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Thursday, Mar 28, 2024
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American Homes Good on FFO

American Homes 4 Rent reported first quarter funds from operations and revenue in-line with Wall Street expectations, but the company continues to lose money. The Agoura Hills single-family landlord reported FFO of $28.1 million (12 cents a share) for the quarter ended March 31, compared to FFO of $25.6 million (11 cents) for the fourth quarter. Revenue rose 19 percent to $77.3 million. FFO is a REIT metric that adds amortization and depreciation expenses into net income to get a better picture of cash flow. Analysts had expected FFO of 13 cents on revenue of $78 million, according to Thomson Financial. On a net income basis, the company lost $6.9 million (-7 cents). The company reported Monday evening after markets closed. Separately on Tuesday, American Homes announced it would issue collateralized bonds through a subsidiary backed by rental income from some of its homes. It is a private placement, so the company did not give any amount it is trying to raise. American Homes did say, however, that the securitization is “intended to reduce the company’s cost of capital over the long term.” The company also is facing rising costs due to higher home prices, but it has remained aggressive in expanding its portfolio. “We continued to put our capital to work, acquiring 2,237 homes in 31 of our target markets,” said Chief Executive David P. Singelyn, in a prepared statement. Last week, the company issued 7.6 million of its 5.5 percent Series C Participating Preferred shares, with net proceeds expected to be about $190 million. The shares carry a provision that would allow the liquidation value to rise depending on the appreciation of home prices in the company’s top 20 markets, as determined by the federal Housing Finance Agency’s House Price Index. It is the company’s third offering in the last six months. The company also announced last week the appointment of a chief financial officer. Diana Lang, 59, replaces Peter J. Nelson, who had been with the Agoura Hills real estate investment trust since 2012 and announced two months ago he was resigning to “pursue other interests.” American Homes is the second-largest owner of single-family homes in the country, with 25,505 single-family properties in 22 states as of March 31. Shares closed up 8 cents, or a fraction of a percent, to $16.75 on the New York Stock Exchange.

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