UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,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
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
   
FORM 10-Q
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2019
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) 
   
MarylandAmerican Homes 4 RentMaryland46-1229660
American Homes 4 Rent, L.P.
Delaware80-0860173
(State or other jurisdiction of

incorporation or organization)
(I.R.S. Employer
Identification No.)
30601 Agoura Road, Suite 200
Agoura Hills, California91301
(Address of principal executive offices) (Zip Code)
 
(805) (805) 413-5300
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbolsName of each exchange on which registered


Class A common shares of beneficial interest, $.01 par valueAMHNew York Stock Exchange
   
Series D perpetual preferred shares of beneficial interest, $.01 par valueAMH-DNew York Stock Exchange
Series E perpetual preferred shares of beneficial interest, $.01 par valueAMH-ENew York Stock Exchange
Series F perpetual preferred shares of beneficial interest, $.01 par valueAMH-FNew York Stock Exchange
Series G perpetual preferred shares of beneficial interest, $.01 par valueAMH-GNew York Stock Exchange
Series H perpetual preferred shares of beneficial interest, $.01 par valueAMH-HNew York Stock Exchange
 

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
American Homes 4 Rent ☒Yes☐  No                American Homes 4 Rent, L.P. ☒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
American Homes 4 Rent ☒Yes☐  No                American Homes 4 Rent, L.P. ☒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“emerging growth company"company” in Rule 12b-2 of the Exchange Act.
American Homes 4 Rent
Large accelerated filerý☒ 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☒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   ☒  No
There were 286,103,292299,837,849 shares of American Homes 4 Rent'sRent’s Class A common shares, of beneficial interest, $0.01 par value per share, and 635,075 shares of American Homes 4 Rent'sRent’s Class B common shares, of beneficial interest, $0.01 par value per share, outstanding on November 1, 2017.July 31, 2019.
 





EXPLANATORY NOTE


This report combines the quarterly reportreports on Form 10-Q for the period ended SeptemberJune 30, 2017,2019, of American Homes 4 Rent also includes the financial results ofand American Homes 4 Rent, L.P. Unless stated otherwise or the context otherwise requires, references to “AH4R"“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"” “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,"“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 SeptemberJune 30, 2017,2019, owned an approximate 83.2%85.2% common partnership interest in, the Operating Partnership. The remaining 16.8%14.8% 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 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, 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.OP units.


Shareholders'Shareholders’ equity, partners'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'partners’ capital in the Operating Partnership'sPartnership’s financial statements and as noncontrolling interests in the Company'sCompany’s financial statements. The noncontrolling interests in the Operating Partnership'sPartnership’s financial statements include an outside ownership interest in a consolidated subsidiary of the Company.Company, which was liquidated during the second quarter of 2018. The noncontrolling interests in the Company'sCompany’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'shareholders’ equity and partners'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'sentity’s debt, noncontrolling interests and shareholders'shareholders’ equity or partners'partners’ capital, as applicable; and a combined Management'sManagement’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
i
    
PART I
 
FINANCIAL INFORMATION
 
Item 1.
 
Financial Statements (Unaudited)
1
  
American Homes 4 Rent
 
  
American Homes 4 Rent
Condensed Consolidated Balance Sheets as of SeptemberJune 30, 2017,2019 and December 31, 20162018
1
  
Condensed Consolidated Statements of Operations for the three and ninesix months ended SeptemberJune 30, 20172019 and 20162018
2
  
Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and ninesix months ended SeptemberJune 30, 20172019 and 20162018
3
  
Condensed Consolidated StatementStatements of Equity for the ninethree and six months ended SeptemberJune 30, 20172019 and 2018
4
  
Condensed Consolidated Statements of Cash Flows for the ninesix months ended SeptemberJune 30, 20172019 and 20162018
56
  
American Homes 4 Rent, L.P.
 
  
American Homes 4 Rent, L.P.
Condensed Consolidated Balance Sheets as of SeptemberJune 30, 2017,2019 and December 31, 2016
7
Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2017 and 20162018
8
  
Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2019 and 2018
9
  
Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and ninesix months ended SeptemberJune 30, 20172019 and 2016
9
Condensed Consolidated Statement of Capital for the nine months ended September 30, 20172018
10
  
Condensed Consolidated Statements of Cash FlowsCapital for the ninethree and six months ended SeptemberJune 30, 20172019 and 20162018
11
  
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2019 and 2018
13
  
American Homes 4 Rent and American Homes 4 Rent, L.P.
 
  
Notes to Unaudited Condensed Consolidated Financial Statements
1315
Item 2.
 
Management’s Discussion and Analysis of Financial Condition and Results of Operations
3029
Item 3.
 
Quantitative and Qualitative Disclosures About Market Risk
46
Item 4.
Controls and Procedures
46
    
Item 4.PART II
 
Controls and ProceduresOTHER INFORMATION
46
 
PART IIItem 1.
 
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 IndexSignatures
48
Signatures
5049



CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
 
Various statements contained in this Quarterly Report on Form 10-Q of American Homes 4 Rent (the “Company,(“AH4R” or “the General Partner”) and of American Homes 4 Rent, L.P. (“the Operating Partnership,” “we,“our operating partnership,” “our” and “us”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 “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, 2017,2018, 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
I—FINANCIAL INFORMATION
ItemITEM 1. Financial Statements.Statements
American Homes 4 Rent
Condensed Consolidated Balance Sheets
(Amounts in thousands, except share data)
September 30, 2017 December 31, 2016June 30, 2019 December 31, 2018
(Unaudited)  (Unaudited)  
Assets 
  
 
  
Single-family properties: 
  
 
  
Land$1,600,906
 $1,512,183
$1,727,940
 $1,713,496
Buildings and improvements7,020,774
 6,614,953
7,566,498
 7,483,600
Single-family properties in operation9,294,438
 9,197,096
Less: accumulated depreciation(1,316,920) (1,176,499)
Single-family properties in operation, net7,977,518
 8,020,597
Single-family properties under development and development land235,508
 153,651
Single-family properties held for sale, net50,370
 87,430
276,581
 318,327
8,672,050
 8,214,566
Less: accumulated depreciation(869,551) (666,710)
Single-family properties, net7,802,499
 7,547,856
Total real estate assets, net8,489,607
 8,492,575
Cash and cash equivalents243,547
 118,799
119,176
 30,284
Restricted cash119,574
 131,442
165,734
 144,930
Rent and other receivables, net35,429
 17,618
31,988
 29,027
Escrow deposits, prepaid expenses and other assets149,366
 133,594
181,187
 146,034
Deferred costs and other intangibles, net13,516
 11,956
8,986
 12,686
Asset-backed securitization certificates25,666
 25,666
25,666
 25,666
Goodwill120,279
 120,279
120,279
 120,279
Total assets$8,509,876
 $8,107,210
$9,142,623
 $9,001,481
      
Liabilities 
  
 
  
Revolving credit facility$—
 $—
$—
 $250,000
Term loan facility, net197,913
 321,735
—
 99,232
Asset-backed securitizations, net1,981,444
 2,442,863
1,953,280
 1,961,511
Exchangeable senior notes, net110,771
 108,148
Secured note payable49,107
 49,828
Unsecured senior notes, net887,777
 492,800
Accounts payable and accrued expenses263,745
 177,206
301,219
 219,229
Participating preferred shares derivative liability68,469
 69,810
Amounts payable to affiliates4,824
 4,967
Total liabilities2,671,449
 3,169,590
3,147,100
 3,027,739
      
Commitments and contingencies

 

Commitments and contingencies (see Note 12)


 


      
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, respectively2,736
 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, 20166
 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, respectively478
 370
Class A common shares ($0.01 par value per share, 450,000,000 shares authorized, 299,827,789 and 296,014,546 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively)2,998
 2,960
Class B common shares ($0.01 par value per share, 50,000,000 shares authorized, 635,075 shares issued and outstanding at June 30, 2019 and December 31, 2018)6
 6
Preferred shares ($0.01 par value per share, 100,000,000 shares authorized, 35,350,000 shares issued and outstanding at June 30, 2019 and December 31, 2018)354
 354
Additional paid-in capital5,517,978
 4,568,616
5,784,398
 5,732,466
Accumulated deficit(417,609) (378,578)(482,354) (491,214)
Accumulated other comprehensive income—
 95
7,062
 7,393
Total shareholders’ equity5,103,589
 4,192,936
5,312,464
 5,251,965
   
Noncontrolling interest734,838
 744,684
683,059
 721,777
Total equity5,838,427
 4,937,620
5,995,523
 5,973,742
      
Total liabilities and equity$8,509,876
 $8,107,210
$9,142,623
 $9,001,481


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,		For the Three Months Ended
June 30,		 For the Six Months Ended
June 30,
2017 2016 2017 20162019 2018 2019 2018
Revenues: 
  
  
  
 
  
  
  
Rents from single-family properties$207,490
 $197,137
 $613,245
 $558,623
Fees from single-family properties2,843
 2,898
 8,137
 7,819
Tenant charge-backs36,094
 30,808
 91,849
 72,077
Rents and other single-family property revenues$279,914
 $262,882
 $557,608
 $519,545
Other409
 5,214
 4,367
 12,811
1,946
 1,601
 3,456
 2,942
Total revenues246,836
 236,057
 717,598
 651,330
281,860
 264,483
 561,064
 522,487
              
Expenses: 
  
  
  
 
  
  
  
Property operating expenses97,944
 92,488
 267,203
 238,987
104,591
 98,843
 211,275
 199,830
Property management expenses17,447
 18,335
 52,367
 53,177
21,650
 18,616
 42,359
 37,603
General and administrative expense8,525
 8,043
 26,746
 24,544
10,486
 9,677
 19,921
 18,908
Interest expense26,592
 32,851
 86,873
 99,309
32,571
 31,978
 64,486
 61,279
Acquisition fees and costs expensed1,306
 1,757
 3,814
 10,899
970
 1,321
 1,804
 2,632
Depreciation and amortization74,790
 75,392
 221,459
 224,513
82,840
 78,319
 164,001
 157,622
Hurricane-related charges, net10,136
 —
 10,136
 —
Other1,285
 3,142
 4,202
 6,482
1,514
 1,624
 2,538
 2,451
Total expenses238,025
 232,008
 672,800
 657,911
254,622
 240,378
 506,384
 480,325
              
Gain on sale of single-family properties and other, net1,895
 11,682
 6,375
 12,574
13,725
 3,240
 19,374
 5,496
Loss on early extinguishment of debt—
 (13,408) (6,555) (13,408)(659) (1,447) (659) (1,447)
Gain on conversion of Series E units—
 —
 —
 11,463
Remeasurement of participating preferred shares8,391
 (2,490) 1,341
 (2,940)—
 —
 —
 1,212
              
Net income (loss)19,097
 (167) 45,959
 1,108
Net income40,304
 25,898
 73,395
 47,423
              
Noncontrolling interest309
 7,316
 (22) 10,391
4,004
 (3,150) 7,030
 (2,036)
Dividends on preferred shares17,253
 13,669
 46,122
 26,650
13,782
 11,984
 27,564
 26,581
Redemption of participating preferred shares—
 32,215
 —
 32,215
              
Net income (loss) attributable to common shareholders$1,535
 $(21,152) $(141) $(35,933)$22,518
 $(15,151) $38,801
 $(9,337)
              
Weighted-average shares outstanding:              
Basic266,767,313
 238,401,343
 256,768,343
 232,036,802
299,466,526
 295,462,572
 298,157,413
 290,848,633
Diluted289,153,060
 238,401,343
 256,768,343
 232,036,802
299,991,084
 295,462,572
 298,676,788
 290,848,633
              
Net income (loss) attributable to common shareholders per share:              
Basic$0.01
 $(0.09) $—
 $(0.15)$0.08
 $(0.05) $0.13
 $(0.03)
Diluted$—
 $(0.09) $—
 $(0.15)$0.08
 $(0.05) $0.13
 $(0.03)
       
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 interests309
 7,308
 (5) 10,366
Dividends on preferred shares17,253
 13,669
 46,122
 26,650
Comprehensive income (loss) attributable to common shareholders$1,535
 $(21,116) $(253) $(35,778)
 For the Three Months Ended
June 30,		 For the Six Months Ended
June 30,
 2019 2018 2019 2018
Net income$40,304
 $25,898
 $73,395
 $47,423
Other comprehensive (loss) income:       
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(240) (241) (481) (361)
Other comprehensive (loss) income(240) (241) (481) 9,192
Comprehensive income40,064
 25,657
 72,914
 56,615
Comprehensive income (loss) attributable to noncontrolling interests3,967
 (3,209) 6,955
 (566)
Dividends on preferred shares13,782
 11,984
 27,564
 26,581
Redemption of participating preferred shares—
 32,215
 —
 32,215
Comprehensive income (loss) attributable to common shareholders$22,315
 $(15,333) $38,395
 $(1,615)
 
The accompanying notes are an integral part of these condensed consolidated financial statements.



American Homes 4 Rent
Condensed Consolidated StatementStatements 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, 2016242,740,482
 $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 taxes89,829
 1
 —
 —
 —
 —
 629
 —
 —
 630
 —
 630
                        
Issuance of Class A common shares, net of offering costs of $10,75930,676,080
 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 units99,312
 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, 2017273,605,703
 $2,736
 635,075
 $6
 47,810,000
 $478
 $5,517,978
 $(417,609) $—
 $5,103,589
 $734,838
 $5,838,427
 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, 2017286,114,637
 $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 taxes59,187
 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 (Note 10)—
 —
 —
 —
 —
 —
 —
 (14,597) —
 (14,597) —
 (14,597)
Noncontrolling interests—
 —
 —
 —
 —
 —
 —
 —
   —
 (2,768) (2,768)
Common shares ($0.05 per share)—
 —
 —
 —
 —
 —
 —
 (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, 2018284,369,661
 $2,844
 635,075
 $6
 38,350,000
 $384
 $5,565,871
 $(462,504) $9,508
 $5,116,109
 $724,541
 $5,840,650
Share-based compensation—
 —
 —
 —
 —
 —
 943
 —
 —
 943
 —
 943
Common stock issued under share-based compensation plans, net of shares withheld for employee taxes164,671
 1
 —
 —
 —
 —
 3,067
 —
 —
 3,068
 —
 3,068
Redemption of Series C participating preferred shares into Class A common shares10,848,827
 109
 —
 —
 (7,600,000) (76) 60,440
 (32,215) —
 28,258
 —
 28,258
Liquidation of consolidated joint venture—
 —
 —
 —
 —
 —
 —
 (1,849) —
 (1,849) 1,608
 (241)
Distributions to equity holders:                       
Preferred shares (Note 10)—
 —
 —
 —
 —
 —
 —
 (11,984) —
 (11,984) —
 (11,984)
Noncontrolling interests—
 —
 —
 —
 —
 —
 —
 —
 —
 —
 (2,767) (2,767)
Common shares ($0.05 per share)—
 —
 —
 —
 —
 —
 —
 (14,822) —
 (14,822) —
 (14,822)
Net income—
 —
 —
 —
 —
 —
 —
 29,048
 —
 29,048
 (3,150) 25,898
Total other comprehensive loss—
 —
 —
 —
 —
 —
 —
 —
 (241) (241) —
 (241)
Balances at June 30, 2018295,383,159
 $2,954
 635,075
 $6
 30,750,000
 $308
 $5,630,321
 $(494,326) $9,267
 $5,148,530
 $720,232
 $5,868,762

American Homes 4 Rent
Condensed Consolidated Statements of Equity (continued)
(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, 2018296,014,546
 $2,960
 635,075
 $6
 35,350,000
 $354
 $5,732,466
 $(491,214) $7,393
 $5,251,965
 $721,777
 $5,973,742
Share-based compensation—
 —
 —
 —
 —
 —
 952
 —
 —
 952
 —
 952
Common stock issued under share-based compensation plans, net of shares withheld for employee taxes77,830
 1
 —
 —
 —
 —
 (761) —
 —
 (760) —
 (760)
Redemptions of Class A units500,000
 5
 —
 —
 —
 —
 6,505
 —
 12
 6,522
 (6,522) —
Distributions to equity holders:                       
Preferred shares (Note 10)—
 —
 —
 —
 —
 —
 —
 (13,782) —
 (13,782) —
 (13,782)
Noncontrolling interests—
 —
 —
 —
 —
 —
 —
 —
   —
 (2,741) (2,741)
Common shares ($0.05 per share)—
 —
 —
 —
 —
 —
 —
 (14,889) —
 (14,889) —
 (14,889)
Net income—
 —
 —
 —
 —
 —
 —
 30,065
 —
 30,065
 3,026
 33,091
Total other comprehensive loss—
 —
 —
 —
 —
 —
 —
 —
 (203) (203) (38) (241)
Balances at March 31, 2019296,592,376
 $2,966
 635,075
 $6
 35,350,000
 $354
 $5,739,162
 $(489,820) $7,202
 $5,259,870
 $715,502
 $5,975,372
Share-based compensation—
 —
 —
 —
 —
 —
 1,269
 —
 —
 1,269
 —
 1,269
Common stock issued under share-based compensation plans, net of shares withheld for employee taxes645,567
 6
 —
 —
 —
 —
 10,257
 —
 —
 10,263
 —
 10,263
Redemptions of Class A units2,589,846
 26
 —
 —
 —
 —
 33,710
 —
 63
 33,799
 (33,799) —
Distributions to equity holders:                       
Preferred shares (Note 10)—
 —
 —
 —
 —
 —
 —
 (13,782) —
 (13,782) —
 (13,782)
Noncontrolling interests—
 —
 —
 —
 —
 —
 —
 —
   —
 (2,611) (2,611)
Common shares ($0.05 per share)—
 —
 —
 —
 —
 —
 —
 (15,052) —
 (15,052) —
 (15,052)
Net income—
 —
 —
 —
 —
 —
 —
 36,300
 —
 36,300
 4,004
 40,304
Total other comprehensive loss—
 —
 —
 —
 —
 —
 —
 —
 (203) (203) (37) (240)
Balances at June 30, 2019299,827,789
 $2,998
 635,075
 $6
 35,350,000
 $354
 $5,784,398
 $(482,354) $7,062
 $5,312,464
 $683,059
 $5,995,523

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,		For the Six Months Ended
June 30,
2017 20162019 2018
Operating activities 
  
 
  
Net income$45,959
 $1,108
$73,395
 $47,423
Adjustments to reconcile net income to net cash provided by operating activities: 
  
   
Depreciation and amortization221,459
 224,513
164,001
 157,622
Noncash amortization of deferred financing costs6,285
 7,912
3,976
 3,888
Noncash amortization of discount on exchangeable senior notes2,624
 1,955
Noncash amortization of discount on ARP 2014-SFR1 securitization—
 1,744
Noncash amortization of discounts on debt instruments217
 1,941
Noncash amortization of cash flow hedging instrument(481) (361)
Noncash share-based compensation3,175
 2,744
2,221
 1,918
Provision for bad debt5,142
 5,092
3,508
 3,616
Hurricane-related charges, net10,136
 —
Loss on early extinguishment of debt6,555
 13,408
659
 1,447
Gain on conversion of Series E units to Series D units—
 (11,463)
Remeasurement of participating preferred shares(1,341) 2,940
—
 (1,212)
Equity in net earnings of unconsolidated ventures(1,367) (418)
Equity in net losses (earnings) of unconsolidated joint ventures147
 (587)
Net gain on sale of single-family properties and other(6,375) (12,574)(19,374) (5,496)
Loss on impairment of single-family properties3,786
 1,467
1,433
 2,236
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)(6,484) (5,522)
Prepaid expenses and other assets(5,690) (429)(8,140) (12,167)
Deferred leasing costs(5,361) (6,199)(2,129) (5,834)
Accounts payable and accrued expenses71,325
 47,920
74,493
 61,061
Amounts payable to affiliates5,009
 (5,425)50
 (8)
Net cash provided by operating activities349,375
 254,980
287,492
 249,965
      
Investing activities 
  
 
  
Cash paid for single-family properties(462,875) (187,886)(71,361) (206,137)
Change in escrow deposits for purchase of single-family properties(2,710) (821)(198) (4,357)
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 other68,618
 71,894
87,172
 30,142
Net proceeds received from sales of non-performing loans—
 44,538
Purchase of commercial office buildings—
 (27,105)
Collections from mortgage financing receivables83
 17,687
Distributions from unconsolidated joint ventures5,981
 6,400
Renovations to single-family properties(31,208) (21,710)
Other capital expenditures for single-family properties(26,725) (22,026)
Proceeds received from hurricane-related insurance claims—
 4,000
Investment in unconsolidated joint ventures(2,265) —
Distributions from joint ventures6,314
 2,440
Initial renovations to single-family properties(16,513) (33,030)
Recurring and other capital expenditures for single-family properties(33,331) (23,331)
Cash paid for development activity(139,722) (95,354)
Other purchases of productive assets(38,060) —
(129) —
Net cash used for investing activities(486,896) (444,009)(170,033) (325,627)
      
Financing activities 
  
 
  
Proceeds from issuance of Class A common shares694,765
 —
Payments of Class A common share issuance costs(10,444) —
Proceeds from issuance of perpetual preferred shares270,000
 498,750
Payments of perpetual preferred share issuance costs(9,229) (15,922)
Repurchase of Class A common shares—
 (34,969)
Proceeds from exercise of stock options988
 2,777
10,336
 2,755
Repurchase of Class A common shares—
 (96,098)
Redemptions of Class A units(169) (399)
Payments related to tax withholding for share-based compensation(2,743) (822)
Payments on asset-backed securitizations(472,470) (374,031)(10,736) (10,490)
Proceeds from revolving credit facility62,000
 951,000
—
 100,000
Payments on revolving credit facility(112,000) (876,000)(250,000) (240,000)
Proceeds from term loan facility25,000
 250,000
Payments on term loan facility(100,000) —
(100,000) (100,000)
Payments on secured note payable(721) (687)—
 (49,427)
Proceeds from unsecured senior notes, net of discount397,944
 497,210
Settlement of cash flow hedging instrument—
 9,628
Distributions to noncontrolling interests(8,333) (8,582)(5,489) (5,536)
Distributions to common shareholders(38,890) (35,997)(29,721) (28,702)
Distributions to preferred shareholders(46,122) (26,650)(13,782) (29,194)
Deferred financing costs paid(3,974) (10,425)(3,572) (5,100)
Net cash provided by financing activities250,401
 257,736
Net cash (used for) provided by financing activities(7,763) 105,353
      
Net increase in cash, cash equivalents and restricted cash112,880
 68,707
109,696
 29,691
Cash, cash equivalents and restricted cash, beginning of period250,241
 168,968
Cash, cash equivalents and restricted cash, beginning of period (see Note 3)175,214
 182,823
Cash, cash equivalents and restricted cash, end of period (see Note 3)$363,121
 $237,675
$284,910
 $212,514

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)
 For the Six Months Ended
June 30,
 2019 2018
Supplemental cash flow information 
  
Cash payments for interest, net of amounts capitalized$(52,980) $(47,663)
    
Supplemental schedule of noncash investing and financing activities 
  
Accrued property acquisitions, renovations and development expenditures$9,837
 $979
Transfers of completed homebuilding deliveries to properties51,946
 37,541
Property and land contributions to an unconsolidated joint venture(5,190) —
Note receivable related to a bulk sale of properties, net of discount29,474
 —
Redemption of participating preferred shares—
 (28,258)
Accrued distributions to affiliates4,647
 (149)
Accrued distributions to non-affiliates26,780
 (1,995)


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, 2016June 30, 2019 December 31, 2018
(Unaudited)  (Unaudited)  
Assets      
Single-family properties:      
Land$1,600,906
 $1,512,183
$1,727,940
 $1,713,496
Buildings and improvements7,020,774
 6,614,953
7,566,498
 7,483,600
Single-family properties in operation9,294,438
 9,197,096
Less: accumulated depreciation(1,316,920) (1,176,499)
Single-family properties in operation, net7,977,518
 8,020,597
Single-family properties under development and development land235,508
 153,651
Single-family properties held for sale, net50,370
 87,430
276,581
 318,327
8,672,050
 8,214,566
Less: accumulated depreciation(869,551) (666,710)
Single-family properties, net7,802,499
 7,547,856
Total real estate assets, net8,489,607
 8,492,575
Cash and cash equivalents243,547
 118,799
119,176
 30,284
Restricted cash119,574
 131,442
165,734
 144,930
Rent and other receivables, net35,429
 17,618
31,988
 29,027
Escrow deposits, prepaid expenses and other assets149,184
 128,403
181,010
 145,807
Amounts due from affiliates25,848
 30,857
25,843
 25,893
Deferred costs and other intangibles, net13,516
 11,956
8,986
 12,686
Goodwill120,279
 120,279
120,279
 120,279
Total assets$8,509,876
 $8,107,210
$9,142,623
 $9,001,481
      
Liabilities      
Revolving credit facility$—
 $—
$—
 $250,000
Term loan facility, net197,913
 321,735
—
 99,232
Asset-backed securitizations, net1,981,444
 2,442,863
1,953,280
 1,961,511
Exchangeable senior notes, net110,771
 108,148
Secured note payable49,107
 49,828
Unsecured senior notes, net887,777
 492,800
Accounts payable and accrued expenses263,745
 177,206
301,219
 219,229
Participating preferred units derivative liability68,469
 69,810
Amounts payable to affiliates4,824
 4,967
Total liabilities2,671,449
 3,169,590
3,147,100
 3,027,739
      
Commitments and contingencies
 
Commitments and contingencies (see Note 12)

 

      
Capital      
Partners' 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
Common units (300,462,864 and 296,649,621 units issued and outstanding at June 30, 2019 and December 31, 2018, respectively)4,450,967
 4,390,137
Preferred units (35,350,000 units issued and outstanding at June 30, 2019 and December 31, 2018)854,435
 854,435
Limited partner:   
Common units (52,226,980 and 55,316,826 units issued and outstanding at June 30, 2019 and December 31, 2018, respectively)681,816
 720,384
Accumulated other comprehensive income—
 95
8,305
 8,786
Total partners' capital5,839,909
 4,939,110
   
Noncontrolling interest(1,482) (1,490)
Total capital5,838,427
 4,937,620
5,995,523
 5,973,742
      
Total liabilities and capital$8,509,876
 $8,107,210
$9,142,623
 $9,001,481


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,		For the Three Months Ended
June 30,		 For the Six Months Ended
June 30,
2017 2016 2017 20162019 2018 2019 2018
Revenues:              
Rents from single-family properties$207,490
 $197,137
 $613,245
 $558,623
Fees from single-family properties2,843
 2,898
 8,137
 7,819
Tenant charge-backs36,094
 30,808
 91,849
 72,077
Rents and other single-family property revenues$279,914
 $262,882
 $557,608
 $519,545
Other409
 5,214
 4,367
 12,811
1,946
 1,601
 3,456
 2,942
Total revenues246,836
 236,057
 717,598
 651,330
281,860
 264,483
 561,064
 522,487
              
Expenses:              
Property operating expenses97,944
 92,488
 267,203
 238,987
104,591
 98,843
 211,275
 199,830
Property management expenses17,447
 18,335
 52,367
 53,177
21,650
 18,616
 42,359
 37,603
General and administrative expense8,525
 8,043
 26,746
 24,544
10,486
 9,677
 19,921
 18,908
Interest expense26,592
 32,851
 86,873
 99,309
32,571
 31,978
 64,486
 61,279
Acquisition fees and costs expensed1,306
 1,757
 3,814
 10,899
970
 1,321
 1,804
 2,632
Depreciation and amortization74,790
 75,392
 221,459
 224,513
82,840
 78,319
 164,001
 157,622
Hurricane-related charges, net10,136
 —
 10,136
 —
Other1,285
 3,142
 4,202
 6,482
1,514
 1,624
 2,538
 2,451
Total expenses238,025
 232,008
 672,800
 657,911
254,622
 240,378
 506,384
 480,325
              
Gain on sale of single-family properties and other, net1,895
 11,682
 6,375
 12,574
13,725
 3,240
 19,374
 5,496
Loss on early extinguishment of debt—
 (13,408) (6,555) (13,408)(659) (1,447) (659) (1,447)
Gain on conversion of Series E units—
 —
 —
 11,463
Remeasurement of participating preferred units8,391
 (2,490) 1,341
 (2,940)—
 —
 —
 1,212
              
Net income (loss)19,097
 (167) 45,959
 1,108
Net income40,304
 25,898
 73,395
 47,423
              
Noncontrolling interest(31) (226) 8
 (446)—
 (248) —
 (259)
Preferred distributions17,253
 13,669
 46,122
 26,650
13,782
 11,984
 27,564
 26,581
Income allocated to Series C and D limited partners—
 10,915
 —
 16,478
Redemption of participating preferred units—
 32,215
 —
 32,215
              
Net income (loss) attributable to common unitholders$1,875
 $(24,525) $(171) $(41,574)$26,522
 $(18,053) $45,831
 $(11,114)
              
Weighted-average common units outstanding:              
Basic322,303,138
 285,208,489
 312,315,728
 271,994,345
352,363,754
 350,812,725
 352,183,171
 346,198,786
Diluted344,688,885
 285,208,489
 312,315,728
 271,994,345
352,888,312
 350,812,725
 352,702,546
 346,198,786
              
Net income (loss) attributable to common unitholders per unit:              
Basic$0.01
 $(0.09) $—
 $(0.15)$0.08
 $(0.05) $0.13
 $(0.03)
Diluted$—
 $(0.09) $—
 $(0.15)$0.08
 $(0.05) $0.13
 $(0.03)
 
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 distributions17,253
 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)
 For the Three Months Ended
June 30,		 For the Six Months Ended
June 30,
 2019 2018 2019 2018
Net income$40,304
 $25,898
 $73,395
 $47,423
Other comprehensive (loss) income:       
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(240) (241) (481) (361)
Other comprehensive (loss) income(240) (241) (481) 9,192
Comprehensive income40,064
 25,657
 72,914
 56,615
Comprehensive loss attributable to noncontrolling interests—
 (248) —
 (259)
Preferred distributions13,782
 11,984
 27,564
 26,581
Redemption of participating preferred units—
 32,215
 —
 32,215
Comprehensive income (loss) attributable to common unitholders$26,282
 $(18,294) $45,350
 $(1,922)
 
The accompanying notes are an integral part of these condensed consolidated financial statements.



American Homes 4 Rent, L.P.
Condensed Consolidated StatementStatements 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, 2016243,375,557
 $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 taxes89,829
 630
 —
 —
 —
 —
 630
 —
 630
                  
Issuance of Class A common units, net of offering costs of $10,75930,676,080
 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 units99,312
 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, 2017274,240,778
 $4,008,095
 $1,095,494
 55,449,466
 $736,320
 $—
 $5,839,909
 $(1,482) $5,838,427
 General Partner Limited Partners Accumulated other comprehensive income 
Total partners’ capital
 Noncontrolling interest Total capital
 Common capital Preferred capital amount Common capital    
 Number of units Amount  Number of units Amount    
Balances at December 31, 2017286,749,712
 $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 taxes59,187
 (408) —
 —
 —
 —
 (408) —
 (408)
Repurchases of Class A units(1,804,163) (34,969) —
 —
 —
 —
 (34,969) —
 (34,969)
Distributions to capital holders:                 
Preferred units (Note 10)—
 —
 (14,597) —
 —
 —
 (14,597) —
 (14,597)
Common units ($0.05 per unit)—
 (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, 2018285,004,736
 $4,205,283
 $901,318
 55,350,153
 $725,901
 $9,508
 $5,842,010
 $(1,360) $5,840,650
Share-based compensation—
 943
 —
 —
 —
 —
 943
 —
 943
Common units issued under share-based compensation plans, net of units withheld for employee taxes164,671
 3,068
 —
 —
 —
 —
 3,068
 —
 3,068
Redemption of Series C participating preferred units into Class A units10,848,827
 186,119
 (157,861) —
 —
 —
 28,258
 —
 28,258
Liquidation of consolidated joint venture—
 (1,849) —
 —
 —
 —
 (1,849) 1,608
 (241)
Distributions to capital holders:                 
Preferred units (Note 10)—
 —
 (11,984) —
 —
 —
 (11,984) —
 (11,984)
Common units ($0.05 per unit)—
 (14,822) —
 —
 (2,767) —
 (17,589) —
 (17,589)
Net income—
 17,064
 11,984
 —
 (2,902) —
 26,146
 (248) 25,898
Total other comprehensive loss—
 —
 —
 —
 —
 (241) (241) —
 (241)
Balances at June 30, 2018296,018,234
 $4,395,806
 $743,457
 55,350,153
 $720,232
 $9,267
 $5,868,762
 $—
 $5,868,762


American Homes 4 Rent, L.P.
Condensed Consolidated Statement of Capital (continued)
(Amounts in thousands, except unit data)
(Unaudited)
 General Partner Limited Partners Accumulated other comprehensive income Total capital
 Common capital Preferred capital amount Common capital  
 Number of units Amount  Number of units Amount  
Balances at December 31, 2018296,649,621
 $4,390,137
 $854,435
 55,316,826
 $720,384
 $8,786
 $5,973,742
Share-based compensation—
 952
 —
 —
 —
 —
 952
Common units issued under share-based compensation plans, net of units withheld for employee taxes77,830
 (760) —
 —
 —
 —
 (760)
Redemptions of Class A units500,000
 6,510
 —
 (500,000) (6,510) —
 —
Distributions to capital holders:             
Preferred units (Note 10)—
 —
 (13,782) —
 —
 —
 (13,782)
Common units ($0.05 per unit)—
 (14,889) —
 —
 (2,741) —
 (17,630)
Net income—
 16,283
 13,782
 —
 3,026
 —
 33,091
Total other comprehensive loss—
 —
 —
 —
 —
 (241) (241)
Balances at March 31, 2019297,227,451
 $4,398,233
 $854,435
 54,816,826
 $714,159
 $8,545
 $5,975,372
Share-based compensation—
 1,269
 —
 —
 —
 —
 1,269
Common units issued under share-based compensation plans, net of units withheld for employee taxes645,567
 10,263
 —
 —
 —
 —
 10,263
Redemptions of Class A units2,589,846
 33,736
 —
 (2,589,846) (33,736) —
 —
Distributions to capital holders:             
Preferred units (Note 10)—
 —
 (13,782) —
 —
 —
 (13,782)
Common units ($0.05 per unit)—
 (15,052) —
 —
 (2,611) —
 (17,663)
Net income—
 22,518
 13,782
 —
 4,004
 —
 40,304
Total other comprehensive loss—
 —
 —
 —
 —
 (240) (240)
Balances at June 30, 2019300,462,864
 $4,450,967
 $854,435
 52,226,980
 $681,816
 $8,305
 $5,995,523

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,		For the Six Months Ended
June 30,
2017 20162019 2018
Operating activities      
Net income$45,959
 $1,108
$73,395
 $47,423
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization221,459
 224,513
164,001
 157,622
Noncash amortization of deferred financing costs6,285
 7,912
3,976
 3,888
Noncash amortization of discount on exchangeable senior notes2,624
 1,955
Noncash amortization of discount on ARP 2014-SFR1 securitization—
 1,744
Noncash amortization of discounts on debt instruments217
 1,941
Noncash amortization of cash flow hedging instrument(481) (361)
Noncash share-based compensation3,175
 2,744
2,221
 1,918
Provision for bad debt5,142
 5,092
3,508
 3,616
Hurricane-related charges, net10,136
 —
Loss on early extinguishment of debt6,555
 13,408
659
 1,447
Gain on conversion of Series E units to Series D units—
 (11,463)
Remeasurement of participating preferred units(1,341) 2,940
—
 (1,212)
Equity in net earnings of unconsolidated ventures(1,367) (418)
Equity in net losses (earnings) of unconsolidated joint ventures147
 (587)
Net gain on sale of single-family properties and other(6,375) (12,574)(19,374) (5,496)
Loss on impairment of single-family properties3,786
 1,467
1,433
 2,236
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)(6,484) (5,522)
Prepaid expenses and other assets(5,690) (429)(8,140) (12,167)
Deferred leasing costs(5,361) (6,199)(2,129) (5,834)
Accounts payable and accrued expenses71,325
 47,920
74,493
 61,061
Amounts payable to affiliates5,009
 (5,425)50
 (8)
Net cash provided by operating activities349,375
 254,980
287,492
 249,965
      
Investing activities      
Cash paid for single-family properties(462,875) (187,886)(71,361) (206,137)
Change in escrow deposits for purchase of single-family properties(2,710) (821)(198) (4,357)
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 other68,618
 71,894
87,172
 30,142
Net proceeds received from sales of non-performing loans—
 44,538
Purchase of commercial office buildings—
 (27,105)
Collections from mortgage financing receivables83
 17,687
Distributions from unconsolidated joint ventures5,981
 6,400
Renovations to single-family properties(31,208) (21,710)
Other capital expenditures for single-family properties(26,725) (22,026)
Proceeds received from hurricane-related insurance claims—
 4,000
Investment in unconsolidated joint ventures(2,265) —
Distributions from joint ventures6,314
 2,440
Initial renovations to single-family properties(16,513) (33,030)
Recurring and other capital expenditures for single-family properties(33,331) (23,331)
Cash paid for development activity(139,722) (95,354)
Other purchases of productive assets(38,060) —
(129) —
Net cash used for investing activities(486,896) (444,009)(170,033) (325,627)
      
Financing activities      
Proceeds from issuance of Class A common units694,765
 —
Payments of Class A common unit issuance costs(10,444) —
Proceeds from issuance of perpetual preferred units270,000
 498,750
Payments of perpetual preferred unit issuance costs(9,229) (15,922)
Repurchase of Class A common units—
 (34,969)
Proceeds from exercise of stock options988
 2,777
10,336
 2,755
Repurchase of Class A common units—
 (96,098)
Redemptions of Class A units(169) (399)
Payments related to tax withholding for share-based compensation(2,743) (822)
Payments on asset-backed securitizations(472,470) (374,031)(10,736) (10,490)
Proceeds from revolving credit facility62,000
 951,000
—
 100,000
Payments on revolving credit facility(112,000) (876,000)(250,000) (240,000)
Proceeds from term loan facility25,000
 250,000
Payments on term loan facility(100,000) —
(100,000) (100,000)
Payments on secured note payable(721) (687)—
 (49,427)
Distributions to noncontrolling interests—
 (230)
Proceeds from unsecured senior notes, net of discount397,944
 497,210
Settlement of cash flow hedging instrument—
 9,628
Distributions to common unitholders(47,223) (43,493)(35,210) (34,238)
Distributions to preferred unitholders(46,122) (26,650)(13,782) (29,194)
Distributions to Series D convertible unitholders—
 (856)
Deferred financing costs paid(3,974) (10,425)(3,572) (5,100)
Net cash provided by financing activities250,401
 257,736
Net cash (used for) provided by financing activities(7,763) 105,353
      
Net increase in cash, cash equivalents and restricted cash112,880
 68,707
109,696
 29,691
Cash, cash equivalents and restricted cash, beginning of period250,241
 168,968
Cash, cash equivalents and restricted cash, beginning of period (see Note 3)175,214
 182,823
Cash, cash equivalents and restricted cash, end of period (see Note 3)$363,121
 $237,675
$284,910
 $212,514

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
 $(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$—
 $1,277,253
Restricted cash$—
 $9,521
Rent and other receivables, net$—
 $843
Escrow deposits, prepaid expenses and other assets$—
 $35,134
Deferred costs and other intangibles, net$—
 $22,696
Asset-backed securitization$—
 $(329,703)
Exchangeable senior notes, net$—
 $(112,298)
Accounts payable and accrued expenses$—
 $(38,485)
Class A common units issued$—
 $(530,460)
 For the Six Months Ended
June 30,
 2019 2018
Supplemental cash flow information   
Cash payments for interest, net of amounts capitalized$(52,980) $(47,663)
    
Supplemental schedule of noncash investing and financing activities   
Accrued property acquisitions, renovations and development expenditures$9,837
 $979
Transfers of completed homebuilding deliveries to properties51,946
 37,541
Property and land contributions to an unconsolidated joint venture(5,190) —
Note receivable related to a bulk sale of properties, net of discount29,474
 —
Redemption of participating preferred units—
 (28,258)
Accrued distributions to affiliates4,647
 (149)
Accrued distributions to non-affiliates26,780
 (1,995)


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



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"AH4R”) is a Maryland real estate investment trust (“REIT”) formed on October 19, 2012, for the purpose of acquiring, developing, 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“the Operating Partnership," our "Operating Partnership"” “our operating partnership” or the "OP"“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,"“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 SeptemberJune 30, 2017,2019, the Company held 50,01552,634 single-family properties in 22 states, including 4691,664 properties classified as held for sale.


AH4R is the general partner of, and as of SeptemberJune 30, 2017,2019, owned an approximate 83.2%85.2% common partnership interest in, the Operating Partnership with the remaining 16.8%14.8% 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, as amended, 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.OP units.

From our formation through June 10, 2013, the Company was externally managed and advised by American Homes 4 Rent Advisor, LLC (the “Advisor”) and the leasing, managing and advertising of our properties were overseen and directed by American Homes 4 Rent Management Holdings, LLC (the “Property Manager”), both of which were subsidiaries of American Homes 4 Rent, LLC (“AH LLC”). On June 10, 2013, we acquired the Advisor and the Property Manager from AH LLC in exchange for 4,375,000 Series D convertible units and 4,375,000 Series E convertible units from the Operating Partnership, therefore internalizing our management including all administrative, financial, property management, marketing and leasing personnel, including executive management. The Company consolidates the Advisor and the Property Manager and the results of these operations are reflected in the condensed consolidated financial statements. Effective August 31, 2016, AH LLC was liquidated and its ownership interests in the Operating Partnership were distributed to its members.


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. Ownership interestsThe ownership interest in certaina consolidated subsidiariessubsidiary of the Company held by outside parties, arewhich was liquidated during the second quarter of 2018, 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, 2016.2018. 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 presentationstatement of the 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, and 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.


Effective December 31, 2016, in accordance with our adoption of Accounting Standards Update ("ASU") No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, the Company includes restricted cash together with cash and cash equivalents when reconciling the beginning and ending balances shown in the statements of cash flows, which has the effect of excluding the presentation of transfers between restricted and unrestricted cash amounts in the statements of cash flows. Prior to the adoption, the beginning and ending balances presented in the statements of cash flows included only cash and cash equivalents, and transfers between restricted and unrestricted cash amounts were presented within operating and investing activities based on the nature of the amounts. All prior period amounts have been reclassified to conform to the current presentation. This resulted in $131.4 million and $111.3 million of restricted cash as of September 30, 2016, and December 31, 2015, respectively, being added to cash, cash equivalents and restricted cash in the condensed consolidated statements of cash flows.
EffectivePronouncements Adopted January 1, 2017,in order to include share-based compensation costs for employees in the same financial statement line item as the cash compensation paid to the employees, noncash share-based compensation expense has been reclassified with the amounts related to corporate administrative employees and centralized and field property management employees reflected in general and administrative expense and property management expenses, respectively, within the condensed consolidated statements of operations. Additionally, all costs associated with operating our proprietary property management platform such as salary expenses for both centralized and field property management personnel, lease expenses and operating costs for property management offices and technology expenses for maintaining the property management platform, which were previously included in property operating expenses, have been reclassified into property management expenses. This resulted in the reclassification of $0.9 million and $2.7 million of noncash share-based compensation expense for the three and nine months ended September 30,2019

In February 2016, respectively, with $0.4 million and $1.1 million of noncash share-based compensation expense reclassified to property management expenses, respectively, and $0.5 million and $1.6 million of noncash share-based compensation expense reclassified to general and administrative expense, respectively, in the condensed consolidated statements of operations. This also resulted in $17.9 million and $52.0 million of property management expenses for the three and nine months ended September 30, 2016, respectively, which were previously included in property operating expenses, being reclassified to property management expenses in the condensed consolidated statements of operations.

There have been no other 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, 2016. 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 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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 remains similar to lessor accounting under previous guidance while aligning with the FASB’s revised revenue recognition guidance for non-lease components of lease agreements. The new guidance requires 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 also requires lessees and lessors to capitalize, as initial direct costs, only those costs incurred due to the execution of a lease. Other costs previously capitalized under ASC 840, including indirect leasing costs, are expensed as incurred. In July 2018, the FASB issued ASU No. 2017-12, Derivatives and Hedging2018-11, Leases (Topic 815):842) Targeted Improvements to Accounting for Hedging Activities, to amend ASC No. 815, Derivatives and Hedging, to more closely align hedge accountingwhich provides lessors with a company’s risk management strategies, provide additional transparencypractical expedient, by class of underlying asset, to not separate non-lease components from the associated lease component if the non-lease components would otherwise be accounted for under the new revenue recognition standard and understandabilityboth the timing and pattern of hedge results,transfer are the same for the non-lease components and associated lease component and, if accounted for separately, the lease component would be classified as wellan operating lease. As issued, ASU No. 2016-02 required modified retrospective application for all leases existing as to simplifyof, or entered into after, the application of hedge accounting. The guidance eliminates the requirement to separately measure and report hedge ineffectiveness. Instead, the entire change in the fair valuebeginning of the hedging instrument included in the assessment of hedge effectiveness will be recorded in other comprehensive income, and amounts deferred in other comprehensive income will be reclassified into earnings andearliest comparative period presented in the same income statement line item that is usedconsolidated financial statements, with certain practical expedients available. ASU No. 2018-11 simplifies the transition requirements by providing companies an option to presentinitially apply the earnings effectnew lease requirements as of the hedged item whendate of adoption and recognize a cumulative effect adjustment to the hedged item affects earnings. Thisopening balance of retained earnings in the period of adoption. In December 2018, the FASB issued ASU No. 2018-20, Narrow-Scope Improvements for Lessors, which allows lessors to make an accounting policy election to exclude sales taxes and other similar taxes on lease transactions from lease revenue and the associated expense and requires lessors to exclude costs paid directly by lessees to third parties on the lessor’s behalf from lease revenue. The guidance will beis effective for public companiesthe Company for annual reporting periods beginning after December 15, 2018, and for interim periods within those annual periods, with early adoption permitted.

The Company adopted this guidance (the “new lease accounting standard”) effective January 1, 2019. As part of our accounting policy for the new guidance, the Company elected the simplified transition requirements provided by ASU No. 2018-11 and applied the new lease accounting standard beginning January 1, 2019. Comparative periods are not restated. We also elected the package of practical expedients which permits the Company to not reevaluate whether existing contracts contain leases, to not reevaluate existing leases for lease classification and to not reassess initial direct costs previously capitalized prior to the adoption of the new guidance. As a result of our accounting policy elections, the Company did not recognize a cumulative effect adjustment on January 1, 2019. The new guidance affects our policy for capitalizing initial direct costs. Had the Company adopted this guidance during the three and six months ended June 30, 2018, the Company would have expensed an additional $1.8 million and $3.4 million, respectively, of indirect leasing costs that were capitalized under the previous guidance. The Company classifies our single-family property leases as operating leases and elects to not separate the lease component, comprised of rents from single-family properties, from the associated non-lease component, comprised of fees from single-family properties and tenant charge-backs. The combined component is accounted for under the new lease accounting standard while certain tenant charge-backs are accounted for as variable payments under the revenue accounting guidance. As a result of the new guidance, the Company reclassified previously reported rents from single-family properties, fees from single-family properties and tenant charge-backs to rents and other single-family property revenues within the condensed consolidated statements of operations. Beginning January 1, 2019, the Company also reclassified bad debt expense from property operating expenses to rents and other single-family property revenues within the condensed consolidated statements of operations; previously reported property operating expenses were not restated. As a lessee, the Company recognized $4.8 million of lease liabilities and corresponding right-of-use assets on January 1, 2019, for office space we lease at our corporate headquarters in Agoura Hills, CA and at our field offices.

In June 2018, the FASB issued ASU No. 2018-07, Compensation—Stock Compensation (Topic 718) Improvements to Nonemployee Share-Based Payment Accounting, which aligns the measurement and classification guidance for share-based payments to nonemployees with the guidance for share-based payments to employees, with certain exceptions. The guidance is effective for the Company in annual reporting periods beginning after December 15, 2018, and for interim periods within those annual periods. An entity should only remeasure liability-classified awards that have not been settled by the date of adoption and equity-classified awards for which a measurement date has not been established through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The Company adopted this guidance effective September 30, 2017, which will impact our hedge accounting policy as disclosed above.January 1, 2019. The adoption of this guidance did not have a material impact on our financial statements.



Recent Accounting Pronouncements Not Yet Effective
In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, to simplify the accounting for goodwill impairment by removing Step 2 of the goodwill impairment test, which had involved determining the fair value of individual assets and liabilities of a reporting unit to measure goodwill. Instead, goodwill impairment will be determined as the excess of a reporting unit’s carrying value over its fair value, not to exceed the carrying amount of goodwill. 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 any goodwill impairment tests performed after January 1, 2017. The Company is currently assessing the impact of the guidance on our financial statements.

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which changed the definition of a business and will now require management to determine whether substantially all of the fair value of gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. When this is the case, the transferred assets and activities is not a business. This determination is important as the accounting treatment for business combinations and asset acquisitions differs since transactions costs are expensed in a business combination and capitalized in an asset acquisition. The guidance will be effective for public companies for annual reporting periods beginning after December 15, 2017, and for interim periods within those annual periods, with early adoption permitted. The guidance will be applied prospectively to any transactions occurring within the period of adoption. The Company adopted this guidance as of January 1, 2017, on a prospective basis, which results in our leased properties no longer meeting the definition of a business. Therefore, dispositions of leased properties will no longer result in a reduction to goodwill. The adoption of this guidance did not have a material impact on our financial statements.

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 will be 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. If early adopted, an entity must adopt all of the amendments in the same period. The Company is currently assessing the impact of the adoption of this guidance and does not anticipate that the adoption of this guidance will have a material impact on our financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, 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. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, which clarifies that receivables arising from operating leases are not within the scope of Topic 326. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842, Leases. In April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, which provides further clarification around some of the amendments in ASU 2016-13. In May 2019, the FASB issued ASU No. 2019-05, Financial Instruments-Credit Losses (Topic 326) Targeted Transition Relief, which provides entities that have certain instruments within the scope of Topic 326 with an option to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost basis upon adoption of Topic 326. 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. An entity will apply the amendments in these ASUs through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (that is, a modified-retrospective approach). A prospective transition approach is required for debt securities for which an other-than-temporary impairment had been recognized before the effective date. The effect of a prospective transition approach is to maintain the same amortized cost basis before and after the effective date of the guidance. The Company is currently assessing the impact of the guidance on our financial statements.


In March 2016,August 2018, the FASB issued ASU No. 2016-09, Compensation—Stock Compensation2018-13, Fair Value Measurement (Topic 718): Improvements820) Disclosure Framework—Changes to Employee Share-Based Payment Accountingthe Disclosure Requirements for Fair Value Measurement, which simplifies several aspectseliminates, adds and modifies certain disclosure requirements for fair value measurements. Companies will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the accounting for share-based payment transactions, includingfair value hierarchy. Companies will also be required to disclose the income tax consequences, classificationrange and weighted average of awards as either equity or liabilities, and classification on the statement of cash flows.significant unobservable inputs used to develop Level 3 fair value measurements. The guidance becameis effective for the Company for annual reporting periodsfiscal years beginning after December 15, 2016, and for interim periods within those annual periods. The Company adopted this guidance effective January 1, 2017, which resulted in our election to recognize forfeitures of share-based compensation as they occur. The adoption of this guidance did not have a material impact on our financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases(Topic 842), which will require lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by all leases with terms of more than one year. Lessor accounting will remain similar to lessor accounting under previous GAAP, while aligning with the FASB's new revenue recognition guidance for non-lease components. 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, 2018,2019, and for interim periods within those annual periods with early adoption permitted,permitted. The amendments on the range and requires the useweighted average of the modified retrospective transition method. 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 requirementsignificant unobservable inputs used to measure certain equity investments atdevelop Level 3 fair value with changesmeasurements and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in fair value recognized in net income. The guidance willthe initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective for the Company for annual reporting periods beginning after December 15, 2017, and for interim periods within those annual periods.date. The Company is currently assessing the impact of the guidance on our financial statements.



In May 2014,August 2018, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers(Topic 606)2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40) Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract, which provides guidance on revenue recognition and supersedesaligns the revenue recognition requirements for capitalizing implementation costs incurred 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 principlea hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). Capitalized implementation costs related to a companyhosting arrangement that is a service contract will recognize revenue when it transfers promised goods or services to customers in an amount that reflectsbe amortized over 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, mostterm of the Company’s rental contract revenue will continue to follow current leasing guidance. We have reviewed our other sourceshosting arrangement, beginning when the module or component 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 accountedhosting arrangement is ready for under ASC 840 until the adoption of ASU 2016-02 beginning January 1, 2019.

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 customer versus noncustomer, with exception to presentation of comprehensive income (revenue and expense when sale to customer or gain and loss when sale to noncustomer).

In our initial assessment, the Company’s current accounting policies for tenant chargebacks, recovery revenue, and real estate property sales are aligned with the new revenue recognition principles prescribed by the new guidance. Although we do not expect the new standards to ultimately change the amount or timing of our revenue recognition, the Company will continue to assess the potential effects of ASU No. 2014-09 and ASU No. 2017-05, noting that the underlying principles and processes used to record that revenue are changing under ASC 606 and ASC 610-20.its intended use. The guidance will beis effective for the Company in fiscal years (interim and annual reporting periods) that beginbeginning after December 15, 2017,2019, and for interim periods within those annual periods with early adoption permitted. At that time,The amendments in this ASU should be applied either retrospectively or prospectively to all implementation costs incurred after the Company may adopt the full retrospective approach or the modified retrospective approach.date of adoption. The Company does not anticipate that adoptionis currently assessing the impact of thisthe guidance will have a material impact 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, and cash reserves in accordance with certain loan agreements.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'sCompany’s and the Operating Partnership'sPartnership’s condensed consolidated statements of cash flows to the corresponding financial statement line items in the condensed consolidated balance sheets as of September 30, 2017 and 2016:(in thousands):
 June 30, December 31,
 2019 2018 2018 2017
Cash and cash equivalents$119,176
 $53,504
 $30,284
 $46,156
Restricted cash165,734
 159,010
 144,930
 136,667
Total cash, cash equivalents and restricted cash$284,910
 $212,514
 $175,214
 $182,823
 September 30, 2017 September 30, 2016
Balance Sheet:   
Cash and cash equivalents$243,547
 $106,308
Restricted cash119,574
 131,367
Statement of Cash Flows:   
Cash, cash equivalents and restricted cash$363,121
 $237,675



Note 4. Single-Family PropertiesReal Estate Assets, Net
 
Single-family properties,The net book value of real estate assets consisted of the following as of SeptemberJune 30, 2017,2019 and December 31, 2016 (dollars in2018 (in thousands):
 September 30, 2017
 Number of
properties		 Net book
value
Leased single-family properties46,026
 $7,130,878
Single-family properties being renovated858
 179,208
Single-family properties being prepared for re-lease392
 49,341
Vacant single-family properties available for lease2,270
 392,702
Single-family properties held for sale, net469
 50,370
Total50,015
 $7,802,499
 June 30, 2019 December 31, 2018
Occupied single-family properties$7,674,364
 $7,448,330
Single-family properties recently acquired19,074
 212,870
Single-family properties in turnover process218,600
 294,093
Single-family properties leased, not yet occupied65,480
 65,304
Single-family properties in operation, net (1)
7,977,518
 8,020,597
Development land144,052
 97,207
Single-family properties under development91,456
 56,444
Single-family properties held for sale276,581
 318,327
Total real estate assets, net$8,489,607
 $8,492,575
(1)Single-family properties in operation, net as of June 30, 2019 and December 31, 2018 included $0.2 million and $5.9 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.
 December 31, 2016
 Number of
properties		 Net book
value
Leased single-family properties44,798
 $7,040,000
Single-family properties being renovated312
 57,200
Single-family properties being prepared for re-lease91
 14,453
Vacant single-family properties available for lease2,102
 348,773
Single-family properties held for sale, net1,119
 87,430
Total48,422
 $7,547,856

Single-family properties, net as of September 30, 2017, and December 31, 2016, included $27.5 million and $14.3 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 $71.2$78.6 million and $67.2$74.1 million for the three months ended SeptemberJune 30, 20172019 and 2016,2018, respectively, and $208.9$155.4 million and $194.2$149.5 million for the ninesix months ended SeptemberJune 30, 20172019 and 2016,2018, respectively.


DuringThe following table summarizes the Company’s dispositions of single-family properties and land for the three and ninesix months ended SeptemberJune 30, 2017, the Company sold 1072019 and 738 homes, respectively, which generated total net proceeds of $14.4 million and $54.2 million, respectively, and resulted in a net gain on sale of $1.9 million and $3.1 million, respectively. Total net proceeds for the nine months ended September 30, 2017, included a $7.0 million note receivable, before a $1.5 million discount, that was recorded during the first quarter of 2017. During the three and nine months ended September 30, 2016, the Company sold 453 and 587 homes, respectively, which generated total net proceeds of $56.2 million and $71.9 million, respectively, and resulted in a net gain on sale of $11.7 million and $12.6 million, respectively.2018 (in thousands, except property data):


Hurricanes Harvey and Irma impacted certain properties in our Houston, Florida and Southeast markets during the third quarter of 2017. Approximately 140 homes sustained major damage and nearly 3,400 homes incurred minor damage, consisting primarily of downed trees and damaged roofs and fences. The Company’s property and casualty insurance policies provide coverage for wind and flood damage, as well as business interruption costs, during the period of remediation and repairs, subject to deductibles and limits. During the three months ended September 30, 2017, the Company recognized a $12.6 million impairment charge to write down the net book values of the impacted properties, of which we believe it is probable that we will recover an estimated $11.0 million through insurance claims, and accrued $8.5 million of additional repair, remediation and other costs. The $10.1 million of net charges were included in hurricane-related charges, net within the condensed consolidated statement of operations for the three months ended September 30, 2017. After the $12.6 million impairment charge, the impacted properties had an aggregate net book value of $8.3 million. The impairment charge represents the difference between management’s estimates of the fair values of the impacted properties and their carrying values. The fair values were based on current market prices of the components of the properties that did not sustain damage. As these fair value measurements were estimated using unobservable inputs, we classify them within Level 3 of the valuation hierarchy.
 For the Three Months Ended For the Six Months Ended
 June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018
Single-family properties:       
Properties sold433
 113
 613
 216
Net proceeds (1)
$82,828
 $18,175
 $115,451
 $29,642
Net gain on sale$13,569
 $3,240
 $19,149
 $5,358
Land:       
Net proceeds$899
 $—
 $1,195
 $500
Net gain on sale$156
 $—
 $225
 $138

(1)Total net proceeds for the three and six months ended June 30, 2019 included a $30.7 million note receivable, before a $1.2 million discount, which is presented in escrow deposits, prepaid expenses and other assets (see Note 6).


Note 5. Rent and Other Receivables, Net
 
Included in rent and other receivables, net is an allowance for doubtful accounts of $9.3$10.7 million and $5.7$8.6 million as of SeptemberJune 30, 2017,2019 and December 31, 2016,2018, respectively. Also included in rent and other receivables, net is $11.0$4.9 million of

hurricane-related insurance claims receivable and $0.9$1.4 million of non-tenant receivables as of SeptemberJune 30, 2017,2019, compared to $0.6$4.9 million of non-tenant receivableshurricane-related insurance claims receivable as of December 31, 2016.2018.

Rents and other single-family property revenues consisted of the following for the three and six months ended June 30, 2019 and 2018 (in thousands):
 For the Three Months Ended For the Six Months Ended
 June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018
Rents from single-family properties (1)
$279,914
 $227,211
 $557,608
 $445,234
Fees from single-family properties—
 2,754
 —
 5,587
Tenant charge-backs—
 32,917
 —
 68,724
Rents and other single-family property revenues$279,914
 $262,882
 $557,608
 $519,545
(1)For the three and six months ended June 30, 2019, rents from single-family properties included $35.3 million and $75.3 million, respectively, of variable lease payments for tenant charge-backs, which are primarily related to cost recoveries on utilities, as well as $3.5 million and $6.5 million, respectively, of variable lease payments for fees from single-family properties.

The Company generally rents our single-family properties under non-cancelable lease agreements with a term of one year. Future minimum rental revenues under existing leases on our properties as of June 30, 2019 and December 31, 2018 were as follows (in thousands):
 June 30, 2019 December 31, 2018
2019$355,553
 $446,745
2020163,123
 4,857
20214,738
 251
2022196
 98
202340
 19
Thereafter20
 —
Total$523,670
 $451,970


Note 6. Escrow Deposits, Prepaid Expenses and Other Assets

The following table summarizes escrow deposits, prepaid expenses and other assets for the Company as of June 30, 2019 and December 31, 2018 (in thousands):
 June 30, 2019 December 31, 2018
Escrow deposits, prepaid expenses and other$43,432
 $38,642
Investments in joint ventures58,517
 56,789
Notes receivable35,638
 6,012
Commercial real estate, vehicles and FF&E, net43,600
 44,591
Total$181,187
 $146,034


Depreciation expense related to commercial real estate, vehicles and FF&E, net was $1.8 million and $1.7 million for the three months ended June 30, 2019 and 2018, respectively, and $3.7 million and $3.4 million for the six months ended June 30, 2019 and 2018, respectively.

Investments in Joint Ventures

In August 2018, the Operating Partnership entered into a $156.3 million joint venture with a leading institutional investor for the purpose of developing, leasing and operating newly constructed single-family rental homes located in select submarkets in the Southeast. The initial term of the joint venture is five years, during which the Company is entitled to a proportionate share of the joint venture’s cash flows based on our 20% ownership interest, along with an opportunity for a promoted interest, and also receives fees for services the Company provides to the joint venture. In evaluating the Company’s 20% ownership interest in the joint venture, we concluded that the joint venture is not a variable interest entity after applying the variable interest model and, therefore, we account for our interest in the joint venture as an investment in an unconsolidated subsidiary after applying the voting interest model using the equity method of accounting. As of June 30, 2019 and December 31, 2018, the balance of the Company’s investment in the joint venture was $20.7 million and $18.0 million, respectively, which is included in escrow deposits, prepaid expenses and other assets on the condensed consolidated balance sheets.

In July 2019, the joint venture parties amended the agreement to increase the size of the partnership to $312.5 million and extend the term of the joint venture to five years from the date of the amendment. The other principal terms of the agreement remain the same. The changes to the agreement do not impact the accounting treatment of the joint venture.

Notes Receivable

In June 2019, as part of a bulk portfolio disposition of 215 homes, the Company issued a $30.7 million secured promissory note, which is secured by a first priority mortgage on the disposed homes, guaranteed by a parent of the borrower, matures on June 20, 2025, bears interest at 2.70% through October 31, 2019 and 4.50% thereafter to maturity, and contains certain required covenants. The secured promissory note requires quarterly interest payments with the full principal due at maturity. As of June 30, 2019, the secured note receivable, net of a $1.2 million discount, had a balance of $29.5 million included in escrow deposits, prepaid expenses and other assets on the condensed consolidated balance sheet.

The Company analyzes its notes receivables quarterly based on certain factors including, but not limited to, the borrower’s financial results and satisfying scheduled payments. A note receivable will be categorized as non-performing if a borrower experiences

financial difficulty and has failed to make scheduled payments. As part of the monitoring process we may meet with a borrower’s management to better understand such borrower’s financial performance and its future plans on an as-needed basis.

Note 6.7. Deferred Costs and Other Intangibles, Net
 
Deferred costs and other intangibles, net, consisted of the following as of SeptemberJune 30, 2017,2019 and December 31, 20162018 (in thousands):
 June 30, 2019 December 31, 2018
Deferred leasing costs$7,521
 $11,912
Deferred financing costs11,245
 11,246
Intangible assets: 
  
Database2,100
 2,100
 20,866
 25,258
Less: accumulated amortization(11,880) (12,572)
Total$8,986
 $12,686

 September 30, 2017 December 31, 2016
Deferred leasing costs$12,831
 $7,470
Deferred financing costs11,244
 6,552
Intangible assets: 
  
Value of in-place leases4,623
 4,739
Trademark3,100
 3,100
Database2,100
 2,100
 33,898
 23,961
Less: accumulated amortization(20,382) (12,005)
Total$13,516
 $11,956


Amortization expense related to deferred leasing costs, the value of in-place leases, trademark and database intangibles was $2.1$2.4 million and $6.9$2.5 million for the three months ended SeptemberJune 30, 20172019 and 2016,2018, respectively, and $7.2$4.9 million and $26.7$4.7 million for the ninesix months ended SeptemberJune 30, 20172019 and 2016,2018, respectively, which has beenand was 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 for both the three months ended SeptemberJune 30, 20172019 and 2016,2018 and $1.3 million and $1.9$1.0 million for both the ninesix months ended SeptemberJune 30, 20172019 and 2016, respectively, which has been2018 and was included in gross interest, prior to interest capitalization (see Note 7)8).
 
The following table sets forth the estimated annual amortization expense related to deferred costs and other intangibles, net as of SeptemberJune 30, 2017,2019 for future periods (in thousands):
 Deferred
Leasing Costs		 Deferred
Financing Costs		 Database Total
Remaining 2019$2,360
 $990
 $150
 $3,500
2020453
 1,969
 132
 2,554
2021—
 1,964
 —
 1,964
2022—
 968
 —
 968
Total$2,813
 $5,891
 $282
 $8,986

Year Deferred
Leasing
Costs		 Deferred
Financing
Costs		 Value of
In-place
Leases		 Trademark Database
Remaining 2017 $1,240
 $495
 $31
 $165
 $75
2018 1,835
 1,964
 21
 92
 300
2019 —
 1,964
 2
 —
 300
2020 —
 1,969
 —
 —
 132
2021 —
 1,964
 —
 —
 —
Thereafter —
 967
 —
 —
 —
Total $3,075
 $9,323
 $54
 $257
 $807




Note 7.8. Debt
 
All of the Company'sCompany’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 SeptemberJune 30, 2017,2019 and December 31, 20162018 (in thousands):
     Outstanding Principal Balance
 Interest Rate (1) Maturity Date September 30, 2017 December 31, 2016
AH4R 2014-SFR1 securitization (2)N/A N/A $—
 $456,074
AH4R 2014-SFR2 securitization4.42% October 9, 2024 497,743
 501,810
AH4R 2014-SFR3 securitization4.40% December 9, 2024 513,361
 517,827
AH4R 2015-SFR1 securitization (3)4.14% April 9, 2045 539,199
 543,480
AH4R 2015-SFR2 securitization (4)4.36% October 9, 2045 468,461
 472,043
Total asset-backed securitizations    2,018,764
 2,491,234
Exchangeable senior notes3.25% November 15, 2018 115,000
 115,000
Secured note payable4.06% July 1, 2019 49,107
 49,828
Revolving credit facility (5)2.43% June 30, 2022 —
 —
Term loan facility (6)2.58% June 30, 2022 200,000
 325,000
Total debt (7)    2,382,871
 2,981,062
Unamortized discount on exchangeable senior notes    (1,156) (1,883)
Equity component of exchangeable senior notes    (3,073) (4,969)
Deferred financing costs, net (8)    (39,407) (51,636)
Total debt per balance sheet    $2,339,235
 $2,922,574

     Outstanding Principal Balance
 
Interest Rate (1)
 Maturity Date June 30, 2019 December 31, 2018
AH4R 2014-SFR2 securitization4.42% October 9, 2024 $488,519
 $491,195
AH4R 2014-SFR3 securitization4.40% December 9, 2024 504,119
 506,760
AH4R 2015-SFR1 securitization (2)
4.14% April 9, 2045 529,433
 532,197
AH4R 2015-SFR2 securitization (3)
4.36% October 9, 2045 459,703
 462,358
Total asset-backed securitizations    1,981,774
 1,992,510
2028 unsecured senior notes (4)
4.08% February 15, 2028 500,000
 500,000
2029 unsecured senior notes4.90% February 15, 2029 400,000
 —
Revolving credit facility (5)
3.60% June 30, 2022 —
 250,000
Term loan facility (6)
N/A N/A —
 100,000
Total debt    2,881,774
 2,842,510
Unamortized discounts on unsecured senior notes    (4,385) (2,546)
Deferred financing costs, net (7)
    (36,332) (36,421)
Total debt per balance sheet    $2,841,057
 $2,803,543
(1)Interest rates are as of SeptemberJune 30, 2017.2019. Unless otherwise stated, interest rates are fixed percentages.
(2)The AH4R 2014-SFR1 securitization was paid off in full during the second quarter of 2017.
(3)The AH4R 2015-SFR1 securitization has a maturity date of April 9, 2045, with an anticipated repayment date of April 9, 2025.
(4)(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 2028 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 LIBORLondon Inter-Bank Offered Rate (“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 September 30, 2017, plus 1-month LIBOR.
(6)
The term loan was fully repaid in June 2019. Prior to repayment, the term loan component of our credit facility provides for a borrowing capacity of up to $200.0 million, with a maturity date of June 2022, and bearsbore 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 September 30, 2017, plus 1-month LIBOR.
(7)The Company was in compliance with all debt covenants associated with its asset-backed securitizations, secured note payable, revolving credit facility and term loan facility as of September 30, 2017, and December 31, 2016.
(8)Deferred financing costs relate to our asset-backed securitizations, and our term loan facility.facility and unsecured senior notes. Amortization of deferred financing costs was $1.4$1.5 million and $2.2 million for both the three months ended SeptemberJune 30, 20172019 and 2016, respectively,2018 and $5.0$3.0 million and $6.3$2.9 million for the ninesix months ended SeptemberJune 30, 20172019 and 2016,2018, respectively, which has beenwas included in gross interest, prior to interest capitalization.


Early ExtinguishmentDebt Maturities
The following table summarizes the contractual maturities of Debtthe Company’s debt on a fully extended basis as of June 30, 2019 (in thousands):

Remaining 2019$10,358
202020,714
202120,714
202220,714
202320,714
Thereafter2,788,560
Total debt$2,881,774

During
Unsecured Senior Notes

In January 2019, the second quarterOperating Partnership issued $400.0 million of 2017, the Company paid off the outstanding principal4.90% unsecured senior notes with a maturity date of February 15, 2029 (the “2029 Notes”). Interest on the AH4R 2014-SFR1 asset-backed securitization2029 Notes is payable semi-annually in arrears on February 15 and August 15 of each year, commencing on August 15, 2019. The Operating Partnership received net proceeds of $395.3 million from this issuance, after underwriting fees of approximately $455.4$2.6 million using and a $2.1 million discount, and before estimated offering costs of $1.0 million. The Operating Partnership used the net proceeds from the Class A common share offering in the first quarter of 2017this issuance to repay amounts outstanding on our revolving credit facility and available cash, which resulted in $6.6 million of charges primarily related to the write-off of unamortized deferred financing costs that were included in loss on early extinguishment of debt within the condensed consolidated statements of operations.for general corporate purposes. The payoff of the AH4R 2014-SFR1 asset-backed securitization also resulted in the release of the 3,799 homes pledged as collateral and $9.4 million of restricted cash for lender requirements.

Exchangeable Senior2029 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, are senior unsecured obligations of the Operating PartnershipPartnership’s unsecured and unsubordinated obligation and rank equally in right of payment with all otherof the Operating Partnership’s existing and future senior unsecured indebtednessand unsubordinated indebtedness. The Operating Partnership may redeem the 2029 Notes at any time, in whole or in part, at the applicable redemption price specified in the indenture with respect to the 2029 Notes. If the 2029 Notes are redeemed on or after November 15, 2028 (three months prior to the maturity date), the redemption price will be equal to 100% of the Operating Partnership. The Operating Partnership’s obligations under the exchangeable senior notes are fully and unconditionally guaranteed by the Company.

The exchangeable senior notes bear interest at a rate of 3.25% per annum and 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 by2029 Notes being redeemed plus accrued and unpaid interest thereon to, but not including, 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 September 30, 2017, was 55.1453 of our Class A common shares per $1,000 principal amount of the notes. The exchange rate is adjusted based on our Class A common share price and distributions to common shareholders.redemption date.

As of September 30, 2017, the exchangeable senior notes, net had a balance of $110.8 million in the condensed consolidated balance sheets, which was net of an unamortized discount of $1.2 million and $3.1 million of unamortized fair value of the exchange settlement feature, which was included in additional paid-in capital within the Company's condensed consolidated balance sheets and was included in general partner's common capital within the Operating Partnership's condensed consolidated balance sheets.

Credit Facilities
During 2016, the Company entered into a $1.0 billion credit agreement, which was subsequently amended in June 2017. The amendment expanded our borrowing capacity on the revolving credit facility to $800.0 million and reduced the term loan facility to $200.0 million. The amendment also lowered our cost of borrowing and provides a more flexible borrowing structure. The interest rate on the revolving credit facility is, at the Company’s election, 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%. Borrowings under the term loan facility accrue interest, at the Company’s election, at either a LIBOR rate plus a margin ranging from 0.90% to 1.75% or a base rate plus a margin ranging from 0.00% to 0.75%. In each case, the actual margin is determined based on the Company's credit ratings in effect from time to time. Based on current corporate ratings for LIBOR-based borrowings as of September 30, 2017, the revolving credit facility bears interest at 1-month LIBOR plus 1.20%, and the term loan facility bears interest at 1-month LIBOR plus 1.35%. The credit agreement includes an accordion feature allowing the revolving credit facility or the term loan facility to be increased to an aggregate amount not to exceed $1.75 billion, subject to certain conditions. The revolving credit facility matures on June 30, 2021, with two six-month extension options at the Company's election upon payment of an extension fee, and the term loan facility matures on June 30, 2022. No amortization payments are required on the term loan facility prior to the maturity date. The credit agreement requires that we maintain certain financial covenants. As of September 30, 2017 and December 31, 2016, the Company had no outstanding borrowings against the revolving credit facility, $200.0 million and $325.0 million, respectively, of outstanding borrowings against the term loan facility and was in compliance with all loan covenants.
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 the ARP 2014-SFR1 securitization and exchangeable senior notes and the fair value of the exchange settlement feature of the exchangeableunsecured senior notes, and capitalized interest for the three and ninesix months ended SeptemberJune 30, 20172019 and 20162018 (in thousands):
 For the Three Months Ended For the Six Months Ended
 June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018
Gross interest$35,221
 $33,341
 $69,833
 $65,078
Capitalized interest(2,650) (1,363) (5,347) (3,799)
Interest expense$32,571
 $31,978

$64,486
 $61,279

 For the Three Months Ended For the Nine Months Ended
 September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016
Gross interest$28,125
 $33,433
 $90,044
 $100,886
Capitalized interest(1,533) (582) (3,171) (1,577)
Interest expense$26,592
 $32,851

$86,873
 $99,309



Note 8.9. Accounts Payable and Accrued Expenses
 
The following table summarizes accounts payable and accrued expenses as of SeptemberJune 30, 2017,2019, and December 31, 20162018 (in thousands):
 June 30, 2019 December 31, 2018
Accrued property taxes$93,653
 $40,566
Resident security deposits86,220
 83,406
Accrued distribution payable26,780
 12,809
Accrued interest24,208
 16,413
Prepaid rent23,382
 22,506
Accrued construction and maintenance liabilities15,737
 18,371
Accounts payable1,750
 195
Other accrued liabilities29,489
 24,963
Total$301,219
 $219,229

 September 30, 2017 December 31, 2016
Accounts payable$1,091
 $9
Accrued property taxes110,572
 46,091
Other accrued liabilities40,490
 31,262
Accrued construction and maintenance liabilities17,107
 9,899
Resident security deposits74,285
 70,430
Prepaid rent20,200
 19,515
Total$263,745
 $177,206

Note 9.10. Shareholders’ Equity / Partners'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.

Class A Common Share Offering

During the first quarter of 2017, the Company issued 14,842,982 Class A common shares of beneficial interest, $0.01 par value per share, in an underwritten public offering and concurrent private placement, raising gross proceeds to the Company of $336.5 million after underwriter's discount and before offering costs of approximately $0.3 million. The Operating Partnership issued an equivalent number of corresponding Class A units to AH4R in exchange for the net proceeds from the issuance.

During the third quarter of 2017, the Company issued 13,800,000 Class A common shares of beneficial interest, $0.01 par value per share, in an underwritten public offering, raising gross proceeds of $312.0 million before offering costs of approximately $9.2 million. The Operating Partnership issued an equivalent number of corresponding Class A units to AH4R in exchange for the net proceeds from the issuance.


At-the-Market Common Share Offering Program
In November 2016, theThe Company established an at-the-market common share offering program under which we were able tocan issue Class A common shares from time to time through various sales agents up to an aggregate of $400.0$500.0 million (the "Original At-the-Market Program"), which was replaced in August 2017 with an at-the-market common share offering program with a $500.0 million capacity on the same terms (the "At-the-Market Program"“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 nine months ended SeptemberAs of June 30, 2017, the Company2019, no shares have been issued and sold 2.0 million Class A common shares under the Original At-the-Market Program for gross proceeds of $46.2and $500.0 million or $22.74 per share, and net proceeds of $45.6 million, after commissions and other expenses of approximately $0.6 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. As of September 30, 2017, $500.0 million remained available for future share issuances under the At-the-Market Program.issuances.


Share Repurchase Program


In September 2015,February 2018, the Company announced that ourCompany’s board of trustees approved are-authorized our existing share repurchase program, authorizing us tothe repurchase of up to $300.0$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 ninesix months ended SeptemberJune 30, 2017,2019, we did not repurchase and retire any of our Class A common shares. During the ninesix months ended SeptemberJune 30, 2016, we2018, the Company repurchased and retired 6.21.8 million of our Class A common shares on a settlement date basis, in accordance with the program, at a weighted-average price of $15.44$19.36 per share and a total price of $96.0$34.9 million. As of SeptemberJune 30, 2017,2019, we had a remaining repurchase authorization of $146.7up to $265.1 million under the program.


Participating Preferred Shares
As of September 30, 2017, the initial liquidation preference on the Company’s participating preferred shares, as adjusted by an amount equal to 50% of the cumulative change in value of an index based on the purchase prices of single-family properties located in our top 20 markets, for all of the Company’s outstanding 5.0% Series A participating preferred shares, 5.0% Series B participating preferred shares and 5.5% Series C participating preferred shares was $490.7 million. As of September 30, 2017, the Operating Partnership had a liquidation preference on its corresponding participating preferred units for the same amount.

Conversion of Series A and B Participating Preferred Shares into Class A Common Shares

On October 3, 2017, the Company converted all 5,060,000 shares of the outstanding 5.0% Series A participating preferred shares and all 4,400,000 shares of the outstanding 5.0% Series B participating preferred shares into Class A common shares and up to $250.0 million of beneficial interest, $0.01 par value, in accordance with the conversion terms in the Articles Supplementary. This resulted in 12,398,276 total Class A common shares issued from the conversion, based on a conversion ratio of 1.3106 Class A common shares issued per Series A and B participating preferred share. The Operating Partnership also converted its corresponding Series A and B participating preferred units into Class A units on October 3, 2017. The conversion ratio was calculated by dividing (1) the initial liquidation preference on the Series A and B participatingour outstanding preferred shares as adjusted by an amount equal to 50%under the program.


Preferred Shares

As of the cumulative change in value of an index based on the purchase prices of single-family properties located in our top 20 markets, plus unaccrued dividends by (2) the one-day volume weighted-average price (“VWAP”) of the Company’s Class A common shares on September 27, 2017, the dateJune 30, 2019 and December 31, 2018, the Company deliveredhad the required noticefollowing series of conversion. As a result of the conversion, the Company will record a $27.6 million allocation of income to the Series A and B participating preferred shareholders in the fourth quarter of 2017, which represents the initial liquidation value in excess of initial recorded equity carrying value, due to the bifurcation of the home price appreciation amount as a liability upon issuance. As the Series A and B participating preferred shares were converted into Class A common shares on October 3, 2017, the related participating preferred shares derivative liability was therefore remeasured based on the actual liquidation value at September 30, 2017.outstanding (in thousands, except share data):

Perpetual Preferred Shares
        June 30, 2019 December 31, 2018
Series Issuance Date Earliest Redemption Date Dividend Rate Outstanding Shares Current Liquidation Value Outstanding Shares Current Liquidation Value
Series D perpetual preferred shares 5/24/2016 5/24/2021 6.500% 10,750,000
 268,750
 10,750,000
 268,750
Series E perpetual preferred shares 6/29/2016 6/29/2021 6.350% 9,200,000
 230,000
 9,200,000
 230,000
Series F perpetual preferred shares 4/24/2017 4/24/2022 5.875% 6,200,000
 155,000
 6,200,000
 155,000
Series G perpetual preferred shares 7/17/2017 7/17/2022 5.875% 4,600,000
 115,000
 4,600,000
 115,000
Series H perpetual preferred shares 9/19/2018 9/19/2023 6.250% 4,600,000
 115,000
 4,600,000
 115,000
Total preferred shares       35,350,000
 $883,750
 35,350,000
 $883,750

During the second quarter of 2017, the Company issued 6,200,000 5.875% Series F cumulative redeemable perpetual preferred shares in an underwritten public offering, raising gross proceeds of $155.0 million before offering costs of approximately $5.3 million, with a liquidation preference of $25.00 per share. The Operating Partnership issued an equivalent number of the same class of perpetual preferred units to AH4R in exchange for the net proceeds from the share issuance.

During the third quarter of 2017, the Company issued 4,600,000 5.875% Series G cumulative redeemable perpetual preferred shares in an underwritten public offering, raising gross proceeds of $115.0 million before offering costs of approximately $4.1 million, with a liquidation preference of $25.00 per share. The Operating Partnership issued an equivalent number of the same class of perpetual preferred units to AH4R in exchange for the net proceeds from the share issuance.


Distributions
 
During the quarter ended September 30, 2017, ourThe Company’s board of trustees declared the following distributions that totaled $0.05 per share on our Class A and Class B common shares, $0.31 on our 5.0% Series A participating preferred shares, $0.31 on our 5.0% Series B participating preferred shares, $0.34 on our 5.5% Series C participating preferred shares, $0.41 on our 6.5% Series D perpetual preferred shares, $0.40 on our 6.35% Series E perpetual preferred shares and $0.37 on our 5.875% Series F perpetual preferred shares. Distributions declared on our 5.875% Series G perpetual preferred shares were for a pro-rated amount of $0.30 during the quarter ended September 30, 2017. During the quarter ended September 30, 2016, our board of trustees declared distributions that totaled $0.05 per share on our Class A and Class B common shares, $0.31 on our5.0% Series A participating preferred shares, $0.31 on our5.0% Series B participating preferred shares, $0.34 on our5.5% Series C participating preferred shares and $0.41 on our 6.5% Series D perpetual preferred shares. Distributions declared on our 6.35% Series E perpetual preferred shares were for a pro-rated amount of $0.41 per share during the quarter ended September 30, 2016. Distributions declared on our Series D convertible units totaled $0.04 per unit for the quarter ended September 30, 2016, which represented 70% of distributions declared on Class A units.respective quarters. The Operating Partnership funds the payment of distributions, and the board of trustees declared an equivalent amount of distributions were declared on the corresponding Operating Partnership units.
  For the Three Months Ended
Security June 30, 2019 March 31, 2019 June 30, 2018 March 31, 2018
Class A and Class B common shares $0.05
 $0.05
 $0.05
 $0.05
5.500% Series C participating preferred shares —
 —
 —
 0.34
6.500% Series D perpetual preferred shares 0.41
 0.41
 0.41
 0.41
6.350% Series E perpetual preferred shares 0.40
 0.40
 0.40
 0.40
5.875% Series F perpetual preferred shares 0.37
 0.37
 0.37
 0.37
5.875% Series G perpetual preferred shares 0.37
 0.37
 0.37
 0.37
6.250% Series H perpetual preferred shares 0.39
 0.39
 —
 —


Noncontrolling Interest


Noncontrolling interest as reflected in the Company’s condensed consolidated balance sheets primarily consists of the interests held by former American Homes 4 Rent, LLC (“AH LLCLLC”) members in units in the Operating Partnership. Former AH LLC members owned 54,276,644,51,629,990 and 54,243,317, or approximately 16.5%14.6% and 18.2%15.4%, of the total 329,690,244352,689,844 and 298,931,517351,966,447 Class A units in the Operating Partnership as of SeptemberJune 30, 2017,2019 and December 31, 2016,2018, respectively. Noncontrolling interest also includes interests held by non-affiliates in

Class A units in the Operating Partnership. Non-affiliate Class A unitholders owned 1,172,822596,990 and 1,279,316,1,073,509, or approximately 0.3%0.2% and 0.4%0.3%, of the total 329,690,244352,689,844 and 298,931,517351,966,447 Class A units in the Operating Partnership as of SeptemberJune 30, 2017,2019 and December 31, 2016,2018, respectively. Also included in noncontrolling interest is the outside ownership interest in a consolidated subsidiary of the Operating Partnership.


The following table summarizes the income or loss allocated to noncontrolling interests as reflected in the Company'sCompany’s condensed consolidated statements of operations for the three and ninesix months ended SeptemberJune 30, 20172019 and 2016:2018 (in thousands):
 For the Three Months Ended For the Six Months Ended
 June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018
Net income (loss) allocated to Class A units$4,004
 $(2,902) $7,030
 $(1,777)
Net loss allocated to noncontrolling interest in a consolidated subsidiary—
 (248) —
 (259)
Total noncontrolling interest$4,004
 $(3,150) $7,030
 $(2,036)
 For the Three Months Ended For the Nine Months Ended
 September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016
Preferred income allocated to Series C convertible units$—
 $—
 $—
 $3,027
Net income (loss) allocated to Class A units340
 (27) (30) 108
Net income allocated to Series D convertible units—
 —
 —
 133
Beneficial conversion feature—
 7,569
 —
 7,569
Net (loss) income allocated to noncontrolling interest in a consolidated subsidiary(31) (226) 8
 (446)
 $309
 $7,316
 $(22) $10,391

 
Noncontrolling interest as reflected in the Operating Partnership'sPartnership’s condensed consolidated balance sheets consistsstatements of capital consisted solely of the outside ownership interest in a consolidated subsidiary of the Operating Partnership.Partnership, which was liquidated during the second quarter of 2018. Income and loss allocated to the Operating Partnership'sPartnership’s noncontrolling interest is reflected in noncontrolling interest within the Operating Partnership'sPartnership’s condensed consolidated statements of operations. The Operating Partnership units owned by former AH LLC members and non-affiliates that are reflected as noncontrolling interest in the Company'sCompany’s condensed consolidated balance sheets are reflected as limited partner capital in the Operating Partnership'sPartnership’s condensed consolidated balance sheets.


2012 Equity Incentive Plan


The Company'sCompany’s employees are compensated through the Operating Partnership, including share-based compensation. When the Company issues Class A common shares under the 2012 Equity Incentive Plan (the "Plan"“Plan”), the Operating Partnership issues an equivalent number of Class A units to AH4R.AH4R and non-management members of our board of trustees.
 
During the ninesix months ended SeptemberJune 30, 20172019 and 2016,2018, the Company granted stock options for 385,60020,000 and 708,000140,000 Class A common shares, respectively, and 174,000343,334 and 74,100304,400 restricted stock units, respectively, to certain employees of the Company and members of our board of trustees under the Plan. The options and restricted stock units granted during the ninesix months ended SeptemberJune 30, 20172019 and 2016,2018 generally vest over four yearsa four-year service period and the options expire 10 years from the date of grant. Restricted stock units granted to non-management trustees during the six months ended June 30, 2019 vest over a one-year service period.
 

The following table summarizes stock option activity under the Plan for the ninesix months ended SeptemberJune 30, 20172019 and 2016:2018:
Shares Weighted-
Average
Exercise Price		 Weighted-
Average
Remaining
Contractual 
Life (in years)		 Aggregate
Intrinsic
Value (1)
(in thousands)		Shares Weighted-Average
Exercise Price		 Weighted-Average
Remaining
Contractual 
Life (in years)		 
Aggregate
Intrinsic
Value (1)
(in thousands)
Options outstanding at January 1, 20162,484,400
 $16.22
 8.0 $1,225
Options outstanding at January 1, 20183,052,450
 $16.65
 6.9 $16,421
Granted708,000
 14.15
    
140,000
 19.40
    
Exercised(172,250) 16.12
   680
(171,875) 16.04
   787
Forfeited(153,150) 16.36
    
(66,250) 17.69
    
Options outstanding at September 30, 20162,867,000
 $15.70
 7.8 $17,021
Options exercisable at September 30, 20161,051,125
 $16.04
 7.1 $5,885
Options outstanding at June 30, 20182,954,325
 $16.79
 6.0 $16,347
Options exercisable at June 30, 20182,174,550
 $16.20
 5.3 $13,123
          
Options outstanding at January 1, 20172,826,500
 $15.69
 7.6 $14,956
Options outstanding at January 1, 20192,252,275
 $16.92
 6.1 $7,713
Granted385,600
 23.38
    
20,000
 20.48
    
Exercised(62,655) 15.77
   444
(650,375) 15.89
   5,336
Forfeited(85,250) 16.24
    
(12,350) 20.80
    
Options outstanding at September 30, 20173,064,195
 $16.64
 7.1 $16,149
Options exercisable at September 30, 20171,681,595
 $15.90
 6.3 $9,764
Options outstanding at June 30, 20191,609,550
 $17.35
 5.8 $11,209
Options exercisable at June 30, 20191,240,400
 $16.72
 5.3 $9,413


(1)Intrinsic value for activities other than exercises is defined as the difference between the grant price and the market value on the last trading day of the period for those stock options where the market value is greater than the exercisegrant price. For exercises, intrinsic value is defined as the difference between the grant price and the market value on the date of exercise.


The following table summarizes the Black-Scholes Option Pricing Model inputs used for valuation of the stock options for Class A common shares granted during the ninesix months ended SeptemberJune 30, 20172019 and 2016:2018:
 2019 2018
Weighted-average fair value$2.85
 $3.03
Expected term (years) 7.0
  7.0
Dividend yield 3.0%  3.0%
Volatility 17.3%  18.9%
Risk-free interest rate 2.6%  2.8%
 2017 2016
Weighted-average fair value$3.82
 $2.82
Expected term (years) 7.0
  7.0
Dividend yield 3.0%  3.0%
Volatility 21.3%  27.3%
Risk-free interest rate 2.2%  1.5%

  

The following table summarizes the activity that relates to the Company’s restricted stock units under the Plan for the ninesix months ended SeptemberJune 30, 20172019 and 2016:2018:
 2019 2018
Restricted stock units at beginning of period372,375
 243,875
Units awarded343,334
 304,400
Units vested(110,900) (80,025)
Units forfeited(8,700) (48,375)
Restricted stock units at end of period596,109

419,875

 2017 2016
Restricted stock units at beginning of period130,150
 91,650
Units awarded174,000
 74,100
Units vested(42,475) (27,250)
Units forfeited(16,200) (6,550)
Restricted stock units at end of the period245,475

131,950

For the three months ended September 30, 2017 and 2016, total non-cashThe Company’s noncash share-based compensation expense related to stock options and restricted stock units was $1.1 million and $0.9 million, respectively, of which $0.7 million and $0.5 million, respectively, relatedrelating to corporate administrative employees and wasis included in general and administrative expense and $0.4 million relatedthe noncash share-based compensation relating to centralized and field property management employees and wasis included in property management expenses withinexpenses. The following table summarizes the condensed consolidated statements of operations. Foractivity that relates to the nine months ended September 30, 2017 and 2016, total non-cashCompany’s noncash share-based compensation expense related to stock options and restricted stock units was $3.2 million and $2.7 million, respectively, of which $1.9 million and $1.6 million, respectively, related to corporate administrative employees and was included in general and administrative expense and $1.3 million and $1.1 million, respectively, related to centralized and field property management employees and was included in property management expenses within the condensed consolidated statements of operations.


Note 10. Related Party Transactions
Concurrently with the Company's public offering of Class A common shares in the first quarter of 2017, the Chairman of our Board of Trustees, B. Wayne Hughes, purchased $50.0 million of our Class A common shares in a private placement at the public offering price. The Operating Partnership issued an equivalent number of corresponding Class A units to AH4R in exchange for the net proceeds from the issuance.three and six months ended June 30, 2019 and 2018 (in thousands):


 For the Three Months Ended For the Six Months Ended
 June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018
General and administrative expense$923
 $520
 $1,582
 $1,118
Property management expenses346
 423
 639
 800
Total noncash share-based compensation expense$1,269
 $943
 $2,221
 $1,918


Note 11. Earnings per Share / Unit
 
American Homes 4 Rent


The following table reflects the Company'sCompany’s computation of net income (loss)or loss per common share on a basic and diluted basis for the three and ninesix months ended SeptemberJune 30, 20172019 and 20162018 (in thousands, except share and per share data): 
 For the Three Months Ended
June 30,		 For the Six Months Ended
June 30,
 2019 2018 2019 2018
Numerator: 
  
  
  
Net income$40,304
 $25,898
 $73,395
 $47,423
Less:       
Noncontrolling interest4,004
 (3,150) 7,030
 (2,036)
Dividends on preferred shares13,782
 11,984
 27,564
 26,581
Redemption of participating preferred shares—
 32,215
 —
 32,215
Allocation to participating securities (1)
45
 —
 75
 —
Numerator for income (loss) per common share–basic and diluted$22,473
 $(15,151) $38,726
 $(9,337)
        
Denominator:       
Weighted-average common shares outstanding–basic299,466,526
 295,462,572
 298,157,413
 290,848,633
Effect of dilutive securities:       
Share-based compensation plan (2)
524,558
 —
 519,375
 —
Weighted-average common shares outstanding–diluted (3)
299,991,084
 295,462,572
 298,676,788
 290,848,633
        
Net income (loss) per common share:

 

 

 

Basic$0.08
 $(0.05) $0.13
 $(0.03)
Diluted$0.08
 $(0.05) $0.13
 $(0.03)
 For the Three Months Ended
September 30,		 For the Nine Months Ended
September 30,
 2017 2016 2017 2016
Numerator: 
  
  
  
Net income (loss)$19,097
 $(167) $45,959
 $1,108
Less:       
Noncontrolling interest309
 7,316
 (22) 10,391
Dividends on preferred shares17,253
 13,669
 46,122
 26,650
Allocation to participating securities (1)12
 —
 —
 —
Numerator for basic income (loss) per common share$1,523
 $(21,152) $(141) $(35,933)
Add back:       
Dividends on participating preferred shares (2)5,569
 —
 —
 —
Remeasurement of participating preferred shares (2)(8,391) —
 —
 —
Numerator for diluted loss per common share$(1,299) $(21,152) $(141) $(35,933)
        
Denominator:       
Weighted-average common shares outstanding–basic266,767,313
 238,401,343
 256,768,343
 232,036,802
Effect of dilutive securities:       
Participating preferred shares (2)22,385,747
 —
 —
 —
Weighted-average common shares outstanding–diluted289,153,060
 238,401,343
 256,768,343
 232,036,802
        
Net income (loss) per common share:       
Basic$0.01
 $(0.09) $—
 $(0.15)
Diluted$—
 $(0.09) $—
 $(0.15)

(1)Participating securities include unvestedUnvested restricted stock units that have nonforfeitable rights to participate in dividends declared on common stock.stock are accounted for as participating securities and reflected in the calculation of basic and diluted earnings per share using the two-class method.
(2)Reflects the dilutive effect of potentially dilutive securities issuable upon the assumed exercise of stock options.
(3)The computation of diluted earnings per share for the three months ended June 30, 2019 and 2018 excludes an aggregate of 94,840 and 6,974,868 potentially dilutive securities, respectively, and for the six months ended June 30, 2019 and 2018 excludes an aggregate of 128,520 and 6,971,928 potentially dilutive securities, respectively, which include participating preferred shares, exchangeable senior notes, common shares issuable upon exercise of stock options and unvested restricted stock units, because their effect would have been anti-dilutive to the respective periods. The effect of the potential conversion of OP units is not reflected in the computation of basic and diluted earnings per share, as they are exchangeable for Class A common shares on a one-for-one basis. The income allocable to the OP units is allocated on this same basis and reflected as noncontrolling interest in the accompanying condensed consolidated financial statements. As such, the assumed conversion of the participating preferred shares into Class A common shares.OP units would have no net impact on the determination of diluted earnings per share.

The computation of diluted earnings per share for the three months ended September 30, 2017 and 2016, excludes an aggregate of 7,078,066 and 26,342,332 potentially dilutive securities, respectively, and for the nine months ended September 30, 2017 and 2016, excludes an aggregate of 29,474,000 and 26,342,332 potentially dilutive securities, respectively, which include a combination of Series A, B and C participating preferred shares, exchangeable senior notes, common shares issuable upon exercise of stock options and unvested restricted stock units, because their effect would have been antidilutive to the respective periods.


American Homes 4 Rent, L.P.


The following table reflects the Operating Partnership'sPartnership’s computation of net income (loss)or loss per common unit on a basic and diluted basis for the three and ninesix months ended SeptemberJune 30, 20172019 and 20162018 (in thousands, except unit and per unit data): 
 For the Three Months Ended
June 30,		 For the Six Months Ended
June 30,
 2019 2018 2019 2018
Numerator: 
  
  
  
Net income$40,304
 $25,898
 $73,395
 $47,423
Less:       
Noncontrolling interest—
 (248) —
 (259)
Preferred distributions13,782
 11,984
 27,564
 26,581
Redemption of participating preferred units—
 32,215
 —
 32,215
Allocation to participating securities (1)
45
 —
 75
 —
Numerator for income (loss) per common unit–basic and diluted$26,477
 $(18,053) $45,756
 $(11,114)
        
Denominator:       
Weighted-average common units outstanding–basic352,363,754
 350,812,725
 352,183,171
 346,198,786
Effect of dilutive securities:       
Share-based compensation plan (2)
524,558
 —
 519,375
 —
Weighted-average common units outstanding–diluted (3)
352,888,312
 350,812,725
 352,702,546
 346,198,786
        
Net income (loss) per common unit:

   

  
Basic$0.08
 $(0.05) $0.13
 $(0.03)
Diluted$0.08
 $(0.05) $0.13
 $(0.03)
 For the Three Months Ended
September 30,		 For the Nine Months Ended
September 30,
 2017 2016 2017 2016
Numerator: 
  
  
  
Net income (loss)$19,097
 $(167) $45,959
 $1,108
Less:       
Noncontrolling interest(31) (226) 8
 (446)
Preferred distributions17,253
 13,669
 46,122
 26,650
Income allocated to Series C and D limited partners—
 10,915
 —
 16,478
Allocation to participating securities (1)12
 —
 —
 —
Numerator for basic income (loss) per common unit$1,863
 $(24,525) $(171) $(41,574)
Add back:       
Distributions to participating preferred units (2)5,569
 —
 —
 —
Remeasurement of participating preferred units (2)(8,391) —
 —
 —
Numerator for diluted loss per common unit$(959) $(24,525) $(171) $(41,574)
        
Denominator:       
Weighted-average common units outstanding–basic322,303,138
 285,208,489
 312,315,728
 271,994,345
Effect of dilutive securities:       
Participating preferred units (2)22,385,747
 —
 —
 —
Weighted-average common units outstanding–diluted344,688,885
 285,208,489
 312,315,728
 271,994,345
        
Net income (loss) per common unit:       
Basic$0.01
 $(0.09) $—
 $(0.15)
Diluted$—
 $(0.09) $—
 $(0.15)


(1)Participating securities include unvestedUnvested restricted stock units that have nonforfeitable rights to participate in dividends declared on common stock.stock are accounted for as participating securities and reflected in the calculation of basic and diluted earnings per share using the two-class method.
(2)Reflects the dilutive effect of potentially dilutive securities issuable upon the assumed conversionexercise of stock options.
(3)The computation of diluted earnings per unit for the three months ended June 30, 2019 and 2018 excludes an aggregate of 94,840 and 6,974,868 potentially dilutive securities, respectively, and for the six months ended June 30, 2019 and 2018 excludes an aggregate of 128,520 and 6,971,928 potentially dilutive securities, which include participating preferred units, into Class Aexchangeable senior notes, common units.units issuable upon exercise of stock options and unvested restricted stock units, because their effect would have been anti-dilutive to the respective periods.

The computation of diluted earnings per unit for the three months ended September 30, 2017 and 2016, excludes an aggregate of 7,078,066 and 26,342,332 potentially dilutive securities, respectively, and for the nine months ended September 30, 2017 and 2016, excludes an aggregate of 29,474,000 and 26,342,332 potentially dilutive securities, respectively, which include a combination of Series A, B and C participating preferred units, exchangeable senior notes, common units issuable upon exercise of stock options and unvested restricted stock units, because their effect would have been antidilutive to the respective periods.

There was no income or loss allocated to Series C convertible units during the three months ended September 30, 2017 and 2016, and zero and $0.87 of net income per basic and diluted unit were allocated to Series D convertible units during the three months ended September 30, 2017 and 2016, respectively. Zero and $0.46 of net income per basic and diluted unit were allocated to Series C convertible units during the nine months ended September 30, 2017 and 2016, respectively, and zero and $0.99 of net income per basic and diluted unit were allocated to Series D convertible units during the nine months ended September 30, 2017 and 2016, respectively. There was no income or loss allocated to Series E convertible units during the three and nine months ended September 30, 2017 and 2016.


Note 12. Commitments and Contingencies
 
As of SeptemberJune 30, 2017,2019, the Company had commitments to acquire 51110 single-family properties for an aggregate purchase price of $122.6$3.3 million, and $13.7 as well as $56.2 million in purchase commitments that relate to both third party developer agreements and land purchase commitments.for our internal construction program. As of December 31, 2016,2018, the Company had commitments to acquire 20388 single-family properties for an aggregate purchase price of $41.7$25.3 million, as well as $58.1 million in purchase commitments that relate to both third party developer agreements and $3.9 million in land purchase commitments.for our internal construction program.


As of SeptemberJune 30, 2017,2019 and December 31, 2016,2018, the Company had sales in escrow for 184approximately 190 and 5778 of our single-family properties, respectively, for aggregate selling prices of $17.1$36.8 million and $6.6$13.6 million, respectively.



We are involved in various legal and administrative proceedings that are incidental to our business. We do not believe these matters will not have a materiallymaterial adverse effect on our financial position or results of operations upon resolution.


Radian Group Inc. (“Radian”), the indirect parent company of Green River Capital LLC (“GRC”), which has been a service provider that provided certain broker price opinions (“BPO”) to us, disclosed in its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2017, that GRC had received a letter in March 2017 from the staff of the SEC stating that it is conducting an investigation captioned “In the Matter of Certain Single Family Rental Securitizations” and requesting information from market participants. Radian disclosed that the letter asked GRC to provide information regarding BPOs that GRC provided on properties included in single family rental securitization transactions (“Securitizations”). On September 13, 2017,January 16, 2018, we received a letter from the staff of the SEC stating that it is conducting an investigation captioned “In the Matter of Certain Single Family Rental Securitizations.“Trading in Silver Bay Realty Trust Corp.” The letter enclosed a subpoena that requests the production ofus to produce certain documents and communications, including those related to our Securitizations, including, without limitation, those relatedcommunications and agreements with Silver Bay Realty Trust Corp. (“Silver Bay”), communications with Silver Bay’s financial advisor, and our purchases, sales and holdings of Silver Bay stock. We purchased Silver Bay stock in 2016 and 2017 and then sold all of our holdings in 2017 for a profit of approximately $3.0 million. We intend to BPOs provided by GRC on properties included in Securitizations. The letter does not allege any violation of law and we are cooperatingcontinue to cooperate fully with the SEC. We understand that other transaction partiesSEC in Securitizations have received requests inconnection with this matter. We do not believe this matter will have a material adverse impact on our financial position or results of operations upon resolution.



Note 13. Fair Value
 
The carrying amount of rents and other receivables, restricted cash, escrow deposits, prepaid expenses and other assets, and accounts payable and accrued expenses approximate fair value because of the short maturity of these amounts. The Company’s participating preferred shares derivative liability is the only financial instrument recorded at fair value on a recurring basis in the condensed consolidated financial statements.


Our revolving credit facility, term loan facility and asset-backed securitizations and secured note payable are also financial instruments, which are classified as Level 3 in the fair value hierarchy as they were estimated by using unobservable inputs. We estimated their fair values by modeling the contractual cash flows required under the instruments and discounting them back to their present values using estimates of current market rates. Our exchangeableunsecured senior notes are also financial instruments which are classified as Level 2 in the fair value hierarchy as their fair value isvalues are estimated using observable inputs based on the market value of the last trade at the end of the period.


The following table displays the carrying values and fair values of our debt instruments as of SeptemberJune 30, 2017,2019 and December 31, 20162018 (in thousands):
 June 30, 2019 December 31, 2018
 Carrying Value Fair Value 
Carrying Value (1)
 Fair Value
AH4R 2014-SFR2 securitization$481,749
 $493,762
 $483,790
 $494,820
AH4R 2014-SFR3 securitization497,106
 512,386
 499,108
 511,450
AH4R 2015-SFR1 securitization521,771
 535,892
 523,865
 534,666
AH4R 2015-SFR2 securitization452,654
 467,750
 454,748
 467,303
Total asset-backed securitizations (1)
1,953,280
 2,009,790
 1,961,511
 2,008,239
2028 unsecured senior notes, net493,195
 517,880
 492,800
 479,730
2029 unsecured senior notes, net394,582
 434,488
 —
 —
Total unsecured senior notes, net (1)
887,777
 952,368

492,800
 479,730
Revolving credit facility (2)
—
 —
 250,000
 250,000
Term loan facility (1) (2)
—
 —
 99,232
 100,000
Total debt$2,841,057
 $2,962,158
 $2,803,543
 $2,837,969

 September 30, 2017 December 31, 2016
 Carrying Value Fair Value Carrying Value Fair Value
AH4R 2014-SFR1 securitization$—
 $—
 $456,074
 $465,343
AH4R 2014-SFR2 securitization497,743
 506,835
 501,810
 510,941
AH4R 2014-SFR3 securitization513,361
 523,653
 517,827
 530,549
AH4R 2015-SFR1 securitization539,199
 546,630
 543,480
 553,689
AH4R 2015-SFR2 securitization468,461
 477,401
 472,043
 483,901
Total asset-backed securitizations (1)2,018,764
 2,054,519
 2,491,234
 2,544,423
Exchangeable senior notes, net (2)110,771
 143,297
 108,148
 142,808
Secured note payable49,107
 49,383
 49,828
 50,053
Term loan facility (3)200,000
 200,000
 325,000
 325,000
Total debt$2,378,642
 $2,447,199
 $2,974,210
 $3,062,284


(1)TheTo conform with current year presentation, the carrying values of the asset-backed securitizations, exclude $37.3 millionunsecured senior notes and $48.4 millionterm loan facility have been presented net of unamortized deferred financing costs of $31.0 million, $4.7 million and $0.8 million, respectively, as of September 30, 2017, and December 31, 2016, respectively.2018. The carrying values of the unsecured senior notes, net remain presented net of unamortized discounts.
(2)The carrying value of the exchangeable senior notes, net is presented net of an unamortized discount.
(3)The carrying value of theAs our revolving credit facility and term loan facility excludes $2.1 million and $3.3 million of deferred financing costs as of September 30, 2017, and December 31, 2016, respectively. As our term loan facility bearsbear interest at a floating rate based on an index plus a spread which is 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%(see Note 8), management believes that the carrying valuevalues (excluding deferred financing costs) of the revolving credit facility and term loan facility reasonably approximatesapproximate fair value.


In October 2017, in anticipation of the issuance of the 2028 unsecured senior notes and in order to hedge interest rate risk, the Operating Partnership entered into a treasury lock agreement on a notional amount of $350.0 million, based on the 10-year treasury note rate at the time. The treasury lock was designated as a cash flow hedging instrument and was settled upon the issuance of the 2028 unsecured senior notes in February 2018, which resulted in a $9.6 million gain that was recorded in other comprehensive income and is being reclassified into earnings as a reduction of interest expense over the term of the 2028 unsecured senior notes. The estimated amount of existing gains that are reported in accumulated other comprehensive income at the reporting date that are expected to be reclassified into earnings within the next 12 months is approximately $1.0 million.

Valuation of the participating preferred shares derivative liability considersconsidered scenarios in which the participating preferred shares would be redeemed or converted into Class A common shares by the Company and the subsequent payoffs under those scenarios. The valuation also considersconsidered certain variables such as the risk-free rate matching the assumed timing of either redemption or conversion, volatility of the underlying home price appreciation index, dividend payments, conversion rates, the assumed timing of

either redemption or conversion and an assumed drift factor in home price appreciation across certain metropolitan statistical areas, or MSAs, as outlined in the agreement. The Series A and BOn April 5, 2018, the Company redeemed all outstanding participating preferred shares were convertedthrough a conversion of those participating preferred shares into Class A common shares on October 3, 2017, andshares. As a result of the relatedredemption, the Company recorded a $32.2 million allocation of income to the Series C participating preferred shareholders in the second quarter of 2018, which represents the initial liquidation value of the Series C participating preferred shares derivative liability was therefore remeasured based onin excess of the actual liquidation value at September 30, 2017 (see Note 9).
The following tables set forth the fairoriginal equity carrying value of the Series C participating preferred shares derivative liability as of September 30, 2017, and December 31, 2016 (in thousands):the redemption date.
  September 30, 2017
Description Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)		 Significant
Other
Observable
Inputs
(Level 2)		 Significant
Unobservable
Inputs
(Level 3)		 Total
Liabilities:  
  
  
  
Participating preferred shares derivative liability $—
 $—
 $68,469
 $68,469
  December 31, 2016
Description Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)		 Significant
Other
Observable
Inputs
(Level 2)		 Significant
Unobservable
Inputs
(Level 3)		 Total
Liabilities:  
  
  
  
Participating preferred shares derivative liability $—
 $—
 $69,810
 $69,810


The following tables presenttable presents changes in the fair values of our Level 3 financial instruments that arewere measured on a recurring basis with changes in fair value recognized in remeasurement of participating preferred shares within the condensed consolidated statements of operations for the ninesix months ended SeptemberJune 30, 2017 and 20162018 (in thousands):
Description January 1, 2018 Conversions Remeasurement included in earnings June 30, 2018
Liabilities:  
    
  
Participating preferred shares derivative liability $29,470
 $(28,258) $(1,212) $—
Description January 1, 2017 Conversions Remeasurement included in earnings September 30, 2017
Liabilities:  
    
  
Participating preferred shares derivative liability $69,810
 $—
 $(1,341) $68,469
Description January 1, 2016 Conversions Gain and remeasurement
included in
earnings		 September 30, 2016
Liabilities:  
    
  
Contingently convertible Series E units liability $69,957
 $(58,494) $(11,463) $—
Participating preferred shares derivative liability $62,790
 $—
 $2,940
 $65,730
Changes in inputs or assumptions used to value the participating preferred shares derivative liability may have a material impact on the resulting valuation.
    
Note 14. Subsequent Events


Subsequent Acquisitions

From OctoberJuly 1, 2017,2019 through OctoberJuly 31, 2017,2019, the Company acquired 471added 53 properties to its portfolio for an aggregate purchase pricea total cost of approximately $106.1$13.6 million, which included four34 homes developed through our internal construction program.


Conversion of Series A and B Participating Preferred Shares into Class A Common SharesSubsequent Dispositions


On October 3, 2017,From July 1, 2019 through July 31, 2019, the Company converted all 5,060,000 sharesdisposed of the outstanding 5.0% Series A participating preferred shares and all 4,400,000 shares110 properties for aggregate net proceeds of the outstanding 5.0% Series B participating preferred shares into 12,398,276 Class A common shares, in accordance with the conversion terms in the Articles Supplementary, based on a conversion ratio of 1.3106 Class A common shares issued per Series A and B participating preferred share (see Note 9).approximately $21.9 million.

Declaration of Distributions
On November 2, 2017, our board of trustees declared quarterly distributions of $0.05 per share on the Company's Class A and Class B common shares are payable on January 5, 2018, to shareholders of record on January 2, 2018. Our board of trustees also declared quarterly distributions of $0.34 per share on the Company's 5.5% Series C participating preferred shares, $0.41 per share on the Company’s 6.5% Series D perpetual preferred shares, $0.40 per share on the Company’s 6.35% Series E perpetual preferred shares, $0.37 per share on the Company’s 5.875% Series F perpetual preferred shares, and $0.37 per share on the Company's 5.875% Series G perpetual preferred shares. The quarterly distributions are payable on January 2, 2018, to shareholders of record on December 15, 2017. The Operating Partnership funds the payment of distributions, and an equivalent amount of distributions were declared on the corresponding Operating Partnership units.




ItemITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.Operations
 
The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q.


Overview
 
The Company isWe are a Maryland REIT focused on acquiring, developing, renovating, leasing and operating single-family homes as rental properties. The Operating Partnership is the entity through which the Company conductswe conduct substantially all of our business and owns,own, directly or through subsidiaries, substantially all of our assets. We commenced operations in November 2012 to continue the investment activities of AH LLC, which was founded by our chairman, B. Wayne Hughes, in 2011 to take advantage of the dislocation in the single-family home market. Effective August 31, 2016, AH LLC was liquidated and its ownership interests in the Operating Partnership were distributed to its members.2012.
 
As of SeptemberJune 30, 2017,2019, we owned 50,01552,634 single-family properties, in selected sub-markets of metropolitan statistical areas, or MSAs, in 22 states, including 4691,664 properties held for sale, of which 384 properties were former ARPI properties, compared to 48,42252,783 single-family properties in 22 states, including 1,1191,945 properties held for sale, as of December 31, 2016,2018, and 48,15352,049 single-family properties in 22 states, including 1,2381,838 properties held for sale and 371 properties identified for future sale as of SeptemberJune 30, 2016.2018. As of SeptemberJune 30, 2017,2019, we had commitments to acquire an additional 51110 single-family properties for an aggregate purchase price of $122.6$3.3 million. As of SeptemberJune 30, 2017, 46,026,2019, 49,111, or 92.9%96.4%, of our total properties (excluding properties held for sale) were occupied, compared to 47,823, or 94.1%, of our total properties (excluding held for sale properties) were leased, compared to 44,798,sale) as of December 31, 2018, and 47,758, or 94.7%95.8%, of our total properties (excluding properties held for sale properties)and identified for future sale) as of December 31, 2016, and 44,746, or 95.4%, of our total properties (excluding held for sale properties) as of SeptemberJune 30, 2016. As of September 30, 2017, our2018. Our portfolio of single-family properties wasis internally managed through our proprietary property management platform.
 
Our Properties and Key Operating Metrics
 
The following table provides a summary of our single-family properties as of SeptemberJune 30, 2017:2019:
Market Number of Single-family Properties (1) % of Total Single-family Properties Avg. Gross Book Value
per Property		 Avg.
Sq. Ft.		 Avg. Property Age
(years)		 Avg. Year Purchased 
Number of Single-Family Properties (1)
 % of Total Single-Family Properties Avg. Gross Book Value per Property Avg.
Sq. Ft.		 Avg. Property Age (years) Avg. Year
Purchased
Atlanta, GA 4,784
 9.4% $177,005
 2,159
 17.1 2015
Dallas-Fort Worth, TX 4,354
 8.8% $162,364
 2,121
 13.9
 2014 4,313
 8.5% 164,369
 2,116
 15.4 2014
Atlanta, GA 4,319
 8.7% 165,430
 2,114
 16.4
 2014
Charlotte, NC 3,638
 7.1% 191,004
 2,089
 15.5 2015
Phoenix, AZ 3,091
 6.1% 173,955
 1,835
 15.8 2015
Houston, TX 3,158
 6.4% 159,123
 2,113
 11.8
 2014 3,071
 6.0% 163,260
 2,094
 13.5 2014
Charlotte, NC 3,248
 6.6% 181,934
 2,064
 14.1
 2014
Indianapolis, IN 2,897
 5.8% 151,377
 1,933
 15.0
 2013 2,813
 5.5% 152,837
 1,931
 16.7 2013
Phoenix, AZ 2,768
 5.6% 162,343
 1,815
 14.9
 2014
Nashville, TN 2,557
 5.2% 202,594
 2,108
 13.3
 2014 2,723
 5.3% 209,995
 2,113
 14.7 2015
Greater Chicago area, IL and IN 2,033
 4.1% 180,753
 1,896
 16.1
 2013
Cincinnati, OH 1,993
 4.0% 172,939
 1,852
 15.3
 2013
Jacksonville, FL 2,205
 4.3% 173,952
 1,939
 14.4 2014
Tampa, FL 2,153
 4.2% 195,416
 1,943
 15.0 2014
Raleigh, NC 1,968
 4.0% 179,187
 1,858
 12.9
 2014 2,046
 4.0% 182,901
 1,874
 14.6 2014
All Other (2) 20,251
 40.8% 179,481
 1,904
 14.4
 2014 20,133
 39.6% 189,963
 1,911
 16.0 2013
Total / Average 49,546
 100.0% $174,014
 1,968
 14.4
 2014 50,970
 100.0% $182,351
 1,984
 15.7 2014


(1)Excludes 4691,664 single-family properties held for sale properties as of SeptemberJune 30, 2017.2019.
(2)Represents 3225 markets in 1921 states.




The following table summarizes certain key leasing metrics as of SeptemberJune 30, 2017:2019:
 Total Single-family Properties (1) 
Total Single-Family Properties (1)
Market Leased Percentage (2) Occupancy Percentage (2) Avg. Contractual Monthly Rent Per Property (2) Avg. Original Lease Term (months) (2) Avg. Remaining Lease Term (months) (2) Avg. Blended Change in Rent (3) 
Avg. Occupied Days Percentage (2)
 
Avg. Monthly Realized Rent per property (3)
 
Avg. Original Lease Term (months) (4)
 
Avg. Remaining Lease Term (months) (4)
 
Avg. Blended Change in
Rent (5)
Atlanta, GA 94.8% $1,600
 11.7 7.9 6.1%
Dallas-Fort Worth, TX 94.0% 92.9% $1,662
 11.9 6.4 4.9% 95.5% 1,760
 11.7 8.0 3.9%
Atlanta, GA 94.0% 93.5% 1,465
 12.0 6.8 5.8%
Charlotte, NC 94.7% 1,589
 12.2 8.1 3.9%
Phoenix, AZ 95.9% 1,411
 11.7 8.2 8.5%
Houston, TX 90.2% 89.3% 1,595
 12.3 6.8 1.5% 93.8% 1,654
 11.9 8.3 3.1%
Charlotte, NC 88.6% 88.2% 1,508
 12.0 6.7 4.1%
Indianapolis, IN 95.0% 94.3% 1,350
 12.8 6.9 3.9% 95.7% 1,428
 11.7 8.2 4.8%
Phoenix, AZ 97.7% 97.3% 1,238
 12.4 6.6 6.9%
Nashville, TN 92.1% 91.4% 1,656
 12.1 6.5 3.6% 95.1% 1,728
 12.1 7.9 3.8%
Greater Chicago area, IL and IN 95.4% 94.4% 1,784
 13.0 7.3 3.5%
Cincinnati, OH 94.5% 93.8% 1,519
 12.7 7.2 3.7%
Jacksonville, FL 95.4% 1,559
 12.0 8.4 5.1%
Tampa, FL 95.3% 1,699
 11.7 8.2 4.2%
Raleigh, NC 93.6% 92.7% 1,456
 12.0 6.7 3.7% 94.9% 1,533
 11.7 7.7 4.2%
All Other (4)(6) 92.2% 91.4% 1,527
 12.2 6.6 4.0% 95.8% 1,662
 11.8 8.2 5.0%
Total / Average 92.9% 92.2% $1,523
 12.2 6.7 4.1% 95.4% $1,626
 11.8 8.1 4.8%


(1) Leasing information excludes 1,664 single-family properties held for sale properties.as of June 30, 2019.
(2)Leased percentage, occupancy percentage, average contractual monthly rent perFor the three months ended June 30, 2019, Average Occupied Days Percentage represents the number of days a property average originalis occupied in the period divided by the total number of days the property is owned during the same period.
(3)For the three months ended June 30, 2019, Average Monthly Realized Rent is calculated as the lease termcomponent of rents and average remaining lease termother single-family property revenues (i.e., rents from single-family properties) divided by the product of (a) number of properties and (b) Average Occupied Days Percentage, divided by the number of months. For properties partially owned during the period, this is adjusted to reflect the number of days of ownership.
(4)Average Original Lease Term and Average Remaining Lease Term are reflected as of period end.
(3) (5)Average blended change in rent representsRepresents the percentage change in rent on all non-month-to-month lease renewals and re-leases during the third quarter of 2017,three months ended June 30, 2019, compared to the annual rent of the previously expired non-month-to-month lease for each individual property.
(4)(6) Represents 3225 markets in 1921 states.


Factors That Affect Our Results of Operations and Financial Condition
 
Our results of operations and financial condition are affected by numerous factors, many of which are beyond our control. Key factors that impact our results of operations and financial condition include our ability to identify and acquire properties;properties, our pace of property acquisitions;acquisitions and the time and cost required to gain access to and renovate the properties, our pace and thencost of newly acquired or developed properties, the time to renovate and lease a newly acquired or developed property at acceptable rental rates;rates, occupancy levels;levels, rates of tenant turnover;turnover, the length of vacancy in properties between tenant leases;leases, our expense ratios;ratios, our ability to raise capital;capital and our capital structure.
 
Property Acquisitions and Dispositions
 
Since our formation, we have rapidly but systematically grown our portfolio of single-family homes. Our ability to identify and acquire single-family homes that meet our investment criteria is impacted by home prices in our target markets, the inventory of properties available-for-sale through our acquisition channels, competition for our target assets and our available capital. Additionally, opportunities from new construction acquisition channels are impacted by the availability of undevelopedvacant developed lots, development land assets and inventory of homes currently under construction or newly developed. Our level of acquisitioninvestment activity has fluctuated based on the number of suitable investmentsopportunities and the level of capital available to invest.invest and recently has been increasingly focused on our new construction channels. During the quarter ended SeptemberJune 30, 2017, our total portfolio increased by 1,0332019, we acquired or developed 144 homes, including 8068 homes acquired through broker acquisitions 213 homes acquired through trustee acquisitions and 124136 homes acquired through new construction acquisitions,channels, of which 1382 homes were developed through our internal construction program, offset by 110 homesand sold or rescinded,433 homes.

During 2018, we identified approximately 1,500 properties to be disposed from six of which 67our smaller markets that we are exiting based on market analysis. Our remaining properties held for sale were former ARPI properties. Rescindedidentified based on sub-market analysis, as well as individual property-level operational review. As of June 30, 2019 and December 31, 2018, there were 1,664 and 1,945 properties representclassified as held for sale. We will continue to evaluate our properties for which the sale has been unwound,potential disposition going forward as in certain jurisdictions, our purchasesa normal course of single-family properties at foreclosure and judicial auctions are subject to the right of rescission, which is generally caused by the borrower filing for bankruptcy.business.

Property Operations
 
TheHomes added to our portfolio through new construction channels, including properties developed through our internal construction program, are available for lease shortly after acquisition or when we receive a certificate of properties involvesoccupancy. Homes added to our portfolio through traditional acquisition channels involve expenditures in addition to payment of the purchase price, including property inspections, closing costs, liens, title insurance, transfer taxes, recording fees, broker commissions, property taxes and

homeowner association (“HOA”) fees, when applicable. In addition, we typically incur costs between $10,000 and $25,000 to renovate a home acquired through traditional acquisition channels to prepare it for rental. Renovation work varies, but may include paint, flooring, carpeting, cabinetry, appliances, plumbing hardware and other items required to prepare the home for rental. The time and cost involved in initially accessing our homes to prepare them for rental can impact our financial performance and varies among properties based on several factors, including the source of acquisition channel, whether the property is located in a judicial or non-judicial foreclosure state, if applicable, and whether or not the home is occupied at the time of acquisition.channel. This process of finalizing the acquisition and gaining initial access to the home can range from

immediate access to multiple months and, on average, takes approximately 2010 to 30 days. Additionally, after gaining access to the home, the time to renovate a property can vary significantly among properties and is most impacted by the age and condition of the property. On average, it takes approximately 50 to 70 days to complete the renovation process after gaining initial access to the home. Our operating results are also impacted by the amount of time it takes to market and lease a property, which can vary greatly among properties, and is impacted by local demand, our marketing techniques and the size of our available inventory. On average, it takes approximately 20 to 40 days to lease a property after completing the renovation process. Lastly, our operating results are impacted by the length of stay of our tenants and the amount of time it takes to prepare and re-lease a property after a tenant vacates. This process, which we refer to as “turnover,” is impacted by numerous factors, including the condition of the home upon move-out of the previous tenant, and by local demand, our marketing techniques and the size of our available inventory at the time of the turnover. On average, it takes approximately 4550 to 5560 days to complete the turnover process.
 
RevenueRevenues
 
Our revenue isrevenues are derived primarily from rents collected under lease agreements with tenants for our single-family properties. These include short-term leases that we enter into directly with our tenants,properties, which typically have a term of one year. Our rental rates and occupancy levels are affected by macroeconomic factors and local and property-level factors, including market conditions, seasonality and tenant defaults, and the amount of time it takes to renovate and re-leaseturn properties when tenants vacate. Additionally, our ability to collect revenues and related operating results are impacted by the credit worthiness and quality of our tenants. On average, our tenants have household incomes ranging from $70,000$60,000 to $100,000$120,000 and primarily consist of families with approximately two adults and one or more children.
 
In addition to rental revenues, we receive feesOur rents and other reimbursements, referred to as “tenant charge-backs”,single-family property revenues are comprised of rental revenue from single-family properties, fees from our tenants,single-family properties rentals and “tenant charge-backs,” which are primarily designedrelated to recover costs for certain items, such as utilities, damages and maintenance. In accordance with GAAP, these fees and tenant charge-backs are presented gross in the condensed consolidated statements of operations.cost recoveries on utilities.
 
Our ability to maintain and grow revenues from our existing portfolio of homes will be dependent on our ability to retain tenants and increase rental rates. We believe that our platform will allow us to achieve strong tenant retention and rental rate increases. The averageBased on our Same-Home population of properties, the year-over-year increase in rent for renewalsAverage Monthly Realized Rent per property was 3.6% and 3.4% and the average increase in rent for re-leases was 4.9% and 5.0%3.7% for the three months ended SeptemberJune 30, 20172019, and 2016,we experienced turnover rates of 10.8% and 11.0% for the three months ended June 30, 2019 and 2018, respectively. Based on our Same-Home population of properties, the year-over-year increase in Average Monthly Realized Rent per property was 3.5% for the six months ended June 30, 2019, and we experienced turnover rates of 11.1%18.5% and 11.5%19.7% for the threesix months ended SeptemberJune 30, 20172019 and 2016, respectively. The average increase in rent for renewals was 3.3% and 3.8% and the average increase in rent for re-leases was 5.1% and 5.8% for the nine months ended September 30, 2017 and 2016, respectively. Based on our Same-Home population of properties, we experienced turnover rates of 31.7% and 32.9% for the nine months ended September 30, 2017 and 2016,2018, respectively.
 
Expenses
 
We monitor the following categories of expenses that we believe most significantly affect our results of operations.
Property Operating Expenses
 
Once a property is available for lease, which we refer to as “rent-ready,” we incur ongoing property-related expenses primarily HOA fees (when applicable); property taxes; insurance; marketing expenses; repairs and maintenance; and turnover costs, which may not be subject to our control. These include primarily property taxes, repairs and maintenance (“R&M”), turnover costs, HOA fees (when applicable) and insurance.
 
Property Management Expenses
 
As we internally manage our portfolio of single-family properties through our proprietary property management platform, we incur costs such as salary expenses for property management personnel, lease expenses and operating costs for property management offices and technology expenses for maintaining theour property management platform. As part of developing our property management platform, we have made significant investments in our infrastructure, systems and technology. We believe that these investments will enable our property management platform to become more efficient over time, especially as our portfolio grows in size.grows. Also included in property management expenses is noncash share-based compensation expense related to centralized and field property management employees.
 
Seasonality
 
We believe that our business and related operating results will be impacted by seasonal factors throughout the year. In particular, we have experiencedWe experience higher levels of tenant move-outs and move-ins during the late spring and summer months, which impacts both our rental

revenues and related turnover costs. Further, our property operating costs are seasonally impacted in certain markets for expenses such as HVAC repairs, turn costs and landscaping expenses during the summer season. Additionally, our single-family properties are at greater risk in certain markets for adverse weather conditions such as hurricanes in the late summer months and extreme cold weather in the winter months.

General and Administrative Expense
 
General and administrative expense primarily consists of corporate payroll and personnel costs, state taxes, trustees’ and officers’ insurance expenses, audit and tax fees, state taxes, trustee fees and other expenses associated with our corporate and administrative functions. Also included in general and administrative expense is noncash share-based compensation expense related to corporate administrative employees.
 
Results of Operations
 
Net income totaled $19.1$40.3 million for the three months ended SeptemberJune 30, 2017,2019, compared to a net lossincome of $0.2$25.9 million for the three months ended SeptemberJune 30, 2016. This improvement was2018. Net income totaled $73.4 million for the six months ended June 30, 2019, compared to net income of $47.4 million for the six months ended June 30, 2018. These improvements were primarily attributable to higher revenues resulting from a larger number of occupied properties and the remeasurement of our participating preferred shares, partially offset by hurricane-related charges in the third quarter of 2017, as well as a loss on early extinguishment of debt in the third quarter of 2016. Net income totaled $46.0 million for the nine months ended September 30, 2017, compared to net income of $1.1 million for the nine months ended September 30, 2016. This improvement was primarily attributable to higher revenuesrental rates and lower interest expense, partially offset by an increase in property operating expenses and hurricane-related charges in the third quarter of 2017, as well as a gain on the conversionsale of Series E convertible units into Series D convertible units in the first quarter of 2016.single family properties, net.


As we continue to grow our portfolio with a portion of our homes still recently developed, acquired and / and/or renovated, we distinguish our portfolio of homes between Same-Home properties and Non-Same-Home and Other properties and Former ARPI properties in evaluating our operating performance. We classify a property as Same-Home if it has been stabilized longer than 90 days prior to the beginning of the earliest period presented under comparison and if it has not been classified as held for sale, identified for future sale or taken out of service as a result of a casualty loss, which allows the performance of these properties to be compared between periods. Single-family properties that we acquire individually (i.e., not through a bulk purchase) are classified as either stabilized or non-stabilized. A property is classified as stabilized once it has been renovated by the Company or newly constructed and then initially leased or available for rent for a period greater than 90 days. Properties acquired through a bulk purchase are first considered stabilized,non-stabilized, as an entire group, provideduntil (1) we have owned them for an adequate period of time to allow for complete on-boarding to our operating platform, and (2) a substantial portion of the properties have experienced tenant turnover at least once under our ownership, providing the opportunity for renovations and improvements to meet our property standards. We classify a property as Former ARPI if it wasAfter such time has passed, properties acquired through the ARPI Merger and is not classified as held for sale as of the end of the current period.a bulk purchase are then evaluated on an individual property basis under our standard stabilization criteria. All other properties, including those classified as held for sale or identified for future sale, are classified as Non-Same-Home and Other.
 
One of the primary financial measures we use in evaluating the operating performance of our single-family properties is Core Net Operating Income (“Core NOI”), which we also present separately for our Same-Home portfolio. Core NOI is a supplemental non-GAAP financial measure that we define as core revenues, which is calculated as rentstotal revenues, excluding expenses reimbursed by tenant charge-backs and fees from single-family properties, net of bad debt expense,other revenues, less core property operating expenses, which is calculated as property operating and property management expenses, excluding noncash share-based compensation expense and expenses reimbursed by tenant charge-backs and bad debt expense.charge-backs.


Core NOI also excludes (1) noncash fair value adjustments associated with remeasuring our participating preferred shares derivative liability to fair value, (2) noncash gain or loss on conversion of convertibleshares or units, (3) gain or loss on early extinguishment of debt, (4) hurricane-related charges, net, which result in material charges to the impacted single-family properties, (5) gain or loss on sales of single-family properties and other, (6) depreciation and amortization, (7) acquisition fees and costs expensed incurred with recent business combinations and the acquisition of individual properties, (8) noncash share-based compensation expense, (9) interest expense, (10) general and administrative expense, (11) other expenses and (12) other revenues. We considerbelieve Core NOI to be a meaningful financial measure because we believe it is helpfulprovides useful information to investors in understandingabout the operating performance of our single-family properties without the impact of certain operating expenses that are reimbursed through tenant charge-backs. We further adjust Core NOI for our Same-Home portfolio by subtracting capital expenditures to calculate Same-Home Core NOI After Capital Expenditures, which we believe is a meaningful supplemental non-GAAP financial measure because it more fully reflects our operating performance after the impact of all property-level expenditures, regardless of whether they are capitalized or expensed.


Core NOI and Same-Home Core NOI After Capital Expenditures should be considered only as supplements to net income or loss as a measure of our performance and should not be used as measures of our liquidity, nor are they indicative of funds available to fund our cash needs, including our ability to pay dividends or make distributions. Additionally, these metrics should not be used as substitutes for net income (loss)or loss or net cash flows from operating activities (as computed in accordance with GAAP).




Comparison of the Three Months Ended SeptemberJune 30, 2017,2019 to the Three Months Ended SeptemberJune 30, 20162018
 
The following table presents a summary of Core NOI for our Same-Home properties, Non-Same-Home and Other properties, Former ARPI properties and total properties for the three months ended SeptemberJune 30, 20172019 and 20162018 (in thousands):
For the Three Months Ended September 30, 2017For the Three Months Ended June 30, 2019
Same-Home
Properties (1)		 % of Core
Revenue		 Non-Same-
Home and Other
Properties		 % of Core
Revenue		 Former ARPI Properties % of Core
Revenue		 Total
Properties		 % of Core
Revenue
Same-Home
Properties (1)
 % of Core
Revenue		 Non-Same-
Home and Other
Properties		 % of Core
Revenue		 Total
Properties		 % of Core
Revenue
Rents from single-family properties$158,491
  
 $18,771
  
 $30,228
   $207,490
  
$188,881
  
 $53,977
  
 $242,858
  
Fees from single-family properties2,099
  
 313
  
 431
   2,843
  
2,597
  
 896
  
 3,493
  
Bad debt expense(1,755)  
 (195)  
 (349)   (2,299)  
(1,381)  
 (359)  
 (1,740)  
Core revenues158,835
  
 18,889
  
 30,310
   208,034
  
190,097
  
 54,514
  
 244,611
  
                          
Property tax expense28,011
 17.6% 3,290
 17.4% 5,317
 17.5% 36,618
 17.6%33,136
 17.5% 10,337
 19.0% 43,473
 17.8%
HOA fees, net (2)3,117
 2.0% 398
 2.1% 731
 2.4% 4,246
 2.0%4,011
 2.1% 1,360
 2.5% 5,371
 2.2%
R&M and turnover costs, net (2)13,720
 8.6% 1,764
 9.4% 2,482
 8.2% 17,966
 8.6%15,208
 8.0% 4,194
 7.7% 19,402
 7.9%
Insurance1,450
 0.9% 231
 1.2% 300
 1.0% 1,981
 1.0%1,712
 0.9% 560
 1.0% 2,272
 0.9%
Property management expenses, net (3)12,041
 7.6% 1,431
 7.6% 2,298
 7.6% 15,770
 7.6%15,462
 8.1% 4,612
 8.4% 20,074
 8.2%
Core property operating expenses58,339
 36.7% 7,114
 37.7% 11,128
 36.7% 76,581
 36.8%69,529
 36.6% 21,063
 38.6% 90,592
 37.0%
                          
Core NOI$100,496
 63.3% $11,775
 62.3% $19,182
 63.3% $131,453
 63.2%$120,568
 63.4% $33,451
 61.4% $154,019
 63.0%

For the Three Months Ended September 30, 2016For the Three Months Ended June 30, 2018
Same-Home
Properties (1)		 % of Core
Revenue		 Non-Same-
Home and Other
Properties		 % of Core
Revenue		 Former ARPI Properties % of Core
Revenue		 Total
Properties		 % of Core
Revenue
Same-Home
Properties (1)
 % of Core
Revenue		 Non-Same-
Home and Other
Properties		 % of Core
Revenue		 Total
Properties		 % of Core
Revenue
Rents from single-family properties$154,610
  
 $13,122
  
 $29,405
   $197,137
  
$181,334
  
 $45,877
  
 $227,211
  
Fees from single-family properties2,228
  
 265
  
 405
   2,898
  
2,123
  
 631
  
 2,754
  
Bad debt expense(1,805)  
 (457)  
 (347)   (2,609)  
(1,329)  
 (287)  
 (1,616)  
Core revenues155,033
  
 12,930
  
 29,463
   197,426
  
182,128
  
 46,221
  
 228,349
  
                          
Property tax expense27,755
 17.9% 2,656
 20.5% 5,460
 18.5% 35,871
 18.2%31,152
 17.1% 8,859
 19.2% 40,011
 17.5%
HOA fees, net (2)3,046
 2.0% 242
 1.9% 743
 2.5% 4,031
 2.0%3,746
 2.1% 1,099
 2.4% 4,845
 2.1%
R&M and turnover costs, net (2)13,947
 8.9% 1,525
 11.9% 2,907
 9.8% 18,379
 9.3%14,526
 8.0% 4,187
 9.0% 18,713
 8.2%
Insurance1,667
 1.1% 187
 1.4% 372
 1.3% 2,226
 1.1%1,520
 0.8% 426
 0.9% 1,946
 0.9%
Property management expenses, net (3)12,948
 8.4% 1,079
 8.3% 2,461
 8.4% 16,488
 8.4%14,799
 8.1% 3,962
 8.6% 18,761
 8.2%
Core property operating expenses59,363
 38.3% 5,689
 44.0% 11,943
 40.5% 76,995
 39.0%65,743
 36.1% 18,533
 40.1% 84,276
 36.9%
                          
Core NOI$95,670
 61.7% $7,241
 56.0% $17,520
 59.5% $120,431
 61.0%$116,385
 63.9% $27,688
 59.9% $144,073
 63.1%


(1) Includes 36,68240,618 properties that have been stabilized longer than 90 days prior to January 1, 2016.2018.
(2)Presented net of tenant charge-backs. In-house maintenance costs, which were previously presented separately, are included in R&M and turnover costs, net.
(3)
Presented net of tenant charge-backs and excludes noncash share-based compensation expense related to centralized and field property management employees.Property management expenses, net for the 2018 period also includes an adjustment for the portion of leasing costs that were previously capitalized, that would be expensed under the new lease accounting standard ASU 2016-02, adopted by the Company on January 1, 2019.



The following are reconciliations of core revenues, Same-Home core venues, core property operating expenses, Same-Home core property operating expenses, Core NOI, Same-Home Core NOI and Same-Home Core NOI After Capital Expenditures to their respective GAAP metrics for the three months ended SeptemberJune 30, 20172019 and 20162018 (amounts in thousands):
For the Three Months Ended
September 30,		For the Three Months Ended
June 30,
2017 20162019 2018
(Unaudited) (Unaudited)(Unaudited) (Unaudited)
Core revenues   
Core revenues and Same-Home core revenues   
Total revenues$246,836
 $236,057
$281,860
 $264,483
Tenant charge-backs(36,094) (30,808)(35,303) (32,917)
Other revenues(1,946) (1,601)
Bad debt expense(2,299) (2,609)—
 (1,616)
Other revenues(409) (5,214)
Core revenues$208,034
 $197,426
244,611
 228,349
Less: Non-Same-Home core revenues54,514
 46,221
Same-Home core revenues$190,097
 $182,128
Core property operating expenses   
Core property operating expenses and Same-Home core property operating expenses   
Property operating expenses$97,944
 $92,488
$104,591
 $98,843
Property management expenses17,447
 18,335
21,650
 18,616
Noncash share-based compensation - property management(417) (411)(346) (423)
Expenses reimbursed by tenant charge-backs(36,094) (30,808)(35,303) (32,917)
Bad debt expense(2,299) (2,609)—
 (1,616)
Internal leasing costs (1)
—
 1,773
Core property operating expenses$76,581
 $76,995
90,592
 84,276
Less: Non-Same-Home core property operating expenses21,063
 18,533
Same-Home core property operating expenses$69,529
 $65,743
Core NOI, Same-Home Core NOI and Same-Home Core NOI After Capital Expenditures  
Net income (loss)$19,097
 $(167)
Remeasurement of participating preferred shares(8,391) 2,490
Core NOI and Same-Home Core NOICore NOI and Same-Home Core NOI  
Net income$40,304
 $25,898
Loss on early extinguishment of debt—
 13,408
659
 1,447
Hurricane-related charges, net10,136
 —
Gain on sale of single-family properties and other, net(1,895) (11,682)(13,725) (3,240)
Depreciation and amortization74,790
 75,392
82,840
 78,319
Acquisition fees and costs expensed1,306
 1,757
970
 1,321
Noncash share-based compensation - property management417
 411
346
 423
Interest expense26,592
 32,851
32,571
 31,978
General and administrative expense8,525
 8,043
10,486
 9,677
Other expenses1,285
 3,142
1,514
 1,624
Other revenues(409) (5,214)(1,946) (1,601)
Tenant charge-backs36,094
 30,808
Expenses reimbursed by tenant charge-backs(36,094) (30,808)
Bad debt expense excluded from operating expenses2,299
 2,609
Bad debt expense included in revenues(2,299) (2,609)
Internal leasing costs (1)
—
 (1,773)
Core NOI131,453
 120,431
154,019
 144,073
Less: Non-Same-Home Core NOI30,957
 24,761
33,451
 27,688
Same-Home Core NOI100,496
 95,670
$120,568
 $116,385
Less: Same-Home capital expenditures8,968
 8,949
Same-Home Core NOI After Capital Expenditures$91,528
 $86,721
(1)    Adjustment amount reflects the portion of leasing costs that were previously capitalized, that would be expensed under the new lease accounting standard ASU 2016-02, adopted by the Company on January 1, 2019.

Total Revenues

Total revenues increased 6.6% to $281.9 million for the three months ended June 30, 2019 from $264.5 million for the three months ended June 30, 2018. Revenue growth was primarily driven by higher rental rates and continued strong leasing activity, as the average number of occupied homes in our portfolio grew to 48,989 homes for the three months ended June 30, 2019 compared to 47,427 homes for the three months ended June 30, 2018. This was partially offset by a $1.7 million reclassification of bad debt expense during the three months ended June 30, 2019, which was included in total revenues as a result of the adoption of the new lease accounting standard.


Property Operating Expenses

Property operating expenses increased 5.8% to $104.6 million for the three months ended June 30, 2019 from $98.8 million for the three months ended June 30, 2018. This increase was primarily attributable to higher property tax expense and growth in the number of homes in our portfolio which drove increases in repairs and maintenance and turnover costs. This was partially offset by the $1.7 million reclassification of bad debt expense associated with the adoption of the new lease accounting standard.

Property Management Expenses

Property management expenses for the three months ended June 30, 2019 and 2018 were $21.7 million and $18.6 million, respectively, which included $0.3 million and $0.4 million, respectively, of noncash share-based compensation expense related to centralized and field property management employees. The increase in property management expense is primarily attributable to higher personnel costs and the additional leasing costs recorded to property management expense as a result of the new lease accounting standard adopted on January 1, 2019.

Core Revenues from Same-Home Properties


Core revenues from Same-Home properties for the three months ended September 30, 2017, increased $3.8 million, or 2.5%,4.4% to $158.8 million from $155.0$190.1 million for the three months ended SeptemberJune 30, 2016.2019 from $182.1 million for the three months ended June 30, 2018. This increase was primarily attributable to higher Average Monthly Realized Rent, which increased 3.7% to $1,620 per month for the three months ended June 30, 2019 compared to $1,562 per month for the three months ended June 30, 2018, as well as a rise in Average Occupied Days Percentage, which increased to 95.7% for the three months ended June 30, 2019 compared to 95.3% for the three months ended June 30, 2018.

Core Property Operating Expenses from Same-Home Properties
Core property operating expenses consist of direct property operating expenses, net of tenant charge-backs, and property management costs, net of tenant charge-backs and excludes noncash share-based compensation expense. Core property operating expenses from Same-Home properties increased 5.8% to $69.5 million for the three months ended June 30, 2019 from $65.7 million for the three months ended June 30, 2018. Same-Home core property operating expenses as a percentage of Same-Home core revenues increased to 36.6% for the three months ended June 30, 2019 from 36.1% for the three months ended June 30, 2018. The increase in Same-Home core property operating expenses as a percentage of Same-Home core revenues was primarily driven by an outsized increase in property tax expense.
General and Administrative Expense
General and administrative expense primarily consists of corporate payroll and personnel costs, state taxes, trustees’ and officers’ insurance expense, audit and tax fees, trustee fees and other expenses associated with our corporate and administrative functions. General and administrative expense for the three months ended June 30, 2019 and 2018 was $10.5 million and $9.7 million, respectively, which included $0.9 million and $0.5 million, respectively, of noncash share-based compensation expense related to corporate administrative employees. The increase in general and administrative expense was primarily related to higher personnel costs, partially offset by lower legal expenses and state taxes.
Interest Expense
Interest expense increased 1.9% to $32.6 million for the three months ended June 30, 2019 from $32.0 million for the three months ended June 30, 2018. This increase was primarily related to the unsecured senior notes issued in January 2019, partially offset by the paydown on the term loan facility in June 2018, the payoff of the exchangeable senior notes in November 2018, and an increase in capitalized interest.
Acquisition Fees and Costs Expensed
All costs of our internal acquisition function are expensed. For the three months ended June 30, 2019 and 2018, acquisition fees and costs expensed totaled $1.0 million and $1.3 million, respectively, which were related to costs associated with purchases of single-family properties, including newly constructed properties from third party builders.

Depreciation and Amortization
Depreciation and amortization expense consists primarily of depreciation of buildings and improvements. Depreciation of our assets is calculated over their useful lives on a straight-line basis over 3 to 30 years. Our intangible assets are amortized on a straight-line basis over the asset’s estimated economic useful life. Depreciation and amortization expense increased 5.8% to $82.8 million for

the three months ended June 30, 2019 from $78.3 million for the three months ended June 30, 2018 primarily due to growth in our average number of depreciable properties.

Other Revenues

Other revenues were $1.9 million for the three months ended June 30, 2019, which included $0.9 million of interest income on short-term investments, $0.7 million of fees from unconsolidated joint ventures and $0.3 million of other income. Other revenues were $1.6 million for the three months ended June 30, 2018, which included $0.6 million of interest income on short-term investments, $0.3 million of equity in earnings from unconsolidated joint ventures, $0.2 million of fees from unconsolidated joint ventures and $0.5 million of other income.

Other Expenses

Other expenses were $1.5 million for the three months ended June 30, 2019, which included $0.9 million related to impairments on properties held for sale, $0.5 million of expenses related to a joint venture and $0.1 million of other expenses. Other expenses were $1.6 million for the three months ended June 30, 2018, which included $1.5 million related to impairments on properties held for sale and $0.1 million of other expenses.


Comparison of the Six Months Ended June 30, 2019 to the Six Months Ended June 30, 2018
The following table presents a summary of Core NOI for our Same-Home properties, Non-Same-Home and Other properties, and total properties for the six months ended June 30, 2019 and 2018 (in thousands):
 For the Six Months Ended June 30, 2019
 
Same-Home
Properties (1)
 % of Core
Revenue		 Non-Same-
Home and Other
Properties		 % of Core
Revenue		 Total
Properties		 % of Core
Revenue
Rents from single-family properties$375,075
   $104,280
   $479,355
  
Fees from single-family properties4,801
   1,705
   6,506
  
Bad debt expense(2,676)   (832)   (3,508)  
Core revenues377,200
  
 105,153
  
 482,353
  
            
Property tax expense65,330
 17.3% 20,514
 19.5% 85,844
 17.8%
HOA fees, net (2)
8,450
 2.2% 2,888
 2.8% 11,338
 2.3%
R&M and turnover costs, net (2)
28,572
 7.6% 8,393
 8.0% 36,965
 7.7%
Insurance3,373
 0.9% 1,092
 1.0% 4,465
 0.9%
Property management expenses, net (3)
30,180
 8.0% 8,948
 8.5% 39,128
 8.1%
Core property operating expenses135,905
 36.0% 41,835
 39.8% 177,740
 36.8%
            
Core NOI$241,295
 64.0% $63,318
 60.2% $304,613
 63.2%

 For the Six Months Ended June 30, 2018
 
Same-Home
Properties (1)
 % of Core
Revenue		 Non-Same-
Home and Other
Properties		 % of Core
Revenue		 Total
Properties		 % of Core
Revenue
Rents from single-family properties$360,460
   $84,774
   $445,234
  
Fees from single-family properties4,197
   1,390
   5,587
  
Bad debt expense(2,937)   (679)   (3,616)  
Core revenues361,720
  
 85,485
  
 447,205
  
            
Property tax expense61,862
 17.1% 17,239
 20.2% 79,101
 17.7%
HOA fees, net (2)
7,256
 2.0% 2,066
 2.4% 9,322
 2.1%
R&M and turnover costs, net (2)
28,404
 7.8% 9,048
 10.6% 37,452
 8.4%
Insurance3,137
 0.9% 856
 1.0% 3,993
 0.9%
Property management expenses, net (3)
30,062
 8.3% 7,725
 9.0% 37,787
 8.4%
Core property operating expenses130,721
 36.1% 36,934
 43.2% 167,655
 37.5%
            
Core NOI$230,999
 63.9% $48,551
 56.8% $279,550
 62.5%

(1) Includes 40,618 properties that have been stabilized longer than 90 days prior to January 1, 2018.
(2)Presented net of tenant charge-backs.
(3)
Presented net of tenant charge-backs and excludes noncash share-based compensation expense related to centralized and field property management employees. Property management expenses, net for the 2018 period also includes an adjustment for the portion of leasing costs that were previously capitalized, that would be expensed under the new lease accounting standard ASU 2016-02, adopted by the Company on January 1, 2019.


The following are reconciliations of core revenues, Same-Home core venues, core property operating expenses, Same-Home core property operating expenses, Core NOI, and Same-Home Core NOI to their respective GAAP metrics for the six months ended June 30, 2019 and 2018 (amounts in thousands):
 For the Six Months Ended
June 30,
 2019 2018
 (Unaudited) (Unaudited)
Core revenues and Same-Home core revenues   
Total revenues$561,064
 $522,487
Tenant charge-backs(75,255) (68,724)
Other revenues(3,456) (2,942)
Bad debt expense—
 (3,616)
Core revenues482,353
 447,205
Less: Non-Same-Home core revenues105,153
 85,485
Same-Home core revenues$377,200
 $361,720
Core property operating expenses and Same-Home core property operating expenses   
Property operating expenses$211,275
 $199,830
Property management expenses42,359
 37,603
Noncash share-based compensation - property management(639) (800)
Expenses reimbursed by tenant charge-backs(75,255) (68,724)
Bad debt expense—
 (3,616)
Internal leasing costs (1)
—
 3,362
Core property operating expenses177,740
 167,655
Less: Non-Same-Home core property operating expenses41,835
 36,934
Same-Home core property operating expenses$135,905
 $130,721
Core NOI and Same-Home Core NOI   
Net income$73,395
 $47,423
Remeasurement of participating preferred shares—
 (1,212)
Loss on early extinguishment of debt659
 1,447
Gain on sale of single-family properties and other, net(19,374) (5,496)
Depreciation and amortization164,001
 157,622
Acquisition fees and costs expensed1,804
 2,632
Noncash share-based compensation - property management639
 800
Interest expense64,486
 61,279
General and administrative expense19,921
 18,908
Other expenses2,538
 2,451
Other revenues(3,456) (2,942)
Internal leasing costs (1)
—
 (3,362)
Core NOI304,613
 279,550
Less: Non-Same-Home Core NOI63,318
 48,551
Same-Home Core NOI$241,295
 $230,999
(1)    Adjustment amount reflects the portion of leasing costs that were previously capitalized, that would be expensed under the new lease accounting standard ASU 2016-02, adopted by the Company on January 1, 2019.

Total Revenues

Total revenues increased 7.4% to $561.1 million for the six months ended June 30, 2019 from $522.5 million for the six months ended June 30, 2018. Revenue growth was primarily driven by higher rental rates and continued strong leasing activity, as our average occupied portfolio grew to 48,600 homes for the six months ended June 30, 2019 compared to 47,156 homes for the six months ended June 30, 2018. This was partially offset by a $3.5 million reclassification of bad debt expense during the six months ended June 30, 2019, which was included in total revenues as a result of the adoption of the new lease accounting standard.

Property Operating Expenses

Property operating expenses increased 5.7% to $211.3 million for the six months ended June 30, 2019 from $199.8 million for the six months ended June 30, 2018. This increase was primarily attributable to higher property tax expense and higher HOA fees. This was partially offset by the $3.5 million reclassification of bad debt expense associated with the adoption of the new lease accounting standard.

Property Management Expenses

Property management expenses for the six months ended June 30, 2019 and 2018 were $42.4 million and $37.6 million, respectively, which included $0.6 million and $0.8 million, respectively, of noncash share-based compensation expense related to centralized and field property management employees. The increase in property management expense is primarily attributable to higher personnel costs and additional leasing costs recorded to property management expenses as a result of the new lease accounting standard adopted on January 1, 2019.

Core Revenues from Same-Home Properties
Core revenues from Same-Home properties increased 4.3% to $377.2 million for the six months ended June 30, 2019 from $361.7 million for the six months ended June 30, 2018. This rise was primarily attributable to higher average monthly rental rates,Average Monthly Realized Rent, which increased 3.5% to $1,610 per month for the six months ended June 30, 2019 compared to $1,555 per month for the six months ended June 30, 2018, as well as a rise in the Average Occupied Days Percentage, which increased to $1,535 per month as of September95.6% for the six months ended June 30, 2017,2019 compared to $1,490 per month as of September95.1% for the six months ended June 30, 2016.2018.
 
Core Property Operating Expenses from Same-Home Properties
 
Core property operating expenses consist of direct property operating expenses, net of tenant charge-backs, and property management costs, net of tenant charge-backs and excludingexcludes noncash share-based compensation expense. Core property operating

expenses from Same-Home properties for the three months ended September 30, 2017, decreased $1.1 million, or 1.7%,increased 4.0% to $58.3 million from $59.4$135.9 million for the threesix months ended SeptemberJune 30, 2016.2019 from $130.7 million for the six months ended June 30, 2018. Same-Home core property operating expenses as a percentage of total Same-Home core revenues decreased to 36.7%36.0% for the threesix months ended SeptemberJune 30, 2017,2019 from 38.3%36.1% for the threesix months ended SeptemberJune 30, 2016.2018. This decrease in Same-Home core property operating expenses as a percentage of Same-Home core revenues was primarily attributable to reduced property management expenses, nettemporarily elevated turnover costs incurred from the beginning of tenant charge-backs and higher core revenues from Same-Home properties.the prior year through April 2018 as part of the Company’s strategic initiative to strengthen occupancy at that time.
 
General and Administrative Expense
 
General and administrative expense which primarily consists of corporate payroll and personnel costs, state taxes, trustees’ and officers’ insurance expense, audit and tax fees, state taxes, trustee fees and other expenses associated with our corporate and administrative functions, was $8.5 million for the three months ended September 30, 2017, compared to $8.0 million for the same period in 2016. This increase was primarily related to higher rent and technology costs. Also included in generalfunctions. General and administrative expense for the six months ended June 30, 2019 and 2018 was $0.7$19.9 million and $0.5$18.9 million, respectively, which included $1.6 million and $1.1 million, respectively, of noncash share-based compensation expense related to corporate administrative employees for the three months ended September 30, 2017employees. The increase in general and 2016, respectively.administrative expense was primarily related to higher personnel costs, partially offset by lower legal expenses and state taxes.

Interest Expense
 
Interest expense was $26.6 million and $32.9increased 5.2% to $64.5 million for the threesix months ended SeptemberJune 30, 2017 and 2016, respectively.2019 from $61.3 million for the six months ended June 30, 2018. This decreaseincrease was primarily duerelated to the unsecured senior notes issued in February 2018 and January 2019, partially offset by the payoff of the ARP 2014-SFR1 asset-backed securitizationsecured note payable in May 2018, the third quarter of 2016,paydown on the term loan facility in June 2018, the payoff of the AH4R 2014-SFR1 asset-backed securitizationexchangeable senior notes in the second quarter of 2017November 2018, and increasedan increase in capitalized interest, partially offset by higher interest expense on the credit facilities.interest.

Acquisition Fees and Costs Expensed
 
All costs of our internal acquisition function are expensed in accordance with GAAP.expensed. For the threesix months ended SeptemberJune 30, 2017, acquisition fees2019 and costs expensed totaled $1.3 million, which was related to costs associated with the purchases of single-family properties. For the three months ended September 30, 2016,2018, acquisition fees and costs expensed totaled $1.8 million including $0.5and $2.6 million, of transaction costsrespectively, which were related to the ARPI Merger and $1.3 millioncosts associated with purchases of other acquisition fees and costs expensed.single-family properties, including newly constructed properties from third party builders.


Depreciation and Amortization
 
Depreciation and amortization expense consists primarily of depreciation of buildings and improvements. Depreciation of our assets is calculated over their useful lives on a straight-line basis over 3 to 30 years. Our intangible assets are amortized on a straight-line basis over the asset’s estimated economic useful life. Depreciation and amortization expense was $74.8 million and $75.4increased 4.0% to $164.0 million for the threesix months ended SeptemberJune 30, 2017 and 2016, respectively. This decrease was attributable to lower amortization related to in-place leases, partially offset by an increase in depreciation expense related2019 from $157.6 million for the six months ended June 30, 2018 primarily due to growth in our average number of depreciable properties.


Other Revenues


Other revenues totaled $0.4were $3.5 million for the threesix months ended SeptemberJune 30, 2017,2019, which included $0.1$1.4 million of interest income related to residential mortgage assetson short-term investments, $1.4 million of fees from unconsolidated joint ventures and $0.6$0.7 million of other income, partially offset by $0.3 million of loss in equity from unconsolidated joint ventures.income. Other revenues totaled $5.2were $2.9 million for the threesix months ended SeptemberJune 30, 2016,2018, which included $4.2$1.0 million of interest income and gain related to residential mortgage assets, $0.4on short-term investments, $0.6 million of equity in earnings from unconsolidated joint ventures, $0.4 million of fees from unconsolidated joint ventures and $0.6$0.9 million of other income.


Other Expenses


Other expenses totaled $1.3were $2.5 million for the threesix months ended SeptemberJune 30, 2017,2019, which included $1.3$1.4 million related to impairments on properties held for sale, $0.9 million of expenses related to a joint venture and $0.2 million of other expenses. Other expenses were $2.5 million for the six months ended June 30, 2018, which included $2.2 million related to impairments on properties held for sale and $0.2 million of expenses related to residential mortgage assets, partially offset by a $0.2 million net recovery of previously accrued expenses. Other expenses totaled $3.1 million for the three months ended September 30, 2016, which included $2.4 million of expenses related to residential mortgage assets, $0.6 million related to impairments on properties held for sale and $0.1$0.3 million of other expenses.

Hurricane-Related Charges, net

Hurricanes Harvey and Irma impacted certain properties in our Houston, Florida and Southeast markets during the third quarter of 2017. Approximately 140 homes sustained major damage and nearly 3,400 homes incurred minor damage, consisting primarily of downed trees and damaged roofs and fences. The Company’s property and casualty insurance policies provide coverage for wind and flood damage, as well as business interruption costs, during the period of remediation and repairs, subject to deductibles

and limits. During the three months ended September 30, 2017, the Company recognized a $12.6 million impairment charge to write down the net book values of the impacted properties, of which we believe it is probable that we will recover an estimated $11.0 million through insurance claims, and accrued $8.5 million of additional repair, remediation and other costs. The $10.1 million of net charges were included in hurricane-related charges, net within the condensed consolidated statement of operations for the three months ended September 30, 2017. Of the $10.1 million of net hurricane-related charges recorded in the period, $5.8 million related to homes in the current Same-Home portfolio. The previously reported Same-Home portfolio has been revised to exclude approximately 100 homes that sustained major damages.

Comparison of the Nine Months Ended September 30, 2017, to the Nine Months Ended September 30, 2016
The following table presents a summary of Core NOI for our Same-Home properties, Non-Same-Home and Other properties, Former ARPI properties and total properties for the nine months ended September 30, 2017 and 2016 (in thousands):
 For the Nine Months Ended September 30, 2017
 Same-Home
Properties (1)		 % of Core
Revenue		 Non-Same-
Home and Other
Properties		 % of Core
Revenue		 Former ARPI Properties % of Core
Revenue		 Total
Properties		 % of Core
Revenue
Rents from single-family properties$473,441
   $49,242
   $90,562
   $613,245
  
Fees from single-family properties5,948
   920
   1,269
   8,137
  
Bad debt expense(3,947)   (467)   (728)   (5,142)  
Core revenues475,442
  
 49,695
  
 91,103
   616,240
  
                
Property tax expense84,245
 17.7% 9,502
 19.1% 16,305
 17.9% 110,052
 17.9%
HOA fees, net (2)9,071
 1.9% 995
 2.0% 2,165
 2.4% 12,231
 2.0%
R&M and turnover costs, net (2)35,240
 7.4% 4,334
 8.7% 6,374
 6.9% 45,948
 7.4%
Insurance4,423
 0.9% 615
 1.2% 807
 0.9% 5,845
 0.9%
Property management expenses, net (3)36,455
 7.7% 3,805
 7.7% 6,985
 7.7% 47,245
 7.7%
Core property operating expenses169,434
 35.6% 19,251
 38.7% 32,636
 35.8% 221,321
 35.9%
                
Core NOI$306,008
 64.4% $30,444
 61.3% $58,467
 64.2% $394,919
 64.1%
 For the Nine Months Ended September 30, 2016
 Same-Home
Properties (1)		 % of Core
Revenue		 Non-Same-
Home and Other
Properties		 % of Core
Revenue		 Former ARPI Properties (4) % of Core
Revenue		 Total
Properties		 % of Core
Revenue
Rents from single-family properties$458,279
   $32,595
   $67,749
   $558,623
  
Fees from single-family properties6,156
   812
   851
   7,819
  
Bad debt expense(3,907)   (657)   (528)   (5,092)  
Core revenues460,528
  
 32,750
  
 68,072
   561,350
  
                
Property tax expense83,269
 18.1% 6,756
 20.6% 12,284
 18.0% 102,309
 18.2%
HOA fees, net (2)8,955
 1.9% 669
 2.0% 1,653
 2.4% 11,277
 2.0%
R&M and turnover costs, net (2)35,953
 7.8% 3,537
 10.9% 6,145
 9.0% 45,635
 8.1%
Insurance5,185
 1.1% 551
 1.7% 854
 1.3% 6,590
 1.2%
Property management expenses, net (3)39,446
 8.6% 2,792
 8.5% 5,780
 8.5% 48,018
 8.6%
Core property operating expenses172,808
 37.5% 14,305
 43.7% 26,716
 39.2% 213,829
 38.1%
                
Core NOI$287,720
 62.5% $18,445
 56.3% $41,356
 60.8% $347,521
 61.9%

(1) Includes 36,682 properties that have been stabilized longer than 90 days prior to January 1, 2016.
(2)Presented net of tenant charge-backs. In-house maintenance costs, which were previously presented separately, are included in R&M and turnover costs, net.
(3)Presented net of tenant charge-backs and excludes noncash share-based compensation expense related to centralized and field property management employees.
(4) Former ARPI properties includes the operating activity of properties acquired through the ARPI Merger from the acquisition date of February 29, 2016, through September 30, 2016.


The following are reconciliations of core revenues, core property operating expenses, Core NOI, Same-Home Core NOI and Same-Home Core NOI After Capital Expenditures to their respective GAAP metrics for the nine months ended September 30, 2017 and 2016 (amounts in thousands):
 For the Nine Months Ended
September 30,
 2017 2016
 (Unaudited) (Unaudited)
Core revenues   
Total revenues$717,598
 $651,330
Tenant charge-backs(91,849) (72,077)
Bad debt expense(5,142) (5,092)
Other revenues(4,367) (12,811)
Core revenues$616,240
 $561,350
Core property operating expenses   
Property operating expenses$267,203
 $238,987
Property management expenses52,367
 53,177
Noncash share-based compensation - property management(1,258) (1,166)
Expenses reimbursed by tenant charge-backs(91,849) (72,077)
Bad debt expense(5,142) (5,092)
Core property operating expenses$221,321
 $213,829
Core NOI, Same-Home Core NOI and Same-Home Core NOI After Capital Expenditures
Net income$45,959
 $1,108
Remeasurement of participating preferred shares(1,341) 2,940
Gain on conversion of Series E units—
 (11,463)
Loss on early extinguishment of debt6,555
 13,408
Hurricane-related charges, net10,136
 —
Gain on sale of single-family properties and other, net(6,375) (12,574)
Depreciation and amortization221,459
 224,513
Acquisition fees and costs expensed3,814
 10,899
Noncash share-based compensation - property management1,258
 1,166
Interest expense86,873
 99,309
General and administrative expense26,746
 24,544
Other expenses4,202
 6,482
Other revenues(4,367) (12,811)
Tenant charge-backs91,849
 72,077
Expenses reimbursed by tenant charge-backs(91,849) (72,077)
Bad debt expense excluded from operating expenses5,142
 5,092
Bad debt expense included in revenues(5,142) (5,092)
Core NOI394,919
 347,521
Less: Non-Same-Home Core NOI88,911
 59,801
Same-Home Core NOI306,008
 287,720
Less: Same-Home capital expenditures21,077
 22,223
Same-Home Core NOI After Capital Expenditures$284,931
 $265,497

Core Revenues from Same-Home Properties
Core revenues from Same-Home properties for the nine months ended September 30, 2017, increased $14.9 million, or 3.2%, to $475.4 million from $460.5 million for the nine months ended September 30, 2016. This rise was primarily attributable to higher average monthly rental rates, which increased to $1,535 per month as of September 30, 2017, compared to $1,490 per month as of September 30, 2016.

Core Property Operating Expenses from Same-Home Properties
Core property operating expenses consist of direct property operating expenses, net of tenant charge-backs, and property management costs, net of tenant charge-backs and excluding noncash share-based compensation expense. Core property operating expenses from Same-Home properties for the nine months ended September 30, 2017, decreased $3.4 million, or 2.0%, to $169.4 million from $172.8 million for the nine months ended September 30, 2016. Same-Home core property operating expenses as a percentage of total Same-Home core revenues decreased to 35.6% for the nine months ended September 30, 2017, from 37.5% for the nine months ended September 30, 2016. This decrease was primarily attributable to lower property management expenses, as well as to higher core revenues from Same-Home properties.
General and Administrative Expense
General and administrative expense, which primarily consists of corporate payroll and personnel costs, trustees’ and officers’ insurance expense, audit and tax fees, state taxes, trustee fees and other expenses associated with our corporate and administrative functions, was $26.7 million for the nine months ended September 30, 2017, compared to $24.5 million for the same period in 2016. This increase was primarily related to nonrecurring rating agency fees incurred during 2017 associated with the Company receiving inaugural investment grade corporate credit ratings, as well as higher nonrecurring legal costs related to our outstanding securitizations and technology costs. Also included in general and administrative expense was $1.9 million and $1.6 million of noncash share-based compensation expense related to corporate administrative employees for the nine months ended September 30, 2017 and 2016, respectively.

Interest Expense
Interest expense was $86.9 million and $99.3 million for the nine months ended September 30, 2017 and 2016, respectively. This decrease was primarily due to the payoff of the ARP 2014-SFR1 asset-backed securitization in the third quarter of 2016, the payoff of the AH4R 2014-SFR1 asset-backed securitization in the second quarter of 2017 and increased capitalized interest, partially offset by an increase in discount amortization on the exchangeable senior notes.

Acquisition Fees and Costs Expensed
All costs of our internal acquisition function are expensed in accordance with GAAP. For the nine months ended September 30, 2017, acquisition fees and costs expensed totaled $3.8 million, including $3.4 million of costs associated with the purchases of single-family properties and $0.4 million of other acquisition fees and costs expensed. For the nine months ended September 30, 2016, acquisition fees and costs expensed totaled $10.9 million, including $6.1 million of transaction costs related to the ARPI Merger and $4.8 million of other acquisition fees and costs expensed.
Depreciation and Amortization
Depreciation and amortization expense consists primarily of depreciation of buildings and improvements. Depreciation of our assets is calculated over their useful lives on a straight-line basis over 3 to 30 years. Our intangible assets are amortized on a straight-line basis over the asset’s estimated economic useful life. Depreciation and amortization expense was $221.5 million and $224.5 million for the nine months ended September 30, 2017 and 2016, respectively. This decrease was attributable to lower amortization related to in-place leases, partially offset by an increase in depreciation expense related to growth in our average number of depreciable properties.

Other Revenues

Other revenues totaled $4.4 million for the nine months ended September 30, 2017, which included $1.4 million of equity in earnings from unconsolidated joint ventures, $1.0 million of income related to residential mortgage assets and $2.0 million of other income. Other revenues totaled $12.8 million for the nine months ended September 30, 2016, which included $10.6 million of income and gain related to residential mortgage assets, $0.4 million of equity in earnings from unconsolidated joint ventures and $1.8 million of other income.

Other Expenses

Other expenses totaled $4.2 million for the nine months ended September 30, 2017, which included $3.8 million related to impairments on properties held for sale and $1.0 million of expenses related to residential mortgage assets, partially offset by a $0.6 million net recovery of previously accrued expenses. Other expenses totaled $6.5 million for the nine months ended September 30, 2016, which included $5.1 million of expenses related to residential mortgage assets and $1.5 million related to impairments on properties held for sale, partially offset by a $0.1 million net recovery of previously accrued expenses.

Hurricane-Related Charges, net

Hurricanes Harvey and Irma impacted certain properties in our Houston, Florida and Southeast markets during the third quarter of 2017. Approximately 140 homes sustained major damage and nearly 3,400 homes incurred minor damage, consisting primarily of downed trees and damaged roofs and fences. The Company’s property and casualty insurance policies provide coverage for wind and flood damage, as well as business interruption costs, during the period of remediation and repairs, subject to deductibles and limits. During the nine months ended September 30, 2017, the Company recognized a $12.6 million impairment charge to write down the net book values of the impacted properties, of which we believe it is probable that we will recover an estimated $11.0 million through insurance claims, and accrued $8.5 million of additional repair, remediation and other costs. The $10.1 million of net charges were included in hurricane-related charges, net within the condensed consolidated statement of operations for the nine months ended September 30, 2017. Of the $10.1 million of net hurricane-related charges recorded in the period, $5.8 million related to homes in the current Same-Home portfolio. The previously reported Same-Home portfolio has been revised to exclude approximately 100 homes that sustained major damages.


Critical Accounting Policies and Estimates
 
Our critical accounting policies are included in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the year ended December 31, 2016. There have been no significant changes to our policies during the three and nine months ended September 30, 2017.2018. For a discussion of recent accounting pronouncements, see “Note 2—Significant Accounting Policies.”Note 2.
 
Income Taxes
 
The CompanyAH4R has elected to be taxed as a REIT for U.S. federal income tax purposes under Sections 856 to 860 of the Internal Revenue Code of 1986, as amended (the “Code”), which commencedcommencing with our taxable year ended December 31, 2012. We believe that we have operated, and continue to operate, in such a manner as to satisfy the requirements for qualification as a REIT. Accordingly, we will not be subject to federal income tax, providedProvided that we qualify as a REIT and our distributions to our shareholders equal or exceed our REIT taxable income.income (determined without regard to the deduction for dividends paid and excluding net capital gains), we generally will not be subject to U.S. federal income tax.

However, qualificationQualification and taxation as a REIT depends upon our ability to meet the various qualification tests imposed under the Code, including tests related to the percentage of income that we earn from specified sources and the percentage of our earnings that we distribute to our shareholders. Accordingly, no assurance can be given that we will continue to be organized or be able to operate in a manner so as to remain qualified as a REIT. If we fail to qualify as a REIT in any taxable year and do not qualify for certain statutory relief provisions, our incomewe would be subject to U.S. federal income tax and state income tax (including any applicable alternative minimum tax) on our taxable income at regular corporate tax rates, and we would likely be precluded from qualifying for treatment as a REIT until the fifth calendar year following the year in which we fail to qualify.

Even if we qualify as a REIT, we may be subject to certain state or local income and capital taxes and U.S. federal income and excise taxes on our undistributed REIT taxable income, if any. OurCertain of our subsidiaries are subject to taxation by U.S. federal, state and local authorities for the periods presented. We made joint elections to treat certain subsidiaries as taxable REIT subsidiaries ("TRS") will bewhich are subject to U.S. federal, state and local taxes on their income at regular corporate rates. The tax years from 2012 through 20162014 to present generally remain open to examination by the taxing jurisdictions to which the Company is subject.


We believe that our Operating Partnership is properly treated as a partnership for U.S. federal income tax purposes. As a partnership, the Operating Partnership is not subject to U.S. federal income tax on ourits income. Instead, each of ourthe Operating Partnership’s partners, including AH4R, is allocated, and may be required to pay tax with respect to, its share of the Operating Partnership’s income. As such, no provision for U.S. federal income taxes has been included for the Operating Partnership.

ASCAccounting Standards Codification 740-10, Income Taxes, requires recognition of deferred tax assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. We recognize tax benefits of uncertain tax

positions only if it is more likely than not that the tax position will be sustained, based solely on its technical merits, with the taxing authority having full authority of all relevant information. The measurement of a tax benefit for an uncertain tax position that meets the more likely than not threshold is based on a cumulative probability model under which the largest amount of tax benefit recognized is the amount with a greater than 50% likelihood of being realized upon ultimate settlement with the taxing authority having full knowledge of all the relevant information. As of SeptemberJune 30, 2017,2019, there were no deferred tax assets and liabilities or unrecognized tax benefits recorded by the Company. We do not anticipate a significant change in unrecognized tax benefits within the next 12 months.

As a REIT we are required to distribute annually at least 90% of our REIT taxable income (determined without regard to the deduction for dividends paid and excluding net capital gains). We expect to use our net operating loss carryforward (“NOL”) to partially reduce our REIT taxable income in current and future years. As of December 31, 2018, AH4R had a NOL for U.S. federal income tax purposes of approximately $275.0 million. Once our NOL is fully used, we may be required to increase AH4R’s distributions to comply with REIT distribution requirements.
 

Liquidity and Capital Resources
 
Our liquidity and capital resources as of SeptemberJune 30, 2017,2019 included cash and cash equivalents of $243.5$119.2 million. Additionally, as of SeptemberJune 30, 2017,2019, we had no outstanding borrowings under our revolving credit facility, which provides for maximum borrowings of up to $800.0 million, and $200.0 million of outstanding borrowings under our term loan facility, which provides for maximum borrowings of $200.0 million.
     
Liquidity is a measure of our ability to meet potential cash requirements, maintain our assets, fund our operations, make distributions to our shareholders and OP unitholders, including AH4R, and meet other general requirements of our business. Our liquidity, to a certain extent, is subject to general economic, financial, competitive and other factors beyond our control. Our liquidity requirements consist primarily of funds necessary to pay for the acquisition, development, renovation and maintenance of our properties, HOA fees (as applicable), real estate taxes, non-recurring capital expenditures, interest and principal payments on our indebtedness, general and administrative expenses, payment of quarterly dividends on our preferred shares and units, and payment of distributions to our Class A common shareholders.shareholders and unitholders.
 
We seek to satisfy our liquidity needs through cash provided by operations, long-term secured and unsecured borrowings, issuances of debt and equity securities (including OP units), asset-backed securitizations, property dispositions and joint venture transactions. We have financed our operations and acquisitions to date through the issuance of equity securities, borrowings under our credit facilities, asset-backed securitizations and asset-backed securitizations.unsecured senior notes. Going forward, we expect to meet our operating liquidity requirements generally through cash on hand and cash provided by operations. We believe our rental income, net of operating expenses and recurring capital expenditures, will generally provide cash flow sufficient to fund our operations and dividend distributions. However, our real estate assets are illiquid in nature. A timely liquidation of assets might not be a viable source of short-term liquidity should a cash flow shortfall arise, and we may need to source liquidity from other financing alternatives.
 
To qualify as a REIT, the CompanyAH4R is required to distribute annually to our shareholders at least 90% of our REIT taxable income (determined without regard to the deduction for dividends paid and excluding net capital gains,gains) and to pay tax at regular corporate rates to the extent that we annually distribute less than 100% of our net taxable income. The Operating Partnership funds the payment of distributions. The Company intendsWe expect to pay quarterly distributionsuse our NOL to reduce our shareholders and to the Operating Partnership's unitholders, including AH4R, which in the aggregate are approximately equal to or exceed the Company's netREIT taxable income in future years. As of December 31, 2018, AH4R had a NOL for U.S. federal income tax purposes of approximately $275.0 million. Once our NOL is fully used, we may be required to increase AH4R’s distributions to comply with REIT distribution requirements and our current policy of distributing approximately all of our REIT taxable income (determined without regard to the relevant year.deduction for dividends paid).
 
Cash Flows


The following table summarizes the Company'sCompany’s and the Operating Partnership’s cash flows for the ninesix months ended SeptemberJune 30, 20172019 and 2016:2018 (in thousands):
For the Nine Months Ended
September 30,		For the Six Months Ended
June 30,
2017 20162019 2018
Net cash provided by operating activities$349,375
 $254,980
$287,492
 $249,965
Net cash used for investing activities(486,896) (444,009)(170,033) (325,627)
Net cash provided by financing activities250,401
 257,736
Net cash (used for) provided by financing activities(7,763) 105,353
Net increase in cash, cash equivalents and restricted cash$112,880
 $68,707
$109,696
 $29,691
 

Our cash flows provided by operating activities depend on numerous factors, including the occupancy level of our properties, the rental rates achieved on our leases, the collection of rent from our tenants and the level of property operating expenses, property management operating expenses and general and administrative expenses.
 
During the ninesix months ended SeptemberJune 30, 2017,2019, net cash provided by operating activities was $349.4$287.5 million, which included cash from operations of $296.0$229.7 million and $53.4 million from other changes in operating assets and liabilities.liabilities of $57.8 million. Net cash used for investing activities was $486.9$170.0 million, which primarily consisted of cash outflows of $465.6$139.7 million related to cash paid for development activity, which consisted of land held for development, land development and homebuilding construction in progress, $71.6 million related to the acquisition of properties, $38.1$16.5 million of initial renovation costs to prepare our properties for rental and $33.3 million of recurring and other capital expenditures for single-family properties, partially offset by cash inflows of $87.2 million related to purchasesnet proceeds received from sales of productivesingle-family properties and other assets. Renovation costs typically include paint, flooring, appliances, landscaping and other improvements. Net cash used for financing activities was $7.8 million, which primarily consisted of cash outflows of $350.0 million of payments on our revolving credit facility and the payoff of the term loan facility, $49.0 million for distributions and $10.7 million of payments on our asset-backed securitizations, partially offset by a cash inflow of $397.9 million in proceeds from the issuance of unsecured senior notes, net of a discount. The net increase in cash, cash equivalents and restricted cash during the six months ended June 30, 2019 was $109.7 million.

During the six months ended June 30, 2018, net cash provided by operating activities was $250.0 million, which included cash from operations of $212.5 million and other changes in operating assets and $31.2liabilities of $37.5 million. Net cash used for investing activities was $325.6 million, which primarily consisted of cash outflows of $210.5 million related to the acquisition of properties, $95.4 million related to cash paid for development activity and $33.0 million of initial renovation costs to prepare our properties for rental, partially offset by cash inflows of $68.6$30.1 million ofin net proceeds received from the sales of single-family properties and other assets. Renovation costs typically include paint, flooring, appliances, landscaping and other improvements. Net cash provided by financing activities was $250.4$105.4 million, which primarily consisted of cash inflows of $497.2 million in proceeds from the issuance of unsecured senior notes, net of a discount, partially offset by cash outflows including $472.5 million for payments on our asset-backed securitizations, $125.0$240.0 million of net payments on our revolving and term loan credit facilities, and $85.0$63.4 million for distributions, to common and preferred shareholders, partially offset by cash inflows of $684.3$49.4 million of net proceeds from the issuance of Class A common shares related tofor payments on our secured note payable and$35.0 million for Class A common share offerings during the first and third quarters of 2017 and the "at the market" offering program and $260.8 million of net proceeds from the issuance of the Series F and Series G perpetual preferred shares.repurchases. The net increase in cash, cash equivalents and restricted cash during the ninesix months ended SeptemberJune 30, 2017,2018, was $112.9$29.7 million.
    
DuringUnsecured Senior Notes

In January 2019, the nine months ended September 30, 2016, net cash provided by operating activities was $255.0Operating Partnership issued $400.0 million which included cash from operations of $231.2 million4.90% unsecured senior notes with a maturity date of February 15, 2029 (the “2029 Notes”). Interest on the 2029 Notes is payable semi-annually in arrears on February 15 and $23.8 million from other changes in operating assets and liabilities. Net cash used

for investing activities was $444.0 million, which primarily consistedAugust 15 of cash outflows of $350.0 million related to the payoff of the credit facility in connection with the ARPI Merger, $188.7 million related to the acquisition of properties, $27.1 million for the purchase of commercial real estate and $21.7 million of renovation costs to prepare our properties for rental, partially offset by cash inflows of $71.9 million ofeach year, commencing on August 15, 2019. The Operating Partnership received net proceeds receivedof $395.3 million from the salesthis issuance, after underwriting fees of single-family propertiesapproximately $2.6 million and othera $2.1 million discount, and $44.5before estimated offering costs of $1.0 million of net proceeds received from. The Operating Partnership used the sales of non-performing loans. Net cash provided by financing activities was $257.7 million, which primarily consisted of cash inflows including $482.8 million of net proceeds from thethis issuance of perpetual preferred shares and $325.0 million of net borrowings againstto repay amounts outstanding on our revolving credit facilities and term loan facility, partially offset by cash outflows of $374.0 million for payments on our asset-backed securitizations and $96.1 million for repurchases of our Class A common shares. The net increase in cash, cash equivalents and restricted cash during the nine months ended September 30, 2016, was $68.7 million.

Credit Facilities

During 2016, the Company entered into a $1.0 billion credit agreement, which was subsequently amended in June 2017. The amendment expanded our borrowing capacity on the revolving credit facility to $800.0 million and reduced the term loan facility to $200.0 million. The amendment also lowered our cost of borrowing and provides a more flexible borrowing structure. The interest rate on the revolving credit facility is, at the Company’s election, 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%. Borrowings under the term loan facility accrue interest, at the Company’s election, at either a LIBOR rate plus a margin ranging from 0.90% to 1.75% or a base rate plus a margin ranging from 0.00% to 0.75%. In each case, the actual margin is determined based on the Company's credit ratings in effect from time to time. Based on current corporate ratings for LIBOR-based borrowings as of September 30, 2017, the revolving credit facility bears interest at 1-month LIBOR plus 1.20%, and the term loan facility bears interest at 1-month LIBOR plus 1.35%. The revolving credit facility matures on June 30, 2021, with two six-month extension options at the Company's election upon payment of an extension fee, and the term loan facility matures on June 30, 2022. The credit agreement requires that we maintain certain financial covenants. As of September 30, 2017, the Company had no outstanding borrowings against the revolving credit facility, $200.0 million of outstanding borrowings against the term loan facility and was in compliance with all loan covenants.

Exchangeable Seniorfor general corporate purposes. The 2029 Notes Net

The exchangeable senior notes are senior unsecured obligations of the Operating PartnershipPartnership’s unsecured and unsubordinated obligation and rank equally in right of payment with all otherof the Operating Partnership’s existing and future senior unsecured indebtednessand unsubordinated indebtedness. The Operating Partnership may redeem the 2029 Notes at any time, in whole or in part, at the applicable redemption price specified in the indenture with respect to the 2029 Notes. If the 2029 Notes are redeemed on or after November 15, 2028 (three months prior to the maturity date), the redemption price will be equal to 100% of the Operating Partnership. The Operating Partnership’s obligations under the exchangeable senior notes are fully and unconditionally guaranteed by the Company. The exchangeable senior notes bear interest at a rate of 3.25% per annum and 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 by2029 Notes being redeemed plus accrued and unpaid interest thereon to, but not including, 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 September 30, 2017, was 55.1453 of our Class A common shares per $1,000 principal amount of the notes. The exchange rate is adjusted based on our Class A common share price and distributions to common shareholders.redemption date.

As of September 30, 2017, the exchangeable senior notes, net had a balance of $110.8 million in the condensed consolidated balance sheets, which was net of an unamortized discount of $1.2 million and $3.1 million of unamortized fair value of the exchange settlement feature, which was included in additional paid-in capital within the Company's condensed consolidated balance sheets and was included in general partner's common capital within the Operating Partnership's condensed consolidated balance sheets.

Early Extinguishment of Debt

During the second quarter of 2017, the Company paid off the outstanding principal on the AH4R 2014-SFR1 asset-backed securitization of approximately $455.4 million using proceeds from the Class A common share offering in the first quarter of 2017 and available cash, which resulted in $6.6 million of charges primarily related to the write-off of unamortized deferred financing costs that were included in loss on early extinguishment of debt within the condensed consolidated statements of operations. The payoff of the AH4R 2014-SFR1 asset-backed securitization also resulted in the release of the 3,799 homes pledged as collateral and $9.4 million of restricted cash for lender requirements.

Class A Common Share Offering

During the first quarter of 2017, the Company issued 14,842,982 Class A common shares of beneficial interest, $0.01 par value per share, in an underwritten public offering and concurrent private placement, raising gross proceeds to the Company of $336.5 million after underwriter's discount and before offering costs of approximately $0.3 million. The Operating Partnership issued an

equivalent number of corresponding Class A units to the Company in exchange for the net proceeds from the issuance.

During the third quarter of 2017, the Company issued 13,800,000 Class A common shares of beneficial interest, $0.01 par value per share, in an underwritten public offering, raising gross proceeds of $312.0 million before offering costs of approximately $9.2 million. The Operating Partnership issued an equivalent number of corresponding Class A units to AH4R in exchange for the net proceeds from the issuance.


At-the-Market Common Share Offering Program


In November 2016, theThe Company established an at-the-market common share offering program under which we were able tocan issue Class A common shares from time to time through various sales agents up to an aggregate of $400.0$500.0 million (the "Original At-the-Market Program"“At-the-Market Program”), which. The program was replacedestablished in August 2017 with an at-the-market common share offering program with a $500.0 million capacity on the same terms (the "At-the-Market Program"). During the nine months ended September 30, 2017, the Company issued and sold 2.0 million Class A common shares under the Original At-the-Market Program for gross proceeds of $46.2 million, or $22.74 per share, and net proceeds of $45.6 million, after commissions and other expenses of approximately $0.6 million. The Operating Partnership issued an equivalent number of corresponding Class A unitsorder to AH4R in exchange foruse the net proceeds from share issuances to repay borrowings against the share issuances.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. As of SeptemberJune 30, 2017, $500.02019, no shares have been issued under the At-the-Market Program and $500.0 million remained available for future share issuances underissuances.

Share Repurchase Program

In February 2018, the At-the-Market Program (see Note 9).

Perpetual Preferred Share Offerings 

DuringCompany’s board of trustees re-authorized our existing share repurchase program, authorizing the second quarterrepurchase of 2017, the Company issued 6,200,000 5.875% Series F cumulative redeemable perpetual preferred shares in an underwritten public offering, raising gross proceedsup to $300.0 million of $155.0 million before offering costs of approximately $5.3 million, with a liquidation preference of $25.00 per share. The Operating Partnership issued an equivalent number of the same class of perpetual preferred units to AH4R in exchange for the net proceeds from the share issuance.

During the third quarter of 2017, the Company issued 4,600,000 5.875% Series G cumulative redeemable perpetual preferred shares in an underwritten public offering, raising gross proceeds of $115.0 million before offering costs of approximately $4.1 million, with a liquidation preference of $25.00 per share. The Operating Partnership issued an equivalent number of the same class of perpetual preferred units to AH4R in exchange for the net proceeds from the share issuance.

Conversion of Series A and B Participating Preferred Shares into Class A Common Shares

On October 3, 2017, the Company converted all 5,060,000 shares of theour outstanding 5.0% Series A participating preferred shares and all 4,400,000 shares of the outstanding 5.0% Series B participating preferred shares into Class A common shares and up to $250.0 millionof beneficial interest, $0.01 par value,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 six months ended June 30, 2019, we did not repurchase and retire any of our shares. During the six months ended June 30, 2018, the Company repurchased and retired 1.8 million of our Class A common shares on a settlement date basis, in accordance with the conversion terms in the Articles Supplementary. This resulted in 12,398,276program, at a weighted-average price of $19.36 per share and a total price of $34.9 million. As of June 30, 2019, we had a remaining repurchase authorization of up to $265.1 million of our outstanding Class A common shares issued fromand up to $250.0 million of our outstanding preferred shares under the conversion, based on a conversion ratio of 1.3106 Class A common shares issued per Series A and B participating preferred share. The Operating Partnership also converted its corresponding Series A and B participating preferred units into Class A units on October 3, 2017 (see Note 9).program.

Off-Balance Sheet Arrangements
 
We have no obligations, assets or liabilities that would be considered off-balance sheet arrangements.


Additional Non-GAAP Measures


Funds from Operations ("FFO"(“FFO”) / Core FFO / Adjusted FFO attributable to common share and unit holders
 
FFO attributable to common share and unit holders is a non-GAAP financial measure that we calculate in accordance with the White Paper on FFOdefinition approved by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”), which defines FFO as net income or loss calculated in accordance with GAAP, excluding extraordinary items, as defined by GAAP, gains and losses from sales or impairment of real estate, plus real estate-related depreciation and amortization (excluding amortization of deferred financing costs and depreciation of non-real estate assets), and after adjustmentadjustments for unconsolidated partnerships and joint ventures. ventures to reflect FFO on the same basis.


Core FFO attributable to common share and unit holders is a non-GAAP financial measure that we use as a supplemental measure of our performance. We compute this metric by adjusting FFO attributable to common share and unit holders for (1) acquisition fees and costs expensed incurred with recent business combinations and the acquisition of individual properties, (2) noncash share-based compensation expense, (3) noncash interest expense related to acquired debt, (4) hurricane-related charges, net, which result in material charges to the impacted single-family properties, (5) gain or loss on early

extinguishment of debt, (6) noncash gain or loss on conversion of convertible units and (7) noncash fair value adjustments associated with remeasuring our participating preferred shares derivative liability to fair value.value, and (7) the allocation of income to our participating preferred shares in connection with their redemption.


Adjusted FFO attributable to common share and unit holders is a non-GAAP financial measure that we use as a supplemental measure of our performance. We compute this metric by adjusting Core FFO attributable to common share and unit holders for (1) recurring capital expenditures that are necessary to help preserve the value and maintain functionality of our properties and (2) actualcapitalized leasing costs incurred during the period. As a portion of our homes are recently developed, acquired and / and/or renovated, we estimate recurring capital expenditures for our entire portfolio by multiplying (a) current period actual recurring capital expenditures per Same-Home propertyProperty by (b) our total number of properties, excluding newly acquired non-stabilized properties and properties classified as held for sale properties.sale.


We present FFO attributable to common share and unit holders because we consider this metric to be an important measure of the performance of real estate companies, as do many investors and analysts in evaluating the Company. We believe that FFO attributable to common share and unit holders is a helpful measure of a REIT’s performance sinceprovides useful information to investors because this metric excludes depreciation, which is included in computing net income and assumes the value of real estate diminishes predictably over time. We believe that real estate values fluctuate due to market conditions and in response to inflation.

We also believe that Core FFO and Adjusted FFO attributable to common share and unit holders are helpfulprovide useful information to investors as supplemental measures of the operating performance of the Company asbecause they allow investors to compare our operating performance to prior reporting periods without the effect of certain items that, by nature, are not comparable from period to period.


FFO, Core FFO and Adjusted FFO attributable to common share and unit holders are not a substitute for net income or net cash flow provided by operating activities, each as determined in accordance with GAAP, as a measure of our operating performance, liquidity or ability to pay dividends. These metrics also are not necessarily indicative of cash available to fund future cash needs. Because other REITs may not compute these measures in the same manner, they may not be comparable among REITs.


The following is a reconciliation of the Company'sCompany’s net income (loss)or loss attributable to common shareholders, determined in accordance with GAAP, to FFO attributable to common share and unit holders, Core FFO attributable to common share and unit holders and Adjusted FFO attributable to common share and unit holders for the three and ninesix months ended SeptemberJune 30, 20172019 and 2016 (amounts in2018 (in thousands):
For the Three Months Ended
September 30,		 For the Nine Months Ended
September 30,		For the Three Months Ended
June 30,		 For the Six Months Ended
June 30,
2017 2016 2017 20162019 2018 2019 2018
(Unaudited) (Unaudited) (Unaudited) (Unaudited)(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net income (loss) attributable to common shareholders$1,535
 $(21,152) $(141) $(35,933)$22,518
 $(15,151) $38,801
 $(9,337)
Adjustments: 
  
  
  
     
  
Noncontrolling interests in the Operating Partnership340
 7,542
 (30) 10,838
4,004
 (2,902) 7,030
 (1,777)
Net (gain) on sale / impairment of single-family properties and other(596) (11,115) (2,589) (11,107)(12,796) (1,704) (17,941) (3,260)
Depreciation and amortization of real estate assets73,037
 73,790
 215,409
 220,168
Adjustments for unconsolidated joint ventures747
 —
 1,301
 —
Depreciation and amortization82,840
 78,319
 164,001
 157,622
Less: depreciation and amortization of non-real estate assets(1,971) (1,787) (3,911) (3,617)
FFO attributable to common share and unit holders$74,316
 $49,065
 $212,649
 $183,966
$95,342
 $56,775
 $189,281
 $139,631
Adjustments: 
  
  
  
 
  
  
  
Internal leasing costs (1)
—
 (1,773) —
 (3,362)
Acquisition fees and costs expensed1,306
 1,757
 3,814
 10,899
970
 1,321
 1,804
 2,632
Noncash share-based compensation - general and administrative699
 480
 1,917
 1,578
923
 520
 1,582
 1,118
Noncash share-based compensation - property management417
 411
 1,258
 1,166
346
 423
 639
 800
Noncash interest expense related to acquired debt910
 1,474
 2,624
 3,699
—
 937
 —
 1,837
Hurricane-related charges, net10,136
 —
 10,136
 —
Loss on early extinguishment of debt—
 13,408
 6,555
 13,408
659
 1,447
 659
 1,447
Gain on conversion of Series E units—
 —
 —
 (11,463)
Remeasurement of participating preferred shares(8,391) 2,490
 (1,341) 2,940
—
 —
 —
 (1,212)
Redemption of participating preferred shares—
 32,215
 —
 32,215
Core FFO attributable to common share and unit holders$79,393
 $69,085
 $237,612
 $206,193
$98,240
 $91,865
 $193,965
 $175,106
Recurring capital expenditures (1)(11,600) (10,411) (27,140) (25,183)
Recurring capital expenditures (2)
(10,330) (8,489) (18,190) (15,875)
Leasing costs(1,960) (2,119) (5,361) (6,199)(1,130) (3,111) (2,129) (5,834)
Internal leasing costs (1)
—
 1,773
 —
 3,362
Adjusted FFO attributable to common share and unit holders$65,833
 $56,555
 $205,111
 $174,811
$86,780
 $82,038
 $173,646
 $156,759
(1)As a portion of our homes are recently acquired and / or renovated, we estimate recurring capital expenditures for our entire portfolio by multiplying (a) current period actual capital expenditures per Same-Home property by (b) our total number of properties, excluding non-stabilized and held for sale properties.

(1)     Adjustment amount reflects the portion of leasing costs that were previously capitalized and treated as a reduction to Adjusted FFO attributable to common share and unit holders that would be expensed under the new lease accounting standard ASU 2016-02, adopted by the Company on January 1, 2019.
(2)    As a portion of our homes are recently developed, acquired and / or renovated, we estimate recurring capital expenditures for our entire portfolio by multiplying (a) current period actual recurring capital expenditures per Same-Home Property by (b) our total number of properties, excluding newly acquired non-stabilized properties and properties classified as held for sale.

EBITDA / EBITDAre / Adjusted EBITDAEBITDAre / Adjusted EBITDAre after Capex and Leasing Costs


EBITDA is defined as earnings before interest, taxes, depreciation and amortization. EBITDA is a non-GAAP financial measure and is used by us and others as a supplemental measure of performance. Adjusted EBITDAEBITDAre is a supplemental non-GAAP financial measure, calculatedwhich we calculate in accordance with the definition approved by NAREIT by adjusting EBITDA for (1) acquisition fees and costs expensed incurred with recent business combinations and the acquisition of individual properties, (2) net gain or loss on sales / impairment of single-family properties and other (3)and adjusting for unconsolidated partnerships and joint ventures on the same basis. Adjusted EBITDAre is a supplemental non-GAAP financial measure calculated by adjusting EBITDAre for (1) acquisition fees and costs expensed incurred with business combinations and the acquisition of individual properties, (2) noncash share-based compensation expense, (4)(3) hurricane-related charges, net, (5)which result in material charges to the impacted single-family properties, (4) gain or loss on early extinguishment of debt, (6)(5) gain or loss on conversion of convertibleshares and units and (7)(6) noncash fair value adjustments associated with remeasuring our participating preferred shares derivative liability to fair value. We consider Adjusted EBITDA to beEBITDAre after Capex and Leasing Costs is a meaningfulsupplemental non-GAAP financial measure of operating performancecalculated by adjusting Adjusted EBITDAre for (1) recurring capital expenditures and (2) leasing costs. We believe these metrics provide useful information to investors because it excludesthey exclude the impact of various income and expense items that are not indicative of operating performance.


The following is a reconciliation of net income or loss, as determined in accordance with GAAP, to EBITDA, EBITDAre, Adjusted EBITDAre and Adjusted EBITDAEBITDAre after Capex and Leasing Costs for the three and ninesix months ended SeptemberJune 30, 20172019 and 2016 (amounts in2018 (in thousands):
For the Three Months Ended
September 30,		 For the Nine Months Ended
September 30,		For the Three Months Ended
June 30,		 For the Six Months Ended
June 30,
2017 2016 2017 20162019 2018 2019 2018
(Unaudited) (Unaudited) (Unaudited) (Unaudited)(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net income (loss)$19,097
 $(167) $45,959
 $1,108
Net income$40,304
 $25,898
 $73,395
 $47,423
Interest expense26,592
 32,851
 86,873
 99,309
32,571
 31,978
 64,486
 61,279
Depreciation and amortization74,790
 75,392
 221,459
 224,513
82,840
 78,319
 164,001
 157,622
EBITDA$120,479
 $108,076
 $354,291
 $324,930
$155,715
 $136,195
 $301,882
 $266,324
              
Net (gain) on sale / impairment of single-family properties and other(12,796) (1,704) (17,941) (3,260)
Adjustments for unconsolidated joint ventures747
 —
 1,301
 —
EBITDAre$143,666
 $134,491
 $285,242
 $263,064
       
Noncash share-based compensation - general and administrative699
 480
 1,917
 1,578
923
 520
 1,582
 1,118
Noncash share-based compensation - property management417
 411
 1,258
 1,166
346
 423
 639
 800
Acquisition fees and costs expensed1,306
 1,757
 3,814
 10,899
970
 1,321
 1,804
 2,632
Net (gain) on sale / impairment of single-family properties and other(596) (11,115) (2,589) (11,107)
Hurricane-related charges, net10,136
 —
 10,136
 —
Loss on early extinguishment of debt—
 13,408
 6,555
 13,408
659
 1,447
 659
 1,447
Gain on conversion of Series E units—
 —
 —
 (11,463)
Remeasurement of participating preferred shares(8,391) 2,490
 (1,341) 2,940
—
 —
 —
 (1,212)
Adjusted EBITDA$124,050
 $115,507
 $374,041
 $332,351
Adjusted EBITDAre$146,564
 $138,202
 $289,926
 $267,849
       
Recurring capital expenditures (1)
(10,330) (8,489) (18,190) (15,875)
Leasing costs(1,130) (3,111) (2,129) (5,834)
Adjusted EBITDAre after Capex and Leasing Costs$135,104
 $126,602
 $269,607
 $246,140

(1)    As a portion of our homes are recently developed, acquired and / or renovated, we estimate recurring capital expenditures for our entire portfolio by multiplying (a) current period actual recurring capital expenditures per Same-Home Property by (b) our total number of properties, excluding newly acquired non-stabilized properties and properties classified as held for sale.



ITEM 3.Quantitative and Qualitative Disclosures aboutAbout Market Risk
 
Interest Rate Risk

The primary market riskDuring the six months ended June 30, 2019, the Company repaid $250.0 million and $100.0 million of outstanding borrowings on its revolving credit facility and term loan facility, respectively. As of June 30, 2019, the Company had no outstanding variable rate debt and therefore no exposure to which we believe we are exposed is interest rate risk which may resulton its current borrowings.

There have been no other material changes to our market risk from many factors, including government monetarythose disclosed in section Part II, Item 7A entitled “Quantitative and tax policies, domestic and international economic and political considerations, and other factors that are beyondQualitative Disclosures About Market Risk” of our control. We may incur additional variable rate debt in the future, including additional amounts that we may borrow under our revolving credit and term loan facilities. In addition, decreases in interest rates may lead to additional competitionAnnual Report on Form 10-K for the acquisition of single-family homes, which may lead to future acquisitions being costlier and resulting in lower yields on single-family homes targeted for acquisition. Significant increases in interest rates may also have an adverse impact on our earnings if we are unable to acquire single-family homes with rental rates high enough to offset the increase in interest rates on our borrowings.
As of September 30, 2017, andyear ended December 31, 2016, our variable-rate debt was comprised of borrowings on our revolving credit facility of zero, our term loan facility of $200.0 million and $325.0 million, respectively, and the outstanding balance on the AH4R 2014-SFR1 securitization of zero and $456.1 million, respectively.  All borrowings under our revolving credit facility bear 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% until the fully extended maturity date of June 2022. All borrowings under our term loan facility bear 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% until the maturity date of June 2022. The AH4R 2014-SFR1 securitization, which was paid off in full during the second quarter of 2016, had a duration-weighted blended interest rate of 1-month LIBOR plus 1.54%. Assuming no change in the outstanding balance of our existing variable-rate debt, the following table illustrates the effect of a 100 basis point increase or decrease in the LIBOR rate on our projected annual interest expense as of September 30, 2017, and December 31, 2016 (in thousands):
 September 30, 2017 December 31, 2016 
Impact to future earnings due to variable rate debt, before the effect of capitalization: 
  
 
Rate increase of 1%$2,000
 $7,813
(1)
Rate decrease of 1% (2)$(2,000) $(4,087) 

(1)Calculation of additional projected annual interest expense as a result of a 100 basis point increase reflects the potential impact of our interest rate cap agreement as of December 31, 2016.
(2)Calculation of projected decrease in annual interest expense as a result of a 100 basis point decrease is reflective of any LIBOR floors or minimum interest rates stated in the agreements of respective borrowings.
This analysis does not consider the effects of the reduced level of overall economic activity that could exist in such an environment. Further, in the event of a change of such magnitude, we would consider taking actions to further mitigate our exposure to the change. However, because of the uncertainty of the specific actions that would be taken and their possible effects, the sensitivity analysis assumes no changes in our capital structure.2018.
 
ITEM 4.Controls and Procedures


American Homes 4 Rent

Disclosure Controls and Procedures
 
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in reports we file and submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in accordance with SEC guidelines and that such information is communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure based on the definition of “disclosure controls and procedures” in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures in reaching that level of reasonable assurance.
 
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures, as required by Exchange Act Rule 13a-15(b), as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective, at a reasonable assurance level.


Internal Control over Financial Reporting
There were no changes in the Company’s internal control over financial reporting during the quarter ended June 30, 2019, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

American Homes 4 Rent, L.P.

Disclosure Controls and Procedures

The Operating Partnership maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in reports we file and submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in accordance with SEC guidelines and that such information is communicated to the Operating Partnership’s management, including the Operating Partnership’s Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure based on the definition of “disclosure controls and procedures” in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. In designing and evaluating the disclosure controls and procedures, the Operating Partnership’s management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures in reaching that level of reasonable assurance.
Under the supervision and with the participation of the Operating Partnership’s management, including its Chief Executive Officer and Chief Financial Officer, the Operating Partnership evaluated the effectiveness of its disclosure controls and procedures, as required by Exchange Act Rule 13a-15(b), as of the end of the period covered by this report. Based on that evaluation, the Operating Partnership’s Chief Executive Officer and Chief Financial Officer concluded that the Operating Partnership’s disclosure controls and procedures were effective, at a reasonable assurance level.


Internal Control over Financial Reporting
 
There were no changes in the Company'sOperating Partnership’s internal control over financial reporting during the quarter ended SeptemberJune 30, 2017,2019, that have materially affected, or are reasonably likely to materially affect, ourthe Operating Partnership’s internal control over financial reporting.


PART II
II—OTHER INFORMATION
 
ItemITEM 1.Legal Proceedings
 
For a description of the Company'sCompany’s legal proceedings, see Note 12.


ItemITEM 1A.Risk Factors
 
In addition to the other information in this Quarterly Report on Form 10-Q, you should carefully consider the risks described in our Annual Report on Form 10-K filed for the year ended December 31, 2016,2018, in Part I, Item 1A, Risk Factors; in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, in Part II, Item 1A, Risk Factors;Factors and in our other filings with the SEC. These factors may materially affect our business, financial condition and operating results and could cause our actual results to differ materially from expectations.


There have been no material changes to our risk factors from those disclosed in the section entitled “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2016, and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2017.2018.


ItemITEM 2.Unregistered Sales of Equity Securities and Use of Proceeds
    
On September 21, 2015, the Company announced that our Board of Trustees approved a share repurchase program authorizing us to repurchase up to $300.0 million of our outstanding Class A common 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. We did not repurchase any of our Class A common shares during the three months ended September 30, 2017. As of September 30, 2017, we had a remaining repurchase authorization of $146.7 million under the program.None.


ItemITEM 3.Defaults uponUpon Senior Securities
 
None.
 
ItemITEM 4.Mine Safety Disclosures
 
Not applicable.
 
ItemITEM 5.Other Information
 
None.
 
ItemITEM 6.Exhibits
 
The exhibits listed below are filed herewith or incorporated herein by reference.


Exhibit Index

Exhibit
Number
 Exhibit Document
   
2.1‡
Amended and Restated Contribution Agreement, dated December 28, 2012, by and among American Homes 4 Rent, American Homes 4 Rent, L.P., American Homes 4 Rent Properties One, LLC and American Homes 4 Rent, LLC (Incorporated by reference to Exhibit 2.1 to Amendment No. 1 to the Company’s Registration Statement on Form S-11 (Registration Number 333-189103) filed June 25, 2013.)
2.2‡
First Amendment to Amended and Restated Contribution Agreement, dated January 30, 2013, by and among American Homes 4 Rent, American Homes 4 Rent, L.P., American Homes 4 Rent Properties One, LLC and American Homes 4 Rent, LLC (Incorporated by reference to Exhibit 2.2 to Amendment No. 1 to the Company’s Registration Statement on Form S-11 (Registration Number 333-189103) filed June 25, 2013.)
2.3‡
Second Amendment to Amended and Restated Contribution Agreement, dated March 18, 2013, by and among American Homes 4 Rent, American Homes 4 Rent, L.P., American Homes 4 Rent Properties One, LLC and American Homes 4 Rent, LLC (Incorporated by reference to Exhibit 2.3 to Amendment No. 1 to the Company’s Registration Statement on Form S-11 (Registration Number 333-189103) filed June 25, 2013.)
2.4‡
Contribution Agreement, dated February 25, 2013, by and among American Homes 4 Rent, LLC, American Homes 4 Rent, American Homes 4 Rent, L.P. and AH4R Properties Holdings, LLC (Incorporated by reference to Exhibit 2.4 to Amendment No. 1 to the Company’s Registration Statement on Form S-11 (Registration Number 333-189103) filed June 25, 2013.)
2.5‡
Contribution Agreement, dated May 28, 2013, by and among American Homes 4 Rent, LLC, American Homes 4 Rent and American Homes 4 Rent, L.P. (Incorporated by reference to Exhibit 2.5 to Amendment No. 1 to the Company’s Registration Statement on Form S-11 (Registration Number 333-189103) filed June 25, 2013.)
2.6‡
Contribution Agreement, dated June 11, 2013, by and among American Homes 4 Rent, American Homes 4 Rent, LLC, Alaska Permanent Fund Corporation, American Homes 4 Rent, L.P., American Homes 4 Rent I, LLC and American Homes 4 Rent TRS, LLC (Incorporated by reference to Exhibit 2.6 to Amendment No. 1 to the Company’s Registration Statement on Form S-11 (Registration Number 333-189103) filed June 25, 2013.)
2.7‡
Agreement and Plan of Merger by and among American Homes 4 Rent, Sunrise Merger Sub, LLC, American Homes 4 Rent, L.P., OP Merger Sub, LLC, American Residential Properties, Inc., American Residential Properties, O.P., L.P. and American Residential GP, LLC, dated December 3, 2015 (Incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed December 4, 2015)
   
3.1 
Articles of Amendment and Restatement of Declaration of Trust of American Homes 4 Rent (Incorporated by reference to Exhibit 3.1 to Amendment No. 1 to the Company’s Registration Statement on Form S-11 (Registration Number 333-189103) filed June 25, 2013.)
   
3.2 
First Articles of Amendment to Articles of Amendment and Restatement of Declaration of Trust of American Homes 4 Rent (Incorporated by reference to Exhibit 3.2 to Amendment No. 2 to the Company’s Registration Statement on Form S-11 (Registration Number 333-189103) filed July 19, 2013.)
   
3.3 
Articles Supplementary for American Homes 4 Rent 5.000% Series A Participating Preferred Shares (Incorporated by reference to Exhibit 3.3 to Post-Effective Amendment No. 1 to the Company’s Registration Statement on Form S-11 (Registration Number 333-191015) filed October 18, 2013.)
3.4
Articles Supplementary for American Homes 4 Rent 5.000% Series B Participating Preferred Shares (Incorporated by reference to Exhibit 3.4 to Post-Effective Amendment No. 1 to the Company’s Registration Statement on Form S-11 (Registration Number 333-192592) filed December 20, 2013.)
3.5
Articles Supplementary for American Homes 4 Rent 5.500% Series C Participating Preferred Shares (Incorporated by reference to Exhibit 3.5 to Post-Effective Amendment No. 1 to the Company’s Registration Statement on Form S-11 (Registration Number 333-195575) filed April 24, 2014.)
3.6
Articles Supplementary for American Homes 4 Rent 6.500% Series D Cumulative Redeemable Perpetual Preferred Shares (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on May 17, 2016.)
   
3.73.4 
Articles Supplementary for American Homes 4 Rent 6.350% Series E Cumulative Redeemable Perpetual Preferred Shares (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on June 22, 2016.)
   
3.83.5 
Articles Supplementary for American Homes 4 Rent 5.875% Series F Cumulative Redeemable Perpetual Preferred Shares (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on April 21, 2017.)
3.9
Articles Supplementary for American Homes 4 Rent 5.875% Series G Cumulative Redeemable Perpetual Preferred Shares (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on July 12, 2017.)
   

Exhibit
Number
 Exhibit Document
   
3.103.6 
Articles Supplementary for American Homes 4 Rent 5.875% Series G Cumulative Redeemable Perpetual Preferred Shares (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on July 12, 2017.)
3.7
Articles Supplementary for American Homes 4 Rent 6.25% Series H Cumulative Redeemable Perpetual Preferred Shares (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on September 13, 2018.)
3.8
Amended and Restated Bylaws of American Homes 4 Rent (Incorporated by reference to Exhibit 3.8 to the Company's Annual Report on Form 10-K for the year ended December 31, 2016 filed February 24, 2017.)
   
4.14.4 
Form of Indenture (Incorporated by reference to Exhibit 4.4 to the Company's Registration Statement on Form S-3 (Registration Number 333-221878) filed December 1, 2017.)
4.5
Indenture, dated November 27, 2013, amongas of February 7, 2018, between American Residential OP,Homes 4 Rent, L.P., as issuer, American Residential Properties, Inc., as guarantor, and U.S. Bank National Association, as trustee (Incorporated by reference to Exhibit 4.1 to American Residential Properties, Inc.’sthe Company's Current Report on Form 8-K filed November 27, 2013.February 7, 2018.)
   
4.24.6 
First Supplemental Indenture, dated as of February 29, 2016,7, 2018, among American Homes 4 Rent, ARPI REIT, LLC,L.P., American Residential Properties OP, L.P. and U.S. Bank National Association, as trustee (Incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K filed March 4, 2016.February 7, 2018.)
   
4.34.7 
Form of Global Note representing American Residential Properties OP, L.P.’s 3.25% Exchangeable Seniorthe Notes due 2018 (Incorporated by reference to Exhibit 4.1 to American Residential Properties, Inc.’s Current Report on Form 8-K filed November 27, 2013.)
10.1
Amendment No. 1 to Credit Agreement, dated June 30, 2017, by and among American Homes 4 Rent, L.P., as Borrower, American Homes 4 Rent, as Parent, Wells Fargo Bank, National Association, as Agent, and the other lending institutions that are parties thereto, as Lenders. (Incorporated by reference to Exhibit 10.14.3 to the Company’s Current Report on Form 8-K filed on July 6, 2017.February 7, 2018.)
   
12.14.8 
RatiosSecond Supplemental Indenture, dated as of Earnings to Fixed Charges and Earnings to Combined Fixed Charges and Preferred Distributions ofJanuary 23, 2019, among American Homes 4 Rent. Filed herewith.Rent, L.P. and U.S. Bank National Association, as trustee (Incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K filed January 23, 2019.)
   
12.24.9 
RatiosForm of EarningsGlobal Note representing the Notes (Incorporated by reference to Fixed Charges and Earningsincluded in Exhibit 4.3 to Combined Fixed Charges and Preferred Distributions of American Homes 4 Rent, L.P. Filed herewith.the Company’s Current Report on Form 8-K filed January 23, 2019.)
   
31.1 
Certification of Chief Executive Officer of American Homes 4 Rent pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934. Filed herewith.
   
31.2 
Certification of Chief Financial Officer of American Homes 4 Rent pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934. Filed herewith.
31.3
Certification of Chief Executive Officer of American Homes 4 Rent, L.P. pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934. Filed herewith.
31.4
Certification of Chief Financial Officer of American Homes 4 Rent, L.P. pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934. Filed herewith.
   
32.1 
Certification of Chief Executive Officer and Chief Financial Officer of American Homes 4 Rent pursuant to 18 U.S.C. 1350. Filed herewith.
32.2
Certification of Chief Executive Officer and Chief Financial Officer of American Homes 4 Rent, L.P. pursuant to 18 U.S.C. 1350. Filed herewith.
   
101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
   
101.SCH XBRL Taxonomy Extension Schema Document
   
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
   
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
   
101.LAB XBRL Taxonomy Label Linkbase Document
   
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document

‡The schedules and exhibits to this agreement have been omitted from this filing. The Company will furnish supplementally a copy of any such omitted schedules or exhibits to the SEC upon request.



SIGNATURES
 
Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.




AMERICAN HOMES 4 RENT
 
/s/ Diana M. LaingChristopher C. Lau
 
Diana M. LaingChristopher C. Lau
Chief Financial Officer
(Principal Financial Officer and duly authorized signatory of registrant)
Date: November 3, 2017August 2, 2019


AMERICAN HOMES 4 RENT, L.P.
/s/ Christopher C. Lau
Christopher C. Lau
Chief Financial Officer
(Principal Financial Officer and duly authorized signatory of registrant)
Date: August 2, 2019



                                




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