American Homes 4 Rent (AMH) Earnings Call Transcript & Summary

Greetings, and welcome to the AMH Second Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I will now turn the conference over to Nick Fromm, Vice President of Investor Relations. Thank you, Nick. You may begin.

Good morning, and thank you for joining us for our Second Quarter 2026 Earnings Conference Call. With me today are Bryan Smith, Chief Executive Officer; Chris Lau, Chief Financial Officer; and Lincoln Palmer, Chief Operating Officer. Please be advised that this call may include forward-looking statements. All statements other than statements of historical fact included in this conference call are forward-looking statements that are subject to a number of risks and uncertainties that could cause actual results to differ materially from those projected in these statements. These risks and other factors that could adversely affect our business and future results are described in our press releases and in our filings with the SEC. All forward-looking statements speak only as of today, July 31, 2026. We assume no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. A reconciliation of GAAP to non-GAAP financial measures is included in our earnings press release and supplemental information package. As a note, our operating and financial results, including GAAP and non-GAAP measures, are fully detailed in our earnings release and supplemental information package. You can find these documents as well as SEC reports and the audio webcast replay of this conference call on our website at www.amh.com. With that, I will turn the call over to our CEO, Bryan Smith.

Welcome, everyone, and thank you for joining us today. Before we get into our results, I would like to briefly touch on the ROAD to Housing Act, which went into law last month following overwhelming bipartisan support. This law reflects a thoughtful approach by policymakers to address housing affordability and allows the industry to move forward with greater certainty. It recognizes the important role that single-family rentals play in the broader housing ecosystem and reinforces a number of aspects of our value proposition. First, it recognizes the role of new home construction in helping to address housing affordability. This highlights the importance of our in-house development program that continues to add newly-built, high-quality homes across the country. Second, by grandfathering in existing single-family rental homes, the legislation acknowledges that professionally managed rental housing is a critical element of our country's housing landscape. Millions of families will continue to have the opportunity to live in high-quality homes and neighborhoods without the burdens of homeownership. And third, the legislation preserves the ability to consolidate existing rental portfolios, enabling AMH to continue delivering our best-in-class resident experience to additional households across the country. This creates value not only for our residents, but also for our shareholders as additional homes are optimized on the AMH platform. Now to earnings. Demand for high-quality, single-family rental housing across our diversified portfolio footprint remains healthy. We delivered a strong first half to the year, highlighted by another great spring leasing season. The team efficiently turned and released a record number of homes through the first 6 months of the year, while also tightly managing expenses. In addition to these expense controls, we also saw contributions from our development program and capital allocation decisions, leading us to raise the midpoint of our core FFO per share guidance by $0.03 and to $1.95, which represents year-over-year growth of 4.3%. Turning to our second quarter same-home results. Average occupied days came in at 96% and new, renewal and blended spreads were 1.4%, 3.2% and 2.7%, respectively, driving core revenue growth of 2.3%. Notably, both new and renewal rate growth accelerated through the quarter, reflecting healthy demand for our homes. This momentum carried into July with occupancy holding at 96.1% and new, renewal and blended spreads of 1.6%, 3.3% and 2.8%, respectively. Looking ahead to the second half of the year, we expect to see the benefits of our lease expiration profile where only 1/3 of 2026 lease expirations remain. This should translate into a meaningfully flatter occupancy curve and set us up well from an inventory and pricing perspective heading into 2027. Turning to investments. We continue to take a disciplined approach to capital allocation. Our development program remains on track. We are seeing modest improvement in initial yields, supported by our pre-leasing efforts and the team's continued success in keeping vertical construction costs flat. On the disposition front, demand from individual homebuyers on the MLS remains strong. We have taken this opportunity to accelerate our portfolio optimization efforts and are tracking ahead of plan, having sold over 1,300 homes in the first half of the year at cap rates in the 4% area. As a reminder, we are match funding on balance sheet development this year with proceeds from our disposition program. Looking ahead, as I mentioned before, we are in a great position to capitalize on portfolio consolidation opportunities that arise. AMH has the platform and balance sheet to create meaningful value, but we will only do so when the cost of capital and economics make sense. In closing, we had a great first half of the year and are optimistic about the future of the industry. I want to thank our teams across the country for their hard work and continued commitment to providing high-quality housing and a superior resident experience to the families we serve. With that, I'll turn the call over to Chris.

Thanks, Bryan, and good morning, everyone. Like usual, I'll cover 3 areas in my comments today; first, a review of our quarterly results; second, an update on our balance sheet and recent capital activity; and third, I'll close with commentary around our increased 2026 guidance. Starting off with our operating results. The team delivered an outstanding second quarter, generating net income attributable to common shareholders of $113.6 million or $0.31 per diluted share. On an FFO share and unit basis, we generated $0.49 of core FFO, representing 5.2% year-over-year growth, and $0.45 of adjusted FFO, representing 8.3% year-over-year growth. Notably, this quarter's FFO growth was driven by exceptional execution across all aspects of the AMH business. As two quick examples, within the same-home portfolio, the teams did an excellent job capturing the spring leasing season, sequentially growing leasing spreads and occupancy throughout the quarter, while impressively holding year-over-year controllable expense growth to less than 1%. And on top of that, our teams set new records on the lease-up and pre-leasing of recently constructed AMH development homes driving incremental NOI contribution outside of the same-home portfolio. In speaking of development, this quarter, we delivered a total of 651 homes to our wholly-owned and joint venture portfolios. Of those homes, 542 were delivered to our wholly-owned portfolio for a total investment cost of approximately $220 million. Additionally, as Bryan mentioned, we saw another quarter of robust disposition activity. On a year-to-date basis, we've now generated approximately $380 million of net proceeds, which is comfortably ahead of our initial timing expectations, which means that on a full year basis, we are now likely tracking towards the upper half of our $400 million to $600 million range that we outlined at the start of the year, reducing some of our planned incremental debt needs. Next, I'd like to quickly turn to our balance sheet and recent capital activity. At the end of the quarter, our net debt, including preferred shares to adjusted EBITDA was 5.2x. We had approximately $84 million of cash available on the balance sheet, and we had a $390 million drawn balance on our $1.25 billion revolving credit facility. Additionally, during the quarter, we attractively repurchased 4.1 million common shares for a total of $123 million at an average price of $29.88 per share. And next, I'll cover our updated 2026 earnings guidance, which was positively revised in yesterday's earnings press release. Starting with the same-home portfolio, recognizing the team's outstanding cost control execution and modestly favorable property tax news in a few of our smaller states, we've lowered the midpoint of our full year core expense growth expectations by 75 basis points to 2%. In turn, we have increased the midpoint of our core NOI growth expectations by 40 basis points to 2.4%, and we now expect 2026 same-home core NOI margins to modestly expand compared to 2025. And for the non-same-home portfolio, we also expect incremental core NOI growth from similar expense benefits and additional contribution from our solid AMH development lease-up activity. And when combined with our better-than-expected disposition activity and incremental share repurchases, we have increased the midpoint of our full year 2026 core FFO per share expectations by a total of $0.03. Our new midpoint of $1.95 per share now reflects the high end of our previous range and represent a year-over-year growth expectation of 4.3%, which continues to position AMH at the top of the residential sector. And before we open the call to your questions, I'd like to close with one final thought. Like Bryan mentioned at the start, as our industry begins to emerge from some of the recent uncertainty, AMH's positioning as the largest integrated operator and developer of single-family rental homes will likely be more important than ever. The AMH development program gives us the unique ability to both control our external growth while also contributing much needed housing stock across the country as we continue to create value for our residents, communities and shareholders. And with that, we'll open the call to your questions. Operator?

[Operator Instructions] Our first question comes from the line of Juan Sanabria with BMO Capital Markets.

Congrats on the quarter. Just hoping you could spend a little bit of time on CapEx? Have a nice trend in the quarter and year-to-date both in terms of maintenance and R&M and turn costs. Just hoping you could expand on what's driving that, whether it's dispositions and/or new developments and kind of the prospects going forward? What's kind of the new normal spend on an annual basis?

Juan, this is Lincoln. Thanks for the question. Good to hear your voice this morning. Coming out of last year, in the first half, we recognize that we had some opportunities to tighten up some of our processes and make some structural adjustments to prepare us for '26. We laid that in with the investments that we've been making in some of the technologies and making sure that we have the right teams, and in the back half of '25 showed great improvements. As we came into '26, as you know, we had a little bit heavier lift with the larger lease expirations in the first and second quarters. The teams did a fantastic job managing through that, probably even a little bit better than we expected. And as we got through what was a little bit of an uncertain period for us, we were able to see that we can handle those types of changes to the lease expiration schedule. So as we move to the back half of the year here, all those improvements remain in place. And we expect that we'll continue to see a great benefit from the things we've done. I wouldn't expect the R&M and turn and some of the other components that are on the controllable side to remain in negative territory. Back half, I would expect something closer to low single digits or inflation link.

Our next question comes from the line of Jamie Feldman with Wells Fargo.

This is Conor on with Jamie. Thinking back to the last earnings call, I believe Atlanta was showing some early green shoots, and there's a bit more caution on Texas and Phoenix. Looking at 2Q results, Houston, Dallas delivered blends over 2%, while Phoenix and Tampa blends were a bit weaker. How would you say those markets have performed versus your initial expectations? And where do you still need to see some more evidence of a recovery?

Yes. Thanks, Conor. We're actually very pleased with what we've seen in the vast majority of our markets from a pickup in occupancy, from a rate perspective. You can see that in the May, June and extension into July performance. Especially pleased with some of the pickups in occupancy that we saw in some markets into July. As far as Atlanta specifically goes, we had a pickup into July there, still probably running a little bit less than what we want to be on total occupancy and rates seem to be trending moderate a little bit. So it's not the bright spot of the portfolio, but again, we're seeing improvements in a lot of places. Tampa, while, again, kind of flat on occupancy and needs some work on rate, we are seeing some green shoots there as well. This time of year, we've seen a reduction in supply in the Tampa market for the first time in quite a while. And we expect that, that will flow through into results over the next few quarters. Continue to see great strength in the Midwest and some of our western markets. Seattle continues to be wonderful for us, high occupancy there. Boise, Salt Lake City, most of these markets are trending in the 96% to 97% range. So very, very happy with the way that things have moved through the season.

Our next question comes from the line of Eric Wolfe with Citi.

I think in the past, you said that you only have about 33% of leases expiring in the back half of this year, correct me if I'm wrong on that. I was curious sort of how that compares to prior years, so last year and the year before that to sort of understand the expiration risk? Assuming it's actually less than the last couple of years, does that influence how you think about renewals in the back half? Does that allow you to be a bit more aggressive because you're not risking as much occupancy? Just trying to understand how that sort of impacts your strategy?

Eric, thanks for the question. As you know, this lease expiration management initiative of ours has been a multiyear effort. We made the broad brush stroke changes to that in '25 where we saw expirations land kind of in the 50-50 range is what we talked about. It looks much more closer to your observation this year, which is 2/3, 1/3. Again, very proud of the way that we managed that for the first part of the year, and we're looking forward to the benefit of that in the back half of the year. Part of that benefit will be on the renewal side, and that's a natural part of our usual curve, where as activity slows down and resident movement slows down, we have a little bit more opportunity on the renewal side. We talked about those trending into the 3.5% range, and we should see them migrate in that direction over the next couple of months. The other benefit is that as that activity slows down this year on the backside of leasing season, that's going to match nicely with the expirations. Those will also slow down, and we expect to be in a much better inventory position. And as we said in the past, our objective is always to go into the first part of every year in the best position possible from an occupancy standpoint. And we think we have a great shot at that this year given the shape and how we plan for it.

Our next question comes from the line of Haendel St. Juste with Mizuho Securities.

I wanted to talk about development. It sounded like the projects in your pipeline, the projects that were leasing up, it seems like they've been a bit better than the part of the raise here. So can you talk about what you're seeing in the pipeline versus your underwriting on the lease-ups and where the yields are coming in versus the [ 5.25% ], I think, you mentioned in prior quarters? And what are you underwriting for projects you're starting today?

Thanks, Haendel. This is Bryan. As I mentioned in my prepared remarks, we're really pleased with the lease-up of our new deliveries this year, and we've seen a little bit of an improvement in yields coming out of Q1 into Q2. A lot of that's just due to pricing. You're seeing the benefits of some of our pre-leasing initiatives that we started last year and are continuing to refine. If you look at the first half of the year, we leased about what we delivered, which is very healthy when you think about these projects that are still in development. And then a really interesting fact, if you look at the back half of the year, I think we're on schedule to deliver about 700 houses. And of those houses, already 40% are rented. And what that means is it's very healthy for us to be able to do it from a pricing perspective from a kind of migration through the development process and delivery process. And in the event, this is one of the benefits of owning the entire development cycle in-house. We have the ability to deliver more quickly or slow down those deliveries on a monthly basis as we plan into next year. Those yields, again, are a major function of rents. They look really good coming into Q2. We're optimistic that there's some nice changes going on. And the new deals that we're looking at, really think of it in terms of replenishment of some of the pipeline to maintain good continuity in the development markets that we really like. But the few deals that we've closed this year are looking the yield into the 6s. We're getting there through a couple of different ways. We're seeing some favorable opportunities on the land side. There's been some optimization in the way that we're designing and delivering these houses. And there's just a ton of demand for them as we talked about in the past. So I would think about the new deals we're looking at that we'll close a few more in the balance of this year as well are in the 6s, and we're working through kind of the mid- to low 5s right now.

Our next question comes from the line of Steve Sakwa with Evercore ISI.

Thanks for the comments on July. I was just hoping if you could maybe clarify what your expectations are as it relates to occupancy in 3Q, 4Q and kind of just also your expectations about blended spreads. I realize occupancy dropped a lot last year. I'm just trying to figure out kind of the cadence of occupancy and blends in the back half.

Steve, thanks for the question. This is Lincoln. Yes, we're aware that the curve looks a little bit differently this year. We expect to hold occupancy in the back half. We talked about that on a full year basis in the high 95% area. We're pleased with the way that July ended, again, with seeing building occupancy in many of our markets, which gives us a great shot of doing this. That's supported in part by the lease expiration management program that we talked about a little bit earlier. New lease rate growth is still anticipated to be in the flattish area for the full year. And then again, the renewal rates in the 3.5% area -- excuse me, yes, the renewal rates in the 3.5% area what blends in the low 2s.

Our next question comes from the line of Jana Galan with Bank of America.

Congratulations on a great quarter. Maybe a question going back to capital allocation. And if you could talk about how you think through the preferences between share buybacks, the development program and maybe where today's seller expectations for some smaller portfolio transactions are?

Jana, Chris here. Why don't I start on the buyback piece and then between Bryan and I, we can talk a little bit about portfolios. On the buyback piece, I would say our view there is really no different than the past couple of quarters, where we continue to very much believe in the business and believe in the stock. And you can see that in how active we've been over the past about 9 months or so now, including repurchasing about $123 million just recently in the second quarter, which brings total repurchases over the past 9 months to a little over 3% or so of shares and units outstanding at an average price of about $31 per share. Since then, it's been nice to see that the stock has started to move in the right direction. But look, going forward, we continue to watch the stock closely right alongside and just like any other form of capital allocation alternative. And if more opportunities look attractive, like we've talked about before, we have more capacity, right? Leverage ended the quarter in the low 5s. It's pretty -- that's below our long-term target. Like we talked about in prepared remarks, dispositions are tracking better than we were expecting at the beginning of the year. And then we still have about $377 million or so of remaining capacity on our current repurchase authorization.

Yes, Jana. And then with regards to portfolios and what we're seeing out there, as most everyone knows, the consolidation environment this year was really on pause with all the legislation and the attention from Washington. There were a couple of deals that closed in January, and then it really was in a little bit of a wait and see. Post legislation, we've seen a little bit more activity. There are some deals that are coming. We're talking to some owners. And what's interesting for us is this legislation preserved our 2 major growth channels, our outlook for growth in the future due to our in-house development program and then the opportunity to consolidate portfolios. On the other hand, it affects the growth opportunities for some of the other smaller companies who are relying on MLS purchases. And these additional regulations, I think are going to make that more difficult, not impossible, there are exceptions, the rules are still being written, but it will make it more difficult and potentially less attractive. And as a result of that, you couple that with the importance of an optimized and efficient operating platform, and it puts us in a really good position to add a lot of value to the portfolios and provide a complete solution to sellers who might find the space less attractive in light of the recent changes. Our expectations are that this will play out over the next 12 to 18 months as people really look to the long-term plans, but we are seeing an uptick in activity. In terms of seller expectations and pricing, we haven't seen anything trade. It's a little bit early to nail those numbers down. But we would expect sellers to become realistic with what we can offer them over time.

Our next question comes from the line of Adam Kramer with Morgan Stanley.

Just wanted to talk about sort of the sequential improvement in new lease from -- I guess, from the quarter to July. Just sort of what's driving that overall? Is it sort of feeling better about where occupancy is, concessions, just general sort of simple pricing? And then I guess more broadly, if you think about sort of the trajectory of this peak leasing season, how would you sort of frame the way it played out, I guess, relative to expectations or relative to "normal year" relative to last year? Just sort of wondering how seasonality ended up playing out because I think there were some concerns to start the year given sort of what transpired a year ago?

Yes. Thanks, Adam. Appreciate the question. I think the shape of the season played out largely like we expected from the standpoint that we saw a healthy level of demand that continues for SFR, much like we've seen in previous years. I think the thing that made this year a little bit different was a couple of things. One was, we're seeing this demand set against a modestly improving supply picture. And that's encouraging giving what we were hoping for at the beginning of the year. The second thing that's really moving the length of the season into July and the performance you saw there was just a strong seasonal execution by our teams. We had -- our field teams were able to, despite having the largest number of expirations for the year in June, turn homes quickly, get them back to market, deliver them to our leasing teams, have them lease them quickly and take advantage of the demand that existed in the peak season. And I think that's the thing that we've done differently this year as we really try to match our activity, our expirations and other business operations to the demand that exists in the season. So largely playing out like we've expected and planned for, and we're looking forward to continuing to seeing benefits from that plan in the back half of the year.