Market Overview

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

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AGOURA HILLS, Calif., Nov. 7, 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 September 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 6.5% to $298.3 million for the third quarter of 2019 from $280.1 million for the third quarter of 2018.
  • Net income attributable to common shareholders totaled $23.5 million, or $0.08 per diluted share, for the third quarter of 2019, compared to $15.2 million, or $0.05 per diluted share, for the third quarter of 2018.
  • Core Funds from Operations ("Core FFO") attributable to common share and unit holders for the third quarter of 2019 was $97.4 million, or $0.28 per FFO share and unit, compared to $92.2 million, or $0.26 per FFO share and unit, for the third quarter of 2018, which represents a 5.4% increase on a per share and unit basis.
  • Adjusted Funds from Operations ("Adjusted FFO") attributable to common share and unit holders for the third quarter of 2019 was $83.9 million, or $0.24 per FFO share and unit, compared to $79.4 million, or $0.23 per FFO share and unit, for the third quarter of 2018, which represents a 5.2% increase on a per share and unit basis.
  • Core Net Operating Income ("Core NOI") from Same-Home properties increased by 2.5% year-over year for the third quarter of 2019. Core NOI After Capital Expenditures from Same-Home properties increased by 2.0% year-over-year for the third quarter of 2019.
  • Maintained strong Same-Home portfolio Average Occupied Days Percentage of 95.1% while achieving a 3.6% year-over-year growth in Average Monthly Realized Rent per property for the third quarter of 2019.
  • Raised Full Year 2019 Core FFO attributable to common share and unit holders guidance by $0.01 per share and unit at the midpoint to a range of $1.10 to $1.12, along with updates to certain other components to 2019 guidance.

"The American Homes 4 Rent platform continues to deliver strong and consistent operating results as we prepare for our next chapter of growth," stated David Singelyn, American Homes 4 Rent's Chief Executive Officer. "To date, we've strategically invested into building a one-of-a-kind internal development program that, when coupled with our operating platform and best-in-class balance sheet, clearly differentiates AMH and positions our portfolio for outsized growth. We are excited to be on the forefront of the built-for-rental home opportunity, which has the potential to both revolutionize our industry and further enhance long-term value creation for our shareholders."

Third 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 $23.5 million, or $0.08 per diluted share, for the third quarter of 2019, compared to $15.2 million, or $0.05 per diluted share, for the third quarter of 2018. This improvement was primarily attributable to higher revenues resulting from a larger number of occupied properties and higher rental rates, which were offset in part by higher property operating expenses and property management expenses, as well as an increase in gain on sale of single-family properties and other, net.

Total revenues increased 6.5% to $298.3 million for the third quarter of 2019 from $280.1 million for the third quarter of 2018. Revenue growth was primarily driven by continued strong leasing activity, as our average occupied portfolio grew to 48,990 homes for the quarter ended September 30, 2019, compared to 47,655 homes for the quarter ended September 30, 2018, as well as higher rental rates.

Core NOI on our total portfolio increased 5.1% to $150.9 million for the third quarter of 2019, compared to $143.6 million for the third 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 and higher repairs and maintenance and turnover costs, net.

Core revenues from Same-Home properties increased 3.9% to $189.6 million for the third quarter of 2019, compared to $182.5 million for the third quarter of 2018. This growth was primarily driven by a 3.6% increase in Average Monthly Realized Rent per property as well as higher fees from single-family properties resulting from operational enhancements to our fee structure. Core property operating expenses from Same-Home properties increased 6.3% to $72.4 million for the third quarter of 2019, compared to $68.1 million for the third quarter of 2018, driven mostly by higher property tax expense related to outsized 2019 valuation increases and higher repairs and maintenance and turnover costs, net primarily due to multiple hurricane and weather-related events, resulting in $1.0 million of expenses in the third quarter of 2019. As a result, Core NOI from Same-Home properties increased 2.5% to $117.2 million for the third quarter of 2019, compared to $114.4 million for the third quarter of 2018. After capital expenditures, Core NOI from Same-Home properties increased 2.0% to $107.2 million for the third quarter of 2019, compared to $105.1 million for the third quarter of 2018. For the third quarter of 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 $97.4 million, or $0.28 per FFO share and unit, for the third quarter of 2019, compared to $92.2 million, or $0.26 per FFO share and unit, for the third quarter of 2018. Adjusted FFO attributable to common share and unit holders for the third quarter of 2019 was $83.9 million, or $0.24 per FFO share and unit, compared to $79.4 million, or $0.23 per FFO share and unit, for the third 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 and higher repairs and maintenance and turnover costs, net.

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 $62.3 million, or $0.21 per diluted share, for the nine-month period ended September 30, 2019, compared to $5.8 million, or $0.02 per diluted share, for the nine-month period ended September 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 7.1% to $859.4 million for the nine-month period ended September 30, 2019 from $802.5 million for the nine-month period ended September 30, 2018. Revenue growth was primarily driven by continued strong leasing activity, as our average occupied portfolio grew to 48,667 homes as of September 30, 2019, compared to 47,255 homes as of September 30, 2018.

Core NOI on our total portfolio increased 7.6% to $455.5 million for the nine-month period ended September 30, 2019, compared to $423.2 million for the nine-month period ended September 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 repairs and maintenance and turnover costs, net and higher property management expenses, net.

Core revenues from Same-Home properties increased 4.2% to $565.9 million for the nine-month period ended September 30, 2019, compared to $543.3 million for the nine-month period ended September 30, 2018. This growth was primarily driven by a 3.6% increase in Average Monthly Realized Rent per property and an increase in Average Occupied Days Percentage to 95.4% from 95.1% as well as higher fees from single-family properties resulting from operational enhancements to our fee structure. Core property operating expenses from Same-Home properties increased 4.8% to $208.0 million for the nine-month period ended September 30, 2019, compared to $198.5 million for the nine-month period ended September 30, 2018, driven mostly by higher property tax expense related to outsized 2019 valuation increases and higher repairs and maintenance and turnover costs, net. As a result, Core NOI from Same-Home properties increased 3.8% to $357.9 million for the nine-month period ended September 30, 2019, compared to $344.8 million for the nine-month period ended September 30, 2018. After capital expenditures, Core NOI from Same-Home properties increased 3.3% to $333.3 million for the nine-month period ended September 30, 2019, compared to $322.6 million for the nine-month period ended September 30, 2018. For the nine-month period ended September 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 $291.4 million, or $0.83 per FFO share and unit, for the nine-month period ended September 30, 2019, compared to $267.3 million, or $0.77 per FFO share and unit, for the nine-month period ended September 30, 2018. Adjusted FFO attributable to common share and unit holders for the nine-month period ended September 30, 2019 was $257.5 million, or $0.73 per FFO share and unit, compared to $236.2 million, or $0.68 per FFO share and unit, for the nine-month period ended September 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 repairs and maintenance and turnover costs, net and higher property management expenses, net.

Portfolio

As of September 30, 2019, the Company had an occupancy percentage of 95.6%, compared to 96.4% as of June 30, 2019. The occupancy percentage on Same-Home properties was 95.7% as of September 30, 2019, compared to 96.4% as of June 30, 2019.

Investments

As of September 30, 2019, the Company's total portfolio consisted of 52,537 homes, including 1,439 properties held for sale, compared to 52,634 homes as of June 30, 2019, including 1,664 properties held for sale, a decrease of 97 homes, which included 341 homes sold, offset by 9 properties acquired through traditional acquisition channels and 235 newly constructed properties delivered through our AMH Development and National Builder Programs.

Capital Activities and Balance Sheet

As of September 30, 2019, the Company had cash and cash equivalents of $171.2 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 13.4 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


Full Year 2019


Previous Guidance


Current Guidance

Core FFO attributable to common share and unit holders

$1.06 - $1.14


$1.10 - $1.12





Same-Home




Core revenues growth

3.2% - 4.2%


3.8% - 4.2%

Core property operating expenses growth

3.5% - 4.5%


4.7% - 5.1%

Core NOI growth

3.0% - 4.0%


3.3% - 3.7%

Core NOI After Capital Expenditures growth

2.6% - 3.6%


2.9% - 3.3%

Changes to Full Year 2019 guidance:

  • Core FFO attributable to common share and unit holders revised to reflect higher NOI growth from Non-Same-Home properties.
  • Same-Home Core revenues growth revised to reflect better than expected strength in Average Occupied Days.
  • Same-Home Core property operating expenses growth revised to reflect higher than expected property tax expense related to outsized 2019 valuation increases.

Note: The Company does not provide guidance for the most comparable GAAP financial measures of net income or loss, total revenues and property operating expenses, or a reconciliation of the above-listed forward-looking non-GAAP financial measures to the comparable GAAP financial measures because we are unable to reasonably predict certain items contained in the GAAP measures, including non-recurring and infrequent items that are not indicative of the Company's ongoing operations. Such items include, but are not limited to, net gain or loss on sales and impairment of single-family properties, casualty loss, Non-Same-Home revenues and Non-Same-Home property operating expenses. These items are uncertain, depend on various factors and could have a material impact on our GAAP results for the guidance period.

Additional Information

A copy of the Company's Third Quarter 2019 Earnings Release and Supplemental Information Package and this press release are available on our website at www.americanhomes4rent.com. This information has also been furnished to the SEC in a current report on Form 8-K.

Conference Call

A conference call is scheduled on Friday, November 8, 2019, at 11:00 a.m. Eastern Time to discuss the Company's financial results for the quarter ended September 30, 2019, and to provide an update on its business. The domestic dial-in number is (877) 451-6152 (U.S. and Canada) and the international dial-in number is (201) 389-0879 (passcode not required). A simultaneous audio webcast may be accessed by using the link at www.americanhomes4rent.com, under "For Investors." A replay of the conference call may be accessed through Friday, November 22, 2019 by calling (844) 512-2921 (U.S. and Canada) or (412) 317-6671 (international), replay passcode number 13695224#, or by using the link at www.americanhomes4rent.com, under "For Investors."

About American Homes 4 Rent

American Homes 4 Rent (NYSE:AMH) is a leader in the single-family home rental industry and "American Homes 4 Rent" is fast becoming

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