Market Overview

American Homes 4 Rent Reports Second Quarter 2019 Financial and Operating Results

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AGOURA HILLS, Calif., July 29, 2019 /PRNewswire/ -- American Homes 4 Rent (NYSE:AMH) (the "Company"), a leading provider of high quality single-family homes for rent, today announced its financial and operating results for the quarter ended June 30, 2019.

www.americanhomes4rent.com . (PRNewsFoto/American Homes 4 Rent) (PRNewsfoto/American Homes 4 Rent)" alt="American Homes 4 Rent is a leader in the single-family home rental industry and "American Homes 4 Rent" is fast becoming a nationally recognized brand for rental homes, known for high quality, good value and tenant satisfaction. We are an internally managed Maryland real estate investment trust, or REIT, focused on acquiring, renovating, leasing, and operating attractive single-family homes as rental properties. As of March 31, 2014, we owned 25,505 single-family properties in selected submarkets in 22 states. Additional information about American Homes 4 Rent is available on our website at www.americanhomes4rent.com . (PRNewsFoto/American Homes 4 Rent) (PRNewsfoto/American Homes 4 Rent)">

Highlights

  • Total revenues increased 6.6% to $281.9 million for the second quarter of 2019 from $264.5 million for the second quarter of 2018.
  • Net income attributable to common shareholders totaled $22.5 million, or $0.08 per diluted share, for the second quarter of 2019, compared to a net loss attributable to common shareholders of $15.2 million, or a $0.05 loss per diluted share, for the second quarter of 2018.
  • Core Funds from Operations ("Core FFO") attributable to common share and unit holders for the second quarter of 2019 was $98.2 million, or $0.28 per FFO share and unit, compared to $91.9 million, or $0.26 per FFO share and unit, for the same period in 2018, which represents a 6.5% increase on a per share and unit basis.
  • Adjusted Funds from Operations attributable to common share and unit holders for the second quarter of 2019 was $86.8 million, or $0.25 per FFO share and unit, compared to $82.0 million, or $0.23 per FFO share and unit, for the second quarter of 2018.
  • Core Net Operating Income ("Core NOI") from Same-Home properties increased by 3.6% year-over year for the second quarter of 2019. Core NOI after capital expenditures from Same-Home properties increased by 2.6% year-over-year for the second quarter of 2019.
  • Same-Home portfolio Average Occupied Days Percentage increased to 95.7% for the second quarter of 2019, compared to 95.3% for the second quarter of 2018, while achieving a 3.7% growth in Average Monthly Realized Rent per property for the same comparable periods.

"American Homes 4 Rent had a strong second quarter with continued operational excellence driving a 7% year-over-year increase in Core FFO per share," stated David Singelyn, American Homes 4 Rent's Chief Executive Officer. "Our best-in-class platform and team once again demonstrated their ability to capture the strength of the spring leasing season, driving a 4.4% year-over-year growth in second quarter Same-Home core revenues. Further, we continue to enhance the quality of our portfolio as we strategically recycle capital from asset sales into the expansion of our industry leading built-for-rental program, which we believe has the long-term potential to revolutionize the single-family rental sector. With our flexible and conservative balance sheet that supports our growth strategy, we are confident in our ability to continue delivering consistent operating results and long term value creation for our shareholders."

Second Quarter 2019 Financial Results

On January 1, 2019, the Company adopted the new lease accounting standard, ASU No. 2016-02, which prospectively results in a larger portion of internal leasing costs being expensed that were previously capitalized. For purposes of comparability, applicable prior period non-GAAP financial metrics have been conformed to reflect the new lease accounting standard. Refer to Non-GAAP Financial Measures for further information.

Net income attributable to common shareholders totaled $22.5 million, or $0.08 per diluted share, for the second quarter of 2019, compared to a net loss attributable to common shareholders of $15.2 million, or a $0.05 loss per diluted share, for the second quarter of 2018. This improvement was primarily attributable to higher revenues resulting from a larger number of occupied properties and higher rental rates, an increase in gain on sale of single-family properties and other, net and a noncash charge related to the redemption of the Series C participating preferred shares through a conversion into Class A common shares during the second quarter of 2018.

Total revenues increased 6.6% to $281.9 million for the second quarter of 2019 from $264.5 million for the second quarter of 2018. Revenue growth was primarily driven by continued strong leasing activity, as our average occupied portfolio grew to 48,989 homes for the quarter ended June 30, 2019, compared to 47,427 homes for the quarter ended June 30, 2018, as well as higher rental rates.

Core NOI on our total portfolio increased 6.9% to $154.0 million for the second quarter of 2019, compared to $144.1 million for the second quarter of 2018. This increase was primarily due to growth in rental income resulting from a larger number of occupied properties and higher rental rates, partially offset by higher property tax expense.

Core revenues from Same-Home properties increased 4.4% to $190.1 million for the second quarter of 2019, compared to $182.1 million for the second quarter of 2018. This growth was primarily driven by a 3.7% increase in Average Monthly Realized Rent per property and an increase in Average Occupied Days Percentage to 95.7% from 95.3%. Core property operating expenses from Same-Home properties increased 5.8% from $65.7 million for the second quarter of 2018 to $69.5 million for the second quarter of 2019, with the largest driver being attributable to an outsized increase in property tax expense. As a result, Core NOI from Same-Home properties increased 3.6% to $120.6 million for the second quarter of 2019, compared to $116.4 million for the second quarter of 2018. After capital expenditures, Core NOI from Same-Home properties increased 2.6% to $112.2 million for the second quarter of 2019, compared to $109.4 million for the second quarter of 2018. For the second quarter of 2019, capital expenditures reflected above average increases from the planned expansion of our strategic preventative maintenance program and storm damages in certain markets related to windstorms and unusually high rainfall towards the end of the quarter.

Core Funds from Operations attributable to common share and unit holders ("Core FFO attributable to common share and unit holders") was $98.2 million, or $0.28 per FFO share and unit, for the second quarter of 2019, compared to $91.9 million, or $0.26 per FFO share and unit, for the second quarter of 2018. Adjusted Funds from Operations attributable to common share and unit holders ("Adjusted FFO attributable to common share and unit holders") for the second quarter of 2019 was $86.8 million, or $0.25 per FFO share and unit, compared to $82.0 million, or $0.23 per FFO share and unit, for the second quarter of 2018. This improvement was primarily attributable to increases in rental revenue driven by a larger number of occupied properties and higher rental rates, partially offset by higher property tax expense.

Year-to-Date 2019 Financial Results

On January 1, 2019, the Company adopted the new lease accounting standard, ASU No. 2016-02, which prospectively results in a larger portion of internal leasing costs being expensed that were previously capitalized. For purposes of comparability, applicable prior period non-GAAP financial metrics have been conformed to reflect the new lease accounting standard. Refer to Non-GAAP Financial Measures for further information.

Net income attributable to common shareholders was $38.8 million, or $0.13 per diluted share, for the six-month period ended June 30, 2019, compared to a net loss attributable to common shareholders of $9.3 million, or a $0.03 loss per diluted share, for the six-month period ended June 30, 2018. This improvement was primarily attributable to higher revenues resulting from a larger number of occupied properties and higher rental rates, an increase in gain on sale of single-family properties and other, net, and a noncash charge related to the redemption of the Series C participating preferred shares through a conversion into Class A common shares during the second quarter of 2018.

Total revenues increased 7.4% to $561.1 million for the six-month period ended June 30, 2019, from $522.5 million for the six-month period ended June 30, 2018. Revenue growth was primarily driven by continued strong leasing activity, as our average occupied portfolio grew to 48,600 homes as of June 30, 2019, compared to 47,156 homes as of June 30, 2018.

Core NOI on our total portfolio increased 9.0% to $304.6 million for the six-month period ended June 30, 2019, compared to $279.6 million for the six-month period ended June 30, 2018. This increase was primarily due to growth in rental income resulting from a larger number of occupied properties and higher rental rates, partially offset by higher property tax expense, higher HOA fees, net and higher property management expenses, net.

Core revenues from Same-Home properties increased 4.3% to $377.2 million for the six-month period ended June 30, 2019, compared to $361.7 million for the six-month period ended June 30, 2018. This growth was primarily driven by a 3.5% increase in Average Monthly Realized Rent per property and an increase in Average Occupied Days Percentage to 95.6% from 95.1%. Core property operating expenses from Same-Home properties increased 4.0% from $130.7 million for the six-month period ended June 30, 2018 to $135.9 million for the six-month period ended June 30, 2019, which was primarily attributable to higher property tax expense and higher HOA fees, net. As a result, Core NOI from Same-Home properties increased 4.5% to $241.3 million for the six-month period ended June 30, 2019, compared to $231.0 million for the six-month period ended June 30, 2018. After capital expenditures, Core NOI from Same-Home properties increased 3.9% to $226.6 million for the six-month period ended June 30, 2019, compared to $218.1 million for the six-month period ended June 30, 2018. For the six-month period ended June 30, 2019, capital expenditures reflected above average increases from the planned expansion of our strategic preventative maintenance program.

Core FFO attributable to common share and unit holders was $194.0 million, or $0.55 per FFO share and unit, for the six-month period ended June 30, 2019, compared to $175.1 million, or $0.50 per FFO share and unit, for the six-month period ended June 30, 2018. Adjusted FFO attributable to common share and unit holders for the six-month period ended June 30, 2019 was $173.6 million, or $0.49 per FFO share and unit, compared to $156.8 million, or $0.45 per FFO share and unit, for the six-month period ended June 30, 2018. This improvement was primarily attributable to increases in rental revenue driven by a larger number of occupied properties and higher rental rates, partially offset by higher property tax expense, higher HOA fees, net and higher property management expenses, net.

Portfolio

As of June 30, 2019, the Company had an occupancy percentage of 96.4%, compared to 95.6% as of March 31, 2019. The occupancy percentage on Same-Home properties was 96.3% as of June 30, 2019, compared to 96.8% as of March 31, 2019.

Investments

As of June 30, 2019, the Company's total portfolio consisted of 52,634 homes, including 1,664 properties held for sale, compared to 52,923 homes as of March 31, 2019, including 1,793 properties held for sale, a decrease of 289 homes, which included 433 homes sold, offset by 8 properties acquired through traditional acquisition channels and 136 newly constructed properties delivered through our AMH Development and National Builder Programs.

Capital Activities and Balance Sheet

During the second quarter of 2019, the Company paid off the term loan facility for the remaining $100.0 million.

As of June 30, 2019, the Company had cash and cash equivalents of $119.2 million and had total outstanding debt of $2.9 billion, excluding unamortized discounts and unamortized deferred financing costs, with a weighted-average interest rate of 4.4% and a weighted-average term to maturity of 13.6 years. The Company had no outstanding borrowings on its $800.0 million revolving credit facility at the end of the quarter.

2019 Guidance

Guidance Summary

No changes have been made to previous Full Year 2019 guidance ranges.


Full Year 2019

Core FFO attributable to common share and unit holders

$1.06 - $1.14



Same-Home


Core revenues growth

3.2% - 4.2%

Core property operating expenses growth

3.5% - 4.5%

Core NOI growth

3.0% - 4.0%

Core NOI After Capital Expenditures growth

2.6% - 3.6%

Reconciliation of Core FFO attributable to common share and unit holders from 2018 to 2019 Guidance Midpoint


Per FFO Share
and Unit

2018 Core FFO attributable to common share and unit holders, as previously reported

$

1.06

Internal leasing costs (1)

(0.02)

2018 Core FFO attributable to common share and unit holders, as conformed for internal leasing costs

$

1.04



Same-Home Core NOI growth

0.05

Non-Same-Home Core NOI growth (2)

0.05

General and administrative expense growth

(0.01)

Interest expense and preferred dividends increase

(0.02)

Share count increase

(0.01)



2019 Core FFO attributable to common share and unit holders - Guidance Midpoint

$

1.10

<



(1)

Adjustment amount reflects the portion of leasing costs that were previously capitalized and treated as a reduction to Adjusted FFO attributable to common share and unit holders that would be expensed under the new lease accounting standard ASU 2016-02, adopted by the Company on January 1, 2019.

(2)

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