2/21/2025

speaker
Operator
Conference Operator

Greetings and welcome to the AMH Fourth Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If you 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 you to your host, Nicholas Frum, Director of Investor Relations. Thank you, Nicholas. You may begin.

speaker
Nicholas Frum
Director of Investor Relations

Good morning. Thank you for joining us for our fourth quarter 2024 earnings conference call. With me today are Brian Smith, Chief Executive Officer, Chris Lau, Chief Financial Officer, and Lincoln Palmer, Chief Operating 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 accurate 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, February 21st, 2025. 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 relief 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, Brian Smith.

speaker
Brian Smith
Chief Executive Officer

Thank you, Nick. Good morning, everyone, and thank you for joining us today. Before we begin, I'd like to take a moment to express our sympathies for those impacted by the recent wildfires in California. Not only is the LA community near and dear to our hearts, but it is also home to many of our team members and one of our corporate offices. We were fortunate that there was no impact to our operations, but it's been heartbreaking to see the destruction. Today marks my first earnings call since taking over as CEO. Our consistent outperformance over the past few years within the residential sector is a direct result of our relentless focus, which will not change. Over the past decade, we have strategically created a portfolio of high quality assets in superior locations. On the growth front, we have a vertically integrated development program that allows us to accretively invest in all cycles while remaining patient and disciplined across our other growth channels. And we will lean into innovation across our entire platform, introducing industry-leading technology solutions that allow us to continue to efficiently deliver the best resident experience in our industry. Our ability to remain focused and execute on this strategy has driven outstanding results, and we continue to be well positioned for the future. From a macro perspective, the single-family residential sector continues to benefit from strong long-term fundamentals. including limited supply of quality housing, a wide affordability gap, and outsized population growth in our markets. And with our disciplined and focused approach, we expect to extend our track record of consistent outperformance within the space. The future at AMH is bright, and I, alongside our outstanding leadership team, am excited to lead this great company through the next chapter of its journey. AMH had a strong finish to 2024, capping off another year of outperformance with 6.6% growth in core FFO per share. Consistent with the year-end strategy we outlined on our last call, the teams optimized revenue and strengthened occupancy during the fourth quarter. While we typically do not focus on sequential monthly changes in occupancy and rate, the chronology over the past quarter is important. Notably, we picked up occupancy in the final two months of the quarter, which is atypical for the end of the year. We also hit an inflection point for rate in November, giving us confidence in our trajectory heading into the new year. This translated into 4% same home core revenue growth, which was in line with our expectations for the quarter and contributed to our full year core revenue growth of 5%. Turning to expenses, Core operating expense growth was 4.8% for the fourth quarter and 4.3% for the full year, reflecting excellent execution by the teams who were able to control the controllables throughout the year. In addition, we received better than expected news on the property tax front that Chris will address in a moment. All of this resulted in 3.6% and 5.3% same home core NOI growths for the fourth quarter and full year, respectively. Turning to 2025, the leasing momentum from the fourth quarter has continued through January and into February, giving us confidence for the year ahead. For the month of January, same home average occupied days was 95.6%. New lease spreads accelerated to 0.7%, while renewal growth held steady at 4.5%. This resulted in blended rate growth of 3.3% for the month. Looking ahead to the top line in 2025, our same home core revenue growth outlook is 3.5% at the midpoint on a full year basis. On the occupancy front, we expect the usual seasonal curve to play out over the course of this year, with full year average occupancy landing in the low 96% area. which is similar to last year and what we consider the normalized long-term run rate for our portfolio. On the rate front, we expect average monthly realized rent growth in the high 3% area, which breaks down to approximately a 2% earn-in from last year's leasing activity and the partial yield contribution from 2025 blended spreads expected to be in the high 3% area. Lastly, bad debt is forecasted to be in the low 1% area in 2025, which will be a modest offset to the other revenue building blocks. Chris will cover the remainder of guidance in a moment. On the investment front, development continues to be our primary growth channel. Since launching our internally managed development program in 2017, we have built over 12,000 homes in 200 communities, adding much-needed supply to the national housing stock. We are proud to be part of the solution in addressing the nation's shortage of quality housing. Similar to 2024, we plan to deliver approximately 2,300 homes in the current year. As rent growth accelerates in the spring leasing season, we expect initial yields to gradually improve, averaging in the mid 5% area on a full year basis. This is similar to the going in yields of our 2024 deliveries which landed a touch below our most recent program expectations. Our newly built homes remain the highest and best use of our internally generated and recycled capital, a testament to their superior quality, location, and long-term return profiles. Outside of development, our expectations do not include any material traditional or national builder acquisitions this year because of the current pricing and cost of capital environments. We will stay true to our buy box and remain patient on the growth side, pursuing incremental opportunities only when they make sense. And when they do arise, as we demonstrated with our portfolio acquisition of nearly 1,700 homes this past quarter, we have the experience and infrastructure to quickly integrate a large number of homes onto our platform. Finally, we will continue to lean into our disposition program as properties become unencumbered through the refinancings of our remaining securitizations. This will allow us to continue to optimize our portfolio while consistently recycling capital at Attractive Economics. Before I hand the call off, I'd like to highlight some of our recent organizational changes. With our CEO transition complete, I want to congratulate Dave once again on his retirement as he concludes his advisory period and finishes out his final term on our Board of Trustees. We are grateful for his leadership and wish him all the best. Additionally, I am proud to announce the promotions of three key members of our leadership team. First, Sarah Bolt Lowell has been elevated to chief administrative officer in addition to her current role as chief legal officer and remains a named executive officer of AMH alongside Chris and me. Second, Zach Johnson has been promoted to EVP Chief Investment Officer. And third, Lincoln Palmer, who will be joining us today for the Q&A portion of the call, has been promoted to EVP Chief Operating Officer. All three have been integral members of our team for more than a decade. With this leadership team firmly in place and our relentless focus on execution, We're well positioned to extend our track record about performance.

speaker
Chris Lau
Chief Financial Officer

Now I'll turn it over to Chris. Thanks, Brian, and good morning, everyone. I'll cover three areas in my comments today. First, a brief review of our year-end results. Second, an update on our balance sheet and recent capital markets activity. And third, I'll close with an overview of our 2025 guidance. Beginning with our operating results, we closed out 2024 with another strong performance focused on the core of our business, generating net income attributable to common shareholders of $123.2 million, or 33 cents per diluted share, and 45 cents of core FFO per share and unit, representing 5.7% year-over-year growth. And for the full year, we generated net income attributable to common shareholders of $398.5 million, or $1.08 for diluted share, and $1.77 of core FFO per share and unit, representing 6.6% year-over-year growth, once again leading the residential sector. From an investment standpoint, during the quarter, we delivered 463 total homes from our AMH development program. This was comprised of 339 homes and 124 homes delivered to our wholly owned and joint venture portfolios, respectively. On a full year basis, we delivered a total of 2,356 AMH development properties which was modestly better than the midpoint of our expectations. Outside of development, as previously mentioned, we acquired a nearly 1700 home portfolio during the fourth quarter for approximately $480 million. Integration of the portfolio is on track as we continue to bring performance of the homes up to AMH standards over the course of 2025. On the dispositions front, we saw another quarter of robust activity. selling 587 properties, generating roughly $180 million of net proceeds. For the full year, we sold 1,705 properties for total net proceeds of approximately $530 million at an average disposition cap rate in the mid 3%, generating a highly attractive source of recycled capital for reinvestment into our development program, which is a meaningful differentiator in today's cost of capital environment. Next, I'd like to turn to our balance sheet and recent capital activity. At the end of the year, our net debt including preferred shares to adjusted EBITDA was 5.4 times. Our one and a quarter billion dollar revolving credit facility was fully undrawn and we had approximately $200 million of cash available on the balance sheet, which included a portion of the proceeds from our well-timed unsecured bond offering during the month of December. The transaction was meaningfully oversubscribed effectively hedged to a 5.08% interest rate and raised total gross proceeds of $500 million that has or will be used to fund a portion of our 2024 portfolio acquisition and 2025 capital needs. Additionally, during the fourth quarter, we also took down approximately 3 million forward ATM shares, generating net proceeds of approximately $110 million. As a reminder, These shares were previously sold under our ATM program during the first quarter at an average sales price of $37.03 per share. Next, I'd like to share an overview of our initial 2025 guidance. For full year 2025, we expect core FFO per share and unit of $1.80 to $1.86, which at the midpoint represents year-over-year growth of 3.4%. And for the same home portfolio, At the midpoint, our expectations contemplate core revenues growth of 3.5%, which Brian discussed a few minutes ago, along with core property operating expense growth of 4%, driven by property tax growth in the mid-4% area, representing another year of moderation, and mid-3% growth on all other expenses, driven by modestly negative insurance expense growth based on our successful renewal campaign, and another year of tight expense controls. Putting together our same home portfolio revenue and expense growth expectations, we expect 2025 same home core NOI growth of 3.25% at the midpoint. From an investment standpoint, we expect another year of consistent and predictable growth from our development program. Similar to last year, in 2025, we expect to deploy between $1 billion and $1.2 billion of total capital, adding between $2,200 and $2,400 new to constructed, AMH development properties to our wholly owned and joint venture portfolios. Specifically, for our wholly owned portfolio, at the midpoint of our ranges, we expect to invest approximately $900 million of AMH capital, consisting of $750 million, or 1,900 homes added from our development program, along with $150 million of combined investment into our wholly owned development pipeline per added share of JV investments in property enhancing CapEx programs. Importantly, our AMH growth capital requirements for the upcoming year remain strategically sized to require minimal, if any, newly raised external capital. For 2025, we expect to fund our $900 million of AMH capital primarily through a combination of retained cash flow, approximately $200 million of cash on the balance sheet, and $400 to $500 million of recycled capital from dispositions. Lastly, In addition to our growth programs, we have our final two securitization loans that we expect to refinance in 2025 prior to their anticipated repayment dates. As a reminder, these securitizations have a combined principal balance of approximately $925 million with an average interest rate of 4.24%. In terms of timing, we have already delivered our notice to pay off the 2015-SFR1 securitization in April. and will likely target repayment of the 2015-SFR2 securitization during the second half of the year. Following repayment of our 2015 securitizations that we expect to refinance into the unsecured bond market over the course of 2025, our balance sheet will become 100% unencumbered. This represents an important credit rating milestone that has been nearly 10 years in the making. And before we open the call to your questions, I wanted to close with a few wrap-up thoughts. As Brian highlighted at the start, our track record of a residential sector outperformance is no accident. It's the result of a disciplined strategic approach across all aspects of AMH. Our relentless focus on the core of our business continues to set us apart, which was on full display this past year. As a couple of highlights, In 2024, we expanded same-home NOI margins and produced best-in-class residential sector NOI growth, while continuing to accretively grow our portfolio through our unique AMH development program and value-unlocking fourth-quarter portfolio acquisition, ultimately translating into full-year core FFO growth per share of 6.6% that once again led the residential sector outperformed our expectations from the start of the year by over 200 basis points and as we head into 2025 i'm confident that our disciplined strategy and relentless focus on the core of our business will continue to set us apart and position us for another year of image value creation and with that we'll open the call to your questions operator thank you we will now be conducting a question and answer session

speaker
Operator
Conference Operator

If you would like to ask a question, please press star 1 on your telephone keypad, a confirmation to indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. So that we may address questions from as many participants as possible, we ask that you limit yourself to one question and one follow-up. If you have additional questions, you may re-queue, and time permitting, those questions will be addressed. One moment, please, while we poll for questions. Thank you. Our first question comes from the line of Juan Sanbria with BMO Capital Markets. Please proceed.

speaker
Juan Sanbria
Analyst, BMO Capital Markets

Hi, good morning. Just hoping you could talk a little bit about your expected development yields in 25? I think you said in the mid-fives. And what, if anything, is assumed in that with regards to tariffs, particularly around lumber from Canada, knowing that that's a material input? And just kind of your thoughts about how you can navigate that or how you're trying to hedge that risk, if at all.

speaker
Brian Smith
Chief Executive Officer

Hi, Juan. Good morning. It's Brian. Yeah, regarding our yields in 2025, our expectations, as I mentioned in my prepared remarks, is that the yields will kind of accelerate as we get into the spring leasing season. The end of Q4 or the end of 24 and the beginning of 25, you're going to see a little bit of the effect of some of the pricing changes we made at the transition from Q3 to Q4 of last year. There'll be a little bit of a carryover into Q1. And then as the year progresses, we expect those rents to really pick back up and accelerate into the back half of the year. One small thing to note, it's important that we manage inventory in these development communities well, because we're going to be delivering new houses in many of these communities. We need to make sure that the timing and strategy of release is optimizing revenue as well. And then on the tariff and immigration front, We're all following what's happening very closely. There's a lot of different things changing kind of on a daily basis. We are recognizing that labor and material increases could be a headwind. There are a lot of different things at play here. There's some good things that we have as one of the nation's top 40 home builders and our ability to monitor and respond to this changing environment. Notably, though, on our development deliveries for 2025, over half of our planned new home deliveries are already baked in in terms of costs on vertical and contracted labor. So we're in a good position entering the first half of the year, but we're paying close attention to how that kind of evolves as we get through the first quarter.

speaker
Juan Sanbria
Analyst, BMO Capital Markets

Great. And then just as a follow-up, hoping you could talk about kind of the latest views on supply. Is that changing in terms of markets you're watching and And your thoughts on we've obviously seen a pickup in homes for sale that aren't necessarily clearing that are kind of sitting there and how that's impacting your pricing power in the traditional SFR market with maybe the shadow supply.

speaker
Brian Smith
Chief Executive Officer

Yes, supply with our asset type is a little bit trickier than maybe it would be on the multifamily side. We track it from a number of different external data sources, and we have some very strong internal data, too, just in projections of expirations and kind of expectations for how markets are going to react. Supply for our portfolio, it's one of the benefits of having the diversified portfolio footprint, in that we have many, many markets, some of which haven't really seen much supply pressure over the past few years at all. The Midwest comes to mind, Carolinas as well. And then the areas that have been impacted, we've been talking about them for many quarters now, thinking about the Southwest. We haven't seen a major change of late, but we are seeing some really nice signs of life in a couple of markets. Specifically in Phoenix, we're getting a really nice occupancy pickup as we get into the new year off of Q4. So there may be a little bit of an easing of supply pressures there, but Again, it's hard to tell exactly, but we are seeing some favorable signs. The same thing is true to some of the pressures that we talked about in the Tampa area, which I think is one of the markets where you've seen a lot of for sale product pressure too.

speaker
Operator
Conference Operator

Thank you. Our next question comes from the line of Eric Wolf with Citibank. Please proceed.

speaker
Eric Wolf
Analyst, Citibank

Hey, thanks. If you look at your occupancy guidance, it suggests that occupancy rises about 50 to 60 dips on average from current levels. Are you seeing any sort of forward indicators in terms of leasing that this increase should happen over the next couple months? And should we expect your blended rate growth to be a little bit more muted over this timeframe just as you build that occupancy?

speaker
Brian Smith
Chief Executive Officer

Yeah, hi, Eric. It's Brian. Yeah, we're seeing some really good signs as we enter the year. If you remember to our last call, we were very strategic about our desire to get really fully occupied to prepare for 2025. it's part of the initiatives that we put out in q4 where we picked up occupancy in both november and december traditionally kind of slower times of the year for us that that success that level of demand and leasing activity has continued into q1 our january um New lease rates accelerated a little bit. As we get into February, we're expecting a pickup and occupancy there as well off of January. And we're looking for really good momentum as we get through Q1 into Q2, which is kind of the prime time season for us. As we're going through that, if you want to think about our expectations for new lease rate growth in Q1, they are moving in the right direction. We have great trajectory moving off of some of the inflection point in November into flat in December, positive into January. And we're expecting similar gains into February and March. So it's definitely moving in the right direction. And we're well positioned for strength in the spring leasing season.

speaker
Eric Wolf
Analyst, Citibank

That's helpful. And then I don't know if you mentioned this in the prepared March. Sorry if I missed it. But you mentioned the high threes, blended rent growth expectation. Could you kind of break that out between new and renewals? And if you can, sort of what's underpinning the new lease projection? Is it based on third-party forecasts from John Burns Consulting? Is it based on the buildup from your markets, what are you basing that new lease projection on? Thanks.

speaker
Brian Smith
Chief Executive Officer

Yeah, sure. So to break it out for our expectations for 25, we're looking at new leases for the year in the 3% area and renewals in the 4% area. Specifically on the new lease side, there are a couple of components there. We have probably a similar loss to lease this quarter as we had last quarter in the low single digits. And then market rent growth across our markets somewhere in the 3% range for the year. And that kind of builds up our expectation.

speaker
Operator
Conference Operator

Thank you. Our next question comes from the line of Jamie Feldman with Wells Fargo. Please proceed.

speaker
Jamie Feldman
Analyst, Wells Fargo Securities

Great, thank you. I guess maybe to put a finer point on the rent growth expectations, you know, can you talk about like maybe your weakest markets and your best markets? You know, if you were to answer that same question, what you think the Delta could be in terms of how strong or how weak the rent growth could be and, and maybe benchmark, you know, maybe just like highlight which, which of those markets you're talking about.

speaker
Brian Smith
Chief Executive Officer

Yeah. Thanks, Jamie. This is Brian. We have a pretty wide range. If you go back to the inflection point in November, we, we had, rent growth as high as in excess of 6% in some markets. So there is variability across the portfolio. As we get into next year, we're looking for continued success in some of the markets that posted great results last year, notably the Midwest and the Carolinas. We've got really good movement in a couple of other maybe smaller markets. You can see positive rent growth in Savannah and Charleston. So we're expecting a continuation of that. And then in terms of other kind of building blocks and expectations for the year, like I said, we're seeing great signs of life in Phoenix and some of the other markets that had a little bit of a pullback as we exited 24.

speaker
Jamie Feldman
Analyst, Wells Fargo Securities

Okay. Thank you for that. And then I know you didn't include acquisitions and guidance, but as you, I guess it's a two-parter, you know, as you unencumber assets and you have more liquidity to put capital to work, Do you think that'll be a factor that drives you to do more acquisitions? And maybe if you could just cover a little bit more, you know, why not have more acquisitions in your guidance? And are there just not portfolios out there? Or do you think they might come to market and you're just not ready to include getting any of those done?

speaker
Chris Lau
Chief Financial Officer

Yeah. Hey, Jamie, it's Chris here. You know, look, like we talk about all the time, we absolutely, you know, keep our finger on the pulse of everything that's going on from an acquisition market perspective. And, you know, look, I think about it in two different categories. You know, we can think about it in terms of one-off acquisitions or portfolios. In terms of one-offs, again, we keep our finger on the pulse there. I would say we're kind of a ways off in terms of where we would find that market attractive to be transacting at. But again, we watch it closely just to give you a little bit of color in terms of what we're seeing. This past quarter through our network of national builder relationships, we screened upwards of 15,000 newly constructed national builder properties. And as we looked at those, we found that something like over 80% of them fell outside of our disciplined AMH buy box in terms of location, quality, and then importantly, single-family detached product type. And for even those that did hit our buy box, average yield on those was somewhere in the mid-fours, which I think really underscores the importance of the development program and its ability to consistently and predictably provide pathway to growth. And then in terms of the second piece, portfolios, Again, no different than what we've talked about in the past. We are optimistic on the number of assembled portfolio opportunities that we know are out there. And what we especially like about those types of opportunities is our potential to unlock value in them, bringing them up to our standards on the AMH platform. just like we're doing currently with the portfolio we acquired in the fourth quarter. But at the same time, we recognize that there's a variety of quality levels in many of those portfolios out there. And again, we are unwavering on our commitment to the AMH 5 box.

speaker
Operator
Conference Operator

Thank you. Our next question comes from the line of Steve Sacqua with Evercore ISI. Please proceed.

speaker
Steve Sacqua
Analyst, Evercore ISI

Yeah, thanks. On the bad debt, you guys aren't really looking for much of an improvement. I'm just curious kind of why and, you know, are there certain markets that are holding you up from seeing better improvement on that figure?

speaker
Chris Lau
Chief Financial Officer

Yeah, sure. Morning to you, Chris here. I can start and then, you know, maybe Lincoln can fill in some color at the market level. But, you know, look, I would say overall the collections narrative is largely unchanged. uh, right. You heard it in prepared remarks, uh, and in the release, our expectation is that that debt continues to run slightly elevated, uh, in, in the low ones over the course of 25, kind of similar to how we are exiting 24, um, which is largely being driven, uh, you know, still by a few remaining municipalities and court systems that like we talked about last year, continue to process at slower than typical timelines. Um, And so, you know, look, I would say, taking a step back, you know, we would love to see this be an area of upside against our guide, but recognizing that some of the processing timelines are out of our control, you know, I think we're going to hold our view kind of similar to where we're running currently until we start to see some of that timing actually move. In terms of some color on the ground, I'm sure Lincoln can share a few additional details.

speaker
Lincoln Palmer
Chief Operating Officer

Yeah, Steve, from a market perspective, the vast majority of our markets are operating from a bad debt perspective, very close to our long-term expectations for a sub-1% run rate. Most of it that we're seeing is from a few select markets. Atlanta is kind of the prime example, and even in Atlanta, it really boils down to a few counties. So as we get those counties moving, we're working with the local jurisdictions the best we can to get those timeframes shortened. And as we have success in doing that, we'll see some improvements in the bad debt. But what you're seeing in the guide is us reflecting what we can see in the market today.

speaker
Steve Sacqua
Analyst, Evercore ISI

Okay, thanks. And maybe just coming back to some of the questions, Brian, on development, you know, whether it's the tariffs or just incremental supply from other builders, I guess the five and a half, I guess, maybe seems a little bit like a low return to get, you know, especially where bond yields are today and certainly where your stock is trading. So like, how do you think about that overall return? Is it sort of against the marginal cost of capital or is it the fact that you can sell assets, you know, in the sub four cap rate that's given you confidence to keep building at five and a half?

speaker
Brian Smith
Chief Executive Officer

Yeah, thanks, Steve. There's a lot of different things that we want to address on that question, but I want to start with the 5.5% yield and make sure everybody recognizes that's the going-in yield. And that's a going-in yield that doesn't include special incentives, leasing incentives, and so forth. It's what we're getting on houses as they're being delivered into active construction projects in many cases. These are not stabilized yields. We see really nice movement as the communities start to stabilize and homes progress. in age and the communities mature a little bit. The 5.5 is going in. From a long-term perspective, we really like what we're seeing from the development, the AMH development homes. And it's a great return. It's a great long-term program. And the numbers that we cite today, we're holding ourselves to a very high standard at the going-in level.

speaker
Chris Lau
Chief Financial Officer

And then Steve, Chris here, I think implied in your question is bringing up a really good reminder around the importance of how we have strategically sized the development program. I know we've talked about this a lot, but we've intentionally sized our pipeline such that any year's development deliveries and spend is fundable without the need for built-in equity. right this year is a perfect example or any of the past years right where the the primary funding building blocks of the development program is retained cash from the portfolio from the business some level of recycled capital from the disposition program which today we know is screening very attractively and then modest levels of incremental debt as debt capacity grows on the balance sheet so again

speaker
Chris Lau
Chief Financial Officer

uh sized strategically to consume minimal amounts of external capital and then importantly no equity needs thank you our next question comes the line of jeff scepter with bank of america please proceed great thank you a follow-up to that conversation i guess two parts would be first brian i don't think you said stabilize yield and then second Maybe, Chris, could you bring in your comments from your opening remarks around expanding your margins? I assume there's some also benefit there on new development. Thank you.

speaker
Brian Smith
Chief Executive Officer

Yeah, thanks, Jeff. I didn't give a comment on exact stabilized yields. We're still looking forward to getting a little bit more homes into the same home pool, as an example, before we start to cite those separately. But what I can tell you is that they're moving in the right direction. The expense controls are at least as good as what we thought they would be. The leasing and uptake has been fantastic. And I want to kind of remind everyone too, these are extremely high quality homes, purpose built for rentals. They're durable. They're highly upgraded off of a normal starter home. They're in great locations. This is exactly the type of home that we want to be owning and managing. and you cannot buy these houses at these prices anywhere in the market. So we're really, really happy with the long-term prospects of these.

speaker
Chris Lau
Chief Financial Officer

Yeah, and Jeff, Chris here. Appreciate the question on the NOI margin expansion. It's an important point and a really important part of our view going forward that we talk a lot about and our view of the opportunity for margin expansion over time. And we see it coming from a couple of different areas. The development program absolutely comes to mind in terms of the more efficient and higher NOI margins coming out of that product. And that will have more and more benefit over time as we deliver more. Those properties stabilize and they can ultimately age their way into the same home pool. That's category number one. Category number two is really comes back to a lot of the really smart and strategic decisions we're making from an asset management perspective and ultimately translating into what is fueling our disposition program. One of the great parts of our asset class is its granularity and our ability to fine tune at the unit level, which is very powerful over time and that we see being beneficial to margins over time as well. And then finally, The last piece to come back to, and we saw this very clearly in 2024, is the opportunity to continue to move margins higher over time at the core of the business, out of the core of the portfolio. And the setup there, as we think about it, like we've talked about many times before, is the opportunity to drive inflationary plus growth from a top line perspective, given fundamental tailwinds of the asset class. and our operating platform, and then ultimately holding the line on expenses as tight as we can. I think we did a fantastic job on that in 2024, translating into 20 basis points of margin expansion in 24.

speaker
Chris Lau
Chief Financial Officer

Thank you. And then my second question, my follow-up, I just wanted to confirm, in terms of opportunities and acquisitions, are you starting to get more incoming from home builders, or it's too early really to see that? And I'm just pointing to the softening home sales. Thank you.

speaker
Chris Lau
Chief Financial Officer

Yep. Thanks, Jeff. Chris here again. I would say a little bit too early, but at the same time, you know, I mentioned this a couple of minutes ago on one of the other questions. You know, we have very well established, you know, robust relationships with all of the large builders out there. And, you know, this quarter, I know I just mentioned this, but, you know, this quarter, as an example, we looked at and screened over 15,000 newly constructed properties. So, you know, I think it's a little bit early. We're watching it closely. But again, I would underscore the fact that we have very mature relationships with all the builders. We've been very active with them in the past, and we will continue to watch it really, really closely.

speaker
Operator
Conference Operator

Thank you. Our next question comes from Angel Sanjus with Mizuho Securities. Please proceed.

speaker
Angel Sanjus

Thank you. Good morning out there. Wanted to follow up a little bit on your renewals guide. I think you said it was 4%.

speaker
spk06

Seems a little conservative, given where you've been in recent years, high sixes in 23, mid fives for 24. So I'm curious if you're seeing any signs of perhaps pricing fatigue, uptick in turnover, Just trying to understand how your pricing power could be evolving here. Thanks.

speaker
Brian Smith
Chief Executive Officer

Hi, Hannah. It's Brian. Yeah, we're really pleased with the results that we've had over the past couple of years, as you cited. And our retention is very strong. All the signs that we're seeing coming into the year are positive. If you look at our pickup and retention last year, the programs are working. Our resident 360 investment which included a significant investment in the communication platform around renewals and kind of the lease administration piece. I think it's paying some dividends. We're having fantastic customer review scores that are contributing to kind of sustained high levels of retention. And then you look at the results that we posted. We mentioned on prepared remarks of 4.5% renewal rate growth in January. We're expecting that to continue through Q1 and then typically see a slight moderation into Q2 for renewals as that's a really high activity period. But we feel that 4% area is a good investment for this year, all things considered with market rent growth and loss to lease.

speaker
Angel Sanjus

Got it. Fair enough. That's it for me. Thank you, guys. Thanks, Tyndall.

speaker
Operator
Conference Operator

Thank you. Our next question comes from the line of Rich Hightower with Barclays. Please proceed.

speaker
Rich Hightower
Analyst, Barclays

Hey, good morning out there, guys. And congrats to Dave if he is on the line with us. So I just want to dig into property taxes for a minute. And obviously, you're getting some relief kind of relative to years past. And just help us understand the key drivers there. Is some of it based on timing around revals in certain states? And then I guess maybe on the flip side, you know, have you given any thought to the impact, given the possible likelihood, I guess, that state budgets and municipal budgets could be affected negatively going forward if, you know, federal reimbursements and contributions to those budgets, you know, falls kind of along the lines of things we've been reading. Thanks.

speaker
Chris Lau
Chief Financial Officer

Yeah, sure. Thanks, Rich. Chris here. You know, look, property taxes overall, I think we were really pleased with how things trended over the course of the year, you know, largely in the direction that we were expecting. And we received some nice final year-end information towards the end of the year. You know, just to put a finer point on that. Some of that information that we received towards the end of the year was notably out of a few of our larger states, including Texas, Florida, and Georgia, where final values and then a little bit on the rate side as well landed a touch better than our previous expectations, which is really what drove the full year down into the 5% area or so. Um, that, like I said, we are, you know, shared in and prepared remarks. We expect that to moderate a touch further into 25. Uh, and that's largely coming from the, the value side of the equation, uh, which is landing back into, you know, what is our long-term run rate, uh, of four to 5% for, for property tax growth. Right. So we're kind of back to, to long-term run rate at this point. Uh, and then, you know, to your point in, in terms of, of budgetary pressures, You know, definitely something that we're watching very closely. With that said, you know, we see the larger driver here being on the value side. But nonetheless, it's something that we watch closely. In particular, we're watching it in Texas. You know, like we've talked about plenty of times, the Texas property tax reform back in 2022, has now expired. And we know that a new property tax relief will need to be repassed for 25 and 26, which as an update is completely supported by both Governor Abbott and then state Congress. It really is a top priority for a portion of the state's budget surplus, which I think latest estimates are like $24 billion. And so, you know, it's things like that that we're watching very closely. But, you know, all things considered, we feel good about, you know, the setup going into 25 and the fact that we're expecting to see additional moderation back into the 4% to 5% area.

speaker
Rich Hightower
Analyst, Barclays

Okay, great. Great color. And just maybe a quick follow-up. I don't think we've spent a lot of time on the call talking about non-rental revenue, you know, other income opportunities for the year. Maybe just run through what you guys are seeing on that front. Thanks.

speaker
Chris Lau
Chief Financial Officer

Um, sure. Yeah. You know, contemplated in the guide and even taking a step back to, to 24, um, you know, modest contribution, uh, from a same home perspective, uh, I think in, in 24 contributed eight to 10 basis points of same store revenue contribution, something like that. Um, you know, we'd expect, uh, modest growth, uh, in that line item into 25 as well, you know, maybe a touch below 24 or so think of the, think of the kind of growing in line, but the broader, uh, rent growth.

speaker
Operator
Conference Operator

Thank you. Our next question comes from the line of John Polosky with Green Street. Please proceed.

speaker
John Polosky
Analyst, Green Street

Good morning. Brian, I want to go back to the conversation about how yields on the development basically shift beyond year one. I know stabilization of the most recent ventures of deliveries is still an unknown, but you've been at it for about eight years, built to rent, so you should have, I would think, a decent sample size of earlier vintages of homes and can you just give us a sense how different like a year three yield is versus the initial yield on the earliest vintages of homes?

speaker
Brian Smith
Chief Executive Officer

Yeah, thanks, John. Just in terms of just getting everything calibrated right, the early years were kind of small test phases. So we've been running full speed for less than that entire time period. But I talked earlier in the call about what the yields look like going in. And then as these communities stabilize, construction traffic exits, they're fully leased as they turn. Like I said before, we're having fantastic experience on the expense side, a little bit better than we even thought in terms of cost of turn and speed to turn. Occupancy and rates have held consistent with expectations. We've talked about some of the increases we've seen in time. So as these projects progress,

speaker
John Polosky
Analyst, Green Street

stabilize those yields are migrating out of the fives and into the sixes and performing you know very well from a long-term perspective okay does that you know into the sixes type trajectory account for stabilized expense load in these homes that just may have not turned or seen property tax resets

speaker
Brian Smith
Chief Executive Officer

Yeah, it does. It does. I'm talking about ones that have matured enough to experience both of those things.

speaker
Chris Lau
Chief Financial Officer

Yeah, John, by year three or so, property taxes will have, you know, settled in and stabilized up and you do have turn activity going on by year three.

speaker
Operator
Conference Operator

Thank you. Our next question comes from the line of Adam Kramer with Morgan Stanley. Please proceed.

speaker
Adam Kramer
Analyst, Morgan Stanley

Great. Thanks for the time, guys. I just wanted to ask about your, you know, the Midwest exposure. I think this has kind of been a source of strength for the market. And I think it's expected to be going forward as well. So if you think about some of these Midwest markets, you know, if you could maybe attribute the strength, you know, and I don't know if it's kind of on the existing home sale side, on the lack of new homes available, maybe it's kind of still a COVID catch-up play in some ways. Maybe just talk about the Midwest and kind of what are some of the drivers of strength in these markets?

speaker
Brian Smith
Chief Executive Officer

Yeah, thanks, Adam. This is Brian. I think probably the easiest way to look at the performance of our Midwest portfolio is to talk about really the quality of assets and the type of single family detached Midwest characterized by large yards. And we were really particular about what locations we wanted to invest in. We've seen a really nice pickup over the past few years with migration into these markets for high quality of life moves. And the reality is there's just not a lot of supply of you know, equal level quality product. There may be supply on the outskirts of lower levels, apartments and so forth. But in terms of the type of home, the quality of home that we have, we're unique in that aspect. One other thing to note, too, with the portfolio transaction that we closed at the end of last year, we were really pleased that we were able to add some homes to those high quality Midwest markets that really it's been kind of difficult to grow.

speaker
Adam Kramer
Analyst, Morgan Stanley

Great. Thanks for that, Brian. And maybe just kind of a more general one looking ahead to 2025. I've been wondering if you could maybe kind of frame the year. I think you kind of gave the blend of rank growth numbers, the new and renewal, the occupancy expectations. But if you were to just kind of take a step back, think about this year relative to maybe pre-COVID years, and I know there's kind of limited history in the public markets there, but would you kind of categorize this year as a normal year or normal seasonality, and what can kind of drive this year to progress differently than maybe a normal year?

speaker
Brian Smith
Chief Executive Officer

Yeah, thanks, Adam. In terms of normal, probably the easiest way to look at it, our rent growth expectations aren't that dissimilar to what we saw pre-COVID, and that's really a snapshot of just this year. That's not really our long-term perspective necessarily. But what is different is our expectation for occupancy. If you remember kind of pre-COVID levels, we were always talking about the 95% area. And there's just been a number of different changes in our industry and with our platform that have given us confidence that that 95% expectation has been moved to 96. That's really the main difference. In terms of how the rate trajectory plays out for the year, we're going to do the best that we can. We're well positioned on the new lease side, but the estimates that we have right now are a good fit for expectations of market rent growth and loss to lease, as I mentioned earlier.

speaker
Chris Lau
Chief Financial Officer

Yeah. And then, Adam, Chris here, I would just add, since you kind of asked the question also in terms of kind of the broader context of outlook overall, again, like Brian just said, and we've been saying since the start here, we're in a great spot and in a position of strength. And because of that, You know, we feel really good about our outlook in the guide for the year ahead, especially relative to the broader residential landscape. And look at the end of the day, it is our objective and we'd love to be able to deliver some nice updates against the guide over the course of the year, and I think about you know the shape of those opportunities. Um, I would say those opportunities are very similar to the focus areas from, from 2024. Uh, you know, we talked about this a minute ago, but bad debt comes to mind. You know, we'd love to be able to see some improvement there, uh, that would represent area or opportunity for upside. And then our objective, no different than any other year, but very similar to 24 in particular is to capture as much upswing as possible on the front end of the leasing curve, and then deliver the tightest expense controls that we can. Again, all of which the team did a fantastic job in 24, and that's our objective again in 25.

speaker
Operator
Conference Operator

Thank you. Our next question comes from the line of Julian Fullen with Goldman Sachs. Please proceed.

speaker
Julian Fullen
Analyst, Goldman Sachs

Thank you for taking my question. I guess on the demand front, can you sort of walk us through what you're seeing in your internal metrics? I guess how is engagement trending versus maybe a year ago or two years ago? How are sort of household incomes of new incoming tenants looking? Anything you can help sort of frame on the demand side?

speaker
Lincoln Palmer
Chief Operating Officer

Thanks, Julian. This is Lincoln. We continue to see really strong incoming residents from a financial perspective, stated incomes running north of $150,000 still, income to rent ratios in the five and a half times. So we're really, really happy with our resident base. The encouraging thing coming off of what Chris and Brian have already talked about out of our kind of strategic stabilization of occupancy in fourth quarter is that we're seeing great trajectory into January and February. Nearly all of our markets are trending, trending very well from both the occupancy and rate perspective. But even more encouraging is to see some of the leading indicators. One of those is foot traffic in our homes. So we saw kind of a 30% pickup from the end of fourth quarter into January. People visiting our homes and that has to do with the return of activity that we've already talked about. And then year over year, that activity is about 15% higher than it was last year. It gives us a lot of confidence going into the remainder of the year that we're going to see a very strong leasing season.

speaker
Julian Fullen
Analyst, Goldman Sachs

Awesome. Thank you. That's very helpful. And when we think about the new lease rate growth assumption for the year of 3%, it does seem to bake in quite a meaningful sequential improvement in new lease spreads versus where we are in January. I guess what's sort of giving you that confidence that we're going to see that that strong ramp, I guess it does sort of seem a little bit more similar to pre-COVID seasonality. Is there anything you're seeing so far in February that's sort of encouraging you?

speaker
Brian Smith
Chief Executive Officer

Yeah, thanks, Joe. This is Brian. It really comes back to the demand momentum that Lincoln's talking about, the fact that our portfolio is well-positioned from an occupancy perspective, and also a testament to the quality of type of asset in the location of our home. So we're in a really good place to be optimistic about continued rate growth and even occupancy pickup as we migrate into the spring leasing season.

speaker
Operator
Conference Operator

Thank you. Our next question comes from the line of Brad Heffern with RBC Capital Markets. Please proceed.

speaker
Linda Sy
Analyst, Jefferies

Brad, are you on mute?

speaker
Operator
Conference Operator

All right. We may have lost Brad, but please enter the queue if you're still there. Our next question comes from the line of Daniel Trico with Scotiabank. Please proceed.

speaker
Daniel Trico
Analyst, Scotiabank

Thanks. Good afternoon. Question on interest expense for Chris. First, kudos on the bond timing. Can you just talk to what's in the current plans on paying down the securitizations you know, do you expect to issue unsecured concurrently or maybe stay a bit more flexible utilizing the line balance and, you know, how that all rolls into interest expense expectations for the year and, you know, the math behind the nine cents dilution from financing costs in the FFO bridge?

speaker
Chris Lau
Chief Financial Officer

Yeah, fantastic question. Thanks, Daniel. So in terms of timing on the securitizations, as I mentioned in prepared remarks, our expectation is that the first of the two will be paid off in April. And then expectation is that the second will be paid off in the second half of the year. Anticipated repayment date falls in October, so I'd expect probably a little bit before that. Base case plan is to refinance those into the unsecured bond market, which is what we have contemplated in guidance. It is that refinancing on an unsecured basis that will be bringing the balance sheet to 100% unencumbered, as I mentioned, very important milestone. And contemplated in the guide is two unsecured bond executions. Timing is a little bit difficult to pay. It'll be dependent on market conditions. Best guess, we could assume one in the first half of the year, one in the second half of the year. But again, it'll depend on market conditions. You know, today, new issue, cost of tenure unsecured, you know, depending on where treasuries are today, probably a touch over mid fives or so. We've contemplated something in that area, actually a touch higher in the guide. But to your point, you know, look, we've got, you know, great flexibility. You know, the credit facility is fully undrawn with total capacity of one and a quarter billion dollars, which would provide additional flexibility for runway if we weren't liking what we were seeing in the bond market. But base case assumption would be two bond market executions over the course of the year. And then to your point on what's contemplated in the bridge in guidance, another great question. Let me break it down into a couple of different pieces for you. The right building blocks is call it about two pennies Just in terms of growth financing, that's the annualization of some of the ATM shares that we sold on a forward basis early in 24 that we just took down. And then a little bit of modest incremental debt over the course of 24 annualizing into this year. So that's two out of the nine pennies. And then you can think of about four of the nine pennies being financing costs on the bulk portfolio we acquired in the fourth quarter. And then that leaves three cents of refinancing headwind. in the nine pennies. And as you're thinking about the math on those three pennies, don't forget that that includes both kind of the annualization of 24 refinancing activities and then partial year consideration for this year's refinancing activities.

speaker
Daniel Trico
Analyst, Scotiabank

That's great. Thanks for the detail, Chris. And just a high-level follow-up for Brian. I know you've been formally prepping to take the reins for maybe a year now, but any early insights you can share on the business steps you've taken or plan to take that's different or incremental to the company.

speaker
Brian Smith
Chief Executive Officer

Thanks, Daniel. The transition went very well. I have a lot of gratitude to Dave for making that really smooth. We have a great strategy. We have a great business. There are a number of really strong things in our favor. I talked about some of them in my prepared remarks. The industry itself has a lot of blue sky ahead So I'm very energized and excited about going forward. In terms of major changes, we've got an excellent strategy to focus on executing, and we're going to continue to focus on the core business, the resident, and continue innovation and optimization. So no major changes, just very excited and optimistic about the future.

speaker
Operator
Conference Operator

Thank you. Our next question comes from the line of Linda Sy with Jefferies. Please proceed.

speaker
Linda Sy
Analyst, Jefferies

Hi. Thanks for taking my question. You said over half of your costs are baked in for development at this point in the year. Is this typical or does it vary? And then what costs aren't baked in?

speaker
Brian Smith
Chief Executive Officer

Hi, Linda. Yeah. By baked in, I mean contracted. We have active construction occurring on half of our expected deliveries for 2025. which means we've already locked in pricing for some of the materials and labor and so forth. And I think that that time frame is typical. We start these communities, we contract with the subcontractor, we begin managing off of those bids. So when you think about kind of the timing and the effect, in the event that there are some constraints on the tariff side or the employment side, it'll probably show up more in the second half of the year.

speaker
Linda Sy
Analyst, Jefferies

Thanks. And then you also earlier highlighted outperforming 2024 core FFO growth by over 200 bps. Do you view the 200 bps as an achievable benchmark for this year? And then what would be some of the risks to potentially achieving this outperformance?

speaker
Chris Lau
Chief Financial Officer

Linda, Chris here. I kind of chuckle. You know, look, I would encourage you to look at the range that we've contemplated in the guide. you know, which is our range of expectations, you know, upper end at $1.86 is into the fives or so. So, you know, I would frame it that way. And then, as I mentioned a couple of minutes ago, in terms of how we think about, you know, shape of the guide over the course of the year, our objective um no different than than any year uh it is to be able uh to to do our best to outperform and and be able to deliver nice updates against the guide again over the course of the year and and i think 24 was a good example of great execution and great execution against our expectations as of the start of the year thank you our next question comes the line of austin worsement with key bank capital markets please proceed

speaker
Linda

Great. Thanks and good morning. I'm just going back to development for a minute. If you were to see construction costs increase faster than rents from here and kind of all else equal around cost of capital, I guess, what yield does development become less attractive where you'd consider, you know, flexing, you know, the size of the development platform down and how easily and quickly can you dial that back?

speaker
Brian Smith
Chief Executive Officer

Hi, Austin. This is Brian. Yeah, I want to start by just reminding everyone, I talked about it earlier, but the yields that we've been citing are the going in, and our development product, our deliveries, and the program itself just is fantastic over the long term, from a long-term perspective. If there was a case where there was the effect of the tariffs and some of the labor issues that people have been talking about, We're talking about, based on estimates from the National Association of Home Builders and other experts within the field, you're talking about something in the neighborhood of 2% range on total home costs for us this year. So we're not talking about a huge needle mover. And there are a bunch of other factors at play. It's difficult to predict. Maybe those changes in cost affect activity. Maybe we're able to shift some of our purchasing patterns and some of the materials we put in to mitigate a little bit of that increase. But again, we're not expecting a massive change there. And then from the perspective of whether the returns are attractive, I can say unequivocally that they are from a long-term perspective.

speaker
Linda

That's helpful. And then if we started to see a pickup in the for-sale markets, I mean, how confident are you that you can sustain kind of the higher occupancy you've achieved following, you know, coming out of the pandemic? And, you know, are you concerned at all that you start to get a pickup and move outs for home purchases and that the impact that that could have on total revenue and even expense growth?

speaker
Brian Smith
Chief Executive Officer

Yeah, the move out to buy has always been and remains our largest reason from our residents who are moving out. The changes in the for sale market will have some effect. The effect though might not be as dramatic as people think. Even when the cost of owning a home was the same as the cost to rent, we still fared very well from a retention perspective. And that gap is enormous right now, especially in the markets that are starting to have a lot of activity. A slight drop in asking rates on houses doesn't do much to bridge the 28% affordability gap. So we're in good shape going into this year. In the meantime, we're bolstering our offering and making sure that we're really focused on the resident experience so that they see renting from us as being super convenient. And, you know, it's difficult to replace that level of service on a home that you own yourself.

speaker
Operator
Conference Operator

Thank you. Our next question comes from the line of Michael Goldsmith with UBS. Please proceed.

speaker
Michael Goldsmith

Good afternoon. Thanks a lot for taking my question. First question is on renewals. Are you seeing any kind of pushback on renewals, just kind of within the context of the 4% renewal rate? Thanks.

speaker
Brian Smith
Chief Executive Officer

Yeah, thanks, Michael. We haven't seen any change. If you notice, we had really nice pickup in retention as we exited last year. We don't have a huge band of negotiations. Our pricing and the way that we offer renewals is very supportable, and the improvements in the communication have made that process a lot easier for both us and the resident. We're not seeing a lot of pushback, and we're not seeing any excess negotiation as we get into 2025.

speaker
Michael Goldsmith

Thanks for that. Then just as a follow-up, have you seen any changes on the regulatory front?

speaker
Brian Smith
Chief Executive Officer

We haven't. I mean, our performance historically really hasn't varied much with changes in the regulatory environment. We have very high-quality operations. We're focused on being proactive and transparent with our residents and other stakeholders. So we haven't seen anything. There's a lot of different things going on, but nothing that has affected us yet.

speaker
Operator
Conference Operator

Thank you. Our next question comes from the line of Brad Hefner with RBC Capital Markets. Please proceed.

speaker
Brad Heffern
Analyst, RBC Capital Markets

Hey, everybody. Can you hear me now?

speaker
Chris Lau
Chief Financial Officer

We can. Morning, Brad.

speaker
Brad Heffern
Analyst, RBC Capital Markets

Sorry about that. I just have one given we're past the top of the hour. I guess on days to re-resident, are there any stats that you can give on that and how it's trended? The turnover number continues to move lower, but then occupancy also came down in the fall. So it just seems like the homes have to be sitting on the market for longer for that to make sense. Just trying to get a sense of the scale of that and if it's abnormally long versus maybe pre-COVID levels.

speaker
Brian Smith
Chief Executive Officer

Yeah, thanks, Brad. You're identifying really exactly what we talked about with the slowdown in activity that we saw exiting the third quarter. And the difference in re-tenanting the expansion in Q4 was really just the catch-up of that as we picked up occupancy in November and December. We expect it to return to kind of consistency. numbers and compress down as we get into the spring leasing season.

speaker
Taiyo Otsunawa
Analyst, Deutsche Bank

Okay, thank you. Thanks, Brett.

speaker
Operator
Conference Operator

Thank you. Our next question comes from the line of John Polosky with Green Street. Please proceed.

speaker
John Polosky
Analyst, Green Street

Hey, thanks for taking the follow-up. Brian, one question for you on corporate governance. I think the board, the size of the board is now 13. What's the right long-term number of directors for AMH and How long will it take to get there?

speaker
Brian Smith
Chief Executive Officer

Yeah. Hi, John. I think these are decisions that are to be considered by our board in its entirety. And that is a focal point in terms of the right number and the right composition. But those are the types of things that they've been discussing at length in the NCG committee as an example. I'll let them decide exactly where that comes out, but it is something that we're focused on and watching.

speaker
Operator
Conference Operator

Thank you. Our next question comes from the line of Taiyo Otsunawa with Deutsche Bank. Please proceed.

speaker
Taiyo Otsunawa
Analyst, Deutsche Bank

Yes. Good afternoon, Brian. Again, congrats on the CEO role. Again, while you and Dave have been long-term partners in the business, just curious, you know, if you're thinking about things any differently from the way Dave thought about it, you know, now that you're kind of in the driver's seat. And also very curious what kind of feedback you are getting from the board now that you're officially a board member as well.

speaker
Brian Smith
Chief Executive Officer

Thanks, Teo. In terms of any changes in strategy, we're very fortunate at AMH to have a leadership team that's been together through the formative years of the company in excess of a decade. We've been working in lockstep from the very beginning. Our strategy is sound. We've done some really good things that we're continuing to lean into on the core of the business, on the development program. So in terms of major changes, we don't anticipate anything, just really continuing to do what we do very well. I would expect to see continued focus on innovation and optimization. The resident and the resident experience is the center of everything that we do. And focus on our core businesses allowed us to have excellent performance. of late and expectations for that to continue.

speaker
Operator
Conference Operator

Thank you. Our next question comes from line of Jesse Letterman with Zellman and Associates. Please proceed.

speaker
Jesse Letterman
Analyst, Zelman & Associates

Hey, thanks for taking the question. So you mentioned earlier there's been a number of different changes across the industry and in the AMH platform specifically that makes you confident the new norm for occupancy is more in the 96% range than 95%. Could you just talk a little bit more about what those changes have been both in the industry and specifically at AMH?

speaker
Brian Smith
Chief Executive Officer

Yeah, thanks, Jesse. Starting with the industry, I think SFR as a whole, People are starting to appreciate the value proposition of a home and a yard and a garage and extra space, as opposed to historically multifamily was really the main choice for families that were going into their 30s and started to expand. So I think there's a general improvement in appreciation of that. People are looking for it when they move to new areas, as an example. And then all of the institutional operators have been very focused on the resident experience, which wasn't a focus. in this specific industry prior to these changes over the past few years. We're very excited about the product that we have. We think that the additions that we've made, not only to the platform, but specifically on technology, have allowed us to be faster and more efficient. Just as an example, it's very easy and frictionless to lease a house from us today. So that is going to bolster occupancy. We've done a very good job of communicating with our residents and providing an excellent services platform, which is going to improve retention. And I could go down the list of each of the line items to show areas that we've improved over time. All of these lead to our improved expectations of a new kind of 96% level of occupancy.

speaker
Operator
Conference Operator

Thank you. There are no further questions at this time. I'd like to pass the call back over to Brian for closing remarks.

speaker
Brian Smith
Chief Executive Officer

Yeah, thank you for your time today. I look forward to talking to you again soon on our next quarter's call. Have a great day.

speaker
Operator
Conference Operator

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Disclaimer

This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.

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