American Homes 4 Rent

Greetings, and welcome to the AMH Fourth 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, Director of Investor Relations, Thank you, Mr. Fromm. You may begin.

Good morning. Thank you for joining us for our fourth 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 facts 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 new 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, February 24, 2023. 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.amh.com. With that, I will turn the call over to our CEO, David Senequist.

Thanks, Nick. Welcome, everyone, and thank you for joining us today. To start, I would like to highlight our company-wide rebranding that was announced last month. Our goal has always been to make leasing a high-quality home easy so our residents can focus on what really matters to them in life. Our rebranding embraces a simplified, modern look, representing our commitment to continued innovation, including an updated website, and enhanced mobile experience. But this is just one part of the equation. The single-family rental sector is constantly evolving, and we plan to further solidify our market leadership by continuing our investment in customer service and maintenance delivery this year through an initiative we named the Resident 360 program. Investments this year will include a combination of added resources to our property management platform, continued system innovation, and bolstering of various supporting functions. In a few moments, Brian and Chris will share details on our operational plan and the financial impacts of this very important initiative. Now turning to the quarter and full year. We closed out 2022 strong, resulting in 13% core FFO growth per share for the year. This represents the second consecutive year of double digit growth, which is a testament to the AMH team, platform, and portfolio. As we look ahead to 2023, we recognize the landscape is changing as the economy cools and inflation continues to pressure consumers and businesses alike. With that in mind, our 2023 outlook contemplates our top line to remain resilient with growth stronger than historical norms. even with some moderation from 2022. This strength and resiliency is due to long-term fundamental tailwinds in our industry. First, there is an undersupply of housing, and current building permits project a significant decline in new housing inventory. Second, housing affordability significantly favors renting. According to the latest John Burns data, It is more than 20% more affordable to rent versus own across our top 20 markets. And finally, our portfolio is concentrated in high quality of life markets, with the majority of our households consisting of dual incomes that are employed in resilient sectors, with some of the most common professions for our residents being nurses, firefighters, and other first responders. Shifting gears to the investment front, we continue to benefit from our AMH development program, the backbone of our growth. Currently, our traditional and national builder channels are largely on pause, as today it remains difficult to acquire properties in an accretive and responsible manner, with expected returns at today's pricing still too low to clear our required return thresholds. But channels will reopen one day. but we do not have a crystal ball showing us the exact timing. As such, our investment guidance reflects no material activity across these two channels in 2023. Updates will be provided should market conditions change. A key benefit of our three-prong growth strategy is that, unlike others, we do not rely solely on open market acquisitions to grow. In 2022, we continue to have consistent and predictable growth through our AMH development program that delivered 2,183 homes consistent with our 2022 plan. We expect another year of consistent growth in deliveries during 2023. Similar to commentary from our last earnings call, we are seeing signs of reduced development labor and input cost in many of our markets. While the deliveries in the fourth quarter reflect peak pricing, today we are seeing those prices decline. As an example, today lumber is one-third the cost of its peak pricing in May of 2022. We expect to see further price reductions in vertical input costs for the balance of this year. Please keep in mind that the vertical development phase is six to nine months, resulting in today's cost reduction benefits showing up in yields in late 2023 or 2024. With respect to asset management, we continue to be focused on optimizing our existing asset base. Specifically, we anticipate another active year on the disposition front to capitalize on current market pricing opportunities by selling homes that do not align with our long-term objectives. This can already be seen in the fourth quarter where we sold approximately $130 million of homes. bringing the full year total to nearly $300 million. The vast majority of these homes were sold to individuals. In closing, as we head into 2023, our resilient asset class, strong tenant base, and one-of-a-kind development program positions us well during these uncertain economic times. Our resident 360 program, as well as long-term favorable rental demand tailwinds, pave the the way for consistent value creation for many years to come. And now I'll turn the call over to Brian for an update on our operations. Brian.