American Homes 4 Rent Reports Second Quarter 2021 Financial and Operating Results

CALABASAS, Calif., Aug. 5, 2021 /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, 2021.

Highlights

• Rents and other single-family property revenues increased 11.7% to $313.7 million for the second quarter of 2021.
• Net income attributable to common shareholders totaled $20.1 million, or $0.06 per diluted share, for the second quarter of 2021, compared to $15.4 million, or $0.05 per diluted share, for the second quarter of 2020.
• Core Funds from Operations ("Core FFO") attributable to common share and unit holders increased 22.9% to $0.33 per FFO share and unit for the second quarter of 2021 and Adjusted Funds from Operations ("Adjusted FFO") attributable to common share and unit holders increased 26.4% to $0.29 per FFO share and unit for the second quarter of 2021.
• Core Net Operating Income ("Core NOI") from Same-Home properties increased by 12.2% year-over-year for the second quarter of 2021.
• Achieved new record high Same-Home Average Occupied Days Percentage of 97.9% in the second quarter of 2021, while generating 13.7% rate growth on new leases.
• Record high seasonal demand continues in the third quarter 2021, driving a 90 basis point year-over year increase in Same-Home Average Occupied Days Percentage to 97.4% in July 2021, while achieving over 16.5% rate growth on new leases.
• Closed a $1.25 billion sustainability-linked credit facility, which amends the Company's existing credit facility and provides for expanded revolving capacity and lower borrowing cost.
• Issued 5,500,000 Class A common shares raising net proceeds of $194.0 million during the second quarter of 2021 and offered 13,245,000 Class A common shares on a forward basis for future estimated net proceeds of $467.3 million.
• Redeemed all outstanding shares of the 6.500% Series D and 6.350% Series E perpetual preferred shares.
• Subsequent to quarter end, issued $450.0 million of 2.375% unsecured senior notes due 2031 and $300.0 million of 3.375% unsecured senior notes due 2051.
• Raised Full Year 2021 Core FFO attributable to common share and unit holders guidance midpoint by $0.05 per share and unit to $1.32, representing anticipated full year growth of 13.8% over prior year.

"The second quarter of 2021 was one of the strongest operational performances in the history of American Homes 4 Rent with quarterly Core FFO per share growth of nearly 23%," stated David Singelyn, American Homes 4 Rent's Chief Executive Officer.  "Additionally, we recently achieved numerous milestone capital accomplishments, including the highly successful debut issuance of 30-year unsecured bonds, which puts us in a position to further expand our 2021 external growth expectations.  Coupled with our record-breaking operating results, we are increasing the midpoint of our full-year Core FFO guidance to $1.32 per share, which now represents nearly 14% anticipated year-over-year growth."

Second Quarter 2021 Financial Results

Net income attributable to common shareholders totaled $20.1 million, or $0.06 per diluted share, for the second quarter of 2021, compared to $15.4 million, or $0.05 per diluted share, for the second quarter of 2020. This increase was primarily attributable to growth in the Company's portfolio, higher occupancy and higher rental rates, partially offset by a noncash charge related to the redemptions of our Series D and Series E perpetual preferred shares.

Rents and other single-family property revenues increased 11.7% to $313.7 million for the second quarter of 2021, compared to $280.7 million for the second quarter of 2020. Revenue growth was driven by an increase in our average occupied portfolio which grew to 52,335 homes for the second quarter of 2021, compared to 49,600 homes for the second quarter of 2020, as well as higher rental rates, higher fees and lower uncollectible rents related to the COVID-19 pandemic.

Core NOI from our total portfolio increased 18.1% to $175.3 million for the second quarter of 2021, compared to $148.4 million for the second quarter of 2020. This growth was driven by a 12.4% increase in core revenues resulting from a larger number of occupied properties and higher rental rates, partially offset by a 3.7% increase in core property operating expenses.

For the Company's Same-Home portfolio, rents from single-family properties increased 6.6% to $242.2 million for the second quarter of 2021, compared to $227.1 million for the second quarter of 2020, which was driven by a 4.1% increase in Average Monthly Realized Rent per property and a 240 basis point increase in Average Occupied Days Percentage. This growth was further benefited by (i) 90 basis points of contribution from higher fees and (ii) 80 basis points from lower uncollectible rents related to the COVID-19 pandemic, which resulted in 8.3% growth in core revenues from Same-Home properties. Core property operating expenses from Same-Home properties increased 2.2% to $87.0 million for the second quarter of 2021, compared to $85.2 million for the second quarter of 2020. As a result, Core NOI from Same-Home properties increased 12.2% to $153.7 million for the second quarter of 2021, compared to $137.0 million for the second quarter of 2020.

Core FFO attributable to common share and unit holders was $122.8 million, or $0.33 per FFO share and unit, for the second quarter of 2021, compared to $94.8 million, or $0.27 per FFO share and unit, for the second quarter of 2020. Adjusted FFO attributable to common share and unit holders was $108.7 million, or $0.29 per FFO share and unit, for the second quarter of 2021, compared to $81.6 million, or $0.23 per FFO share and unit, for the second quarter of 2020. These improvements were primarily attributable to growth in the Company's portfolio and a larger number of occupied properties as well as higher rental rates.

Year-to-Date 2021 Financial Results

Net income attributable to common shareholders totaled $50.3 million, or $0.16 per diluted share, for the six-month period ended June 30, 2021, compared to $35.6 million, or $0.12 per diluted share, for the six-month period ended June 30, 2020. This increase was primarily attributable to growth in the Company's portfolio, higher occupancy and higher rental rates, as well as an increase in gain on sale and impairment of single-family properties and other, net, partially offset by a noncash charge related to the redemptions of our Series D and Series E perpetual preferred shares.

Rents and other single-family property revenues increased 10.2% to $626.2 million for the six-month period ended June 30, 2021, compared to $568.0 million for the six-month period ended June 30, 2020. Revenue growth was driven by an increase in our average occupied portfolio which grew to 51,980 homes for the six-month period ended June 30, 2021, compared to 49,322 homes for the six-month period ended June 30, 2020, as well as higher rental rates and higher fees, partially offset by increased uncollectible rents related to the COVID-19 pandemic.

Core NOI from our total portfolio increased 13.4% to $346.4 million for the six-month period ended June 30, 2021, compared to $305.4 million for the six-month period ended June 30, 2020. This growth was driven by a 10.1% increase in core revenues resulting from a larger number of occupied properties and higher rental rates, partially offset by a 4.7% increase in core property operating expenses.

For the Company's Same-Home portfolio, rents from single-family properties increased 6.1% to $478.9 million for the six-month period ended June 30, 2021, compared to $451.3 million for the six-month period ended June 30, 2020, which was driven by a 3.7% increase in Average Monthly Realized Rent per property and a 220 basis point increase in Average Occupied Days Percentage. This growth was (i) further benefited by 60 basis points of contribution from higher fees and (ii) partially offset by 50 basis points of drag from increased uncollectible rents related to the COVID-19 pandemic, which resulted in 6.2% growth in core revenues from Same-Home properties. Core property operating expenses from Same-Home properties increased 3.0% to $170.0 million for the six-month period ended June 30, 2021, compared to $165.0 million for the six-month period ended June 30, 2020. As a result, Core NOI from Same-Home properties increased 8.0% to $306.0 million for the six-month period ended June 30, 2021, compared to $283.2 million for the six-month period ended June 30, 2020.

Core FFO attributable to common share and unit holders was $239.7 million, or $0.65 per FFO share and unit, for the six-month period ended June 30, 2021, compared to $197.9 million, or $0.56 per FFO share and unit, for the six-month period ended June 30, 2020. Adjusted FFO attributable to common share and unit holders for the six-month period ended June 30, 2021 was $215.0 million, or $0.58 per FFO share and unit, compared to $175.1 million, or $0.50 per FFO share and unit, for the six-month period ended June 30, 2020. These improvements were primarily attributable to growth in the Company's portfolio and a larger number of occupied properties as well as higher rental rates.

Collections Update

Collections have continued to remain resilient throughout the pandemic with the Company recognizing bad debt on 2.5% of its second quarter 2021 rental billings for its Same-Home portfolio. Additionally, collections of July 2021 rental billings continue to remain consistent with pandemic payment histories within the same time frame.

Portfolio

As of June 30, 2021, the Company had an occupancy percentage of 97.1%, compared to 97.5% as of March 31, 2021. The occupancy percentage on Same-Home properties was 98.2% as of June 30, 2021, compared to 98.1% as of March 31, 2021.

Investments

As of June 30, 2021, the Company's wholly-owned portfolio consisted of 54,785 homes, compared to 53,984 homes as of March 31, 2021, an increase of 801 homes during the second quarter of 2021, which included 256 newly constructed properties delivered through our AMH Development Program and 642 homes acquired through our National Builder Program and traditional acquisition channel, partially offset by 97 homes sold. As of June 30, 2021, the Company had 589 properties held for sale, compared to 636 properties as of March 31, 2021. Also, as of June 30, 2021, the Company had an additional 1,530 properties held in unconsolidated joint ventures, representing a net increase of 147 properties, compared to 1,383 properties held in unconsolidated joint ventures as of March 31, 2021.

Capital Activities, Balance Sheet and Liquidity

In April 2021, the Company closed a $1.25 billion revolving credit facility, amending its existing $800 million revolving credit facility. The amended revolving credit facility provides for expanded borrowing capacity, reflects a more favorable pricing grid based on current market conditions, and includes a sustainability component based upon third-party performance measures through which overall pricing can further improve if the Company meets certain targets. The interest rate on the amended revolving credit facility is at either LIBOR plus a margin ranging from 0.725% to 1.45% or a base rate (determined according to the greater of a prime rate, federal funds rate plus 0.5% or daily LIBOR rate plus 1.0%) plus a margin ranging from 0.00% to 0.45%. In each case the actual margin is determined based on the Company's credit ratings in effect from time to time. The amended revolving credit facility matures on April 15, 2025, with two six-month extension options at the Company's election if certain conditions are met.

In May 2021, the Company issued 5,500,000 Class A common shares of beneficial interest, $0.01 par value per share, in an underwritten public offering, raising net proceeds of $194.0 million after deducting underwriting discounts and before offering costs of approximately $0.2 million. The Company used the net proceeds from the offering to repay indebtedness under its revolving credit facility, to partially fund the redemption of its Series D and Series E perpetual preferred shares discussed below and for general corporate purposes. In connection with this offering, the Company also entered into a forward sale agreement to issue an additional 13,245,000 Class A common shares of beneficial interest, $0.01 par value per share, for future estimated net proceeds of $467.3 million after deducting underwriting discounts. The forward sale agreement expires May 2022 and the Company expects to use these net proceeds for general corporate purposes including, without limitation, property acquisitions and developments.

In June 2021, the Company redeemed all 10,750,000 shares of the outstanding 6.500% Series D perpetual preferred shares, $0.01 par value per share, and all 9,200,000 shares of the outstanding 6.350% Series E perpetual preferred shares, $0.01 par value per share, for cash at a liquidation preference of $25.00 per share plus any accrued and unpaid dividends.

As of June 30, 2021, the Company had cash and cash equivalents of $40.6 million and had total outstanding debt of $3.5 billion, excluding unamortized discounts and unamortized deferred financing costs, with a weighted-average interest rate of 3.8% and a weighted-average term to maturity of 10.4 years. The Company had $620.0 million of outstanding borrowings on its $1.25 billion revolving credit facility at the end of the quarter. Additionally, the Company has no debt maturities, other than recurring principal amortization, until 2024. During the second quarter of 2021, the Company generated $71.1 million of Retained Cash Flow and sold 97 properties generating $28.2 million of net proceeds.

In July 2021, American Homes 4 Rent, L.P. (the "Operating Partnership"), the entity through which the Company conducts substantially all of its business and owns, directly or through subsidiaries, substantially all of its assets, issued $450.0 million of 2.375% unsecured senior notes with a maturity date of July 15, 2031 and $300.0 million of 3.375% unsecured senior notes with a maturity date of July 15, 2051. Interest on the notes is payable semi-annually in arrears on January 15 and July 15 of each year, commencing on January 15, 2022. The Operating Partnership received aggregate net proceeds of $731.6 million from these issuances, after underwriting fees of approximately $5.6 million and a $12.8 million discount, and before estimated offering costs of $1.1 million. The Operating Partnership used the net proceeds from this offering to repay amounts outstanding on its revolving credit facility and intends to use any remaining net proceeds for general corporate purposes, including, without limitation, property acquisitions and developments, the expansion, redevelopment and/or improvement of existing properties in the Operating Partnership's portfolio, other capital expenditures, the redemption of its preferred shares, the repayment of outstanding indebtedness, working capital and other general purposes.

2021 Guidance

The Company is providing revised 2021 guidance based on its current and expected views of the single-family rental market and general economic conditions. However, the extent to which the pandemic may continue to impact us and our residents will continue to depend on future developments. These include resurgences, new variants or strains, such as the Delta variant, the impact of government regulations, vaccine adoption rates, the effectiveness of vaccines, and the direct and indirect economic effects of the pandemic and containment measures, among others. We will continue to monitor these events which may result in future revisions to our guidance estimates.

Guidance Summary

Changes to Full Year 2021 guidance:

• $0.03 related to our Same-Home portfolio reflecting strengthened core revenues outlook primarily driven by strong occupancy and leasing results.
• $0.02 related to our Non-Same-Home portfolio reflecting strengthened core revenues outlook primarily driven by strong occupancy and leasing results as well as partial year impact from our expanded external growth program, net of financing costs. Since our first quarter update on May 6, 2021, we have increased our external growth expectations by approximately $300 million to $1.4 billion to $1.6 billion, which now includes between 3,500 and 4,000 wholly-owned inventory additions as well as investments into our wholly-owned land and development pipeline and pro-rata share of joint venture investments. When combined with 100% of gross joint venture investments, we now expect to deploy total gross capital of $1.6 billion to $1.8 billion for the year.

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 Second Quarter 2021 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, August 6, 2021 at 11:00 a.m. Eastern Time to discuss the Company's financial results for the quarter ended June 30, 2021 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 "Investor relations." A replay of the conference call may be accessed through Friday, August 20, 2021 by calling (844) 512-2921 (U.S. and Canada) or (412) 317-6671 (international), replay passcode number 13721357#, or by using the link at www.americanhomes4rent.com, under "Investor relations."

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 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, developing, renovating, leasing, and operating attractive, single-family homes as rental properties. As of June 30, 2021, we owned 54,785 single-family properties in selected submarkets in 22 states.

Forward-Looking Statements

This press release and the accompanying Supplemental Information Package contain "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," "outlook," "guidance" 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, our 2021 Guidance, our expectations with respect to the impacts of the COVID-19 pandemic, our belief that our acquisition and homebuilding programs will result in continued growth and the estimated timing of our development deliveries set forth in the Supplemental Information Package. The Company has based these forward-looking statements on its current expectations and assumptions about future events. While the Company'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 the Company's control and could cause actual results to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company undertakes no obligation to update any forward-looking statements to conform to actual results or changes in its expectations, unless required by applicable law. Currently, one of the most significant factors that could cause actual outcomes to differ materially from our forward-looking statements is the adverse effect of the COVID-19 pandemic. The extent to which COVID-19 will impact our future financial results will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, including resurgences, new variants or strains, such as the Delta variant, the impact of government regulations, vaccine adoption rates, the effectiveness of vaccines, and the direct and indirect economic effects of the pandemic and containment measures, among others. 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 the Company in general, see the "Risk Factors" disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2020 and the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, and in the Company's subsequent filings with the SEC.

Funds from Operations attributable to common share and unit holders and Retained Cash Flow

The following is a reconciliation of net income or loss attributable to common shareholders to FFO attributable to common share and unit holders, Core FFO attributable to common share and unit holders, Adjusted FFO attributable to common share and unit holders and Retained Cash Flow for the three and six months ended June 30, 2021 and 2020 (amounts in thousands, except share and per share data):

The following are reconciliations of core revenues, Same-Home core revenues, core property operating expenses, Same-Home core property operating expenses, Core NOI, Same-Home Core NOI and Same-Home Core NOI After Capital Expenditures to their respective GAAP metrics for the three and six months ended June 30, 2021 and 2020 (amounts in thousands):

Contact:
American Homes 4 Rent
Investor Relations
Phone: (855) 794-2447
Email: [email protected]

SOURCE American Homes 4 Rent