American Homes 4 Rent (NYSE: AMH ) has been a poor performer over the past year, losing about 16% of its value. Investors have become increasingly concerned with home values and rental inflation as data suggests an ongoing weakening in shelter demand. I last coveredOver fifteen years of experience making contrarian bets based on my macro view and stock-specific turnaround stories to garner outsized returns with a favorable risk/reward profile. If you want me to cover a specific stock or have a question for ...

Core Insights - Single-family rent growth is slowing down significantly, with July's increase at 2.3%, down from 3.1% a year ago, indicating a broader weakening across metro areas and price tiers [2][3] - The national average rent growth for high-end properties decreased to 2.9% from 3.2% year-over-year, while low-end rents saw a drop from 2.8% to 1.6% [7] - Chicago leads the largest metropolitan markets with a rent growth of 5.1%, while Miami experienced no rent growth, contrasting sharply with the previous year's 40% increase [6] Industry Trends - The single-family rental market had previously outperformed the apartment rental market due to high demand and limited supply in the for-sale market, but this trend is now reversing [8] - Single-family rental REITs, such as Invitation Homes and American Homes 4 Rent, have been expanding their rental communities to meet demand, but the recent slowdown may prompt a reevaluation of their growth strategies [9][10] - The largest single-family rental REITs are currently selling more homes than they are acquiring, focusing on consolidating into full rental communities rather than standalone properties [10]

Core Viewpoint - Goldman Sachs analyst Julien Blouin expresses caution regarding the residential REIT sector, highlighting challenges for the second half of 2025 and into 2026 due to weaker job growth, slowing migration trends in Sunbelt markets, and rising supply forecasts [1][8][10] Company Summaries - **Camden Property Trust (CPT)**: Downgraded to Sell with a price forecast of $106, down from $118, due to persistent vacancy and supply issues in Sunbelt markets. Expected rent growth for 2026 is only +1.4%, significantly below management's guidance of over 4% [2] - **American Homes 4 Rent (AMH)**: Downgraded to Neutral from Buy, with a price forecast of $37, down from $43. Analysts note a weaker home-selling environment is creating "shadow supply," impacting rent growth through 2026 [3] - **Invitation Homes Inc (INVH)**: Remains the only Buy-rated stock, though price forecast trimmed to $36 from $37. Analysts believe INVH's scale and relative valuation position it better than peers despite moderating rent trends [4] - **Mid-America Apartments Communities Inc (MAA)**: Maintained at Neutral with a price forecast cut to $148 from $163. Updated rent growth models led to the reduction, although lower same-store expenses provided some offset [5] - **Equity Residential (EQR)**: Also rated Neutral, with a slight price forecast reduction to $70 from $72. Key headwinds include softening trends in Washington, D.C., and Boston submarkets [5] - **Essex Property Trust Inc (ESS)**: Rated Neutral, with a price forecast nudged up to $291 from $288. Projected sector-leading rent growth in 2026-2027 is tempered by near-term challenges in Los Angeles submarkets [6] - **UDR Inc. (UDR)**: Maintained at Sell with a price forecast of $37. Analysts cut second-half 2025 lease growth projections due to rising vacancies and slowed rent growth in Washington D.C. and Boston [7] Sector Insights - The residential REIT sector is facing headwinds from persistent supply growth and decelerating migration, particularly in Sunbelt markets, which have absorbed record volumes in recent years [8] - Rent growth expectations for 2026 may be overstated, with subdued performance anticipated in key markets like Houston, Dallas, and Phoenix. Coastal markets, particularly Washington D.C. and Boston, are expected to weaken further [9] - The sector is experiencing one of the weakest job growth environments outside of a recession, limiting demand from significantly outpacing supply [10]

Industry Overview - The Zacks REIT and Equity Trust - Residential industry is currently facing challenges due to oversupply and economic uncertainty, particularly in the Sun Belt region, leading to weakened rents and occupancy levels [1][4] - The industry includes companies that own, develop, and manage various residential properties, generating revenue primarily through renting spaces to tenants [3] Current Market Dynamics - A surge in new apartment construction has resulted in modest rent declines and slight dips in occupancy, forcing landlords to offer concessions to attract and retain tenants [4][5] - Broader macroeconomic pressures, including tariffs and labor market strains, are impacting renter affordability and investor sentiment [6][7] Demand and Retention - Despite the oversupply, strong rental demand persists due to demographic-driven household formation and high homeownership costs, which limit the ability of renters to purchase homes [2][8] - Landlords are focusing on property upgrades and enhancing resident experiences to support tenant retention and drive renewal lease growth [9] Industry Performance - The REIT and Equity Trust - Residential industry has underperformed the broader Finance sector and the S&P 500, declining 16.6% over the past year compared to the S&P 500's 19.9% increase [14] - The industry's Zacks Industry Rank is 161, placing it in the bottom 34% of around 250 Zacks industries, indicating dim near-term prospects [11][12] Valuation Metrics - The industry is currently trading at a forward 12-month price-to-FFO ratio of 15.15, which is above the Finance sector's forward P/E of 17.60 but below the S&P 500's forward P/E of 23.39 [17] - Over the last five years, the industry has traded between a high of 26.19 and a low of 13.61, with a median of 16.98 [21] Company Highlights - **Equity Residential (EQR)**: Focused on urban and high-density suburban areas, EQR is expected to benefit from favorable apartment market demand, with projected same-store revenue growth of 2.6-3.2% for 2025 [22][24] - **UDR, Inc.**: Manages a diversified portfolio of A/B quality properties, experiencing low resident turnover and benefiting from healthy demand amid favorable demographic trends [27][29] - **American Homes 4 Rent (AMH)**: Focuses on single-family rentals, benefiting from strong demand as millennials transition from apartments to single-family homes, with high occupancy rates averaging around 96% [31][34]

Core Insights - The single-family rental market is evolving as major landlords shift from purchasing individual homes to developing build-to-rent communities, driven by the need for cost-effective operations and changing market dynamics [1][4][6]. Single-Family Rental Market - The top six single-family rental landlords own a total of 422,000 properties, while mom-and-pop landlords control approximately 11 million single-family rentals out of nearly 50 million total rental units in the US [1][5]. - Since 2022, major single-family rental landlords have been selling individual homes acquired during the Housing Bust, which began in 2012 when home prices were low [2][11]. - These landlords are increasingly focusing on new construction of entire for-rent developments, which are more efficient to manage compared to scattered older homes [3][4]. Major Players in Single-Family Rentals - Progress Residential, the largest single-family rental landlord, owns 94,000 properties and has shifted to acquiring build-to-rent developments, totaling 7,500 rentals [7][8]. - Invitation Homes, with 93,603 single-family rentals, has also transitioned to purchasing new construction developments, selling off individual homes since 2022 [10][11]. - American Homes 4 Rent owns 60,596 single-family rentals and has completed its 10,000th home in build-to-rent developments, planning to deliver 1,800 to 2,000 homes in 2025 [13][15]. Multifamily Rental Market - The largest multifamily landlord, Greystar, has expanded its portfolio to 122,545 units, reflecting a significant growth of 53% over four years [20]. - The multifamily sector has seen a historic boom with over 4 million units started between 2015 and 2024, but is now facing challenges with a delinquency rate for multifamily mortgages rising to 6.9% [20][25]. - The top 50 multifamily landlords collectively own 2.50 million rental apartments, marking a 10% increase over the past five years [22].

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Industry Overview - The single-family rental (SFR) industry is experiencing strong long-term fundamentals, driven by a large millennial cohort entering prime rental age and challenging affordability dynamics [3] - Demand within the SFR industry is expected to remain robust, supporting long-term growth prospects [3] Company Positioning - AMH has strategically built a portfolio of high-quality assets located in superior locations across the United States [4] - The company maintains a well-diversified portfolio footprint, which enhances its market presence [4] - AMH's operations are supported by a robust and efficient services platform, bolstered by ongoing investments in technology [4]

Industry Overview - The single-family rental (SFR) industry is currently in a strong position, benefiting from robust long-term fundamentals [3] - Demand in the SFR sector is expected to remain strong as the large millennial cohort transitions into prime rental age, coupled with challenging affordability dynamics [3] Company Positioning - AMH has strategically built a portfolio of high-quality assets located in superior locations across the United States [4] - The company maintains a well-diversified portfolio footprint, which supports its competitive advantage in the residential space [4] - AMH's high-quality assets are backed by a robust and efficient services platform, enhanced by ongoing investments in technology [4]

Financial Data and Key Metrics Changes - The business is performing very well, with positive revisions across the board in guidance [5] - August quarter-to-date same-home occupancy was 96%, with blended spreads in the high threes [5][17] - Full-year expectation on blended spreads is high threes, with less moderation in occupancy expected in the back half of the year compared to last year [17][30] Business Line Data and Key Metrics Changes - The company is on track to deliver over 2,200 newly built rental homes this year [3] - The focus on single-family detached products is increasingly important, differentiating the company from other residential portfolios [7] - FFO expectations for this year are leading the residential sector by hundreds of basis points [9] Market Data and Key Metrics Changes - Demand is in line with seasonal expectations, with differentiated markets like the Midwest, Seattle, and Salt Lake City performing extremely well [11][12] - Florida markets, particularly Orlando and Jacksonville, are performing well despite some pressures in Tampa [12] - In markets like Austin and San Antonio, supply is causing pressure, but the company remains committed to these long-term [24][25] Company Strategy and Development Direction - The company has a vertically integrated development program, allowing for efficient integration of new homes [3] - The strategy includes optimizing lease expirations to match stronger leasing seasons, shifting from a 50/50 split to 60/40 in favor of the first half of the year [16] - The company is exploring opportunities to acquire finished lots from national builders, which could enhance yields [40] Management's Comments on Operating Environment and Future Outlook - Management is optimistic about the future, citing strong demand fundamentals driven by the aging millennial cohort and affordability challenges [2] - The company is encouraged by regulatory changes focusing on easing development processes and addressing housing supply issues [60] - Collections and bad debt are trending positively, with bad debt tracking below 100 bps year-to-date [27][29] Other Important Information - The company is on track to have a fully unencumbered balance sheet by the end of the year, which is expected to positively impact its rating outlook [54][56] - The insurance renewal for the year resulted in a decrease in premiums, reflecting the company's strong performance [62] Q&A Session Summary Question: Demand environment and geographical performance - Demand is in line with seasonal expectations, with strong performance in diversified markets like the Midwest and Florida [11][12] Question: Trends in occupancy and lease expirations - Lease expirations have been optimized to match stronger leasing seasons, with expectations for less steepness in occupancy moderation [16][17] Question: Supply trends in markets - Supply pressures are noted in Austin and San Antonio, but the company remains committed to these markets long-term [24][25] Question: Development underwriting and tariff impacts - Vertical construction costs have remained stable, with the company managing to absorb tariff impacts effectively [35][36] Question: Portfolio acquisition opportunities - There has been a lack of portfolio activity recently, but management expects more opportunities to arise in the future [42][44] Question: Cost of capital and funding development - The development program is sized to be fundable without the need for incremental equity, relying on retained cash flow and recycled capital [49] Question: Regulatory changes and their impact - Recent regulatory changes are encouraging, focusing on easing development processes and addressing housing supply issues [60]

Core Viewpoint - AMH, a leading integrated owner, operator, and developer of single-family rental homes, will participate in a roundtable discussion at the BofA Securities 2025 Global Real Estate Conference on September 10, 2025 [1]. Company Overview - AMH (NYSE: AMH) is an internally managed Maryland real estate investment trust (REIT) focused on acquiring, developing, renovating, leasing, and managing single-family rental properties [3]. - As of June 30, 2025, AMH owned over 61,000 single-family properties across the Southeast, Midwest, Southwest, and Mountain West regions of the United States [4]. Recognition and Awards - In recent years, AMH has been recognized as a 2025 Great Place to Work®, a 2025 Top U.S. Homebuilder by Builder100, and one of the 2025 Most Trustworthy Companies in America by Newsweek and Statista Inc. [4].