American Homes 4 Rent ((AMH)) has held its Q2 earnings call. Read on for the main highlights of the call.
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American Homes 4 Rent (AMH) recently held its earnings call, revealing a generally positive sentiment driven by strong financial performance, increased guidance, and robust leasing activity. While favorable property tax developments and successful development programs underscore a positive outlook, challenges in acquisitions and market supply pressures remain areas of concern.
Increased Full Year Core FFO Guidance
AMH has raised its full-year Core FFO per share guidance by $0.03 to $1.86 at the midpoint, marking a 5.1% growth. This adjustment positions AMH at the forefront of the residential sector, highlighting its strong financial trajectory.
Strong Leasing and Revenue Growth
The company reported a more than 5% year-over-year increase in second-quarter foot traffic, which fueled solid leasing and rate growth. With a Same-Home average occupied days of 96.3% and rental rate spreads of 4.1% for new, 4.4% for renewal, and 4.3% blended, AMH demonstrated robust leasing performance.
Favorable Property Tax Developments
The passage of new property tax relief measures in Texas for 2025 and 2026 has positively impacted AMH’s updated full-year outlook, providing a favorable financial boost.
Successful AMH Development Program
AMH Development delivered 636 homes in the second quarter, aligning with expectations and showcasing value creation despite a challenging acquisition environment.
Improved Balance Sheet and Capital Activity
AMH’s financial health is underscored by a reduction in net debt, including preferred shares to adjusted EBITDA, down to 5.2x. The company successfully raised $650 million in a 5-year bond offering at a 4.95% coupon rate.
Challenges in Acquisition Environment
The acquisition landscape remains challenging, with the majority of reviewed assets not meeting AMH’s criteria. Only five homes were acquired in the quarter, reflecting the difficulties in finding suitable properties.
Pressure in Certain Markets
Supply pressures in markets like Phoenix and parts of Florida present challenges, although AMH’s portfolio continues to show resilience.
Slow Portfolio Optimization
Despite reviewing thousands of assets, AMH’s sale of only 370 properties in the second quarter indicates a slow pace in optimizing its portfolio.
Forward-Looking Guidance
AMH’s updated guidance reflects positive operational performance, with an increase in full-year Core FFO per share guidance to $1.86 at the midpoint, a 5.1% growth. The company reported year-to-date Core FFO growth of 4.9% and adjusted FFO growth of 6.3%. Same-Home core revenue growth was 3.9%, supported by strong leasing metrics and favorable property tax developments in Texas. AMH’s robust balance sheet management is evident with a net debt to adjusted EBITDA of 5.2x and a fully undrawn $1.25 billion revolving credit facility.
In summary, American Homes 4 Rent’s earnings call conveyed an optimistic outlook with increased guidance and strong leasing activity. While favorable property tax developments and successful development programs bolster confidence, the company faces challenges in acquisitions and market supply pressures, which it continues to navigate strategically.