What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-11-03 compared with 2023-08-01 · 111 added, 90 removed, 440 unchanged (31% 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 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.

As of September 30, 2023, we owned 59,092 single-family properties in select submarkets of metropolitan statistical areas (“MSAs”) in 21 states, including 700 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 58,961 single-family properties in 21 states, including 1,057 properties held for sale, as of September 30, 2022.

As of September 30, 2023, 55,949 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 55,421 of our total properties (excluding properties held for sale) as of September 30, 2022.

Also, as of September 30, 2023, the Company had an additional 2,936 properties held in unconsolidated joint ventures, compared to 2,540 properties held in unconsolidated joint ventures as of December 31, 2022 and 2,271 properties held in unconsolidated joint ventures as of September 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 June 30, 2023:

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

Total Single-Family Properties (1)

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Total/Average 58,392 100.0 % $ 12,771.3 100.0 % $ 218,717 1,991 17.4 2015

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

(1) Excludes 700 single-family properties held for sale as of September 30, 2023.

(2) Represents 15 markets in 13 states.

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

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

Total Single-Family Properties (1)

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Total/Average 95.6 % $ 2,081 12.0 6.6 7.1 %

(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.

(1) Excludes 700 single-family properties held for sale as of September 30, 2023.

(2) For the three months ended September 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 September 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 June 30, 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 September 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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We anticipate beginning to grow in these acquisition channels when the housing and capital markets stabilize.

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.

During the three months ended September 30, 2023, we developed or acquired 623 homes, including 615 newly constructed homes delivered through our AMH Development Program and eight homes acquired through our traditional acquisition channel, offset by 224 homes sold to third parties.

During the three months ended September 30, 2023, we also developed an additional 99 newly constructed homes which were delivered to our unconsolidated joint ventures, aggregating to 714 total program deliveries through our AMH Development Program.

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

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

As of September 30, 2023 and December 31, 2022, there were 700 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 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.

Based on our Same-Home population of properties (defined below), the year-over-year increase in Average Monthly Realized Rent per property was 6.8% for the three months ended September 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 8.6% and 8.3% during the three months ended September 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 7.3% for the nine months ended September 30, 2023, and we experienced turnover rates of 23.1% and 22.2% during the nine months ended September 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 $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.

Net income totaled $88.1 million for the three months ended September 30, 2023, compared to $61.7 million for the three months ended September 30, 2022.

The increase was primarily due to higher rental rates as well as higher net gains on property sales.

Net income totaled $341.2 million for the nine months ended September 30, 2023, compared to $206.2 million for the nine months ended September 30, 2022.

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

As we continue to grow our portfolio with a portion of our homes still recently developed, acquired and/or renovated, we distinguish our portfolio of homes between Same-Home properties and Non-Same-Home and Other properties in evaluating our operating performance.

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

Comparison of the Three Months Ended June 30, 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):

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

For the Three Months Ended

September 30,

Core revenues and Same-Home core revenues

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Net income $ 88,092 $ 61,665

Hurricane-related charges, net — 6,133

Gain on sale and impairment of single-family properties and other, net (33,335) (24,197)

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Same-Home Core NOI $ 191,089 $ 185,223

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

The following tables present a summary of Core NOI for our Same-Home properties, Non-Same-Home and Other properties and total properties for the three months ended September 30, 2023 and 2022 (amounts in thousands):

For the Three Months Ended September 30, 2023

Properties (1)

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Core NOI $ 191,089 63.2 % $ 33,735 63.0 % $ 224,824 63.2 %

For the Three Months Ended June 30, 2022

For the Three Months Ended September 30, 2022

Properties (1)

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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.

Rents and other single-family property revenues increased 7.7% to $421.7 million for the three months ended September 30, 2023 from $391.6 million for the three months ended September 30, 2022.

Revenue growth was primarily driven by 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 operating expenses increased 9.8% to $167.0 million for the three months ended September 30, 2023 from $152.1 million for the three months ended September 30, 2022.

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.

Property management expenses for the three months ended September 30, 2023 and 2022 were $30.8 million and $29.7 million, respectively, which included $1.0 million of noncash share-based compensation expense in each period related to centralized and field

property management employees.

The increase in property management expenses was primarily attributable to 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 revenues from Same-Home properties increased 5.8% to $302.3 million for the three months ended September 30, 2023 from $285.7 million for the three months ended September 30, 2022.

This increase was primarily attributable to higher Average Monthly Realized Rent per property, which increased 6.8% to $2,086 per month for the three months ended September 30, 2023 compared to $1,954 per month for the three months ended September 30, 2022, partially offset by a decrease in Average Occupied Days Percentage, which was 96.4% for the three months ended September 30, 2023 compared to 97.1% for the three months ended September 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.

Core property operating expenses from Same-Home properties increased 10.7% to $111.2 million for the three months ended September 30, 2023 from $100.4 million for the three months ended September 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 increased R&M and turnover costs, net.

General and Administrative Expense

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

General and administrative expense for the three months ended 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.

General and administrative expense for the three months ended September 30, 2023 and 2022 was $18.3 million and $17.0 million, respectively, which included $4.2 million and $3.4 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 and the timing of increased personnel and information technology costs to support growth in our business as well as other inflationary increases.

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.

Interest expense decreased 5.2% to $34.4 million for the three months ended September 30, 2023 from $36.3 million for the three months ended September 30, 2022.

The decrease was primarily due to additional capitalized interest during the three months ended September 30, 2023 related to an increase in development activities under our AMH Development Program.

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.

Acquisition and other transaction costs for the three months ended September 30, 2023 and 2022 were $3.4 million and $4.5 million, respectively, which included $1.3 million 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 a result of a decrease in personnel costs due to fewer planned transactions through our traditional acquisition channel during the three months ended September 30, 2023.

Depreciation and Amortization

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

Depreciation and amortization expense increased 8.4% 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.

Depreciation and amortization expense increased 5.1% to $114.9 million for the three months ended September 30, 2023 from $109.3 million for the three months ended September 30, 2022 primarily due to growth in the average number and cost of depreciable properties as well as ongoing capital investments into existing properties.

Hurricane-Related Charges, net

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

The Company’s property and casualty insurance

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

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

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.

Gain on sale and impairment of single-family properties and other, net for the three months ended September 30, 2023 and 2022 was $33.3 million and $24.2 million, respectively, which included $0.3 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 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

Other income and expense, net for the three months ended September 30, 2023 and 2022 was $1.9 million and $0.8 million, respectively, which primarily related to interest income, fees from unconsolidated joint ventures and equity in income (losses) from unconsolidated joint ventures, partially offset by expenses related to unconsolidated joint ventures and other nonrecurring expenses.

Comparison of the Nine Months Ended September 30, 2023 to the Nine Months Ended September 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 nine months ended September 30, 2023 and 2022 (amounts in thousands):

For the Nine Months Ended

September 30,

Core revenues and Same-Home core revenues

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Net income $ 341,205 $ 206,234

Hurricane-related charges, net — 6,133

Gain on sale and impairment of single-family properties and other, net (180,752) (79,052)

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Same-Home Core NOI $ 575,219 $ 549,957

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

The following tables present a summary of Core NOI for our Same-Home properties, Non-Same-Home and Other properties and total properties for the nine months ended September 30, 2023 and 2022 (amounts in thousands):

For the Nine Months Ended September 30, 2023

Properties (1)

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Core NOI $ 575,219 64.3 % $ 93,967 61.5 % $ 669,186 63.9 %

For the Six Months Ended June 30, 2022

For the Nine Months Ended September 30, 2022

Properties (1)

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Rents and Other Single-Family Property Revenues

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.

Rents and other single-family property revenues increased 9.5% to $1.2 billion for the nine months ended September 30, 2023 from $1.1 billion for the nine months ended September 30, 2022.

Revenue growth was driven by higher rental rates and an increase in our average occupied portfolio which grew to 55,901 homes for the nine months ended September 30, 2023, compared to 54,658 homes for the nine months ended September 30, 2022.

Property Operating Expenses

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 operating expenses increased 10.0% to $456.7 million for the nine months ended September 30, 2023 from $415.0 million for the nine months ended September 30, 2022.

Property Management Expenses

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.

Property management expenses for the nine months ended September 30, 2023 and 2022 were $92.3 million and $84.5 million, respectively, which included $3.2 million and $3.1 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 an increase in personnel related expenses as well as other inflationary increases.

Core Revenues from Same-Home Properties

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 revenues from Same-Home properties increased 6.7% to $895.2 million for the nine months ended September 30, 2023 from $838.7 million for the nine months ended September 30, 2022.

This increase was primarily attributable to higher Average Monthly Realized Rent per property, which increased 7.3% to $2,049 per month for the nine months ended September 30, 2023 compared to $1,910 per month for the nine months ended September 30, 2022, partially offset by a decrease in Average Occupied Days Percentage, which was 96.9% for the nine months ended September 30, 2023 compared to 97.2% for the nine months ended September 30, 2022.

Core Property Operating Expenses from Same-Home Properties

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.

Core property operating expenses from Same-Home properties increased 10.8% to $320.0 million for the nine months ended September 30, 2023 from $288.7 million for the nine months ended September 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 inflationary increases in R&M and turnover costs, net and property management expenses, net.

General and Administrative 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.

General and administrative expense for the nine months ended September 30, 2023 and 2022 was $56.1 million and $53.1 million, respectively, which included $13.9 million and $13.4 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 the timing of increased personnel and information technology costs to support growth in our business as well as other inflationary increases.

Interest Expense

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.

Interest expense increased 6.6% to $105.1 million for the nine months ended September 30, 2023 from $98.6 million for the nine months ended September 30, 2022.

This increase was primarily due to additional interest from the issuances of the 2032 and 2052 unsecured senior notes in April 2022, partially offset by additional capitalized interest during the nine months ended September 30, 2023 related to an increase in development activities under our AMH Development Program.

Acquisition and Other Transaction Costs

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.

Acquisition and other transaction costs for the nine months ended September 30, 2023 and 2022 were $12.7 million and $18.1 million, respectively, which included $3.7 million and $7.2 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 as well as a decrease in personnel costs due to fewer planned transactions through our traditional acquisition channel during the nine months ended September 30, 2023.

Depreciation and Amortization

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

Depreciation and amortization expense increased 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.

Depreciation and amortization expense increased 8.6% to $340.8 million for the

nine months ended September 30, 2023 from $313.7 million for the nine months ended September 30, 2022 primarily due to growth in the average number and cost of depreciable properties as well as ongoing capital investments into existing properties.

Hurricane-Related Charges, net

The Company’s property and casualty insurance policies provide coverage for wind and flood damage, as well as business interruption costs, during the period of remediation and repairs, subject to deductibles and limits.

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

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

Gain on sale and impairment of single-family properties and other, net for the six months ended June 30, 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.

Gain on sale and impairment of single-family properties and other, net for the nine months ended September 30, 2023 and 2022 was $180.8 million and $79.1 million, respectively, which included $1.1 million and $1.3 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 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.

Other income and expense, net for the nine months ended September 30, 2023 and 2022 was $9.1 million and $6.8 million, respectively, which primarily related to interest income, fees from unconsolidated joint ventures and equity in income (losses) from unconsolidated joint ventures, partially offset by expenses related to unconsolidated joint ventures and other nonrecurring expenses.

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 six months ended June 30, 2023.

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

Recent Accounting Pronouncements

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

Our liquidity and capital resources as of 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.

Our liquidity and capital resources as of September 30, 2023 included cash and cash equivalents of $69.5 million.

Additionally, as of September 30, 2023, we had no outstanding borrowings and $2.7 million committed to outstanding letters of credit under our $1.25 billion revolving credit facility, leaving $1.25 billion of remaining borrowing capacity.

Under our June 2023 At-the-Market Program discussed below, we also had $1.0 billion remaining available for future share issuances as of September 30, 2023.

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

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Commitments and Contingencies and Note 16.

Subsequent Events to our condensed consolidated financial statements in this report, there have been no

other material changes outside the ordinary course of business to our other known contractual obligations described in “Liquidity and Capital Resources” in Part II, “Item 7.

Subsequent Events to our condensed consolidated financial statements in this report, there have been no other material changes outside the ordinary course of business to our other known contractual obligations described in “Liquidity and Capital Resources” in Part II, “Item 7.

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

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

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

For the Nine Months Ended

September 30,

2023 2022 Change

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

Net cash provided by operating activities increased $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.

Net cash provided by operating activities increased $26.6 million, or 4.5%, from $596.8 million for the nine months ended September 30, 2022 to $623.4 million for the nine months ended September 30, 2023 primarily due to increased cash inflows generated from higher rental rates and a larger number of occupied properties, 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 $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.

Net cash used for investing activities decreased $802.3 million, or 63.3%, from $1.3 billion for the nine months ended September 30, 2022 to $465.3 million for the nine months ended September 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 $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.

Cash outflows for the addition of single-family properties to our portfolio through these channels decreased $569.8 million during the nine months ended September 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 nine months ended September 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 $56.7 million primarily as a result of a decreased volume of properties that underwent initial or property-enhancing renovations during the nine months ended September 30, 2023.

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 $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.

Net proceeds received from the sale of single-family properties and other increased $221.0 million as a result of an increased volume of properties sold during the nine months ended September 30, 2023.

In addition, cash paid for deposits on land option contracts decreased $9.5 million and cash outflows for other investing activities decreased $5.0 million during the nine months ended September 30, 2023.

These changes were partially offset by (i) a $33.4 million reduction in collections on notes receivables related to property sales, (ii) a $19.0 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 $7.6 million increase in recurring and other capital expenditures for single-family properties primarily due to inflationary increases in costs.

Financing Activities

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.

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.

Net cash used for financing activities was $133.4 million for the nine months ended September 30, 2023 compared to net cash provided by financing activities of $736.8 million for the nine months ended September 30, 2022.

This change of $870.2 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 $262.9 million reduction in proceeds from the issuance of Class A common shares, net of offering costs, (iii) a $60.2 million decrease in proceeds from liabilities related to consolidated land not owned, and (iv) a $57.1 million increase in distributions paid to common share and unit holders resulting from a 22% increase in distributions paid per common share and unit.

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 nine months ended September 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 nine months ended September 30, 2022.

Class A Common Share Offering

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At-the-Market Common Share Offering Program

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”).

During the second quarter of 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.

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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.

As of September 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 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.

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

As of September 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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As of December 31, 2022, AMH had a net operating loss (“NOL”) for U.S.

federal income tax purposes of an estimated $11.8 million.

federal income tax purposes of $11.8 million.

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

During the six months ended June 30, 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.

During the nine months ended September 30, 2023 and 2022, the Company distributed an aggregate $283.8 million and $229.9 million, respectively, to common shareholders, preferred shareholders and noncontrolling interests on a cash basis.

Additional Non-GAAP Measures

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

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

For the Three Months Ended

June 30, For the Six Months Ended

September 30, For the Nine Months Ended

September 30,

2023 2022 2023 2022

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Noncash share-based compensation - property management 953 1,015 3,151 3,146

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

Redemption of perpetual preferred shares — — — 5,276

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

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

For the Three Months Ended

June 30, For the Six Months Ended

September 30, For the Nine Months Ended

September 30,

2023 2022 2023 2022

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Acquisition, other transaction costs and other 3,399 4,482 12,650 18,114

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

Adjusted EBITDAre $ 213,325 $ 198,509 $ 638,405 $ 580,115

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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