American Homes 4 Rent 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q. Overview We are a Maryland REIT focused on acquiring, developing, renovating, leasing and managing single-family homes as rental properties. The Operating Partnership is the entity through which we conduct substantially all of our business and own, directly or through subsidiaries, substantially all of our assets. We commenced operations in November 2012 and we have elected to be taxed as a REIT. As of June 30, 2024, we owned 59,493 single-family properties in select submarkets of metropolitan statistical areas (“MSAs”) in 21 states, including 633 properties held for sale, compared to 59,332 single-family properties in 21 states, including 862 properties held for sale, as of December 31, 2023 and 58,693 single-family properties in 21 states, including 648 properties held for sale, as of June 30, 2023. As of June 30, 2024, 56,669 of our total properties (excluding properties held for sale) were occupied, compared to 55,768 of our total properties (excluding properties held for sale) as of December 31, 2023 and 56,000 of our total properties (excluding properties held for sale) as of June 30, 2023. Also, as of June 30, 2024, the Company had an additional 3,167 properties held in unconsolidated joint ventures, compared to 2,978 properties held in unconsolidated joint ventures as of December 31, 2023 and 2,846 properties held in unconsolidated joint ventures as of June 30, 2023. 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, 2024: Total Single-Family Properties (1) Market Number of Single-Family Properties % of Total Single-Family Properties Gross Book Value (millions) % of Gross Book Value Total Avg. Gross Book Value per Property Avg. Sq. Ft. Avg. Property Age (years) Avg. Year Purchased or Delivered Atlanta, GA 5,911 10.0 % $ 1,347.4 10.2 % $ 227,955 2,179 17.4 2016 Charlotte, NC 4,139 7.0 % 924.7 7.0 % 223,404 2,114 17.9 2015 Dallas-Fort Worth, TX 3,976 6.8 % 701.2 5.3 % 176,361 2,093 20.0 2014 Phoenix, AZ 3,337 5.7 % 721.5 5.5 % 216,224 1,842 19.5 2016 Nashville, TN 3,361 5.7 % 846.0 6.4 % 251,718 2,120 16.3 2016 Jacksonville, FL 3,206 5.4 % 716.7 5.4 % 223,546 1,926 14.3 2016 Tampa, FL 2,960 5.0 % 702.2 5.3 % 237,215 1,948 15.1 2016 Indianapolis, IN 2,830 4.8 % 494.8 3.8 % 174,836 1,927 21.4 2014 Houston, TX 2,350 4.0 % 419.7 3.2 % 178,589 2,082 18.6 2014 Las Vegas, NV 2,322 3.9 % 680.5 5.2 % 293,057 1,941 11.3 2017 Raleigh, NC 2,199 3.7 % 440.8 3.3 % 200,476 1,888 18.0 2015 Columbus, OH 2,148 3.6 % 423.2 3.2 % 197,018 1,882 21.5 2015 Cincinnati, OH 2,121 3.6 % 420.1 3.2 % 198,087 1,843 21.5 2014 Orlando, FL 2,078 3.5 % 474.4 3.6 % 228,316 1,919 17.6 2016 Salt Lake City, UT 1,921 3.3 % 588.7 4.5 % 306,457 2,246 17.5 2016 Charleston, SC 1,578 2.7 % 369.6 2.8 % 234,234 1,965 13.1 2017 Greater Chicago area, IL and IN 1,534 2.6 % 294.8 2.2 % 192,174 1,866 22.8 2013 San Antonio, TX 1,212 2.1 % 240.9 1.8 % 198,754 1,914 15.3 2015 Savannah/Hilton Head, SC 1,050 1.8 % 223.1 1.7 % 212,511 1,889 15.7 2016 Seattle, WA 1,013 1.7 % 338.0 2.6 % 333,672 2,006 14.4 2017 All Other (2) 7,614 13.1 % 1,823.4 13.8 % 239,480 1,917 17.3 2016 Total/Average 58,860 100.0 % $ 13,191.7 100.0 % $ 224,120 1,993 17.6 2015 (1) Excludes 633 single-family properties held for sale as of June 30, 2024. (2) Represents 15 markets in 13 states. 30 The following table summarizes certain key leasing metrics as of June 30, 2024: Total Single-Family Properties (1) Market Avg. Occupied Days Percentage (2) Avg. Monthly Realized Rent per Property (3) Avg. Original Lease Term (months) (4) Avg. Remaining Lease Term (months) (4) Avg. Blended Change in Rent (5) Atlanta, GA 95.2 % $ 2,217 12.0 6.2 5.8 % Charlotte, NC 97.1 % 2,133 12.0 6.4 6.2 % Dallas-Fort Worth, TX 95.4 % 2,255 12.0 6.4 5.3 % Phoenix, AZ 95.3 % 2,111 12.0 6.6 5.0 % Nashville, TN 95.3 % 2,310 12.0 6.0 5.4 % Jacksonville, FL 95.4 % 2,148 12.0 6.6 4.4 % Tampa, FL 95.3 % 2,380 12.0 6.2 5.2 % Indianapolis, IN 97.9 % 1,837 12.1 5.7 5.5 % Houston, TX 96.2 % 2,029 12.0 6.3 5.2 % Las Vegas, NV 93.5 % 2,262 12.0 6.4 4.1 % Raleigh, NC 95.8 % 2,006 12.1 6.7 5.5 % Columbus, OH 97.3 % 2,145 12.0 6.1 6.2 % Cincinnati, OH 97.7 % 2,092 12.0 6.0 5.8 % Orlando, FL 94.4 % 2,333 12.0 6.3 6.2 % Salt Lake City, UT 96.9 % 2,407 12.0 6.0 4.3 % Charleston, SC 93.9 % 2,252 12.0 6.6 5.7 % Greater Chicago area, IL and IN 98.2 % 2,384 12.0 6.0 7.0 % San Antonio, TX 95.0 % 1,934 12.0 7.0 1.6 % Savannah/Hilton Head, SC 97.4 % 2,191 12.0 6.3 8.6 % Seattle, WA 94.8 % 2,737 11.5 6.4 6.8 % All Other (6) 95.8 % 2,176 12.0 6.1 5.2 % Total/Average 95.8 % $ 2,190 12.0 6.3 5.4 % (1) Excludes 633 single-family properties held for sale as of June 30, 2024. (2) For the three months ended June 30, 2024, 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, 2024, 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, 2024, 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. We believe these key single-family property and leasing metrics provide useful information to investors because they allow investors to understand the composition and performance of our properties on a market by market basis. Management also uses these metrics to understand the composition and performance of our properties at the market level. Factors That Affect Our Results of Operations and Financial Condition 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, 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 Since our formation, we have rapidly but systematically grown our portfolio of single-family properties. Our ability to identify and acquire homes that meet our investment criteria is impacted by home prices in our target markets, the inventory of properties available-for-sale through traditional acquisition channels, availability of bulk portfolio acquisition opportunities, competition for our target assets and our available capital. We are also focused on developing “built-for-rental” homes through our internal AMH Development Program. In addition, we acquire newly constructed homes from third-party developers through our National Builder 31 Program. Opportunities from these new construction channels are impacted by the availability of vacant developed lots, development land assets and inventory of homes currently under construction or newly developed. Our level of investment activity has fluctuated based on the number of suitable opportunities and the level of capital available to invest. We have strategically scaled back acquisitions of single-family properties through our National Builder Program and traditional acquisition channels as the housing market adjusts to the current macroeconomic environment. We will continue to evaluate all of our growth channels and grow accordingly, if and when, acquisition opportunities are attractive relative to the condition of capital markets. During the three months ended June 30, 2024, we developed or acquired 590 homes, including 580 newly constructed homes delivered to our operating portfolio through our AMH Development Program and 10 homes acquired through our National Builder Program and traditional acquisition channel, partially offset by 345 homes identified for sale or contributed to unconsolidated joint ventures. During the three months ended June 30, 2024, we also developed an additional 91 newly constructed homes which were delivered to our unconsolidated joint ventures, aggregating to 671 total program deliveries through our AMH Development Program. During the six months ended June 30, 2024, we developed or acquired 1,050 homes, including 1,021 newly constructed homes delivered to our operating portfolio through our AMH Development Program and 29 homes acquired through our National Builder Program and traditional acquisition channel, partially offset by 660 homes identified for sale or contributed to unconsolidated joint ventures. During the six months ended June 30, 2024, we also developed an additional 119 newly constructed homes which were delivered to our unconsolidated joint ventures, aggregating to 1,140 total program deliveries through our AMH Development Program. Our properties and land held for sale were identified based on individual asset-level review, as well as submarket analysis. As of June 30, 2024 and December 31, 2023, there were 633 and 862 properties, respectively, as well as certain land lots, classified as held for sale. We will continue to evaluate our properties and land for potential disposition going forward as a normal course of business. Property Operations Homes added to our portfolio through new construction channels include properties developed through our internal AMH Development Program and newly constructed properties acquired from third-party developers through our National Builder Program. Rental homes developed through our AMH Development Program involve substantial up-front costs, time to acquire and develop land, time to build the rental home, and time to lease the rental home before the home generates income. This process is dependent upon the nature of each lot acquired and the timeline varies primarily due to land development requirements. Once land development requirements have been met, historically it has taken approximately four to six months to complete the rental home vertical construction process. However, delivery of homes may be staggered to facilitate leasing absorption. Our internal construction program is managed by our team of development professionals that oversee the full rental home construction process including all land development and work performed by subcontractors. We typically incur costs between $250,000 and $450,000 to acquire and develop land and build a rental home. Homes added through our AMH Development Program are available for lease immediately upon or shortly after receipt of a certificate of occupancy. Rental homes acquired from third-party developers through our National Builder Program are dependent on the inventory of newly constructed homes and homes currently under construction. Homes added to our portfolio through traditional acquisition channels require expenditures in addition to payment of the purchase price, including property inspections, closing costs, liens, title insurance, transfer taxes, recording fees, broker commissions, property taxes and homeowner association (“HOA”) fees, when applicable. In addition, we typically incur costs between $20,000 and $40,000 to renovate a home acquired through traditional acquisition channels to prepare it for rental. Renovation work varies, but may include paint, flooring, cabinetry, appliances, plumbing hardware and other items required to prepare the home for rental. The time and cost involved to prepare our homes for rental can impact our financial performance and varies among properties based on several factors, including the source of acquisition channel and age and condition of the property. Historically, it has taken approximately 20 to 90 days to complete the renovation process, which will fluctuate based on our overall acquisition volume as well as availability of construction labor and materials. Our operating results are also impacted by the amount of time it takes to market and lease a property, which can vary greatly among properties, and is impacted by local demand, our marketing techniques and the size of our available inventory. Typically, it takes approximately 10 to 50 days to lease a property after acquiring or developing a new property through our new construction channels and 20 to 40 days after completing the renovation process for a traditionally acquired property. Lastly, our operating results are impacted by the length of stay of our tenants and the amount of time it takes to prepare and re-lease a property after a tenant vacates. This process, which we refer to as “turnover,” is impacted by numerous factors, including the condition of the home upon move-out of the previous tenant, and by local demand, our marketing techniques and the size of our available inventory at the time of the turnover. Typically, it takes approximately 20 to 50 days to complete the turnover process. 32 Revenues Our revenues are derived primarily from rents collected from tenants for our single-family properties under lease agreements which typically have a term of one year. Our rental rates and occupancy levels are affected by macroeconomic factors and local and property-level factors, including market conditions, seasonality and tenant defaults, and the amount of time it takes to turn properties when tenants vacate. Additionally, our ability to collect revenues and related operating results are impacted by the credit worthiness and quality of our tenants. Typically, our incoming residents have household incomes ranging from $80,000 to $140,000 and primarily consist of families with approximately two adults and one or more children. Our rents and other single-family property revenues are comprised of rental revenue from single-family properties, fees from our single-family property rentals and “tenant charge-backs,” which are primarily related to cost recoveries on utilities. Our ability to maintain and grow revenues from our existing portfolio of homes will be dependent on our ability to retain tenants and increase rental rates. Based on our Same-Home population of properties (defined below), the year-over-year increase in Average Monthly Realized Rent per property was 5.6% for the three months ended June 30, 2024, and we experienced turnover rates, which represents the number of tenant move-outs during the period divided by the total number of properties, of 7.8% and 8.5% during the three months ended June 30, 2024 and 2023, respectively. Based on our Same-Home population of properties, the year-over-year increase in Average Monthly Realized Rent per property was 5.7% for the six months ended June 30, 2024, and we experienced turnover rates of 14.2% and 14.9% during the six months ended June 30, 2024 and 2023, respectively. Expenses We monitor the following categories of expenses that we believe most significantly affect our results of operations. Property Operating Expenses Once a property is available for lease for the first time, which we refer to as “rent-ready,” we incur ongoing property-related expenses which may not be subject to our control. These include primarily property taxes, repairs and maintenance (“R&M”), turnover costs, HOA fees (when applicable) and insurance. Property Management Expenses As we internally manage our portfolio of single-family properties through our proprietary property management platform, we incur costs such as salary expenses for property management personnel, lease expenses and operating costs for property management offices and technology expenses for maintaining as well as enhancing our property management platform. As part of developing our property management platform, we continue to make significant investments in our personnel, infrastructure, systems and technology that will impact expenses based on investment programs during the year. We believe that these investments will enable our property management platform to become more efficient over time, especially as our portfolio grows. Also included in property management expenses is noncash share-based compensation expense related to centralized and field property management employees. Seasonality We believe that our business and related operating results will be impacted by seasonal factors throughout the year. Historically, we have experienced higher levels of tenant move-outs and move-ins during the late spring and summer months, which impacts both our rental revenues and related turnover costs. Our property operating costs are seasonally impacted in certain markets for expenses such as HVAC repairs, turn costs and landscaping expenses during the summer season. Additionally, our single-family properties are at greater risk in certain markets for adverse weather conditions such as hurricanes in the late summer months and extreme cold weather in the winter months. General and Administrative Expense General and administrative expense primarily consists of corporate payroll and personnel costs, federal and state taxes, trustees’ and officers’ insurance expenses, audit and tax fees, trustee fees and other expenses associated with our corporate and administrative functions. In addition, we continue to make corporate level investments to support certain initiatives which will impact expenses based on given investment programs during the year. Also included in general and administrative expense is noncash share-based compensation expense related to corporate administrative employees. 33 Results of Operations Net income totaled $108.5 million for the three months ended June 30, 2024, compared to $115.4 million for the three months ended June 30, 2023. The decrease was primarily due to lower net gains on property sales, partially offset by increases in rents and other single-family property revenues exceeding increases in total expenses. Net income totaled $236.6 million for the six months ended June 30, 2024, compared to $253.1 million for the six months ended June 30, 2023. The decrease was primarily due to lower net gains on property sales, partially offset by increases in rents and other single-family property revenues exceeding increases in total expenses. 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. Single-family properties that we acquire individually (i.e., not through a bulk purchase) are classified as either stabilized or non-stabilized. A property is classified as stabilized once it has been renovated by the Company or newly constructed and then initially leased or available for rent for a period greater than 90 days. Properties acquired through a bulk purchase are first considered non-stabilized, as an entire group, until (1) we have owned them for an adequate period of time to allow for complete on-boarding to our operating platform, and (2) a substantial portion of the properties have experienced tenant turnover at least once under our ownership, providing the opportunity for renovations and improvements to meet our property standards. After such time has passed, properties acquired through a bulk purchase are then evaluated on an individual property basis under our standard stabilization criteria. All other properties, including those classified as held for sale or taken out of service as a result of a casualty loss, are classified as Non-Same-Home and Other. One of the primary financial measures we use in evaluating the operating performance of our single-family properties is Core Net Operating Income (“Core NOI”), which we also present separately for our Same-Home portfolio. Core NOI is a supplemental non-GAAP financial measure that we define as core revenues, which is calculated as rents and other single-family property revenues, excluding expenses reimbursed by tenant charge-backs, less core property operating expenses, which is calculated as property operating and property management expenses, excluding noncash share-based compensation expense and expenses reimbursed by tenant charge-backs. Core NOI also excludes (1) gain or loss on early extinguishment of debt, (2) hurricane-related charges, net, which result in material charges to our single-family property portfolio, (3) gains and losses from sales or impairments of single-family properties and other, (4) depreciation and amortization, (5) acquisition and other transaction costs incurred with business combinations and the acquisition or disposition of properties as well as nonrecurring items unrelated to ongoing operations, (6) noncash share-based compensation expense, (7) interest expense, (8) general and administrative expense, and (9) other income and expense, net. We believe Core NOI provides useful information to investors about the operating performance of our single-family properties without the impact of certain operating expenses that are reimbursed through tenant charge-backs. Core NOI and Same-Home Core NOI should be considered only as supplements to net income or loss as a measure of our performance and should not be used as measures of our liquidity, nor are they indicative of funds available to fund our cash needs, including our ability to pay dividends or make distributions. 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”)). 34 Comparison of the Three Months Ended June 30, 2024 to the Three Months Ended June 30, 2023 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, 2024 and 2023 (amounts in thousands): For the Three Months Ended June 30, 2024 2023 Core revenues and Same-Home core revenues Rents and other single-family property revenues $ 423,494 $ 395,548 Tenant charge-backs (47,371) (45,814) Core revenues 376,123 349,734 Less: Non-Same-Home core revenues (37,359) (28,646) Same-Home core revenues $ 338,764 $ 321,088 Core property operating expenses and Same-Home core property operating expenses Property operating expenses $ 149,470 $ 142,553 Property management expenses 32,382 30,666 Noncash share-based compensation - property management (1,340) (1,132) Expenses reimbursed by tenant charge-backs (47,371) (45,814) Core property operating expenses 133,141 126,273 Less: Non-Same-Home core property operating expenses (14,307) (12,859) Same-Home core property operating expenses $ 118,834 $ 113,414 Core NOI and Same-Home Core NOI Net income $ 108,534 $ 115,414 Loss on early extinguishment of debt 63 — Gain on sale and impairment of single-family properties and other, net (43,892) (62,758) Depreciation and amortization 117,603 113,199 Acquisition and other transaction costs 2,937 4,175 Noncash share-based compensation - property management 1,340 1,132 Interest expense 38,678 34,844 General and administrative expense 21,693 19,937 Other income and expense, net (3,974) (2,482) Core NOI 242,982 223,461 Less: Non-Same-Home Core NOI (23,052) (15,787) Same-Home Core NOI $ 219,930 $ 207,674 35 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, 2024 and 2023 (amounts in thousands): For the Three Months Ended June 30, 2024 Same-Home Properties (1) % of Core Revenue Non-Same- Home and Other Properties % of Core Revenue Total Properties % of Core Revenue Rents from single-family properties $ 334,433 $ 36,981 $ 371,414 Fees from single-family properties 7,207 937 8,144 Bad debt (2,876) (559) (3,435) Core revenues 338,764 37,359 376,123 Property tax expense 57,972 17.1 % 6,054 16.2 % 64,026 17.0 % HOA fees, net (2) 6,116 1.8 % 622 1.7 % 6,738 1.8 % R&M and turnover costs, net (2) 25,207 7.4 % 3,056 8.2 % 28,263 7.5 % Insurance 4,303 1.3 % 645 1.7 % 4,948 1.3 % Property management expenses, net (3) 25,236 7.5 % 3,930 10.5 % 29,166 7.8 % Core property operating expenses 118,834 35.1 % 14,307 38.3 % 133,141 35.4 % Core NOI $ 219,930 64.9 % $ 23,052 61.7 % $ 242,982 64.6 % For the Three Months Ended June 30, 2023 Same-Home Properties (1) % of Core Revenue Non-Same- Home and Other Properties % of Core Revenue Total Properties % of Core Revenue Rents from single-family properties $ 318,031 $ 28,841 $ 346,872 Fees from single-family properties 6,677 723 7,400 Bad debt (3,620) (918) (4,538) Core revenues 321,088 28,646 349,734 Property tax expense 55,260 17.2 % 5,483 19.1 % 60,743 17.4 % HOA fees, net (2) 5,803 1.8 % 488 1.7 % 6,291 1.8 % R&M and turnover costs, net (2) 23,918 7.4 % 3,036 10.6 % 26,954 7.7 % Insurance 4,162 1.3 % 439 1.5 % 4,601 1.3 % Property management expenses, net (3) 24,271 7.6 % 3,413 12.0 % 27,684 7.9 % Core property operating expenses 113,414 35.3 % 12,859 44.9 % 126,273 36.1 % Core NOI $ 207,674 64.7 % $ 15,787 55.1 % $ 223,461 63.9 % (1) Includes 52,987 properties that have been stabilized longer than 90 days prior to January 1, 2023. (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 7.1% to $423.5 million for the three months ended June 30, 2024 from $395.5 million for the three months ended June 30, 2023. Revenue growth was primarily driven by higher rental rates. Property Operating Expenses Property operating expenses increased 4.9% to $149.5 million for the three months ended June 30, 2024 from $142.6 million for the three months ended June 30, 2023. This increase was primarily driven by annual increases in property tax expense and inflationary increases in all other expenses. Property Management Expenses Property management expenses for the three months ended June 30, 2024 and 2023 were $32.4 million and $30.7 million, respectively, which included $1.3 million and $1.1 million, respectively, of noncash share-based compensation expense in each period 36 related to centralized and field property management employees. The increase in property management expenses was primarily attributable to an increase in personnel related expenses and noncash share-based compensation expense. Core Revenues from Same-Home Properties Core revenues from Same-Home properties increased 5.5% to $338.8 million for the three months ended June 30, 2024 from $321.1 million for the three months ended June 30, 2023. This increase was primarily attributable to higher Average Monthly Realized Rent per property, which increased 5.6% to $2,178 per month for the three months ended June 30, 2024 compared to $2,063 per month for the three months ended June 30, 2023, as well as higher fees from single-family properties and lower uncollectible rents, partially offset by a decrease in Average Occupied Days Percentage, which was 96.6% for the three months ended June 30, 2024 compared to 97.0% for the three months ended June 30, 2023. 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 4.8% to $118.8 million for the three months ended June 30, 2024 from $113.4 million for the three months ended June 30, 2023 primarily driven by annual increases in property tax expense and inflationary increases in all other expenses. 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, 2024 and 2023 was $21.7 million and $19.9 million, respectively, which included $7.6 million and $6.0 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 an increase in noncash share-based compensation expense as well as an increase in personnel related expenses. Interest Expense Interest expense increased 11.0% to $38.7 million for the three months ended June 30, 2024 from $34.8 million for the three months ended June 30, 2023. The increase was primarily due to additional interest from the issuance of unsecured senior notes in January 2024, partially offset by lower interest expense resulting from the payoff of the AMH 2014-SFR2 securitization in February 2024. 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, 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, 2024 and 2023 were $2.9 million and $4.2 million, respectively, which included $1.6 million and $1.4 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 a decrease in personnel costs as a result of fewer planned transactions through our traditional acquisition channel during the three months ended June 30, 2024. 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 3.9% to $117.6 million for the three months ended June 30, 2024 from $113.2 million for the three months ended June 30, 2023 primarily due to growth in the average number and cost of depreciable properties as well as ongoing capital investments into existing 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, 2024 and 2023 was $43.9 million and $62.8 million, respectively, which included $2.4 million and $0.4 million, respectively, of impairment charges in each 37 period related to homes classified as held for sale during each period. The decrease was primarily related to lower net gains on property sales resulting from fewer properties sold. Loss on Early Extinguishment of Debt Loss on early extinguishment of debt was $0.1 million for the three months ended June 30, 2024, compared to zero for the three months ended June 30, 2023, as a result of legal and administrative fees associated with the payoff of the AMH 2014-SFR2 securitization in February 2024. Other Income and Expense, net Other income and expense, net for the three months ended June 30, 2024 and 2023 was $4.0 million and $2.5 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, 2024 to the Six Months Ended June 30, 2023 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, 2024 and 2023 (amounts in thousands): For the Six Months Ended June 30, 2024 2023 Core revenues and Same-Home core revenues Rents and other single-family property revenues $ 847,049 $ 793,251 Tenant charge-backs (104,708) (101,209) Core revenues 742,341 692,042 Less: Non-Same-Home core revenues (70,659) (55,121) Same-Home core revenues $ 671,682 $ 636,921 Core property operating expenses and Same-Home core property operating expenses Property operating expenses $ 305,397 $ 289,621 Property management expenses 63,784 61,466 Noncash share-based compensation - property management (2,784) (2,198) Expenses reimbursed by tenant charge-backs (104,708) (101,209) Core property operating expenses 261,689 247,680 Less: Non-Same-Home core property operating expenses (28,912) (26,528) Same-Home core property operating expenses $ 232,777 $ 221,152 Core NOI and Same-Home Core NOI Net income $ 236,629 $ 253,113 Loss on early extinguishment of debt 1,017 — Gain on sale and impairment of single-family properties and other, net (112,793) (147,417) Depreciation and amortization 233,329 225,916 Acquisition and other transaction costs 6,261 9,251 Noncash share-based compensation - property management 2,784 2,198 Interest expense 77,255 70,726 General and administrative expense 43,578 37,792 Other income and expense, net (7,408) (7,217) Core NOI 480,652 444,362 Less: Non-Same-Home Core NOI (41,747) (28,593) Same-Home Core NOI $ 438,905 $ 415,769 38 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, 2024 and 2023 (amounts in thousands): For the Six Months Ended June 30, 2024 Same-Home Properties (1) % of Core Revenue Non-Same- Home and Other Properties % of Core Revenue Total Properties % of Core Revenue Rents from single-family properties $ 663,124 $ 70,339 $ 733,463 Fees from single-family properties 14,376 1,769 16,145 Bad debt (5,818) (1,449) (7,267) Core revenues 671,682 70,659 742,341 Property tax expense 116,021 17.3 % 12,593 17.8 % 128,614 17.3 % HOA fees, net (2) 11,868 1.8 % 1,184 1.7 % 13,052 1.8 % R&M and turnover costs, net (2) 46,797 7.0 % 6,312 8.9 % 53,109 7.2 % Insurance 8,545 1.3 % 1,180 1.7 % 9,725 1.3 % Property management expenses, net (3) 49,546 7.3 % 7,643 10.8 % 57,189 7.7 % Core property operating expenses 232,777 34.7 % 28,912 40.9 % 261,689 35.3 % Core NOI $ 438,905 65.3 % $ 41,747 59.1 % $ 480,652 64.7 % For the Six Months Ended June 30, 2023 Same-Home Properties (1) % of Core Revenue Non-Same- Home and Other Properties % of Core Revenue Total Properties % of Core Revenue Rents from single-family properties $ 631,256 $ 55,830 $ 687,086 Fees from single-family properties 13,312 1,528 14,840 Bad debt (7,647) (2,237) (9,884) Core revenues 636,921 55,121 692,042 Property tax expense 109,114 17.1 % 11,513 20.9 % 120,627 17.5 % HOA fees, net (2) 11,247 1.8 % 1,026 1.9 % 12,273 1.8 % R&M and turnover costs, net (2) 44,262 6.9 % 6,308 11.4 % 50,570 7.3 % Insurance 7,731 1.2 % 801 1.5 % 8,532 1.2 % Property management expenses, net (3) 48,798 7.7 % 6,880 12.4 % 55,678 8.0 % Core property operating expenses 221,152 34.7 % 26,528 48.1 % 247,680 35.8 % Core NOI $ 415,769 65.3 % $ 28,593 51.9 % $ 444,362 64.2 % (1) Includes 52,987 properties that have been stabilized longer than 90 days prior to January 1, 2023. (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 6.8% to $847.0 million for the six months ended June 30, 2024 from $793.3 million for the six months ended June 30, 2023. Revenue growth was primarily driven by higher rental rates. Property Operating Expenses Property operating expenses increased 5.4% to $305.4 million for the six months ended June 30, 2024 from $289.6 million for the six months ended June 30, 2023. This increase was primarily driven by annual increases in property tax expense and inflationary increases in all other expenses. Property Management Expenses Property management expenses for the six months ended June 30, 2024 and 2023 were $63.8 million and $61.5 million, respectively, which included $2.8 million and $2.2 million, respectively, of noncash share-based compensation expense in each period related to 39 centralized and field property management employees. The increase in property management expenses was primarily attributable to an increase in personnel related expenses and noncash share-based compensation expense. Core Revenues from Same-Home Properties Core revenues from Same-Home properties increased 5.5% to $671.7 million for the six months ended June 30, 2024 from $636.9 million for the six months ended June 30, 2023. This increase was primarily attributable to higher Average Monthly Realized Rent per property, which increased 5.7% to $2,163 per month for the six months ended June 30, 2024 compared to $2,045 per month for the six months ended June 30, 2023, as well as higher fees from single-family properties and lower uncollectible rents, partially offset by a decrease in Average Occupied Days Percentage, which was 96.4% for the six months ended June 30, 2024 compared to 97.1% for the six months ended June 30, 2023. Core Property Operating Expenses from Same-Home Properties Core property operating expenses from Same-Home properties consist of direct property operating expenses, net of tenant charge-backs, and property management costs, net of tenant charge-backs, and excludes noncash share-based compensation expense. Core property operating expenses from Same-Home properties increased 5.3% to $232.8 million for the six months ended June 30, 2024 from $221.2 million for the six months ended June 30, 2023 primarily driven by annual increases in property tax expense and inflationary increases in all other expenses. 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 six months ended June 30, 2024 and 2023 was $43.6 million and $37.8 million, respectively, which included $14.4 million and $9.7 million, respectively, of noncash share-based compensation expense in each period related to corporate administrative employees. The increase in general and administrative expense was primarily related to an increase in noncash share-based compensation expense as well as an increase in personnel related expenses. Interest Expense Interest expense increased 9.2% to $77.3 million for the six months ended June 30, 2024 from $70.7 million for the six months ended June 30, 2023. The increase was primarily due to additional interest from the issuance of unsecured senior notes in January 2024, partially offset by lower interest expense resulting from the payoff of the AMH 2014-SFR2 securitization in February 2024. 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, or the disposal of certain properties or portfolios of properties which do not qualify for capitalization. Acquisition and other transaction costs for the six months ended June 30, 2024 and 2023 were $6.3 million and $9.3 million, respectively, which included $3.2 million and $2.4 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 a decrease in personnel costs as a result of fewer planned transactions through our traditional acquisition channel during the six months ended June 30, 2024. 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 3.3% to $233.3 million for the six months ended June 30, 2024 from $225.9 million for the six months ended June 30, 2023 primarily due to growth in the average number and cost of depreciable properties as well as ongoing capital investments into existing properties. Gain on Sale and Impairment of Single-Family Properties and Other, net Gain on sale and impairment of single-family properties and other, net for the six months ended June 30, 2024 and 2023 was $112.8 million and $147.4 million, respectively, which included $3.3 million and $0.8 million, respectively, of impairment charges in each 40 period related to homes classified as held for sale during each period. The decrease was primarily related to lower net gains on property sales resulting from fewer properties sold. Loss on Early Extinguishment of Debt Loss on early extinguishment of debt was $1.0 million for the six months ended June 30, 2024, compared to zero for the six months ended June 30, 2023, as a result of the payoff of the AMH 2014-SFR2 securitization in February 2024. Other Income and Expense, net Other income and expense, net for the six months ended June 30, 2024 and 2023 was $7.4 million and $7.2 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 Our critical accounting estimates are included in Part II, “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the 2023 Annual Report. There have been no material changes to these estimates during the six months ended June 30, 2024. Recent Accounting Pronouncements See Note 2. Significant Accounting Policies to our condensed consolidated financial statements in this report for a discussion of the adoption and potential impact of recently issued accounting standards, if any. Liquidity and Capital Resources Liquidity is a measure of our ability to meet potential cash requirements, maintain our assets, fund our operations, make distributions to our shareholders and OP unitholders, including AMH, and meet other general requirements of our business. Our liquidity, to a certain extent, is subject to general economic, financial, competitive and other factors beyond our control. Sources of Capital We expect to satisfy our cash requirements through cash provided by operations, long-term secured and unsecured borrowings, issuances of debt and equity securities (including OP units), property dispositions and joint venture transactions. We expect to meet our operating liquidity requirements and our dividend distributions generally through cash on hand and cash provided by operations. For our acquisition and development expenditures, we expect to supplement these sources through the issuance of equity securities, including under our 2023 At-the-Market Program described below, borrowings under our $1.25 billion 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 June 30, 2024 included $718.4 million of cash and cash equivalents. Additionally, as of June 30, 2024, we had no outstanding borrowings and $2.3 million committed to outstanding letters of credit under our $1.25 billion revolving credit facility, leaving $1.25 billion of remaining borrowing capacity. During the six months ended June 30, 2024, the Company issued (i) $600.0 million of 5.500% unsecured senior notes with a maturity date of February 1, 2034 (the “2034 Notes I”), raising net proceeds of $595.5 million, (ii) $500.0 million of 5.500% unsecured senior notes with a maturity date of July 15, 2034 (the “2034 Notes II”), raising net proceeds of $494.0 million, and (iii) 932,746 Class A common shares under its 2023 At-the-Market Program, raising gross proceeds of $33.7 million with $864.3 million remaining available for future share issuances as of June 30, 2024. As of June 30, 2024, the Company also had estimated net proceeds of $109.3 million available from future settlement of the March 2024 Forward Sale Agreement under its 2023 At-the-Market Program (described below). We maintain an investment grade credit rating which provides for greater availability of and lower cost of debt financing. Uses of Capital Our expected material cash requirements over the next twelve months consist of (i) contractually obligated expenditures, including payments of principal and interest, (ii) other essential expenditures, including property operating expenses, HOA fees (as applicable), real estate taxes, maintenance capital expenditures, general and administrative expenses and dividends on our equity securities 41 including those paid in accordance with REIT distribution requirements, and (iii) opportunistic expenditures, including to pay for the acquisition, development and renovation of our properties and repurchases of our securities. With respect to our contractually obligated expenditures, our cash requirements within the next twelve months include accounts payable and accrued expenses, interest payments on debt obligations, principal amortization on our asset-backed securitizations, the repayment of our AMH 2014-SFR3 asset-backed securitization, operating lease obligations and purchase commitments to acquire single-family properties and land for our AMH Development Program. During the six months ended June 30, 2024, the Company repaid all amounts due under the AMH 2014-SFR2 securitization and in July 2024, the Company provided notice to the third-party lender of its intent to repay all amounts due under the AMH 2014-SFR3 securitization during the third quarter of 2024. Except as described in Note 8. Debt, Note 9. Accounts Payable and Accrued Expenses, Note 15. Commitments and Contingencies and Note 16. Subsequent Events to our condensed consolidated financial statements in this report, there have been no other material changes outside the ordinary course of business to our other known contractual obligations described in “Liquidity and Capital Resources” in Part II, “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the 2023 Annual Report. Cash Flows The following table summarizes the Company’s and the Operating Partnership’s cash flows for the six months ended June 30, 2024 and 2023 (amounts in thousands): For the Six Months Ended June 30, 2024 2023 Change Net cash provided by operating activities $ 475,780 $ 415,676 $ 60,104 Net cash used for investing activities (108,312) (237,822) 129,510 Net cash provided by (used for) financing activities 292,317 (34,044) 326,361 Net increase in cash, cash equivalents and restricted cash $ 659,785 $ 143,810 $ 515,975 Operating Activities Our cash flows provided by operating activities, which is our principal source of cash flows, depend on numerous factors, including the occupancy level of our properties, the rental rates achieved on our leases, the collection of rent from our tenants and the level of property operating expenses, property management expenses, general and administrative expense and interest expense. Net cash provided by operating activities increased $60.1 million, or 14.5%, from $415.7 million for the six months ended June 30, 2023 to $475.8 million for the six months ended June 30, 2024 as a result of 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 as well as changes in working capital primarily related to the timing of payments for accounts payable and accrued expenses and prepaid expenses and other assets. Investing Activities Net cash used for investing activities decreased $129.5 million, or 54.5%, from $237.8 million for the six months ended June 30, 2023 to $108.3 million for the six months ended June 30, 2024. Our investing activities are most significantly impacted by the level of investment activity through traditional acquisition channels, availability of bulk portfolio acquisition opportunities, the development of “built-for-rental” homes through our AMH Development Program and the acquisition of newly built properties through our National Builder Program. We have strategically scaled back acquisitions of single-family properties through our National Builder Program and traditional acquisition channels as the housing market adjusts to the current macroeconomic environment. We will continue to evaluate all of our growth channels and grow accordingly, if and when, acquisition opportunities are attractive relative to the condition of capital markets. 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. Cash outflows for the addition of single-family properties to our portfolio, primarily for our AMH Development Program, decreased $21.3 million as a result of the timing of development-related payments. 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. Cash outflows for recurring and other capital expenditures for single-family properties and renovations to single-family properties decreased $10.9 million largely as a result of scaled back acquisitions and a reduction in spend on property-enhancing capital expenditures during the six months ended June 30, 2024. Additional drivers for the decrease in net cash used for investing activities include (i) a $96.4 million increase in distributions from joint ventures, net of contributions, primarily due to additional cash distributions received with respect to our property and land contributions during the six months ended June 30, 2024, (ii) $25.7 million of cash proceeds received during the six months ended June 30, 2024 for our AMH 2014-SFR2 Class F asset-backed securitization certificates, and (iii) a $7.3 million decrease in cash outflows for other investing activities primarily due to a nonrecurring investment 42 in a residential-focused proptech company during the six months ended June 30, 2023. These changes were partially offset by a $32.1 million decrease in net proceeds received from sales of single-family properties and other primarily resulting from fewer properties sold during the six months ended June 30, 2024. Financing Activities Net cash provided by financing activities was $292.3 million for the six months ended June 30, 2024 compared to net cash used for financing activities of $34.0 million for the six months ended June 30, 2023. This $326.4 million change in financing activities was primarily due to (i) $1.1 billion of proceeds from unsecured senior notes, net of discounts and deferred financing costs paid, from the issuances of unsecured senior notes (see below) during the six months ended June 30, 2024 and (ii) a $40.0 million reduction in cash outflows to pay down our revolving credit facility. These changes were partially offset by (i) a $459.0 million increase in payments on asset-backed securitizations resulting from the payoff of the AMH 2014-SFR2 securitization during the six months ended June 30, 2024, (ii) a $265.2 million reduction in proceeds from the issuance of Class A common shares, net of offering costs, (iii) $36.4 million of payments to a land banking entity related to liabilities to repurchase consolidated land not owned for our AMH Development Program during the six months ended June 30, 2024, and (iv) a $35.9 million increase in distributions paid to common share and unit holders resulting from an 18% increase in distributions paid per common share and unit during the six months ended June 30, 2024. Early Extinguishment of Debt During the first quarter of 2024, the Operating Partnership paid off the $460.6 million outstanding principal on the AMH 2014-SFR2 securitization, which resulted in $1.0 million of charges related to the write-off of unamortized deferred financing costs and related legal fees and included in loss on early extinguishment of debt within the condensed consolidated statements of operations. The payoff of the AMH 2014-SFR2 securitization also resulted in the release of the 4,516 homes pledged as collateral and $10.3 million of cash restricted for lender requirements. The Company received $25.7 million from the payoff for its investment in the AMH 2014-SFR2 Class F asset-backed securitization certificates that were issued by the Operating Partnership and acquired by the Company in 2014 as part of the AMH 2014-SFR2 securitization debt offering. The Class F certificates were recorded as an asset-backed securitization certificates receivable by the Company and as an amount due from affiliates by the Operating Partnership prior to the payoff. Unsecured Senior Notes During the first quarter of 2024, the Operating Partnership issued the 2034 Notes I, which carry a green bond designation and were issued under the Company’s green finance framework. Interest on the 2034 Notes I is payable semi-annually in arrears on February 1 and August 1 of each year, commencing on August 1, 2024. The Operating Partnership received aggregate net proceeds of $595.5 million from this offering, after underwriting fees of $3.9 million and a $0.6 million discount, and before offering costs of $1.3 million. Pending full allocation of an amount equal to the net proceeds to finance new or existing projects meeting the eligibility criteria described in the prospectus supplement related to the offering, the Operating Partnership used the net proceeds primarily to repay outstanding indebtedness, including the payoff of the AMH 2014-SFR2 securitization. The Operating Partnership may redeem the 2034 Notes I in whole at any time or in part from time to time at the applicable redemption price specified in the indenture. If the 2034 Notes I are redeemed on or after November 1, 2033 (three months prior to the maturity date), the redemption price will be equal to 100% of the principal amount of the 2034 Notes I being redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date. During the second quarter of 2024, the Operating Partnership issued the 2034 Notes II. Interest on the 2034 Notes II is payable semi-annually in arrears on January 15 and July 15 of each year, commencing on January 15, 2025. The Operating Partnership received aggregate net proceeds of $494.0 million from this offering, after underwriting fees of $3.3 million and a $2.7 million discount, and before offering costs of $1.1 million. The Operating Partnership intends to use the net proceeds from the offering for the repayment of outstanding indebtedness, which may include the repayment or voluntary prepayment of all or a portion of the outstanding AMH 2014-SFR3 securitization, as well as general corporate purposes, including, without limitation, property acquisitions and developments, the expansion, redevelopment and/or improvement of existing properties in the Company’s portfolio, other capital expenditures, working capital and other general purposes. The Operating Partnership may redeem the 2034 Notes II in whole at any time or in part from time to time at the applicable redemption price specified in the indenture. If the 2034 Notes II are redeemed on or after April 15, 2034 (three months prior to the maturity date), the redemption price will be equal to 100% of the principal amount of the 2034 Notes II being redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date. The 2034 Notes I and 2034 Notes II are the Operating Partnership’s unsecured and unsubordinated obligations and rank equally in right of payment with all of the Operating Partnership’s existing and future unsecured and unsubordinated indebtedness. The indentures require that we maintain certain financial covenants. 43 At-the-Market Common Share Offering 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 “2023 At-the-Market Program”). The 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 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 2023 At-the-Market Program may be suspended or terminated by the Company at any time. During the first quarter of 2024, the Company issued 932,746 Class A common shares under its 2023 At-the-Market Program, raising $33.7 million in gross proceeds before commissions and other expenses of approximately $0.5 million. As of June 30, 2024, 3,732,429 shares have been issued under the 2023 At-the-Market Program and $864.3 million remained available for future share issuances. During the first quarter of 2024, the Company entered into a forward sale agreement with the forward purchaser (the “March 2024 Forward Sale Agreement”), which is accounted for in equity, to offer 2,987,024 Class A common shares on a forward basis under its 2023 At-the-Market Program at the request of the Company by the forward seller. The Company expects to physically settle the March 2024 Forward Sale Agreement by the delivery of the Class A common shares and receive proceeds by February 28, 2025, although the Company has the right to elect settlement prior to that time subject to certain conditions. Although the Company expects to physically settle, the March 2024 Forward Sale Agreement allows the Company to cash or net-share settle all or a portion of its obligations. If the Company elects to cash or net share settle the March 2024 Forward Sale Agreement, the Company may not receive any proceeds, and may owe cash or Class A common shares to the forward purchaser in certain circumstances. The March 2024 Forward Sale Agreement is subject to early termination or settlement under certain circumstances. As of June 30, 2024, the Company has estimated net proceeds of approximately $109.3 million available from future settlement under the March 2024 Forward Sale Agreement, subject to adjustment in accordance with the forward sale transaction. 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. Share Repurchase Program The Company’s board of trustees authorized the establishment of our share repurchase program for the repurchase of up to $300.0 million of our outstanding Class A common shares and up to $250.0 million of our outstanding preferred shares from time to time in the open market or in privately negotiated transactions. The program does not have an expiration date, but may be suspended or discontinued at any time without notice. All repurchased shares are constructively retired and returned to an authorized and unissued status. The Operating Partnership funds the repurchases and constructively retires an equivalent number of corresponding Class A units. During the six months ended June 30, 2024 and 2023, we did not repurchase and retire any of our Class A common shares or preferred shares. As of June 30, 2024, 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 As a REIT, we generally are required to distribute annually to our shareholders at least 90% of our REIT taxable income (determined without regard to the deduction for dividends paid and any net capital gains) and to pay tax at regular corporate rates to the extent that we annually distribute less than 100% of our REIT taxable income (determined without regard to the deduction for dividends paid and including any net capital gains). The Operating Partnership funds the payment of distributions. We historically used our net operating loss (“NOL”) for U.S. federal income tax purposes to reduce our REIT taxable income and have substantially utilized our NOL as of December 31, 2023. During the six months ended June 30, 2024 and 2023, the Company distributed an aggregate $225.1 million and $189.2 million, respectively, to common shareholders, preferred shareholders and noncontrolling interests on a cash basis. 44 Additional Non-GAAP Measures Funds from Operations (“FFO”) / Core FFO / Adjusted FFO attributable to common share and unit holders FFO attributable to common share and unit holders is a non-GAAP financial measure that we calculate in accordance with the definition approved by the National Association of Real Estate Investment Trusts (“NAREIT”), which defines FFO as net income or loss calculated in accordance with GAAP, excluding gains and losses from sales or impairment of real estate, plus real estate-related depreciation and amortization (excluding amortization of deferred financing costs and depreciation of non-real estate assets), and after adjustments for unconsolidated partnerships and joint ventures to reflect FFO on the same basis. Core FFO attributable to common share and unit holders is a non-GAAP financial measure that we use as a supplemental measure of our performance. We compute this metric by adjusting FFO attributable to common share and unit holders for (1) acquisition and other transaction costs incurred with business combinations and the acquisition or disposition of properties as well as nonrecurring items unrelated to ongoing operations, (2) noncash share-based compensation expense, (3) hurricane-related charges, net, which result in material charges to our single-family property portfolio, (4) gain or loss on early extinguishment of debt and (5) the allocation of income to our perpetual preferred shares in connection with their redemption. Adjusted FFO attributable to common share and unit holders is a non-GAAP financial measure that we use as a supplemental measure of our performance. We compute this metric by adjusting Core FFO attributable to common share and unit holders for (1) Recurring Capital Expenditures that are necessary to help preserve the value and maintain functionality of our properties and (2) capitalized leasing costs incurred during the period. As a portion of our homes are recently developed, acquired and/or renovated, we estimate Recurring Capital Expenditures for our entire portfolio by multiplying (a) current period actual Recurring Capital Expenditures per Same-Home Property by (b) our total number of properties, excluding newly acquired non-stabilized properties and properties classified as held for sale. We present FFO attributable to common share and unit holders because we consider this metric to be an important measure of the performance of real estate companies, as do many investors and analysts in evaluating the Company. We believe that FFO attributable to common share and unit holders provides useful information to investors because this metric excludes depreciation, which is included in computing net income and assumes the value of real estate diminishes predictably over time. We believe that real estate values fluctuate due to market conditions and in response to inflation. We also believe that Core FFO and Adjusted FFO attributable to common share and unit holders provide useful information to investors because they allow investors to compare our operating performance to prior reporting periods without the effect of certain items that, by nature, are not comparable from period to period. FFO, Core FFO and Adjusted FFO attributable to common share and unit holders are not a substitute for net income or net cash provided by operating activities, each as determined in accordance with GAAP, as a measure of our operating performance, liquidity or ability to pay dividends. These metrics also are not necessarily indicative of cash available to fund future cash needs. Because other REITs may not compute these measures in the same manner, they may not be comparable among REITs. 45 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, 2024 and 2023 (amounts in thousands): For the Three Months Ended June 30, For the Six Months Ended June 30, 2024 2023 2024 2023 Net income attributable to common shareholders $ 92,142 $ 98,029 $ 201,431 $ 215,494 Adjustments: Noncontrolling interests in the Operating Partnership 12,906 13,899 28,226 30,647 Gain on sale and impairment of single-family properties and other, net (43,892) (62,758) (112,793) (147,417) Adjustments for unconsolidated joint ventures 1,196 1,058 2,793 1,568 Depreciation and amortization 117,603 113,199 233,329 225,916 Less: depreciation and amortization of non-real estate assets (4,769) (4,249) (9,424) (8,426) FFO attributable to common share and unit holders (1) $ 175,186 $ 159,178 $ 343,562 $ 317,782 Adjustments: Acquisition, other transaction costs and other 2,937 4,175 6,261 9,251 Noncash share-based compensation - general and administrative 7,559 5,982 14,398 9,725 Noncash share-based compensation - property management 1,340 1,132 2,784 2,198 Loss on early extinguishment of debt 63 — 1,017 — Core FFO attributable to common share and unit holders (1) $ 187,085 $ 170,467 $ 368,022 $ 338,956 Recurring Capital Expenditures (21,403) (20,913) (35,527) (35,106) Leasing costs (1,042) (768) (1,837) (1,576) Adjusted FFO attributable to common share and unit holders (1) $ 164,640 $ 148,786 $ 330,658 $ 302,274 (1) Unit holders include former AH LLC members and other non-affiliates that own Class A units in the Operating Partnership and their OP units are reflected as noncontrolling interests in the Company’s condensed consolidated financial statements. See Note 10. Shareholders’ Equity / Partners’ Capital to our condensed consolidated financial statements included in this report. EBITDA / EBITDAre / Adjusted EBITDAre / Fully Adjusted EBITDAre EBITDA is defined as earnings before interest, taxes, depreciation and amortization. EBITDA is a non-GAAP financial measure and is used by us and others as a supplemental measure of performance. EBITDAre is a supplemental non-GAAP financial measure, which we calculate in accordance with the definition approved by NAREIT by adjusting EBITDA for gains and losses from sales or impairments of single-family properties and adjusting for unconsolidated partnerships and joint ventures on the same basis. Adjusted EBITDAre is a supplemental non-GAAP financial measure calculated by adjusting EBITDAre for (1) acquisition and other transaction costs incurred with business combinations and the acquisition or disposition of properties as well as nonrecurring items unrelated to ongoing operations, (2) noncash share-based compensation expense, (3) hurricane-related charges, net, which result in material charges to our single-family property portfolio , and (4) gain or loss on early extinguishment of debt. Fully Adjusted EBITDAre is a supplemental non-GAAP financial measure calculated by adjusting Adjusted EBITDAre for (1) Recurring Capital Expenditures and (2) leasing costs. As a portion of our homes are recently developed, acquired and/or renovated, we estimate Recurring Capital Expenditures for our entire portfolio by multiplying (a) current period actual Recurring Capital Expenditures per Same-Home Property by (b) our total number of properties, excluding newly acquired non-stabilized properties and properties classified as held for sale. We 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. 46 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, 2024 and 2023 (amounts in thousands): For the Three Months Ended June 30, For the Six Months Ended June 30, 2024 2023 2024 2023 Net income $ 108,534 $ 115,414 $ 236,629 $ 253,113 Interest expense 38,678 34,844 77,255 70,726 Depreciation and amortization 117,603 113,199 233,329 225,916 EBITDA $ 264,815 $ 263,457 $ 547,213 $ 549,755 Gain on sale and impairment of single-family properties and other, net (43,892) (62,758) (112,793) (147,417) Adjustments for unconsolidated joint ventures 1,196 1,058 2,793 1,568 EBITDAre $ 222,119 $ 201,757 $ 437,213 $ 403,906 Noncash share-based compensation - general and administrative 7,559 5,982 14,398 9,725 Noncash share-based compensation - property management 1,340 1,132 2,784 2,198 Acquisition, other transaction costs and other 2,937 4,175 6,261 9,251 Loss on early extinguishment of debt 63 — 1,017 — Adjusted EBITDAre $ 234,018 $ 213,046 $ 461,673 $ 425,080 Recurring Capital Expenditures (21,403) (20,913) (35,527) (35,106) Leasing costs (1,042) (768) (1,837) (1,576) Fully Adjusted EBITDAre $ 211,573 $ 191,365 $ 424,309 $ 388,398