American Homes 4 Rent

Greetings, and welcome to the American Homes for Rent third quarter 2022 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. It is now my pleasure to introduce your host, Nick Fromm, Senior Manager of Investor Relations. Thank you, sir. You may begin.

Good morning. Thank you for joining us for our third quarter 2022 earnings conference call. With me today are David Singlin, Chief Executive Officer, Brian Smith, Chief Operating Officer, and Chris Lau, Chief Financial 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, November 4th, 2022. 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.americanhomesforrent.com. With that, I will turn the call over to our CEO, David Sinkland.

Welcome everyone and thank you for joining us today. Before we begin, I want to take a moment and thank our team members for their efforts surrounding Hurricane Ian. The safety of our residents and team members is our number one priority and our disaster response team was in place and ready to act within a moment's notice. Chris will talk through the numbers later in the call, but we were fortunate with the ultimate path of the hurricane. That said, We recognize many others are suffering hardships from the storm. And to help, American Homes for Rent has donated to various Hurricane Ian relief efforts. Our employees are also assisting their communities by working with shelters, contributing to charitable groups, and providing necessary food and supplies. Our thoughts go out to everyone who has been affected as we hope for a quick recovery. Now turning to the quarter. We delivered another round of consistent results with core FFO per share of 39 cents, representing 11.6% year over year growth. Brian and Chris will provide more details on our operating results in a moment. But first, I will discuss the macro environment. This country is in an uncertain economic period. Elevated inflation has been persistent and has forced the Fed to significantly raise interest rates. Today, the housing market is showing signs of disruption like it did in the 1980s and the global financial crisis. In this environment, the resiliency of the single-family rental asset class is on full display. Our national platform and strong balance sheet position us to capitalize on any opportunities that may arise. Cyclical durability has been at the core of the American Homes for Rent thesis from day one. Housing is a bedrock need and single-family rental fundamentals are supported by favorable long-term supply and demand dynamics. On the supply side, our country has a housing shortage. This is only getting worse as projections for single-family housing permits continue to decline. On the demand side, our business continues to benefit as the value proposition of high-quality housing without the headaches of homeownership, becomes more appreciated. Recently, this demand trend has been supplemented by the fact that renting today is significantly more affordable than homeownership. Using recent John Burns data, it is about 15% cheaper to rent versus own across our top 20 markets. On the investment front, we continue to deliver high-quality homes from our development programs. I am excited to see the progress we have made in some of our recently opened development markets in the West. Please keep in mind that costs for initial deliveries in newly opened markets tend to be elevated, which is reflected in this quarter's deliveries. Over time, our pipeline in these markets will continue to mature, and we will realize economies of scale. Also, as outlined in yesterday's press release, our 2022 delivery guidance was slightly reduced to modest construction delays in Florida. This is purely a timing issue caused by the hurricane. Now, looking forward. Today's uncertain housing market reminds us of 2011, when American Homes was launched and began significantly growing its portfolio. Today, we are taking a patient and disciplined approach to acquiring homes and land parcels. Price discovery continues, and further adjustments are necessary before it makes sense for us to come back in a meaningful way to the open market. With borrowing rates remaining elevated, challenging times may be ahead for private portfolios, home builders, and landowners. This will likely result in significant opportunities for American Homes for Rent. Today, there is inventory of tens of thousands of builder homes and a growing backlog of homes on the MLS as days on market continue to elongate. While the majority of these homes are in secondary and tertiary markets or do not meet our quality standards, we are beginning to see price reductions on those homes that do. Today, these homes do not fit our yield requirements, but over time, I believe we will see opportunities to acquire high-quality, well-located homes. While we are excited about these opportunities, our development program remains the best avenue for consistent growth. Today, we see two encouraging signs. First, high-quality and well-located land is becoming available, including vacant developed lots that are ready for vertical buildings. we continue to see price adjustments and remain patient and disciplined in our land acquisition program. Second, with home builders slowing their development programs, we are seeing favorable price movements in construction materials and labor. To date, prices have declined on most early stage home building input costs through the drywall phase. As home building slows, I expect we will continue to see favorable movement in our cost to build homes. This, along with favorable operating trends, should result in higher yields for future development deliveries. At quarter end, we owned or optioned more than 15,000 lots, representing a long runway of built-in growth. We will continue to take a prudent and disciplined approach with investments as we execute on our long-term growth plans. On the sustainability front, We continue to make great progress. To date, we have installed solar systems on amenity centers and begun pioneering solar build-to-rent communities. Our sustainability department remains hard at work, evaluating science-based targets, focusing on energy-efficient solutions, and creating action plans to achieve net zero carbon emissions over time. In closing, we all need to acknowledge that we are in uncertain times. I remind you that our asset class was born out of an opportunity created by a housing disruption. While these uncertain times may lead to some short-term issues and noise, the big picture here is that long-term opportunities will present themselves and separate the players in our industry. Today, we are prepared for those opportunities. with a diversified portfolio and scalable platform supported by a strong balance sheet. Now, I'll turn the call over to Brian for an update on our operations. Thank you, Dave.