American Homes 4 Rent 10-Q

Item 1. Financial Statements American Homes 4 Rent Condensed Consolidated Balance Sheets (Amounts in thousands, except share data) June 30, 2020 December 31, 2019 (Unaudited) Assets Single-family properties: Land $ 1,794,943 $ 1,756,504 Buildings and improvements 7,904,656 7,691,877 Single-family properties in operation 9,699,599 9,448,381 Less: accumulated depreciation ( 1,603,376 ) ( 1,462,105 ) Single-family properties in operation, net 8,096,223 7,986,276 Single-family properties under development and development land 453,127 355,427 Single-family properties held for sale, net 171,622 209,828 Total real estate assets, net 8,720,972 8,551,531 Cash and cash equivalents 32,010 37,575 Restricted cash 129,235 126,544 Rent and other receivables 32,331 29,618 Escrow deposits, prepaid expenses and other assets 141,302 140,961 Investments in unconsolidated joint ventures 69,979 67,935 Asset-backed securitization certificates 25,666 25,666 Goodwill 120,279 120,279 Total assets $ 9,271,774 $ 9,100,109 Liabilities Revolving credit facility $ 130,000 $ — Asset-backed securitizations, net 1,935,800 1,945,044 Unsecured senior notes, net 889,129 888,453 Accounts payable and accrued expenses 287,036 243,193 Amounts payable to affiliates — 4,629 Total liabilities 3,241,965 3,081,319 Commitments and contingencies (see Note 15) Equity Shareholders’ equity: Class A common shares ($ 0.01 par value per share, 450,000,000 shares authorized, 300,512,943 and 300,107,599 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively) 3,005 3,001 Class B common shares ($ 0.01 par value per share, 50,000,000 shares authorized, 635,075 shares issued and outstanding at June 30, 2020 and December 31, 2019) 6 6 Preferred shares ($ 0.01 par value per share, 100,000,000 shares authorized, 35,350,000 shares issued and outstanding at June 30, 2020 and December 31, 2019) 354 354 Additional paid-in capital 5,797,384 5,790,775 Accumulated deficit ( 461,435 ) ( 465,368 ) Accumulated other comprehensive income 6,247 6,658 Total shareholders’ equity 5,345,561 5,335,426 Noncontrolling interest 684,248 683,364 Total equity 6,029,809 6,018,790 Total liabilities and equity $ 9,271,774 $ 9,100,109 The accompanying notes are an integral part of these condensed consolidated financial statements. 1 American Homes 4 Rent Condensed Consolidated Statements of Operations (Amounts in thousands, except share and per share data) (Unaudited) For the Three Months Ended June 30, For the Six Months Ended June 30, 2020 2019 2020 2019 Revenues: Rents and other single-family property revenues $ 280,689 $ 279,914 $ 568,031 $ 557,608 Other 2,409 1,946 4,661 3,456 Total revenues 283,098 281,860 572,692 561,064 Expenses: Property operating expenses 110,436 104,591 217,933 211,275 Property management expenses 22,260 21,650 45,536 42,359 General and administrative expense 11,493 10,486 22,759 19,921 Interest expense 29,558 32,571 59,273 64,486 Acquisition and other transaction costs 1,956 970 4,103 1,804 Depreciation and amortization 84,836 82,840 167,657 164,001 Other 1,403 1,514 7,513 2,538 Total expenses 261,942 254,622 524,774 506,384 Gain on sale of single-family properties and other, net 10,651 13,725 21,416 19,374 Loss on early extinguishment of debt — ( 659 ) — ( 659 ) Net income 31,807 40,304 69,334 73,395 Noncontrolling interest 2,656 4,004 6,157 7,030 Dividends on preferred shares 13,782 13,782 27,564 27,564 Net income attributable to common shareholders $ 15,369 $ 22,518 $ 35,613 $ 38,801 Weighted-average common shares outstanding: Basic 301,011,545 299,466,526 300,912,307 298,157,413 Diluted 301,412,243 299,991,084 301,358,769 298,676,788 Net income attributable to common shareholders per share: Basic $ 0.05 $ 0.08 $ 0.12 $ 0.13 Diluted $ 0.05 $ 0.08 $ 0.12 $ 0.13 The accompanying notes are an integral part of these condensed consolidated financial statements. 2 American Homes 4 Rent Condensed Consolidated Statements of Comprehensive Income (Loss) (Amounts in thousands) (Unaudited) For the Three Months Ended June 30, For the Six Months Ended June 30, 2020 2019 2020 2019 Net income $ 31,807 $ 40,304 $ 69,334 $ 73,395 Other comprehensive loss: Gain on cash flow hedging instrument: Reclassification adjustment for amortization of interest expense included in net income ( 240 ) ( 240 ) ( 481 ) ( 481 ) Other comprehensive loss ( 240 ) ( 240 ) ( 481 ) ( 481 ) Comprehensive income 31,567 40,064 68,853 72,914 Comprehensive income attributable to noncontrolling interests 2,621 3,967 6,087 6,955 Dividends on preferred shares 13,782 13,782 27,564 27,564 Comprehensive income attributable to common shareholders $ 15,164 $ 22,315 $ 35,202 $ 38,395 The accompanying notes are an integral part of these condensed consolidated financial statements. 3 American Homes 4 Rent Condensed Consolidated Statements of Equity (Amounts in thousands, except share data) (Unaudited) Class A common shares Class B common shares Preferred shares Number of shares Amount Number of shares Amount Number of shares Amount Additional paid-in capital Accumulated deficit Accumulated other comprehensive income Shareholders’ equity Noncontrolling interest Total equity Balances at December 31, 2018 296,014,546 $ 2,960 635,075 $ 6 35,350,000 $ 354 $ 5,732,466 $ ( 491,214 ) $ 7,393 $ 5,251,965 $ 721,777 $ 5,973,742 Share-based compensation — — — — — — 952 — — 952 — 952 Common stock issued under share-based compensation plans, net of shares withheld for employee taxes 77,830 1 — — — — ( 761 ) — — ( 760 ) — ( 760 ) Redemptions of Class A units 500,000 5 — — — — 6,505 — 12 6,522 ( 6,522 ) — Distributions to equity holders: Preferred shares (Note 10) — — — — — — — ( 13,782 ) — ( 13,782 ) — ( 13,782 ) Noncontrolling interests — — — — — — — — — — ( 2,741 ) ( 2,741 ) Common shares ($ 0.05 per share) — — — — — — — ( 14,889 ) — ( 14,889 ) — ( 14,889 ) Net income — — — — — — — 30,065 — 30,065 3,026 33,091 Total other comprehensive loss — — — — — — — — ( 203 ) ( 203 ) ( 38 ) ( 241 ) Balances at March 31, 2019 296,592,376 $ 2,966 635,075 $ 6 35,350,000 $ 354 $ 5,739,162 $ ( 489,820 ) $ 7,202 $ 5,259,870 $ 715,502 $ 5,975,372 Share-based compensation — — — — — — 1,269 — — 1,269 — 1,269 Common stock issued under share-based compensation plans, net of shares withheld for employee taxes 645,567 6 — — — — 10,257 — — 10,263 — 10,263 Redemptions of Class A units 2,589,846 26 — — — — 33,710 — 63 33,799 ( 33,799 ) — Distributions to equity holders: Preferred shares (Note 10) — — — — — — — ( 13,782 ) — ( 13,782 ) — ( 13,782 ) Noncontrolling interests — — — — — — — — — — ( 2,611 ) ( 2,611 ) Common shares ($ 0.05 per share) — — — — — — — ( 15,052 ) — ( 15,052 ) — ( 15,052 ) Net income — — — — — — — 36,300 — 36,300 4,004 40,304 Total other comprehensive loss — — — — — — — — ( 203 ) ( 203 ) ( 37 ) ( 240 ) Balances at June 30, 2019 299,827,789 $ 2,998 635,075 $ 6 35,350,000 $ 354 $ 5,784,398 $ ( 482,354 ) $ 7,062 $ 5,312,464 $ 683,059 $ 5,995,523 4 American Homes 4 Rent Condensed Consolidated Statements of Equity (continued) (Amounts in thousands, except share data) (Unaudited) Class A common shares Class B common shares Preferred shares Number of shares Amount Number of shares Amount Number of shares Amount Additional paid-in capital Accumulated deficit Accumulated other comprehensive income Shareholders’ equity Noncontrolling interest Total equity Balances at December 31, 2019 300,107,599 $ 3,001 635,075 $ 6 35,350,000 $ 354 $ 5,790,775 $ ( 465,368 ) $ 6,658 $ 5,335,426 $ 683,364 $ 6,018,790 Share-based compensation — — — — — — 1,808 — — 1,808 — 1,808 Common stock issued under share-based compensation plans, net of shares withheld for employee taxes 208,010 2 — — — — ( 165 ) — — ( 163 ) — ( 163 ) Distributions to equity holders: Preferred shares (Note 10) — — — — — — — ( 13,782 ) — ( 13,782 ) — ( 13,782 ) Noncontrolling interests — — — — — — — — — — ( 2,602 ) ( 2,602 ) Common shares ($ 0.05 per share) — — — — — — — ( 15,088 ) — ( 15,088 ) — ( 15,088 ) Cumulative effect of adoption of ASU 2016-13 (Notes 2 and 6) — — — — — — — ( 1,494 ) — ( 1,494 ) — ( 1,494 ) Net income — — — — — — — 34,026 — 34,026 3,501 37,527 Total other comprehensive loss — — — — — — — — ( 206 ) ( 206 ) ( 35 ) ( 241 ) Balances at March 31, 2020 300,315,609 $ 3,003 635,075 $ 6 35,350,000 $ 354 $ 5,792,418 $ ( 461,706 ) $ 6,452 $ 5,340,527 $ 684,228 $ 6,024,755 Share-based compensation — — — — — — 2,090 — — 2,090 — 2,090 Common stock issued under share-based compensation plans, net of shares withheld for employee taxes 197,334 2 — — — — 2,876 — — 2,878 — 2,878 Distributions to equity holders: Preferred shares (Note 10) — — — — — — — ( 13,782 ) — ( 13,782 ) — ( 13,782 ) Noncontrolling interests — — — — — — — — — — ( 2,601 ) ( 2,601 ) Common shares ($ 0.05 per share) — — — — — — — ( 15,098 ) — ( 15,098 ) — ( 15,098 ) Net income — — — — — — — 29,151 — 29,151 2,656 31,807 Total other comprehensive loss — — — — — — — — ( 205 ) ( 205 ) ( 35 ) ( 240 ) Balances at June 30, 2020 300,512,943 $ 3,005 635,075 $ 6 35,350,000 $ 354 $ 5,797,384 $ ( 461,435 ) $ 6,247 $ 5,345,561 $ 684,248 $ 6,029,809 The accompanying notes are an integral part of these condensed consolidated financial statements. 5 American Homes 4 Rent Condensed Consolidated Statements of Cash Flows (Amounts in thousands) (Unaudited) For the Six Months Ended June 30, 2020 2019 Operating activities Net income $ 69,334 $ 73,395 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 167,657 164,001 Noncash amortization of deferred financing costs, debt discounts and cash flow hedging instrument 3,697 3,712 Noncash share-based compensation 3,898 2,221 Loss on early extinguishment of debt — 659 Equity in net losses of unconsolidated joint ventures 1,090 147 Net gain on sale of single-family properties and other ( 21,416 ) ( 19,374 ) Loss on impairment of single-family properties and other 5,100 1,433 Other changes in operating assets and liabilities: Rent and other receivables ( 6,420 ) ( 2,976 ) Prepaid expenses and other assets ( 2,130 ) ( 8,140 ) Deferred leasing costs ( 1,902 ) ( 2,129 ) Accounts payable and accrued expenses 60,777 74,493 Amounts due from related parties ( 481 ) 50 Net cash provided by operating activities 279,204 287,492 Investing activities Cash paid for single-family properties ( 136,772 ) ( 71,361 ) Change in escrow deposits for purchase of single-family properties 3,344 ( 198 ) Net proceeds received from sales of single-family properties and other 128,883 87,172 Proceeds received from hurricane-related insurance claims 3,705 — Investment in unconsolidated joint ventures ( 5,155 ) ( 2,265 ) Distributions from joint ventures 17,239 6,314 Renovations to single-family properties ( 8,046 ) ( 16,513 ) Recurring and other capital expenditures for single-family properties ( 46,435 ) ( 33,331 ) Cash paid for development activity ( 271,670 ) ( 139,722 ) Other purchases of productive assets ( 7,559 ) ( 129 ) Net cash used for investing activities ( 322,466 ) ( 170,033 ) Financing activities Proceeds from exercise of stock options 4,341 10,336 Payments related to tax withholding for share-based compensation ( 1,626 ) ( 2,743 ) Payments on asset-backed securitizations ( 11,763 ) ( 10,736 ) Proceeds from revolving credit facility 130,000 — Payments on revolving credit facility — ( 250,000 ) Payments on term loan facility — ( 100,000 ) Proceeds from unsecured senior notes, net of discount — 397,944 Distributions to noncontrolling interests ( 7,779 ) ( 5,489 ) Distributions to common shareholders ( 45,221 ) ( 29,721 ) Distributions to preferred shareholders ( 27,564 ) ( 13,782 ) Deferred financing costs paid — ( 3,572 ) Net cash provided by (used for) financing activities 40,388 ( 7,763 ) Net (decrease) increase in cash, cash equivalents and restricted cash ( 2,874 ) 109,696 Cash, cash equivalents and restricted cash, beginning of period (see Note 3) 164,119 175,214 Cash, cash equivalents and restricted cash, end of period (see Note 3) $ 161,245 $ 284,910 6 American Homes 4 Rent Condensed Consolidated Statements of Cash Flows (continued) (Amounts in thousands) (Unaudited) For the Six Months Ended June 30, 2020 2019 Supplemental cash flow information Cash payments for interest, net of amounts capitalized $ ( 55,392 ) $ ( 52,980 ) Supplemental schedule of noncash investing and financing activities Accrued property renovations and development expenditures $ 12,614 $ 9,837 Transfers of completed homebuilding deliveries to properties 156,367 51,946 Property and land contributions to unconsolidated joint ventures ( 18,978 ) ( 5,190 ) Note receivable related to a bulk sale of properties, net of discount — 29,474 Accrued distributions to affiliates — 4,647 Accrued distributions to non-affiliates 32 26,780 The accompanying notes are an integral part of these condensed consolidated financial statements. 7 American Homes 4 Rent, L.P. Condensed Consolidated Balance Sheets (Amounts in thousands, except unit data) June 30, 2020 December 31, 2019 (Unaudited) Assets Single-family properties: Land $ 1,794,943 $ 1,756,504 Buildings and improvements 7,904,656 7,691,877 Single-family properties in operation 9,699,599 9,448,381 Less: accumulated depreciation ( 1,603,376 ) ( 1,462,105 ) Single-family properties in operation, net 8,096,223 7,986,276 Single-family properties under development and development land 453,127 355,427 Single-family properties held for sale, net 171,622 209,828 Total real estate assets, net 8,720,972 8,551,531 Cash and cash equivalents 32,010 37,575 Restricted cash 129,235 126,544 Rent and other receivables 32,331 29,618 Escrow deposits, prepaid expenses and other assets 141,302 140,681 Investments in unconsolidated joint ventures 69,979 67,935 Amounts due from affiliates 25,666 25,946 Goodwill 120,279 120,279 Total assets $ 9,271,774 $ 9,100,109 Liabilities Revolving credit facility $ 130,000 $ — Asset-backed securitizations, net 1,935,800 1,945,044 Unsecured senior notes, net 889,129 888,453 Accounts payable and accrued expenses 287,036 243,193 Amounts payable to affiliates — 4,629 Total liabilities 3,241,965 3,081,319 Commitments and contingencies (see Note 15) Capital Partners’ capital: General partner: Common units ( 301,148,018 and 300,742,674 units issued and outstanding at June 30, 2020 and December 31, 2019, respectively) 4,484,879 4,474,333 Preferred units ( 35,350,000 units issued and outstanding at June 30, 2020 and December 31, 2019) 854,435 854,435 Limited partner: Common units ( 52,026,980 units issued and outstanding at June 30, 2020 and December 31, 2019) 683,153 682,199 Accumulated other comprehensive income 7,342 7,823 Total capital 6,029,809 6,018,790 Total liabilities and capital $ 9,271,774 $ 9,100,109 The accompanying notes are an integral part of these condensed consolidated financial statements. 8 American Homes 4 Rent, L.P. Condensed Consolidated Statements of Operations (Amounts in thousands, except unit and per unit data) (Unaudited) For the Three Months Ended June 30, For the Six Months Ended June 30, 2020 2019 2020 2019 Revenues: Rents and other single-family property revenues $ 280,689 $ 279,914 $ 568,031 $ 557,608 Other 2,409 1,946 4,661 3,456 Total revenues 283,098 281,860 572,692 561,064 Expenses: Property operating expenses 110,436 104,591 217,933 211,275 Property management expenses 22,260 21,650 45,536 42,359 General and administrative expense 11,493 10,486 22,759 19,921 Interest expense 29,558 32,571 59,273 64,486 Acquisition and other transaction costs 1,956 970 4,103 1,804 Depreciation and amortization 84,836 82,840 167,657 164,001 Other 1,403 1,514 7,513 2,538 Total expenses 261,942 254,622 524,774 506,384 Gain on sale of single-family properties and other, net 10,651 13,725 21,416 19,374 Loss on early extinguishment of debt — ( 659 ) — ( 659 ) Net income 31,807 40,304 69,334 73,395 Preferred distributions 13,782 13,782 27,564 27,564 Net income attributable to common unitholders $ 18,025 $ 26,522 $ 41,770 $ 45,831 Weighted-average common units outstanding: Basic 353,038,525 352,363,754 352,939,287 352,183,171 Diluted 353,439,223 352,888,312 353,385,749 352,702,546 Net income attributable to common unitholders per unit: Basic $ 0.05 $ 0.08 $ 0.12 $ 0.13 Diluted $ 0.05 $ 0.08 $ 0.12 $ 0.13 The accompanying notes are an integral part of these condensed consolidated financial statements. 9 American Homes 4 Rent, L.P. Condensed Consolidated Statements of Comprehensive Income (Loss) (Amounts in thousands) (Unaudited) For the Three Months Ended June 30, For the Six Months Ended June 30, 2020 2019 2020 2019 Net income $ 31,807 $ 40,304 $ 69,334 $ 73,395 Other comprehensive loss: Gain on cash flow hedging instrument: Reclassification adjustment for amortization of interest expense included in net income ( 240 ) ( 240 ) ( 481 ) ( 481 ) Other comprehensive loss ( 240 ) ( 240 ) ( 481 ) ( 481 ) Comprehensive income 31,567 40,064 68,853 72,914 Preferred distributions 13,782 13,782 27,564 27,564 Comprehensive income attributable to common unitholders $ 17,785 $ 26,282 $ 41,289 $ 45,350 The accompanying notes are an integral part of these condensed consolidated financial statements. 10 American Homes 4 Rent, L.P. Condensed Consolidated Statements of Capital (Amounts in thousands, except unit data) (Unaudited) General Partner Limited Partners Accumulated other comprehensive income Total capital Common capital Preferred capital amount Common capital Number of units Amount Number of units Amount Balances at December 31, 2018 296,649,621 $ 4,390,137 $ 854,435 55,316,826 $ 720,384 $ 8,786 $ 5,973,742 Share-based compensation — 952 — — — — 952 Common units issued under share-based compensation plans, net of units withheld for employee taxes 77,830 ( 760 ) — — — — ( 760 ) Redemptions of Class A units 500,000 6,510 — ( 500,000 ) ( 6,510 ) — — Distributions to capital holders: Preferred units (Note 10) — — ( 13,782 ) — — — ( 13,782 ) Common units ($ 0.05 per unit) — ( 14,889 ) — — ( 2,741 ) — ( 17,630 ) Net income — 16,283 13,782 — 3,026 — 33,091 Total other comprehensive loss — — — — — ( 241 ) ( 241 ) Balances at March 31, 2019 297,227,451 $ 4,398,233 $ 854,435 54,816,826 $ 714,159 $ 8,545 $ 5,975,372 Share-based compensation — 1,269 — — — — 1,269 Common units issued under share-based compensation plans, net of units withheld for employee taxes 645,567 10,263 — — — — 10,263 Redemptions of Class A units 2,589,846 33,736 — ( 2,589,846 ) ( 33,736 ) — — Distributions to capital holders: Preferred units (Note 10) — — ( 13,782 ) — — — ( 13,782 ) Common units ($ 0.05 per unit) — ( 15,052 ) — — ( 2,611 ) — ( 17,663 ) Net income — 22,518 13,782 — 4,004 — 40,304 Total other comprehensive loss — — — — — ( 240 ) ( 240 ) Balances at June 30, 2019 300,462,864 $ 4,450,967 $ 854,435 52,226,980 $ 681,816 $ 8,305 $ 5,995,523 11 American Homes 4 Rent, L.P. Condensed Consolidated Statements of Capital (continued) (Amounts in thousands, except unit data) (Unaudited) General Partner Limited Partners Accumulated other comprehensive income Total capital Common capital Preferred capital amount Common capital Number of units Amount Number of units Amount Balances at December 31, 2019 300,742,674 $ 4,474,333 $ 854,435 52,026,980 $ 682,199 $ 7,823 $ 6,018,790 Share-based compensation — 1,808 — — — — 1,808 Common units issued under share-based compensation plans, net of units withheld for employee taxes 208,010 ( 163 ) — — — — ( 163 ) Distributions to capital holders: Preferred units (Note 10) — — ( 13,782 ) — — — ( 13,782 ) Common units ($ 0.05 per unit) — ( 15,088 ) — — ( 2,602 ) — ( 17,690 ) Cumulative effect of adoption of ASU 2016-13 (Notes 2 and 6) — ( 1,494 ) — — — — ( 1,494 ) Net income — 20,244 13,782 — 3,501 — 37,527 Total other comprehensive loss — — — — — ( 241 ) ( 241 ) Balances at March 31, 2020 300,950,684 $ 4,479,640 $ 854,435 52,026,980 $ 683,098 $ 7,582 $ 6,024,755 Share-based compensation — 2,090 — — — — 2,090 Common units issued under share-based compensation plans, net of units withheld for employee taxes 197,334 2,878 — — — — 2,878 Distributions to capital holders: Preferred units (Note 10) — — ( 13,782 ) — — — ( 13,782 ) Common units ($ 0.05 per unit) — ( 15,098 ) — — ( 2,601 ) — ( 17,699 ) Net income — 15,369 13,782 — 2,656 — 31,807 Total other comprehensive loss — — — — — ( 240 ) ( 240 ) Balances at June 30, 2020 301,148,018 $ 4,484,879 $ 854,435 52,026,980 $ 683,153 $ 7,342 $ 6,029,809 The accompanying notes are an integral part of these condensed consolidated financial statements. 12 American Homes 4 Rent, L.P. Condensed Consolidated Statements of Cash Flows (Amounts in thousands) (Unaudited) For the Six Months Ended June 30, 2020 2019 Operating activities Net income $ 69,334 $ 73,395 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 167,657 164,001 Noncash amortization of deferred financing costs, debt discounts and cash flow hedging instrument 3,697 3,712 Noncash share-based compensation 3,898 2,221 Loss on early extinguishment of debt — 659 Equity in net losses of unconsolidated joint ventures 1,090 147 Net gain on sale of single-family properties and other ( 21,416 ) ( 19,374 ) Loss on impairment of single-family properties and other 5,100 1,433 Other changes in operating assets and liabilities: Rent and other receivables ( 6,420 ) ( 2,976 ) Prepaid expenses and other assets ( 2,130 ) ( 8,140 ) Deferred leasing costs ( 1,902 ) ( 2,129 ) Accounts payable and accrued expenses 60,777 74,493 Amounts due from related parties ( 481 ) 50 Net cash provided by operating activities 279,204 287,492 Investing activities Cash paid for single-family properties ( 136,772 ) ( 71,361 ) Change in escrow deposits for purchase of single-family properties 3,344 ( 198 ) Net proceeds received from sales of single-family properties and other 128,883 87,172 Proceeds received from hurricane-related insurance claims 3,705 — Investment in unconsolidated joint ventures ( 5,155 ) ( 2,265 ) Distributions from joint ventures 17,239 6,314 Renovations to single-family properties ( 8,046 ) ( 16,513 ) Recurring and other capital expenditures for single-family properties ( 46,435 ) ( 33,331 ) Cash paid for development activity ( 271,670 ) ( 139,722 ) Other purchases of productive assets ( 7,559 ) ( 129 ) Net cash used for investing activities ( 322,466 ) ( 170,033 ) Financing activities Proceeds from exercise of stock options 4,341 10,336 Payments related to tax withholding for share-based compensation ( 1,626 ) ( 2,743 ) Payments on asset-backed securitizations ( 11,763 ) ( 10,736 ) Proceeds from revolving credit facility 130,000 — Payments on revolving credit facility — ( 250,000 ) Payments on term loan facility — ( 100,000 ) Proceeds from unsecured senior notes, net of discount — 397,944 Distributions to common unitholders ( 53,000 ) ( 35,210 ) Distributions to preferred unitholders ( 27,564 ) ( 13,782 ) Deferred financing costs paid — ( 3,572 ) Net cash provided by (used for) financing activities 40,388 ( 7,763 ) Net (decrease) increase in cash, cash equivalents and restricted cash ( 2,874 ) 109,696 Cash, cash equivalents and restricted cash, beginning of period (see Note 3) 164,119 175,214 Cash, cash equivalents and restricted cash, end of period (see Note 3) $ 161,245 $ 284,910 13 American Homes 4 Rent, L.P. Condensed Consolidated Statements of Cash Flows (continued) (Amounts in thousands) (Unaudited) For the Six Months Ended June 30, 2020 2019 Supplemental cash flow information Cash payments for interest, net of amounts capitalized $ ( 55,392 ) $ ( 52,980 ) Supplemental schedule of noncash investing and financing activities Accrued property renovations and development expenditures $ 12,614 $ 9,837 Transfers of completed homebuilding deliveries to properties 156,367 51,946 Property and land contributions to unconsolidated joint ventures ( 18,978 ) ( 5,190 ) Note receivable related to a bulk sale of properties, net of discount — 29,474 Accrued distributions to affiliates — 4,647 Accrued distributions to non-affiliates 32 26,780 The accompanying notes are an integral part of these condensed consolidated financial statements. 14 American Homes 4 Rent American Homes 4 Rent, L.P. Notes to Unaudited Condensed Consolidated Financial Statements Note 1. Organization and Operations American Homes 4 Rent (“AH4R” or “General Partner”) is a Maryland real estate investment trust (“REIT”) formed on October 19, 2012 for the purpose of acquiring, developing, renovating, leasing and operating single-family homes as rental properties. American Homes 4 Rent, L.P., a Delaware limited partnership formed on October 22, 2012, and its consolidated subsidiaries (collectively, the “Operating Partnership” or the “OP”) is the entity through which the Company conducts substantially all of our business and owns, directly or through subsidiaries, substantially all of our assets. References to the “Company,” “we,” “our” and “us” mean collectively AH4R, the Operating Partnership and those entities/subsidiaries owned or controlled by AH4R and/or the Operating Partnership. As of June 30, 2020, the Company held 53,000 single-family properties in 22 states, including 948 properties classified as held for sale. AH4R is the general partner of, and as of June 30, 2020 owned approximately 85.2 % of the common partnership interest in, the Operating Partnership. The remaining 14.8 % of the common partnership interest was owned by limited partners. As the sole general partner of the Operating Partnership, AH4R has exclusive control of the Operating Partnership’s day-to-day management. The Company’s management operates AH4R and the Operating Partnership as one business, and the management of AH4R consists of the same members as the management of the Operating Partnership. AH4R’s primary function is acting as the general partner of the Operating Partnership. The only material asset of AH4R is its partnership interest in the Operating Partnership. As a result, AH4R generally does not conduct business itself, other than acting as the sole general partner of the Operating Partnership, issuing equity from time to time and guaranteeing certain debt of the Operating Partnership. AH4R itself is not directly obligated under any indebtedness, but guarantees some of the debt of the Operating Partnership. The Operating Partnership owns substantially all of the assets of the Company, including the Company’s ownership interests in its joint ventures, either directly or through its subsidiaries, conducts the operations of the Company’s business and is structured as a limited partnership with no publicly traded equity. One difference between the Company and the Operating Partnership is $ 25.7 million of asset-backed securitization certificates issued by the Operating Partnership and purchased by AH4R. The asset-backed securitization certificates are recorded as an asset-backed securitization certificates receivable by the Company and as an amount due from affiliates by the Operating Partnership. AH4R contributes all net proceeds from its various equity offerings to the Operating Partnership. In return for those contributions, AH4R receives Operating Partnership units (“OP units”) equal to the number of shares it has issued in the equity offering. Based on the terms of the Agreement of Limited Partnership of the Operating Partnership, as amended, OP units can be exchanged for shares on a one -for-one basis. Except for net proceeds from equity issuances by AH4R, the Operating Partnership generates the capital required by the Company’s business through the Operating Partnership’s operations, by the Operating Partnership’s incurrence of indebtedness or through the issuance of OP units. Note 2. Significant Accounting Policies Basis of Presentation The condensed consolidated financial statements are unaudited. The condensed consolidated financial statements of the Company include the accounts of AH4R, the Operating Partnership and their consolidated subsidiaries, and the condensed consolidated financial statements of the Operating Partnership include the accounts of the Operating Partnership and its consolidated subsidiaries. Intercompany accounts and transactions have been eliminated. The Company consolidates real estate partnerships and other entities that are not variable interest entities (“VIEs”) when it owns, directly or indirectly, a majority interest in the entity or is otherwise able to control the entity. The Company consolidates VIEs in accordance with Accounting Standards Codification (“ASC”) No. 810, Consolidation, if the Company is the primary beneficiary of the VIE as determined by the Company’s power to direct the VIE’s activities and its obligation to absorb its losses or the right to receive its benefits that are potentially significant to the VIE. Entities for which the Company owns an interest, but does not consolidate, are accounted for under the equity method of accounting as an investment in an unconsolidated subsidiary and are included in investments in unconsolidated joint ventures within the condensed consolidated balance sheets. The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and in conjunction with the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures required for annual financial statements have been condensed or excluded pursuant to SEC rules and regulations. Accordingly, the condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. Any references in this report to the number of properties is outside the scope of our independent registered public 15 accounting firm’s review of our financial statements, in accordance with the standards of the Public Company Accounting Oversight Board. In the opinion of management, all adjustments of a normal and recurring nature necessary for a fair statement of the condensed consolidated financial statements for the interim periods have been made. The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Effective March 31, 2020, as a result of the expected growth in our joint venture activities, the investments in unconsolidated joint ventures balance has been reclassified into a separate balance sheet line item. This resulted in the reclassification of $ 67.9 million as of December 31, 2019, which was previously included in escrow deposits, prepaid expenses and other assets, into investments in unconsolidated joint ventures in the condensed consolidated balance sheets. Certain other amounts in the condensed consolidated financial statements for the prior periods have also been reclassified to conform to the current year presentation. Accounting Pronouncements Adopted January 1, 2020 In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , to amend the accounting for credit losses for certain financial instruments by requiring companies to recognize an estimate of expected credit losses as an allowance in order to recognize such losses more timely than under previous guidance that had allowed companies to wait until it was probable such losses had been incurred. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses , which clarifies that receivables arising from operating leases are not within the scope of Topic 326. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842, Leases . In April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments , which provides further clarification around some of the amendments in ASU 2016-13. In May 2019, the FASB issued ASU No. 2019-05, Financial Instruments-Credit Losses (Topic 326) Targeted Transition Relief , which provides entities that have certain instruments within the scope of Topic 326 with an option to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost basis upon adoption of Topic 326. In November 2019, the FASB issued ASU No. 2019-11, Codification Improvements to Topic 326, Financial Instruments—Credit Losses , which provides further clarification around some of the amendments in ASU 2016-13. The guidance is effective for the Company for annual reporting periods beginning after December 15, 2019, and for interim periods within those annual periods. Early adoption is permitted for annual reporting periods beginning after December 15, 2018, and interim periods within those annual periods. An entity will apply the amendments in these ASUs through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (that is, a modified-retrospective approach). A prospective transition approach is required for debt securities for which an other-than-temporary impairment had been recognized before the effective date. The effect of a prospective transition approach is to maintain the same amortized cost basis before and after the effective date of the guidance. The Company adopted this guidance effective January 1, 2020. The adoption of this guidance did not have a material impact on our financial statements (see Note 6. Escrow Deposits, Prepaid Expenses and Other Assets). In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820) Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement , which eliminates, adds and modifies certain disclosure requirements for fair value measurements. Companies will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy. Companies will also be required to disclose the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The guidance is effective for fiscal years beginning after December 15, 2019, and for interim periods within those annual periods with early adoption permitted. The amendments on the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The Company adopted this guidance effective January 1, 2020. The adoption of this guidance did not have a material impact on our financial statements. In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40) Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract , which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). Capitalized implementation costs related to a hosting arrangement that is a service contract will be amortized over the term of the hosting arrangement, beginning when the module or component of the hosting arrangement is ready for its intended use. The guidance is effective for fiscal years beginning after December 15, 2019, and for interim periods within those annual periods with early adoption permitted. The amendments in this ASU should be applied either 16 retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company adopted this guidance effective January 1, 2020. The adoption of this guidance did not have a material impact on our financial statements. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting , which provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The amendments in this ASU apply only to contracts, hedging relationships and other transactions that reference the London Inter-Bank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform but do not apply to contract modifications made or hedging relationships entered into or evaluated after December 31, 2022. The amendments in this ASU allow companies to (i) account for modifications to contracts within the scope of ASC 310, Receivables , and ASC 470, Debt , prospectively by adjusting the effective interest rate and (ii) account for modifications to contracts within the scope of ASC 842, Leases , as a continuation of existing lease agreements. The guidance also provides optional expedients for modifications to contracts within the scope of ASC 815, Derivatives and Hedging . The guidance is effective immediately, and entities may elect to apply the guidance as of January 1, 2020 or the beginning of a subsequent interim period, or prospectively from a date beginning January 1, 2020 or in a subsequent interim period up to the date the financial statements are available to be issued. The Company adopted this guidance effective January 1, 2020. The adoption of this guidance did not have a material impact on our financial statements. In April 2020, the FASB issued staff question and answer (“Q&A”) document Topic 842 and Topic 840: Accounting for Lease Concessions Related to the Effects of the COVID-19 Pandemic . Under ASC No. 842, Leases, lease concessions granted by lessors beyond the enforceable rights and obligations contained in the existing lease agreement would generally be accounted for as a lease modification. The staff Q&A document permits lessors to make an election, if certain criteria are met, to account for a lease concession related to the effects of the COVID-19 pandemic as though it were part of the enforceable rights and obligations of the existing lease agreement rather than account for the concession as a lease modification. The Company elects to not evaluate whether a COVID-19-related concession is a lease modification and elects to not apply the lease modification guidance in those circumstances. The effect of these elections did not have a material impact on the Company’s condensed consolidated financial statements. Recent Accounting Pronouncements Not Yet Effective In January 2020, the FASB issued ASU No. 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) , which clarifies the interaction between ASC Topics 321, 323 and 815. ASC 321, Investments—Equity Securities , provides a company with a measurement alternative to measure certain equity securities without a readily determinable fair value at cost, minus impairment, if any. If the company then identifies observable price changes in orderly transactions for the identical or a similar investment of the same issuer, it should measure the equity security at fair value as of the date that the observable transaction occurred. The amendments in this ASU clarify that a company should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative in accordance with ASC 321 immediately before applying or upon discontinuing the equity method. The amendments in this ASU also clarify the accounting treatment of forward contracts and purchased options for securities that will be accounted for under the equity method of accounting upon settlement or exercise. The guidance is effective for fiscal years beginning after December 15, 2020, and for interim periods within those annual periods with early adoption permitted. The amendments in this ASU should be applied prospectively by applying the amendments at the beginning of the interim period that includes the adoption date. The Company is currently assessing the impact of the guidance on its financial statements. Note 3. Cash, Cash Equivalents and Restricted Cash Restricted cash primarily consists of funds held related to resident security deposits, cash reserves in accordance with certain loan agreements and funds held in the custody of our transfer agent for the payment of distributions. Funds held related to resident security deposits are restricted during the term of the related lease agreement, which is generally one year. Cash reserved in connection with lender requirements is restricted during the term of the related debt instrument. The following table provides a reconciliation of cash, cash equivalents and restricted cash per the condensed consolidated statements of cash flows to the corresponding financial statement line items in the condensed consolidated balance sheets (in thousands): June 30, December 31, 2020 2019 2019 2018 Cash and cash equivalents $ 32,010 $ 119,176 $ 37,575 $ 30,284 Restricted cash 129,235 165,734 126,544 144,930 Total cash, cash equivalents and restricted cash $ 161,245 $ 284,910 $ 164,119 $ 175,214 17 Note 4. Real Estate Assets, Net The net book values of real estate assets consisted of the following as of June 30, 2020 and December 31, 2019 (in thousands): June 30, 2020 December 31, 2019 Occupied single-family properties $ 7,775,254 $ 7,534,627 Single-family properties recently acquired 31,669 88,181 Single-family properties in turnover process 188,299 308,008 Single-family properties leased, not yet occupied 101,001 55,460 Single-family properties in operation, net 8,096,223 7,986,276 Development land 237,169 224,041 Single-family properties under development 215,958 131,386 Single-family properties held for sale, net 171,622 209,828 Total real estate assets, net $ 8,720,972 $ 8,551,531 Depreciation expense related to single-family properties was $ 81.6 million and $ 78.6 million for the three months ended June 30, 2020 and 2019, respectively, and $ 161.4 million and $ 155.4 million for the six months ended June 30, 2020 and 2019, respectively. The following table summarizes the Company’s dispositions of single-family properties and land for the three and six months ended June 30, 2020 and 2019 (in thousands, except property data): For the Three Months Ended For the Six Months Ended June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Single-family properties: Properties sold 216 433 626 613 Net proceeds (1) $ 47,626 $ 82,828 $ 128,812 $ 115,451 Net gain on sale $ 10,651 $ 13,569 $ 24,409 $ 19,149 Land: Net proceeds $ — $ 899 $ 71 $ 1,195 Net gain on sale $ — $ 156 $ 7 $ 225 (1) Total net proceeds for the three and six months ended June 30, 2019 included a $ 30.7 million note receivable, before a $ 1.2 million discount, which is presented in escrow deposits, prepaid expenses and other assets (see Note 6. Escrow Deposits, Prepaid Expenses and Other Assets). Note 5. Rent and Other Receivables Included in rents and other single-family property revenues are variable lease payments for tenant charge-backs, which primarily relate to cost recoveries on utilities, and variable lease payments for fees from single-family properties. Variable lease payments for tenant charge-backs were $ 35.4 million and $ 35.3 million for the three months ended June 30, 2020 and 2019, respectively, and $ 75.4 million and $ 75.3 million for the six months ended June 30, 2020 and 2019, respectively. Variable lease payments for fees from single-family properties were $ 3.3 million and $ 3.5 million for the three months ended June 30, 2020 and 2019, respectively, and $ 7.3 million and $ 6.5 million for the six months ended June 30, 2020 and 2019, respectively. The Company generally rents its single-family properties under non-cancelable lease agreements with a term of one year . The following table summarizes future minimum rental revenues under existing leases on our properties as of June 30, 2020 (in thousands): June 30, 2020 Remaining 2020 $ 382,221 2021 202,327 2022 8,637 2023 34 Total $ 593,219 As of December 31, 2019, rent and other receivables also included $ 2.7 million of hurricane-related insurance claims receivable, which was fully collected during the three months ended March 31, 2020. 18 Note 6. Escrow Deposits, Prepaid Expenses and Other Assets The following table summarizes the components of escrow deposits, prepaid expenses and other assets as of June 30, 2020 and December 31, 2019 (in thousands): June 30, 2020 December 31, 2019 Escrow deposits, prepaid expenses and other $ 54,129 $ 54,545 Deferred costs and other intangibles, net 5,662 6,840 Notes receivable, net 35,397 36,834 Commercial real estate, software, vehicles and FF&E, net 46,114 42,742 Total $ 141,302 $ 140,961 Depreciation expense related to commercial real estate, software, vehicles and furniture, fixtures and equipment (“FF&E”), net was $ 2.1 million and $ 1.8 million for the three months ended June 30, 2020 and 2019, respectively, and $ 4.1 million and $ 3.7 million for the six months ended June 30, 2020 and 2019, respectively. Deferred Costs and Other Intangibles, Net Deferred costs and other intangibles, net, consisted of the following as of June 30, 2020 and December 31, 2019 (in thousands): June 30, 2020 December 31, 2019 Deferred leasing costs $ 3,506 $ 3,738 Deferred financing costs 11,244 11,244 Database intangible asset 2,100 2,100 16,850 17,082 Less: accumulated amortization ( 11,188 ) ( 10,242 ) Total $ 5,662 $ 6,840 Amortization expense related to deferred leasing costs, the value of in-place leases, and database intangibles was $ 1.1 million and $ 2.4 million for the three months ended June 30, 2020 and 2019, respectively, and $ 2.1 million and $ 4.9 million for the six months ended June 30, 2020 and 2019, respectively, and was included in depreciation and amortization within the condensed consolidated statements of operations. Amortization of deferred financing costs that relate to our revolving credit facility was $ 0.5 million for both the three months ended June 30, 2020 and 2019 and $ 1.0 million for both the six months ended June 30, 2020 and 2019 and was included in gross interest, prior to interest capitalization (see Note 8. Debt). The following table sets forth the estimated annual amortization expense related to deferred costs and other intangibles, net as of June 30, 2020 for future periods (in thousands): Deferred Leasing Costs Deferred Financing Costs Total Remaining 2020 $ 1,321 $ 991 $ 2,312 2021 418 1,964 2,382 2022 — 968 968 Total $ 1,739 $ 3,923 $ 5,662 Notes Receivable, Net The Company obtained promissory notes in connection with two bulk dispositions of our single-family properties. The promissory notes are secured by first priority mortgages on the disposed homes, contain certain covenants and require monthly or quarterly interest payments with the full principal due at maturity. Notes receivable are presented net of discounts, and interest income from the notes, including amortization of discounts, is presented in other revenues within the condensed consolidated statements of operations. Upon adoption of ASU 2016-13 on January 1, 2020 (see Note 2. Significant Accounting Policies), we are required to estimate and recognize lifetime expected losses, rather than incurred losses, on these notes receivable, which results in the earlier recognition of credit losses even if the expected risk of credit loss is remote. An allowance for expected credit losses of $ 1.5 million was established with a cumulative-effect adjustment to accumulated deficit in the condensed consolidated statements of equity. Notes receivable are presented net of the allowance for expected credit losses, which the Company estimates on a quarterly basis based on (i) credit quality indicators such as the borrower’s historical performance, including the borrower’s financial results and satisfaction of scheduled payments, (ii) current conditions, 19 including macroeconomic conditions and other conditions affecting the borrower, and (iii) other reasonable and supportable forecasts about the future. As part of the monitoring process, we may meet with a borrower’s management to better understand such borrower’s financial performance and its future plans on an as-needed basis. A note receivable will be categorized as non-performing if a borrower experiences financial difficulty and has failed to make scheduled payments. Changes to the allowance for expected credit losses are recognized in other expenses within the condensed consolidated statements of operations. Note 7. Investments in Unconsolidated Joint Ventures As of June 30, 2020, the Company held 20 % ownership interests in three unconsolidated joint ventures. During the second quarter of 2014, the Company entered into a joint venture with the Alaska Permanent Fund Corporation (the “Alaska JV”) to invest in homes acquired through traditional acquisition channels and during the third quarter of 2018, the Company entered into a joint venture with another leading institutional investor (the “Institutional Investor JV”) to invest in newly constructed single-family rental homes. In evaluating the Company’s 20 % ownership interests in these joint ventures, we concluded that the joint ventures are not VIEs after applying the variable interest model and, therefore, we account for our interests in the joint ventures as investments in unconsolidated subsidiaries after applying the voting interest model using the equity method of accounting. During the first quarter of 2020, the Company entered into a $ 253.1 million strategic joint venture with institutional investors advised by J.P. Morgan Asset Management (the “J.P. Morgan JV”) focused on constructing and operating newly built rental homes, which was subsequently upsized to $ 625.0 million during the second quarter of 2020. The Company holds a 20 % ownership interest in the joint venture, which has an evergreen term. In evaluating the Company’s 20 % ownership interest in the joint venture, we concluded that the Company does not have a controlling financial interest and, therefore, we account for our interest in the joint venture as an investment in an unconsolidated subsidiary using the equity method of accounting. The following table summarizes our investments in unconsolidated joint ventures (in thousands, except percentages and property data): Joint Venture Description % Ownership at June 30, 2020 Completed Homes at June 30, 2020 Balances at June 30, 2020 Balances at December 31, 2019 Alaska JV 20 % 380 $ 27,528 $ 29,326 Institutional Investor JV 20 % 542 39,712 33,757 J.P. Morgan JV 20 % 14 2,739 — Other (1) N/A N/A — 4,852 936 $ 69,979 $ 67,935 (1) Includes legacy joint ventures, which the Company acquired as part of the American Residential Properties, Inc. merger in February 2016, that were liquidated during the first quarter of 2020. The Company provides various services to these joint ventures, which are considered to be related parties, including property management and development services and has opportunities to earn promoted interests. Management fee and development fee income from unconsolidated joint ventures was $ 1.3 million and $ 0.7 million for the three months ended June 30, 2020 and 2019, respectively, and $ 2.2 million and $ 1.4 million for the six months ended June 30, 2020 and 2019, respectively, and was included in other revenues within the condensed consolidated statements of operations. 20 Note 8. Debt All of the Company’s indebtedness is debt of the Operating Partnership. AH4R is not directly obligated under any indebtedness, but guarantees some of the debt of the Operating Partnership. The following table presents the Company’s debt as of June 30, 2020 and December 31, 2019 (in thousands): Outstanding Principal Balance Interest Rate (1) Maturity Date June 30, 2020 December 31, 2019 AH4R 2014-SFR2 securitization 4.42 % October 9, 2024 $ 482,812 $ 485,828 AH4R 2014-SFR3 securitization 4.40 % December 9, 2024 497,897 501,393 AH4R 2015-SFR1 securitization (2) 4.14 % April 9, 2045 523,797 526,560 AH4R 2015-SFR2 securitization (3) 4.36 % October 9, 2045 454,724 457,212 Total asset-backed securitizations 1,959,230 1,970,993 2028 unsecured senior notes (4) 4.08 % February 15, 2028 500,000 500,000 2029 unsecured senior notes 4.90 % February 15, 2029 400,000 400,000 Revolving credit facility (5) 1.36 % June 30, 2022 130,000 — Total debt 2,989,230 2,870,993 Unamortized discounts on unsecured senior notes ( 3,900 ) ( 4,143 ) Deferred financing costs, net (6) ( 30,401 ) ( 33,353 ) Total debt per balance sheet $ 2,954,929 $ 2,833,497 (1) Interest rates are as of June 30, 2020. Unless otherwise stated, interest rates are fixed percentages. (2) The AH4R 2015-SFR1 securitization has an anticipated repayment date of April 9, 2025. (3) The AH4R 2015-SFR2 securitization has an anticipated repayment date of October 9, 2025. (4) The stated interest rate on the 2028 unsecured senior notes is 4.25 %, which was effectively hedged to yield an interest rate of 4.08 %. (5) The revolving credit facility provides for a borrowing capacity of up to $ 800.0 million and the Company had approximately $ 3.7 million and $ 6.2 million committed to outstanding letters of credit that reduced our borrowing capacity as of June 30, 2020 and December 31, 2019, respectively. The revolving credit facility bears interest at LIBOR plus 1.20 % as of June 30, 2020. LIBOR is expected to be discontinued after 2021 and the Company expects to replace the contractual reference rate with an appropriate alternative. The Company does not expect this modification to have a material impact on its financial statements. (6) Deferred financing costs relate to our asset-backed securitizations and unsecured senior notes. Amortization of deferred financing costs was $ 1.5 million for both the three months ended June 30, 2020 and 2019 and $ 3.0 million for both the six months ended June 30, 2020 and 2019, respectively, which was included in gross interest, prior to interest capitalization. Debt Maturities The following table summarizes the contractual maturities of the Company’s principal debt balances on a fully extended basis as of June 30, 2020 (in thousands): Debt Maturities Remaining 2020 $ 10,358 2021 20,714 2022 150,714 2023 20,714 2024 954,568 Thereafter 1,832,162 Total debt $ 2,989,230 Interest Expense The following table summarizes our (i) gross interest cost, which includes fees on our credit facilities and amortization of deferred financing costs and the discounts on unsecured senior notes, and (ii) capitalized interest for the three and six months ended June 30, 2020 and 2019 (in thousands): For the Three Months Ended For the Six Months Ended June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Gross interest cost $ 34,630 $ 35,221 $ 68,994 $ 69,833 Capitalized interest ( 5,072 ) ( 2,650 ) ( 9,721 ) ( 5,347 ) Interest expense $ 29,558 $ 32,571 $ 59,273 $ 64,486 21 Note 9. Accounts Payable and Accrued Expenses The following table summarizes accounts payable and accrued expenses as of June 30, 2020 and December 31, 2019 (in thousands): June 30, 2020 December 31, 2019 Accrued property taxes $ 100,839 $ 44,280 Resident security deposits 88,147 84,832 Prepaid rent 23,310 19,970 Accrued interest 23,274 23,090 Accrued construction and maintenance liabilities 16,431 20,435 Accounts payable 1,484 5,037 Accrued distribution payable — 13,024 Other accrued liabilities 33,551 32,525 Total $ 287,036 $ 243,193 Note 10. Shareholders’ Equity / Partners’ Capital When the Company issues common or preferred shares, the Operating Partnership issues an equivalent number of units of partnership interest of a corresponding class to AH4R, with the Operating Partnership receiving the net proceeds from the share issuances. At-the-Market Common Share Offering Program In June 2020, the Company extended its at-the-market common share offering program under which we can issue Class A common shares from time to time through various sales agents up to an aggregate gross sales offering price of $ 500.0 million (the “At-the-Market Program”). The At-the-Market Program also provides that we may enter into forward contracts for our Class A common shares with forward sellers and forward purchasers. The Company intends to use any net proceeds from the At-the-Market Program (i) to repay indebtedness the Company has incurred or expects to incur under its revolving credit facility, (ii) to develop new single-family properties and communities, (iii) to acquire and renovate single-family properties and for related activities in accordance with the Company’s business strategy and (iv) for working capital and general corporate purposes, including repurchases of the Company’s securities, acquisitions of additional properties, capital expenditures and the expansion, redevelopment and/or improvement of properties in the Company’s portfolio. The At-the-Market Program may be suspended or terminated by the Company at any time. As of June 30, 2020, no shares have been issued under the At-the-Market Program and $ 500.0 million remained available for future share issuances. Share Repurchase Program The Company’s board of trustees authorized the establishment of our share repurchase program, authorizing the repurchase of up to $ 300.0 million of our outstanding Class A common shares and up to $ 250.0 million of our outstanding preferred shares from time to time in the open market or in privately negotiated transactions. The program does not have an expiration date, but may be suspended or discontinued at any time without notice. All repurchased shares are constructively retired and returned to an authorized and unissued status. The Operating Partnership funds the repurchases and constructively retires an equivalent number of corresponding Class A units. During the six months ended June 30, 2020 and 2019, we did not repurchase and retire any of our shares. As of June 30, 2020, we had a remaining repurchase authorization of up to $ 265.1 million of our outstanding Class A common shares and up to $ 250.0 million of our outstanding preferred shares under the program. 22 Preferred Shares As of June 30, 2020 and December 31, 2019, the Company had the following series of preferred shares outstanding (in thousands, except share data): June 30, 2020 December 31, 2019 Series Issuance Date Earliest Redemption Date Dividend Rate Outstanding Shares Current Liquidation Value Outstanding Shares Current Liquidation Value Series D perpetual preferred shares 5/24/2016 5/24/2021 6.500 % 10,750,000 $ 268,750 10,750,000 $ 268,750 Series E perpetual preferred shares 6/29/2016 6/29/2021 6.350 % 9,200,000 230,000 9,200,000 230,000 Series F perpetual preferred shares 4/24/2017 4/24/2022 5.875 % 6,200,000 155,000 6,200,000 155,000 Series G perpetual preferred shares 7/17/2017 7/17/2022 5.875 % 4,600,000 115,000 4,600,000 115,000 Series H perpetual preferred shares 9/19/2018 9/19/2023 6.250 % 4,600,000 115,000 4,600,000 115,000 Total preferred shares 35,350,000 $ 883,750 35,350,000 $ 883,750 Distributions The Company’s board of trustees declared the following distributions during the respective quarters. The Operating Partnership funds the payment of distributions, and the board of trustees declared an equivalent amount of distributions on the corresponding Operating Partnership units. For the Three Months Ended Security June 30, 2020 March 31, 2020 June 30, 2019 March 31, 2019 Class A and Class B common shares $ 0.05 $ 0.05 $ 0.05 $ 0.05 6.500% Series D perpetual preferred shares 0.41 0.41 0.41 0.41 6.350% Series E perpetual preferred shares 0.40 0.40 0.40 0.40 5.875% Series F perpetual preferred shares 0.37 0.37 0.37 0.37 5.875% Series G perpetual preferred shares 0.37 0.37 0.37 0.37 6.250% Series H perpetual preferred shares 0.39 0.39 0.39 0.39 Noncontrolling Interest Noncontrolling interest as reflected in the Company’s condensed consolidated balance sheets primarily consists of the interests held by former American Homes 4 Rent, LLC (“AH LLC”) members in units in the Operating Partnership. Former AH LLC members owned 51,429,990 , or approximately 14.6 %, of the total 353,174,998 and 352,769,654 Class A units in the Operating Partnership as of June 30, 2020 and December 31, 2019, respectively. Noncontrolling interest also includes interests held by non-affiliates in Class A units in the Operating Partnership. Non-affiliate Class A unitholders owned 596,990 , or approximately 0.2 %, of the total 353,174,998 and 352,769,654 Class A units in the Operating Partnership as of June 30, 2020 and December 31, 2019, respectively. The Operating Partnership units owned by former AH LLC members and non-affiliates reflected as noncontrolling interest in the Company’s condensed consolidated balance sheets are reflected as limited partner capital in the Operating Partnership’s condensed consolidated balance sheets. Note 11. Share-Based Compensation 2012 Equity Incentive Plan The Company’s employees are compensated through the Operating Partnership, including share-based compensation. When the Company issues Class A common shares under the 2012 Equity Incentive Plan (the “Plan”), the Operating Partnership issues an equivalent number of Class A units to AH4R and non-management members of our board of trustees. Restricted stock units (“RSUs”) granted to employees during the six months ended June 30, 2020 vest over a three-year service period, and stock options and RSUs granted to employees during the six months ended June 30, 2019 vest over a four-year service period. RSUs granted to non-management trustees vest over a one-year service period. Stock options granted during the six months ended June 30, 2019 expire 10 years from the date of grant. 23 The following table summarizes stock option activity under the Plan for the six months ended June 30, 2020 and 2019: For the Six Months Ended June 30, 2020 June 30, 2019 Options outstanding at beginning of period 1,529,800 2,252,275 Granted — 20,000 Exercised ( 255,550 ) ( 650,375 ) Forfeited ( 2,850 ) ( 12,350 ) Options outstanding at end of period 1,271,400 1,609,550 Options exercisable at end of period 1,124,800 1,240,400 The following table summarizes RSU activity under the Plan for the six months ended June 30, 2020 and 2019: For the Six Months Ended June 30, 2020 June 30, 2019 RSUs outstanding at beginning of period 599,109 372,375 Units awarded 461,279 343,334 Units vested ( 206,597 ) ( 110,900 ) Units forfeited ( 39,995 ) ( 8,700 ) RSUs outstanding at end of period 813,796 596,109 The Company’s noncash share-based compensation expense relating to corporate administrative employees is included in general and administrative expense and the noncash share-based compensation expense relating to centralized and field property management employees is included in property management expenses. The following table summarizes the activity that relates to the Company’s noncash share-based compensation expense for the three and six months ended June 30, 2020 and 2019 (in thousands): For the Three Months Ended For the Six Months Ended June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 General and administrative expense $ 1,649 $ 923 $ 3,018 $ 1,582 Property management expenses 441 346 880 639 Total noncash share-based compensation expense $ 2,090 $ 1,269 $ 3,898 $ 2,221 24 Note 12. Earnings per Share / Unit American Homes 4 Rent The following table reflects the Company’s computation of net income per common share on a basic and diluted basis for the three and six months ended June 30, 2020 and 2019 (in thousands, except share and per share data): For the Three Months Ended For the Six Months Ended June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Numerator: Net income $ 31,807 $ 40,304 $ 69,334 $ 73,395 Less: Noncontrolling interest 2,656 4,004 6,157 7,030 Dividends on preferred shares 13,782 13,782 27,564 27,564 Allocation to participating securities (1) 42 45 96 75 Numerator for income per common share–basic and diluted $ 15,327 $ 22,473 $ 35,517 $ 38,726 Denominator: Weighted-average common shares outstanding–basic 301,011,545 299,466,526 300,912,307 298,157,413 Effect of dilutive securities: Share-based compensation plan (2) 400,698 524,558 446,462 519,375 Weighted-average common shares outstanding–diluted (3) 301,412,243 299,991,084 301,358,769 298,676,788 Net income per common share: Basic $ 0.05 $ 0.08 $ 0.12 $ 0.13 Diluted $ 0.05 $ 0.08 $ 0.12 $ 0.13 (1) Unvested restricted stock units that have nonforfeitable rights to participate in dividends declared on common stock are accounted for as participating securities and reflected in the calculation of basic and diluted earnings per share using the two-class method. (2) Reflects the effect of potentially dilutive securities issuable upon the assumed exercise of stock options. (3) The effect of the potential conversion of OP units is not reflected in the computation of basic and diluted earnings per share, as they are exchangeable for Class A common shares on a one -for-one basis. The income allocable to the OP units is allocated on this same basis and reflected as noncontrolling interest in the accompanying condensed consolidated financial statements. As such, the assumed conversion of the OP units would have no net impact on the determination of diluted earnings per share. 25 American Homes 4 Rent, L.P. The following table reflects the Operating Partnership’s computation of net income per common unit on a basic and diluted basis for the three and six months ended June 30, 2020 and 2019 (in thousands, except unit and per unit data): For the Three Months Ended For the Six Months Ended June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Numerator: Net income $ 31,807 $ 40,304 $ 69,334 $ 73,395 Less: Preferred distributions 13,782 13,782 27,564 27,564 Allocation to participating securities (1) 42 45 96 75 Numerator for income per common unit–basic and diluted $ 17,983 $ 26,477 $ 41,674 $ 45,756 Denominator: Weighted-average common units outstanding–basic 353,038,525 352,363,754 352,939,287 352,183,171 Effect of dilutive securities: Share-based compensation plan (2) 400,698 524,558 446,462 519,375 Weighted-average common units outstanding–diluted 353,439,223 352,888,312 353,385,749 352,702,546 Net income per common unit: Basic $ 0.05 $ 0.08 $ 0.12 $ 0.13 Diluted $ 0.05 $ 0.08 $ 0.12 $ 0.13 (1) Unvested restricted stock units that have nonforfeitable rights to participate in dividends declared on common stock are accounted for as participating securities and reflected in the calculation of basic and diluted earnings per share using the two-class method. (2) Reflects the effect of potentially dilutive securities issuable upon the assumed exercise of stock options. Note 13. Fair Value The carrying amount of rents and other receivables, restricted cash, escrow deposits, prepaid expenses and other assets, and accounts payable and accrued expenses approximate fair value because of the short maturity of these amounts. Our notes receivable are financial instruments classified as Level 3 in the fair value hierarchy as their fair values were estimated using unobservable inputs. We estimated the fair values of the notes receivable by modeling the expected contractual cash flows required under the instruments and discounting them back to their present values using estimates of current market rates. As the estimated current market rates were not substantially different from the discount rates originally applied, the carrying amount of notes receivable, net approximates fair value. Our asset-backed securitizations and revolving credit facility are financial instruments classified as Level 3 in the fair value hierarchy as their fair values were estimated using unobservable inputs. We estimated the fair values of the asset-backed securitizations by modeling the contractual cash flows required under the instruments and discounting them back to their present values using estimates of current market rates. As our revolving credit facility bears interest at a floating rate based on an index plus a spread (see Note 8. Debt), management believes that the carrying value (excluding deferred financing costs) of the revolving credit facility reasonably approximates fair value. Our unsecured senior notes are financial instruments classified as Level 2 in the fair value hierarchy as their fair values were estimated using observable inputs based on the market value of the last trade at the end of the period. 26 The following table displays the carrying values and fair values of our debt instruments as of June 30, 2020 and December 31, 2019 (in thousands): June 30, 2020 December 31, 2019 Carrying Value Fair Value Carrying Value Fair Value AH4R 2014-SFR2 securitization $ 477,329 $ 491,262 $ 479,706 $ 491,302 AH4R 2014-SFR3 securitization 492,175 507,435 495,029 510,486 AH4R 2015-SFR1 securitization 517,486 532,246 519,576 534,531 AH4R 2015-SFR2 securitization 448,810 464,351 450,733 466,558 Total asset-backed securitizations 1,935,800 1,995,294 1,945,044 2,002,877 2028 unsecured senior notes, net 493,984 534,910 493,589 531,870 2029 unsecured senior notes, net 395,145 452,532 394,864 446,728 Total unsecured senior notes, net 889,129 987,442 888,453 978,598 Revolving credit facility 130,000 130,000 — — Total debt $ 2,954,929 $ 3,112,736 $ 2,833,497 $ 2,981,475 Note 14. Related Party Transactions As of June 30, 2020 and December 31, 2019, affiliates owned approximately 14.9 % and 13.6 %, respectively, of the Company’s outstanding Class A common shares. On a fully-diluted basis, affiliates held (including consideration of 635,075 Class B common shares and 51,272,165 Class A units as of June 30, 2020 and December 31, 2019) an approximate 27.4 % and 26.3 % interest as of June 30, 2020 and December 31, 2019, respectively. American Homes 4 Rent As of December 31, 2019, the Company had a $ 4.6 million payable related to accrued common distributions to affiliates, which was included in amounts payable to affiliates on the Company’s condensed consolidated balance sheets. American Homes 4 Rent, L.P. As of June 30, 2020, the Operating Partnership had a receivable from affiliates of $ 25.7 million related to the asset-backed securitization certificates held by AH4R, which was included in amounts due from affiliates on the Operating Partnership’s condensed consolidated balance sheets. As of December 31, 2019, the Operating Partnership had a receivable from affiliates of $ 25.7 million related to the asset-backed securitization certificates held by AH4R, which was included in amounts due from affiliates on the Operating Partnership’s condensed consolidated balance sheets, and had a $ 4.6 million payable related to accrued common distributions to affiliates, which was included in amounts payable to affiliates on the Operating Partnership’s condensed consolidated balance sheets. Note 15. Commitments and Contingencies As of June 30, 2020, the Company had commitments to acquire 72 single-family properties for an aggregate purchase price of $ 20.8 million, as well as $ 55.6 million in purchase commitments that relate to both third-party developer agreements and land for our AMH Development Program. As of December 31, 2019, the Company had commitments to acquire 289 single-family properties for an aggregate purchase price of $ 75.1 million, as well as $ 44.3 million in purchase commitments that relate to both third-party developer agreements and land for our AMH Development Program. As of June 30, 2020 and December 31, 2019, the Company had sales in escrow for approximately 112 and 305 of our single-family properties, respectively, for aggregate selling prices of $ 28.4 million and $ 57.5 million, respectively. As of June 30, 2020 and December 31, 2019, the Company, as a condition for entering into some of its development contracts, had outstanding surety bonds of approximately $ 34.0 million and $ 14.5 million, respectively. We are involved in various legal and administrative proceedings that are incidental to our business. We believe these matters will not have a materially adverse effect on our financial position or results of operations upon resolution. 27 COVID-19 Pandemic The global economy has continued to be severely impacted by the COVID-19 pandemic. We are actively monitoring the impact of the COVID-19 pandemic, which we anticipate will negatively impact our business and results of operations for our third fiscal quarter and likely beyond. The extent to which our operations will be impacted will depend largely on future developments, which are highly uncertain and cannot be accurately predicted, including new information which may emerge concerning the severity of the pandemic and actions by government authorities to contain the pandemic or treat its impact, among other things. Note 16. Subsequent Events Revolving Credit Facility From July 1, 2020 through July 31, 2020, the Company paid down $ 25.0 million under its revolving credit facility, resulting in $ 105.0 million of outstanding borrowings under its revolving credit facility as of July 31, 2020. Subsequent Acquisitions From July 1, 2020 through July 31, 2020, the Company added 157 properties to its portfolio for a total cost of approximately $ 38.8 million, which included 128 newly constructed properties delivered through our AMH Development Program and 29 newly constructed homes acquired from third-party developers through our National Builder Program. Subsequent Dispositions From July 1, 2020 through July 31, 2020, the Company disposed of 91 properties for aggregate net proceeds of approximately $ 20.1 million. Subsequent Joint Venture Activity From July 1, 2020 through July 31, 2020, the Company contributed $ 57.8 million of land and in-process development projects to unconsolidated joint ventures and received $ 46.2 million in cash distributions from unconsolidated joint ventures in respect of its contributions. 28