American Homes 4 Rent ((AMH)) has held its Q4 earnings call. Read on for the main highlights of the call.
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American Homes 4 Rent delivered a strong performance in 2024, showcasing robust growth in Funds from Operations (FFO) and Net Operating Income (NOI), along with a successful development program and strategic acquisitions. The company is poised for 2025 with notable leasing momentum and a solid balance sheet, although there is a more conservative outlook for revenue growth in the coming year, accompanied by concerns regarding development yields and increased interest expenses.
Strong Finish to 2024
American Homes 4 Rent concluded 2024 on a high note, achieving a 6.6% growth in core FFO per share. The year also saw core revenue growth of 5% and a same-home core NOI increase of 5.3%. These results underscore the company’s effective operational strategies and robust financial health.
Successful Development Program
Since 2017, American Homes 4 Rent has constructed over 12,000 homes across 200 communities. In 2024 alone, they exceeded expectations by delivering 2,356 homes, demonstrating their ability to efficiently execute large-scale development projects.
Robust Acquisitions and Dispositions
The company made significant moves in Q4 by acquiring a nearly 1,700-home portfolio for $480 million, while also selling 587 properties, resulting in net proceeds of $180 million. These strategic acquisitions and dispositions indicate a well-balanced approach to growth and capital management.
Strong Leasing Momentum into 2025
Leasing momentum has carried into early 2025, with new lease spreads improving by 0.7% and renewal growth at 4.5%. This continued momentum suggests a promising start to the new year for the company.
Solid Balance Sheet and Capital Management
Ending 2024 with a net debt to adjusted EBITDA of 5.4 times, American Homes 4 Rent maintains a robust financial position, supported by a fully undrawn $1.25 billion revolving credit facility and $200 million in cash.
Modest 2025 Revenue Growth Outlook
Looking ahead, the company anticipates a more modest same-home core revenue growth of 3.5% at the midpoint for 2025, representing a slowdown from the previous year.
Pressure on Development Yields
The company faces pressure on development yields, expected to be approximately 5.5%, which may appear low relative to current bond yields and stock trading levels.
Higher Interest Expense Impact
American Homes 4 Rent’s guidance accounts for a nine-cent dilution from financing costs due to refinancing and growth financing activities, indicating a cautious approach to managing interest expenses.
Forward-Looking Guidance
In their 2025 guidance, American Homes 4 Rent projects core FFO per share to range between $1.80 and $1.86, reflecting a 3.4% growth at the midpoint. Occupancy is expected to stabilize around 96%, with same-home core revenue growth at 3.5%. The company plans to deliver roughly 2,300 homes from its development program and deploy $1 billion to $1.2 billion in capital, adding 2,200 to 2,400 newly constructed homes. Rent growth and new lease spreads are forecasted to be in the high 3% range, with disciplined growth without requiring external equity capital.
In summary, American Homes 4 Rent’s 2024 performance was marked by strong financial results and strategic growth initiatives. While facing some challenges in 2025 regarding revenue growth and development yields, the company remains well-positioned with a strong balance sheet and continued leasing momentum. Investors and stakeholders can view the upcoming year with cautious optimism, guided by the company’s comprehensive forward-looking strategies.
