American Homes 4 Rent Q4 FY2024 earnings call

Key Managerial Messages

• Bryan Smith highlighted the CEO transition, strategic focus on the residential sector with a portfolio of high-quality assets, and innovation across the platform.
• 2024 results: Core FFO per share grew 6.6%, Q4 saw occupancy pickup in final two months and rate inflection in November, core revenue and NOI grew.
• 2025 guidance: Same-home core revenue midpoint growth 3.5%, occupancy low 96%, rate high 3%, bad debt low 1%; development to deploy $1-$1.2 billion, add 2,200-2,400 new homes; no material acquisitions expected, focus on buybacks and disposition program.
• Organizational changes: Dave's retirement, promotions of Sarah Bolt Lowell to Chief Administrative Officer, Zach Johnson to EVP Chief Investment Officer, and Lincoln Palmer to EVP Chief Operating Officer.

In 2024, American Homes 4 Rent had a strong finish with 6.6% growth in core FFO per share. Fourth quarter same-home core revenue grew 4%, contributing to full-year core revenue growth of 5%. Core operating expense growth was 4.8% in Q4 and 4.3% for the full year. Same-home core NOI growth was 3.6% in Q4 and 5.3% for the full year. For 2025, development is expected to deliver approximately 2,300 homes with initial yields averaging in the mid-5% area. Revenue contribution: Core FFO, core revenue, core operating expenses, and same-home core NOI are key metrics driving segment performance.

Forward-Looking Guidance

• Core FFO per share in unit expected $1.80 to $1.86 (midpoint 3.4% year-over-year growth).
• Same-home core revenue midpoint growth 3.5%, core property operating expense growth 4%, leading to same-home core NOI midpoint growth 3.25%.
• Development to deploy $1-$1.2 billion, add 2,200-2,400 newly constructed homes; fund primarily from retained cash flow, cash on balance sheet, and recycled capital from dispositions.
• Expect to refinance remaining securitizations and optimize portfolio while recycling capital.

Risks Discussed

• Tariff and labor/material issues: Potential headwinds from changes in tariffs and labor costs affecting development costs.
• Market supply changes: Uncertainty in market supply impacting occupancy and pricing power in certain markets.
• Bad debt processing delays: Some municipalities have slower processing timelines affecting bad debt figures.
• For-sale market impact: Potential effect of a pickup in the for-sale market on move-outs and revenue/expense growth.

Q: Talk about expected development yields in 2025 and tariffs.

A: Yields to accelerate in spring leasing season; over half of 2025 development deliveries are cost-baked, but monitoring tariff and labor changes closely.

Q: Occupancy guidance and blended rate growth.

A: Positive leasing signs with January new lease rates accelerating, renewals steady at 4.5%, expecting blended rate growth of 3.3% in January, and positive momentum into spring.

Q: Acquisitions and guidance.

A: Monitoring acquisition market; 80% of screened national builder properties not in buy box, but portfolios have value unlock potential; no material acquisitions expected in 2025.

Q: Bad debt and markets.

A: Bad debt forecasted low 1%; majority markets operating near sub-1% run rate, but some select markets like Atlanta have delays due to municipal processing timelines.

Q: Property taxes and non-rental revenue.

A: Property tax relief from some states, modest non-rental revenue contribution expected, growing in line with broader rent growth.