American Homes 4 Rent(AMH)2025-02-21 23:00Financial Data and Key Metrics Changes - American Homes 4 Rent reported a 6.6% growth in core FFO per share for 2024, with net income attributable to common shareholders reaching 1.08 per diluted share, representing a 6.6% year-over-year growth [6][22][33] - The company achieved 4% same-home core revenue growth for Q4 2024, contributing to a full-year core revenue growth of 5% [9][10] - Core operating expense growth was 4.8% for Q4 and 4.3% for the full year, reflecting effective cost control measures [9][10] Business Line Data and Key Metrics Changes - The development program delivered 2,356 homes in 2024, slightly exceeding expectations, with plans to deliver approximately 2,300 homes in 2025 [13][14][23] - The company acquired a nearly 1,700-home portfolio for approximately 180 million in net proceeds, with a total of 1,705 properties sold for approximately $530 million in 2024 [24] Market Data and Key Metrics Changes - The company expects average occupancy for 2025 to land in the low 96% area, consistent with last year's performance [12] - New lease spreads accelerated by 0.7% in January, with renewal growth steady at 4.5%, resulting in blended rate growth of 3.3% for the month [11] - The Midwest and Carolinas markets showed strong performance, with positive rent growth expected in these regions [55][111] Company Strategy and Development Direction - The company maintains a vertically integrated development program, focusing on high-quality assets in superior locations, and plans to continue leveraging technology for operational efficiency [4][5] - American Homes 4 Rent aims to optimize its portfolio through dispositions and is committed to a disciplined approach to acquisitions, focusing on quality and location [15][16][61] - The company plans to fund its growth primarily through retained cash flow and recycled capital from dispositions, minimizing the need for external capital [29][75] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the residential sector's long-term fundamentals, citing limited housing supply and population growth as key drivers [5][6] - The company anticipates a strong leasing momentum continuing into 2025, with expectations for same-home core revenue growth of 3.5% [11][27] - Management highlighted the importance of maintaining expense controls and optimizing revenue to drive margin expansion [80][82] Other Important Information - The company expects bad debt to remain in the low 1% area for 2025, reflecting ongoing challenges in certain markets [12][66] - Recent organizational changes were announced, including promotions within the leadership team, aimed at strengthening operational execution [17][19] Q&A Session Summary Question: Expected development yields in 2025 and impact of tariffs - Management expects yields to accelerate as the spring leasing season approaches, with over half of planned new home deliveries already contracted [36][41] Question: Latest views on supply and market impacts - Management noted that supply pressures vary by market, with some areas like the Midwest showing resilience while others, like the Southwest, are experiencing easing [42][45] Question: Occupancy guidance and leasing indicators - Management reported strong signs of demand and leasing activity, with expectations for occupancy to rise in the coming months [46][48] Question: Breakdown of blended rent growth expectations - New leases are expected to grow around 3%, while renewals are projected at 4%, based on market rent growth and loss to lease [51][52] Question: Insights on bad debt and market performance - Management indicated that bad debt is expected to remain slightly elevated due to processing delays in certain municipalities [64][66] Question: Property tax trends and future expectations - Management expressed optimism about property tax growth moderating to a long-term run rate of 4% to 5% [96][99] Question: Non-rental revenue opportunities - Modest growth in non-rental revenue is anticipated, aligning with broader rent growth trends [101] Question: Midwest market strength and drivers - Management highlighted the quality of assets and migration trends as key factors driving strength in the Midwest markets [111][112] Question: Overall outlook for 2025 compared to pre-COVID years - Management believes 2025 will reflect a return to normal seasonality, with occupancy expectations adjusted upward to 96% [116][119]