American Homes 4 Rent

Greetings and welcome to the American Homes to a Rent first quarter 2019 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Stephanie Heim. Please go ahead.

Good morning. Thank you for joining us for our first quarter 2019 earnings conference call. I'm here today with Dave Singlin, Chief Executive Officer, Jack Corrigan, Chief Operating Officer, and Chris Lau, Chief Financial Officer of American Homes for Rent. At the outset, I need to advise you 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, May 3, 2019. We assume no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. A reconciliation to GAAP of the non-GAAP financial measures we are providing on this call is included in our earnings press release. 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.americanhomesforrent.com. With that, I will turn the call over to our CEO, David Singlen.

Thank you, Stephanie. Good morning and welcome to our first quarter 2019 earnings conference call. Before I begin, I would like to read an announcement I forwarded to the American Homes for Rent team members this morning. B. Wayne Hughes, our founder and chairman of the board, will retire after next week's annual meeting. Wayne is a legend in the real estate industry. In 1972, he founded Public Storage, one of the nation's largest real estate investment trusts. He served as its CEO until his retirement in 2002 and as a trustee until 2012. Wayne also founded American Commercial Equities, a private real estate company that owns retail and office properties in California and Hawaii. Eight years ago, in May 2011, Wayne approached me with his idea of acquiring and managing single-family rental homes. Wayne purchased the first homes in Las Vegas that May, and that concept and those homes were the beginning of what is known today as American Homes for Rent. Wayne's vision and leadership were instrumental in making American Homes for Rent a leader in the single-family rental industry. Today, we own nearly 53,000 single-family rental homes, providing quality housing to 200,000 residents, have more than $1 billion of annual revenue, and are leading the industry into its next chapter with in-house development and construction of single-family homes. Tamara Gustafson, Wayne Hughes's daughter, will remain a member of the Board of Trustees and continue the Hughes family legacy and counsel to the company. Wayne's vision, counsel, and leadership will be missed, but I am grateful for his guidance and support during our formative years. We wish him well and continued success. Next, a couple of additional comments before we move on to our first quarter earnings. Our annual meeting and quarterly board meeting will be held next week. At those meetings, the Board of Trustees will name a new chairman and declare and announce the first quarter distributions. Now moving on to our earnings. I am pleased with our results in the first quarter. Our portfolio performed well. Our investment programs are on track and our balance sheet is strong. As always, I would like to thank all of our AMH team members for their hard work and focus. As I mentioned on our last call, we continue to refine and improve our operating platform and business execution. The foundation of our efforts is built on four cornerstones. Operational excellence, consistent and accretive growth, financial strength and flexibility, and superior customer service. Beginning with operational excellence, we had a strong start to the year. 4FFO was 27 cents per share, up 11.6% on a per share and unit basis from the first quarter of last year. We continued to see and experience strong rental demand. Our same home occupancy at March 31st was 96.7%. And our average occupied days for the first quarter 2019 was 95.5%, compared to 94.8% for the first quarter last year. Our total cost to maintain a home, including expensed and capitalized costs, was $487 per home in the first quarter of 2019, which was less than our first quarter 2018 cost. Please note that while our costs are down year over year, This year's cost includes an expansion of our preventative maintenance program designed to reduce maintenance-related expenditures over the long term and improve resident satisfaction. Driven by solid revenue growth and lower cost to maintain a home, our same home core NOI margin of 64.5% for the first quarter this year was 70 basis points higher than last year. Jack will further discuss the details of our first quarter operations later on the call. As we head into the spring leasing season, we continue to maintain a strong same-home average occupied days for the month of April at 95.8%, of 60 basis points compared to April 2018, along with rental rate spreads of nearly 5%. Our second cornerstone is consistent and accretive growth. This begins with AMH Development, our in-house development program. We believe the opportunity to design homes for rent strategically enhances the benefits of our diversified portfolio. At a high level, we are building homes using value engineered plans that are aesthetically pleasing and designed for durability and lower cost to maintain. These new homes include customized features based on our operational expertise and resident feedback. We are currently building in high demand areas within our existing footprint and are capturing premium yields of approximately 100 basis points for AMH development homes and 50 basis points for homes acquired through our National Builder Program. Jack will have more information on our investment activity later on the call. Our third cornerstone is our best in class balance sheet. Since our formation, we have maintained a strong balance sheet, providing ample liquidity to fund our growth at the most advantageous cost. Today, we have adequate capital in place to fund this year's investment activity without the need to access the capital markets. Chris will provide more details on capital structure and recent financial activities later on the call. And our fourth cornerstone is our commitment to superior customer service during the full life cycle of the resident experience. We are seeing increased participation rates in our resident surveys with high satisfaction levels in all areas of service. For example, our in-house maintenance survey results show satisfaction levels in excess of 95%, and our Google ratings have continued to be strong and are up year over year. We have always invested in our team through a recurring training program. We have added team members in selected areas to provide bench strength. The benefits of these efforts are positive improvements in resident turnover and fewer escalated resident issues. Since the first quarter of 2017, we have seen over 380 basis point improvement in our trailing 12-month turnover rates. Overall, we are very pleased with our solid start to the year and believe that we are well positioned for the spring leasing season. Our local management teams are fully staffed and running on all cylinders with strong leadership. We remain confident with our guidance ranges and the team's ability to execute consistently on our operational goals for the year. And now I'll turn the call over to Jack.