American Homes 4 Rent (AMH) March 3, 2026 Conference Transcript

Welcome to Citi's 2026 Global Property CEO Conference. I'm Nick Joseph here with Eric Wolfe with Citi Research. Pleased to have with us AMH and CEO Brian Smith. This session is for Citi clients only and disclosures have been made available at the Corporate Access Desk. To ask a question, you can raise your hand or go to liveqa.com and enter code GPC26 to submit any questions. Brian, we'll turn it over to you to introduce the team and company, make any opening remarks, tell investors why they should buy your stock today, and then we'll get into Q&A. And then you have to press the button.

There we go. Yeah, thank you, Nick. Good morning. Thank you for joining us today. With me on my right is Chris Lau, our chief financial officer. To my left is Lincoln Palmer, our chief operating officer. We recently reported fourth quarter and full year 2025 earnings last week. So I'll keep my remarks focused on some of the highlights and then what we're seeing today in the business. Our teams executed exceptionally well to close out 2025, delivering residential sector-leading FFO growth in excess of 5%. Demand for single-family rentals, and AMH homes in particular, remains strong. And as we transition into 2026, we've been proactive in responding to persistent supply pressures in some of our markets through the slower leasing season. And we do this by adjusting price where appropriate to prioritize occupancy. After a slower start to the year, we are encouraged by the arrival of the spring leasing season as we head into March. On the policy front, our government affairs teams remain highly engaged at the federal, state, and local levels, and we continue to clearly communicate that AMH is part of the solution to the housing shortage and affordability issues. And this is really focused on our In Us development program, which is directly addressing the supply shortages in some of the key markets. Development remains a key differentiator for AMH. Since inception of the development program, we've delivered more than 14,000 newly constructed homes, helping to modernize and expand the nation's aging housing stock. In 2026, we expect to deliver approximately 1,900 newly developed homes, further strengthening our portfolio and the long-term growth profile. Over time, our development drives higher-quality cash flows and allows us to recycle capital into assets with better long-term fundamentals. And with that, I'll turn it over to Chris to walk through current performance and our capital plan in more detail.

Sure. A couple quick updates. We put out an update deck that hit the website on Friday. Pretty similar to what we were talking about on the earnings call. January and February, same home occupancy, 95%. Renewals in the mid-threes or so. New leases, modestly negative at minus 1%. Like we also talked about on the earnings call, we will likely stay focused on occupancy through the majority of the first quarter. um seeing nice encouraging signs in terms of activities we're moving into the march time frame um but all that we we think will translate into a slightly more moderated seasonal curve for this year in terms of high points of the guide you probably got the majority of them from the call we are expecting same home noi growth of two percent uh ffo growth of 2.7 percent a little bit moderated relative to 2025 but still top of the pack when we think about the residential peer set um a couple of other quick updates in terms of capital uh main update from the capital perspective is that we have been active on share repurchases recently uh you probably heard the update uh that through the fourth quarter and into the beginning of 2026 we fully exhausted our existing share repurchase authorization we acquired in two percent of shares and units outstanding uh that's about 265 million dollars at an average purchase price of 3165 per share uh very shortly after uh finishing that authorization the board approved a fresh authorization 500 million dollars uh and then importantly uh for this year's we think about the capital plan uh as many of you probably heard we have throttled down the development program and in particular balance sheet spend going into the development program such that this year's balance sheet component is fundable through recycled capital coming from the disposition program, freeing up a couple hundred million dollars of incremental capital capacity for things like additional repurchases. So that was probably a good pause point to open it up.

Great. Although I don't know if we got to the top reason to buy your stock today. development program and the operating platform the development program and the operating platform and i know um there have been a lot of proposals um that have been out there and nothing is sort of concrete um today but i guess based on what you know um or what you expect around the legislation to come i guess how do you see this changing the industry if at all how do you see it changing and your strategy, if at all.

Yeah, thank you. There were some developments yesterday that you may have seen with a draft Senate bill that's been circulated that included a lot of the information that we expected through our last month or so of meetings in Washington, D.C. There's still a lot open for debate, so it's difficult to figure out exactly where it's going to land. There are some things in there that we're comforting. They set the threshold for institutional ownership levels. It also, under the current language, appears that the existing portfolios are grandfathered in, kind of business as usual. And then there's some key components that still need to be worked out. We got it last night. We've been reviewing it, and there's some back and forth before it goes to debate on the Senate floor. So it's difficult to predict exactly how it shakes out. Once we have a little bit more clarity, which may come later in this week as it gets debated or it gets pushed to the House, we probably could form a better opinion. The key things, though, that we've been messaging in Washington and at the state and local level, as I said earlier, we're part of the solution if you're talking about supply shortage and the easiest way to affordability is to have more choice. So there's recognition of the importance of build-to-rent and supply in this overall narrative. So we're hopeful that we'll be able to lean into that over time. But in terms of the mechanics and how portfolios are dealt with, restrictions on the MLS, it still remains to be seen.

Understood. I guess based on what we know, again, I know it's moving around and there's a draft yesterday. But I guess more broadly, if someone can't grow their portfolio, do you think that that sort of changes the amount of capital that's willing to go into the SFR space or maybe I guess that capital that previously was focused on acquisitions or portfolios now moves more towards development and does that bring sort of a risk around it that you get more supply in certain areas and that sort of and I'll get to the next part of the question but really it's like if you're going to see more capital focus on development does that also change your market selection from places that are easier to develop Yeah, there are a lot of different factors mixed in.

A couple of things that are important to remember. The importance of the operating platform, and there are relatively few sophisticated, highly efficient operating platforms. So that kind of narrows the space a little bit. The development business is hard. We've been doing it for nine plus years, incorporating a lot of internal experience, all the data that we're getting from the operating side of the business to really optimize what we're delivering and where. so I think we've got a decent head start but if that's the only growth channel I would expect additional investment there there's plenty of room the markets that we're in we own a very small percentage we're very particular in the areas that we're invested in but again you're talking about a couple thousand homes and MSAs of millions of people so if there was some additional competition on the build to rent side I don't think it would have as much of an effect as the increase that we've seen over the past few years. And I think the difference between those two is the expectations for performance from that initial flush of capital ended up playing out differently than they expected from the beginning. And it ties back to having the operating platform and really being focused on what and where you're developing. So I think there's some protection around our position. But again, seeing a little bit of extra competition is not out of the realm of possibility.

And you talked about this on the call and then in your opening remarks that there's been sort of some stubborn supply that's, you know, reduced pricing power recently. I guess what I don't completely understand about that is that I guess I would have thought that the sort of supply aspect of it would be, you know, a little bit more predictable. I thought, you know, sort of supply, at least the BTR was coming down meaningfully this year, especially sort of given this lagged impact of, you know, it became much more difficult to develop as interest rates rose a couple of years ago.

I guess, is it really sort of supply that's impacting things or is there also a bit of a demand component there where you just had, you know, you've had lower job growth, you have lower lower consumer sentiment um i guess how do you sort of determine that it's really the the the problem sort of supply right now and and when do you think that gets better so maybe i'll talk about the customer and demand side first as far as sentiment goes and maybe customer capability uh the customers coming into the the platform are still as healthy as we've seen them in many years uh the rents uh continue to grow right in line with incomes so they're very tight there are bad debt performances as good as it's ever been so the customer seems healthy we talked a little bit about the demand this year being a little bit later than we expected on the upswing into the leasing season but as brian mentioned in his opening remarks encouraged by the level of demand that we're seeing it's not outside of normal seasonal fluctuation um so there hasn't been a significant um significant drop off in in demand overall for uh single family homes and for for amh homes um i think on the on the supply side what we've seen is um you talked a little bit about the timing eric you know i think everybody saw permits and starts slow down quite a bit um last year and deliveries were expected to kind of peak and begin to fall. And it seems like those deliveries have maybe extended longer than they normally would have. You look at past cycles, it's taken longer to get those deliveries to market. I think that's one of the reasons why we were surprised on the multifamily front last year as an example. Levels in multifamily seem to be about the same as they were in 2025 at the same time last year. So how quickly that overhang and supply gets absorbed is going to depend on the level of demand, which we see as healthy. Absorption in multifamily seems to be pretty healthy, but we're looking at the residential landscape in general. So think about the continuum of housing from multifamily to single family for rent. You have build-to-rent in there as well, and then for sale supply. Build-to-rent has been a little bit more stubborn, but again, And given the capital flows into build-to-rent in the last couple of years, that seems to be improving. And then on the for sale side, the inventory is higher than it's been for several years, but still lower than pre-pandemic levels. So there may be some effect from conversions from for sale to for rent, but it's really market-specific where we're seeing some of those things. And we're prepared to make adjustments to the platform as we see those improving. It's difficult to say when that's going to be. I think there have been some missteps in the last year or two about calling an inflection point or something on demand, but we definitely see a road ahead where that improves.

And when you say demand is good right now, obviously it's bad weather earlier in the year, but demand is good right now, it's consistent, normal seasonal pattern. You're measuring that based on leads, you're measuring that based on conversions.

What are the demand indicators that you all talk about internally, week to week, and sort of how are those trending year over year yeah we watch the uh we watch the uh in internally the metrics starting at the very front of the um the lease journey for our residents so whether they're engaging with an external platform first or coming directly into the amh platform we look at the number of interests for our homes specifically the thing that we we key in on is the number of showings so people actually walking through our homes um and then in in that journey how many of those showings ultimately convert to leases so um the the interest and the uh showings have been uh relatively stable with within um a small amount of variability and then the kickoff

to the season starting kind of in mid-february um we had we had some some better leasing than we've seen in a while so um as it translates all the way through uh again we're we're really encouraged by the directionality of it um so maybe we can talk about that um because i think before and again correct me if i'm wrong you sort of it leads going into conversions but maybe that conversion was taking a little bit longer than it normally does which is sort of increasing the amount of time that a home might sit vacant i guess what do you see now in terms of your your forward indicators it sounds like you're pretty encouraged about um the direction of occupancy um over the next couple of months maybe just help us understand um you know sort of where retention is on a forward basis

why you think occupancy will increase yeah a couple different reasons um one uh retention remains strong turnover was at the lowest levels that it was um that it's been in the history of the company in 2025 rolling into 2026 uh the kind of 2025 basis point moderation in uh occupancy year over year contemplates a slight uptick in turnover and then slight extension in the the timeline that takes the lease reflective of the supply in the marketplace people have more choice we've talked a little bit about that but over the next couple months beginning especially in second quarter we should see occupancy build given the activity that we're seeing in the marketplace as activity builds rate tends to follow uh we'll build to a a peak in uh may june is as typical and then hold as much of that occupancy in the back half of the year as we can supported by our view on kind of flat new lease rate growth uh for for the full year and renewals in in the three percent range and then a favorable expiration profile in the back half as we've been working on for the last couple years and the renewals recently are in the mid threes is that where you've been signing, I guess, for March, April, and I guess early part of May? Right, yeah. It's going to be in the mid-threes for the first half of the year.

Maybe just quickly on expenses before we shift over to capital allocation. You've seen a much lower rate of property tax growth. It's a majority or almost a majority, I guess, of your expense structure um you know i guess what gives you the confidence this year that um you know you're only going to see a call it like a three percent increase um at this point in time do you have sort of assessments and other information that you've seen this far uh that sort of supports that um just trying to understand the comfort around that specific piece of the guidance yeah um you know i would i would tie that into expenses overall that we see expenses being pretty cooperative this year.

You know, at this point, we're contemplating 3% property tax expense growth in 26. You know, the components of that is, you know, generally speaking, we see values being in the flattish environment in 2026. Recognizing, though, that, you know, property taxes pay for things from a budget standpoint, the cost of those things that need to be funded in budgets continue to you know increase inflationarily and so we we are contemplating the fact that we may see rates go up in some markets across the country so um you know at this point um you know the start of the year we feel good about the three percent area well below long-term average long-term average for us is four to five percent um and then in terms of expenses more broadly um insurance renewal is is done at this point we finished it a couple of days ago um our insurance renewal for this year is down in the plus or minus 10% area. That's a decrease. So A, that's good. B, that's especially good considering that's a decrease on top of last year's decrease as well. And then in terms of other aspects of expenses, the teams are doing a great job controlling the controllables. And overall, we see expense growth this year growing sub 3%.

Maybe we shift to capital allocation and maybe I guess first off, just the dividend. You grew at, you know, recently announced the increase 10%. Was that, you know, just based off of taxable net income? Was that kind of the amount that was required to grow it? Or how did you think about kind of paying out a higher dividend versus other uses of that capital?

I would say it's a balance of all of that. It's a function of natural taxable income growth within the business. Naturally, we are continuing to robustly lean into dispositions. You know, a portion of dispositions can be 1031 into the development program. But naturally, when we are disposing of properties at the levels that we are, that creates tax considerations, which fold into our distribution planning on kind of a multi-year basis. And we'll continue to, right? This year, we're contemplating selling between four and $600 million of properties for this year. We are endeavoring to, you know, do as much as we can there. Last year, we did a great job outperforming our disposition guidance at the start of the year, and we're going to attempt to do that again this year as well. As we think about distribution planning, it's a function of creating, well, managing the taxable piece, creating the right type of glide path and return profile over time, balanced with retention of cash flow coming out of the business for reinvestment opportunities. But ultimately, it's a balance between all of that and is influenced by the level at which we're disposing of homes these days.

I guess on that point, you mentioned the $500 million dispositions at midpoint of your guidance. I guess what is a sort of good cap rate expectation around that?

High threes to four area. That's about where we're selling today and kind of the environment that we see kind of in front of us for 2026.

And that's like an economic cap rate, including, you know, CapEx, or does that just appear sort of nominal based on NOI? And I guess, does that include closing costs, like seller fees, title, all those things?

Yeah, essentially that's an all-in number. Think of it as the value at which we're selling to end-user buyers via the MLS. So think about it in terms of an all-in number of where we are selling to the end-user buyer with then cashflow assumptions, assuming if you had a third-party investor buyer purchasing that home where market rents would screen and kind of a market rate cost structure including a reserve for capex coming to an economic yield okay so it's economic yield correct okay yeah is there a way for us to think about it on a nominal basis just so we can sort of model earnings yeah you know a typical third party investor buyer would model anywhere between 30 and 50 basis points of capex reserve in that economic yield okay and i guess you brought this up a moment ago in terms of one of the reasons why you grew the dividend by by 10 but i guess

is there a certain amount that we can think about that you can sell each year and i know it depends on the tax basis of what you're actually selling but just generally if there's a certain amount that we can think about you can sell each year without having to do like a special dividend or or get into sort of tax consequences from selling?

It's a tough question to answer quantitatively. I'm not trying to dodge the questions. There's just a lot of things that go into it. You know, I would say the level that we're at right now is already kind of planned into the tax strategy and kind of dividend glide path that you've seen. We could turn that up a little bit further from where we are kind of all else held constant it's also a function of how much we are 1031 into the development program keep in mind you can only 1031 into the balance sheet component of the development program as we are increasing the proportion of development going into joint ventures obviously that decreases the amount of assets you can be 1031 into but i would say the simple answer is there's still some room from a tax perspective before we would need to get into um special distribution territory okay and then you have this policy and i think it's you know good ethical moral policy but that you only sell homes when people are moved out right um but i

guess you know sort of my question is you know given that there's you know legislation and i guess you know i'll read through the the full draft later but you know there's a legislation around you know you can't grow your portfolios beyond a certain amount unless it's you know sort of an exception you know do you start to rethink that policy i guess at all and you know as long as that lease is being honored by the buyer right so it's someone that's buying it and you know honoring the lease for the ascension the term you know could you reconsider that policy because it seems like it really does sort of limit what you can sell right i mean you're very limited to to the the 25 or so of people that that that turn over each year so could you reconsider that policy um and you know hopefully that would allow you to sort of sell what you want yeah i think

it's a it's a product for a couple of different things um one there's a difference in value of a home to an end user versus what the income stream that that home is going to going to produce when you consider the type of assets that we're selling the non-core assets the assets that might not be as well located, characterized in some cases by really very high HPA, the rent didn't follow, maybe not optimal size. There's a bunch of different reasons. So the ones that we're selling, the ones that are good disposition candidates have that particular yield profile, but that yield profile is not necessarily indicative of the rest of the portfolio. So the question could lead to offering the ability to buy to some of our residents for those tagged houses as well. So that's something that we've talked about internally, and we've run some internal programs in the past to offer the residents the opportunity to buy, and there's some savings on transaction costs and whatnot. We haven't seen a very significant uptake in that. I think the largest program that we ran had an uptake in the sub-5 percent area, but it is something that we're considering and taking a look at. It was most appropriate in our strategy to exit a specific market, and so we did put it through that ringer. But it's something that we're thinking about, and it may be more relevant in the context of whatever legislation ultimately gets passed. But at this point in time, we still really like the asset management and disposition program that we had planned for the year.

I guess, why do you think the uptake on that program where you're selling to the resident is you know five percent or less is it a down payment issue obviously the total cost including you know mortgage insurance and everything else is much higher but is there specific reasons that the tenants cite that that they you know don't transact yeah it's it's probably a little bit of all the above the the cost to own there's a big gap between cost to own and cost to rent at our current rent levels.

A down payment is clearly important. Some people just would prefer to rent and not have that particular obligation. There are a bunch of different reasons. We were surprised at how low the uptake was. In this specific example, we offered a discount to market value, the lesser of a discount to market value or a discount to appraise value. We were exiting California and we thought that would be the quickest way to process through. I was surprised at the low level of uptake. It was in a different interest rate environment as well. So the gap between cost to own and cost to rent wasn't as wide as it is today. So there's a number of different contributing factors that, again, lead us to believe that the current disposition path is the best for us and the most realistic too.

And I guess for those that, you know, because you have a certain percent that move out to purchase a home every year, are they just not, did they just not buy the, I mean, I guess you're continuing to rent that home, but I guess my question is, if you have like 20% of people that are moving out to each year to purchase homes, you know, could you just sell it to them, right? I mean, they're moving out anyways, you know.

It's possible, but again, people are moving out because they're moving out of market. There's a lot of other factors that come into play for those decisions and it's difficult to identify exactly which ones are going to make that choice in advance of them making that choice so short of offering everyone the opportunity it'd be very difficult to to hone down on which specific ones fit our disposition profile and also the timing was right for the resident to purchase in light of all the life events that that might drive that decision.

I guess maybe on the buybacks, you know, as you said, you've been a buyer in size of your stock. You're funding it through dispositions. I guess hopefully the stock price improves, I guess, but if it doesn't, you know, would you be willing to take up leverage a bit?

Would you be willing to sort of take down development sort of capex for next year and forward years maybe just talk about sort of your willingness um um to be a the buyer of your stock and how that might impact other parts of your business yeah you know i would say we're committed to the quality of the balance sheet that that's that's critical um we we are totally comfortable taking leverage up to to target leverage in the mid fives we're a little bit below that currently so there's some capacity there um uh development um yes you know again we we control the entire development life cycle end to end we have the ability to throttle up and throttle down like we have done already um additionally we we've got uh you know a robust joint venture pipeline that we can continue to kind of um you know have discussions and toggle between so so the answer is yes you know obviously there are limits to how much you can kind of throttle but uh yes absolutely and you know as we think about kind of the the next uh kind of funding area or source of opportunity um we would look to two dispositions right again there is yes naturally an upper limit to how much can be accomplished in one given year but we will continue leaning in as much as we possibly can um and i would remind of two things one um keep in mind that the balance sheet is fully unencumbered at this point. We recently freed up 20,000 homes that were previously collateralized by securitizations for the past decade. Those were paid off over the course of 2024 and 2025. And there's, you know, a meaningful portion of asset management and recycling opportunities that are now freed up out of those previously collateralized pools. That's one. And then two, you know, we did a great job outperforming our expectations last year in terms of where we started the disposition outlook at the beginning of the year we started 2025 contemplating four to five hundred million dollars of dispositions you probably all recall that as we got into the back half of the year we were speaking to the high end of that range and ultimately we ended the year at 573 million dollars of disposition proceeds last year so you know our objective for this year is going to be to continue to lean as in as much as possible then maybe on development i think you quoted initial yields around 5.3% for this year for what's delivering.

Obviously, your cost of capital has changed. Your equity price has gone down. Interest rates have come down, so your debt costs presumably down, but I guess overall cost of capital has gone up a bit. Can you just talk about the value creation that you see out of that pipeline and why you're still committed to it, even as sort of development yields have sort of come down into the low five range?

Yeah, and I think the key factor is the driver for those yields coming down a little bit below expectations. And it has to do with the overall rate and rent environment. We think over time that that will recover, but it's not immune to the other pressures that we're seeing across residential. So this particular point in time, the five threes, where we're entering, this is a bond delivery, first lease. We're doing a good job of managing the, matching the delivery cadence to level of demand. Those returns, there are no concessions being offered on the rental side. So what you see is what you get during the active development process. We have strategies to improve those yields over time, especially as we replenish the land pipeline um the outlook for this particular year though is what we have in play active communities developing and that's the 5.3 expectation or similar last year is where we sit but on land that we're bringing into the pipeline to replenish that supply we've got some initiatives in play that we think can drive down the overall cost basis without sacrificing on the revenue side. The key to those yield improvements is getting that total investment cost down, and we're doing that through the complex of land, and the current market is a little bit different. We're seeing opportunities to get VDLs, vacant developed lots, which is much quicker to the vertical construction side. It cuts down that carrying cost and lets us hold the land for a much shorter period. We have other initiatives on site plan and floor plan optimization that will allow us to have similar quality but be able to deliver at a lower price. We've controlled the vertical construction costs very well from 24 to 25, running flat basically with the expectations that will continue flat into 26. So there are a number of good things at play coupled with kind of a return to normalcy on the rent side. gives us a lot of confidence going forward. But the outlook for the near term is as we've talked about.

Thanks. One of the key themes we've been exploring with every company is just the deployment internally of AI to find different efficiencies. So curious from your side where you're seeing the best opportunities today and how you're actually doing that. Is it building yourself? Is it partnering? Is it buying?

Yeah, it's a very good, pertinent question to date. We've talked about it a little bit, but we started our first real AI initiative was focused on the front end of the leasing platform. We partnered with a third-party provider, but we have a highly customized internal system. And effectively what it's doing is it's taking all the inbound demand, phone calls, electronic submissions, and working the prospects through the system into the touring and the check-in of the actual house. And at that point, they have a clear choice to either continue on a self-service basis or have assistance from some of our licensed sales agents or leasing agents. It's been very effective. It allows us to have no wait times on queues, 24-7 phone calls. The initial implementation is going extremely well. It's used across our entire system, and we've seen some efficiencies, not only on the cost side, but on execution. So we built a better process and done it economically. So that was number one. That same system will form the foundation for our communication platform with our residents, which is really important, the way that they speak with the property managers, the way that they order service. So it's really the foundation for a key information exchange that will end up driving a lot of other efficiencies. Outside of that, we have some other initiatives that we've utilized, third parties, some stuff that won't have a huge impact initially, but it's very clear, discrete investment and a very nice return. HOA management and a couple of other small pieces. We're actively looking into applications that will improve the efficiency of the services platform and then really trying to crack the code on how to properly market this in this environment.

Thank you. Really quickly, rapid fire, same story, no high growth for single-family rentals next year in 27? Low single digits. Three?

Yeah, in that range.

And then more if you're the same number of public companies, within the SFR next year?