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 March 31, 2018
or
¨
 
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)
Commission File Number: 333-221878-02 (American Homes 4 Rent, L.P.)
 
 
 
AMERICAN HOMES 4 RENT
AMERICAN HOMES 4 RENT, L.P.
(Exact name of registrant as specified in its charter) 
 
 
 
Maryland (American Homes 4 Rent)
 
46-1229660
Delaware (American Homes 4 Rent, L.P.)
 
80-0860173
(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.
American Homes 4 Rent ý  Yes   ¨  No                American Homes 4 Rent, L.P. 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).
American Homes 4 Rent ý  Yes   ¨  No                American Homes 4 Rent, L.P. 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.
American Homes 4 Rent

Large accelerated filer
ý
 
Accelerated filer
¨
Non-accelerated filer
¨

(Do not check if a smaller reporting company)
Smaller reporting company
¨
 
 
 
Emerging growth company
¨

American Homes 4 Rent, L.P.
Large accelerated filer
¨

 
Accelerated filer
¨

Non-accelerated filer
ý
(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.
American Homes 4 Rent  ¨                         American Homes 4 Rent, L.P. ¨ 
 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
American Homes 4 Rent ¨  Yes   ý  No                American Homes 4 Rent, L.P. ¨  Yes   ý  No
There were 295,218,488 shares of American Homes 4 Rent's Class A common shares, $0.01 par value per share, and 635,075 shares of American Homes 4 Rent's Class B common shares, $0.01 par value per share, outstanding on May 2, 2018.
 



EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the period ended March 31, 2018, of American Homes 4 Rent and American Homes 4 Rent, L.P. Unless stated otherwise or the context otherwise requires, references to “AH4R" or "the General Partner" 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 March 31, 2018, owned an approximate 83.7% common partnership interest in, the Operating Partnership. The remaining 16.3% 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 that combining the quarterly reports on Form 10-Q of the Company and the Operating Partnership into this single report provides the following benefits:

•
enhances investors' understanding of the Company and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;

•
eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the disclosure applies to both the Company and the Operating Partnership; and

•
creates time and cost efficiencies through the preparation of one combined report instead of two separate reports.

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 as 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, as amended (the "Agreement of Limited 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 OP units.

Shareholders' equity, partners' capital and noncontrolling interests are the main areas of difference between the 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 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.




This report also includes separate Part I, Item 4. Controls and Procedures sections and separate Exhibits 31 and 32
certifications for each of the Company and the Operating Partnership in order to establish that the requisite certifications have
been made and that the Company and the Operating Partnership are compliant with Rule 13a-15 or Rule 15d-15 of the Securities
Exchange Act of 1934 and 18 U.S.C. §1350.

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
American Homes 4 Rent, L.P.
Form 10-Q
INDEX
 
 
 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
 
Various statements contained in this Quarterly Report on Form 10-Q of American Homes 4 Rent ("AH4R,” “the General Partner") and of American Homes 4 Rent, L.P. ("the Operating Partnership," "our operating partnership," or “the OP”) 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 operations, 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, 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.


i

PART I
FINANCIAL INFORMATION
Item 1. Financial Statements.
American Homes 4 Rent
Condensed Consolidated Balance Sheets
(Amounts in thousands, except share data)
 
March 31, 2018
 
December 31, 2017
 
(Unaudited)
 
 
Assets
 

 
 

Single-family properties:
 

 
 

Land
$
1,670,599

 
$
1,665,631

Buildings and improvements
7,286,264

 
7,303,270

Single-family properties held for sale, net
201,693

 
35,803

 
9,158,556

 
9,004,704

Less: accumulated depreciation
(989,476
)
 
(939,724
)
Single-family properties, net
8,169,080

 
8,064,980

Cash and cash equivalents
203,883

 
46,156

Restricted cash
156,272

 
136,667

Rent and other receivables, net
28,115

 
30,144

Escrow deposits, prepaid expenses and other assets
241,707

 
171,851

Deferred costs and other intangibles, net
13,031

 
13,025

Asset-backed securitization certificates
25,666

 
25,666

Goodwill
120,279

 
120,279

Total assets
$
8,958,033

 
$
8,608,768

 
 
 
 
Liabilities
 

 
 

Revolving credit facility
$
—

 
$
140,000

Term loan facility, net
198,132

 
198,023

Asset-backed securitizations, net
1,973,242

 
1,977,308

Unsecured senior notes, net
492,282

 
—

Exchangeable senior notes, net
112,597

 
111,697

Secured note payable
48,604

 
48,859

Accounts payable and accrued expenses
262,267

 
222,867

Amounts payable to affiliates
2,001

 
4,720

Participating preferred shares derivative liability
28,258

 
29,470

Total liabilities
3,117,383

 
2,732,944

 
 
 
 
Commitments and contingencies


 


 
 
 
 
Equity
 

 
 

Shareholders’ equity:
 

 
 

Class A common shares, $0.01 par value per share, 450,000,000 shares authorized, 284,369,661 and 286,114,637 shares issued and outstanding at March 31, 2018, and December 31, 2017, respectively
2,844

 
2,861

Class B common shares, $0.01 par value per share, 50,000,000 shares authorized, 635,075 shares issued and outstanding at March 31, 2018, and December 31, 2017
6

 
6

Preferred shares, $0.01 par value per share, 100,000,000 shares authorized, 38,350,000 shares issued and outstanding at March 31, 2018, and December 31, 2017
384

 
384

Additional paid-in capital
5,565,871

 
5,600,256

Accumulated deficit
(462,504
)
 
(453,953
)
Accumulated other comprehensive income
9,508

 
75

Total shareholders’ equity
5,116,109

 
5,149,629

 
 
 
 
Noncontrolling interest
724,541

 
726,195

Total equity
5,840,650

 
5,875,824

 
 
 
 
Total liabilities and equity
$
8,958,033

 
$
8,608,768


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

1

American Homes 4 Rent
Condensed Consolidated Statements of Operations
(Amounts in thousands, except share and per share data)
(Unaudited)
 
For the Three Months Ended
March 31,
 
2018
 
2017
Revenues:
 

 
 

Rents from single-family properties
$
218,023

 
$
201,107

Fees from single-family properties
2,833

 
2,604

Tenant charge-backs
35,807

 
28,373

Other
1,341

 
1,670

Total revenues
258,004

 
233,754

 
 
 
 
Expenses:
 

 
 

Property operating expenses
100,987

 
83,305

Property management expenses
18,987

 
17,478

General and administrative expense
9,231

 
9,295

Interest expense
29,301

 
31,889

Acquisition fees and costs expensed
1,311

 
1,096

Depreciation and amortization
79,303

 
73,953

Other
827

 
1,558

Total expenses
239,947

 
218,574

 
 
 
 
Gain on sale of single-family properties and other, net
2,256

 
2,026

Remeasurement of participating preferred shares
1,212

 
(5,410
)
 
 
 
 
Net income
21,525

 
11,796

 
 
 
 
Noncontrolling interest
1,114

 
(301
)
Dividends on preferred shares
14,597

 
13,587

 
 
 
 
Net income (loss) attributable to common shareholders
$
5,814

 
$
(1,490
)
 
 
 
 
Weighted-average shares outstanding:
 
 
 
Basic
286,183,429

 
244,391,368

Diluted
286,727,863

 
244,391,368

 
 
 
 
Net income (loss) attributable to common shareholders per share:
 
 
 
Basic
$
0.02

 
$
(0.01
)
Diluted
$
0.02

 
$
(0.01
)
 
 
 
 
Dividends declared per common share
$
0.05

 
$
0.05

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

2

American Homes 4 Rent
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Amounts in thousands)
(Unaudited)
 
 
For the Three Months Ended
March 31,
 
2018
 
2017
Net income
$
21,525

 
$
11,796

Other comprehensive income (loss):
 
 
 
Gain on cash flow hedging instruments:
 
 
 
Gain on settlement of cash flow hedging instrument
9,553

 
—

Reclassification adjustment for amortization of interest expense included in net income
(120
)
 
(28
)
Gain on investment in equity securities:
 
 
 
Reclassification adjustment for realized gain included in net income
—

 
(67
)
Other comprehensive income (loss)
9,433

 
(95
)
Comprehensive income
30,958

 
11,701

Comprehensive income (loss) attributable to noncontrolling interests
2,643

 
(283
)
Dividends on preferred shares
14,597

 
13,587

Comprehensive income (loss) attributable to common shareholders
$
13,718

 
$
(1,603
)
 
The accompanying notes are an integral part of these condensed consolidated financial statements.


3

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, 2017
286,114,637

 
$
2,861

 
635,075

 
$
6

 
38,350,000

 
$
384

 
$
5,600,256

 
$
(453,953
)
 
$
75

 
$
5,149,629

 
$
726,195

 
$
5,875,824

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Share-based compensation
—

 
—

 
—

 
—

 
—

 
—

 
975

 
—

 
—

 
975

 
—

 
975

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common stock issued under share-based compensation plans, net of shares withheld for employee taxes
59,187

 
1

 
—

 
—

 
—

 
—

 
(409
)
 
—

 
—

 
(408
)
 
—

 
(408
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Repurchase of Class A common shares
(1,804,163
)
 
(18
)
 
—

 
—

 
—

 
—

 
(34,951
)
 
—

 
—

 
(34,969
)
 
—

 
(34,969
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Distributions to equity holders:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred shares
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(14,597
)
 
—

 
(14,597
)
 
—

 
(14,597
)
Noncontrolling interests
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(2,768
)
 
(2,768
)
Common shares
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(14,365
)
 
—

 
(14,365
)
 
—

 
(14,365
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
—

 
—

 
—

 
—

 
—

 
—

 
—

 
20,411

 
—

 
20,411

 
1,114

 
21,525

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total other comprehensive income
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
9,433

 
9,433

 
—

 
9,433

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balances at March 31, 2018
284,369,661

 
$
2,844

 
635,075

 
$
6

 
38,350,000

 
$
384

 
$
5,565,871

 
$
(462,504
)
 
$
9,508

 
$
5,116,109

 
$
724,541

 
$
5,840,650

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

4

American Homes 4 Rent
Condensed Consolidated Statements of Cash Flows
(Amounts in thousands)
(Unaudited) 
 
For the Three Months Ended
March 31,
 
2018
 
2017
Operating activities
 

 
 

Net income
$
21,525

 
$
11,796

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
79,303

 
73,953

Noncash amortization of deferred financing costs
1,900

 
2,562

Noncash amortization of discounts on debt instruments
935

 
840

Noncash amortization of cash flow hedging instrument
(120
)
 
—

Noncash share-based compensation
975

 
938

Provision for bad debt
2,000

 
1,510

Remeasurement of participating preferred shares
(1,212
)
 
5,410

Equity in net earnings of unconsolidated ventures
(314
)
 
(295
)
Net gain on sale of single-family properties and other
(2,256
)
 
(2,026
)
Loss on impairment of single-family properties
700

 
929

Net gain on resolutions of mortgage loans
—

 
(15
)
Other changes in operating assets and liabilities:
 
 
 
Rent and other receivables
(3,886
)
 
(2,657
)
Prepaid expenses and other assets
(13,476
)
 
(8,356
)
Deferred leasing costs
(2,723
)
 
(1,482
)
Accounts payable and accrued expenses
29,150

 
22,050

Amounts payable to affiliates
(10
)
 
4,880

Net cash provided by operating activities
112,491

 
110,037

 
 
 
 
Investing activities
 

 
 

Cash paid for single-family properties
(149,674
)
 
(73,622
)
Change in escrow deposits for purchase of single-family properties
(4,115
)
 
(1,072
)
Net proceeds received from sales of single-family properties and other
11,967

 
31,306

Proceeds received from hurricane-related insurance claims
4,000

 
—

Collections from mortgage financing receivables
—

 
70

Distributions from joint ventures
1,230

 
1,192

Initial renovations to single-family properties
(20,400
)
 
(7,677
)
Recurring and other capital expenditures for single-family properties
(11,167
)
 
(6,484
)
Other purchases of productive assets
(53,472
)
 
(13,710
)
Net cash used for investing activities
(221,631
)
 
(69,997
)
 
 
 
 
Financing activities
 

 
 

Proceeds from issuance of Class A common shares
—

 
350,612

Payments of Class A common share issuance costs
—

 
(236
)
Repurchase of Class A common shares
(34,969
)
 
—

Share-based compensation (payments) proceeds, net
(414
)
 
258

Payments on asset-backed securitizations
(5,312
)
 
(6,231
)
Proceeds from revolving credit facility
100,000

 
—

Payments on revolving credit facility
(240,000
)
 
—

Proceeds from term loan facility
—

 
25,000

Payments on secured note payable
(255
)
 
(245
)
Proceeds from unsecured senior notes, net of discount
497,210

 
—

Settlement of cash flow hedging instrument
9,628

 
—

Distributions to noncontrolling interests
(5,457
)
 
(2,779
)
Distributions to common shareholders
(14,337
)
 
(12,214
)
Distributions to preferred shareholders
(14,597
)
 
(13,587
)
Deferred financing costs paid
(5,025
)
 
—

Net cash provided by financing activities
286,472

 
340,578

 
 
 
 
Net increase in cash, cash equivalents and restricted cash
177,332

 
380,618

Cash, cash equivalents and restricted cash, beginning of period
182,823

 
250,241

Cash, cash equivalents and restricted cash, end of period (see Note 3)
$
360,155

 
$
630,859



5

American Homes 4 Rent
Condensed Consolidated Statements of Cash Flows (continued)
(Amounts in thousands)
(Unaudited)
 
For the Three Months Ended
March 31,
 
2018
 
2017
Supplemental cash flow information
 

 
 

Cash payments for interest, net of amounts capitalized
$
(22,690
)
 
$
(28,487
)
 
 
 
 
Supplemental schedule of noncash investing and financing activities
 

 
 

Accounts payable and accrued expenses related to property acquisitions, renovations and construction
$
9,375

 
$
(951
)
Transfers of completed homebuilding deliveries to properties
$
8,693

 
$
—

Note receivable related to a bulk sale of properties, net of discount
$
—

 
$
5,483

Accrued distributions to affiliates
$
(2,719
)
 
$
—

Accrued distributions to non-affiliates
$
25

 
$
—


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

6

American Homes 4 Rent, L.P.
Condensed Consolidated Balance Sheets
(Amounts in thousands, except unit data)
 
March 31, 2018
 
December 31, 2017
 
(Unaudited)
 
 
Assets
 
 
 
Single-family properties:
 
 
 
Land
$
1,670,599

 
$
1,665,631

Buildings and improvements
7,286,264

 
7,303,270

Single-family properties held for sale, net
201,693

 
35,803

 
9,158,556

 
9,004,704

Less: accumulated depreciation
(989,476
)
 
(939,724
)
Single-family properties, net
8,169,080

 
8,064,980

Cash and cash equivalents
203,883

 
46,156

Restricted cash
156,272

 
136,667

Rent and other receivables, net
28,115

 
30,144

Escrow deposits, prepaid expenses and other assets
241,697

 
171,851

Amounts due from affiliates
25,676

 
25,666

Deferred costs and other intangibles, net
13,031

 
13,025

Goodwill
120,279

 
120,279

Total assets
$
8,958,033

 
$
8,608,768

 
 
 
 
Liabilities
 
 
 
Revolving credit facility
$
—

 
$
140,000

Term loan facility, net
198,132

 
198,023

Asset-backed securitizations, net
1,973,242

 
1,977,308

Unsecured senior notes, net
492,282

 
—

Exchangeable senior notes, net
112,597

 
111,697

Secured note payable
48,604

 
48,859

Accounts payable and accrued expenses
262,267

 
222,867

Amounts payable to affiliates
2,001

 
4,720

Participating preferred units derivative liability
28,258

 
29,470

Total liabilities
3,117,383

 
2,732,944

 
 
 
 
Commitments and contingencies

 

 
 
 
 
Capital
 
 
 
Partners' capital:
 
 
 
General partner:
 
 
 
Common units (285,004,736 and 286,749,712 units issued and outstanding at March 31, 2018, and December 31, 2017, respectively)
4,205,283

 
4,248,236

Preferred units (38,350,000 units issued and outstanding at March 31, 2018, and December 31, 2017)
901,318

 
901,318

Limited partners:
 
 
 
Common units (55,350,153 units issued and outstanding at March 31, 2018, and December 31, 2017)
725,901

 
727,544

Accumulated other comprehensive income
9,508

 
75

Total partners' capital
5,842,010

 
5,877,173

 
 
 
 
Noncontrolling interest
(1,360
)
 
(1,349
)
            Total capital
5,840,650

 
5,875,824

 
 
 
 
Total liabilities and capital
$
8,958,033

 
$
8,608,768


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


7

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
March 31,
 
2018
 
2017
Revenues:
 
 
 
Rents from single-family properties
$
218,023

 
$
201,107

Fees from single-family properties
2,833

 
2,604

Tenant charge-backs
35,807

 
28,373

Other
1,341

 
1,670

Total revenues
258,004

 
233,754

 
 
 
 
Expenses:
 
 
 
Property operating expenses
100,987

 
83,305

Property management expenses
18,987

 
17,478

General and administrative expense
9,231

 
9,295

Interest expense
29,301

 
31,889

Acquisition fees and costs expensed
1,311

 
1,096

Depreciation and amortization
79,303

 
73,953

Other
827

 
1,558

Total expenses
239,947

 
218,574

 
 
 
 
Gain on sale of single-family properties and other, net
2,256

 
2,026

Remeasurement of participating preferred units
1,212

 
(5,410
)
 
 
 
 
Net income
21,525

 
11,796

 
 
 
 
Noncontrolling interest
(11
)
 
38

Preferred distributions
14,597

 
13,587

 
 
 
 
Net income (loss) attributable to common unitholders
$
6,939

 
$
(1,829
)
 
 
 
 
Weighted-average common units outstanding:
 
 
 
Basic
341,533,582

 
299,947,328

Diluted
342,078,016

 
299,947,328

 
 
 
 
Net income (loss) attributable to common unitholders per unit:
 
 
 
Basic
$
0.02

 
$
(0.01
)
Diluted
$
0.02

 
$
(0.01
)
 
The accompanying notes are an integral part of these condensed consolidated financial statements.


8

American Homes 4 Rent, L.P.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Amounts in thousands)
(Unaudited)
 
 
For the Three Months Ended
March 31,
 
2018
 
2017
Net income
$
21,525

 
$
11,796

Other comprehensive income (loss):
 
 
 
Gain on cash flow hedging instruments:
 
 
 
Gain on settlement of cash flow hedging instrument
9,553

 
—

Reclassification adjustment for amortization of interest expense included in net income
(120
)
 
(28
)
Gain on investment in equity securities:
 
 
 
Reclassification adjustment for realized gain included in net income
—

 
(67
)
Other comprehensive income (loss)
9,433

 
(95
)
Comprehensive income
30,958

 
11,701

Comprehensive (loss) income attributable to noncontrolling interests
(11
)
 
38

Preferred distributions
14,597

 
13,587

Comprehensive income (loss) attributable to common unitholders
$
16,372

 
$
(1,924
)
 
The accompanying notes are an integral part of these condensed consolidated financial statements.


9

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, 2017
286,749,712

 
$
4,248,236

 
$
901,318

 
55,350,153

 
$
727,544

 
$
75

 
$
5,877,173

 
$
(1,349
)
 
$
5,875,824

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Share-based compensation
—

 
975

 
—

 
—

 
—

 
—

 
975

 
—

 
975

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common units issued under share-based compensation plans, net of units withheld for employee taxes
59,187

 
(408
)
 
—

 
—

 
—

 
—

 
(408
)
 
—

 
(408
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Repurchase of Class A units
(1,804,163
)
 
(34,969
)
 
—

 
—

 
—

 
—

 
(34,969
)
 
—

 
(34,969
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Distributions to capital holders:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred units
—

 
—

 
(14,597
)
 
—

 
—

 
—

 
(14,597
)
 
—

 
(14,597
)
Common units
—

 
(14,365
)
 
—

 
—

 
(2,768
)
 
—

 
(17,133
)
 
—

 
(17,133
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
—

 
5,814

 
14,597

 
—

 
1,125

 
—

 
21,536

 
(11
)
 
21,525

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total other comprehensive income
—

 
—

 
—

 
—

 
—

 
9,433

 
9,433

 
—

 
9,433

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balances at March 31, 2018
285,004,736

 
$
4,205,283

 
$
901,318

 
55,350,153

 
$
725,901

 
$
9,508

 
$
5,842,010

 
$
(1,360
)
 
$
5,840,650

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


10

American Homes 4 Rent, L.P.
Condensed Consolidated Statements of Cash Flows
(Amounts in thousands)
(Unaudited) 
 
For the Three Months Ended
March 31,
 
2018
 
2017
Operating activities
 
 
 
Net income
$
21,525

 
$
11,796

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
79,303

 
73,953

Noncash amortization of deferred financing costs
1,900

 
2,562

Noncash amortization of discounts on debt instruments
935

 
840

Noncash amortization of cash flow hedging instrument
(120
)
 
—

Noncash share-based compensation
975

 
938

Provision for bad debt
2,000

 
1,510

Remeasurement of participating preferred units
(1,212
)
 
5,410

Equity in net earnings of unconsolidated ventures
(314
)
 
(295
)
Net gain on sale of single-family properties and other
(2,256
)
 
(2,026
)
Loss on impairment of single-family properties
700

 
929

Net gain on resolutions of mortgage loans
—

 
(15
)
Other changes in operating assets and liabilities:
 
 
 
Rent and other receivables
(3,886
)
 
(2,657
)
Prepaid expenses and other assets
(13,476
)
 
(8,356
)
Deferred leasing costs
(2,723
)
 
(1,482
)
Accounts payable and accrued expenses
29,150

 
22,050

Amounts payable to affiliates
(10
)
 
4,880

Net cash provided by operating activities
112,491

 
110,037

 
 
 
 
Investing activities
 
 
 
Cash paid for single-family properties
(149,674
)
 
(73,622
)
Change in escrow deposits for purchase of single-family properties
(4,115
)
 
(1,072
)
Net proceeds received from sales of single-family properties and other
11,967

 
31,306

Proceeds received from hurricane-related insurance claims
4,000

 
—

Collections from mortgage financing receivables
—

 
70

Distributions from joint ventures
1,230

 
1,192

Initial renovations to single-family properties
(20,400
)
 
(7,677
)
Recurring and other capital expenditures for single-family properties
(11,167
)
 
(6,484
)
Other purchases of productive assets
(53,472
)
 
(13,710
)
Net cash used for investing activities
(221,631
)
 
(69,997
)
 
 
 
 
Financing activities
 
 
 
Proceeds from issuance of Class A units
—

 
350,612

Payments of Class A unit issuance costs
—

 
(236
)
Repurchase of Class A units
(34,969
)
 
—

Share-based compensation (payments) proceeds, net
(414
)
 
258

Payments on asset-backed securitizations
(5,312
)
 
(6,231
)
Proceeds from revolving credit facility
100,000

 
—

Payments on revolving credit facility
(240,000
)
 
—

Proceeds from term loan facility
—

 
25,000

Payments on secured note payable
(255
)
 
(245
)
Proceeds from unsecured senior notes, net of discount
497,210

 
—

Settlement of cash flow hedging instrument
9,628

 
—

Distributions to common unitholders
(19,794
)
 
(14,993
)
Distributions to preferred unitholders
(14,597
)
 
(13,587
)
Deferred financing costs paid
(5,025
)
 
—

Net cash provided by financing activities
286,472

 
340,578

 
 
 
 
Net increase in cash, cash equivalents and restricted cash
177,332

 
380,618

Cash, cash equivalents and restricted cash, beginning of period
182,823

 
250,241

Cash, cash equivalents and restricted cash, end of period (see Note 3)
$
360,155

 
$
630,859



11

American Homes 4 Rent, L.P.
Condensed Consolidated Statements of Cash Flows (continued)
(Amounts in thousands)
(Unaudited)
 
For the Three Months Ended
March 31,
 
2018
 
2017
Supplemental cash flow information
 
 
 
Cash payments for interest, net of amounts capitalized
$
(22,690
)
 
$
(28,487
)
 
 
 
 
Supplemental schedule of noncash investing and financing activities
 
 
 
Accounts payable and accrued expenses related to property acquisitions, renovations and construction
$
9,375

 
$
(951
)
Transfers of completed homebuilding deliveries to properties
$
8,693

 
$
—

Note receivable related to a bulk sale of properties, net of discount
$
—

 
$
5,483

Accrued distributions to affiliates
$
(2,719
)
 
$
—

Accrued distributions to non-affiliates
$
25

 
$
—


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


12

American Homes 4 Rent
American Homes 4 Rent, L.P.
Notes to Unaudited Condensed Consolidated Financial Statements

Note 1. Organization and Operations

American Homes 4 Rent (“AH4R") is a Maryland real estate investment trust (“REIT”) formed on October 19, 2012, for the purpose of acquiring, renovating, leasing and operating single-family homes as rental properties. American Homes 4 Rent, L.P., a Delaware limited partnership formed on October 22, 2012, and its consolidated subsidiaries (collectively, the "Operating Partnership," our "operating partnership" or the "OP") is the entity through which the Company conducts substantially all of our business and owns, directly or through subsidiaries, substantially all of our assets. 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. As of March 31, 2018, the Company held 51,840 single-family properties in 22 states, including 1,892 properties identified as part of the Company's disposition program, comprised of 1,318 properties classified as held for sale and 574 properties identified for future sale.

AH4R is the general partner of, and as of March 31, 2018, owned an approximate 83.7% common partnership interest in, the Operating Partnership with the remaining 16.3% common partnership interest 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. 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 OP units.

Note 2. Significant Accounting Policies
 
Basis of Presentation
 
The condensed consolidated financial statements are unaudited and include the accounts of AH4R, the Operating Partnership and their consolidated subsidiaries. The condensed consolidated financial statements of the Operating Partnership include the accounts of the Operating Partnership and its consolidated subsidiaries. Intercompany accounts and transactions have been eliminated. The Company consolidates real estate partnerships and other entities that are not variable interest entities (“VIEs”) when it owns, directly or indirectly, a majority interest in the entity or is otherwise able to control the entity. The Company consolidates VIEs in accordance with Accounting Standards Codification (“ASC”) No. 810, Consolidation, if it is the primary beneficiary of the VIE as determined by its power to direct the VIE’s activities and the obligation to absorb its losses or the right to receive its benefits, which are potentially significant to the VIE. Entities for which the Company owns an interest, but does not consolidate, are accounted for under the equity method of accounting as an investment in unconsolidated subsidiary and are included in escrow deposits, prepaid expenses and other assets within the condensed consolidated balance sheets. The ownership interest in a consolidated subsidiary of the Company held by outside parties is included in noncontrolling interest within the condensed consolidated financial statements.

The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and in conjunction with the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures required for annual financial statements have been condensed or excluded pursuant to SEC rules and regulations. Accordingly, the condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. Any references in this report to the number of properties is outside the scope of our independent registered public accounting firm’s review of our financial statements, in accordance with the standards of the Public Company Accounting Oversight Board. In the opinion of management, all adjustments of a normal and recurring nature necessary for a fair presentation of the

13

condensed consolidated financial statements for the interim periods have been made. The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

There have been no changes to our significant accounting policies that have had a material impact on our condensed consolidated financial statements and related notes, compared to those policies disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017. Therefore, notes to the condensed consolidated financial statements that would substantially duplicate the disclosures contained in our most recent audited consolidated financial statements have been omitted.

Recent Accounting Pronouncements

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which is intended to reduce the existing diversity in practice by addressing eight specific cash flow issues related to how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The guidance is effective for the Company for annual reporting periods beginning after December 15, 2017, and for interim periods within those annual periods with early adoption permitted. The Company adopted this guidance effective January 1, 2018. The adoption of this guidance did not have a material impact on our financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326), to amend the accounting for credit losses for certain financial instruments by requiring companies to recognize an estimate of expected credit losses as an allowance in order to recognize such losses more timely than under previous guidance that had allowed companies to wait until it was probable such losses had been incurred. The guidance will be effective for the Company for annual reporting periods beginning after December 15, 2019, and for interim periods within those annual periods. Early adoption is permitted for annual reporting periods beginning after December 15, 2018, and interim periods within those annual periods. The Company is currently assessing the impact of the guidance on our financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which sets forth principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e. lessors and lessees). Lessor accounting will remain similar to lessor accounting under previous guidance, while aligning with the FASB's new revenue recognition guidance for non-lease components. The new guidance will require lessees to recognize right-of-use assets and lease liabilities on the balance sheet for the rights and obligations created by all leases with terms of more than one year. The new guidance will also require lessees and lessors to capitalize, as initial direct costs, only those costs that are incurred due to the execution of a lease. Any other costs incurred, including allocated indirect costs, will no longer be capitalized and instead will be expensed as incurred. The guidance will be effective for the Company for annual reporting periods beginning after December 15, 2018, and for interim periods within those annual periods, with early adoption permitted, and requires the use of the modified retrospective transition method. The Company does not anticipate significant changes in the accounting for our residential operating leases for which we are the lessor, as our leases generally do not have terms of more than one year. As part of our operations, we lease office space for our corporate and property management offices under non-cancelable operating lease agreements for which we are the lessee. We anticipate that the adoption of this guidance will require us to recognize a right-of-use asset and corresponding lease liability for these office leases. The Company is currently assessing the impact of the adoption of this guidance on our financial statements.

In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which amends certain aspects of recognition, measurement, presentation and disclosure of financial instruments, including the requirement to measure certain equity investments at fair value with changes in fair value recognized in net income. The guidance is effective for the Company for annual reporting periods beginning after December 15, 2017, and for interim periods within those annual periods. The Company adopted this guidance effective January 1, 2018. The adoption of this guidance did not have a material impact on our financial statements.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which provides guidance on revenue recognition and supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, most industry-specific guidance and some cost guidance included in Subtopic 605-35, “Revenue Recognition-Construction-Type and Production-Type Contracts.” The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under current guidance. These judgments include identifying “distinct” performance obligations in multi-element contracts, estimating the amount of variable consideration to include in the transaction price at contract inception, allocating the transaction price to each separate performance obligation, and determining at contract inception whether the performance obligation is satisfied over time or at a point in time. Since lease contracts under ASC 840, "Leases", are specifically excluded from ASU No. 2014-09’s scope, most of the Company’s rental

14

contract revenue will continue to follow current leasing guidance. We have reviewed our other sources of revenue and identified that the non-lease components (tenant chargebacks and recovery revenue) in our single-family home and office leases will continue being accounted for under ASC 840 until the adoption of ASU 2016-02 beginning January 1, 2019. Based on our assessment, the Company’s current accounting policies for these non-lease components are aligned with the revenue recognition principles prescribed by the new guidance. Therefore, the new standard did not ultimately change the amount or timing of our revenue recognition. As part of ASU No. 2014-09, the FASB issued consequential amendments to other sections, eliminating ASC 360-20, Real Estate Sales and adding ASU No. 2017-05 Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets, Subtopic 610-20, "Other Income". Real estate sales to noncustomers will follow new guidance from ASC 610-20, while sales to customers will follow the general revenue guidance in ASC 606. While the Company’s property sales are not part of our ordinary customer activity and will fall under ASC 610-20, there is little economic difference in the accounting for real estate sales to customers versus noncustomers, with the exception of the presentation of comprehensive income (revenue and expense when sales to customers or gains and losses when sales to noncustomers). The Company adopted the new revenue recognition guidance using the modified retrospective approach, effective January 1, 2018. We evaluated the revenue recognition for our contracts under existing accounting standards and under the new revenue recognition ASU and determined that there were no differences in the amounts or timing of recognition. Therefore, the adoption of this ASU did not result in an adjustment to our retained earnings on January 1, 2018.

In February 2018, the FASB issued ASU No. 2018-03, Recognition and Measurement of Financial Assets and Financial Liabilities, which retained the current framework for accounting for financial instruments in GAAP but made targeted improvements to address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The guidance will be effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years beginning after June 15, 2018. The Company is currently assessing the impact of the guidance on our financial statements.

Note 3. Cash, Cash Equivalents and Restricted Cash

We consider all demand deposits, cashier's checks, money market accounts and certificates of deposit with a maturity of three months or less to be cash equivalents. We maintain our cash and cash equivalents and escrow deposits at financial institutions. The combined account balances typically exceed the Federal Deposit Insurance Corporation ("FDIC") insurance coverage, and, as a result, there is a concentration of credit risk related to amounts on deposit. We believe that the risk is not significant.
    
Restricted cash primarily consists of funds held related to resident security deposits, cash reserves in accordance with certain loan agreements and funds held in the custody of our transfer agent for the payment of distributions. Funds held related to resident security deposits are restricted during the term of the related lease agreement, which is generally one year. Cash reserved in connection with lender requirements is restricted during the term of the related debt instrument.

The following table provides a reconciliation of cash, cash equivalents and restricted cash per the Company's and the Operating Partnership's condensed consolidated statements of cash flows to the corresponding financial statement line items in the condensed consolidated balance sheets as of March 31, 2018 and 2017:
 
March 31, 2018
 
March 31, 2017
Balance Sheet:
 
 
 
Cash and cash equivalents
$
203,883

 
$
495,802

Restricted cash
156,272

 
135,057

Statement of Cash Flows:
 
 
 
Cash, cash equivalents and restricted cash
$
360,155

 
$
630,859



15

Note 4. Single-Family Properties
 
Single-family properties, net, consisted of the following as of March 31, 2018, and December 31, 2017 (in thousands, except property data):
 
March 31, 2018
 
Number of
properties
 
Net book
value
Leased single-family properties
47,677

 
$
7,455,093

Single-family properties being renovated
503

 
124,233

Single-family properties being prepared for re-lease
289

 
37,630

Vacant single-family properties available for lease
1,479

 
262,429

Single-family properties held for sale, net
1,318

 
201,693

Single-family properties identified for future sale
574

 
88,002

Total
51,840

 
$
8,169,080

 
December 31, 2017
 
Number of
properties
 
Net book
value
Leased single-family properties
46,996

 
$
7,284,708

Single-family properties being renovated
980

 
225,194

Single-family properties being prepared for re-lease
372

 
47,994

Vacant single-family properties available for lease
2,581

 
471,281

Single-family properties held for sale, net
310

 
35,803

Total
51,239

 
$
8,064,980


Single-family properties, net as of March 31, 2018, and December 31, 2017, included $4.7 million and $44.2 million, respectively, related to properties for which the recorded grant deed had not been received. For these properties, the trustee or seller has warranted that all legal rights of ownership have been transferred to us on the date of the sale, but there was a delay for the deeds to be recorded.

Depreciation expense related to single-family properties was $75.4 million and $68.7 million for the three months ended March 31, 2018 and 2017, respectively.

During the three months ended March 31, 2018, the Company sold 103 homes, which generated total net proceeds of $11.5 million and resulted in a net gain on sale of $2.1 million, and sold land, which generated total net proceeds of $0.5 million and resulted in a net gain on sale of $0.1 million. During the three months ended March 31, 2017, the Company sold 504 homes, which generated total net proceeds of $24.0 million, which includes a $7.0 million note receivable, before a $1.5 million discount, and resulted in a net loss on sale of $1.0 million.

Note 5. Rent and Other Receivables, Net
 
Included in rent and other receivables, net is an allowance for doubtful accounts of $10.8 million and $10.4 million as of March 31, 2018, and December 31, 2017, respectively. Also included in rent and other receivables, net, is $4.9 million of hurricane-related insurance claims receivable and $0.2 million of non-tenant receivables as of March 31, 2018, compared to $8.9 million of hurricane-related insurance claims receivable and $1.2 million of non-tenant receivables as of December 31, 2017.
 

16

Note 6. Escrow Deposits, Prepaid Expenses and Other Assets

The following table summarizes escrow deposits, prepaid expenses and other assets as of March 31, 2018, and December 31, 2017 (in thousands):
 
March 31, 2018
 
December 31, 2017
Escrow deposits, prepaid expenses and other
$
49,628

 
$
33,964

Investments in joint ventures
41,425

 
42,341

Commercial real estate, vehicles and FF&E, net
45,168

 
43,608

Land held for development
70,023

 
39,079

Homebuilding construction in progress
35,463

 
12,859

Total
$
241,707

 
$
171,851


Note 7. Deferred Costs and Other Intangibles, Net
 
Deferred costs and other intangibles, net, consisted of the following as of March 31, 2018, and December 31, 2017 (in thousands):
 
March 31, 2018
 
December 31, 2017
Deferred leasing costs
$
9,753

 
$
7,030

Deferred financing costs
11,244

 
11,244

Intangible assets:
 

 
 

Value of in-place leases
179

 
179

Trademark
—

 
3,100

Database
2,100

 
2,100

 
23,276

 
23,653

Less: accumulated amortization
(10,245
)
 
(10,628
)
Total
$
13,031

 
$
13,025


Amortization expense related to deferred leasing costs, the value of in-place leases, trademark and database was $2.2 million and $2.9 million for the three months ended March 31, 2018 and 2017, respectively, which has been included in depreciation and amortization within the condensed consolidated statements of operations. Deferred financing costs that relate to our revolving credit facility are included in deferred costs and other intangibles, net within the condensed consolidated balance sheets. Amortization of deferred financing costs that relate to our revolving credit facility was $0.5 million and $0.4 million for the three months ended March 31, 2018 and 2017, respectively, which has been included in gross interest, prior to interest capitalization (see Note 8).
 
The following table sets forth the estimated annual amortization expense related to deferred costs and other intangibles, net as of March 31, 2018, for future periods (in thousands):
Year
 
Deferred
Leasing Costs
 
Deferred
Financing Costs
 
Value of
In-place Leases
 
Database
Remaining 2018
 
$
3,751

 
$
1,479

 
$
6

 
$
225

2019
 
272

 
1,964

 
2

 
300

2020
 
—

 
1,969

 
—

 
132

2021
 
—

 
1,964

 
—

 
—

2022
 
—

 
967

 
—

 
—

Total
 
$
4,023

 
$
8,343

 
$
8

 
$
657



17

Note 8. Debt
 
All of the Company's indebtedness is debt of the Operating Partnership. AH4R is not directly obligated under any indebtedness, but guarantees some of the debt of the Operating Partnership. The following table presents the Company’s debt as of March 31, 2018, and December 31, 2017 (in thousands):
 
 
 
 
 
Outstanding Principal Balance
 
Interest Rate (1)
 
Maturity Date
 
March 31, 2018
 
December 31, 2017
AH4R 2014-SFR2 securitization
4.42%
 
October 9, 2024
 
$
495,043

 
$
496,326

AH4R 2014-SFR3 securitization
4.40%
 
December 9, 2024
 
510,721

 
512,041

AH4R 2015-SFR1 securitization (2)
4.14%
 
April 9, 2045
 
536,341

 
537,723

AH4R 2015-SFR2 securitization (3)
4.36%
 
October 9, 2045
 
465,940

 
467,267

Total asset-backed securitizations
 
 
 
 
2,008,045

 
2,013,357

Unsecured senior notes (4)
4.08%
 
February 15, 2028
 
500,000

 
—

Exchangeable senior notes
3.25%
 
November 15, 2018
 
115,000

 
115,000

Secured note payable
4.06%
 
July 1, 2019
 
48,604

 
48,859

Revolving credit facility (5)
3.08%
 
June 30, 2022
 
—

 
140,000

Term loan facility (6)
3.23%
 
June 30, 2022
 
200,000

 
200,000

Total debt (7)
 
 
 
 
2,871,649

 
2,517,216

Unamortized discounts on unsecured and exchangeable senior notes
 
 
 
 
(3,412
)
 
(895
)
Equity component of exchangeable senior notes
 
 
 
 
(1,746
)
 
(2,408
)
Deferred financing costs, net (8)
 
 
 
 
(41,634
)
 
(38,026
)
Total debt per balance sheet
 
 
 
 
$
2,824,857

 
$
2,475,887

(1)
Interest rates are as of March 31, 2018. Unless otherwise stated, interest rates are fixed percentages.
(2)
The AH4R 2015-SFR1 securitization has a maturity date of April 9, 2045, with an anticipated repayment date of April 9, 2025.
(3)
The AH4R 2015-SFR2 securitization has a maturity date of October 9, 2045, with an anticipated repayment date of October 9, 2025.
(4)
The stated interest rate on the unsecured senior notes is 4.25%, which was effectively hedged to yield an interest rate of 4.08%.
(5)
The revolving credit facility provides for a borrowing capacity of up to $800.0 million, with a fully extended maturity date of June 2022, and bears interest at a LIBOR rate plus a margin ranging from 0.825% to 1.55% or a base rate (generally determined according to a prime rate or federal funds rate) plus a margin ranging from 0.00% to 0.55%. The interest rate stated represents the applicable spread for LIBOR based borrowings as of March 31, 2018, plus 1-month LIBOR.
(6)
The term loan facility provides for a borrowing capacity of up to $200.0 million, with a maturity date of June 2022, and bears interest at a LIBOR rate plus a margin ranging from 0.90% to 1.75% or a base rate (generally determined according to a prime rate or federal funds rate) plus a margin ranging from 0.00% to 0.75%. The interest rate stated represents the applicable spread for LIBOR based borrowings as of March 31, 2018, plus 1-month LIBOR.
(7)
The Company was in compliance with all debt covenants associated with its asset-backed securitizations, unsecured senior notes, secured note payable, revolving credit facility and term loan facility as of March 31, 2018, and December 31, 2017.
(8)
Deferred financing costs relate to our asset-backed securitizations, term loan facility and unsecured senior notes. Amortization of deferred financing costs was $1.4 million and $2.2 million for the three months ended March 31, 2018 and 2017, respectively, which has been included in gross interest, prior to interest capitalization.
 

18

Debt Maturities
 
The following table summarizes the contractual maturities of the Company's debt on a fully extended basis as of March 31, 2018 (in thousands):
Remaining 2018
$
131,290

2019
68,564

2020
20,714

2021
20,714

2022
220,714

Thereafter
2,409,653

Total debt
2,871,649

Unamortized discounts and deferred financing costs (1)
(46,792
)
Total debt per balance sheet
$
2,824,857

(1)
Includes the unamortized discounts on the unsecured and exchangeable senior notes, the equity component of the exchangeable senior notes and deferred financing costs, net.
 
Unsecured Senior Notes

In February 2018, the Operating Partnership issued $500.0 million of 4.25% unsecured senior notes with a maturity date of February 15, 2028 (the "2028 Notes"). Interest on the 2028 Notes is payable semi-annually in arrears on February 15 and August 15 of each year, commencing on August 15, 2018. The Operating Partnership received net proceeds of $494.0 million from this issuance, after underwriting fees of approximately $3.2 million and a $2.8 million discount, and before estimated offering costs of $1.8 million. The Operating Partnership intends to use the net proceeds from this issuance for general corporate purposes, including, without limitation, acquisitions of additional properties, the repayment of outstanding indebtedness, capital expenditures, the expansion, redevelopment and/or improvement of our properties, working capital and other general purposes, including repurchases of securities. The 2028 Notes are the Operating Partnership's unsecured and unsubordinated obligation and rank equally in right of payment with all of the Operating Partnership’s existing and future unsecured and unsubordinated indebtedness. The Operating Partnership may redeem the 2028 Notes at any time, in whole or in part, at the applicable redemption price specified in the Indenture with respect to the 2028 Notes. If the 2028 Notes are redeemed on or after November 15, 2027 (three months prior to the maturity date), the redemption price will be equal to 100% of the principal amount of the 2028 Notes being redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date. The 2028 Notes have been initially guaranteed by American Residential Properties OP, L.P., (the “Guarantor Subsidiary”), a 100% owned subsidiary of the Operating Partnership, but such guarantee will be automatically released at the time that the Guarantor Subsidiary no longer guarantees our credit facility. Including the effect of a cash flow hedging instrument settled in February 2018 (see Note 13), the 2028 Notes yield an effective interest rate of 4.08%.

Exchangeable Senior Notes, Net

The exchangeable senior notes, which were assumed in connection with the Company's merger (the "ARPI Merger") with American Residential Properties, Inc. ("ARPI") during 2016, contain an exchange settlement feature, which provides that the exchangeable senior notes may, under certain circumstances, be exchangeable for cash, our Class A common shares or a combination of cash and our Class A common shares, at the option of the Operating Partnership, based on an initial exchange rate of 46.9423 shares of ARPI's common stock per $1,000 principal amount of the notes. Settlements for cash will be paid for by the Operating Partnership, while settlements for the Company's Class A common shares will be issued by AH4R with the Operating Partnership issuing an equivalent number of Class A units to AH4R. The adjusted initial exchange rate would be 53.2795 of our Class A common shares per $1,000 principal amount of the notes, based on the 1.135 exchange ratio of ARPI shares to our shares resulting from the ARPI Merger. The current exchange rate as of March 31, 2018, was 55.4118 of the Company's Class A common shares per $1,000 principal amount of the notes. The exchange rate is adjusted based on the Company's Class A common share price and distributions to common shareholders.


19

Interest Expense
 
The following table displays our total gross interest, which includes unused commitment and other fees on our credit facilities and amortization of deferred financing costs, the discounts on senior notes and the fair value of the exchange settlement feature of the exchangeable senior notes, and capitalized interest for the three months ended March 31, 2018 and 2017 (in thousands):
 
For the Three Months Ended
 
March 31, 2018
 
March 31, 2017
Gross interest
$
31,737

 
$
32,492

Capitalized interest
(2,436
)
 
(603
)
Interest expense
$
29,301

 
$
31,889


Note 9. Accounts Payable and Accrued Expenses
 
The following table summarizes accounts payable and accrued expenses as of March 31, 2018, and December 31, 2017 (in thousands):
 
March 31, 2018
 
December 31, 2017
Accounts payable
$
272

 
$
1,726

Accrued property taxes
67,190

 
47,765

Other accrued liabilities
37,023

 
31,788

Accrued distribution payable
27,006

 
26,982

Accrued construction and maintenance liabilities
29,173

 
17,928

Resident security deposits
80,156

 
75,951

Prepaid rent
21,447

 
20,727

Total
$
262,267

 
$
222,867

 
Note 10. Shareholders’ Equity / Partners' Capital

When the Company issues common or preferred shares, the Operating Partnership issues an equivalent number of units of partnership interest of a corresponding class to AH4R, with the Operating Partnership receiving the net proceeds from the share issuances.

At-the-Market Common Share Offering Program
In November 2016, the Company established an at-the-market common share offering program under which we were able to issue Class A common shares from time to time through various sales agents up to an aggregate of $400.0 million (the "Original At-the-Market Program"). The program was established in order to use the net proceeds from share issuances to repay borrowings against the Company’s revolving credit and term loan facilities, to acquire and renovate single-family properties and for related activities in accordance with the Company’s business strategy, and for working capital and general corporate purposes. The program may be suspended or terminated by the Company at any time. During the three months ended March 31, 2017, the Company issued and sold 0.6 million Class A common shares under the Original At-the-Market Program for gross proceeds of $14.3 million, or $22.72 per share, and net proceeds of $14.1 million, after commissions and other expenses of approximately $0.2 million. The Operating Partnership issued an equivalent number of corresponding Class A units to AH4R in exchange for the net proceeds from the share issuances. The Original At-the-Market Program was replaced in August 2017 with an at-the-market common share offering program with a $500.0 million capacity with the same terms (the "At-the-Market Program"). As of March 31, 2018, no shares have been issued under the At-the-Market Program and $500.0 million remained available for future share issuances.

Share Repurchase Program

In February 2018, the Company's board of trustees re-authorized our existing share repurchase program, authorizing the repurchase of up to $300.0 million of our outstanding Class A common shares and up to $250.0 million of our outstanding preferred shares from time to time in the open market or in privately negotiated transactions. The program does not have an expiration date, but may be suspended or discontinued at any time without notice. All repurchased shares are constructively retired and returned to an authorized and unissued status. The Operating Partnership funds the repurchases and constructively retires an equivalent number of corresponding Class A units. During the three months ended March 31, 2018, the Company repurchased and retired 1.8 million of our Class A common shares on a settlement date basis, in accordance with the program, at a weighted-average price of $19.36 per share and a total price of $34.9 million. We did not repurchase and retire any of our shares during the three months ended March 31, 2017.

20

As of March 31, 2018, we had a remaining repurchase authorization of up to $265.1 million of our outstanding Class A common shares and up to $250.0 million of our outstanding preferred shares under the program.

As of March 31, 2018, and December 31, 2017, the Company had the following series of preferred shares outstanding (in thousands, except share data):