American Homes 4 Rent Reports Second Quarter 2013 Financial Results

Significant increases in number of owned and leased homes

Closing of internalization transaction

Closing of initial public offering

20 Aug, 2013, 20:37 ET from American Homes 4 Rent

AGOURA HILLS, Calif., Aug. 20, 2013 /PRNewswire/ -- American Homes 4 Rent (NYSE: AMH) ("AMH", "we" or "us") today announced its financial and operating results for the quarter ended June 30, 2013 and certain updated portfolio information through July 31, 2013.

Highlights

  • Increase in properties to 19,825 as of July 31, 2013 from 18,326 as of June 30, 2013
  • Maintained high occupancy level with 97% of properties leased that have been rent ready for more than 90 days
  • 1,773 properties leased during July 2013, for a total of 11,753 leased properties as of month-end, with an additional 2,176 properties rent ready as of July 31, 2013
  • Closed internalization transaction on June 10, 2013
  • Closed transaction to acquire 4,778 properties held by joint venture with Alaska Permanent Fund Corporation on June 11, 2013 (the "Alaska Portfolio")
  • Completion of initial public offering and concurrent private placements, and recent exercise in full of the underwriters' option to purchase additional shares.

"We are pleased with our recent accomplishments of internalizing our management platform and completing our initial public offering.  We believe that our new public platform will provide us opportunities for the continued expansion of our business across many fronts.  We are also excited about our continuing opportunity to acquire quality homes," said David P. Singelyn, AMH's Chief Executive Officer.

Recent Transactions

As previously disclosed, on June 10, 2013, AMH closed an important transaction to internalize certain operations previously provided to AMH by American Homes 4 Rent, LLC ("AH LLC"), a company formed by our founder and board chairman B. Wayne Hughes.  AMH is now self-managed with respect to corporate and property management operations, which we believe provides an efficient structure for both current operations and future growth. 

On June 11, 2013, AMH completed the acquisition of 4,778 properties from a joint venture with the Alaska Permanent Fund Corporation, substantially increasing the size of its portfolio.

As previously announced, AMH completed its IPO in August 2013 and the underwriters exercised in full their option to purchase additional shares.  Assuming that the underwriters' option closes as expected on August 21, 2013, the sale of the IPO shares together with the shares sold in the concurrent private placements to American Homes 4 Rent, LLC and the Alaska Permanent Fund Corporation, will provide us with gross proceeds of $886.8 million, before underwriters' discounts and offering costs.

Second Quarter 2013 Financial Results

AMH had total revenues of $18.1 million for the second quarter of 2013, a 176% increase over revenues reported for the first quarter of 2013.  This increase was largely due to the acquisition of the Alaska Portfolio, which was 75% leased as of the date of acquisition, and revenue from leases commencing throughout the first and second quarters.  

AMH reported net loss attributable to common shareholders of $14.0 million for the second quarter of 2013 and $21.7 million for the six months ended June 30, 2013.

AMH had net operating income ("NOI") from leased properties of $10.7 million for the second quarter of 2013, an increase of 164% over the first quarter of 2013.  NOI from leased properties is a supplemental non-GAAP financial measure that we define as rents from single-family properties, less property operating expenses for leased single-family properties.  A reconciliation from net income / (loss) to NOI is included in a schedule accompanying this press release.    

Properties

AMH had 19,825 properties as of July 31, 2013 compared to 18,326 properties as of June 30, 2013. 

"We are pleased that we have been able to continue to successfully grow our portfolio and lease our properties across a broad and diverse base of markets, while maintaining our strict underwriting standards with respect to the quality of the product and expected financial returns," said Jack Corrigan, AMH's Chief Operating Officer.

The following tables provide a summary of properties in which AMH has an interest as of July 31, 2013 and June 30, 2013.

Properties as of July 31, 2013 (1)

Estimated Total Book Value (3)

Properties

Estimated Total Investment (2)

Average per

Property

Units

% of Total

$ millions

Avg. per Property

$ millions

Avg. per Property

Square Footage

Property Age (years)

Indianapolis, IN

1,718

8.7%

$252.1

$146,731

$246.1

$143,234

1,870

11.6

Dallas-Fort Worth, TX

1,660

8.4%

269.9

162,603

262.2

157,927

2,209

10.2

Greater Chicago area,   IL and IN

1,361

6.9%

218.0

160,165

206.7

151,845

1,855

12.4

Atlanta, GA

1,216

6.1%

214.2

176,147

195.3

160,584

2,168

13.2

Houston, TX

1,027

5.2%

179.2

174,472

179.2

174,472

2,295

9.6

Phoenix, AZ

1,005

5.1%

173.7

172,834

169.4

168,545

1,848

11.9

Cincinnati, OH

960

4.8%

149.6

155,883

139.4

145,196

1,812

11.3

Jacksonville, FL

892

4.5%

135.6

151,974

131.7

147,635

1,924

9.8

Charlotte, NC

877

4.4%

152.0

173,271

146.8

167,376

1,948

10.6

Nashville, TN

869

4.4%

181.4

208,743

173.9

200,155

2,193

9.5

All Other (4)

8,240

41.6%

1,474.7

178,973

1,435.1

174,166

1,913

10.9

Total / Average

19,825

100.0%

$3,400.4

$171,519

$3,285.7

$165,733

1,972

11.0

 

 

Properties as of June 30, 2013 (1)

Estimated Total Book Value (3)

Properties

Estimated Total Investment (2)

Average per

Property

Units

% of Total

$ millions

Avg. per Property

$ millions

Avg. per Property

Square Footage

Property Age (years)

Dallas-Fort Worth, TX

1,515

8.3%

$248.6

$164,094

$240.8

$158,967

2,206

10.3

Indianapolis, IN

1,533

8.4%

225.7

147,228

219.7

143,309

1,871

11.6

Greater Chicago area, IL and IN

1,244

6.8%

201.4

161,868

190.0

152,765

1,865

12.4

Atlanta, GA

1,185

6.5%

209.5

176,790

190.6

160,820

2,171

13.2

Houston, TX

1,000

5.5%

174.7

174,650

174.7

174,650

2,289

9.7

Phoenix, AZ

941

5.1%

146.4

155,563

136.1

144,661

1,817

11.3

Cincinnati, OH

840

4.6%

145.9

173,745

141.6

168,613

1,848

11.9

Jacksonville, FL

840

4.6%

128.7

153,256

124.9

148,648

1,935

9.9

Nashville, TN

821

4.5%

171.9

209,320

164.4

200,199

2,192

9.5

Charlotte, NC

787

4.3%

136.5

173,470

131.3

166,899

1,939

10.6

All Other (4)

7,620

41.6%

1,373.4

180,240

1,333.6

175,015

1,920

10.9

Total / Average

18,326

100.0%

$3,162.7

$172,579

$3,047.7

$166,307

1,977

11.0

(1)

Includes 377 properties in which we hold an approximate one-third interest.

(2)

For properties that we acquired directly, Estimated Total Investment represents our actual purchase price (including closing costs) and estimated renovation costs plus a 5% acquisition and renovation fee, if applicable. Estimated renovation costs represent the total costs we have incurred or expect to renovate a property to prepare it for rental. These costs typically include paint, flooring, appliances, blinds and landscaping. Estimated Total Investment differs from Estimated Total Book Value only with respect to the properties contributed by AH LLC. For properties contributed by AH LLC, Estimated Total Book Value is an estimate of the properties' GAAP book value, which includes estimates for renovation costs we expect to incur. These properties were recorded at the net book value of AH LLC as of the date of contribution. See note 3 below.

(3)

Estimated Total Book Value represents the estimated book value on a GAAP basis of all properties. In the case of AH LLC's contribution of properties to us, for GAAP purposes these transactions are considered to be transactions between entities under common control under the provisions of ASC 805, Business Combinations. As a result, these properties have been reflected at the net carrying cost of AH LLC. For the properties acquired from the Alaska Joint Venture, the $904.5 million purchase price has been allocated among the properties in accordance with GAAP. For all other properties, Estimated Total Book Value represents the actual purchase price (including closing costs) and estimated renovation costs plus a 5% acquisition and renovation fee, if any.

(4)

Represents 34 markets in 18 states.

 

Leasing and Renewal Experience

The following tables summarize our leasing experience on Stabilized Properties (1) through July 31, 2013 and June 30, 2013.

Leasing Experience as of July 31, 2013

Number of Properties

Average Annual  Scheduled Rent Per Property

Leased  (1)

Available for Rent 30+ Days (2)

Available for Rent 90+ Days (3)

30+ Days Occupancy % (4)

90+ Days Occupancy % (5)

Dallas-Fort Worth, TX

966

995

972

97%

99%

$17,444

Indianapolis, IN

938

996

954

94%

98%

14,600

Greater Chicago area, IL and IN

428

473

449

90%

95%

19,140

Atlanta, GA

904

942

926

96%

98%

15,919

Houston, TX

482

528

495

91%

97%

17,923

Phoenix, AZ

691

745

731

93%

95%

13,142

Cincinnati, OH

511

548

533

93%

96%

16,868

Jacksonville, FL

539

552

542

98%

99%

15,386

Nashville, TN

594

615

605

97%

98%

17,848

Charlotte, NC

428

516

433

83%

99%

15,371

All Other (6)

3,842

4,604

4,040

83%

95%

16,679

Total / Average

10,323

11,514

10,680

90%

97%

$16,374

 

Leasing Experience as of June 30, 2013

Number of Properties

Average Annual  Scheduled Rent Per Property

Leased  (1)

Available for Rent 30+ Days (2)

Available for Rent 90+ Days (3)

30+ Days Occupancy % (4)

90+ Days Occupancy % (5)

Dallas-Fort Worth, TX

817

840

824

97%

99%

$17,179

Indianapolis, IN

744

783

756

95%

98%

14,549

Greater Chicago area, IL and IN

359

402

375

89%

96%

19,136

Atlanta, GA

848

883

869

96%

98%

15,875

Houston, TX

366

396

370

92%

99%

17,536

Phoenix, AZ

654

711

704

92%

93%

12,984

Cincinnati, OH

404

473

437

85%

92%

16,859

Jacksonville, FL

499

512

502

97%

99%

15,372

Nashville, TN

518

540

529

96%

98%

17,892

Charlotte, NC

367

404

371

91%

99%

15,296

All Other (7)

3,262

3,893

3,404

84%

96%

16,616

Total / Average

8,838

9,837

9,141

90%

97%

$16,249

 

(1)

Includes leases on properties for which we have completed renovations and excludes leases with tenants existing at the date of acquisition ("Stabilized Properties").

(2)

Available for Rent 30+ Days represents the number of properties that have been leased after we have completed renovations or are available for rent (i.e., "rent-ready") for a period of greater than 30 days.

(3)

Available for Rent 90+ Days represents the number of properties that have been leased after we have completed renovations or are available for rent (i.e., "rent-ready") for a period of greater than 90 days.

(4)

Occupancy percentage is computed by dividing the number of leased properties by the number of properties available for rent 30+ days.

(5)

Occupancy percentage is computed by dividing the number of leased properties by the number of properties available for rent 90+ days.

(6)

Represents 30 markets in 18 states.

(7)

Represents 29 markets in 17 states.

As previously disclosed, based on our experience with 471 leases that matured before June 30, 2013, 65% of the tenants renewed their leases at an average increase in rental rate of 2.4%.

Capital Activities and Liquidity

As of June 30, 2013, AMH had cash and cash equivalents of $251.4 million and $670.0 million was outstanding on its credit facility. The initial closing of AMH's IPO and concurrent private placements on August 6, 2013 provided us with $747.4 million of proceeds, net of underwriters' discounts before other offering costs.  Proceeds from the IPO and concurrent private placements were immediately used to pay down the outstanding balance of the credit facility.  The credit facility now provides for aggregate borrowings up to $500 million.

As previously reported, the underwriters have exercised in full their option to purchase an additional 6,617,647 of our Class A common shares at the IPO price of $16.00 per share, less underwriters' discounts.  This transaction, which is expected to close on August 21, 2013, will provide AMH with an additional $100.9 million of proceeds, net of underwriters' discounts.

Conference Call

A conference call is scheduled on Wednesday, August 21, 2013, at 11:00 a.m. Eastern Time to discuss AMH's financial results for the second quarter ended June 30, 2013 and to provide a portfolio update. The domestic dial-in number is (800) 434-1335 (for U.S. and Canada) and the international dial-in number is (404) 920-6442 (conference ID number for either domestic or international is 979119#). 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 September 4, 2013 by calling (800) 920-7487 (U.S. and Canada) or (404) 920-1710 (international) or by using the link at www.americanhomes4rent.com, under "For Investors."  All forms of replay utilize conference ID number 979119#.

About American Homes 4 Rent

American Homes 4 Rent is an internally managed Maryland real estate investment trust, or REIT, focused on acquiring, renovating, leasing, and operating single-family homes as rental properties. As of July 31, 2013, we owned 19,825 single-family properties in selected submarkets in 22 states and we continually evaluate potential target markets that meet our underwriting criteria and are located where we believe we can achieve sufficient scale for internalized property management. We are 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. 

Forward-Looking Statements

This press release contains "forward-looking statements." These forward-looking statements relate to beliefs, expectations or intentions and similar statements concerning matters that are not of historical fact and are generally accompanied by words such as "estimate," "project," "predict," "believe," "expect," "anticipate," "intend," ,"potential," "plan," "goal" or other words that convey the uncertainty of future events or outcomes. Examples of forward-looking statements contained in this press release include, among others, the expected timing of the closing of the underwriters' option to purchase additional shares, our belief that our self-managed platform will provide an efficient structure for both current operations and future growth, our ability to continue growing our single-family home portfolio and expanding our business across many fronts and our continuing opportunity to acquire quality homes.  AMH has based these forward-looking statements on its current expectations and assumptions about future events. While AMH's management considers these expectations to be reasonable, they are inherently subject to risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond AMH's control. Investors should not place undue reliance on these forward-looking statements.  All information in this press release is current as of the date of the release.  AMH undertakes no obligation to update any forward-looking statements to conform to actual results or changes in its expectations.  For a further description of the risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks relating to the business of AMH in general, see AMH's prospectus filed with the Securities and Exchange Commission on August 2, 2013. 

         

American Homes 4 Rent

Condensed Consolidated Balance Sheets (Amounts in thousands, except share information)

June 30, 2013

December 31, 2012

(Unaudited)

Assets

Single-family properties:

Land

$                    580,433

$                      96,139

Buildings and improvements

2,472,921

411,706

3,053,354

507,845

Less: accumulated depreciation

(13,850)

(2,132)

Single-family properties, net

3,039,504

505,713

Cash and cash equivalents

251,406

397,198

Restricted cash for resident security deposits

13,572

-

Rent and other receivables

7,644

6,586

Escrow deposits, prepaid expenses and other assets

27,936

11,961

Deferred costs and other intangibles, net

21,978

-

Goodwill

120,655

-

Total assets

$                 3,482,695

$                    921,458

Liabilities

Credit facility

$                    670,000

$                                -

Accounts payable and accrued expenses

75,318

11,282

Amounts payable to affiliates

21,160

5,012

Contingently convertible Series E units liability

64,881

-

Total liabilities

831,359

16,294

Commitments and contingencies

Equity

Shareholders' equity:

   Class A common shares, $0.01 par value

      per share, 450,000,000 shares authorized,

      129,433,425 and 38,663,998 shares issued and

      outstanding at June 30, 2013 and

      December 31, 2012, respectively

1,294

387

   Class B common shares, $0.01 par value

      per share, 50,000,000 shares authorized,

      635,075 and 667 shares issued and

      outstanding at June 30, 2013 and

      December 31, 2012, respectively

6

-

Additional paid-in capital

1,965,413

914,565

Accumulated deficit

(32,027)

(10,278)

Total shareholders' equity

1,934,686

904,674

Noncontrolling interest

716,650

490

            Total equity

2,651,336

905,164

Total liabilities and equity

$                 3,482,695

$                    921,458

 

American Homes 4 Rent

Condensed Consolidated Statements of Operations (Amounts in thousands, except share information) (Unaudited)

For the Three Months 

For the Six Months 

Ended June 30,

Ended June 30,

2013

2012

2013

2012

Revenues:

Rents from single-family properties

$          17,585

$               184

$          24,144

$               280

Other

535

-

535

-

Total revenues

18,120

184

24,679

280

Expenses:

Property operating expenses

      Leased single-family properties

6,859

90

9,362

133

      Vacant single-family properties

4,391

96

6,120

118

General and administrative expense

811

1,487

2,436

1,657

Advisory fees

3,610

-

6,352

-

Interest expense

-

-

370

-

Noncash share-based compensation expense

279

-

453

-

Acquisition fees and costs expensed

2,099

-

3,489

-

Depreciation and amortization

10,879

77

13,784

102

Total expenses

28,928

1,750

42,366

2,010

Gain on remeasurement of equity method investment

10,945

-

10,945

-

Income / (loss) from continuing operations

137

(1,566)

(6,742)

(1,730)

Discontinued operations

Gain on disposition of assets

904

-

904

-

Income from discontinued operations

82

-

104

-

Total income from discontinued operations

986

-

1,008

-

Net income / (loss)

1,123

(1,566)

(5,734)

(1,730)

Noncontrolling interest

4,664

-

5,559

-

Conversion of preferred units

10,456

-

10,456

-

Net loss attributable to common shareholders

$         (13,997)

$           (1,566)

$         (21,749)

$           (1,730)

Weighted average shares outstanding - basic and diluted

95,971,706

3,301,667

72,234,717

3,301,667

Net loss per share - basic and diluted (1):

Loss from continuing operations

$             (0.16)

$             (0.47)

$             (0.31)

$             (0.52)

Discontinued operations

0.01

-

0.01

-

Net loss attributable to common shareholders

per share - basic and diluted (1)

$             (0.15)

$             (0.47)

$             (0.30)

$             (0.52)

(1)

Due to inherent complexity of the above condensed consolidated financial statements as a result of the transaction completed between entities under common control, AMH does not consider the historical net loss per share computations as meaningful.

American Homes 4 Rent

Condensed Consolidated Statements of Equity (Amounts in thousands, except share information) (Unaudited)

Class A common shares

Class B common shares

Additional

Number

Number

paid-in

Accumulated

Shareholders'

Noncontrolling

Total

of shares

Amount

of shares

Amount

capital

deficit

equity

interest

equity

Balances at 

   December 31, 2012

38,663,998

$    387

667

$        -

$    914,565

$ (10,278)

$   904,674

$             490

$   905,164

Issuance of Class A 

   common shares, net 

   of offering costs 

   of $44,003

46,718,750

467

-

-

703,030

-

703,497

-

703,497

2,770 Property 

   Contribution

-

-

634,408

6

(356,487)

-

(356,481)

390,016

33,535

Settlement of 

   subscription agreement

434,783

4

-

-

(4)

-

-

-

-

Management

   Internalization

-

-

-

-

-

-

-

65,188

65,188

Alaska Joint Venture

   Acquisition

43,609,394

436

-

-

703,856

-

704,292

200,195

904,487

RJ Joint Ventures

   Acquisition

-

-

-

-

-

-

-

61,060

61,060

Share-based 

   compensation

6,500

-

-

-

453

-

453

-

453

Distributions to

  noncontrolling 

   interests

-

-

-

-

-

-

-

(5,858)

(5,858)

Conversion of 

   preferred units

-

-

-

-

-

(10,456)

(10,456)

-

(10,456)

Net loss

-

-

-

-

-

(11,293)

(11,293)

5,559

(5,734)

Balances at 

   June 30, 2013

129,433,425

$ 1,294

635,075

$       6

$ 1,965,413

$ (32,027)

$1,934,686

$      716,650

$2,651,336

(Photo: http://photos.prnewswire.com/prnh/20130820/LA67031)

Non-GAAP Financial Measures

Reconciliation of Net Operating Income to Net Income (Loss)

Net operating income, or NOI, from leased properties is a supplemental non-GAAP financial measure that AMH defines as rents from single-family properties, less property operating expenses for leased single-family properties.  NOI excludes income from discontinued operations, gain on remeasurement of equity method investment, depreciation and amortization, acquisition fees and costs expensed, noncash share-based compensation expense, interest expense, advisory fees, general and administrative expense, property operating expenses for vacant single-family properties and other revenues. 

AMH considers NOI from leased properties to be a meaningful financial measure because we believe it is helpful to investors in understanding the operating performance of our leased single-family properties. It should be considered only as a supplement to net income (loss) as a measure of our performance. NOI from leased properties should not be used as a measure of AMH's liquidity, nor is it indicative of funds available to fund AMH's cash needs, including its ability to pay dividends or make distributions. NOI from leased properties also should not be used as a supplement to or substitute for net income (loss) or net cash flows from operating activities (as computed in accordance with GAAP).

The following is a reconciliation of NOI to net income (loss) as determined in accordance with GAAP:

Three Months Ended

June 30, 2013

March 31, 2013

Net income / (loss)

$             1,123

$                (6,857)

Income from discontinued operations

(986)

(22)

Gain on remeasurement of equity method investment

(10,945)

-

Depreciation and amortization

10,879

2,905

Acquisitions fees and costs expensed

2,099

1,390

Noncash share-based compensation expense

279

174

Interest expense

-

370

Advisory fees

3,610

2,742

General and administrative expense

811

1,625

Property operating expenses for vacant single-family properties

4,391

1,729

Other revenues

(535)

-

Net operating income

$           10,726

$                 4,056

 

Contact: Peter J. Nelson American Homes 4 Rent Tel: (855) 794-2447

SOURCE American Homes 4 Rent