Exhibit 99.1

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

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Report of Independent Auditors

The Stockholders and Board of Directors

American Residential Properties, Inc.

We have audited the accompanying consolidated financial statements of American Residential Properties, Inc., which comprise the consolidated balance sheets as of December 31, 2015 and 2014, and the related consolidated statements of operations, comprehensive loss, equity and cash flows for each of the three years in the period ended December 31, 2015, and the related notes to the consolidated financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in conformity with U.S. generally accepted accounting principles; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free of material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

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Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of American Residential Properties, Inc. at December 31, 2015 and 2014, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2015 in conformity with U.S. generally accepted accounting principles.

/s/ Ernst & Young LLP

Phoenix, Arizona

February 28, 2016

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AMERICAN RESIDENTIAL PROPERTIES, INC.

CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except share amounts)

The accompanying notes are an integral part of these consolidated financial statements.

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AMERICAN RESIDENTIAL PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands, except share and per-share amounts)

The accompanying notes are an integral part of these consolidated financial statements.

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AMERICAN RESIDENTIAL PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(amounts in thousands)

The accompanying notes are an integral part of these consolidated financial statements.

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AMERICAN RESIDENTIAL PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(amounts in thousands, except share amounts)

The accompanying notes are an integral part of these consolidated financial statements.

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AMERICAN RESIDENTIAL PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(amounts in thousands)

The accompanying notes are an integral part of these consolidated financial statements.

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AMERICAN RESIDENTIAL PROPERTIES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015

1.              Company’s Organization and Operations

As used in these consolidated financial statements and related notes, the terms “American Residential Properties, Inc.,” the “Company,” “us,” “we” and “our” refer to American Residential Properties, Inc. We are an internally managed real estate company organized as a real estate investment trust, or REIT, that acquires, owns and manages single-family homes as rental properties. We own all of our assets and conduct substantially all of our operations through (i) American Residential Properties OP, L.P., a Delaware limited partnership, or our Operating Partnership, in which we have a 97.9% interest as of December 31, 2015 and for which, through our wholly owned subsidiary, American Residential GP, LLC, we serve as sole general partner, and (ii) American Residential Properties TRS, LLC, or our TRS, which is our taxable REIT subsidiary.  We have elected to be taxed as a REIT for federal income tax purposes. As a REIT, we will generally not be subject to federal income taxes to the extent that we currently distribute all of our taxable income to our stockholders and meet other specific requirements.

We were incorporated in Maryland in March 2012 and completed our initial private offering of our common stock in May 2012, raising net proceeds of approximately $208.7 million. In December 2012 and January 2013, we raised an additional approximately $139.1 million of net proceeds from a follow-on private offering of our common stock and a private placement of our common stock. We contributed the net proceeds from these offerings and the sale of shares to our founders at incorporation to our Operating Partnership in exchange for an aggregate of 18,424,857 units of limited partnership interest in our Operating Partnership.

We completed our initial public offering, or our IPO, in May 2013, in which we issued and sold 13,700,000 shares of our common stock at a public offering price of $21.00 per share, and we received approximately $265.1 million of net proceeds, after deducting the underwriting discounts and commissions, structuring fee and other offering expenses payable by us.

As of December 31, 2015, we own 8,937 properties in Arizona, California, Florida, Georgia, Illinois, Indiana, Nevada, North Carolina, Ohio, South Carolina, Tennessee and Texas.

2.              Summary of Significant Accounting Policies

Basis of Accounting and Principles of Consolidation

The accompanying consolidated financial statements include the accounts of American Residential Properties, Inc., our Operating Partnership and the wholly owned subsidiaries of our Operating Partnership. All majority-owned subsidiaries are consolidated and included in our consolidated financial statements. All intercompany balances and transactions have been eliminated in consolidation.

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make judgments, estimates and assumptions that may affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates.

Investment in Real Estate

Property acquired not subject to an existing lease is accounted for as an asset acquisition, with the property recorded at the purchase price, including acquisition costs, and allocated between land and building and improvements based upon their relative fair values at the date of acquisition. Property acquired with an existing lease is recorded as a business combination. For properties acquired through portfolio transactions, we determine whether the acquisition qualifies as a business combination based on the nature and status of the properties as of the acquisition date. A portfolio comprised of properties that are substantially leased at acquisition is treated as a business combination. A portfolio comprised of properties that are substantially vacant at acquisition is treated as an asset acquisition. For property acquisitions accounted for as business combinations, the land, building and improvements and the existing lease are recorded at fair value at the date of acquisition, with acquisition costs expensed as incurred.

Fair value is determined under the guidance of ASC Topic 820, Fair Value Measurements, primarily based on unobservable market data inputs, which are categorized as Level 3 inputs. In making estimates of fair values for purposes of allocating purchase price, we utilize our market knowledge and published market data. Our real estate portfolio is depreciated using the straight-line method over the estimated useful lives of the respective assets, ranging from 5 to 27.5 years.

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We have acquired portfolios of leased properties from established operators, or local operator, that retain day-to-day management responsibilities pursuant to a longer-term net lease. In these arrangements, the local operator is responsible for all property-related expenses and we receive payments from the local operator that escalate over the term of the net lease. In-place lease intangibles associated with homes managed by local operators are valued based on management’s estimates of lost rent and carrying costs. In-place lease intangibles associated with the acquisition of self-managed homes are valued based on management’s estimate of lost rent during the time it would take to locate a tenant and execute a lease if the property were vacant, considering current market conditions and costs to execute similar leases. In estimating lost rent and carrying costs, management considers market rents, real estate taxes, insurance, costs to execute similar leases (including leasing commissions) and other related costs. The value assigned to in-place leases is amortized on a straight-line basis as a component of depreciation and amortization expense over the remaining initial term of the related lease. The leases reflect market rental rates.

We incur costs to prepare our acquired properties to be rented. These costs (including direct internal costs) are capitalized and allocated to building costs. Costs related to the restoration or improvement of our properties (including direct internal costs) that improve and extend their useful lives are capitalized and depreciated over their estimated useful lives. Expenditures for ordinary repairs and maintenance are expensed as incurred.

Impairment of Long-Lived Assets

We evaluate our long-lived assets for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Significant indicators of impairment may include, but are not limited to, declines in home values, rental rates and occupancy percentages and significant changes in the economy. We make our assessment at the individual property level because it represents the lowest level of cash flows. If an impairment indicator exists, we compare the expected future undiscounted cash flows from the property against its net carrying amount. We prepare our future undiscounted cash flow analysis using estimates based on current rental rates, renewals and occupancy, operating expenses and inputs from our annual planning process and historical performance. When preparing these estimates, we consider each property’s historical results, current operating trends and current market conditions. These estimates may be impacted by a variety of factors, including inflation, expected rental rates, the general health of the economy and market competition. If the sum of the estimated undiscounted cash flows is less than the net carrying amount of the property, we record an impairment loss for the difference between the estimated fair value of the individual property and the carrying amount of the property at that date. To determine the estimated fair value, we consider both recent comparable homes sales and the use of discounted projected future cash flows. The rates used to discount projected future cash flows reflect market discount rates. No impairments were recorded during the years ended December 31, 2015, 2014 or 2013.

Revenue Recognition

We lease single-family residences we own and manage directly to tenants who occupy the properties under operating leases, generally, with terms of one year. We perform credit investigations on prospective tenants and obtain security deposits. Rental revenue, net of any concessions, is recognized on a straight-line basis over the term of the lease, which is not materially different than if it were recorded when due from tenants and recognized monthly as it is earned. We have acquired portfolios of leased properties from local operators that retain day-to-day management responsibilities pursuant to a longer-term net lease. Properties that are subject to longer-term operating arrangements with local operators are leased to the operator for a minimum of five to ten years with renewal options. These local operators are responsible for all taxes, insurance, maintenance and capital expenses (including significant capital improvements) of the properties under the terms of the operating arrangements. Under our local operator net lease agreements, we earn base rental revenue paid monthly, with contractual minimum annual rent increases on each anniversary of the lease commencement date. We recognize rental revenue on a straight-line basis over the term of the lease.

Mortgage Financings

We hold mortgage financing receivables for investment. The receivables are carried at cost, net of related unamortized premiums or discounts, if any. The mortgage loans are secured by single-family homes.

Interest income on mortgage financings is recognized on the effective interest method applied on a loan-by-loan basis. Direct costs, if any, associated with funding loans are offset against any related fees received and the balance, along with any premium or discount, is deferred and amortized as an adjustment to interest income over the terms of the related loans using the effective interest method.

Cash and Cash Equivalents

Cash and cash equivalents are held in depository accounts with financial institutions that are members of the Federal Deposit Insurance Corporation, or the FDIC. Cash balances with institutions may be in excess of federally insured limits or may be invested in time deposits that are not insured by the institution or the FDIC or any other government agency. We have not realized any losses in such cash investments and we believe that these investments are not exposed to any significant credit risk. Cash equivalents consist of highly liquid investments with original maturities of three months or less when acquired. Such investments are stated at cost, which approximates fair value.

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Restricted Cash

Restricted cash primarily consists of funds that are restricted as to withdrawal or use under the terms of certain contractual agreements, which include payments of real estate taxes, insurance, interest and tenant security deposits.

Acquisition Deposits

We have made earnest money deposits relating to offers to purchase rental properties. If the offers to purchase rental properties are not accepted, the deposits will be returned to us.

Rents and Other Receivables, Net

We maintain an allowance for doubtful accounts for estimated losses that may result from the inability of tenants, local operators or borrowers to make required rent or other payments. This allowance is estimated based on payment history and current credit status. If a tenant, local operator or borrower fails to make contractual payments beyond any allowance, we may recognize bad debt expense in future periods equal to the amount of unpaid rent, interest or principal and deferred rent. We generally do not require collateral or other security from our tenants, other than security deposits. Mortgage loans are secured by single-family homes. If estimates of collectability differ from the cash received, then the timing and amount of our reported revenue could be impacted.

Deferred Leasing Costs and Lease Intangibles, Net

Deferred leasing commissions and other direct costs associated with leasing our properties (including direct internal costs) and in-place lease intangibles are capitalized and amortized on a straight-line basis over the terms of the related leases.

Deferred Financing Costs, Net

Financing costs are recorded at cost and consist of loan fees and other costs incurred in connection with obtaining debt. Amortization of deferred financing costs is computed using a method, which approximates the effective interest method over the remaining life of the debt, and is included in interest expense in the accompanying consolidated statements of operations.

Investments in Unconsolidated Ventures

Investments in ventures are generally accounted for under the equity method of accounting when we exercise significant influence over the venture but we do not serve as managing member or control the venture. Net income (loss) allocations are included in the investment balance along with the contributions made and distributions received over the life of the investment. In October 2012, we invested approximately $5.5 million in Flat Iron VI LLC, a joint venture in which our equity interest is approximately 78% of the total amount invested. In December 2012, we invested approximately $4.7 million in Siphon Draw LLC, a joint venture in which our equity interest is approximately 80% of the total amount invested. In May 2013, we invested approximately $18.0 million in Red Rock River LLC, a joint-venture in which our equity interest is approximately 62% of the total amount invested.  Each of these joint ventures used invested funds to purchase portfolios of residential mortgage loans.

Goodwill

Goodwill represents the estimated fair value of the real estate acquisition and management platform acquired from ARM (Note 11). Goodwill has an indefinite life and, accordingly, we do not amortize this asset but instead analyze it on an annual basis for impairment. ASC 350, Intangibles - Goodwill and Other, permits us to assess qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than the carrying amount as a basis to determine whether the two-step impairment test is necessary. We also have the option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the first step of the two-step goodwill impairment test. The first step in the impairment test compares the fair value of the reporting unit with its carrying amount. If the carrying amount exceeds fair value, the second step is required to determine the amount of the impairment loss by comparing the implied fair value of the reporting unit goodwill with the carrying amount of that goodwill. Impairment charges, if any, are recognized in operating results. No impairments have been recorded for the years ended December 31, 2015, 2014 or 2013.

Other Assets, Net

Other assets include prepaid expenses, deposits, other receivables and other miscellaneous assets, including office furniture and equipment. Office property and equipment is recorded at cost and depreciated using the straight-line method over the estimated useful lives of the respective assets of three to seven years.

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Income Taxes

We have elected to be taxed as a REIT under Sections 856 to 860 of the Code. We believe that we have operated in such a manner as to satisfy the requirements for qualification as a REIT. Accordingly, we will not be subject to federal income tax, provided that we qualify as a REIT and our distributions to our stockholders equal or exceed our REIT taxable income.

Qualification and taxation as a REIT depends upon our ability to meet the various qualification tests imposed under the Code related to the percentage of income that we earn from specified sources, the percentage of our assets that fall within specified categories, the diversity of our capital stock ownership, and the percentage of our earnings that we distribute. Accordingly, no assurance can be given that we will be organized or be able to operate in a manner so as to qualify or remain qualified as a REIT. If we fail to qualify as a REIT in any taxable year, we will be subject to federal and state income tax (including any applicable alternative minimum tax) on our taxable income at regular corporate tax rates, and we may be ineligible to qualify as a REIT for four subsequent tax years. Even if we qualify as a REIT, we may be subject to certain state and local income and franchise taxes, and our TRS will be subject to federal, state and local taxes on its income. Franchise taxes are included in general and administrative expenses in the accompanying consolidated statements of operations.

We have elected to treat our TRS as a taxable REIT subsidiary. Certain activities that we undertake will be conducted in our TRS, such as third-party property management and non-customary services for our tenants and holding assets that we cannot hold directly. Our TRS is subject to both federal and state income taxes.

We determine whether any tax position taken or expected to be taken meet the “more-likely-than-not” threshold of being sustained by the applicable federal, state or local tax authority. As of December 31, 2015 and 2014, we concluded that there is no tax liability relating to uncertain income tax positions. Our policy is to recognize interest related to any underpayment of income taxes as interest expense and to recognize any penalties as operating expenses. There was no accrual for interest or penalties at December 31, 2015 or 2014.

We file federal, state and local income tax returns. Federal and state tax returns filed for 2014, 2013 and 2012 are still subject to examination. We believe that we have appropriate support for the income tax positions taken on our tax returns. We have net operating loss carryforwards for income tax purposes at December 31, 2015, 2014 and 2013. These losses would be available to reduce future taxable income or distribution requirements until they expire, which varies by jurisdiction but generally is not more than 20 years from the tax year in which they originate. Based on all available evidence, we cannot conclude it is more likely than not these attributes will be utilized in the future and thus a valuation allowance has been recorded against them.

Stock-Based Payments

We have awarded stock-based compensation to certain employees and members of our Board of Directors in the form of long-term incentive plan, or LTIP, units and restricted shares of our common stock (Note 9). We estimate the fair value of the awards and recognize this value over the requisite vesting period. For LTIP units, the fair value is based on the market value of our common stock on the date of grant and a discount for lack of marketability estimated by a third-party consultant.

Earnings (Loss) Per Share

Basic earnings (loss) per share, or EPS, is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding for the period. Diluted EPS is computed by dividing net loss attributable to common stockholders as adjusted for dilutive securities, by the weighted-average number of shares of common stock outstanding plus dilutive securities. Any anti-dilutive securities are excluded from the diluted per-share calculation. Potentially dilutive securities include unvested restricted shares of our common stock, OP units, vested and unvested LTIP units and exchangeable senior notes. We intend to satisfy our exchange obligation for the principal amount of the exchangeable senior notes to the exchanging note holders entirely in cash. As we intend to settle the principal amount of the exchangeable senior notes in cash, the “if-converted” method to include debt in diluted EPS is not applicable and the treasury stock method is being used and as our stock price is below the conversion price, there is no impact.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board, or FASB. We adopt the new pronouncements as of the specified effective date. Unless otherwise discussed, these new accounting pronouncements include technical corrections to existing guidance or introduce new guidance related to specialized industries or entities and therefore we believe will have minimal, if any, impact on our financial position or results of operations upon adoption.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in GAAP when it becomes effective. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which

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defers the effective date of ASU 2014-09, Revenue from Contracts with Customers, for all entities by one year. With the deferral, ASU 2014-09 is effective for public companies for annual reporting periods beginning after December 15, 2017 with early application permitted for annual reporting periods beginning after December 15, 2016. As leases are excluded from this guidance, the Company does not anticipate this standard to have a material impact on its financial position, results of operations and cash flows.

In February 2015, the FASB issued ASU 2015-02, Amendments to the Consolidation Analysis (“ASU 2015-02”). ASU 2015-02 makes targeted amendments to the current consolidation guidance and ends the deferral granted to investment companies from applying the existing variable interest entity guidance. ASU 2015-02 will be effective for public entities for annual and interim reporting periods beginning after December 15, 2015 with early adoption allowed in any interim period. We have not yet selected a transition method nor have we determined the effect of ASU 2015-02 on our ongoing financial reporting.

In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). ASU 2015-03 will require that debt issuance costs related to a recognized debt liability, which are currently presented as deferred charges (assets), be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. ASU 2015-03 will be effective for financial statements issued for public companies for fiscal years beginning after December 15, 2015, and for interim periods within those fiscal years.

In August 2015, the FASB issued ASU 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements, which clarifies the treatment of debt issuance costs from line-of-credit arrangements after adoption of ASU 2015-03. ASU 2015-15 clarifies that SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The Company will plan to adopt the provisions of ASU 2015-15 upon adoption of ASU 2015-03 (discussed above).

In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”). ASU 2016-02 amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU 2016-02 is effective for public companies beginning January 1, 2019. Early adoption of ASU 2016-02 is permitted. The standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company is evaluating the effect, if any, of the standard on its financial statements.

3.              Mortgage Financings

Mortgage loans as of December 31, 2015 and December 31, 2014 are approximately $20.5 million and $21.0 million with weighted-average annual interest rates of approximately 8.5% and 11.9%, and weighted-average remaining terms of approximately 373 and 100 days, respectively.

4.              Rents and Other Receivables

Our rents and other receivables are reported net of allowances for doubtful accounts, which are summarized as follows (in thousands):

Our provisions for doubtful accounts for self-managed homes and local operator homes are included as components of rental revenue on our consolidated statements of operations, and are summarized as follows (in thousands):

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5.              Deferred leasing costs and lease intangibles

Our identifiable deferred leasing costs and intangible assets as of December 31, 2015 and 2014 are summarized as follows (amounts in thousands):

The impact of the amortization of deferred leasing costs and acquired in-place leases on our depreciation and amortization expense is approximately $7.8 million, $6.4 million and $5.0 million for the years ended December 31, 2015, 2014 and 2013, respectively.

Our estimate of future amortization of the deferred leasing costs and lease intangible assets in our balance sheet at December 31, 2015 is as follows (amounts in thousands):

6.              Deferred financing costs, net

Our deferred financing costs, net as of December 31, 2015 and December 31, 2014 are summarized as follows (amounts in thousands):

The impact of the amortization of deferred financing costs on our interest expense is approximately $5.0 million, $6.2 million and $1.7 million for the years ended December 31, 2015, 2014, and 2013 respectively.

7.              Debt

The following table details the Company’s debt as of December 31, 2015 and 2014 (amounts in thousands):

Credit Facility

In January 2013, we entered into a $150 million senior secured revolving credit facility, or the Original Credit Facility, with a syndicate of major national banks. In September 2013, we entered into an amended and restated $290 million senior secured revolving credit facility, or the First Amended and Restated Credit Facility, with a syndicate of major national banks, which amended and

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restated in its entirety the $150 million Original Credit Facility. In October 2013 and December 2013, we entered into joinder agreements further expanding the First Amended and Restated Credit Facility to $380 million. In June 2014, we exercised the accordion feature, increasing our borrowing capacity to $500 million and we also amended the First Amended and Restated Credit Facility to increase the size of the accordion feature to allow further increases of the borrowing capacity to an aggregate maximum of $750 million, subject to meeting certain criteria and obtaining additional commitments from the lenders. In November 2015, we entered into a second amended and restated senior secured credit facility, or the Credit Facility, which restates and replaces in its entirety the Company’s First Amended and Restated Credit Facility. The Credit Facility provides for a maximum borrowing capacity of $450 million, composed of a revolving credit facility of $200 million and a term loan facility that permits a single draw term loan of $250 million. The Credit Facility also provides for an accordion feature to allow us to increase the maximum borrowing capacity by $300 million, subject to meeting certain criteria and obtaining additional commitments from one or more lenders. The amount available for us to borrow under the Credit Facility is subject to limitations governed by calculations based on the cost, value and debt yield supported by our properties that form the borrowing base of the Credit Facility.

The Credit Facility requires us to comply with various financial covenants as well as customary affirmative and negative covenants that restrict our ability to, among other things, incur debt and liens, make investments, dispose of properties and make distributions. The Credit Facility is secured by a first priority lien on all equity interests of our Operating Partnership and American Residential Leasing, LLC, which is a wholly owned subsidiary of our Operating Partnership and certain subsidiaries of the Operating Partnership. The Credit Facility contains certain financial covenants, including a maximum leverage ratio, a minimum tangible net worth, a minimum fixed charge coverage ratio and a minimum liquidity. As of December 31, 2015, we were in compliance with all of the financial covenants of the Credit Facility.

The Credit Facility has a maturity date of May 2017 with two optional six-month extensions. Borrowings under the Credit Facility bear interest, at our option, at either the one-month, two-month, three-month or six-month Eurodollar rate or the base rate, plus, in each case, a spread based on a ratio of total indebtedness to total asset value (each as defined in the credit agreement that governs the Credit Facility) ranging from less than or equal to 50% to greater than 60%. The Eurodollar rate for an interest period is the London Interbank Offered Rate, or LIBOR, for a term equivalent to such period plus a spread ranging from 2.00% to 2.90% (determined as described in the preceding sentence) and the base rate for any day is a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate plus 0.50%, (b) Bank of America’s “prime rate” for such day and (c) the one-month Eurodollar rate plus 1.00% plus a spread ranging from 1.00% to 1.90% (determined as described in the preceding sentence). We are also required to pay a quarterly fee on the unused portion of the Credit Facility at a rate of between 0.25% and 0.375% per annum, based on the actual daily unused balance during a fiscal quarter. For the years ended December 31, 2015, 2014 and 2013 the Company incurred non-utilization fees of $0.5 million, $0.7 million and $0.5 million, respectively.  The Eurodollar rate for an interest period for the term facility is LIBOR for a term equivalent to such period plus a spread ranging from 2.00% to 2.80% (determined as described in the preceding sentence) and the base rate for any day for the term facility is a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate plus 0.50%, (b) Bank of America’s “prime rate” for such day and (c) the one-month Eurodollar rate plus 1.00% plus a spread ranging from 1.00% to 1.80% (determined as described in the preceding sentence).

As of December 31, 2015 and 2014, $100.0 million and $311.0 million was outstanding under the revolving credit facility, respectively, bearing interest at a weighted-average rate of 2.4% and 3.0%, respectively, with remaining availability of $100.0 million at December 31, 2015. As of December 31, 2015, the term credit facility has an outstanding balance of $250.0 million and a weighted average rate of 2.28%.

Exchangeable Senior Notes

In November 2013, we issued and sold $115.0 million aggregate principal amount of 3.25% Exchangeable Senior Notes due 2018 (the “Notes”). The Notes are senior unsecured obligations of the Operating Partnership and rank equally in right of payment with all other existing and future senior unsecured indebtedness of the Operating Partnership. Interest is payable in arrears on May 15 and November 15 of each year, beginning May 15, 2014, until the maturity date of November 15, 2018. The Operating Partnership’s obligations under the Notes are fully and unconditionally guaranteed by the Company. The Notes bear interest at a rate of 3.25% per annum and contain an exchange settlement feature, which provides that the Notes may, under certain circumstances, be exchangeable for cash, shares of our common stock or a combination of cash and shares of our common stock, at the option of the Operating Partnership, based on an initial exchange rate of 46.9423 shares of our common stock per $1,000 principal amount of Notes.  At the initial exchange rate, the Notes are exchangeable for our common stock at an exchange price of approximately $21.30 per share of our common stock, representing an approximately 22.5% premium over the last reported sale price of our common stock on November 21, 2013, which was $17.39 per share. As of December 31, 2015, the exchange rate is 47.4697 shares of our common stock per $1,000 principal amount of Notes.

Prior to the close of business on the business day immediately preceding August 15, 2018, the Notes will be exchangeable at the option of the holders only under the following circumstances: (1) during any calendar quarter beginning after December 31, 2013 (and only during such quarter) if the closing sale price per share of our common stock is more than 130% of the then-current exchange price for at least 20 trading days (whether or not consecutive) in the period of 30 consecutive trading days ending on the last trading

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day of the preceding calendar quarter; (2) during the five consecutive business-day period following any five consecutive trading-day period in which the trading price per $1,000 principal amount of Notes was less than 98% of the product of the closing sale price per share of our common stock multiplied by the then-current exchange rate; or (3) upon the occurrence of specified corporate transactions described in the Indenture. On or after August 15, 2018, the Notes will be exchangeable at any time prior to the close of business on the second business day immediately preceding the maturity date. Subject to its election to satisfy its exchange obligations entirely in shares of our common stock, upon exchange, the Operating Partnership will pay or deliver, as the case may be, to exchanging holders in respect of each $1,000 principal amount of notes being exchanged a settlement amount either solely in cash, solely in shares or in a combination of cash and shares of our common stock.

In connection with the issuance of the Notes, we recorded approximately $99.1 million within exchangeable senior notes on the accompanying consolidated balance sheet, based on the fair value of the instrument using a straight-debt rate of 6.5% at the time of issuance, and approximately $15.4 million in additional paid-in-capital, net of $0.5 million in financing costs, in the accompanying consolidated statements of equity. The difference between the $115.0 million face amount and the $99.1 million will be accreted over the five year period ended November 15, 2018. As of December 31, 2015 and 2014, the unaccreted discount was $9.8 million and $12.8 million, respectively.

The following table details the debt and equity components recognized related to the 3.25% Notes (in thousands):

Securitization Loan

In August 2014, the Company completed a private securitization transaction (the “2014-1 Securitization”) in which ARP 2014-1 Borrower, LLC (the “Borrower”), a special purpose, bankruptcy remote entity and an indirect subsidiary of our operating partnership, American Residential Properties OP, L.P. (our “Operating Partnership”), entered into a loan agreement (the “Loan Agreement”) with a third-party lender, German American Capital Corporation (the “Lender”), for a $342.2 million loan (the “Securitization Loan”) represented by a promissory note (the “Note”). The Borrower is wholly owned by ARP 2014-1 Equity Owner, LLC (the “Equity Owner”), a special purpose, bankruptcy-remote entity and wholly owned direct subsidiary of our Operating Partnership.

The Securitization Loan is a two-year, floating rate loan, composed of six floating rate components computed monthly based on one-month LIBOR for each interest period plus a fixed component spread for each of the six components, resulting in a duration-weighted blended interest rate of LIBOR plus 2.00%. The Note requires monthly payments of interest only. We entered into an interest rate cap agreement for the initial two-year term of the loan, with a LIBOR-based strike rate equal to 3.12%.

The Securitization Loan may be extended for three, 12-month extensions at the Borrower’s option, resulting in a fully extended maturity date of September 9, 2019, provided there is no event of default under the Loan Agreement, the Borrower obtains a replacement interest rate cap agreement in a form reasonably acceptable to the Lender and the Borrower complies with the other terms set forth in the Loan Agreement. We intend to fully extend the maturity date.

The Note was immediately transferred by the Lender to ARP 2014-1 Depositor, LLC (the “Depositor”), another special purpose, bankruptcy-remote entity that is a wholly-owned direct subsidiary of our Operating Partnership, and then to American Residential Properties 2014-SFR1 Trust (the “Trust”), an entity intended to qualify as a real estate mortgage investment conduit (“REMIC”), in exchange for seven classes of single-family rental pass-through certificates representing all the beneficial ownership interests in the loan and the Trust. The certificates have the following initial certificate balances, pass-through rates and ratings:

(1)                           The ratings shown were provided by Moody’s Investors Service, Inc. (“Moody’s”), Kroll Bond Rating Agency, Inc. (“Kroll”) and Morningstar Credit Ratings, LLC (“Morningstar”) as of the closing of the 2014-1 Securitization. The interest rates on the certificates and classification were based on a credit assessment and rating by these rating agencies of the credit quality of the portfolio of 2,876 homes securing the certificates and do not reflect any credit rating of the Company as an entity.

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Distributions in respect of interest on the certificates are made monthly to the Class A, Class B, Class C, Class D, Class E and Class F certificates, in that order, in each case until the interest then-distributable to each class is paid in full. Any loan losses are allocated to each class in the reverse of that order. The Class R certificates represent the residual REMIC interest of the Trust and do not have an initial certificate balance or pass-through rate and will not be entitled to distributions of interest. Each of the six components of the Securitization Loan has a principal amount equal to the principal amount of the corresponding certificate.

Upon receipt of the certificates, the Depositor sold the certificates to investors for gross proceeds of $340.6 million, before issuance costs of $10.9 million. Proceeds from the transaction were used to repay a portion of the then-outstanding balance on the credit facility. Taking into account the discount at which certain of the certificates were sold, and assuming the successful exercise of the three one-year extension options of the Loan Agreement and amortization of the discount over the resulting fully extended period, the effective weighted average of the fixed-rate spreads is 2.11% plus 1-month LIBOR.

The Securitization Loan was originally secured by first priority mortgages on a pool of 2,876 homes transferred to the Borrower from the Company’s portfolio of properties. In October 2015, we made a $0.1 million principal payment after the sale of one of the homes in the securitization pool. The Borrower’s homes were substantially similar to the other properties owned by the Company and were leased to tenants underwritten on substantially the same basis as the tenants in the Company’s other properties. During the duration of the loan, the Borrower’s properties may be transferred to third parties upon the satisfaction of certain conditions, including there being no event of default; additionally, the Borrower can substitute properties only if a property owned by it becomes a disqualified property under the terms of the loan. The Borrower is limited in its ability to incur any additional indebtedness.

The Securitization Loan is also secured by a security interest in all of the Borrower’s personal property and a pledge of all of the assets of the Equity Owner, including a security interest in its membership interest in the Borrower. The Company provides a limited guaranty (i) for certain losses arising out of designated acts of intentional misconduct and (ii) for the principal amount of the loan and all other obligations under the Loan Agreement in the event of insolvency or bankruptcy proceedings.

The Loan Agreement provides that the Borrower maintain covenants typical for securitization transactions including establishing and maintaining a cash management account controlled by the lender to collect all rents and cash generated by the Borrower’s properties. In the absence of an event of default, the Borrower will receive any excess cash after payment of expenses related to the certificates (such as trustee fees and expenses, servicing fees and expenses, special servicing fees and expenses and other service provider fees and expenses), monthly interest and property-related expenses. Upon the occurrence of an event of default under the Securitization Loan or if the Borrower does not maintain a debt yield (net cash flow divided by the outstanding principal balance of the loan) on the portfolio of at least 5.695%, the lender may transfer the excess cash to an account which lender controls. Upon the occurrence of an event of default under the loan, the lender may also foreclose on its security interests, in limited circumstances may enforce the Company’s guaranty and may appoint a new property manager. As of December 31, 2015, the Company was in compliance with all covenants under the Loan Agreement.

The Company has accounted for the transfer of the Note from its subsidiary to the trust as a sale under ASC 860, Transfers and Servicing, with no resulting gain or loss as the Note was both originated by the third party lender and immediately transferred at the same fair market value. The Company has also evaluated and did not identify any variable interests in the Trust. Accordingly, the Company continues to consolidate, at historical cost basis, the homes placed as collateral for the Note. The Company has recorded a $340.9 million and $340.7 million asset-backed securitization liability, representing the principal balance outstanding on the Note as of December 31, 2015 and 2014, respectively, net of $1.2 million and $1.6 million unamortized discount, respectively, in the consolidated balance sheets.

Derivative and Hedging Activities

As part of certain lender requirements in connection with the Securitization Loan, we entered into an interest rate cap agreement with an aggregate notional amount of $342.2 million and LIBOR-based strike rate equal to 3.12% for the initial two year term of the Securitization Loan to hedge against interest rate fluctuations. This interest rate cap agreement was formally designated as a cash flow hedge at inception and will be regularly assessed for effectiveness on an on-going basis. During the year ended December 31, 2015, our interest rate cap agreement was 100% effective as a cash flow hedge and, as a result, changes in fair value have been classified in accumulated other comprehensive loss. These amounts will subsequently be reclassified into earnings in the period which the hedged transaction affects earnings. The fair value of our interest rate cap agreement is estimated to be $74 as of December 31, 2015 and has been included in other assets, net in the accompanying consolidated balance sheets. The interest rate cap is valued using Level 2 observable market-based inputs, including interest rate curves.

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Maturities

Future scheduled debt principal payments as of December 31, 2015 are as follows (amounts in thousands):

8.              Earnings (Loss) Per Share

Basic net income or loss attributable to common stockholders is computed by dividing reported net income or loss attributable to common stockholders by the weighted-average number of common and contingently issuable shares outstanding during each period.

A reconciliation of our net loss per share is as follows (amounts in thousands, except share and per-share amounts):

For all periods presented, no potentially dilutive securities were included in computing loss per share of common stock as their effect would be anti-dilutive. Potentially dilutive securities excluded were OP units, vested LTIP units, unvested LTIP units and unvested restricted shares of common stock. The weighted-average numbers of shares of potentially dilutive securities were as follows:

9.              Stock Compensation

We award stock-based compensation to certain employees and members of our Board of Directors through the American Residential Properties, Inc. 2012 Equity Incentive Plan, or our 2012 Equity Incentive Plan. Under our 2012 Equity Incentive Plan, the Compensation Committee of our Board of Directors has the ability to grant nonqualified stock options, incentive stock options, restricted shares of our common stock, restricted stock units, dividend equivalents, stock appreciation rights and other awards to our officers, employees, directors and other persons providing services to our Operating Partnership and its subsidiaries. The number of shares of our common stock available for grant under our 2012 Equity Incentive Plan is subject to an aggregate limit of 1,500,000 shares. Our 2012 Equity Incentive Plan expires on May 11, 2022, except as to any grants which are then outstanding. As of December 31, 2015, there were 372,898 shares of our common stock available for grant under our 2012 Equity Incentive Plan.

We recorded stock-based compensation cost of approximately $2.8 million, $3.0 million and $5.3 million as part of general, administrative and other expense in the consolidated statements of operations for the years ended December 31, 2015, 2014 and 2013, respectively.

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LTIP Units

Under our 2012 Equity Incentive Plan, we may grant LTIP units. LTIP units are a special class of partnership interests in our Operating Partnership with certain restrictions, which are convertible into OP units, subject to satisfying vesting and other conditions. LTIP unit holders are entitled to receive the same distributions as holders of our OP units (only if we pay such distributions) on the unvested portion of their LTIP units. The vesting of LTIP units is determined at the time of the grant and may be based on performance criteria. Any unvested LTIP units are forfeited, except in limited circumstances, as determined by the Compensation Committee of our Board of Directors, when the recipient is no longer employed by us or when a director leaves our Board of Directors for any reason. LTIP units may be subject to full or partial accelerated vesting under certain circumstances, as described in the applicable award agreement.

Service-Based LTIP Units

Service-based LTIP units are valued at fair value on the date of grant and compensation expense is recognized over the vesting period, on a straight-line basis.  These shares generally vest over three years based on continued service or employment. We valued the service-based LTIP units at a per-unit value equivalent to the per-share offering price of our common stock sold in our private and public offerings less a discount for lack of marketability estimated with the assistance of a third-party consultant for grants issued prior to our IPO. Subsequent to our IPO, we valued the service-based LTIP units at the per-share market close trading price of our common stock on the date of grant less a discount for lack of marketability estimated with the assistance of a third-party consultant.

The following table summarizes information about the service-based LTIP units outstanding as of December 31, 2015:

Total unrecognized compensation cost related to unvested service-based LTIP units was approximately $0.8 million as of December 31, 2015, and is expected to be recognized in general, administrative and other expense over a weighted-average period of approximately 1.76 years, subject to the stated vesting conditions.

Market-Based LTIP Units

In November 2013, we issued 338,094 LTIP units, of which up to 50% will vest based on the percentage increase of the Company’s total stockholder return, or TSR, beginning on May 14, 2013 (the date of the closing of our initial public offering), and up to 50% will vest based on the relative outperformance of our TSR as compared to the percentage change of the SNL US REIT Equity Index, or the Index, over the same period. The market-based LTIP awards were valued on the date of grant using a Monte Carlo simulation method. The aggregate grant date fair value of the market-based LTIP units was $1.9 million.

In June 2014, we issued 39,136 LTIP units, of which up to 100% will vest based on the percentage increase of the Company’s TSR beginning on January 1, 2014. The market-based LTIP awards were valued on the date of grant using a Monte Carlo simulation method. The aggregate grant date fair value of the market-based LTIP units was $0.4 million.

In April 2015, we issued 91,399 LTIP units, of which up to 50% will vest based on the performance of the Company’s TSR measured against the MSCI U.S. Equity REIT Index, beginning on January 1, 2015, and up to 50% will vest based on the performance of the Company’s TSR measured against the average TSR of three other public REITs whose primary business is to acquire, own and operate single-family residential properties, over the same period. The market-based LTIP awards were valued on the date of grant using a Monte Carlo simulation method. The aggregate grant date fair value of the market-based LTIP units was $1.2 million.

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The following table summarizes information about the market-based LTIP units outstanding as of December 31, 2015:

Total unrecognized compensation cost related to unvested market-based LTIP units totaled approximately $1.0 million as of December 31, 2015, and is expected to be recognized in general, administrative and other expense over a weighted-average period of approximately 2.17 years, subject to stated vesting conditions.

Restricted Stock

Under our 2012 Equity Incentive Plan, we may grant restricted shares of our common stock. Restricted shares of our common stock are valued at the per-share market close trading price of our common stock on the date of the grant and compensation expense is recognized over the vesting period, which approximates a straight-line basis.  These shares generally vest over three years based on continued service or employment.

The following table summarizes information about the shares of restricted common stock outstanding as of December 31, 2015:

Total unrecognized compensation cost related to unvested shares of restricted common stock totaled approximately $0.4 million as of December 31, 2015, and is expected to be recognized in general, administrative and other expense over a weighted-average period of approximately 1.74 years, subject to stated vesting conditions.

10.       Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The three levels of fair value defined in ASC 820-10, Fair Value Measurements, are as follows:

·                  Level 1—Valuations based on quoted market prices in active markets for identical assets or liabilities that the reporting entity has the ability to access.

·                  Level 2—Valuations based on quoted market prices for similar assets or liabilities, quoted market prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.

·                  Level 3—Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities, which are typically based on the reporting entity’s own assumptions.

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Companies are required to disclose the estimated fair values of all financial instruments, even if they are not carried at their fair value. The fair values of financial instruments are estimates based upon market conditions and perceived risks as of December 31, 2015 and 2014. These estimates require management’s judgment and may not be indicative of the future fair values of the assets and liabilities.

Our financial instruments include cash and cash equivalents, restricted cash, acquisition deposits, rents and other receivables, accounts payable and accrued expenses. We consider the carrying amounts of these instruments to approximate fair value because of their short-term nature.

Our mortgage financings, the Credit Facility, the Notes and the Securitization Loan are also financial instruments, and we estimated their fair value based on market quotes for comparable instruments or discounted cash flow analysis using estimates of the amount and timing of future cash flows, market rates and credit spreads. The estimated fair value of the Credit Facility using Level 2 assumptions approximates the carrying amounts. The estimated fair values of our mortgage financing receivables using Level 3 assumptions approximates the carrying amounts.  In 2014 we entered into an interest rate cap designated as a cash flow hedge to reduce our exposure to interest rate risk.  See Note 7 for disclosures on the fair value of our interest rate cap.

The fair values of our Notes and the Securitization Loan using Level 2 assumptions are as follows (amounts in thousands):