Strong Rental Growth and Operational Efficiency Drive Solid Financial Performance

American Homes 4 Rent, a leading real estate investment trust (REIT) focused on acquiring, developing, renovating, leasing, and managing single-family homes, has reported another quarter of strong financial results. The company’s focus on strategic growth, operational excellence, and prudent capital management has enabled it to navigate the current macroeconomic environment effectively.

Financial Highlights

• Net income for the three months ended June 30, 2024 was $108.5 million, compared to $115.4 million in the same period last year. The decrease was primarily due to lower net gains on property sales, partially offset by increases in rents and other single-family property revenues exceeding increases in total expenses.
• Net income for the six months ended June 30, 2024 was $236.6 million, compared to $253.1 million in the same period last year. The decrease was also primarily due to lower net gains on property sales, partially offset by increases in rents and other single-family property revenues exceeding increases in total expenses.
• Core Net Operating Income (Core NOI), a key performance metric, increased 8.7% to $243.0 million for the three months ended June 30, 2024, compared to $223.5 million in the same period last year. For the six months ended June 30, 2024, Core NOI increased 8.2% to $480.7 million, compared to $444.4 million in the same period last year.
• Same-Home Core NOI, which excludes the impact of recently acquired or developed properties, increased 5.9% to $219.9 million for the three months ended June 30, 2024, and increased 5.6% to $438.9 million for the six months ended June 30, 2024, compared to the same periods in the prior year.

Operational Highlights

• As of June 30, 2024, the company owned 59,493 single-family properties in 21 states, including 633 properties held for sale, compared to 59,332 single-family properties as of December 31, 2023 and 58,693 single-family properties as of June 30, 2023.
• Occupancy remained strong, with 56,669 of the company’s total properties (excluding properties held for sale) occupied as of June 30, 2024, compared to 55,768 as of December 31, 2023 and 56,000 as of June 30, 2023.
• The company had an additional 3,167 properties held in unconsolidated joint ventures as of June 30, 2024, compared to 2,978 as of December 31, 2023 and 2,846 as of June 30, 2023.
• Average Monthly Realized Rent per property increased 5.6% to $2,178 for the three months ended June 30, 2024, compared to $2,063 in the same period last year. For the six months ended June 30, 2024, Average Monthly Realized Rent per property increased 5.7% to $2,163, compared to $2,045 in the same period last year.
• The company’s Same-Home portfolio occupancy rate was 96.6% for the three months ended June 30, 2024, compared to 97.0% in the same period last year. For the six months ended June 30, 2024, the Same-Home portfolio occupancy rate was 96.4%, compared to 97.1% in the same period last year.

Growth Initiatives and Capital Allocation

• During the three months ended June 30, 2024, the company developed or acquired 590 homes, including 580 newly constructed homes delivered to its operating portfolio through its internal AMH Development Program and 10 homes acquired through its National Builder Program and traditional acquisition channel.
• For the six months ended June 30, 2024, the company developed or acquired 1,050 homes, including 1,021 newly constructed homes delivered to its operating portfolio through the AMH Development Program and 29 homes acquired through the National Builder Program and traditional acquisition channel.
• The company has strategically scaled back acquisitions of single-family properties through its National Builder Program and traditional acquisition channels as the housing market adjusts to the current macroeconomic environment. It will continue to evaluate all of its growth channels and grow accordingly, if and when, acquisition opportunities are attractive relative to the condition of capital markets.
• The company issued $600 million of 5.500% unsecured senior notes due 2034 (the “2034 Notes I”) and $500 million of 5.500% unsecured senior notes due 2034 (the “2034 Notes II”) during the first and second quarters of 2024, respectively, to fund its growth initiatives and repay outstanding indebtedness.
• As of June 30, 2024, the company had $718.4 million in cash and cash equivalents and $1.25 billion of remaining borrowing capacity under its revolving credit facility.

Strengths and Opportunities

• The company’s focus on strategic growth, operational efficiency, and prudent capital management has enabled it to navigate the current macroeconomic environment effectively.
• The company’s internal AMH Development Program and National Builder Program provide a steady pipeline of newly constructed homes to expand its portfolio, complementing its traditional acquisition channel.
• The company’s proprietary property management platform allows it to efficiently manage its growing portfolio of single-family homes, driving operational excellence and cost efficiencies.
• The company’s investment-grade credit rating provides access to a diverse range of financing options at favorable terms, supporting its growth initiatives.
• The single-family rental market continues to exhibit strong demand, driven by favorable demographic trends and the ongoing shift towards renting over homeownership.

Weaknesses and Challenges

• The company’s reliance on property acquisitions and development to drive growth exposes it to risks associated with the availability and cost of land, construction materials, and labor, which could impact its ability to execute its growth plans.
• The company’s portfolio is concentrated in certain geographic markets, which makes it vulnerable to regional economic and real estate market conditions.
• The company’s business is subject to seasonal fluctuations, which can impact its financial performance and cash flows.
• The company faces competition from other single-family rental REITs, institutional investors, and individual investors, which could affect its ability to acquire properties and maintain occupancy levels.

Outlook and Future Prospects American Homes 4 Rent’s strong financial and operational performance, coupled with its strategic growth initiatives and prudent capital management, position the company well to navigate the current macroeconomic environment and capitalize on the continued growth of the single-family rental market. The company’s focus on operational efficiency, tenant satisfaction, and disciplined capital allocation should enable it to deliver sustainable long-term value for its shareholders.

However, the company will need to closely monitor and address the potential challenges it faces, such as rising construction costs, labor shortages, and regional market conditions, to ensure its growth plans remain on track. Additionally, the company’s ability to maintain its competitive edge and market share will depend on its ability to adapt to changing industry dynamics and consumer preferences.

Overall, American Homes 4 Rent’s strong financial performance, strategic growth initiatives, and prudent capital management position the company as a leading player in the single-family rental market, with the potential to deliver continued growth and value creation for its shareholders.