American Homes 4 Rent Class A Stock

Welcome to Bank of America's 2026 Global Real Estate Conference. I'm Jana Galan, BofA's residential REIT analyst. And we're thrilled to have with us from AMH, CFO, Chris Lau; Chief Operating Officer, Lincoln Palmer; and Investor Relations, Nick Fromm. I'll turn it over to Chris for opening remarks, and then we can jump into Q&A.

Sure. Just to get us going from a high level, I would say that the business is performing really well. I think we would have all seen that in the quarter. Leasing activity has continued to remain solid. The teams are executing super well. You saw that translate into a $0.03 bump to the guide on a full year basis at the midpoint. We're now expecting FFO growth to be north of 4%, 4.3% actually, which continues to be at the very top of the residential pack.

Since the end of the quarter, we've just put out a July and August update. It hit the website back half of last week. I'd say the right takeaway there is that things are going according to plan. New leases importantly, continue to remain in positive territory, moderating a touch with seasonality, just like we were expecting from 1.6% in July to 80 basis points in August. Renewals held steady at 3.3% in both months, and occupancy was 96.1% in July, 95.9% in August, again, kind of trending just as we were expecting it, too. On the expense side of things, I think everyone has probably seen that expenses very much have been a bright spot this year.

The team has done a fantastic job controlling the controllables. Property taxes for this year, trending below long-term average, latest midpoint of the guide is 2.75% growth this year. That's below long-term average, which is more like 4% to 5%. And real-time update there for anyone that's familiar with how property tax information flows over the course of the year. The end of summer, early fall is the time where we start to hear back on the results of the appeals process. I can't put any numbers to it yet, but we are starting to begin to get back some of those appeals results. Directionally, I will say that we're starting to see some results come back that feel like -- they're a little bit in what I would characterize as good guy territory.

We still need to collect more information and importantly, property taxable rates come out later this year, fourth quarter. But by the time we report the third quarter, we should have a pretty good visibility on values. And like I said, so far, so good in terms of what we're seeing. Capital plan-wise, nothing terribly new to report there. We continue to execute on this year's moderated development program. Importantly, that is sized in a way that the balance sheet component is match fundable with recycled capital coming out of the disposition program. That, like we talked about at the beginning of the year, has freed up incremental capital capacity this year for other things like share repurchases as an example.

I'm sure everyone saw that we were active, very active on share repurchases in the first 5 to 6 months of this year. Fast forward to the middle of this year, I felt like the stock was moving in the right direction for at least a period of time. Obviously, everything has pulled back over the last week, we can change or so. So it continues to be something very top of mind that we're watching very closely again. And then final high-level update since many of us would have spoken at least live last. Obviously, the road to Housing Act has now passed. Since passing in July, update is Congress has delegated it down to the respective agencies treasury HUD, et cetera, for the actual detailed rule writing process that is targeted to take place over the course of this calendar year.

We'll see how much gets done by the end of the calendar year before going into effect at the beginning of 2027. Key takeaway there is that from an industry perspective, we now have pathway to Clarity, which we've all been looking for. And then from an AMH perspective, I would say that the AMH strategy has probably never been more differentiated than it is currently. Considering the fact that our 2 primary growth channels being internal AMH development and portfolio consolidations are both protected and specifically allowed under the new law.

I'll probably pause there. Main takeaways, like I said, business is performing well. The third quarter-to-date update is that things are going according to plan, and the team is hyper-focused on executing to the best of their and our ability into the balance of the year.

Thank you so much, Chris. Maybe just starting with kind of the policy since that's been so forefront this year and definitely outcome of road to housing for you and your sector is much better than feared and pretty much business as usual. I would be curious if there's anything in the midterms that you guys are watching concerned, being talked about.

Just like everyone else, we're watching it very closely for the most part for this year, any of the states that we operate in, essentially, those states are out of session for this year. So we're very focused at the state and local level going into '27. But quite frankly, that's kind of business as usual for us, right? Housing ultimately is governed, state and local level. As many of you know, we have invested heavily into our own government affairs team starting years ago at this point.

And their day job is really focusing on educating advocating at the state and local level. This was really the first year where we essentially redirected their efforts to the federal level. And now that road to housing is behind us, they can essentially get back to their day job at the state and local level. But the simple answer is, no, nothing to call out right now, recognizing that the states that we operate within are churn for this year.

Could you verify your comment about an internal development portfolio consolidation in the context of road to housing for you meet?

Sure. So you'd probably recall, we've talked for years about the fact that there are a large number of assembled kind of medium -- small- to medium-sized portfolios out there. Think of it thousands to a couple thousand unit portfolios are the sweet spot for the last probably year or 2, we've been talking about the fact that many of those portfolios are going to need liquidity at some point and very likely could be great consolidation opportunities for us. You can use the portfolio that we consolidated in 2024 is kind of the perfect example of what those portfolios look like couple of thousand units.

That portfolio, in particular, was managed by a couple of different regional property managers that operated that portfolio to the best of their ability, but below the AMH level of operational performance, just to give you an example, when we acquired that portfolio. Operating margins were, call it, in the mid-50s. We brought it on to our platform, brought it up to our standards within about 12 months or so. Operating margins moved up into the mid-60s. That means that the initial in-place cap rate that we bought that portfolio at which was a 5 to very low 5s, expanded up into the high 5s, close to 6 once brought up to our operating standards, again, creating value coming on to our platform.

That's the type of opportunity that we've been talking about for the last year or 2. My point on the impact of the new Road Housing Act is for many of those portfolios that had ambitions to get larger and have the ability to continue to grow. It's going to be much more difficult for them to do so in today's environment without access to the MLS and to be determined access to being able to buy from builders that we think will translate into over time increased seller motivation as they're looking to liquidate and monetize those portfolios. It's not going to happen overnight. Our best guess is over the next probably 12 to 18 months. We'll start to see some of this play out. which is perfectly fine for us. Obviously, the cost of capital off of the balance sheet today isn't exactly where we would want it to be for these types of portfolio consolidation opportunities. And so we're going to watch it closely as we get into '27. And on the right cost of capital environment, there is a lot of value to be unlocked and created in these types of consolidation opportunities.

And [indiscernible] and they can't [indiscernible] refresh on that.

Yes. The details are the definition of a large institutional investor ended up being 350 units or larger. Why 350? No one really knows, but that is where it landed. And so if you are 350 units or larger, as a practical matter, you really can't buy off of the MLS anymore. That's the key distinction here. Theoretically, you can subject to certain exceptions if we can get into the details of, but the punchline of it is there are economic costs that would come with acquiring off of the MLS that as a practical matter, if you are a defined large institutional investor it's not really going to be a viable growth channel anymore. But to your point on portfolio transactions under the law, transactions between portfolio owners of 350 units or larger are allowed from one owner to another meaning consolidation.

Just to confirm you, does this tie to your sentence, you said or statement, we now have clarity. I just want to make sure have you fleshed that out completely? Or is there anything else to elaborate on because talking to a lot of folks post-neREIT, there was some excitement and then a lot of generals are still -- they're not seeing the clarity. So is there anything else to mention to folks?

The key clarity, some of the early concepts that were being discussed, like forced divestiture requirements totally removed. Pure clarity on that. Clarity on development being specifically carved out and protected, which essentially is a direct acknowledgment of the fact that all forms of new supply both for sale and for rental are very important in terms of solving housing and across the country. Key clarity on the ability to consolidate portfolios is very important. So that is really what we mean by clarity, right?

Taking some of the early-stage things like forced divestiture completely off of the table, really reinforcing the AMH strategy. And then, of course, yes, there are still pieces that need to be defined throughout the remainder of the specific rule writing process that will be a little bit more relevant to others, and in particular, some of the small- and medium-sized portfolio owners and operators, but good clarity for strategies, specifically like AMH.

And this is what you're saying, [ Claude ] is now going to go through over the coming months, early '27 will know for sure, I guess...

Let me asterisk the word choice "For sure". So that is -- that's the objective. Our political experts would tell us that for a lot of this size, it is not uncommon for this type of rule writing process to take upwards of 12 to 18 months on average. Congress is endeavoring to accomplish this and more like months. The experts would say that's a pretty ambitious time line. So we'll have to see exactly how much of this is ultimately defined by the start of the new year, but that's the objective. And like I said, we're going to have to keep everyone updated.

But again, the important piece is, bigger picture, nothing like forced divestiture, reinforcement of development portfolio consolidation. Those are not subject to interpretation in the rule writing process. It's more of the finer details in terms of how some of the other things are going to go effectively into law.

Right. So for those who are looking for 100% clarity, while the fine details will be worked out, none of that should impact AMH and how you're operating and developing and potentially doing portfolio acquisitions.

Correct on operating, developing, managing of the balance sheet, et cetera. The portfolio consolidations, part of that, I think, will be contingent on how some of the rule writing process plays out. The body language, if you will, that we're getting from other portfolio owners out there is they're waiting to see what the rule writing process looks like they're waiting to see how others react. They're waiting to see how homebuilders respond and their willingness to continue to sell to institutional buyers before they recalibrate kind of their strategy and plan.

So I would say, yes, with respect to everything other than the portfolio consolidation piece, where, as we know, right now, there is a pretty wide bid-ask spread in the market for portfolio consolidations. The portfolio owners need to see a little bit more of that clarity before we think we start to see more motivation from a pricing perspective.

You can buy MLS, if you put in capital CAPEX. You sort of referred to it as not economically viable. Why?

There's the two main exceptions that would allow you to -- as a large institutional investor to 350 units or larger, you can continue to buy off of the MLS if you meet one of a couple of exceptions. The two main ones are, you're acquiring a home that is not currently up to code that typically would not be the type of property, someone like an AMH would be targeting, it's not up the code and it requires substantial investment to bring it up to code, meaning obviously economic investment. That's number one.

The second main exception is you could acquire that property if you include it in some type of home ownership support program. That is currently being defined in terms of what actually that means. But it is something along the lines of the institutional investor that purchased it at home has to include that home or the resident in that home and some type of program that they are funding the purchaser of that home that they are funding that will ultimately support that residence journey towards homeownership, whatever that may mean, again, economic cost to it. So I think my comment is as a practical matter, pretty much everyone is viewing the MLS exceptions as likely meaning not economically viable in terms of MLS being a true growth channel the way that it used to be.

How frequently were you buying from the MLS before?

From an AMH perspective, we've not been an active purchaser off of the MLS for years at this point. So that goes back to my point about the fact that the AMH strategy is essentially unchanged in that we've not been a meaningful purchaser off of the MLS for years and the primary growth from an AM strategic perspective has been internal development, supplemented or to be supplemented by the opportunity to create value as we hopefully consolidate portfolios down the road in the right cost of capital environment.

The development is the clear path. How do you lean even further into the development? And maybe talk about some of the expertise or things you've learned over the years versus, let's say, the homebuilders and what they're doing.

Oh, sure. Let me start and then maybe you talk about some of the things that differentiate one of our development homes on the ground relative to what they're seeing from others or even scattered sites. So yes, we have invested heavily into our development program for years at this point. We have been the largest integrated developer and operator of single-family build-to-rent homes for a number of years at this point, actively developing in, call it, 15 markets or so across the portfolio.

In today's environment, it's a little bit about just to your point in terms of how do you grow it from here. Look, the reality is for anyone in our industry, if you want to have sight line to predictable growth over time, it needs to be through newly constructive product. Obviously, the MLS is not realistically going to be a viable channel. Again, we'll need to see how the builders kind of respond after the final language is written. And then portfolio consolidations, as much as we love them, from a value unlocking perspective, they're episodic.

And so if you want true sightline to predictable growth. It needs to be coming through development, which, again, really differentiates the AMH development program. In terms of the sizing of it, look, we would love to ramp the sizing of it. Many markets across the country needs more housing, especially the type of housing that we're building in the location that we're building at the quality that is being constructed. The challenge becomes, obviously, the cost of capital environment that we're operating in right now.

And so the balanced approach that we've taken this year is ensuring that we keep the development and development machine running into all of our markets. That's very important strategically for the longer term. but sizing it appropriately in this type of environment, like I was talking about a couple of minutes ago. What that means is we've moderated the sizing and volume of the program overall this year. We can do that because we control the entire program end to end. We have allocated a larger proportion of this year's pipeline to our joint venture partners.

As we're thinking about 2027, that discussion with our joint venture partners is very active right now in terms of proportion of pipeline to be matched with JV capital. That could be one way to expand the development program further going forward as we think about this type of cost of capital environment. But Jeff, it's ultimately of balance, right, continuing to invest in to keep the development program operating and running in our markets but doing it appropriately in this type of cost of capital environment and thinking about the best matching of balance sheet, match-funded capital from dispositions from the balance sheet and then the mix of right JV capital complement from a sizing perspective. In terms of some of the things that we're doing, Lincoln has got great perspective...

Just one follow-up on that because I think years ago, you were contemplating something similar to what, let's say, I think what Prologis has with the open-end fund developing maybe assets that you -- your cost of capital is there, but open-end fund creates that cost of capital, to develop or fees maybe maintain some ownership, put it into the fund and really take advantage of what some of the -- and now today, the banks are looking to offer to develop. Is that still a possibility or you're strictly focused on the JVs?

Rewinding a little bit, we maybe have discussed it just kind of like an idea start or something open ended wise, those discussions never really went that far. I would say the style of JV relationships we've had to date has been a great kind of strategic and stylistic match for what we're trying to accomplish via the development program. And with the balance sheet, what we've been able to accomplish, in particular, with one of our largest joint venture relationships because it's structured as an evergreen vehicle.

We've talked a lot about this, but it truly is an evergreen joint venture were 20%. Our partner is 80%. It does not have an end-state, and after that pipeline of homes is developed and stabilized, we go through, and we synthetically crystallize the promote, if not familiar with a traditional JV Think of it you would go through and value the portfolio, just like if you're going to hypothetically sell it. you calculate what the promote payment would be through the promote waterfall and rather than paying it to us in cash like you would in a typical finite-life's JV we go through and reset our capital account.

So our 20% goes up by whatever that promote payment would be our partner's 80% would go down by whatever that promote payment would be. And we live on into perpetuity. And the great thing about that is it fits our investment time frame, right? These are communities that we are building with a very long time frame and mindset. It enables us to create and realize the value from the development program without the need to monetize anything. And very interestingly, it takes that promote payment and locks it into ongoing cash flow stream from that venture as opposed to a one and done cash promote payment, which just rate it's a validation of the vehicle, but how do you really ascribe value to that when it's a single cash payment event.

At the project level, before JVs is about development costs and returns and does it vary by region?

Apologies, maybe even more broadly in terms of capital allocation, stocks may be low implied 6% cap rate, so that's one option with buybacks. And then if you can talk a little bit about the investment yields on development? And then what -- I know there's a bit of spread right now, but what do the smaller portfolios? What do they hope to achieve?

In no particular order, no question. The stock is attractive. You saw us active earlier in the year that the way -- the reason why we developed this year's capital plan the way that we did is to create incremental capacity for things like buybacks. From this point forward, there's some leverage capacity on the balance sheet. Dispositions are going well this year. We continue to have remaining board authorization as we continue to watch the stock closely.

Tying that to the development program and construction costs, it's a huge focus of ours. We talk a lot about, and I'm sure everyone has heard our objective to continue to influence and migrate development yield higher over time. The program right now is delivering second quarter was -- second quarter deliveries, I think were 5.4%. We absolutely want to see that higher. And the way that we're thinking about it is it's a funny way to characterize it, but we're really attacking it from all angles to migrate those yields higher. And part of it is attacking the existing pipeline.

The way that we do that is through the absolute most disciplined construction cost controls, we can deliver, and the team has done a fantastic job on that. And if you look at the cost to vertically construct a home this time of year compared to a year ago, those vertical construction costs are basically flat year-over-year. That is a function of the team doing a really good job managing the supply chain, our trade, labor base, et cetera, along with the fact that we continue to just mature and get better as a builder. But the objective is to tightly control those development costs as possible.

Hopefully, at some point, we see a reacceleration in market rents as construction costs are controlled. We hopefully see some level of reacceleration in market rents mathematically that translates into yield expansion with respect to the existing pipeline. And then the other way that we are attacking it is right now, as you all probably know, we've not been a large acquirer of land recently. In fact, over the last 12 to 18 months, we've actually been a net seller of land. But for the small amount of land that we are underwriting, today's land environment, along with everything else I just talked about from a cost control perspective, new deals are penciling at the 6% plus area.

Even though we haven't needed to add a ton of land to the pipeline, there are some markets where we're going to need to be sprinkling in backfilling of land positions, and that is our opportunity to be sprinkling in higher-yielding new vintage projects, if you want to think of it that way, mixing into the development program as we are attacking the existing pipeline, again, towards the objective of migrating yields higher.

And maybe just where we are in terms of kind of expectations of the smaller portfolio?

Yield-wise?

Yes.

I can't comment on where yields are currently just because nothing is actively trading. I can use our last portfolio that we acquired in '24 as an example. Obviously, things will have changed since then. But to give you kind of a kind of a frame of reference or magnitude in terms of the value to be unlocked I think I just mentioned this a couple of minutes ago. We acquired that portfolio at an in-place kind of 5 to very low 5. What's bringing it onto our platform and up to our standards, that expanded up into the high 5s, probably even close to 6%, just kind of giving you a frame of reference in terms of the value that can be created by bringing things on to the AMH platform.

In terms of where portfolios with price today, it's really tough to say because things are a little bit in a wait and see, again, for a lot of the rule writing to play out.

And then maybe -- thank you very much for providing kind of operational update heading into the conference. I would love to hear kind of how peak leasing season played out relative to your expectations. And I know you also played around a little bit with the lease expirations and kind of how that...

Sure. I thought I'm going to let me off the hook here. peak leasing season went extremely well this year. As you know, we've been planning for quite a while around the lease expirations. Those are layered 2/3 into the first half of the year now, 1/3 into the back half. This year was a challenging environment from a for a couple of reasons. One, we had more expirations this year than we ever have. That translated into more move-outs, albeit still high retention.

The higher move-outs related to the expirations and that challenged our operating teams who did a fantastic job getting those houses turned very quickly back on the market. We had a couple of record leasing months. That was very encouraging to see. And maybe more notably, the operational results extended a little bit later in the season this year just due to those efforts. Chris mentioned that we saw rates directionally increase, not a large magnitude, but from June into July. That's abnormal, and we're still in positive territory for the year.

So very encouraged with the way that the first half went. The other thing I should give the team credit for is just a remarkable job that they did on managing expenses through that entire background. As we get into the back half of the year here, again, expirations are going to be lower. We still plan to see new lease rate growth on a full year basis in the flattish range as we continue to see a little bit of moderation.

Again, we're planning for a flatter curve also on occupancy in the high 95% area on a full year basis. And then renewals are steady right now in the low to mid-3s and you expect to see those trickle higher over the next few months as we come into the first part of the year. So the goal for the business now is looking to '27, the setup coming into peak leasing beginning of leasing season in January and February. It's extremely important to us and a lot of ways defines the year for the business.

If you remember, we came into '26 with around 95% occupancy, we expect to come into '27 in a much better position than that. And that should support to the extent that market rate growth participates then it should support some rate growth on both the new and renewal side.

How can we think about kind of the 2027 earn-in from everything you've kind of accomplished year-to-date?

Yes, do you want to talk to the components of earning, Chris?

you're still on the hook. No. Just as a reminder, earn-in rolling into '26, let's call it, mid 1s or so, 1, 5. I'm hesitant to overly quote where we think earnings is going to be going in just because it depends on where spreads land for the next couple of months. not out of the question that it could land a touch if you take the midpoint of the guide, it would imply something a touch lower than what we've rolled into '26 with. But I think there's going to be a number of different kind of puts and takes as we think about the building blocks for '27. Earning is one piece. Occupancy is another piece of the mind, occupancy this year comped negatively a little bit relative to 25 basis points or so.

Just like Lincoln was talking about, the objective, especially with the benefit of the optimized lease curve is to come into '27 in a better and stronger occupancy position, which is beneficial both from statement of the obvious occupancy position, but pricing position coming into the new year. And then probably, the thing that we focus ourselves on more is market rent growth, right? Because we don't talk about earning and earning is very important, no doubt in terms of the building blocks to revenue growth, but earn-in is also kind of the current year's impact from last year's activity.

And so market rent growth is much more of a reflection of what's going on in the here and now, especially from a leading indicator perspective. And I guess we didn't talk a ton about supply, but to seal Lincoln's punchline. The takeaway is that there are many different aspects of supply that very much feel like they're moving in the right direction over the course of 2026. So I'm going to sit here and call bottom and get the crystal ball out at this point. No, not yet. But the right takeaway is it feels like supply is moving in the right direction.

It's also -- we're hesitant to try to crystal ball market rent growth for '27 at this point, but if we want to just reference someone who is in the business of crystal balling that type of stuff, If you're going to use John Burns data, as an example. John Burns views 2026 market rent growth in the low ones. His current estimate for 2027 is the high ones. Obviously, it's not a quantum leap year-over-year, but directionally, he is thinking that market rent growth is moving in the right direction. We'll formulate our views on that over the next couple of months before we initiate the guide for next year. But that's one of the pieces that we like to focus on because obviously, it's more of a reflection of the current environment.

What's the data on supply?

The data -- The data on supply.

Yes. If you heard my comments on the second quarter earnings call, supply generally moving in the right direction, meaning we saw in second quarter the first reduction in overall supply. I know this is very market specific, and I can get into a couple of details. But we saw the first reductions in overall supply in single-family rentals for the first time in several quarters, by several, I mean, 8 or 9 potentially depending on the market, of course. And so that was encouraging to see.

Notably, we saw some improvements in some markets that have been a little bit challenged over the last 12 months. Florida is one of those. Again, on the single-family side, we've seen reductions in all three of our markets, Jacksonville, Orlando and Tampa. Texas markets are another one that we've been watching very carefully. They seem to be more challenged on the multifamily side. Not as a clear reduction in the multifamily in some markets like San Antonio, but it does seem like it's peaked. And the permits and kind of completions have moderated.

So we're encouraged by that. And then the other one that we're watching very carefully is Phoenix. Build-to-rent inventory there has been a big issue, probably a little bit of reprieve from the regulatory air gap that's been created in the last few months, slowing of investment in that market. So we're encouraged that it's moving in the right direction. I think you layer that in with everything that Chris was talking about. We have good supply trends. We've set up the business in the right way for the back half of the year with the expirations, slightly increased view on new lease rates going into the first of the year. We have a very positive outlook on '27 so far.

Any quick takes on shadow supply?

Yes. I have some quick takes on shadow supply. We've talked about this quite a bit over the last couple of days. It's been a topic of conversation for several months now, especially in the higher interest rate environment and especially given what's happened over the last several weeks, maybe renewed interest there. It's very difficult to separate out the shadow supply from the aggregate single-family rental supply in the market because most of those are coming into the market under professionally managed banners.

So it's difficult to differentiate the house that someone may have converted from for sale yesterday from the house that's managed by the same company that was converted 3 years ago. So we're watching it very carefully. The encouraging thing is as we're seeing the overall aggregate supply come down, if there is continued pressure from shadow supply, either that component is remaining consistent, and it's being overshadowed by the reduction in the rest of the mom-and-pop inventory in the market or they're all coming down together.

And so we're encouraged by what we're seeing there. We do have some view into the institutional supply as well, whether that's public or private individuals or businesses that have larger amounts of inventory and that seems to be easing in most markets.

Unfortunately, we're out of time, but we have three rapid fire questions. We're asking all the REITs. Number one, if long-term rates stay higher for longer, which has the biggest impact on your sector's earnings, higher refinancing costs lower transaction activity or less new supply?

Definitely refinancing costs. So officially, I will say we don't have any debt maturities until 2028. I would maybe select transaction activity.

I selfishly would select supply.

Over the next 3 years, will third-party capital become a more important source of growth for public REITs than balance sheet capital?

Over what time frame?

Next 3 years.

Probably more.

And for your sector, will 2027 same-store NOI growth be higher, the same or lower than '26?

Higher.

Great. Thank you so much, Chris, and Linc. I appreciate the time.

Greetings, and welcome to the AMH Second Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I will now turn the conference over to Nick Fromm, Vice President of Investor Relations. Thank you, Nick. You may begin.

Good morning, and thank you for joining us for our Second Quarter 2026 Earnings Conference Call. With me today are Bryan 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 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, July 31, 2026. 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, Bryan Smith.

Welcome, everyone, and thank you for joining us today. Before we get into our results, I would like to briefly touch on the ROAD to Housing Act, which went into law last month following overwhelming bipartisan support. This law reflects a thoughtful approach by policymakers to address housing affordability and allows the industry to move forward with greater certainty. It recognizes the important role that single-family rentals play in the broader housing ecosystem and reinforces a number of aspects of our value proposition. First, it recognizes the role of new home construction in helping to address housing affordability. This highlights the importance of our in-house development program that continues to add newly-built, high-quality homes across the country. Second, by grandfathering in existing single-family rental homes, the legislation acknowledges that professionally managed rental housing is a critical element of our country's housing landscape. Millions of families will continue to have the opportunity to live in high-quality homes and neighborhoods without the burdens of homeownership. And third, the legislation preserves the ability to consolidate existing rental portfolios, enabling AMH to continue delivering our best-in-class resident experience to additional households across the country. This creates value not only for our residents, but also for our shareholders as additional homes are optimized on the AMH platform.

Now to earnings. Demand for high-quality, single-family rental housing across our diversified portfolio footprint remains healthy. We delivered a strong first half to the year, highlighted by another great spring leasing season. The team efficiently turned and released a record number of homes through the first 6 months of the year, while also tightly managing expenses. In addition to these expense controls, we also saw contributions from our development program and capital allocation decisions, leading us to raise the midpoint of our core FFO per share guidance by $0.03 and to $1.95, which represents year-over-year growth of 4.3%.

Turning to our second quarter same-home results. Average occupied days came in at 96% and new, renewal and blended spreads were 1.4%, 3.2% and 2.7%, respectively, driving core revenue growth of 2.3%. Notably, both new and renewal rate growth accelerated through the quarter, reflecting healthy demand for our homes. This momentum carried into July with occupancy holding at 96.1% and new, renewal and blended spreads of 1.6%, 3.3% and 2.8%, respectively.

Looking ahead to the second half of the year, we expect to see the benefits of our lease expiration profile where only 1/3 of 2026 lease expirations remain. This should translate into a meaningfully flatter occupancy curve and set us up well from an inventory and pricing perspective heading into 2027.

Turning to investments. We continue to take a disciplined approach to capital allocation. Our development program remains on track. We are seeing modest improvement in initial yields, supported by our pre-leasing efforts and the team's continued success in keeping vertical construction costs flat. On the disposition front, demand from individual homebuyers on the MLS remains strong. We have taken this opportunity to accelerate our portfolio optimization efforts and are tracking ahead of plan, having sold over 1,300 homes in the first half of the year at cap rates in the 4% area. As a reminder, we are match funding on balance sheet development this year with proceeds from our disposition program.

Looking ahead, as I mentioned before, we are in a great position to capitalize on portfolio consolidation opportunities that arise. AMH has the platform and balance sheet to create meaningful value, but we will only do so when the cost of capital and economics make sense.

In closing, we had a great first half of the year and are optimistic about the future of the industry. I want to thank our teams across the country for their hard work and continued commitment to providing high-quality housing and a superior resident experience to the families we serve.

With that, I'll turn the call over to Chris.

Thanks, Bryan, and good morning, everyone. Like usual, I'll cover 3 areas in my comments today; first, a review of our quarterly results; second, an update on our balance sheet and recent capital activity; and third, I'll close with commentary around our increased 2026 guidance.

Starting off with our operating results. The team delivered an outstanding second quarter, generating net income attributable to common shareholders of $113.6 million or $0.31 per diluted share. On an FFO share and unit basis, we generated $0.49 of core FFO, representing 5.2% year-over-year growth, and $0.45 of adjusted FFO, representing 8.3% year-over-year growth. Notably, this quarter's FFO growth was driven by exceptional execution across all aspects of the AMH business. As two quick examples, within the same-home portfolio, the teams did an excellent job capturing the spring leasing season, sequentially growing leasing spreads and occupancy throughout the quarter, while impressively holding year-over-year controllable expense growth to less than 1%. And on top of that, our teams set new records on the lease-up and pre-leasing of recently constructed AMH development homes driving incremental NOI contribution outside of the same-home portfolio.

In speaking of development, this quarter, we delivered a total of 651 homes to our wholly-owned and joint venture portfolios. Of those homes, 542 were delivered to our wholly-owned portfolio for a total investment cost of approximately $220 million. Additionally, as Bryan mentioned, we saw another quarter of robust disposition activity. On a year-to-date basis, we've now generated approximately $380 million of net proceeds, which is comfortably ahead of our initial timing expectations, which means that on a full year basis, we are now likely tracking towards the upper half of our $400 million to $600 million range that we outlined at the start of the year, reducing some of our planned incremental debt needs.

Next, I'd like to quickly turn to our balance sheet and recent capital activity. At the end of the quarter, our net debt, including preferred shares to adjusted EBITDA was 5.2x. We had approximately $84 million of cash available on the balance sheet, and we had a $390 million drawn balance on our $1.25 billion revolving credit facility. Additionally, during the quarter, we attractively repurchased 4.1 million common shares for a total of $123 million at an average price of $29.88 per share.

And next, I'll cover our updated 2026 earnings guidance, which was positively revised in yesterday's earnings press release. Starting with the same-home portfolio, recognizing the team's outstanding cost control execution and modestly favorable property tax news in a few of our smaller states, we've lowered the midpoint of our full year core expense growth expectations by 75 basis points to 2%. In turn, we have increased the midpoint of our core NOI growth expectations by 40 basis points to 2.4%, and we now expect 2026 same-home core NOI margins to modestly expand compared to 2025. And for the non-same-home portfolio, we also expect incremental core NOI growth from similar expense benefits and additional contribution from our solid AMH development lease-up activity. And when combined with our better-than-expected disposition activity and incremental share repurchases, we have increased the midpoint of our full year 2026 core FFO per share expectations by a total of $0.03.

Our new midpoint of $1.95 per share now reflects the high end of our previous range and represent a year-over-year growth expectation of 4.3%, which continues to position AMH at the top of the residential sector.

And before we open the call to your questions, I'd like to close with one final thought. Like Bryan mentioned at the start, as our industry begins to emerge from some of the recent uncertainty, AMH's positioning as the largest integrated operator and developer of single-family rental homes will likely be more important than ever. The AMH development program gives us the unique ability to both control our external growth while also contributing much needed housing stock across the country as we continue to create value for our residents, communities and shareholders.

And with that, we'll open the call to your questions. Operator?

[Operator Instructions] Our first question comes from the line of Juan Sanabria with BMO Capital Markets.

Congrats on the quarter. Just hoping you could spend a little bit of time on CapEx? Have a nice trend in the quarter and year-to-date both in terms of maintenance and R&M and turn costs. Just hoping you could expand on what's driving that, whether it's dispositions and/or new developments and kind of the prospects going forward? What's kind of the new normal spend on an annual basis?

Juan, this is Lincoln. Thanks for the question. Good to hear your voice this morning. Coming out of last year, in the first half, we recognize that we had some opportunities to tighten up some of our processes and make some structural adjustments to prepare us for '26. We laid that in with the investments that we've been making in some of the technologies and making sure that we have the right teams, and in the back half of '25 showed great improvements.

As we came into '26, as you know, we had a little bit heavier lift with the larger lease expirations in the first and second quarters. The teams did a fantastic job managing through that, probably even a little bit better than we expected. And as we got through what was a little bit of an uncertain period for us, we were able to see that we can handle those types of changes to the lease expiration schedule.

So as we move to the back half of the year here, all those improvements remain in place. And we expect that we'll continue to see a great benefit from the things we've done.

I wouldn't expect the R&M and turn and some of the other components that are on the controllable side to remain in negative territory. Back half, I would expect something closer to low single digits or inflation link.

Our next question comes from the line of Jamie Feldman with Wells Fargo.

This is Conor on with Jamie. Thinking back to the last earnings call, I believe Atlanta was showing some early green shoots, and there's a bit more caution on Texas and Phoenix. Looking at 2Q results, Houston, Dallas delivered blends over 2%, while Phoenix and Tampa blends were a bit weaker. How would you say those markets have performed versus your initial expectations? And where do you still need to see some more evidence of a recovery?

Yes. Thanks, Conor. We're actually very pleased with what we've seen in the vast majority of our markets from a pickup in occupancy, from a rate perspective. You can see that in the May, June and extension into July performance. Especially pleased with some of the pickups in occupancy that we saw in some markets into July.

As far as Atlanta specifically goes, we had a pickup into July there, still probably running a little bit less than what we want to be on total occupancy and rates seem to be trending moderate a little bit. So it's not the bright spot of the portfolio, but again, we're seeing improvements in a lot of places. Tampa, while, again, kind of flat on occupancy and needs some work on rate, we are seeing some green shoots there as well. This time of year, we've seen a reduction in supply in the Tampa market for the first time in quite a while. And we expect that, that will flow through into results over the next few quarters.

Continue to see great strength in the Midwest and some of our western markets. Seattle continues to be wonderful for us, high occupancy there. Boise, Salt Lake City, most of these markets are trending in the 96% to 97% range. So very, very happy with the way that things have moved through the season.

Our next question comes from the line of Eric Wolfe with Citi.

I think in the past, you said that you only have about 33% of leases expiring in the back half of this year, correct me if I'm wrong on that. I was curious sort of how that compares to prior years, so last year and the year before that to sort of understand the expiration risk? Assuming it's actually less than the last couple of years, does that influence how you think about renewals in the back half? Does that allow you to be a bit more aggressive because you're not risking as much occupancy? Just trying to understand how that sort of impacts your strategy?

Eric, thanks for the question. As you know, this lease expiration management initiative of ours has been a multiyear effort. We made the broad brush stroke changes to that in '25 where we saw expirations land kind of in the 50-50 range is what we talked about. It looks much more closer to your observation this year, which is 2/3, 1/3. Again, very proud of the way that we managed that for the first part of the year, and we're looking forward to the benefit of that in the back half of the year.

Part of that benefit will be on the renewal side, and that's a natural part of our usual curve, where as activity slows down and resident movement slows down, we have a little bit more opportunity on the renewal side. We talked about those trending into the 3.5% range, and we should see them migrate in that direction over the next couple of months.

The other benefit is that as that activity slows down this year on the backside of leasing season, that's going to match nicely with the expirations. Those will also slow down, and we expect to be in a much better inventory position. And as we said in the past, our objective is always to go into the first part of every year in the best position possible from an occupancy standpoint. And we think we have a great shot at that this year given the shape and how we plan for it.

Our next question comes from the line of Haendel St. Juste with Mizuho Securities.

I wanted to talk about development. It sounded like the projects in your pipeline, the projects that were leasing up, it seems like they've been a bit better than the part of the raise here. So can you talk about what you're seeing in the pipeline versus your underwriting on the lease-ups and where the yields are coming in versus the [ 5.25% ], I think, you mentioned in prior quarters? And what are you underwriting for projects you're starting today?

Thanks, Haendel. This is Bryan. As I mentioned in my prepared remarks, we're really pleased with the lease-up of our new deliveries this year, and we've seen a little bit of an improvement in yields coming out of Q1 into Q2. A lot of that's just due to pricing. You're seeing the benefits of some of our pre-leasing initiatives that we started last year and are continuing to refine. If you look at the first half of the year, we leased about what we delivered, which is very healthy when you think about these projects that are still in development. And then a really interesting fact, if you look at the back half of the year, I think we're on schedule to deliver about 700 houses. And of those houses, already 40% are rented. And what that means is it's very healthy for us to be able to do it from a pricing perspective from a kind of migration through the development process and delivery process. And in the event, this is one of the benefits of owning the entire development cycle in-house. We have the ability to deliver more quickly or slow down those deliveries on a monthly basis as we plan into next year.

Those yields, again, are a major function of rents. They look really good coming into Q2. We're optimistic that there's some nice changes going on. And the new deals that we're looking at, really think of it in terms of replenishment of some of the pipeline to maintain good continuity in the development markets that we really like. But the few deals that we've closed this year are looking the yield into the 6s. We're getting there through a couple of different ways. We're seeing some favorable opportunities on the land side. There's been some optimization in the way that we're designing and delivering these houses. And there's just a ton of demand for them as we talked about in the past.

So I would think about the new deals we're looking at that we'll close a few more in the balance of this year as well are in the 6s, and we're working through kind of the mid- to low 5s right now.

Our next question comes from the line of Steve Sakwa with Evercore ISI.

Thanks for the comments on July. I was just hoping if you could maybe clarify what your expectations are as it relates to occupancy in 3Q, 4Q and kind of just also your expectations about blended spreads. I realize occupancy dropped a lot last year. I'm just trying to figure out kind of the cadence of occupancy and blends in the back half.

Steve, thanks for the question. This is Lincoln. Yes, we're aware that the curve looks a little bit differently this year. We expect to hold occupancy in the back half. We talked about that on a full year basis in the high 95% area. We're pleased with the way that July ended, again, with seeing building occupancy in many of our markets, which gives us a great shot of doing this. That's supported in part by the lease expiration management program that we talked about a little bit earlier. New lease rate growth is still anticipated to be in the flattish area for the full year. And then again, the renewal rates in the 3.5% area -- excuse me, yes, the renewal rates in the 3.5% area what blends in the low 2s.

Our next question comes from the line of Jana Galan with Bank of America.

Congratulations on a great quarter. Maybe a question going back to capital allocation. And if you could talk about how you think through the preferences between share buybacks, the development program and maybe where today's seller expectations for some smaller portfolio transactions are?

Jana, Chris here. Why don't I start on the buyback piece and then between Bryan and I, we can talk a little bit about portfolios. On the buyback piece, I would say our view there is really no different than the past couple of quarters, where we continue to very much believe in the business and believe in the stock. And you can see that in how active we've been over the past about 9 months or so now, including repurchasing about $123 million just recently in the second quarter, which brings total repurchases over the past 9 months to a little over 3% or so of shares and units outstanding at an average price of about $31 per share.

Since then, it's been nice to see that the stock has started to move in the right direction. But look, going forward, we continue to watch the stock closely right alongside and just like any other form of capital allocation alternative. And if more opportunities look attractive, like we've talked about before, we have more capacity, right? Leverage ended the quarter in the low 5s. It's pretty -- that's below our long-term target. Like we talked about in prepared remarks, dispositions are tracking better than we were expecting at the beginning of the year. And then we still have about $377 million or so of remaining capacity on our current repurchase authorization.

Yes, Jana. And then with regards to portfolios and what we're seeing out there, as most everyone knows, the consolidation environment this year was really on pause with all the legislation and the attention from Washington. There were a couple of deals that closed in January, and then it really was in a little bit of a wait and see. Post legislation, we've seen a little bit more activity. There are some deals that are coming. We're talking to some owners. And what's interesting for us is this legislation preserved our 2 major growth channels, our outlook for growth in the future due to our in-house development program and then the opportunity to consolidate portfolios.

On the other hand, it affects the growth opportunities for some of the other smaller companies who are relying on MLS purchases. And these additional regulations, I think are going to make that more difficult, not impossible, there are exceptions, the rules are still being written, but it will make it more difficult and potentially less attractive. And as a result of that, you couple that with the importance of an optimized and efficient operating platform, and it puts us in a really good position to add a lot of value to the portfolios and provide a complete solution to sellers who might find the space less attractive in light of the recent changes.

Our expectations are that this will play out over the next 12 to 18 months as people really look to the long-term plans, but we are seeing an uptick in activity.

In terms of seller expectations and pricing, we haven't seen anything trade. It's a little bit early to nail those numbers down. But we would expect sellers to become realistic with what we can offer them over time.

Our next question comes from the line of Adam Kramer with Morgan Stanley.

Just wanted to talk about sort of the sequential improvement in new lease from -- I guess, from the quarter to July. Just sort of what's driving that overall? Is it sort of feeling better about where occupancy is, concessions, just general sort of simple pricing? And then I guess more broadly, if you think about sort of the trajectory of this peak leasing season, how would you sort of frame the way it played out, I guess, relative to expectations or relative to "normal year" relative to last year? Just sort of wondering how seasonality ended up playing out because I think there were some concerns to start the year given sort of what transpired a year ago?

Yes. Thanks, Adam. Appreciate the question. I think the shape of the season played out largely like we expected from the standpoint that we saw a healthy level of demand that continues for SFR, much like we've seen in previous years. I think the thing that made this year a little bit different was a couple of things. One was, we're seeing this demand set against a modestly improving supply picture. And that's encouraging giving what we were hoping for at the beginning of the year. The second thing that's really moving the length of the season into July and the performance you saw there was just a strong seasonal execution by our teams. We had -- our field teams were able to, despite having the largest number of expirations for the year in June, turn homes quickly, get them back to market, deliver them to our leasing teams, have them lease them quickly and take advantage of the demand that existed in the peak season. And I think that's the thing that we've done differently this year as we really try to match our activity, our expirations and other business operations to the demand that exists in the season. So largely playing out like we've expected and planned for, and we're looking forward to continuing to seeing benefits from that plan in the back half of the year.

Our next question comes from the line of David Segall with Green Street Advisors.

Given guidance and the year-to-date performance, it seems to imply a slowdown in revenue growth in the second half versus the first half. And I appreciate all the color on the leasing building blocks, but I just want to try to understand like what's really driving that expectation for decelerating revenue growth trend?

David, Chris here. A couple of things there. One, the main thing that I would point out is, keep in mind the timing of earn-in rolling from last year into this year. And that's one of the things that we talked about at the beginning of 2026. And if you think about blended spreads in 2025 being in the mid-3s plus, that's a contributor to this year's overall revenues growth. But obviously, earn-in from last year is going to contribute into the first 6 months of this year. And you can see that being a little bit of a factor in terms of first half versus second half of 2026 revenue growth.

But more broadly, I would say things in general are playing out pretty similar to what our range of expectations were at the start of the year. And I know Lincoln walked through the pieces, but the pieces that we walked through, occupancy so far, very similar to what we are expecting, new lease performance almost dead on top of what we were contemplating at the beginning of the year, and then renewals, like Lincoln was talking about running in the low 3s, a touch better than what we were expecting at the start of the year. But keep in mind, we're talking about tens of basis points on a portion of our leases. And we still have a lot of work left to do. But nonetheless, we're very optimistic that our teams will continue to execute at the highest level. And as you think about the year the setup is playing out really, really nicely and especially on that renewal side. It's not totally out of the question that we could land the full year a touch above the mid.

Our next question comes from the line of Jesse Lederman with Zelman & Associates.

Question on the development platform trajectory. So you framed keeping it in motion in your highest conviction markets as being really mission-critical. But even though you've had a disposition run rate that's tracking ahead of plan, like you discussed, you've left the full year guide unchanged, which implies the second half deliveries are going to be among the lowest for any half since the program really began to ramp. And so given your matched funding, it seems like you do have capacity to do more. So the question is, why hold the delivery guide flat rather than raise it? Is it kind of deliberately throttling capital elsewhere or conservatism? Any info on that would be great.

Yes. Thanks, Jesse. This is Bryan. Development is a little bit different than some of the other acquisition channels in the past. If you go back to kind of the history of the company, we had the ability to almost instantly change our pace of closings on auctions and MLS and so forth. But development requires a plan and a strategy and it's a little bit less nimble in the short term. We put together a strong plan this year for 1,900 deliveries, keeping all of the markets in a healthy position with land replenishments that allowed us to retain that optionality as the cost of capital environment improves at some point, or are there other factors that make the development yields more attractive. So we really like the level that we're delivering at this year.

The back half of the year being a little bit less than the first half of the year is indicative of the strategy of delivering homes into stronger demand environments. And you can see that playing out in the success that we've had in lease-up on new deliveries into this year. So we're pleased with our strategy, and we're going to continue to implement it with a little bit more of a balance of deliveries to the first half.

Our next question comes from the line of Michael Goldsmith with UBS.

I'm here with Ami Probandt. The peak leasing season got off to a slow start, but it seems to have been extended into early July. Is there anything to point to in terms of customer behavior, which you think has led to the shift?

Thanks for the question. Appreciate it. This is Lincoln. There's nothing to point to in terms of customer behavior necessarily. I think as I mentioned before, the peak season had more to do with, again, the slightly improving supply environment and just execution by the teams and the setup of our plan for the year. So we plan to capture as much as demand as we could while the season lasted. That's reflected in the higher number of expirations in the first part of the year. As that played out this year, we saw the same trajectory that we would normally see in most years with the peak of demand occurring in May and June. And then as we moved into July, we just saw a very nice extension of the results given that we were able to turn those homes quickly, lease the homes quickly, giving us a nice extension of that performance and a set up into the back half that's going to be beneficial from an occupancy and rate standpoint.

So I won't say anything large on the consumer side. Again, just a little bit better supply and the same foot traffic competing for lower inventory.

Our next question comes from the line of Brad Heffern with RBC Capital Markets.

Lots for future delivery have obviously been declining for some time. I know part of that was the relative attractiveness of the yields versus the repurchase, and I'm sure the regulatory uncertainty had you pausing on additions as well. You did mention the yield is looking better and maybe seeing some loosening on the land side. So I'm wondering should we see those lots sort of stabilize now that the regulatory stuff is out of the way? Should they go up? Will they continue to drift lower? What's the rightsizing for that program?

Yes. Thanks, Brad. This is Bryan. You're exactly right. We're expecting to replenish land through the balance of the year. I think it was really quiet on the land acquisition side at the first half. And then the question 2 is, what size pipeline do you want relative to your future deliveries? And is it 3 years, 3.5 years of supply? Part of that has to do with the type of land that you're buying. One of the nice things that we've seen of late is VDL opportunities, opportunities to purchase land that's further down the line on development, which would allow us to effectively shorten the pipeline and deliver into vertical and deliver finished homes more quickly. And so there's a little bit of a different mix going forward. But no, you're exactly right. We plan to add some land. And the pipeline has been reduced and rebalanced in some ways to kind of reflect the current environment. But going forward, we're seeing some really good deals, and we'll be adding to that through the balance of the year.

Our next question comes from the line of Peter Abramowitz with Deutsche Bank.

I just wanted to go back to the non-same-store NOI contribution of the guidance raise and specifically the lease-up. Could you talk about maybe some of the markets where lease-up is exceeding your expectations on development? And kind of the delta versus what you're expecting for the year? Has there been a unifying theme in terms of whether it feels like the upside to your expectations has been more supply or demand driven?

Peter, I appreciate the question. Chris here, and then I'll start and Lincoln can fill in, if helpful. Actually, as we think about that initial lease-up of recently delivered homes outside of the same-home pool, the really encouraging part there is that there isn't a single market that stands out. They really all stand out, and that is a reflection of the team's level of execution across the board. And there is a -- you used the term unifying theme. The one unifying theme across the board is our ability and the team's ability to actually pre-lease homes before they're actually finished from a construction standpoint, which accelerates obviously, the lease-up timing. And if you want an interesting statistic that really kind of demonstrates it across the board, in the first 6 months of this year, we actually executed more initial leases than actual homes that were delivered. And that really underscores the point on pre-leasing, which means, I think Brian mentioned this a couple of minutes ago, a meaningful portion of our deliveries for the back half of the year have already committed leases on them at this point.

And while we are expecting the teams to do a good job this year, to your point, in terms of upside to the guide or upside to our expectations at the start of the year, the team definitely exceeded what we were expecting at the beginning of the year, which has driven some of the upside and a portion of the guidance increase.

And then -- this is Line again. It's hard to overstate the importance of this program from our perspective in that it has benefits to the company that Chris laid out and then benefits to the resident as well. If you imagine the ability of a resident who's typically locked into a 30-day time line to find a home, being able to find a home 90 or 120 days out, especially if they're migrating to a new market, taking a new job in a different place, they have the ability to go and find that home on their own time line, which matches our deliveries. They have the ability to lease a brand-new home that they may not otherwise have access to in great areas with great schools. They have the excitement of watching that home be built and moving into a brand-new home with that new home smell and the other things that would be part of the new build process at a 25% discount to what it would cost if they purchased it today. So we're really proud of what we're offering, and we're committed to finding things that are both a benefit to the company and to our residents.

Our next question comes from the line of Jade Rahmani with KBW.

Are you seeing any opportunities to increase third-party property management? And also, are there any AI use cases you've found in the area of property management to make it more efficient and perhaps maintenance more preventative or even self-performing on the part of tenants?

Yes. Thanks, Jade. This is Bryan. Our views on third-party management really haven't changed as we've gone through this year. We went out and tested it, as you know, a few years back and decided that we were better focusing on some of the opportunities we had with development and whatnot. But we do have the platform set up. And our perspective this year, especially in light of some of the issues on the regulatory side, is that it will be a nice tool to allow us to be a full solutions provider to any owner, any portfolio owner who may want us to run through a disposition process on a portion of homes that we didn't want. So the example that I gave a couple of times ago was that if an owner has 1,000 houses, if 500 fit our buy box, we can take those 500 on balance sheet if the economics work and then use third-party management to manage the additional homes as appropriate through the disposition process or whatever solution fits that particular seller. We think it gives us a competitive advantage on the portfolio and consolidation front.

Our last question comes from the line of Jesse Lederman with Zelman & Associates.

Kind of on the similar vein in terms of potential opportunities that may arise from the legislation seems to be an increased reliance on new construction for rental stock. So I'm curious, have you ever thought of or would you consider potentially expanding the development platform to perform for others so you can generate additional revenue and also increase your capacity, which may lead to some more operating leverage on your own developments?

Yes. Thanks, Jesse. This is Bryan. Yes, exactly. We're an entrepreneurial group. We've been in discussions for fee building opportunities that could lead to third-party management in the interim to ultimately acquisition opportunities. We're open to that. We don't have any deals to announce today. But it's an interesting option for us for the exact reasons that you detailed.

There are no further questions at this time. I'd like to pass it back to management for any closing remarks.

Yes. Thank you for your time today. We really appreciate the continued interest in AMH and look forward to speaking with you next quarter.

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

All right. So good morning. My name is Haendel St. Juste, REIT analyst with Mizuho Securities. I'm pleased to be here this morning with the management team from American Homes 4 Rent, a pioneer of the single-family rental industry and one of the leading platforms in the space.

This morning, we have with us CEO, Bryan Smith; CFO, Chris Lau; COO, Lincoln Palmer. I'm going to turn it over to Bryan for some intro remarks. I'll then kick us off with a few questions and open up the floor to questions. So please don't be shy.

With that, Bryan, the floor is yours.

Yes. Thank you, Haendel. I'll start with a few thoughts on the business and the regulatory environment before I hand it over to Chris for some comments on our most recent update.

2026 is off to a good start. Demand for single-family rentals and AMH homes, in particular, has been strong. Our important spring leasing season can be characterized by consistent occupancy and rate gains against the backdrop of excellent expense management.

Our entire platform from operations to asset management to development continues to deliver. The team's disciplined operating approach and strong local market execution have positioned us well for the year and gives us a lot of confidence as we move through the balance of 2026.

On the regulatory front, the legislative process continues to move forward as the House and the Senate are negotiating the final changes to the final housing bill that we hope to see come out shortly. We continue to be highly engaged there, and we feel good about where things currently stand, particularly following the House's decision to remove the Senate's 7-year disposition requirement from the original language.

But importantly, American Homes is in a strong position regardless of the legislative outcome. We have the platform, the scale and capabilities to continue to create value through our in-house development program and best-in-class operations.

With that, I'll turn it over to Chris.

So we just put out an update deck back part of last week. The punchline is that spring has been shaping up nicely, just like we were talking about on the first quarter earnings call and as we were hoping for. Notably, we've seen a nice continued build in occupancy. We built another 60 basis points of occupancy from 95.6% in April, up to 96.2% in May.

Just like we were talking about on the earnings call, against that strengthening occupancy, we were able to push a touch more on new leases, which grew from plus 1.2% in April up to 1.5% in May. And then we held steady on renewals, just like we were talking about on the call, 3.0% in April into May at 3.1%.

A couple of other quick updates on the expense side of things, nothing terribly new to update folks on. Just as a reminder, it's kind of early in the property tax information kind of calendar at this point. We'll have better information over the next kind of month or 2.

The teams continue to remain hyper-focused on controlling the controllables with respect to the remainder of expenses, which they've been doing a great job on so far this year.

Capital plan-wise, things are going according to plan. We continue to execute on this year's moderated development program. We continue to see good activity as we continue to lean into dispositions. And we continue to be thoughtful around share repurchases.

Quarter-to-date in the second quarter, we've now repurchased about $123 million of stock so far. I'm sure we'll get into plenty of other topics. But takeaway from a business perspective, things are feeling good. Spring has been shaping up nicely, and the teams are executing really, really well.

Fantastic. Thank you. Bryan, maybe we could start with the regulatory. Certainly, it's front and center in a lot of investor minds, and I know you spent a lot of time in Washington this year. Curious what is the actual state of play right now? I think the bill is on the Senate floor.

I don't know if it's going to be weeks, months, but I think that I heard there's a little bit of pushback from maybe Senator Warren about some of the provisions that are in this bill that weren't in the prior version, namely the removal of the 7-year for sale of development. So curious what the latest read is on maybe timing?

And then more broadly, as we think about the bill, how do you think the read-through for your ability to acquire homes to trade assets? And then obviously, the point of contention, the 7-year for-sale provision.

Yes. So the current state, Congress has been in recess to return this week, and they have a lot of other things, obviously, to address. But -- our understanding is that Senator Thune and Speaker Johnson are in active negotiations. We were encouraged, as I said earlier, with the House's passed Housing Act that effectively removed the 7-year disposition requirement from the Senate language. There are a couple of other changes as well.

Importantly, too, it removes build-to-rent from consideration, which is very good for us with our internal development program. So I think that's in negotiation. It's difficult to know exactly what motivations are on both sides, but the fact that they're discussing it. And I think it's important, too. Everybody wants to address housing affordability and supply. And I think this bill has some good provisions that give us confidence that there'll at least be active dialogue and a decent chance of passing.

AMH is in a really good position if the House version passes with our build-to-rent platform and the fact that we have the operating platform to support to really run in concert with those deliveries. The effect on the overall industry, it's muted development so far this year, all of the attention that our space has gotten specifically on kind of what the level of federal regulation is going to ultimately be.

But we are well positioned if it passes and if it doesn't pass to continue to deliver really high-quality assets into a pretty robust demand environment. Specifically, if the House version passes, there'll be restrictions on MLS purchases, but we haven't been active in that space for a number of years. And again, our growth channels are going to be heavily focused on new development supply and then potentially consolidation from other players who might find the space less attractive without the growth avenues that they thought they had.

That's a really interesting last point. Certainly, as we digest some of the potential outcomes here, it certainly seems like they most net-net, clearly are positive for your position in this industry as some of the smaller players you alluded to reassess their options.

And I also know there's a number of players who got into this business 5, 7, 10 years ago when the cost of debt was lower. So are you -- I was going to ask receiving any phone calls, but curious what your read of the temperature from some of these smaller players. Are you getting inbounds? Anything you're willing to share on that front?

Yes. I think our team has been active in the space with relationships with a lot of the owners and investors who have come in. Again, people are recognizing the importance of having that operating platform to support the growth. And if you don't have that, it's difficult to be nimble to react to whatever regulatory changes occur. Specific to the MLS, the restrictions have exceptions for those who can put in a path to homeownership program as an example. It's not particularly -- that channel is not attractive to us today.

But because we have the operating platform and we're nimble, if we decided to go that route, it would be a quick and easy change. But if you're relying on third-party managers and others to execute on the operating side, it becomes really difficult. So that's been front and center.

And then the fact that there just haven't been a lot of trades, a lot of community sales and portfolio sales this year makes their exit options more limited. So there are a few good things that are playing, I think, in our favor, should play into our favor, but we're watching it very closely. It just comes down to the economics relative to cost of capital at this point.

Can I add?

Yes.

Cost of capital is important. But just to underscore, these are really unique value creation opportunities. And if you want a perfect case study, you can look at the portfolio that we consolidated in the second half of 2024, which is really kind of a win-win in terms of value creation all the way around. It was an exit solution to the seller. It was an enhanced resident experience to the residents of all of those homes and unique value unlocking from an AMH perspective as we brought those homes, exactly as Bryan was mentioning, that were previously being managed by third-party property managers, in-place operating margins somewhere in the 50s, which is pretty representative of where smaller scale managers will operate.

Over the first 12 months or so of bringing those properties onto our platform, bringing the level of performance up to AMH standards, those operating margins move from in the 50s up into the 60s, uniquely unlocking value as they come on or came on to the AMH platform. So of course, this needs to all be thought of in the right cost of capital environment. The math needs to math. But these are very unique win-win value creation type of opportunities.

Great color. Great color. I appreciate that. Maybe shifting a bit, if we could, to just the fundamental backdrop here, the setup. Seen the updates, encouraged by what we're hearing with the trends in your portfolio. So I guess if we think about how the sector is -- how the year is evolving, it sounds like it's more or less within your range of expectations. So I'm curious what color you can provide us on kind of the demand pricing power, where perhaps the portfolio is performing a bit stronger? Is supply having an impact in certain areas. So some color on just the fundamentals, the pricing, how the year is evolving so far.

Sure. I'll just give you a few points on how we're thinking about the year so far. Hopefully, you've all seen the investor update coming out of the beginning of leasing season and the normal season of activity this year in February, we've had a consistent build in rate and occupancy into May. You can see the updates on the new leasing, which turned positive. And then renewals are running in the 3% range for April and May. We're encouraged by the strength of the season.

It seems like the prospects this year are a little bit more urgent in the way that they're shopping. We're converting a little bit better than we did last year, translating into some of that -- the positive momentum that you see. We should see some pickup in occupancy into June. I would think about this as kind of the peak of our season. May and June typically is the time of the year where we'd see new lease rate growth peak out.

And then as we move into the back half of the year, it's not abnormal to see new leases accelerate slightly. So we should come off of the 3% area that we see today into the mid-3s as we move into the back half of the year, and we've sent renewals in the -- into April -- or excuse me, August and September.

As far as the backdrop, Haendel, I think what we would say on the backdrop is probably a consistently improving supply picture. We've seen improvements in most of our markets and notably some nice decreases, which are giving us some indications of some green shoots in some places. Atlanta is an example of where we've seen some improvement over the last few months. It was the first time in several quarters where we've seen the rate of growth in that supply start to decrease.

I think it's been well noted that the deliveries in many of the different product types in residential have slowed over the last year or so. I think we're starting to see some of the benefit of that in the standing supply. And then as we continue to use this demand to consume some of that supply that's in the marketplace today, I think we'll see a nice opportunity in new lease rate growth and occupancy going forward.

So overall, we're pleased with the way that the season is shaping up. We're encouraged by some positive indications on the backdrop overall and well prepared as we go into the second half of the year from the operations standpoint to take advantage of any of the positive momentum that we have.

Relative to the guide and expectations, I think you said it exactly right. First 5 months of the year so far, pretty similar, similar ballpark to what we were expecting. Very much we are expecting the build in occupancy that Lincoln was just talking about. Very much we are expecting new leases to start to modestly negative territory in the first quarter, inflecting positively into the second.

And then just like Lincoln said, moderation, the typical seasonal bell curve in new leases into the back part of the year. And then renewals in the first 5 months or so, pretty similar to what we are expecting in the 3-ish area.

To Lincoln's point, as we're looking into the third quarter at this point, those are likely going to settle more mid-3s or so into the third quarter. If anyone were to unpack the components of the guide, you would see that the guide contemplates 3.0 on a full year basis. We'd like to see a little bit more data there and those renewals to stick for a little bit longer before we start talking about expectations on the full year, but the first 5 months or so pretty similar to what we're expecting.

Good color. I wanted to maybe double-click on that a bit because we're sitting here today and the portfolio trends are great, but there's some of us who are a little maybe nervous given what we saw last year and certainly sounds like the foot traffic, the conversions are there. So curious, as you sit here today, what -- help us understand what is driving some of that demand in a world of maybe it's higher mortgage rates, but there's some concern about a weak macro and some of the jobs. So as you sit here today, it's June, your level of comfort, confidence in the near-term outlook given what we saw last year. Any kind of early indicators or data that you can help clarify or highlight for us to maybe to deal with.

Sure. A couple of things that give us some confidence that the demand that we see for our product is sustainable. One is it's been relatively consistent for a long period of time despite some of the ebbs and flows in the economy and some of the things you talked about in the job market, we have a very resilient industry in that people prioritize their housing in their budget. So there could be a lot of fluctuations around that and people will still pay their rent.

One of the things that really surprised us was how well our portfolio performed during the COVID period, which arguably in the last decade is probably one of the most challenging household financial periods we've seen for a long time.

The other thing that gives us some comfort is the idea that the residents that are coming into the portfolio today are well qualified, much like they have been in the past. We continue to see improvements in income. The growth in the income is running north of where new lease rate growth is. So people are -- their incomes are keeping pace with rent growth. We have redundant incomes.

So 2 adults typically in the households, child, a pet, those tend to be -- that tends to be a sticky situation. People like to keep their kids in the schools. And more importantly, if there's any disruption in one type of income or the other, we have a second income typically. And then as far as the rest of the year and how the year performs.

Our current residents also are in very great shape. Bad debt and collections continues to run very well, close to historical lows. And then the back half of the year, we talked a little bit about our lease expiration management initiative. Some of you have heard us talk about that over the last several quarters. This is the first full year where we're executing on that.

As we move into the back half of the year, we have a much lower expiration profile than we have in the past, set that next to a slightly improving supply profile and the idea that we're controlling expenses well. I think it gives us some comfort going into the back half that we'll be able to perform extremely well and land the year where we planned so.

Great. Maybe shifting gears, capital allocation, maybe for you, Chris, thinking about the balance sheet, the range of opportunities in front of you today. You've been fairly active on stock buybacks. There is a unique opportunity to sell homes into the MLS market at fairly attractive cap rates. So curious on your appetite for further buybacks, what that could mean for dispositions? And then how does development funding fit into all of this?

Yes. I would say the key word to our view is balance. And as we think about all these different pieces, we don't view any of them as either or all of these things, if done and kind of thoughtfully constructed the right way in terms of the capital plan, all these things can live alongside one another and complement each other very nicely.

And you can see that reflected in the plan that we came into this year with. For anyone that's unfamiliar, coming into this year, we turned down the pace of our development program coming into 2026. That's one of the many benefits of controlling our development program from end to end.

We have the ability to turn it up and turn it down, in this case, turn it down. So we reduced the overall level of volume and capital throughput. Within that reduced level of volume, we've allocated a larger portion of projects to our JV pipeline for this year, shrinking the balance sheet capital component of this year's development program such that it is match fundable with proceeds recycled capital from our disposition program, where we see great opportunities to both optimize the existing portfolio, identifying and pruning underperforming properties and/or properties that represent higher and better use of capital elsewhere. Selling of those properties to end-user homebuyers via the MLS.

On average, this year so far, we've been disposing of properties in a dispo cap rate range of about 4% or so, recycling that back into our development program. The downsizing or moderating of the development program to be matched fundable with disposition proceeds frees up incremental capital in this year's capital plan for other things like share repurchases, where we have been active for the past 6 to 7 months at this point, regularly repurchasing shares fourth quarter, first quarter and second quarter to date so far.

In total, over the past 6 to 7 months, we've now repurchased about 3%, maybe even 3% and change of total shares and units outstanding. Again, it's a very nice complement to the development program and the long-term value creation there.

And then importantly, as we're balancing all of these things, it's very important that we maintain the development program and all of our development program infrastructure, right? The development program is a major differentiator, value creation source for us and will be going forward. And so as we're thinking about navigating this type of capital -- cost of capital environment, balancing all these different things, mission-critical that the development program maintains in motion in all of our high conviction development markets.

Bryan, maybe for you. As we chatting a little earlier. I've seen others in the industry include third-party management, mezz lending. Curious on the incremental options that you're either considering or have looked at in the past and how perhaps those 2 options specifically could or maybe not fit into your playbook?

Sure. Just for those who might not know, we tested a third-party management initiative a few years back, focused on large institutional owners and new build-to-rent product. We worked through it. We built the infrastructure. The platform is prepared to turn that on as needed. But we thought we had other bigger opportunities with our development program and kind of internal initiatives. So we put that on pause.

The way that I would look at third-party management, in particular going forward is it's part of the suite of solutions that we can offer to other smaller owners, portfolio owners. And what I mean by that is we have the ability to -- as an example, if an owner owned 1,000 houses, 500 of which fit our buy box to be able to acquire those 500 and then manage the other 500 through the disposition process, if that's what the seller would want.

So we have a lot of flexibility, and I think we'll use that tool to be an attractive way to get us into acquisition opportunities we might not otherwise have had.

In terms of the immediate opportunities for a large-scale move into that just for management-only purposes, it's probably not in the cards right now. But over time, we're going to be looking at those opportunities, maybe ways to license part of our operating platform that have nice margins where we have a real advantage. So over time, it's something that we'll consider, but nothing in the immediate future on a fee-specific basis.

In terms of lending, again, we feel like there's so much opportunity in refinements in the way that we're delivering houses and kind of our core right down the middle of the fairway business that, that's where our focus is going to remain.

Great. I want to pause there and see if there are any questions from the audience. Don't be shy. All right. In the front here?

Yes. Going back to [indiscernible] a little bit of historical context on that like going back to pandemic GST like how our far back would you go on the [indiscernible].

Worst case, it's hard to imagine. Again, given some of the stuff that we've been through already and residents prioritizing their rent payments. We typically operated in the sub-1% range on our bad debt. So pre-COVID, you can think of that in terms of 70, 80 basis points. I think we're running 80, 90 right now. So very close to historical lows. And that's been relatively consistent.

There was a fluctuation during COVID where we had higher bad debt just because people weren't required to pay rent legally for a period of time. And those of you who follow us over the last several years, that took a little bit of time to resolve that as we went through that delinquency management process in different jurisdictions that tended to be very local. But again, with a healthy resident and the way that they're performing today, we have -- we don't have any concerns about the residents.

How high did we get during the [indiscernible]?

Do you remember repeat, Chris?

This is a total memory Test.

Let's see if it matches 150 basis points, something like that.

Yes, I'd say 150 to 200.

Anyone else out there?

Bryan, could you just open the door maybe in the future [indiscernible] faster kind of steadfast going down that you talk through maybe what's changing taking that perhaps kind of -- perhaps in the future with the new housing bill and the lack of opportunity of the MLS [indiscernible] at all.

Yes. We tested it. We looked at it. We're a very entrepreneurial group. We tested development before we figured out that we could scale it on the 3PM side. We had, again, a focus on build-to-rent. We knew that we were very good lease-up and management and again, decided to kind of pivot off of it.

We've always figured out ways to get credit to be able to monetize the significant investments we've made in our platform that extend beyond the normal operations. Chris mentioned one before, ability to have that big lift on portfolios that are externally managed, bringing them on balance sheet. So we're really looking at it as a tool to kind of enhance our balance sheet investment.

But again, we're -- we recognize that with our scale, we have advantages on the leasing side, as an example, where we have hundreds of thousands of inbound inquiries regularly, and we're releasing thousands of homes a month. So are there ways to leverage that interest and that demand elsewhere.

So we're thinking about it, nothing in the immediate term, but there's a lot of power to the scale of the platform on the leasing side, on the services side, on the disposition side, things that could provide future opportunity.

And maybe continuing that, I guess I'd be remiss if I didn't bring up the topic of AI. And so as you think about the power of the platform, what you've been able to accomplish the last 10-plus years, but the opportunity ahead as you assess your data capabilities, overlaying AI, how do you think about that broadly?

And maybe any examples of how you're either beginning to implement new programs, maybe some expectations around either margin impact or anything you're willing to share on that front?

Yes. We've -- we were prepared for a lot of these advancements in the investments that we made in our data platform a few years ago. We had to make sure that the foundation was set to take advantage of all these new good things, some of which are difficult to even anticipate now.

Our current state of AI investment, we're seeing it in a lot of the applications that we -- that run through our entire operating platform. But the most major initial forays, initial investments are on the leasing front, where we're using it as a front-end tool to handle all the inbound inquiries and effectively get the prospects into the touring of the home stage unassisted and then give them a very clear convenient option to continue to run through the entire leasing process digitally if they choose.

At the same time, we've got our sales teams at the ready to provide whatever level of assistance they need, the sales and leasing to bring that prospect home as a resident. So it started on the leasing front. I've talked about it in the past. It's going to form the foundation of our communication platform with our resident.

Multichannel dual-way communication is a big change off of what people have had traditionally, especially in rentals. So we see some benefits on that side. There are clear operating efficiencies that we're already starting to realize. But what we're looking at it from a long-term view is what can we deliver because of the AI capabilities that's going to enhance the resident experience and make our houses that much more attractive, which ultimately result in better renewal rates, longer stays and more efficiency.

So we're trying to take the customer perspective and based on feedback that we're getting from them, deliver new solutions that now are economical because of the advancements in AI. So that's what we're focused on right now. There's a lot of kind of not some bold stuff that's happening under the hood. We've got improvements in the way that we're managing the hundreds of thousands of HOA documents and a lot of things from an operating efficiency side. But I think the next phase is what can we do to dramatically improve that resident experience and do it efficiently and economically.

Great. 20 seconds. I don't know if that leaves time for one quick one in the front.

Just to follow up, is there anything on like predictive maintenance [indiscernible].

The maintenance part is really the most important one, I think. So we're looking at solutions to empower our technicians to be experts across all aspects of home maintenance. So traditionally, you might have someone who's really a plumbing or an electrician, but how do you put the knowledge and tools in anyone's hand to solve this.

And ultimately, it could lead to self-performance from the residents if they have the ability to quickly diagnose, order replacement parts and have a clear path to replacement, it's easier than having to wait and make appointments for others to come visit. So those are the types of things that we're thinking about. Nothing necessarily to announce now, but the pace of change is quick, and there's a lot of opportunity out there.

Great. Well, that's our time. Thank you all for joining us, and thank you to the team from American Homes 4 Rent.

Greetings, and welcome to the AMH First Quarter 2026 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Nick Fromm, Vice President of Investor Relations. Thank you. Please begin.

Good morning, and thank you for joining us for our first quarter 2026 earnings conference call. With me today are Bryan 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 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 7, 2026. 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, Bryan Smith.

Welcome, everyone, and thank you for joining us today. 2026 is off to a good start. Our strong first quarter was characterized by solid seasonal demand and excellent execution by our field and asset management teams. Against the backdrop of political and economic uncertainty, our results demonstrate the resiliency of single-family rentals and the strength of the AMH platform.

Seasonal demand picked up as expected in the back half of the first quarter despite a slightly later start this year. This resulted in record leasing volumes for March and continued momentum through April. The recent occupancy and new lease spread trajectories put us in a good position as we move through the remainder of peak leasing season. The teams did a great job in meeting the accelerating demand by efficiently turning homes in a period of heightened lease expirations. And their ability to control the controllables drove an impressive reduction in same-home core operating expenses year-over-year. This resulted in strong same-home core NOI growth of 3.7% for the quarter. For April, the leasing momentum from March continued, further improving new lease spreads to 1.2% and same-home average occupied days to 95.6%, representing a 30 basis point sequential improvement.

On the investment front, we continue to execute on our 2026 capital plan. During the quarter, we delivered over 500 high-quality purpose-built AMH development homes at a 5.3% average initial yield. As a reminder, this year's moderated on-balance sheet development activity will be match funded with proceeds from our disposition program. Our asset management team did a great job identifying noncore assets and recycling capital in the first quarter, selling over 700 homes for approximately $200 million of net proceeds. Importantly, we continue to see strong MLS demand across all of our markets, demonstrating the resilient value of single-family housing to end-user homebuyers.

And finally, we continue to remain active on share repurchases, taking a thoughtful and strategic approach to capital deployment. Over the past 6 months, we have repurchased approximately $360 million of common stock, which represents roughly 3% of total shares and units outstanding.

Before I close, I would like to provide a brief legislative update. The discussions in Washington around the 21st Century ROAD Act are continuing as we speak. Our focus remains on ensuring that the role of single-family rental housing is well understood and appropriately represented. We are actively engaged alongside industry partners to support policies that encourage housing supply. We will keep you informed as developments unfold.

Most importantly, millions of Americans call single-family rentals home and our focus on providing quality housing with an exceptional resident experience is unwavering. With our leading operating platform and vertically integrated development program, AMH is well positioned as an industry leader to adapt and respond effectively in all environments.

With that, I will turn the call over to Chris.

Thanks, Bryan, and good morning, everyone. Like usual, I'll cover 3 areas in my comments today. First, a review of our quarterly results. Second, an update on our balance sheet and recent capital activity. And third, I'll close with a few thoughts around our unchanged 2026 guidance. Starting off with our operating results. The team has delivered a good quarter with solid execution across the board, generating net income attributable to common shareholders of $128 million or $0.35 per diluted share. On an FFO share and unit basis, we generated $0.48 of core FFO, representing 4.6% year-over-year growth and $0.45 of adjusted FFO, representing 8% year-over-year growth.

From an investment perspective, we continued executing on our moderated 2026 development plan, delivering a total of 539 homes to our wholly owned and joint venture portfolios during the quarter. Specifically, for our wholly owned portfolio, we delivered 457 homes for a total investment cost of approximately $187 million. Additionally, we saw another quarter of robust disposition activity, generating total net proceeds of nearly $200 million at an average economic disposition yield in the 4% area.

Next, I'd like to quickly turn to our balance sheet and recent capital activity. At the end of the quarter, our net debt, including preferred shares to adjusted EBITDA was 5.3x. We had approximately $63 million of cash available on the balance sheet, and we had a $390 million drawn balance on our $1.25 billion revolving credit facility. Additionally, during the quarter, we repurchased 3.7 million common shares for a total of $115 million at an average price of $31.49 per share. And subsequent to quarter end, we repurchased an additional 3.2 million common shares for a total of $94 million at an average price of $29.37 per share. Over the past 6 months, we have repurchased a total of $360 million of common shares representing approximately 3% of total shares and units outstanding and continue to have over $400 million remaining on our existing share repurchase authorization.

Lastly, before we open the call to your questions, I wanted to briefly touch on our 2026 outlook. As contemplated in our guidance, after a slower start to January and February, leasing season is now fully underway with healthy demand and strong activity. Additionally, as we saw in the first quarter, the team is doing an excellent job controlling the controllables on expenditures.

As a reminder, however, it is still early in the year with the majority of spring leasing activity and move-out season still ahead of us. And with that in mind, we've left our 2026 guidance unchanged and continue to remain optimistic on our position moving forward.

As demonstrated by this quarter's results, our operating platform is clearly firing on all cylinders. The positive inflection in April new leasing spreads is a great reminder of the resilient demand for single-family rentals and our prudent approach to capital management continues to create value into the balance of 2026 and beyond.

And with that, thank you again for your time, and we'll open the call to your questions. Operator?

[Operator Instructions] Our first question comes from the line of Jamie Feldman with Wells Fargo.

This is Conor on for Jamie. New leases experienced a solid 200 bps acceleration versus 1Q. Can you unpack what drove that inflection? How would you describe the spring leasing season versus typical seasonality? Are there certain markets that are key drivers? And how are May trends comparing so far?

Conor, Lincoln here. I appreciate the comments on new leases. We're -- as Chris mentioned in his prepared remarks, we're pleased with the way that the season has kicked off here. What you're seeing in new leases is driven primarily by a balanced approach to our revenue management strategy. We have -- we've seen great activity at the beginning of the year and that's driven both improvements in occupancy and rate.

As we mentioned before, it got off to a little bit slower start, but the May and April results saw great leasing activity. We think of that in terms of 15% incremental over last year. As we've talked about before on the seasonality piece, we expect to continue to build rate and occupancy into the season here. We're right in the thick of it. And we can expect on May and June to build some occupancy incrementally. Rate will follow.

Again, our objective is to maximize that top line. We'll take this first half of the year to capture as much rate and occupancy as we can. And then as we talked about in the past, we will control the controllables and hold as much of that occupancy as possible. May is feeling really good so far. No change in the great activities that we've seen for the first of the year. So we're encouraged by the season.

Our next question comes from the line of Eric Wolfe with Citi.

You mentioned a second ago that you expect occupancy to continue to build into the future months here. I guess with occupancy coming up so much, are you starting to be a little bit more aggressive on the renewal side? Or are you going to sort of expect to kind of stay around this sort of 3% level and build occupancy? Just curious how you're thinking about sort of pricing going forward versus trying to build more occupancy into the back half of the year.

Yes. Thanks, Eric. What we're seeing on the renewals so far this year is just part of this consistent and balanced approach to our revenue plan. You can see the results of that in the top line. We've had great retention this year relative to renewal offers that we've sent out.

As a reminder, full year, we've contemplated in our guide in the 3% area for renewals. First quarter landed at 3.2%. Notably, we're seeing pickups into May and June on renewal rates. So Q2 should land very similar to Q1. And then we're mailing into Q3 now in the mid-3s. So we're comfortable with the way that's moving. We'll continue to find additional opportunity in the back months of the year as that's available to us.

Our next question comes from the line of Juan Sanabria with BMO Capital Markets.

This is Robin Haneland filling in for Juan. I was just curious on the latest on the regulatory front and the probability of stripping out build-for-rent hindrances?

Yes. Thanks, Robin. This is Bryan. The latest and greatest on the regulatory front, just the update to the minute is that the House is working on a response to the Senate Housing Bill, which specifically addressed build-to-rent and had some restrictions. So that remains in discussion today. It's difficult to predict the timing or the exact outcome. But it's important to note that everybody's objective is the same, the policymakers, ours, the industry, and that's addressing housing affordability. The initial bill that was passed by the House, the 21st Century Act, did just that by facilitating the development process, making it a little bit more efficient. And then some of the other additions from the Senate have caused some public concerns, not only just from single-family rentals, but across the homebuilder space and a lot of headlines against that.

And so the House has taken that into consideration. It remains to be seen on timing. It remains to be seen on the outcome. But what's important to note, from AMH's perspective, this regulatory attention has really highlighted the importance of having a scalable operating platform and a development platform that we believe can create some additional opportunities for AMH going forward. So we think we're in a pretty good place, but the outcome remains to be seen.

Our next question comes from the line of Steve Sakwa with Evercore ISI.

This is Manus on for Steve. Just wondering if you could touch on how you feel today on additional buybacks, which you obviously were active on kind of G&A versus development starts. So just curious on your kind of capital allocation front, how you kind of sit currently and what do you expect for the next month?

Sure, Manus. It's Chris here. Look, as we're thinking about buybacks more broadly, the right place to start is, as you hear from us all the time, we very much believe in the business, and we believe in the stock. And you can see that clearly demonstrated by the fact that we've been active consistently repurchasing stock over the past, call it, 6 months at this point. We were active during the fourth quarter, active during the first quarter and now into the beginning of the second quarter as well, like we mentioned in the prepared remarks. At this point, cumulatively, we've repurchased about 3% of total shares and units outstanding.

And then to your point, looking forward, on top of that, we continue to have over $400 million remaining on our existing repurchase authorization. Like we talked about at the start of the year, we came into 2026 with our capital plan contemplating a couple of hundred million dollars of incremental capital capacity for additional repurchases. That's without taking leverage above the mid-5s. And not all of that has been deployed yet.

And then more broadly, we were talking about this last quarter, we continue to have a great opportunity as we think about leaning into dispositions, just like we did in 2025, to potentially free up additional layers of capital as we think about evaluating further repurchases to complement the strategic and long-term value being created by our development program.

Our next question comes from the line of Haendel St. Juste with Mizuho Securities.

This is Mike on with Haendel at Mizuho. Our question is, how are concessions trending by market and in particular, Arizona, Texas, Florida? And what is the current level of concessions in terms of weeks in those markets being offered?

Thanks, Mike. I appreciate the question. As we said in the past, in general, we don't offer concessions on the rent side. We haven't been doing that for quite some time. Especially in our new development communities, we have the ability to match our deliveries with the demand, and so we never build inventory and cause issues where we would need to use those.

We do watch carefully concessions in the marketplace that may be competitive with ours. There has been a lot of that. But our product is moving very well and seems to be positioned well in the marketplace. So we're not going to use those.

Our next question comes from the line of Jana Galan with Bank of America.

Congrats on a nice start to spring leasing. I was curious if there's any changes in the move-outs to buy, whether increasing or decreasing, in any of your markets?

Jana, I appreciate the comments. Move-out to buy has remained really consistent where it's been for the last several quarters, just sub-30%. As a reminder, that's essentially where it's been for most of our history. We've seen it come down slightly from the low 30s as homeownership has changed a little bit for Americans. But it seems like for the most part, it continues to be one of our largest reasons for moving out and no anticipated changes to that in the near future.

Our next question comes from the line of John Pawlowski with Green Street.

I have a few questions just to better understand the quality of the dispositions in the last few quarters. I won't ask for precise figures, but can you give us a sense, directional sense on square footage per home, average age of home, the rent versus -- average rent, again, relative to the rest of the portfolio, so we understand how low quality homes these have been in the last couple of quarters?

John, this is Bryan. I don't have the exact numbers in front of me, but for the dispositions in Q1, generally characterized by slightly smaller square footage than the rest of the portfolio. Age, generally for our -- the dispositions, they're older homes, especially when you consider that we're maintaining a pretty good hold on average age because we're delivering brand-new houses into the portfolio. And then it could be characterized by slightly lower rent, too. I think the key factor is that in the vast majority of the cases, these are noncore assets with noncore due to location or maybe some demand characteristics at a minimum.

And I also wanted to remind everyone that we had a number of houses freed up last year when we paid off the securitizations that we haven't had access to in a while with maybe a little bit higher proportion or higher weight in the Texas markets. And so you're seeing some of those kind of lower-end homes work through the system.

Yes. John, Chris here. Just to point out one number that I think you may have noticed, but a lot of what Bryan was talking about, you can see that translating into the average net proceeds per property we sold in the quarter, which was plus or minus $200,000 per door, reflective of some of the attributes that Bryan was talking about.

Importantly, those homes still generated an average disposition yield in the 4% area, representing a really attractive form of recycled capital. But equally, if not, in certain instances, more important than just the attractive capital recycling is the opportunity like Bryan was talking about to really asset manage, make some really smart decisions and optimize the portfolio at a super granular unit-by-unit level.

Our next question comes from the line of Rich Hightower with Barclays.

So I guess a multipart on development really quickly. So just with, obviously, the price of certain commodities going up quite a lot recently. I'm curious for your estimate of the interplay between that and sort of prospective development yields on the pipeline in place. And then help us understand maybe the pace of development kind of going forward, just given the cloud of uncertainty that currently exists. We'll see how the legislation front turns out. But just give us a sense of how you're thinking about all that right now.

Yes. Thanks, Rich. This is Bryan. I'll start with the inflationary effects that are starting to creep into the marketplace. We're obviously watching it very closely. And the good news for us is on the current developments, we're pretty well locked in on price. And to put it in perspective, our expectation for our vertical costs of the deliveries this year is really right on top, if not slightly down from last year. So the team has done a great job of controlling those costs.

We well-publicized what's going on globally, supply chain, et cetera. And it's very difficult to predict what effect that's going to have. I know that lumber has gone up in the near term. If we do see an effect on that, it will be later in the year, but there may be counterbalancing effects as well. It just really remains to be seen how things get worked out.

We're likening a little bit to the way we handled, at least within our internal development program, the tariffs of last year. So there was a tariff effect that was counterbalanced by some reduced activity from some of the homebuilders that had some downward pressure on cost of labor. So there are a lot of moving parts. In the event that it persists, we probably wouldn't see that play out in costs until the end of '26 or into '27. We'll be in a much better position to talk about that on the next call.

And then relative to our development plans and our capital allocation strategy this year, if you notice, we have anticipated reduced number of deliveries in 2026 relative to 2025. That's one of the benefits of owning a mass development program, you have the flexibility to flex up or flex down in response to current market conditions. In this case, some of the regulatory uncertainty and cost of capital considerations have driven us to that particular output expectation for '26.

As we go through and things get worked out in Washington, depending on the outcome, there may be really nice opportunities that could provide a catalyst for the development program. But again, having that flexibility by owning that full stack in-house is really important at this time.

Our next question comes from the line of Adam Kramer with Morgan Stanley.

I just wanted to ask about same-store expense growth. I think it decreased modestly in the quarter. Just wondering sort of what the drivers of that were, if any of that was maybe onetime in nature or sort of expenses shifting to another part of the year. And then maybe just generally update on insurance. I assume it's a little bit too early in the year to start talking about taxes, but to the extent that there's any incremental data or nuggets on property taxes, that would be great to hear.

Yes. Adam, Chris here. Yes, sure. I can just run down the list. Property taxes, the summary is, in general, no major updates. As everyone probably recalls, first quarter is a pretty quiet time of year for new property tax information. So full year outlook still unchanged in the 3% area. A reminder that the bulk of assessed values come back over the summer months. Tax rates are typically released much later in the year, late third quarter into the fourth quarter.

On insurance, you may recall that our insurance renewal is done at this point. It's actually completed at the end of February. So we knew about it at the time of the guide, so contemplated in our full year outlook. The feedback that we heard is that the market has continued to recognize the outperformance of our program, and you can see that reflected in the success of this year's renewal, where we saw our 2026 insurance rates decrease by about 10%. So good renewal there reflected into the outlook.

And then on controllable expenses in the quarter, I would say we've got a couple of different things going on, a little bit of a combo, in part, a little bit of timing just in terms of year-over-year comps. But then also, probably more importantly, just really great execution from the teams like Lincoln was talking about.

And just to underscore that a little bit more, it's especially notable when you consider the increased level of scheduled expirations we had on deck this quarter given the ongoing maturity in the lease expiration management program. That translated into a slightly higher level of move-outs this quarter. You can probably see that in quarterly turnover rate on the same-store page. And the team was able to do a really good job processing that volume quickly and very efficiently, still delivering a year-over-year decrease in controllable expenses even with an uptick in year-over-year move-outs.

Our next question comes from the line of Jesse Lederman with Zelman & Associates.

So your guidance implies an occupancy lift through the end of the year. Just looking historically, the only year occupancy didn't moderate from 2Q to 4Q was in 2020. Obviously, you had the kind of post-COVID demand lift. And it seems like you still do have some wood to chop on the new move-in pricing to get to flat for the year based on where you are through April. So just curious if you're still expecting new move-in pricing to be flat and what gives you confidence you can achieve a stronger-than-seasonal occupancy and new move-ins in the back half of the year.

Jesse, thanks for the question. Yes, you're correct to notice the slight differences this year and the way that we're thinking about seasonality in the curve. Again, front half, build occupancy and rate; back half, hold as much as we can.

There are a few notable differences about this season. Number one, we're contemplating flattish new lease rate growth for the year, and that's in support of this overall optimized revenue strategy, which is intended to support occupancy. The second piece that's very important is that our lease expiration profile in the back half of the year is extremely low compared to where it's been in the past. So we think that will help as well. And then we're hoping for a slightly improving supply picture, but we're watching that carefully as well. So there are a lot of different things going on this year that are different than previous years. And we think that we have a good plan.

And Jesse, Chris here. You made a comment about the shape of new leases, just to make sure we're on the same page. I would say, as Lincoln was talking about new leases very much tracking according to plan, just to make sure we understand kind of the shape and expectations over the course of the year. As we know, we are building occupancy in the first quarter, modestly negative new leases, translating and inflecting positively in the second quarter that Lincoln was talking about, that we expect to build a touch more on into May.

But as we get into the back part of the year, like we talked about last quarter when we were initiating the guide, we still are expecting new leases to naturally reflect the typical seasonal curvature in the business, and it would be natural to expect some level of moderation in new leases as we get into the third and fourth quarter.

Our next question comes from the line of Ami Probandt with UBS.

You mentioned the initial yield on the developments of 5.3%. What's the stabilized yield? And what are you targeting in terms of a spread for your developments versus your cost of capital?

Ami, this is Bryan. Yes, the 5.3% yield that I cited in my prepared remarks is the going-in yield that's upon delivery and actively delivering communities, active construction sites. I think it gives a good indication of the level of demand for our houses and our product. Earlier in the call, Lincoln was asked about whether we were offering concessions, and we're unique in the marketplace and that we don't. We don't need to.

In fact, one of the interesting things that we've leaned into this year that's new is our pre-leasing efforts. And we're -- we've designed our program now to offer these houses well in advance of the certificate of occupancy. And the uptake on that has been fantastic. If I remember correctly, the statistics, even though this program is still in its infancy, we leased over half of our new deliveries before they were ready. So pre-leased over half of our new deliveries for the month of March.

So anyway, there's great demand, but I want to make sure that we look at this from the perspective of the going-in yield. And then upon stabilization, which we've defined in the past as completely completed community, maybe been through 1 turn cycle, we've seen yield improvement.

The best way that I could think about it in terms of that momentum that we've given is to put it into the context against the scattered site and what we're seeing in the same-home pool. And the behavior of the new development communities relative to the scattered site portfolio is right on top of each other in terms of occupancy as we sit today. The rate growth is similar.

So from the revenue side, it's pretty similar. But the stark contrast is the difference in the total cost to maintain that we see. Total cost to maintain, meaning the maintenance costs, the turn costs and CapEx. And we're operating these new development homes at a fraction of what it costs to operate the scattered site homes. And you can see the effect of that as more and more of those come into the same-home pool with the idea that our total cost to maintain has gone down by 5% since 2023.

So although we're not in a position to give exact yields with a lot of the moving pieces, they're performing as we expected, and we look forward to many more good things to come.

Our next question comes from the line of Brad Heffern with RBC Capital Markets.

It feels like the regulatory uncertainty is having an impact on future supply. When do you think we'll start to notice that in the fundamentals? And then do you think that, that's something that's likely to stick around sort of regardless of what the regulatory outcome is?

Yes. Thanks, Brad. It definitely has affected supply. It's been widely discussed as the effect of the headlines that we've seen this year on capital coming into the space. So I think it will have probably a more immediate effect on the build-to-rent projects. I believe a lot of them that were in flight will get completed, but it's changed people's outlook.

It goes back to something that I said earlier, too, it highlighted the importance of scale and the importance of having the operating platform that can be nimble and adjust to any sort of regulatory changes. We don't expect to immediately see the effect on supply. But depending on what gets passed, as I spoke of earlier, anything that restricts supply is going to be bad for housing affordability. The existing rental units that we have maybe been looked at with a premium. We're optimistic though that, that won't be the final outcome.

Anyway, in a nutshell, we've seen an effect today. We don't know how long-lasting it's going to be. But putting that into the context of an already improving supply profile puts us in a good position as we get through this year and the next.

Our next question comes from the line of Peter Abramowitz with Deutsche Bank.

Yes. Most of my questions have been answered, but I just wanted to follow up. I think you had a comment earlier that the seasonality and the rate of expirations is a little bit lower in the fourth quarter this year. Just kind of curious what's the dynamic that caused that shift? And I guess now that, that's how the lease book looks, is that something that you expect will happen kind of regularly in future years going forward?

Yes. Thanks, Peter. What you're seeing is the result of our intentional alignment of our lease expiration schedule. We've talked about that in the past as shifting expirations from the back half of the year to the front half, where we have more opportunity to lease to gain occupancy and to build rate.

We've done the broad lifting on that side. Think of the balance between the first half and the second now is 2/3 in the first half and maybe 1/3 in the second half. Again, that's been very intentional just relative to what we know about seasonality and the activity that we see in the back half of the year.

So that will continue. We'll continue to make refinements to that as we lean into lease expiration management and communities and get a little bit more precise on months, days and weeks of expiration. So very much intentional and we'll continue that effort.

Our next question comes from the line of Jade Rahmani with KBW.

This is Jason Sabshon on for Jade. I was just curious if you've seen any movement in pricing from sellers or in development yields based on any of the uncertainty that we've been seeing from regulation or the rate environment.

Jason, this is Bryan. I think some of the uncertainty that we've seen this year has really put a pause on a lot of the transaction market. What we have seen though is more of a willingness from some of the midsized operators to discuss ways that they could partner with us. Nothing has happened because of this kind of overhang, but we do believe that it creates some opportunity going forward.

Again, it goes back to my comment about the value of having the operating platform and in our case, too, the development platform. So things might be a little bit on pause in the transaction market, but we're optimistic that, that will change eventually.

Our next question is a follow-up from the line of John Pawlowski with Green Street.

Chris, there's been a lot of churn in the same-store from dispositions and then homes getting added to the held-for-sale bucket. Can you give me a sense just how much lift to full year '26 expected same-store revenue growth, the disposition and held-for-sale activity has had?

You're right. At the start of any year, we are resetting of the pool. This year, the pool grew by about 1,500 units, which is largely newly constructed homes, delivered over the last couple of years and have now stabilized and matured their way into the same-home pool. Also each and every quarter as homes vacate, we can inspect them and finalize the decision as to whether or not they are appropriate disposition and capital recycling candidates.

But to your point in terms of same-store revenue growth, keep in mind that when we reset the pool, we're obviously -- statement of the obvious here, we're resetting both current and prior year pool. So any changes, whether it is new homes coming in when we are resetting the pool annually or identifying homes for disposition, they're coming out of both periods, current and prior period.

Also keep in mind that if there is a home that is an appropriate disposition candidate, more likely than not, it would have been occupied in the prior period, right? So it is apples-to-apples by the time you reset the pool and have the same composition of properties in both the current period and prior period for comparison.

Our next question comes from the line of Ami Probandt with UBS.

I was wondering what do you think led to the slightly later than normal start to the peak leasing season? Is this weather or just general lumpiness? Or is there something a factor that you could point to that may be driving the trend?

Yes. Thanks for the follow-up, Ami. Look, the shape of every year is a little bit different, and there are a lot of different factors that go into that. You mentioned one, weather can definitely play a part on that. There was some weather this year with the abnormally cold season across many parts of the country where we operate. Some of that can be uncertainty, whether that's on the regulatory front. There's a lot of things going on in the world right now or just financial uncertainty.

We're not sure exactly what drives that from period to period. We're encouraged that despite the late start, we're seeing excellent activity this time of year, and we expect that, that will continue throughout the season here. So regardless of what happens from period to period, we're prepared to respond to those with the appropriate operational adjustments.

Our next question comes from the line of Jesse Lederman with Zelman & Associates.

Just wanted to dig in a little bit more. I know there was a comment on the supply profile already improving. Would love any color you can provide, whether that's in the more supply-burdened markets, in particular. Any color on supply potentially clearing up here would be awesome.

Yes. Thanks for the follow-up, Jesse. Yes, we do see supply generally improving across most of our markets. We're encouraged today, especially with the amount of demand that's in the marketplace this time of the year during leasing season that can help us to consume through some of that.

We've also talked a lot about moderation in starts and deliveries. I think most people can see in the data that's coming across. Burns, as an example, released his outlook on apartment deliveries for '26, which shows a 40% reduction year-over-year. That's encouraging. Same type of trend is happening on the BTR side, especially with some of the regulatory uncertainty and maybe cost of capital environment. So in general, we think that there are some things that are happening that are very good.

On the other hand, there's still some standing inventory in some parts of the country that needs to be consumed. And the rate at which that gets consumed is going to vary market by market, depending on how much is there and what the demand profile for those particular areas look like. We still see heavy inventory in Arizona and Texas, and it's going to take a little bit longer probably to work through some of the things there. But we're also seeing great signs of life in many of our markets. You can see that in some of the improvement this season. All of our markets currently are running -- almost all the markets are running north of 95% with continued incremental improvements into the season.

So as we move forward, we'll see how that turns out in each of the markets, but encouraged that we're seeing signs of life in some places and know that we still have some work to do in a couple of markets.

Our next question comes from the line of Austin Wurschmidt with KeyBanc Capital Markets.

I was just curious, kind of piggybacking off the last question a little bit. So with supply potentially starting to improve in some of these markets, would you expect the spread between your Midwest markets to start to converge with some of the Sunbelt markets over the next 12 to 18 months, call it?

Yes. Thanks for the question, Austin. I think what happens on the convergence of those spreads probably has more to do with what happens in the Sunbelt and what happens in the Midwest. The performance in the Midwest is projected to be very strong for the next several years. Rate growth, as an example, migration and supply all seem to have great profiles for several years now. As the other markets improve, I'm sure that we'll see some convergence of those, but it probably has more to do with what's happening outside of the Midwest, which continues to be very strong.

Ladies and gentlemen, that concludes our question-and-answer session. I'll turn the floor back to management for any final comments.

I want to thank you for your time today. I hope everyone has a good weekend, and we look forward to seeing many of you at NAREIT next month. Bye.

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

Welcome to Citi's 2026 Global Property CEO Conference. I'm Nick Joseph here with Eric Wolfe with Citi Research. Pleased to have with us AMH and CEO, Bryan Smith. This session is for Citi clients only, and disclosures have been made available at the corporate access desk. [Operator Instructions]

Bryan, we'll turn it over to you to introduce the team and company, make any opening remarks, tell investors why they should buy your stock today, and then we'll get into Q&A.

Good morning. Thank you for joining us today. With me on my right is Chris Lau, our Chief Financial Officer. And to my left is Lincoln Palmer, our Chief Operating Officer. We recently reported fourth quarter and full year 2025 earnings last week. So I'll keep my remarks focused on some of the highlights and then what we're seeing today in the business.

Our teams executed exceptionally well to close out 2025, delivering residential sector-leading FFO growth in excess of 5%. Demand for single-family rentals and AMH homes, in particular, remains strong. And as we transition into 2026, we've been proactive in responding to persistent supply pressures in some of our markets through the slower leasing season.

And we did this by adjusting price where appropriate to prioritize occupancy. After a slower start to the year, we are encouraged by the arrival of the spring leasing season as we head into March.

On the policy front, our government affairs teams remain highly engaged at the federal, state and local levels, and we continue to clearly communicate that AMH is part of the solution to the housing shortage and affordability issues. And this is really focused on our in-house development program, which is directly addressing the supply shortages in some of the key markets.

Development remains a key differentiator for AMH. Since inception of the development program, we've delivered more than 14,000 newly constructed homes, helping to modernize and expand the nation's aging housing stock. In 2026, we expect to deliver approximately 1,900 newly developed homes, further strengthening our portfolio and the long-term growth profile. Over time, our development drives higher quality cash flows and allows us to recycle capital into assets with better long-term fundamentals.

And with that, I'll turn it over to Chris to walk through current performance and our capital plan in more detail.

Sure. A couple of quick updates. We put out an update deck that hit the website on Friday, pretty similar to what we were talking about on the earnings call, January and February same-home occupancy, 95%, renewals in the mid-3s or so, new leases modestly negative at minus 1%.

Like we also talked about on the earnings call, we will likely stay focused on occupancy through the majority of the first quarter, seeing nice encouraging signs in terms of activity as we're moving into the March time frame. But all that, we think, will translate into a slightly more moderated seasonal curve for this year.

In terms of high points of the guide, you probably got the majority of them from the call. We are expecting same-home NOI growth of 2%, FFO growth of 2.7%, a little bit moderated relative to 2025, but still top of the pack when we think about the residential peer set.

A couple of other quick updates in terms of capital. Main update from a capital perspective is that we have been active on share repurchases recently.

You probably heard the update that through the fourth quarter and into the beginning of 2026, we fully exhausted our existing share repurchase authorization we acquired in 2% of shares in units outstanding. That's about $265 million at an average purchase price of $31.65 per share. Very shortly after finishing that authorization, the Board approved a fresh authorization, $500 million.

And then importantly, for this year, as we think about the capital plan, as many of you probably heard, we have throttled down the development program and in particular, balance sheet spend going into the development program such that this year's balance sheet component is fundable through recycled capital coming from the disposition program, freeing up a couple of hundred million dollars of incremental capital capacity for things like additional repurchases. So that's probably a good pause point to open it up.

Great. Although I don't know if we got to the top reason you didn't answer the top reason to buy your stock today?

The development program and the operating platform.

Got it. And I know there have been a lot of proposals that have been out there and nothing is sort of concrete today. But I guess based on what you know or what you expect around the legislation to come, I guess, how do you see this changing the industry, if at all? How do you see it changing your strategy, if at all?

Yes. Thank you. There were some developments yesterday that you may have seen with a draft Senate bill that's been circulated that included a lot of the information that we expected through our last month or so of meetings in Washington, D.C. There's still a lot open for debate. So it's difficult to figure out exactly where it's going to land.

There are some things in there that we're comforting. They set the threshold for institutional ownership levels. It also under the current language appears the existing portfolios are grandfathered in kind of business as usual. And then there's some key components that still need to be worked out. We got it last night. We've been reviewing it, and there's some back and forth before it goes to debate on the Senate floor.

So it's difficult to predict exactly how it shakes out. Once we have a little bit more clarity, which may come later in this week as it gets debated or it gets pushed to the House, we probably could form a better opinion.

The key things, though, that we've been messaging in Washington and at the state and local level, as I said earlier, we're part of the solution if you're talking about supply shortage and the easiest way to affordability is to have more choice. So there's recognition of the importance of build-to-rent and supply in this overall narrative.

So we're hopeful that we'll be able to lean into that over time. But in terms of the mechanics and how portfolios are dealt with restrictions on the MLS, it still remains to be seen.

Understood. I guess, based on what we know, again, I know it's moving around and there's a draft yesterday. But I guess more broadly, if someone can't grow their portfolio, do you think that, that sort of changes the amount of capital that's willing to go into the SFR space? Or maybe, I guess, that capital that previously was focused on acquisitions or portfolios now moves more towards development?

And does that bring sort of a risk around it that you get more supply in certain areas and that sort of -- and I'll get to the next part of the question, but it really is like if you're going to see more capital focused on development, does that also change your market selection from places that are easier to develop?

Yes. There are a lot of different factors mixed in. A couple of things are important to remember, the importance of the operating platform, and there are relatively few sophisticated, highly efficient operating platforms. So that kind of narrows the space a little bit.

The development business is hard. We've been doing it for 9-plus years, incorporating a lot of internal experience, all the data that we're getting from the operating side of the business to really optimize what we're delivering and where. So I think we've got a decent head start.

But if that's the only growth channel, I would expect additional investment there. There's plenty of room. The markets that we're in, we own a very small percentage. We're very particular in the areas that we're invested in.

But again, you're talking about a couple of thousand homes and MSAs of millions of people. So if there was some additional competition on the build-to-rent side, I don't think it would have as much of an effect as the increase that we've seen over the past few years.

And I think the difference between those two is the expectations for performance from that initial flush of capital ended up playing out differently than they expected from the beginning, and it ties back to having the operating platform and really being focused on what and where you're developing. So I think there's some protection around our position. But again, seeing a little bit of extra competition is not out of the realm of possibility.

And you talked about this on the call and then in your opening remarks that there's been sort of some stubborn supply that's reduced pricing power recently. I guess what I don't completely understand about that is that, I guess, I would have thought that the sort of supply aspect of it would be a little bit more predictable.

I thought sort of supply, at least the BTR was coming down meaningfully this year, especially sort of given this lagged impact of it's much -- it became much more difficult to develop as interest rates rose a couple of years ago.

I guess is it really sort of supply that's impacting things? Or is there also a bit of a demand component there where you just had -- you've had lower job growth, you have lower consumer sentiment? I guess how do you sort of determine that it's really the problem is sort of supply right now? And when do you think that gets better?

So maybe I'll talk about the customer and demand side first. As far as sentiment goes and maybe customer capability, the customers coming into the platform are still as healthy as we've seen them in many years. The rents continue to grow right in line with incomes. So they're very tight there. Our bad debt performance is as good as it's ever been. So the customer seems healthy.

We talked a little bit about the demand this year being a little bit later than we expected on the upswing into leasing season. But as Bryan mentioned in his opening remarks, encouraged by the level of demand that we're seeing. It's not outside of normal seasonal fluctuation. So there hasn't been a significant drop-off in demand overall for single-family homes and for AMH homes.

I think on the supply side, what we've seen is -- you talked a little bit about the timing, Eric. I think everybody saw permits and starts slow down quite a bit last year and deliveries were expected to kind of peak and begin to fall. And it seems like those deliveries have maybe extended longer than they normally would have. If you look at past cycles, it's taken longer to get those deliveries to market.

I think that's one of the reasons why we were surprised on the multifamily front last year as an example, levels in multifamily seem to be about the same as they were in 2025, the same time last year.

So how quickly that overhang in supply gets absorbed is going to depend on the level of demand, which we see as healthy absorption in multifamily seems to be pretty healthy. But we're looking at the residential landscape in general. So if you think about the continuum of housing from multifamily to single-family for rent, you have build-to-rent in there as well and then for sale supply. Build-to-rent has been a little bit more stubborn.

But again, given the capital flows into build-to-rent in the last couple of years, that seems to be improving. And then on the for-sale side, the inventory is higher than it's been for several years, but still lower than pre-pandemic levels.

So there may be some effect from conversions from for sale to for rent, but it's really market specific where we're seeing some of those things. And we're prepared to make adjustments to the platform as we see those improving. It's difficult to say when that's going to be. I think there have been some missteps in the last year or 2 about calling an inflection point or something on demand, but we definitely see a road ahead where that improves.

And when you say demand is good right now, obviously, some bad weather earlier in the year, but demand is good right now. It's consistent, normal seasonal pattern. You're measuring that based on leads, you're measuring that based on conversions? Like what are the demand indicators that you all talk about internally, week-to-week? And sort of how are those trending year-over-year?

Yes. We watch the -- internally, the metrics starting at the very front of the lease journey for our residents. So whether they're engaging with an external platform first or coming directly into the AMH platform, we look at the number of interest for our homes. Specifically, the thing that we key in on is the number of showings, so people actually walking through our homes. And then in that journey, how many of those showings ultimately convert to leases.

So the interest and the showings have been relatively stable within a small amount of variability. And then the kickoff to the season starting kind of in mid-February, we had some better leasing than we've seen in a while. So as it translates all the way through, again, we're really encouraged by the directionality of it.

So maybe we can talk about that because I think before -- and again, correct me if I'm wrong, you sort of leads going into conversions, but maybe that conversion was taking a little bit longer than it normally does, which is sort of increasing the amount of time that a home might sit vacant.

I guess, what are you seeing now in terms of your forward indicators? It sounds like you're pretty encouraged about the direction of occupancy over the next couple of months. Maybe just help us understand sort of where retention is on a forward basis, why you think occupancy will increase?

Yes. A couple of different reasons. One, retention remains strong. Turnover was at the lowest levels that it was that it's been in the history of the company in 2025. Rolling into 2026, the kind of 25 basis point moderation in occupancy year-over-year contemplates a slight uptick in turnover and then slight extension in the timeline that it takes to lease, reflective of the supply in the marketplace. People have more choice. We've talked a little bit about that.

But over the next couple of months, beginning, especially in second quarter, we should see occupancy build, given the activity that we're seeing in the marketplace. As activity builds, rate tends to follow, we'll build to a peak in May, June, is as typical and then hold as much of that occupancy in the back half of the year as we can, supported by our view on kind of flat new lease rate growth for the full year and renewals in the 3% range and then a favorable expiration profile in the back half as we've been working on for the last couple of years.

And the renewals recently are in the mid-3s. Is that where you've been signing, I guess, for March, April and I guess, early part of May?

Right. Yes. It's going to be in the mid-3s for the first half of the year here.

Maybe just quickly on expenses before we shift over to capital allocation. You've seen a much lower rate of property tax growth. It's a majority or almost a majority, I guess, of your expense structure.

I guess, what gives you the confidence this year that you're only going to see a, call it, like a 3% increase? At this point in time, do you have sort of assessments and other information that you've seen thus far that sort of supports that? Just trying to understand the comfort around that specific piece of the guidance.

Yes. I would tie that into expenses overall that we see expenses being pretty cooperative this year. At this point, we're contemplating 3% property tax expense growth in '26. The components of that is, generally speaking, we see values being in the flattish environment in 2026, recognizing though that property taxes pay for things from a budget standpoint. The cost of those things that need to be funded in budgets continue to increase inflationarily.

And so we are contemplating the fact that we may see rates go up in some markets across the country. So at this point, at the start of the year, we feel good about the 3% area, well below long-term average. Long-term average for us is 4% to 5%.

And then in terms of expenses more broadly, insurance renewal is done at this point. We finished it a couple of days ago. Our insurance renewal for this year is down in the plus or minus 10% area. That's a decrease.

So a, that's good. B, that's especially good considering that's a decrease on top of last year's decrease as well. And then in terms of other aspects of expenses, the teams are doing a great job controlling the controllables. And overall, we see expense growth this year growing sub-3%.

Maybe we shift to capital allocation and maybe I guess, first off, just the dividend. You grew it -- recently announced the increased 10%. Was that just based off of taxable net income? Was that kind of the amount that was required to grow it? Or how do you think about kind of paying out a higher dividend versus other uses of that capital?

I would say it's a balance of all of that. It's a function of natural taxable income growth within the business. Naturally, we are continuing to robustly lean into dispositions. A portion of dispositions can be [ 1031 ] into the development program. But naturally, when we are disposing of properties at the levels that we are, that creates tax considerations, which fold into our distribution planning on kind of a multiyear basis.

And we'll continue to, right? This year, we're contemplating selling between $400 million and $600 million of properties for this year. We are endeavoring to do as much as we can there. Last year, we did a great job outperforming our disposition guidance at the start of the year, and we're going to attempt to do that again this year as well.

As we think about distribution planning, it's a function of creating, well, managing the taxable piece, creating the right type of glide path and return profile over time, balanced with retention of retention of cash flow coming out of the business for reinvestment opportunities. But ultimately, it's a balance between all of that and is influenced by the level at which we're disposing of homes these days.

I guess on that point, you mentioned the $500 million of dispositions at midpoint of your guidance. I guess what is a sort of good cap rate expectation around that?

High 3s to 4 area. That's about where we're selling today and kind of the environment that we see kind of in front of us for 2026.

And that's like an economic cap rate, including CapEx? Or is that just a pure sort of nominal based on NOI? And I guess, does that include closing costs, like seller fees, title, all those things?

Yes. Essentially, that's an all-in number. Think of it as the value at which we're selling to end-user buyers via the MLS. So think about it in terms of an all-in number of where we are selling to the end-user buyer within cash flow assumptions assuming if you had a third-party investor buyer purchasing that home, where market rents would screen and kind of a market rate cost structure, including a reserve for CapEx coming to an economic yield.

Okay. So it's economic yield?

Correct.

Okay. Is there a way for us to think about it on a nominal basis just so we can sort of model earnings?

Yes. A typical third-party investor buyer would model anywhere between 30 and 50 basis points of CapEx reserve in that economic yield.

Okay. And I guess, you brought this up a moment ago in terms of one of the reasons why you grew the dividend by 10%. But I guess, is there a certain amount that we can think about that you can sell each year? And I know it depends on the tax basis of what you're actually selling. But just generally, if there's a certain amount that we can think about you can sell each year without having to do like a special dividend or get into sort of tax consequences from selling?

It's a tough question to answer quantitatively. I'm not trying to dodge the question. There's just a lot of things that go into it. I would say the level that we're at right now is already kind of planned into the tax strategy and kind of dividend glide path that you've seen. We could turn that up a little bit further from where we are kind of all else held constant.

It's also a function of how much we are [ 1031 ] into the development program. Keep in mind, you can only 1031 into the balance sheet component of the development program as we are increasing the proportion of development going into joint ventures. Obviously, that decreases the amount of assets you can be [ 1031 ] into. But I would say the simple answer is there's still some room from a tax perspective before we would need to get into special distribution territory.

Okay. And then you have this policy, and I think it's good ethical moral policy, but that you only sell homes when people are moved out, right? But I guess sort of my question is, given that there's legislation, and I guess I'll read through the full draft later, but there's a legislation around you can't grow your portfolios beyond a certain amount unless it's sort of an exception. Do you start to rethink that policy, I guess, at all?

And as long as that lease is being honored by the buyer, right? So it's someone that's buying it and honoring the lease for the extension of the term, could you reconsider that policy? Because it seems like it really does sort of limit what you can sell, right? I mean you're very limited to the 25% or so of people that turn over each year. So could you reconsider that policy? And hopefully, that would allow you to sort of sell what you want?

Yes. I think it's a product of a couple of different things. One, there is a difference in value of a vacant home to an end user versus what the income stream that, that home is going to produce. When you consider the type of assets that we're selling, the noncore assets, the assets that might not be as well located, characterized in some cases by really very high HPA that rent didn't follow, maybe not optimal size. There's a bunch of different reasons.

So the ones that we're selling, the ones that are good disposition candidates have that particular yield profile, but that yield profile is not necessarily indicative of the rest of the portfolio. So the question could lead to offering the ability to buy to some of our residents for those tagged houses as well. So that's something that we've talked about internally.

And we've run some internal programs in the past to offer the residents the opportunity to buy and there's some savings on transaction costs and whatnot. We haven't seen a very significant uptake in that. I think the largest program that we ran had an uptake in the sub-5% area. But it is something that we're considering and taking a look at. It was most appropriate in our strategy to exit a specific market.

And so we did put it through that ringer. But it's something that we're thinking about and it may be more relevant in the context of whatever legislation ultimately gets passed. But at this point in time, we still really like the asset management and disposition program that we have planned for the year.

I guess why do you think the uptake on that program where you're selling to the resident is 5% or less? Is it a down payment issue? Obviously, the total cost, including mortgage and insurance and everything else is much higher. But is there specific reasons that tenants cite that they don't transact?

Yes. It's probably a little bit of all of the above. The cost to own, there's a big gap between cost to own and cost to rent at our current rent levels. Down payment is clearly important. Some people just would prefer to rent and not have that particular obligation. There are a bunch of different reasons. We were surprised at how low the uptake was.

In this specific example, we offered a discount to market value, the lesser of a discount to market value or a discount to appraised value. We were exiting California, and we thought that would be the quickest way to process through. I was surprised at the low level of uptake and it was in a different interest rate environment as well. So the gap between cost to own and cost to rent wasn't as wide as it is today.

So there's a number of different contributing factors that, again, lead us to believe that the current disposition path is the best for us and the most realistic too.

Got it. And I guess for those that -- because you have a certain percent that move out to purchase a home every year, are they just not -- did they just not buy the -- I mean, I guess you're continuing to rent that home. But I guess my question is, if you have like 20% of people that are moving out each year to purchase homes, could you just sell it to them, right? I mean they're moving out anyways.

It's possible. But again, people are moving out because they're moving out of market. There's a lot of other factors that come into play for those decisions. And it's difficult to identify exactly which ones are going to make that choice in advance of them making that choice.

So short of offering everyone the opportunity, it would be very difficult to hone down on which specific ones fit our disposition profile and also the timing was right for the resident to purchase in light of all the life events that might drive that decision.

I guess maybe on the buybacks, as you said, you've been a buyer in size of your stock. You're funding it through dispositions. I guess hopefully, the stock price improves, I guess, but if it doesn't, would you be willing to take up leverage a bit? Would you be willing to sort of take down development sort of CapEx for next year and forward years? Maybe just talk about sort of your willingness to be the buyer of your stock and how that might impact other parts of your business.

Yes. I would say we're committed to the quality of the balance sheet. That's critical. We are totally comfortable taking leverage up to target leverage in the mid-5s. We're a little bit below that currently. So there's some capacity there.

Development, yes, again, we control the entire development life cycle end to end. We have the ability to throttle up and throttle down like we have done already. Additionally, we've got a robust joint venture pipeline that we can continue to kind of have discussions and toggle between.

So the answer is, yes. Obviously, there are limits to how much you can kind of throttle. But yes, absolutely. And as we think about kind of the next kind of funding area or source of opportunity, we would look to dispositions, right? Again, there is, yes, naturally an upper limit to how much can be accomplished in one given year, but we will continue leaning in as much as we possibly can.

And I would remind of two things. One, keep in mind that the balance sheet is fully unencumbered at this point. We recently freed up 20,000 homes that were previously collateralized by securitizations for the past decade. Those were paid off over the course of 2024 and 2025. And there's a meaningful portion of asset management and recycling opportunities that are now freed up out of those previously collateralized pools. That's one.

And then two, we did a great job outperforming our expectations last year in terms of where we started the disposition outlook at the beginning of the year. We started 2025 contemplating $400 million to $500 million of dispositions.

You probably all recall that as we got into the back half of the year, we were speaking to the high end of that range. And ultimately, we ended the year at $573 million of disposition proceeds last year. So our objective for this year is going to be to continue to lean in as much as possible.

Then maybe on development. I think you quoted sort of initial yields around 5.3 for this year for what's delivering. Obviously, your cost of capital has changed. Your equity price has gone down. Interest rates have come down, so your debt costs presumably down. But I guess overall cost of capital has gone up a bit.

Can you just talk about sort of the value creation that you see out of that pipeline and why you're still committed to it even as sort of development yields have sort of come down into the low 5 range?

Yes. And I think the key factor is the driver for those yields coming down a little bit below expectations. And it has to do with the overall rate and rent environment. We think over time that, that will recover, but it's not immune to the other pressures that we're seeing across residential. So at this particular point in time, the 5.3 is where we're entering. This is upon delivery, first lease.

We're doing a good job of managing the -- matching the delivery cadence to level of demand. Those returns, there are no concessions being offered on the rental side on those. So what you see is what you get during the active development process.

We have strategies to improve those yields over time, especially as we replenish the land pipeline. The outlook for this particular year, though, is what we have in play, active communities developed, and that's a 5.3 expectation or similar to last year is where we sit.

But on land that we're bringing into the pipeline to replenish that supply, we've got some initiatives in play that we think can drive down the overall cost basis without sacrificing on the revenue side.

The key to those yield improvements is getting that total investment cost down. And we're doing that through -- there's -- the complex of land in the current market is a little bit different. We're seeing opportunities to get VDLs, vacant developed lots, which is much quicker to the vertical construction side. It cuts down that carrying cost and lets us hold the land for a much shorter period.

We have other initiatives on site plan and floor plan optimization that will allow us to have similar quality, but be able to deliver at a lower price. We've controlled the vertical construction costs very well from '24 to '25, running flat basically with the expectations that will continue flat into '26.

So there are a number of good things at play that coupled with kind of a return to normalcy on the rent side gives us a lot of confidence going forward. But the outlook for the near term is as we've talked about.

One of the key themes we've been exploring with every company is just the deployment internally of AI to find different efficiencies. So curious from your side, where you're seeing the best opportunities today and how you're actually doing that? Is it building yourself? Is it partnering? Is it buying?

Yes. It's a very good pertinent question to date. We've talked about it a little bit, but we started -- our first real AI initiative was focused on the front end of the leasing platform. We partnered with a third-party provider, but we have a highly customized internal system.

And effectively, what it's doing is it's taking all the inbound demand, phone calls, electronic submissions and working the prospects through the system into the touring and the check-in of the actual house. And at that point, they have a clear choice to either continue on a self-service basis or have assistance from some of our sales -- license sales agents or leasing agents.

It's been very effective. It allows us to have no wait times on queues, 24/7 phone calls. The initial implementation has gone extremely well. It's used across our entire system, and we've seen some efficiencies not only on the cost side, but on execution. So we built a better process and done it economically. So that was number one.

That same system will form the foundation for our communication platform with our residents, which is really important, the way that they speak with the property managers, the way that they order service. So it's really the foundation for a key information exchange that will end up driving a lot of other efficiencies.

Outside of that, we have some other initiatives that we've utilized third parties, some stuff that won't have a huge impact initially, but it's very clear discrete investment and a very nice return, HOA management and a couple of other small pieces. We're actively looking into applications that will improve the efficiency of the services platform and then really trying to crack the code on how to properly market in this environment.

Really quickly, rapid fire. Same-store NOI growth for single-family rentals next year in '27?

Low single digits. Yes, in that range, in the range.

And then more fewer of the same number of public companies within the SFR next year?

Same.

Greetings, and welcome to the AMH Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Nick Fromm, Vice President of Investor Relations. Thank you, Nick. You may begin.

Good morning, and thank you for joining us for our Fourth Quarter 2025 Earnings Conference call. With me today are Bryan 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 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, February 20, 2026. 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, Bryan Smith.

Welcome, everyone, and thank you for joining us today. After our team delivered a solid close to 2025, the new year is off to a busy start. Before we dive into our results and outlook, I would like to address the executive order of the administration issued last month, showing its focus on housing affordability and the role that single-family rentals play. We appreciate the attention to this critical issue and continue to emphasize that AMH is part of the solution. Alongside our industry peers and partners, we are actively engaged with government and business leaders in Washington and around the country. .

These meetings have been encouraging as we continue to work with policymakers on the challenges of affordability, which will require sustained investment and collaboration across both the public and private sectors. Millions of Americans call single-family rental home. In fact, consistently since 1965, roughly 1/3 of households in the United States are renters.

This includes first responders, educators and health care providers who rely on this option to live in the communities they serve. Our homes provide access to the same desirable neighborhoods at a fraction of the estimated monthly cost of homeownership.

Further, a single-family rental home often represents an important step in a family's journey towards homeownership. Our surveys show that buying a home is the #1 reason residents move out of our portfolio. Over the course of 2025, we estimate over 5,000 households or approximately 30% of all move-outs left their AMH home to purchase a house.

Our strategy has always been centered around providing quality housing and an exceptional resident experience. In our early years, we achieved this by renovating homes and revitalizing neighborhoods across the country. During that time, housing starts slowed dramatically, causing shortages in many of our markets.

In 2017, we made the strategic decision focused on ground-up development to meet the growing demand for single-family rentals. Since then, our in-house development program has added over 14,000 newly built homes across the country. For the past few years, AMH has not been materially active buying homes on the MLS, instead, we've been an active seller. In 2025 alone, we sold over 1,800 homes to individual homeowners, and 2026, we expect similar activity.

Proceeds from these dispositions continue to provide the necessary capital for our development program. In 2026, we plan to deliver around 1,900 newly constructed homes across the portfolio. And the foundation for our future growth remains centered around adding homes through our in-house development program. Now let's turn to our fourth quarter and full year results. In 2025, we delivered $1.87 of core FFO per share, representing year-over-year growth of 5.4%.

Our consistent results not only demonstrate our commitment to operational excellence within the same home portfolio, but also underscores our approach to maximizing value across all areas of the business. Operationally, our teams did a great job navigating a challenging environment in the tail end of 2025, which included seasonal demand moderation and stubborn supply.

This put downward pressure on rate and occupancy heading into the beginning of 2026. For the month of January, new, renewal and blended spreads were minus 1%, 3.5% and 2.4%, respectively, while same-home average occupied days was 95%. Throughout the first quarter, our focus will continue to be on occupancy with our outlook for 2026, contemplating a flatter seasonal curve or rate growth of occupancy than we would normally expect.

Chris will cover guidance in more detail later in the call. As we look ahead, it is clear that there is a growing need for more high-quality housing in America. AMH with its well-located homes outstanding resident service and new home development program is committed to doing its part. Thank you to the team for your hard work last year and your continued commitment to excellence.

With that, I'll turn the call over to Chris.

Thanks, Bryan, and good morning, everyone. As usual, I'll cover 3 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 2026 guidance and capital plan.

Beginning with our operating results, we closed out 2025 with solid execution, generating quarterly net income attributable to common shareholders of $123.8 million or $0.33 per diluted share and $0.47 of quarterly core FFO per share in unit, representing 4.1% year-over-year growth. And for full year 2025, we generated net income attributable to common shareholders of $439 million or $1.18 per diluted share and $1.87 of core FFO per share in unit, representing 5.4% year-over-year growth, once again leading the residential sector.

From an investment standpoint, during the quarter, we delivered 490 total homes from our AMH Development program. This brings our full year deliveries to over 2,300 homes contributing much needed newly constructed housing stock to 14 markets across the country. On the disposition front, we had another active quarter selling 646 properties, generating roughly $190 million of net proceeds.

For the full year, we sold 1,827 properties for total net proceeds of approximately $570 million at an average disposition cap rate in the high 3%. As a reminder, our disposition properties are regularly sold to individual homeowners and provide us with a highly attractive form of capital to reinvest back into our AMH Development program.

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 5.2x, our $1.25 billion revolving credit facility had a $360 million balance, and we had approximately $110 million of cash available on the balance sheet.

During the fourth quarter of 2025 and January of '26, we fully utilized our remaining $265 million share repurchase authorization and repurchased a total of 8.4 million common shares representing approximately 2% of total share units outstanding. These shares were repurchased at an attractive price of $31.65 per share representing an attractive capital deployment opportunity complementing the long-term value created by our AMH Development program.

Next, I'd like to share an overview of our initial 2026 guidance. For the full year, we expect core FFO per share unit of $1.89 to $1.95, which at the midpoint represents year-over-year growth of 2.7% and for the same home portfolio. At the midpoint, our expectations contemplate core revenues growth of 2.25%, which reflects average monthly realized rent growth and the 2.5% area and a 25 basis point year-over-year occupancy headwind as we expect 2026 average occupied days in the high 95% area.

Additionally, our outlook contemplates core property operating expense growth of 2.75% driven by property tax growth in the 3% area, representing another year of below average growth and mid 2% growth on all other expenses, driven by another successful insurance renewal campaign and our continued commitment to efficiently managing controllable expenses.

Putting together, our same-home revenue and expense growth expectations, we expect 2026 same-home core NOI growth of 2% at the midpoint. From an investment standpoint, given the current capital market conditions, we have strategically moderated our development plan activities such that we expect to deploy approximately $750 million of total capital, including joint ventures, adding approximately 1,900 new to constructed AMX development homes to our wholly owned and joint venture portfolios.

Specifically, for our wholly-owned portfolio, we expect to invest approximately $550 million of AMH capital, consisting of 1,400 homes added from our development program that we plan to fund entirely to recycled capital from our disposition program.

Additionally, our full year outlook only contemplates the $115 million of share repurchases that were already executed in January. While the stock price continues to represent an attractive capital deployment opportunity, given the recent attention on our industry and ongoing capital market uncertainty, we plan to take a patient approach to the timing of any additional repurchases.

However, as we continue to monitor the market. As mentioned in yesterday's release, our Board recently approved a new $500 million share repurchase authorization. Additionally, keep in mind that our balance sheet has a couple of hundred million dollars of opportunistic capital capacity given the strategic sizing of this year's development activities.

And before we open the call to your questions, I wanted to close with a few final thoughts. 2025 was another great example of the power of the Image platform, as we delivered another year of residential sector-leading core FFO growth. As we head into 2026, we remain committed to the AMH strategy, which has demonstrated our ability to create differentiated value for our residents, local communities, team members and shareholders. And with that, we'll open the call to your questions. Operator?

We will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Eric Wolfe with Citibank.

Can you just talk about why you're expecting a flatter occupancy and rent growth curve than you normally expect? And I guess, specifically what that means for your blended rate growth expectation? And then I guess, lastly, on the occupancy, you said that you're expecting it to be flatter this year as well. But if I look at your fourth quarter, you're down like 30 basis points year-over-year. And I think that's what you're expecting through the full year of 2026. So I guess why -- I guess it seems to me like you're expecting something more sort of seasonal like you saw in 2025. So just help us work through both those elements.

Yes. Thanks, Eric. This is Lincoln. As we come into 2025 or 2026, excuse me, we're seeing the start of leasing season that we would normally see maybe slightly delayed from where it was in previous years. We also -- as we talked at Dallas NAREIT, we had expected to build a little bit of occupancy coming into the end of 2025 and kind of start the year in a position of strength. Despite some price action, we came in a couple of hundred houses behind just to put some context behind where we sit today. So starting the year, we're highly focused on kind of building occupancy throughout leasing season, supported by some price action and then expect a flatter kind of peak of that occupancy and then holding more into the back of the year.

And specifically to your question about fourth quarter and typical trends there, we expect that hold in the back half to be supported by not only the flat new lease rate growth that you're seeing now, but a favorable expiration curve again for 2026.

Yes. And then Eric, it's Chris. Just to make sure I kind of understand some of the numbers behind what Lincoln was talking about. On the full year context, we're thinking about new leases and about the flattish area for full year '26 renewals kind of consistently in the plus or minus 3% area on the full year. .

That then comes to our full year blended spread expectation in the low 2s. And as you heard us talking about in guidance view around occupancy being in the high 95s, which, to Lincoln's point, the focus right now is on occupancy through the first quarter, building a bit into the middle of the year. And then the objective is to hold and flatten that curve into the back part of the year.

Our next question comes from Jamie Feldman with Wells Fargo.

I appreciate the thoughts on the seasonal curve. Maybe just as you thought about giving your guidance for the year, I mean, there's a lot of moving pieces out there on the political front, on the demand side, on the supply side, where would you say there's the most variability to your numbers? And maybe talk us through the high end, the low end of the range and what gets you to either end across the key line items.

Thanks, Jamie. The other thing that we're looking at this year is we've contemplated the building blocks of the guide is just the environment that we start the year end. Normally, as we kick off the season, the 200, 300 house pickup that we're looking for probably isn't that big of the list.

The challenges in the current environment is that supply across all aspects of residential, different housing types seems to be stubbornly elevated. We see that in multifamily. We see that on the first sale side with some of the sale of rent conversions and then some BTR that's sticky in some of the markets.

Again, it's -- it's highly market-dependent. And we have markets where supply is not an issue overall, but some of those markets that we've talked about before that took those high levels of deliveries that outpaced absorption over the last couple of years. Continue to struggle to work through that. On the demand side, we're seeing great demand for AMH products still.

The traffic this year is not outside of normal year-over-year fluctuation. But again, set against that backdrop of higher supply levels, it just seems like our prospects have more choice in the marketplace. And that's leading to some slightly extended lease-up times, but any dislocation in those supplies, we view as being temporary related to those suppliers, just in the long-term outlook for demand for AMH homes hasn't changed in most of our markets.

Our next question comes from the line of Steve Sakwa with Evercore ISI.

Just wanted to focus a little bit on the development pipeline. I mean it sounds like you're slowing deliveries a little bit and being a little bit more cautious, I guess, certainly given the capital markets environment. But like where are you seeing development yields for the product you're starting today based on today's rents and today's cost? What can you get? And I guess, how do you weigh deploying capital there against the buybacks? I know you're being probably a little bit cautious given the political environment, but sort of how do you weigh those 2 things today? .

Steve, this is Bryan. Thanks for the question. I'll start with what the pipeline looks like. kind of round out how we completed 2025 as well. As we talked about last year or in November, the -- going in delivery development yields and active projects was slightly lower than the 5.5% we thought we'd get hit at the beginning of the year, really indicative of just general rent pressures across all of residential. So we ended last year somewhere in the 5.3% area ongoing in yields. And we're expecting similar yields in 2026 for the 1,900 homes that we're planning to deliver. Highly dependent on rent movement, but in the current environment, similar to 2025 is what our outlook is. And those are the ones that are in play right now or soon to be actively started.

And then, Steve, Chris here, just from a capital perspective, I think the key to all of this is appropriate sizing of capital. Everyone saw that we made a pretty quick pivot in terms of sizing of capital towards the end of 2025. And you can see that we pivoted further heading into 2026 sizing the on-balance sheet portion of development capital deployment to essentially be match funded with disposition proceeds for this year. .

On top of sizing to the development program, that then frees up incremental capital capacity for buybacks that can function as a nice complement to the development program and the long-term value creation there. You saw that we were active on that already, repurchasing in about 2% of shares and units outstanding towards the end of '25 and beginning of '26, and we have capacity on the balance sheet for about a couple of hundred million dollars of incremental opportunistic capital deployment.

But as I mentioned in prepared remarks, and no actually mentioned in your question, -- there's a lot of different moving pieces out there right now. And so we're going to make sure that we remain prudent and if we be patient in terms of how quickly we're moving on additional repurchases at this point.

Our next question comes from the line of Haendel St. Juste with Mizuho Securities.

Maybe some color on OpEx. You outlined expectation for tax, I think to be up 4 to 5 -- sort of the 4% to 5% long-term average we've seen. Is there anything unique worth highlighting? Do you think this is a sustainable level near term? And maybe some color on turnover, what you're expecting in your recent insurance renewals. .

Sure, Haendel, Chris here. Yes, look, on property taxes, overall, I think it's probably helpful to point out the fact 2025 actually ended up being 1 of our lowest property tax growth years in company history, down in the 2.5% area. .

And as we move into 2026, we're expecting another year of what I would call moderate property tax growth in the plus or minus 3% area. A touch above 25%, but still well below long-term average, long-term average for us is 4% to 5%. Recall 1 of the things that drove our property tax growth of 2.5% last year is that it was actually 1 of our best years ever in terms of appealed outcomes. And at least at the start of '26, probably not totally prudent to expect that we'll have 2 record back-to-back years on appeals.

But nonetheless, 3% is something that I would still call very much in the maybe cooperative areas, the right characterization. And in terms of other components of expense growth for this year, our outlook also contemplates about a double-digit decrease in year-over-year insurance costs. That is based off of our successful renewal campaign that becomes effective at the end of this month.

And then for remaining expenses, controllables in particular, we are expecting growth in, call it, the 3-ish area or so that I think represents another year of tight expense controls.

Our next question comes from the line of Jeff Spector with Bank of America. .

Great. If you could talk a little bit more about the supply pressure you saw in '25, what surprised you would be a little bit more specific in terms of markets. And and how that may impact your strategy going forward on markets? Again, Midwest continues to outperform. Do you want to try to lean in more there? -- given the pressure you're seeing, let's say, in the Sunbelt and your thoughts on that supply pressure in '26.

Thanks, Jeff. This is Lincoln again. When I look at the individual markets, you can see the performance of most of those in the fourth quarter in the supplemental. If you just walk down across, you can see the footprints of the supply impact in those numbers. .

And again, I would just anchor back to the idea that the build in inventory and the standing accumulation of availability across all of the different product types is the result of those deliveries heavily outpacing in some markets. The absorption. I think all of us are really to see the starts and deliveries have slowed.

Those are on the downswing, but we also understand that there is still some of that standing inventory that needs to be consumed. When I look across those markets, those that are heavily impacted, and they're impacted for different reasons. San Antonio, as an example, took heavy deliveries of multifamily. And so there's a lot of standing inventory there, and you can see that in the results.

Phoenix is probably 1 of the epicenters for build to rent. And there's still some, albeit different product than ours, but still some levels of inventory on the build-to-rent side there. And then Las Vegas is 1 where we've probably seen a little bit more of for sale to float conversions and more competition from traditional landlords.

So when it comes to the Midwest, we talked about this quite a bit. The underlying fundamentals there are still strong. we don't anticipate those changing in the short term. They did not take some of those high levels of deliveries of different types of product over the years. So there's still supply constrained to some extent, still relatively affordable, still a great place to live. And in the short term, that's not going to change. So we're watching the markets carefully and committed to most of them for the long term.

Our next question comes from the line of David Segall with Green Street.

Recognizing that you're going to take a more patient approach to additional buybacks this year. Would you need additional sales activity dispositions in order to fund any additional buybacks? And I recall that you had 20,000 homes that were released from collateral from being securitized is lateral last year. Would we see that as a source of additional funding this year?

Sure. David, Chris here. We're thinking about sizing of buybacks in general. I think 1 of the most important things to remember is the importance of balance in our approach, right, where we are balancing the importance of keeping the development program in motion, which is mission-critical, especially for long-term value creation. We're balancing that with maintaining our commitment to the balance sheet and targeted leverage levels balanced with a, what I would call, a robust, but also responsible level of dispositions. .

And so as we think about incremental buybacks from here, as I mentioned in prepared remarks, today and over the course of the year, there is, I would call it, a couple of hundred million dollars of incremental capital capacity already on the balance sheet in the form of leverage capacity.

And then beyond that would be the opportunity to recycle additional capital through the disposition program. You are exactly correct in that we are of the view that there's a pretty good healthy runway of disposition opportunity ahead of us. especially given the fact that we recently freed up 20,000 homes that were previously encumbered by our securitizations that were paid off over the last couple of years.

But the natural governor there, like we've talked about plenty of times, is just how quickly those homes that are being identified out of those previously collaterized homes can actually be sold.

And the governor there is the fact that we are selling homes in our disposition program ultimately to home buyers via the MLS and to sell a home to a home buyer via the MLS it needs to be vacant as we all know. And as we also know, 95% of the portfolio is not vacant.

We take our responsibility as a housing provider, extremely serious and we will never take housing away from an existing resident to sell a home, which means we need to let leases roll, tenants move out, and then we can prep the home for sale, which creates a little bit of a governor in terms of how many homes can actually be sold in 1 given year.

Our next question comes from the line of Buck Horne with Raymond James.

I was curious if you could comment a little bit about the news from the White House last night about potentially capping the single-family or the investor band at about 100 homes per organization. So if that's a much lower cap than previously contemplated, just going through a thought exercise of how do you think that plays out in the industry? Does that potentially force a lot of subscale operators to either pull rental inventory out of the market or sell inventory quickly. What do you think those other smaller tier operators are going to do if that type of cap is in place? .

Buck, this is Bryan. Thanks for your question. There's obviously been a lot of attention on this issue this year. We've been actively engaged with policymakers at the state, local and Federal level. If you go back to the executive order, there was -- the first part was defining the size and definition of institutional investor, which was -- the treasury was tasked with 30 days.

And I think the 30 days is up today. So whether that ends up being a 100 or some other number remains to be seen. There's a lot still moving in the definitions and just on how this is all going to ultimately shake out. But as you know, we've been investing heavily into our government affairs efforts for years. Active engagement allows us to be at the center of a lot of these discussions and really get our message across that we are a key part of the housing solution, especially as we're addressing the supply shortage with our in-house development program.

And the mechanics of how it affects smaller operators versus larger build to rent versus versus scattered side are still unclear. But the good news is from these meetings, there's a clear understanding that supply has not kept up with demand and supply solutions are continuing to be sought. The other key piece that we're as an industry with our partners are trying to make sure he realizes the importance of single-family rentals in the full housing ecosystem. So those are the types of messages that we're working on, as I mentioned in my prepared remarks, but how it shakes out still remains to be seen.

Our next question comes from the line of Brad Heffern with RBC Capital Markets.

Yes. Obviously, I appreciate all the color on the supply impacts. When do you think we're going to be in a more normal environment just from a supply-demand balance standpoint? .

Brad, this is Lincoln. I appreciate that question. I think it's 1 that's been asked quite a bit over the last year -- it's really going to depend on how quickly we can consume through -- as a housing industry we consume through that standing inventory. That's going to depend on demand.

Like I mentioned before, the demand is still there for our product. but it's going to take some time to work through the inventory. So I'm not ready to call that yet. I think we don't have a view necessarily on when that's going to turn around. What I will tell you is we have better data and insight into that than we ever have. And we're watching it extremely closely, and we're ready to adjust as soon as we see some leading indicators that tell us that it's improving.

Our next question comes from the line of Jesse Lederman with Zelman.

When you spoke in late October, you noted your internal dashboards were indicating some inflection point in seasonal leasing activity. But it looks like in November versus December, occupancy was lower sequentially and and that's continued here in January. So what changed over the subsequent few months relative to your expectations? -- in October? And if you could just talk through the renewal rent growth falling roughly that 70 basis point monthly into January. That would be great as well. .

Yes. Thanks, Jesse. Yes, fourth quarter was a little bit of a tough time from a visibility standpoint. We did start to see some moderation as we saw across the housing landscape in general, I think -- there were some fits and starts, where we saw in November as an example, we started to see a pickup in activity.

As we talk through that, our expectation was that we would build occupancy through the end of the year, and again, come into the first of the year like we normally do it in a good occupancy position, that wasn't sustained. We adjusted our pricing strategy and some other things that led to that slightly negative new lease rate growth in the fourth quarter, but it didn't quite turn out the way that we thought it would.

So -- we're pulling out all the stops at the first of the year here to support occupancy. Our goal is again to build through peak season and focus highly on making sure that we have occupied homes. That is supported by the new lease rate growth that you've seen, but -- to your other question, a slight moderation in renewals, just recognizing the fact that we -- the components of building that occupancy or new leasing and retention inside the portfolio.

So we wanted to support the retention a little bit. We're setting those renewal rates out well in advance. So those went out for January and February, right about that same time, we were contemplating some of those other changes in the marketplace.

So Overall, I think we're in the right place on the renewals as well, slight moderation, but full year around the 3% area should go to where we need to be on the occupancy.

Our next question comes from the line of Michael Goldsmith with UBS. .

Can you talk a little bit about pricing trends at the build to rent versus the scatter site product? And are you offering concessions at either or both of those segments in your portfolio? .

Michael, this is Bryan. Thanks for the question. pricing trends, it's interesting. We talked -- or I talked earlier in the call about where the 2025 yields settled is really a function of the rate environment.

But if you were to compare our community leasing with scattered site. We've seen pretty favorable demand for our communities. We've been leasing them up without concessions, no concessions on the scattered site. -- and really no concessions on the lease-up of the new development communities as they're being delivered.

It's really interesting, too, because as we talked about in the past, these are homes that are being delivered into active construction sites, and we're still supporting good rent without having to do a lot on the concession side.

And to kind of add on to a little bit of what Lincoln has been talking about with supply and demand, when that supply pressure starts to be alleviated and hopefully, in the near term, we're going to see the benefit on our new development product. It's a superior product. The rents at a premium. There's a lot of demand for it and the pricing power will return there, and you'll see yields migrate north on our development new deliveries as well.

Our next question comes from the line of Jade Rahmani with KBW.

This is Jason Sabshon on for Jade. So homebuilders have leaned in or rate buydowns and incentives lately. Can you comment on the supply-demand balance in key Sunbelt markets and whether you're seeing that aggressiveness from builders drive any increase in move-outs to buy.

Yes. Thanks for the question, Jason. Again, it's the for-sale markets, 1 portion of the supply that we watch very carefully. Our move out to buy has remained pretty steady in the high 20s to 30% area. So we haven't seen a major shift. There are some anecdotes in some of the markets about incentives outside of rate buydowns. As an example, some of the the builders in our Florida markets got pretty aggressive, and we're willing to buy out some of our leases for our residents who were interested in buying homes.

We're watching that very carefully. It's happening on the fringe, again, not affecting the overall trend. And then, of course, I think everybody is also interested in how many of the those 4 sale homes are coming back into the portfolio or into the overall inventory. And we're watching that carefully as well. So not a huge impact so far to small anecdotes of builders trying to respond to do their part to give some market share.

Our next question comes from the line of Jason Wayne with Barclays.

Thanks for the question. Looking at the development pipeline, you have some lots in some markets outside of the Sunbelt, like the Midwest and in the West Coast -- just wondering where the delivery this year located and where you'd have the preference for starting new developments. .

Yes, thank you Jason. This is Bryan. In our development program in the Midwest, it's focused on Columbus. And if you look at our supplemental, you can see what the lot pipeline is behind that. We really like the Columbus market. We really like a number of the markets in the Carolinas, Seattle has been strong as well. So you can see the pipeline there, and we're looking forward to delivering really good product into those high-demand markets. .

And then some of the other markets where we have a significant development presence, we feel very good about those markets over the long term, but there may be some short-term pressures referring more towards the lot pipeline that we have in places like Arizona and Las Vegas.

Our next question comes from the line of Eric Wolfe with Citibank.

And looking at the changes in your same-store pool, your third quarter occupancy was 95%, like as reported last quarter, and now it's 96.4%. So there's a summary like a 50 basis point change based on what you sold. I guess what is the reason for that? I mean is it -- are you selling more vacant homes than normal? Why was there such a sort of jump in the occupancy based on the new same-store pool? Because obviously, it creates a little bit of a more difficult comp for you. .

Eric, Chris here. Essentially, what you're seeing is the result of smart asset management decisions where we are identifying some of the outlier and/or underperforming properties through our asset management process for disposition. And so over time, as we are identifying those underperformers, they're moving their way into the disposition program and ultimately being sold. .

Obviously, that has an upward improving lift to the remainder of the same-store pool. There's always a little bit of movement from 1 quarter to the next usually not terribly large, but it's a function of making smart asset management decisions at the unit level.

Okay. And then last question. You normally have a pretty good idea, not perfect, but good idea of sort of what forward occupancy looks like and I know it can miss based on various factors. But I guess, as you look at things 30, 60 days out based on your revenue management system, are you seeing that typical lift in occupancy that you normally see at this time of year, especially since you've throttled baked down a bit. Just curious if you can give us a perspective on sort of where you expect to go over the next couple of months?

Yes. Thanks. This is Lincoln again. As I mentioned before, a little bit slower start to the leasing season than we would have preferred. However, we are seeing the normal trend in activity that's moving upwards. So again, with the first on billing occupancy, we'd expect to move into the 96% of the peak of season and then again, hold some of that into the back of the year. So -- over the next couple of months, we would expect if we execute well, that we'll see the occupancy goal. .

Our next question comes from the line of Austin Wurschmidt with KeyBanc Capital Markets. .

Great beyond the supply challenge markets that you've discussed, is the moderation you're assuming in guidance around lease rate growth or that flatter seasonal curve that you described. Is it broad-based? Are you seeing it more pronounced than either the Sun Belt or Midwest markets? And then on top of that, just curious how much that's playing into your development decisions. .

Maybe I'll just give some commentary on the overall market and then Bryan or Chris want to comment on the development they can. Yes. Look, again, I think that what we're seeing is the effect of broad-based supply across all housing types. It is very market specific, and I wouldn't want to point to 1 factor that would look like it's affecting all of our markets, especially equal. Like I said earlier, we have many markets that are not supply pressure at all. Take a Seattle and Salt Lake City as an example, where not only they have not had heavy deliveries over the last couple of years, but they're also significantly geographically constrained. It's difficult to build inventory into those markets. So it's not equal across all of them, and we evaluate each of them individually. .

Yes. And then Austin, Chris here. On your -- the second part of your question around development Look, the development program sizing is a function of relative returns, yields coming out of the development program compared to capital market conditions and cost of capital currently. .

As Bryan was talking about, right now, 1 of the larger drivers to the current yield profile is market rent growth. The other side of the equation in terms of construction. The teams have done a fantastic job controlling costs throughout the development program. I forget if we mentioned this data already. But if you look at the hard vertical construction costs to develop a home in 2026, they're essentially flat to even modestly down 2020 -- sorry, 2025 compared to 2024, which is fantastic, right?

But ultimately, sizing in the development program is a function of relative returns and yields compared to capital market conditions and cost of capital and alternative uses of that capital and freeing up some extra capacity for repurchases like you've already seen us be active on.

Our next question comes from the line of Buck Horne with Raymond James. .

Appreciate the time. Wanted to talk about the dispositions that were executed in not only the fourth quarter just year-to-date? Just thinking through the -- what you've been able to sell with the like net proceeds were just a shade under $300,000 per house most of your markets median resale prices are probably closer to 400,000 and -- how would you characterize kind of the tier of the dispositions that you're selling?

Are these houses typically lower quartile or the middle road? Or are they fairly representative of the value of the homes in the portfolio? How should investors think about that?

Yes. Thanks, Buck. This is Brian. The typical property that we're disposing of that we're selling really is a noncore asset. And in many cases, it's maybe not the location that we want or there are other characteristics that, that just make it have a different growth profile to the rest of the assets.

So I think it's fair to say that this average sales price would be lower for that cohort than the rest of our of our homes, especially the new homes that we're delivering on the development side, which are superior quality and location. But the #1 reason for disposition for us is location.

A lot of it is the fact that we finally getting access to homes that we acquired via consolidation in the past, many of which were subsequently securitized. So we're getting access to some product that might be a little bit -- maybe a lower level than what's typical across our portfolio.

Our next question comes from the line of Brad Heffern with RBC Capital Markets. .

Chris, just given all the political noise, do you have an elevated level of advocacy costs or anything like that, that are in G&A and that are having an impact on the guide? .

Yes. Good question. I appreciate you asking. As everyone knows, we started investing into our own government affairs teams, department, resources and initiatives years ago at this point. And so there's already just a structural component of our cost structure represented by government affairs and advocacy-related costs. .

Again, we're expecting to incur those in 2026. Each year, those dollars and resources are directed a little bit differently. Obviously, this year, those will be directed towards the current matter at hand. The right way to think about it is a little bit under $0.01 or so is what just regularly run through our numbers each year.

And then as we progress throughout the course of this year to the extent that those numbers change, we need more or what not difficult to crystal ball that at this point.

But to the extent that those numbers change, we will make sure that we call them out separately. So everyone can clearly understand those dollars separate and apart from the run rate cost structure of the business.

Our next question comes from the line of Steve Sakwa with Evercore ISI. .

I just wanted to follow up on the dispositions. What constraints, I guess, outside of tax issues that you have around dispositions, meaning you want certain size of homes or certain scale in the market. So to what extent are your dispositions limited by you wanting to have a good footprint in each market as you think about kind of the disconnect between kind of the sales values and kind of where the stock is trading.

Yes, Steve, Chris here. I can start that one. Look, there's a number of different perspectives that we need to think about dispositions through tax planning is definitely 1 of them. The other piece, like I was talking about earlier is just the natural timing governor in terms of how many homes can be sold in any 1 given year. .

Considering how much collateral has been freed up from our securitizations like we were talking about. We are of the view that there's a pretty good runway of disposition candidates ahead of us. But the natural governor there will be the sheer volume of those that can be sold in any 1 given year, given the fact that we need to let leases roll, residents move, then homes can go into the market. At that point, they move quickly. But obviously, leases need to roll first. That's the main governor in consideration. We're thinking about the amount of volume that can be done in any 1 given year.

Steve, this is Bryan. Further to your question on market sizing, our operating platform has proven to be very efficient at different sizes. What we're doing is we're looking at these houses at an individual level and finding the ones that are not noncore, have different growth prospects than then we could find on the development program as an example. We're able to strategically prune these houses and then reinvest them in areas with better long-term growth.

There are no further questions. I'd like to pass the call back over to management for any closing remarks. .

I'd like to thank everyone for your time today. We appreciate the continued interest in AMH and look forward to speaking with you next quarter. .

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

Ladies and gentlemen, Greetings, and welcome to the American Home Foreign Third Quarter 2025 Earnings Conference Call. [Operator Instructions]. As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host for today, Nicholas Fromm, Director, Investor Relations. Please go ahead.

Good morning, and thank you for joining us for our third quarter 2025 earnings conference call. With me today are Bryan 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 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, October 30, 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 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, Bryan Smith.

Welcome, everyone, and thank you for joining us today. 2025 is quickly coming to a close and our industry-leading results continue to reinforce the benefits of the AMH strategy, which is centered around portfolio optimization, operational execution and a prudent approach to capital management.

During the third quarter, we saw solid contribution from all areas of the AMH platform, driving core FFO per share growth of 6.2%. Due to our strong third quarter results, an updated outlook on the full year, we increased our core FFO per share guidance by $0.01 to $1.87 at the midpoint, representing growth of 5.6%.

In this last stretch of 2025, our focus is on building occupancy and gaining momentum to position the portfolio for strength heading into 2026. Fundamentals in the single-family rental industry continue to benefit from favorable population demographics within the millennial cohort and a growing need for high-quality housing. The AMH portfolio continues to capture this demand, given our portfolio's high-quality assets in superior locations with a focus on highly desirable single-family detached homes.

Turning to the third quarter. We delivered solid same-home core revenue growth of 3.8%, driven by same-home average occupied days of 95.9%. And and new renewal and blended rental rate spreads of 2.5%, 4% and 3.6%, respectively. On the expense front, the team's focus on controlling the controllables kept same-home core operating expense growth muted at 2.4%, leading to same-home core NOI growth of 4.6%.

As we exited the third quarter, we saw a tapering of activity that drove October same-home average occupied days to 95.1%. Preliminary new lease spreads of 0.3% and were balanced by continued strength in renewal rate growth of 4%. Given the heightened focus on monthly updates, it is important to mention that our internal dashboards indicate that we have reached an inflection point in seasonal leasing activity. Leasing velocity has improved over September levels and this, coupled with benefits from our lease expiration management initiative, positions us to close out the year with momentum.

Turning to our growth programs. We remain focused on portfolio optimization and prudent capital allocation. This year, we are on track to deliver approximately 2,300 homes, of which 1,900 are wholly owned. As a reminder, development is being funded by internally generated cash incremental debt capacity from growing EBITDA and recycled capital from our disposition program.

Despite the headlines of a slowdown in MLS activity, we continue to see great success selling nearly 1,200 homes to end-user homebuyers year-to-date. This enables us to accretively deploy disposition proceeds into development, driving residential leading earnings contribution outside of our same-home pool while also continuing to improve the quality of our portfolio.

As we begin to shift our focus to 2026, we expect a similar number of deliveries from the development program next year. Maintaining strategic sizing of the program to be funded with internally generated capital and incremental debt capacity.

Outside of development, we continue to review thousands of assets each month across all of our markets, but bid-ask spreads are still too wide considering the current cost of capital. To close, our strong year-to-date performance is a direct result of the enduring AMH strategy and outstanding execution from our teams. Our industry-leading core FFO growth guidance reflects earnings contribution from all areas of the business and maintains our position at the top of the residential sector.

With that, I'll turn the call over to Chris.

Thanks, Bryan, and good morning, everyone. I'll cover 3 areas in my comments today. First, a review of our quarterly results; second, an update on our now fully unencumbered balance sheet, and third, I'll close with commentary around our 2025 guidance, which was increased for a second time this year in yesterday's earnings press release.

Starting off with our operating results. This quarter was another example of the power of the AMG strategy and our ability to create value and grow earnings across all areas of the business. For the quarter, we reported net income attributable to common shareholders of $99.7 million or $0.27 per diluted share. On an FFO share and unit basis, we generated $0.47 of core FFO, representing 6.2% year-over-year growth and $0.42 of adjusted FFO, representing an impressive 9.1% year-over-year growth.

In addition to our strong execution this quarter, we've now received the majority of our final assessed property tax values which have landed favorably compared to our initial expectations in several states, notably Texas. Additionally, the team was highly active on the appeals front this year, filing over 24,000 individual appeals with a record level of success.

All combined, we now expect full year 2025 property tax growth to be in the high 2% area, which has been positively reflected in our updated full year outlook that I'll talk about shortly.

Turning to investments. For the third quarter, our AMH Development program delivered a total of 651 homes to our wholly owned and joint venture portfolios. This was on track with our expectations and continues to demonstrate our unique ability to accretively redeploy capital from our disposition program. During the quarter, we sold 395 properties generating approximately $125 million of net proceeds at an average economic disposition yield in the high 3%.

Next, I'd like to turn to our balance sheet and recent capital activity. At the end of the quarter, our net debt, including preferred shares to adjusted EBITDA was down to 5.1x, our $1.25 billion revolving credit facility had a $110 million drawn balance and we had approximately $50 million of cash available on the balance sheet.

Importantly, as we announced previously, during the quarter, we paid off our final securitization 2015 [ SFR2 ]. Our balance sheet is now 100% unencumbered, marking an exciting milestone in AMH's history. Additionally, all debt other than our credit facility, is fixed rate, and we have 0 maturities until 2028.

And next, I'll cover our updated 2025 earnings guidance. As I mentioned earlier, we now expect full year same-home property tax growth in the high 2% area. And when combined with our team's continued execution, controlling the controllables on expenses, we have lowered our full year same-home core expense growth expectations by 50 basis points to 3.25%. In turn, this translates into a 25 basis point increase to the midpoint of our full year same-home core NOI growth expectations to 4%. And when further combined with our modestly improved outlook on full year net interest costs, we have increased the midpoint of our full year 2025 core FFO per share expectations by $0.01.

Our new midpoint of $1.87 per share now represents a year-over-year growth expectation of 5.6%. And before we open the call to your questions, I'd like to highlight that 2025 is on track to be a perfect demonstration of the strength of the AMH strategy. Our relentless focus on portfolio optimization and operational excellence is expected to drive an impressive 4% growth in same-home core NOI this year, while notably also expanding core NOI margins. And on top of same home. This year, we expect an incremental 160 basis points of core FFO per share growth contribution driven by our prudent approach to capital management, including the balance sheet, capital recycling and our development program.

All told, our full year expected core FFO per share growth now leads the residential sector by hundreds of basis points and once again demonstrates the power of the AMH strategy.

And with that, we'll now open the call to your questions. We're out of respect for the crowded earnings calendar, we're going to limit the initial queue to only 1 question. To the extent we have time, please feel free to rejoin the queue for follow-ups. Operator?

[Operator Instructions]. Our first question comes from Juan Sanabria with BMO Capital Markets.

This is Emily on behalf of Juan. I wanted to ask you following the shift in your lease exploration strategy to front-load the expirations in the first half of the year. How has that changed impacted occupancy and new lease trends in the third quarter? And as we move through the fourth quarter, how should we think about seasonality compared to last year in terms of both the new lease and blended rate growth.

Thanks, Emily, for your question. I appreciate it. We've done a lot of work this year on the lease exploration management program. as we mentioned in previous meetings, we spent most of the year making large shifts in expirations from the back half of the year to the first half of the year. It's playing out extremely well and about as we expected, as we moved out of third quarter and into fourth quarter, we're going to start realizing the peak of those benefits with the lowest number of expirations. That should allow us to build a little bit of occupancy into the end of the year and to set ourselves up well for 2026.

And Emily, Chris here, if you want to see how it's actually translating through in a couple of other places, knock-on benefits to our numbers. You can see that turnover rate was down, comping positively 60 basis points year-over-year in the quarter. That's a function of optimizing of lease expirations. And then in turn, that enabled the team to really execute well in terms of controlling the controllables. And as you can probably see from the print, R&M and turn for the quarter grew just a touch over 2%.

The next question comes from the line of Jamie Feldman with Wells Fargo.

This is Connor on with Jamie. The Midwest markets continued to outperform. Do you expect that to be sustained into year-end? And could this outperformance continue into 2026? Or would you expect some reversion between the Sunbelt and Midwest regions.

Thanks for the question, Conor. I appreciate having you on. We continue to see great strength in the Midwest. We think it's due to good underlying fundamentals. Midwest has a great quality of life, good cost of living is still growing relatively affordable from a housing standpoint. So we think the long-term fundamentals in the Midwest will continue to support the diversified portfolio in a positive way. It's possible that there could be some divergence between the different markets as we continue to resolve some of the issues across the different areas. But so far, we're very happy with the Midwest and has contributed very well to the portfolio, and we don't expect that to change anytime soon.

The next question comes from the line of Eric Wolfe with Citi.

It's actually Nick Kerr on for Eric this morning. So a question on the same-store revenue growth. If you guys have done 4.2% year-to-date, it seems like you're implying a pretty big deceleration in -- so just wanted to understand what's kind of driving that decel, whether that's or fee income, higher bad debt, just kind of the puts and takes there?

Sure. Chris here. Look, I think a couple of different thoughts come to mind from a timing perspective. The first of which has to do with the timing of last year's leasing spreads, and in turn, how those are earning into this year. If we all recall, blended spreads in the first 9 months of last year, we're running well north of 5% before moderating into the low 3s in the fourth quarter of 2024, which you can then see flowing through into our run rate of revenue growth by quarter this year, that's one.

Two is timing of fees like we've been talking about all year. As we know, a good portion of our fees are related to leasing volumes, which we strategically have accelerated into the earlier parts of the year given the lease expiration management initiative, which is great in terms of aligning leasing activity with leasing season, but also means that fourth quarter fees will likely comp a little bit negatively year-over-year.

And then finally, look, we are very aware that it's somewhat of a choppy residential environment out there. You can see it across many of the other residential peers reporting this week. And so we also just want to make sure that we remain prudent in the guide. But if we zoom it out and think about the broader context, I'd say that we are extremely proud of our full year top line outlook in the high 3s, [ 3.75 ] at the mid, which, as we all know, is head and shoulders above the rest of the residential landscape. -- and especially impressive when you think about our expense growth in the low 3s, which I would remind us all means that we're expecting to expand NOI margins this year.

The next question comes from the line of Steve Sakwa with Evercore ISI.

Bryan, I guess I wanted to come back to the comments you made about the fourth quarter. I appreciate the early color on October. But I guess you did make a comment that said you reached the seasonal low. So I guess you're sort of suggesting that November-December trends may be better, like these might mark kind of the worst monthly trends for the quarter. A, is that kind of the case. And then just when you kind of wrap everything together, could you or Chris, just maybe remind us about the puts and takes as we think about next year, either the onetimers it help this year or some of the onetimers that might have hurt this year that might help growth next year?

Yes. Thank you, Steve. I was really trying to give commentary to put the performance into context. The -- as we exited the Labor Day period, which is traditionally pretty slow, we normally see a pickup in September, kind of the second half of September. And that pickup was a little bit delayed. This is in terms of foot traffic and the other metrics that we're measuring from a leasing perspective.

We saw that pick up in October, which gives us confidence in the momentum that we're carrying into November. If you couple that with the strides that we've made on the lease expiration management initiative, where we're going to have our lowest number of move-outs in the month of November. It really screens well for us to pick up occupancy and position the portfolio well as we enter 2026.

So I think you're right on in terms of our outlook for November and December having a really positive effect on occupancy with the objective of positioning ourselves well to take advantage of the returning pricing power that we'll see in next year's spring leasing season.

Yes. And then Steve, Chris here for the second part of your question, I would totally underscore the importance of that momentum that Brian is talking about carrying into the new year. We joke all the time that spring basically starts now heading into the end of the year. But it's just a couple of directional thoughts as we're all beginning to kind of frame things for 2026. The building blocks like we've talked about before, if we think about the guide this year and our expectation for blended spreads in the back half of 2025, that would imply '26 burn in somewhere just a touch under 2%.

Most likely for next year, we don't expect loss to lease to play a major role in '26 revenue growth. And then the remaining question is market rent growth for next year, where obviously a little bit too early for us to express a view. But if you'd like an early read from, say, some of the John Burns data, as an example, he's actually expecting market rent to reaccelerate a touch going into next year -- latest data for 2025 is that he was expecting market rents to grow 75 basis points or so. This year, he sees that going up into the 1.5% to 2% area next year. I just give that as kind of a directional reference point. with the reminder that we typically outperform Burns's average estimates within AMH footprint.

Our next question comes from Haendel with Mizuho Securities.

I guess I'm curious how you're thinking about stock buybacks today versus what you're yielding in the development and the funding capacity on your balance sheet. I guess I'm curious if you're position to perhaps do both.

Sure. Appreciate it. It's a good question. It's Chris here. Look, stock buybacks are definitely something that we're watching very closely. And we look at them just like any other form of investment as we're ultimately endeavoring to maximize shareholder value over the long term. With that said, we are very mindful that stock buybacks can be a little bit of a double-edged sword as we think about them in terms of increasing leverage and then reducing future capacity to create value through incremental growth. But look, at the right levels, buybacks can definitely make sense. I would remind you that we have an active share repurchase program already in place. We have been active on it in years past at the right levels.

And to your question about capacity, we have close to 0.5 turn of opportunistic leverage capacity on the balance sheet. So again, I think the key is at the right price and appropriately sized buybacks could definitely make sense, again, at the right price as a complement to the value that's being created by our development program.

The next question comes from Jeff Spector with Bank of America.

Bryan, you talked about portfolio optimization. I know that you've had a number of initiatives underway this year, last year, is there anything new or changing into '26 that we should be aware of that could further help, whether it's grab again market share in terms of searches or AI, anything else that would be new helpful beneficial, I should say, next year.

Yes. Thanks, Jeff. You nailed a number of our initiatives. From an asset management perspective, we've become a lot more sophisticated in the way that we're analyzing our existing assets and the type of rigor that we're putting into the areas that we're optimistic about investing into and going into in the future.

So the asset management function has been -- has done a fantastic job of taking assets out into the disposition market and repositioning those into higher yield, higher growth areas. So you got that part of the equation. And then the initiatives that we're in the midst of rolling out some of our -- actually have already have rolled out from an AI perspective are going to further help that operational advantage that we see.

So we started, as I talked about in the past, with a focus on kind of the front end of the resident life cycle, which is the leasing cycle and implemented a really effective AI tool not only is it better -- creates a better experience for the prospects, but it's also a lot more efficient for us internally. It was something that we rolled out customized and we're starting to see the benefits of it from our leasing platform.

As we continue to think of other ways that AI can contribute in the near term, we've talked about improvements to the communication platform, which is helpful from a number of different angles, probably will show up most in the way that we renew -- retain our residents. But the way that we're communicating with them spans the entire spectrum of the way that they order services and submit maintenance requests and really opens up kind of the next level of communication, which is a key preference from their side.

There are a lot of other smaller initiatives that are coming through. But in terms of what we're going to look into next year, we'll see the full power of the improvements we've made on the leasing side, we've improved our access solution. I think we've become more precise on where we're investing. This feedback is also supporting the importance of the diversified portfolio footprint and the focus on single-family detached. So there are just a number of good things that are going to continue to play out into 2026 from that perspective.

Our next question comes from Adam Kramer with Morgan Stanley.

Got question here. I just wanted to ask about what you guys are seeing in terms of supply. And I think there's sort of a few different buckets of it, right, BTR supply versus what's happening in the existing home side, shadow supply. Maybe what's happening with new homes from homebuilders as well. So maybe just what you're seeing in sort of each of those buckets and maybe how does that compare to 6 or 12 months ago?

Yes. Thanks, Adam. This is Lincoln here. look, we start with supply in the local level. I think it's easy to talk about on a national level, but you get the real picture we have to kind of zoom in a little bit to what's happening in each of the local markets. And we acknowledge that it's still difficult to find a lot of information that may be more available in other more developed platforms like the multifamily tools. But what we're doing is we're starting with our internal data. We're buying that with some external sources. We've got good information from publicly available stuff like Zillow and Burns and then some other proprietary sources that are flowing into a revenue optimization model.

There definitely is an impact, I think, from the conversions of 4 sales to 4 rent. It's a little bit difficult to nail down exactly what that is. But you can see where that may be impacting our portfolio with a little bit of rate pressure and a little bit of occupancy. But we have a lot of markets that are still running extremely well. We talked about the Midwest a little bit earlier some of our Western markets, Salt Lake City, Seattle, some of those are doing extremely well from a supply standpoint. It does seem that BTR and multifamily are off peak deliveries. We'd expect those to continue to improve into 2026. The rate at which that happens probably depends a little bit on the level of demand that's in the marketplace, but we do expect it to get a little bit better.

Our next question comes from David Segall with Green Street.

I was curious if you could provide any insight into the pricing for smaller portfolios in the market and maybe the opportunity set for consolidation in the space.

Yes. Thanks, David. This is Bryan. The pricing for smaller portfolios is relatively consistent with what we've seen on the MLS side and on the national builder side. I think there's still a little bit of a disconnect with owners expecting to be able to get kind of end-user homeowner pricing in terms of their market value expectations. So we haven't seen a lot of change there what we've looked at is generally characterized by high 4 caps, maybe 5 at best. But there's still a little bit of a gap between their pricing and what we would need to be able to do anything in sale.

And David, Chris here. Pricing aside, like we've talked about before. Looking forward, we're very optimistic on the number of those types of portfolio opportunities that are out there. And one of the things that we especially like about them is the ability to uniquely unlock value by bringing them on to the AMH platform, right, which is just what we have done and are doing, creating value in that portfolio we acquired towards the end of 2024.

Our next question comes from Linda Tsai with Jefferies.

On the improved NOI margins in '25, how much of this is from lower turn versus operating efficiencies? Like what are you doing to improve upon controlling the controllables. And what does this trajectory look like as you move into '26?

Sure. Chris here, why don't I start? And then if there's anything else that Lincoln wants to fill in from an operational perspective, you can chime in too. I would say it's a function of a couple of different things.

One, of course, it starts with good strength in the top line. solid and full occupancy in the 96% area this year, good strength in spreads over the course of the year in the high 3s, ultimately translating into the top line growing high fees. Beyond that, it is very much a function of just, like you said, controlling the controllables on expenses. The team is doing a great job there, executing over the course of the year. And for this year, we're getting a little help from timing of property taxes as well.

So as we think about looking forward, I would say last year 2024 and this year 2025 are both good examples of the opportunity that we've been talking about in terms of longer-term ability to continue to creep and grind margins higher, right? Given the opportunity to continue to maintain strength in the top line, longer term, we view this business as inflationary plus to the top line. And via all of the investments we're making, controlling expenses holding the line on expense growth at inflationary levels, maybe even a touch below as we execute really well, translating into continued opportunity for margin expansion year-over-year going forward. And again, last year and this year, good examples of margins creeping higher by tens of basis points per year.

Yes. Thanks, Linda. This is Lincoln. As far as the upside of the business, one of the things we haven't talked about for quite a while is our investments in our resident 360 program. I think what we're seeing now is some returns on those investments that they are continuing to pay dividends.

As part of that initiative, we realigned our maintenance functions with the local markets where there could be better decision-making more quickly, provide better service to the residents and hold vendors accountable to scope and cost. That seems to be paying some dividends. And then the other thing that's seems to be working very well as we're finding some synergies between the purchasing skill sets in our new development program and our property management programs that are continuing to keep our costs under control. So overall, we have optimism that as we continue to focus on the business and improve the different areas that we'll continue to see improvements.

Our next question comes from Jesse Lederman with Zelman & Associates.

I want to clarify the comments made earlier about reaching an inflection point recently. Was that for occupancy? I know you reached 95.1% in October. So are you expecting the inflection and improvement through the rest of the year exclusively for occupancy? Or do you expect that to translate through to accelerating rent growth as well, which would, of course, be counter seasonal? And then anything you're doing to spur the inflection such as increased incentives or concession on vacant units?

Thanks, this is Brian. Yes. The inflection point commentary really was centered around what we're seeing on our dashboards from leasing activity. It starts with increased inquiries into our website into our system migrates into showings applications and ultimately, leases.

The commentary included the commentary that October leasing was better than September. We're going to see those effects in occupancy, especially coupled with, as I mentioned earlier, the lease expiration management initiative. So I would expect to see those benefits on the occupancy side. The rent growth will return in the spring leasing season next year, especially since we're going to be well positioned at that point.

I appreciate you noticing too on the concession side. We've maintained this fantastic momentum on new development communities and getting those leased without the use of concessions. And then with the scattered site same on portfolio, concessions aren't a tool that we've employed. So what you're seeing is the actual pull-through results.

Our next question comes from Brad Heffern with RBC Capital Markets.

For the development program, can you talk about what the go-forward yield is today? And how do you see that evolving?

Yes. Thanks, Brad. This is Bryan -- yield for 2025, we talked about that at the beginning of the year, and the expectation was that it was going to accelerate from the low 5s in Q1 into the mid-5s for the year. As we got into the spring leasing season, we're really pleased with the results that we saw and hope that maybe the midsize be maybe even touch better. But in light of the general conditions that we saw kind of exiting September exiting the third quarter, it looks like that mid-5s might be just a touch lower for 2025.

It's a function of really just short-term changes in rents on the input side, the team has done a fantastic job of managing costs. So we're delivering these houses of vertical construction costs that are consistently flat over 2024, which is especially impressive in this environment that includes commentary, daily commentary on tariffs and a lot of other moving pieces. So the delivery from the cost perspective has been very successful. We're on track with our number of deliveries that we set at the beginning of the year. So the development team has done a fantastic job executing. What we're seeing on the red side is temporary in nature.

As we look forward, we have good visibility in the environment as to what we're delivering in Q4 and into Q1, and I'd expect those yields to kind of be consistent with what we're seeing now as we get in to -- leasing season, hopefully, we'll be able to accelerate those rents.

Our next question comes from Jade Ramani with KBW.

This is Jason Sabshon on for Jade. So CapEx came in a bit lower versus expectations. So Curious what drove that? Was it the level of construction activity in your markets with reduced activity from some of the builders, lower multifamily starts driving better pricing than trade partners, any thoughts there? And if you expect this trend to continue would be helpful.

Yes. Thanks, Jason. I think what you're seeing is a little bit of timing. There some fewer move-outs in third quarter than they are in the first part of the year. So we need to keep that in mind. But overall, I would account most of the improvement to just continued vigilance in the stabilized portfolio to cost controls, controlling those controllables, which is our mantra in the back half of the year here.

As I mentioned earlier, it's those impacts from Resident 360, the intentional focus on maintenance, the cooperation between the different groups and the company and probably a little bit of continued contribution of low-cost purpose-built single-family homes for our new development program that have lower cost profiles. So overall, I would call it intentionality that's driving that CapEx improvement.

We have our next question from Omotayo Okusanya with Deutsche Bank.

Just curious if you could give us any thoughts on regulatory updates, especially as you're about to kind of go through an election cycle?

Thanks, this is Bryan. From a regulatory perspective, it's been relatively quiet as it pertains to single-family rentals of late. We've internally taken the opportunity to get out and really tell our story with the local municipalities and government officials. And I think we've done a very good job of showing them what we're delivering into the communities, showing that we're part of the solution from a supply perspective.

And then as you get a little bit higher level, there's just a lot of talk about federal government shutdown, immigration policies. From a shutdown perspective, we're really hopeful that our government leaders can find a solution quickly -- in the near term, it hasn't had a lot of effect -- direct impact on AMH. But we do have a couple of cases with some residents that have been affected, and we're working very closely with them to bridge those gaps.

And then from an immigration perspective, we haven't seen any effect on the cost of our development program and the way that we're delivering the vertical construction costs, as I mentioned earlier. But over the long run, it's difficult to really put a finger on whether there's going to be any issues from a demand perspective for housing. So in a nutshell, it's been relatively quiet. We've been proactive in messaging and we're just paying very close attention to what's going on at a macro level.

Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management for the closing comments.

Yes, thank you for your time today. We really appreciate the continued interest in AMH and I look forward to speaking with you next quarter.

Thank you. Ladies and gentlemen, the conference of American Homes foreign has now concluded. Thank you for your participation. You may now disconnect your lines.

Good morning. Welcome to Bank of America's 2025 Global Real Estate Conference. I'm Jana Galan, and I cover the residential REITs at Bank of America. We're very pleased to have with us AMH's CEO, Bryan Smith; CFO, Chris Lau; and EVP and COO, Lincoln Palmer. Bryan will start with a few opening remarks, and then we can jump into Q&A.

Thank you, Jana. I'll start today with some brief comments on the single-family rental industry, and then I'll highlight a few key points specific to AMH. And then Chris will take over and maybe give a little bit more detail on the operations and talk about the update that we posted last week.

To start, the SFR industry is in a great place and continues to benefit from very strong long-term fundamentals. Most notably, demand across the industry will continue to be strong as the large millennial cohort ages into prime single-family rental age. This, coupled with the challenging affordability dynamics, provides us with great support for long-term future growth within the industry. And AMH, in particular, is in a great position to continue its track record of outperformance in the residential space.

We've strategically assembled a portfolio of high-quality assets in superior locations and have a well-diversified portfolio footprint around the United States. In addition, these high-quality assets are supported by a very robust and efficient services platform that's benefited from our continued investment in technology, which has created an efficient and very high industry-leading resident experience.

And finally, on the growth side, we have the only vertically integrated development program in the single-family industry. We're on track to deliver over 2,200 homes this year of newly built rentals across our portfolio. And outside of development, we're staying true to our buy box and remaining patient. When we find opportunities like the one we saw last year, portfolio acquisition that we completed in the fourth quarter, we're prepared both from a balance sheet perspective and from an operational perspective to integrate those homes quickly and seamlessly.

In a nutshell, AMH is very well positioned to expand on its success as we continue to innovate within the single-family rental industry. Now I'll pass it over to Chris.

Yes. Look, in terms of updates, from a high-level perspective, the business is performing very, very well for anyone that followed the quarter. I think you clearly saw that in results this past quarter. I think you would have clearly seen that in updates to the guide, which as you guys probably all took note was pretty much positively revised across the board. In terms of update today, we put out an updated deck. It hit the website on Wednesday, I want to say.

The punchline there is, as you guys know, this time of year is the middle of move-out and turnover season, and the teams are doing a great job executing. August quarter-to-date same-home occupancy was 96%. Blended spreads in the high 3s, pretty much right on top of what we were expecting. At this point in the year, new leases are kind of following the seasonal moderation shape. Like we've been talking about, this year, we're expecting to see less moderation in that shape than last year and long-term average.

And we see that being balanced by continued strength in renewals, which for this time of year and really for the balance of this year, renewals represent the bulk of our leasing activity and is essentially the name of the game as we're thinking about shape of top line for the balance of the year. In terms of -- in addition to operating updates, we always think that it's helpful to reinforce a couple of the key strategic differences that differentiate us and our results.

Bryan touched on a couple of them, but just to recap them real quick before we kick it off into Q&A. As we think about the things that make us different, it really comes down to 3 key things: One, the portfolio, the commitment to diversification, like Bryan was talking about. Also increasingly important is the focus on single-family detached product. Like we all know, there's a lot of different forms of supply out there right now, apartment supply, flat BTR type of supply that is head-winding a lot of other residential portfolios differently and more than ours.

And you can clearly see that reflected in our results. That's a function of diversification, product type. Demand is very important, like Bryan talked about, that would be number two. And then the third that we like to reinforce is the importance of capital allocation strategy and, importantly, access to the development program. I'd encourage you all to take a look at the updated investor deck that's on the website. I would check out Page 9, where you can tangibly and incrementally see FFO contribution coming from the various different components of the business.

Same-store, which is, yes, meaningful, but also non-same-store contribution largely coming from the development program. And when you look at it over the last couple of years, it's actually 3 years on the slide, it's very enlightening seeing the contribution from both. We know our industry -- our FFO has led the industry, seeing the componentry is very eye-opening. So I'd encourage you to take a look at that. But to hand it back over to you, I think we'd say business is performing well. FFO expectations for this year, once again leading the residential sector by hundreds of basis points, and we continue to be really optimistic forward-looking.

Great. Thank you. Happy to take any questions from the room. But I guess maybe we could start with just if you could talk about the demand environment and maybe geographically, is it still kind of Midwest leading? What do you see on the ground? And if you could talk to the different markets?

Yes. Demand overall is in line with seasonal expectations. It looks a lot like last year, maybe a little bit better. When we look on a market-by-market basis, I think it's important to point back to something that Chris said, which is we're committed to this diversified portfolio. And these times like this are when that shows real strength. We have a lot of, I would call, differentiated markets that are performing extremely well. The Midwest is one of those, Jana.

Seattle, while we have competition there, it's one of our new development markets. Salt Lake City continues to perform extremely well; again, a differentiated market for us. The Carolinas are doing very well also. There's been talk about Florida a little bit in the news lately when it comes to supply and demand and migration.

Our Florida markets, Orlando, especially is performing very well. Jacksonville is right behind it. Tampa, while it seems to be experiencing a little bit more of the pressures that otherwise others may be seeing, our new development product in that market continues to be something that people are looking for and demanding and our communities are moving very well there also.

So overall, very pleased with demand. We're pleased with the -- this diversified footprint in the markets that are still challenged, call it, Phoenix, San Antonio, that have a lot of that influx of all of the different types of product that Chris talked about. We're still committed to those markets long term. We see great fundamentals there and expect those to correct at some point when supply eases a bit.

And I'm curious, do you notice any type of differentiation in performance or demand between the scattered site product and the BTR communities?

We operate all of our properties the same way. We're still developing our community management strategy. One of the things that we have the unique ability to do in our communities is to match our deliveries in those communities with demand. It's a lot different than delivering, say, a horizontal type apartment, townhomes, or multifamily. So instead of dropping a building in a community with 30 units in it or 20 units in it, we match our deliveries to the demand.

So in our communities, we'll take, call it, 4 to 6 deliveries a month depending on the pace, and we have the ability to shift that up and down. So it allows us to lease through without the use of concessions. And that's one of the differences between the scattered site portfolio and those communities. It's a real nice benefit that those provide to us.

Great. And you touched on the current occupancy, but it is move-out season. Can you kind of walk us through how you expect that to trend through year-end? And I know you also did some work in terms of the renewal schedules and optimizing when leases expire. If you could kind of explain that to us.

Sure.

Yes. Maybe that's the right place to start because that's really a key theme to this year, and that's our objective of optimizing the shape of how leases expire over the course of the year to best match up with the strongest parts of the leasing season. And so the right way to think about it is, historically, our lease expirations were typically split 50% first half of the year, 50% second half of the year. What we've been able -- Lincoln and the team have been able to accomplish is really shifting that earlier into the year to better match up with the strength of leasing season.

So today, lease expirations are split more 60% first half of the year, 40% back half of the year. And importantly, the places that we've been able to move leases from is largely out of the fourth quarter, moving expirations out of the fourth quarter and shifting them into the spring time. So what that's doing for us is that it is increasing the proportion of new lease opportunities during the stronger rate environment time of the year. And then decreasing the proportion of new leases that get reset during a seasonally slower time of the year being the fourth quarter.

In terms of what that means for this year, that's translating into less steepness in the back half of the year that we're expecting on new leases and also occupancy. For this year, full year expectation on blended spreads is high 3s. And then importantly, we're also expecting to see less moderation in occupancy in the back half of this year as well. Naturally, occupancy will moderate in the back half of the year. That's just a function of it being turnover season. There's naturally frictional time between tenant A and tenant B, but we're expecting less of that this year compared to last year.

Great. And a lot of us try amongst you and your peers to take a look at this type of blended spread activity and kind of an earn-in that you'd be starting the year at. I don't know if you can kind of walk us through how you think about those different components and kind of help us with the 2026 earn-in.

Yes. Based on the midpoint of expectations as of today, and I think expectation for earn-in going into next year, probably just sub 2% or so, not too far different than 2024 earn-in rolling into '25. I think this year's start of the year earn-in was more like 2%. So similar ballpark, probably a little bit sub-2%.

And if we could talk a little bit about supply trends in your markets. And I think the BTR is a little easier for us to track, but how do we think about more of that someone who can't sell their home potentially turning that into a rental unit. Yes, if you could kind of help us with the supply outlook.

Sure. I talked a little bit about supply in some of the specific markets. So maybe more generally, it's very shadow supply is something that's very difficult to measure, I think, for everyone because they can kind of come on and off. There's optionality. A lot of times, people will have their home listed for sale at the same time that it's -- they may also be willing to rent it. So it's a little bit challenging for us to measure. What we do is kind of start with a broad level of what all those -- all the different supply inputs are.

And so that would be the build-to-rent, the multifamily, the single-family, maybe some of that shadow supply to the extent that we can measure it, and then we're going to drill down to AMH type product that is competitive directly with us. One of the important things that I think differentiates us from most of the product that's on the market today is just our commitment to, I think Chris mentioned the single-family detached product. There's a lot of townhome out there. There's a lot of this horizontal apartment. And more importantly, we've stayed committed to A locations, places where people want to be convenient to work.

A lot of the development that's taken place has happened in tertiary markets. And that's the stuff that's going to be really challenging to move through over the next whatever period of time it takes to absorb that inventory. So for us, as I said, in most of our markets for competitive AMH supply, we're seeing little pressure in most of the places. The couple that I mentioned are the places where you've seen the biggest influx of supply in maybe some of our Texas markets and Arizona.

I guess maybe if we could look a little bit more at those markets. Is it all supply, is it the shadow supply that's causing an issue? Or if you could kind of help us understand what's happening specifically in kind of the weaker rent growth markets?

Yes. For sure, in Austin, San Antonio, it's just -- it's all supply. There's -- now there are some indications that depending on which reports you look at, there are some indications that, that supply, at least deliveries have peaked. I think the multifamily especially expected a little bit more relief in '25 than they saw and maybe that got extended out to '26 just based on the pace of absorption. So it has something to do with that. Again, the shadow supply is tough to separate out individually.

But when you compound all of that together in a market like Austin, a lot of pressure. And then Phoenix is a little bit the same way. But again, Phoenix is a -- it's always been a great market for us. We continue to develop in Phoenix and the communities continue to perform well there. So overall, the most important piece for us is to just drill directly down to competitive supply that looks like AMH product in AMH locations. And that's the easiest way, I think, for us to get a picture around it. And again, most of the places, we're just not experiencing a lot.

And then maybe just kind of different portfolio operating trends. If you can give us an update kind of how bad debt is trending and then kind of any changes in residents taking a little bit longer to pay or on the margin changes with the resident profile, rent to incomes?

Chris, do you want to start on bad debt and then maybe I'll talk about the resident.

Sure. Collections and bad debt have been a bright spot year-to-date through the first 6 months, tracking a little bit better than our expectations. First 6-month bad debt was sub-100 basis points. That's moving in the right direction. As we think about the balance of this year, as many of you know, naturally, there is some level of seasonality to bad debt that typically ticks up a touch as we get into move-out time. So we'd expect that to, as I said, bump up as we get into the third quarter, but still heading in the right direction, which we take as a good indication of resident wherewithal and health.

Yes. And as far as portfolio goes, residents are coming to the platform still have strong incomes north of $150,000, 5x multiples on rent, 2 income earners, which gives us some comfort that there's redundancy in our households. And then the profile hasn't changed a whole lot. It's the late 30s resident who is kind of the peak of that millennial profile that Chris talked about, that's the support for our long-term demand. So overall, things are good. I think there's been a lot of question over the last couple of days about the jobs revision that came out and how that may be affecting our residents.

If you look back at the period that, that covers, it's retroactive. And what we're seeing in our residents, despite all of that information being out there, it's already baked into the portfolio. Residents are coming in with, again, still high incomes, credit scores aren't suffering. I think the most -- probably the most concurrent place that you would see something coming into the portfolio as a result of job loss or difficulty to pay would probably be in our delinquency rates.

Those continue to perform extremely well and are at least as good or higher than they've been for several years. So residents continue to be strong. And we also take comfort in the fact that a lot of our residents are employed in essential industries, whether it's health care, first responders, teachers. These are people who are members of their community that are involved in essential activities. And again, the redundancy gives us some comfort as well that we have some backup in the event that there are some disruptions in households. But so far, we're not seeing anything in the AMH resident.

Great. So maybe just to kind of tie it all together, earn-in on the rents slightly less than last year or potentially in line, occupancy a little bit better and then bad debt kind of stable.

We're talking this year or next year?

Just looking forward.

Looking forward. Well, yes, occupancy is at a stable point, similar year-over-year '24 into '25, 96%, low 96s or so. We like that area. Earn-in, yes, just sub 2% going into next year. We'll have to see where market rent growth ultimately shapes up going into next year. That will be a big factor. And then collections and bad debt, yes, heading in the right direction. We do know that there are still a number of municipalities and court systems that continue to process at slightly slower than kind of historical kind of normal time lines. That will probably still be a factor going into next year, but collection is definitely moving in the right direction as well.

Great. Maybe we could turn it over to kind of the development side. And if you can just kind of walk us through kind of the underwriting on development today. And I think there was a lot of expectations of tariff impacts. Just kind of curious how the year has played out thus far and how you're thinking about it going forward?

Sure. We set expectations at the beginning of this year to deliver the newly built homes at a going-in yield of the mid-5s. If you remember, if you followed, that was slightly lower in Q1 as expected as we caught up on some extra inventory that we saw at the end of last year. But we're on track for that. So those yields have improved as we progress through the year. With regards to tariffs, we're really pleased with the fact that our vertical construction costs are the same as last year, if not slightly down.

So there's -- we've been able to absorb any impact that we would have seen from tariffs through a couple of different areas, optimization, maturation of our platform and then really an increased availability of labor that we're seeing because home starts from the other homebuilders are down or certainly below our expectations. So our team has done a fantastic job managing those vertical construction costs, muting any effect that tariffs might have. And we expect that to continue into the near future as well. So really pleased with that part of the business and the results that we've shown this year.

And then maybe just on -- we saw homebuilders had a pretty challenging spring selling season. I'm sure you looked at opportunities to buy in bulk from them. If you could kind of walk us through what their expectations are?

Sure. The biggest news there is, there's been a little bit of a change, at least we feel like there's been a change in sentiment. We've been looking at very large tapes from the national builders for as many quarters as I can remember, 7 or 8 at least. And as I talked about on the last call, we saw a little bit of a change over the last couple of months where some of the larger national builders were more willing to discuss price, more flexible in that negotiation. It's moved the yields, potential yields slightly, but they're still in the high 4s under our underwriting model.

And when you lay that next to what we're able to deliver our own internal development, which is built to our exact specs in the exact locations that we want, built for long-term durability from a maintenance perspective and significantly upgraded from a lot of the other entry-level homes that are on these tapes, it really shows the strength of our internal development program as the right place to kind of form the foundation of our growth programs.

Going forward, we're optimistic in that willingness. We see that continuing. We still have a long way to go before it makes sense to do anything at scale. But there's one other piece that's kind of surfaced of late that's unique to us, I think, and that is national builders and regionals being willing to talk about trading or selling us finished lots in some of their communities. So a lot of the stuff that we saw coming through on tapes over the past few quarters, think about mostly townhomes, a lot of attached, maybe 20% fit our buy box, characterized by kind of maybe B-ish locations.

And the homebuilders are still having success moving product in their A locations, but just not at the same pace. So as they project fewer sales per month, they're starting to consider maybe we cut out a piece at the back end of the phase, sell finished lots to AMH, they can develop noncompeting product. We're not going to be selling houses. So it's a nice -- there's some nice synergies there that they're starting to surface. We haven't done anything yet, but that we're optimistic that there could be opportunities there as well. And we're the only one that's completely vertically integrated that can take advantage of those lot opportunities as they come.

And what would that kind of look like in terms of pricing? Would that help the kind of mid-5% yields? Or how should we think about that opportunity versus finished?

And it's nice, too, because it's -- the cycle time to get those houses delivered is obviously a lot shorter. If all the horizontal development is complete, we would be taking these lots down later in the cycle at, at least maybe even a discount to what we could deliver the internal development. So there's a nice savings on the time and the speed. But yes, the expectation is it's going to push those yields in the 6 to 6 plus.

Great. And then maybe turning over to -- you had great success last -- at the end of last year with the portfolio acquisition. Just curious kind of what you're hearing might come to market? Is it dependent on rates coming down?

Yes, we've been a little bit surprised at the lack of portfolio activity. We closed the one about this time last year, fourth quarter. And it was a perfect scenario for us. We were able to provide a comprehensive solution to an owner that had -- that wanted to exit the space. Because we operate so many markets, it was an easy overlay, and we have a very mature disposition program to call some of those assets that didn't fit for either one of us. So we saw that as a great opportunity to go out and kind of leverage that solution.

But since we closed that particular transaction, it's been really quiet, almost kind of a wait and see what happens from some of the other portfolio owners. I think it's a matter of time before some more of those opportunities come in front of us, but not a lot is traded. And I have to say the activity, maybe even slightly less activity in terms of seeing different tapes than maybe even 6 months ago.

Is there a kind of enough out there to kind of assess like what's the bid-ask spread between where they want to sell these portfolios and where you'd be willing to buy them?

Yes. Not a ton of activity to nail that down with any precision, but there's an expectation. If you look at the way we're managing our disposition program and the fact that we can sell houses to end users in the 3 cap range, which would technically be the market value of a vacant house. There's a gap between the value of a vacant house to a homeowner and value to an investor from a cash flow basis right now. So bridging that difference is an important consideration.

With a sophisticated seller that we had that we transacted with last year, it was pretty easy. But some of the smaller portfolios, which are also very good fits, we still need to close that gap. Their expectations for market value a little bit different than what it would show to an investor. That's one of the hurdles. But again, there hasn't been a lot of dialogue about it, but we do expect it to come at some point.

And then just curious, we're hearing home prices are coming down in Florida and Texas. Is it anywhere close to where these one-off acquisitions of how you kind of started the company makes sense or that's no longer going to apply in the growth strategy?

No, we'd love to. And that's one of the benefits we have. We've got a really nice foundation with the development program, and then we can be opportunistic either on the MLS portfolios or from a national builder perspective. The homes that are having the greatest price pressures are not necessarily the -- wouldn't necessarily be the top of our list. So you're seeing slightly inferior product. You've got a lot of attached homes, a lot of town homes, maybe a little bit further out, and they're seeing a little bit more pressure.

But if you factor in like a true underwriting model on that, it makes it less attractive to us. So despite the fact that the home prices are coming down in the event that it would be a product that we like, it's a little bit crowded. So we don't see a great opportunity there in the short term.

Maybe turning it over to Chris, just help us think about the cost of capital and how you're kind of financing the developments, but also potentially if these opportunities do -- larger portfolio opportunities do come to market.

Yes. When we think about funding of the development program, it's a really important topic. I think a lot of people in this room have heard us kind of broken record the intentionality we have there in terms of how we have sized that program such that it is fundable without any need for incremental equity as we think about future years of development pipeline, no need for equity and minimal-ish amounts of incremental debt.

So the primary funding blocks for the way that we have the development program sized is retained cash flow from the business, recycled capital from dispositions, which today, as Bryan mentioned, is screening very attractively selling with dispo cap rates in the 3s and then some level of modest incremental leverage capacity off of the balance sheet as EBITDA grows, which is really important in terms of dependability of funding sight line to the development program.

What that then in turn does is means that incremental forms of capital, whether it be incremental debt or equity for that matter, become opportunistic weapons to think about additional opportunities for growth, whether it is if things on a one-off basis end up making sense, opportunities to buy from builders make sense. Portfolios, we love the strategy and idea of portfolio consolidations. It's a great way to essentially match timing against then cost of capital; again, when the math makes sense.

And it's a fantastic value creation opportunity for us as well, using the fourth quarter portfolio as an example that Bryan was talking about, that portfolio under the previous owner was being managed by 4, 5, 6 different local and regional third-party property managers, doing a fine job. They just cannot operate at the same level of standard that we can and someone with 60,000 units can. And so based on in-place cash flows, we bought that deal in the low 5s.

Over the first 12 months, as we overlay our pricing acumen, collection processes, expenditure management controls, our expectation is that yields out of that portfolio should grow into the high 5s, if not even potentially close to 6 as operations come up to our level of standards, again, creating value that is unlocked by bringing those portfolios onto our platform, which represent really unique opportunities.

And I guess just when you think about your cost of capital relative to this kind of mid-5, are you getting enough of a premium for...

We are. And again, that comes down to how we have it sized, right? If we think about 2/3 or more of this year's development spend is coming from retained cash flow out of the business, disposition proceeds in the 3s and incremental cost of borrowing in the 5 to low 5s, blended in, definitely.

Great. And then I believe you have a final securitization coming due. Maybe if you can kind of walk us through the plan.

Yes. That final securitization is actually scheduled for payoff at the end of this month. Very excitingly, that represents our last securitization on the balance sheet, which means by the end of this year, the balance sheet will be 100% unencumbered, which has been a goal of ours basically since the beginning. Happy to see this day come. When that is paid off, that frees up another 4,500 units or so of previously collateralized homes that can now be freely reviewed by our asset management program and considered for disposition.

To give you some context in terms of the securitizations that we've been paying off of the balance sheet. Last year, we paid off 2 securitizations. This year, we will -- with this last one, we will have paid off 2 securitizations this year as well. That frees up a total of about 18,000 homes that can now be freely reviewed again by the asset management program. Our best guess is plus or minus 10% of those could be disposition candidates essentially helping to fuel our pipeline of disposition opportunities over the next couple of years as we think about various different funding sources.

And you've kind of talked about this has been a big goal of the company. Curious from the rating agency standpoint, how are they thinking about the fully unencumbered portfolio?

That's a good question. It's a positive. And you can see that in our S&P outlook that was moved to positive a couple of months ago. This was a key part of that discussion. So we are mid-BBB positive with S&P, Baa2 with Moody's, optimistic that Moody's will share S&P's view soon in terms of shifting of outlook.

Bringing down that low 5.

Yes. Well, I will say, the market -- anyone can see this from our last couple of executions in the market. I would say the fixed income community fully sees in respect to where the balance sheet is. The balance sheet in terms of leverage, low 5s, nearing 100% unencumbered, very much screens high BBB territory. That's where bonds are pricing for us currently, but I think it's a nice validation of that.

And then maybe just anything new on the regulatory front?

Yes. The regulatory front, just kind of zooming out, there's been a distinct change in kind of the outlook towards our industry, I think, over the past 6 months with the change in administration. And there's a lot of talk these days about this new focus on potentially declaring a housing emergency later on in the year. We're not exactly sure what that means or what effect that's going to have. But we're encouraged by the fact that it seems like there's more focus on the problem, the supply side of the housing equation rather than discussions about what was wrong with the existing home stock and problems with interest rates and so forth.

So we're encouraged that people are focusing on the right things. And these conversations are similar to conversations we've had within local municipalities, with governors of some of our key states to try to figure out ways to ease up on regulations to allow us to get permits quicker to cut down on all the development fees that have really grown substantially over the past 5 or 6 years. So we're encouraged that I think they're focusing on the right things going forward.

Down at a more local level, there have been a number of nice measures passed in Florida, Georgia, North Carolina and Texas that help us with managing trespassers and some other things. There's been some good progress on that over the last couple of years. But again, the focus, I think, is moving to the right place, and it's changed distinctly over the past few years from a focus on institutional owners. And again, we're in a very unique position in that we're part of the solution, too. So we get some recognition for that as well.

Okay. Last chance for any questions.

About your insurance exposure and like what you retain, what kind of risk you retain that kind of trends for insurance costs?

Sure. So for this year, our insurance renewal is done. It was done beginning part of this year in February. Our year-over-year premium change was a decrease in the mid-single digits for this year. I think as everyone knows, coming into '25, I would say the insurance kind of market and landscape is -- was in a better, healthier place coming into this year than coming into '24. And I think what that helped the insurers to be able to do was differentiate between good performing risks like ours versus some of the other risk-producing sectors out there elsewhere, and you saw that reflected in our renewal down mid-single digits.

In terms of what we retain, we do run a small-ish captive insurance program, not huge, a couple of million dollars of premium per year. Going forward, we definitely see opportunity to increase that responsibly, not shifting any terms of change in risk composition on the balance sheet. But for a portfolio like ours over the past 10 years plus, our insurance program has been profitable to our insurance partners every single year, except for the year of Harvey, right? One loss year out of 10 plus at this point. That's the type of risk that would make sense to retain a little bit more of captively, helping to bring down our insurance costs over time.

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Look, it's another form of capital allocation that we evaluate all the time. The difference is development isn't just a form of allocating capital accretively both to value and earnings. It's also a function of improving the portfolio, right? If you think about the quality of product that we are delivering via the development program, this is quality of product in locations that you just can't replicate or buy anywhere else. And we truly see it improving the quality of our stock and our asset base over time, especially when you think about the fact that a good portion of that capital is coming from disposing and selling otherwise underperforming kind of lower-performing assets out of the portfolio, really creating a refreshing effect to our stock and portfolio over time.

So a lot of different kind of benefits to the development program. Share buybacks are something that we evaluate all the time. I don't think we're there quite yet in terms of attractiveness of taking capital away from the development program, but it's something that we do regularly think about.

And I have a few rapid fire. So when the Fed starts to cut, do you expect rates for long-term debt to decline, stay flat or rise?

Flat to slight decline.

Last year, the majority of companies stated they're ramping up spending on AI initiatives. How would you characterize your plans over the next year, higher, flat or lower?

Higher.

And then do you believe same-store NOI for your sector will be higher, lower or the same next year?

I'd say for residential overall, higher.

Great. Thank you very much.