What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-05 compared with 2022-05-06 · 210 added, 75 removed, 337 unchanged (46% of the section changed)

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We commenced operations in November 2012.

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.

As of June 30, 2022, we owned 58,715 single-family properties in select submarkets of metropolitan statistical areas (“MSAs”) in 22 states, including 955 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 54,785 single-family properties in 22 states, including 589 properties held for sale as of June 30, 2021.

As of June 30, 2022, 55,220 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 52,645 of our total properties (excluding properties held for sale) as of June 30, 2021.

Also, as of June 30, 2022, the Company had an additional 2,046 properties held in unconsolidated joint ventures, compared to 1,942 properties held in unconsolidated joint ventures as of December 31, 2021, and 1,530 properties held in unconsolidated joint ventures as of June 30, 2021.

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

Key Single-Family Property and Leasing Metrics

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

The following table summarizes certain key single-family properties metrics as of June 30, 2022:

Total Single-Family Properties (1)

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Total/Average 57,760 100.0 % $ 12,065.4 100.0 % $ 208,888 1,988 16.9 2015

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

(1) Excludes 955 single-family properties held for sale as of June 30, 2022.

(2) Represents 15 markets in 13 states.

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

The following table summarizes certain key leasing metrics as of June 30, 2022:

Total Single-Family Properties (1)

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Total/Average 96.0 % $ 1,917 12.0 6.4 9.3 %

(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.

(1) Excludes 955 single-family properties held for sale as of June 30, 2022.

(2) For the three months ended June 30, 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 June 30, 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 March 31, 2022, 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 June 30, 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 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 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 March 31, 2022 and December 31, 2021, there were 855 and 659 properties, respectively, classified as held for sale.

During the three months ended June 30, 2022, we developed or acquired 928 homes, including 315 newly constructed homes delivered through our AMH Development Program and 613 homes acquired through our National Builder Program and traditional acquisition channel, partially offset by 197 homes sold to third parties.

During the three months ended June 30, 2022, we also developed an additional 214 newly constructed properties which were delivered to our unconsolidated joint ventures, aggregating to 529 total program deliveries through our AMH Development Program.

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

As of June 30, 2022 and December 31, 2021, there were 955 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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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 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.

Typically, 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.

This process, which we refer to as “turnover,” is impacted by numerous factors, including the condition of the home upon move-out of the previous tenant, and by local demand, our marketing techniques and the size of our available inventory at the time of the turnover.

On average, it takes approximately 30 to 50 days to complete the turnover process.

Typically, it takes approximately 30 to 50 days to complete the turnover process.

Our revenues are derived primarily from rents collected from tenants for our single-family properties under lease agreements which typically have a term of one year.

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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 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.

Based on our Same-Home population of properties (defined below), the year-over-year increase in Average Monthly Realized Rent per property was 8.3% for the three months ended June 30, 2022, and we experienced turnover rates of 7.6% and 8.2% during the three months ended June 30, 2022 and 2021, respectively.

Based on our Same-Home population of properties, the year-over-year increase in Average Monthly Realized Rent per property was 7.9% for the six months ended June 30, 2022, and we experienced turnover rates of 13.6% and 15.1% during the six months ended June 30, 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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Results of Operations

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.

Net income totaled $74.6 million for the three months ended June 30, 2022, compared to net income of $51.8 million for the three months ended June 30, 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.

Net income totaled $144.6 million for the six months ended June 30, 2022, compared to net income of $100.7 million for the six months ended June 30, 2021.

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

A property is classified as stabilized once it has been renovated by the Company or newly constructed and then initially leased or available for rent for a period greater than 90 days.

A property is classified as stabilized once it has been renovated by the Company or newly constructed and then initially leased or available for rent for a period greater than

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 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

Comparison of the Three Months Ended June 30, 2022 to the Three Months Ended June 30, 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 June 30, 2022 and 2021 (amounts in thousands):

For the Three Months Ended June 30, 2022

Properties (1)

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Core NOI $ 174,435 64.8 % $ 30,535 61.6 % $ 204,970 64.3 %

For the Three Months Ended March 31, 2021

For the Three Months Ended June 30, 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 March 31, 2022 and 2021 (amounts in thousands):

For the Three Months Ended

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Rents and Other Single-Family Property Revenues

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.

Rents and other single-family property revenues increased 15.4% to $361.9 million for the three months ended June 30, 2022 from $313.7 million for the three months ended June 30, 2021.

Revenue growth was driven by an increase in our average occupied portfolio which grew to 54,786 homes for the three months ended June 30, 2022, compared to 52,335 homes for the three months ended June 30, 2021, as well as higher rental rates and lower uncollectible rents.

Property Operating Expenses

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 operating expenses increased 10.9% to $129.3 million for the three months ended June 30, 2022 from $116.6 million for the three months ended June 30, 2021.

This increase was primarily attributable to inflationary increases and growth in our portfolio.

Property Management Expenses

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.

Property management expenses for the three months ended June 30, 2022 and 2021 were $28.8 million and $22.4 million, respectively, which included $1.1 million and $0.6 million, respectively, 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 from (i) the timing of increased compensation in the second half of 2021 as a result of the inflationary environment and (ii) increased headcount 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 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 revenues from Same-Home properties increased 9.4% to $269.2 million for the three months ended June 30, 2022 from $246.1 million for the three months ended June 30, 2021.

This increase was primarily attributable to higher Average Monthly Realized Rent per property, which increased 8.3% to $1,901 per month for the three months ended June 30, 2022 compared to $1,755 per month for the three months ended June 30, 2021, and lower uncollectible rents, partially offset by a decrease in Average Occupied Days Percentage, which was 97.4% for the three months ended June 30, 2022 compared to 97.9% for the three months ended June 30, 2021.

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 5.4% 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.

Core property operating expenses from Same-Home properties increased 7.9% to $94.7 million for the three months ended June 30, 2022 from $87.8 million for the three months ended June 30, 2021 primarily driven by annual growth in property tax expense and other inflationary increases.

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 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.

General and administrative expense for the three months ended June 30, 2022 and 2021 was $18.8 million and $12.8 million, respectively, which included $5.9 million and $1.8 million, respectively, of noncash share-based compensation expense related to corporate administrative employees.

The increase in general and administrative expense was primarily related to an increase in noncash share-based compensation expense driven by retirement provisions that resulted in accelerated expense recognition for retirement eligible employees during the three months ended June 30, 2022, as well as the timing of increased personnel and information technology costs to support growth in our business.

Interest Expense

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.

Interest expense increased 26.4% to $34.8 million for the three months ended June 30, 2022 from $27.5 million for the three months ended June 30, 2021.

This increase was primarily due to additional interest from the issuances of the 2031 and 2051 unsecured senior notes in July 2021 and the 2032 and 2052 unsecured senior notes in April 2022, partially offset by additional capitalized interest during the three months ended June 30, 2022 related to an increase in our development activities under our AMH Development Program and an increase in acquired properties that underwent initial renovation during the three months ended June 30, 2022.

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 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.

Acquisition and other transaction costs consist 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 for the three months ended June 30, 2022 and 2021 were $7.7 million and $3.0 million, respectively, which included $3.6 million and $0.7 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 noncash share-based compensation expense driven by retirement provisions that resulted in accelerated expense recognition for retirement eligible employees during the three months ended June 30, 2022, as well as higher acquisition costs associated with the growth of our portfolio.

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 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.

Depreciation and amortization expense increased 14.6% to $104.4 million for the three months ended June 30, 2022 from $91.1 million for the three months ended June 30, 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 $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.

Gain on sale and impairment of single-family properties and other, net for the three months ended June 30, 2022 and 2021 was $32.8 million and $10.8 million, respectively, which included zero and $0.2 million of impairment charges, respectively, related to homes

classified as held for sale during each period.

The increase was primarily related to an increase in properties sold as well as higher net gains from property sales.

Other Income and Expense, net

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.

Other income and expense, net for the three months ended June 30, 2022 and 2021 was $3.6 million and $0.8 million, 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.

Comparison of the Six Months Ended June 30, 2022 to the Six Months Ended June 30, 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 six months ended June 30, 2022 and 2021 (amounts in thousands):

For the Six Months Ended June 30, 2022

Properties (1)

Revenue Non-Same-

Home and Other

Properties % of Core

Revenue Total

Properties % of Core

Rents from single-family properties $ 526,327 $ 90,374 $ 616,701

Fees from single-family properties 10,377 2,614 12,991

Bad debt (5,134) (1,986) (7,120)

Core revenues 531,570 91,002 622,572

Property tax expense 88,604 16.7 % 15,785 17.3 % 104,389 16.9 %

HOA fees, net (2)

9,703 1.8 % 1,780 2.0 % 11,483 1.8 %

R&M and turnover costs, net (2)

38,784 7.3 % 8,701 9.6 % 47,485 7.6 %

Insurance 5,805 1.1 % 1,105 1.2 % 6,910 1.1 %

Property management expenses, net (3)

39,872 7.5 % 10,036 11.0 % 49,908 8.0 %

Core property operating expenses 182,768 34.4 % 37,407 41.1 % 220,175 35.4 %

Core NOI $ 348,802 65.6 % $ 53,595 58.9 % $ 402,397 64.6 %

For the Six Months Ended June 30, 2021

Properties (1)

Revenue Non-Same-

Home and Other

Properties % of Core

Revenue Total

Properties % of Core

Rents from single-family properties $ 488,774 $ 56,870 $ 545,644

Fees from single-family properties 9,222 1,478 10,700

Bad debt (11,466) (2,460) (13,926)

Core revenues 486,530 55,888 542,418

Property tax expense 84,596 17.4 % 10,792 19.3 % 95,388 17.5 %

HOA fees, net (2)

9,021 1.9 % 1,248 2.2 % 10,269 1.9 %

R&M and turnover costs, net (2)

35,439 7.3 % 5,800 10.4 % 41,239 7.6 %

Insurance 5,057 1.0 % 673 1.2 % 5,730 1.1 %

Property management expenses, net (3)

37,397 7.7 % 5,957 10.7 % 43,354 8.0 %

Core property operating expenses 171,510 35.3 % 24,470 43.8 % 195,980 36.1 %

Core NOI $ 315,020 64.7 % $ 31,418 56.2 % $ 346,438 63.9 %

(1) Includes 47,914 properties that have been stabilized longer than 90 days prior to January 1, 2021.

(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 six months ended June 30, 2022 and 2021 (amounts in thousands):

For the Six Months Ended

Core revenues and Same-Home core revenues

Rents and other single-family property revenues $ 717,981 $ 626,227

Tenant charge-backs (95,409) (83,809)

Core revenues 622,572 542,418

Non-Same-Home core revenues 91,002 55,888

Same-Home core revenues $ 531,570 $ 486,530

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

Property operating expenses $ 262,913 $ 235,272

Property management expenses 54,802 46,115

Noncash share-based compensation - property management (2,131) (1,598)

Expenses reimbursed by tenant charge-backs (95,409) (83,809)

Core property operating expenses 220,175 195,980

Non-Same-Home core property operating expenses 37,407 24,470

Same-Home core property operating expenses $ 182,768 $ 171,510

Core NOI and Same-Home Core NOI

Net income $ 144,569 $ 100,735

Gain on sale and impairment of single-family properties and other, net (54,855) (26,829)

Depreciation and amortization 204,369 181,188

Acquisition and other transaction costs 13,632 7,814

Noncash share-based compensation - property management 2,131 1,598

Interest expense 62,368 55,533

General and administrative expense 36,129 27,998

Other income and expense, net (5,946) (1,599)

Core NOI 402,397 346,438

Non-Same-Home Core NOI 53,595 31,418

Same-Home Core NOI $ 348,802 $ 315,020

Rents and Other Single-Family Property Revenues

Rents and other single-family property revenues increased 14.7% to $718.0 million for the six months ended June 30, 2022 from $626.2 million for the six months ended June 30, 2021.

Revenue growth was driven by an increase in our average occupied portfolio which grew to 54,403 homes for the six months ended June 30, 2022, compared to 51,980 homes for the six months ended June 30, 2021, as well as higher rental rates and lower uncollectible rents.

Property Operating Expenses

Property operating expenses increased 11.7% to $262.9 million for the six months ended June 30, 2022 from $235.3 million for the six months ended June 30, 2021.

This increase was primarily attributable to inflationary increases and growth in our portfolio.

Property Management Expenses

Property management expenses for the six months ended June 30, 2022 and 2021 were $54.8 million and $46.1 million, respectively, which included $2.1 million and $1.6 million, respectively, of noncash share-based compensation expense in each period related to centralized and field property management employees.

Core Revenues from Same-Home Properties

Core revenues from Same-Home properties increased 9.3% to $531.6 million for the six months ended June 30, 2022 from $486.5 million for the six months ended June 30, 2021.

This increase was primarily attributable to higher Average Monthly Realized Rent per property, which increased 7.9% to $1,878 per month for the six months ended June 30, 2022 compared to $1,741 per month for the six months ended June 30, 2021, and lower uncollectible rents, partially offset by a decrease in Average Occupied Days Percentage, which was 97.5% for the six months ended June 30, 2022 compared to 97.6% for the six months ended June 30, 2021.

Core Property Operating Expenses from Same-Home Properties

Core property operating expenses from Same-Home properties increased 6.6% to $182.8 million for the six months ended June 30, 2022 from $171.5 million for the six months ended June 30, 2021 primarily driven by annual growth in property tax expense and other inflationary increases.

General and Administrative Expense

General and administrative expense for the six months ended June 30, 2022 and 2021 was $36.1 million and $28.0 million, respectively, which included $10.0 million and $6.2 million, respectively, of noncash share-based compensation expense related to corporate administrative employees.

The increase in general and administrative expense was primarily related to an increase in noncash share-based compensation expense, as well as the timing of increased personnel and information technology costs to support growth in our business.

Interest Expense

Interest expense increased 12.3% to $62.4 million for the six months ended June 30, 2022 from $55.5 million for the six months ended June 30, 2021.

This increase was primarily due to additional interest from the issuances of the 2031 and 2051 unsecured senior notes in July 2021 and the 2032 and 2052 unsecured senior notes in April 2022, partially offset by additional capitalized interest during the six months ended June 30, 2022 related to an increase in our development activities under our AMH Development Program and an increase in acquired properties that underwent initial renovation during the six months ended June 30, 2022.

Acquisition and Other Transaction Costs

Acquisition and other transaction costs for the six months ended June 30, 2022 and 2021 were $13.6 million and $7.8 million, respectively, which included $6.0 million and $3.5 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 and 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 12.8% to $204.4 million for the six months ended June 30, 2022 from $181.2 million for the six months ended June 30, 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 for the six months ended June 30, 2022 and 2021 was $54.9 million and $26.8 million, respectively, which included $1.1 million and $0.2 million of impairment charges, respectively, related to homes classified as held for sale during each period.

The increase was primarily related to an increase in properties sold as well as higher net gains from property sales, partially offset by higher impairment charges.

Other Income and Expense, net

Other income and expense, net for the six months ended June 30, 2022 and 2021 was $5.9 million and $1.6 million, 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

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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.

There have been no material changes to these estimates during the six months ended June 30, 2022.

Recent Accounting Pronouncements

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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.

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.

Our liquidity and capital resources as of June 30, 2022 included cash and cash equivalents of $70.4 million.

Additionally, as of June 30, 2022, we had no outstanding borrowings under our revolving credit facility, which provides for maximum borrowings of up to $1.25 billion, of which $2.5 million was committed to outstanding letters of credit.

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.

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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

The following table summarizes the Company’s and the Operating Partnership’s cash flows for the six months ended June 30, 2022 and 2021 (amounts in thousands):

For the Six Months Ended

2022 2021 Change

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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 $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.

Net cash provided by operating activities increased $47.2 million, or 14.2%, from $331.8 million for the six months ended June 30, 2021 to $379.0 million for the six months ended June 30, 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 $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.

Net cash used for investing activities increased $368.4 million, or 62.9%, from $585.2 million for the six months ended June 30, 2021 to $953.5 million for the six months ended June 30, 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 $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.

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.

Cash outflows for the addition of single-family properties to our portfolio through these channels increased $400.8 million during the six months ended June 30, 2022.

Homes acquired through our traditional acquisition channel also require additional expenditures to prepare them for rental, and cash outflows for renovations to single-family properties increased $41.7 million primarily as a result of an increased volume of newly acquired properties that underwent initial renovation during the six months ended June 30, 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.

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 the sale of single-family properties and other increased $38.6 million as a result of an increased volume of properties sold and a higher average realized sales price per property during the six months ended June 30, 2022, and we collected $33.2 million during the six months ended June 30, 2022 from notes receivables related to property sales.

Net cash inflows from unconsolidated joint ventures increased $5.8 million during the six months ended June 30, 2022 due to the timing of contributions and distributions to and from our unconsolidated joint ventures.

Cash outflows for other purchases of productive assets increased $8.3 million primarily due to an investment in a residential-focused proptech venture capital fund during the six months ended June 30, 2022.

Financing Activities

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.

Net cash provided by financing activities increased $433.1 million from $171.8 million for the six months ended June 30, 2021 to $604.9 million for the six months ended June 30, 2022 primarily due to $876.8 million of proceeds from unsecured senior notes, net of discount, during the six months ended June 30, 2022, a $343.8 million reduction in cash paid for the redemptions of the Series F perpetual preferred shares during the six months ended June 30, 2022 compared to the Series D and Series E perpetual preferred shares during the during the six months ended June 30, 2021, and a $181.8 million increase in proceeds from the issuance of Class A common shares, net of offering costs, during six months ended June 30, 2022.

Net cash provided by financing activities also increased due to $33.8 million of proceeds from liabilities related to consolidated land not owned during the six months ended June 30, 2022 and a $16.3 million reduction in distributions to preferred shareholders as a result of the redemptions of our Series F perpetual preferred shares during the six months ended June 30, 2022 and Series D and Series E perpetual preferred shares during the six months ended June 30, 2021.

These increases were partially offset by activity under our revolving credit facility, which resulted in $350.0 million of net cash outflows during the six months ended June 30, 2022 compared to $620.0 million of net cash inflows during the six months

ended June 30, 2021, and a $51.4 million increase in distributions paid to common share and unit holders resulting from an 80% increase in distributions paid per common share and unit.

Unsecured Senior Notes

In April 2022, the Operating Partnership issued $600.0 million of 3.625% unsecured senior notes with a maturity date of April 15, 2032 (the “2032 Notes”) and $300.0 million of 4.300% unsecured senior notes with a maturity date of April 15, 2052 (the “2052 Notes” and, together with the 2032 Notes, the “Notes”).

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

The Operating Partnership received aggregate net proceeds of $870.3 million from these issuances, after underwriting fees of approximately $6.5 million and a $23.2 million discount, and before offering costs of approximately $1.7 million.

The Operating Partnership used net proceeds from this offering to repay amounts outstanding on its revolving credit facility, for the redemption of its Series F perpetual preferred shares and for general corporate 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 indentures require that we maintain certain financial covenants.

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 2032 Notes are redeemed on or after January 15, 2032 (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 2052 Notes are redeemed on or after October 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.

Class A Common Share Offering

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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.

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.

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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.

As of June 30, 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

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

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.

During the six

months ended June 30, 2022 and 2021, no shares were issued under the At-the-Market Program.

As of June 30, 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 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.

During the six months ended June 30, 2022 and 2021, we did not repurchase and retire any of our Class A common shares or preferred shares.

As of June 30, 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.

Redemption of Perpetual Preferred Shares

In May 2022, the Company redeemed all 6,200,000 shares of the outstanding 5.875% Series F perpetual preferred shares, $0.01 par value per share, for cash at the 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 F perpetual preferred units.

As a result of the redemption, the Company recorded a $5.3 million allocation of income to the Series F perpetual preferred shareholders within the condensed consolidated statements of operations during the three and six months ended June 30, 2022, which represents the initial liquidation value of the Series F perpetual preferred shares in excess of its carrying value as of the redemption date.

Distributions

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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.

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.

During the six months ended June 30, 2022 and 2021, the Company distributed an aggregate $154.3 million and $119.2 million, respectively, to common shareholders, preferred shareholders and noncontrolling interests on a cash basis.

Additional Non-GAAP Measures

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We compute this metric by adjusting Core FFO attributable to common share and unit holders for (1) Recurring Capital Expenditures that are necessary to help preserve the value and maintain functionality of our properties and (2) capitalized leasing costs incurred during the period.

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

Same-Home Property by (b) our total number of properties, excluding newly acquired non-stabilized properties and properties classified as held for sale.

We present FFO attributable to common share and unit holders because we consider this metric to be an important measure of the performance of real estate companies, as do many investors and analysts in evaluating the Company.

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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 months ended March 31, 2022 and 2021 (amounts 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 six months ended June 30, 2022 and 2021 (amounts in thousands):

For the Three Months Ended

June 30, For the Six Months Ended

2022 2021 2022 2021

Net income attributable to common shareholders $ 56,590 $ 20,102 $ 112,529 $ 50,316

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Noncash share-based compensation - property management 1,132 599 2,131 1,598

Redemption of perpetual preferred shares 5,276 15,879 5,276 15,879

Core FFO attributable to common share and unit holders $ 153,223 $ 122,790 $ 303,024 $ 239,712

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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 months ended March 31, 2022 and 2021 (amounts 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 six months ended June 30, 2022 and 2021 (amounts in thousands):

For the Three Months Ended

June 30, For the Six Months Ended

2022 2021 2022 2021

Net income $ 74,555 $ 51,814 $ 144,569 $ 100,735

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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