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Item 7. Management’s Discussion and Analysis

2023-02-24 compared with 2022-02-25 · 134 added, 116 removed, 382 unchanged (40% of the section changed)

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Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2021.

We are a Maryland REIT focused on acquiring, developing, renovating, leasing and operating single-family homes as rental properties.

We are a Maryland REIT focused on acquiring, developing, renovating, leasing and managing single-family homes as rental properties.

The Operating Partnership is the entity through which we conduct substantially all of our business and own, directly or through subsidiaries, substantially all of our assets.

We commenced operations in November 2012.

As of December 31, 2021, we owned 57,024 single-family properties in selected sub-markets of metropolitan statistical areas (“MSAs”) in 22 states, including 659 properties held for sale, compared to 53,584 single-family properties in 22 states, including 711 properties held for sale, as of December 31, 2020.

As of December 31, 2021, 53,637, or 95.2%, of our total properties (excluding properties held for sale) were occupied, compared to 51,271, or 97.0%, of our total properties (excluding properties held for sale) as of December 31, 2020.

We commenced operations in November 2012 and we have elected to be taxed as a REIT.

As of December 31, 2022, we owned 58,993 single-family properties in select submarkets of metropolitan statistical areas (“MSAs”) in 21 states, including 1,115 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.

As of December 31, 2022, 55,605 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.

Also, as of December 31, 2022, the Company had an additional 2,540 properties held in unconsolidated joint ventures, compared to 1,942 properties held in unconsolidated joint ventures as of December 31, 2021.

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

Market Number of Single-Family Properties (1)

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

Total Single-Family Properties (1)

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

Gross Book Value per Property Avg.

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Phoenix, AZ 3,405 5.9 % 711.9 5.8 % 209,085 1,838 18.6 2015

Houston, TX 2,914 5.2 % 495.7 4.4 % 170,106 2,099 15.9 2014

Nashville, TN 3,238 5.6 % 775.8 6.3 % 239,592 2,110 15.7 2016

Indianapolis, IN 2,910 5.0 % 499.4 4.1 % 171,612 1,930 19.9 2014

Tampa, FL 2,635 4.7 % 559.4 4.9 % 212,303 1,942 14.9 2015

Houston, TX 2,642 4.6 % 465.1 3.8 % 176,023 2,095 17.0 2014

Jacksonville, FL 2,891 5.0 % 602.9 4.9 % 208,527 1,931 14.5 2016

Tampa, FL 2,729 4.7 % 602.7 4.9 % 220,833 1,939 15.5 2016

Raleigh, NC 2,177 3.8 % 429.2 3.5 % 197,136 1,889 16.9 2015

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Orlando, FL 1,867 3.2 % 379.1 3.1 % 203,033 1,897 19.3 2015

Greater Chicago area, IL and IN 1,700 3.0 % 317.2 2.8 % 186,612 1,870 20.3 2013

Salt Lake City, UT 1,908 3.3 % 575.9 4.7 % 301,837 2,242 16.3 2016

Charleston, SC 1,463 2.6 % 319.6 2.8 % 218,479 1,974 11.8 2016

Greater Chicago area, IL and IN 1,611 2.8 % 304.3 2.5 % 188,859 1,869 21.3 2013

Las Vegas, NV 1,854 3.2 % 493.2 4.0 % 266,016 1,908 13.0 2016

Austin, TX (3)

794 1.4 % 160.3 1.4 % 201,922 1,965 13.0 2015

Charleston, SC 1,524 2.6 % 345.7 2.8 % 226,808 1,963 12.1 2017

San Antonio, TX 1,325 2.3 % 258.1 2.1 % 194,760 1,933 14.2 2015

1,292 2.3 % 238.1 2.1 % 184,267 1,946 13.8 2015

Seattle, WA 1,141 2.0 % 369.9 3.0 % 324,227 1,996 13.0 2017

Savannah/Hilton Head, SC 1,042 1.8 % 216.6 1.8 % 207,830 1,889 14.2 2016

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(2) Represents 15 markets in 13 states.

(3) 286 properties were reclassified from Austin, TX to San Antonio, TX during the year ended December 31, 2021 as a result of property reassignments between district offices.

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

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Phoenix, AZ 94.9 % 1,938 12.0 6.1 9.6 %

Houston, TX 94.8 % 1,752 12.4 6.1 5.6 %

Nashville, TN 95.8 % 2,104 12.0 6.4 8.9 %

Indianapolis, IN 95.0 % 1,714 12.1 6.2 5.4 %

Tampa, FL 94.9 % 1,878 12.0 6.3 8.6 %

Houston, TX 96.7 % 1,883 12.0 6.3 5.5 %

Jacksonville, FL 95.8 % 1,981 12.0 6.6 8.2 %

Tampa, FL 97.3 % 2,122 12.0 6.3 10.3 %

Raleigh, NC 96.4 % 1,827 12.1 5.9 9.1 %

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Orlando, FL 96.2 % 2,053 12.0 6.3 9.9 %

Greater Chicago area, IL and IN 97.8 % 2,005 12.3 6.2 7.5 %

Salt Lake City, UT 95.8 % 2,247 12.0 5.9 8.2 %

Charleston, SC 85.8 % 2,013 12.0 6.5 7.7 %

Greater Chicago area, IL and IN 97.9 % 2,201 12.2 6.2 7.3 %

Las Vegas, NV 91.5 % 2,070 12.0 6.4 7.4 %

Austin, TX 91.7 % 1,853 12.2 6.3 7.3 %

Charleston, SC 97.0 % 2,062 12.0 6.2 7.8 %

San Antonio, TX 94.0 % 1,859 12.0 6.0 5.3 %

Seattle, WA 93.8 % 2,496 12.0 5.5 7.8 %

Savannah/Hilton Head, SC 96.9 % 1,935 12.0 6.5 9.3 %

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Total/Average 95.8 % $ 2,001 12.0 6.2 8.1 %

(1) Leasing information excludes 659 single-family properties held for sale as of December 31, 2021.

(1) Excludes 1,115 single-family properties held for sale as of December 31, 2022.

(2) For the year ended December 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.

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Our results of operations and financial condition are affected by numerous factors, many of which are beyond our control.

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

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

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

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

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

In addition, we

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

In addition, we also

acquire newly constructed homes from third-party developers through our National Builder Program.

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

Our level of investment activity has fluctuated based on the number of suitable opportunities and the level of capital available to invest.

During the year ended December 31, 2021, we developed or acquired 3,921 homes for our consolidated portfolio, including 1,368 newly constructed properties delivered through our AMH Development Program and 2,553 homes acquired through our National Builder Program and traditional acquisition channel, partially offset by 481 homes sold.

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 year ended December 31, 2022, we developed or acquired 2,958 homes, including 1,320 newly constructed homes delivered through our AMH Development Program, 1,438 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 989 homes sold to third parties or contributed to an unconsolidated joint venture.

During the year ended December 31, 2022, we also developed an additional 863 newly constructed properties which were delivered to our unconsolidated joint ventures, aggregating to 2,183 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.

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

As of December 31, 2022 and 2021, there were 1,115 and 659 properties, respectively, classified as held for sale.

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

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

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

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

On average, it takes approximately 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 20 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.

Our rental rates and occupancy levels are affected by macroeconomic factors and local and property-level factors, including market conditions, seasonality and tenant defaults, and the amount of time it takes to turn properties when tenants vacate.

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.

Additionally, our ability to collect revenues and related operating results are impacted by the credit worthiness and

quality of our tenants.

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 5.3% for the year ended December 31, 2021 and we experienced turnover rates, which represents the number of tenant move-outs during the period divided by the total number of properties, of 29.8% and 33.4% for the years ended December 31, 2021 and 2020, respectively.

Based on our Same-Home population of properties (defined below), the year-over-year increase in Average Monthly Realized Rent per property was 8.0% for the year ended December 31, 2022 and we experienced turnover rates, which represents the number of tenant move-outs during the period divided by the total number of properties, of 27.7% and 29.6% during the years ended December 31, 2022 and 2021, respectively.

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

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Property Management Expenses

As we internally manage our portfolio of single-family properties through our proprietary property management platform, we incur costs such as salary expenses for property management personnel, lease expenses and operating costs for property management offices and technology expenses for maintaining our property management platform.

As part of developing our property management platform, we have made significant investments in our infrastructure, systems and technology.

As part of developing our property management platform, we continue to make significant investments in our personnel, infrastructure, systems and technology that will impact expenses based on investment programs during the year.

We believe that these investments will enable our property management platform to become more efficient over time, especially as our portfolio grows.

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General and administrative expense primarily consists of corporate payroll and personnel costs, federal and state taxes, trustees’ and officers’ insurance expenses, audit and tax fees, trustee fees and other expenses associated with our corporate and administrative functions.

In addition, we also continue to make corporate level investments to support certain initiatives which will impact expenses based on given investment programs during the year.

Also included in general and administrative expense is noncash share-based compensation expense related to corporate administrative employees.

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Net income totaled $310.0 million for the year ended December 31, 2022, compared to $210.6 million for the year ended December 31, 2021.

This increase was primarily due to a larger number of occupied properties resulting from growth in the Company’s portfolio and higher rental rates and fees, as well as an increase in gain on sale and impairment of single-family properties and other, net.

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

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

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

This increase was primarily due to a larger number of occupied properties resulting from 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 year ended December 31, 2022.

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, identified for future 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.

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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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Comparison of the Year Ended December 31, 2022 to the Year Ended December 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 years ended December 31, 2021 and 2020 (in thousands):

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 years ended December 31, 2022 and 2021 (amounts in thousands):

For the Year Ended December 31, 2022

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Net income $ 310,025 $ 210,559

Hurricane-related charges, net 6,133 —

Gain on sale and impairment of single-family properties and other, net (136,459) (49,696)

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Rents and other single-family property revenues increased 14.3% to $1.5 billion for the year ended December 31, 2022, compared to $1.3 billion for the year ended December 31, 2021.

Revenue growth was driven by an increase in our average occupied portfolio which grew to 52,542 homes for the year ended December 31, 2021, compared to 50,065 homes for the year ended December 31, 2020, as well as higher rental rates and fees.

Revenue growth was driven by an increase in our average occupied portfolio which grew to 54,847 homes for the year ended December 31, 2022, compared to 52,542 homes for the year ended December 31, 2021, as well as higher rental rates and lower uncollectible rents.

Property Operating Expenses

Property operating expenses increased 12.6% to $552.1 million for the year ended December 31, 2022 from $490.2 million for the year ended December 31, 2021.

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

This increase was primarily attributable to growth in our portfolio, inflationary increases in R&M and turnover costs and outsized increases in property taxes in select states across our portfolio.

Property Management Expenses

Property management expenses for the years ended December 31, 2021 and 2020 were $96.9 million and $89.9 million, respectively, which included $3.0 million and $1.7 million, respectively, of noncash share-based compensation expense related to centralized and field property management employees.

The increase in property management expenses was primarily attributable to higher personnel costs as a result of inflationary increases and growth in our portfolio as well as higher noncash share-based compensation expense.

Property management expenses for the years ended December 31, 2022 and 2021 were $112.7 million and $96.9 million, respectively, which included $3.9 million and $3.0 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 7.3% to $964.3 million for the year ended December 31, 2021 from $899.0 million for the year ended December 31, 2020.

This increase was primarily attributable to higher Average Monthly Realized Rent per property, which increased 5.3% to $1,773 per month for the year ended December 31, 2021 compared to $1,684 per month for the year ended December 31, 2020, a rise in the Average Occupied Days Percentage, which increased to 97.6% for the year ended December 31, 2021 compared to 96.3% for the year ended December 31, 2020, and higher fees.

Core revenues from Same-Home properties increased 8.5% to $1.1 billion for the year ended December 31, 2022 from $981.3 million for the year ended December 31, 2021.

This increase was primarily attributable to higher Average Monthly Realized Rent per property, which increased 8.0% to $1,920 per month for the year ended December 31, 2022 compared to $1,777 per month for the year ended December 31, 2021, and lower uncollectible rents, partially offset by a decrease in Average Occupied Days Percentage, which was 97.3% for the year ended December 31, 2022 compared to 97.6% for the year ended December 31, 2021.

Core Property Operating Expenses from Same-Home Properties

Core property operating expenses consist of direct property operating expenses, net of tenant charge-backs, and property management costs, net of tenant charge-backs, and excludes noncash share-based compensation expense.

Core property operating expenses from Same-Home properties increased 4.7% to $342.9 million for the year ended December 31, 2021 from $327.4 million for the year ended December 31, 2020, primarily driven by annual growth in property tax expense and other inflationary increases.

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 7.4% to $370.1 million for the year ended December 31, 2022 from $344.5 million for the year ended December 31, 2021 primarily driven by outsized increases in property taxes in select states across our portfolio, 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 years ended December 31, 2021 and 2020 was $56.4 million and $48.5 million, respectively, which included $9.4 million and $6.6 million, respectively, of noncash share-based compensation expense related to corporate administrative employees.

The increase in general and administrative expense was primarily related to higher personnel costs to support growth in our business as well as outsized performance-based bonuses during the year ended December 31, 2021, and higher noncash share-based compensation expense.

General and administrative expense for the years ended December 31, 2022 and 2021 was $68.1 million and $56.4 million, respectively, which included $15.3 million and $9.4 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 decreased 1.8% to $114.9 million for the year ended December 31, 2021 from $117.0 million for the year ended December 31, 2020.

This decrease was primarily due to additional capitalized interest during the year ended December 31, 2021 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 and 2051 unsecured senior notes during July 2021 and increased borrowings under the revolving credit facility.

Interest expense increased 17.4% to $134.9 million for the year ended December 31, 2022 from $114.9 million for the year ended December 31, 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 year ended December 31, 2022 related to an increase in development activities under our AMH Development Program and an increase in properties that underwent renovation during the year ended December 31, 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 years ended December 31, 2021 and 2020 were $15.7 million and $9.3 million, respectively, which included $5.4 million and $1.5 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 noncash share-based compensation expense as well as higher acquisition costs associated with the growth of our portfolio.

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 years ended December 31, 2022 and 2021 were $23.5 million and $15.7 million, respectively, which included $8.1 million and $5.4 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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Depreciation and amortization expense increased 14.4% to $426.5 million for the year ended December 31, 2022 from $372.8 million for the year ended December 31, 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 year ended December 31, 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 year ended December 31, 2022, the Company recognized $8.9 million in gross charges

primarily related to an estimated accrual for minor repair and remediation costs, partially offset by an estimated $2.8 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 was $49.7 million and $38.8 million for the years ended December 31, 2021 and 2020, respectively, which included $0.2 million and $2.0 million of impairment charges, respectively, related to homes classified as held for sale.

The increase was primarily due to higher net gains on property sales and lower impairment charges.

Also included in gain on sale and impairment of single-family properties, net during the year ended December 31, 2020 was a

$3.5 million noncash write-down associated with the liquidation of legacy joint ventures, which were acquired as part of the American Residential Properties, Inc.

merger in February 2016.

Gain on sale and impairment of single-family properties and other, net for the years ended December 31, 2022 and 2021 was $136.5 million and $49.7 million, respectively, which included $2.5 million and $0.2 million, respectively, of impairment charges 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 was $4.0 million and $1.7 million for the years ended December 31, 2021 and 2020, respectively, which primarily related to interest income, fees from unconsolidated joint ventures and equity in income (losses) from unconsolidated joint ventures, partially offset by expenses related to unconsolidated joint ventures and other nonrecurring expenses.

Also included in other income and expense, net for the year ended December 31, 2020 was a net expense of $2.9 million related to a legal matter involving a former employee.

Other income and expense, net for the years ended December 31, 2022 and 2021 was $6.9 million and $4.0 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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Liquidity and Capital Resources

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

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

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

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 facility, issuances of unsecured senior notes and proceeds from sales of single-family properties.

However, our real estate assets are illiquid in nature.

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Our liquidity and capital resources as of December 31, 2022 included cash and cash equivalents of $69.2 million.

Additionally, as of December 31, 2021, we had $350.0 million of outstanding borrowings under our revolving credit facility, which provides for maximum borrowings of up to $1.25 billion, of which $1.6 million was committed to outstanding letters of credit.

Additionally, as of December 31, 2022, we had $130.0 million of outstanding borrowings and $4.0 million committed to outstanding letters of credit under our $1.25 billion revolving credit facility, leaving $1.1 billion of remaining borrowing capacity.

As described below, in January 2023, we also issued and physically settled the remaining 8,000,000 Class A common shares under the January 2022 Forward Sale Agreements, receiving net proceeds of $298.4 million.

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

Uses of Capital

Our expected material cash requirements for the twelve months ended December 31, 2022 and thereafter 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.

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

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

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Exhibit and Financial Statement Schedules” of this Annual Report on Form 10-K for a discussion of our material short-term and long-term cash requirements.

A summary of our contractual obligations as of December 31, 2021 is presented below (in thousands):

A summary of our contractual obligations as of December 31, 2022 is presented below (amounts in thousands):

Payments by Period

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Future interest payments on debt obligations would also be impacted by the level of borrowing on our revolving credit facility in the future.

(3) Represents commitments to acquire 482 single-family properties for an aggregate purchase price of $160.4 million, as well as $409.0 million in purchase commitments for land relating to our AMH Development Program.

The following table summarizes the Company’s and the Operating Partnership’s cash flows for the years ended December 31, 2021 and 2020:

(3) Represents commitments to acquire 52 single-family properties for an aggregate purchase price of $12.3 million and land relating to our AMH Development Program for an aggregate purchase price of $228.9 million.

The timing of these obligations due within one year may be extended beyond December 31, 2023.

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

For the Years Ended December 31,

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Net cash provided by financing activities 786,177 1,064,955 (278,778)

Net (decrease) increase in cash, cash equivalents and restricted cash $ (73,310) $ 100,958 $ (174,268)

Net increase (decrease) in cash, cash equivalents and restricted cash $ 26,193 $ (73,310) $ 99,503

Operating Activities

Our cash flows provided by operating activities, which is our principal source of cash flows, depend on numerous factors, including the occupancy level of our properties, the rental rates achieved on our leases, the collection of rent from our tenants and the level of property operating expenses, property management expenses and general and administrative expenses.

Net cash provided by operating activities increased $121.1 million, or 25.5%, from $474.1 million during the year ended December 31, 2020 to $595.2 million during the year ended December 31, 2021, primarily as a result of increased cash flows generated from a larger number of occupied properties and increases in rental rates on lease renewals and re-leasing of our single-family properties as well as higher fees, partially offset by higher cash outflows for property taxes and other property related expenses associated with the growth in our portfolio.

Net cash provided by operating activities increased $70.3 million, or 11.8%, from $595.2 million during the year ended December 31, 2021 to $665.5 million during the year ended December 31, 2022, primarily as a result of increased cash flows generated from a larger number of occupied properties, higher rental rates and lower uncollectible rents, partially offset by higher cash outflows for property related expenses as a result of inflationary increases and growth in our portfolio.

Investing Activities

For the Years Ended December 31, Change

(Amounts in thousands)

Sources of cash from investing activities:

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Distributions from joint ventures 68,310 57,550 10,760

Proceeds received from hurricane-related insurance claims 4,842 3,705 1,137

Payments received on notes for sale of properties 1,253 — 1,253

Proceeds from notes receivable related to the sale of properties 34,090 1,253 32,837

Change in escrow deposits for purchase of single-family properties 20,431 (33,005) 53,436

Proceeds received from storm-related insurance claims 1,981 4,842 (2,861)

$ 417,321 $ 162,712 $ 254,609

Uses of cash for investing activities:

Cash paid for single-family properties $ (850,071) $ (269,273) $ (580,798)

Cash paid for development activity $ (921,423) $ (824,247) $ (97,176)

Cash paid for single-family properties (595,171) (850,071) 254,900

Recurring and other capital expenditures for single-family properties (138,779) (122,551) (16,228)

Renovations to single-family properties (98,019) (47,681) (50,338)

Change in escrow deposits for purchase of single-family properties (33,005) (374) (32,631)

Investment in unconsolidated joint ventures (25,313) (29,260) 3,947

Other purchases of productive assets (22,367) (18,694) (3,673)

Other investing activities (49,570) (22,367) (27,203)

Cash paid for deposits on land option contracts (14,548) — (14,548)

$ (1,842,823) $ (1,896,177) $ 53,354

Net cash used for investing activities $ (1,425,502) $ (1,733,465) $ 307,963

Net cash used for investing activities increased $1.09 billion, or 169.6%, from $642.9 million during the year ended December 31, 2020 to $1.73 billion during the year ended December 31, 2021.

Net cash used for investing activities decreased $308.0 million, or 17.8%, from $1.7 billion during the year ended December 31, 2021 to $1.4 billion during the year ended December 31, 2022.

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

Cash outflows for the addition of single-family properties to our portfolio through these channels increased $873.4 million during the year ended December 31, 2021.

Renovations to single-family properties increased as a result of an increased volume in purchases of homes through our traditional acquisition channel.

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

Net proceeds received from sales of single-family properties and other decreased as a result of a decrease in homes sold.

Recurring and other capital expenditures for single-family properties increased as a result of investments in properties to increase future revenues or reduce maintenance expenditures.

Cash outflows for the addition of single-family properties to our portfolio through these channels decreased $211.2 million during the year ended December 31, 2022 primarily due to a strategic scale back in the acquisition of single-family properties through our National Builder Program and traditional acquisition channel during the second half of the year ended December 31, 2022 as the housing market adjusts to the current macroeconomic environment.

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 $50.3 million primarily as a result of an increased volume of properties that underwent initial or property-enhancing renovations during the year ended December 31, 2022.

Recurring and other capital expenditures for single-family properties increased $16.2 million primarily due to growth in our portfolio and inflationary increases in costs.

The development of “built-for-rental” homes and our property-enhancing capital expenditures may reduce recurring and other capital expenditures on an average per-home basis in the future.

Net cash used for investing activities also increased as a result of a reduction in distributions, net of investments, from our unconsolidated joint ventures and an increase in purchases of other productive assets

during the year ended December 31, 2021.

These increased cash outflows were partly offset by increased proceeds received from hurricane-related insurance claims and payments received on notes for sale of properties.

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 $160.4 million as a result of an increased volume of properties sold and a higher average realized sales price per property during the year ended December 31, 2022 and proceeds from notes receivable related to the sale of properties increased $32.8 million year-over-year.

Net cash inflows from unconsolidated joint ventures increased $14.7 million during the year ended December 31, 2022 due to the timing of contributions and distributions to and from our unconsolidated joint ventures.

Cash outflows for other investing activities increased $27.2 million primarily due to investments in venture capital funds focused on proptech and decarbonization in the real estate industry during the year ended December 31, 2022 and a year-over-year increase in cash outflows for information technology projects.

Cash outflows for deposits on land option contracts increased $14.5 million as a result of deposits made during the year ended December 31, 2022.

Financing Activities

Net cash provided by financing activities increased $795.2 million from $269.8 million during the year ended December 31, 2020 to $1.06 billion during the year ended December 31, 2021 primarily due to the debt and equity activity described below.

As of December 31, 2021, the Company had outstanding asset-backed securitizations with varying maturities starting in 2024 with an aggregate principal amount of $1.92 billion and outstanding unsecured senior notes with varying maturities starting in 2028 with an aggregate principal amount of $1.65 billion.

Net cash provided by financing activities decreased $278.8 million from $1.1 billion during the year ended December 31, 2021 to $786.2 million during the year ended December 31, 2022 primarily due to the debt and equity activity described below, partially offset by $60.2 million of proceeds from liabilities related to consolidated land not owned during the year ended December 31, 2022 (see Land Option Contracts in Note 2.

Significant Accounting Policies).

As of December 31, 2022, the Company had outstanding asset-backed securitizations with varying maturities starting in 2024 with an aggregate principal amount of $1.9 billion and outstanding unsecured senior notes with varying maturities starting in 2028 with an

aggregate principal amount of $2.6 billion.

The Company also amended its existing revolving credit facility during the year ended December 31, 2021 to provide for maximum borrowings of up to $1.25 billion and extend its maturity date to 2025 with two six-month extension options at the Company’s election if certain conditions are met.

As of December 31, 2022, the Company had $130.0 million of outstanding borrowings under its revolving credit facility.

During the year ended December 31, 2021, the Company issued $750.0 million of unsecured senior notes, receiving $737.2 million in proceeds, net of a discount, and paid $18.0 million in deferred financing costs and $4.0 million for the settlement of a treasury lock (see Note 12.

During the year ended December 31, 2022, the Company issued $900.0 million of unsecured senior notes, receiving $876.8 million in proceeds, net of discount, and paid $8.2 million in deferred financing costs.

The Company also borrowed $620.0 million and paid down $840.0 million on its revolving credit facility and repaid $22.6 million on its asset-backed securitizations.

During the year ended December 31, 2021, the Company issued $750.0 million of unsecured senior notes, receiving $737.2 million in proceeds, net of discount, and paid $18.0 million in deferred financing costs and $4.0 million for the settlement of a treasury lock (see Note 12.

Fair Value) in connection with the issuances.

The Company also borrowed $1.41 billion and repaid $1.06 billion on its revolving credit facility and repaid $24.3 million on its asset-backed securitizations.

During the year ended December 31, 2020, the Company borrowed and fully repaid $130.0 million on its revolving credit facility and repaid $22.5 million on its asset-backed securitizations.

The Company also borrowed $1.4 billion and paid down $1.1 billion on its revolving credit facility and repaid $24.3 million on its asset-backed securitizations.

For additional information regarding the Company’s debt issuances, see Note 7.

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Exhibit and Financial Statement Schedules” of this Annual Report on Form 10-K.

Class A Common Share Offering

Class A Common Share Offerings

During the first quarter of 2022, the Company completed an underwritten public offering for 23,000,000 of its Class A common shares of beneficial interest, $0.01 par value per share, of which 10,000,000 shares were issued directly by the Company and 13,000,000 shares were offered on a forward basis at the request of the Company by the forward sellers.

In connection with this offering, the Company entered into forward sale agreements with the forward purchasers (the “2022 Forward Sale Agreements”) for these 13,000,000 shares which are accounted for in equity.

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.

During the third quarter of 2022, the Company issued and physically settled 5,000,000 Class A common shares under the 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 December 31, 2022, 8,000,000 Class A common shares remained available for future settlement under the 2022 Forward Sale Agreements.

In January 2023, the Company issued and physically settled the remaining 8,000,000 Class A common shares, receiving net proceeds of $298.4 million.

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

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

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

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

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

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During the third and fourth quarters of 2021, the Company issued and physically settled all 13,245,000 Class A common shares under the 2021 Forward Sale Agreements, receiving net proceeds of $463.5 million.

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

The Company used these net proceeds for general corporate purposes including property acquisitions and developments.

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

Redemptions of Perpetual Preferred Shares

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

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 consolidated statements of operations during the year ended December 31, 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.

dividends in accordance with the terms of such shares.

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

As a result of the redemption, the Company recorded an $8.5 million allocation of income to the Series D perpetual preferred shareholders within the consolidated statements of operations during the year ended December 31, 2021, which represents the initial liquidation value of the Series D perpetual preferred shares in excess of their carrying value as of the redemption date.

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

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

As a result of the redemption, the Company recorded a $7.4 million allocation of income to the Series E perpetual preferred

shareholders within the consolidated statements of operations during the year ended December 31, 2021, which represents the initial liquidation value of the Series E perpetual preferred shares in excess of their carrying value as of the redemption date.

As a result of the redemption, the Company recorded a $7.4 million allocation of income to the Series E perpetual preferred shareholders within the consolidated statements of operations during the year ended December 31, 2021, which represents the initial liquidation value of the Series E perpetual preferred shares in excess of its carrying value as of the redemption date.

At-the-Market Common Share Offering Program

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

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

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

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

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

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

During the year ended December 31, 2021, the Company issued 1,749,286 Class A common shares under the At-the-Market Program, raising $72.3 million in gross proceeds before commissions and other expenses of approximately $1.1 million.

During the year ended December 31, 2022, no shares were issued under the At-the-Market Program.

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The Operating Partnership funds the payment of distributions.

AH4R had an NOL for U.S.

AMH had an NOL for U.S.

federal income tax purposes of an estimated $11.8 million as of December 31, 2022 and $25.4 million as of December 31, 2021.

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During the years ended December 31, 2022 and 2021, the Company distributed an aggregate $306.4 million and $207.3 million, respectively, to common shareholders, preferred shareholders and noncontrolling interests on a cash basis.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that we believe are reasonably likely to have a material impact on our financial condition.

Additional Non-GAAP Measures

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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.

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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 years ended December 31, 2021 and 2020 (in thousands):

For the Years Ended December 31,

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FFO attributable to common share and unit holders (1)

Acquisition, other transaction costs and other (1)

$ 564,726 $ 470,631

Acquisition, other transaction costs and other 23,452 15,749

Noncash share-based compensation - general and administrative 15,318 9,361

Noncash share-based compensation - property management 3,861 3,004

Hurricane-related charges, net 6,133 —

Redemption of perpetual preferred shares 5,276 15,879

Core FFO attributable to common share and unit holders (1)

$ 618,766 $ 514,624

Recurring Capital Expenditures (65,636) (52,134)

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Adjusted FFO attributable to common share and unit holders (1)

(1) Included in acquisition, other transaction costs and other is a net $2.9 million nonrecurring expense related to a legal matter involving a former employee during the year ended December 31, 2020.

$ 550,544 $ 459,068

(1) Unit holders include former AH LLC members and other non-affiliates that own Class A units in the Operating Partnership and their OP units are reflected as noncontrolling interests in the Company’s consolidated financial statements.

Shareholders’ Equity / Partners’ Capital to our consolidated financial statements included as a separate section in Part IV, “Item 15.

Exhibit and Financial Statement Schedules” of this Annual Report on Form 10-K.

EBITDA / EBITDAre / Adjusted EBITDAre / Fully Adjusted EBITDAre

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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 years ended December 31, 2021 and 2020 (in thousands):

For the Years Ended December 31,

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Acquisition, other transaction costs and other 23,452 15,749

15,749 12,889

Hurricane-related charges, net 6,133 —

Adjusted EBITDAre $ 784,076 $ 678,591

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Fully Adjusted EBITDAre $ 715,854 $ 623,035

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis