American Homes 4 Rent - FORM 8-K - EX-99.2 - EXHIBIT 99.2 - March 13, 2014

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8-K - FORM 8-K - American Homes 4 Rentv371694_8k.htm
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EX-99.1 - EXHIBIT 99.1 - American Homes 4 Rentv371694_ex99-1.htm

 

 

Fourth Quarter 2013

 

Supplemental Information Package

 

 

     

 

 

 
 

 

American Homes 4 Rent

Supplemental Information Package

Fourth Quarter 2013

 

Table of Contents

 

Summary  
Financial and Operating Highlights 3
Fact Sheet 4
Notes to Fact Sheet 5
   
Earnings  
2013 Quarterly Consolidated Statements of Operations 6
Funds from Operations and Adjusted Funds from Operations 7
   
Property Information  
Top 20 Markets Summary 9
Top 20 Markets Home Price Appreciation Trends 10
Leasing Experience 11
   
Operational Information  
Acquisition, Renovation and Leasing Rates 12
Portfolio Footprint Map 13
   
Non-GAAP Financial Measures  
Reconciliation of Net Operating Income to Net Loss 14

 

2
 

 

American Homes 4 Rent

Supplemental Information Package

Fourth Quarter 2013

 

Financial and Operating Highlights

 

Fourth Quarter 2013 Highlights

 

·31.2% sequential quarterly growth in revenues to $64.9 million

 

·Funds from operations (“FFO”) was $20.9 million or $0.09 per FFO share, compared to $19.6 million or $0.09 per FFO share for the third quarter

 

·Adjusted funds from operations (“AFFO”) (as defined) was $25.6 million or $0.11 per FFO share, compared to $20.7 million or $0.10 per FFO share for the third quarter

 

·Net operating income from leased properties (“NOI”) was $40.0 million, a 26.6% increase from the $31.6 million reported for the prior quarter

 

·9.4% increase in portfolio to 23,268 single-family properties from 21,267 as of September 30, 2013, and from January 1, 2014 through February 28, 2014, acquired an additional 1,533 homes, increasing the portfolio to 24,801

 

·3,473 properties leased during quarter ended December 31, 2013, for a total of 17,328 leased properties as of December 31, 2013

 

·Continued growth in total portfolio occupancy to 74.5% as of December 31, 2013, which has improved to 79.5% since yearend

 

·Solid tenant renewal rate of 73.4%

 

Year 2013 Highlights

 

·Revenues of $139.0 million and NOI of $86.5 million

 

·During 2013 acquired approximately 20,000 single-family properties in desirable sub-markets of 22 states

 

·Leased approximately 15,460 homes during 2013, raising the Company’s total portfolio occupancy from 31.9% to 74.5%

 

·Successfully raised $886.8 million in initial public offering in July 2013

 

·2013 tenant renewal rate of 71.1%

 

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American Homes 4 Rent

Supplemental Information Package

Fourth Quarter 2013

 

Fact Sheet

(Amounts in thousands, except share, per share and property information)

(Unaudited)

 

   Mar 31,
2013		   Jun 30,
2013		   Sep 30,
2013		   Dec 31,
2013		 
Operating Data - for the three months ended                
Revenues from single-family properties (1)  $6,559   $17,757   $49,163   $64,470 
Total revenues  $6,559   $18,120   $49,463   $64,890 
Leased property operating expenses  $2,503   $6,859   $17,579   $24,470 
Net operating income (2)  $4,056   $10,898   $31,584   $40,000 
Net operating income margin   62%   61%   64%   62%
General and administrative expense and                    
advisory fees as a percentage of total revenues   67%   24%   6%   6%
Annualized general and administrative expense and                    
advisory fees as a percentage of total assets   1.04%   0.51%   0.28%   0.35%
                     
Selected Balance Sheet Information - at end of period                    
Single-family properties, net  $1,120,843   $3,039,504   $3,530,122   $3,861,422 
Total assets  $1,678,261   $3,482,695   $3,885,261   $4,224,144 
Outstanding borrowings under credit facility (3)  $-   $670,000   $238,000   $375,000 
Total liabilities  $49,798   $831,359   $395,968   $573,485 
Total market capitalization (4)    n/a      n/a    $3,861,700   $3,873,866 
NYSE AMH Class A common share closing price    n/a      n/a    $16.15   $16.20 
                     
Portfolio Data - at end of period                    
Leased single-family properties   2,338    10,245    14,384    17,328 
Single-family properties being renovated   3,880    6,074    4,147    2,744 
Vacant single-family properties available for lease   1,356    2,007    2,736    3,152 
Single-family properties held for sale   -    -    -    44 
Total single-family properties   7,574    18,326    21,267    23,268 
Total portfolio occupancy   30.9%   55.9%   67.6%   74.5%
Available for rent 30+ days occupancy (5)    n/a     89.7%   89.6%   90.1%
Available for rent 90+ days occupancy (6)    n/a     96.7%   96.2%   94.5%
Quarterly lease renewal rate   62.3%   68.3%   73.0%   73.4%
                     
Other Data                    
Distributions declared per common share  $-   $-   $-   $0.05 
Distributions declared per Series A preferred share (7)  $-   $-   $-   $0.23 

 

4
 

 

American Homes 4 Rent

Supplemental Information Package

Fourth Quarter 2013

 

Notes to Fact Sheet

 

(1)Consists of rents from single-family properties and other revenues from single-family properties.
(2)Net operating income (“NOI”) is a supplemental non-GAAP financial measure that we define as rents from single-family properties and other revenues from single-family properties, less property operating expenses for leased single-family properties. A reconciliation between net loss (as determined in accordance with GAAP) and NOI is included in a schedule accompanying this supplemental information package.
(3)Our credit facility provides for borrowing capacity of up to $800 million and bears interest at 30 day LIBOR plus 2.75% (3.125% beginning in March 2017). Borrowings are available until March 2015, which may be extended for an additional year subject to the satisfaction of certain financial covenant tests. Upon expiration of the credit facility period, any outstanding borrowings will convert to a term loan through September 30, 2018.
(4)Total market capitalization includes common shares outstanding at the end of respective period and 13,787,292 Class A units, 31,085,974 Series C units, 4,375,000 Series D units and 4,375,000 Series E units.
(5)Available for rent 30+ days occupancy is calculated as the number of leased properties divided by the number of leased properties after we have completed initial renovations or are available for rent for a period of greater than 30 days.
(6)Available for rent 90+ days occupancy is calculated as the number of leased properties divided by the number of leased properties after we have completed initial renovations or are available for rent for a period of greater than 90 days.
(7)Represents initial pro-rated quarterly dividend on the Company’s 5% Series A participating preferred shares.

 

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American Homes 4 Rent

Supplemental Information Package

Fourth Quarter 2013

 

2013 Quarterly Consolidated Statements of Operations

(Amounts in thousands, except share and per share information)

(Unaudited)

 

   For the Three Months Ended     
   Mar 31,
2013		   Jun 30,
2013		   Sep 30,
2013		   Dec 31,
2013		   Year Ended
Dec 31, 2013		 
Revenues:                         
Rents from single-family properties  $6,495   $17,020   $47,364   $61,843   $132,722 
Other revenues from single-family properties   64    737    1,799    2,627    5,227 
Other   -    363    300    420    1,083 
Total revenues   6,559    18,120    49,463    64,890    139,032 
                          
Expenses:                         
Property operating expenses                         
Leased single-family properties   2,503    6,859    17,579    24,470    51,411 
Vacant single-family properties and other   1,729    4,391    7,873    8,348    22,341 
General and administrative expense   1,625    811    2,742    3,667    8,845 
Advisory fees   2,742    3,610    -    -    6,352 
Interest expense   370    -    -    -    370 
Noncash share-based compensation expense   174    279    153    473    1,079 
Acquisition fees and costs expensed   1,390    2,099    496    814    4,799 
Depreciation and amortization   2,905    10,879    24,043    33,160    70,987 
Total expenses   13,438    28,928    52,886    70,932    166,184 
                          
Gain on remeasurement of equity method investment   -    10,945    -    -    10,945 
Remeasurement of Series E units   -    -    (438)   (1,619)   (2,057)
Remeasurement of Preferred shares   -    -    -    (1,810)   (1,810)
                          
Income / (loss) from continuing operations   (6,879)   137    (3,861)   (9,471)   (20,074)
                          
Discontinued operations                         
Gain on disposition of single-family properties   -    904    -    -    904 
Income from discontinued operations   22    82    -    -    104 
Total income from discontinued operations   22    986    -    -    1,008 
                          
Net income / (loss)   (6,857)   1,123    (3,861)   (9,471)   (19,066)
                          
Noncontrolling interest   895    4,664    3,798    3,888    13,245 
Dividends on preferred shares   -    -    -    1,160    1,160 
Conversion of preferred units   -    10,456    -    -    10,456 
                          
Net loss attributable to common shareholders  $(7,752)  $(13,997)  $(7,659)  $(14,519)  $(43,927)
                          
Weighted average shares outstanding - basic and diluted   48,233,982    95,971,706    162,725,150    185,499,066    123,592,086 
                          
Net loss per share - basic and diluted:                         
Loss from continuing operations  $(0.16)  $(0.16)  $(0.05)  $(0.08)  $(0.37)
Discontinued operations   -    0.01    -    -    0.01 
Net loss attributable to common shareholders                         
per share - basic and diluted  $(0.16)  $(0.15)  $(0.05)  $(0.08)  $(0.36)

 

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American Homes 4 Rent

Supplemental Information Package

Fourth Quarter 2013

 

Funds from Operations and Adjusted Funds from Operations

 

The following is a reconciliation of net loss attributable to common shareholders, determined in accordance with GAAP, to FFO and AFFO for the three months ended September 30, 2013 and December 31, 2013 (amounts in thousands, except share and per share information):

 

   For the Three Months Ended 
   Sep 30, 2013   Dec 31, 2013 
Net loss attributable to common shareholders  $(7,659)  $(14,519)
Adjustments:          
Noncontrolling interests in the Operating Partnership   4,028    3,718 
Depreciation and amortization of real estate assets   23,211    31,702 
Funds from operations  $19,580   $20,901 
Adjustments:          
Acquisition fees and costs expensed   496    814 
Noncash share-based compensation expense   153    473 
Remeasurement of Series E units   438    1,619 
Remeasurement of Preferred shares   -    1,810 
Adjusted funds from operations  $20,667   $25,617 
Weighted average number of FFO shares (1)   216,348,416    239,122,332 
FFO per weighted average FFO share  $0.09   $0.09 
AFFO per weighted average FFO share  $0.10   $0.11 

  

(1)Includes 162,725,150 and 185,499,066 weighted average Class A common shares and Class B common shares outstanding for the three months ended September 30, 2013 and December 31, 2013, respectively, and assumes full conversion of all Operating Partnership units outstanding, including 13,787,292 Class A units, 31,085,974 Series C units, 4,375,000 Series D units and 4,375,000 Series E units.

 

FFO is a non-GAAP measure that we calculate in accordance with the White Paper on FFO approved by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”), which defines FFO as net income or loss calculated in accordance with Generally Accepted Accounting Principles (“GAAP”), excluding extraordinary items, as defined by GAAP, gains and losses from sales of depreciable real estate and impairment write-downs associated with depreciable real estate, plus real estate-related depreciation and amortization (excluding amortization of deferred financing costs and depreciation of non-real estate assets), and after adjustment for unconsolidated partnerships and joint ventures.

 

AFFO is a non-GAAP financial measure that we use as a supplemental measure of our performance. We compute AFFO by adjusting FFO for (1) acquisition fees and costs expensed incurred with recent business combinations and the acquisition of properties with existing leases, (2) noncash share-based compensation expense and (3) noncash fair value adjustments associated with remeasuring our Series E units liability and Preferred shares derivative liability to fair value.

 

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American Homes 4 Rent

Supplemental Information Package

Fourth Quarter 2013

 

Funds from Operations and Adjusted Funds from Operations (continued)

 

We present FFO and FFO per FFO share because we consider FFO to be an important measure of the performance of real estate companies, as do many analysts in evaluating our Company. We believe that FFO is a helpful measure of a REIT’s performance since FFO excludes depreciation, which is included in computing net income and assumes the value of real estate diminishes predictably over time. We believe that real estate values fluctuate due to market conditions and in response to inflation. We also believe that AFFO and AFFO per FFO share are helpful to investors as supplemental measures of the operating performance of our Company as they allow investors to compare our operating performance to prior reporting periods without the effect of certain items that, by nature, are not comparable from period to period.

 

FFO and AFFO are not a substitute for net cash flow provided by operating activities or net loss per share, as determined in accordance with GAAP, as a measure of our liquidity or operating performance or our ability to pay dividends. FFO and AFFO also are not necessarily indicative of cash available to fund future cash needs. Because other REITs may not compute FFO and AFFO in the same manner, FFO and AFFO may not be comparable among REITs.

 

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American Homes 4 Rent

Supplemental Information Package

Fourth Quarter 2013

 

Top 20 Markets Summary

 

The table below summarizes certain information with respect to our top 20 markets as of December 31, 2013:

 

Market  Number of
Properties		   Percentage
of Total
Properties		   Net Book
Value
($ millions)		   Percentage
of Net
Book Value		   Net Book
Value per
Property		   Average
Sq. Ft.		   Avg. Age
(years)		   Leased
Properties		   Occupancy
Percentage		 
Dallas-Fort Worth, TX   2,085    9.0%  $324.3    8.4%  $155,542    2,188    10.2    1,573    75.4%
Indianapolis, IN   2,021    8.7%   292.5    7.6%   144,743    1,893    11.5    1,509    74.7%
Greater Chicago area, IL and IN   1,519    6.5%   230.4    6.0%   151,702    1,861    12.4    857    56.4%
Atlanta, GA   1,461    6.3%   237.0    6.1%   162,204    2,157    13.0    1,112    76.1%
Cincinnati, OH   1,244    5.3%   207.4    5.4%   166,756    1,849    13.5    842    67.7%
Houston, TX   1,223    5.3%   210.4    5.4%   172,010    2,293    9.6    860    70.3%
Charlotte, NC   1,058    4.5%   177.8    4.6%   168,027    1,964    10.7    906    85.6%
Nashville, TN   994    4.3%   199.2    5.2%   200,444    2,202    9.5    884    88.9%
Jacksonville, FL   974    4.2%   140.6    3.6%   144,333    1,923    9.6    801    82.2%
Phoenix, AZ   962    4.1%   143.2    3.7%   148,828    1,811    11.3    868    90.2%
Tampa, FL   818    3.5%   156.9    4.1%   191,850    2,081    10.3    661    80.8%
Raleigh, NC   815    3.5%   144.7    3.7%   177,519    1,918    9.5    638    78.3%
Salt Lake City, UT   727    3.1%   156.5    4.1%   215,337    2,199    12.0    627    86.2%
Columbus, OH   725    3.1%   104.0    2.7%   143,515    1,823    12.7    433    59.7%
Las Vegas, NV   713    3.1%   119.8    3.1%   168,051    1,846    12.1    676    94.8%
Orlando, FL   613    2.6%   99.8    2.6%   162,743    1,966    12.5    468    76.3%
Austin, TX   408    1.8%   57.0    1.5%   139,795    1,892    9.7    277    67.9%
Greenville, SC   380    1.6%   63.0    1.6%   165,886    1,919    10.4    252    66.3%
Tucson, AZ   376    1.6%   48.9    1.3%   129,994    1,654    9.6    350    93.1%
Greensboro, NC   356    1.5%   59.7    1.5%   167,819    1,909    10.0    256    71.9%
All Other (2)   3,796    16.3%   688.3    17.8%   181,231    1,850    11.4    2,478    65.3%
Total / Average   23,268    100.0%  $3,861.4    100.0%  $165,948    1,972    11.2    17,328    74.5% (1) 

 

(1)As of the date of this supplemental information package, March 13, 2014, our total portfolio occupancy has increased to approximately 79.5%.
(2)Represents 22 markets in 15 states.

 

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American Homes 4 Rent

Supplemental Information Package

Fourth Quarter 2013

 

Top 20 Markets Home Price Appreciation Trends

 

       HPA Index (1)     
Market  Relative Weighting of Top 20 Markets (2)   Dec 31,
2012 (3)		   Mar 31,
2013		   Jun 30,
2013		   Sep 30,
2013		   Dec 31,
2013		   2013 HPA Index Appreciation 
Dallas-Fort Worth, TX (4)   9.507%   100.0    100.9    105.5    107.1    108.4    8.4%
Indianapolis, IN   8.880%   100.0    104.0    107.4    110.4    108.0    8.0%
Greater Chicago area, IL and IN   7.679%   100.0    101.2    109.7    110.8    111.7    11.7%
Atlanta, GA   7.545%   100.0    104.1    111.5    114.6    115.0    15.0%
Nashville, TN   6.390%   100.0    102.1    106.7    107.9    109.9    9.9%
Houston, TX   6.312%   100.0    102.1    106.7    108.2    111.0    11.0%
Cincinnati, OH   6.119%   100.0    99.6    105.4    107.9    105.3    5.3%
Salt Lake City, UT   5.495%   100.0    104.7    109.7    110.3    109.6    9.6%
Tampa, FL   5.361%   100.0    100.2    107.8    111.1    112.3    12.3%
Charlotte, NC   5.354%   100.0    105.3    109.5    112.8    113.4    13.4%
Phoenix, AZ   5.270%   100.0    102.4    109.8    115.0    117.0    17.0%
Jacksonville, FL   4.776%   100.0    108.0    111.0    112.1    113.2    13.2%
Las Vegas, NV   4.371%   100.0    102.7    112.0    122.0    125.3    25.3%
Raleigh, NC   4.040%   100.0    103.5    106.1    107.8    107.0    7.0%
Columbus, OH   3.167%   100.0    101.5    106.9    111.0    107.8    7.8%
Orlando, FL   3.036%   100.0    99.4    106.9    110.0    107.5    7.5%
Tucson, AZ   1.867%   100.0    98.5    102.6    106.4    107.7    7.7%
Greensboro, NC   1.789%   100.0    102.8    104.8    105.4    102.3    2.3%
Austin, TX   1.550%   100.0    101.6    108.7    110.7    109.2    9.2%
San Antonio, TX   1.490%   100.0    99.0    100.3    101.1    100.8    0.8%
Total / weighted average   100.0%                            10.8%

 

(1)HPA Index reflects the House Price Index of the Federal Housing Finance Agency (“FHFA”), known as the Quarterly Purchase-Only Index, specifically the non-seasonally adjusted “Purchase-Only Index” for the “100 Largest Metropolitan Statistical Areas.”
(2)Relative weighting of top 20 markets based on properties as of September 30, 2013, consistent with relative weighting used for purposes of computing the “HPA Factor” for our 5% Series A participating preferred shares and 5% Series B participating preferred shares as described in the prospectuses for those securities.
(3)For the illustrative purposes of this table, the HPA Index has been indexed as of December 31, 2012 and, as such, a baseline index value of 100.0 has been assigned to each market as of such date. The HPA Index values with respect to the other periods presented are relative measures calculated in relation to the baseline index value.
(4)Our Dallas-Fort Worth, TX market is comprised of the Dallas-Plano-Irving and Fort Worth-Arlington Metropolitan Divisions, with each division being given equal weighting for purposes of determining the HPA Index.

 

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American Homes 4 Rent

Supplemental Information Package

Fourth Quarter 2013

 

Leasing Experience

 

The table below summarizes our leasing experience through December 31, 2013:

 

Market  Leased (1)   Available for Rent 30+ Days(2)   Available for Rent 90+ Days(3)   30+ Days Occupancy % (4)   90+ Days Occupancy % (5)   Average Annual Scheduled Rent Per Property 
Dallas-Fort Worth, TX   1,554    1,667    1,583    93.2%   98.2%  $17,523 
Indianapolis, IN   1,479    1,656    1,601    89.3%   92.4%   14,717 
Greater Chicago area, IL and IN   774    974    849    79.5%   91.2%   19,258 
Atlanta, GA   1,093    1,144    1,119    95.5%   97.7%   15,902 
Houston, TX   773    800    791    96.6%   97.7%   18,144 
Phoenix, AZ   827    875    866    94.5%   95.5%   13,247 
Cincinnati, OH   816    950    878    85.9%   92.9%   16,795 
Jacksonville, FL   690    713    698    96.8%   98.9%   15,388 
Nashville, TN   856    865    864    99.0%   99.1%   17,741 
Charlotte, NC   883    915    901    96.5%   98.0%   15,728 
All Other (6)   6,813    7,815    7,368    87.2%   92.5%   16,529 
Total / Average   16,558    18,374    17,518    90.1%   94.5%  $16,444 

 

(1)Includes leases on properties for which we have completed renovations and excludes leases with tenants existing at the date of acquisition (“Stabilized Properties”)
(2)Available for Rent 30+ Days represents the number of properties that have been leased after we have completed renovations or are available for rent (i.e., “rent-ready”) for a period of greater than 30 days.
(3)Available for Rent 90+ Days represents the number of properties that have been leased after we have completed renovations or are available for rent (i.e., “rent-ready”) for a period of greater than 90 days.
(4)Occupancy percentage is computed by dividing the number of leased properties by the number of properties available for rent 30+ days.
(5)Occupancy percentage is computed by dividing the number of leased properties by the number of properties available for rent 90+ days.
(6)Represents 32 markets in 19 states.

  

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American Homes 4 Rent

Supplemental Information Package

Fourth Quarter 2013

 

Acquisition, Renovation and Leasing Rates

 

 

“Rent Ready” includes properties for which initial construction has been completed during each quarter

“Leases Signed” includes the number of initial leases signed each quarter (includes Pre-Existing Leases)

 

12
 

American Homes 4 Rent

Supplemental Information Package

Fourth Quarter 2013

 

Portfolio Footprint Map

  

All properties in all markets are managed by AMH personnel.

  

 

 

13
 

 

American Homes 4 Rent

Supplemental Information Package

Fourth Quarter 2013

 

Reconciliation of Net Operating Income to Net Loss

 

NOI is a supplemental non-GAAP financial measure that AMH defines as rents from single-family properties and other revenues from single-family properties, less property operating expenses for leased single-family properties. NOI excludes income from discontinued operations, remeasurement of preferred shares, remeasurement of Series E units, gain on remeasurement of equity method investment, depreciation and amortization, acquisition fees and costs expensed, noncash share-based compensation expense, interest expense, advisory fees, general and administrative expense, property operating expenses for vacant single-family properties and other and other revenues. 

 

AMH considers NOI to be a meaningful financial measure because we believe it is helpful to investors in understanding the operating performance of our leased single-family properties. It should be considered only as a supplement to net income / (loss) as a measure of our performance. NOI should not be used as a measure of AMH’s liquidity, nor is it indicative of funds available to fund AMH’s cash needs, including its ability to pay dividends or make distributions. NOI also should not be used as a substitute for net income / (loss) or net cash flows from operating activities (as computed in accordance with GAAP).

 

The following is a reconciliation of NOI to net loss as determined in accordance with GAAP (amounts in thousands):

 

   For the Three Months Ended   For the Years Ended December 31, 
   December 31, 2013   September 30, 2013   2013   2012 
Net loss  $(9,471)  $(3,861)  $(19,066)  $(10,236)
Income from discontinued operations   -    -    (1,008)   - 
Remeasurement of Preferred shares   1,810    -    1,810    - 
Remeasurement of Series E units   1,619    438    2,057    - 
Gain on remeasurement of equity method investment   -    -    (10,945)   - 
Depreciation and amortization   33,160    24,043    70,987    2,111 
Acquisitions fees and costs expensed   814    496    4,799    869 
Noncash share-based compensation expense   473    153    1,079    70 
Interest expense   -    -    370    - 
Advisory fees   -    -    6,352    937 
General and administrative expense   3,667    2,742    8,845    7,199 
Property operating expenses for vacant                    
single-family properties and other   8,348    7,873    22,341    1,846 
Other revenues   (420)   (300)   (1,083)   - 
Net operating income  $40,000   $31,584   $86,538   $2,796 

 

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