What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-05-06 compared with 2021-11-05 · 119 added, 326 removed, 293 unchanged (60% of the section changed)

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We commenced operations in November 2012.

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.

As of March 31, 2022, we owned 57,984 single-family properties in selected sub-markets of metropolitan statistical areas (“MSAs”) in 22 states, including 855 properties held for sale, compared to 57,024 single-family properties in 22 states, including 659 properties held for sale, as of December 31, 2021, and 53,984 single-family properties in 22 states, including 636 properties held for sale as of March 31, 2021.

As of March 31, 2022, 54,352 of our total properties (excluding properties held for sale) were occupied, compared to 53,637 of our total properties (excluding properties held for sale) as of December 31, 2021 and 52,025 of our total properties (excluding properties held for sale) as of March 31, 2021.

Also, as of March 31, 2022, the Company had an additional 1,849 properties held in unconsolidated joint ventures, compared to 1,942 properties held in unconsolidated joint ventures as of December 31, 2021, and 1,383 properties held in unconsolidated joint ventures as of March 31, 2021.

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 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 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 (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.

Risk Factors—Risks Related to Our Business— We are subject to risks from the global pandemic associated with COVID-19 and we may in the future be subject to risks from other public health crises ” in our 2020 Annual Report.

Key Single-Family Property and Leasing Metrics

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

Market Number of Single-Family Properties (1)

% of Total Single-Family Properties Gross Book Value (millions) % of Gross Book Value Total Avg.

The following table summarizes certain key single-family properties metrics as of March 31, 2022:

Total Single-Family Properties (1)

Market Number of Single-Family Properties % of Total Single-Family Properties Gross Book Value (millions) % of Gross Book Value Total Avg.

Gross Book Value per Property Avg.

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Phoenix, AZ 3,334 5.8 % 656.6 5.6 % 196,946 1,834 18.2 2015

Houston, TX 2,917 5.3 % 491.4 4.5 % 168,444 2,099 15.7 2014

Nashville, TN 3,118 5.5 % 722.9 6.2 % 231,839 2,108 15.6 2015

Indianapolis, IN 2,932 5.1 % 488.3 4.2 % 166,541 1,930 19.2 2014

Tampa, FL 2,612 4.7 % 550.2 5.0 % 210,645 1,944 14.8 2015

Houston, TX 2,850 5.0 % 490.6 4.2 % 172,146 2,103 16.2 2014

Jacksonville, FL 2,770 4.8 % 558.9 4.8 % 201,781 1,935 14.3 2016

Tampa, FL 2,662 4.7 % 571.5 4.9 % 214,682 1,940 15.1 2015

Raleigh, NC 2,167 3.8 % 421.9 3.6 % 194,694 1,886 16.4 2015

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Orlando, FL 1,840 3.2 % 362.6 3.1 % 197,054 1,899 18.9 2015

Greater Chicago area, IL and IN 1,713 3.1 % 318.6 2.9 % 186,003 1,871 20.1 2013

Salt Lake City, UT 1,830 3.2 % 526.9 4.5 % 287,922 2,227 16.2 2015

Charleston, SC 1,385 2.5 % 296.9 2.7 % 214,394 1,979 12.0 2016

Greater Chicago area, IL and IN 1,686 3.0 % 315.1 2.7 % 186,917 1,869 20.6 2013

Las Vegas, NV 1,597 2.8 % 384.9 3.3 % 241,031 1,879 14.3 2015

Austin, TX (3)

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

Charleston, SC 1,512 2.6 % 335.8 2.9 % 222,077 1,970 11.7 2016

San Antonio, TX 1,331 2.3 % 253.2 2.2 % 190,253 1,938 13.8 2015

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

Seattle, WA 1,106 1.9 % 349.0 3.0 % 315,583 2,002 12.5 2017

Savannah/Hilton Head, SC 990 1.7 % 194.4 1.7 % 196,390 1,887 13.6 2016

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Total/Average 57,129 100.0 % $ 11,706.3 100.0 % $ 204,910 1,989 16.8 2015

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

(1) Excludes 855 single-family properties held for sale as of March 31, 2022.

(2) Represents 15 markets in 13 states.

(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:

The following table summarizes certain key leasing metrics as of March 31, 2022:

Total Single-Family Properties (1)

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Phoenix, AZ 96.0 % 1,767 11.9 6.3 12.0 %

Houston, TX 96.0 % 1,766 12.5 6.7 6.5 %

Nashville, TN 97.3 % 1,951 12.0 6.1 8.7 %

Indianapolis, IN 95.7 % 1,625 12.0 6.1 7.2 %

Tampa, FL 98.2 % 1,879 12.0 6.9 9.5 %

Houston, TX 96.4 % 1,812 12.5 5.6 5.6 %

Jacksonville, FL 97.3 % 1,841 12.0 6.0 9.6 %

Tampa, FL 97.9 % 1,952 12.0 6.1 10.7 %

Raleigh, NC 95.6 % 1,736 12.4 6.2 7.9 %

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Orlando, FL 97.9 % 1,907 12.0 5.6 8.5 %

Greater Chicago area, IL and IN 97.9 % 2,029 12.3 6.9 8.0 %

Salt Lake City, UT 95.8 % 2,070 12.1 6.6 8.4 %

Charleston, SC 96.6 % 1,903 12.0 7.1 8.4 %

Greater Chicago area, IL and IN 97.2 % 2,077 12.3 6.2 8.4 %

Las Vegas, NV 93.9 % 1,920 11.9 6.4 10.5 %

Austin, TX 96.1 % 1,835 12.2 7.3 8.4 %

Charleston, SC 92.6 % 1,947 12.0 6.3 7.3 %

San Antonio, TX 94.3 % 1,763 12.0 5.9 6.9 %

Seattle, WA 94.3 % 2,311 12.0 6.9 9.3 %

Savannah/Hilton Head, SC 96.3 % 1,785 11.9 6.7 10.6 %

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Total/Average 96.2 % $ 1,872 12.1 6.2 8.8 %

(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.

(1) Excludes 855 single-family properties held for sale as of March 31, 2022.

(2) For the three months ended March 31, 2022, 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 March 31, 2022, 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 September 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 March 31, 2022, 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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Our results of operations and financial condition are affected by numerous factors, many of which are beyond our control.

Currently, the most significant factor impacting our results of operations and financial condition is the effect of the COVID-19 pandemic, which is discussed above.

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.

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, inflationary increases in labor and material costs and labor shortages have impacted and may continue to impact certain aspects of our business, including our AMH Development Program, our renovation program associated with recently acquired properties and our 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.

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

We 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 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.

During the three months ended March 31, 2022, we developed or acquired 1,131 homes, including 325 newly constructed homes delivered through our AMH Development Program, 606 homes acquired through our National Builder Program and traditional acquisition channel and 200 homes acquired in a bulk transaction from an unconsolidated joint venture, partially offset by 171 homes sold to third parties or contributed to an unconsolidated joint venture.

During the three months ended March 31, 2022, we also developed an additional 127 newly constructed properties which were delivered to our unconsolidated joint ventures, aggregating to 452 total program deliveries through our AMH Development Program.

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

As of September 30, 2021 and December 31, 2020, there were 604 and 711 properties, respectively, classified as held for sale.

As of March 31, 2022 and December 31, 2021, there were 855 and 659 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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This process is dependent upon the nature of each lot acquired and the 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.

Once land development requirements have been met, historically it has taken approximately four to six months to complete the rental home vertical construction process.

However, delivery of homes may be staggered to facilitate leasing absorption.

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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 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.

Historically, it has taken approximately 20 to 90 days to complete the renovation process, which will fluctuate based on our overall acquisition volume as well as availability of construction labor and materials.

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.

On average, it takes approximately 20 to 40 days to lease a property after acquiring or developing a new property through our new construction channels or after completing the renovation process for a traditionally acquired property.

On average, it takes approximately 10 to 30 days to lease a property after acquiring or developing a new property through our new construction channels and 20 to 40 days after completing the renovation process for a traditionally acquired property.

Lastly, our operating results are impacted by the length of stay of our tenants and the amount of time it takes to prepare and re-lease a property after a tenant vacates.

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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 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.

Based on our Same-Home population of properties (defined below), the year-over-year increase in Average Monthly Realized Rent per property was 7.5% for the three months ended March 31, 2022, and we experienced turnover rates of 6.2% and 7.0% during the three months ended March 31, 2022 and 2021, respectively.

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

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

We experience higher levels of tenant move-outs and move-ins during the late spring and summer months, which impacts both our rental revenues and related turnover costs.

Historically, we have experienced higher levels of tenant move-outs and move-ins during the late spring and summer months, which impacts both our rental revenues and related turnover costs.

Our property operating costs are seasonally impacted in certain markets for expenses such as HVAC repairs, turn costs and landscaping expenses during the summer season.

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Results of Operations

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.

Net income totaled $70.0 million for the three months ended March 31, 2022, compared to net income of $48.9 million for the three months ended March 31, 2021.

This increase was primarily due to a larger number of occupied properties associated with growth in the Company’s portfolio, higher rental rates and lower uncollectible rents, as well as higher net gains on property sales.

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.

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Properties acquired through a bulk purchase are first considered non-stabilized, as an entire group, until (1) we have owned them for an adequate period of time to allow for complete on-boarding to our operating platform, and (2) a substantial portion of the properties have experienced tenant turnover at least once under our ownership, providing the opportunity for renovations and improvements to meet our property standards.

After such time has passed, properties acquired through a bulk purchase are then evaluated on an individual property basis under our standard stabilization criteria.

After such time has passed, properties acquired through a bulk purchase are then

evaluated on an individual property basis under our standard stabilization criteria.

All other properties, including those classified as held for sale or taken out of service as a result of a casualty loss, are classified as Non-Same-Home and Other.

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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 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

Comparison of the Three Months Ended March 31, 2022 to the Three Months Ended March 31, 2021

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 March 31, 2022 and 2021 (amounts in thousands):

For the Three Months Ended March 31, 2022

Properties (1)

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Core NOI $ 175,325 66.3 % $ 22,102 56.3 % $ 197,427 65.0 %

For the Three Months Ended September 30, 2020

For the Three Months Ended March 31, 2021

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 September 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 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.

Rents and other single-family property revenues increased 13.9% to $356.1 million for the three months ended March 31, 2022 from $312.6 million for the three months ended March 31, 2021.

Revenue growth was driven by an increase in our average occupied portfolio which grew to 53,995 homes for the three months ended March 31, 2022, compared to 51,648 homes for the three months ended March 31, 2021, as well as higher rental rates and lower uncollectible rents.

Property Operating Expenses

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 operating expenses increased 12.6% to $133.6 million for the three months ended March 31, 2022 from $118.7 million for the three months ended March 31, 2021.

This increase was primarily a result of inflationary increases and growth in our portfolio.

Property Management Expenses

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.

Property management expenses for the three months ended March 31, 2022 and 2021 were $26.0 million and $23.7 million, respectively, which included $1.0 million of noncash share-based compensation expense in each period related to centralized and field property management employees.

The increase in property management expenses was primarily attributable to higher personnel costs as a result of inflationary increases and to support growth in our portfolio as well as an increase in other miscellaneous property management expenses.

Core Revenues from Same-Home Properties

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 revenues from Same-Home properties increased 8.9% to $264.6 million for the three months ended March 31, 2022 from $242.9 million for the three months ended March 31, 2021.

This increase was primarily attributable to higher Average Monthly Realized Rent per property, which increased 7.5% to $1,856 per month for the three months ended March 31, 2022 compared to $1,727 per month for the three months ended March 31, 2021, a rise in the Average Occupied Days Percentage, which increased to 97.5% for the three months ended March 31, 2022 compared to 97.3% for the three months ended March 31, 2021, and lower uncollectible rents.

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 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 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 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 $3.3 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

Depreciation and amortization expense consists primarily of depreciation of buildings and improvements.

Depreciation of our assets is calculated over their useful lives on a straight-line basis over three to 30 years.

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

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 $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

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)

Revenue Non-Same-

Home and Other

Properties % of Core

Revenue Total

Properties % of Core

Rents from single-family properties $ 721,855 $ 110,025 $ 831,880

Fees from single-family properties 13,937 2,719 16,656

Bad debt (15,832) (3,446) (19,278)

Core revenues 719,960 109,298 829,258

Property tax expense 124,863 17.3 % 18,349 16.7 % 143,212 17.2 %

HOA fees, net (2)

13,633 1.9 % 2,190 2.0 % 15,823 1.9 %

R&M and turnover costs, net (2)

58,162 8.1 % 9,752 8.9 % 67,914 8.2 %

Insurance 7,350 1.0 % 1,367 1.3 % 8,717 1.1 %

Property management expenses, net (3)

55,268 7.7 % 10,899 10.0 % 66,167 8.0 %

Core property operating expenses 259,276 36.0 % 42,557 38.9 % 301,833 36.4 %

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

For the Nine Months Ended September 30, 2020

Properties (1)

Revenue Non-Same-

Home and Other

Properties % of Core

Revenue Total

Properties % of Core

Rents from single-family properties $ 678,986 $ 75,864 $ 754,850

Fees from single-family properties 10,099 1,564 11,663

Bad debt (13,709) (2,218) (15,927)

Core revenues 675,376 75,210 750,586

Property tax expense 120,231 17.8 % 15,227 20.3 % 135,458 18.1 %

HOA fees, net (2)

12,726 1.9 % 1,833 2.4 % 14,559 1.9 %

R&M and turnover costs, net (2)

55,667 8.2 % 8,484 11.3 % 64,151 8.5 %

Insurance 6,279 0.9 % 921 1.2 % 7,200 1.0 %

Property management expenses, net (3)

54,648 8.1 % 8,899 11.8 % 63,547 8.5 %

Core property operating expenses 249,551 36.9 % 35,364 47.0 % 284,915 38.0 %

Core NOI $ 425,825 63.1 % $ 39,846 53.0 % $ 465,671 62.0 %

(1) Includes 46,832 properties that have been stabilized longer than 90 days prior to January 1, 2020.

(2) Presented net of tenant charge-backs.

(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 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

Rents and other single-family property revenues $ 965,790 $ 875,963

Tenant charge-backs (136,532) (125,377)

Core revenues 829,258 750,586

Non-Same-Home core revenues 109,298 75,210

Same-Home core revenues $ 719,960 $ 675,376

Core property operating expenses and Same-Home core property operating expenses

Property operating expenses $ 369,966 $ 344,107

Property management expenses 70,677 67,512

Noncash share-based compensation - property management (2,278) (1,327)

Expenses reimbursed by tenant charge-backs (136,532) (125,377)

Core property operating expenses 301,833 284,915

Non-Same-Home core property operating expenses 42,557 35,364

Same-Home core property operating expenses $ 259,276 $ 249,551

Core NOI and Same-Home Core NOI

Net income $ 149,236 $ 109,487

Gain on sale and impairment of single-family properties and other, net (36,401) (28,522)

Depreciation and amortization 275,682 254,653

Acquisition and other transaction costs 11,093 5,719

Noncash share-based compensation - property management 2,278 1,327

Interest expense 86,630 88,540

General and administrative expense 40,645 35,329

Other income and expense, net (1,738) (862)

Core NOI 527,425 465,671

Non-Same-Home Core NOI 66,741 39,846

Same-Home Core NOI $ 460,684 $ 425,825

Rents and Other Single-Family Property Revenues

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 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 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 6.6% 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 3.9% 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.

Core property operating expenses from Same-Home properties increased 5.4% to $89.3 million for the three months ended March 31, 2022 from $84.7 million for the three months ended March 31, 2021 primarily driven by annual growth in property tax expense and other inflationary increases.

General and Administrative Expense

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.

General and administrative expense for the three months ended March 31, 2022 and 2021 was $17.3 million and $15.2 million, respectively, which included $4.0 million and $4.3 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 as a result of inflationary increases and to support growth in our business as well as timing of professional fees.

Interest Expense

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.

Interest expense decreased 1.6% to $27.6 million for the three months ended March 31, 2022 from $28.0 million for the three months ended March 31, 2021.

This decrease was primarily due to additional capitalized interest during the three months ended March 31, 2022 related to an increase in our development activities under our AMH Development Program and an increase in acquired properties that underwent initial renovation, partially offset by additional interest from the issuance of the 2031 unsecured senior notes and the 2051 unsecured senior notes during July 2021 and higher borrowings costs on the revolving credit facility during the three months ended March 31, 2022.

Acquisition and Other Transaction Costs

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.

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 nine months ended September 30, 2021 as well as higher acquisition costs associated with the growth of our portfolio.

Acquisition and other transaction costs for the three months ended March 31, 2022 and 2021 were $6.0 million and $4.8 million, respectively, which included $2.4 million and $2.8 million, respectively, of noncash share-based compensation expense related to employees in these functions.

The increase in acquisition and other transaction costs was primarily related to higher acquisition costs associated with the growth of our portfolio, partially offset by lower 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 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.

Depreciation and amortization expense increased 11.0% to $100.0 million for the three months ended March 31, 2022 from $90.1 million for the three months ended March 31, 2021 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 $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.

Gain on sale and impairment of single-family properties and other, net was $22.0 million and $16.1 million for the three months ended March 31, 2022 and 2021, respectively, which included $1.1 million and $0.1 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.

Other Income and Expense, net

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

Our critical accounting policies are included in Part II, “Item 7.

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 nine months ended September 30, 2021.

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

federal income tax purposes under Sections 856 to 860 of the Internal Revenue Code of 1986, as amended (the “Code”), commencing with our taxable year ended December 31, 2012.

We believe that we have operated, and continue to operate, in such a manner as to satisfy the requirements for qualification as a REIT.

Provided that we qualify as a REIT and our distributions to our shareholders equal or exceed our REIT taxable income (determined without regard to the deduction for dividends paid and including any net capital gains), we generally will not be subject to U.S.

federal income tax.

Qualification and taxation as a REIT depend upon our ability to meet the various qualification tests imposed under the Code, including tests related to the percentage of income that we earn from specified sources and the percentage of our earnings that we distribute to our shareholders.

Accordingly, no assurance can be given that we will continue to be organized or be able to operate in a manner so as to remain qualified as a REIT.

If we fail to qualify as a REIT in any taxable year and do not qualify for certain statutory relief provisions, we would be subject to U.S.

federal income tax and state income tax on our taxable income at regular corporate tax rates, and we would likely be precluded from qualifying for treatment as a REIT until the fifth calendar year following the year in which we fail to qualify.

Even if we qualify as a REIT, we may be subject to certain state or local income and capital taxes and U.S.

federal income and excise taxes on our undistributed REIT taxable income, if any.

Certain of our subsidiaries are subject to taxation by U.S.

federal, state and local authorities for the periods presented.

We made joint elections to treat certain subsidiaries as taxable REIT subsidiaries which are subject to U.S.

federal, state and local taxes on their income at regular corporate rates.

The tax years from 2016 to present generally remain open to examination by the taxing jurisdictions to which the Company is subject.

We believe that our Operating Partnership is properly treated as a partnership for U.S.

federal income tax purposes.

As a partnership, the Operating Partnership is not subject to U.S.

federal income tax on its income.

Instead, each of the Operating Partnership’s partners, including AH4R, is allocated, and may be required to pay tax with respect to, its share of the Operating Partnership’s income.

As such, no provision for U.S.

federal income taxes has been included for the Operating Partnership.

Accounting Standards Codification 740-10, Income Taxes, requires recognition of deferred tax assets for the expected future tax consequences of events that have been included in the financial statements or tax returns.

Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

We recognize tax benefits of uncertain tax positions only if it is more likely than not that the tax position will be sustained, based solely on its technical merits, with the taxing authority having full knowledge of all relevant information.

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 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 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 $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.

Other income and expense, net was $2.3 million and $0.8 million for the three months ended March 31, 2022 and 2021, 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.

Critical Accounting Estimates

Our critical accounting estimates are included in Part II, “Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the 2021 Annual Report.

There have been no material changes to these estimates during the three months ended March 31, 2022.

Recent Accounting Pronouncements

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Liquidity and Capital Resources

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.

Liquidity is a measure of our ability to meet potential cash requirements, maintain our assets, fund our operations, make distributions to our shareholders and OP unitholders, including AH4R, and meet other general requirements of our business.

Our liquidity, to a certain extent, is subject to general economic, financial, competitive and other factors beyond our control.

Our liquidity requirements consist primarily of funds necessary to pay for the acquisition, development, renovation and maintenance of our properties, HOA fees (as applicable), real estate taxes, non-recurring capital expenditures, interest and principal payments on our indebtedness, general and administrative expenses, payment of quarterly dividends on our preferred shares and units, and payment of distributions to our common shareholders and unitholders.

We seek to satisfy our liquidity needs through cash provided by operations, long-term secured and unsecured borrowings, issuances of debt and equity securities (including OP units), asset-backed securitizations, property dispositions and joint venture transactions.

Sources of Capital

We expect to satisfy our cash requirements through cash provided by operations, long-term secured and unsecured borrowings, issuances of debt and equity securities (including OP units), asset-backed securitizations, property dispositions and joint venture transactions.

We have financed our operations, acquisitions and development expenditures to date through the issuance of equity securities, borrowings under our credit facilities, asset-backed securitizations and unsecured senior notes, and proceeds from the sale of single-family properties.

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A timely liquidation of assets might not be a viable source of short-term liquidity should a cash flow shortfall arise, and we may need to source liquidity from other financing alternatives including drawing on our revolving credit facility.

As discussed above under “COVID-19 Business Update,” the COVID-19 pandemic could adversely impact our future operating cash flows.

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 nine months ended September 30, 2021 and 2020 (in thousands):

For the Nine Months Ended

September 30,

Our liquidity and capital resources as of March 31, 2022 included cash and cash equivalents of $56.6 million.

Additionally, as of March 31, 2022, we had $410.0 million of outstanding borrowings under our revolving credit facility, which provides for maximum borrowings of up to $1.25 billion, of which $2.2 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 April 2022, the Company issued $600.0 million of 3.625% unsecured senior notes due 2032 and $300.0 million of 4.300% unsecured senior notes due 2052 raising net proceeds of $870.3 million and as described below, we also have estimated net proceeds of $488.6 million available from future settlement of the January 2022 Forward Sale Agreements.

We maintain an investment grade credit rating which provides for greater availability of and lower cost of debt financing.

Uses of Capital

Our expected material cash requirements over the next twelve months consist of (i) contractually obligated expenditures, including payments of principal and interest, (ii) other essential expenditures, including property operating expenses, HOA fees (as applicable), real estate taxes, maintenance capital expenditures, general and administrative expenses and dividends on our equity securities including those paid in accordance with REIT distribution requirements, and (iii) opportunistic expenditures, including to pay for the acquisition, development and renovation of our properties and repurchases of our securities.

With respect to our contractually obligated expenditures, our cash requirements within the next twelve months include accounts payable and accrued expenses, interest payments on debt obligations, principal amortization on our asset-backed securitizations, operating lease obligations and purchase commitments to acquire single-family properties and land for our AMH Development Program.

Except as described in Note 8.

Debt, Note 9.

Accounts Payable and Accrued Expenses, Note 15.

Commitments and Contingencies and Note 16.

Subsequent Events to our condensed consolidated financial statements in this report, there have been no other material changes outside the ordinary course of business to our other known contractual obligations described in “Liquidity and

Capital Resources” in Part II, “Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the 2021 Annual Report.

The following table summarizes the Company’s and the Operating Partnership’s cash flows for the three months ended March 31, 2022 and 2021 (amounts in thousands):

For the Three Months Ended

2022 2021 Change

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Net cash provided by financing activities 369,235 3,260 365,975

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

Net increase (decrease) in cash, cash equivalents and restricted cash $ 15,213 $ (52,973) $ 68,186

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 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.

Net cash provided by operating activities increased $6.7 million, or 4.4%, from $152.0 million for the three months ended March 31, 2021 to $158.7 million for the three months ended March 31, 2022 primarily as a result of increased cash flows generated from a larger number of occupied properties, higher rental rates and lower uncollectible rents, partially offset by higher cash outflows for property related expenses as a result of inflationary increases and growth in our portfolio.

Investing Activities

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.

Net cash used for investing activities increased $304.5 million, or 146%, from $208.2 million for the three months ended March 31, 2021 to $512.8 million for the three months ended March 31, 2022.

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 $597.0 million during the nine months ended September 30, 2021.

Cash outflows for the addition of single-family properties to our portfolio through these channels increased $298.0 million during the three months ended March 31, 2022.

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 $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.

Renovations to single-family properties increased $12.7 million as a result of an increased volume in purchases of homes through our traditional acquisition channel during the three months ended March 31, 2022.

These increases in net cash used for investing activities were partially offset by an increase of $5.1 million in net proceeds received from sales of single-family properties as a result of higher average per home realized sales prices during the three months ended March 31, 2022.

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 $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 $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

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.

The interest rate on the amended revolving credit facility is at either LIBOR plus a margin ranging from 0.725% to 1.45% or a base rate (determined according to the greater of a prime rate, federal funds rate plus 0.5% or daily LIBOR rate plus 1.0%) plus a margin ranging from 0.00% to 0.45%.

In each case the actual margin is determined based on the Company’s credit ratings in effect from time to time.

The amended revolving credit facility matures on April 15, 2025, with two six-month extension options at the Company’s election if certain conditions are met.

Class A Common Share / Unit Offering

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 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.

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

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.

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.

Net cash provided by financing activities increased $366.0 million from $3.3 million for the three months ended March 31, 2021 to $369.2 million for the three months ended March 31, 2022 primarily due to $375.6 million of net proceeds from the issuance of Class A common shares, an $8.0 million reduction in distributions to preferred shareholders as a result of the redemption of our Series D and E perpetual preferred shares in June 2021 and $19.8 million of proceeds from liabilities related to consolidated land not owned during the three months ended March 31, 2022 (see Note 6.

Escrow Deposits, Prepaid Expenses and Other Assets to our condensed consolidated financial statements in this report for further discussion).

These increases were partially offset by a $20.0 million reduction in borrowing activity, net of paydowns, under our revolving credit facility and a $16.6 million increase in distributions paid to common share and unit holders resulting from an 80% increase in distributions paid per common share and unit.

Class A Common Share Offering

During the first quarter of 2022, the Company completed an underwritten public offering for 23,000,000 of its Class A common shares of beneficial interest, $0.01 par value per share, of which 10,000,000 shares were issued directly by the Company, and 13,000,000 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 “January 2022 Forward Sale Agreements”) for these 13,000,000 shares which are accounted for in equity.

The Company expects to physically settle the January 2022 Forward Sale Agreements by the delivery of the Class A common shares and receive proceeds by January 20, 2023, 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 January 2022 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 January 2022 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 January 2022 Forward Sale Agreements are subject to early termination or settlement under certain circumstances.

The Company received net proceeds of $375.8 million from the 10,000,000 Class A common shares issued directly by the Company after deducting underwriting fees and before offering costs of approximately $0.2 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.

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.

Redemptions of Perpetual Preferred 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.

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.

As a result of the redemption, the Company recorded a $7.4 million allocation of income to the Series E 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 E perpetual preferred shares in excess of its carrying value as of the redemption date.

The Company used the net proceeds from the offering to repay indebtedness under its revolving credit facility 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 $488.6 million after deducting underwriting fees.

The Company expects to use these net proceeds (i) to repay indebtedness it 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 its business strategy and (iv) for general corporate purposes.

As of March 31, 2022, the Company has estimated net proceeds of $488.6 million available from future settlement under the January 2022 Forward Sale Agreements.

At-the-Market Common Share Offering Program

During the second quarter of 2020, the Company extended its at-the-market common share offering program under which it 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 Company maintains an at-the-market common share offering program under which it can issue Class A common shares from time to time through various sales agents up to an aggregate gross sales offering price of $500.0 million (the “At-the-Market Program”).

The At-the-Market Program also provides that we may enter into forward contracts for our Class A common shares with forward sellers and forward purchasers.

The Company intends to use any net proceeds from the At-the-Market Program (i) to repay indebtedness the Company has incurred or expects to incur under its revolving credit facility, (ii) to develop new single-family properties and communities, (iii) to acquire and renovate single-family properties and for related activities in accordance with the Company’s business strategy and (iv) for working capital and general corporate purposes, including repurchases of the Company’s securities, acquisitions of additional properties, capital expenditures and the expansion, redevelopment and/or improvement of properties in the Company’s portfolio.

The 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 its business strategy and (iv) for working capital and general corporate purposes, including repurchases of the Company’s securities, acquisitions of additional properties, capital expenditures and the expansion, redevelopment and/or improvement of properties in the Company’s portfolio.

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

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.

During the three months ended March 31, 2022 and 2021, no shares were issued under the At-the-Market Program.

As of March 31, 2022, 1,835,416 shares have been issued under the At-the-Market Program and $425.2 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 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.

During the three months ended March 31, 2022 and 2021, we did not repurchase and retire any of our Class A common shares or preferred shares.

As of March 31, 2022, 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

1 unchanged sentence

The Operating Partnership funds the payment of distributions.

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

federal income tax purposes of $66.9 million.

As of December 31, 2021, AH4R had a net operating loss (“NOL”) for U.S.

federal income tax purposes of an estimated $25.4 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

During the third quarter of 2020, one of our unconsolidated joint ventures entered into a loan agreement to borrow up to a $201.0 million aggregate commitment.

During the initial two-year term, the loan bears interest at LIBOR plus a 3.50% margin and matures on August 11, 2022.

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

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.

To date, the guarantee has not been invoked and we believe that the actions that would trigger a guarantee would generally be disadvantageous to the joint venture and us, and therefore are unlikely to occur.

However, there can be no assurances that actions that could trigger the guarantee will not occur.

We have no other material obligations, assets or liabilities that would be considered off-balance sheet arrangements.

Contractual Obligations and Commitments

Material changes to our aggregate indebtedness, if any, are described in Note 8.

Debt to our condensed consolidated financial statements in this report.

Except as described in Note 15.

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.

During the three months ended March 31, 2022 and 2021, the Company distributed an aggregate $77.7 million and $69.1 million, respectively, to common shareholders, preferred shareholders and noncontrolling interests on a cash basis.

Additional Non-GAAP Measures

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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 nine months ended September 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 months ended March 31, 2022 and 2021 (amounts in thousands):

For the Three Months Ended

September 30, For the Nine Months Ended

September 30,

2021 2020 2021 2020

Net income attributable to common shareholders $ 55,939 $ 30,214

6 unchanged sentences

Acquisition, other transaction costs and other 5,974 4,846

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

Noncash share-based compensation - general and administrative 4,030 4,342

Noncash share-based compensation - property management 999 999

Redemption of perpetual preferred shares — — 15,879 —

Core FFO attributable to common share and unit holders $ 149,801 $ 116,922

2 unchanged sentences

Adjusted FFO attributable to common share and unit holders $ 138,088 $ 106,296

(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 nine months ended September 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 months ended March 31, 2022 and 2021 (amounts in thousands):

For the Three Months Ended

September 30, For the Nine Months Ended

September 30,

2021 2020 2021 2020

Net income $ 70,014 $ 48,921

8 unchanged sentences

Acquisition, other transaction costs and other 5,974 4,846

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

Adjusted EBITDAre $ 186,123 $ 161,497

2 unchanged sentences

Fully Adjusted EBITDAre $ 174,410 $ 150,871

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