American Homes 4 Rent — FY2023 Form 10-K
Business and period. AMH is a REIT focused on acquiring, developing, renovating, leasing and managing single-family rental homes. This annual filing covers the year ended December 31, 2023; it is not a standalone fourth-quarter report. AMH owned 87.7% of its Operating Partnership. At year-end, the company held 59,332 homes in 21 states, including 862 classified as held for sale, and had 2,978 additional homes in unconsolidated joint ventures.
Financial and operating performance
| Metric | FY2023 | FY2022 |
|---|---|---|
| Rental and other property revenue | $1.624 billion | $1.491 billion |
| Net income | $432.1 million | $310.0 million |
| Net income attributable to common shareholders | $366.2 million; $1.01 diluted EPS | $250.8 million; $0.71 diluted EPS |
| Net cash from operating activities | $738.7 million | $665.5 million |
| Net cash used in investing activities | $692.6 million | $1.426 billion |
| Net cash from (used in) financing activities | $(42.2) million | $786.2 million |
| Core NOI / margin | $904.8 million / 64.3% | $829.6 million / 64.4% |
| Same-Home Core NOI / margin | $770.5 million / 64.7% | $732.9 million / 65.6% |
Revenue increased 8.9% and net income increased 39.4%. Management attributed the earnings increase mainly to higher gains on property sales, higher rents and more occupied homes. The $209.8 million net gain on property sales and impairments compared with $136.5 million in 2022; the company sold 1,546 homes, versus 987. GAAP net income margin was approximately 26.6% of revenue, compared with 20.8% in 2022, reflecting in part those gains. Core NOI and FFO measures are non-GAAP and should not be treated as substitutes for GAAP income or cash flow.
Same-Home core revenue rose 6.5%; average monthly realized rent increased 7.1% to $2,065, while average occupied days declined to 96.8% from 97.2%. Average year-end portfolio leasing metrics included 95.0% occupied days and $2,132 monthly realized rent per property. Property operating expenses rose 8.6%, principally from property taxes and inflation in maintenance and turnover costs; Same-Home core operating expenses rose 9.1%. Interest expense increased 3.9% to $140.2 million. Common distributions were $0.88 per share in 2023, up from $0.72 in 2022.
Debt, liquidity and capital
- Year-end debt principal was $4.517 billion: $1.877 billion in asset-backed securitizations, $2.550 billion in unsecured senior notes and $90.0 million drawn on the revolving facility. Balance-sheet debt, net of discounts and financing costs, was $4.462 billion.
- Cash and cash equivalents were $59.4 million; restricted cash was $162.5 million. The $1.25 billion revolving facility had $1.16 billion of available borrowing capacity after borrowings and letters of credit.
- Scheduled principal maturities included $948.9 million in 2024, primarily securitizations. In January 2024, the company issued $600 million of 5.500% unsecured notes due 2034, with $595.5 million net proceeds, and gave notice of its intent to repay the $461.5 million AMH 2014-SFR2 securitization. It also paid down the revolver; no borrowings remained as of February 16, 2024.
- Operating cash flow increased 11.0%. Investing outflows declined substantially as acquisitions through traditional channels and the National Builder Program were scaled back. Development spending remained significant at $979.8 million.
Changes, outlook and risks
- During 2023, AMH developed or acquired 1,885 homes, including 1,838 delivered through its internal development program, and sold 1,546 homes. An additional 479 developed homes were delivered to joint ventures. Management said it had strategically reduced traditional and National Builder acquisitions while housing and capital markets adjusted, and anticipated resuming growth in those channels when markets stabilize.
- Management cited continued demand drivers including household formation, housing shortages and the cost of homeownership, and expected recent demand trends to continue into 2024. These are expectations, not quantified financial guidance; the filing does not provide clear numeric earnings or revenue guidance.
- On February 21, 2024, the board approved a first-quarter 2024 dividend of $0.26 per common share. The filing states future distributions remain at the board’s discretion and depend on results, liquidity, debt terms, law and REIT requirements.
- Key risks include inflation and rising property taxes, higher interest rates and financing costs, tenant defaults or weaker rent growth, acquisition and development costs or delays, insurance availability and uninsured losses, severe weather and climate exposure, and increased landlord-tenant regulation. The portfolio is geographically concentrated: 58.4% of properties were in ten listed markets.
- The company reported a Georgia Attorney General inquiry concerning customary landlord-tenant matters and said it was cooperating and discussing a possible negotiated resolution. It also reported other ordinary-course legal proceedings, which management did not expect to materially adversely affect financial position or results. No material cybersecurity incident was known as of year-end.
- Unusual earnings item: property sale gains rose materially and contributed to net income growth. Hurricane Ian generated $6.1 million of net charges in 2022; no hurricane-related charges were reported for 2023. The independent auditor issued an unqualified opinion and identified real estate asset accounting, including capitalization, dispositions and held-for-sale classification, as a critical audit matter.
Important facts for investors to verify
- How much of earnings growth and future cash generation is sustainable without the higher property-sale gains?
- Whether the 2024 securitization repayments and refinancing plans proceed as intended, and how they affect interest expense, liquidity and remaining maturities.
- Whether rent growth and occupancy can offset rising property taxes, maintenance, insurance and other operating costs.
- Development delivery pace, leasing absorption and returns on development spending, alongside the timing of any return to external acquisitions.
- The status and potential financial or operational consequences of the Georgia Attorney General matter and evolving rent, eviction and fee regulations.