AMH - Earnings call transcript Q3 2017

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Operator

Greetings, and welcome to the American Homes 4 Rent Third Quarter 2017 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

Now I would like to turn the conference over to your host, Stephanie Heim. Please go ahead.

Stephanie Heim

Good morning. us third joining conference XXXX for call. you for quarter our earnings Thank with Executive and Singelyn, Chief here American Dave I'm today Rent. Chief Vice Finance Diana Chief Homes X Executive Operating Laing, Officer; Financial Lau, Officer; Chris President, of Officer; Corrigan, Jack I advise the forward-looking this include you call outset, At that may statements. need to cause to this actual these uncertainties forward-looking statements are All than of statements call materially and differ statements to statements. risks historical are results conference a subject from other that in of could facts included in projected number that those could These affect and risks and other factors described SEC. press the business that are future releases in with our adversely results and filings our in our statements forward-looking only today, speak November All of as X, XXXX. or a whether forward-looking events update revise information, future We any result otherwise. new assume as or obligation statements, of no to A are GAAP our we non-GAAP providing included financial press on release reconciliation, measures in of is supplemental. and earnings call to the this

webcast and our find With press can Singelyn. audio call at will website on that, You this over SEC I www.americanhomesXrent.com. CEO, turn release, reports conference our David our the call the replay to supplemental, of

Dave Singelyn

call. Good our third conference welcome morning, and to thank earnings XXXX and quarter you, Stephanie,

the Diana our call to like would I from Jack and Before details a of turn strategy over review to quarter, business cover the and I the to high level.

unprecedented and some our well as as overcame Company the challenges. quarter third for which of another was we in progress The faced significant quarter quarter operational

institutionalized rebuilding value in demonstrated residents the the continued hurricanes of operating and our reap of back-to-back of previously communities. ongoing our During of our the best-in-class the we the communicated strategic acquisition quarter, to supporting scale growth it plan, the and our throughout exceeded the their expectations platform tragic provided and power benefits

our that successfully and the built-for-rental Rent. traditional add AMH report of XXXX, single-family a foreclosure and third our XXXX for our will National of acquisition to channels, MLF’s. growth quarter, strategic Looking in on significantly to to ramp-up development of strategic homes of Builder over and American X our blended yields plan the economic the which of the Homes I'm initiative total target range. initiatives. growing homes X,XXX our homes million capital portfolio pleased continues planned accretively consisting over we additional growing our mid-to-high our million, remainder quarter, be Also, program investment acquired estimated $XXX through Last we primary level high-quality strategic rental of for X% $XXX generating attractive forward, is auctions for introduced exceeding in program through deployment

leased were flowing acquisitions been built-for-rental comparable points As over growing traditional National are the planned, already our by this acquisition homes the quarter's Builder majority premiums of acquisitions XX at XXX deliveries of channel markets. channels traditional have sourced and yield estimated through supplemented through Many these our in came program. cash of over and basis

constructed now of newly in rollout built-for-rental acquisitions AMH for proving traditional at markets. of first the evidencing many and leased quarter yield homes, comparable delivered a development superior XX is in the and quarter Again, tremendous rental the our homes to product. Our program AMH provide estimated deliveries third of over channel basis are cash our been points have XXX development premiums flowing demand

growth Through revised in attractive unique our the mark. expect history cost our increase XXXX. opportunity the end our we capital strategic using quarter, expect tremendous landscape to the an plan industry, and we accretively the of and targets. of as construction – previous in see now the $XXX rental only we mid-to-high acquisition investment XXXX, acquisition portfolio quarter's to now Company's and $X.X opportunities ability Recognizing fourth This grow capital, our of grade new our have acquisition X% our of to And In single-family to a we accretively forma invest the milestone cost the plentiful also the acquisition marked the million. of activity XX% to in home eclipsed we important of by to access plan our versus combination attractive by and for range more than billion. capital pro $XXX deploy over yields deploy million economic of over XX,XXX

in operational results front, the our quarter. On solid remain the third

together impact FEMA margin disruption homes to them to displaced personal share, triage XXXX, each significantly the all higher drove of separate topline a relief in to core efficiency a expansion remain AMH spite the of XXX representative and assigned the virtually particularly over quarterly of our same After caused them technology personnel in safety, residents, and across headwinds muted, implemented reported period quarter and notable and per in our identify portion and team growth, their multifaceted while were put further X% world-class third fundamentals of our our operating NOI Adjusted to we we of national damaged resident measures from turnover to the resources activities of in AMH other we’ve in and hurricanes. our and increased supportive to of process the deleveraging affected to solutions, significant safety action increase another the our the approximately we impact plan faced EBITDA are our of and well-being and of our Macro to our care basis quarter in near-term and hurricanes. the completed reallocated And relocating including residents. portfolio X% employees to $X.XX improvement Continued Operationally, to The areas with on the centralized through immediately scale agencies. point by connecting strengths ensuring a Focused test the to as significant and our platform, support for seasonal these XX.X%. with as proprietary achievements compared the typically Same-Home XXXX. well third markets. XXXX. levels FFO home

availability through our internal initial the assets. were initiated. assessments of our personnel, were Full vendors. And scarce use additional we of avoided we third-party incurred been have and that Regarding may damage dependent swiftly losses the remediation efforts on if

disclosed, our more who items And later hurricanes on members operations and previously will we consisting As on insurance that of damage, $XX tirelessly cost includes would provide care residents estimated estimated both and unreimbursed total throughout Irma. our Harvey million I details to concluding, after and in we the these the to costs, which like to expect deductible sincerely and repair for team trees, damaged we before an minor and down our our thank primarily to homes Diana have incur recorded fences. roofs worked support call.

XXXX, accretively classes rentals, Jack. we value real call of I'll of on the and the operating demand returns through opportunity to deploy Now relative and future best-in-class generating continued optimization portfolio for than unique our the XX% our I already growing Rent a remain will our macro cash other outsized our of XXXX, by estate for cost to end the single-family over flow to turn growth anticipate X in asset bullish shareholders. American capital now platform creating of that positive end investment-grade by more And fundamentals of further and approach strength organic supply Homes as and produce

Jack Corrigan

Dave, and operations. you, I begin good Thank will morning, with everyone.

NOI expense XX,XXX performance of were last the X.X% in in which in flat in decreases reflects a the X.X%, X% X.X%. compared Capital we of Same-Home same revenue increase the resulting growth quarter, third homes, quarter NOI after roughly of recorded period expenditures of the capital year. our to portfolio and For of resulting expenditures an increase

damages Same-Home will from and hurricane-related direct These rebuild. were costs repair note, Houston six our one uninhabitable, to removed were Same-Home the in homes primarily excluded and sustained the be cleanup months approximately a major pool results. determined that year are vacant take to to from currently XXX homes As Nearly are entirely. market

Additionally, from $X.X homes markets and pool in in the in hurricanes. the minor remain properties approximately the X,XXX the million Same-Home These approximately Houston damages of Florida pool. incurred Same-Home

However, the experience are the we to statement. regards hurricane-related to results presented for from our excluded leasing, on continue demand With solid Same-Home income separately and operating costs properties.

that well-being rental in by overall potential towards the end quarter, leasing many and as ongoing as metrics and Houston tenants late in short-term recovered prepared hurricanes assisting for our of the these and the of both recovery on rental strong markets, respectively. and of rates the into from having XX% Same-Home our average in of homes our back-to-back occupancy And portfolio, personnel, renewal the from by we blended hurricanes markets, the as of X.X% for translated disrupted For results. our maintained on impact preservation September. well and impressive a achieved and X.X% as was prioritized an increase That’s management more effort early fact residents quarter, leasing the Southeast, in other rate the slower activity X.X%. leases, leasing hurricane is the of despite property Even we new August

leasing we seen up have in Following already activity October. the hurricanes, pick

short-term These As an of our this reductions the available supply, Columbus, of new homes October, in to expected increased near-term is leases with delivery Southeast adding in of trend, temporary us X,XXX signed in of those and our pre-hurricane X,XXX large resulting in were a an X,XXX of occupancy a homes properties levels. August, Further, experiences illustration increase in declines certain inventory and leases occupancy issues program, July, in portfolio certain in signed with and about to are competing resulting of to growth as our level markets in additional returning we September, Same-Home absorption when were our acquisition XXXX including X,XXX portfolio. Ohio. in back our XXXX our existing our short-term to in from creating at number our similar markets

quarter properties occupancy. have XXXX expect will of impact the on addition of and first We fourth quarter the in of XXXX acquired some negative the

quarter these second we will will third these and homes absorbed. activity fuel XXXX However, leasing get expect acquisitions when

exceeded more a tremendous ramping team I will acquisitions our has our done quarter. detail in go through few this job which our targets a minutes, program, up for As growth in

the great are homes long-term and We furthering proven in attractive market great in already investment footprint. our acquiring quality locations,

Turning to maintenance costs.

highest and costs points are during attributable XX over the primarily portfolio, turnover decline to million resulted year. for quarter. quarter. typically primarily investment of period cost in expenditures, For the including quarter. third These savings excluding quarter. which summer is maintenance This expenditures capital costs in repair additional approximately the program incremental turnover on of our of during in resilient capital savings maintenance intentional of and repair flooring issues million we million deployment this the discussed last result $XX.X that hurricane-related expenditures HVAC in to This or last maintenance, were direct in-house The and installation a months the third HVAC $X the and basis the our approximately flooring same are $XX.X includes quarter, on $X personnel but than focus Same-Home costs costs million repairs lower

have and future for stated expenditures. will we but this will expect of turn years cost couple before, turnover we times As increased continue the reduce next it

maintenance-related Excluding flooring for reduce last this continue the focusing Same-Home evidencing year, program, $X.X by same total costs during compared expansion. resilient ability X.X% while about expenditures on quarter portfolio the our period third our or still million to the to portfolio decreased to

investment capital yields Turning for as as our exciting for we activity. of flow added third those Dave In homes average we with quarter, through XXX milestone including one-off blending held exceeding transactions provision homes. were homes, target X,XXX previously the million, including acquired forma an acquisitions our approximately of company, out marking pro by traditional homes And for XX,XXX to to cash nearly X.X%. the X,XXX total total transaction growth laid for expenditures $XXX mentioned, surpassed sale. a

at in already our demonstrating homes comparable channel rental demand delivery leased, XX traditional over we I in discuss Builder homes will XX National construction further strong of development markets, new investment own these program AMH and our of flowing our for estimated markets million. a yield Additionally, homes XXX construction and Many few through have for of new total construction which new a acquisitions premiums program in been homes the from cash took $XX minutes.

volume quarterly mentioned, Dave ramp pace this expected to our up later As $XXX XXXX. to year million of and into continue we an

Builder plan the of flow benefit than XXXX with our national expand and our billion XX homebuilders of program growth $X.X traditional yield, development. higher and regional our performance reflecting is acquisition relationships burden properties, turnover third-party growing stabilized built-for-rental a revised capital over repair rents. and established AMH pro averaging have points cash of and includes on Builder we premium and conservative National two-third acquisition program, program one-third traditional The expenditure based National pipeline on the commitment. a channels forma the historic new and Same-Home our and basis maintenance, including portfolio of have To sourced Our more construction for with two-third balance from acquisitions split

cost term, to the homes includes Similar traditional the XX we points the to that result underwriting And to approximately channels. AMH Bear to acquisition our greater With yield homes on conservative flow in the greater premium entitled mind National on program, a an that even have cash average these our and AMH cost is our development our developing Although also term, greater of to portfolio, development currently another should the that under market an yield, in premium. XXX currently invested anticipate construction. short. of based over expenses homes to AMH pro expect are a longer land again our lower only already Builder compared over our of stabilized and Same-Home homes built-for-rental longer we and reflect construction even development The lower maintenance we conservative forma repair times of over burden initiative capital cash. level performance XX% premium. result and yield we a in value relatively expect expenditure and turnover the initiative, respect homes historic is basis XX% than including

Additionally, opportunities submarkets. existing in-fill our in already targeted of current our pipeline consists

risk-adjusted we of attractive premium development the believe basis. channels other of AMH view than extremely As on XXX-plus profile a the result, different not of yield meaningfully acquisition a program be risk points our and basis to as our that

factors. homes and related it dispositions property to Finally, escrow fourth forward third ARPI and transactions. during have sold the specific XXX into the in sales quarter to Sales the to of completed be XXX the market related quarter, and more we now going and relates approximately as and have normalized will most non-core

some XXXX. our Finally, I’d expectations like on year to you of full update for

been continue growth is reminder, the range. fourth quarter projected activity with the and metrics X.X% X% our lowest full leasing operating has be blended to the the of seasonality spread quarterly As in year a reflect historically will And business. leasing to our Same-Home turnover. still the quarter to

we X% disruption, Factoring in the rate are towards year, into X% rental specifically costs the resilient year the certain Repair, initiative. cost growth and being rental we including revenue XXXX X.X% to home mid increase to and including our due the hurricane expect our inventory those tax per previously a fourth range expected X% benefits full the extra of tax now reported in full of to expect communicated to flooring low-end the an property carried rate markets, favorable related However, occupancy of capitalized year to be range. quarter, to still our in turnover range. in level maintenance this and $X,XXX higher the be property received expensed

at with margin As full guidance our a Same-Home above are result, we comfortable XX%. still previously year or communicated

Officer. our will I over the Financial to Now Laing, Diana turn call Chief

Diana Laing

briefly for I’ll balance third activity then and and the our results discuss metrics sheet our comments, In recent Jack. my you, financial review markets quarter. Thank capital

and flexibility measures, are the and option. financial growth XX.X the continued results, priced on in release issued our sheet stock as remain and are balance balance of which best-in-class and proceeds $XXX rating very detailed shares Our provides in with August, package earnings and capital GAAP we to gross an quarter to supplemental we of generating including attractively access In we objective. upsized our in our through website. to common that us million non-GAAP over-allotment third our offering, operating active investment-grade grow maintaining the were fully that available with Beginning information sheet, committed include million

third stock aftermarket during our gross the generating issued XX.X the We conversions shares. Series through B issuance preferred quarter common In October $XX.X million in which conversion shares participating in million X.X will X% resulted These of of proceeds program, shares. A an million early announced of $XX.X the effective of and Series we dividends new X% million. September, were they in result of and outstanding common also the reduction preferred annual

pro debt As the in market conversion and our to and a for debt deleveraging quarter-end, of represented growth total about X.Xx our capitalization total of completed earlier. a Net generated is was charge and market activities total preferred adjusted cap. EBITDA represented result from of stock X.Xx EBITDA year XX% forma Fixed of NOI our compared was to significant and to our unencumbered assets. X% coverage X.Xx subsequent preferred XX.X%

our available our we million this cash. have more a prefunds through end a As as portion initiatives on raised we the than liquidity of we growth $XXX of mentioned including capital and million $XXX permanent facility into of of balance revolving over fully undrawn year credit million effectively earlier, $X the now billion of and the XXXX sheet, year $XXX

our business retained addition, expenditures, dividends for after more In which capital provides flow and cash additional generates $XXX million in fuel annual than growth.

Turning to financial results.

in as expect million, million separately which we amount statement as total will charge $XX on insurance is the from losses This quarter, the to quarter, compared the per third X% share quarter the $X.XX from the share repair of during and core share the core back-to-back During figure total FFO per X% same $XX year. reflects to expected of current sheet per estimated represents recorded significant AFFO. for income a was cost. in balance FFO, share recognized hurricanes charges third hurricane-related despite million the increase to the and of deleveraging but XXXX, This FFO is recover up was our included the which quarter XXXX. experienced this claims. $X.XX excluded of regard we $X.XX per of With share, $XX.X $X.XX AFFO for through of

are hurricane-related our future recoveries through Approximately periods. to XXX be we adjustments We’ll major net will we’ll those sustained go will the future proceeds. damage carrier, estimated uninhabitable our not line losses item be recognize properties work of as re-leased. any the revenue presented generating business and hurricane-related costs in in As interruption renovated charges receive and claims with the some and currently and insurance rental process and insurance receive for reimbursement until we

XXX homes, grouping As other XXX were presented in property sales pool. These from with now of of the Same-Home Jack removed been and about XX homes, And the our Same-Home as other have these non-stabilized XX mentioned, in the for along the Page homes supplemental. pool. held on are XXX

the of until these over rehabilitation expect the properties. to next other months return the Same-Home of We meet requirements recently they but not properties the portfolio will occur that they’ll renovated several

Now, we’ll to the Operator? call open questions.

Operator

first Thank Please you. FBR. Our question. Instructions] [Operator from question with state Corak your is David

David Corak

good morning, Very everyone.

So in to pieces a moving the guidance, from lot margin and Can I taxes. kind you what past effect? guess the talked us do within pool already just kind some the you about when two the give rent net will I maybe same-store of property you calls, anticipating below of above growth beginning you’ve or guidance, growth the think you guidance? year come gave a the were of Core same-store NOI mean, in that to at

Jack Corrigan

that revenues will margins say margins lower, be would better. I are better. but be Well, slightly the will Maybe

better were we than property through decreases and anticipated expense Our property particularly the cost. year management taxes in

David Corak

get and think I is And guess my lower was higher and necessarily there. margin just, have I you communicated. we can revenue that don’t Right. question

trying if expectations? you I to So based kind just previous us can help was the paint picture see on of

Jack Corrigan

– nine better. months was year overall the – for in mean, NOI the expectations growth I last the slightly it think approached for was I think, I the maybe or

Dave Singelyn

maybe the components year-over-year. and our beginning little mix the I different, think with has of is been is pretty It’s what good in our growth cash up flow were X.X% Same-Home at X% the your and a and X.X% flow expectations in The is but year. a that cash line

David Corak

low we And give came And be maybe just on how specifically thinking you, you it between taxes, any difference great. or then was Thank expectations? color the initial property some again. it that about Can there on just into relatively your XXXX? expectations should

Diana Laing

several from to, adjustments related experienced year coming were out-of-period through credits actually that call current that successful with. it, we year, we the I This appeals we guess Sure.

year. in property or So low what see small a taxes that’s resulting you fairly in increase over from fairly last

take could all those adjustments, I think bill-to-bill the of X.X%. you If are about out increases

year, think I rate credits. to run our so X.X% because But decent could increase I X.X% the going low this more is And from be think now. of going to X% these that a look like for for forward

So guess I if you…

David Corak

or that markets occupancy on ending and those Could of mentioned, you stand hurricane-impacted they some there. of don’t have couple occupancy you kind what markets A of those markets the hurricane numbers share where today? on where we ended

Jack Corrigan

Jacksonville XX.X%, a had would board think Texas. of Well, in you markets by were because in But the were Tampa was and be affected lot at partially churning up at affected Charleston, hurricane I at markets other XX.X%, Florida personnel instead wouldn’t the from our somewhat I’d were say the helping of that at we guess principally homes that at ended homes, going and XX.X%, ended ones and in affected, Orlando and Houston XX%. ended XX.X%, affected

David Corak

are And least year-over-year? at that from up they or

Jack Corrigan

sorry? up? they Are I’m

David Corak

Yes.

Jack Corrigan

to were you up, year are QX Yes, talking –? XXXX QX – – of they XXXX some Quarter-to-quarter end down. or are

David Corak

No. they Where stand today? do

Jack Corrigan

they I leases had say in But leasing. know do would pretty market-by-market about We was stand; after new our October strong. that Where X,XXX I October move-outs. X,XXX and about absorption don’t

David Corak

Thanks guys.

Operator

Please is next Bank your from question with of Sanabria Our state America. question. Juan

Juan Sanabria

time. for the thanks Hi,

more give looks occupancy could same-store revenue of, through – guess, on like quarter. I the missed, sort line. the the you hoping kind decreased Just color of It on

job So the you the really fantastic of checking hurricane. that that. better of of like I like did get out But drove wanted occupancy decreased just with your were occupancy. quarter-end. it guys what kind quarter-end a hurt there But a into looks sense – through to the maybe It maybe the sounds field people

frame numbers kind is just was trending climb kind maybe back what downwards And occupancy things same-store the ended the blip top a basis. at you’re where or third growth of quarter are towards revenue trending this the on and line? that how core to one-time kind that of – the of like you currently, could us So drove help maybe you just trying miss if

Jack Corrigan

Yes.

for depends think occupancy the the decline. reason on I it

like it’s we in were to if new Columbus so properties market a adding significant… And Charlotte, or because

Juan Sanabria

What same-store be from if the homes new the results? excluded

Jack Corrigan

they same-store. They the with homes compete would do but in the

product throw would same take the they have in they if new XXX% other neighborhood, versus if in the one Same-Home. took a neighborhood, the XX-XX the you a that houses competing So have the you home chance if you have you chance two before up

the there summer of So starts is mutes and probably markets when really we demand again, of effect, March, the you But into or expect same-store through the and effect. it that And into the months, an lower But that whether heavily through picking you much adding where an whether would up indirect. I direct and see effect Same-Home. of can get houses that January. an year in new you’ll have get it occupancy demand inventory I it’s we’re starts that to occurring or homes. the indirect effect And then definitely pretty that or the that’s when didn’t the all be see the summer end February, of there’s that because would expect in much absorbed,

already On affected hurricane, October. the seeing saw that tremendous a are we by demand markets in that we the

We move towards natural levels. occupancy their that are seeing more

Juan Sanabria

grows maybe your grow rapidly, the Could markets? in like occupancy more spot October? as the think Dragon pipeline help acquisition a since you’re us target occupancy about, you us And acquiring in give will

Jack Corrigan

in a well-positioned will decrease will the not where absorb mean, that heavily the plan fourth and I first But very it. for and we’ll we’re leasing be then Our to occupancy grow. previously slightly is when markets think we And the in that quarters. this in is a acquiring consistent it XXXX had acquiring season there and we were trend likelihood XXXX. I is

leasing short-term, to it’s it quarters we’ll second where in much the especially first, in and are the we’ll quarter. strong – stay For isn’t the as absorb as static very, long-term, the where very we positive, and fourth in first pretty as

Juan Sanabria

And that? what’s occupancy, if spot the you have

Dave Singelyn

it I’m XX, have I can of to as not Chris October you get with with it. back don’t sure me.

Juan Sanabria

on just M&A. Okay. question And separate a then

established own out on-balance at building looking You guys sheet Any have at private? it’s your whether development in homebuilder or capability. external obviously about this time, public an thoughts point opportunities

Dave Singelyn

are acquire homebuilder. No. point, a we At looking this to not

have very, we’re the our I we own think very that function in happy company. homebuilding with

We for program and and between Builder are build we’re homes we looking covered. think out that own to our And well-positioned I the think I National internally, inventory. our only well will program building be

Juan Sanabria

Thank you.

Operator

Green Pawlowski is Street Please Advisors. question next your Our question. state from with John

John Pawlowski

having heavily Good Jack, damaged I’m towards are the the the the throughout removed the understanding you’re hurricane average weakness little from hurricanes the And And end quarter. trouble And a morning. seeing of impacts. understand I homes occupancy and happened same-store quarter. were can a down But rate in weakness die growth that? the can and If fall. and stop you Can traffic homeowners. market the can displaced benefit storms why you just removed walk there such occupancy? in anything, from maybe get through me

Jack Corrigan

Yes.

than happened in the August, benefit think benefit would hurricane in the hurricane. September. Houston. later happened And will some have the get we I But late

some and by seeing because affected Houston new definitely inventory not we’re are being it’s buying. we in all not So absorption at

good So is absorption there.

was look it’s occurred, the that the average we’re end-of-period in last lower. quarter it the for by, clearly occupancy affected basis think markets in Southeast was Texas I And end-of-period was and acquiring. if where at you year the at X.X% Same-Home where on Columbus that lower then than occupancy occupancy the markets and the a

John Pawlowski

So dropped Houston XX bps. the average for occupancy

the up to be seem hurricane. So heading there weakness to

I growth why what’s occupancy? can get But in rate weakness So the drop.

Jack Corrigan

Houston In particularly?

John Pawlowski

just to the the happened to I’m my hurricane. I due you’re around. some XQ Yes, mean, And trying describing that in get head XXXX occupancy in weakness of

Jack Corrigan

the completely the allow damaged home in out things. even of did to wasn’t and taken that Houston One if people things of we was the of to lease get their out

that And see that quarter, occupancy of recover see not the you’ll if effect the I So down you’ll expect September. more. that in coming fourth in

John Pawlowski

and then XXXX I right. to peers your All nature any had the pricing highly of larger past markets. what issue the can absorption even in in you really and stock your temporary stated only and percentage you that And given very that you you XXXX, in similar total your the saw of own on the in thought given never and small move business peers fragmented market,

the it’s So case. you’re saying, what exactly not

You as any that Is activity can’t increases. in accurate? move pricing institutional given market

Jack Corrigan

on been we added said least low said, were move XXXX, Move In I think I at product. pricing pricing very of rents, rate we the move had I Well, on when consistent bunch of a what rents increases Arizona pricing institutional we homes. low. think pretty and – was the what rental value in we’ve on

thing moved had got that in and Same Indianapolis. happened absorbed, As Tampa rents considerably. up

I’ve – never don’t I So competition. that believed effect of there’s no

don’t value I just – of think it affects the there don’t houses. think is I So the

John Pawlowski

Got it. a lot. That sense. makes Thanks

Operator

Our Nick Citigroup. state next is Joseph with question Please question. your from

Nick Joseph

continuing on of maybe of think it homes and personnel acquired that. existing lease you owned? impact Thanks. become existing they homes eye take the off about focused is homes that to is new a newly impact? of the a your more on Or that on kind market When their them ball the with the you’ve portfolio, Maybe it impact up

Jack Corrigan

flow where think hiring, it into It's personnel the I has the And gets much pretty market. are there inventory I all. a that's It's impact occasions at are behind rare. mean, a of market impact. impact. not But don't we

Nick Joseph

is you versus for talked you why now existing the step up external external the to of portfolios? the do performance the how that think and growth now really growth? gas balance about Thanks, between So, and ramping about right time on

Jack Corrigan

way and of can is. Dave had cash it month, the putting be the $XXX and at on every same earning not to the we've assets but we're we as cash of million Diana are positive earning we're delivering, houses anything least sitting it's from Well, might not absorption more and earning extent in, my in than and chime perspective,

then position us well periods. high buy. leasing it's So I And will for accretive the think it to really

Dave Singelyn

a in acquisitions, absorption. that In the I on impact. Yeah, And short it's quarter, long-term going think ramp come if a XX are up just have particular XX short-term very or market, as we huge it's cause a that quarters going to absorption you're turned now then market, inventory, you your Growth issue. And you in another look a the if have absorption prior lease. your anytime back homes properties two website of that XX term, absorption positive. you your And at an market a to to got is in about question have you’ve issue. short-term homes and that's new and a

the impact. you're they As you power cost And capital, of those doing properties those of a assets, get which lower very leasing absorbed. are absorption the the new middle short-term are especially will – when earning have positive. with But through a accretively big seasons, go of them then, accretive year, using

Nick Joseph

you focused acquisitions. Thanks. on And which then, markets are for most

Dave Singelyn

inventory our been in has acquisition. Atlanta. been second. Charlotte adding heaviest continually our We've Columbus,

the know I XX in affected in heavy country don't that where we been I But Tampa, properties. in, Florida or is Orlando. Jacksonville, across think it markets, that's And some very acquiring. XX the And much. Southeast. then So added the we've Charleston, But states,

Jack Corrigan

Southeast and Columbus.

Operator

from next Steve ISI. Sakwa state Please Our question question. your is with Evercore

Steve Sakwa

here. I Thanks, guess kind theme to the of same on keep

there revenue occupancy and of markets high-priced you occupancy If marry of at sort secondly, then gained the the and And of wondering only was and of end you in lose just rent markets at Meaning, that's kind X%? of the up shift look on to kind rent, change of Page contributing I'm concessions sort that are relates how in maybe issue went average those of spreads, drive kind all and XX in renewals sort to monthly to sort the the low-rent both here? to in occupancy the look and that a growth? at how fitting and up. was mix your of try period that did new X.X% on

Jack Corrigan

two very – Concessions, line rent. straight Steve, I items identified your month because XX rolled you through period to over identify. they important in a you’ve think

in bit a year before. a mix bit higher that are seen of rental And than maybe they a We've little been year accentuated with think, of XXXX. in the they – were the is It's more The has I that bit XXXX, just, quarters. there spread exactly correct. it's For little growth. lower rate previous been little

rent higher where markets, our is occupancy has of some that the down. come at look you If

the to occupancy and those at the is little and the of reconciliation as of next reverse. rental of up will the in occupancy year, look the homes and has lower gone bottom get there rates And that You the normalizes line. rent some Midwest, re-absorbed Arizonas, a revenue mix markets, bit

Steve Sakwa

presumably next the more against if you your assume look may little that year, that growth Xs be sort which accelerate in commentary to Xs cannibalization same you're high your in starting even new is year? and leases and that given renewal guess only we as fair QX of I into it to kind getting into kind XXXX, then these a in next low of of And the creates bit of of want program that acquisition in revenue kind yourself

Dave Singelyn

short-term program growth has some the impacts. Again,

year, look they quarter, the you fourth a yes. to end leasing as think season, third be will things I softer, bit will into think in the into little of did But I this the in quarter, it year. the go next similar what

Steve Sakwa

in-house program, capital then realize you I your What of Builders? I relatively in-house kind the I remind of question with just I kind are guess, allocation. sort And homebuilding of the to what risk of final I piece kind you National which partnering you capabilities farming Okay. of just guess, versus sort of in-house And sort this doing is a us the of guess out? what, have? on kind I of mitigate, doing is you have homebuilding can overall guess small of just the are But

Dave Singelyn

part and a reduced we Yes, that's premium building well homes cost the our benefit. that a there's on definitely we own yield get, premium or that get so of

we institutionally, one use us products of have and think which determining in destroyed the occasionally, – gets putting even help they've in of on the it's the the bank it us And And more knowledge flooring. recently the plank they by it's rebuilding helped type or We've to good fire see to I whatever. houses. in we’re looks houses, to the floor down. vinyl than changed and new glue-down, from great glued because where type, the floor durable

good. we make they're is you of mistakes small. your risk, learn And starting and the as reducing from far what that's part slow as doing So

if kind started going we've could very we're far. what move So them seen we wanted with in at to we we way. wanted see of we experimenting so to – cost we a build with the And then and that controlled XX them like homes way the at to

really we're bit. little program going even so to if a And and good, we'll that move really, more. it's accelerate accelerate it And

Jack Corrigan

the homebuilding They've one experienced thing, other the question, the this is I your of staffing And homebuilders. industry. people out that come think Steve, group are is with of

department to so we that bring And build their as they institutional us knowledge organically. and

Steve Sakwa

thanks. Okay,

Operator

is question. your from state Please Our Rahmani with KBW. question Jade next

Jade Rahmani

slower to Have also the market occupancy markets? market occupancy what Thanks those the of at and you very growth in re-leasing much. extent looked and rent reflective is declining

Dave Singelyn

the any in. it don't I we're has markets think any occupancy of that market relationship to in

has But about low think Carolina people North rentals. little think that not and I or could sure a a that see about new one of the – programs less you a to buying has that's I move-outs downpayments XXX% I is on slightly but sure I new majority lot I'm houses percent I'm some buy could short-term. for the few not sure homebuilding And and houses. Charlotte for for I'm – demand XXX% going more not new guess only anything, about

Jade Rahmani

around XX% expected? the so. It's been Has than or turnover higher you

Dave Singelyn

it has not that to our – because it going year. to It's have place, been tenant last older, enough validation long expect around it they're drop. we enough, less of lower continue the don't but in And to we are it's the the we been haven't likely move-out. seems – the than statistics, I like seems

your So move-out over reduce time, should percentage. that

Jack Corrigan

in no going But there increase on. is turnover

Jade Rahmani

you on of CapEx total? Can spend property CapEx? the recurring CapEx and expect you a dollars? aggregate turnover us on guess I rather per cost the than what annual Not in basis, but to in remind renovation improvement

Dave Singelyn

per take mean, you property, the XX,XXX. I Yes. multiple that by

a about running property. is CapEx the XXX So

by your So XX,XXX. that multiply

Chris Lau

Yes.

Jade, adjustment make to at the that that actually AFFO. can The that's other you we it, way is look

so way apply held sale the going just total actual we that for of CapEx those be going homes burden place yet. kind our incurring that portfolio. the CapEx in at give look And be that rest of and or to will purchased then aren't are And Same-Home to expectation for a the pool. that including the use of excluding the to CapEx we is to aren't it the that for that And – portfolio,

Jade Rahmani

running? turnover or annual costs And a – where on an On turn are per basis? basis

Dave Singelyn

basis, a know operationally subtracted say, have that's turn it the you mine security On per effect. that not – what but out hasn't I – but number? Chris deposit

Chris Lau

homes charge of know, out a turnover just total of But actually that as the about that repairs CapEx in per it's that split, including a about to the turnover backs. is on home home. incurring turning of on blend into effective the and portion you XX.XX of or cost was is of capture net have that X.XX with on $X,XXX to about The number expenses turn XX.XX you get It so, were costs average. turned and the to rate XX.XX net maintenance

Jade Rahmani

Okay.

So the R&M? XX.XX includes CapEx expenses, and

Chris Lau

capital utilities R&M, in of expenditures. over, well all turnover of in that homes correct. there vacant we to are on that's then process That's our turning extent cost, included and incurring are the as

Jade Rahmani

Just you tenants to amenities features, where on that and type and communities exclusive parks of of could keep the dog build-to-rent. self-contained Are you longer? add exploring the thing stickier rental idea any

Dave Singelyn

– are unique very we we're benefits communities. to those looking obviously There's communities. Yes, at those

a there's all little of infer, we little there risk we're As as into those of different – account also is taking opportunities. bit and that evaluate profile you a

Jade Rahmani

sort locations? activity So right bought purchase? now to built-to-rent is the one-off largest one infill of you've confined of What's in lots your number

Dave Singelyn

the Largest that closed in we've purchases?

Jack Corrigan

about are The largest on is that we actively XXX. working

Jade Rahmani

XXX lots all lots? those like in one. Are adjacent

Dave Singelyn

Yes.

Jade Rahmani

Okay. Thanks very questions. taking for much the

Operator

Our your Ronald state next question Morgan from Stanley. is Kamdem Please from question.

Ronald Kamdem

for Hey, thank the time. you guys

of maybe possible back with learned or up? job there it the in wondering. Obviously, rehabilitated, So I'm said picked online? another the the month going phenomenal to that. back of XXX a kind hurricane getting that way, Is there. impact to any a dealing homes save Company going that through that sort the just lessons them is of are – being those did way efficiencies the or of team the of two there's Just terms a

Dave Singelyn

I with the plan. those of be cetera. homes. the The removed of the to online XXX are probably rehabilitation the including But of were processes, every quickly. homes, quickly. deal pretty There each I expect the of and them dealing factors all the that is started we with considering all We by city many online and of those the you a refurbished permitting some them a and issues on. able Which are tenant impact many with moving to we the obstacles permitting end number we to wet bringing are to of timing have of them, and successful think one city material et of XXXX. pretty that that the as responded think quickly very process, impact going of homes and of have I And

Ronald Kamdem

understand when And of a factor something And to But it. you're costs, so on is – thinking houses. I to in-house But potentially I going number back development, that already about gating lands. that entitled lot ramps? a the appreciate about the that then how land that how just be is it could forth? small cost land and of is the just team Got what curious thinking

Jack Corrigan

not doesn't to are pencils, project with can mean, the go make it definitely it that Yes, leasing. terms of that I a whether and for if forward pencil yield in it land cost portion significant of decision

Ronald Kamdem

initial Great. would curious, be are takes? about any And I’m Thanks. tax the came not maybe on bill out. how that question Clearly, you a lot last digest. thinking that? guys of just to just had then the Or time But

Jack Corrigan

are as well. of still that the in we Yes, period digestion bill

it's to I comment. think a premature little So

Ronald Kamdem

Understood, much. thanks so

Operator

Haendel St. Our next is from question

Juste Securities. with question. Mizuho Please state your

Haendel St. Juste

morning. Good

Jack Corrigan

morning, Haendel. Good

Haendel St. Juste

guess in more concessions a I better Is It your telling Southeast occupancy markets should tailwind in quarter you fourth way near-term it? understand may burn come some pieces the some of could in maybe been this Houston – and back fair up. So the off year XXXX and have as quarter us revenue if the help of potential certainly look and and that the want some same-store into of be at a of than good occupancy. back half to the tailwind occupancy I to that added as that like revenue this for outlook Same-Home you're The sounds clearly, you just me.

Jack Corrigan

Partially.

of amount we now inventory. the at broad. was offering those offering up we're we more concessions the concessions some and now. I that we some the are think had there and Houston. But And On were concession did to – inventory, the built offered Indianapolis, concessions concessions right end last in in Chicago than the markets higher of year, concessions our lower But we available

think I concessions amount year. So will the be of similar last to

up I a there. big expect pick So wouldn't

Haendel St. Juste

Okay. of I But the together pieces put what other consistent? were largely

Jack Corrigan

Yes.

Haendel St. Juste

And thinking that about I guess, Okay. going market you're forward. I'm then maybe Houston, how curious

perhaps you much you bigger here? what of the perhaps a could hurricanes be Or made more you're in bet how You perhaps willing add now changing I'm that thinking could have and enough much? too there even guys And the your if aftermath you're there? seeing to if if right is or than peers. maybe at all more be And wondering acquisition opportunities

Dave Singelyn

in get from really in I've as I think money I economy. and don't out much, I recover and general, area, through in hit And all FEMA think. of insurance boosted more money the oil. the But Houston and It continue more came boosted the will I've Houston seen to L.A. diversified earthquake XXXX will what lived when think an too disasters big it's

like there. investment So I our

We we've have adding not right But gone at looked and are opportunities But adding. currently we elsewhere. now, potentially there. plenty a of few

Haendel St. Juste

a for last on been while one. guess market then hot that's I Okay, one and been maybe a Nashville. It's pretty here.

in plant competing bit GE guess, think facing have closed saw that that you could sounds issue some I the maybe I we supply. talk if the like Just more But news curious your might about of against there. think it's own that, a of a also it I

I'm in the may market change perhaps curious that to any that and local how if that then your or add there's market or perhaps you So change anything there? economy willingness view

Jack Corrigan

continue affected there, throughout And not was Springhill we're affected. seen still by that, closure. acquiring pretty Springhill. Other we've Springhill The leasing than was section of Nashville. Nashville just that GE strong

Haendel St. Juste

Okay, thank you.

Operator

Associates. Please Hardik question. Our next question with Zelman from & your is state Goel

Hardik Goel

any signed How know the I October? question. taking was said was asked revisit my leases many to taking earlier just and many I people have Do were you want a may sense You many this for thanks approach. call. guys, guys have how move-ins But in move-outs on X,XXX. how be Hey, about different really for it quickly, that?

Jack Corrigan

I is X,XXX signed and move-outs. what about said X,XXX leases

Hardik Goel

So occupancy? XXX net that's roughly that's gain, basis points right? of XX So

Jack Corrigan

to about added pool. XXX we Well, the homes

So…

Hardik Goel

Right. that's And portfolio. that do were your – you in isolating to have homes

the same-store So gone home for October occupancy in let's has pool? that say, up

Jack Corrigan

I seen I’ve it haven't yet only out seen pool. broken – for results October's overall. by

Hardik Goel

based little acquiring of homes or are you bit, of most seems vacant? are gears a results, leased do on that shifting vacant. you these vacant I most But expect acquired, just And like are you your do they it. have homes mean, it Got plan only homes? these these on

Jack Corrigan

I do them acquisition up vacant. one-off the who they're time would say Unless bulk then leases XX.X% we somebody transactions from are, Yes. of that a first,

Hardik Goel

And me. just for last question

revised upwards acquisition builders. mentioned guidance You for and built-to-rent ratio XXXX. of your would more your be roughly the you X/X X/X quarter with acquisition, kind Last of your from in-house of program

So does ratio being your with revised? that how guidance now acquisition change

Jack Corrigan

It doesn't change much.

Hardik Goel

That’s thanks. right, me. All all from

Operator

Harter from with state Credit is question. question Suisse. next Please your Our Douglas

Douglas Harter

potential Thanks, I efficiency getting about levels? gains peak we much can whether the was could Are wondering drive higher? you room talk have, if how for you margin close you to further

Dave Singelyn

it's of the properties, think adding one as add we Yes, benefits properties. of I

property over still ways We our management management we properties. company our started You're in going a XXXX. to have of to fixed cost more go see January allocated all property our in industry. department And in our

get still cautious on are materials turn and would inflation. We're inflation cost. would year. and we're at better salary getting say, seeing new we I pretty especially the with side expect So cost and some construction this every it, I to of better seeing

Jack Corrigan

let And that. me just thing one to add

the to Right putting we for that the third more the our resilient efficient. in homes As additional in efficiency pay into That of process making reduce – we in now, make how has that look continue quarter. the we that by to future more cost flooring and will dividends cost turns million indicated, in efficient. future But are our homes. investing that had $X the turn each of at process

Dave Singelyn

with placing the very build new Homebuilder our well It's renovated homes we National And that replaced in renovated to renovated extent the resilient on the received. flooring. building, homes homes, flooring, we the – that program have be or ourselves, the our it new are homes to and newly all we're of whether resilient extent all flooring

Douglas Harter

flooring a anything meaningful else you coming there investment that being the Is kind like up? foresee of

Jack Corrigan

No. the new have help our investment? do homes. meaningful We A in things cost that other some

that we But out see decks decided in mean, any of for other haven't of that refinishing We is lot particularly is homes. fiberglass the wood a stairs I instead deck in our Southeast of Atlanta. to it's really, on roll just maintenance and constantly the needing the and just cost wood wood

the And maintenance-free. much homes, that decks have so extent to they're more new we with

Douglas Harter

thank sense, Makes you.

Operator

next with Ryan BTIG. question from is Our question. Please Gilbert state your

Ryan Gilbert

filling me for in. thanks Hi,

October that you implies think revenue Or see On it it just is the results? the give X% guidance, I a of XXXX that I fourth growth you're reacceleration think December? full push results going rent to to confidence leasing revenue able X.X% November in the what I inflect quarter. year in October revenue already to guess you gives higher? that you're Have going in to and you that seen be confidence

Jack Corrigan

think our XX% little really that's And expect to one we got get get rental and that there. higher occupied I rate back On and of Texas, bit help will to markets, I a of cushion. us

Dave Singelyn

is revenue X.X% said. inside that band so right months as our we nine year-to-date we're Ryan, Same-Home,

Ryan Gilbert

the running same-store you're well Okay, over – that core get NOI understood. to XX get guidance. to over of to XX% mean, And then margin low on end – now the to I range.

the pretty fourth number in You need low quarter. a

I out that NOI So core side anything on I'm or would XX%? below there push that the side look is should missing cost margin the cost meaningfully for on

Dave Singelyn

No, pretty conservative are guidance. that I we on think

Ryan Gilbert

for international one. then Is progressing? homebuilders picked sounds progress with better regional than when you last in expected this like the up establishing homebuilders. just the It that program? you guidance How's acquisition Okay, you great. started XXXX And volume from relationships and

Jack Corrigan

and in they’re initially rented times about at program. houses, then they It us lot they’ve built about the is. more cap they it. like little our to inclined it other a a But that And and when communities give excited they our of they're look thinking well – houses start not

Dave Singelyn

have – We in multiple homebuilders in delivery third we states delivering quarter, will in XX future. the be additional XXX homebuilders product and that the took of from homes

Ryan Gilbert

Great, you. thank

Operator

now closing like call session. We management question-and-answer back over for I the have reached end the remarks. of would turn to our to

Dave Singelyn

the today. Have the us you day. of end with Thank joining to We February. look again speaking good in forward for you year at a

Operator

concludes Thank today's you. This conference.

thank may at your you this lines and for time disconnect participation. You your

American Homes 4 Rent (AMH) 3 Nov 172017 Q3 Earnings call transcript