Invitation Homes Inc. (INVH) Earnings Call Transcript & Summary

Welcome to Citi's 2021 Virtual Global Property CEO Conference. I'm Nick Joseph with Citi Research. We're pleased to have with us Invitation Homes and CEO, Dallas Tanner. This session is for Citi clients only. If media or other individuals are on the line, please disconnect now. Disclosures are available on the webcast. [Operator Instructions] Dallas, I'll turn it over to you to introduce the company and the team, and then we'll get into Q&A.

Great. Thanks, Nick. It's great to be here. With me today, I have Ernie Freedman, our Chief Financial Officer; and Charles Young, our Chief Operating Officer. And Nick, is it okay if I just give a couple of opening comments?

Perfect.

Excellent. Well, one, we appreciate the great job Citi does with this conference. We've had excellent meetings so far, so thank you. I know virtual is always an interesting venue, but this seems to be working really well. A couple of things. So we just came off of an earnings call and we're obviously very bullish about the current prospects for SFR, and maybe more specifically, Invitation Homes. But just by way of update, I think it's important that I touch on a couple of things around supply and demand. First and foremost, we put out an update, but from January to February, our new lease growth went from 7.3% to 8.3% in February. Now for context of where we were last year, February is one of our slower generally kind of leasing cycles as you look at a year, and we're 660 basis points ahead of that from a new lease rate growth perspective. We saw a similar thing around renewals between 4.2 to 4.4 from January to February. So the fundamentals are excellent. Our occupancy continues to stay well north of 98%. So while we continue to try to go out and capture that market rate growth, we're getting also the same reciprocal benefit on the renewal side. The second thing I'd just kind of comment on real briefly is that we're really focused on external growth. We've got a great Q4 where we picked up 1,200 homes. We're continually building out the different pipelines of channels that feed into our overall portfolio strategy, buying one-off, buying direct from builders, doing things through right buyer channels and also some of the other consolidation, many bulk and M&A opportunities are in front of us, and we're bullish about where those prospects are even in a tight supply environment. And lastly, with our customers staying with us now well into their third year and beyond, some of the ancillary revenue opportunities that we laid out at our Investor Day 18 months ago are starting to come to fruition. We talked about the fact at our Investor Day that we wanted to be somewhere between, say, $15 million and $30 million on a run rate at the end of 3 years. We have a high degree of confidence we'll be in that number, if not better. And we feel like our customer is excited about the offerings that are in front of them, and they're choosing to opt into these. So with that, Nick, we're happy to answer any questions that you may have for us today.

Great. Thanks. We're opening every session with the same question. Coming out of the pandemic, if an investor were to choose only 1 real estate stock to own, what are the 3 reasons why they should invest in Invitation Homes?

Great question. I mean, first, I'd say the fundamentals are as strong as any sector out there, period. The second thing I would say is we, Invitation Homes, have had the best NOI growth across multifamily and single-family rentals since our IPO, and we'd expect more of the same. And three, scale and location matter. We have the best of both in the SFR space. And with that we're intent on growing and adding to that portfolio. So those would be kind of my 3 reasons.

Great. Why don't we start with operations. You mentioned the operating update in the investor presentation. How is this trending relative to your expectations? And then if you think about it from a market perspective, are you seeing broad strength? Or are there any markets that are surprising to the upside or the downside?

I'll offer a couple of thoughts and ask Charles to weigh in as well. But I -- taking a step back, going into the pandemic, we had almost 12 months of occupancy gains. We're well on our way to what we'd always talked about being a 97%-plus business. I think the pandemic may have accelerated a little bit of that in terms of our retention rates getting a bit higher, and people staying and opting in to maybe stay a little bit longer. The work-from-home component is clearly going to be a tailwind for our business for many years to come. We would expect that our retention rates stay as normal, if not better than what we had pre-pandemic. But I think as you start to think about where we're seeing this, we're seeing it everywhere, quite frankly. Now fortunately, for us, we've been in the markets that have had a higher, call it, tailwind with demographic profiles, household formation, wage growth, et cetera. So we're positioned really well. But we're even seeing it in markets like Chicago, where we're seeing, for the first time in a couple of years, really healthy new lease rate growth, good occupancy and a decent growth story there. So it feels really healthy around the board. Charles, I don't know if you want to add anything to that.

Yes. It has been across the board. I would highlight our West Coast markets have really been driving it, when you think about Phoenix's 14% new lease growth in February. California has still really healthy new lease growth. But to Dallas' point around, it's not just the west. In Atlanta, we've had double-digit new lease growth over the last 3 months. And so -- and Florida has good demand. So we're really excited about kind of position our portfolio as in going into peak season. And again, this is -- these are really healthy numbers that are typically summer-type demand numbers that are happening in Q1. So I think it's worth highlighting that, that we're positioned really well.

And how do you think about that operating strategy? Obviously, you're coming in with that strength already from an occupancy standpoint. Does it make your decision differently in terms of pricing on the new lease side or even on going out on renewals?

Not as much on the new lease side. We use our metrics in our normal process that looks at demand, supply and kind of the comps that are out there to price our new leases. We do the same on the renewals. But seeing what's happening on the new lease side, it gives us a bit more confidence to go -- to push a little bit on the [ adds ], and we've done that in the last few months. We've been going out in kind of 6s -- mid- to high 6s on our renewal [ adds ] and our negotiating bands and spreads have gotten a little tighter. We gave a little bit of leeway last year because of the pandemic. We're still being thoughtful about how we work with our residents. But ultimately, we think we're kind of in a normal opportunity on the renewal to capture where rates are going right now based on the demand and the supply that we have.

And Nick, one thing that I think is worth mentioning is these numbers are obviously extremely healthy from an investor perspective. But it also comes with the fact that we're still operating in a few environments where we have some caps. California is a great example of that with the fires and the sensitivity around everything that's going on with the different municipalities, and we're really careful there. And in Seattle, we haven't -- which has always been historically one of our highest rate growth markets, we have not been able to really offer a renewal rate for almost a year. So we're in a really good position as some of these moratoriums and things burn off to actually go out and find a little bit more loss to lease that will be in these numbers.

And when are you expecting those 2 specific California and Washington to actually kind of alleviate some where it could be a more normalized operating environment?

If we knew the answer to that, we'd be in a different business. We'd be forecasting everything. But I will say this, it feels like every time we get up to a deadline, they extend it another 30, 60, 90 days. I think that, in large part, has to do with kind of vaccine availabilities, consumer confidence around that we're getting through the worst of it. We would hope that by early mid-summer, we start to see some blue sky there in terms of being able to operate the way we're used to operating, which includes enforcement of the lease, et cetera. So all things considered, things still feel pretty good, even though in some markets, we really are operating with one arm on our back.

Charles, what are you seeing kind of from private competition in terms of occupancy and price? You obviously have the benefit of the operating platform and a lot of different homes. And some of the private competitors certainly do as well, but are you seeing the same kind of strength and ability to push the mom-and-pops that you may be competing with?

I think it's on them. They have a little different model, where many of the mom-and-pops are solving for occupancy. And we're typically, even in a normal time, slightly higher than they are, just given our operational efficiency and our margin ability, and frankly, our marketing ability. When you kind of -- we capture you within our website or within our world, we're able to communicate with you, and you indicate what you're looking for a 3-bedroom in this submarket, we're going to show you homes in that submarket and stay in touch with you, which a lot of the mom-and-pops don't have. So while we watch them, and we're seeing them push rate a little bit more, we're still -- we're typically out ahead of them a bit more assertively in terms of rate. And what's really interesting is just given our execution specifically around days to re-resident, our occupancy is staying as high as their occupancy and we're able to capture that rate growth. We've been able to really improve on the days to re-resident, that's why we kept our occupancy in that 98%-or-so. We expect that may come down slightly as we continue to push on rate, but we're really healthy on both positions right now.

You mentioned the ancillary revenue opportunity, which was a big topic at the Investor Day. What has worked? What are you seeing real take up there? And how do you get towards that $15 million to $30 million?

Dallas, you want me to go?

It's either of us. Yes, go ahead, Charles.

Yes. I mean I think the immediate answer has been around the smart home. We've been -- we were early adopter there. And we have it in over half our homes of over 50,000 homes at this point, over 30,000 of our residents are -- have chosen to pay $20 a month. We've been really thoughtful around the infrastructure of that system and getting the cost and the ability to offer more sophisticated offerings like video doorbell. So that's our kind of main piece that we've been able to solidify and grow, and we expect we'll get even better as we can add on more to it. We've had real success around our HVAC filter system in which we're, quarterly, able to send filters to our residents. We get a little bit of fee, but we're also making sure we're extending the life of our HVAC systems. We've had success with partnerships around pests with Terminix in our Florida markets, and we're now launching to other markets. And we're spending a lot of time getting really -- capturing all we can around the pet side of the world. Over half of our residents have pets. It's a real opportunity for us to make sure that we're enforcing the lease, at the same time thinking about how do we offer more services. These are the ones that are just in front of us right now, while we continue to think about energy and solar and landscaping and other ability that will hopefully get us beyond that $15 million to $30 million, and really grow that part of it. Dallas, add anything if you feel like I missed something.

I think just basically, Nick, it falls into 2 buckets. There's things that are just part of the IH experience that you opt into as part of the lease, smart home, HVAC, things like that, and there's the other ancillary that Charles talked about. And I think there's a couple of big markers out there for us that we, quite frankly, haven't figured out totally how to do the right way yet around landscape and a few other big categories that I think, with time and distance, will be big revenue generators. They'll also keep the expense just down, to Charles' point, and that will just further increase our margins. So a lot of blue sky there. We're excited about where we are. We have confidence that we'll hit those numbers, if not do a little bit better, and we view it as potentially a $100 million business as this thing continues to develop and it gets better and better. It will take us 5 to 7 years to kind of get in that part of the space. But the big thing is that people got to do things digitally and on their phone, mobile. Mobile is where a lot of these opportunities feel less sales-y and where they can opt in and create the suite of services for themselves that will help them have a better experience with us overall, which will lend itself to longer duration for the lease.

And so most of these will be opt in? Or do you think they'll just be part of the suite of options from renting from Invitation?

Generally, the latter. We'll have a couple of things like Smart Home and HVAC, which are just part of the deal. If you want to lease from us, we want you to have these services, for a variety of reasons. They tell us a lot about the consumer. They help us get smarter at how we manage the home, and with ESG and everything else and the direction we're headed around being just environmentally sensitive to how our homes are operating, we want that smart technology being used. And so that -- some of these will be non-negotiable, but a few of them -- but the majority, I would say, the vast majority will be at your own discretion on what you want to help modify your lease and also modify your experience.

You've made a lot of progress on the days to re-lease. I think it was down 10 days into the mid-30s. Are there opportunities for further enhancements there? Or have we kind of hit the limit of how quickly you can re-lease any kind of home?

I don't think we've hit the limit. We did make a really significant move last year going from 45 days to 35 days. And we captured a lot of the low-hanging fruit that were based on how long it takes us to initially turn a home, what we're able to do around pre-leasing, making sure we don't have aged inventory. So we built our systems around that so we can sustain the numbers that we're at. But I do think that we have the ability to squeeze it down a day or 2 as we go and with a goal of trying to get to the low 30s or in the 20s. A lot of it is going to be around technology, the mobile use that Dallas talked about and being able to pre-lease. We've implemented floor plans and virtual tours. These are things that allow our residents to make decisions around what house they want to be in before they actually get a chance to see the house. And that's a big part of where we can start to drive that number down even further. So low-hanging fruit is gone, but we still have room to grow, and we're going to keep pushing on it.

Appreciate everyone sending in questions. We've had a handful on expenses, just kind of what the right long-term growth rate is you think from expense standpoint, recognizing a lot of that is on property taxes, but just any additional efficiencies that you could get out of the business?

Yes, Nick, this is Ernie. I'm happy to address that. I think you said in the premise to your question, in our business, 40% to 45% of our expenses are real estate taxes. So I'll talk about the other 55%-or-so that we have. I think the answer there is we still have some opportunity for some more efficiencies as we move forward. Our next biggest line items with regards to expenses outside of property tax, repairs and maintenance, turnover costs and personnel and other. And this is in that case where our locations and, importantly, our scale make a really big difference for us because with our scale, as we continue to add more densification to our markets, it allows us to do our repairs and maintenance work a little bit more efficiently in terms of getting people to the homes faster. It can do more service calls on a daily basis and allows us to buy our supplies a little bit more cheaply because of the fact that we have such scale that we have. And it's kind of the same thing then on the turnover side as well, just not as dramatic as on the repairs and maintenance side. And then on personnel and other, we can continue to grow our footprint, and yet, we don't need to staff up proportionately because we're able to maintain some of our fixed personnel costs in relatively similar places. So I think we still have opportunities there to do better than inflation, meaning less than inflationary growth in those types of areas. And then offsetting that, on the real estate tax side, we probably do see more than inflationary growth because of the lack of housing in the U.S. and the supply-demand fundamentals that we have today. The good news is that gets offset typically by revenue growth and by home price appreciation, so it helps us on the revenue side. So we still -- we've done a lot of great things over the last few years, Nick, but we think there's still more opportunities for us to continue to work on our margins and be a little bit more efficient still.

We also have a handful of questions on the demographic trends that we've seen. And if you see any risk from a reversal of the strong demand you've seen during COVID, if any of that is transitory? And if you could see any kind of headwind coming out of the pandemic?

That's a good question. I mean the short answer is no. Remember, pre-pandemic, and it's the same today, 2/3 of our cohort of renters or people that have a lease with us are choosing to lease. They could very well own a home if they wanted to, but they're choosing the leasing lifestyle. And so for that, we've got actually quite a bit of conviction around the fact that being down payment light, having a company like ours who can take care of everything, has actually got quite a bit of sex appeal to it for the consumer. And so as we continue to make that offering set better, more simple and in a way that is as transparent as possible while enhancing the experience, we think we're going to have more people that actually choose this way of life. And so we don't view anything in terms of the -- reverse of that question was like, are you going to have a mass exits post pandemic? No, we're having occupancy gains pre-pandemic. I think, if anything, we may tailor some of our offerings to be a little bit more focused on the work-from-home component, and that element that's going to exist for a long period of time, that's not going to change overnight. So we view it as a net positive. The feedback in our surveys that we get from residents tell us that a lot of the reason that they've either moved in the last year or thinking about staying in a detached product home is because of the work-from-home component and needing more space, and then when we got all the normal fundamental factors that drive our demand anyway, good schools, transportations, jobs, et cetera. So all of that makes, I think, a pretty compelling story around one of my first answer to your 3 points, which is the fundamentals for our space are as good as any out there, bar none.

How do you think about tailoring your portfolio for the -- either hybrid or more work-from-home?

Well, some of it can be in the way that you design spaces, homes you try to acquire, right, through that process. And then -- otherwise, we can also go into some offerings that are making it a bit simpler. I'll give you one example. We have a partnership with Home Depot, where our residents get discount codes based on when they sign leases with us, et cetera, that they can then use over the life of the term of their home. It's great for our residents, it's great for Invitation Homes. There's a rebate involved there. So there's value added, right? And there's other kind of things like that, that you could do that center around work-from-home strategies, whether it'd be around office furniture and things like that, or just having some of your neighborhoods where you've got some input. We do buy a lot of homes from builders, having neighborhoods that would be 5G-centric and things like that. There are some things you can do with antennas, things like that, that we're exploring that maybe part -- and I guess, I don't think this applies to the whole. But I think in part, you can create some sustainability around a work-from-home marketing strategy that may have some compelling offering or needs to it.

Are you seeing any trends or changes to the trends move out to buy homes?

No. That -- and it's funny, we get this question every conference, and we talk about a lot of our quarterly calls. It's been the same number for 8 years. It fluctuates between, say, 20% and 26% depending on where we are in the quarter. So on average, it's almost a rule of thumb for us now. We basically believe that 25% of our turnover is going to move out to purchase a home. So on average, 8% to 10% of our portfolio a year cycles into homeownership.

Does that surprise you that it hasn't moved at all?

No. I think it's in line with what I said before, which is 2/3 of our customer base choose to lease for a variety of reasons. So I would expect that if you look at like the big numbers in the country, 2/3 of the country own something, 1/3 of the country leases something, right, in one way, shape or form, and we're on that leasing side of that, that 47 million households. And in that 47 million, a small percentage are cycling in ownership ever so often. And so I look at the pool as being pretty consistent, quite frankly.

How do you think about supply in the business going forward? Obviously, there's been a big push into single-family rentals, both institutionally, but also on the new build side. Do you think supply could become an issue on the rental front?

Well, supply is just really tight generally, right? We're underserved by a couple million -- a couple of million units from, we call it a macro perspective. Most economists would tell you that over the last decade, we've undersupplied ourselves by probably 1.5 million to 2 million units. When we get the question around there's so much build-to-rent coming into the environment, as we've looked at it, and we've talked with Burns and other economists, let's just say there's 80,000 to 100,000 units of build-to-rent that are being brought into the space over the next 2 years. There's going to be 6 million transactions this year and another 6 million transactions next year. It's, quite frankly, a drop in the bucket. If we added 100,000 build-to-rent units across the 16 million homes, or build-to-rent units that are for lease today, it's not going to move the needle all that much. So I think it's going to come back to kind of your core tendencies around, are you putting them in the right locations? Are you building the right type of product? And even in that build-to-rent segment, we got to be really clear about what we're talking about. There's build-to-rent in the traditional sense that single-family homes or detached neighborhoods with, what I would call, decent sized square footage, 1,500 square foot plus, but a lot of the build-to-rent product you're seeing today is more garden-style apartments, 800 to -- excuse me, 800 to 1,300 square foot units that offer great amenities, but it's really not meant for families at the end of the day. And so it differentiates itself naturally. And I think the demand factors are being taken into consideration with what people are building and why. And you start to kind of compare it, it's not all one and the same. So not too concerned about the amount of supply that's coming in yet, no. But I think people should be careful that are building it. And I think they ought to be thoughtful around why they're building it, where they're building it and making sure that they have the right demand profile for the product.

What's the best capital allocation decision today?

Well, for us, we want to grow externally, right? So our cost of capital is okay right now. I wouldn't say it's off the charts good. We think stock is fairly cheap. But I think that there's still some really good opportunities to buy. And we see some pretty compelling arguments for growth in both the Southwest and Southeast, as Charles mentioned. We like the path we're on. We're delevering slowly through growth, buying assets unencumbered, adding them to our unencumbered pool, and that's bringing down our debt profile. But we also think that this business can continue to support great growth around it. And so I think being active in the one-off space, working on our builder channels, which continues to be an area of focus for us, we've got the best of both worlds with half a dozen to a dozen builders right now buying product direct with builder warranties and things that we want, but not taking any risk on our balance sheet. And we think that that's a winning strategy to complement the other areas of focus we have. And then I think, as you mentioned, there's quite a bit of dollars coming into the space right now that are focused on trying to get scale and density. We view that as a net positive for a couple of reasons: one, we think these will be future opportunities for consolidation and M&A, we view that as a positive; and two, the more focus it is on the space, the more the services and the third-party businesses and the companies that evolve around the space get better, and that just makes the industry better. And I think it's important to remember that there's 16 million rentals out there in the single-family space. The industry itself is really in the first inning. We're 2%, 2.5% of the overall space. We've got a lot of work ahead of us to build great companies with even bigger scale over time.

Is there a yield premium that, on balance sheet development, gets interesting?

We're not seeing it. I mean, truthfully, as you look at the cost of capital right now -- excuse me, the cost of construction where land costs are going, I've had a couple of conversations with public builders in the last couple of weeks, their CEOs, and they're turning down dirt deals because they feel like it's getting a little too frothy, which, by the way, I view as healthy. I think if builders are smart about the growth, it will actually keep the cycle going longer. We won't overbuild, and we may just see a continued, call it, premium to quality housing units. We view that as a net positive. But I think the jury is going to be out on that. And it also goes down to the where, Nick. I mean, look, you know we buy a more expensive product. We have a higher gross economic rent, and we think it's indicative of the markets we're in and also where we align ourselves in those markets. So we want that demand. The customer, to us, is more than just somebody taking a lease. We want to create an experience. We want them to opt into some of those ancillary offerings that we're having to make that experience unique. And I think by having a bit better real estate that's more focused on being infill, we're going to continue to get that customer with a higher rent income ratio that wants that type of an experience. They'll stay stickier.

Given the capital and the interest in the space, is it surprising that acquisition yields haven't compressed?

Starting to see some of it, truthfully. You are starting to see that acquisition yields are compressing. And you're seeing what we would say kind of mid-5s buys starting to get more into the lower 5s, call it, 5.25. What's been interesting, and I think it's the right way to look at it, is stabilized portfolios that have good product in good markets are trading inside of cap rates on a one-off basis. And there was a deal last week in Houston, the D.R. Horton did that, sold them in the low to mid-4s. We've looked at a couple of opportunities in Sunbelt markets that we really like, where I think if we're going to be a buyer, we're going to have to be competitive and be in the low to mid-4s on stabilized product, on in place. I think there's upside to those numbers if we operate it. I think we can create extra value there. But I am starting to see, and it makes sense as the industry evolves, as the quality of the real estate continues to get better, that we will see portfolios that trade kind of inside of what we would view as the first 10 years of traditional cap rates. And I think that's natural. And I would expect the public markets to look at our own cap rates and see some compression there, too, over time and distance. I think it just makes sense.

What sort of operating uplift can you get when you're buying in that kind of bulk?

We've talked about this historically. We typically have been able to find between 30 and 50 basis points of upside by just operating it, call it, the Invitation Homes way. And we certainly have an opportunity, as an owner of real estate, to be a bit more aggressive on rate to Charles' point. I mean when you have -- when you can wash your [ ask ] through the average, right, you have an ability to kind of just be really principled and disciplined about making sure you're getting as much market rate as available at that point in time.

We have a question come in on the underwriting of acquisitions. How do you account for HPA and underwriting?

That's a really good question in today's environment because when Charles quote you 12% and 14% new lease rate growth, you can almost think about that as a trailing 12 for those markets in terms of where HPA has been, right? It's a good proxy. So we try to be realistic, but we also err on the side of conservatism to some degree because if I go to Ernie and say, we're going to plug-in 10% home price appreciation into our model for Phoenix for the next year, he's going to say back to the drawing board in terms of how we think about our capital. But we do got to be realistic about where things are going. And we have been, I think, a bit more aggressive in certain markets, specifically when we know that things are happening real-time on the ground. By the way, one of the reasons that matters to have the type of scale that we do is the revenue management curve is as equally important to our underwriting on the buy side as it is to Charles on the operations. So that curve and where we're seeing, call it, new take -- new price take from our customer is influencing the way we underwrite, where we think the values are going. And look, guys, at this point, we've literally made offers on millions of homes over the last decade. So we have a pretty high degree of confidence on what we're seeing in a particular ZIP code or submarket at any given point in time. And we have other cycles we can look back to in terms of where we're seeing that demand. So that was a long way of giving you kind of a terrible answer, but the short answer, Nick, would be we are rational with a hair of conservatism to it when we're looking at our own processes because we don't want to overshoot on this.

Makes sense. Maybe just on balance sheet versus JV acquisitions. I mean how do you think about balancing those? And should we expect additional JVs as a source of capital going forward?

Well, let me answer the first part, and then I'll let Ernie kind of weigh in on kind of how we think about capital. But first and foremost, we talked -- we've been focused on this for a couple of years. We'd love to have an alternate kind of capital stack if we don't like where maybe our current equity price is trading, right? So something that gives us really good flexibility, that's a cultural fit for us with those -- with that partnership group, and something where we don't have to go outside of what we would traditionally invest in. That's what we have right now on our current structure. We have extreme flexibility. We set the buy box. We talk with our partners about how we want to allocate both on balance sheet or in the JV. It gives us an opportunity to be more aggressive in markets where maybe if we were only buying for the balance sheet, we wouldn't be as aggressive, right, because maybe our allocation in Atlanta right now at 12,500 units. On balance sheet, we might be more focused on like a Denver and a Dallas to get more additional scale. But having a JV partner lets us be equally as active in Atlanta. And by the way, we think of it as almost like a lumberyard off to the side. Eventually, we'd like to put this thing fully on balance sheet. We make great fees. We get great property management structures. So from an IRR perspective, shareholders should be really happy with how we're using that capital and generating what are really outsized returns on that capital in the near term. And long term, we'll likely own the real estate. Ernie, I don't know if you want to weigh in on anything from, call it, a capital stack perspective?

Yes. I would just say, Nick, we're going to be very particular if we're going to think about doing new joint ventures in the future. Typically, you form a joint venture, that becomes your exclusive investment vehicle. We were able because so many people want to get into the single-family space, negotiate some pretty good terms for us in our current JV that it doesn't have to be our exclusive investment vehicle. And so for us, for the year, Nick, we'll probably balance our acquisitions pretty much between the joint venture and the balance sheet. And we talked about in our earnings call that we expect to be about $1 billion worth of acquisitions this year. And between JV capital, between capital that we'll raise from dispositions off the balance sheet, excess cash flow that we retain because of the low dividend payout ratio, and then we got a little ahead of ourselves in 2020 in terms of raising cash, not knowing how the capital markets were going to look in 2021. We've got more than enough capital available for us to do what we want to do in terms of buying $1 billion worth of assets without having to tap the equity markets in 2021. Now if we find extra -- better opportunities, more opportunities to grow faster, we could allocate some of that to the JV or we might have to look for other opportunities to raise capital. But in our base case, we're in a good spot from a capital perspective and get everything we want to get done. So it's really just going to be up to the team finding the right product, and we're confident we'll do that.

Great. What are your top 3 priorities to improve your ESG score next year?

Well, there's a couple of things we're focused on. One is laying out, full stop, our strategy around environmental and what we want to do in terms of how we capture the data from homes, and apply that to our long-term thinking going forward. I talked a little bit about that earlier. The smart technology we have in our homes will allow it to do it. I think, two, and we've already done a lot of this, we brought on a D&I officer over a year ago, continue to expand our ERGs, our employee resource groups, and also create better awareness. And I think we've got an opportunity as a company. We do a lot of great things. We have, for a long period of time internally, but we need to evangelize that a little bit better. So that's a focus as well. And I think, three, on the social side, we've got a number of programs that are going out, both how we participate in our communities in broad-based programs that center around community impact that our residents can also participate in as well as our associates have historically. And lastly, we have a signature program with SkillsUSA, where we're opening up opportunities for vocational schooling, which will then feed into opportunities for minority-owned business -- minority-backed businesses, diversity-backed businesses that will also feed into our maintenance and technology platforms. So it's -- we're really excited. We think we have an ability with our platform to create additional demand and opportunity for some of these programs that come out of SkillsUSA, which is the vocational arm of our business. There's just a nice symmetry there, and we're going to create a ton of great opportunities for students and also for some of these businesses to participate with Invitation Homes to help build their own brand and create success for them down the road.

Great. We have a rapid-fire questions to end the session. When we are sitting physically together in Florida a year from today, what will be the one thing that will surprise people the most about your business over the prior 12 months?

Hopefully, it's by the pool, I'd add. But second, I think, Nick, people are going to look back and go, the occupancy story with the growth of revenue alongside it was really compelling.

What do you think your corporate travel budget will be in 2022, as a rough percentage of what you spent in 2019?

I'd say 50%.

What will same-store NOI growth be for the single-family rental sector overall next year in 2022?

This one we always defer on because there's only 2 of us, but I would just make a comment on it. We put it in our deck that we posted. IH has been the #1 performer on NOI growth across our peers and the multifamily side of it the last 4 years since our IPO. And I would expect more of the same from us. We're going to keep pushing the envelope, try to grow NOI, create meaningful shareholder returns, and I imagine our peers are going to likely try and do the same.

And then finally, what will the 10-year U.S. treasury yield be a year from now? Roughly.

1.75.

1.75. Great. Well, thank you all for the time. Really enjoyed it. And hope the rest of the conference goes well.

Awesome. Thanks, Nick.

Thanks, Nick.

Thanks, Nick.