American Homes 4 Rent (AMH) September 16, 2026 Conference Transcript

Welcome to Bank of America's 2026 Global Real Estate Conference. I'm Jana Gallen, B of A's Residential REIT Analyst, and we're thrilled to have with us from AMH CFO Chris Lau, Chief Operating Officer Lincoln Palmer, and Investor Relations Nick I'll turn it over to Chris for opening remarks, and then we can jump into Q&A.

Just to get us going, from a high level, I would say that the business is performing really well. I think we would have all seen that in the quarter. Leasing activity has continued to remain solid. The teams are executing super well. You saw that translate into a three-penny bump to the guide on a full-year basis at the midpoint. We're now expecting FFO growth to be north of 4%, 4.3% actually, which continues to be at the very top of the residential pack. Since the end of the quarter, we just put out a July and August update. It hit the website back half of last week. You know, I would say the right takeaway there is that things are going according to plan. New visas, importantly, continue to remain in positive territory, moderating a touch with seasonality, just like we were expecting, from 1.6% in July to 80 basis points in August. renewals held steady at 3.3 percent in both months and occupancy was 96.1 in july 95.9 in august again kind of trending just as we were expecting it to on the expense side of things i think everyone has probably seen that expenses very much have been a bright spot this year the team has done a fantastic job controlling the controllables property taxes for this year trending below long-term average. Latest midpoint of the guide is 2.75% growth this year. That's below long-term average, which is more like 4% to 5%. Real-time update there for anyone that's familiar with how property tax information flows over the course of the year. The end of summer, early fall is the time where we start to hear back on the results of the appeals process. I can't put any numbers to it yet but we are starting to begin to get back some of those appeals results directionally i will say that we're starting to see some results come back that feel like uh they're a little bit in what i would characterize as good guy territory um you know we still need to collect more information um and importantly property tax rates come out later this year fourth quarter but by the time we report the third quarter we should have pretty good visibility on values and like i said you know so far so good in terms of what we're seeing. Capital plan-wise, nothing terribly new to report there. We continue to execute on this year's moderated development program, importantly, that is sized in a way that the balance sheet component is match fundable with recycled capital coming out of the disposition program. That, like we talked about at the beginning of the year, has freed up incremental capital capacity this year for other things like share repurchases as as an example. I'm sure everyone saw that we were active, you know, very active on share repurchases in the first five to six months of this year. You know, fast forward to the middle of this year, it felt like the stock was moving in the right direction for at least a period of time. Obviously, everything has pulled back over the last week we can change or so. So it continues to be something very top of mind that we're watching very closely again. And then, you know, final high-level update. Since many of us would have spoken at least live last, obviously the Road to Housing Act has now passed. Since passing in July, the latest update is Congress has delegated it down to the respective agencies, Treasury, HUD, et cetera, for the actual detailed rule writing process that is targeted to take place over the course of this calendar year. We'll see how much gets done by the end of this calendar year before going into effect at the beginning of 2027. You know, key takeaway there is that from an industry perspective, we now have pathway to clarity, which we've all been looking for. And then from an AMH perspective, I would say that the AMH strategy has probably never been more differentiated than it is currently, considering the fact that our two primary growth channels being internal amh development and portfolio consolidations are both protected and and you know specifically allowed under the new law um high level wise i'll probably pause there you know main takeaways like i said business is performing well um the the third quarter to date update is that things are going according to plan and the team is hyper focused on executing to the best of of their and our ability into the balance of the year.

Thank you so much, Chris. Maybe just starting with kind of the policy, since that's been so forefront this year, and definitely outcome of road to housing for you and your sector is much better than feared, and pretty much business as usual. I would be curious if there's anything in the midterms that you guys are watching, concerned, being talked about. it?

You know, just like everyone else, we're watching it very closely, you know, for the most part for this year, you know, any of the states that we operate in, you know, essentially those states are out of session for this year. So, you know, we're very focused at the state and local level going into 27. But quite frankly, that's kind of business as usual for us, right? You know, Housing ultimately is governed state and local level. As many of you know, we have invested heavily into our own government affairs team starting years ago at this point, and their day job is really focusing on educating, advocating at the state and local level. This was really the first year where we essentially redirected their efforts to the federal level, and now that road to housing is, you know, quote, behind us, they can essentially get back to their day job at the state and local level. But the simple answer is no, nothing to call out right now recognizing that, you know, the states that we operate within are adjourned for this year.

Could you clarify your comment about an internal development portfolio consolidation in the context of road to housing for you meets what?

Sure. So, you probably recall, we've talked for years about the fact that there are a large number of assembled kind of medium, small to medium-sized portfolios out there. Think of it, you know, thousand to couple thousand unit portfolios are the sweet spot. you know, for the last probably year or two, we've been talking about the fact that many of those portfolios are going to need liquidity at some point and very likely could be great consolidation opportunities for us. You can use the portfolio that we consolidated in 2024 as kind of the perfect example of what those portfolios look like. You know, a couple thousand units, that portfolio in particular was managed by a couple of different regional property managers that operated that portfolio to the best of their ability, but below the AMH level of operational performance. Just to give you an example, when we acquired that portfolio, operating margins were call it in the mid-50s. We brought it onto our platform, brought it up to our standards within about 12 months or so. Operating margins moved up into the mid-60s. That means that the initial in-place cap rate that we bought that portfolio at, which was a five to very low fives, expanded up into the high fives close to six, once brought up to our operating standards, again, creating value coming onto our platform. That's the type of opportunity that we've been talking about for the last year or two. My point on the impact of the new Road to Housing Act is for many of those portfolios that had ambitions to get larger and have the ability to continue to grow, it's going to be much more difficult for them to do so in today's environment without access to the MLS and, you know, to be determined access to being able to buy from builders that we think will translate into, over time, increased seller motivation as they're looking to liquidate and monetize those portfolios. It's not going to happen overnight. You know, our best guess is over the next probably 12 to 18 months, we'll start to see some of this play out, which is perfectly fine for us. Obviously, the cost of capital off the balance sheet today isn't exactly where we would want it to be for these types of portfolio consolidation opportunities. And so we're going to watch it closely as we get into 27. And on the right cost of capital environment, there's a lot of value to be unlocked and created in these types of consolidation opportunities.

And the act you've been buying and they can't just refresh on them.

Yeah. The details are the definition of a large institutional investor ended up being 350 units or larger. Why 350? No one really knows, but that is where it landed. And so if you are 350 units or larger, as a practical matter, you really can't buy off of the MLS anymore. That's the key distinction here. Theoretically, you can subject to certain exceptions, if we can get into the details of, but the punchline of it is there are economic costs that would come with acquiring off of the MLS, that as a practical matter, if you are a defined large institutional investor, it's not really going to be a viable growth channel anymore. But to your point on portfolio transactions, under the law, transactions between portfolio owners of 350 units or larger are allowed from one owner to another, meaning consolidation.

So, just to confirm you, does this tie to your sentence you said, or statement, we now have clarity? I just want to make sure, have you fleshed that out completely, or is there anything else to, you know, elaborate on? Because, you know, talking to To a lot of folks post-name read, there was some excitement, and then a lot of generals are still, they're not seeing the clarity. So is there anything else to mention to folks?

The key clarity, some of the early concepts that were being discussed, like forced divestiture requirements, totally removed. Pure clarity on that. Clarity on development being specifically carved out and protected, which essentially is a direct acknowledgement of the fact that all forms of new supply, both for sale and for rental, are very important in terms of solving housing in and across the country. Key clarity on the ability to consolidate portfolios is very important. So that is really what we mean by clarity, right? Taking some of the early stage things like forced divestiture completely off of the table, really reinforcing the AMH strategy. And then, of course, yes, there are still pieces that need to be defined throughout the remainder of the specific rule writing process that will be a little bit more relevant to others, and in particular, some of the small and medium-sized portfolio owners and operators. but good clarity for strategies specifically like AMHs.

And this is what you're saying? HUD is now going to go through over the coming months. I'm about early 27. We'll know for sure, I guess.

Let me asterisk the word choice for sure. So that is, that's the objective. Our political experts would tell us that for a law of this size, it is not uncommon for this type of rule writing process to take upwards of 12 to 18 months on average. Congress is endeavoring to accomplish this in more like six months. The experts would say that's a pretty ambitious timeline. So we'll have to see exactly how much of this is ultimately defined by the start of the new year, but that's the objective. And like I said, we're going to have to keep everyone updated. But again, the important pieces, bigger picture, nothing like forced divestiture, reinforcement of development, portfolio consolidations, those are not subject to interpretation in the rule writing process. It's more of the finer details in terms of how some of the other things are going to go effectively into law.

Right. So for those who are looking for a hundred percent clarity uh you know while the fine details will be worked out none of that should impact amh and how you're operating and developing and potentially doing portfolio acquisitions correct on operating developing managing of the balance sheet etc the portfolio consolidations part of that i think will be contingent on how some of the rule writing process plays out.

The body language, if you will, that we're getting from other portfolio owners out there is they're waiting to see what the rule writing process looks like. They're waiting to see how others react. They're waiting to see how home builders respond and their willingness to continue to sell to institutional buyers before they recalibrate kind of their strategy and plan. So I would say yes, with respect to everything other than the portfolio consolidation piece, where, as we know, right now, there's a pretty wide bid-ask spread in the market for portfolio consolidations. The portfolio owners need to see a little bit more of that clarity before, you know, we think we start to see more motivation from a pricing perspective. Recollection is, you mentioned it a little bit, that you can buy off MLS if you put in capital, capex you sort of refer to it as not economically viable why the two main exceptions um that would allow you to as a as a large institutional investor to 350 units or larger you can continue to buy off of the mls if you meet one of a couple of exceptions the two main ones are you're acquiring a home that is not currently up to code that typically would not be the type of property someone like an AMH would be targeting, it's not up to code and it requires substantial investment to bring it up to code, meaning obviously economic investment. That's number one. The second main exception is you could acquire that property if you include it in some type of home ownership support program. That is currently being defined in terms of what actually that means, but it is something along the lines of the institutional investor that purchases of that home has to include that home or the resident in that home in some type of program that they are funding, the purchaser of that home that they are funding, that will ultimately support that resident's journey towards home ownership, whatever that may mean. Again, economic cost to it. So I think my comment is, as a practical matter, pretty much everyone is viewing the MLS exceptions as likely meaning not economically viable in terms of MLS being a true growth channel the way that it used to be.

How frequently were you buying from the MLS before?

Oh, from an AMH perspective, we've not been an active purchaser off of the MLS for years at this point. So that goes back to my point about the fact that the AMH strategy is essentially unchanged in that we've not been a meaningful purchaser off of the MLS for years and the the primary growth from an AMH strategic perspective has been internal development supplemented or to be supplemented by the opportunity to create value as we you know hopefully consolidate portfolios down the road in the right cost of the capital environment.

So development is the clear path, how do you lean even further into the development? And maybe talk about some of the expertise or things you've learned over the years versus, let's say, the home builders and what they're doing.

Oh, sure. Let me start. And then, you know, maybe you talk about some of the things that differentiate one of our development homes on the ground relative to what we're seeing from others or even scatter site. So yes, we have invested heavily into our development program for years at this point. You know, we have been the largest integrated, you know, developer and operator of single family built to rent homes for a number of years at this point, actively developing in, you know, called 15 markets or so across the portfolio. In today's environment, It's a little bit about, Jeff, to your point in terms of how do you grow it from here. You know, look, the reality is for anyone in our industry, if you want to have a sightline to predictable growth over time, it needs to be through newly constructed product. Obviously, the MLS is not realistically going to be a viable channel. Again, we'll need to see how the builders kind of respond after the final language is And then portfolio consolidations, you know, as much as we love them from a value unlocking perspective, they're episodic. And so if you want true sightline to predictable growth, it needs to be coming through development, which, again, really differentiates the AMH development program. In terms of the sizing of it, look, we would love to ramp the sizing of it. Many markets across the country need more housing, especially the type of housing that we're building in the location that we're building at the quality that it's being constructed. The challenge becomes, obviously, the cost of capital environment that we're operating in right now. And so, you know, the balanced approach that we've taken this year is ensuring that we keep the development program and development machine running in all of our markets. That's very important strategically for the longer term, but sizing it appropriately in this type of environment, like I was talking about a couple of minutes ago. What that means is, you know, we've moderated the sizing and volume of the program overall this year. We can do that because we control the entire program end to end. We have allocated a larger proportion of this year's pipeline to our joint venture partners. As we're thinking about 2027, that discussion with our joint venture partners is very active right now in terms of proportion of pipeline to be matched with JV Capital. You know, that could be one way to expand the development program further going forward as we think about this type of cost of capital environment. But Jeff, it's ultimately a balance, right? continuing to invest into, keep the development program operating and running in our markets, but doing it appropriately in this type of cost of capital environment and thinking about the best matching of balance sheet match-funded capital from dispositions from the balance sheet, and then the mix of right JV capital complement from a sizing perspective. In terms of some of the things that we're doing, Lincoln's got great perspective.

Just one follow-up on that, because I think years ago you were contemplating something I think similar to what, let's say, I think what Prologis has with the open-end fund developing maybe assets that you, you know, your cost of capital is there, but open-end fund creates that cost of capital, develop for fees, maybe maintain some ownership, put it into the fund, and really take advantage of what some of the, and now today the banks are looking to offer to develop. to develop. Is that still a possibility or you're strictly focused on the JVs?

You know, rewinding a little bit, you know, we maybe have discussed it just kind of like an idea start or something open-ended-wise. You know, those discussions never really went that far. I would say that the style of JV relationships we've had to date has been a great kind of strategic and stylistic match for what we're trying to accomplish via the development program. And with the balance sheet, what we've been able to accomplish in particular with one of our largest joint venture relationships is it's structured as an evergreen vehicle. We've talked a lot about this, but it truly is, you know, an evergreen joint venture. We're 20%. Our partner is 80%. It does not have an end date. And after that pipeline of homes is developed and stabilized, we go through and we, you know, synthetically crystallize the promote. If anyone's familiar with a traditional JV, think of it, you know, you would go through and value the portfolio, just like if you were going to, you know, hypothetically sell it, you calculate what the promote payment would be through the promote waterfall. And rather than paying it to us in cash, like you would in a typical you know finite lives jv we go through and reset our capital accounts so our 20 goes up by whatever that promote payment would be our partners uh 80 um would go down by whatever that promote payment would be and we live on into perpetuity and the great thing about that is um you know it fits our investment time frame right these are communities that we are building with a very long, you know, time frame and mindset, it enables us to, you know, create and realize the value from the development program without the need to monetize anything. And very interestingly, it takes that promote payment and locks it into ongoing cash flow stream from that venture as opposed to a one and done, you know, cash promote payment, which is great.

It's a validation of the vehicle, but how do you really ascribe value to that when it's a single, you cash payment event at the project level before jv's tell us about development costs and returns and does it vary by region i apologize maybe even more broadly in terms of capital allocation you know stocks may be low implied six cap rates but that's one option with buybacks and then if you can talk a little bit about the investment yields and development and then what i know there's a bid x spread right now but what do the smaller portfolios uh what do they hope to achieve Yeah.

In no particular order, no question, the stock is attractive. You saw us active earlier in the year. The reason why we developed this year's capital plan the way that we did is to create incremental capacity for things like buybacks from this point forward. There's some leverage capacity on the balance sheet. Dispositions are going well this year. We continue to have remaining board authorization as we continue to watch the stock closely. Okay. Tying that to the development program and construction costs, it's a huge focus of ours. You know, we talk a lot about, and I'm sure everyone has heard, you know, our objective to continue to influence and migrate development yields higher over time. The program right now is delivering second quarter was, second quarter deliveries, I think we're a 5-4. We absolutely want to see that fire. And the way that we're thinking about it is it's a funny way to characterize it, but we're really attacking it from all angles to migrate those fields higher. And part of it is attacking the existing pipeline. The way that we do that is through the absolute most disciplined construction cost controls we can deliver. And the team has done a fantastic job on that. if you look at the cost to vertically construct a home, you know, this time of year compared to a year ago, those vertical construction costs are basically flat year over year. That is a function of the team doing a really good job managing the supply chain, our trades, labor base, etc., along with the fact that we continue to just mature and get better as a builder. But the objective is to as tightly control those development costs as possible. Hopefully at some point we see a reacceleration in market rents as construction costs are controlled. We hopefully see some level of reacceleration market rents mathematically that translates into yield expansion with respect to the existing pipeline. And then the other way that we are attacking it is right now, as you all probably know, we've not been a large acquirer of land recently. In fact, over the last 12 to 18 months, we've actually been a net seller of land. But for the small amount of land that we are underwriting, you know, in today's land environment, along with, you know, everything else I just talked about from a cost controls perspective, new deals are penciling at the 6% plus area. Even though we haven't needed to add a ton of land to the pipeline, there are some markets where we're going to need to be sprinkling in backfilling of land positions. And that is our opportunity to be sprinkling in, you know, higher yielding new vintage projects, if you want to think of it that way, mixing into the development program as we are attacking the existing pipeline again towards the objective of migrating yields higher.

And maybe just where we are in terms of kind of expectations of the smaller portfolio.

Oh, yield wise? Yes. Oh, I can't comment on where yields are currently just because nothing is actively trading um i can use our last portfolio that we acquire acquired in 24 as an example obviously things will have changed since then but to give you a kind of a kind of a frame of reference or magnitude in terms of the value to be unlocked there i think i just mentioned this a couple minutes ago you know we acquired that portfolio at an in place kind of five to very low five um what's bringing it onto our platform and up to our standards, that expanded up into the high fives, probably even close to six, just kind of giving you a frame of reference in terms of the value that can be created by bringing things onto the AMH platform. In terms of where portfolios would price today, it's really tough to say because, you know, things are a little bit in a wait and see again for a lot of the rule writing to play out.

And then maybe thank you very much for providing a kind of operational update heading into the conference. I would love to hear kind of how peak leasing season played out relative to your expectations, and I know you also played around a little bit with the lease expirations and kind of how that…

Sure. I thought you were going to let me off the hook here. Peak leasing season went extremely well this year. As you know, we've been planning for quite a while around the lease expirations. Those are layered two-thirds into the first half of the year now, one-third into the back half. This year was a challenging environment for a couple reasons. One, we had more expirations this year than we ever have. That translated into more move-outs, albeit still high retention. The higher move-outs related to the expirations, and that challenged our operating teams who did a fantastic job getting those houses turned very quickly back on the market. We had a couple record leasing months. That was very encouraging to see, and maybe more notably, the operational results extended a little bit later in the season this year just due to those efforts. Chris mentioned that we saw rates directionally increase, not a large magnitude, but from June into July. That's abnormal, and we're still in positive territory for the year, so I'm very encouraged with the way that the first half went. The other thing I should give the teams credit for is just the remarkable job that they did on managing expenses through that entire background. As we get into the back half of the year here, again, expirations are going to be lower. We still plan to see new lease rate growth on a full year basis in the slattish range as we continue to see a little bit of moderation. Again, we're planning for a flatter curve also on occupancy in the high 95 area on a full year basis. And then renewals are steady right now in the low to mid threes, and we expect to see those trickle higher over the next few months as we come into the first part of the year. So the goal for the business now is looking to 27, the setup coming into peak leasing or beginning of leasing season in January and February is extremely important to us and it in a lot of ways defines the year for the business. If you remember, we came into 26 with around 95% occupancy, we expect to come into 27 in a much better position than that. And that should support, you know, to the extent that market rate growth participates, then it should support some rate growth on both the new and renewal side.

How can we think about kind of the 2027 earn-in from everything you've kind of accomplished year-to-date?

Yeah, do you want to talk to the components for earn-in, Chris?

I thought you were still on the hook. Just as a reminder, earn-in rolling into 26, let's call it mid-ones or so, 1.5. I'm hesitant to overly quote where we think earn-in is going to be going into 27, just because it depends on where spreads land for the next couple of months. Not out of the question that it could land a touch—if you take the midpoint of the guide, it would imply something a touch lower than what we rolled into 26 with. But I think there's going to be a number of different kind of flips and takes as we think about uh the building blocks for 27. earning is one piece um occupancy uh it's another piece keep in mind um you know occupancy this year comped negatively a little bit relative to 25 you know 25 basis points or so um just like lincoln was talking about the objective especially with the benefit of the optimized lease curve is to come into 27 in in a in a better and stronger occupancy position which is beneficial both from statement of the obvious occupancy position but pricing position coming into the new year. And then, you know, probably the thing that we focus ourselves on more is market rent growth, right? Because we can talk about earn-in and earn-in is very important, no doubt, in terms of the building blocks to revenue growth, but earn-in is also kind of the current year's impact from last year's activity. And so, you know, market rent growth is much more of a reflection of what's going on in the here and now, especially from a leading indicator perspective. And I guess we didn't talk a ton about supply, but to seal Lincoln's punchline. The takeaway is that there are many different aspects of supply that very much feel like they're moving in the right direction over the course of 2026. Are we going to sit here and call bottom and get the crystal ball out at this point? No, not yet. But the right takeaway is it feels like supply is moving in the right direction. It's also, you know, we're hesitant to try to crystal ball market rent growth for 27 at this point. But if we want to just reference someone who is in the business of crystal balling that type of stuff, You want to use John Burns data as an example. John Burns views 2026 market rent growth in the low ones. His current estimate for 2027 is the high ones. Obviously, it's not a quantum leap year over year, but directionally, you know, he is thinking that market rent growth is moving in the right direction. We'll, you know, formulate our views on that over the next couple of months before we initiate the guide for next year. But, you know, that's one of the pieces that we like to focus on because obviously it's more of a reflection of the current environment. What's the data on supply? The data on supply.

Yeah. If you heard my comments on the second quarter earnings call, supply generally moving in the right direction, meaning we saw in second quarter the first reduction in overall supply. I know this is very market specific and I can get into a couple of details, but we saw the first reductions in overall supply in single family rentals for the first time in several quarters. By several, I mean eight or nine, potentially, depending on the market, of course. And so that was encouraging to see. Notably, we saw some improvements in some markets that have been a little bit challenged over the last 12 months. Florida's one of those. Again, on the single-family side, we've seen reductions in all three of our markets, Jacksonville, Orlando, and Tampa. Texas markets are another one that we've been watching very carefully. they seem to be more challenged on the multifamily side. Not as clear reduction in the multifamily in some markets like San Antonio, but it does seem like it's peaked and the permits and kind of completions have moderated, so we're encouraged by that. And then the other one that we're watching very carefully is Phoenix. Build to rent inventory there has been a big issue, probably a little bit of reprieve from the regulatory air gap that's been created in the last few months, slowing of investment in that market. So we're encouraged that it's moving in the right direction. I think you layered that in with everything that Chris was talking about. We have good supply trends. We've set up the business in the right way for the back half of the year with the expirations. Slightly increased view on new lease rates going into first of the year. We have a very positive outlook on 27 so far, so.

Any quick takes on shadow supply?

Yeah, I have some quick takes on shadow supply. We've talked about this quite a bit over the last couple days. It's been a topic of conversation for several months now, especially in the higher interest rate environment, and especially given what's happened over the last several weeks, maybe renewed interest there. It's very difficult to separate out the shadow supply from the aggregate single-family rental supply in the market because most of those are coming into the market under professionally managed banners. So it's difficult to differentiate the house that someone may have converted from for sale yesterday from the house that's managed by the same company that was converted three years ago. So we're watching it very carefully. The encouraging thing is, as we're seeing the overall aggregate supply come down, if there is continued pressure from shadow supply, either that component is remaining consistent and it's being overshadowed by the reduction in the rest of the mom and pop inventory in the market, or they're all coming down together. And so, we're encouraged by what we're seeing there. We do have some view into the institutional supply as well, whether that's public or private individuals or businesses that have larger amounts of inventory, and that seems to be easing in most markets.

Unfortunately, we're out of time, but we have three rapid-fire questions we're asking all the REITs. Number one, if long-term rates stay higher for longer, which has the biggest impact on your sector's earnings? Higher refinancing costs, lower transaction activity, or less new supply?

Definitely refinancing costs. Selfishly, I will say we don't have any debt maturities until 2028, so I would maybe select transaction activity.

I selfishly would select supply.

Over the next three years, will third-party capital become a more important source of growth for public REITs than balance sheet capital?

Over what time, friend?

Next three years.

Probably more.

And for your sector, will 2027 same-story NOI growth be higher, the same, or lower than 26? Great. Thank you so much, Chris and Lincoln. Appreciate the time.