Baron Funds, an investment management firm, released its “Baron Real Estate Income Fund” third quarter 2023 investor letter, a copy of which can be downloaded here. In the first nine months of 2023, the Fund has increased 1.20%, outperforming the REIT Index, which declined 2.89%. As of September 30, 2023, the Fund has maintained its top 3% ranking among all real estate funds for its 5-year performance period. Spare some time to check the fund’s top 5 holdings to know more about their top bets for 2023.
In its Q3 2023 investor letter, Baron Real Estate Income Fund mentioned Invitation Homes Inc. (NYSE:INVH) and explained its insights for the company. Founded in 2012, Invitation Homes Inc. (NYSE:INVH) is a Dallas, Texas-based real estate investment trust company with a $19.3 billion market capitalization. Invitation Homes Inc. (NYSE:INVH) delivered a 6.48% return since the beginning of the year, while its 12-month returns are down by -3.01%. The stock closed at $31.56 per share on October 19, 2023.
Here is what Baron Real Estate Income Fund has to say about Invitation Homes Inc. (NYSE:INVH) in its Q3 2023 investor letter:
“Following strong second quarter results, we modestly increased our investments in single-family rental REITs Invitation Homes, Inc. (NYSE:INVH). Demand conditions for rental homes are attractive due to the sharp decline in home affordability; the propensity to rent in order to avoid mortgage down payments, avoid higher monthly mortgage costs, and maintain flexibility; and the stronger demand for home rentals in suburbs rather than apartment rentals in cities. Rising construction costs are limiting the supply of single-family rental homes in the U.S. housing market. This limited inventory combined with strong demand is leading to robust rent growth.
Invitation Homes have an opportunity to partially offset the impact of inflation given that their in-place annual leases are significantly below market rents. Valuations are compelling at mid-5% capitalization rates, and we believe the shares are currently valued at a discount to our assessment of net asset value. We remain mindful that expense headwinds and slower top-line growth could weigh on growth later in 2023 and 2024. We will continue to closely monitor business developments and will adjust our exposures accordingly.”
An aerial view of a New York city skyline, showing the expansive real estate projects of the company. Editorial photo for a financial news article. 8k. –ar 16:9
Our calculations show that Invitation Homes Inc. (NYSE:INVH) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. Invitation Homes Inc. (NYSE:INVH) was in 25 hedge fund portfolios at the end of the second quarter of 2023, compared to 17 funds in the previous quarter. Invitation Homes Inc. (NYSE:INVH) delivered a -11.52% return in the past 3 months.
We also discussed Invitation Homes Inc. (NYSE:INVH) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters Q3 2023 page.
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Disclosure: None. This article is originally published at Insider Monkey.
