RBC Capital Markets, LLC
Brad Heffern, CFA (Analyst)
(512) 708-6311, brad.heffern@rbccm.com
Michael Carroll, CFA (Analyst)
(440) 715-2649, michael.carroll@rbccm.com
Ryan Clark (Senior Associate)
(512) 708-6342, ryan.clark@rbc.com
March 30, 2021
American Homes 4 Rent
Outperform
Own To Build; Iniang at Outperform
Our view: We have a favorable view of the single-family rental sector,
given available rent growth that will likely be above the mul-family
average and a significant opportunity for greater scale. We see AMH as
the only current way to play SFR development, which is likely to generate
outsized yields vs acquision at only a modestly increased risk profile.
While rent growth has lagged its closest peer INVH, we see this as a
difference in locaon focus and think development will make up for it
over me. We iniate with an Outperform rang and $37sh price target.
Key points:
• Significant development upside: AMH is the only home developer
currently in the single-family REIT space, and we expect that to generate
yields of 75-100 bps above prevailing cap rates. We also see single-family
development as less risky than mul-family, given easier perming,
shorter construcon melines and small investments in any given
property. We expect that the feedback loop from a large resident pool
who can make recommendaons for future build-to-rent properes will
be difficult for new entrants to recreate.
• Focus on the perimeter: AMH mainly focuses on buying and developing
homes around the perimeter of major metro areas. We think this
strategy is beneficial because the company is compeng in areas with
slightly lower demand, and where there is likely more land available for
development. We do think this locaon focus is part of the reason that
AMH has underperformed INVH’s rent growth over me. However, we
expect outsized development yields to make up this differenal.
• Strong balance sheet: AMH has a strong balance sheet to match the
slightly higher risk profile of its development business. The company
has the only investment grade balance sheet in the single-family space,
and leverage metrics more closely align with the larger mul-family
companies. We also expect AMH’s cost of debt to move down over
me from current levels of ~4.4%. Cash on the balance sheet and the
low leverage profile should allow AMH to complete the planned 2021
program without issuing equity.
• Esmates are above consensus: Core FFO esmates are +1%+7% versus
consensus for 20212022. For 2022, we expect that consensus may be
underwring a smaller growth program and/or understang potenal
accreon from new development/acquision. There may also be an
expectaon that single-family will see some rent weakness as work-fromhome trends abate post-COVID, but we do not see this as a valid concern.
• Valuaon premium is jusfied: AMH currently trades at 2021E/2022E
FFO mulples of 26.3x/23.0x, compared to INVH at 22.9x/21.2x, and a
12%8% premium to the combined SF/MF names. AMH is trading at a 2%
premium to NAV and a 5.04% implied cap rate. We think the opportunity
ahead for the single-family sector means AMH should trade at a premium
to the mul-family names, while its development program and stronger
balance sheet are a good jusficaon for a premium to INVH. Please see
our companion industry report.
NYSE: AMH; USD 33.49
Price Target USD 37.00
Scenario Analysis*
Downside
Scenario
Current
Price
Price
Target
Upside
Scenario
33.00
1%
33.49
37.00
11%
42.00
26%
*Implied Total Returns
Key Stascs
Shares O/S (MM):
Dividend:
RBC Esmates
369.1
0.20
Market Cap (MM):
Yield:
Avg. Daily Volume:
12,361
0.6%
1,679,082
FY Dec
FFO/Sh, Rpt
Diluted
P/Rpt FFO
AFFO/Sh, Diluted
P/AFFO
2020E
1.10
2021E
1.24
2022E
1.43
30.4x
1.03
32.5x
27.0x
1.13
29.6x
23.4x
1.31
25.6x
FFO/Sh, Rpt
Diluted
2020
2021
AFFO/Sh, Diluted
2020
2021
Q1
Q2
Q3
Q4
0.28E
0.30E
0.26E
0.29E
0.28E
0.31E
0.29E
0.34E
0.26E
0.27E
0.23E
0.26E
0.25E
0.29E
0.28E
0.31E
All values in USD unless otherwise noted.
Priced as of prior trading day's market close, EST (unless otherwise noted).
Disseminated: Mar 30, 2021 16:06EDT; Produced: Mar 30, 2021 16:06EDT
For Required Conflicts Disclosures, see page 35
American Homes 4 Rent
Key fundamental quesons
Our view
How will new entrants affect the
single-family home space?
Most investors view recent announcements of private capital invesng in singlefamily rentals in a negave light, but we see it as either a neutral or posive
development. We think instuonal and public operators currently represent less
than 0.5% of the U.S. single-family home rental market, so there likely significant
room for addional parcipants and growth. Instuonal purchases of single-family
homes are also dwarfed by tradional home purchases. We think more instuonal
single-home porolios will likely create good future acquision opportunies for
public single-family companies.
What is the impact of COVID on
AMH?
We see COVID-related disrupons as having a largely favorable impact on AMH’s
business. Work from home dynamics have driven increased demand for homes,
and AMH saw record occupancy in 4Q20. The pandemic did not appear to have a
noceable impact on rental rate growth. The only obvious negave impact that we
see is higher rent delinquency.
How does AMH generate value?
AMH mainly generates value through development and operaons. The company’s
development plaorm is unique, as most single-family companies (public or private)
grow exclusively through acquision. We think that AMH can develop at a 100+
bps discount to prevailing cap rates. AMH’s operang plaorm also creates value
by reducing operang expense, minimizing unoccupied days, providing local market
insight and creang a resident feedback loop.
What are the capital needs of the
business?
We project $540mm of cash flow from operaons in 2021, with a dividend of the
$125mm. The excess cash flow mainly goes towards recurring/renovaon/revenue
enhancing capex (~$120mm per year) and to fund part of the development program
(RBCe $700mm in 2021). AMH also typically pursues acquisions, and we ancipate
roughly $400mm of acquisions in 2021. AMH has historically funded its growth
with a combinaon of debt, equity and divestures, although the company plans to
use only debt and divestures to fund the 2021 program.
What is AMH’s valuaon?
AMH currently trades at 2021E/2022E FFO mulples of 26.3x/23.0x, compared to
INVH at 22.9x/21.2x, and a 12%8% premium to the combined SF/MF names. AMH is
trading at a 2% discount to NAV and a 5.04% implied cap rate. We think the potenal
accreon from development and acquisions more than jusfies AMH’s premiums.
March 30, 2021
Brad Heffern, CFA (512) 708-6311; brad.heffern@rbccm.com
2
American Homes 4 Rent
Key ESG quesons
This section is intended to highlight key ESG discussion points relevant to this company, as well as our views on the outlook. Both
the questions we highlight and our responses will evolve over time as the dialogue between management, analysts and investors
continues to advance. We welcome any feedback on the topics.
Our view
What are the most material ESG
issues facing the company?
We think the environmental component of ESG is the most pressing issue. We think
that the small market cap for the two single-family rental companies (AMH, INVH)
means that they will largely be compared with mul-family companies, who have
beer monitoring and control over environmental metrics. We expect that singlefamily rental companies could struggle to reduce their emissions, energy, water and
waste footprints, as they are effecvely enrely in the control of residents and are
distributed over a wide area.
Does the company integrate ESG
consideraons into its strategy?
AMH has noted that its focus on development and acquisions from new builders
will reduce the average age of its porolio, and increase efficiencies with newer
fixtures/appliances. AMH noted that its senior leadership team is given measurable
ESG goals as part of its annual business objecves, although these goals have not
been disseminated.
What is diversity like at the board/
management level?
For all management posions, AMH has a 4258 female/male split, and minories
represent 29% of the posions. For senior leadership posions, there is a 2971
female/male split and minories represent 35% of posions. 23% of board members
are female, but we have not seen a disclosed minority split.
March 30, 2021
Brad Heffern, CFA (512) 708-6311; brad.heffern@rbccm.com
3
Investment Thesis
Big Opportunity For Single-Family Rental
The public U.S. pure play single-family rental universe is just two companies
 Single family rental has a large opportunity to grow in terms of public market cap
 The total single family rental market is a similar size to the multi-family market, at 16-17 million units for each
 AMH and INVH have only 0.8% market share, while the large public multi-family REITs have 2.8% market share
 Market cap for single family would need to quadruple to equal the market cap for large multi-family, despite the fact that the underlying
markets are roughly the same size
Rental Market Share
Total Market Cap
$140
3.0%
2.0%
$120
AMH+INVH have
0.8% market share,
compared to 2.8% for
MF REITs
$100
Market Cap ($B)
YE20 Market Share
2.5%
1.5%
1.0%
$80
$60
$40
0.5%
$20
0.0%
$0
AMH
Source:
MF REITs have
~$115B in market
cap, compared to
~$28B for AMH/INVH
INVH
Large MF Public REITs
Company reports, RBCCM estimates
AMH
Source:
INVH
Large MF Public REITs
Factset
Note: Large multi-family REITs include AIRC, AVB, CPT, EQR, ESS, MAA and UDR
4
RBC Capital Markets
Single-Family Has Had Greater Rent Growth Than Multi-Family
Rent growth for single family has been above multi-family since at least mid 2016
 AMH’s rent growth crossed over the multi-family average starting in 3Q16, and has averaged growth of 3.5% per year from 2Q16-1Q20
(pre-COVID) versus the multi-family average of 2.7%
 Single-family rental rates were not noticeably impacted by COVID
 AMH has seen lower rental rate increases than INVH, which we think is largely due to differing locations (metro vs. boundary)
 We do not currently assume any upside for rent in single family vs. multi family, so continuation of this trend would represent further
upside
AMH/INVH Rent Growth vs. Multi-Family
8%
Same-Store YoY Rent Growth
6%
4%
2%
0%
-2%
-4%
AMH
INVH
4Q20
3Q20
2Q20
1Q20
4Q19
3Q19
2Q19
1Q19
4Q18
3Q18
2Q18
1Q18
4Q17
3Q17
2Q17
1Q17
4Q16
3Q16
2Q16
1Q16
4Q15
3Q15
2Q15
1Q15
-6%
Multi-Family Average
Source: Company reports, RealPage
5
RBC Capital Markets
Development Is A Differentiator
AMH has a development program, differentiating it from INVH
 AMH started its own development business in 2016, which gives the company an alternative to used home acquisitions and cuts the
general contractor margin out of a new home acquisition
 Recent stabilized yields for development have been in the 6% range, well above our assumed cap rate of 5.2%
 We see single-family development as less risky than multi-family given small risks for individual assets and shorter timelines
 AMH does need to maintain a strong balance sheet given increased development risk
AMH Development Completions
Source: AMH
6
RBC Capital Markets
Acquisition & Disposition
AMH does acquire and divest homes through traditional channels in addition to development
 While AMH has evolved over time to focus more on development than on acquisition, the company still does have a significant
acquisition program
 AMH also divests properties, but in smaller scale than acquisitions
 Since 1Q17, AMH has acquired nearly 9,000 homes at a cost of $2.2B ($248K/home) and has divested around 4,500 homes for
proceeds of $770mm ($171K/home)
 We expect AMH to acquire roughly $400mm in homes in 2021, while divesting $100mm
 AMH expects roughly 80% of acquisitions to come through traditional channels, with 20% coming from national builders
AMH Acquisition History
1,400
1,200
400
$50,000
200
# of Homes
Average Purchase Price
Source:
4Q20
3Q20
2Q20
1Q20
4Q19
3Q19
1Q17
4Q20
3Q20
2Q20
1Q20
4Q19
3Q19
2Q19
1Q19
4Q18
3Q18
2Q18
1Q18
4Q17
3Q17
2Q17
1Q17
Company reports
0
2Q19
$0
0
# of Homes
7
$100,000
200
$0
Source:
600
1Q19
$100,000
$150,000
4Q18
400
800
3Q18
600
$200,000
$200,000
2Q18
800
1,000
1Q18
$300,000
$250,000
4Q17
1,000
1,200
3Q17
$400,000
$300,000
2Q17
$500,000
Average Sales Price (USD)
1,600
# of Homes
Average Purchase Price (USD)
$600,000
Average Sales Price
Company reports
RBC Capital Markets
# of Homes
AMH Disposition History
Focus On Outskirts
AMH focuses on the perimeters of cities
 AMH has historically acquired primarily on the perimeters of cities, rather than close to city centers
 This strategy benefits the development program, as land is typically not easily available in city centers
 We expect that the AMH portfolio may generate slightly lower rental rate increases over time than INVH, but this will be made up by
higher yields on the development portfolio
AMH Assets - Phoenix
INVH Assets - Phoenix
Source:
Source:
8
AMH website
INVH website
RBC Capital Markets
Strong Balance Sheet
AMH has the only investment grade single-family balance sheet
 AMH’s net debt plus preferred-to-EBITDA ratio of 5.5x is roughly average compared to the SF/MF group average
 AMH’s secured debt to total assets of 18% is elevated compared to multi-family peers, although we note AMH will likely work down its
securitizations over time
 AMH has an investment grade rating (BBB- for S&P and Baa3 for Moody’s)
 AMH’s clean balance sheet helps match the risk profile of its development program
 We see AMH’s cost of debt (~4.4%) as elevated relative to its risk profile, and AMH’s unsecured notes are currently trading at yields of
roughly 2.6-2.8%, so there is an opportunity for interest expense to move lower over time
Leverage Metrics
10x
30%
9x
Net Debt+Pref-to-EBITDA
7x
20%
6x
5x
15%
4x
10%
3x
2x
Secured-to-Total Assets
25%
8x
5%
1x
0x
0%
AVB
CPT
EQR
ESS
Net Debt+Pref/EBITDA
Source:
9
MAA
UDR
AMH
INVH
Secured to Total Assets
Company reports, RBCCM estimates
RBC Capital Markets
RBC Capital Markets Estimates Are Above Consensus
RBC’s estimates are above consensus
 Our AMH core FFO estimates are +1%/+7% versus consensus for 2021/2022
 We think consensus estimates may underestimate accretion from the development program and/or acquisitions
 Consensus may also be assuming post-COVID weakness in rental rates and/or not incorporating a bad debt tailwind
RBC vs. Consensus Estimates
RBCCMe Core FFO
2021E
2022E
AMH
AVB
CPT
EQR
ESS
INVH
MAA
UDR
Average
Source:
10
$1.27
$7.81
$5.15
$2.81
$12.69
$1.40
$6.53
$2.00
$1.46
$8.73
$5.64
$3.09
$14.16
$1.52
$7.03
$2.19
Consensus Core FFO
2021
2022
$1.26
$7.83
$5.05
$2.77
$12.25
$1.36
$6.51
$1.94
$1.36
$8.34
$5.30
$2.97
$12.99
$1.46
$6.87
$2.07
% Delta
2021
2022
1%
0%
2%
2%
4%
3%
0%
3%
7%
5%
6%
4%
9%
4%
2%
6%
2%
5%
Factset, RBCCM estimates
RBC Capital Markets
Valuation is Trading at a Premium
AMH is trading at a premium to both INVH and the multi-family group
 AMH currently trades at 2021E/2022E FFO multiples of 26.3x/23.0x, compared to INVH at 22.9x/21.2x, and a 12%/8% premium to the
combined SF/MF names
 AMH is trading at a 2% discount to NAV and a 5.04% implied cap rate
 We think the potential accretion from development and acquisitions more than justifies AMH’s premiums
Price to Core FFO
NAV Premium/(Discount)
27.0x
Price to Core FFO
25.0x
23.0x
21.0x
19.0x
17.0x
15.0x
AVB
CPT
EQR
ESS
2021E
Source:
11
Factset, RBCCM estimates
MAA
UDR
AMH
12%
5%
10%
5%
8%
5%
6%
5%
4%
4%
2%
4%
0%
4%
(2%)
(4%)
INVH
4%
AVB
2022E
CPT
EQR
ESS
NAV Prem/Disc. (L axis)
Source:
Implied Cap Rate
NAV/Cap Rate Valuation
MAA
UDR
AMH
INVH
Implied Cap (R axis)
Factset, RBCCM estimates
RBC Capital Markets
Company History & Snapshot
Company Overview and History
What American Homes 4 Rent Does
American Homes 4 Rent (NYSE: AMH) is a single-family home rental company focused on acquiring, developing, renovating, leasing
and operating single-family properties. As of YE2020, the company held 53,584 single-family properties in sub-markets of
metropolitan statistical areas within 22 states. AMH’s objective is to generate attractive, risk-adjusted returns for its shareholders
through dividends and capital appreciation. AMH was founded in 2012 by the founder of Public Storage, and held an IPO in 2013.
$35
120%
COVID-19 market
selloff
$30
Repurchases $550
million worth of shares
in the open market
$20
AMH acquires Beazer
pre-owned rental
homes for $151 million
80%
60%
$15
$10
40%
Acquisition of American
Residential Properties
for $1.36 billion
20%
$5
$0
Source: Company filings and reports, RBC Capital Markets
13
Cumulative Return
Stock Pricse
$25
100%
0%
Price
Cumulative Total Return
RBC Capital Markets
American Homes for Rent
35% NOI Generated by Top 5 Regions (2020E)
Atlanta, GA
8%
Dividend Yield
4.0%
Dallas-Fort
Worth, TX
8%
3.4%
3.3%
3.0%
2.8%
3.0%
2.1%
Charlotte,
NC
8%
2.0%
1.2%
Nashville,
TN
6%
Other
65%
3.3%
3.0%
1.0%
Phoenix,
AZ
5%
0.0%
AMH
Total Return
AVB
CPT
EQR
ESS
INVH
MAA
UDR
Market Snapshot
190%
170%
150%
130%
110%
90%
70%
50%
30%
10%
-10%
2013
2014
2015
2016
AMH US Equity
2017
Peer Average
2018
2019
2020
S&P 500
Source: Bloomberg, FactSet, Company Documents, RBCCM estimates
Peers: AVB, CPT, EQR, ESS, INVH, MAA, UDR
14
RBC Capital Markets
Property Overview
Portfolio Performance
Pre-COVID performance for AMH’s portfolio was slightly above the multi-family average
 We see AMH’s portfolio continuing to outperform multi-family in 2021, although performance screens below INVH
Same-Store Expense Performance
7%
7%
6%
6%
Same-Store Opex Growth
Same-Store Revenue Growth
Same-Store Revenue Performance
5%
4%
3%
2%
1%
0%
2018
AMH
2019
INVH
2020
2021E
2%
1%
0%
MF REIT Average
2018
AMH
2019
INVH
2020
2021E
2022E
MF REIT Average
Same-Store Occupancy Performance
8%
Same-Store Occupancy Change
8%
Same-Store NOI Growth
3%
-2%
2017
2022E
Same-Store NOI Performance
6%
4%
2%
0%
-2%
-4%
-6%
2017
4%
-1%
-1%
-2%
2017
5%
2018
AMH
2019
INVH
2020
2021E
MF REIT Average
2022E
6%
4%
2%
0%
-2%
-4%
-6%
2017
2018
AMH
2019
INVH
2020
2021E
2022E
MF REIT Average
Source: Bloomberg, FactSet, Company Documents, RBCCM estimates
Group includes AVB, CPT, EQR, ESS, MAA, UDR; performance adjusted to reflect straight-line concessions
16
RBC Capital Markets
Portfolio Summary
 AMH has more than 50k single-family
homes, with over 44k stabilized homes
 Top NOI generating regions for AMH
include: Atlanta (5% NOI), Dallas-Fort
Worth (5% NOI) and Charlotte (5%
NOI)
 We expect AMH to continue to focus on
expanding its internal built-for-rental
development program
Market
# Homes
Atlanta, GA
3,878
Dallas-Fort Worth, TX
3,770
Charlotte, NC
3,252
Indianapolis, IN
2,743
Houston, TX
2,463
Phoenix, AZ
2,293
Nashville, TN
2,277
Jacksonville, FL
1,993
Tampa, FL
1,916
Cincinnati, OH
1,927
Columbus, OH
1,915
Raleigh, NC
1,883
Greater Chicago
1,691
Orlando, FL
1,399
Salt Lake City, UT
1,249
Charleston, SC
984
Las Vegas, NV
910
San Antonio, TX
900
Savannah/Hilton Head, SC 811
Winston Salem, NC
706
Other
5,703
Total
44,663
4Q20
Rent
$1,689
$1,812
$1,651
$1,486
$1,695
$1,544
$1,797
$1,626
$1,760
$1,674
$1,715
$1,584
$1,911
$1,747
$1,840
$1,753
$1,639
$1,584
$1,606
$1,427
$1,752
$2,341
Occupancy
97.7%
97.3%
97.5%
97.4%
96.8%
98.3%
95.4%
97.3%
97.5%
97.3%
98.6%
96.7%
97.3%
96.7%
96.7%
97.3%
97.7%
95.5%
98.0%
97.7%
97.5%
96.1%
NOI
$11,627
$11,059
$11,201
$7,089
$6,380
$7,798
$8,649
$6,097
$5,813
$6,239
$6,380
$6,097
$4,679
$4,112
$5,388
$3,403
$2,978
$2,410
$2,552
$2,127
$19,709
$217,073
NOI %
5%
5%
5%
3%
3%
4%
4%
3%
3%
3%
3%
3%
2%
2%
2%
2%
1%
1%
1%
1%
9%
100%
Source: Bloomberg, FactSet, Company Documents
17
RBC Capital Markets
Company-Level Performance and Capital Allocation
FFO and Dividend Growth
Cumulative FFO growth has been above average, however we see this premium fading
 We think FFO growth and dividend growth are the two most important corporate-level metrics for REIT performance
 AMH had FFO growth above the peer average since 2016; we see AMH growth falling below the group average in 2021/2022
 We see dividend growth as less relevant for the single-family names, as we want them to retain more cash for
acquisitions/development
Cumulative FFO Growth
Cumulative Dividend Growth
120%
Per Share Dividend Growth
Per Share FFO Growth
280%
240%
200%
160%
120%
80%
40%
0%
2014
2015
2016
AMH
Source:
19
2017
2018
INVH
2019
2020
MF Average
2021E
2022E
80%
40%
0%
2014
2015
2016
AMH
2017
2018
INVH
2019
2020 2021E
MF Average
2022E
Company reports, RBCCM estimates, Factset; group includes AVB, CPT, EQR, ESS, MAA and UDR; CPT and EQR adjusted for 2016 special dividends
RBC Capital Markets
Corporate Returns
Returns screen below peers, but likely development related
 Traditional corporate return measures like ROACE and ROE are less applicable to REITs in our view given our opinion that
depreciation expense has little meaning, but we like FFO/undepreciated book value as a return metric
 AMH’s corporate returns have been below both the MF REIT average and INVH
 We think much of this difference can be explained by unproductive land and construction in progress on the balance sheet, which
appears to depress returns by around 1 percentage point
FFO/Undepreciated Book Value
FFO/Undepreciated Book Value
12.0%
11.0%
10.0%
9.0%
8.0%
7.0%
2018
2019
AMH
Source:
20
2020
INVH
2021E
2022E
MF REIT Average
Company reports, RBCCM estimates
RBC Capital Markets
Capital Allocation Strategy
AMH’s primary use of capital is development, followed by acquisitions
 We project $540mm of cash flow from operations in 2021, with a dividend of $125mm
 The excess cash flow mainly goes towards recurring/renovation/revenue enhancing capex (~$120mm per year) and to fund part of
the development program (RBCe $700mm in 2021)
 AMH also typically pursues acquisitions, and we anticipate roughly $400mm of acquisitions in 2021
 AMH has historically funded its growth with a combination of debt, equity and divestitures, although the company plans to use only
debt and divestitures to fund the 2021 program
 AMH also has a significant JV option, with a $625mm equity size and 20% commitment; AMH expects this JV to acquire $300mm in
properties in 2021
Uses of Capital
$1,400
$1,400
$1,200
$1,200
$1,000
Total Capital (mm)
Total Capital (mm)
Sources of Capital
$800
$600
$400
$200
($200)
$600
$400
$0
2018
Cash Flow
21
$800
$200
$0
Source:
$1,000
2019
Divestitures
2020
Equity
2021E
Debt
2018
Dividend
Recurring Capex
2019
Renovations
2020
Development
2021E
Other
Acquisitions
Company reports, RBCCM estimates
RBC Capital Markets
Balance Sheet and Leverage
AMH has the only investment grade balance sheet in the single-family space
 AMH’s net debt/preferred-to-EBITDA ratio of 5.5x is slightly below the group average
 AMH’s secured debt to total assets of 18% is above the group average of 6%. We don’t view this as a major concern given we are
benchmarking against multi-family, as well as single-family peers
 Investment grade credit ratings (BBB- for S&P and Baa3 for Moody’s)
 Clean balance sheet matches higher risk profile of development program
 We expect cost of debt to move lower over time
2020 Net
Debt+Pref/
EBITDA of 5.5x
Investment
Grade Credit –
BBB-/Baa3
Current Leverage Profile
Maturity Schedule
10x
30%
$2,100
7x
20%
6x
5x
15%
4x
10%
3x
2x
5%
1x
$1,873
$1,800
Total Debt ($millions)
25%
8x
Secured-to-Total Assets
9x
Net Debt+Pref-to-EBITDA
4.4% weighted
average interest
on all debt
$1,500
$1,200
$975
$900
$600
$300
0x
0%
AVB
CPT
EQR
ESS
Net Debt+Pref/EBITDA
MAA
UDR
AMH
INVH
$0
$0
2022
2023
$0
$0
2025
2026
$0
2024
Post-2027
Secured to Total Assets
Source: Bloomberg, FactSet, Company Documents, RBC Capital Markets
Credit agencies include: Moody’s, Fitch, S&P
22
RBC Capital Markets
Valuation
Price Target Methodology
We value AMH at $37/sh using a combination of NAV, DCF and FFO multiple methodologies
 We estimate a forward 12-month NAV of $34/sh based on a 4.9% cap rate, our 2021 projection for NOI, JV income and construction in
progress
 Our DCF methodology indicates a value of $40/sh based on the NPV of cash flows provided by our model through 2025, a terminal
growth rate of 3.5% and a WACC of 6.4%
 We assign a 27.0x FFO multiple to our 2021 estimate to arrive at a FFO methodology value of $34/sh; the 27.0x multiple is a premium
to our assumptions for the multi-family group, given the greater relative acquisition/development runway for single family
 We include a 10% premium to our NAV to capture potential acquisition/development upside, and the average of the three
methodologies arrives at our $37/sh price target. The implied return to our price target supports an Outperform rating.
DCF Methodology
Annualized In Place NOI
Forward 12-Month NOI
Cap Rate
Economic Cap Rate
Gross Value In Place
Gross Value Forward 12 Months
Other Assets
Preferred
Net Debt
4.93%
4.04%
$14,820,958
$15,695,050
$671,709
$883,750
$2,848,355
Net Asset Value In Place
Net Asset Value Forward 12 Months
$11,760,562
$12,634,654
NAV In Place Per Share
NAV In Place Forward 12 Months
$31.87
$34.23
Source:
24
$730,808
$773,909
FFO Multiple Methodology
Long-Term Growth Rate
WACC
Gross DCF Value
Other Assets
Preferred
Net Debt
Net DCF Value
3.5%
6.4%
$17,763,947
$671,709
$883,750
$2,848,355
$14,703,551
DCF Per Share
Ter. Growth
NAV Methodology
DCF Sens.
$39.84
3.00%
3.25%
3.50%
3.75%
4.00%
2021 Core FFO Estimate
Assumed Multiple
FFO Value
$1.27
27.0x
$34.34
$39.84
6.00%
$39.05
$43.69
$49.27
$56.09
$64.61
6.25%
$34.57
$38.46
$43.05
$48.56
$55.30
WACC
6.50%
$30.75
$34.04
$37.88
$42.42
$47.87
6.75%
$27.44
$30.26
$33.51
$37.31
$41.79
7.00%
$24.55
$26.99
$29.78
$32.99
$36.74
RBCCM estimates
RBC Capital Markets
Relative Valuation & Performance
P/FFO – Trading above long-term historical average
28.0x
26.0x
24.0x
22.0x
20.0x
18.0x
16.0x
14.0x
12.0x
10.0x
Mar-17
26.3x current
multiple; 22.0x
long-term average
Sep-17
Mar-18
Sep-18
Mar-19
AMH
Sep-19
INVH
Mar-20
Sep-20
Mar-21
MF Average
P/ NTM NAVPS – Trading above its historical average
109% currently;
91% long-term
average
120%
110%
100%
90%
80%
70%
60%
50%
Mar-17
Sep-17
Mar-18
Sep-18
Mar-19
AMH
Sep-19
INVH
Mar-20
Sep-20
Mar-21
MF Average
Source: Factset
25
RBC Capital Markets
Management & ESG
Management Team & Executive Compensation
Tamara Gustavson, Chairman - Ms. Gustavson has served as Chairman since May 2019 and as a member of the
5
Years on AMH
Board
Board since August 2016. She is also a real estate investor and philanthropist and has been a member of the Public Storage
(NYSE: PSA) Board of Trustees since November 2008. She was previously employed by Public Storage from 1983 to 2003,
serving most recently as Senior Vice President—Administration.
David Singelyn, CEO - Mr. Singelyn has served as a trustee of the company and Chief Executive Officer since October
10 Years at AMH
2012. Mr. Singelyn co-founded AH LLC with Mr. Hughes in June 2011 and served as the Chief Executive Officer of American
Homes 4 Rent Advisor, LLC, AMH’s former manager, until the company internalized its senior management on June 10,
2013. From 2003 through April 2013, Mr. Singelyn was Chairman and President of Public Storage Canada, a real estate
company previously listed on the Toronto Stock Exchange.
John “Jack” Corrigan, CIO - Mr. Corrigan has served as a trustee of the company and Chief Investment Officer since
10 Years at AMH
October 2012. Previously, he served as Chief Operating Officer from 2012 to 2019 and Chief Operating Officer of American
Homes 4 Rent Advisor, LLC, AMH’s former manager, from 2011 to 2013. From 2006 to 2011, Mr. Corrigan was the Chief
Executive Officer of A & H Property and Investments, a full-service leasing and property management company in Los
Angeles County.
Bryan Smith, COO - Mr. Smith has served as Chief Operating Officer since October 2019. Previously, he served as
2 Years at AMH
10
2
8
2
Years at AMH
Executive Vice President and President of Property Management from 2015 to 2019, Senior Vice President and Director of
Property Management from 2012 to 2015 and Senior Vice President of Acquisitions for AMH’s former manager from 2011 to
2012.
Christopher Lau, CFO - Mr. Lau has served as Chief Financial Officer since July 2018 and is responsible for overseeing
the company’s financial functions, including financial planning and analysis, accounting, financial reporting, treasury, tax,
investor relations and capital markets. Previously, he served as Vice President, Senior Vice President and then Executive
Vice President – Finance from 2013 – 2018.
Sara Vogt-Lowell, CLO - Ms. Vogt-Lowell has served as Chief Legal Officer since October 2012, and as such oversees
92
Years at AMH
all legal matters and transactions, guides the defense of the company against prospective and pending claims and monitors
applicable legal, regulatory and compliance developments. From 2011 until the Management Internalization, Ms. Vogt-Lowell
held the same position with AMH’s former manager.
2019 Compensation
2
2Executive
Compensation
Change
Title
Age
Salary
Stock
Non-Equity
Other
Total
In Control
David P. Singelyn
CEO
58
$550,000
$0
$903,375
$23,700
$1,477,075
$0
John Corrigan
CIO
59
$525,000
$0
$676,594
$17,450
$1,219,044
$0
Bryan Smith
COO
46
$375,000
$684,000
$411,750
$17,450
$1,488,200
$1,741,313
Christopher Lau
CFO
38
$350,000
$684,000
$376,600
$11,200
$1,421,800
$1,701,998
Sara Vogt-Lowell
CLO
44
$285,000
$547,200
$229,996
$11,200
$1,073,396
$1,415,765
Source: Company Filings
27
RBC Capital Markets
The “E” In ESG
AMH is behind multi-family peers for environmental disclosure, but the playing field is not level
 AMH has published two ESG reports, covering calendar 2018 and 2019
 The company has not published detailed environmental statistics, but does have a number of GRI disclosures
 We think the environmental category will be tough for single-family rental companies, as the decentralized nature of the business
creates issues around monitoring and consumption control
 Multi-family rental companies can have very strong monitoring and have control of consumption in common areas
 Single-family will likely continue to be compared to multi-family, putting the companies at a disadvantage
Environmental Disclosure
AMH
AVB
CPT
ELS
EQR
ESS
INVH
MAA
SUI
UDR
Source:
28
SASB/GRI
Sustainability
Disclosures
+
+
+
+
+
Scope 1/2
Emissions
+
+
+
+
+
Key Statistic Availability
Energy
Water
Use
Use
+
+
+
+
+
+
+
+
+
+
Waste
+
+
+
+
+
Reduction
Targets
+
+
+
+
+
Env. Cert.
%
NA
22%
11%
1%
12%
21%
NA
5%
NA
6%
Company reports
RBC Capital Markets
The “S” and “G” In ESG
Management and board stats look similar to peers
 AMH’s senior management and board predictably have shorter tenures than multi-family peers, given the relatively recent IPO
 AMH has a split CEO/Chairperson role, which we like to see
 Female representation is slightly above average among senior management, and slightly below average on the board
 Insider ownership is below average among senior management, but well above average on the board
Management/Board Composition
AMH
AVB
CPT
ELS
EQR
ESS
INVH
MAA
SUI
UDR
Average
Source:
29
Split Chair/
CEO
Yes
No
No
Yes
Yes
Yes
Yes
No
No
No
50%
Senior Management
Average
%
Tenure
Female
8
33%
17
11%
20
38%
17
43%
16
11%
11
31%
5
30%
15
33%
24
25%
10
27%
14
28%
Ownership
0.2%
0.3%
0.6%
0.5%
0.2%
0.1%
0.2%
0.4%
1.6%
0.5%
%
Independent
69%
82%
80%
73%
77%
78%
82%
92%
75%
89%
0.5%
80%
Board Members
Average
%
Tenure
Female
5
23%
9
18%
15
30%
15
27%
11
31%
13
33%
5
27%
9
23%
14
25%
12
33%
11
27%
Ownership
6.6%
0.2%
0.9%
4.5%
1.6%
0.6%
0.2%
0.5%
1.8%
0.7%
1.8%
Company reports, Factset
RBC Capital Markets
Appendix
Potential Catalysts & Risks
Drivers of potential outperformance and underperformance
Potential Catalysts
Risks to rating and price target
 Continued single-family outperformance: Rent growth for
single-family rentals has been outperforming growth for multifamily rentals of late, so a continuation of this theme could be a
catalyst
 Economic trends: The largest risks to all single/multi-family
home companies relate to general economic trends, including
employment/wage growth, household formation and relative
housing affordability
 Work-from-home trends: COVID-related work from home was
a significant tailwind for the single-family space, so to the extent
this dynamic continues, it could be positive for equity
performance
 Excess capital: Private operators and institutions continue to
increase allocations to the single-family space, which could
potentially push down returns
 Continued development execution: AMH is the largest
developer of single-family homes in the peer group, so
continued execution on this front could lead to value creation
 Accretive acquisitions: While AMH is primarily development
focused, the company acquires properties as well, so accretive
acquisitions could boost performance
31
 Development risk: AMH is a significant developer, which brings
execution risks along with higher potential returns
 Inflation: As yield instruments, we see the single-family REITs
at higher risk compared to the broader equity market, and an
inability or lag in passing through inflation to residents could
impact equity performance
 Regulatory: We expect that the influx of capital into the singlefamily rental space could eventually garner more regulatory
oversight
RBC Capital Markets
Model
1Q20
Per Share Items
FFO/ Di l uted Sha re
Core FFO/ Di l uted Sha re
2Q20
3Q20
4Q20
2020
1Q21E
2Q21E
3Q21E
4Q21E
2021E
Brad Heffern | brad.heffern@rbccm.com | (512) 708-6311
1Q22E
2Q22E
3Q22E
4Q22E
2022E
$0.28
$0.29
$0.26
$0.05
$0.26
$0.27
$0.23
$0.05
$0.28
$0.29
$0.25
$0.05
$0.29
$0.31
$0.28
$0.05
$1.10
$1.17
$1.03
$0.20
$0.30
$0.31
$0.27
$0.10
$0.29
$0.29
$0.26
$0.10
$0.31
$0.32
$0.29
$0.10
$0.34
$0.35
$0.31
$0.10
$1.24
$1.27
$1.13
$0.40
$0.36
$0.36
$0.33
$0.12
$0.34
$0.34
$0.31
$0.12
$0.36
$0.37
$0.33
$0.12
$0.38
$0.38
$0.35
$0.12
$1.43
$1.46
$1.31
$0.48
45,253
$1,664
95.3%
45,075
$1,678
95.6%
44,862
$1,686
96.9%
44,663
$1,694
97.3%
44,963
$1,680
96.3%
44,663
$1,698
97.1%
44,663
$1,725
97.0%
44,663
$1,755
96.9%
44,663
$1,771
96.8%
44,663
$1,737
97.0%
44,663
$1,773
96.7%
44,663
$1,799
96.6%
44,663
$1,822
96.5%
44,663
$1,831
96.4%
44,663
$1,806
96.6%
Sa me-Store Revenue
% Change YoY Same Store
$215
3.9%
$217
0.0%
$220
3.6%
$221
3.5%
$873
2.8%
$221
4.0%
$224
4.3%
$228
4.1%
$230
4.0%
$903
4.1%
$230
4.0%
$233
3.9%
$236
3.4%
$237
3.0%
$935
3.6%
Sa me-Store Opera ti ng Expens e
% Change YoY Same Store
$75
4.0%
$87
6.1%
$83
3.0%
$79
4.2%
$324
4.3%
$77
4.5%
$90
4.5%
$86
4.5%
$83
4.5%
$336
4.5%
$80
4.0%
$93
4.0%
$90
4.0%
$86
4.0%
$350
4.0%
$140
65.1%
3.8%
$130
60.1%
-3.4%
$137
62.2%
4.0%
$142
64.2%
3.2%
$549
62.9%
1.9%
$144
65.0%
3.7%
$135
60.0%
4.1%
$141
62.1%
3.8%
$147
64.0%
3.8%
$567
62.8%
3.9%
$149
65.0%
4.0%
$140
59.9%
3.8%
$146
61.9%
3.0%
$151
63.7%
2.4%
$585
62.6%
3.3%
$290
$75
$83
$11
$3
$30
$0
$17
$283
$87
$85
$11
$7
$30
$0
$16
$311
$83
$87
$13
$6
$29
$0
$18
$299
$79
$89
$13
$5
$28
$0
$18
$1,183
$324
$343
$49
$21
$117
$0
$70
$304
$77
$89
$12
-$2
$29
$0
$17
$307
$90
$90
$12
-$2
$29
$0
$17
$331
$86
$91
$12
-$2
$29
$0
$18
$325
$83
$92
$12
-$2
$29
$0
$19
$1,267
$336
$363
$47
-$6
$117
$0
$71
$339
$80
$93
$12
-$2
$29
$0
$19
$341
$93
$94
$12
-$2
$29
$0
$19
$364
$90
$95
$12
-$2
$29
$0
$19
$355
$86
$96
$12
-$2
$29
$0
$20
$1,398
$350
$378
$49
-$6
$116
$0
$77
Adjus ted FFO / Di l uted Sha re
Common Di vi dend / Di l uted Sha re
Same-Store Portfolio Stats
Uni ts
Monthl y Rent
Occupa ncy
Sa me-Store NOI
NOI Margin
% Change YoY Same Store
Income Statement
Revenue
Opera ti ng Expens es
Depreci a ti on & Amorti za ti on
Genera l & Admi ni s tra ti ve
Other Income/(Expens e)
Interes t Expens e
Income Ta x Expens e
Income Not Ava i l a bl e To Common
Reported Net Income
$20
$15
$23
$27
$85
$20
$14
$23
$31
$89
$37
$30
$38
$44
$149
FFO
Core FFO
AFFO
$99
$103
$93
$91
$95
$82
$99
$106
$90
$108
$115
$104
$397
$419
$369
$111
$114
$101
$105
$108
$95
$116
$119
$105
$126
$129
$115
$458
$469
$415
$133
$136
$122
$127
$130
$116
$136
$139
$125
$143
$146
$133
$539
$551
$496
Di l uted FFO Sha res Outs ta ndi ng
353.6
353.5
360.8
369.1
359.2
369.1
369.1
369.1
369.1
369.1
374.1
376.6
379.1
381.6
377.9
Adjus ted EBITDAre
$149
$140
$152
$160
$600
$160
$154
$164
$174
$652
$182
$175
$184
$192
$733
$33
$1,941
$994
$2,902
$32
$1,936
$1,019
$2,923
$316
$1,932
$889
$2,505
$137
$1,928
$890
$2,680
$34
$1,923
$990
$2,878
$426
$1,918
$1,590
$3,081
$228
$1,913
$1,590
$3,275
$38
$1,908
$1,590
$3,459
$64
$1,903
$1,590
$3,428
$402
$1,898
$1,990
$3,485
$350
$1,893
$1,990
$3,533
$305
$1,888
$1,990
$3,572
4.9x
5.0x
4.3x
4.5x
4.7x
4.9x
5.1x
5.3x
5.1x
5.0x
4.9x
4.9x
Balance Sheet & Leverage
Leverage
Ca s h & Equi va l ents
Mortga ge/Property Debt
Corpora te Debt
Net Debt
Net Debt/EBITDAre
Source: RBC Capital Markets Estimates & Company Reports
32
Financial Values in US $MM's Unless Noted
RBC Capital Markets
American Homes 4 Rent
Target/Upside/Downside Scenarios
Investment summary
American Homes 4 Rent
43
125 Weeks
07NOV18 - 29MAR21
38
TARGET
37.00
33
CURRENT 33.49
28
23
18
40m
30m
20m
10m
2019
2020
2021
N D J F M A M J J A S O N D J F M A M J J A S O N D J F M
AMH US
Rel. S&P 500 COMPOSITE
MA 40 weeks
Source: Bloomberg and RBC Capital Markets esmates for Target
Valuaon
We esmate a forward 12-month NAV of $34sh based on a
4.9% cap rate, our 2021 projecon for NOI, JV income and
construcon in progress.
Our DCF methodology indicates a value of $40sh based on
the NPV of cash flows provided by our model through 2025, a
terminal growth rate of 3.5% and a WACC of 6.4%.
We assign a 27.0x FFO mulple to our 2021 esmate to arrive
at a FFO methodology value of $34sh; the 27.0x mulple
is a premium to our assumpons for the mul-family group,
given the greater relave acquision/development runway for
single family.
We include a 10% premium to our NAV to capture potenal
acquision/development upside, and the average of the three
methodologies arrives at our $37sh price target. The implied
return to our price target supports an Outperform rang.
We have a favorable view of the single-family rental sector,
given available rent growth that will likely be above the mulfamily average and a significant opportunity for greater scale.
We see AMH as the only current way to play the development
side of the business, which is likely to generate outsized yields
versus acquision at only a modestly increased risk profile.
While rent growth has lagged its closest peer INVH, we see
this as a difference in locaon focus and think development
will make up for the difference over me. We also like AMH’s
strong balance sheet, and iniate with an Outperform rang
and $37sh price target.
Risks to rang and price target
Economic trends: The largest risks to all single/mul-family
home companies relate to general economic trends, including
employment/wage growth, household formaon and relave
housing affordability.
Excess capital: Private operators and instuons connue to
increase allocaons to the single-family space, which could
potenally push down returns.
Development risk: AMH is a significant developer, which
brings execuon risks along with higher potenal returns.
Inflaon: As yield instruments, we see the single-family REITs
at higher risk compared to the broader equity market, and an
inability or lag in passing through inflaon to residents could
impact equity performance.
Regulatory: We expect that the influx of capital into the singlefamily rental space could eventually garner more regulatory
oversight.
Upside scenario
Our upside scenario is $42. This is based on a 25 bps lower cap
rate for our NAV, a 25 bps lower WACC for our DCF and 10%
upside to our 2021 core FFO esmate using the same mulple.
Downside scenario
Our downside scenario is $33. This is based on a 25 bps higher
cap rate for our NAV, a 25 bps higher WACC for our DCF and
10% downside to our 2021 core FFO esmate using the same
mulple.
March 30, 2021
Brad Heffern, CFA (512) 708-6311; brad.heffern@rbccm.com
34
American Homes 4 Rent
Company descripon
American Homes 4 Rent (NYSE: AMH) is a single-family home rental company focused on acquiring, developing, renovang,
leasing and operang single-family properes. As of YE2020, the company held 53,584 single-family properes in sub-markets of
metropolitan stascal areas within 22 states. AMH’s objecve is to generate aracve, risk-adjusted returns for its shareholders
through dividends and capital appreciaon. AMH was founded in 2012 by the founder of Public Storage, and held an IPO in 2013.
Required disclosures
Conflicts disclosures
The analyst(s) responsible for preparing this research report received compensaon that is based upon various factors, including
total revenues of the member companies of RBC Capital Markets and its affiliates, a poron of which are or have been generated
by investment banking acvies of the member companies of RBC Capital Markets and its affiliates.
Please note that current conflicts disclosures may differ from those as of the publicaon date on, and as set forth in,
this report. To access current conflicts disclosures, clients should refer to hps://www.rbccm.com/GLDisclosure/PublicWeb/
DisclosureLookup.aspx?entyId=1 or send a request to RBC CM Research Publishing, P.O. Box 50, 200 Bay Street, Royal Bank Plaza,
29th Floor, South Tower, Toronto, Ontario M5J 2W7.
RBC Capital Markets, LLC makes a market in the securies of American Homes 4 Rent.
Explanaon of RBC Capital Markets Equity rang system
An analyst's 'sector' is the universe of companies for which the analyst provides research coverage. Accordingly, the rang assigned
to a parcular stock represents solely the analyst's view of how that stock will perform over the next 12 months relave to the
analyst's sector average.
Rangs
Outperform (O): Expected to materially outperform sector average over 12 months.
Sector Perform (SP): Returns expected to be in line with sector average over 12 months.
Underperform (U): Returns expected to be materially below sector average over 12 months.
Restricted (R): RBC policy precludes certain types of communicaons, including an investment recommendaon, when RBC is
acng as an advisor in certain merger or other strategic transacons and in certain other circumstances.
Not Rated (NR): The rang, price targets and esmates have been removed due to applicable legal, regulatory or policy constraints
which may include when RBC Capital Markets is acng in an advisory capacity involving the company.
As of March 31, 2020, RBC Capital Markets disconnued its Top Pick rang. Top Pick rated securies represented an analysts best
idea in the sector; expected to provide significant absolute returns over 12 months with a favorable risk-reward rao. Top Pick
rated securies have been reassigned to our Outperform rated securies category, which are securies expected to materially
outperform sector average over 12 months.
Risk Rang
The Speculave risk rang reflects a security's lower level of financial or operang predictability, illiquid share trading volumes,
high balance sheet leverage, or limited operang history that result in a higher expectaon of financial and/or stock price volality.
Distribuon of rangs
For the purpose of rangs distribuons, regulatory rules require member firms to assign rangs to one of three rang categories
- Buy, Hold/Neutral, or Sell - regardless of a firm''s own rang categories. Although RBC Capital Markets'' rangs of Outperform
(O), Sector Perform (SP), and Underperform (U) most closely correspond to Buy, Hold/Neutral and Sell, respecvely, the meanings
are not the same because our rangs are determined on a relave basis.
Distribution of ratings
RBC Capital Markets, Equity Research
As of 31-Dec-2020
Rating
BUY [Outperform]
HOLD [Sector Perform]
SELL [Underperform]
March 30, 2021
Count
828
615
67
Percent
54.83
40.73
4.44
Investment Banking
Serv./Past 12 Mos.
Count
299
166
12
Percent
36.11
26.99
17.91
Brad Heffern, CFA (512) 708-6311; brad.heffern@rbccm.com
35
American Homes 4 Rent
Rating and price target history for: American Homes 4 Rent, AMH US as of 29-Mar-2021 (in USD)
35
30
25
20
2018
Q1
Q2
Q3
2019
Q1
Q2
Q3
2020
Q1
Legend:
TP: Top Pick; O: Outperform; SP: Sector Perform; U: Underperform; R: Restricted; I: Initiation of Research Coverage; D: Discontinuation of Research Coverage;
NR: Not Rated; NA: Not Available; RL: Recommended List - RL: On: Refers to date a security was placed on a recommended list, while RL Off: Refers to date
a security was removed from a recommended list; Rtg: Rating.
Q2
Q3
2021
15
Q1
Created by: BlueMatrix
References to a Recommended List in the recommendaon history chart may include one or more recommended lists or model
porolios maintained by RBC Wealth Management or one of its affiliates. RBC Wealth Management recommended lists include
the Guided Porolio: Prime Income (RL 6), the Guided Porolio: Dividend Growth (RL 8), the Guided Porolio: ADR (RL 10),
and the Guided Porolio: All Cap Growth (RL 12). RBC Capital Markets recommended lists include the Strategy Focus List and
the Fundamental Equity Weighngs (FEW) porolios. The abbreviaon 'RL On' means the date a security was placed on a
Recommended List. The abbreviaon 'RL Off' means the date a security was removed from a Recommended List.
Equity valuaon and risks
For valuaon methods used to determine, and risks that may impede achievement of, price targets for covered companies, please
see the most recent company-specific research report at www.rbcinsight.com or send a request to RBC Capital Markets Research
Publishing, P.O. Box 50, 200 Bay Street, Royal Bank Plaza, 29th Floor, South Tower, Toronto, Ontario M5J 2W7.
American Homes 4 Rent
Valuaon
We esmate a forward 12-month NAV of $34sh based on a 4.9% cap rate, our 2021 projecon for NOI, JV income and construcon
in progress.
Our DCF methodology indicates a value of $40sh based on the NPV of cash flows provided by our model through 2025, a terminal
growth rate of 3.5% and a WACC of 6.4%.
We assign a 27.0x FFO mulple to our 2021 esmate to arrive at a FFO methodology value of $34sh; the 27.0x mulple is a
premium to our assumpons for the mul-family group, given the greater relave acquision/development runway for single
family.
We include a 10% premium to our NAV to capture potenal acquision/development upside, and the average of the three
methodologies arrives at our $37sh price target. The implied return to our price target supports an Outperform rang.
Risks to rang and price target
Economic trends: The largest risks to all single/mul-family home companies relate to general economic trends, including
employment/wage growth, household formaon and relave housing affordability.
Excess capital: Private operators and instuons connue to increase allocaons to the single-family space, which could potenally
push down returns.
Development risk: AMH is a significant developer, which brings execuon risks along with higher potenal returns.
Inflaon: As yield instruments, we see the single-family REITs at higher risk compared to the broader equity market, and an inability
or lag in passing through inflaon to residents could impact equity performance.
Regulatory: We expect that the influx of capital into the single-family rental space could eventually garner more regulatory
oversight.
Conflicts policy
March 30, 2021
Brad Heffern, CFA (512) 708-6311; brad.heffern@rbccm.com
36
American Homes 4 Rent
RBC Capital Markets Policy for Managing Conflicts of Interest in Relaon to Investment Research is available from us on request.
To access our current policy, clients should refer to
hps://www.rbccm.com/global/file-414164.pdf
or send a request to RBC Capital Markets Research Publishing, P.O. Box 50, 200 Bay Street, Royal Bank Plaza, 29th Floor, South
Tower, Toronto, Ontario M5J 2W7. We reserve the right to amend or supplement this policy at any me.
Disseminaon of research and short-term trade ideas
RBC Capital Markets endeavors to make all reasonable efforts to provide research simultaneously to all eligible clients, having
regard to local me zones in overseas jurisdicons. RBC Capital Markets' equity research is posted to our proprietary website
to ensure eligible clients receive coverage iniaons and changes in rangs, targets and opinions in a mely manner. Addional
distribuon may be done by the sales personnel via email, fax, or other electronic means, or regular mail. Clients may also
receive our research via third party vendors. RBC Capital Markets also provides eligible clients with access to SPARC on the Firms
proprietary INSIGHT website, via email and via third-party vendors. SPARC contains market color and commentary regarding
subject companies on which the Firm currently provides equity research coverage. Research Analysts may, from me to me,
include short-term trade ideas in research reports and  or in SPARC. A short-term trade idea offers a short-term view on
how a security may trade, based on market and trading events, and the resulng trading opportunity that may be available. A
short-term trade idea may differ from the price targets and recommendaons in our published research reports reflecng the
research analyst's views of the longer-term (one year) prospects of the subject company, as a result of the differing me horizons,
methodologies and/or other factors. Thus, it is possible that a subject company's common equity that is considered a long-term
'Sector Perform' or even an 'Underperform' might present a short-term buying opportunity as a result of temporary selling pressure
in the market; conversely, a subject company's common equity rated a long-term 'Outperform' could be considered suscepble
to a short-term downward price correcon. Short-term trade ideas are not rangs, nor are they part of any rangs system, and
the firm generally does not intend, nor undertakes any obligaon, to maintain or update short-term trade ideas. Short-term trade
ideas may not be suitable for all investors and have not been tailored to individual investor circumstances and objecves, and
investors should make their own independent decisions regarding any securies or strategies discussed herein. Please contact
your investment advisor or instuonal salesperson for more informaon regarding RBC Capital Markets' research.
For a list of all recommendaons on the company that were disseminated during the prior 12-month period, please click on the
following link: hps://rbcnew.bluematrix.com/sellside/MAR.acon
The 12 month history of SPARCs can be viewed at RBC Insight.
Analyst cerficaon
All of the views expressed in this report accurately reflect the personal views of the responsible analyst(s) about any and all of
the subject securies or issuers. No part of the compensaon of the responsible analyst(s) named herein is, or will be, directly or
indirectly, related to the specific recommendaons or views expressed by the responsible analyst(s) in this report.
Third-party-disclaimers
The Global Industry Classificaon Standard ("GICS”) was developed by and is the exclusive property and a service mark of MSCI Inc. (“MSCI”) and Standard & Poor's Financial Services
LLC (“S&P”) and is licensed for use by RBC. Neither MSCI, S&P, nor any other party involved in making or compiling the GICS or any GICS classificaons makes any express or implied
warranes or representaons with respect to such standard or classificaon (or the results to be obtained by the use thereof), and all such pares hereby expressly disclaim all warranes
of originality, accuracy, completeness, merchantability and fitness for a parcular purpose with respect to any of such standard or classificaon. Without liming any of the foregoing,
in no event shall MSCI, S&P, any of their affiliates or any third party involved in making or compiling the GICS or any GICS classificaons have any liability for any direct, indirect, special,
punive, consequenal or any other damages (including lost profits) even if nofied of the possibility of such damages.
RBC Capital Markets disclaims all warranes of originality, accuracy, completeness, merchantability or fitness for a parcular purpose with respect to any statements made to the media
or via social media that are in turn quoted in this report, or otherwise reproduced graphically for informaonal purposes.
References herein to "LIBOR", "LIBO Rate", "L" or other LIBOR abbreviaons means the London interbank offered rate as administered by ICE Benchmark Administraon (or any other
person that takes over the administraon of such rate).
Disclaimer
RBC Capital Markets is the business name used by certain branches and subsidiaries of the Royal Bank of Canada, including RBC Dominion Securies Inc., RBC
Capital Markets, LLC, RBC Europe Limited, RBC Capital Markets (Europe) GmbH, Royal Bank of Canada, Hong Kong Branch and Royal Bank of Canada, Sydney Branch.
The informaon contained in this report has been compiled by RBC Capital Markets from sources believed to be reliable, but no representaon or warranty, express
or implied, is made by Royal Bank of Canada, RBC Capital Markets, its affiliates or any other person as to its accuracy, completeness or correctness. All opinions and
esmates contained in this report constute RBC Capital Markets' judgement as of the date of this report, are subject to change without noce and are provided
in good faith but without legal responsibility. Nothing in this report constutes legal, accounng or tax advice or individually tailored investment advice. This
material is prepared for general circulaon to clients and has been prepared without regard to the individual financial circumstances and objecves of persons who
receive it. The investments or services contained in this report may not be suitable for you and it is recommended that you consult an independent investment
advisor if you are in doubt about the suitability of such investments or services. This report is not an offer to sell or a solicitaon of an offer to buy any securies.
March 30, 2021
Brad Heffern, CFA (512) 708-6311; brad.heffern@rbccm.com
37
American Homes 4 Rent
Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. RBC Capital Markets research
analyst compensaon is based in part on the overall profitability of RBC Capital Markets, which includes profits aributable to investment banking revenues.
Every province in Canada, state in the U.S., and most countries throughout the world have their own laws regulang the types of securies and other investment
products which may be offered to their residents, as well as the process for doing so. As a result, the securies discussed in this report may not be eligible for sale
in some jurisdicons. RBC Capital Markets may be restricted from publishing research reports, from me to me, due to regulatory restricons and/ or internal
compliance policies. If this is the case, the latest published research reports available to clients may not reflect recent material changes in the applicable industry
and/or applicable subject companies. RBC Capital Markets research reports are current only as of the date set forth on the research reports. This report is not,
and under no circumstances should be construed as, a solicitaon to act as securies broker or dealer in any jurisdicon by any person or company that is not
legally permied to carry on the business of a securies broker or dealer in that jurisdicon. To the full extent permied by law neither RBC Capital Markets nor
any of its affiliates, nor any other person, accepts any liability whatsoever for any direct, indirect or consequenal loss arising from, or in connecon with, any use
of this report or the informaon contained herein. No maer contained in this document may be reproduced or copied by any means without the prior wrien
consent of RBC Capital Markets in each instance.
Addional informaon is available on request.
To U.S. Residents:
This publicaon has been approved by RBC Capital Markets, LLC (member FINRA, NYSE, SIPC), which is a U.S. registered broker-dealer and which accepts
responsibility for this report and its disseminaon in the United States. Any U.S. recipient of this report that is not a registered broker-dealer or a bank acng in
a broker or dealer capacity and that wishes further informaon regarding, or to effect any transacon in, any of the securies discussed in this report, should
contact and place orders with RBC Capital Markets, LLC.
To Canadian Residents:
This publicaon has been approved by RBC Dominion Securies Inc.(member IIROC). Any Canadian recipient of this report that is not a Designated Instuon in
Ontario, an Accredited Investor in Brish Columbia or Alberta or a Sophiscated Purchaser in Quebec (or similar permied purchaser in any other province) and
that wishes further informaon regarding, or to effect any transacon in, any of the securies discussed in this report should contact and place orders with RBC
Dominion Securies Inc., which, without in any way liming the foregoing, accepts responsibility for this report and its disseminaon in Canada.
To U.K. Residents:
This publicaon has been approved by RBC Europe Limited ('RBCEL') which is authorized by the Prudenal Regulaon Authority and regulated by the Financial
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distribuon in the United Kingdom to retail clients, as defined under the rules of the FCA. RBCEL accepts responsibility for this report and its disseminaon in
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This material is distributed in the EU by either RBCEL on an authorised cross-border basis, or by RBC Capital Markets (Europe) GmbH (RBC EG) which is authorised
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.® Registered trademark of Royal Bank of Canada. RBC Capital Markets is a trademark of Royal Bank of Canada. Used under license.
Copyright © RBC Capital Markets, LLC 2021 - Member SIPC
Copyright © RBC Dominion Securies Inc. 2021 - Member Canadian Investor Protecon Fund
Copyright © RBC Europe Limited 2021
Copyright © Royal Bank of Canada 2021
All rights reserved
March 30, 2021
Brad Heffern, CFA (512) 708-6311; brad.heffern@rbccm.com
38