What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-11-04 compared with 2022-08-05 · 137 added, 117 removed, 430 unchanged (37% of the section changed)

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We commenced operations in November 2012.

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.

As of September 30, 2022, we owned 58,961 single-family properties in select submarkets of metropolitan statistical areas (“MSAs”) in 21 states, including 1,057 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 56,077 single-family properties in 22 states, including 604 properties held for sale as of September 30, 2021.

As of September 30, 2022, 55,421 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 53,133 of our total properties (excluding properties held for sale) as of September 30, 2021.

Also, as of September 30, 2022, the Company had an additional 2,271 properties held in unconsolidated joint ventures, compared to 1,942 properties held in unconsolidated joint ventures as of December 31, 2021, and 1,729 properties held in unconsolidated joint ventures as of September 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 June 30, 2022:

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

Total Single-Family Properties (1)

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Total/Average 57,904 100.0 % $ 12,215.4 100.0 % $ 210,960 1,988 17.0 2015

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

(1) Excludes 1,057 single-family properties held for sale as of September 30, 2022.

(2) Represents 15 markets in 13 states.

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

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

Total Single-Family Properties (1)

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Total/Average 95.7 % $ 1,963 12.0 6.7 9.5 %

(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.

(1) Excludes 1,057 single-family properties held for sale as of September 30, 2022.

(2) For the three months ended September 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 September 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 June 30, 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 September 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 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.

Recently, we have strategically scaled back acquisitions through our National Builder Program and traditional acquisition channel as the housing market adjusts to the current macroeconomic environment.

We anticipate beginning to grow in these acquisition channels when the housing and capital markets stabilize.

During the three months ended September 30, 2022, we developed or acquired 410 homes, including 265 newly constructed homes delivered through our AMH Development Program and 145 homes acquired through our National Builder Program and traditional acquisition channel, partially offset by 164 homes sold to third parties.

During the three months ended September 30, 2022, we also developed an additional 236 newly constructed properties which were delivered to our unconsolidated joint ventures, aggregating to 501 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.

As of September 30, 2022 and December 31, 2021, there were 1,057 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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Additionally, our ability to collect revenues and related operating results are impacted by the credit worthiness and quality of our tenants.

Typically, our tenants have household incomes ranging from $70,000 to $120,000 and primarily consist of families with approximately two adults and one or more children.

Typically, our incoming residents have household incomes ranging from $80,000 to $140,000 and primarily consist of families with approximately two adults and one or more children.

Our rents and other single-family property revenues are comprised of rental revenue from single-family properties, fees from our single-family property rentals and “tenant charge-backs,” which are primarily related to cost recoveries on utilities.

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 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.

Based on our Same-Home population of properties (defined below), the year-over-year increase in Average Monthly Realized Rent per property was 8.1% for the three months ended September 30, 2022, and we experienced turnover rates of 8.3% and 8.8% during the three months ended September 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 nine months ended September 30, 2022, and we experienced turnover rates of 21.8% and 23.8% during the nine months ended September 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 $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.

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.

Net income totaled $61.7 million for the three months ended September 30, 2022, compared to $48.5 million for the three months ended September 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, partially offset by $6.1 million of hurricane-related charges, net in the three months ended September 30, 2022.

Net income totaled $206.2 million for the nine months ended September 30, 2022, compared to $149.2 million for the nine months ended September 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.

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

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

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

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

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.

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.

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

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

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

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

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

Comparison of the Three Months Ended June 30, 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

Comparison of the Three Months Ended September 30, 2022 to the Three Months Ended September 30, 2021

The following tables present 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, 2022 and 2021 (amounts in thousands):

For the Three Months Ended September 30, 2022

Properties (1)

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Core NOI $ 175,156 64.5 % $ 35,682 61.4 % $ 210,838 64.0 %

For the Three Months Ended June 30, 2021

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

For the Three Months Ended

September 30,

Core revenues and Same-Home core revenues

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Net income $ 61,665 $ 48,501

Hurricane-related charges, net 6,133 —

Gain on sale and impairment of single-family properties and other, net (24,197) (9,572)

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Rents and Other Single-Family Property Revenues

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.

Rents and other single-family property revenues increased 15.3% to $391.6 million for the three months ended September 30, 2022 from $339.6 million for the three months ended September 30, 2021.

Revenue growth was driven by an increase in our average occupied portfolio which grew to 55,321 homes for the three months ended September 30, 2022, compared to 52,889 homes for the three months ended September 30, 2021, as well as higher rental rates and lower uncollectible rents.

Property Operating Expenses

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 operating expenses increased 12.9% to $152.1 million for the three months ended September 30, 2022 from $134.7 million for the three months ended September 30, 2021.

This increase was primarily attributable to inflationary increases in R&M and turnover costs, annual growth in property tax expense and growth in our portfolio.

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.

Property management expenses for the three months ended September 30, 2022 and 2021 were $29.7 million and $24.6 million, respectively, which included $1.0 million and $0.7 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 due to increased headcount to support growth in our portfolio.

Core Revenues from Same-Home Properties

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 revenues from Same-Home properties increased 8.1% to $271.5 million for the three months ended September 30, 2022 from $251.1 million for the three months ended September 30, 2021.

This increase was primarily attributable to higher Average Monthly Realized Rent per property, which increased 8.1% to $1,943 per month for the three months ended September 30, 2022 compared to $1,798 per month for the three months ended September 30, 2021, and lower uncollectible rents, partially offset by a decrease in Average Occupied Days Percentage, which was 97.1% for the three months ended September 30, 2022 compared to 97.4% for the three months ended September 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 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.

Core property operating expenses from Same-Home properties increased 6.1% to $96.4 million for the three months ended September 30, 2022 from $90.8 million for the three months ended September 30, 2021 primarily driven by annual growth in property tax expense, higher property management personnel costs due to increased headcount to support growth in our portfolio, 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 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.

General and administrative expense for the three months ended September 30, 2022 and 2021 was $17.0 million and $12.6 million, respectively, which included $3.4 million and $1.6 million, respectively, of noncash share-based compensation expense in each period related to corporate administrative employees.

The increase in general and administrative expense was primarily related to increased personnel and information technology costs to support growth in our business, as well as 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 September 30, 2022.

Interest Expense

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.

Interest expense increased 16.6% to $36.3 million for the three months ended September 30, 2022 from $31.1 million for the three months ended September 30, 2021.

This increase was primarily due to additional interest from the issuances of the 2032 and 2052 unsecured senior notes in April 2022, partially offset by additional capitalized interest during the three months ended September 30, 2022 related to an increase in development activities under our AMH Development Program during the three months ended September 30, 2022.

Acquisition and Other Transaction Costs

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.

Acquisition and other transaction costs for the three months ended September 30, 2022 and 2021 were $4.5 million and $3.3 million, respectively, which included $1.3 million and $0.8 million, respectively, of noncash share-based compensation expense in each period related to employees in these functions.

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

Depreciation and Amortization

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

Depreciation and amortization expense increased 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.

Depreciation and amortization expense increased 15.7% to $109.3 million for the three months ended September 30, 2022 from $94.5 million for the three months ended September 30, 2021 primarily due to growth in our average number of depreciable properties.

Hurricane-Related Charges, net

Hurricane Ian impacted certain properties primarily located in Florida, South Carolina and North Carolina, resulting in $6.1 million of hurricane-related charges, net during the three months ended September 30, 2022.

The Company’s property and casualty insurance

policies provide coverage for wind and flood damage, as well as business interruption costs, during the period of remediation and repairs, subject to deductibles and limits.

During the three months ended September 30, 2022, the Company recognized $8.4 million in gross charges primarily related to an estimated accrual for minor repair and remediation costs, partially offset by an estimated $2.3 million of related insurance claims that we believe is probable we will recover.

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 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.

Gain on sale and impairment of single-family properties and other, net for the three months ended September 30, 2022 and 2021 was $24.2 million and $9.6 million, respectively, which included $0.2 million and zero 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 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

Other income and expense, net for the three months ended September 30, 2022 and 2021 was $0.8 million and $0.1 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 Nine Months Ended September 30, 2022 to the Nine Months Ended September 30, 2021

The following tables present 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, 2022 and 2021 (amounts in thousands):

For the Nine Months Ended September 30, 2022

Properties (1)

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Core NOI $ 521,239 65.3 % $ 91,996 59.9 % $ 613,235 64.4 %

For the Six Months Ended June 30, 2021

For the Nine Months Ended September 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 six months ended June 30, 2022 and 2021 (amounts in thousands):

For the Six Months Ended

The following are reconciliations of core revenues, Same-Home core revenues, core property operating expenses, Same-Home core property operating expenses, Core NOI and Same-Home Core NOI to their respective GAAP metrics for the nine months ended September 30, 2022 and 2021 (amounts in thousands):

For the Nine Months Ended

September 30,

Core revenues and Same-Home core revenues

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Net income $ 206,234 $ 149,236

Hurricane-related charges, net 6,133 —

Gain on sale and impairment of single-family properties and other, net (79,052) (36,401)

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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.

Rents and other single-family property revenues increased 14.9% to $1.1 billion for the nine months ended September 30, 2022 from $965.8 million for the nine months ended September 30, 2021.

Revenue growth was driven by an increase in our average occupied portfolio which grew to 54,658 homes for the nine months ended September 30, 2022, compared to 52,269 homes for the nine months ended September 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 operating expenses increased 12.2% to $415.0 million for the nine months ended September 30, 2022 from $370.0 million for the nine months ended September 30, 2021.

This increase was primarily attributable to inflationary increases in R&M and turnover costs, annual growth in property tax expense 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.

Property management expenses for the nine months ended September 30, 2022 and 2021 were $84.5 million and $70.7 million, respectively, which included $3.1 million and $2.3 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 revenues from Same-Home properties increased 8.9% to $798.6 million for the nine months ended September 30, 2022 from $733.4 million for the nine months ended September 30, 2021.

This increase was primarily attributable to higher Average Monthly Realized Rent per property, which increased 7.9% to $1,899 per month for the nine months ended September 30, 2022 compared to $1,760 per month for the nine months ended September 30, 2021, and lower uncollectible rents, partially offset by a decrease in Average Occupied Days Percentage, which was 97.4% for the nine months ended September 30, 2022 compared to 97.6% for the nine months ended September 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.

Core property operating expenses from Same-Home properties increased 6.4% to $277.3 million for the nine months ended September 30, 2022 from $260.6 million for the nine months ended September 30, 2021 primarily driven by annual growth in property tax expense, higher property management 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, 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.

General and administrative expense for the nine months ended September 30, 2022 and 2021 was $53.1 million and $40.6 million, respectively, which included $13.4 million and $7.7 million, respectively, of noncash share-based compensation expense in each period 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.

Interest expense increased 13.8% to $98.6 million for the nine months ended September 30, 2022 from $86.6 million for the nine months ended September 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 nine months ended September 30, 2022 related to an increase in development activities under our AMH Development Program and an increase in acquired properties that underwent initial renovation during the nine months ended September 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.

Acquisition and other transaction costs for the nine months ended September 30, 2022 and 2021 were $18.1 million and $11.1 million, respectively, which included $7.2 million and $4.3 million, respectively, of noncash share-based compensation expense in each period related to employees in these functions.

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 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.

Depreciation and amortization expense increased 13.8% to $313.7 million for the nine months ended September 30, 2022 from $275.7 million for the nine months ended September 30, 2021 primarily due to growth in our average number of depreciable properties.

Hurricane-Related Charges, net

The Company’s property and casualty insurance

policies provide coverage for wind and flood damage, as well as business interruption costs, during the period of remediation and repairs, subject to deductibles and limits.

During the nine months ended September 30, 2022, the Company recognized $8.4 million in gross charges primarily related to an estimated accrual for minor repair and remediation costs, partially offset by an estimated $2.3 million of related insurance claims that we believe is probable we will recover.

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.

Gain on sale and impairment of single-family properties and other, net for the nine months ended September 30, 2022 and 2021 was $79.1 million and $36.4 million, respectively, which included $1.3 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.

Other income and expense, net for the nine months ended September 30, 2022 and 2021 was $6.8 million and $1.7 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 six months ended June 30, 2022.

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

Recent Accounting Pronouncements

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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.

Going forward, we expect to meet our operating liquidity requirements generally through cash on hand and cash provided by operations.

We believe our rental income, net of operating expenses and recurring capital expenditures, will generally provide cash flow sufficient to fund our operations and dividend distributions.

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), property dispositions and joint venture transactions.

We expect to meet our operating liquidity requirements and our dividend distributions generally through cash on hand and cash provided by operations.

For our acquisition and development expenditures, we expect to supplement these sources through the issuance of equity securities, including under our At-the-Market Program described below, borrowings under our credit facilities, issuances of unsecured senior notes, and proceeds from sales of single-family properties.

However, our real estate assets are illiquid in nature.

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 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.

Our liquidity and capital resources as of September 30, 2022 included cash and cash equivalents of $97.2 million.

Additionally, as of September 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 $2.7 million was committed to outstanding letters of credit.

As described below, we also have estimated net proceeds of $297.1 million available from future settlement of the January 2022 Forward Sale Agreements.

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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.

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.

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

For the Six Months Ended

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

For the Nine Months Ended

September 30,

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 $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.

Net cash provided by operating activities increased $98.6 million, or 19.8%, from $498.2 million for the nine months ended September 30, 2021 to $596.8 million for the nine months ended September 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 $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.

Net cash used for investing activities increased $76.2 million, or 6.4%, from $1.2 billion for the nine months ended September 30, 2021 to $1.3 billion for the nine months ended September 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 $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.

Cash outflows for the addition of single-family properties to our portfolio through these channels increased $96.2 million during the nine months ended September 30, 2022.

Homes acquired through our traditional acquisition channel require additional expenditures to prepare them for rental, and cash outflows for renovations to single-family properties increased $52.4 million primarily as a result of an increased volume of properties that underwent initial or property-enhancing renovations during the nine months ended September 30, 2022.

Recurring and other capital expenditures for single-family properties increased $8.4 million primarily due to growth in our portfolio.

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.

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

Net proceeds received from the sale of single-family properties and other increased $61.9 million as a result of an increased volume of properties sold and a higher average realized sales price per property during the nine months ended September 30, 2022, and we collected $34.0 million during the nine months ended September 30, 2022 from notes receivables related to property sales.

Net cash inflows from unconsolidated joint ventures increased $14.7 million during the nine months ended September 30, 2022 due to the timing of contributions and distributions to and from our unconsolidated joint ventures.

Cash outflows for other investing activities increased $19.1 million primarily due to investments in venture capital funds focused on proptech and decarbonization in the real estate industry during the nine months ended September 30, 2022 and a year-over-year increase in cash outflows for information technology projects.

Cash outflows for deposits on land option contracts increased $10.7 million as a result of deposits made during the nine months ended September 30, 2022.

Financing Activities

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.

Net cash provided by financing activities increased $106.6 million, from $630.2 million for the nine months ended September 30, 2021 to $736.8 million for the nine months ended September 30, 2022 primarily due to (i) a $343.8 million reduction in cash paid for the redemptions of perpetual preferred shares as well as an $18.6 million reduction in distributions to preferred shareholders as a result of the redemptions of our Series F perpetual preferred shares during the nine months ended September 30, 2022 and Series D and Series E perpetual preferred shares during the nine months ended September 30, 2021, (ii) a $139.6 million year-over-year increase in proceeds from unsecured senior notes, net of discount, (iii) $60.2 million of proceeds from liabilities related to consolidated land not owned during the nine months ended September 30, 2022, and (iv) a $9.8 million year-over-year decrease in financing costs paid.

This increase was partially offset by (i) activity under our revolving credit facility, which resulted in $350.0 million of net cash outflows during the nine months ended September 30, 2022 compared to zero net activity during the nine months ended September 30, 2021, (ii) an $86.0 million increase in distributions paid to common share and unit holders resulting from an 80% increase in distributions paid per common share and unit, and (iii) a $31.6 million year-over-year decrease in proceeds from the issuance of Class A common shares, net of offering costs.

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”).

During the second quarter of 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.

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

In September 2022, the Company issued and physically settled 5,000,000 Class A common shares under the January 2022 Forward Sale Agreements, receiving net proceeds of $185.6 million.

The Company used these net proceeds to repay indebtedness under its revolving credit facility and for general corporate purposes.

As of September 30, 2022, 8,000,000 Class A common shares remained available for future settlement under the January 2022 Forward Sale Agreements.

The Company expects to physically settle the remaining shares by January 20, 2023 through the delivery of the Class A common shares and expects that net proceeds will be approximately $297.1 million.

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.

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 January 2022 Forward Sale Agreements are subject to early termination or settlement under certain circumstances.

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 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.

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.

When the Company issues common shares, the Operating Partnership issues an equivalent number of units of partnership interest of a corresponding class to AH4R, with the Operating Partnership receiving the net proceeds from the share issuances.

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 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.

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

As of September 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 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.

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

As of September 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.

During the second quarter of 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.

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 nine months ended September 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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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.

federal income tax purposes of $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.

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.

During the nine months ended September 30, 2022 and 2021, the Company distributed an aggregate $229.9 million and $162.5 million, respectively, to common shareholders, preferred shareholders and noncontrolling interests on a cash basis.

Additional Non-GAAP Measures

Funds from Operations (“FFO”) / Core FFO / Adjusted FFO attributable to common share and unit holders

FFO attributable to common share and unit holders is a non-GAAP financial measure that we calculate in accordance with the definition approved by the National Association of Real Estate Investment Trusts (“NAREIT”), which defines FFO as net income or loss calculated in accordance with GAAP, excluding gains and losses from sales or impairment of real estate, plus real estate-related depreciation and amortization (excluding amortization of deferred financing costs and depreciation of non-real estate assets), and after adjustments for unconsolidated partnerships and joint ventures to reflect FFO on the same basis.

depreciation and amortization (excluding amortization of deferred financing costs and depreciation of non-real estate assets), and after adjustments for unconsolidated partnerships and joint ventures to reflect FFO on the same basis.

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

We compute this metric by adjusting FFO attributable to common share and unit holders for (1) acquisition and other transaction costs incurred with business combinations and the acquisition or disposition of properties as well as nonrecurring items unrelated to ongoing operations, (2) noncash share-based compensation expense, (3) hurricane-related charges, net, which result in material charges to the impacted single-family properties, (4) gain or loss on early extinguishment of debt and (5) the allocation of income to our perpetual preferred shares in connection with their redemption.

We compute this metric by adjusting FFO attributable to common share and unit holders for (1) acquisition and other transaction costs incurred with business combinations and the acquisition or disposition of properties as well as nonrecurring items unrelated to ongoing operations, (2) noncash share-based compensation expense, (3) hurricane-related charges, net, which result in material charges to our single-family property portfolio, (4) gain or loss on early extinguishment of debt and (5) the allocation of income to our perpetual preferred shares in connection with their redemption.

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

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.

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

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.

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

For the Three Months Ended

June 30, For the Six Months Ended

September 30, For the Nine Months Ended

September 30,

2022 2021 2022 2021

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Noncash share-based compensation - property management 1,015 680 3,146 2,278

Hurricane-related charges, net 6,133 — 6,133 —

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

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EBITDAre is a supplemental non-GAAP financial measure, which we calculate in accordance with the definition approved by NAREIT by adjusting EBITDA for gains and losses from sales or impairments of single-family properties and adjusting for unconsolidated partnerships and joint ventures on the same basis.

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

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

Fully Adjusted EBITDAre is a supplemental non-GAAP financial measure calculated by adjusting Adjusted EBITDAre for (1) Recurring Capital Expenditures and (2) leasing costs.

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

The following is a reconciliation of net income, as determined in accordance with GAAP, to EBITDA, EBITDAre, Adjusted EBITDAre and Fully Adjusted EBITDAre for the three and six months ended June 30, 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 nine months ended September 30, 2022 and 2021 (amounts in thousands):

For the Three Months Ended

June 30, For the Six Months Ended

September 30, For the Nine Months Ended

September 30,

2022 2021 2022 2021

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Acquisition, other transaction costs and other 4,482 3,279 18,114 11,093

Hurricane-related charges, net 6,133 — 6,133 —

Adjusted EBITDAre $ 198,509 $ 170,759 $ 580,115 $ 497,794

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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