• Revenue Growth: 4.4% increase over the prior year for the third quarter.
• Same-Home Operating Expense Growth: 2.6% increase over the prior year.
• Core NOI Growth: 5.4% for the third quarter.
• Net Income: $73.8 million or $0.20 per diluted share.
• Core FFO per Share: $0.44, representing 6.3% year-over-year growth.
• Adjusted FFO per Share: $0.38, representing 8% year-over-year growth.
• Development Program Deliveries: 753 homes delivered in the third quarter.
• Acquisition: Acquired a single-family rental portfolio of nearly 1,700 homes for approximately $480 million.
• Disposition: Sold 256 homes, generating over $81 million of net proceeds.
• Net Debt to Adjusted EBITDA: 5.0 times at the end of the quarter.
• Full Year Core FFO Guidance: Increased to $1.77 per share, representing 6.6% year-over-year growth.

• Warning! GuruFocus has detected 8 Warning Signs with AMH.

Release Date: October 30, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• American Homes 4 Rent (NYSE:AMH) reported a strong third quarter with a 4.4% revenue growth over the prior year.
• The company achieved a core NOI growth of 5.4% for the quarter, reflecting effective cost management.
• AMH successfully acquired a single-family rental portfolio of nearly 1,700 homes, expected to yield an NOI of approximately 6% once stabilized.
• The development program remains on track to deliver approximately 2,300 high-quality homes, contributing to long-term growth.
• AMH's balance sheet remains strong with a fully undrawn $1.25 billion revolving credit facility and over $160 million in cash available.

Negative Points

• The company faced significant weather disruptions, including hurricanes, resulting in estimated damages of $3.9 million in the third quarter.
• Occupancy rates slightly decreased to 95.2%, reflecting challenges in maintaining high occupancy levels.
• There is uncertainty in the market due to upcoming elections and economic conditions, which could impact future performance.
• The company noted a slight increase in bad debt during the third quarter, attributed to the move-out season.
• AMH's new lease rate growth moderated to 2% in October, indicating potential challenges in maintaining rental growth momentum.

Q & A Highlights

Q: Can you discuss the pricing dynamics for new customers and expectations for new leasing into 2025? A: Bryan Smith, Chief Operating Officer, explained that demand remains strong due to a shortage of quality housing. There was a temporary reduction in activity due to storms, but the team recalibrated asking rates. They expect to pick up occupancy in Q4, setting up well for 2025. New lease rate growth is expected to be in the low ones, with renewals in the high fours to low to mid-fives for the full year.

Q: Could you provide insights on bad debt trends and expectations? A: Christopher Lau, Chief Financial Officer, noted that collections are tracking as expected, with third-quarter bad debt running in the low ones, correlating with move-out season. They expect bad debt to moderate in Q4, bringing the full year to around 1%, aligning with guidance.

Q: How do you view the acquisition of the new portfolio in terms of yield and optimization? A: Christopher Lau highlighted that the portfolio was acquired at an attractive entry point with in-place cash flow yields around 5%. Once optimized on the AMH platform, yields are expected to stabilize in the high 5% to 6% range, representing significant yield creation due to AMH's operational efficiencies.

Q: What are your thoughts on the impact of property tax assessments and expectations for 2025? A: Lau mentioned that assessed values have been better than expected in several states, leading to a reduced full-year property tax growth expectation of 6%. For 2025, while it's early to specify, they expect continued moderation in property tax growth, considering the cooling home price appreciation environment.

Q: Can you elaborate on the demand metrics and the profile of incoming residents? A: Bryan Smith stated that nearly 1 million new users visited their platform in Q3, indicating strong demand. Incoming residents have strong incomes, with household incomes exceeding $150,000, reflecting the quality of AMH's assets and locations.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.