AMH - Earnings call transcript Q2 2019

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Operator

Greetings, and welcome to the American Homes 4 Rent Second Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

I’d now like to turn the conference over to your host, Stephanie Heim. you. Thank

begin. may You

Stephanie Heim

and you conference us with call. Officer; Rent. Operating Chief Thank of Financial quarter Homes American David our XXXX Executive X Officer; Chief Corrigan, earnings I’m Jack Lau, for morning. Chief for Officer joining second Singelyn, Chris Good here today

and our and subject At statements XXXX. the this other adversely to a a factors this of with than cause update result of to may are the historical to speak in that SEC. conference forward-looking and or include statements, could All other fact information, any could forward-looking statements. releases events those that no as as I assume risks future you need or XX, our business in otherwise. July These that revise of call differ projected statements today, forward-looking are statements. forward-looking are future outset, included statements filings risks and described that affect of to advise results call All obligation from number only We these press in materially new statements our in uncertainties whether results actual

are to our the financial reconciliation providing included non-GAAP A is on earnings measures of call we this release. GAAP in press

our and information package. supplemental note, including GAAP detailed release earnings and financial a operating As results, fully and our non-GAAP measures, in are

webcast the at You of well www.americanhomesXrent.com. can and SEC conference audio replay find call these as our documents this reports on website as

With CEO, to David our that, Singelyn. call will over I the turn

David Singelyn

quality earnings with per FFO I’m second conference morning, share, results quarter. $X.XX and welcome Core Beginning extremely Thank up in our operations, our to quarter Good you, XXXX the second Stephanie. pleased platform was with call. quarter of a on reflects year. assets focused experience. a X% controlling management property our strong from and increase while providing expenses, market customer our fundamental and maintaining the This second last

healthy, population robust point, continued strongest homes is touch level, for on on by seen, me are our support growth metrics markets, rental occupancy which we in that our single-family demand this what the I’ve rental rates To driven and high macro the to employment highlight let market supports a our be the seeing rents. trends ground. On several in continues and

rent. with typical of resident their head a more and is the reduced our today’s First, tax home. from a environment XXs. to and family opting with payment household down And children often today’s in high of transient homeownership, in households single-family desire requirements more market job benefits and Families are

X.X declining, pace homeownership U.S. is or While year, demand. on the national to is this the benefiting flat single-family rate add million the households rental

is tailored the markets focus with we our than portfolio our Employment markets the outsized growth XX% population higher and national growth growth in markets in than on average. the Second, our average, national to drivers. twice is more

Third, we of XX% resident than per year-over-year property in perspective quarter portfolio available more second saw showings increase XXXX. in the our

think a trend renters years, Further, Estate they a down XX%. as owning purchase buy can these current millennial Fourth, recent is last to do trended Mac, possible, that from a Burns to see the renters that rent according stay John has older four in confirms XX% affordable over they home. Freddie home research than value of of XX% more to as afford number home This XX% if to it stating and to Real Consulting renters the intend not many even renters the own. long to and from preferred of

have the a dropped design, is diversified different mid-XXXXs, operating years. least in rate declined at have has XX rental portfolio by single-family on home basis, six appreciation. than prices states. appreciation never rents while price home Single-family our been national stable Since Finally, more

Charlotte and be never classes. far most as single-family recession, real great like declined Single-family markets, proved other markets in rents than in Atlanta Additionally, other stable Tampa. to the and during more fell estate such rents some

growth, regard is growth. developing to changer believe With to market, for for and that to remain on our are strategic a growth program our a and as our and best purpose the invest net value. program near-term the asset We providing industry, homes and to durability focused for lower capital for game this Development we built profitable accretion designed our risk-adjusted opportunity cost rental maintain, long-term AMH

designing homes our homes, acceptance program, with markets establishing operate, adding market existing prototype building now teams, building to where cluster efficiencies. neighborhoods three and additional scale platform. of piloting neighborhoods for Further, fine-tuning our rental are the vendors, testing we we market years nearly We’re into in relationships and this with and our the homes currently

building than From maintain than in a homes we lower built mind, to cost maintain rental at cost similar are new perspective, and existing lower program most future an economic acquire result could a new systems, the with homes home. will our appliances to homes. combined we in new with investment cost These which, are

Our program continues its and benefits. to yet full are realize up, ramp to we

homes balancing acceptance project. resident risk. we and than vigilant seeing building market in demand capital Initial purpose-built remaining are are meet to In now for the this current evidence returns landscape has traditional Perhaps of on projected, developing in commitment alternative an our changing continue explore rent housing to and program, that is is development market that channel originally while summary, better market the selection ways environment. rental to as our the homebuilders justified we and diversity line or and the expand best

a made amendment of The prospectus clear, purpose to update week, amendment Next, sale shareholders. completed is and the retains of we resale executives of substantial sales Management and by in sole the half the repayment the and stock an have related announced as interest filing stake loans loans company concerning prospectus been in this the by to with ownership the named only all committed to is first February. To have of company may alignment be repaid. previously we filed the affiliates. with the already made last in you to seen, XXXX, affiliate connection is filed certain

the pleased our with first of results in very I’m XXXX. closing, In half

is Our our maturing take arise. to balance full, of us and is that our are advantage positioning strong, structurally will development channels opportunities growth portfolio sheet

huge front over we sit As and we’ll of today, we momentum opportunities I’m long-term. us, have our the in here confident that sustain

tiny early Professional us within asset is the market, for operate a We of a management to single-family for rental an huge fraction accounts ownership which industry still growth. the in institutional that of gives stages a runway overall class. long transition and

that and in provides. rates, home isn’t recent as most and value seeing families we with sustained decreases mortgage mentioned, supply Even renting rental strong the our previously household demand are sufficient in interest the remain formations new housing As homes to markets. demand well-located flexibility meet

Finally, recession-resistant Housing the economic a cycles. our all attributes. and sector resilient with need, platform our is through results nondiscretionary should solid is produce

turn to Jack. call the now, And over I’ll

Jack Corrigan

and Dave, everyone. good you, Thank morning,

As we efficiencies teams of excellence entire maintenance to have committed mentioned From our results. line of organization, our and throughout is we previously, practices teams cornerstones the are our leasing drive one four and to operational to maximize bottom best our company. establishing

and strong, Demand to results to directly quarter both rental second occupancy us homes tied Our this allowing for rates. relentless focus. remains push our are

and occupied a percentage, a For realized XX.X% Average increase our up in XX revenues the basis rent Same-Home resulting we core average was in basis during monthly up sequentially. quarter, achieved the XX days portfolio of X.X%, same-home of up from second points second X.X%. points quarter-over-quarter XXXX quarter

focus benefits on service provide our turnover. customer to Additionally, continues reducing by

basis, trailing last the XX-month and compared points turnover this represents of was quarter consecutive to down second on year, improved For quarter, a XX our XXth basis retention.

in given at may but that this of mind are move-ins vary. or our quarter full this vacancy and point and We the of timing frictional bear is trend, month structurally portfolio proud in from move-outs any

homes is a July demand; strong resident. are than result trended we see in year, can closed, have downtime not yet While made last for ready move-outs which however, new slightly to higher continue as

operating expenses. to Turning

Second property taxes, X.X% significant increase higher property properties operating from Same-Home driving year-over-year, will expenses discuss was factor quarter in Chris up which XXXX the were most core X.X% later. expenses

and the were maintenance up recurring quarter, XX.X%. repairs and capital costs and turnover For expenditures up X.X% second were

maintenance in roofing, due second, quarter. storm and unusually above-average end landscaping factors; and higher of of to storms The XXXX; our quarter capital rainfall of driven second expansion the increase by relative costs the our high two specifically, certain towards in damages, and wind program expenditures first, the fencing preventative was planned to markets

Year-to-date, repairs over expenditures X.X% turnover recurring average capital the first and and within our maintenance, XXXX home, and per of costs are expectations. up of our range half $X,XXX

Turning to growth.

into is on up, line the the strategy late increasing XXXX as opportunity build-for-rent as for focused our XXXX. should As are mentioned, ramping These growth. bottom programs through to and benefits programs have our accretive best move which we Dave risk-adjusted

for homes the Consistent quarter added $XX with homes expectations of million of XXX a investment $XX approximately during we XXX million, approximately second these our through XXXX, total of build-for-rent programs. totaling added were our

deliveries. track $XXX million into our pipeline XXXX invest take $XXX we on million year be remain of $XXX additional expect still we and to from for XXXX, to the into to rest channels. with Further, to to in the homes our our inventory build-for-rent future expected majority other from an For $XXX million development million pipeline

to asset management. Turning

strategically into to better assets sense prune returns. reasons to capital where and long-term for continue it operational our and our with evaluate We portfolio opportunities makes recycle

expect we the X,XXX at June quarter, for homes for over proceeds approximately million. and XXX which course sold year And this $XXX net we the held second $XXX and generate of to million million between homes During sale, we $XX XXXX, approximately XX, had of next.

year to to customer provide a line was our residents. finish look in for expectations. it We a and quarter summary, the continuing remainder with strong, solid superior out the In experience of our

Now, turn Chris. I call to over the will

Chris Lau

sheet Thanks, XXXX results, I’ll of on update our operating Jack. touch and guidance. briefly review you quarter In conclude today, our second with our comments on balance my a

that supplemental of on basis with our adopted year that can and to you covering I’d remind accounting conformed that find information operating our like you are package. reconciliations new lease presented back certain this a the Before XXXX results, all in applicable was our standard metrics the of consistent

our per common of attributable or quarter shareholders second share. the share compares diluted per of of for a And or net second now operating $XX.X of XXXX. getting diluted generated the results; for we to loss quarter $X.XX This net $X.XX into million million income $XX.X XXXX, to

$XX.X share FFO second as million to quarter same the unit was XXXX, the core last million per $XX.X for or of per for year. or compared and $X.XX Also, FFO and FFO unit $X.XX share quarter

of of as share second share compared quarter Adjusted $XX quarter for second $XX.X million of FFO the FFO XXXX was was quarter XXXX adjusted per $X.XX FFO unit share second million the and and in XXXX. FFO for the the quarter second per for to compared of $X.XX per XXXX. a On to unit basis,

our higher June for point, with Also presentation. a assessment and of XX% the in of tax update note for property At are property continuing to since this investor year. assessed like jurisdictions you than received to values that at provide portfolio quarter, are the expectations taxes now certain start see initial further the the our on we’ve over increases of I’d

Georgia. with and of some outsized reference, are the For Indiana Texas, increases notable states

active appeals we tax As or value on expect have file property individual are and tax always, property XX,XXX appeals filed already front extremely value over the to year. this

historical appeals’ in rate reminder, this results been efforts outcome about our begin fourth appeals and trickle year’s to and we different, success As is XX%, XX% the each has the know quarter. but on to the third won’t until year throughout a of

to and we are released and the mind that values XXX% that property in third have received tax local of not fourth millage keep changes rates typically tax assessed our any in quarters. annual Additionally, property

full in on tax input X% year property full to X%. range our now all our from of an into based year, X% the initial compared this experts, in we to expectations high year just expectations. local tax minute, at of property of increase of I’ll the our available which expenses guidance likely to expect and was a However, the information start currently increase team tie

quick before give that, I’ll a However, on our update you balance sheet.

maturity of of $X.X weighted rate a of average weighted X.X% debt turn with At billion the a XX.X total interest years. the of quarter, approximately had to average we end and

EBITDA X.Xx EBITDA to reminder, plus until adjusted was XXXX. Our X.Xx. other don’t have And regular was shares debt than maturities a net principal we any and debt-to-adjusted preferred debt as amortization

funding balance and on and on unrestricted going million recyclable undrawn. We of at revolving of had we million end the annual approximately of flow $XXX the liquidity second million fully the of of terms approximately was capital $XXX In forward, year. sheet cash sources our track our facility $XXX cash $XXX program credit this is retained and quarter, generate generate to disposition million

an extremely with consistent to cornerstones provide us continues growing and foundation to differentiator sheet portfolio. a accretively solid key balance our our Our be with strategic continue

our remained some to on year like in I’d with ranges, evening’s Finally, provide guidance release. thoughts last unchanged which full you current

or with our midpoint are off, the Same-Home we are operating year of revenues full full very performance range. and First year pleased year-to-date at guidance above tracking believe our

that However, third the of mindful being the our we are heaviest period ahead. fact quarter still move-out is

year appeals receive current our that With rates other full Taking as that that tax property I operating our will current tax represent of expense core largest the now property property with X.X%. high believe and trending this which year previously X% expense Same-Home continue of expectation end for year’s we mentioned I’ll guidance in remaining remain you year we now fluid Next, property category, our high results of the growth full the consideration, this range into towards categories, range. campaign. X.X% expenses to taxes, are remind to is values, Same-Home expense said, assessed our

our are and revenues on growth confident we property bottom of expenses, taking our year CapEx funds operating NOI NOI line current this year core Same-Home remain operations. of core results we from so growth, Same-Home into Same-Home guidance and after far proud ranges consideration in full Overall, and views our

now concludes the Operator? That to call questions. your open and remarks, prepared we’ll our

Operator

will you. Please from time thank be is question a Citigroup. Great, go Our we At first ahead. session. Nick from question-and-answer [Operator Joseph Instructions] this conducting

Nick Joseph

development Maybe on of Thanks. the deliveries. just the on for start more color the cadence program, looking

quarter? third deliver So and in do what also and fourth at you in homes how the many the you cost expect then expect to quarter

Jack Corrigan

remainder heavily we expect be the about deliver We year, quarter. XXX of vertical to homes. construction. currently towards to more the the It weighted XXX XXX for will fourth in about Well, have

end year by we the All we deliver have of the the of and end would of deliver those the by to we to in expect year. expect also some that horizontal then construction

David Singelyn

Nick, it’s Dave.

once a these done, go add couple was to heard, test of we had land. at roll did point, you’ve decided we And for just to history the things that of we of a some development me and is Let our things, but program out. it test that look

So we have the can land you bit of a because get gap little to start the before a process. you had

back that year of where X,XXX or and weighted the at was are. plus mentioned that’s to year, that to the very We expected home beginning very, minus we exactly but we the it in for going be be

expect We’re to where we be.

in and want of land and more teams acquire towards importantly the and develop and for We the homes, for out are well we XXXX. are building positioned acquiring the back the back marketplaces really very that to XXXX the half half this year,

Nick Joseph

rent it think Thanks. Or development to you take renter And deliver to prelease long in do opportunity does begin a then Are how seeing an up? a of homes? move any you typically and you how for the paying after about lease home?

Jack Corrigan

move-in. a deliver lease XX to time then XX we the signed to – move-in leasing another Once – home, and days average days it’s so is lease from or from about

Nick Joseph

Thanks.

David Singelyn

Nick. Thanks,

Operator

here of Please next Bank from is Our America. ahead. go from question Shirley Wu

Shirley Wu

Hey, morning, guys. good

David Singelyn

Good morning, Shirley.

Shirley Wu

Good morning.

years? the your the it’s Doesn’t the almost update been us portfolio? talk to two program. let’s since this have land this you a – on properties intend get bit say, it, an now you give about also next And versus over, three you these it and bank follow Could build-for-rent. years on premiums expand started you traditional could how terms call to in a So program year you you little the for of,

Jack Corrigan

more, you’re that just get to you’re – depends got on – lots, less. But some we much are buying on X% approximately raw that lots horizontal which far work. it to lots, really pretty you do the vacant or premium, We as as all land – build Yes. whether ready a developments developed some the

need we X,XXX So to cadence, and our about inventory lots about expect the right in total that – is we’re now – we to have at… deliver need the lots we

Chris Lau

Shirley, At X,XXX. it’s Chris.

the will quarter’s which week. land be get or million sheet, can just the Q You about $XXX moment. this of translates this balance But of into that about lots it’s on X,XXX quarters either past the Q this at out probably filed later from

Shirley Wu

Got it.

previously now interesting doing on it’s you’re of well. as horizontals – was typically I that only because lots mentioned can I also you you that So land build buy think but you would vertically,

Jack Corrigan

that. it No, said for said we think ever be I development. is we entitled What don’t would

go and So you build land buy it. you the actually land there or escrowing make are entitlements to you into you sure all on before you for close

the So without entitlements. we buy being don’t sure of anything

Shirley Wu

Chris, expenses. it. Got maybe, And to on quick a

that range your And to you rough estimate as appeals? taxes typically your give previous estate XX% appeals would a much those XX%, to now success are those higher your X% success end came X%, noted trending So lower X%. be us for years this you rate in of towards to appeals down real how could for the

Chris Lau

amount, it say an I year. at when translate does to we to all beginning start as information it vary difficult into success can on exact level It’s and I we of guide conservative rate and really because into dollar say, have we hand, in would is the year recalibrated reasonable, the the we But account and now with both a that appeals. of those year the take what have

adjusted And so all expectation. factored our that into

and good have kind balance But you I remarks, of my adherence until and our would we third appeals good that quarter. in to a record those the in have by throughout very of results the track I ability I fourth don’t mentioned on predict prepared the as appeals, think saying, actually a them. back

Shirley Wu

for the Thanks Great. color.

Chris Lau

Sure.

Operator

Gilbert Your Please ahead. next from question go BTIG. is Ryan from

Ryan Gilbert

Hi, guys. thanks,

the in XX% the going around the half It the development XX% first half. of like year deliver the to deliveries second one you’re on another in for looks Just total program. and

or cadence to extrapolate is – deliveries? that fair that to the it kind of probably to XXXX XXXX, XXXX Looking is

Jack Corrigan

be deliveries still but as think be the would not will back-ended will I pretty XXXX. by And XXXX XXXX, I flow. say Well, even as back-ended, it that

Ryan Gilbert

Okay.

David Singelyn

Yes. This is Dave.

we’re me up. through of to ramping still first half first the but that be add. saying continue It’s XXXX. are to XXXX, the going see of a we Let you is higher will multiyear up What is ramp XXXX just up, and than half ramp significantly

Ryan Gilbert

the And tolerating to Okay, that noticed homebuilders We’ve saw shift the in great. July. in that side increase on are entry-level products. more move-outs the on then you homebuilding

of have higher if wondering affordable be would I’m your being impacted product. that markets with you where being you’re – levels supply seen So you’re any competing directly from

Jack Corrigan

our I’m we What an competes, saw – that – first are just level abnormal of the really in last they kids there but aren’t a are went of until had first go lot usually year school lease February to biggest out. them a the is we that the move-out move out of lease-up sure, and of a more on in month-to-month competition was they after seeing and period year some we through May, the percentages way. – year want we heavy lot when through

you I a and it’s other than went that So related think that. they think April, lease properties anything expirations for two, just month-to-month month to May in don’t I but have see or more March,

David Singelyn

Yes.

vacancy move-outs small are impact. in Just increase to middle and today, little any We, add essentially bit a of bit little seeing. to of the typically move-outs an our summer. to a we’re is a a is you’re It’s have bit to kind little that. what of going The the seasonality see business of of the going in one month in full frictional

July. to is move-outs bit it’s it’s change. tick little numbers. year It’s more Jack’s but the did comparable a taken very I pretty last up, a see don’t move-out to comments, be slight we It comparable. July want in over a significant that

Ryan Gilbert

great. Okay, much. Thanks very

Operator

Steve Sakwa go is Our from from ISI. Please next Evercore question ahead.

Steve Sakwa

Chris, top just to the back on guess, line. I circle Thanks.

on like your worry the to both trying or lot about of a least was of first the You’re and above half range in figure of the sort I’m growth new end the of trending kind midpoint out you’ve And renewals. locked better. of rent good high trend. occupancy in at leases commentary currently, It just and sort seems how you

the hit or of about more play first you may second slippage be point you sort devil’s a in decline So little XX of XXX advocate, of to point basis to to year. see trying with the in just I’m of what the I’m basis reconcile that than middle sort range, of half. the a need trying the half just a large to posted that,

Chris Lau

Yes.

would in think, couple guide say, thoughts the So One, keep I it’s good mind of we though left terms year even that remarks range above full formally to on question, Steve. far basis. we’re think of that of as for in come commentary the some we and mind. I in a important unchanged, to where midpoint my we’re believe we that tracking prepared tracking

comp on line in pretty we of really half year. the and we we of as at think year of throughout when the mind taken think there the set year normalized had it’s we basis. I levels in the back XXXX, about all second, the to and the which prior the top keep first into more consideration a the then comps stable occupancy full that year, And no in soft was important set the that fact the that surprise And a start year guide

the of need the we prior So we the half first second year year. comps half as of occupancy to revenue versus think about that year just in mind, growth keep

right the out, the move-out of of third Jack keep in in quarter mind third toughest we’re in about in have overall, general And us pointed guide of the still middle that now thinking as quarter. year also perspective, and then the right lastly, that, and that we time ahead is to we’re from the need the a as just

prudent very terms that we’re guide revenues evolve we mind, in the tracking year. how recognize happy in with. so are the throughout which we going well, to and we’re keeping we’re But also of And be

Steve Sakwa

turnover on doing the moveout around vacancy trying a in bit to the hard to bit rent of sort and more that little manage you to rents you up a guess, renewal in –? anything just more little I may terms today portfolio rates of rates? the higher and capture follow creating kind little Are or or pushing of bit. a And turnover differently be

Jack Corrigan

X.X bit the say kind We ago, on No. the rents I the of because X where have same overall, – a been about taking that already average, – expire. in probably we Xs last would a of to bit. We spreads, around in low years re-leasing that pushing on started rates approach we’re our renewal from that went we the past. little the when are we’re little but with the a high and we’ve consistent weighs they couple But years. pretty

Steve Sakwa

Okay. And then, some I it that bounce Chris, think up the the can the that quarter-to-quarter R&M. based back you timing. year? just the secondly be was half in quarter, do around of on just in of know about X.X may about on How

Chris Lau

into mean, in say we’re top X% basis, I expenses was component cost keep taxes of on expenses basis on I and kind property a the Xs the of you’re the a piece of cost it’s component overall our of terms full of components put we basis, X.X%, full of were you we was in the around being or equation much of if maintain. on then, about in expenses thought everything And on into of that of to a that – process component would little gone bounce I a our expense but overall. the spoke X% all It around of And the one, well kind in pretty year our mind two, would year, as expecting of expense expenses can we taxes start property categories, think the No, year tracking of so to in kind else, Yes. of what’s to think which our and being that we year two and with view kind that’s thoughts what would including And our and expenses now. balancing thoughts kind right. full maintain. and to the of say, bit, on on recall right at are that’s I what kind

Steve Sakwa

it Thanks. Okay. That’s me. from

Chris Lau

Sure. Thanks, Steve.

Operator

question Our Advisors. Pawlowski John from go Please next Green here from is ahead. Street

John Pawlowski

question than on that like and on just So greater turn it CapEx expected. Continuing is Was fair? higher. R&M costs remarks rainfall Jack’s pressure? expectations color are with expenses in great causing Steve’s expense would Thanks. is that I high there. unusually prepared – and Is line that more CapEx

Chris Lau

That’s right.

if me color and you numbers can little likes. Jack insight, more then a he give Let provide operational more the on

good So question.

quarterly about the we of and was as the $XXX,XXX referring to pieces the that of or so. that of overall kind items, unpacked As kind change ballpark The was kind year-over-year in of Jack think here. storm-related attributable the CapEx to, about component was

at program. out separate planned if CapEx things that in we of into maintenance and increase really, regular remainder so increases, And look our there, and the preventative then the way on the investment two going then

top constant of in we our expectations to regular that about To top what right which that a $XXX,XXX, was the is preventative on the kind you And a of CapEx, of X% were. what order storm then of give damages components other $XXX,XXX you were expecting the this of rough if which magnitude, dollars hold for this quarter were increase on just we’ve right maintenance under all and program preventive the expand into quarter. our maintenance into program to for way

Jack Corrigan

painting Yes. And a the I’ll add exterior for on the that’s little just program, mostly a preventive in-house gotten the that just primarily, homes is which the for of aged. the exterior – have of maintenance reminder, homes, maintenance our program

So of in that rollout and program the XXXX in it we completed XXXX. started

in we in the number quarter a XXXX. of to have second what XXXX higher compared So seeing you’re

Chris Lau

if I more one just And point John, quick. can real make

guide, recalls are throughout consideration not damages, there the the of in type in I year, weather-related costs of guide, we at up in we to that throughout knowing storm year, It’s can the the speaks each than I sure guide think at events year. the history when On predict weather-type fall the us tell the when perfect just this that importance things would And often start that that component want but in for come I’m to more of fact the that year the initiated the that included going the highlight a that year. everyone they’re difficult of like of they’re start portfolio in where the to year. kind of having example the and to is to fall, going some

John Pawlowski

Okay. saying? And what is guide, then the doesn’t rainfall this change you’re

Chris Lau

kind consideration Because start weather-related at this in a year. kind of guide component the of of just right. the the of That’s the is

John Pawlowski

field is longer And you you how this learn just then just right-sized? need headcount anything in and expense peers the the side the your AMH keep the and to Or operate forward business, field term evolve, change portfolio in to maybe consistent? the expense current the see Dave, salaries is for revenue structurally for to current revenue maybe, and talk, the trends as as there going current

David Singelyn

a property our things, you things management question one have area. of we much you’ve John, the about last good Yes. shored year, to we probably it to field done – period we ensure seen in number it’s in a the area, talked what is the more execution that that consistent we’ve becoming up year’s look And numbers, period. of this and at need

a may the With the little to completely things. on get full, actually couple that become of of quicker areas a we to a we’re efficient additional on stabilized – where we couple leasing side. a more side people are of couple that to said, place add As we we can respond a there maintenance is

in and much the going to very, All numbers. very changes really it minor not of you’re talking I’m of about these see are

the I like is getting when but of a It’s done our to our We’ve work of we we right systems opportunities in no started blueprint and people improve. – where right years was There lot the platform. and – there stabilize systems position. are today. to on So taken number a are

So where we are I’d like today.

John Pawlowski

you. Thank Okay.

Chris Lau

Thanks, John.

Operator

Please Hill question next is Our ahead. Morgan from Stanley. from go Rich

Rich Hill

back to Chris, taxes. about the want property you that to come I comments made

I it you like they high surprised coming think we’re given seemed X.X% bit so the across the was may States. a United little end. HPA seeing which were for be me for that quarter, the That said around what or in towards

trend lower expect over And you increases wondering specific the tax next the your So seeing to markets high years? is do driving end to I’m if the of of we’re couple anything that’s to nationally. what there that

Chris Lau

Rich, No. good question.

of couple things. a So

recalibrated my are to expected If be in our in high of basis back a the Xs. property on taxes to you comments of year prepared go full remarks, view one now

not in think taxes quarter, of property accrued of what seeing a So was in the that one-fourth you you on get had year our quarter, taxes you will, mid-Xs have about of expectation we what a tax basis accrued for little of year see that year. if at needed full from the just property up, in year, kind of for that quarter, property the accrued start that reason to we first expectation you’re way And the the expectation. the quarter adjust the quarter. the the then the true at essentially beginning second the of And you that a bit the of in throughout as first was

the in I expecting we’re to So back X.X% the expect of year something high-Xs. through I And as a mentioned, would half down year. the get that basis, trend on full we as

Rich Hill

Okay. That’s helpful.

to that basis you you can money so to quantify much any now going the you? sort expense have guidance? on preventative And you program, help do your think of spend future. obviously, maybe money preventative a way same-store maintenance forward without program will that giving But how there in Is save

Jack Corrigan

that increase you be those the the on going things turn. would is you do the difficult it didn’t but one turns catch the if – doing it too doing were to late – exterior we That on doing when doing it, quantify, it’s your work and of sometimes you’re to

categorizing homes which need work catch the we before need get homes So to we’re visits – more to as problem. and gets it have the be to a immediate a make trying to

in, run, expenditures, long short the you’re effective maintaining in pushing up but think, in and cost-effective the us. save should, more it you’re the In the house way. run, I more So a way a

things replace a But and marketability. the of It’s benefit that on it couple it. have to as talking A paint decks. – wood here, Painting lot to keeps fresh dry is there product, also looking cheaper second is that second it routinely to and and houses get rot painting about. a it it’s benefit and it we’re opposed helps

So there’s the preventative benefit pieces maintenance of program. two to

David Singelyn

without it with to benefit can other work having do tenants. to it the the schedule And exterior we is

being tenants us to the So till like and wait lot the we don’t without fixing coming house is of a asked. empty have and home the out up

Rich Hill

it. Got

your quick rates question but from questions ever I single-family follow-up market. So, this, rental think got of just lot haven’t one prepared Did We correctly? remarks. said a about the you David, in declined hear I that

David Singelyn

– you over the you we XXXXs. on national for have average anytime And direct a can on declined the if basis to since that. sources – last national want, some of a On basis rental not rates

Rich Hill

you much. your appreciate guys. Thank very time, I

David Singelyn

Thanks, Rich.

Operator

from Haendel question Our St. here next is

Mizuho. Please ahead. Juste from go

Haendel St. Juste

the easy I there? drove what’s Phoenix, big new What rate on first. growth? guess, in lease jump the one quick got

Jack Corrigan

quite for it pretty Phoenix one rest to of the that to relatively rents market. has the of is Phoenix the time. has compared And been low some advantages strong

$XX is So or increase percentage. a $XX a higher a

Haendel St. Juste

Okay.

say the the a number that we it’s number, figure rate some number – given of of a wouldn’t – not stand but but out the versus maybe of outsized XX% it’s markets. like absolute for again that – a rest see So not that recurrable, double-digit an in could certainly it is growth or well, number your seems type opportunity I rates, recurring level it

Jack Corrigan

Right.

Last at year year, second schedule looking quarter the re-leasing rates higher. XX.X% think, I a Phoenix last here. I’m were at in

don’t we’ve expect success but perpetuity, double-digit the I years. there So in had pretty good last few growth

Haendel St. Juste

type expired, the Meaning, the of And guess, leases technically is homes. contractually have, from of on growth portfolio you are a percent but getting I What rate basis? leases? remain Okay. those what today the in tenants month-to-month

Chris Lau

currently. Just change about the total call under, of portfolio it, X%

David Singelyn

Yes.

when they we renewal have month-to-month, go X,XXX XX%, our if – so... – homes – – a plus they’re to lease is current year signed about whatever but they raised we program would and them So

Haendel St. Juste

in Got it. same the And it. store. Got that’s

Okay.

Chris Lau

lease number overall, in it schedule. back was you XX That the the Page that – in get actually tracking on supplemental, of it, expiration Haendel, you’re in if and can the interested

Jack Corrigan

not don’t either We on we side. renewal do include spreads it do in spreads. in and the include We nor premium XX% the that include the premium XX%

Haendel St. Juste

Okay.

to necessarily turnover you And guess, given curious aren’t band on given in market? of I I bit X% I’m on wanting much you’re portfolio, a industry willing rates getting rate? rents, leased outsized but formation. be in household earlier question I I’m why on getting much retention more? perhaps a on the about growth, the perhaps see new guys test I turnover, the leases the not you the average back quarter. dynamics, curious stable are pushing just how the guess, pushing Okay. an Are force during then to more this could you strong dynamics. to how Understanding we that any think doing in

Jack Corrigan

Well, looked really it’s at market market. house, house by by

to group, leased three highest you houses being competitors, are the rent as if have if you going by lease. the to last one the that So yours place you’re other in be

judging why market So spreads market, and differential really you by different are that’s house on these things you what markets in see the are. house, by the

rates, As conservative. far tried little as we to a be renewal

pretty resident’s to Phoenix a You see you’re probably going a X% mouth. sour in to XX% be little renewals, get able might but increase re-leasing. on renewals leave Yes, on versus in on we more your taste

Haendel St. Juste

Okay.

guess, can curious, this the where in taxes. bringing to just OpEx Okay. about Chris, on estate go year I’m year’s guidance. questions remember the and talked were the And real We guidance. there issue in more I last I then point the around experience just one, just if time, I back

in You subsequently raised the same-store expense guidance the year. later

in the third quarter, guidance actually the ended period. on up you of think third quarter missed raising the that I same-store

us, I’m guess it headwinds. to industry ongoing that given At of of that’s I portion you won’t same-store curious, raise guidance? in need confidence experience least light do – last around have how year’s at least you and that lower much expense all not going a just So the

Chris Lau

very remarks the around really to think we’re it’s think of not the that approach those keep think the prepared approaching to well. we to I top those prudently. within just believe again line confident comments in everyone that important believe we and and mind our say, think throughout remind we’re and where at evolved our I That or to ranges recalibration tone expenses. X.X%. we’re year you’re But in expenses, we’ll two would also I Yes. But that consideration to midpoint. taxes, X.X% on line, upper tracking this from the to tracking with above into as range both and we’re in some And and respect hearing And is in expense our we taking just believe on the total half the applied our range. very thoughts I overall, be expenses applies on property that’s comfortable then the to guide of this ranges, there. top I we And the ranges, us how year

Haendel St. Juste

Chris. Thanks,

Chris Lau

Thanks, Haendel.

Operator

go Our next & question ahead. Zelman here is from Please from Associates. Goel Hardik

Hardik Goel

revenue, property Hey, guys. a so wanted and G&A in are up cost. know last overheads as of I question. look X% property I put was increase bit a a those going revenue and both on What’s roughly program year-over-year And efficiencies. management. Thanks my to for have if little percentage just focus on taking at I of The year. there? X.X% more to you guys management

Jack Corrigan

answer quite had, take sees. and things of a I’ll the our can he else But it bit it, us times. and one in we year we were turn anything Chris that part last cost then poached of

probably pay That’s have package generous year. for a percentage And this good people portion more a increase. of the so our we be

talked The get this and move slack. so last that in hired we team is to we with field, basically last versus leave other team did left thing when we SWAT – year, we’re SWAT this up do call, not about pick nobody we on that year the quarter’s people I and We there. think poached the a

fully June May, we’re and July. think I in utilized So

Chris Lau

also. of give other And couple Hardik, let thoughts me you a

looking of kind at of the that I calculate the – think the efficiency you’re the I we back to in percentage. in numbers helpful it’s think, platform supplemental

management G&A I also a Same-Home it’s and them apart if year-over-year say helpful and management, XX see of separately. basis it think on that would look up we’re basis In at you at understanding a break And you on think to basis, you’ll on them, property it look full especially year-over-year. I terms points about and property

on a pretty that some well of investments mentioned, full platform though making we overall, Jack basis. even year in tracking So we’re the those are

kind back and recall a so. year-over-year a some G&A, reset comp we exact the reminder, And of is, about the talked of our components increase to year’s when And then a a the as start hold since implies on the year-over-year. comparable to million commentary of impact start one had that initiated call think that of And X% year’s it, G&A the kind but the the quarters for we guide or to that, G&A G&A couple this I if it’s year. that you of X% helpful was $X.X confident then this, at basis we the cash it’s this in on go to about been year of of at of

running is and full million. comments to on excluding through that and again our year $XX is basis, the And year, this you expecting full million And if half G&A – start be right of on comp. a a our year year were. the we’re take top that you compare you back half go stock $XX we’re to to And if of to of the of where at if the what take first expectations G&A year-to-date,

Hardik Goel

me. all from That’s Thanks. right. All

Operator

from Douglas Our Suisse. Credit from ahead. Please is next question Harter go

Douglas Harter

whether Given or the raising the want can about to build-to-rent, portfolio? of ramp take in it that homes of you additional And would capital? talk that come JVs of to capital form what kind size the number attractiveness the of could the and of

David Singelyn

We then couple it, it look and to you at It’s a it acquisition and program the the is really to development to so ability than on up. ramping Dave. of your this at – ramp little take things about capital. call, Yes. longer have up as program One the program. does earlier execute look does There’s mentioned we’ve you this

are we to the execute, up. ramping On ability

test our We have initial the out land. and been have acquiring markets staffed a after actively number of

programs, On all three well interest growth joint in venture it’s national the is a On of asset, acquiring community. rentals, as in lot the as single-family development. channels side, builders there in of investment house in existing

through interest that fact are a considering of we capital are pipeline well all We the those as significant areas, flow. as ourselves in that seeing we retain have cash and of

additional the our additional guidelines have. this debt year for We’re as have debt rating that we million Even we the we capacity credit is about with – target EBITDA grows. or $XXX restrictions as we capacity have have even that well as

have we lot to a ramp different that up. just do, of a ways we want it. finance It is program So to

XXXX. We are and and see that of ramping the year results you’re seeing – latter primarily you’ll up, in towards the half the of this

Douglas Harter

you. Thank

Operator

Our go next from is Please Rahmani Jade KBW. question from ahead.

Ryan Tomasello

Hi, your of if seeing markets you’re competition be in as them for for Ryan I everyone. disposition new This acquisitions discernible any or your whether in for is assets. using impact of Jade. efficient an the actually wondering was channel Tomasello terms on from that iBuyers, attractive

Jack Corrigan

homes. Yes. existing new through We’ve in a we through our other coming the lot acquiring terms still them is much of that homes, of are channel we don’t growth of used assets, for but and disposition for Remember see efficient that competition of than people.

they so a competition And in are impacting have product don’t lot acquiring we that us. assets of for

Ryan Tomasello

target going? percentage on that build over tell construction general, can the us the where, of and you today, in percentage or program, see have And new time, you if new portfolio portfolio for then what a of could is the you the

Jack Corrigan

to percentage we’re about homes staffed a this to X,XXX to year. of the would X.X% portfolio X% currently point, It’s small Yes. probably very a at grow that at of grow. expect the I And in but a range, level

Ryan Tomasello

if sure if for you’re targets versus could. And over the any I you prepared if metric one, internal you times trends ago? a where you turnover remarks, running last your in can have gave one that those but last, it year seeing are in time? just discuss And I’m not today

Chris Lau

where give I’d in Jack, Chris. tracking it’s can the quarter, Ryan, speak the we’re Yes. targets. you to

year quarter so in probably keep in full XXs. higher anytime mid-XXs, mind were of ago, second turn days, days, the or turn XX is quote we For a cash-to-cash, the kind days this ran and we

So trending favorably year-over-year basis. on a

Jack Corrigan

up to down, then year where move-out rent-ready bit. coming sign are close has it to ago and times marketing is pretty The day moved a little a was the lease to Yes.

to up resilience come contract it the that longer more our Just we days it’s that about wait seven on as program, to out. takes because going warning exercise a average bit little

Ryan Tomasello

over you that expect go where average And to do time...

Jack Corrigan

the expect would days be not time during year, depending to time anywhere the in I it time, year, fast the this XX to marketing season from days because peak is the of year nonpeak. Over as later the of in it time leasing to on XX XX as is

Ryan Tomasello

Great. Thanks for taking the questions.

Jack Corrigan

Thanks, Ryan.

Operator

Our is from from ahead. next W. Please Babin Baird. here Robert question Drew go

Drew Babin

in good Jacksonville. year-to-date, this had Hey, is of A inventory, good morning. percentage your been

investment on amount imagine to touch wanted that and And but a of the home decent a large obviously, affordable geographically, market. I I outskirts, least at it’s on inventory market So infill? there’s year? you – your is remainder to investment that for this going may the be a And there? Is so what big are of be more continue seeing market to

Jack Corrigan

but I markets continue of outsized terms a is development. main will think the first investment you’re it’s in one It investment be the that seeing there reason market, to of entered we a big little into

along, So and other it’s we’ve further delivered there than more the houses in markets.

Drew Babin

you a what’s of can market, growth sort Okay. play jobs us remind attractive And are kind that adding of there, what from long-term perspective is? employers about the any demand the

Jack Corrigan

growth, job unemployment population fairly higher-than-average significantly low got It’s it’s rate. just growth, Yes. and

six growth we consistently years. characteristics it’s The demographic been for within portfolio. there has the that like the got it’s strong and demand So

Drew Babin

that. for Thanks Okay.

of XXXX, sort to the year year? year tail it this might this Just relative in $XXX one we $XXX the next more deliveries markets the are to where on that of more of end for your Kind me. of million million on opposite development spending, spending deliveries will end see what

Jack Corrigan

we open of States. United right opened, part of hired we the Western to markets somebody at the XXXX the up on When beginning

ones where we are be have or building a Las Seattle region going Austin Austin, are region. development Boise, the then that Vegas we’re little – Lake Salt to San City, open, the So Antonio and later Denver, are in sizable to fairly building

you some So there. will see

rest year, development be we our the of is probably program. primarily it’s the where which going to For the started Southeast,

Drew Babin

color. the for Thanks Great.

Operator

is Our BTIG. Please from Gilbert question from go next Ryan ahead.

Ryan Gilbert

follow-up Hey, guys. thanks for taking the

markets enough one rents has are or I’m directly the Builder negotiate center wholesale sales the National strong rent where that if into on Just the at and wondering to that overall enough a on walk buy high can been just just Program. preferences from sales. there you are quick growth salesperson? bulk list I any prices know a price But

Jack Corrigan

negotiate the extent the heart to set far it we way We with enough specifications just it It’s way much the can than economics flowing our their we are in doing just it the could. finish buying advance so when back. and we’re in a off our get better and is on great up

David Singelyn

it’s Ryan, Dave.

is the looking that to lot going do program We was take that discounts, developments, of there a of a we interest them there. help but significant a homebuilders as – can’t advantage and some get lot of well it’s slow add, homebuilders finishes. have viable closeout us. and Let The we are partnership me them, some with it’s had working our on development stage both becoming with discussions, us the a just much more where in we they of by And now of working are of we well. get a to it’s and we’re for today,

Ryan Gilbert

you. Thank

Operator

session as today’s teleconference. question-and-answer as This the concludes well

You disconnect for at Thank may again lines your this you your time. participation.

American Homes 4 Rent (AMH) 30 Jul 192019 Q2 Earnings call transcript