American Homes 4 Rent Q1 2025 Earnings Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Jamie Feldman - Wells Fargo & Company. - Analyst : Great. I wanted to -- I was hoping you could dig more into the strength in your Midwest markets. You've outsized rent growth there. We're curious if that's more of a catch-up versus the sale, given high rent growth in the Sunbelt markets during COVID. But do you think these markets could continue to outperform on a multiyear outlook and with that backdrop, what's your appetite to grow your land bank and your development pipeline there, given most of your lands in more southern markets?

Question: Jamie Feldman - Wells Fargo & Company. - Analyst : Okay. And then can you talk about the puts and takes of the heavy presence of public builders in North Florida and Texas? Specifically the increased competition for more build-to-rent supply, also entry-level single-family homes with rate buy-downs? And does this provide an opportunity for external growth or more of a headwind on demand competition?

Question: Steve Sakwa - Evercore ISI Institutional Equities - Analyst : Are you doing anything, I guess, proactively to kind of just the leasing strategy at this point realize the uncertainty out there has grown, but the fundamentals on the ground today still seem to be quite strong. So I just wasn't sure if you were kind of redirecting the field to do anything differently or is it pretty much business as usual until you see meaningful changes in leasing dynamics?

Question: Steve Sakwa - Evercore ISI Institutional Equities - Analyst : Okay. And then as it relates to development, I can appreciate the fact that most of the pipeline for this year is built out or committed on price. How do you think about the price risk into next year on the Camden call just finished up? They talked about a very de minimis sort of price increase from kind of the tariffs as they sit here today. Is that sort of your expectation if things were to play out as is it cost increases would be, say, sub 5%? Or do you feel like there's more pressure on pricing if tariffs stayed where they are?

Question: Haendel St. Juste - Mizuho Securities USA - Analyst : Good to see you. Maybe just a follow-up on the last one from Steve there. Just can you remind us what percentage of your development cost for home labor related. You mentioned that there's more labor availability. Curious if there's a sense that there could be some maybe a benefit on that front?

Question: Haendel St. Juste - Mizuho Securities USA - Analyst : That's, I guess, a little monitor how that this solves on the labor front. My other question was tied to the uptick in turnover in the first quarter and normally versus your peers, but again, understanding that you have the strategic initiative that you're employing here. I guess I'm curious if you have a sense of how much turnover maybe would have been without the program? And perhaps help us understand how much longer we could be seeing hired over from this program? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 4:00PM, AMH.N - Q1 2025 American Homes 4 Rent Earnings Call

Question: Nicholas Joseph - Citibank, N.A - Analyst : It's Nick Joseph here with Eric. I recognize it's early in the year and the macro uncertainty that you're seeing. But just given the results through April on same-store revenue. If you hit the midpoint of guidance, a deceleration of about 100 basis points for the remainder of the year. Is that just conservatism given everything that we've talked about? Or are there headwinds in the back half of the year either on other income or occupancy or other things that we should be mindful of?

Question: Nicholas Joseph - Citibank, N.A - Analyst : Makes sense. And then I know you collect a lot of data. Are you seeing anything from the data you collect a weakening consumer or weakening demand?

Question: Adam Kramer - Morgan Stanley & Co LLC - Analyst : Look, I think the April result kind of showed you were able to push occupancy, build occupancy at the same time as pushing rents. I was wondering as you kind of sit here today, kind of what's the priority here. Is it to kind of further build occupancy? Or do you feel pretty good with where occupancy is today? And you kind of shift to being able to push on the new lease back a little bit more?

Question: Adam Kramer - Morgan Stanley & Co LLC - Analyst : Great. And then maybe just a higher-level question here. Can you think about your BTR portfolio, development portfolio? I think you're over 10,000 homes at this point. Is there any kind of noticeable difference in the demographics between the kind of residents in the development homes versus the kind of scattered site traditional SFR homes, any kind of demographic differences be it age, be it kind of number of people in the household, children, et cetera?

Question: Jeffrey Spector - Bank of America Corporation - Analyst : Just a follow-up on guidance. April payrolls did come in stronger than expected today. I guess can you talk about the potential or historical lag between the labor market weakening and impact on your business and demand trends? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 4:00PM, AMH.N - Q1 2025 American Homes 4 Rent Earnings Call

Question: Jeffrey Spector - Bank of America Corporation - Analyst : Sorry, and I mean really just trying to get back to -- like thinking about the historical lag, meaning it's obviously, we're seeing a lot of strength through April. The jobs number came in strong. So as again, we think about the guidance for this year, what could potentially change that or change the trajectory of demand, right? What would be the lag between if we saw a weakening in the labor market and an impact on your business? Is that historically 3 months, 6 months, 12 months?

Question: Rich Hightower - Barclays Bank PLC. - Analyst : I'll take Rich Hightower as my queue here, guys. I just want to talk about CapEx for a second here. So if I go to just recurring CapEx per home, it was up quite a lot year-on-year, but then obviously down quite a lot as we kind of look sequentially over the prior four quarters. So just maybe talk a little bit about the movement maybe the seasonality in those figures? And how -- just looking at the age of the portfolio, how that metric factors into the decision to sell a property? And when you say you're selling at a kind of an implied three-Ish cap rate to an end user, does that factor in the CapEx you're not spending in the way you think about that metric? Just maybe a little more color on that topic. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 4:00PM, AMH.N - Q1 2025 American Homes 4 Rent Earnings Call

Question: Rich Hightower - Barclays Bank PLC. - Analyst : That's great. On the rest, I think you guys get every single part of my multipart question there. And then I think just a follow-up in terms of AMH acquiring properties sort of in the open market. I mean, do you guys -- remind me, do you guys buy anything directly from other homebuilders? Or is the fact that you have in-house development somehow, is there somehow a gating factor that would prevent that from really sort of an active source of acquisitions for you guys? Just tell me how that works.

Question: David Segal - Green Street - Analyst : Just following up on that. If pricing for those assets is in the four handle range, how does that compare to nearby suburban and product?

Question: David Segal - Green Street - Analyst : Great. And just about what you think the kind of fair run rate occupancy is for the SFR business. And prior to the 2020, you're averaging around 95% occupancy. Since then, you've had two years, a 97% or higher. Last year it was low 96% and it sounds like you're expecting similar this year. But what do you think like the long run fair occupancy level is?

Question: Brad Heffern - RBC Capital Markets - Analyst : On the leasing spreads to start the year, it's obviously been a number of years since we've seen kind of a typical leasing trajectory. Can you just frame what we've seen so far this year? I'm suspecting you'll say that it's above average. But how does it look compared to -- how you would typically expect to be the normal year?

Question: Brad Heffern - RBC Capital Markets - Analyst : Okay. Got it. And then on the development program, you reiterated the 5.5% yield. It does seem pretty tight to acquisition opportunities in kind of the high four's. I guess what's the yield premium that you need over other growth options for that program? And then do you see the benefits of the consistency and all the other things that you talked about with that sort of offsetting maybe the normal development math that we would normally think of like 100 or 150 basis point spread?

Question: Daniel Tricarico - Scotiabank Global Banking and Markets - Analyst : Chris, looking for an update on the FFO bridge for Q4 release, the $0.09 headwind financing costs Obviously, there's still some more to do on that front security side. So you're thinking about that today, where you could unsecured. And also, you had the anticipated repayment date in April for the [ 15, 2015-1 ] but let on the line to repay it. So curious if there's anything to read into there?

Question: Daniel Tricarico - Scotiabank Global Banking and Markets - Analyst : Helpful, Chris. And I want to follow up on Steve's from early, Bryan, on the Q1 call, you said half of the vertical and contracted labor for [25%] -- the tariffs. So I'm curious what percentage of the remainder of '25 and '26 of spot today? And then on the 2% to 3% impact you mentioned earlier, can you just more details on the magnitude of increase for the bigger drivers of that?

Question: Michael Goldsmith - UBS Investment Bank - Analyst : We talked a little bit earlier about the demographic of [ Bob versus scarce ] but maybe you could talk a little bit about any difference in performance there? And do you see any difference in rent growth and over -- maybe said another way, do people stay longer in a new home?

Question: Michael Goldsmith - UBS Investment Bank - Analyst : Got it. And then just a quick follow up here. You maintained your guidance for same-store revenue and expense, but just wondering if there were any kind of under the hood changes in the buildup or assumptions where there may be some offsetting pieces?

Question: Jesse Lederman - Zelman & Associates - Analyst : Questions on the development pipeline, but maybe thinking a little bit further out. So current deliveries have been a little bit heavier in Florida and the Sunbelt, obviously, based on investment decisions and land that was bought several years ago. And as you think several years from now based on land you're acquiring today, where should we expect growth in the portfolio to come from a geographic perspective?

Question: Jesse Lederman - Zelman & Associates - Analyst : Okay. That's really helpful. Second question is on the portfolio acquisition from last year. Just curious how that's trending relative to your expectations? I know you're assuming some growth in the yield based on kind of assimilating that into your platform. So just curious on how that's trending thus far, though it's early. Any color there would be great.

Question: Austin Wurschmidt - KeyBanc Capital Markets Inc - Analyst : Great, thanks and little out there. Just curious if you guys continue to see an improvement in your cost of equity, if there's any parts of the business that you'd lean into a little more from a capital allocation perspective, acquisitions, obviously, development. And just wondering if the hurdle rate returns have changed at all just taking into account the greater uncertainty in the economic backdrop.

Question: Austin Wurschmidt - KeyBanc Capital Markets Inc - Analyst : And then just pivoting a little bit to an earlier question about the pricing dynamics going on between Midwest versus Sunbelt. You also had some commentary on affordability gap versus owning a home. I guess how does the affordability stream from just a

Question: Linda Yu Tsai - Jefferies LLC - Analyst : Any additional color you could share on your lease segment initiative. How much improvement do you foresee and [rate] or any other benefits you could quantify? And how long is the tail for this improvement? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 4:00PM, AMH.N - Q1 2025 American Homes 4 Rent Earnings Call

Question: Linda Yu Tsai - Jefferies LLC - Analyst : Is it a multiyear improvement where the benefit is larger initially? And then as it grows, it sort of [ 80% ] over time?

Question: Omotayo Okusanya - Deutsche Bank AG - Analyst : Most of my questions have been answered, but quick one on repairs and maintanace. Just curious how that -- you expect that to trend in the course of the year, just given some of the concerns about tariffs and potential impact on material costs and things of that nature?

Question: Omotayo Okusanya - Deutsche Bank AG - Analyst : That's helpful. And then if I may ask another one, just what is to date, again, they have this proposed new rent control policy, but they kind of included everyone except single family for rent. Just kind of curious whether that was more from a lobbying perspective, where you guys have excluded? Or if you have to talk about why SFR in particular works from that initiative?

Question: Steve Sakwa - Evercore ISI Institutional Equities - Analyst : Just one quick follow-on if I missed it. I apologize if you guys touched on bad debt. It was up about 18% in the quarter, and it's running maybe close to 1%. I know your peer reported a number that was probably closer to 70 basis points and theirs was down