What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2020-11-06 compared with 2020-08-07 · 138 added, 126 removed, 466 unchanged (36% of the section changed)

4 unchanged sentences

We commenced operations in November 2012.

As of June 30, 2020, we owned 53,000 single-family properties in selected sub-markets of metropolitan statistical areas (“MSAs”) in 22 states, including 948 properties held for sale, compared to 52,552 single-family properties in 22 states, including 1,187 properties held for sale, as of December 31, 2019, and 52,634 single-family properties in 22 states, including 1,664 properties held for sale as of June 30, 2019.

As of June 30, 2020, we had commitments to acquire an additional 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 June 30, 2020, 50,170, or 96.4%, of our total properties (excluding properties held for sale) were occupied, compared to 48,767, or 94.9%, of our total properties (excluding properties held for sale) as of December 31, 2019, and 49,111, or 96.4%, of our total properties (excluding properties held for sale) as of June 30, 2019.

Also, as of June 30, 2020, the Company had an additional 936 properties held in unconsolidated joint ventures, compared to 808 properties held in unconsolidated joint ventures as of December 31, 2019, and 659 properties held in unconsolidated joint ventures as of June 30, 2019.

As of September 30, 2020, we owned 53,229 single-family properties in selected sub-markets of metropolitan statistical areas (“MSAs”) in 22 states, including 813 properties held for sale, compared to 52,552 single-family properties in 22 states, including 1,187 properties held for sale, as of December 31, 2019, and 52,537 single-family properties in 22 states, including 1,439 properties held for sale as of September 30, 2019.

As of September 30, 2020, we had commitments to acquire an additional 396 single-family properties for an aggregate purchase price of $99.8 million, as well as $65.5 million in purchase commitments that relate to both third-party developer agreements and land for our AMH Development Program.

As of September 30, 2020, 51,090, or 97.5%, of our total properties (excluding properties held for sale) were occupied, compared to 48,767, or 94.9%, of our total properties (excluding properties held for sale) as of December 31, 2019, and 48,868, or 95.6%, of our total properties (excluding properties held for sale) as of September 30, 2019.

Also, as of September 30, 2020, the Company had an additional 1,131 properties held in unconsolidated joint ventures, compared to 808 properties held in unconsolidated joint ventures as of December 31, 2019, and 717 properties held in unconsolidated joint ventures as of September 30, 2019.

Our portfolio of single-family properties, including those held in our unconsolidated joint ventures, is internally managed through our proprietary property management platform.

COVID-19 Business Update

The Company has maintained continuity in business operations since the beginning of the COVID-19 pandemic and produced strong operating results in the second quarter of 2020 demonstrating the flexibility of its technology enabled operating platform and the resiliency of its high-quality, diversified portfolio.

The Company has maintained continuity in business operations since the beginning of the COVID-19 pandemic and produced strong operating results in the third quarter of 2020 demonstrating the flexibility of its technology enabled operating platform and the resiliency of its high-quality, diversified portfolio.

Comprehensive remote working policies remain in place for all corporate and field offices, and operational protocols have been tailored based on state and local mandates to ensure continuity of services, while protecting employees, residents and their families.

Additionally, during the second quarter of 2020, the Company waived late fees and month-to-month lease premiums, halted evictions for nonpayment of rent, and offered zero percent increases on newly signed renewals for leases expiring between April and July 2020.

Driven by shifting housing preferences as households migrate away from city centers and apartments, the Company is experiencing record demand levels and reported its highest ever Same-Home portfolio Average Occupied Days Percentages in June and July 2020 of 96.1% and 96.4%, respectively.

Driven by shifting housing preferences as households migrate away from city centers and apartments, the Company is experiencing record demand levels and reported its highest ever Same-Home portfolio Average Occupied Days Percentages in September and October 2020 of 97.2% and 97.2%, respectively.

Additionally, as the Company entered the third quarter of 2020, it began a socially responsible return to normal operating practices, including the assessment of late fees, in jurisdictions where allowable, and modest renewal increases on expiring leases.

Collections continue to remain resilient with the Company recognizing revenue on 96.5% of its second quarter 2020 rental billings, all of which has been collected in cash through July 2020 without application of any existing resident security deposits or adjustment for deferred payment plans.

As further second quarter 2020 collections are received, the associated revenue will be recognized in the applicable future period.

As we pursue additional collections, we are working closely with delinquent residents on a case-by-case basis to find the resolution that is best for the resident and the Company.

Although minimal to date, workout options may include deferred payment plans which we began offering in June, or, where appropriate, early lease termination.

For the month of July, collections are tracking in line with the second quarter of 2020 as the Company collected 92% of July rents during July 2020, which represents over 99% of second quarter 2020 payment history for the same time frame.

Collections continue to remain resilient.

The Company reported third quarter 2020 rental revenue equivalent to 98.0% of quarterly rental billings, comprised of:

(i) one percentage point of second quarter 2020 rental billings received and recognized in the third quarter and (ii) 97.0% of revenue recognition on third quarter rental billings.

On a cumulative basis through October 2020, we have now received 97.5% of second quarter rental billings and 96.3% of third quarter rental billings, which is consistent with second quarter payment history for the same time frame.

Collections are reported without application of any existing resident security deposits or adjustment for deferred payment plans.

During October 2020, the Company has collected 93.7% of October rents, which represents 101% of second quarter 2020 payment history for the same time frame.

Although the Company has produced strong operating results to date during the COVID-19 pandemic, the extent to which the pandemic will ultimately impact us and our residents will depend on future developments which are highly uncertain.

These include the scope, severity and duration of the pandemic, including potential resurgences, and the direct and indirect economic effects of the pandemic and containment measures, among others.

These include the scope, severity and duration of the pandemic, including resurgences, status of eviction moratoriums, the speed and effectiveness of vaccine and treatment developments and the direct and indirect economic effects of the pandemic and containment measures, among others.

For more information on risks related to COVID-19, see Part II, “Item 1A.

1 unchanged sentence

Key Single-Family Property and Leasing Metrics

The following table summarizes certain key single-family properties metrics as of June 30, 2020:

The following table summarizes certain key single-family properties metrics as of September 30, 2020:

Market Number of Single-Family Properties (1)

27 unchanged sentences

Total/Average 52,416 100.0 % $ 9,836.8 100.0 % $ 187,667 1,987 16.3 2014

(1) Excludes 948 single-family properties held for sale as of June 30, 2020.

(1) Excludes 813 single-family properties held for sale as of September 30, 2020.

(2) Represents 15 markets in 14 states.

The following table summarizes certain key leasing metrics as of June 30, 2020:

The following table summarizes certain key leasing metrics as of September 30, 2020:

Total Single-Family Properties (1)

28 unchanged sentences

Total/Average 96.9 % $ 1,689 12.1 7.1 2.8 %

(1) Leasing information excludes 948 single-family properties held for sale as of June 30, 2020.

(2) For the three months ended June 30, 2020, Average Occupied Days Percentage represents the number of days a property is occupied in the period divided by the total number of days the property is owned during the same period.

(3) For the three months ended June 30, 2020, Average Monthly Realized Rent is calculated as the lease component of rents and other single-family property revenues (i.e., rents from single-family properties) divided by the product of (a) number of properties and (b) Average Occupied Days Percentage, divided by the number of months.

(1) Leasing information excludes 813 single-family properties held for sale as of September 30, 2020.

(2) For the three months ended September 30, 2020, Average Occupied Days Percentage represents the number of days a property is occupied in the period divided by the total number of days the property is owned during the same period after initially being placed in-service.

(3) For the three months ended September 30, 2020, Average Monthly Realized Rent is calculated as the lease component of rents and other single-family property revenues (i.e., rents from single-family properties) divided by the product of (a) number of properties and (b) Average Occupied Days Percentage, divided by the number of months.

For properties partially owned during the period, this is adjusted to reflect the number of days of ownership.

(4) Average Original Lease Term and Average Remaining Lease Term are reflected as of period end.

(5) Represents the percentage change in rent on all non-month-to-month lease renewals and re-leases during the three months ended June 30, 2020, compared to the annual rent of the previously expired non-month-to-month comparable long-term lease for each property.

(5) Represents the percentage change in rent on all non-month-to-month lease renewals and re-leases during the three months ended September 30, 2020, compared to the annual rent of the previously expired non-month-to-month comparable long-term lease for each property.

(6) Represents 15 markets in 14 states.

12 unchanged sentences

Our level of investment activity has fluctuated based on the number of suitable opportunities and the level of capital available to invest.

During the three months ended June 30, 2020, we developed or acquired 440 homes, including 327 newly constructed properties delivered through our AMH Development Program and 113 homes acquired through our National Builder Program and traditional acquisition channel, partially offset by 216 homes sold.

Although we are currently continuing construction activity on our existing pipeline of internally developed built-for-rental homes, subject to compliance with state and local mandates related to COVID-19, given market uncertainties regarding future asset values, we have temporarily suspended our acquisitions through traditional channels and the National Builder Program.

During the three months ended September 30, 2020, we developed or acquired 508 homes, including 400 newly constructed properties delivered through our AMH Development Program and 108 homes acquired through our National Builder Program and traditional acquisition channel, partially offset by 233 homes sold and 46 homes contributed to unconsolidated joint ventures.

We are currently continuing construction activity on our existing pipeline of internally developed built-for-rental homes, subject to compliance with state and local mandates related to COVID-19, and we have resumed acquisitions through our National Builder Program and traditional acquisition channel.

Our properties held for sale were identified based on sub-market analysis, as well as individual property-level operational review.

As of June 30, 2020 and December 31, 2019, there were 948 and 1,187 properties, respectively, classified as held for sale.

As of September 30, 2020 and December 31, 2019, there were 813 and 1,187 properties, respectively, classified as held for sale.

We will continue to evaluate our properties for potential disposition going forward as a normal course of business.

24 unchanged sentences

Our ability to maintain and grow revenues from our existing portfolio of homes will be dependent on our ability to retain tenants and increase rental rates.

Based on our Same-Home population of properties (defined below), the year-over-year increase in Average Monthly Realized Rent per property was 3.1% for the three months ended June 30, 2020, and we experienced turnover rates of 9.3% and 10.9% during the three months ended June 30, 2020 and 2019, respectively.

Based on our Same-Home population of properties, the year-over-year increase in Average Monthly Realized Rent per property was 3.3% for the six months ended June 30, 2020, and we experienced turnover rates of 17.2% and 18.9% during the six months ended June 30, 2020 and 2019, respectively.

In response to the COVID-19 pandemic, we offered zero percent increases on newly signed renewals for leases expiring during the three months ended June 30, 2020.

Based on our Same-Home population of properties (defined below), the year-over-year increase in Average Monthly Realized Rent per property was 2.7% for the three months ended September 30, 2020, and we experienced turnover rates of 9.2% and 10.8% during the three months ended September 30, 2020 and 2019, respectively.

Based on our Same-Home population of properties, the year-over-year increase in Average Monthly Realized Rent per property was 3.1% for the nine months ended September 30, 2020, and we experienced turnover rates of 26.3% and 29.6% during the nine months ended September 30, 2020 and 2019, respectively.

In response to the COVID-19 pandemic, we waived month-to-month lease premiums and offered zero percent increases on newly signed renewal leases between April and July 2020 and then began a socially responsible return to normal operating practices including modest renewal increases on expiring leases.

We monitor the following categories of expenses that we believe most significantly affect our results of operations.

Property Operating Expenses

Once a property is available for lease, which we refer to as “rent-ready,” we incur ongoing property-related expenses which may not be subject to our control.

Once a property is available for lease for the first time, which we refer to as “rent-ready,” we incur ongoing property-related expenses which may not be subject to our control.

These include primarily property taxes, repairs and maintenance (“R&M”), turnover costs, HOA fees (when applicable) and insurance.

12 unchanged sentences

Results of Operations

Net income totaled $31.8 million for the three months ended June 30, 2020, compared to net income of $40.3 million for the three months ended June 30, 2019.

This decrease was primarily attributable to increased uncollectible rents and tenant utility reimbursements related to the COVID-19 pandemic, as well as higher property operating expenses and a reduction in gain on sale of single-family properties and other, net.

Net income totaled $69.3 million for the six months ended June 30, 2020, compared to net income of $73.4 million for the six months ended June 30, 2019.

This decrease was primarily attributable to increased uncollectible rents and tenant utility reimbursements related to the COVID-19 pandemic, as well as higher property operating expenses and a noncash write-down included in other expenses associated with the liquidation of legacy joint ventures, which were acquired as part of the American Residential Properties, Inc.

Net income totaled $40.2 million for the three months ended September 30, 2020, compared to net income of $41.4 million for the three months ended September 30, 2019.

This decrease was primarily attributable to increased uncollectible rents and tenant utility reimbursements related to the COVID-19 pandemic, partially offset by growth in the Company’s portfolio and higher occupancy.

Net income totaled $109.5 million for the nine months ended September 30, 2020, compared to net income of $114.8 million for the nine months ended September 30, 2019.

This decrease was primarily attributable to increased uncollectible rents and tenant utility reimbursements related to the COVID-19 pandemic and a noncash write-down included in other expenses associated with the liquidation of legacy joint ventures, which were acquired as part of the American Residential Properties, Inc.

(“ARPI”) merger in February 2016.

As we continue to grow our portfolio with a portion of our homes still recently developed, acquired and/or renovated, we distinguish our portfolio of homes between Same-Home properties and Non-Same-Home and Other properties in evaluating our operating performance.

We classify a property as Same-Home if it has been stabilized longer than 90 days prior to the beginning of the

earliest period presented under comparison and if it has not been classified as held for sale or taken out of service as a result of a casualty loss, which allows the performance of these properties to be compared between periods.

This decrease was offset in part by growth in the Company’s portfolio and higher occupancy.

operating performance.

We classify a property as Same-Home if it has been stabilized longer than 90 days prior to the beginning of the earliest period presented under comparison and if it has not been classified as held for sale or taken out of service as a result of a casualty loss, which allows the performance of these properties to be compared between periods.

Single-family properties that we acquire individually (i.e., not through a bulk purchase) are classified as either stabilized or non-stabilized.

5 unchanged sentences

Core NOI is a supplemental non-GAAP financial measure that we define as core revenues, which is calculated as total revenues, excluding expenses reimbursed by tenant charge-backs and other revenues, less core property operating expenses, which is calculated as property operating and property management expenses, excluding noncash share-based compensation expense and expenses reimbursed by tenant charge-backs.

Core NOI also excludes (1) gain or loss on early extinguishment of debt, (2) hurricane-related charges, net, which result in material charges to the impacted single-family properties, (3) gain or loss on sales of single-family properties and other, (4) depreciation and amortization, (5) acquisition and other transaction costs incurred with business combinations and the acquisition or disposition of properties, (6) noncash share-based compensation expense, (7) interest expense, (8) general and administrative expense, (9) other expenses and (10) other revenues.

Core NOI also excludes (1) gain or loss on early extinguishment of debt, (2) hurricane-related charges, net, which result in material charges to the impacted single-family properties, (3) gain or loss on sales of single-family properties and other, (4) depreciation and amortization, (5) acquisition and other transaction costs incurred with business combinations and the acquisition or disposition of properties as well as nonrecurring items unrelated to ongoing operations, (6) noncash share-based compensation expense, (7) interest expense, (8) general and administrative expense, (9) other expenses and (10) other revenues.

We believe Core NOI provides useful information to investors about the operating performance of our single-family properties without the impact of certain operating expenses that are reimbursed through tenant charge-backs.

1 unchanged sentence

Additionally, these metrics should not be used as substitutes for net income or loss or net cash flows from operating activities (as computed in accordance with accounting principles generally accepted in the United States of America (“GAAP”)).

Comparison of the Three Months Ended June 30, 2020 to the Three Months Ended June 30, 2019

The following table presents a summary of Core NOI for our Same-Home properties, Non-Same-Home and Other properties, and total properties for the three months ended June 30, 2020 and 2019 (in thousands):

For the Three Months Ended June 30, 2020

Comparison of the Three Months Ended September 30, 2020 to the Three Months Ended September 30, 2019

The following table presents a summary of Core NOI for our Same-Home properties, Non-Same-Home and Other properties, and total properties for the three months ended September 30, 2020 and 2019 (in thousands):

For the Three Months Ended September 30, 2020

Properties (1)

20 unchanged sentences

Core NOI $ 136,862 62.5 % $ 23,367 60.1 % $ 160,229 62.1 %

For the Three Months Ended June 30, 2019

For the Three Months Ended September 30, 2019

Properties (1)

19 unchanged sentences

(1) Includes 44,862 properties that have been stabilized longer than 90 days prior to January 1, 2019.

(2) As a result of the COVID-19 pandemic, rents from single-family properties were impacted by the Company’s socially responsible decisions to waive month-to-month lease premiums and offer zero percent increases on newly signed renewals for leases expiring throughout the second quarter of 2020.

Fees from single-family properties were also impacted as the Company waived late fees throughout the second quarter of 2020.

(3) Includes $7.0 million and $6.0 million for the total portfolio and Same-Home portfolio, respectively, of increased uncollectible rents related to the COVID-19 pandemic for the second quarter of 2020.

(2) As a result of the COVID-19 pandemic, rents from single-family properties were impacted by the Company’s socially responsible decisions between April and July 2020 to waive month-to-month lease premiums and offer zero percent increases on newly signed renewal leases.

Fees from single-family properties were also impacted as the Company waived late fees between April and July 2020.

(3) Includes increased uncollectible rents related to the COVID-19 pandemic of $2.2 million and $1.9 million for the total portfolio and Same-Home portfolio, respectively, during the third quarter of 2020.

(4) Presented net of tenant charge-backs.

(5) Includes $1.9 million and $1.8 million for the total portfolio and Same-Home portfolio, respectively, of increased uncollectible tenant utility reimbursements and $0.5 million and $0.4 million, respectively, of increased costs associated with enhanced cleaning and safety protocols related to the COVID-19 pandemic for the second quarter of 2020.

(5) Includes increased uncollectible tenant utility reimbursements of $0.7 million and $0.6 million for the total portfolio and Same-Home portfolio, respectively, during the third quarter of 2020.

(6) Presented net of tenant charge-backs and excludes noncash share-based compensation expense related to centralized and field property management employees.

The following are reconciliations of core revenues, Same-Home core revenues, core property operating expenses, Same-Home core property operating expenses, Core NOI and Same-Home Core NOI to their respective GAAP metrics for the three months ended June 30, 2020 and 2019 (amounts in thousands):

For the Three Months Ended

September 30,

Core revenues and Same-Home core revenues

15 unchanged sentences

Net income $ 40,153 $ 41,401

Loss on early extinguishment of debt — 659

Gain on sale of single-family properties and other, net (12,422) (13,521)

10 unchanged sentences

Total Revenues

Total revenues increased 0.4% to $283.1 million for the three months ended June 30, 2020 from $281.9 million for the three months ended June 30, 2019.

Revenue growth was driven by an increase in our average occupied portfolio which grew to 49,600 homes for the three months ended June 30, 2020, compared to 48,989 homes for the three months ended June 30, 2019, as well as higher rental rates, offset by an increase in uncollectible rents and tenant utility reimbursements related to the COVID-19 pandemic.

Total revenues increased 4.2% to $310.8 million for the three months ended September 30, 2020 from $298.3 million for the three months ended September 30, 2019.

Revenue growth was driven by an increase in our average occupied portfolio which grew to 50,630 homes for the three months ended September 30, 2020, compared to 48,990 homes for the three months ended September 30, 2019, as well as higher rental rates, offset by an increase in uncollectible rents and tenant utility reimbursements related to the COVID-19 pandemic.

Property Operating Expenses

Property operating expenses increased 5.6% to $110.4 million for the three months ended June 30, 2020 from $104.6 million for the three months ended June 30, 2019.

This increase was primarily attributable to higher property tax expense and higher repairs and maintenance and turnover costs.

Property operating expenses increased 5.3% to $126.2 million for the three months ended September 30, 2020 from $119.8 million for the three months ended September 30, 2019.

This increase was primarily attributable to higher property tax expense and higher repairs and maintenance and turnover costs as a result of growth in our portfolio.

Property Management Expenses

Property management expenses for the three months ended June 30, 2020 and 2019 were $22.3 million and $21.7 million, respectively, which included $0.4 million and $0.3 million, respectively, of noncash share-based compensation expense related to

centralized and field property management employees.

The increase in property management expenses was primarily attributable to higher personnel costs.

Property management expenses for the three months ended September 30, 2020 and 2019 were $22.0 million and $22.7 million, respectively, which included $0.4 million and $0.4 million, respectively, of noncash share-based compensation expense

related to centralized and field property management employees.

The decrease in property management expenses was primarily attributable to lower employee headcount and lower employee travel and other costs.

Core Revenues from Same-Home Properties

Core revenues from Same-Home properties were $212.0 million for both the three months ended June 30, 2020 and 2019, primarily driven by a 3.1% increase in Average Monthly Realized Rent per property, which increased to $1,678 per month for the three months ended June 30, 2020 compared to $1,627 per month for the three months ended June 30, 2019, offset by an increase in uncollectible rents related to the COVID-19 pandemic.

Additionally, during the three months ended June 30, 2020, core revenues from Same-Home properties were impacted by (i) the Company’s socially responsible decisions to waive month-to-month lease premiums and offer zero percent increases on newly signed renewals for leases expiring throughout the quarter and (ii) waived late fees throughout the quarter.

Core revenues from Same-Home properties increased 3.6% to $219.1 million for the three months ended September 30, 2020 from $211.5 million for the three months ended September 30, 2019 primarily driven by a 2.7% increase in Average Monthly Realized Rent per property, which increased to $1,686 per month for the three months ended September 30, 2020 compared to $1,642 per month for the three months ended September 30, 2019, as well as a 1.6% increase in Average Occupied Days Percentage, partially offset by an increase in uncollectible rents related to the COVID-19 pandemic.

Core Property Operating Expenses from Same-Home Properties

Core property operating expenses from Same-Home properties consist of direct property operating expenses, net of tenant charge-backs, and property management costs, net of tenant charge-backs, and excludes noncash share-based compensation expense.

Core property operating expenses from Same-Home properties increased 6.1% to $81.7 million for the three months ended June 30, 2020 from $77.0 million for the three months ended June 30, 2019, primarily driven by $2.2 million of incremental costs incurred during the three months ended June 30, 2020 related to the COVID-19 pandemic including enhanced cleaning costs and increased uncollectible tenant utility reimbursements.

Core property operating expenses from Same-Home properties increased 3.0% to $82.3 million for the three months ended September 30, 2020 from $79.9 million for the three months ended September 30, 2019, primarily driven by annual growth in property tax expense and higher R&M and turnover costs, net, which includes $0.6 million of increased uncollectible tenant utility reimbursements related to the COVID-19 pandemic during the three months ended September 30, 2020, partially offset by lower property management expenses, net.

General and Administrative Expense

General and administrative expense primarily consists of corporate payroll and personnel costs, federal and state taxes, trustees’ and officers’ insurance expense, audit and tax fees, trustee fees and other expenses associated with our corporate and administrative functions.

General and administrative expense for the three months ended June 30, 2020 and 2019 was $11.5 million and $10.5 million, respectively, which included $1.6 million and $0.9 million, respectively, of noncash share-based compensation expense related to corporate administrative employees.

The increase in general and administrative expense was primarily related to higher noncash share-based compensation expense as well as an increase in state taxes and professional fees.

General and administrative expense for the three months ended September 30, 2020 and 2019 was $12.6 million and $11.1 million, respectively, which included $1.7 million and $0.9 million, respectively, of noncash share-based compensation expense related to corporate administrative employees.

The increase in general and administrative expense was primarily related to higher noncash share-based compensation expense and the timing of legal fees.

Interest Expense

Interest expense decreased 9.3% to $29.6 million for the three months ended June 30, 2020 from $32.6 million for the three months ended June 30, 2019.

This decrease was primarily related to additional capitalized interest during the three months ended June 30, 2020 and the payoff of the term loan facility in June 2019, partially offset by draws on our revolving credit facility during the first six months of 2020.

Interest expense decreased 7.0% to $29.3 million for the three months ended September 30, 2020 from $31.5 million for the three months ended September 30, 2019.

This decrease was primarily related to additional capitalized interest during the three months ended September 30, 2020.

Acquisition and Other Transaction Costs

Acquisition and other transaction costs were $2.0 million and $1.0 million for the three months ended June 30, 2020 and 2019, respectively, which primarily related to costs associated with purchases of single-family properties, including newly constructed properties from third-party builders, as well as costs associated with the disposal of certain properties or portfolios of properties.

Acquisition and other transaction costs were $1.6 million and $0.7 million for the three months ended September 30, 2020 and 2019, respectively, which primarily related to costs associated with purchases of single-family properties, including newly constructed properties from third-party builders, as well as costs associated with the disposal of certain properties or portfolios of properties.

The planned growth in our acquisition program, including an increase in personnel, was the primary driver for the year-over-year increase.

3 unchanged sentences

Our intangible assets are amortized on a straight-line basis over the asset’s estimated economic useful life.

Depreciation and amortization expense increased 2.4% to $84.8 million for the three months ended June 30, 2020 from $82.8 million for the three months ended June 30, 2019 primarily due to growth in our average number of depreciable properties.

Depreciation and amortization expense increased 6.0% to $87.0 million for the three months ended September 30, 2020 from $82.1 million for the three months ended September 30, 2019 primarily due to growth in our average number of depreciable properties.

Other Revenues

Other revenues were $2.4 million and $1.9 million for the three months ended June 30, 2020 and 2019, respectively, which primarily related to interest income, fees from unconsolidated joint ventures, and equity in earnings from unconsolidated joint ventures.

Other revenues were $2.9 million and $5.2 million for the three months ended September 30, 2020 and 2019, respectively, which primarily related to interest income, fees from unconsolidated joint ventures, and equity in earnings from unconsolidated joint ventures.

Other Expenses

Other expenses were $1.4 million and $1.5 million for the three months ended June 30, 2020 and 2019, respectively, which primarily related to impairments on properties held for sale and expenses related to joint ventures.

Comparison of the Six Months Ended June 30, 2020 to the Six Months Ended June 30, 2019

The following table presents a summary of Core NOI for our Same-Home properties, Non-Same-Home and Other properties, and total properties for the six months ended June 30, 2020 and 2019 (in thousands):

For the Six Months Ended June 30, 2020

Other expenses were $4.5 million and $2.6 million for the three months ended September 30, 2020 and 2019, respectively, which primarily related to impairments on properties held for sale, expenses related to unconsolidated joint ventures and a net expense of $2.9 million related to a legal matter involving a former employee during the three months ended September 30, 2020.

Comparison of the Nine Months Ended September 30, 2020 to the Nine Months Ended September 30, 2019

The following table presents a summary of Core NOI for our Same-Home properties, Non-Same-Home and Other properties, and total properties for the nine months ended September 30, 2020 and 2019 (in thousands):

For the Nine Months Ended September 30, 2020

Properties (1)

20 unchanged sentences

Core NOI $ 405,954 62.9 % $ 59,717 56.9 % $ 465,671 62.0 %

For the Six Months Ended June 30, 2019

For the Nine Months Ended September 30, 2019

Properties (1)

19 unchanged sentences

(1) Includes 44,862 properties that have been stabilized longer than 90 days prior to January 1, 2019.

Fees from single-family properties were also impacted as the Company waived late fees throughout the second quarter of 2020.

Fees from single-family properties were also impacted as the Company waived late fees between April and July 2020.

(3) Includes increased uncollectible rents related to the COVID-19 pandemic of $9.2 million and $7.9 million for the total portfolio and Same-Home portfolio, respectively, during the nine months ended September 30, 2020.

(4) Presented net of tenant charge-backs.

(5) Includes increased uncollectible tenant utility reimbursements of $2.6 million and $2.4 million and costs associated with enhanced cleaning and safety protocols related to the COVID-19 pandemic of $0.5 million and $0.4 million for the total portfolio and Same-Home portfolio, respectively, during the nine months ended September 30, 2020.

(6) Presented net of tenant charge-backs and excludes noncash share-based compensation expense related to centralized and field property management employees.

The following are reconciliations of core revenues, Same-Home core revenues, core property operating expenses, Same-Home core property operating expenses, Core NOI and Same-Home Core NOI to their respective GAAP metrics for the six months ended June 30, 2020 and 2019 (amounts in thousands):

For the Six Months Ended

The following are reconciliations of core revenues, Same-Home core revenues, core property operating expenses, Same-Home core property operating expenses, Core NOI and Same-Home Core NOI to their respective GAAP metrics for the nine months ended September 30, 2020 and 2019 (amounts in thousands):

For the Nine Months Ended

September 30,

Core revenues and Same-Home core revenues

28 unchanged sentences

Total Revenues

Total revenues increased 2.1% to $572.7 million for the six months ended June 30, 2020 from $561.1 million for the six months ended June 30, 2019.

Revenue growth was driven by an increase in our average occupied portfolio which grew to 49,322 homes for the six months ended June 30, 2020, compared to 48,600 homes for the six months ended June 30, 2019, as well as higher rental rates, offset by an increase in uncollectible rents and tenant utility reimbursements related to the COVID-19 pandemic.

Total revenues increased 2.8% to $883.5 million for the nine months ended September 30, 2020 from $859.4 million for the nine months ended September 30, 2019.

Revenue growth was driven by an increase in our average occupied portfolio which grew to 49,764 homes for the nine months ended September 30, 2020, compared to 48,667 homes for the nine months ended September 30, 2019, as well as higher rental rates, offset by an increase in uncollectible rents and tenant utility reimbursements related to the COVID-19 pandemic.

Property Operating Expenses

Property operating expenses increased 3.2% to $217.9 million for the six months ended June 30, 2020 from $211.3 million for the six months ended June 30, 2019.

This increase was primarily attributable to higher property tax expense and higher repairs and maintenance and turnover costs.

Property operating expenses increased 3.9% to $344.1 million for the nine months ended September 30, 2020 from $331.1 million for the nine months ended September 30, 2019.

This increase was primarily attributable to higher property tax expense and higher repairs and maintenance and turnover costs as a result of growth in our portfolio.

Property Management Expenses

Property management expenses for the six months ended June 30, 2020 and 2019 were $45.5 million and $42.4 million, respectively, which included $0.9 million and $0.6 million, respectively, of noncash share-based compensation expense related to

centralized and field property management employees.

The increase in property management expenses was primarily attributable to higher personnel costs.

Property management expenses for the nine months ended September 30, 2020 and 2019 were $67.5 million and $65.1 million, respectively, which included $1.3 million and $1.0 million, respectively, of noncash share-based compensation expense related to centralized and field property management employees.

The increase in property management expenses was primarily attributable to higher personnel costs, partially offset by lower employee travel costs.

Core Revenues from Same-Home Properties

Core revenues from Same-Home properties increased 2.0% to $428.4 million for the six months ended June 30, 2020 from $420.1 million for the six months ended June 30, 2019, primarily driven by a 3.3% increase in Average Monthly Realized Rent per property, which increased to $1,671 per month for the six months ended June 30, 2020 compared to $1,617 per month for the six months ended June 30, 2019, partially offset by an increase in uncollectible rents related to the COVID-19 pandemic.

Additionally, during the six months ended June 30, 2020, core revenues from Same-Home properties were impacted by (i) the Company’s socially responsible decisions to waive month-to-month lease premiums and offer zero percent increases on newly signed renewals for leases expiring throughout the second quarter of 2020 and (ii) waived late fees throughout the second quarter of 2020.

Core revenues from Same-Home properties increased 2.5% to $645.6 million for the nine months ended September 30, 2020 from $629.6 million for the nine months ended September 30, 2019, primarily driven by a 3.1% increase in Average Monthly Realized Rent per property, which increased to $1,676 per month for the nine months ended September 30, 2020 compared to $1,625 per month for the nine months ended September 30, 2019, as well as a 0.5% increase in Average Occupied Days Percentage, partially offset by an increase in uncollectible rents related to the COVID-19 pandemic.

Additionally, during the nine months ended September 30, 2020, core revenues from Same-Home properties were impacted by (i) the Company’s socially responsible decisions between April and July 2020 to waive month-to-month lease premiums and offer zero percent increases on newly signed renewal leases and (ii) waived late fees between April and July 2020.

Core Property Operating Expenses from Same-Home Properties

Core property operating expenses from Same-Home properties increased 5.0% to $158.2 million for the six months ended June 30, 2020 from $150.6 million for the six months ended June 30, 2019, primarily driven by higher property tax expense and $2.2 million of incremental costs incurred during the three months ended June 30, 2020 related to the COVID-19 pandemic including enhanced cleaning costs and increased uncollectible tenant utility reimbursements.

Core property operating expenses from Same-Home properties increased 4.3% to $239.6 million for the nine months ended September 30, 2020 from $229.7 million for the nine months ended September 30, 2019, primarily driven by annual growth in property tax expense and higher R&M and turnover costs, net, which includes $2.8 million of incremental costs related to the COVID-19 pandemic including increased uncollectible tenant utility reimbursements and enhanced cleaning costs during the nine months ended September 30, 2020.

General and Administrative Expense

General and administrative expense for the six months ended June 30, 2020 and 2019 was $22.8 million and $19.9 million, respectively, which included $3.0 million and $1.6 million, respectively, of noncash share-based compensation expense related to corporate administrative employees.

General and administrative expense for the nine months ended September 30, 2020 and 2019 was $35.3 million and $31.0 million, respectively, which included $4.7 million and $2.5 million, respectively, of noncash share-based compensation expense related to corporate administrative employees.

The increase in general and administrative expense was primarily related to higher noncash share-based compensation expense as well as higher personnel costs and an increase in state taxes.

Interest Expense

Interest expense decreased 8.1% to $59.3 million for the six months ended June 30, 2020 from $64.5 million for the six months ended June 30, 2019.

This decrease was primarily related to additional capitalized interest during the six months ended June 30, 2020 and the payoff of the term loan facility in June 2019, partially offset by the unsecured senior notes issued in late January 2019 and draws on our revolving credit facility during the first six months of 2020.

Interest expense decreased 7.7% to $88.5 million for the nine months ended September 30, 2020 from $96.0 million for the nine months ended September 30, 2019.

This decrease was primarily related to additional capitalized interest during the nine months ended September 30, 2020 and the payoff of the term loan facility in June 2019, partially offset by the unsecured senior notes issued in late January 2019.

Acquisition and Other Transaction Costs

Acquisition and other transaction costs were $4.1 million and $1.8 million for the six months ended June 30, 2020 and 2019, respectively, which primarily related to costs associated with purchases of single-family properties, including newly constructed properties from third-party builders, as well as costs associated with the disposal of certain properties or portfolios of properties.

Acquisition and other transaction costs were $5.7 million and $2.5 million for the nine months ended September 30, 2020 and 2019, respectively, which primarily related to costs associated with purchases of single-family properties, including newly constructed properties from third-party builders, as well as costs associated with the disposal of certain properties or portfolios of properties.

The planned growth in our acquisition program, including an increase in personnel, was the primary driver for the year-over-year increase.

3 unchanged sentences

Our intangible assets are amortized on a straight-line basis over the asset’s estimated economic useful life.

Depreciation and amortization expense increased 2.2% to $167.7 million for the six months ended June 30, 2020 from $164.0 million for the six months ended June 30, 2019 primarily due to growth in our average number of depreciable properties.

Depreciation and amortization expense increased 3.5% to $254.7 million for the nine months ended September 30, 2020 from $246.1 million for the nine months ended September 30, 2019 primarily due to growth in our average number of depreciable properties.

Other Revenues

Other revenues were $4.7 million and $3.5 million for the six months ended June 30, 2020 and 2019, respectively, which primarily related to interest income, fees from unconsolidated joint ventures, and equity in earnings from unconsolidated joint ventures.

Other revenues were $7.5 million and $8.7 million for the nine months ended September 30, 2020 and 2019, respectively, which primarily related to interest income, fees from unconsolidated joint ventures, and equity in earnings from unconsolidated joint ventures.

Other Expenses

Other expenses were $7.5 million and $2.5 million for the six months ended June 30, 2020 and 2019, respectively, which primarily related to impairments on properties held for sale and expenses related to joint ventures.

Also included in other expenses for the six months ended June 30, 2020 was a $4.9 million noncash write-down associated with the liquidation of legacy joint ventures, which were acquired as part of the ARPI merger in February 2016.

Other expenses were $12.0 million and $5.1 million for the nine months ended September 30, 2020 and 2019, respectively, which primarily related to impairments on properties held for sale and expenses related to unconsolidated joint ventures.

Also included in other expenses for the nine months ended September 30, 2020 was a $4.9 million noncash write-down associated with the liquidation of legacy joint ventures, which were acquired as part of the ARPI merger in February 2016, and a net expense of $2.9 million related to a legal matter involving a former employee.

Critical Accounting Policies and Estimates

1 unchanged sentence

Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of our Annual Report on Form 10-K for the year ended December 31, 2019 (the “2019 Annual Report”).

There have been no changes to these policies during the six months ended June 30, 2020.

There have been no changes to these policies during the nine months ended September 30, 2020.

AH4R has elected to be taxed as a REIT for U.S.

25 unchanged sentences

The measurement of a tax benefit for an uncertain tax position that meets the more likely than not threshold is based on a cumulative probability model under which the largest amount of tax benefit recognized is the amount with a greater than 50% likelihood of being realized upon ultimate settlement with the taxing authority having full knowledge of all the relevant information.

As of June 30, 2020, there were no deferred tax assets and liabilities or unrecognized tax benefits recorded by the Company.

As of September 30, 2020, there were no deferred tax assets and liabilities or unrecognized tax benefits recorded by the Company.

We do not anticipate a significant change in unrecognized tax benefits within the next 12 months.

3 unchanged sentences

As of December 31, 2019, AH4R had an NOL for U.S.

federal income tax purposes of an estimated $188.8 million.

federal income tax purposes of $189.1 million.

Once our NOL is fully used, we would be required to increase AH4R’s distributions to comply with REIT distribution requirements and our current policy of distributing approximately all of our REIT taxable income (determined without regard to the deduction for dividends paid).

2 unchanged sentences

Liquidity and Capital Resources

Our liquidity and capital resources as of June 30, 2020 included cash and cash equivalents of $32.0 million.

Additionally, as of June 30, 2020, we had $130.0 million of outstanding borrowings under our revolving credit facility, which provides for maximum borrowings of up to $800.0 million, of which $3.7 million was committed to outstanding letters of credit.

Our liquidity and capital resources as of September 30, 2020 included cash and cash equivalents of $315.8 million.

Additionally, as of September 30, 2020, we had no outstanding borrowings under our revolving credit facility, which provides for maximum borrowings of up to $800.0 million, of which $1.5 million was committed to outstanding letters of credit.

We have no debt maturities, other than recurring principal amortization, until 2024.

10 unchanged sentences

Since we do not know the ultimate severity and length of the COVID-19 pandemic, and thus cannot predict the impact it will have on our tenants and on the debt and equity capital markets, we cannot estimate the ultimate impact it will have on our liquidity and capital resources.

As of July 31, 2020, the Company had cash and cash equivalents of $55.7 million and $105.0 million of outstanding borrowings on its revolving credit facility, with no other changes to total outstanding debt since June 30, 2020.

During July 2020, the Company sold an additional 91 properties generating $20.1 million of net proceeds.

The following table summarizes the Company’s and the Operating Partnership’s cash flows for the six months ended June 30, 2020 and 2019 (in thousands):

For the Six Months Ended

The following table summarizes the Company’s and the Operating Partnership’s cash flows for the nine months ended September 30, 2020 and 2019 (in thousands):

For the Nine Months Ended

September 30,

2020 2019 Change

2 unchanged sentences

Net cash provided by (used for) financing activities 287,589 (73,523) 361,112

Net (decrease) increase in cash, cash equivalents and restricted cash $ (2,874) $ 109,696 $ (112,570)

Net increase in cash, cash equivalents and restricted cash $ 277,908 $ 122,796 $ 155,112

Operating Activities

Our cash flows provided by operating activities, which is our principal source of cash flows, depend on numerous factors, including the occupancy level of our properties, the rental rates achieved on our leases, the collection of rent from our tenants and the level of property operating expenses, property management expenses and general and administrative expenses.

Net cash provided by operating activities decreased $8.3 million, or 2.9%, from $287.5 million for the six months ended June 30, 2019 to $279.2 million for the six months ended June 30, 2020, primarily as a result of changes in operating assets and liabilities , including a decrease in collections on rent and tenant utility reimbursements associated with the COVID-19 pandemic, partially offset by cash flows generated from a larger number of occupied properties and increases in rental rates on lease renewals and re-leasing of our single-family properties.

Net cash provided by operating activities increased $7.0 million, or 1.7%, from $420.4 million for the nine months ended September 30, 2019 to $427.4 million for the nine months ended September 30, 2020, primarily as a result of increased cash flows generated from a larger number of occupied properties and increases in rental rates on lease renewals and re-leasing of our single-family properties, partially offset by a decrease in collections on rent and tenant utility reimbursements associated with the COVID-19 pandemic.

Investing Activities

Net cash used for investing activities increased $152.4 million, or 89.6%, from $170.0 million for the six months ended June 30, 2019 to $322.5 million for the six months ended June 30, 2020, primarily driven by the strategic expansion of our portfolio through traditional acquisition channels, the development of “built-for-rental” homes through our AMH Development Program, and acquiring newly built properties through our National Builder Program using cash generated from operating and financing activities and by recycling capital through the sale of single-family properties.

However, as a result of the COVID-19 pandemic and given the market uncertainty regarding future asset values, the Company has temporarily suspended its acquisitions through traditional channels and the National Builder Program.

The Company plans to continue construction activity, while in compliance with state and local mandates, on its existing pipeline of “built-for-rental” homes through our AMH Development Program.

Net cash used for investing activities increased $213.0 million, or 95.0%, from $224.1 million for the nine months ended September 30, 2019 to $437.1 million for the nine months ended September 30, 2020, primarily driven by the strategic expansion of our portfolio through traditional acquisition channels, the development of “built-for-rental” homes through our AMH Development Program, and acquiring newly built properties through our National Builder Program.

We use cash generated from operating and financing activities and by recycling capital through the sale of single-family properties to invest in this strategic expansion.

The Company has continued construction activity, while in compliance with state and local mandates related to COVID-19, on its existing pipeline of “built-for-rental” homes through our AMH Development Program.

Recurring and other capital expenditures for single-family properties increased as a result of investments in properties to increase future revenues or reduce maintenance expenditures.

The development of “built-for-rental” homes and our property-enhancing capital expenditures may reduce recurring and other capital expenditures on an average per home basis in the future.

These increased cash outflows were offset by additional proceeds from sales of single-family properties and other and additional distributions from unconsolidated joint ventures in respect of property contributions.

Financing Activities

Net cash provided by or used for financing activities increased $48.2 million from $7.8 million of net cash outflows for the six months ended June 30, 2019 to $40.4 million of net cash inflows for the six months ended June 30, 2020, driven by $81.0 million of increased borrowing activity, net of repayments, partially offset by a $31.6 million increase in cash paid for distributions.

The Company received $130.0 million of proceeds from its revolving credit facility, offset by $11.8 million of payments on its asset-backed securitizations, during the six months ended June 30, 2020, compared to $397.9 million of proceeds from unsecured senior notes, net of discount, offset by $350.0 million of payments on its revolving credit and term loan facilities and $10.7 million of payments on its asset-backed securitizations, during the six months ended June 30, 2019.

The Company distributed $80.6 million on a cash basis to share and unit holders during the six months ended June 30, 2020, compared to $49.0 million during the six months ended June 30, 2019, as a result of timing differences in distributions year-over-year.

Net cash provided by or used for financing activities increased $361.1 million from $73.5 million of net cash outflows for the nine months ended September 30, 2019 to $287.6 million of net cash inflows for the nine months ended September 30, 2020, driven by $413.5 million of proceeds from the issuance of Class A common shares, net of share issuance costs, during the nine months ended September 30, 2020, partially offset by $48.8 million of increased debt repayment activity, net of new borrowings, and $0.9 million of increased distributions to share and unit holders compared to the nine months ended September 30, 2019.

During the nine months ended September 30, 2020, the Company borrowed and fully repaid $130.0 million on its revolving credit facility and repaid $17.1 million on its asset-backed securitizations, compared to the nine months ended September 30, 2019 during which the Company received $397.9 million of proceeds from the issuance of unsecured senior notes, net of discount, and repaid $350.0 million on its revolving credit and term loan facilities and $16.3 million on its asset-backed securitizations.

The Company distributed $112.8 million on a cash basis to share and unit holders during the nine months ended September 30, 2020, compared to $111.9 million during the nine months ended September 30, 2019.

Class A Common Share Offering

During the third quarter of 2020, the Company issued 14,950,000 Class A common shares of beneficial interest, $0.01 par value per share, in an underwritten public offering, raising net proceeds of $411.7 million after deducting underwriting discounts and before offering costs of approximately $0.2 million.

The Company used the net proceeds from this offering to repay indebtedness the Company had incurred under its revolving credit facility and intends to use the remaining net proceeds (i) to develop new single-family properties and communities, (ii) to acquire and renovate single-family properties and for related activities in accordance with its business strategy and (iii) for general corporate purposes.

The Operating Partnership issued an equivalent number of corresponding Class A units to AH4R in exchange for the net proceeds from the issuance.

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”).

During the second quarter of 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.

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.

During the three and nine months ended September 30, 2020, the Company issued 86,130 Class A common shares under the At-the-Market Program, raising $2.4 million in gross proceeds before commissions and other expenses of approximately $0.4 million.

As of September 30, 2020, 86,130 shares have been issued under the At-the-Market Program and $497.6 million remained available for future share issuances.

Share Repurchase Program

3 unchanged sentences

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.

During the nine months ended September 30, 2020 and 2019, we did not repurchase and retire any of our shares.

As of September 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.

Distributions

3 unchanged sentences

As of December 31, 2019, AH4R had an NOL for U.S.

federal income tax purposes of an estimated $188.8 million.

federal income tax purposes of $189.1 million.

5 unchanged sentences

Except as described in Note 15.

Commitments and Contingencies to our condensed consolidated financial statements in this report, as of June 30, 2020, there have been no other material changes outside of the ordinary course of business to our other known contractual obligations, which are set forth in the table included in Part II, “Item 7.

Commitments and Contingencies to our condensed consolidated financial statements in this report, as of September 30, 2020, there have been no other material changes outside of the ordinary course of business to our other known contractual obligations, which are set forth in the table included in Part II, “Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2019 Annual Report.

3 unchanged sentences

Core FFO attributable to common share and unit holders is a non-GAAP financial measure that we use as a supplemental measure of our performance.

We compute this metric by adjusting FFO attributable to common share and unit holders for (1) acquisition and other transaction costs incurred with business combinations and the acquisition or disposition of properties, (2) noncash share-based compensation expense, (3) hurricane-related charges, net, which result in material charges to the impacted single-family properties, and (4) gain or loss on early extinguishment of debt.

We compute this metric by adjusting FFO attributable to common share and unit holders for (1) acquisition and other transaction costs incurred with business combinations and the acquisition or disposition of properties as well as nonrecurring items unrelated to ongoing operations, (2) noncash share-based compensation expense, (3) hurricane-related charges, net, which result in material charges to the impacted single-family properties, and (4) gain or loss on early extinguishment of debt.

Adjusted FFO attributable to common share and unit holders is a non-GAAP financial measure that we use as a supplemental measure of our performance.

8 unchanged sentences

Because other REITs may not compute these measures in the same manner, they may not be comparable among REITs.

The following is a reconciliation of the Company’s net income attributable to common shareholders, determined in accordance with GAAP, to FFO attributable to common share and unit holders, Core FFO attributable to common share and unit holders and Adjusted FFO attributable to common share and unit holders for the three and six months ended June 30, 2020 and 2019 (in thousands):

The following is a reconciliation of the Company’s net income attributable to common shareholders, determined in accordance with GAAP, to FFO attributable to common share and unit holders, Core FFO attributable to common share and unit holders and Adjusted FFO attributable to common share and unit holders for the three and nine months ended September 30, 2020 and 2019 (in thousands):

For the Three Months Ended

June 30, For the Six Months Ended

September 30, For the Nine Months Ended

September 30,

2020 2019 2020 2019

6 unchanged sentences

FFO attributable to common share and unit holders $ 99,470 $ 95,505 $ 289,360 $ 284,786

Acquisition and other transaction costs 1,956 970 4,103 1,804

Acquisition, other transaction costs and other (1)

4,541 651 8,644 2,455

Noncash share-based compensation - general and administrative 1,723 938 4,741 2,520

8 unchanged sentences

$ 89,627 $ 83,854 $ 264,721 $ 257,500

(1) Core FFO and Adjusted FFO attributable to common share and unit holders include negative financial impacts associated with the COVID-19 pandemic that relate to (i) the Company’s socially responsible decisions to waive month-to-month lease premiums and offer zero percent increases on newly signed renewals for leases expiring throughout the second quarter of 2020, (ii) waived late fees throughout the second quarter of 2020, and (iii) $9.4 million of other negative financial impacts from the COVID-19 pandemic including $7.0 million of increased uncollectible rents, $1.9 million of increased uncollectible tenant utility reimbursements and $0.5 million of increased costs associated with enhanced cleaning and safety protocols.

Additionally, due to stay-at-home orders during the COVID-19 pandemic, Adjusted FFO attributable to common share and unit holders includes above average levels of HVAC system replacements resulting in $1.3 million of incremental HVAC capital expenditures within the second quarter of 2020.

(1) Included in acquisition, other transaction costs and other is a net $2.9 million nonrecurring expense related to a legal matter involving a former employee during the three months ended September 30, 2020.

(2) Core FFO and Adjusted FFO attributable to common share and unit holders include negative financial impacts associated with the COVID-19 pandemic that relate to (i) the Company’s socially responsible decisions between April and July 2020 to waive month-to-month lease premiums and offer zero percent increases on newly signed renewal leases, (ii) waived late fees between April and July 2020, and (iii) $2.9 million and $12.3 million of other negative financial impacts from the COVID-19 pandemic including $2.2 million and $9.2 million of increased uncollectible rents and $0.7 million and $2.6 million of increased uncollectible tenant utility reimbursements during the three and nine months ended September 30, 2020, respectively.

Also included is $0.5 million of increased costs associated with enhanced cleaning and safety protocols during the nine months ended September 30, 2020.

Additionally, due primarily to abnormally high home system usage during stay-at-home orders, we incurred approximately $2.1 million and $3.4 million of incremental capital expenditures within Adjusted FFO attributable to common share and unit holders that primarily related to HVAC and home system replacements during the three and nine months ended September 30, 2020, respectively.

(3) As a portion of our homes are recently developed, acquired and/or renovated, we estimate recurring capital expenditures for our entire portfolio by multiplying (a) current period actual recurring capital expenditures per Same-Home Property by (b) our total number of properties, excluding newly acquired non-stabilized properties and properties classified as held for sale.

3 unchanged sentences

EBITDAre is a supplemental non-GAAP financial measure, which we calculate in accordance with the definition approved by NAREIT by adjusting EBITDA for the net gain or loss on sales / impairment of single-family properties and other and adjusting for unconsolidated partnerships and joint ventures on the same basis.

Adjusted EBITDAre is a supplemental non-GAAP financial measure calculated by adjusting EBITDAre for (1) acquisition and other transaction costs incurred with business combinations and the acquisition or disposition of properties, (2) noncash share-based compensation expense, (3) hurricane-related charges, net, which result in material charges to the impacted single-family properties, and (4) gain or loss on early extinguishment of debt.

Adjusted EBITDAre is a supplemental non-GAAP financial measure calculated by adjusting EBITDAre for (1) acquisition and other transaction costs incurred with business combinations and the acquisition or disposition of properties as well as nonrecurring items unrelated to ongoing operations, (2) noncash share-based compensation expense, (3) hurricane-related charges, net, which result in material charges to the impacted single-family properties, and (4) gain or loss on early extinguishment of debt.

Fully Adjusted EBITDAre (formerly known as Adjusted EBITDAre after Capex and Leasing Costs) is a supplemental non-GAAP financial measure calculated by adjusting Adjusted EBITDAre for (1) Recurring Capital Expenditures and (2) leasing costs.

We believe these metrics provide useful information to investors because they exclude the impact of various income and expense items that are not indicative of operating performance.

The following is a reconciliation of net income, as determined in accordance with GAAP, to EBITDA, EBITDAre, Adjusted EBITDAre and Fully Adjusted EBITDAre for the three and six months ended June 30, 2020 and 2019 (in thousands):

The following is a reconciliation of net income, as determined in accordance with GAAP, to EBITDA, EBITDAre, Adjusted EBITDAre and Fully Adjusted EBITDAre for the three and nine months ended September 30, 2020 and 2019 (in thousands):

For the Three Months Ended

June 30, For the Six Months Ended

September 30, For the Nine Months Ended

September 30,

2020 2019 2020 2019

8 unchanged sentences

Noncash share-based compensation - property management 447 350 1,327 989

Acquisition and other transaction costs 1,956 970 4,103 1,804

Acquisition, other transaction costs and other (1)

4,541 651 8,644 2,455

Loss on early extinguishment of debt — — — 659

4 unchanged sentences

Fully Adjusted EBITDAre $ 134,972 $ 131,092 $ 401,159 $ 400,699

(2) As a portion of our homes are recently developed, acquired and/or renovated, we estimate recurring capital expenditures for our entire portfolio by multiplying (a) current period actual recurring capital expenditures per Same-Home Property by (b) our total number of properties, excluding newly acquired non-stabilized properties and properties classified as held for sale.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis