receipt of late payments that were billed in prior months) divided by the total amounts billed in that period. When a payment plan is in place with a resident, amounts are considered to be billed at the time they would have been billed based on the terms of the original lease, not the terms of the payment plan. We believe this provides management and external stakeholders with meaningful information about our success in collecting amounts due under our lease agreements;

•

“Same Store” or “Same Store portfolio” includes, for a given reporting period, homes that have been stabilized and seasoned, excluding homes that have been sold, homes that have been identified for sale to an owner occupant and have become vacant, homes that have been deemed inoperable or significantly impaired by casualty loss events or force majeure, homes acquired in portfolio transactions that are deemed not to have undergone renovations of sufficiently similar quality and characteristics as the existing Invitation Homes Same Store portfolio, and homes in markets that we have announced an intent to exit where we no longer operate a significant number of homes for the primary purpose of income generation. Homes are considered stabilized if they have (i) completed an initial renovation and (ii) entered into at least one post-initial renovation lease. An acquired portfolio that is both leased and deemed to be of sufficiently similar quality and characteristics as the existing Invitation Homes Same Store portfolio may be considered stabilized at the time of acquisition. Homes are considered to be seasoned once they have been stabilized for at least 15 months prior to January 1st of the year in which the Same Store portfolio was established. We believe information about the portion of our portfolio that has been fully operational for the entirety of a given reporting period and its prior year comparison period provides management and external stakeholders with meaningful information about the performance of our comparable homes across periods and about trends in our organic business;

•	“Southeast United States” includes our Atlanta and Carolinas markets;

•	“South Florida” includes Miami-Fort Lauderdale-West Palm Beach, FL, and Port St. Lucie, FL;

•	“Southern California” includes Los Angeles-Long Beach-Anaheim, CA, Oxnard-Thousand Oaks-Ventura, CA, Riverside-San Bernardino-Ontario, CA, and San Diego-Carlsbad, CA;

•	“total homes” or “total portfolio” refers to the total number of homes we own, whether or not stabilized, and excludes any properties previously acquired in purchases that have been subsequently rescinded or vacated. Unless the context otherwise requires, all measures in this Quarterly Report on Form 10-Q are presented on a total portfolio basis;

•

“turnover rate” represents the number of instances that homes in an identified population become unoccupied in a given period, divided by the number of homes in such population. To the extent the measurement period shown is less than 12 months, the turnover rate may be reflected on an annualized basis. We believe turnover rate impacts average occupancy and thus our rental revenues, making comparisons of turnover rate helpful to management and external stakeholders in evaluating changes in rental revenues across periods. In addition, turnover can impact our cost to maintain homes, making changes in turnover rate useful to management and external stakeholders in evaluating changes in our property operating and maintenance expenses across periods; and

•	“Western United States” includes our Southern California, Northern California, Seattle, Phoenix, Las Vegas, and Denver markets.

---

---

---

---

---

---

---

---

Note 1—Organization and Formation

Invitation Homes Inc. (“INVH”) is a real estate investment trust (“REIT”) that conducts its operations through Invitation Homes Operating Partnership LP (“INVH LP”). INVH LP was formed for the purpose of owning, renovating, leasing, and operating single-family residential properties. Through THR Property Management L.P., a wholly owned subsidiary of INVH LP (the “Manager”), we provide all management and other administrative services with respect to the properties we own.

On February 6, 2017, INVH completed an initial public offering (“IPO”), changed its jurisdiction of incorporation to Maryland, and amended its charter to provide for the issuance of up to 9,000,000,000 shares of common stock and 900,000,000 shares of preferred stock, in each case $0.01 par value per share. In connection with certain pre-IPO reorganization transactions, INVH LP became (1) owned by INVH directly and through Invitation Homes OP LLC, a wholly owned subsidiary of INVH, and (2) the owner of all of the assets, liabilities, and operations of certain pre-IPO ownership entities. These transactions were accounted for as a reorganization of entities under common control utilizing historical cost basis.

On November 16, 2017 (the “Merger Date”), INVH and certain of its affiliates entered into a series of transactions with Starwood Waypoint Homes (“SWH”) and certain SWH affiliates which resulted in SWH and its operating partnership being merged into INVH and INVH LP, respectively, with INVH and INVH LP being the surviving entities (the “Mergers”). The Mergers were accounted for as a business combination in accordance with ASC 805, Business Combinations, and INVH was designated as the accounting acquirer.

The limited partnership interests of INVH LP consist of common units and other classes of limited partnership interests that may be issued (the “OP Units”). As of June 30, 2020, INVH owns 99.4% of the common OP Units and has the full, exclusive, and complete responsibility for and discretion over the day to day management and control of INVH LP.

Our organizational structure includes several wholly owned subsidiaries of INVH LP that were formed to facilitate certain of our financing arrangements (the “Borrower Entities”). These Borrower Entities are used to align the ownership of our single-family residential properties with certain of our debt instruments. Collateral for certain of our individual debt instruments may be in the form of equity interests in the Borrower Entities or in pools of single-family residential properties owned either directly by the Borrower Entities or indirectly by their wholly owned subsidiaries (see Note 6).

References to “Invitation Homes,” the “Company,” “we,” “our,” and “us” refer, collectively, to INVH, INVH LP, and the consolidated subsidiaries of INVH LP.

Note 2—Significant Accounting Policies

Basis of Presentation

The accompanying interim condensed consolidated financial statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and with the rules and regulations of the Securities and Exchange Commission for interim financial information and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with our audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019.

These condensed consolidated financial statements include the accounts of INVH and its consolidated subsidiaries. All intercompany accounts and transactions have been eliminated in the condensed consolidated financial statements. In the opinion of management, all adjustments that are of a normal recurring nature considered necessary for a fair presentation of our interim financial statements have been included in these condensed consolidated financial statements. Operating results for the six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2020.

---

We consolidate entities when we own, directly or indirectly, a majority interest in the entity or are otherwise able to control the entity. We consolidate variable interest entities (“VIEs”) in accordance with ASC 810, Consolidation, if we are the primary beneficiary of the VIE as determined by our power to direct the VIE’s activities and the obligation to absorb its losses or the right to receive its benefits, which are potentially significant to the VIE. A VIE is broadly defined as an entity with one or more of the following characteristics: (a) the total equity investment at risk is insufficient to finance the entity’s activities without additional subordinated financial support; (b) as a group, the holders of the equity investment at risk lack (i) the ability to make decisions about the entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; or (c) the equity investors have voting rights that are not proportional to their economic interests, and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights.

As described in Note 5, we have an investment in a joint venture with the Federal National Mortgage Association (“FNMA”), which is a voting interest entity. We do not hold a controlling financial interest in the joint venture but have significant influence over its operating and financial policies. Additionally, FNMA holds certain substantive participating rights that preclude the presumption of control by us; as such, we account for our investment using the equity method. In connection with the Mergers, we initially recorded this investment at fair value in connection with purchase accounting and have subsequently adjusted for our proportionate share of net earnings or losses and other comprehensive income or loss, cash contributions made and distributions received, and other adjustments, as appropriate. Distributions of operating profit from the joint venture are reported as part of operating cash flows while distributions related to a capital transaction, such as a refinancing transaction or sale, are reported as investing activities.

Non-controlling interests represent the OP Units not owned by INVH, including any vested OP Units granted in connection with certain share-based compensation awards. Non-controlling interests are presented as a separate component of equity on the condensed consolidated balance sheets as of June 30, 2020 and December 31, 2019, and the condensed consolidated statements of operations for the three and six months ended June 30, 2020 include an allocation of the net income attributable to the non-controlling interest holders. Vested OP Units are redeemable for shares of our common stock on a one-for-one basis or, in our sole discretion, cash, and redemptions of OP Units are accounted for as a reduction in non-controlling interests with an offset to stockholders’ equity based on the pro rata number of OP Units redeemed.

Significant Risks and Uncertainties

One of the most significant risks and uncertainties to our financial condition and results of operations is the potential adverse effect of the ongoing pandemic resulting from the coronavirus, or COVID-19. Since the outbreak, a number of our residents have requested rent deferral and/or late fee relief, and components of our rental revenues and other property income have been impacted by the pandemic. In addition, some jurisdictions across the United States have imposed temporary eviction moratoriums and are allowing residents to defer missed rent payments without incurring late fees, and such jurisdictions and other local and national authorities may expand or extend measures imposing restrictions on our ability to enforce residents’ contractual rental obligations and limiting our ability to increase rents. We cannot predict if states, municipalities, and/or local authorities will expand existing restrictions, if additional states or municipalities will implement similar restrictions, or when restrictions currently in place will expire. Certain other restrictions imposed by jurisdictions across the United States are intended to limit operations by businesses not deemed “essential businesses.” While none of the current restrictions have materially impacted our ability to provide services to our residents or homes, future measures may negatively impact our ability to access our homes, complete service requests, or make our homes ready for new residents. Many experts predict that the outbreak will trigger, or even has already triggered, a period of global economic slowdown or a global recession.

The COVID-19 pandemic could have material and adverse effects on our financial condition, results of operations, and cash flows in the near term due to, but not limited to, the following: (1) reduced economic activity that severely impacts the earnings or health of our residents, thereby causing them to be unable to fully meet their obligations to us and resulting in increases in uncollectible revenues and thus reductions in rental revenues and other property income; (2) governmental restrictions and moratoriums that negatively impact our ability to charge and collect rental revenues and other property income or impose restrictions on our ability to provide services to our residents and homes; (3) negative financial impact of the pandemic that could impact our ability to access funds available under our Revolving Facility (as defined in Note 6) or affect future compliance with financial covenants of our Credit Facility (as defined in Note 6) and other debt agreements; and (4) weaker economic conditions that could cause us to recognize impairments in value of our tangible assets or goodwill.

---

The extent to which the COVID-19 pandemic ultimately impacts our operations depends on ongoing developments, which remain highly uncertain and cannot be predicted with confidence, including the scope, severity, and duration of the pandemic, the extent and duration of actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic, containment measures, monetary and/or fiscal policies implemented to provide support or relief to businesses and/or residents, and other government, regulatory, and/or legislative changes precipitated by the COVID-19 pandemic, among others. While we have taken steps to mitigate the impact of the pandemic on our results of operations, there can be no assurance that these efforts will be successful.

Adoption of New Accounting Standards

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which changes how companies measure credit losses for certain financial assets, excluding receivables arising from operating leases. This guidance requires an entity to estimate its expected credit loss and record an allowance based on this estimate so that it is presented at the net amount expected to be collected on the financial asset. We adopted this standard as of January 1, 2020, and it did not have a material impact on our condensed consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) (“ASU 2020-04”), which contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives, and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. We have elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future London Interbank Offer Rate (“LIBOR”) indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. We continue to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.

In April 2020, the FASB staff issued a question and answer document (the “Lease Modification Q&A”) focused on the application of lease accounting guidance to lease accommodations resulting from the COVID-19 pandemic as many lessors have been asked to provide rent deferrals, rent abatements, late fee waivers, and other lease concessions to lessees (collectively, “lease accommodations”). While the lease modification guidance in ASC 842, Leases, addresses routine changes to lease terms resulting from negotiations between a lessee and lessor, it did not contemplate the rapid implementation of lease accommodations to address the sudden liquidity constraints of some lessees arising from the COVID-19 pandemic.

Under existing lease guidance, we would have been required to determine, on a lease by lease basis, if each lease accommodation resulted from a new arrangement reached with the resident (treated within the lease modification accounting framework) or if each was contemplated under the enforceable rights and obligations within the existing lease agreement (precluded from applying the lease modification accounting framework). If certain criteria are met, the Lease Modification Q&A allows lessors to bypass the lease by lease analysis and instead elect to either apply the lease modification accounting framework or not, with such election applied consistently to leases with similar characteristics and similar circumstances. We elected to apply the Lease Modification Q&A guidance not to perform a lease by lease analysis with respect to any lease accommodations and to account for such accommodations outside of the lease modification framework. The Lease Modification Q&A has not had a material impact on our condensed consolidated financial statements for the three and six months ended June 30, 2020. However, the extent of lease accommodations granted to residents as a result of the COVID-19 pandemic in future periods may materially affect our condensed consolidated financial statements.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. These estimates are inherently subjective in nature and actual results could differ from those estimates.

---

Accounting Policies

There have been no changes to our significant accounting policies that have had a material impact on our condensed consolidated financial statements and related notes, compared to those policies disclosed in our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019.

Note 3—Investments in Single-Family Residential Properties

The following table sets forth the net carrying amount associated with our properties by component:

		June 30, 2020				December 31, 2019
Land		$	4,487,945			$	4,499,346
Single-family residential property		13,258,956				13,121,179
Capital improvements		510,574				513,269
Equipment		113,076				113,370
Total gross investments in the properties		18,370,551				18,247,164
Less: accumulated depreciation		(2,252,814		)		(2,003,972		)
Investments in single-family residential properties, net		$	16,117,737			$	16,243,192

As of June 30, 2020 and December 31, 2019, the carrying amount of the residential properties above includes $119,454 and $119,608, respectively, of capitalized acquisition costs (excluding purchase price), along with $68,727 and $65,747, respectively, of capitalized interest, $26,438 and $25,565, respectively, of capitalized property taxes, $4,643 and $4,616, respectively, of capitalized insurance, and $2,992 and $2,836, respectively, of capitalized homeowners’ association (“HOA”) fees.

During the three months ended June 30, 2020 and 2019, we recognized $135,647 and $131,782, respectively, of depreciation expense related to the components of the properties, and $1,619 and $1,249, respectively, of depreciation and amortization related to corporate furniture and equipment. These amounts are included in depreciation and amortization in the condensed consolidated statements of operations. Further, during the three months ended June 30, 2020 and 2019, impairments totaling $1,442 and $4,076, respectively, have been recognized and are included in impairment and other in the condensed consolidated statements of operations.

During the six months ended June 30, 2020 and 2019, we recognized $269,561 and $264,302, respectively, of depreciation expense related to the components of the properties and $2,732 and $2,338, respectively, of depreciation and amortization related to corporate furniture and equipment. These amounts are included in depreciation and amortization in the condensed consolidated statements of operations. Further, during the six months ended June 30, 2020 and 2019, impairments totaling $3,913 and $7,329, respectively, have been recognized and are included in impairment and other in the condensed consolidated statements of operations.

---

Note 4—Cash, Cash Equivalents, and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported on the condensed consolidated balance sheets that sum to the total of such amounts shown in the condensed consolidated statements of cash flows:

		June 30, 2020				December 31, 2019
Cash and cash equivalents		$	571,719			$	92,258
Restricted cash		223,894				193,987
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows		$	795,613			$	286,245

Pursuant to the terms of the mortgage loans and Secured Term Loan (as defined in Note 6), we are required to establish, maintain, and fund from time to time (generally, either monthly or at the time borrowings are funded) certain specified reserve accounts. These reserve accounts include, but are not limited to, the following types of accounts: (i) property tax reserves; (ii) insurance reserves; (iii) capital expenditure reserves; and (iv) HOA reserves. The reserve accounts associated with our mortgage loans and Secured Term Loan are under the sole control of the loan servicer. Additionally, we hold security deposits pursuant to resident lease agreements that we are required to segregate. We are also required to hold letters of credit by certain of our insurance policies. Accordingly, amounts funded to these reserve accounts, security deposit accounts, and other restricted accounts have been classified on our condensed consolidated balance sheets as restricted cash.

The amounts funded, and to be funded, to the reserve accounts are subject to formulae included in the mortgage loan and Secured Term Loan agreements and are to be released to us subject to certain conditions specified in the loan agreements being met. To the extent that an event of default were to occur, the loan servicer has discretion to use such funds to either settle the applicable operating expenses to which such reserves relate or reduce the allocated loan amount associated with a residential property of ours.

The balances of our restricted cash accounts, as of June 30, 2020 and December 31, 2019, are set forth in the table below. As of June 30, 2020 and December 31, 2019, no amounts were funded to the insurance accounts as the conditions specified in the mortgage loan and Secured Term Loan agreements that require such funding did not exist.

		June 30, 2020				December 31, 2019
Resident security deposits		$	154,529			$	148,186
Property taxes		39,413				10,443
Collections		18,759				24,034
Capital expenditures		5,632				5,627
Letters of credit		3,317				3,459
Special and other reserves		2,244				2,238
Total		$	223,894			$	193,987

---

Note 5—Other Assets

As of June 30, 2020 and December 31, 2019, the balances in other assets, net are as follows:

		June 30, 2020				December 31, 2019
Investments in debt securities, net		$	310,380			$	316,991
Held for sale assets(1)		77,386				116,529
Investment in unconsolidated joint venture		54,152				54,778
Rent and other receivables, net		31,644				25,244
Prepaid expenses		31,345				32,106
ROU lease assets — operating and finance, net		23,063				13,768
Investments in equity securities		16,734				16,650
Corporate fixed assets, net		9,138				9,825
Deferred leasing costs, net		7,801				7,427
Amounts deposited and held by others		2,787				1,348
Deferred financing costs, net		1,580				2,765
Derivative instruments (Note 7)		86				1,643
Other		8,663				6,192
Total		$	574,759			$	605,266

(1)	As of June 30, 2020 and December 31, 2019, 327 and 478 properties, respectively, are classified as held for sale.

Investments in Debt Securities, net

In connection with certain of our Securitizations (as defined in Note 6), we have retained and purchased certificates totaling $310,380, net of unamortized discounts of $2,465, as of June 30, 2020. These investments in debt securities are classified as held to maturity investments. As of June 30, 2020, we have not recognized any credit losses with respect to these investments in debt securities. As of December 31, 2019, there were no gross unrecognized holding gains or losses, and there were no other than temporary impairments recognized in accumulated other comprehensive loss. As of June 30, 2020, our retained certificates are scheduled to mature over the next month to seven years.

Investment in Unconsolidated Joint Venture

We own a 10% interest in a joint venture with FNMA to operate, lease, and manage a portfolio of properties primarily located in Arizona, California, and Nevada. A wholly owned subsidiary of INVH LP is the managing member of the joint venture and is responsible for the operation and management of the properties, subject to FNMA’s approval of major decisions. As of June 30, 2020 and December 31, 2019, the joint venture owned 602 and 641 properties, respectively.

Rent and Other Receivables

We lease our properties to residents pursuant to leases that generally have an initial contractual term of at least 12 months, provide for monthly payments, and are cancelable by the resident and us under certain conditions specified in the related lease agreements. Rental revenues and other property income and the corresponding rent and other receivables are recorded net of any concessions and bad debt (including actual write-offs, credit reserves, and uncollectible amounts) for all periods presented.

---

Variable lease payments consist of resident reimbursements for utilities, and various other fees, including late fees and lease termination fees, among others. Variable lease payments are charged based on the terms and conditions included in the resident leases. For the three months ended June 30, 2020 and 2019, rental revenues and other property income includes $19,613 and $23,253 of variable lease payments, respectively. For the six months ended June 30, 2020 and 2019, rental revenues and other property income includes $44,660 and $44,583 of variable lease payments, respectively.

Future minimum rental revenues under leases existing on our single-family residential properties as of June 30, 2020 are as follows:

Year		Lease Payments to be Received
Remainder of 2020		$	698,441
2021		502,586
2022		43,571
2023		—
2024		—
Thereafter		—
Total		$	1,244,598

Right-of-Use (“ROU”) Lease Assets — Operating and Finance, net

The following table presents supplemental information related to leases into which we have entered as a lessee as of June 30, 2020 and December 31, 2019:

		June 30, 2020								December 31, 2019
		Operating Leases				Finance Leases				Operating Leases				Finance Leases
Other assets		$	13,225			$	9,838			$	12,552			$	1,216
Other liabilities		14,483				9,382				13,787				1,210
Weighted average remaining lease term		3.9 years				3.6 years				3.8 years				2.0 years
Weighted average discount rate		4.0		%		4.0		%		4.0		%		4.0		%

Investments in Equity Securities

We hold investments in equity securities without a readily determinable fair value. We have elected to measure the investments at cost, less any impairment, plus or minus changes resulting from observable price changes for identical or similar investments in the same issuers. As of June 30, 2020 and December 31, 2019, the carrying amount of our investments in equity securities was $16,734 and $16,650, respectively. During the six months ended June 30, 2020, we recorded $34 of unrealized gains on our investments in equity securities which are included in other, net in the condensed consolidated statements of operations. No unrealized gains or losses were recorded during the three months ended June 30, 2020 and the three and six months ended June 30, 2019.

Deferred Financing Costs, net

In connection with our Revolving Facility, we incurred $9,673 of financing costs during the year ended December 31, 2017, which have been deferred as other assets, net on our condensed consolidated balance sheets. These deferred financing costs are being amortized as interest expense on a straight-line basis over the term of the Revolving Facility. As of June 30, 2020 and December 31, 2019, the unamortized balances of these deferred financing costs are $1,580 and $2,765, respectively.

---

Note 6—Debt

Mortgage Loans

Our securitization transactions (the “Securitizations” or the “mortgage loans”) are collateralized by certain homes owned by the respective Borrower Entities. We utilize the proceeds from our securitizations to fund: (i) repayments of then-outstanding indebtedness; (ii) initial deposits into Securitization reserve accounts; (iii) closing costs in connection with the mortgage loans; and (iv) general costs associated with our operations.

The following table sets forth a summary of our mortgage loan indebtedness as of June 30, 2020 and December 31, 2019:

												Outstanding Principal Balance(5)
		Origination Date		Maturity Date(1)		Maturity Date if Fully Extended(2)		Interest Rate(3)		Range of Spreads(4)		June 30, 2020				December 31, 2019
IH 2017-1(6)		April 28, 2017		June 9, 2027		June 9, 2027		4.23%		N/A		$	994,606			$	995,520
SWH 2017-1(7)		September 29, 2017		October 9, 2020		January 9, 2023		1.73%		102-347 bps		736,208				744,092
IH 2017-2(7)		November 9, 2017		December 9, 2020		December 9, 2024		1.31%		91-186 bps		616,429				624,475
IH 2018-1(7)		February 8, 2018		March 9, 2021		March 9, 2025		1.28%		76-206 bps		780,718				793,720
IH 2018-2(7)		May 8, 2018		June 9, 2021		June 9, 2025		1.50%		95-230 bps		934,426				957,135
IH 2018-3(7)(8)		June 28, 2018		July 9, 2020		July 9, 2025		1.51%		105-230 bps		1,143,986				1,213,035
IH 2018-4(7)		November 7, 2018		January 9, 2021		January 9, 2026		1.58%		115-225 bps		928,533				938,430
Total Securitizations												6,134,906				6,266,407
Less: deferred financing costs, net												(16,331		)		(27,946		)
Total												$	6,118,575			$	6,238,461

(1)	The maturity dates above reflect all extension options that have been exercised.

(2)	Represents the maturity date if we exercise each of the remaining one year extension options available, which are subject to certain conditions being met.

(3)

Except for IH 2017-1, interest rates are based on a weighted average spread over LIBOR (or a comparable or successor rate as provided for in our loan agreements), plus applicable servicing fees; as of June 30, 2020, LIBOR was 0.16%. Our IH 2017-1 mortgage loan bears interest at a fixed rate of 4.23% per annum, equal to the market determined pass-through rate payable on the certificates including applicable servicing fees.

(4)	Range of spreads is based on outstanding principal balances as of June 30, 2020.

(5)	Outstanding principal balance is net of discounts and does not include deferred financing costs, net.

(6)	Net of unamortized discount of $2,465 and $2,641 as of June 30, 2020 and December 31, 2019, respectively.

(7)

The initial maturity term of each of these mortgage loans is two years, individually subject to three to five, one year extension options at the Borrower Entity’s discretion (provided that there is no continuing event of default under the mortgage loan agreement and the Borrower Entity obtains and delivers a replacement interest rate cap agreement from an approved counterparty within the required timeframe to the lender). Our SWH 2017-1, IH 2017-2, IH 2018-1 and IH 2018-2 mortgage loans have exercised the first extension option. The maturity dates above reflect all extensions that have been exercised.

(8)	On July 9, 2020, the extension of the maturity date of the IH 2018-3 mortgage loan from July 9, 2020 to July 9, 2021 was approved by the lender (see Note 15).

---

Securitization Transactions

For each Securitization transaction, the Borrower Entity executed a loan agreement with a third party lender. Except for IH 2017-1, each outstanding mortgage loan originally consisted of six floating rate components. The two year initial terms are individually subject to three to five, one year extension options at the Borrower Entity’s discretion. Such extensions are available provided there is no continuing event of default under the respective mortgage loan agreement and the Borrower Entity obtains and delivers a replacement interest rate cap agreement from an approved counterparty within the required timeframe to the lender. IH 2017-1 is a 10 year, fixed rate mortgage loan comprised of two components. Certificates issued by the trust in connection with Component A of IH 2017-1 benefit from FNMA’s guaranty of timely payment of principal and interest.

Each mortgage loan is secured by a pledge of the equity in the assets of the respective Borrower Entities, as well as first-priority mortgages on the underlying properties and a grant of security interests in all of the related personal property. As of June 30, 2020 and December 31, 2019, a total of 35,786 and 37,040 homes, respectively, with a net book value of $6,862,201 and $7,137,576, respectively, are pledged pursuant to the mortgage loans. Each Borrower Entity has the right, subject to certain requirements and limitations outlined in the respective loan agreements, to substitute properties. We are obligated to make monthly payments of interest for each mortgage loan.

Transactions with Trusts

Concurrent with the execution of each mortgage loan agreement, the respective third party lender sold each loan it originated to individual depositor entities (the “Depositor Entities”) who subsequently transferred each loan to Securitization-specific trust entities (the “Trusts”). The Depositor Entities for our currently outstanding Securitizations are wholly owned subsidiaries. We accounted for the transfers of the individual Securitizations from the wholly owned Depositor Entities to the respective Trusts as sales under ASC 860, Transfers and Servicing, with no resulting gain or loss as the Securitizations were both originated by the lender and immediately transferred at the same fair market value.

As consideration for the transfer of each loan to the Trusts, the Trusts issued classes of certificates which mirror the components of the individual loans (collectively, the “Certificates”) to the Depositor Entities, except that Class R certificates do not have related loan components as they represent residual interests in the Trusts. The Certificates represent the entire beneficial interest in the Trusts. Following receipt of the Certificates, the Depositor Entities sold the Certificates to investors and used the proceeds as consideration for the loans sold to the Depositor Entities by the lenders. These transactions had no effect on our condensed consolidated financial statements other than with respect to Certificates we retained in connection with Securitizations or purchased at a later date.

The Trusts are structured as pass-through entities that receive interest payments from the Securitizations and distribute those payments to the holders of the Certificates. The assets held by the Trusts are restricted and can only be used to fulfill the obligations of those entities. The obligations of the Trusts do not have any recourse to the general credit of any entities in these condensed consolidated financial statements. We have evaluated our interests in certain certificates of the Trusts held by us (discussed below) and determined that they do not create a more than insignificant variable interest in the Trusts. Additionally, the retained certificates do not provide us with any ability to direct activities that could impact the Trusts’ economic performance. Therefore, we do not consolidate the Trusts.

Retained Certificates

As the Trusts made Certificates available for sale to both domestic and foreign investors, sponsors of the mortgage loans are required to retain a portion of the risk that represents a material net economic interest in each loan pursuant to Regulation RR (the “Risk Retention Rules”) under the Securities Exchange Act of 1934, as amended. As such, loan sponsors are required to retain a portion of the credit risk that represents not less than 5% of the aggregate fair value of the loan as of the closing date.

IH 2017-1 issued Class B certificates, which are restricted certificates that were made available exclusively to INVH LP in order to comply with the Risk Retention Rules. The Class B certificates bear a stated annual interest rate of 4.23%, including applicable servicing fees.

---

For SWH 2017-1, IH 2017-2, IH 2018-1, IH 2018-2, IH 2018-3, and IH 2018-4, we retain 5% of each class of certificates to meet the Risk Retention Rules. These retained certificates accrue interest at a floating rate of LIBOR plus a spread ranging from 0.76% to 3.47%.

The retained certificates total $310,380 and $316,991 as of June 30, 2020 and December 31, 2019, respectively, and are classified as held to maturity investments and recorded in other assets, net on the condensed consolidated balance sheets (see Note 5).

Loan Covenants

The general terms that apply to all of the mortgage loans require each Borrower Entity to maintain compliance with certain affirmative and negative covenants. Affirmative covenants include each Borrower Entity’s, and certain of their respective affiliates’, compliance with (i) licensing, permitting and legal requirements specified in the mortgage loan agreements, (ii) organizational requirements of the jurisdictions in which they are organized, (iii) federal and state tax laws, and (iv) books and records requirements specified in the respective mortgage loan agreements. Negative covenants include each Borrower Entity’s, and certain of their affiliates’, compliance with limitations surrounding (i) the amount of each Borrower Entity’s indebtedness and the nature of their investments, (ii) the execution of transactions with affiliates, (iii) the Manager, (iv) the nature of each Borrower Entity’s business activities, and (v) the required maintenance of specified cash reserves. As of June 30, 2020, and through the date our condensed consolidated financial statements were issued, we believe each Borrower Entity is in compliance with all affirmative and negative covenants.

Prepayments

For the mortgage loans, prepayments of amounts owed by us are generally not permitted under the terms of the respective mortgage loan agreements unless such prepayments are made pursuant to the voluntary election or mandatory provisions specified in such agreements. The specified mandatory provisions become effective to the extent that a property becomes characterized as a disqualified property, a property is sold, and/or upon the occurrence of a condemnation or casualty event associated with a property. To the extent either a voluntary election is made, or a mandatory prepayment condition exists, in addition to paying all interest and principal, we must also pay certain breakage costs as determined by the loan servicer and a spread maintenance premium if prepayment occurs before the month following the one or two year anniversary of the closing dates of each of the mortgage loans except for IH 2017-1. For IH 2017-1, prepayments on or before December 2026 will require a yield maintenance premium. For the six months ended June 30, 2020 and 2019, we made voluntary and mandatory prepayments of $131,677 and $709,383, respectively, under the terms of the mortgage loan agreements. During the six months ended June 30, 2019, prepayments included the full repayment of the CSH 2016-2 mortgage loan.

Secured Term Loan

On June 7, 2019, 2019-1 IH Borrower LP, a consolidated subsidiary (“2019-1 IH Borrower” and one of our Borrower Entities), entered into a 12 year loan agreement with a life insurance company (the “Secured Term Loan”). The Secured Term Loan bears interest at a fixed rate of 3.59%, including applicable servicing fees, for the first 11 years and bears interest at a floating rate based on a spread of 147 bps, including applicable servicing fees, over one month LIBOR (subject to certain adjustments as outlined in the loan agreement) for the twelfth year. The Secured Term Loan is secured by first priority mortgages on a portfolio of single-family rental properties as well as a first priority pledge of the equity interests of 2019-1 IH Borrower. We utilized the proceeds from the Secured Term Loan to fund: (i) repayments of then-outstanding indebtedness; (ii) initial deposits into the Secured Term Loan’s reserve accounts; (iii) transaction costs related to the closing of the Secured Term Loan; and (iv) general corporate purposes.

---

The following table sets forth a summary of our Secured Term Loan indebtedness as of June 30, 2020 and December 31, 2019:

		Maturity Date		Interest Rate(1)		June 30, 2020				December 31, 2019
Secured Term Loan		June 9, 2031		3.59%		$	403,363			$	403,464
Deferred financing costs, net						(2,377		)		(2,486		)
Secured Term Loan, net						$	400,986			$	400,978

(1)

The Secured Term Loan bears interest at a fixed rate of 3.59% per annum including applicable servicing fees for the first 11 years and for the twelfth year bears interest at a floating rate based on a spread of 147 bps over one month LIBOR (or a comparable or successor rate as provided for in our loan agreement), including applicable servicing fees, subject to certain adjustments as outlined in the loan agreement. Interest payments are made monthly.

Collateral

The Secured Term Loan’s collateral pool contains 3,332 and 3,333 homes, respectively, as of June 30, 2020 and December 31, 2019, with a net book value of $727,530 and $734,759, respectively. 2019-1 IH Borrower has the right, subject to certain requirements and limitations outlined in the loan agreement, to substitute properties representing up to 20% of the collateral pool annually, and to substitute properties representing up to 100% of the collateral pool over the life of the Secured Term Loan. In addition, four times after the first anniversary of the closing date, 2019-1 IH Borrower has the right, subject to certain requirements and limitations outlined in the loan agreement, to execute a special release of collateral representing up to 15% of the then-outstanding principal balance of the Secured Term Loan in order to bring the loan-to-value ratio back in line with the Secured Term Loan’s loan-to-value ratio as of the closing date. Any such special release of collateral would not change the then-outstanding principal balance of the Secured Term Loan, but rather would reduce the number of single-family rental homes included in the collateral pool.

Loan Covenants

The Secured Term Loan requires 2019-1 IH Borrower to maintain compliance with certain affirmative and negative covenants. Affirmative covenants include 2019-1 IH Borrower’s, and certain of its affiliates’, compliance with (i) licensing, permitting and legal requirements specified in the loan agreement, (ii) organizational requirements of the jurisdictions in which they are organized, (iii) federal and state tax laws, and (iv) books and records requirements specified in the loan agreement. Negative covenants include 2019-1 IH Borrower’s, and certain of its affiliates’, compliance with limitations surrounding (i) the amount of 2019-1 IH Borrower’s indebtedness and the nature of its investments, (ii) the execution of transactions with affiliates, (iii) the Manager, (iv) the nature of 2019-1 IH Borrower’s business activities, and (v) the required maintenance of specified cash reserves. As of June 30, 2020, and through the date our condensed consolidated financial statements were issued, we believe 2019-1 IH Borrower is in compliance with all affirmative and negative covenants.

Prepayments

Prepayments of the Secured Term Loan are generally not permitted unless such prepayments are made pursuant to the voluntary election or mandatory provisions specified in the loan agreement. The specified mandatory provisions become effective to the extent that a property becomes characterized as a disqualified property, a property is sold, and/or upon the occurrence of a condemnation or casualty event associated with a property. To the extent either a voluntary election is made, or a mandatory prepayment condition exists, in addition to paying all interest and principal, we must also pay certain breakage costs as determined by the loan servicer and a yield maintenance premium if prepayment occurs before June 9, 2030. For the six months ended June 30, 2020, we made mandatory prepayments of $101. No prepayments were made for the six months ended June 30, 2019.

---

Term Loan Facility and Revolving Facility

On February 6, 2017, we entered into a credit agreement with a syndicate of banks, financial institutions, and institutional lenders for a credit facility (the “Credit Facility”), which was amended on December 18, 2017 to include all entities and homes acquired in the Mergers. The Credit Facility provides $2,500,000 of borrowing capacity and consists of a $1,000,000 revolving facility (the “Revolving Facility”), which will mature on February 6, 2021, with a one year extension option, and a $1,500,000 term loan facility (the “Term Loan Facility”), which will mature on February 6, 2022. The Revolving Facility also includes borrowing capacity available for letters of credit and for short-term borrowings referred to as swing line borrowings, in each case subject to certain sublimits. The Credit Facility provides us with the option to enter into additional incremental credit facilities (including an uncommitted incremental facility that provides us with the option to increase the size of the Revolving Facility and/or the Term Loan Facility by an aggregate amount of up to $1,500,000), subject to certain limitations. Proceeds from the Term Loan Facility were used to repay then-outstanding indebtedness and for general corporate purposes. Proceeds from the Revolving Facility are used for general corporate purposes.

The following table sets forth a summary of the outstanding principal amounts under the Credit Facility as of June 30, 2020 and December 31, 2019:

		Maturity Date		Interest Rate(1)		June 30, 2020				December 31, 2019
Term Loan Facility		February 6, 2022		1.86%		$	1,500,000			$	1,500,000
Deferred financing costs, net						(4,809		)		(6,253		)
Term Loan Facility, net						$	1,495,191			$	1,493,747
Revolving Facility(2)		February 6, 2021		1.91%		$	—			$	—

(1)	Interest rates for the Term Loan Facility and the Revolving Facility are based on LIBOR plus an applicable margin. As of June 30, 2020, the applicable margins were 1.70% and 1.75%, respectively, and LIBOR was 0.16%.

(2)	If we exercise the one year extension option, the maturity date will be February 6, 2022.

Interest Rate and Fees

Borrowings under the Credit Facility bear interest, at our option, at a rate equal to a margin over either (a) a LIBOR rate determined by reference to the Bloomberg LIBOR rate (or a comparable or successor rate as provided for in our loan agreement) for the interest period relevant to such borrowing, or (b) a base rate determined by reference to the highest of (1) the administrative agent’s prime lending rate, (2) the federal funds effective rate plus 0.50%, and (3) the LIBOR rate that would be payable on such day for a LIBOR rate loan with a one month interest period plus 1.00%. The margin is based on a total leverage based grid. The margin for the Revolving Facility ranges from 0.75% to 1.30% in the case of base rate loans, and 1.75% to 2.30% in the case of LIBOR rate loans. The margin for the Term Loan Facility ranges from 0.70% to 1.30% in the case of base rate loans, and 1.70% to 2.30% in the case of LIBOR rate loans. In addition, the Credit Facility provides that, upon receiving an investment grade rating on its non-credit enhanced, senior unsecured long term debt of BBB- or better from Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies, Inc., or Baa3 or better from Moody’s Investors Service, Inc. (an “Investment Grade Rating Event”), we may elect to convert to a credit rating based pricing grid.

In addition to paying interest on outstanding principal under the Credit Facility, we are required to pay a facility fee to the lenders under the Revolving Facility in respect of the unused commitments thereunder. The facility fee rate is based on the daily unused amount of the Revolving Facility and is either 0.35% or 0.20% per annum based on the unused facility amount. Upon converting to a credit rating pricing based grid, the unused facility fee will no longer apply and we will be required to pay a facility fee ranging from 0.125% to 0.300%. We are also required to pay customary letter of credit fees.

---

Prepayments and Amortization

No principal reductions are required under the Credit Facility. We are permitted to voluntarily repay amounts outstanding under the Term Loan Facility at any time without premium or penalty, subject to certain minimum amounts and the payment of customary “breakage” costs with respect to LIBOR loans. Once repaid, no further borrowings will be permitted under the Term Loan Facility.

Loan Covenants

The Credit Facility contains certain customary affirmative and negative covenants and events of default. Such covenants will, among other things, restrict, subject to certain exceptions, our ability and that of the Subsidiary Guarantors (as defined below) and their respective subsidiaries to (i) engage in certain mergers, consolidations or liquidations, (ii) sell, lease or transfer all or substantially all of their respective assets, (iii) engage in certain transactions with affiliates, (iv) make changes to our fiscal year, (v) make changes in the nature of our business and our subsidiaries, and (vi) incur additional indebtedness that is secured on a pari passu basis with the Credit Facility.

The Credit Facility also requires us, on a consolidated basis with our subsidiaries, to maintain a (i) maximum total leverage ratio, (ii) maximum secured leverage ratio, (iii) maximum unencumbered leverage ratio, (iv) minimum fixed charge coverage ratio, (v) minimum unencumbered fixed charge coverage ratio, and (vi) minimum tangible net worth. If an event of default occurs, the lenders under the Credit Facility are entitled to take various actions, including the acceleration of amounts due under the Credit Facility and all actions permitted to be taken by a secured creditor. As of June 30, 2020, and through the date our condensed consolidated financial statements were issued, we believe we were in compliance with all affirmative and negative covenants.

Guarantees and Security

The obligations under the Credit Facility are guaranteed on a joint and several basis by each of our direct and indirect domestic wholly owned subsidiaries that own, directly or indirectly, unencumbered assets (the “Subsidiary Guarantors”), subject to certain exceptions. The guarantee provided by any Subsidiary Guarantor will be automatically released upon the occurrence of certain events, including if it no longer has a direct or indirect interest in an unencumbered asset or as a result of certain non-recourse refinancing transactions pursuant to which such Subsidiary Guarantor becomes contractually prohibited from providing its guaranty of the Credit Facility. In addition, INVH may be required to provide a guarantee of the Credit Facility under certain circumstances, including if INVH does not maintain its qualification as a REIT.

The Credit Facility is collateralized by first priority or equivalent security interests in all the capital stock of, or other equity interests in, any Subsidiary Guarantor held by us and each of the Subsidiary Guarantors. The security interests granted under the Credit Facility will be automatically released upon the occurrence of certain events, including upon an Investment Grade Rating Event or if the total net leverage ratio is less than or equal to 8.00:1.00 for four consecutive fiscal quarters.

Convertible Senior Notes

In connection with the Mergers, we assumed SWH’s convertible senior notes. In July 2014, SWH issued $230,000 in aggregate principal amount of 3.00% convertible senior notes due 2019 (the “2019 Convertible Notes”). Interest on the 2019 Convertible Notes was payable semiannually in arrears on January 1st and July 1st of each year. The notes matured on July 1, 2019, and we settled substantially all of the outstanding balance of the 2019 Convertible Notes through the issuance of 12,553,864 shares of our common stock.

---

In January 2017, SWH issued $345,000 in aggregate principal amount of 3.50% convertible senior notes due 2022 (the “2022 Convertible Notes” and together with the 2019 Convertible Notes, the “Convertible Senior Notes”). Interest on the 2022 Convertible Notes is payable semiannually in arrears on January 15th and July 15th of each year. The 2022 Convertible Notes will mature on January 15, 2022.

The following table summarizes the terms of the Convertible Senior Notes outstanding as of June 30, 2020 and December 31, 2019:

												Principal Amount
		Coupon Rate		Effective Rate(1)		Conversion Rate(2)		Maturity Date		Remaining Amortization Period		June 30, 2020				December 31, 2019
2022 Convertible Notes		3.50%		5.12%		43.7694		January 15, 2022		1.54 years		$	345,000			$	345,000
Net unamortized fair value adjustment												(8,180		)		(10,701		)
Total												$	336,820			$	334,299

(1)	Effective rate includes the effect of the adjustment to the fair value of the debt as of the Merger Date, the value of which reduced the initial liability recorded to $324,252 for the 2022 Convertible Notes.

(2)

The conversion rate as of June 30, 2020 represents the number of shares of common stock issuable per $1,000 principal amount (actual $) of the 2022 Convertible Notes converted on such date, as adjusted in accordance with the indenture as a result of cash dividend payments and the effects of previous mergers. As of June 30, 2020, the 2022 Convertible Notes do not meet the criteria for conversion. We have the option to settle the 2022 Convertible Notes in cash, common stock, or a combination thereof.

Terms of Conversion

On July 1, 2019, we settled substantially all of the outstanding balance of the 2019 Convertible Notes with the issuance of 12,553,864 shares of our common stock. At the settlement date, the conversion rate applicable to the 2019 Convertible Notes was 54.5954 shares of our common stock per $1,000 principal amount (actual $) of the 2019 Convertible Notes (equivalent to a conversion price of approximately $18.32 per common share — actual $). For the three and six months ended June 30, 2019, interest expense for the 2019 Convertible Notes, including non-cash amortization of discounts, was $2,783 and $5,586, respectively.

As of June 30, 2020, the conversion rate applicable to the 2022 Convertible Notes is 43.7694 shares of our common stock per $1,000 principal amount (actual $) of the 2022 Convertible Notes (equivalent to a conversion price of approximately $22.85 per common share — actual $). The conversion rate for the 2022 Convertible Notes is subject to adjustment in some events, but will not be adjusted for any accrued and unpaid interest. In addition, following certain events that occur prior to the maturity date, we will adjust the conversion rate for a holder who elects to convert its 2022 Convertible Notes in connection with such an event in certain circumstances. At any time prior to July 15, 2021, holders may convert the 2022 Convertible Notes at their option only under specific circumstances as defined in the indenture agreement, dated as of January 10, 2017, between us and our trustee, Wilmington Trust National Association (the “Convertible Notes Trustee”). On or after July 15, 2021 and until maturity, holders may convert all or any portion of the 2022 Convertible Notes at any time. Upon conversion, we will pay or deliver, as the case may be, cash, common stock, or a combination of cash and common stock, at our election. The “if-converted” value of the 2022 Convertible Notes exceeds the principal amount by $70,715 as of June 30, 2020 as the closing market price of our common stock of $27.53 per common share (actual $) exceeds the implicit conversion price. For the three months ended June 30, 2020 and 2019, interest expense for the 2022 Convertible Notes, including non-cash amortization of discounts, was $4,279 and $4,217, respectively. For the six months ended June 30, 2020 and 2019, interest expense for the 2022 Convertible Notes, including non-cash amortization of discounts, was $8,558 and $8,434, respectively.

---

General Terms

We may not redeem the 2022 Convertible Notes prior to their maturity date except to the extent necessary to preserve our status as a REIT for United States federal income tax purposes, as further described in the indenture. If we undergo a fundamental change as defined in the indenture, holders may require us to repurchase for cash all or any portion of their 2022 Convertible Notes at a fundamental change repurchase price equal to 100% of the principal amount of the 2022 Convertible Notes to be repurchased, plus accrued and unpaid interest up to, but excluding, the fundamental change repurchase date.

Debt Maturities Schedule

The following table summarizes the contractual maturities of our debt as of June 30, 2020:

Year		Mortgage Loans(1)(2)				Secured Term Loan				Term Loan Facility				Revolving Facility(3)				Convertible Senior Notes				Total
Remainder of 2020		$	2,496,623			$	—			$	—			$	—			$	—			$	2,496,623
2021		2,643,677				—				—				—				—				2,643,677
2022		—				—				1,500,000				—				345,000				1,845,000
2023		—				—				—				—				—				—
2024		—				—				—				—				—				—
Thereafter		994,606				403,363				—				—				—				1,397,969
Total		6,134,906				403,363				1,500,000				—				345,000				8,383,269
Less: deferred financing costs, net		(16,331		)		(2,377		)		(4,809		)		—				—				(23,517		)
Less: unamortized fair value adjustment		—				—				—				—				(8,180		)		(8,180		)
Total		$	6,118,575			$	400,986			$	1,495,191			$	—			$	336,820			$	8,351,572

(1)

The maturity dates of the obligations are reflective of all extensions that have been exercised as of June 30, 2020. If fully extended, we would have no mortgage loans maturing before 2023. Such extensions are available provided there is no continuing event of default under the respective mortgage loan agreement and the Borrower Entity obtains and delivers a replacement interest rate cap agreement from an approved counterparty within the required timeframe to the lender.

(2)	On July 9, 2020, the extension of the maturity date of the IH 2018-3 mortgage loan from July 9, 2020 to July 9, 2021 was approved by the lender (see Note 15).

(3)	If we exercise the one year extension option, the maturity date will be in 2022.

Note 7—Derivative Instruments

From time to time, we enter into derivative instruments to manage the economic risk of changes in interest rates. We do not enter into derivative transactions for speculative or trading purposes. Designated hedges are derivatives that meet the criteria for hedge accounting and that we have elected to designate as hedges. Non-designated hedges are derivatives that do not meet the criteria for hedge accounting or that we did not elect to designate as hedges.

---

Designated Hedges

We have entered into various interest rate swap agreements, which are used to hedge the variable cash flows associated with variable-rate interest payments. Currently, each of our swap agreements is indexed to LIBOR and is designated for hedge accounting purposes. LIBOR is set to expire at the end of 2021, and we will work with the counterparties to our swap agreements to adjust each floating rate to a comparable or successor rate. Changes in the fair value of these swaps are recorded in other comprehensive income and are subsequently reclassified into earnings in the period in which the hedged forecasted transactions affect earnings.

The table below summarizes our interest rate swap instruments as of June 30, 2020:

Agreement Date

Forward Effective Date

Maturity Date

Strike Rate

Index

Notional Amount

December 21, 2016

February 28, 2017

January 31, 2022

1.97%

One month LIBOR

$

750,000

December 11, 2019

February 28, 2017

December 31, 2024

1.74%

One month LIBOR

750,000

January 12, 2017

February 28, 2017

August 7, 2020

1.59%

One month LIBOR

1,100,000

April 19, 2018

January 31, 2019

January 31, 2025

2.86%

One month LIBOR

400,000

February 15, 2019

March 15, 2019

March 15, 2022

2.23%

One month LIBOR

800,000

April 19, 2018

March 15, 2019

November 30, 2024

2.85%

One month LIBOR

400,000

April 19, 2018

March 15, 2019

February 28, 2025

2.86%

One month LIBOR

400,000

June 3, 2016

July 15, 2019

July 15, 2020

1.30%

One month LIBOR

450,000

January 10, 2017

January 15, 2020

January 15, 2021

2.13%

One month LIBOR

550,000

May 8, 2018

March 9, 2020

June 9, 2025

2.99%

One month LIBOR

325,000

May 8, 2018

June 9, 2020

June 9, 2025

2.99%

One month LIBOR

595,000

June 3, 2016

July 15, 2020

July 15, 2021

1.47%

One month LIBOR

450,000

June 28, 2018

August 7, 2020

July 9, 2025

2.90%

One month LIBOR

1,100,000

January 10, 2017

January 15, 2021

July 15, 2021

2.23%

One month LIBOR

550,000

December 9, 2019

July 15, 2021

November 30, 2024

2.90%

One month LIBOR

400,000

November 7, 2018

March 15, 2022

July 31, 2025

3.14%

One month LIBOR

400,000

November 7, 2018

March 15, 2022

July 31, 2025

3.16%

One month LIBOR

400,000

During the three and six months ended June 30, 2020 and 2019, such derivatives were used to hedge the variable cash flows associated with existing variable-rate interest payments. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on our variable-rate debt. During the next 12 months, we estimate that $153,198 will be reclassified to earnings as an increase in interest expense.

---

Non-Designated Hedges

Concurrent with entering into certain of the mortgage loan agreements and in connection with previous mergers, we entered into or acquired and maintain interest rate cap agreements with terms and notional amounts equivalent to the terms and amounts of the mortgage loans made by the third party lenders. Currently, each of our cap agreements is indexed to LIBOR, which is set to expire at the end of 2021. We will work with the counterparties to our cap agreements to adjust each floating rate to a comparable or successor rate. To the extent that the maturity date of one or more of the mortgage loans is extended through an exercise of one or more extension options, replacement or extension interest rate cap agreements must be executed with terms similar to those associated with the initial interest rate cap agreements and strike prices equal to the greater of the interest rate cap strike price and the interest rate at which the debt service coverage ratio (as defined) is not less than 1.2 to 1.0. The interest rate cap agreements, including all of our rights to payments owed by the counterparties and all other rights, have been pledged as additional collateral for the mortgage loans. Additionally, in certain instances, in order to minimize the cash impact of purchasing required interest rate caps, we simultaneously sell interest rate caps (which have identical terms and notional amounts) such that the purchase price and sales proceeds of the related interest rate caps are intended to offset each other. The purchased and sold interest rate caps have strike prices ranging from approximately 3.24% to 5.31%.

Fair Values of Derivative Instruments on the Condensed Consolidated Balance Sheets

The table below presents the fair value of our derivative financial instruments as well as their classification on the condensed consolidated balance sheets as of June 30, 2020 and December 31, 2019:

		Asset Derivatives										Liability Derivatives
				Fair Value as of										Fair Value as of
		Balance Sheet Location		June 30, 2020				December 31, 2019				Balance Sheet Location		June 30, 2020				December 31, 2019
Derivatives designated as hedging instruments:
Interest rate swaps		Other assets		$	—			$	1,643			Other liabilities		$	634,337			$	275,679
Derivatives not designated as hedging instruments:
Interest rate caps		Other assets		86				—				Other liabilities		2				—
Total				$	86			$	1,643					$	634,339			$	275,679

---

Offsetting Derivatives

We enter into master netting arrangements, which reduce risk by permitting net settlement of transactions with the same counterparty. The tables below present a gross presentation, the effects of offsetting, and a net presentation of our derivatives as of June 30, 2020 and December 31, 2019:

		June 30, 2020
														Gross Amounts Not Offset in the Statement of Financial Position
		Gross Amounts of Recognized Assets/ Liabilities				Gross Amounts Offset in the Statement of Financial Position				Net Amounts of Assets/ Liabilities Presented in the Statement of Financial Position				Financial Instruments				Cash Collateral Received				Net Amount
Offsetting assets:
Derivatives		$	86			$	—			$	86			$	—			$	—			$	86
Offsetting liabilities:
Derivatives		$	634,339			$	—			$	634,339			$	—			$	—			$	634,339

		December 31, 2019
														Gross Amounts Not Offset in the Statement of Financial Position
		Gross Amounts of Recognized Assets/ Liabilities				Gross Amounts Offset in the Statement of Financial Position				Net Amounts of Assets/ Liabilities Presented in the Statement of Financial Position				Financial Instruments				Cash Collateral Received				Net Amount
Offsetting assets:
Derivatives		$	1,643			$	—			$	1,643			$	(1,054	)		$	—			$	589
Offsetting liabilities:
Derivatives		$	275,679			$	—			$	275,679			$	(1,054	)		$	—			$	274,625

---

Effect of Derivative Instruments on the Condensed Consolidated Statements of Comprehensive Loss and the Condensed Consolidated Statements of Operations

The tables below present the effect of our derivative financial instruments in the condensed consolidated statements of comprehensive loss and the condensed consolidated statements of operations for the three months ended June 30, 2020 and 2019:

		Amount of Loss Recognized in OCI on Derivative								Location of Gain Reclassified from Accumulated OCI into Net Income		Amount of Gain (Loss) Reclassified from Accumulated OCI into Net Income								Total Amount of Interest Expense Presented in the Condensed Consolidated Statements of Operations
		For the Three Months Ended June 30,										For the Three Months Ended June 30,								For the Three Months Ended June 30,
		2020				2019						2020				2019				2020				2019
Derivatives in cash flow hedging relationships:
Interest rate swaps		$	(52,817	)		$	(148,599	)		Interest expense		$	(28,042	)		$	7,891			$	86,071			$	95,706

		Location of Loss Recognized in Net Income on Derivative		Amount of Loss Recognized in Net Income on Derivative
				For the Three Months Ended June 30,
				2020			2019
Derivatives not designated as hedging instruments:
Interest rate caps		Interest expense		39			1

The tables below present the effect of our derivative financial instruments in the condensed consolidated statements of comprehensive loss and the condensed consolidated statements of operations for the six months ended June 30, 2020 and 2019:

		Amount of Loss Recognized in OCI on Derivative								Location of Gain Reclassified from Accumulated OCI into Net Income		Amount of Gain (Loss) Reclassified from Accumulated OCI into Net Income								Total Amount of Interest Expense Presented in the Condensed Consolidated Statements of Operations
		For the Six Months Ended June 30,										For the Six Months Ended June 30,								For the Six Months Ended June 30,
		2020				2019						2020				2019				2020				2019
Derivatives in cash flow hedging relationships:
Interest rate swaps		$	(394,255	)		$	(236,467	)		Interest expense		$	(36,609	)		$	18,754			$	170,828			$	189,689

		Location of Loss Recognized in Net Income on Derivative		Amount of Loss Recognized in Net Income on Derivative
				For the Six Months Ended June 30,
				2020				2019
Derivatives not designated as hedging instruments:
Interest rate caps		Interest expense		$	52			$	34

---

Credit-Risk-Related Contingent Features

The agreements with our derivative counterparties which govern our interest rate swap agreements contain a provision where we could be declared in default on our derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to our default on the indebtedness.

As of June 30, 2020, the fair value of certain derivatives in a net liability position was $634,339. If we had breached any of these provisions at June 30, 2020, we could have been required to settle the obligations under the agreements at their termination value, which includes accrued interest and excludes the nonperformance risk related to these agreements, of $665,305.

Note 8—Stockholders' Equity

As of June 30, 2020, we have issued 560,532,679 shares of common stock. In addition, we issue OP Units from time to time which, upon vesting, are redeemable for shares of our common stock on a one-for-one basis or, in our sole discretion, cash and are reflected as non-controlling interests on our condensed consolidated balance sheets and statements of equity. As of June 30, 2020, 3,463,285 outstanding OP Units are redeemable.

During the three and six months ended June 30, 2020, we issued 16,765,234 and 18,889,954, respectively, shares of common stock.

Public Offering

On June 4, 2020, we completed an underwritten public offering of 16,675,000 shares of our common stock, including 2,175,000 shares sold pursuant to the underwriters’ full exercise of the option to purchase additional shares. During the three and six months ended June 30, 2020, this offering generated net proceeds of $447,533, after giving effect to commissions and other costs totaling $6,861.

At the Market Equity Program

On August 22, 2019, we entered into distribution agreements with a syndicate of banks (the “Agents”), pursuant to which we may sell, from time to time, up to an aggregate sales price of $800,000 of our common stock through the Agents (the “ATM Equity Program”). During the three and six months ended June 30, 2020, we sold 15,400 and 1,887,466 shares of our common stock under our ATM Equity Program, respectively, generating net proceeds of $344 and $56,265, respectively, after giving effect to Agent commissions and other costs totaling $66 and $977, respectively. As of June 30, 2020, $685,799 remains available for future offerings under the ATM Equity Program.

Dividends

To qualify as a REIT, we are required to distribute annually to our stockholders at least 90% of our REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains, and to pay tax at regular corporate rates to the extent that we annually distribute less than 100% of our net taxable income. We intend to pay quarterly dividends to our stockholders, which in the aggregate are approximately equal to or exceed our net taxable income in the relevant year. The timing, form, and amount of distributions, if any, to our stockholders, will be at the sole discretion of our board of directors.

---

The following table summarizes our dividends declared from January 1, 2019 through June 30, 2020:

Record Date

Amount per Share

Pay Date

Total Amount Declared

Q2-2020

May 13, 2020

$

0.15

May 29, 2020

$

81,916

Q1-2020

February 12, 2020

0.15

February 28, 2020

81,673

Q4-2019

November 13, 2019

0.13

November 27, 2019

70,693

Q3-2019

August 15, 2019

0.13

August 30, 2019

70,465

Q2-2019

May 15, 2019

0.13

May 31, 2019

68,334

Q1-2019

February 13, 2019

0.13

February 28, 2019

67,965

On July 22, 2020, our board of directors declared a dividend of $0.15 per share to stockholders of record on August 12, 2020, which is payable on August 28, 2020 (see Note 15).

Note 9—Related Party Transactions

Management Services

One of our consolidated subsidiaries, as the managing member of a joint venture with FNMA (see Note 5), earns a management fee based upon the venture’s gross receipts. For the three months ended June 30, 2020 and 2019, we earned $629 and $713, respectively, and for the six months ended June 30, 2020 and 2019, we earned $1,309 and $1,449, respectively, of management fees which are included in other, net in the accompanying condensed consolidated statements of operations.

Note 10—Share-Based Compensation

Prior to completion of the IPO, our board of directors adopted, and our stockholders approved, the Invitation Homes Inc. 2017 Omnibus Incentive Plan (the “Omnibus Incentive Plan”) to provide a means through which to attract and retain key personnel and to provide a means whereby our directors, officers, employees, consultants, and advisors can acquire and maintain an equity interest in us, or be paid incentive compensation, including incentive compensation measured by reference to the value of our common stock, and to align their interests with those of our stockholders. Under the Omnibus Incentive Plan, we may issue up to 16,000,000 shares of common stock.

Our share-based awards consist of time-vesting restricted stock units (“RSUs”), performance and market based vesting RSUs (“PRSUs”), and Outperformance Awards (defined below). Time-vesting RSUs are participating securities for earnings (loss) per common share (“EPS”) purposes, and PRSUs and Outperformance Awards are not. For detailed discussion of RSUs and PRSUs issued prior to January 1, 2020, refer to our Annual Report on Form 10-K for the year ended December 31, 2019.

Share-Based Awards

The following summarizes our share-based award activity during the six months ended June 30, 2020.

Annual Long Term Incentive Plan (“LTIP”):

•

Annual LTIP Awards Granted: During the six months ended June 30, 2020, we granted 499,228 RSUs pursuant to LTIP awards (together with previously granted annual LTIP awards, “LTIP Awards”). Each award includes components which vest based on time-vesting conditions, market based vesting conditions, and performance based vesting conditions, each of which is subject to continued employment through the applicable vesting date. The time-vesting RSUs granted during the six months ended June 30, 2020 vest in three equal annual installments based on an anniversary date of March 1, 2020. The PRSUs granted during the six months ended June 30, 2020 may be earned based on the achievement of certain measures over a three year performance period that ends December 31, 2022. The number of PRSUs earned will be determined based on performance achieved during the performance period for each measure at certain threshold, target, or maximum levels and corresponding payout ranges. In general, the LTIP

---

PRSUs are earned after the end of the performance period on the date on which the performance results are certified by our compensation and management development committee (the “Compensation Committee”).

All of the LTIP Awards are subject to certain change in control and retirement eligibility provisions that may impact these vesting schedules.

•

PRSU Results: In February 2020, the Compensation Committee certified performance achievement with respect to Tranche 3 of our 2017 LTIP Awards. Certain PRSUs vested and achieved performance in excess of the target level, resulting in the issuance of an additional 91,200 shares of common stock. Such awards are reflected as an increase in the number of awards granted and vested in the table below. Certain other PRSUs did not achieve performance criteria, resulting in the cancellation of 5,348 awards. Such awards are reflected as an increase in the number of awards forfeited/canceled in the table below.

Director Awards

During the six months ended June 30, 2020, we granted 58,690 time-vesting RSUs to members of our board of directors, which awards will fully vest on the date of INVH’s 2021 annual stockholders meeting, subject to continued service on the board of directors through such date.

Outperformance Awards

On May 1, 2019, the Compensation Committee approved one-time equity based awards with market based vesting conditions in the form of PRSUs and OP Units (the “Outperformance Awards”). The Outperformance Awards may be earned based on the achievement of rigorous absolute total shareholder return and relative total shareholder return thresholds over a three year performance period ending on March 31, 2022. Upon completion of the performance period, the dollar value of the awards earned under the absolute and relative total shareholder return components will be separately calculated, and the number of earned Outperformance Awards will be determined based on the earned dollar value of the awards and the stock price at the performance certification date. Earned awards will vest 50% on March 31, 2022 and 25% on each of the first and second anniversaries of such date, subject to continued employment. The current aggregate $12,390 grant-date fair value of the Outperformance Awards still outstanding was determined based on Monte-Carlo option pricing models which estimate the probability of the vesting conditions being satisfied.

Summary of Total Share-Based Awards

The following table summarizes activity related to non-vested time-vesting RSUs and PRSUs, other than Outperformance Awards, during the six months ended June 30, 2020:

		Time-Vesting Awards							PRSUs							Total Share-Based Awards(1)
		Number			Weighted Average Grant Date Fair Value (Actual $)				Number			Weighted Average Grant Date Fair Value (Actual $)				Number			Weighted Average Grant Date Fair Value (Actual $)
Balance, December 31, 2019		685,069			$	22.48			925,076			$	23.13			1,610,145			$	22.86
Granted		225,760			28.25				423,358			29.73				649,118			29.21
Vested(2)		(291,694	)		(22.96		)		(152,967	)		(22.25		)		(444,661	)		(22.72		)
Forfeited / canceled		(7,362	)		(25.31		)		(17,833	)		(23.24		)		(25,195	)		(23.85		)
Balance, June 30, 2020		611,773			$	24.35			1,177,634			$	25.62			1,789,407			$	25.18

(1)	Total share-based awards excludes Outperformance Awards.

(2)	All vested share-based awards are included in basic EPS for the periods after each award’s vesting date. The estimated fair value of share-based awards that fully vested during the six months ended June 30, 2020 was $9,759. During the six months ended June 30, 2020, 322 RSUs were accelerated pursuant to the terms and conditions of the Omnibus Incentive Plan and related award agreements.

---

Grant-Date Fair Values

The grant-date fair values of the time-vesting RSUs and PRSUs with performance condition vesting criteria are generally based on the closing price of our common stock on the grant date. However, the grant-date fair values for share-based awards with market condition vesting criteria are based on Monte-Carlo option pricing models. The following table summarizes the significant inputs utilized in these models for such awards granted during the six months ended June 30, 2020:

		For the Six Months Ended June 30, 2020
Expected volatility(1)		17.2	%	—	17.3%
Risk-free rate		0.85%
Expected holding period (years)		2.09		—	2.84

(1)	Expected volatility was estimated based on the historical volatility of INVH’s realized returns and the applicable index.

Summary of Total Share-Based Compensation Expense

During the three and six months ended June 30, 2020 and 2019, we recognized share-based compensation expense as follows:

		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2020				2019				2020				2019
General and administrative		$	1,659			$	2,795			$	4,927			$	7,715
Property management expense		447				820				1,280				1,507
Total		$	2,106			$	3,615			$	6,207			$	9,222

As of June 30, 2020, there is $27,382 of unrecognized share-based compensation expense related to non-vested share-based awards which is expected to be recognized over a weighted average period of 2.10 years.

Note 11—Fair Value Measurements

The carrying amounts of restricted cash, certain components of other assets, accounts payable and accrued expenses, resident security deposits, and certain components of other liabilities approximate fair value due to the short maturity of these amounts. Our interest rate swap agreements and interest rate cap agreements are the only financial instruments recorded at fair value on a recurring basis within our condensed consolidated financial statements. The fair values of our interest rate caps and swaps, which are classified as Level 2 in the fair value hierarchy, are estimated using market values of instruments with similar attributes and maturities. See Note 7 for the details of the condensed consolidated balance sheet classification and the fair values for the interest rate caps and swaps.

---

The following table displays the carrying values and fair values of financial instruments as of June 30, 2020 and December 31, 2019:

				June 30, 2020								December 31, 2019
				Carrying Value				Fair Value				Carrying Value				Fair Value
Assets carried at historical cost on the condensed consolidated balance sheets:
Investments in debt securities(1)		Level 2		$	310,380			$	309,011			$	316,991			$	318,299
Liabilities carried at historical cost on the condensed consolidated balance sheets:
Mortgage loans(2)		Level 2		$	6,134,906			$	6,113,628			$	6,266,407			$	6,292,261
Secured Term Loan(3)		Level 3		403,363				450,008				403,464				411,213
Term Loan Facility(4)		Level 3		1,500,000				1,491,166				1,500,000				1,500,444
Convertible Senior Notes(5)		Level 3		336,820				351,456				334,299				346,489

(1)	The carrying values of investments in debt securities are shown net of discount.

(2)	The carrying values of the mortgage loans are shown net of discount and exclude $16,331 and $27,946 of deferred financing costs as of June 30, 2020 and December 31, 2019, respectively.

(3)	The carrying value of the Secured Term Loan excludes $2,377 and $2,486 of deferred financing costs as of June 30, 2020 and December 31, 2019, respectively.

(4)	The carrying value of the Term Loan Facility excludes $4,809 and $6,253 of deferred financing costs as of June 30, 2020 and December 31, 2019, respectively.

(5)	The carrying values of the Convertible Senior Notes include unamortized discounts of $8,180 and $10,701 as of June 30, 2020 and December 31, 2019, respectively.

The fair values of our investment in debt securities and mortgage loans, which are classified as Level 2 in the fair value hierarchy, are estimated based on market bid prices of comparable instruments at the end of the period. The following table displays the significant unobserverable inputs used to develop our Level 3 fair value measurements as of June 30, 2020:

		Quantitative Information about Level 3 Fair Value Measurement(1)
		Fair Value				Valuation Technique		Unobservable Input		Rate
Secured Term Loan		$	450,008			Discounted Cash Flow		Effective Rate		2.39%
Term Loan Facility		1,491,166				Discounted Cash Flow		Effective Rate		2.19	%	—	2.28%
Convertible Senior Notes		351,456				Discounted Cash Flow		Effective Rate		2.26%

(1)	Our Level 3 fair value instruments require interest only monthly payments.

---

Our assets measured at fair value on a nonrecurring basis are those assets for which we have recorded impairments. The assets for which we have recorded impairments, measured at fair value on a nonrecurring basis, are summarized below:

		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2020				2019				2020				2019
Investments in single-family residential properties, net held for use (Level 3):
Pre-impairment amount		$	451			$	7,313			$	451			$	7,553
Total impairments		(89		)		(1,788		)		(89		)		(1,818		)
Fair value		$	362			$	5,525			$	362			$	5,735

		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2020				2019				2020				2019
Investments in single-family residential properties, net held for sale (Level 3):
Pre-impairment amount		$	6,994			$	12,090			$	17,794			$	31,114
Total impairments		(1,353		)		(2,288		)		(3,824		)		(5,511		)
Fair value		$	5,641			$	9,802			$	13,970			$	25,603

For additional information related to our single-family residential properties as of June 30, 2020 and December 31, 2019, refer to Note 3.

Note 12—Earnings per Share

Basic and diluted EPS are calculated as follows:

		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2020				2019				2020				2019
(in thousands, except share and per share data)
Numerator:
Net income available to common stockholders — basic and diluted		$	42,784			$	38,833			$	92,638			$	59,549
Denominator:
Weighted average common shares outstanding — basic		548,811,968				525,070,036				545,680,740				523,265,455
Effect of dilutive securities:
Incremental shares attributed to non-vested share-based awards		1,108,245				863,607				1,156,069				925,014
Weighted average common shares outstanding — diluted		549,920,213				525,933,643				546,836,809				524,190,469
Net income per common share — basic		$	0.08			$	0.07			$	0.17			$	0.11
Net income per common share — diluted		$	0.08			$	0.07			$	0.17			$	0.11

Incremental shares attributed to non-vested share-based awards are excluded from the computation of diluted EPS when they are anti-dilutive. For the three and six months ended June 30, 2020, 342,849 and 250,538 incremental shares attributed to non-vested share-based awards, respectively, and 9,495 incremental shares attributed to non-vested share-based awards for the six months ended June 30, 2019 are excluded from the denominator as their inclusion would have been anti-dilutive. For the three months ended June 30, 2019, all incremental shares attributed to non-vested share-based awards were included in the denominator.

---

For the three and six months ended June 30, 2020 and 2019, the vested OP Units have been excluded from the computation of EPS because all income attributable to the OP Units has been recorded as non-controlling interest and thus excluded from net income available to common stockholders.

Using the “if-converted” method, 12,553,864 potential shares of common stock for the 2019 Convertible Notes are excluded from the computation of diluted EPS for the three and six months ended June 30, 2019 as they are anti-dilutive. For the three and six months ended June 30, 2020 and 2019, 15,100,443 potential shares of common stock issuable upon the conversion of the 2022 Convertible Notes are also excluded from the computation of diluted EPS as they are anti-dilutive. Additionally, no adjustment to the numerator is required for interest expense related to the Convertible Senior Notes for the three and six months ended June 30, 2020 and 2019. See Note 6 for further discussion about the Convertible Senior Notes.

Note 13—Income Tax

We account for income taxes under the asset and liability method. For our taxable REIT subsidiaries (“TRSs”), deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. We provide a valuation allowance, from time to time, for deferred tax assets for which we do not consider realization of such assets to be more likely than not.

As of June 30, 2020 and December 31, 2019, we have not recorded any deferred tax assets and liabilities or unrecognized tax benefits. We do not anticipate a significant change in unrecognized tax benefits within the next 12 months.

We have sold assets that were either subject to Section 337(d) of the Internal Revenue Code of 1986, as amended, or were held by TRSs. These transactions resulted in $299 and $844 of current income tax expense for the three months ended June 30, 2020 and 2019, respectively, and $429 and $1,605 of current income tax expense for the six months ended June 30, 2020 and 2019, which has been recorded in gain on sale of property, net of tax in the condensed consolidated statements of operations.

Note 14—Commitments and Contingencies

Lease Commitments

The following table sets forth our fixed lease payment commitments as a lessee as of June 30, 2020, for the periods below:

Year		Operating Leases				Finance Leases
Remainder of 2020		$	2,353			$	1,533
2021		4,735				3,009
2022		3,228				2,456
2023		2,220				2,410
2024		2,084				680
Thereafter		1,096				—
Total lease payments		15,716				10,088
Less: imputed interest		(1,233		)		(706		)
Total lease liability		$	14,483			$	9,382

---

The components of lease expense for the three and six months ended June 30, 2020 and 2019 are as follows:

		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2020				2019				2020				2019
Operating lease cost:
Fixed lease cost		$	1,158			$	916			$	2,151			$	1,897
Variable lease cost		262				356				597				699
Total operating lease cost		$	1,420			$	1,272			$	2,748			$	2,596
Finance lease cost:
Amortization of ROU assets		$	713			$	129			$	921			$	237
Interest on lease liabilities		128				5				270				18
Total finance lease cost		$	841			$	134			$	1,191			$	255

Insurance Policies

Pursuant to the terms of certain of our loan agreements (see Note 6), laws and regulations of the jurisdictions in which our properties are located, and general business practices, we are required to procure insurance on our properties. As of June 30, 2020, there are no material contingent liabilities related to uninsured losses with respect to our properties.

Legal Matters

We are subject to various legal proceedings and claims that arise in the ordinary course of our business. We accrue a liability when we believe that it is both probable that a liability has been incurred and that we can reasonably estimate the amount of the loss. We do not believe that the final outcome of these proceedings or matters will have a material adverse effect on our condensed consolidated financial statements.

Note 15—Subsequent Events

In connection with the preparation of the accompanying condensed consolidated financial statements, we have evaluated events and transactions occurring after June 30, 2020, for potential recognition or disclosure.

Extension of Existing Mortgage Loan

On July 9, 2020, the extension of the maturity date of the IH 2018-3 mortgage loan from July 9, 2020 to July 9, 2021 was approved by the lender.

Dividend Declaration

On July 22, 2020, our board of directors declared a dividend of $0.15 per share to stockholders of record on August 12, 2020, which is payable on August 28, 2020.

---

---

---

•	Resident satisfaction survey scores have continued to climb as we further refine our COVID-19 response.

•	Same Store average occupancy has continued to climb through the summer reaching record highs of 97.5% in the second quarter of 2020 and 97.8% in July 2020. Same Store average occupancy was 170 bps higher in July 2020 than in July 2019. Same Store new lease rent growth accelerated during the three months ended June 30, 2020 and averaged 4.9% in July.

•	As of June 30, 2020, total liquidity from unrestricted cash and undrawn credit facility capacity was $1,571.7 million.

•	Successful issuance and sale of 16.7 million common shares for net proceeds of $447.5 million to provide capital primarily for acquisition opportunities.

•	Full repayment of the $270.0 million revolving credit facility balance that had been drawn in March.

•	Resumption of sourcing new acquisitions in June, returning us to an acquisition pace similar to pre-COVID-19 levels.

---

(1)	As of June 30, 2020.

(2)	Represents average occupancy for the three months ended June 30, 2020.

(3)	Represents average monthly rent for the three months ended June 30, 2020.

(4)	Represents the percentage of rental revenues and other property income generated in each market for the three months ended June 30, 2020.

(5)	In December 2019, we announced a plan to fully exit the Nashville market and sold 708 homes in Nashville in a bulk transaction. As of June 30, 2020, we have 58 remaining homes in the market.

---

---

---

---

---

---

---

---

---

---

(1)	The maturity dates above reflect all extension options that have been exercised.

(2)	Represents the maturity date if we exercise each of the remaining one year extension options available, which are subject to certain conditions being met.

(3)	Except for IH 2017-1, interest rates are based on a weighted average spread over LIBOR, plus applicable servicing fees; as of June 30, 2020, LIBOR was 0.16%. Our IH 2017-1 mortgage loan bears interest at a fixed rate of 4.23% per annum, equal to the market determined pass-through rate payable on the certificates including applicable servicing fees.

(4)	Range of spreads is based on outstanding principal balances as of June 30, 2020.

(5)	Outstanding principal balance is net of discounts and does not include deferred financing costs, net.

(6)	Net of unamortized discount of $2.5 million and $2.6 million as of June 30, 2020 and December 31, 2019, respectively.

(7)

The initial maturity term of each of these mortgage loans is two years, individually subject to three to five, one year extension options at the Borrower Entity’s discretion (provided that there is no continuing event of default under the mortgage loan agreement and the Borrower Entity obtains and delivers a replacement interest rate cap agreement from an approved counterparty within the required timeframe to the lender). Our SWH 2017-1, IH 2017-2, IH 2018-1 and IH 2018-2 mortgage loans have exercised the first extension option. The maturity dates above reflect all extensions that have been exercised.

(8)	On July 9, 2020, the extension of the maturity date of the IH 2018-3 mortgage loan from July 9, 2020 to July 9, 2021 was approved by the lender.

---

---

---

(1)

The Secured Term Loan bears interest at a fixed rate of 3.59% per annum including applicable servicing fees for the first 11 years and for the twelfth year bears interest at a floating rate based on a spread of 147 bps over one month LIBOR (or a comparable or successor rate as provided for in our loan agreement), including applicable servicing fees, subject to certain adjustments as outlined in the loan agreement. Interest payments are made monthly.

---

(1)	Interest rates for the Term Loan Facility and the Revolving Facility are based on LIBOR plus an applicable margin. As of June 30, 2020, the applicable margins were 1.70% and 1.75%, respectively, and LIBOR was 0.16%.

(2)	If we exercise the one year extension option, the maturity date will be February 6, 2022.

---

---

(1)	Effective rate includes the effect of the adjustment to the fair value of the debt as of the Merger Date, the value of which reduced the initial liability recorded to $324.3 million for the 2022 Convertible Notes.

(2)

The conversion rate as of June 30, 2020 represents the number of shares of common stock issuable per $1,000 principal amount (actual $) of the 2022 Convertible Notes converted on such date, as adjusted in accordance with the indenture as a result of cash dividend payments and the effects of previous mergers. As of June 30, 2020, the 2022 Convertible Notes do not meet the criteria for conversion. We have the option to settle the 2022 Convertible Notes in cash, common stock, or a combination thereof.

---

---

---

---

(1)	Includes estimated payments for the remaining six months of 2020.

(2)	Includes estimated interest payments on the respective debt based on amounts outstanding as of June 30, 2020 at rates in effect as of such date; as of June 30, 2020, LIBOR was 0.16%.

(3)	Represents the maturity date if we exercise each of the remaining one year extension options available, which are subject to certain conditions being met. See Part I. Item 1. “Financial Statements — Note 6 of Notes to Condensed Consolidated Financial Statements” for a description of maturity dates without consideration of extension options.

(4)	Includes the related unused commitment fee.

(5)	Represents the principal amount and interest obligation of the 2022 Convertible Notes which is calculated using the notes’ coupon rate.

(6)	Includes interest rate swap and interest rate cap obligations calculated using LIBOR as of June 30, 2020, or 0.16%.

(7)	Represents commitments to acquire 165 single-family rental homes as of June 30, 2020.

---

---

(1)

For the three months ended June 30, 2020 and 2019, $447 and $820 was recorded in property management expense, respectively, and $1,659 and $2,795 was recorded in general and administrative expense, respectively. For the six months ended June 30, 2020 and 2019, $1,280 and $1,507 was recorded in property management expense, respectively, and $4,927 and $7,715 was recorded in general and administrative expense, respectively.

(2)	Includes merger and transaction-related expenses included within general and administrative.

(3)	Includes interest income, unrealized gains from investments in equity securities, and other miscellaneous income and expenses.

---

(1)	Includes $447 and $820 of share-based compensation expense for the three months ended June 30, 2020 and 2019, respectively. Includes $1,280 and $1,507 of share-based compensation expense for the six months ended June 30, 2020 and 2019, respectively.

(2)	Includes $1,659 and $2,795 of share-based compensation expense for the three months ended June 30, 2020 and 2019, respectively. Includes $4,927 and $7,715 of share-based compensation expense for the six months ended June 30, 2020 and 2019, respectively.

(3)	Includes interest income, unrealized gains from investments in equity securities, and other miscellaneous income and expenses.

(4)	The Same Store portfolio totaled 72,261 homes for the six months ended June 30, 2020 and 2019.

---

---

(1)

For the three months ended June 30, 2020 and 2019, $447 and $820 was recorded in property management expense, respectively, and $1,659 and $2,795 was recorded in general and administrative expense, respectively. For the six months ended June 30, 2020 and 2019, $1,280 and $1,507 was recorded in property management expense, respectively, and $4,927 and $7,715 was recorded in general and administrative expense, respectively.

---

(2)	Includes expenses associated with secondary offerings of common stock completed during the three and six months ended June 30, 2019 included within other, net.

(3)	Includes merger and transaction-related expenses included within general and administrative.

(4)	Includes unrealized gains on our investments in equity securities during the six months ended June 30, 2020 included within other, net. There were no unrealized gains or losses on our investments in equity securities in any other period.

(5)

On July 1, 2019, we settled the full outstanding balance of the 2019 Convertible Notes with the issuance of 12,553,864 shares of common stock, and these shares of common stock are included within all net income, FFO, Core FFO, and AFFO per common share calculations subsequent to that date. The impact of the 2019 Convertible Notes in the period prior to conversion is reflected in the FFO per common share — diluted computation above in accordance with the “if-converted” method consistent with Nareit’s guidance for calculating FFO per share. For the three and six months ended June 30, 2019, the numerator for FFO per common share — diluted is adjusted for $2,783 and $5,586, respectively, of interest expense on the 2019 Convertible Notes, including non-cash amortization of discounts. The denominator is adjusted for 12,553,864 shares of common stock issued on July 1, 2019 upon the conversion of the 2019 Convertible Notes. No such adjustments were made to Core FFO and AFFO per common share — diluted.

(6)

Incremental shares attributed to non-vested share-based awards totaling 1,108,245 and 863,607 shares for the three months ended June 30, 2020 and 2019, respectively, and 1,156,069 and 925,014 for the six months ended June 30, 2020 and 2019, respectively, are included in the denominator for net income per common share — diluted. For the computations of FFO, Core FFO, and AFFO per common share — diluted, common share equivalents of 1,394,042 and 1,248,805 for the three months ended June 30, 2020 and 2019, respectively, and 1,509,274 and 1,479,272 for the six months ended June 30, 2020 and 2019, respectively, related to incremental shares attributed to non-vested share-based awards are included in the denominator.

(7)

Vested units of partnership interests in INVH LP (“OP Units”) have been excluded from the computation of net income per common share — diluted for the periods above because all net income attributable to the vested OP Units has been recorded as non-controlling interest and thus excluded from net income available to common stockholders. Weighted average vested OP Units of 3,463,285 and 5,463,285 for the three months ended June 30, 2020 and 2019, respectively, and 3,463,285 and 7,067,026 for the six months ended June 30, 2020 and 2019, respectively, are included in the denominator for the computations of FFO, Core FFO, and AFFO per common share — diluted.

---

---

---

---

•	demand for single-family rental properties decreasing substantially and/or occupancy decreasing materially;

•

inability by our residents to meet their lease obligations has reduced and may continue to reduce our cash flows, and the resulting impact on rental and other property income could impact our ability to make all required debt service payments and to continue paying dividends to our stockholders at expected levels or at all. For example, our securitized financings require that monthly cash collections from their respective property collateral pools be controlled by the servicer until monthly debt service payments and property management fees are paid and escrow reserves are funded. So long as we remain in compliance with certain covenants contained in the underlying loan agreements, after such monthly payments are made the servicer releases all residual net cash flow to us. This residual net cash flow represents a material portion of our cash flows. If the property collateral pools experience higher rates of resident defaults or delinquencies these covenants may not be achieved. This would result in the servicer holding all residual net cash flow from any collateral pool that does not meet the covenant requirements, net of a monthly funding to us for budgeted operating expenses, in blocked collateral accounts for the benefit of the securitized lender rather than being made available to us. Our lack of access to the net cash flow from securitized collateral pools could have a material adverse effect on our business, results of operations and financial condition;

•

a general decline in business activity and demand for real estate transactions could adversely affect (1) our ability to acquire or dispose of single-family homes on terms that are attractive or at all and (2) the value of our homes and our business such that we may recognize impairment on the carrying value of our investments in single-family residential properties and other assets subject to impairment review, including, but not limited to, goodwill;

•	difficulty accessing debt and equity capital on attractive terms, or at all, impacts to our credit ratings, and a severe disruption of, and/or instability in, the global financial markets or deteriorations in credit and financing conditions may affect our access to capital necessary to fund business operations, including acquisitions, or address maturing liabilities on a timely basis;

•

the financial impact of the COVID-19 pandemic could negatively impact our future compliance with financial covenants of our Credit Facility and other debt agreements and result in a default and potentially an acceleration of indebtedness, which non-compliance could negatively impact our ability to make additional borrowings under our Revolving Facility or to exercise extension options on our mortgage loans and the Revolving Facility;

•	a deterioration in our ability to operate in affected areas or delays in the supply of products or services by vendors that are needed for our efficient operations; and

•	the potential negative consequences for the health of our associates, particularly if a significant number of them are impacted, could result in a deterioration in our ability to ensure business continuity during this disruption.

---

---

---