Edgar Filing: American Homes 4 Rent

Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q



(Mark One)
ý		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2017



¨		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
¨		EXCHANGE ACT OF 1934

For the transition period from to

COMMISSION FILE NUMBER: 001-36013

AMERICAN HOMES 4 RENT

(Exact name of registrant as specified in its charter)



Maryland		46-1229660
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

30601 Agoura Road, Suite 200

Agoura Hills, California 91301

(Address of principal executive offices) (Zip Code)

(805) 413-5300

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ý Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ý Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer	ý		Accelerated filer	¨
Non-accelerated filer	¨	(Do not check if a smaller reporting company)	Smaller reporting company	¨
			Emerging growth company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes ý No

There were 286,103,292 shares of American Homes 4 Rent's Class A common shares of beneficial interest, $0.01 par value per share, and 635,075 shares of American Homes 4 Rent's Class B common shares of beneficial interest, $0.01 par value per share, outstanding on November 1, 2017.

EXPLANATORY NOTE

This quarterly report on Form 10-Q for the period ended September 30, 2017, of American Homes 4 Rent also includes the financial results of American Homes 4 Rent, L.P. Unless stated otherwise or the context otherwise requires, references to “AH4R" mean American Homes 4 Rent, a Maryland real estate investment trust (“REIT”), and references to “the Operating Partnership," "our Operating Partnership" or “the OP” mean American Homes 4 Rent, L.P., a Delaware limited partnership, and its subsidiaries taken as a whole. References to “the Company,” “we,” "our," and “us” mean collectively AH4R, the Operating Partnership and those entities/subsidiaries owned or controlled by AH4R and/or the Operating Partnership.

AH4R is the general partner of, and as of September 30, 2017, owned an approximate 83.2% common partnership interest in, the Operating Partnership. The remaining 16.8% common partnership interest was owned by limited partners. As the sole general partner of the Operating Partnership, AH4R has exclusive control of the Operating Partnership’s day-to-day management. The Company’s management operates AH4R and the Operating Partnership as one business, and the management of AH4R consists of the same members as the management of the Operating Partnership.

The Company believes it is important to understand the few differences between AH4R and the Operating Partnership in the context of how AH4R and the Operating Partnership operate as a consolidated company. AH4R’s primary function is acting as the general partner of the Operating Partnership. The only material asset of AH4R is its partnership interest in the Operating Partnership. As a result, AH4R generally does not conduct business itself, other than acting as the sole general partner of the Operating Partnership, issuing equity from time to time and guaranteeing certain debt of the Operating Partnership. AH4R itself is not directly obligated under any indebtedness, but guarantees some of the debt of the Operating Partnership. The Operating Partnership owns substantially all of the assets of the Company, including the Company’s ownership interests in its joint ventures, either directly or through its subsidiaries, conducts the operations of the Company’s business and is structured as a limited partnership with no publicly traded equity. One difference between the Company and the Operating Partnership is $25.7 million of asset-backed securitization certificates issued by the Operating Partnership and purchased by AH4R. The asset-backed securitization certificates are recorded as an asset-backed securitization certificates receivable by the Company and an amount due from affiliates by the Operating Partnership. AH4R contributes all net proceeds from its various equity offerings to the Operating Partnership. In return for those contributions, AH4R receives Operating Partnership units (“OP units”) equal to the number of shares it has issued in the equity offering. Based on the terms of the Agreement of Limited Partnership of the Operating Partnership, OP units can be exchanged for shares on a one-for-one basis. Except for net proceeds from equity issuances by AH4R, the Operating Partnership generates the capital required by the Company’s business through the Operating Partnership’s operations, by the Operating Partnership’s incurrence of indebtedness or through the issuance of units of partnership interest.

Shareholders' equity, partners' capital and noncontrolling interests are the main areas of difference between the condensed consolidated financial statements of the Company and those of the Operating Partnership. The limited partnership interests in the Operating Partnership are accounted for as partners' capital in the Operating Partnership's financial statements and as noncontrolling interests in the Company's financial statements. The noncontrolling interests in the Operating Partnership's financial statements include an outside ownership interest in a consolidated subsidiary of the Company. The noncontrolling interests in the Company's financial statements include the same noncontrolling interests at the Operating Partnership level, as well as the limited partnership interests in the Operating Partnership. The differences between shareholders' equity and partners' capital result from differences in the equity and capital issued at the Company and Operating Partnership levels.

To help investors understand the differences between the Company and the Operating Partnership, this report provides

separate condensed consolidated financial statements for the Company and the Operating Partnership; a single set of consolidated notes to such financial statements that includes separate discussions of each entity's debt, noncontrolling interests and shareholders' equity or partners' capital, as applicable; and a combined Management's Discussion and Analysis of Financial Condition and Results of Operations section that includes discrete information related to each entity.

In order to highlight the differences between the Company and the Operating Partnership, the separate sections in this report for the Company and the Operating Partnership specifically refer to the Company and the Operating Partnership. In the sections that combine disclosure of the Company and the Operating Partnership, this report refers to actions or holdings as being actions or holdings of the Company. Although the Operating Partnership is generally the entity that directly or indirectly enters into contracts and joint ventures and holds assets and debt, reference to the Company is appropriate because the Company is one business and the Company operates that business through the Operating Partnership. The separate discussions of the Company and the Operating Partnership in this report should be read in conjunction with each other to understand the results of the Company on a consolidated basis and how management operates the Company.

American Homes 4 Rent

Form 10-Q

INDEX



		Page
	CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS	i

PART I	FINANCIAL INFORMATION

Item 1.	Financial Statements	1

	American Homes 4 Rent

	Condensed Consolidated Balance Sheets as of September 30, 2017, and December 31, 2016	1

	Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2017 and 2016	2

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2017 and 2016	3

	Condensed Consolidated Statement of Equity for the nine months ended September 30, 2017	4

	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 and 2016	5

	American Homes 4 Rent, L.P.

	Condensed Consolidated Balance Sheets as of September 30, 2017, and December 31, 2016	7

	Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2017 and 2016	8

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2017 and 2016	9

	Condensed Consolidated Statement of Capital for the nine months ended September 30, 2017	10

	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 and 2016	11

	American Homes 4 Rent and American Homes 4 Rent, L.P.

	Notes to Condensed Consolidated Financial Statements	13

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	46

Item 4.	Controls and Procedures	46

PART II	OTHER INFORMATION

Item 1.	Legal Proceedings	47

Item 1A.	Risk Factors	47

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	47

Item 3.	Defaults Upon Senior Securities	47

Item 4.	Mine Safety Disclosures	47

Item 5.	Other Information	47

Item 6.	Exhibits	47

	Exhibit Index	48

	Signatures	50

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Various statements contained in this Quarterly Report on Form 10-Q of American Homes 4 Rent (the “Company,” “we,” “our” and “us”), including those that express a belief, expectation or intention, as well as those that are not statements of historical fact, are forward-looking statements. These forward-looking statements may include projections and estimates concerning the timing and success of specific projects and our future revenues, income and capital spending. Our forward-looking statements are generally accompanied by words such as “estimate,” “project,” “predict,” “believe,” “expect,” “intend,” “anticipate,” “potential,” “plan,” “goal” or other words that convey the uncertainty of future events or outcomes. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These and other important factors, including those discussed or incorporated by reference under Part II, Item 1A.”Risk Factors”, Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report and in our Annual Report on Form 10-K for the year ended December 31, 2016, and in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, filed with the Securities and Exchange Commission, may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements.

While forward-looking statements reflect our good faith beliefs, assumptions and expectations, they are not guarantees of future performance, and you should not unduly rely on them. The forward-looking statements in this Quarterly Report on Form 10-Q speak only as of the date of this report. We are not obligated to update or revise these statements as a result of new information, future events or otherwise, unless required by applicable law.

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements.

American Homes 4 Rent

Condensed Consolidated Balance Sheets

(Amounts in thousands, except share data)



	September 30, 2017			December 31, 2016
	(Unaudited)
Assets
Single-family properties:
Land	$	1,600,906		$	1,512,183
Buildings and improvements	7,020,774			6,614,953
Single-family properties held for sale, net	50,370			87,430
	8,672,050			8,214,566
Less: accumulated depreciation	(869,551		)	(666,710		)
Single-family properties, net	7,802,499			7,547,856
Cash and cash equivalents	243,547			118,799
Restricted cash	119,574			131,442
Rent and other receivables, net	35,429			17,618
Escrow deposits, prepaid expenses and other assets	149,366			133,594
Deferred costs and other intangibles, net	13,516			11,956
Asset-backed securitization certificates	25,666			25,666
Goodwill	120,279			120,279
Total assets	$	8,509,876		$	8,107,210

Liabilities
Revolving credit facility	$	—		$	—
Term loan facility, net	197,913			321,735
Asset-backed securitizations, net	1,981,444			2,442,863
Exchangeable senior notes, net	110,771			108,148
Secured note payable	49,107			49,828
Accounts payable and accrued expenses	263,745			177,206
Participating preferred shares derivative liability	68,469			69,810
Total liabilities	2,671,449			3,169,590

Commitments and contingencies

Equity
Shareholders’ equity:
Class A common shares, $0.01 par value per share, 450,000,000 shares authorized, 273,605,703 and 242,740,482 shares issued and outstanding at September 30, 2017, and December 31, 2016, respectively	2,736			2,427
Class B common shares, $0.01 par value per share, 50,000,000 shares authorized, 635,075 shares issued and outstanding at September 30, 2017, and December 31, 2016	6			6
Preferred shares, $0.01 par value per share, 100,000,000 shares authorized, 47,810,000 and 37,010,000 shares issued and outstanding at September 30, 2017, and December 31, 2016, respectively	478			370
Additional paid-in capital	5,517,978			4,568,616
Accumulated deficit	(417,609		)	(378,578		)
Accumulated other comprehensive income	—			95
Total shareholders’ equity	5,103,589			4,192,936

Noncontrolling interest	734,838			744,684
Total equity	5,838,427			4,937,620

Total liabilities and equity	$	8,509,876		$	8,107,210

The accompanying notes are an integral part of these condensed consolidated financial statements.

American Homes 4 Rent

Condensed Consolidated Statements of Operations

(Amounts in thousands, except share and per share data)

(Unaudited)



	For the Three Months Ended September 30,					For the Nine Months Ended September 30,
	2017		2016			2017			2016
Revenues:
Rents from single-family properties	$	207,490	$	197,137		$	613,245		$	558,623
Fees from single-family properties	2,843		2,898			8,137			7,819
Tenant charge-backs	36,094		30,808			91,849			72,077
Other	409		5,214			4,367			12,811
Total revenues	246,836		236,057			717,598			651,330

Expenses:
Property operating expenses	97,944		92,488			267,203			238,987
Property management expenses	17,447		18,335			52,367			53,177
General and administrative expense	8,525		8,043			26,746			24,544
Interest expense	26,592		32,851			86,873			99,309
Acquisition fees and costs expensed	1,306		1,757			3,814			10,899
Depreciation and amortization	74,790		75,392			221,459			224,513
Hurricane-related charges, net	10,136		—			10,136			—
Other	1,285		3,142			4,202			6,482
Total expenses	238,025		232,008			672,800			657,911

Gain on sale of single-family properties and other, net	1,895		11,682			6,375			12,574
Loss on early extinguishment of debt	—		(13,408		)	(6,555		)	(13,408		)
Gain on conversion of Series E units	—		—			—			11,463
Remeasurement of participating preferred shares	8,391		(2,490		)	1,341			(2,940		)

Net income (loss)	19,097		(167		)	45,959			1,108

Noncontrolling interest	309		7,316			(22		)	10,391
Dividends on preferred shares	17,253		13,669			46,122			26,650

Net income (loss) attributable to common shareholders	$	1,535	$	(21,152	)	$	(141	)	$	(35,933	)

Weighted-average shares outstanding:
Basic	266,767,313		238,401,343			256,768,343			232,036,802
Diluted	289,153,060		238,401,343			256,768,343			232,036,802

Net income (loss) attributable to common shareholders per share:
Basic	$	0.01	$	(0.09	)	$	—		$	(0.15	)
Diluted	$	—	$	(0.09	)	$	—		$	(0.15	)

Dividends declared per common share	$	0.05	$	0.05		$	0.15		$	0.15

The accompanying notes are an integral part of these condensed consolidated financial statements.

American Homes 4 Rent

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Amounts in thousands)

(Unaudited)



	For the Three Months Ended September 30,					For the Nine Months Ended September 30,
	2017		2016			2017			2016
Net income (loss)	$	19,097	$	(167	)	$	45,959		$	1,108
Other comprehensive income (loss):
Unrealized gain on interest rate cap agreement:
Reclassification adjustment for amortization of interest expense included in net income (loss)	—		28			(28		)	130
Unrealized gain on investment in equity securities:
Reclassification adjustment for realized gain included in net income (loss)	—		—			(67		)	—
Other comprehensive income (loss)	—		28			(95		)	130
Comprehensive income (loss)	19,097		(139		)	45,864			1,238
Comprehensive income (loss) attributable to noncontrolling interests	309		7,308			(5		)	10,366
Dividends on preferred shares	17,253		13,669			46,122			26,650
Comprehensive income (loss) attributable to common shareholders	$	1,535	$	(21,116	)	$	(253	)	$	(35,778	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

American Homes 4 Rent

Condensed Consolidated Statement of Equity

(Amounts in thousands, except share data)

(Unaudited)



	Class A common shares			Class B common shares			Preferred shares
	Number of shares	Amount		Number of shares	Amount		Number of shares	Amount		Additional paid-in capital		Accumulated deficit			Accumulated other comprehensive income			Shareholders’ equity			Noncontrolling interest			Total equity

Balances at December 31, 2016	242,740,482	$	2,427	635,075	$	6	37,010,000	$	370	$	4,568,616	$	(378,578	)	$	95		$	4,192,936		$	744,684		$	4,937,620

Share-based compensation	—	—		—	—		—	—		3,175		—			—			3,175			—			3,175

Common shares issued under share-based compensation plans, net of shares withheld for employee taxes	89,829	1		—	—		—	—		629		—			—			630			—			630

Issuance of Class A common shares, net of offering costs of $10,759	30,676,080	307		—	—		—	—		683,700		—			—			684,007			—			684,007

Issuance of perpetual preferred shares, net of offering costs of $9,355	—	—		—	—		10,800,000	108		260,537		—			—			260,645			—			260,645

Redemptions of Class A units	99,312	1		—	—		—	—		1,321		—			—			1,322			(1,491		)	(169		)

Distributions to equity holders:
Preferred shares	—	—		—	—		—	—		—		(46,122		)	—			(46,122		)	—			(46,122		)
Noncontrolling interests	—	—		—	—		—	—		—		—			—			—			(8,333		)	(8,333		)
Common shares	—	—		—	—		—	—		—		(38,890		)	—			(38,890		)	—			(38,890		)

Net income (loss)	—	—		—	—		—	—		—		45,981			—			45,981			(22		)	45,959

Total other comprehensive loss	—	—		—	—		—	—		—		—			(95		)	(95		)	—			(95		)

Balances at September 30, 2017	273,605,703	$	2,736	635,075	$	6	47,810,000	$	478	$	5,517,978	$	(417,609	)	$	—		$	5,103,589		$	734,838		$	5,838,427

The accompanying notes are an integral part of these condensed consolidated financial statements.

American Homes 4 Rent

Condensed Consolidated Statements of Cash Flows

(Amounts in thousands)

(Unaudited)



	For the Nine Months Ended September 30,
	2017			2016
Operating activities
Net income	$	45,959		$	1,108
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	221,459			224,513
Noncash amortization of deferred financing costs	6,285			7,912
Noncash amortization of discount on exchangeable senior notes	2,624			1,955
Noncash amortization of discount on ARP 2014-SFR1 securitization	—			1,744
Noncash share-based compensation	3,175			2,744
Provision for bad debt	5,142			5,092
Hurricane-related charges, net	10,136			—
Loss on early extinguishment of debt	6,555			13,408
Gain on conversion of Series E units to Series D units	—			(11,463		)
Remeasurement of participating preferred shares	(1,341		)	2,940
Equity in net earnings of unconsolidated ventures	(1,367		)	(418		)
Net gain on sale of single-family properties and other	(6,375		)	(12,574		)
Loss on impairment of single-family properties	3,786			1,467
Net gain on resolutions of mortgage loans	(17		)	(7,205		)
Other changes in operating assets and liabilities:
Rent and other receivables	(11,929		)	(12,110		)
Prepaid expenses and other assets	(5,690		)	(429		)
Deferred leasing costs	(5,361		)	(6,199		)
Accounts payable and accrued expenses	71,325			47,920
Amounts payable to affiliates	5,009			(5,425		)
Net cash provided by operating activities	349,375			254,980

Investing activities
Cash paid for single-family properties	(462,875		)	(187,886		)
Change in escrow deposits for purchase of single-family properties	(2,710		)	(821		)
Cash acquired in noncash business combinations	—			25,020
Payoff of credit facility in connection with ARPI merger	—			(350,000		)
Net proceeds received from sales of single-family properties and other	68,618			71,894
Net proceeds received from sales of non-performing loans	—			44,538
Purchase of commercial office buildings	—			(27,105		)
Collections from mortgage financing receivables	83			17,687
Distributions from unconsolidated joint ventures	5,981			6,400
Renovations to single-family properties	(31,208		)	(21,710		)
Other capital expenditures for single-family properties	(26,725		)	(22,026		)
Other purchases of productive assets	(38,060		)	—
Net cash used for investing activities	(486,896		)	(444,009		)

Financing activities
Proceeds from issuance of Class A common shares	694,765			—
Payments of Class A common share issuance costs	(10,444		)	—
Proceeds from issuance of perpetual preferred shares	270,000			498,750
Payments of perpetual preferred share issuance costs	(9,229		)	(15,922		)
Proceeds from exercise of stock options	988			2,777
Repurchase of Class A common shares	—			(96,098		)
Redemptions of Class A units	(169		)	(399		)
Payments on asset-backed securitizations	(472,470		)	(374,031		)
Proceeds from revolving credit facility	62,000			951,000
Payments on revolving credit facility	(112,000		)	(876,000		)
Proceeds from term loan facility	25,000			250,000
Payments on term loan facility	(100,000		)	—
Payments on secured note payable	(721		)	(687		)
Distributions to noncontrolling interests	(8,333		)	(8,582		)
Distributions to common shareholders	(38,890		)	(35,997		)
Distributions to preferred shareholders	(46,122		)	(26,650		)
Deferred financing costs paid	(3,974		)	(10,425		)
Net cash provided by financing activities	250,401			257,736

Net increase in cash, cash equivalents and restricted cash	112,880			68,707
Cash, cash equivalents and restricted cash, beginning of period	250,241			168,968
Cash, cash equivalents and restricted cash, end of period (see Note 3)	$	363,121		$	237,675

American Homes 4 Rent

Condensed Consolidated Statements of Cash Flows (continued)

(Amounts in thousands)

(Unaudited)



	For the Nine Months Ended September 30,
	2017			2016
Supplemental cash flow information
Cash payments for interest, net of amounts capitalized	$	(77,964	)	$	(87,707	)

Supplemental schedule of noncash investing and financing activities
Accounts payable and accrued expenses related to property acquisitions and renovations	$	7,151		$	(226	)
Transfer of term loan borrowings to revolving credit facility	$	50,000		$	—
Transfer of deferred financing costs from term loan to revolving credit facility	$	1,524		$	—
Transfers of completed homebuilding deliveries to properties	$	3,010		$	—
Note receivable related to a bulk sale of properties, net of discount	$	5,635		$	—

Merger with ARPI
Single-family properties	$	—		$	1,277,253
Restricted cash	$	—		$	9,521
Rent and other receivables, net	$	—		$	843
Escrow deposits, prepaid expenses and other assets	$	—		$	35,134
Deferred costs and other intangibles, net	$	—		$	22,696
Asset-backed securitization	$	—		$	(329,703	)
Exchangeable senior notes, net	$	—		$	(112,298	)
Accounts payable and accrued expenses	$	—		$	(38,485	)
Class A common shares and units issued	$	—		$	(530,460	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

American Homes 4 Rent, L.P.

Condensed Consolidated Balance Sheets

(Amounts in thousands, except unit data)



	September 30, 2017			December 31, 2016
	(Unaudited)
Assets
Single-family properties:
Land	$	1,600,906		$	1,512,183
Buildings and improvements	7,020,774			6,614,953
Single-family properties held for sale, net	50,370			87,430
	8,672,050			8,214,566
Less: accumulated depreciation	(869,551		)	(666,710		)
Single-family properties, net	7,802,499			7,547,856
Cash and cash equivalents	243,547			118,799
Restricted cash	119,574			131,442
Rent and other receivables, net	35,429			17,618
Escrow deposits, prepaid expenses and other assets	149,184			128,403
Amounts due from affiliates	25,848			30,857
Deferred costs and other intangibles, net	13,516			11,956
Goodwill	120,279			120,279
Total assets	$	8,509,876		$	8,107,210

Liabilities
Revolving credit facility	$	—		$	—
Term loan facility, net	197,913			321,735
Asset-backed securitizations, net	1,981,444			2,442,863
Exchangeable senior notes, net	110,771			108,148
Secured note payable	49,107			49,828
Accounts payable and accrued expenses	263,745			177,206
Participating preferred units derivative liability	68,469			69,810
Total liabilities	2,671,449			3,169,590

Commitments and contingencies

Capital
Partners' capital:
General partner:
Common units (274,240,778 and 243,375,557 units issued and outstanding at September 30, 2017, and December 31, 2016, respectively)	4,008,095			3,357,992
Preferred units (47,810,000 and 37,010,000 units issued and outstanding at September 30, 2017, and December 31, 2016, respectively)	1,095,494			834,849
Limited partners:
Common units (55,449,466 and 55,555,960 units issued and outstanding at September 30, 2017, and December 31, 2016, respectively)	736,320			746,174
Accumulated other comprehensive income	—			95
Total partners' capital	5,839,909			4,939,110

Noncontrolling interest	(1,482		)	(1,490		)
Total capital	5,838,427			4,937,620

Total liabilities and capital	$	8,509,876		$	8,107,210

The accompanying notes are an integral part of these condensed consolidated financial statements.

American Homes 4 Rent, L.P.

Condensed Consolidated Statements of Operations

(Amounts in thousands, except unit and per unit data)

(Unaudited)



	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2017			2016			2017			2016
Revenues:
Rents from single-family properties	$	207,490		$	197,137		$	613,245		$	558,623
Fees from single-family properties	2,843			2,898			8,137			7,819
Tenant charge-backs	36,094			30,808			91,849			72,077
Other	409			5,214			4,367			12,811
Total revenues	246,836			236,057			717,598			651,330

Expenses:
Property operating expenses	97,944			92,488			267,203			238,987
Property management expenses	17,447			18,335			52,367			53,177
General and administrative expense	8,525			8,043			26,746			24,544
Interest expense	26,592			32,851			86,873			99,309
Acquisition fees and costs expensed	1,306			1,757			3,814			10,899
Depreciation and amortization	74,790			75,392			221,459			224,513
Hurricane-related charges, net	10,136			—			10,136			—
Other	1,285			3,142			4,202			6,482
Total expenses	238,025			232,008			672,800			657,911

Gain on sale of single-family properties and other, net	1,895			11,682			6,375			12,574
Loss on early extinguishment of debt	—			(13,408		)	(6,555		)	(13,408		)
Gain on conversion of Series E units	—			—			—			11,463
Remeasurement of participating preferred units	8,391			(2,490		)	1,341			(2,940		)

Net income (loss)	19,097			(167		)	45,959			1,108

Noncontrolling interest	(31		)	(226		)	8			(446		)
Preferred distributions	17,253			13,669			46,122			26,650
Income allocated to Series C and D limited partners	—			10,915			—			16,478

Net income (loss) attributable to common unitholders	$	1,875		$	(24,525	)	$	(171	)	$	(41,574	)

Weighted-average common units outstanding:
Basic	322,303,138			285,208,489			312,315,728			271,994,345
Diluted	344,688,885			285,208,489			312,315,728			271,994,345

Net income (loss) attributable to common unitholders per unit:
Basic	$	0.01		$	(0.09	)	$	—		$	(0.15	)
Diluted	$	—		$	(0.09	)	$	—		$	(0.15	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

American Homes 4 Rent, L.P.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Amounts in thousands)

(Unaudited)



	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2017			2016			2017			2016
Net income (loss)	$	19,097		$	(167	)	$	45,959		$	1,108
Other comprehensive income (loss):
Unrealized gain on interest rate cap agreement:
Reclassification adjustment for amortization of interest expense included in net income (loss)	—			28			(28		)	130
Unrealized gain on investment in equity securities:
Reclassification adjustment for realized gain included in net income (loss)	—			—			(67		)	—
Other comprehensive income (loss)	—			28			(95		)	130
Comprehensive income (loss)	19,097			(139		)	45,864			1,238
Comprehensive (loss) income attributable to noncontrolling interests	(31		)	(226		)	8			(446		)
Preferred distributions	17,253			13,669			46,122			26,650
Income allocated to Series C and D limited partners	—			10,915			—			16,478
Comprehensive income (loss) attributable to common unitholders	$	1,875		$	(24,497	)	$	(266	)	$	(41,444	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

American Homes 4 Rent, L.P.

Condensed Consolidated Statement of Capital

(Amounts in thousands, except unit data)

(Unaudited)



	General Partner							Limited Partners					Accumulated other comprehensive income			Total partners' capital			Noncontrolling interest			Total capital
	Common capital				Preferred capital amount			Common capital
	Units	Amount						Units		Amount

Balances at December 31, 2016	243,375,557	$	3,357,992		$	834,849		55,555,960		$	746,174		$	95		$	4,939,110		$	(1,490	)	$	4,937,620

Share-based compensation	—	3,175			—			—		—			—			3,175			—			3,175

Common units issued under share-based compensation plans, net of units withheld for employee taxes	89,829	630			—			—		—			—			630			—			630

Issuance of Class A common units, net of offering costs of $10,759	30,676,080	684,007			—			—		—			—			684,007			—			684,007

Issuance of perpetual preferred units, net of offering costs of $9,355	—	—			260,645			—		—			—			260,645			—			260,645

Redemptions of Class A units	99,312	1,322			—			(106,494	)	(1,491		)	—			(169		)	—			(169		)

Distributions to capital holders:
Preferred units	—	—			(46,122		)	—		—			—			(46,122		)	—			(46,122		)
Noncontrolling interests	—	—			—			—		—			—			—			—			—
Common units	—	(38,890		)	—			—		(8,333		)	—			(47,223		)	—			(47,223		)

Net income (loss)	—	(141		)	46,122			—		(30		)	—			45,951			8			45,959

Total other comprehensive loss	—	—			—			—		—			(95		)	(95		)	—			(95		)

Balances at September 30, 2017	274,240,778	$	4,008,095		$	1,095,494		55,449,466		$	736,320		$	—		$	5,839,909		$	(1,482	)	$	5,838,427

The accompanying notes are an integral part of these condensed consolidated financial statements.

American Homes 4 Rent, L.P.

Condensed Consolidated Statements of Cash Flows

(Amounts in thousands)

(Unaudited)



	For the Nine Months Ended September 30,
	2017			2016
Operating activities
Net income	$	45,959		$	1,108
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	221,459			224,513
Noncash amortization of deferred financing costs	6,285			7,912
Noncash amortization of discount on exchangeable senior notes	2,624			1,955
Noncash amortization of discount on ARP 2014-SFR1 securitization	—			1,744
Noncash share-based compensation	3,175			2,744
Provision for bad debt	5,142			5,092
Hurricane-related charges, net	10,136			—
Loss on early extinguishment of debt	6,555			13,408
Gain on conversion of Series E units to Series D units	—			(11,463		)
Remeasurement of participating preferred units	(1,341		)	2,940
Equity in net earnings of unconsolidated ventures	(1,367		)	(418		)
Net gain on sale of single-family properties and other	(6,375		)	(12,574		)
Loss on impairment of single-family properties	3,786			1,467
Net gain on resolutions of mortgage loans	(17		)	(7,205		)
Other changes in operating assets and liabilities:
Rent and other receivables	(11,929		)	(12,110		)
Prepaid expenses and other assets	(5,690		)	(429		)
Deferred leasing costs	(5,361		)	(6,199		)
Accounts payable and accrued expenses	71,325			47,920
Amounts payable to affiliates	5,009			(5,425		)
Net cash provided by operating activities	349,375			254,980

Investing activities
Cash paid for single-family properties	(462,875		)	(187,886		)
Change in escrow deposits for purchase of single-family properties	(2,710		)	(821		)
Cash acquired in noncash business combinations	—			25,020
Payoff of credit facility in connection with ARPI merger	—			(350,000		)
Net proceeds received from sales of single-family properties and other	68,618			71,894
Net proceeds received from sales of non-performing loans	—			44,538
Purchase of commercial office buildings	—			(27,105		)
Collections from mortgage financing receivables	83			17,687
Distributions from unconsolidated joint ventures	5,981			6,400
Renovations to single-family properties	(31,208		)	(21,710		)
Other capital expenditures for single-family properties	(26,725		)	(22,026		)
Other purchases of productive assets	(38,060		)	—
Net cash used for investing activities	(486,896		)	(444,009		)

Financing activities
Proceeds from issuance of Class A common units	694,765			—
Payments of Class A common unit issuance costs	(10,444		)	—
Proceeds from issuance of perpetual preferred units	270,000			498,750
Payments of perpetual preferred unit issuance costs	(9,229		)	(15,922		)
Proceeds from exercise of stock options	988			2,777
Repurchase of Class A common units	—			(96,098		)
Redemptions of Class A units	(169		)	(399		)
Payments on asset-backed securitizations	(472,470		)	(374,031		)
Proceeds from revolving credit facility	62,000			951,000
Payments on revolving credit facility	(112,000		)	(876,000		)
Proceeds from term loan facility	25,000			250,000
Payments on term loan facility	(100,000		)	—
Payments on secured note payable	(721		)	(687		)
Distributions to noncontrolling interests	—			(230		)
Distributions to common unitholders	(47,223		)	(43,493		)
Distributions to preferred unitholders	(46,122		)	(26,650		)
Distributions to Series D convertible unitholders	—			(856		)
Deferred financing costs paid	(3,974		)	(10,425		)
Net cash provided by financing activities	250,401			257,736

Net increase in cash, cash equivalents and restricted cash	112,880			68,707
Cash, cash equivalents and restricted cash, beginning of period	250,241			168,968
Cash, cash equivalents and restricted cash, end of period (see Note 3)	$	363,121		$	237,675

American Homes 4 Rent, L.P.

Condensed Consolidated Statements of Cash Flows (continued)

(Amounts in thousands)

(Unaudited)



	For the Nine Months Ended September 30,
	2017			2016
Supplemental cash flow information
Cash payments for interest, net of amounts capitalized	$	(77,964	)	$	(87,707	)

Supplemental schedule of noncash investing and financing activities
Accounts payable and accrued expenses related to property acquisitions and renovations	$	7,151		$