AMERICAN HOMES 4 RENT 2026 Q2 Earnings Call

Good morning. Thank you for joining us for our second quarter 2026 earnings conference call. With me today are Bryan Smith, Chief Executive Officer, Chris Lau, Chief Financial Officer, and Lincoln Palmer, Chief Operating Officer. Please be advised that this call may include forward-looking statements. All statements other than statements of historical fact included in this conference call are forward-looking statements that are subject to a number of risks and uncertainties that could cause actual results to differ materially from those projected in these statements. These risks and other factors that could adversely affect our business and future results are described in our press releases and in our filings with the SEC. All forward-looking statements speak only as of today, July 31st, 2026.

We assume no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. A reconciliation of GAAP to non-GAAP financial measures is included in our earnings press release and supplemental information package. As a note, our operating and financial results, including GAAP and non-GAAP measures, are fully detailed in our earnings release and supplemental information package. You can find these documents as well as SEC reports and the audio webcast replay of this conference call on our website at www.amh.com. With that, I will turn the call over to our CEO, Bryan Smith.

Welcome, everyone. Thank you for joining us today. Before we get into our results, I would like to briefly touch on the Road to Housing Act, which went into law last month following overwhelming bipartisan support. This law reflects a thoughtful approach by policymakers to address housing affordability and allows the industry to move forward with greater certainty. It recognizes the important role that single-family rentals play in the broader housing ecosystem and reinforces a number of aspects of our value proposition. First, it recognizes the role of new home construction in helping to address housing affordability. This highlights the importance of our in-house development program that continues to add newly built, high-quality homes across the country. Second, by grandfathering in existing single-family rental homes, the legislation acknowledges that professionally managed rental housing is a critical element of our country's housing landscape.

Millions of families will continue to have the opportunity to live in high-quality homes and neighborhoods without the burdens of homeownership. Third, the legislation preserves the ability to consolidate existing rental portfolios, enabling AMH to continue delivering our best-in-class resident experience to additional households across the country. This creates value not only for our residents, but also for our shareholders as additional homes are optimized on the AMH platform. Now to earnings. Demand for high-quality single-family rental housing across our diversified portfolio footprint remains healthy. We delivered a strong first half to the year, highlighted by another great spring leasing season. The team efficiently turned and re-leased a record number of homes through the first six months of the year, while also tightly managing expenses.

In addition to these expense controls, we also saw contributions from our development program and capital allocation decisions, leading us to raise the midpoint of our Core FFO per share guidance by $0.03 to $1.95, which represents year-over-year growth of 4.3%. Turning to our second quarter same home results, average occupied days came in at 96%, and new renewal and blended spreads were 1.4%, 3.2%, and 2.7% respectively, driving core revenue growth of 2.3%. Notably, both new and renewal rate growth accelerated through the quarter, reflecting healthy demand for our homes. This momentum carried into July, with occupancy holding at 96.1% and new renewal and blended spreads of 1.6%, 3.3%, and 2.8% respectively. Looking ahead to the second half of the year, we expect to see the benefits of our lease expiration profile, where only one-third of 2026 lease expirations remain.

This should translate into a meaningfully flatter occupancy curve and set us up well from an inventory and pricing perspective heading into 2027. Turning to investments, we continue to take a disciplined approach to capital allocation. Our development program remains on track. We are seeing modest improvement in initial yields supported by our pre-leasing efforts and the team's continued success in keeping vertical construction costs flat. On the disposition front, demand from individual homebuyers on the MLS remains strong. We have taken this opportunity to accelerate our portfolio optimization efforts and are tracking ahead of plan, having sold over 1,300 homes in the first half of the year at cap rates in the 4% area. As a reminder, we are match funding on-balance-sheet development this year with proceeds from our disposition program.

Looking ahead, as I mentioned before, we are in a great position to capitalize on portfolio consolidation opportunities that arise. AMH has the platform and balance sheet to create meaningful value, but we will only do so when the cost of capital and economics make sense. In closing, we had a great first half of the year and are optimistic about the future of the industry. I want to thank our teams across the country for their hard work and continued commitment to providing high-quality housing and a superior resident experience to the families we serve. With that, I will turn the call over to Chris.

Thanks, Bryan, and good morning, everyone. Like usual, I'll cover three areas in my comments today. First, a review of our quarterly results, second, an update on our balance sheet and recent capital activity, third, I'll close with commentary around our increased 2026 guidance. Starting off with our operating results, the teams delivered an outstanding second quarter, generating net income attributable to common shareholders of $113.6 million, or $0.31 per diluted share. On an FFO shared unit basis, we generated $0.49 of Core FFO, representing 5.2% year-over-year growth, $0.45 of Adjusted FFO representing 8.3% year-over-year growth. Notably, this quarter's FFO growth was driven by exceptional execution across all aspects of the AMH business.

As two quick examples, within the Same-Home portfolio, the teams did an excellent job capturing the spring leasing season, sequentially growing leasing spreads and occupancy throughout the quarter, while impressively holding year-over-year controllable expense growth to less than 1%. On top of that, our teams set new records on the lease-up and pre-leasing of recently constructed AMH Development homes, driving incremental NOI contribution outside of the Same-Home portfolio. Speaking of development, this quarter, we delivered a total of 651 homes to our wholly owned and joint venture portfolios. Of those homes, 542 were delivered to our wholly owned portfolio for a total investment cost of approximately $220 million. Additionally, as Bryan mentioned, we saw another quarter of robust disposition activity. On a year-to-date basis, we've now generated approximately $380 million of net proceeds, which is comfortably ahead of our initial timing expectations.

Means that on a full year basis, we are now likely tracking towards the upper half of our $400 million-$600 million range that we outlined at the start of the year, reducing some of our planned incremental debt needs. Next, I'd like to quickly turn to our balance sheet and recent capital activity. At the end of the quarter, our net debt, including preferred shares to Adjusted EBITDA, was 5.2 times. We had approximately $84 million of cash available on the balance sheet, we had a $390 million drawn balance on our $1.25 billion revolving credit facility. Additionally, during the quarter, we attractively repurchased 4.1 million common shares for a total of $123 million at an average price of $29.88 per share. Next, I'll cover our updated 2026 earnings guidance, which was positively revised in yesterday's earnings press release.

Starting with the Same-Home portfolio, recognizing the team's outstanding cost control execution and modestly favorable property tax news in a few of our smaller states, we've lowered the midpoint of our full-year Core expense growth expectations by 75 basis points to 2%. In turn, we have increased the midpoint of our Core NOI growth expectations by 40 basis points to 2.4%, we now expect 2026 Same-Home Core NOI margins to modestly expand compared to 2025. For the non-Same-Home portfolio, we also expect incremental Core NOI growth from similar expense benefits and additional contribution from our solid AMH Development lease-up activity. When combined with our better-than-expected disposition activity and incremental share repurchases, we've increased the midpoint of our full-year 2026 Core FFO-per-share expectations by a total of $0.03.

Our new midpoint of $1.95 per share now reflects the high end of our previous range and represents a year-over-year growth expectation of 4.3%, which continues to position AMH at the top of the residential sector. Before we open the call to your questions, I'd like to close with one final thought. Like Bryan mentioned at the start, as our industry begins to emerge from some of the recent uncertainty, AMH's positioning as the largest integrated operator and developer of single-family rental homes will likely be more important than ever. The AMH Development Program gives us the unique ability to both control our external growth while also contributing much-needed housing stock across the country as we continue to create value for our residents, communities, and shareholders. With that, we'll open the call to your questions.