What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-11-05 compared with 2021-08-06 · 143 added, 126 removed, 476 unchanged (36% of the section changed)

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We commenced operations in November 2012.

As of June 30, 2021, we owned 54,785 single-family properties in selected sub-markets of metropolitan statistical areas (“MSAs”) in 22 states, including 589 properties held for sale, compared to 53,584 single-family properties in 22 states, including 711 properties held for sale, as of December 31, 2020, and 53,000 single-family properties in 22 states, including 948 properties held for sale as of June 30, 2020.

As of June 30, 2021, 52,645, or 97.1%, of our total properties (excluding properties held for sale) were occupied, compared to 51,271, or 97.0%, of our total properties (excluding properties held for sale) as of December 31, 2020, and 50,170, or 96.4%, of our total properties (excluding properties held for sale) as of June 30, 2020.

Also, as of June 30, 2021, the Company had an additional 1,530 properties held in unconsolidated joint ventures, compared to 1,293 properties held in unconsolidated joint ventures as of December 31, 2020, and 936 properties held in unconsolidated joint ventures as of June 30, 2020.

As of September 30, 2021, we owned 56,077 single-family properties in selected sub-markets of metropolitan statistical areas (“MSAs”) in 22 states, including 604 properties held for sale, compared to 53,584 single-family properties in 22 states, including 711 properties held for sale, as of December 31, 2020, and 53,229 single-family properties in 22 states, including 813 properties held for sale as of September 30, 2020.

As of September 30, 2021, 53,133, or 95.8%, of our total properties (excluding properties held for sale) were occupied, compared to 51,271, or 97.0%, of our total properties (excluding properties held for sale) as of December 31, 2020, and 51,090, or 97.5%, of our total properties (excluding properties held for sale) as of September 30, 2020.

Also, as of September 30, 2021, the Company had an additional 1,729 properties held in unconsolidated joint ventures, compared to 1,293 properties held in unconsolidated joint ventures as of December 31, 2020, and 1,131 properties held in unconsolidated joint ventures as of September 30, 2020.

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 2021 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 2021 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 most 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.

Collections have continued to remain resilient throughout the pandemic with the Company recognizing bad debt on 2.5% of its second quarter 2021 rental billings for its Same-Home portfolio.

Additionally, collections of July 2021 rental billings continue to remain consistent with pandemic payment histories within the same time frame.

Collections remain strong with the Company reporting bad debt equivalent to 1.7% of its third quarter 2021 rental billings for its Same-Home portfolio, which reflects benefits from strengthening underlying collections as well as government rental assistance programs.

The Company has helped its residents access nearly $14 million related to these government assistance programs throughout the course of the pandemic and continues to work with residents on a case-by-case basis.

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 resurgences, new variants or strains, such as the Delta variant, the impact of government regulations, vaccine adoption rates, the effectiveness of vaccines, 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, new variants or strains, such as the Delta variant, the impact of government regulations, vaccine adoption rates (including boosters), the effectiveness of vaccines, employee retention issues resulting from vaccine mandates, 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 I, “Item 1A.

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Key Single-Family Property and Leasing Metrics

The following table summarizes certain key single-family properties metrics as of June 30, 2021:

The following table summarizes certain key single-family properties metrics as of September 30, 2021:

Market Number of Single-Family Properties (1)

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Austin, TX (3)

781 1.4 % 156.4 1.4 % 200,229 1,957 13.0 2015

San Antonio, TX (3)

1,254 2.3 % 225.8 2.1 % 180,099 1,951 13.9 2015

Savannah/Hilton Head, SC 944 1.7 % 177.4 1.6 % 187,872 1,875 13.5 2016

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Total/Average 55,473 100.0 % $ 10,948.6 100.0 % $ 197,368 1,987 16.7 2015

(1) Excludes 589 single-family properties held for sale as of June 30, 2021.

(1) Excludes 604 single-family properties held for sale as of September 30, 2021.

(2) Represents 15 markets in 13 states.

The following table summarizes certain key leasing metrics as of June 30, 2021:

(3) 263 properties were reclassified from Austin, TX to San Antonio, TX during the three months ended September 30, 2021 as a result of property reassignments between district offices.

The following table summarizes certain key leasing metrics as of September 30, 2021:

Total Single-Family Properties (1)

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Total/Average 97.0 % $ 1,809 12.1 6.9 9.0 %

(1) Leasing information excludes 589 single-family properties held for sale as of June 30, 2021.

(2) For the three months ended June 30, 2021, 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 June 30, 2021, 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 604 single-family properties held for sale as of September 30, 2021.

(2) For the three months ended September 30, 2021, 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, 2021, 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, 2021, 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, 2021, 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 13 states.

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Other key factors that impact our results of operations and financial condition include the pace at which we identify and acquire suitable land and properties, the time and cost required to renovate the acquired properties, the pace and cost of our property developments, the time to lease newly acquired or developed properties at acceptable rental rates, occupancy levels, rates of tenant turnover, the length of vacancy in properties between tenant leases, our expense ratios, our ability to raise capital and our capital structure.

Additionally, recent supply chain disruptions, increases in material costs and labor shortages may have an impact on certain aspects of our business, including our AMH Development Program, renovation program associated with recently acquired properties and maintenance program.

Property Acquisitions, Development and Dispositions

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Our ability to identify and acquire homes that meet our investment criteria is impacted by home prices in our target markets, the inventory of properties available-for-sale through traditional acquisition channels, competition for our target assets and our available capital.

We are increasingly focused on developing “built-for-rental” homes through our internal AMH Development Program.

are increasingly focused on developing “built-for-rental” homes through our internal AMH Development Program.

In addition, we also acquire newly constructed homes from third-party developers through our National Builder Program.

Opportunities from these

new construction channels are impacted by the availability of vacant developed lots, development land assets and inventory of homes currently under construction or newly developed.

Opportunities from these new construction channels are impacted by the availability of vacant developed lots, development land assets and inventory of homes currently under construction or newly developed.

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, 2021, we developed or acquired 898 homes, including 256 newly constructed properties delivered through our AMH Development Program and 642 homes acquired through our National Builder Program and traditional acquisition channel, partially offset by 97 homes sold.

During the three months ended September 30, 2021, we developed or acquired 1,382 homes, including 368 newly constructed properties delivered through our AMH Development Program and 1,014 homes acquired through our National Builder Program and traditional acquisition channel, partially offset by 90 homes sold.

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

As of June 30, 2021 and December 31, 2020, there were 589 and 711 properties, respectively, classified as held for sale.

As of September 30, 2021 and December 31, 2020, there were 604 and 711 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.

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The time and cost involved to prepare our homes for rental can impact our financial performance and varies among properties based on several factors, including the source of acquisition channel and age and condition of the property.

On average, it takes approximately 20 to 40 days to complete the renovation process.

On average, it has taken approximately 20 to 40 days to complete the renovation process.

However, as a result of increased acquisition volumes as well as recent construction labor and material constraints, the time to complete the renovation process has increased by 30 days on average.

Our operating results are also impacted by the amount of time it takes to market and lease a property, which can vary greatly among properties, and is impacted by local demand, our marketing techniques and the size of our available inventory.

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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 4.1% for the three months ended June 30, 2021, and we experienced turnover rates of 8.2% and 9.4% during the three months ended June 30, 2021 and 2020, respectively.

Based on our Same-Home population of

properties (defined below), the year-over-year increase in Average Monthly Realized Rent per property was 3.7% for the six months ended June 30, 2021, and we experienced turnover rates of 15.1% and 17.4% during the six months ended June 30, 2021 and 2020, 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 6.2% for the three months ended September 30, 2021, and we experienced turnover rates of 8.9% and 9.2% during the three months ended September 30, 2021 and 2020, respectively.

Based on our Same-Home population of properties (defined below), the year-over-year increase in Average Monthly Realized Rent per property was 4.5% for the nine months ended September 30, 2021, and we experienced turnover rates of 23.9% and 26.6% during the nine months ended September 30, 2021 and 2020, respectively.

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

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Results of Operations

Net income totaled $51.8 million for the three months ended June 30, 2021, compared to net income of $31.8 million for the three months ended June 30, 2020.

This increase was primarily attributable to growth in the Company’s portfolio, higher occupancy and higher rental rates.

Net income totaled $100.7 million for the six months ended June 30, 2021, compared to net income of $69.3 million for the six months ended June 30, 2020.

This increase was primarily attributable to growth in the Company’s portfolio, higher occupancy and higher rental rates, as well as an increase in gain on sale and impairment of single-family properties and other, net, partially offset by increased uncollectible rents related to the COVID-19 pandemic.

Net income totaled $48.5 million for the three months ended September 30, 2021, compared to net income of $40.2 million for the three months ended September 30, 2020.

This increase was primarily attributable to growth in the Company’s portfolio, a larger number of occupied properties and higher rental rates and fees.

Net income totaled $149.2 million for the nine months ended September 30, 2021, compared to net income of $109.5 million for the nine months ended September 30, 2020.

This increase was primarily attributable to growth in the Company’s portfolio, a larger number of occupied properties and higher rental rates and fees, as well as an increase in gain on sale and impairment of single-family properties and other, net, partially offset by increased uncollectible rents related to the COVID-19 pandemic.

Effective March 31, 2021, the Company reclassified certain impairment charges related to homes classified as held for sale from other expenses to gain on sale and impairment of single-family properties and other, net within the condensed consolidated statements of operations.

The Company also reclassified other revenues and the remaining other expenses to other income and expense, net within the condensed consolidated statements of operations.

The reclassification had no impact to net income, core revenues, core property operating expenses, Core NOI, Core FFO and Adjusted FFO attributable to common share and unit holders, Adjusted EBITDAre or Fully Adjusted EBITDAre.

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.

The reclassification had no impact to net income, core revenues, core property operating expenses, Core NOI, Core FFO and Adjusted FFO attributable to common share and unit holders,

Adjusted EBITDAre or Fully Adjusted EBITDAre.

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.

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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, 2021 to the Three Months Ended June 30, 2020

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, 2021 and 2020 (in thousands):

For the Three Months Ended June 30, 2021

Comparison of the Three Months Ended September 30, 2021 to the Three Months Ended September 30, 2020

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, 2021 and 2020 (in thousands):

For the Three Months Ended September 30, 2021

Properties (1)

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Core NOI $ 155,926 63.3 % $ 25,061 61.8 % $ 180,987 63.1 %

For the Three Months Ended June 30, 2020

For the Three Months Ended September 30, 2020

Properties (1)

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(3) 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, 2021 and 2020 (amounts in thousands):

For the Three Months Ended

September 30,

Core revenues and Same-Home core revenues

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Rents and Other Single-Family Property Revenues

Rents and other single-family property revenues increased 11.7% to $313.7 million for the three months ended June 30, 2021 from $280.7 million for the three months ended June 30, 2020.

Revenue growth was driven by an increase in our average occupied portfolio which grew to 52,335 homes for the three months ended June 30, 2021, compared to 49,600 homes for the three months ended June 30, 2020, as well as higher rental rates, higher fees from single-family properties and lower uncollectible rents related to the COVID-19 pandemic.

Rents and other single-family property revenues increased 10.3% to $339.6 million for the three months ended September 30, 2021 from $307.9 million for the three months ended September 30, 2020.

Revenue growth was primarily driven by an increase in our average occupied portfolio which grew to 52,889 homes for the three months ended September 30, 2021, compared to 50,630 homes for the three months ended September 30, 2020, as well as higher rental rates and fees from single-family properties.

Property Operating Expenses

Property operating expenses increased 5.6% to $116.6 million for the three months ended June 30, 2021 from $110.4 million for the three months ended June 30, 2020.

Property operating expenses increased 6.8% to $134.7 million for the three months ended September 30, 2021 from $126.2 million for the three months ended September 30, 2020.

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

Property Management Expenses

Property management expenses for the three months ended June 30, 2021 and 2020 were $22.4 million and $22.3 million, respectively, which included $0.6 million and $0.4 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 noncash share-based compensation expense.

Property management expenses for the three months ended September 30, 2021 and 2020 were $24.6 million and $22.0 million, respectively, which included $0.7 million and $0.4 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 and higher noncash share-based compensation expense.

Core Revenues from Same-Home Properties

Core revenues from Same-Home properties increased 8.3% to $240.7 million for the three months ended June 30, 2021 from $222.1 million for the three months ended June 30, 2020 primarily driven by a 4.1% increase in Average Monthly Realized Rent per property, which increased to $1,752 per month for the three months ended June 30, 2021 compared to $1,683 per month for the three months ended June 30, 2020, a 2.4% increase in Average Occupied Days Percentage, higher fees from single-family properties and lower uncollectible rents related to the COVID-19 pandemic.

Core revenues from Same-Home properties increased 7.3% to $246.3 million for the three months ended September 30, 2021 from $229.6 million for the three months ended September 30, 2020 primarily driven by a 6.2% increase in Average Monthly Realized Rent per property, which increased to $1,794 per month for the three months ended September 30, 2021 compared to $1,690 per month for the three months ended September 30, 2020, a 0.4% increase in Average Occupied Days Percentage and higher fees from single-family properties.

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 2.2% to $87.0 million for the three months ended June 30, 2021 from $85.2 million for the three months ended June 30, 2020 primarily driven by annual growth in property tax expense, partially offset by lower property management expenses, net.

Core property operating expenses from Same-Home properties increased 5.7% to $90.4 million for the three months ended September 30, 2021 from $85.5 million for the three months ended September 30, 2020 primarily driven by annual growth in property tax expense, higher R&M and turnover costs, net and higher 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, 2021 and 2020 was $12.8 million and $11.5 million, respectively, which included $1.8 million and $1.6 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 personnel costs and higher professional fees.

General and administrative expense for the three months ended September 30, 2021 and 2020 was $12.6 million in each period, which included $1.6 million and $1.7 million, respectively, of noncash share-based compensation expense related to corporate administrative employees.

Interest Expense

Interest expense decreased 6.9% to $27.5 million for the three months ended June 30, 2021 from $29.6 million for the three months ended June 30, 2020.

This decrease was primarily related to additional capitalized interest during the three months ended June 30, 2021 related to an increase in our development activities under our AMH Development Program.

Interest expense increased 6.3% to $31.1 million for the three months ended September 30, 2021 from $29.3 million for the three months ended September 30, 2020.

This increase was primarily due to additional interest from the issuance of the 2031 and 2051 unsecured senior notes during July 2021 and higher borrowings on the revolving credit facility during the three months ended September 30, 2021, partially offset by additional capitalized interest during the three months ended September 30, 2021 related to an increase in our development activities under our AMH Development Program.

Acquisition and Other Transaction Costs

Acquisition and other transaction costs consists primarily of costs associated with purchases of single-family properties, including newly constructed properties from third-party builders, the development of single-family properties, or the disposal of certain properties or portfolios of properties which do not qualify for capitalization.

Acquisition and other transaction costs were $3.0 million and $2.0 million for the three months ended June 30, 2021 and 2020, respectively, which included $0.7 million of noncash share-based compensation expense related to employees in these functions during the three months ended June 30, 2021.

The increase in acquisition and other transaction costs was primarily related to higher noncash share-based compensation expense.

Acquisition and other transaction costs were $3.3 million and $1.6 million for the three months ended September 30, 2021 and 2020, respectively, which included $0.8 million of noncash share-based compensation expense related to employees in these functions during the three months ended September 30, 2021.

The increase in acquisition and other transaction costs was primarily related to higher acquisition costs associated with the growth of our portfolio as well as higher noncash share-based compensation expense.

Depreciation and Amortization

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

Depreciation and amortization expense increased 7.4% to $91.1 million for the three months ended June 30, 2021 from $84.8 million for the three months ended June 30, 2020 primarily due to growth in our average number of depreciable properties.

Depreciation and amortization expense increased 8.6% to $94.5 million for the three months ended September 30, 2021 from $87.0 million for the three months ended September 30, 2020 primarily due to growth in our average number of depreciable properties.

Gain on Sale and Impairment of Single-Family Properties and Other, net

Gain on sale and impairment of single-family properties and other, net was $10.8 million and $10.0 million for the three months ended June 30, 2021 and 2020, respectively, which included $0.2 million and $0.7 million of impairment charges, respectively, related to homes classified as held for sale during each period.

The increase was primarily related to higher net gains from property sales as well as lower impairment charges.

Gain on sale and impairment of single-family properties and other, net was $9.6 million and $12.2 million for the three months ended September 30, 2021 and 2020, respectively, which included zero and $0.2 million of impairment charges, respectively, related to homes classified as held for sale during each period.

The decrease was primarily related to lower net gains from property sales.

Other Income and Expense, net

Other income and expense, net was $0.8 million and $1.7 million for the three months ended June 30, 2021 and 2020, respectively, which primarily related to interest income, fees from unconsolidated joint ventures, equity in earnings from unconsolidated joint ventures, partially offset by expenses related to unconsolidated joint ventures.

Comparison of the Six Months Ended June 30, 2021 to the Six Months Ended June 30, 2020

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, 2021 and 2020 (in thousands):

For the Six Months Ended June 30, 2021

Included in other income and expense, net was $0.1 million of net other income and $1.4 million of net other expenses for the three months ended September 30, 2021 and 2020, respectively, which primarily related to interest income, fees from unconsolidated joint ventures, and equity in income (losses) from unconsolidated joint ventures, partially offset by expenses related to unconsolidated joint ventures and other nonrecurring expenses.

Also included in other income and expense, net for the three months ended September 30, 2020 was a net expense of $2.9 million related to a legal matter involving a former employee.

Comparison of the Nine Months Ended September 30, 2021 to the Nine Months Ended September 30, 2020

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, 2021 and 2020 (in thousands):

For the Nine Months Ended September 30, 2021

Properties (1)

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Core NOI $ 460,684 64.0 % $ 66,741 61.1 % $ 527,425 63.6 %

For the Six Months Ended June 30, 2020

For the Nine Months Ended September 30, 2020

Properties (1)

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(3) 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, 2021 and 2020 (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, 2021 and 2020 (amounts in thousands):

For the Nine Months Ended

September 30,

Core revenues and Same-Home core revenues

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Rents and Other Single-Family Property Revenues

Rents and other single-family property revenues increased 10.2% to $626.2 million for the six months ended June 30, 2021 from $568.0 million for the six months ended June 30, 2020.

Revenue growth was primarily driven by an increase in our average occupied portfolio which grew to 51,980 homes for the six months ended June 30, 2021, compared to 49,322 homes for the six months ended June 30, 2020, as well as higher rental rates and higher fees from single-family properties, partially offset by an increase in uncollectible rents related to the COVID-19 pandemic.

Rents and other single-family property revenues increased 10.3% to $965.8 million for the nine months ended September 30, 2021 from $876.0 million for the nine months ended September 30, 2020.

Revenue growth was primarily driven by an increase in our average occupied portfolio which grew to 52,269 homes for the nine months ended September 30, 2021, compared to 49,764 homes for the nine months ended September 30, 2020, as well as higher rental rates and fees from single-family properties, partially offset by an increase in uncollectible rents related to the COVID-19 pandemic.

Property Operating Expenses

Property operating expenses increased 8.0% to $235.3 million for the six months ended June 30, 2021 from $217.9 million for the six months ended June 30, 2020.

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

Property operating expenses increased 7.5% to $370.0 million for the nine months ended September 30, 2021 from $344.1 million for the nine months ended September 30, 2020.

This increase was primarily attributable to higher property tax expense, HOA fees, R&M and turnover costs and insurance costs as a result of growth in our portfolio.

Property Management Expenses

Property management expenses for the six months ended June 30, 2021 and 2020 were $46.1 million and $45.5 million, respectively, which included $1.6 million and $0.9 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 noncash share-based compensation expense and higher personnel costs, partially offset by lower employee travel and office costs and lower recoverable expenses for tenant utilities.

Property management expenses for the nine months ended September 30, 2021 and 2020 were $70.7 million and $67.5 million, respectively, which included $2.3 million and $1.3 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 and higher noncash share-based compensation expense.

Core Revenues from Same-Home Properties

Core revenues from Same-Home properties increased 6.2% to $476.0 million for the six months ended June 30, 2021 from $448.2 million for the six months ended June 30, 2020 primarily driven by a 3.7% increase in Average Monthly Realized Rent per property, which increased to $1,737 per month for the six months ended June 30, 2021 compared to $1,675 per month for the six months ended June 30, 2020, a 2.2% increase in Average Occupied Days Percentage and higher fees from single-family properties, partially offset by an increase in uncollectible rents related to the COVID-19 pandemic.

Core revenues from Same-Home properties increased 6.6% to $720.0 million for the nine months ended September 30, 2021 from $675.4 million for the nine months ended September 30, 2020 primarily driven by a 4.5% increase in Average Monthly Realized Rent per property, which increased to $1,756 per month for the nine months ended September 30, 2021 compared to $1,680 per month for the nine months ended September 30, 2020, a 1.6% increase in Average Occupied Days Percentage and higher fees from single-family properties, 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 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 3.0% to $170.0 million for the six months ended June 30, 2021 from $165.0 million for the six months ended June 30, 2020 primarily driven by annual growth in property tax expense.

Core property operating expenses from Same-Home properties increased 3.9% to $259.3 million for the nine months ended September 30, 2021 from $249.6 million for the nine months ended September 30, 2020 primarily driven by annual growth in property tax expense, higher HOA fees, net and higher R&M and turnover costs, net.

General and Administrative Expense

General and administrative expense for the six months ended June 30, 2021 and 2020 was $28.0 million and $22.8 million, respectively, which included $6.2 million and $3.0 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 driven by retirement provisions that resulted in accelerated expense recognition for retirement eligible employees during the six months ended June 30, 2021, as well as higher personnel costs and higher professional fees.

General and administrative expense for the nine months ended September 30, 2021 and 2020 was $40.6 million and $35.3 million, respectively, which included $7.7 million and $4.7 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 driven by retirement provisions that resulted in accelerated expense recognition for retirement eligible employees during the nine months ended September 30, 2021, as well as higher personnel costs and professional fees.

Interest Expense

Interest expense decreased 6.3% to $55.5 million for the six months ended June 30, 2021 from $59.3 million for the six months ended June 30, 2020.

This decrease was primarily related to additional capitalized interest during the six months ended June 30, 2021 related to an increase in our development activities under our AMH Development Program.

Interest expense decreased 2.2% to $86.6 million for the nine months ended September 30, 2021 from $88.5 million for the nine months ended September 30, 2020.

This decrease was primarily due to additional capitalized interest during the nine months ended September 30, 2021 related to an increase in our development activities under our AMH Development Program, partially offset by additional interest from the issuance of the 2031 and 2051 unsecured senior notes during July 2021.

Acquisition and Other Transaction Costs

Acquisition and other transaction costs were $7.8 million and $4.1 million for the six months ended June 30, 2021 and 2020, respectively, which included $3.5 million of noncash share-based compensation expense related to employees in these functions during the six months ended June 30, 2021.

The increase in acquisition and other transaction costs was primarily related to higher noncash share-based compensation expense driven by retirement provisions that resulted in accelerated expense recognition for retirement eligible employees during the six months ended June 30, 2021.

Acquisition and other transaction costs were $11.1 million and $5.7 million for the nine months ended September 30, 2021 and 2020, respectively, which included $4.3 million of noncash share-based compensation expense related to employees in these functions during the nine months ended September 30, 2021.

Depreciation and Amortization

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

Depreciation and amortization expense increased 8.1% to $181.2 million for the six months ended June 30, 2021 from $167.7 million for the six months ended June 30, 2020 primarily due to growth in our average number of depreciable properties.

Depreciation and amortization expense increased 8.3% to $275.7 million for the nine months ended September 30, 2021 from $254.7 million for the nine months ended September 30, 2020 primarily due to growth in our average number of depreciable properties.

Gain on Sale and Impairment of Single-Family Properties and Other, net

Gain on sale and impairment of single-family properties and other, net was $26.8 million and $16.3 million for the six months ended June 30, 2021 and 2020, respectively, which included $0.2 million and $5.1 million of impairment charges, respectively, related to homes classified as held for sale during each period.

The increase was primarily related to higher net gains from property sales and lower impairment charges.

During the six months ended June 30, 2020, a $3.5 million noncash write-down

associated with the liquidation of legacy joint ventures, which were acquired as part of the American Residential Properties, Inc.

Gain on sale and impairment of single-family properties and other, net was $36.4 million and $28.5 million for the nine months ended September 30, 2021 and 2020, respectively, which included $0.2 million and $5.3 million of impairment charges, respectively, related to homes classified as held for sale during each period.

The increase was primarily related to lower impairment

During the nine months ended September 30, 2020, a $3.5 million noncash write-down associated with the liquidation of legacy joint ventures, which were acquired as part of the American Residential Properties, Inc.

merger in February 2016, was included in gain on sale and impairment of single-family properties and other, net.

Other Income and Expense, net

Other income and expense, net was $1.6 million and $2.2 million for the six months ended June 30, 2021 and 2020, respectively, which primarily related to interest income, fees from unconsolidated joint ventures, equity in earnings from unconsolidated joint ventures, partially offset by expenses related to unconsolidated joint ventures.

Other income and expense, net was $1.7 million and $0.9 million for the nine months ended September 30, 2021 and 2020, respectively, which primarily related to interest income, fees from unconsolidated joint ventures, and equity in income (losses) from unconsolidated joint ventures, partially offset by expenses related to unconsolidated joint ventures and other nonrecurring expenses.

Also included in other income and expense, net for the nine months ended September 30, 2020 was a net expense of $2.9 million related to a legal matter involving a former employee.

Critical Accounting Policies and Estimates

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Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2020 Annual Report.

There have been no changes to these policies during the six months ended June 30, 2021.

There have been no changes to these policies during the nine months ended September 30, 2021.

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

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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, 2021, there were no deferred tax assets and liabilities or unrecognized tax benefits recorded by the Company.

As of September 30, 2021, 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.

As a REIT, we generally are required to distribute annually to our shareholders at least 90% of our REIT taxable income (determined without regard to the deduction for dividends paid and any net capital gains) and to pay tax at regular corporate rates to the extent that we annually distribute less than 100% of our REIT taxable income (determined without regard to the deduction for dividends paid and including any net capital gains).

the extent that we annually distribute less than 100% of our REIT taxable income (determined without regard to the deduction for dividends paid and including any net capital gains).

The Operating Partnership funds the payment of distributions.

As of December 31, 2020, AH4R had a net operating loss (“NOL”) for U.S.

federal income tax purposes of an estimated $60.2 million.

We intend to use

our NOL (to the extent available) to reduce our REIT taxable income to the extent that REIT taxable income is not reduced by our deduction for dividends paid.

federal income tax purposes of $66.9 million.

We intend to use our NOL (to the extent available) to reduce our REIT taxable income to the extent that REIT taxable income is not reduced by our deduction for dividends paid.

Recent Accounting Pronouncements

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Liquidity and Capital Resources

Our liquidity and capital resources as of June 30, 2021 included cash and cash equivalents of $40.6 million.

Additionally, as of June 30, 2021, we had $620.0 million of outstanding borrowings under our revolving credit facility, which provides for maximum borrowings of up to $1.25 billion, of which $1.2 million was committed to outstanding letters of credit.

As described in Note 16.

Subsequent Events to our condensed consolidated financial statements in this report, in July 2021, the Company issued $450.0 million of 2.375% unsecured senior notes due 2031 and $300.0 million of 3.375% unsecured senior notes due 2051 raising net proceeds of $731.6 million and as described below, we also have estimated net proceeds of $467.3 million available from future settlement of the May 2021 Forward Sale Agreements.

Our liquidity and capital resources as of September 30, 2021 included cash and cash equivalents of $64.0 million.

Additionally, as of September 30, 2021, we had no outstanding borrowings under our revolving credit facility, which provides for maximum borrowings of up to $1.25 billion, of which $1.2 million was committed to outstanding letters of credit.

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

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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.

The following table summarizes the Company’s and the Operating Partnership’s cash flows for the six months ended June 30, 2021 and 2020 (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, 2021 and 2020 (in thousands):

For the Nine Months Ended

September 30,

2021 2020 Change

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Net cash provided by financing activities 630,185 287,589 342,596

Net decrease in cash, cash equivalents and restricted cash $ (81,541) $ (2,874) $ (78,667)

Net (decrease) increase in cash, cash equivalents and restricted cash $ (63,083) $ 277,908 $ (340,991)

Operating Activities

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Net cash provided by

operating activities increased $52.6 million, or 18.8%, from $279.2 million for the six months ended June 30, 2020 to $331.8 million for the six months ended June 30, 2021 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 associated with the COVID-19 pandemic.

operating activities increased $70.8 million, or 16.6%, from $427.4 million for the nine months ended September 30, 2020 to $498.2 million for the nine months ended September 30, 2021 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 higher cash outflows for property taxes and a decrease in collections on rent associated with the COVID-19 pandemic.

Investing Activities

Net cash used for investing activities increased $262.7 million, or 81.5%, from $322.5 million for the six months ended June 30, 2020 to $585.2 million for the six months ended June 30, 2021.

Net cash used for investing activities increased $754.4 million, or 172.6%, from $437.1 million for the nine months ended September 30, 2020 to $1.2 billion for the nine months ended September 30, 2021.

Our investing activities are most significantly impacted by the strategic expansion of our portfolio through traditional acquisition channels, the development of “built-for-rental” homes through our AMH Development Program and the acquisition of newly built properties through our National Builder Program.

Cash outflows for the addition of single-family properties to our portfolio through these channels increased $192.8 million during the six months ended June 30, 2021.

Cash outflows for the addition of single-family properties to our portfolio through these channels increased $597.0 million during the nine months ended September 30, 2021.

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.

Net proceeds received from sales of single-family properties and other decreased $54.4 million during the six months ended June 30, 2021 driven by a decrease in homes sold as our held for sale portfolio has declined.

Net cash used for investing activities also includes recurring and other capital expenditures for single-family properties and renovations to single-family properties, which increased $15.4 million during the six months ended June 30, 2021 as a result of investments in properties to increase future revenues or reduce maintenance expenditures.

Net proceeds received from sales of single-family properties and other decreased $83.6 million during the nine months ended September 30, 2021 driven by a decrease in homes sold.

Net cash used for investing activities also includes recurring and other capital expenditures for single-family properties and renovations to single-family properties, which increased $28.5 million during the nine months ended September 30, 2021 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.

Net cash used for investing activities also increased as a result of a $4.1 million increase in purchases of other productive assets during the six months ended June 30, 2021 and nonrecurring proceeds of $3.7 million from hurricane-related insurance claims during the six months ended June 30, 2020.

These increases in net cash used for investing activities were partially offset by a $7.7 million increase in distributions, net of investments, from our unconsolidated joint ventures.

Net cash used for investing activities also increased as a result of a $39.3 million reduction in distributions, net of investments, from our unconsolidated joint ventures and a $4.2 million increase in purchases of other productive assets during the nine months ended September 30, 2021.

Financing Activities

Net cash provided by financing activities increased $131.4 million from $40.4 million for the six months ended June 30, 2020 to $171.8 million for the six months ended June 30, 2021 primarily driven by $193.8 million in net proceeds from the issuance of Class A common shares and a $490.0 million increase in net borrowings on our revolving credit facility during the six months ended June 30, 2021.

These increases in cash inflows were partially offset by the $498.8 million of cash outflows for the redemption of our Series D and E perpetual preferred shares primarily funded by the draws on our revolving credit facility, $38.6 million of increased distributions to share and unit holders and $11.2 million of deferred financing costs paid for the amendment of our revolving credit facility during the six months ended June 30, 2021.

Net cash provided by financing activities increased $342.6 million from $287.6 million for the nine months ended September 30, 2020 to $630.2 million for the nine months ended September 30, 2021 primarily driven by a $179.3 million increase in net proceeds from the issuance of Class A common shares and $737.2 million of net proceeds from the issuance of unsecured senior notes during the nine months ended September 30, 2021.

These increases in cash inflows were partially offset by $498.8 million of cash outflows for the redemption of our Series D and E perpetual preferred shares, $49.7 million of increased distributions to share and unit holders, $18.0 million of deferred financing costs paid for the amendment of our revolving credit facility and the issuance of unsecured senior notes and $4.0 million for the settlement of a cash flow hedging instrument during the nine months ended September 30, 2021.

Unsecured Senior Notes

In July 2021, the Operating Partnership issued $450.0 million of 2.375% unsecured senior notes with a maturity date of July 15, 2031 (the “2031 Notes”) and $300.0 million of 3.375% unsecured senior notes with a maturity date of July 15, 2051 (the “2051 Notes” and, together with the 2031 Notes, the “Notes”).

Interest on the Notes is payable semi-annually in arrears on January 15 and July 15 of each year, commencing on January 15, 2022.

The Operating Partnership received aggregate net proceeds of $731.6 million from these issuances, after underwriting fees of approximately $5.6 million and a $12.8 million discount, and before offering costs of $1.4 million.

The Operating Partnership used the net proceeds from this offering to repay amounts outstanding on its revolving credit facility and for general corporate purposes, including, without limitation, property acquisitions and developments, the expansion, redevelopment and/or improvement of existing properties in the Operating Partnership’s portfolio, other capital expenditures, the redemption of its preferred shares, the repayment of outstanding indebtedness, working capital and other general purposes.

The Notes are the Operating Partnership’s unsecured and unsubordinated obligations and rank equally in right of payment with all of the Operating Partnership’s existing and future unsecured and unsubordinated indebtedness.

The Operating Partnership may redeem the Notes in whole at any time or in part from time to time at the applicable redemption price specified in the indentures with respect to the Notes.

If the 2031 Notes are redeemed on or after April 15, 2031 (three months prior to the maturity date), the redemption price will be equal to 100% of the principal amount of the notes being redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date.

If the 2051 Notes are redeemed on or after January 15, 2051 (six months prior to the maturity date), the redemption price will be equal to 100% of the principal amount of the notes being redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date.

Revolving Credit Facility

In April 2021, the Company closed a $1.25 billion revolving credit facility, amending its existing $800 million revolving credit facility.

During the second quarter of 2021, the Company closed a $1.25 billion revolving credit facility, amending its existing $800 million revolving credit facility.

The amended revolving credit facility provides for expanded borrowing capacity, reflects a more favorable pricing grid based on current market conditions, and includes a sustainability component based upon third-party performance measures through which overall pricing can further improve if the Company meets certain targets.

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Class A Common Share / Unit Offering

In May 2021, the Company completed an underwritten public offering for 18,745,000 of its Class A common shares of beneficial interest, $0.01 par value per share, of which 5,500,000 shares were issued directly by the Company, and 13,245,000 shares were offered on a forward basis at the request of the Company by the forward sellers.

During the second quarter of 2021, the Company completed an underwritten public offering for 18,745,000 of its Class A common shares of beneficial interest, $0.01 par value per share, of which 5,500,000 shares were issued directly by the Company and 13,245,000 shares were offered on a forward basis at the request of the Company by the forward sellers.

In connection with this offering, the Company entered into forward sale agreements with the forward purchasers (the “May 2021 Forward Sale Agreements”) for these 13,245,000 shares which are accounted for in equity.

The Company expects to physically settle the May 2021 Forward Sale Agreements by the delivery of the Class A common shares and receive proceeds by May 21, 2022, although the Company has the right to elect settlement prior to that time subject to certain conditions.

Although the Company expects to physically settle, the May 2021 Forward Sale Agreements allow the Company to cash or net-share settle all or a portion of its obligations.

If the Company elects to cash or net share settle the May 2021 Forward Sale Agreements, the Company may not receive any proceeds, and may owe cash or Class A common shares to the forward purchasers in certain circumstances.

The May 2021 Forward Sale Agreements are subject to early termination or settlement under certain circumstances.

The Company received net proceeds of $194.0 million from the 5,500,000 Class A common shares issued directly by the Company after deducting underwriting discounts and before offering costs of approximately $0.2 million.

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The Company used the net proceeds to repay indebtedness under its revolving credit facility, to partially fund the redemption of its Series D and Series E perpetual preferred shares discussed below and for general corporate purposes.

The Company did not initially receive proceeds from the sale of the Class A common shares offered on a forward basis but estimates that net proceeds will be approximately $467.3 million after deducting underwriting discounts.

The Company did not initially receive proceeds from the sale of the Class A common shares offered on a forward basis.

In September 2021, the Company issued and physically settled 11,400,000 Class A common shares under the May 2021 Forward Sale Agreements, receiving net proceeds of $399.0 million.

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

As of September 30, 2021, 1,845,000 Class A common shares remained available for future settlement under the May 2021 Forward Sale Agreements.

The Company expects to physically settle the remaining shares by May 21, 2022 through the delivery of the Class A common shares and expects that net proceeds will be approximately $64.6 million.

The Company expects to use these net proceeds for general corporate purposes including, without limitation, property acquisitions and developments.

Although the Company expects to physically settle the remaining shares, the May 2021 Forward Sale Agreements allow the Company to cash or net-share settle all or a portion of its obligations.

The May 2021 Forward Sale Agreements are subject to early termination or settlement under certain circumstances.

Redemptions of Perpetual Preferred Shares

In June 2021, the Company redeemed all 10,750,000 shares of the outstanding 6.500% Series D perpetual preferred shares, $0.01 par value per share, for cash at a liquidation preference of $25.00 per share plus any accrued and unpaid dividends in accordance with the terms of such shares.

During the second quarter of 2021, the Company redeemed all 10,750,000 shares of the outstanding 6.500% Series D perpetual preferred shares, $0.01 par value per share, for cash at a liquidation preference of $25.00 per share plus any accrued and unpaid dividends in accordance with the terms of such shares.

The Operating Partnership also redeemed its corresponding Series D perpetual preferred units.

As a result of the redemption, the Company recorded an $8.5 million allocation of income to the Series D perpetual preferred shareholders within the condensed consolidated statements of operations in the second quarter of 2021, which represents the initial liquidation value of the Series D perpetual preferred shares in excess of its carrying value as of the redemption date.

In June 2021, the Company redeemed all 9,200,000 shares of the outstanding 6.350% Series E perpetual preferred shares, $0.01 par value per share, for cash at a liquidation preference of $25.00 per share plus accrued and unpaid dividends in accordance with the terms of such shares.

During the second quarter of 2021, the Company redeemed all 9,200,000 shares of the outstanding 6.350% Series E perpetual preferred shares, $0.01 par value per share, for cash at a liquidation preference of $25.00 per share plus accrued and unpaid dividends in accordance with the terms of such shares.

The Operating Partnership also redeemed its corresponding Series E perpetual preferred units.

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The At-the-Market Program may be suspended or terminated by the Company at any time.

During the six months ended June 30, 2021 and 2020, no shares were issued under the At-the-Market Program.

As of June 30, 2021, 86,130 shares have been issued under the At-the-Market Program and $497.6 million remained available for future share issuances.

During the three and nine months ended September 30, 2020, 86,130 shares were issued 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, 2021, 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

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The Operating Partnership funds the repurchases and constructively retires an equivalent number of corresponding Class A units.

During the six months ended June 30, 2021 and 2020, we did not repurchase and retire any of our shares.

As of June 30, 2021, 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, 2021 and 2020, we did not repurchase and retire any of our shares.

As of September 30, 2021, 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

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As of December 31, 2020, AH4R had an NOL for U.S.

federal income tax purposes of an estimated $60.2 million.

We intend to use our NOL (to the extent available) to reduce our REIT taxable income to the extent that REIT taxable income is not reduced by our deduction for dividends

federal income tax purposes of $66.9 million.

We intend to use our NOL (to the extent available) to reduce our REIT taxable income to the extent that REIT taxable income is not reduced by our deduction for dividends paid.

Off-Balance Sheet Arrangements

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The loan agreement provides for three one-year extension options that include additional fees and interest.

As of June 30, 2021, the joint venture’s loan had a $139.7 million outstanding principal balance.

As of September 30, 2021, the joint venture’s loan had a $161.3 million outstanding principal balance.

The Company has provided a customary non-recourse guarantee that may become a liability for us upon a voluntary bankruptcy filing by the joint venture or occurrence of other actions such as fraud or a material misrepresentation by us or the joint venture.

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Debt to our condensed consolidated financial statements in this report.

As further described in Note 16.

Except as described in Note 15.

Commitments and Contingencies to our condensed consolidated financial statements in this report, as of June 30, 2021, 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, 2021, 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 2020 Annual Report.

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We believe that real estate values fluctuate due to market conditions and in response to inflation.

We also believe that Core FFO and Adjusted FFO

attributable to common share and unit holders provide useful information to investors because they allow investors to compare our operating performance to prior reporting periods without the effect of certain items that, by nature, are not comparable from period to period.

We also believe that Core FFO and Adjusted FFO attributable to common share and unit holders provide useful information to investors because they allow investors to compare our operating performance to prior reporting periods without the effect of certain items that, by nature, are not comparable from period to period.

FFO, Core FFO and Adjusted FFO attributable to common share and unit holders are not a substitute for net income or net cash provided by operating activities, each as determined in accordance with GAAP, as a measure of our operating performance, liquidity or ability to pay dividends.

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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, 2021 and 2020 (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, 2021 and 2020 (in thousands):

For the Three Months Ended

June 30, For the Six Months Ended

September 30, For the Nine Months Ended

September 30,

2021 2020 2021 2020

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Acquisition, other transaction costs and other (1)

3,279 4,753 11,093 9,265

Noncash share-based compensation - general and administrative 1,557 1,723 7,722 4,741

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Adjusted FFO attributable to common share and unit holders $ 113,292 $ 89,627 $ 328,256 $ 264,721

(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 and nine months ended September 30, 2020.

EBITDA / EBITDAre / Adjusted EBITDAre / Fully Adjusted EBITDAre

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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, 2021 and 2020 (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, 2021 and 2020 (in thousands):

For the Three Months Ended

June 30, For the Six Months Ended

September 30, For the Nine Months Ended

September 30,

2021 2020 2021 2020

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Acquisition, other transaction costs and other (1)

3,279 4,753 11,093 9,265

Adjusted EBITDAre $ 170,759 $ 151,526 $ 497,794 $ 440,510

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Fully Adjusted EBITDAre $ 153,046 $ 134,972 $ 455,333 $ 401,159

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