What changed in this filing

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Item 1. Business

2021-02-26 compared with 2020-02-28 · 77 added, 29 removed, 180 unchanged (37% of the section changed)

4 unchanged sentences

We commenced operations in November 2012.

AH4R is the general partner of, and as of December 31, 2019 , owned approximately 85.2% of the common partnership interest in the Operating Partnership with the remaining 14.8% of the common partnership interest owned by limited partners.

AH4R is the general partner of, and as of December 31, 2020 owned approximately 85.9% of the common partnership interest in, the Operating Partnership.

The remaining 14.1% 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.

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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 an amount due from affiliates by the Operating Partnership.

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.

17 unchanged sentences

federal income taxes has been included for the Operating Partnership.

Our principal executive office is located at 30601 Agoura Road, Suite 200, Agoura Hills, California 91301.

Our principal executive office is located at 23975 Park Sorrento, Suite 300, Calabasas, California 91302.

Our main telephone number is (805) 413-5300.

4 unchanged sentences

We believe we can achieve this objective by pursuing the following strategies:

Secure early-mover advantage and position us as a dominant owner/operator of single-family rental properties.

• Maintain early-mover advantage and position us as a dominant owner/operator of single-family rental properties.

Historically, the single-family home rental market has been extremely fragmented, comprised primarily of private and individual property investors in local markets.

13 unchanged sentences

Not all of the homes we acquire through traditional channels meet all of these criteria, especially if acquired as part of a bulk purchase.

In addition to our traditional MLS acquisition channel, we have increasingly been acquiring newly constructed homes from third-party developers through our National Builder Program.

Build a one-of-a-kind internal development program.

In addition to our traditional MLS acquisition channel, we continue to acquire newly constructed homes from third-party developers through our National Builder Program.

• Expand our one-of-a-kind internal development program.

We are increasingly focused on developing “built-for-rental” homes through our internal AMH Development Program, which we believe represents the best investment on a risk-adjusted return basis.

2 unchanged sentences

Our inventory of land holdings and future acquisitions will allow us to sustain our projected stabilized level of development over the next several years.

Assemble a geographically diversified portfolio.

• Maintain a geographically diversified portfolio.

We monitor and manage the diversification of our portfolio in order to reduce the risks associated with adverse developments affecting a particular market.

27 unchanged sentences

We are increasingly focused on developing “built-for-rental” homes through our internal AMH Development Program and acquiring newly constructed homes from third-party developers through our National Builder Program in target markets in selected sub-markets of MSAs.

Rental homes developed through internal construction channels involve substantial up-front costs, time to acquire and develop land, and time to build the rental homes before the homes generate income.

This process is dependent upon the availability of suitable land assets, the nature of each lot acquired, and the inventory of newly constructed homes and homes currently under construction.

The development timeline varies primarily due to land development requirements.

Rental homes developed through our AMH Development Program involve substantial up-front costs, time to acquire and develop land, time to build the rental home, and time to lease the rental home before the home generates income.

This process is dependent upon the availability of suitable land assets and the nature of each lot acquired.

Rental homes acquired from third-party developers through our National Builder Program are dependent on the inventory of newly constructed homes and homes currently under construction.

For our AMH Development Program, the development timeline varies primarily due to land development requirements.

Once land development requirements have been met, on average it takes approximately four to six months to complete the rental home vertical construction process.

Our internal AMH Development Program is managed by our team of development professionals that oversee the full rental home construction process including all land development and work performed by subcontractors.

Homes added via new construction channels are available for lease immediately upon or shortly after receipt of a certificate of occupancy.

However, delivery of homes may be staged to account for delays in demand.

Our AMH Development Program is managed by our team of development professionals that oversee the full rental home construction process including all land development and work performed by subcontractors.

Homes added through our AMH Development Program are available for lease immediately upon or shortly after receipt of a certificate of occupancy.

On average, it takes approximately 20 to 40 days to lease a property after its development.

12 unchanged sentences

This team focuses on maximizing the benefit of our investment in property renovation.

Once a home is acquired, if it is not occupied, we promptly begin the renovation process, during which each property is thoroughly evaluated.

Any resulting work is presented for bid to approved contractors in each of our markets.

Once a home is acquired, if it is not occupied, we promptly begin the renovation process, during which the property is thoroughly evaluated.

Any resulting work is presented for bid to approved contractors, which we maintain in each of our markets.

We have negotiated substantial quantity discounts in each of our markets for products that we regularly use during the renovation process, such as paint, window blinds and flooring.

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We advertise the available properties through multiple channels, including our website, online marketplaces, MLS, yard signs and local brokers.

The majority of our homes are shown using technology-driven “self-guided” showings.

Substantially all of our homes are shown using technology-driven “self-guided” showings.

Prospective tenants may submit an application through our website or in person.

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Tenants’ charges and payment history are available to tenants online through the tenant portal.

Tenants who do not pay rent by the late payment date (typically within five calendar days of the due date) will receive notification and are assessed a late fee.

Tenants who do not pay rent by the late payment date (typically within five calendar days of the due date) will receive notification and are assessed a late fee, in jurisdictions where allowable.

Eviction is a last resort, and the eviction process is managed in compliance with local and state regulations.

1 unchanged sentence

• Tenant Relations and Property Maintenance.

We also are responsible for property repairs and maintenance and tenant relations.

We offer a 24/7 emergency line to handle after-hours issues, and our tenants can contact us through our local property management office or call center.

We also are responsible for most property repairs and maintenance and tenant relations.

Our tenants can request maintenance through our online website, our 24/7 emergency line to handle after-hours issues, or through our local property management office or call center.

As part of our ongoing property management, we conduct routine repairs and maintenance as appropriate to maximize long-term rental income and cash flows from our portfolio, and are increasingly performing this work using in-house employees as opposed to third-party vendors.

9 unchanged sentences

The system obtains credit information from a major credit bureau, which is used to evaluate prospective tenant rental applications.

Risk Management

We face various forms of risk in our business ranging from broad economic, housing market and interest rate risks, to more specific factors, such as credit risk related to our tenants, re-leasing of properties and competition for properties.

We believe that the systems and processes developed by our experienced executive team since commencing our operations in November 2012 allow us to monitor, manage and ultimately navigate these risks.

We maintain property, liability and corporate level insurance coverage related to our business, including crime and fidelity, property management errors and omissions, trustees’ and officers’ errors and omissions, cyber liability, employment practice liability and workers’ compensation.

and workers’ compensation.

We believe the policy specifications and insured limits under our insurance program are appropriate and adequate for our business and properties given the relative risk of loss, the cost of the coverage and industry practice.

However, our insurance coverage is subject to substantial deductibles and carveouts, and we will be self-insured up to the amount of such deductibles and carveouts.

See “Risk Factors—Risks Related to Our Business—We are self-insured against many potential losses, and uninsured or underinsured losses relating to properties may adversely affect our financial condition, operating results, cash flows and ability to make distributions on our preferred and common shares” and “Risk Factors—Risks Related to the Real Estate Industry—Environmentally hazardous conditions may adversely affect our financial condition, cash flows and operating results.”

However, our insurance coverage is subject to substantial deductibles and carve-outs, and we will be self-insured up to the amount of such deductibles and carve-outs.

See “Risk Factors—Risks Related to Our Business—We are self-insured against many potential losses, and uninsured or underinsured losses relating to properties may adversely affect our financial condition, operating results, cash flows and ability to make distributions” and “Risk Factors—Risks Related to the Real Estate Industry—Environmentally hazardous conditions may adversely affect our financial condition, cash flows and operating results.”

Competition and Trends in Market Demand

We face competition from different sources in each of our two primary activities:

5 unchanged sentences

However, we believe that our acquisition platform, our extensive in-house property management infrastructure and market knowledge in markets that meet our selection criteria provide us with competitive advantages.

Further, we have benefited from increases in long-term demand primarily due to households accelerating decisions to leave city centers and apartments for suburban, detached single-family homes.

As a result of the COVID-19 pandemic, the work-from-home proliferation has driven further demand as employees have less need to live near city centers and also desire larger living spaces to accommodate working from home.

Our properties are subject to various covenants, laws and ordinances, and certain of our properties are also subject to the rules of the various HOAs where such properties are located.

4 unchanged sentences

We believe that our properties are in substantial compliance with the FHA and other regulations.

Eviction Moratorium

In response to the COVID-19 pandemic, on September 4, 2020, the Centers for Disease Control and Prevention (the “CDC”) issued a federal eviction moratorium that temporarily halts residential evictions of qualifying tenants for nonpayment of rent during the period from September 4, 2020 to December 31, 2020.

On December 27, 2020, the CDC extended the moratorium through January 31, 2021 and on January 29, 2021, the CDC extended the moratorium through March 31, 2021.

We believe that we are in compliance with this moratorium.

We expect vigorous debate and discussion in a number of areas, including residential housing, fiscal policy, monetary policy and healthcare, to continue over the next few years.

However, we cannot be certain if or when any specific proposal or policy might be announced, emerge from committee or be approved by Congress, and, if so, what the effects on us may be.

Environmental Matters

8 unchanged sentences

federal, state and local income tax.

Under the Code, REITs are subject to numerous organizational and operational requirements, including a requirement that they distribute annually at least 90% of their REIT taxable income to their shareholders.

Under the Code, REITs are subject to numerous organizational and operational requirements, including a requirement that they generally distribute annually at least 90% of their REIT taxable income, computed without regard to the dividends paid deduction and any net capital gains to their shareholders.

If AH4R fails to qualify as a REIT in any taxable year and does not qualify for certain statutory relief provisions, our income would be subject to U.S.

3 unchanged sentences

federal income and excise taxes on our undistributed income.

Investment Company Act of 1940

We intend to conduct our operations so that neither we nor any of our subsidiaries are required to register as an investment company under the Investment Company Act of 1940.

Human Capital Management

As of December 31, 2020, we have 1,447 dedicated personnel.

None of our personnel are covered by a collective bargaining agreement.

Our success depends on our employees providing quality service to our residents.

This requires us to attract, retain and grow a skilled and diverse workforce to design and maintain high quality homes.

We are committed to creating and maintaining a great place to work with an inclusive culture, competitive benefits, and opportunities for training and growth.

Our commitment to human capital development is a focus of not just our senior management, but also our board of trustees.

The Human Capital and Compensation Committee of the board of trustees oversees our company’s human capital programs and policies, including with respect to employee retention and development, and regularly meets with senior management to discuss these issues.

Employee Engagement

We recognize employee engagement as a critical factor to our success.

We have developed programs designed to attract and retain our talent, and to identify ways to increase employee engagement and satisfaction across the organization.

To help build a positive culture and employee experience, each year we appoint members to our company’s Employee Council.

This council, led by members of senior management, provides participants with a unique forum to provide feedback from all levels in the organization.

Partnering with a third-party engagement survey company, we also periodically survey all employees to measure and assess employee satisfaction.

All feedback is anonymous and aggregated in a secure system for analysis.

Another important part of engagement is compensating our employees competitively and providing an attractive benefits package.

All full-time employees are eligible for our benefits package including healthcare insurance, a 401(k) retirement plan, paid time off and our employee wellness programs.

During the year ended December 31, 2020, employee turnover was 26.3%.

Diversity, Equity and Inclusion

We champion inclusion and diversity and embrace Valuing Differences as one of our company’s core philosophies.

As of December 31, 2020, approximately 50% of our workforce had participated in our 2 Hour Values Differences Seminar.

All employees will have participated in this training by June 2021.

Our Human Resources department routinely monitors diversity in all employment decisions, including but not limited to hiring and promotions.

The data in the table below reflects our employee diversity as of December 31, 2020.

We believe that women and minority representation is enhanced through our ongoing human capital programs.

Women Minorities

Employees 46% 38%

Management positions 34% 26%

Senior leadership of VP or above 30% 30%

Training and Development

We provide training designed to meet the business and technical skills necessary for our employees to succeed in their roles and to advance their careers in our company.

We provide leadership development training to support our managers and executives and to complement our succession planning efforts.

We provided approximately 71,900 hours of training to employees, an average of 50 hours per employee, during the year ended December 31, 2020.

Meetings with our District and Regional Managers held throughout the year are intentional opportunities to focus on our employee’s leadership and development.

Workplace Safety

The health and safety of our employees is a top priority.

We have implemented company-wide policies that address occupational health and safety concerns, and offer programs that address these topics.

We provide annual safety training for all employees and every employee in a safety-sensitive position is required to complete additional relevant training.

Our OSHA Recordable Incident Rate for 2020 was 1.56.

In response to the COVID-19 pandemic, we established protocols to keep our residents, employees and third-party contractors safe.

Our maintenance team instituted a process to ensure a property was safe to enter, and we also communicated with our employees to ensure they had appropriate personal protective equipment.

All field employees were outfitted with safety gloves, masks and sanitizer to ensure there was no cross-contamination between properties.

We believe that our business and related operating results will be impacted by seasonal factors throughout the year.

5 unchanged sentences

We make available free of charge on or through our website our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports as soon as reasonably practicable after we electronically file the report with or furnish it to the Securities and Exchange Commission (“SEC”).

This information is also available in print to any shareholder who requests it, with any such requests addressed to Investor Relations, American Homes 4 Rent, 30601 Agoura Road, Suite 200, Agoura Hills, CA 91301.

We also make available free of charge on our website our Corporate Governance Guidelines, our Code of Business Conduct and Ethics and the charters of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee of the Company’s board of trustees.

This information is also available in print to any shareholder who requests it, with any such requests addressed to Investor Relations, American Homes 4 Rent, 23975 Park Sorrento, Suite 300, Calabasas, California 91302.

We also make available free of charge on our website our Corporate Governance Guidelines, our Code of Business Conduct and Ethics and the charters of the Audit Committee, Human Capital and Compensation Committee and Nominating and Corporate Governance Committee of the Company’s board of trustees.

We intend to disclose on our website any changes to, or waivers from, our Code of Business Conduct and Ethics.

2 unchanged sentences

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-K

Item 1. Business