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EX-32.2 - EXHIBIT 32.2 - American Homes 4 Rentamh06301810qexhibit322.htm
EX-32.1 - EXHIBIT 32.1 - American Homes 4 Rentamh06301810qexhibit321.htm
EX-31.4 - EXHIBIT 31.4 - American Homes 4 Rentamh06301810qexhibit314.htm
EX-31.3 - EXHIBIT 31.3 - American Homes 4 Rentamh06301810qexhibit313.htm
EX-31.2 - EXHIBIT 31.2 - American Homes 4 Rentamh06301810qexhibit312.htm
EX-31.1 - EXHIBIT 31.1 - American Homes 4 Rentamh06301810qexhibit311.htm
EX-12.2 - EXHIBIT 12.2 - American Homes 4 Rentamh06301810qexhibit122.htm
EX-12.1 - EXHIBIT 12.1 - American Homes 4 Rentamh06301810qexhibit121.htm


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 

 
FORM 10-Q
 
 
 
  
(Mark One)
ý
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2018
or
¨
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from                      to                     
 
Commission File Number: 001-36013 (American Homes 4 Rent)
Commission File Number: 333-221878-02 (American Homes 4 Rent, L.P.)
 
 
 
AMERICAN HOMES 4 RENT
AMERICAN HOMES 4 RENT, L.P.
(Exact name of registrant as specified in its charter) 
 
 
 
Maryland (American Homes 4 Rent)
 
46-1229660
Delaware (American Homes 4 Rent, L.P.)
 
80-0860173
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
30601 Agoura Road, Suite 200
Agoura Hills, California 91301
(Address of principal executive offices) (Zip Code)
 
(805) 413-5300
(Registrant’s telephone number, including area code)
 
 
 
 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
American Homes 4 Rent ý  Yes   ¨  No                American Homes 4 Rent, L.P. ý  Yes   ¨  No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
American Homes 4 Rent ý  Yes   ¨  No                American Homes 4 Rent, L.P. ý  Yes   ¨  No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
American Homes 4 Rent

Large accelerated filer
ý
 
Accelerated filer
¨
Non-accelerated filer
¨

(Do not check if a smaller reporting company)
Smaller reporting company
¨
 
 
 
Emerging growth company
¨

American Homes 4 Rent, L.P.
Large accelerated filer
¨

 
Accelerated filer
¨

Non-accelerated filer
ý
(Do not check if a smaller reporting company)
Smaller reporting company
¨

 
 
 
Emerging growth company
¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
American Homes 4 Rent  ¨                         American Homes 4 Rent, L.P. ¨ 
 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
American Homes 4 Rent ¨  Yes   ý  No                American Homes 4 Rent, L.P. ¨  Yes   ý  No
There were 295,383,219 shares of American Homes 4 Rent's Class A common shares, $0.01 par value per share, and 635,075 shares of American Homes 4 Rent's Class B common shares, $0.01 par value per share, outstanding on August 1, 2018.
 




EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the period ended June 30, 2018, of American Homes 4 Rent and American Homes 4 Rent, L.P. Unless stated otherwise or the context otherwise requires, references to “AH4R" or "the General Partner" mean American Homes 4 Rent, a Maryland real estate investment trust (“REIT”), and references to “the Operating Partnership," "our operating partnership" or “the OP” mean American Homes 4 Rent, L.P., a Delaware limited partnership, and its subsidiaries taken as a whole. References to “the Company,” “we,” "our," and “us” mean collectively AH4R, the Operating Partnership and those entities/subsidiaries owned or controlled by AH4R and/or the Operating Partnership.

AH4R is the general partner of, and as of June 30, 2018, owned an approximate 84.2% common partnership interest in, the Operating Partnership. The remaining 15.8% common partnership interest was owned by limited partners. As the sole general partner of the Operating Partnership, AH4R has exclusive control of the Operating Partnership’s day-to-day management. The Company’s management operates AH4R and the Operating Partnership as one business, and the management of AH4R consists of the same members as the management of the Operating Partnership.

The Company believes that combining the quarterly reports on Form 10-Q of the Company and the Operating Partnership into this single report provides the following benefits:

enhances investors' understanding of the Company and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;

eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the disclosure applies to both the Company and the Operating Partnership; and

creates time and cost efficiencies through the preparation of one combined report instead of two separate reports.

The Company believes it is important to understand the few differences between AH4R and the Operating Partnership in the context of how AH4R and the Operating Partnership operate as a consolidated company. AH4R’s primary function is acting as the general partner of the Operating Partnership. The only material asset of AH4R is its partnership interest in the Operating Partnership. As a result, AH4R generally does not conduct business itself, other than acting as the sole general partner of the Operating Partnership, issuing equity from time to time and guaranteeing certain debt of the Operating Partnership. AH4R itself is not directly obligated under any indebtedness, but guarantees some of the debt of the Operating Partnership. The Operating Partnership owns substantially all of the assets of the Company, including the Company’s ownership interests in its joint ventures, either directly or through its subsidiaries, conducts the operations of the Company’s business and is structured as a limited partnership with no publicly traded equity. One difference between the Company and the Operating Partnership is $25.7 million of asset-backed securitization certificates issued by the Operating Partnership and purchased by AH4R. The asset-backed securitization certificates are recorded as an asset-backed securitization certificates receivable by the Company and as an amount due from affiliates by the Operating Partnership. AH4R contributes all net proceeds from its various equity offerings to the Operating Partnership. In return for those contributions, AH4R receives Operating Partnership units (“OP units”) equal to the number of shares it has issued in the equity offering. Based on the terms of the Agreement of Limited Partnership of the Operating Partnership, as amended (the "Agreement of Limited Partnership"), OP units can be exchanged for shares on a one-for-one basis. Except for net proceeds from equity issuances by AH4R, the Operating Partnership generates the capital required by the Company’s business through the Operating Partnership’s operations, by the Operating Partnership’s incurrence of indebtedness or through the issuance of OP units.

Shareholders' equity, partners' capital and noncontrolling interests are the main areas of difference between the consolidated financial statements of the Company and those of the Operating Partnership. The limited partnership interests in the Operating Partnership are accounted for as partners' capital in the Operating Partnership's financial statements and as noncontrolling interests in the Company's financial statements. The noncontrolling interests in the Operating Partnership's financial statements include an outside ownership interest in a consolidated subsidiary of the Company. The noncontrolling interests in the Company's financial statements include the same noncontrolling interests at the Operating Partnership level, as well as the limited partnership interests in the Operating Partnership. The differences between shareholders' equity and partners' capital result from differences in the equity and capital issued at the Company and Operating Partnership levels.

To help investors understand the differences between the Company and the Operating Partnership, this report provides
separate consolidated financial statements for the Company and the Operating Partnership; a single set of consolidated notes to such financial statements that includes separate discussions of each entity's debt, noncontrolling interests and shareholders' equity or partners' capital, as applicable; and a combined Management's Discussion and Analysis of Financial Condition and Results of Operations section that includes discrete information related to each entity.





This report also includes separate Part I, Item 4. Controls and Procedures sections and separate Exhibits 31 and 32
certifications for each of the Company and the Operating Partnership in order to establish that the requisite certifications have
been made and that the Company and the Operating Partnership are compliant with Rule 13a-15 or Rule 15d-15 of the Securities
Exchange Act of 1934 and 18 U.S.C. §1350.

In order to highlight the differences between the Company and the Operating Partnership, the separate sections in this report for the Company and the Operating Partnership specifically refer to the Company and the Operating Partnership. In the sections that combine disclosure of the Company and the Operating Partnership, this report refers to actions or holdings as being actions or holdings of the Company. Although the Operating Partnership is generally the entity that directly or indirectly enters into contracts and joint ventures and holds assets and debt, reference to the Company is appropriate because the Company is one business and the Company operates that business through the Operating Partnership. The separate discussions of the Company and the Operating Partnership in this report should be read in conjunction with each other to understand the results of the Company on a consolidated basis and how management operates the Company.



American Homes 4 Rent
American Homes 4 Rent, L.P.
Form 10-Q
INDEX
 
 
 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
 
Various statements contained in this Quarterly Report on Form 10-Q of American Homes 4 Rent ("AH4R,” “the General Partner") and of American Homes 4 Rent, L.P. ("the Operating Partnership," "our operating partnership," or “the OP”) including those that express a belief, expectation or intention, as well as those that are not statements of historical fact, are forward-looking statements. These forward-looking statements may include projections and estimates concerning the timing and success of specific projects and our future operations, revenues, income and capital spending. Our forward-looking statements are generally accompanied by words such as “estimate,” “project,” “predict,” “believe,” “expect,” “intend,” “anticipate,” “potential,” “plan,” “goal” or other words that convey the uncertainty of future events or outcomes. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These and other important factors, including those discussed or incorporated by reference under Part II, Item 1A.”Risk Factors”, Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report and in our Annual Report on Form 10-K for the year ended December 31, 2017, filed with the Securities and Exchange Commission, may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements.
 
While forward-looking statements reflect our good faith beliefs, assumptions and expectations, they are not guarantees of future performance, and you should not unduly rely on them. The forward-looking statements in this Quarterly Report on Form 10-Q speak only as of the date of this report. We are not obligated to update or revise these statements as a result of new information, future events or otherwise, unless required by applicable law.


i


PART I
FINANCIAL INFORMATION
Item 1. Financial Statements.
American Homes 4 Rent
Condensed Consolidated Balance Sheets
(Amounts in thousands, except share data)
 
June 30, 2018
 
December 31, 2017
 
(Unaudited)
 
 
Assets
 

 
 

Single-family properties:
 

 
 

Land
$
1,670,214

 
$
1,665,631

Buildings and improvements
7,276,606

 
7,303,270

Single-family properties held for sale, net
284,012

 
35,803

 
9,230,832

 
9,004,704

Less: accumulated depreciation
(1,046,911
)
 
(939,724
)
Single-family properties, net
8,183,921

 
8,064,980

Cash and cash equivalents
53,504

 
46,156

Restricted cash
159,010

 
136,667

Rent and other receivables, net
28,049

 
30,144

Escrow deposits, prepaid expenses and other assets
246,877

 
171,851

Deferred costs and other intangibles, net
13,142

 
13,025

Asset-backed securitization certificates
25,666

 
25,666

Goodwill
120,279

 
120,279

Total assets
$
8,830,448

 
$
8,608,768

 
 
 
 
Liabilities
 

 
 

Revolving credit facility
$

 
$
140,000

Term loan facility, net
99,120

 
198,023

Asset-backed securitizations, net
1,969,322

 
1,977,308

Unsecured senior notes, net
492,406

 

Exchangeable senior notes, net
113,533

 
111,697

Secured note payable

 
48,859

Accounts payable and accrued expenses
282,734

 
222,867

Amounts payable to affiliates
4,571

 
4,720

Participating preferred shares derivative liability

 
29,470

Total liabilities
2,961,686

 
2,732,944

 
 
 
 
Commitments and contingencies


 


 
 
 
 
Equity
 

 
 

Shareholders’ equity:
 

 
 

Class A common shares, $0.01 par value per share, 450,000,000 shares authorized, 295,383,159 and 286,114,637 shares issued and outstanding at June 30, 2018, and December 31, 2017, respectively
2,954

 
2,861

Class B common shares, $0.01 par value per share, 50,000,000 shares authorized, 635,075 shares issued and outstanding at June 30, 2018, and December 31, 2017
6

 
6

Preferred shares, $0.01 par value per share, 100,000,000 shares authorized, 30,750,000 and 38,350,000 shares issued and outstanding at June 30, 2018, and December 31, 2017, respectively
308

 
384

Additional paid-in capital
5,630,321

 
5,600,256

Accumulated deficit
(494,326
)
 
(453,953
)
Accumulated other comprehensive income
9,267

 
75

Total shareholders’ equity
5,148,530

 
5,149,629

Noncontrolling interest
720,232

 
726,195

Total equity
5,868,762

 
5,875,824

 
 
 
 
Total liabilities and equity
$
8,830,448

 
$
8,608,768


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

1


American Homes 4 Rent
Condensed Consolidated Statements of Operations
(Amounts in thousands, except share and per share data)
(Unaudited)
 
For the Three Months Ended
June 30,
 
For the Six Months Ended
June 30,
 
2018
 
2017
 
2018
 
2017
Revenues:
 

 
 

 
 

 
 

Rents from single-family properties
$
227,211

 
$
204,648

 
$
445,234

 
$
405,755

Fees from single-family properties
2,754

 
2,690

 
5,587

 
5,294

Tenant charge-backs
32,917

 
27,382

 
68,724

 
55,755

Other
1,601

 
2,288

 
2,942

 
3,958

Total revenues
264,483

 
237,008

 
522,487

 
470,762

 
 
 
 
 
 
 
 
Expenses:
 

 
 

 
 

 
 

Property operating expenses
98,843

 
85,954

 
199,830

 
169,259

Property management expenses
18,616

 
17,442

 
37,603

 
34,920

General and administrative expense
9,677

 
8,926

 
18,908

 
18,221

Interest expense
31,978

 
28,392

 
61,279

 
60,281

Acquisition fees and costs expensed
1,321

 
1,412

 
2,632

 
2,508

Depreciation and amortization
78,319

 
72,716

 
157,622

 
146,669

Other
1,624

 
1,359

 
2,451

 
2,917

Total expenses
240,378

 
216,201

 
480,325

 
434,775

 
 
 
 
 
 
 
 
Gain on sale of single-family properties and other, net
3,240

 
2,454

 
5,496

 
4,480

Loss on early extinguishment of debt
(1,447
)
 
(6,555
)
 
(1,447
)
 
(6,555
)
Remeasurement of participating preferred shares

 
(1,640
)
 
1,212

 
(7,050
)
 
 
 
 
 
 
 
 
Net income
25,898

 
15,066

 
47,423

 
26,862

 
 
 
 
 
 
 
 
Noncontrolling interest
(3,150
)
 
(30
)
 
(2,036
)
 
(331
)
Dividends on preferred shares
11,984

 
15,282

 
26,581

 
28,869

Redemption of participating preferred shares
32,215

 

 
32,215

 

 
 
 
 
 
 
 
 
Net loss attributable to common shareholders
$
(15,151
)
 
$
(186
)
 
$
(9,337
)
 
$
(1,676
)
 
 
 
 
 
 
 
 
Weighted-average shares outstanding─basic and diluted
295,462,572

 
258,900,456

 
290,848,633

 
251,685,993

 
 
 
 
 
 
 
 
Net loss attributable to common shareholders per share─basic and diluted
$
(0.05
)
 
$

 
$
(0.03
)
 
$
(0.01
)
 
 
 
 
 
 
 
 
Dividends declared per common share
$
0.05

 
$
0.05

 
$
0.10

 
$
0.10

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

2


American Homes 4 Rent
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Amounts in thousands)
(Unaudited)
 
 
For the Three Months Ended
June 30,
 
For the Six Months Ended
June 30,
 
2018
 
2017
 
2018
 
2017
Net income
$
25,898

 
$
15,066

 
$
47,423

 
$
26,862

Other comprehensive (loss) income:
 
 
 
 
 
 
 
Gain on cash flow hedging instruments:
 
 
 
 
 
 
 
Gain on settlement of cash flow hedging instrument

 

 
9,553

 

Reclassification adjustment for amortization of interest expense included in net income
(241
)
 

 
(361
)
 
(28
)
Gain on investment in equity securities:
 
 
 
 
 
 

Reclassification adjustment for realized gain included in net income

 

 

 
(67
)
Other comprehensive (loss) income
(241
)
 

 
9,192

 
(95
)
Comprehensive income
25,657

 
15,066

 
56,615

 
26,767

Comprehensive loss attributable to noncontrolling interests
(3,209
)
 
(31
)
 
(566
)
 
(314
)
Dividends on preferred shares
11,984

 
15,282

 
26,581

 
28,869

Redemption of participating preferred shares
32,215

 

 
32,215

 

Comprehensive loss attributable to common shareholders
$
(15,333
)
 
$
(185
)
 
$
(1,615
)
 
$
(1,788
)
 
The accompanying notes are an integral part of these condensed consolidated financial statements.


3


American Homes 4 Rent
Condensed Consolidated Statement of Equity
(Amounts in thousands, except share data)
(Unaudited)
 
Class A common shares
 
Class B common shares
 
Preferred shares
 
 
 
 
 
 
 
 
 
 
 
 
 
Number
of shares
 
Amount
 
Number
of shares
 
Amount
 
Number
of shares
 
Amount
 
Additional
paid-in
capital
 
Accumulated
deficit
 
Accumulated other
comprehensive
income
 
Shareholders’
equity
 
Noncontrolling
interest
 
Total
equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balances at December 31, 2017
286,114,637

 
$
2,861

 
635,075

 
$
6

 
38,350,000

 
$
384

 
$
5,600,256

 
$
(453,953
)
 
$
75

 
$
5,149,629

 
$
726,195

 
$
5,875,824

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Share-based compensation

 

 

 

 

 

 
1,918

 

 

 
1,918

 

 
1,918

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common stock issued under share-based compensation plans, net of shares withheld for employee taxes
223,858

 
2

 

 

 

 

 
2,658

 

 

 
2,660

 

 
2,660

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Redemption of Series C participating preferred shares into Class A common shares
10,848,827

 
109

 

 

 
(7,600,000
)
 
(76
)
 
60,440

 
(32,215
)
 

 
28,258

 

 
28,258

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Repurchase of Class A common shares
(1,804,163
)
 
(18
)
 

 

 

 

 
(34,951
)
 

 

 
(34,969
)
 

 
(34,969
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liquidation of consolidated joint venture

 

 

 

 

 

 

 
(1,849
)
 

 
(1,849
)
 
1,608

 
(241
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Distributions to equity holders:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred shares

 

 

 

 

 

 

 
(26,581
)
 

 
(26,581
)
 

 
(26,581
)
Noncontrolling interests

 

 

 

 

 

 

 

 

 

 
(5,535
)
 
(5,535
)
Common shares

 

 

 

 

 

 

 
(29,187
)
 

 
(29,187
)
 

 
(29,187
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income

 

 

 

 

 

 

 
49,459

 

 
49,459

 
(2,036
)
 
47,423

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total other comprehensive income

 

 

 

 

 

 

 

 
9,192

 
9,192

 

 
9,192

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balances at June 30, 2018
295,383,159

 
$
2,954

 
635,075

 
$
6

 
30,750,000

 
$
308

 
$
5,630,321

 
$
(494,326
)
 
$
9,267

 
$
5,148,530

 
$
720,232

 
$
5,868,762

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

4


American Homes 4 Rent
Condensed Consolidated Statements of Cash Flows
(Amounts in thousands)
(Unaudited)
 
For the Six Months Ended
June 30,
 
2018
 
2017
Operating activities
 

 
 

Net income
$
47,423

 
$
26,862

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
157,622

 
146,669

Noncash amortization of deferred financing costs
3,888

 
4,410

Noncash amortization of discounts on debt instruments
1,941

 
1,714

Noncash amortization of cash flow hedging instrument
(361
)
 

Noncash share-based compensation
1,918

 
2,059

Provision for bad debt
3,616

 
2,843

Loss on early extinguishment of debt
1,447

 
6,555

Remeasurement of participating preferred shares
(1,212
)
 
7,050

Equity in net earnings of unconsolidated ventures
(587
)
 
(1,623
)
Net gain on sale of single-family properties and other
(5,496
)
 
(4,480
)
Loss on impairment of single-family properties
2,236

 
2,487

Net gain on resolutions of mortgage loans

 
(16
)
Other changes in operating assets and liabilities:
 
 
 
Rent and other receivables
(5,522
)
 
(4,497
)
Prepaid expenses and other assets
(12,167
)
 
(7,440
)
Deferred leasing costs
(5,834
)
 
(3,401
)
Accounts payable and accrued expenses
61,061

 
40,967

Amounts payable to affiliates
(8
)
 
5,047

Net cash provided by operating activities
249,965

 
225,206

 
 
 
 
Investing activities
 

 
 

Cash paid for single-family properties
(206,137
)
 
(226,937
)
Change in escrow deposits for purchase of single-family properties
(4,357
)
 
(1,708
)
Net proceeds received from sales of single-family properties and other
30,142

 
54,232

Proceeds received from hurricane-related insurance claims
4,000

 

Collections from mortgage financing receivables

 
78

Distributions from joint ventures
2,440

 
2,144

Initial renovations to single-family properties
(33,030
)
 
(18,351
)
Recurring and other capital expenditures for single-family properties
(23,331
)
 
(15,038
)
Other purchases of productive assets
(95,354
)
 
(16,936
)
Net cash used for investing activities
(325,627
)
 
(222,516
)
 
 
 
 
Financing activities
 

 
 

Proceeds from issuance of Class A common shares

 
355,589

Payments of Class A common share issuance costs

 
(350
)
Proceeds from issuance of perpetual preferred shares

 
155,000

Payments of perpetual preferred share issuance costs

 
(5,209
)
Repurchase of Class A common shares
(34,969
)
 

Share-based compensation proceeds, net
1,933

 
1,858

Redemptions of Class A units

 
(169
)
Payments on asset-backed securitizations
(10,490
)
 
(466,793
)
Proceeds from revolving credit facility
100,000

 
62,000

Payments on revolving credit facility
(240,000
)
 
(20,000
)
Proceeds from term loan facility

 
25,000

Payments on term loan facility
(100,000
)
 
(100,000
)
Payments on secured note payable
(49,427
)
 
(482
)
Proceeds from unsecured senior notes, net of discount
497,210

 

Settlement of cash flow hedging instrument
9,628

 

Distributions to noncontrolling interests
(5,536
)
 
(5,555
)
Distributions to common shareholders
(28,702
)
 
(25,172
)
Distributions to preferred shareholders
(29,194
)
 
(28,869
)
Deferred financing costs paid
(5,100
)
 
(3,930
)
Net cash provided by (used for) financing activities
105,353

 
(57,082
)
 
 
 
 

5



American Homes 4 Rent
Condensed Consolidated Statements of Cash Flows (continued)
(Amounts in thousands)
(Unaudited)
 
For the Six Months Ended
June 30,
 
2018
 
2017
Net increase (decrease) in cash, cash equivalents and restricted cash
29,691

 
(54,392
)
Cash, cash equivalents and restricted cash, beginning of period
182,823

 
250,241

Cash, cash equivalents and restricted cash, end of period (see Note 3)
$
212,514

 
$
195,849

 
 
 
 
Supplemental cash flow information
 

 
 

Cash payments for interest, net of amounts capitalized
$
(47,663
)
 
$
(54,157
)
 
 
 
 
Supplemental schedule of noncash investing and financing activities
 

 
 

Accounts payable and accrued expenses related to property acquisitions, renovations and construction
$
979

 
$
3,922

Transfer of term loan borrowings to revolving credit facility
$

 
$
50,000

Transfer of deferred financing costs from term loan to revolving credit facility
$

 
$
1,354

Transfers of completed homebuilding deliveries to properties
$
37,541

 
$

Note receivable related to a bulk sale of properties, net of discount
$

 
$
5,559

Redemption of participating preferred shares
$
(28,258
)
 
$

Accrued distributions to affiliates
$
(149
)
 
$

Accrued distributions to non-affiliates
$
(1,995
)
 
$


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

6


American Homes 4 Rent, L.P.
Condensed Consolidated Balance Sheets
(Amounts in thousands, except unit data)
 
June 30, 2018
 
December 31, 2017
 
(Unaudited)
 
 
Assets
 
 
 
Single-family properties:
 
 
 
Land
$
1,670,214

 
$
1,665,631

Buildings and improvements
7,276,606

 
7,303,270

Single-family properties held for sale, net
284,012

 
35,803

 
9,230,832

 
9,004,704

Less: accumulated depreciation
(1,046,911
)
 
(939,724
)
Single-family properties, net
8,183,921

 
8,064,980

Cash and cash equivalents
53,504

 
46,156

Restricted cash
159,010

 
136,667

Rent and other receivables, net
28,049

 
30,144

Escrow deposits, prepaid expenses and other assets
246,869

 
171,851

Amounts due from affiliates
25,674

 
25,666

Deferred costs and other intangibles, net
13,142

 
13,025

Goodwill
120,279

 
120,279

Total assets
$
8,830,448

 
$
8,608,768

 
 
 
 
Liabilities
 
 
 
Revolving credit facility
$

 
$
140,000

Term loan facility, net
99,120

 
198,023

Asset-backed securitizations, net
1,969,322

 
1,977,308

Unsecured senior notes, net
492,406

 

Exchangeable senior notes, net
113,533

 
111,697

Secured note payable

 
48,859

Accounts payable and accrued expenses
282,734

 
222,867

Amounts payable to affiliates
4,571

 
4,720

Participating preferred units derivative liability

 
29,470

Total liabilities
2,961,686

 
2,732,944

 
 
 
 
Commitments and contingencies

 

 
 
 
 
Capital
 
 
 
Partners' capital:
 
 
 
General partner:
 
 
 
Common units (296,018,234 and 286,749,712 units issued and outstanding at June 30, 2018, and December 31, 2017, respectively)
4,395,806

 
4,248,236

Preferred units (30,750,000 and 38,350,000 units issued and outstanding at June 30, 2018, and December 31, 2017, respectively)
743,457

 
901,318

Limited partners:
 
 
 
Common units (55,350,153 units issued and outstanding at June 30, 2018, and December 31, 2017)
720,232

 
727,544

Accumulated other comprehensive income
9,267

 
75

Total partners' capital
5,868,762

 
5,877,173

Noncontrolling interest

 
(1,349
)
            Total capital
5,868,762

 
5,875,824

 
 
 
 
Total liabilities and capital
$
8,830,448

 
$
8,608,768


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


7


American Homes 4 Rent, L.P.
Condensed Consolidated Statements of Operations
(Amounts in thousands, except unit and per unit data)
(Unaudited)
 
For the Three Months Ended
June 30,
 
For the Six Months Ended
June 30,
 
2018
 
2017
 
2018
 
2017
Revenues:
 
 
 
 
 
 
 
Rents from single-family properties
$
227,211

 
$
204,648

 
$
445,234

 
$
405,755

Fees from single-family properties
2,754

 
2,690

 
5,587

 
5,294

Tenant charge-backs
32,917

 
27,382

 
68,724

 
55,755

Other
1,601

 
2,288

 
2,942

 
3,958

Total revenues
264,483

 
237,008

 
522,487

 
470,762

 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
Property operating expenses
98,843

 
85,954

 
199,830

 
169,259

Property management expenses
18,616

 
17,442

 
37,603

 
34,920

General and administrative expense
9,677

 
8,926

 
18,908

 
18,221

Interest expense
31,978

 
28,392

 
61,279

 
60,281

Acquisition fees and costs expensed
1,321

 
1,412

 
2,632

 
2,508

Depreciation and amortization
78,319

 
72,716

 
157,622

 
146,669

Other
1,624

 
1,359

 
2,451

 
2,917

Total expenses
240,378

 
216,201

 
480,325

 
434,775

 
 
 
 
 
 
 
 
Gain on sale of single-family properties and other, net
3,240

 
2,454

 
5,496

 
4,480

Loss on early extinguishment of debt
(1,447
)
 
(6,555
)
 
(1,447
)
 
(6,555
)
Remeasurement of participating preferred units

 
(1,640
)
 
1,212

 
(7,050
)
 
 
 
 
 
 
 
 
Net income
25,898

 
15,066

 
47,423

 
26,862

 
 
 
 
 
 
 
 
Noncontrolling interest
(248
)
 
1

 
(259
)
 
39

Preferred distributions
11,984

 
15,282

 
26,581

 
28,869

Redemption of participating preferred units
32,215

 

 
32,215

 

 
 
 
 
 
 
 
 
Net loss attributable to common unitholders
$
(18,053
)
 
$
(217
)
 
$
(11,114
)
 
$
(2,046
)
 
 
 
 
 
 
 
 
Weighted-average common units outstanding─basic and diluted
350,812,725

 
314,451,049

 
346,198,786

 
307,239,255

 
 
 
 
 
 
 
 
Net loss attributable to common unitholders per unit─basic and diluted
$
(0.05
)
 
$

 
$
(0.03
)
 
$
(0.01
)
 
The accompanying notes are an integral part of these condensed consolidated financial statements.


8


American Homes 4 Rent, L.P.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Amounts in thousands)
(Unaudited)
 
 
For the Three Months Ended
June 30,
 
For the Six Months Ended
June 30,
 
2018
 
2017
 
2018
 
2017
Net income
$
25,898

 
$
15,066

 
$
47,423

 
$
26,862

Other comprehensive (loss) income:
 
 
 
 
 
 
 
Gain on cash flow hedging instruments:
 
 
 
 
 
 
 
Gain on settlement of cash flow hedging instrument

 

 
9,553

 

Reclassification adjustment for amortization of interest expense included in net income
(241
)
 

 
(361
)
 
(28
)
Gain on investment in equity securities:
 
 
 
 
 
 
 
Reclassification adjustment for realized gain included in net income

 

 

 
(67
)
Other comprehensive (loss) income
(241
)
 

 
9,192

 
(95
)
Comprehensive income
25,657

 
15,066

 
56,615

 
26,767

Comprehensive (loss) income attributable to noncontrolling interests
(248
)
 
1

 
(259
)
 
39

Preferred distributions
11,984

 
15,282

 
26,581

 
28,869

Redemption of participating preferred units
32,215

 

 
32,215

 

Comprehensive loss attributable to common unitholders
$
(18,294
)
 
$
(217
)
 
$
(1,922
)
 
$
(2,141
)
 
The accompanying notes are an integral part of these condensed consolidated financial statements.


9


American Homes 4 Rent, L.P.
Condensed Consolidated Statement of Capital
(Amounts in thousands, except unit data)
(Unaudited)
 
General Partner
 
Limited Partners
 
Accumulated other comprehensive income
 
Total partners' capital
 
Noncontrolling interest
 
Total capital
 
Common capital
 
Preferred capital amount
 
Common capital
 
 
 
 
 
Units
 
Amount
 
 
Units
 
Amount
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balances at December 31, 2017
286,749,712

 
$
4,248,236

 
$
901,318

 
55,350,153

 
$
727,544

 
$
75

 
$
5,877,173

 
$
(1,349
)
 
$
5,875,824

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Share-based compensation

 
1,918

 

 

 

 

 
1,918

 

 
1,918

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common units issued under share-based compensation plans, net of units withheld for employee taxes
223,858

 
2,660

 

 

 

 

 
2,660

 

 
2,660

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Redemption of Series C participating preferred units into Class A units
10,848,827

 
186,119

 
(157,861
)
 

 

 

 
28,258

 

 
28,258

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Repurchase of Class A units
(1,804,163
)
 
(34,969
)
 

 

 

 

 
(34,969
)
 

 
(34,969
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liquidation of consolidated joint venture

 
(1,849
)
 

 

 

 

 
(1,849
)
 
1,608

 
(241
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Distributions to capital holders:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred units

 

 
(26,581
)
 

 

 

 
(26,581
)
 

 
(26,581
)
Common units

 
(29,187
)
 

 

 
(5,535
)
 

 
(34,722
)
 

 
(34,722
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income

 
22,878

 
26,581

 

 
(1,777
)
 

 
47,682

 
(259
)
 
47,423

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total other comprehensive income

 

 

 

 

 
9,192

 
9,192

 

 
9,192

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balances at June 30, 2018
296,018,234

 
$
4,395,806

 
$
743,457

 
55,350,153

 
$
720,232

 
$
9,267

 
$
5,868,762

 
$

 
$
5,868,762

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


10


American Homes 4 Rent, L.P.
Condensed Consolidated Statements of Cash Flows
(Amounts in thousands)
(Unaudited) 
 
For the Six Months Ended
June 30,
 
2018
 
2017
Operating activities
 
 
 
Net income
$
47,423

 
$
26,862

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
157,622

 
146,669

Noncash amortization of deferred financing costs
3,888

 
4,410

Noncash amortization of discounts on debt instruments
1,941

 
1,714

Noncash amortization of cash flow hedging instrument
(361
)
 

Noncash share-based compensation
1,918

 
2,059

Provision for bad debt
3,616

 
2,843

Loss on early extinguishment of debt
1,447

 
6,555

Remeasurement of participating preferred units
(1,212
)
 
7,050

Equity in net earnings of unconsolidated ventures
(587
)
 
(1,623
)
Net gain on sale of single-family properties and other
(5,496
)
 
(4,480
)
Loss on impairment of single-family properties
2,236

 
2,487

Net gain on resolutions of mortgage loans

 
(16
)
Other changes in operating assets and liabilities:
 
 
 
Rent and other receivables
(5,522
)
 
(4,497
)
Prepaid expenses and other assets
(12,167
)
 
(7,440
)
Deferred leasing costs
(5,834
)
 
(3,401
)
Accounts payable and accrued expenses
61,061

 
40,967

Amounts payable to affiliates
(8
)
 
5,047

Net cash provided by operating activities
249,965

 
225,206

 
 
 
 
Investing activities
 
 
 
Cash paid for single-family properties
(206,137
)
 
(226,937
)
Change in escrow deposits for purchase of single-family properties
(4,357
)
 
(1,708
)
Net proceeds received from sales of single-family properties and other
30,142

 
54,232

Proceeds received from hurricane-related insurance claims
4,000

 

Collections from mortgage financing receivables

 
78

Distributions from joint ventures
2,440

 
2,144

Initial renovations to single-family properties
(33,030
)
 
(18,351
)
Recurring and other capital expenditures for single-family properties
(23,331
)
 
(15,038
)
Other purchases of productive assets
(95,354
)
 
(16,936
)
Net cash used for investing activities
(325,627
)
 
(222,516
)
 
 
 
 
Financing activities
 
 
 
Proceeds from issuance of Class A units

 
355,589

Payments of Class A unit issuance costs

 
(350
)
Proceeds from issuance of perpetual preferred units

 
155,000

Payments of perpetual preferred unit issuance costs

 
(5,209
)
Repurchase of Class A units
(34,969
)
 

Share-based compensation proceeds, net
1,933

 
1,858

Redemptions of Class A units

 
(169
)
Payments on asset-backed securitizations
(10,490
)
 
(466,793
)
Proceeds from revolving credit facility
100,000

 
62,000

Payments on revolving credit facility
(240,000
)
 
(20,000
)
Proceeds from term loan facility

 
25,000

Payments on term loan facility
(100,000
)
 
(100,000
)
Payments on secured note payable
(49,427
)
 
(482
)
Proceeds from unsecured senior notes, net of discount
497,210

 

Settlement of cash flow hedging instrument
9,628

 

Distributions to common unitholders
(34,238
)
 
(30,727
)
Distributions to preferred unitholders
(29,194
)
 
(28,869
)
Deferred financing costs paid
(5,100
)
 
(3,930
)
Net cash provided by (used for) financing activities
105,353

 
(57,082
)


11


American Homes 4 Rent, L.P.
Condensed Consolidated Statements of Cash Flows (continued)
(Amounts in thousands)
(Unaudited)
 
For the Six Months Ended
June 30,
 
2018
 
2017
Net increase (decrease) in cash, cash equivalents and restricted cash
29,691

 
(54,392
)
Cash, cash equivalents and restricted cash, beginning of period
182,823

 
250,241

Cash, cash equivalents and restricted cash, end of period (see Note 3)
$
212,514

 
$
195,849

 
 
 
 
Supplemental cash flow information
 
 
 
Cash payments for interest, net of amounts capitalized
$
(47,663
)
 
$
(54,157
)
 
 
 
 
Supplemental schedule of noncash investing and financing activities
 
 
 
Accounts payable and accrued expenses related to property acquisitions, renovations and construction
$
979

 
$
3,922

Transfer of term loan borrowings to revolving credit facility
$

 
$
50,000

Transfer of deferred financing costs from term loan to revolving credit facility
$

 
$
1,354