What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-08-01 compared with 2023-05-05 · 189 added, 70 removed, 341 unchanged (43% of the section changed)

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

As of March 31, 2023, we owned 58,639 single-family properties in select submarkets of metropolitan statistical areas (“MSAs”) in 21 states, including 903 properties held for sale, compared to 58,993 single-family properties in 21 states, including 1,115 properties held for sale, as of December 31, 2022, and 57,984 single-family properties in 22 states, including 855 properties held for sale as of March 31, 2022.

As of March 31, 2023, 56,049 of our total properties (excluding properties held for sale) were occupied, compared to 55,605 of our total properties (excluding properties held for sale) as of December 31, 2022 and 54,352 of our total properties (excluding properties held for sale) as of March 31, 2022.

Also, as of March 31, 2023, the Company had an additional 2,688 properties held in unconsolidated joint ventures, compared to 2,540 properties held in unconsolidated joint ventures as of December 31, 2022, and 1,849 properties held in unconsolidated joint ventures as of March 31, 2022.

As of June 30, 2023, we owned 58,693 single-family properties in select submarkets of metropolitan statistical areas (“MSAs”) in 21 states, including 648 properties held for sale, compared to 58,993 single-family properties in 21 states, including 1,115 properties held for sale, as of December 31, 2022 and 58,715 single-family properties in 22 states, including 955 properties held for sale, as of June 30, 2022.

As of June 30, 2023, 56,000 of our total properties (excluding properties held for sale) were occupied, compared to 55,605 of our total properties (excluding properties held for sale) as of December 31, 2022 and 55,220 of our total properties (excluding properties held for sale) as of June 30, 2022.

Also, as of June 30, 2023, the Company had an additional 2,846 properties held in unconsolidated joint ventures, compared to 2,540 properties held in unconsolidated joint ventures as of December 31, 2022 and 2,046 properties held in unconsolidated joint ventures as of June 30, 2022.

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

Key Single-Family Property and Leasing Metrics

The following table summarizes certain key single-family properties metrics as of March 31, 2023:

The following table summarizes certain key single-family properties metrics as of June 30, 2023:

Total Single-Family Properties (1)

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Total/Average 58,045 100.0 % $ 12,560.3 100.0 % $ 216,389 1,990 17.3 2015

(1) Excludes 903 single-family properties held for sale as of March 31, 2023.

(1) Excludes 648 single-family properties held for sale as of June 30, 2023.

(2) Represents 15 markets in 13 states.

The following table summarizes certain key leasing metrics as of March 31, 2023:

The following table summarizes certain key leasing metrics as of June 30, 2023:

Total Single-Family Properties (1)

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Total/Average 96.2 % $ 2,063 12.0 6.3 7.5 %

(1) Excludes 903 single-family properties held for sale as of March 31, 2023.

(2) For the three months ended March 31, 2023, Average Occupied Days Percentage represents the number of days a property is occupied in the period divided by the total number of days the property is owned during the same period after initially being placed in-service.

(3) For the three months ended March 31, 2023, 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 648 single-family properties held for sale as of June 30, 2023.

(2) For the three months ended June 30, 2023, 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, 2023, Average Monthly Realized Rent is calculated as the lease component of rents and other single-family property revenues (i.e., rents from single-family properties) divided by the product of (a) number of properties and (b) Average Occupied Days Percentage, divided by the number of months.

For properties partially owned during the period, this is adjusted to reflect the number of days of ownership.

(4) Average Original Lease Term and Average Remaining Lease Term are reflected as of period end.

(5) Represents the percentage change in rent on all non-month-to-month lease renewals and re-leases during the three months ended March 31, 2023, compared to the annual rent of the previously expired non-month-to-month comparable long-term lease for each property.

(5) Represents the percentage change in rent on all non-month-to-month lease renewals and re-leases during the three months ended June 30, 2023, compared to the annual rent of the previously expired non-month-to-month comparable long-term lease for each property.

(6) Represents 15 markets in 13 states.

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

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.

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, property taxes including changes in rates and valuation assessments of our properties, our ability to raise capital and our capital structure.

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

Property Acquisitions, Development and Dispositions

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

During the three months ended March 31, 2023, we developed or acquired 312 homes, including 299 newly constructed homes delivered through our AMH Development Program and 13 homes acquired through our National Builder Program, offset by 666 homes sold to third parties.

During the three months ended March 31, 2023, we also developed an additional 167 newly constructed properties which were delivered to our unconsolidated joint ventures, aggregating to 466 total program deliveries through our AMH Development Program.

During the three months ended June 30, 2023, we developed or acquired 469 homes, including 468 newly constructed homes delivered through our AMH Development Program and one home acquired through our National Builder Program, offset by 415 homes sold to third parties.

During the three months ended June 30, 2023, we also developed an additional 166 newly constructed properties which were delivered to our unconsolidated joint ventures, aggregating to 634 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 March 31, 2023 and December 31, 2022, there were 903 and 1,115 properties, respectively, classified as held for sale.

As of June 30, 2023 and December 31, 2022, there were 648 and 1,115 properties, respectively, classified as held for sale.

We will continue to evaluate our properties for potential disposition going forward as a normal course of business.

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Our 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 8.0% for the three months ended March 31, 2023, and we experienced turnover rates, which represents the number of tenant move-outs during the period divided by the total number of properties, of 6.4% and 6.2% during the three months ended March 31, 2023 and 2022, respectively.

Based on our Same-Home population of properties (defined below), the year-over-year increase in Average Monthly Realized Rent per property was 7.2% for the three months ended June 30, 2023, and we experienced turnover rates, which represents the number of tenant move-outs during the period divided by the total number of properties, of 8.4% and 7.7% during the three months ended June 30, 2023 and 2022, respectively.

Based on our Same-Home population of properties, the year-over-year increase in Average Monthly Realized Rent per property was 7.6% for the six months ended June 30, 2023, and we experienced turnover rates of 14.7% and 13.8% during the six months ended June 30, 2023 and 2022, 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 $137.7 million for the three months ended March 31, 2023, compared to $70.0 million for the three months ended March 31, 2022.

This increase was primarily due to higher net gains on property sales as well as a larger number of occupied properties resulting from growth in the Company’s portfolio and higher rental rates.

Net income totaled $115.4 million for the three months ended June 30, 2023, compared to $74.6 million for the three months ended June 30, 2022.

This increase was primarily due to higher net gains on property sales, a larger number of occupied properties and higher rental rates.

Net income totaled $253.1 million for the six months ended June 30, 2023, compared to $144.6 million for the six months ended June 30, 2022.

This increase was primarily due to higher net gains on property sales, a larger number of occupied properties and higher rental rates.

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 experienced 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.

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

Comparison of the Three Months Ended March 31, 2023 to the Three Months Ended March 31, 2022

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 March 31, 2023 and 2022 (amounts in thousands):

For the Three Months Ended March 31, 2023

Comparison of the Three Months Ended June 30, 2023 to the Three Months Ended June 30, 2022

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, 2023 and 2022 (amounts in thousands):

For the Three Months Ended

Core revenues and Same-Home core revenues

Rents and other single-family property revenues $ 395,548 $ 361,876

Tenant charge-backs (45,814) (43,137)

Core revenues 349,734 318,739

Non-Same-Home core revenues 48,672 36,165

Same-Home core revenues $ 301,062 $ 282,574

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

Property operating expenses $ 142,553 $ 129,270

Property management expenses 30,666 28,768

Noncash share-based compensation - property management (1,132) (1,132)

Expenses reimbursed by tenant charge-backs (45,814) (43,137)

Core property operating expenses 126,273 113,769

Non-Same-Home core property operating expenses 18,216 15,432

Same-Home core property operating expenses $ 108,057 $ 98,337

Core NOI and Same-Home Core NOI

Net income $ 115,414 $ 74,555

Gain on sale and impairment of single-family properties and other, net (62,758) (32,811)

Depreciation and amortization 113,199 104,415

Acquisition and other transaction costs 4,175 7,658

Noncash share-based compensation - property management 1,132 1,132

Interest expense 34,844 34,801

General and administrative expense 19,937 18,847

Other income and expense, net (2,482) (3,627)

Core NOI 223,461 204,970

Non-Same-Home Core NOI 30,456 20,733

Same-Home Core NOI $ 193,005 $ 184,237

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 June 30, 2023 and 2022 (amounts in thousands):

For the Three Months Ended June 30, 2023

Properties (1)

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Core NOI $ 193,005 64.1 % $ 30,456 62.6 % $ 223,461 63.9 %

For the Three Months Ended March 31, 2022

For the Three Months Ended June 30, 2022

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.

For the Three Months Ended

Rents and Other Single-Family Property Revenues

Rents and other single-family property revenues increased 9.3% to $395.5 million for the three months ended June 30, 2023 from $361.9 million for the three months ended June 30, 2022.

Revenue growth was driven by an increase in our average occupied portfolio which grew to 56,025 homes for the three months ended June 30, 2023, compared to 54,786 homes for the three months ended June 30, 2022, as well as higher rental rates.

Property Operating Expenses

Property operating expenses increased 10.3% to $142.6 million for the three months ended June 30, 2023 from $129.3 million for the three months ended June 30, 2022.

This increase was primarily attributable to increased property tax expense from anticipated 2023 property tax assessments and timing of prior year property tax accruals as well as inflationary increases in R&M and turnover costs.

Property Management Expenses

Property management expenses for the three months ended June 30, 2023 and 2022 were $30.7 million and $28.8 million, respectively, which included $1.1 million of noncash share-based compensation expense related to centralized and field property management employees for both periods.

The increase in property management expenses was primarily attributable to an increase in personnel related expenses.

Core Revenues from Same-Home Properties

Core revenues from Same-Home properties increased 6.5% to $301.1 million for the three months ended June 30, 2023 from $282.6 million for the three months ended June 30, 2022.

This increase was primarily attributable to higher Average Monthly Realized Rent per property, which increased 7.2% to $2,048 per month for the three months ended June 30, 2023 compared to $1,910 per month for the three months ended June 30, 2022, partially offset by a decrease in Average Occupied Days Percentage, which was 97.0% for the three months ended June 30, 2023 compared to 97.3% for the three months ended June 30, 2022.

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 9.9% to $108.1 million for the three months ended June 30, 2023 from $98.3 million for the three months ended June 30, 2022 primarily driven by increased property tax expense from anticipated 2023 property tax assessments and timing of prior year property tax accruals as well as 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, 2023 and 2022 was $19.9 million and $18.8 million, respectively, which included $6.0 million and $5.9 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 inflationary increases and the timing of professional services fees.

Interest Expense

Interest expense was $34.8 million for both the three months ended June 30, 2023 and 2022 as a result of consistent interest expense on outstanding debt in both periods.

Acquisition and Other Transaction Costs

Acquisition and other transaction costs consist primarily of personnel and platform 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, 2023 and 2022 were $4.2 million and $7.7 million, respectively, which included $1.4 million and $3.6 million, respectively, of noncash share-based compensation expense in each period related to employees in these functions.

The decrease in acquisition and other transaction costs was primarily due to lower noncash share-based compensation expense.

Depreciation and Amortization

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

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

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

Depreciation and amortization expense increased 8.4% to $113.2 million for the three months ended June 30, 2023 from $104.4 million for the three months ended June 30, 2022 primarily due to growth in the average number of depreciable properties.

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

Gain on sale and impairment of single-family properties and other, net for the three months ended June 30, 2023 and 2022 was $62.8 million and $32.8 million, respectively, which included $0.4 million and zero, respectively, of impairment charges related to homes classified as held for sale during each period.

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

Other Income and Expense, net

Other income and expense, net for the three months ended June 30, 2023 and 2022 was $2.5 million and $3.6 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.

Comparison of the Six Months Ended June 30, 2023 to the Six Months Ended June 30, 2022

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, 2023 and 2022 (amounts in thousands):

For the Six Months Ended

Core revenues and Same-Home core revenues

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Same-Home Core NOI $ 386,681 $ 367,577

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 six months ended June 30, 2023 and 2022 (amounts in thousands):

For the Six Months Ended June 30, 2023

Properties (1)

Revenue Non-Same-

Home and Other

Properties % of Core

Revenue Total

Properties % of Core

Rents from single-family properties $ 592,360 $ 94,726 $ 687,086

Fees from single-family properties 12,537 2,303 14,840

Bad debt (7,405) (2,479) (9,884)

Core revenues 597,492 94,550 692,042

Property tax expense 104,081 17.5 % 16,546 17.6 % 120,627 17.5 %

HOA fees, net (2)

10,622 1.8 % 1,651 1.7 % 12,273 1.8 %

R&M and turnover costs, net (2)

42,661 7.1 % 7,909 8.4 % 50,570 7.3 %

Insurance 7,365 1.2 % 1,167 1.2 % 8,532 1.2 %

Property management expenses, net (3)

46,082 7.7 % 9,596 10.1 % 55,678 8.0 %

Core property operating expenses 210,811 35.3 % 36,869 39.0 % 247,680 35.8 %

Core NOI $ 386,681 64.7 % $ 57,681 61.0 % $ 444,362 64.2 %

For the Six Months Ended June 30, 2022

Properties (1)

Revenue Non-Same-

Home and Other

Properties % of Core

Revenue Total

Properties % of Core

Rents from single-family properties $ 551,662 $ 65,039 $ 616,701

Fees from single-family properties 10,930 2,061 12,991

Bad debt (5,016) (2,104) (7,120)

Core revenues 557,576 64,996 622,572

Property tax expense 91,990 16.5 % 12,399 19.0 % 104,389 16.9 %

HOA fees, net (2)

10,068 1.8 % 1,415 2.2 % 11,483 1.8 %

R&M and turnover costs, net (2)

40,102 7.2 % 7,383 11.4 % 47,485 7.6 %

Insurance 6,101 1.1 % 809 1.2 % 6,910 1.1 %

Property management expenses, net (3)

41,738 7.5 % 8,170 12.6 % 49,908 8.0 %

Core property operating expenses 189,999 34.1 % 30,176 46.4 % 220,175 35.4 %

Core NOI $ 367,577 65.9 % $ 34,820 53.6 % $ 402,397 64.6 %

(1) Includes 50,038 properties that have been stabilized longer than 90 days prior to January 1, 2022.

(2) Presented net of tenant charge-backs.

(3) Presented net of tenant charge-backs and excludes noncash share-based compensation expense related to centralized and field property management employees.

Rents and Other Single-Family Property Revenues

Rents and other single-family property revenues increased 11.7% to $397.7 million for the three months ended March 31, 2023 from $356.1 million for the three months ended March 31, 2022.

Revenue growth was driven by an increase in our average occupied portfolio which grew to 55,827 homes for the three months ended March 31, 2023, compared to 53,995 homes for the three months ended March 31, 2022, as well as higher rental rates.

Rents and other single-family property revenues increased 10.5% to $793.3 million for the six months ended June 30, 2023 from $718.0 million for the six months ended June 30, 2022.

Revenue growth was driven by an increase in our average occupied portfolio which grew to 55,885 homes for the six months ended June 30, 2023, compared to 54,403 homes for the six months ended June 30, 2022, as well as higher rental rates.

Property Operating Expenses

Property operating expenses increased 10.0% to $147.1 million for the three months ended March 31, 2023 from $133.6 million for the three months ended March 31, 2022.

Property operating expenses increased 10.2% to $289.6 million for the six months ended June 30, 2023 from $262.9 million for the six months ended June 30, 2022.

Property Management Expenses

Property management expenses for the three months ended March 31, 2023 and 2022 were $30.8 million and $26.0 million, respectively, which included $1.1 million and $1.0 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

lower than normal staffing levels in the three months ended March 31, 2022 leading to a subsequent increase in personnel in the three months ended June 30, 2022 to a more stabilized level, as well as inflationary increases in supplies and materials expense.

Property management expenses for the six months ended June 30, 2023 and 2022 were $61.5 million and $54.8 million, respectively, which included $2.2 million and $2.1 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 (i) an increase in personnel related expenses and (ii) lower than normal staffing levels in the three months ended March 31, 2022 leading to a subsequent increase in personnel in the three months ended June 30, 2022 to a more stabilized level.

Core Revenues from Same-Home Properties

Core revenues from Same-Home properties increased 7.7% to $298.1 million for the three months ended March 31, 2023 from $276.9 million for the three months ended March 31, 2022.

This increase was primarily attributable to higher Average Monthly Realized Rent per property, which increased 8.0% to $2,014 per month for the three months ended March 31, 2023 compared to $1,865 per month for the three months ended March 31, 2022, partially offset by a decrease in Average Occupied Days Percentage, which was 97.2% for the three months ended March 31, 2023 compared to 97.4% for the three months ended March 31, 2022.

Core revenues from Same-Home properties increased 7.2% to $597.5 million for the six months ended June 30, 2023 from $557.6 million for the six months ended June 30, 2022.

This increase was primarily attributable to higher Average Monthly Realized Rent per property, which increased 7.6% to $2,031 per month for the six months ended June 30, 2023 compared to $1,888 per month for the six months ended June 30, 2022, partially offset by a decrease in Average Occupied Days Percentage, which was 97.1% for the six months ended June 30, 2023 compared to 97.3% for the six months ended June 30, 2022.

Core Property Operating Expenses from Same-Home Properties

Core property operating expenses from Same-Home properties increased 12.2% to $103.6 million for the three months ended March 31, 2023 from $92.4 million for the three months ended March 31, 2022 primarily driven by (i) increased property tax expense from anticipated 2023 property tax assessments and timing of prior year property tax accruals and (ii) increased property management expenses primarily attributable to lower than normal staffing levels in the three months ended March 31, 2022 leading to a subsequent increase in personnel in the three months ended June 30, 2022 to a more stabilized level.

Core property operating expenses from Same-Home properties increased 11.0% to $210.8 million for the six months ended June 30, 2023 from $190.0 million for the six months ended June 30, 2022 primarily driven by (i) increased property tax expense from anticipated 2023 property tax assessments and timing of prior year property tax accruals, (ii) increased property management expenses primarily attributable to lower than normal staffing levels in the three months ended March 31, 2022 leading to a subsequent increase in personnel in the three months ended June 30, 2022 to a more stabilized level and (iii) other inflationary increases.

General and Administrative Expense

General and administrative expense for the three months ended March 31, 2023 and 2022 was $17.9 million and $17.3 million, respectively, which included $3.7 million and $4.0 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 the timing of increased personnel and information technology costs to support growth in our business during the three months ended March 31, 2023, partially offset by lower noncash share-based compensation expense.

General and administrative expense for the six months ended June 30, 2023 and 2022 was $37.8 million and $36.1 million, respectively, which included $9.7 million and $10.0 million, respectively, of noncash share-based compensation expense in each period related to corporate administrative employees.

Interest Expense

Interest expense increased 30.2% to $35.9 million for the three months ended March 31, 2023 from $27.6 million for the three months ended March 31, 2022.

This increase was primarily due to additional interest expense from the issuances of the 2032 and 2052 unsecured senior notes in April 2022.

Interest expense increased 13.4% to $70.7 million for the six months ended June 30, 2023 from $62.4 million for the six months ended June 30, 2022.

This increase was primarily due to additional interest from the issuances of the 2032 and 2052 unsecured senior notes in April 2022.

Acquisition and Other Transaction Costs

Acquisition and other transaction costs for the three months ended March 31, 2023 and 2022 were $5.1 million and $6.0 million, respectively, which included $1.0 million and $2.4 million, respectively, of noncash share-based compensation expense related to employees in these functions.

Acquisition and other transaction costs for the six months ended June 30, 2023 and 2022 were $9.3 million and $13.6 million, respectively, which included $2.4 million and $6.0 million, respectively, of noncash share-based compensation expense in each period related to employees in these functions.

The decrease in acquisition and other transaction costs was primarily due to lower noncash share-based compensation expense.

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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 $112.7 million for the three months ended March 31, 2023 from $100.0 million for the three months ended March 31, 2022 primarily due to growth in our average number of depreciable properties.

Depreciation and amortization expense increased 10.5% to $225.9 million for the six months ended June 30, 2023 from $204.4 million for the six months ended June 30, 2022 primarily due to growth in the average number of depreciable properties.

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

Gain on sale and impairment of single-family properties and other, net for the three months ended March 31, 2023 and 2022 was $84.7 million and $22.0 million, respectively, which included $0.4 million and $1.1 million, respectively, of impairment charges 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 six months ended June 30, 2023 and 2022 was $147.4 million and $54.9 million, respectively, which included $0.8 million and $1.1 million, respectively, of impairment charges related to homes classified as held for sale during each period.

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

Other Income and Expense, net

Other income and expense, net for the three months ended March 31, 2023 and 2022 was $4.7 million and $2.3 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 six months ended June 30, 2023 and 2022 was $7.2 million and $5.9 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 2022 Annual Report.

There have been no material changes to these estimates during the three months ended March 31, 2023.

There have been no material changes to these estimates during the six months ended June 30, 2023.

Recent Accounting Pronouncements

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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.

For our acquisition and development expenditures, we expect to supplement these sources through the issuance of equity securities, including under our June 2023 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.

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

Our liquidity and capital resources as of March 31, 2023 included cash and cash equivalents of $255.6 million.

Additionally, as of March 31, 2023, we had no outstanding borrowings and $4.0 million committed to outstanding letters of credit under our $1.25 billion revolving credit facility, leaving $1.25 billion of remaining borrowing capacity.

Our liquidity and capital resources as of June 30, 2023 included cash and cash equivalents of $199.6 million.

Additionally, as of June 30, 2023, we had no outstanding borrowings and $4.0 million committed to outstanding letters of credit under our $1.25 billion revolving credit facility, leaving $1.25 billion of remaining borrowing capacity.

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

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Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the 2022 Annual Report.

The following table summarizes the Company’s and the Operating Partnership’s cash flows for the three months ended March 31, 2023 and 2022 (amounts in thousands):

For the Three Months Ended

The following table summarizes the Company’s and the Operating Partnership’s cash flows for the six months ended June 30, 2023 and 2022 (amounts in thousands):

For the Six Months Ended

2023 2022 Change

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Net cash used for investing activities (237,822) (953,511) 715,689

Net cash provided by financing activities 63,300 369,235 (305,935)

Net cash (used for) provided by financing activities (34,044) 604,913 (638,957)

Net increase in cash, cash equivalents and restricted cash $ 143,810 $ 30,398 $ 113,412

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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 $41.7 million, or 26.3%, from $158.7 million for the three months ended March 31, 2022 to $200.5 million for the three months ended March 31, 2023, primarily due to increased cash inflows generated from a larger number of occupied properties resulting from growth in our portfolio and higher rental rates, partially offset by higher cash outflows for property related expenses as a result of inflationary increases.

Net cash provided by operating activities increased $36.7 million, or 9.7%, from $379.0 million for the six months ended June 30, 2022 to $415.7 million for the six months ended June 30, 2023 primarily due to increased cash inflows generated from a larger number of occupied properties and higher rental rates, partially offset by higher cash outflows for property related expenses as a result of inflationary increases.

Investing Activities

Net cash used for investing activities decreased $439.9 million, or 85.8%, from $512.8 million for the three months ended March 31, 2022 to $72.9 million for the three months ended March 31, 2023.

Net cash used for investing activities decreased $715.7 million, or 75.1%, from $953.5 million for the six months ended June 30, 2022 to $237.8 million for the six months ended June 30, 2023.

Our investing activities are most significantly impacted by the level of investment activity 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 decreased $311.6 million during the three months ended March 31, 2023 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 three months ended March 31, 2023 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 decreased $13.0 million primarily as a result of a decreased volume of properties that underwent initial or property-enhancing renovations during the three months ended March 31, 2023.

Recurring and other capital expenditures for single-family properties increased $7.5 million primarily due to growth in our portfolio and inflationary increases in costs.

Cash outflows for the addition of single-family properties to our portfolio through these channels decreased $543.1 million during the six months ended June 30, 2023 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 six months ended June 30, 2023 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 decreased $40.1 million primarily as a result of a decreased volume of properties that underwent initial or property-enhancing renovations during the six months ended June 30, 2023.

Recurring and other capital expenditures for single-family properties increased $13.8 million primarily due to 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.

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 $133.1 million as a result of an increased volume of properties sold during the three months ended March 31, 2023.

The decrease in cash outflows was partially offset by a $6.4 million decrease in net cash inflows from unconsolidated joint ventures during the three months ended March 31, 2023 due to the timing of contributions and distributions to and from our unconsolidated joint ventures.

Net proceeds received from the sale of single-family properties and other increased $198.9 million as a result of an increased volume of properties sold during the six months ended June 30, 2023.

The decrease in cash outflows was partially offset by (i) a $32.8 million reduction in collections on notes receivables related to property sales, (ii) a $16.7 million reduction in net cash inflows from unconsolidated joint ventures due to the timing of contributions and distributions to and from our unconsolidated joint ventures and (iii) a $2.0 million reduction in proceeds received from storm-related insurance claims.

Financing Activities

Net cash provided by financing activities decreased $305.9 million, or 82.9%, from $369.2 million for the three months ended March 31, 2022 to $63.3 million for the three months ended March 31, 2023 primarily due to (i) a $77.3 million year-over-year decrease in proceeds from the issuance of Class A common shares, net of offering costs, (ii) activity under our revolving credit facility, which resulted in $130.0 million of net cash outflows during the three months ended March 31, 2023 compared to $60.0 million of net cash inflows during the three months ended March 31, 2022, (iii) a $19.1 million increase in distributions paid to common share and unit holders resulting from a 22% increase in distributions paid per common share and unit, and (iv) a $19.8 million decrease in proceeds from liabilities related to consolidated land not owned.

These decreases in net cash provided by financing activities were partially offset by a $2.3 million reduction in distributions to preferred shareholders as a result of the redemptions of our Series F perpetual preferred shares during the three months ended June 30, 2022.

Net cash used for financing activities was $34.0 million for the six months ended June 30, 2023 compared to net cash provided by financing activities of $604.9 million for the six months ended June 30, 2022.

This change of $639.0 million was primarily due to (i) an $868.6 million reduction in proceeds from unsecured senior notes, net of discount and deferred financing costs, (ii) a $77.3 million reduction in proceeds from the issuance of Class A common shares, net of offering costs, (iii) a $38.0 million increase in distributions paid to common share and unit holders resulting from a 22% increase in distributions paid per common share and unit and (iv) a $33.8 million decrease in proceeds from liabilities related to consolidated land not owned.

These changes were partially offset by (i) a $220.0 million reduction in net cash outflows to pay down our revolving credit facility, (ii) a nonrecurring $155.0 million cash outflow for the redemption of the Series F perpetual preferred shares during the six months ended June 30, 2022 and (iii) a $3.1 million

reduction in distributions to preferred shareholders as a result of the redemption of our Series F perpetual preferred shares during the six months ended June 30, 2022.

Class A Common Share Offering

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During the third quarter of 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.

In January 2023, the Company 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, which it used to repay indebtedness under its revolving credit facility and for general corporate purposes.

During the first quarter of 2023, the Company 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, which it used to repay indebtedness under its revolving credit facility and for general corporate purposes.

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.

At-the-Market Common Share Offering Program

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

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

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

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

During the three months ended March 31, 2023 and 2022, no shares were issued under the At-the-Market Program.

As of March 31, 2023, 1,835,416 shares have been issued under the At-the-Market Program and $425.2 million remained available for future share issuances.

In June 2023, the Company entered into a new at-the-market common share offering program, replacing the previously expiring 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 $1.0 billion (the “June 2023 At-the-Market Program”).

The June 2023 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 June 2023 At-the-Market Program (i) to repay indebtedness the Company has incurred or expects to incur under its revolving credit facility or other debt obligations under its securitizations, (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 June 2023 At-the-Market Program may be suspended or terminated by the Company at any time.

As of June 30, 2023, no shares have been issued under the June 2023 At-the-Market Program and $1.0 billion remained available for future share issuances.

Share Repurchase Program

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

During the three months ended March 31, 2023 and 2022, we did not repurchase and retire any of our Class A common shares or preferred shares.

As of March 31, 2023, we had a remaining repurchase authorization of up to $265.1 million of our outstanding Class A common shares and up to $250.0 million of our outstanding preferred shares under the program.

During the six months ended June 30, 2023 and 2022, we did not repurchase and retire any of our Class A common shares or preferred shares.

As of June 30, 2023, we had a remaining repurchase authorization of up to $265.1 million of our outstanding Class A common shares and up to $250.0 million of our outstanding preferred shares under the program.

Distributions

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

During the three months ended March 31, 2023 and 2022, the Company distributed an aggregate $94.6 million and $77.7 million, respectively, to common shareholders, preferred shareholders and noncontrolling interests on a cash basis.

During the six months ended June 30, 2023 and 2022, the Company distributed an aggregate $189.2 million and $154.3 million, respectively, to common shareholders, preferred shareholders and noncontrolling interests on a cash basis.

Additional Non-GAAP Measures

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Because other REITs may not compute these measures in the same manner, they may not be comparable among REITs.

The following is a reconciliation of the Company’s net income attributable to common shareholders, determined in accordance with GAAP, to FFO attributable to common share and unit holders, Core FFO attributable to common share and unit holders and Adjusted FFO attributable to common share and unit holders for the three months ended March 31, 2023 and 2022 (amounts in thousands):

The following is a reconciliation of the Company’s net income attributable to common shareholders, determined in accordance with GAAP, to FFO attributable to common share and unit holders, Core FFO attributable to common share and unit holders and Adjusted FFO attributable to common share and unit holders for the three and six months ended June 30, 2023 and 2022 (amounts in thousands):

For the Three Months Ended

June 30, For the Six Months Ended

2023 2022 2023 2022

Net income attributable to common shareholders $ 98,029 $ 56,590 $ 215,494 $ 112,529

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Noncash share-based compensation - property management 1,132 1,132 2,198 2,131

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

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

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

The following is a reconciliation of net income, as determined in accordance with GAAP, to EBITDA, EBITDAre, Adjusted EBITDAre and Fully Adjusted EBITDAre for the three months ended March 31, 2023 and 2022 (amounts in thousands):

The following is a reconciliation of net income, as determined in accordance with GAAP, to EBITDA, EBITDAre, Adjusted EBITDAre and Fully Adjusted EBITDAre for the three and six months ended June 30, 2023 and 2022 (amounts in thousands):

For the Three Months Ended

June 30, For the Six Months Ended

2023 2022 2023 2022

Net income $ 115,414 $ 74,555 $ 253,113 $ 144,569

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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