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amh:single_family_property

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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 September 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)

American Homes 4 Rent | Maryland | 46-1229660
American Homes 4 Rent, L.P. | Delaware | 80-0860173
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.)

30601 Agoura Road, Suite 200
Agoura Hills, California 91301
(Address of principal executive offices) (Zip Code)
(805) 413-5300
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:

Title of each class |  | Trading symbols |  | Name of each exchange on which registered
Class A common shares of beneficial interest, $.01 par value |  | AMH |  | New York Stock Exchange
Series D perpetual preferred shares of beneficial interest, $.01 par value |  | AMH-D |  | New York Stock Exchange
Series E perpetual preferred shares of beneficial interest, $.01 par value |  | AMH-E |  | New York Stock Exchange
Series F perpetual preferred shares of beneficial interest, $.01 par value |  | AMH-F |  | New York Stock Exchange
Series G perpetual preferred shares of beneficial interest, $.01 par value |  | AMH-G |  | New York Stock Exchange
Series H perpetual preferred shares of beneficial interest, $.01 par value |  | AMH-H |  | New 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.
American Homes 4 Rent ☒ Yes ☐ No American Homes 4 Rent, L.P. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).
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, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

American Homes 4 Rent
Large accelerated filer | ☒ |  | Accelerated filer | ☐
Non-accelerated filer | ☐ |  | 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 ☒ No American Homes 4 Rent, L.P. ☐ Yes ☒ No
There were 300,075,999 shares of American Homes 4 Rent’s Class A common shares, $0.01 par value per share, and 635,075 shares of American Homes 4 Rent’s Class B common shares, $0.01 par value per share, outstanding on November 6, 2019.

EXPLANATORY NOTE
This report combines the quarterly reports on Form 10-Q for the period ended September 30, 2019, of American Homes 4 Rent and American Homes 4 Rent, L.P. Unless stated otherwise or the context otherwise requires, references to “AH4R” or “the General Partner” mean American Homes 4 Rent, a Maryland real estate investment trust (“REIT”), and references to “the Operating Partnership,” “our operating partnership” or “the OP” mean American Homes 4 Rent, L.P., a Delaware limited partnership, and its subsidiaries taken as a whole. References to “the Company,” “we,” “our,” and “us” mean collectively AH4R, the Operating Partnership and those entities/subsidiaries owned or controlled by AH4R and/or the Operating Partnership.
AH4R is the general partner of, and as of September 30, 2019, owned an approximate 85.2% common partnership interest in, the Operating Partnership. The remaining 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 OP units.
Shareholders’ equity, partners’ capital and noncontrolling interests are the main areas of difference between the consolidated financial statements of the Company and those of the Operating Partnership. The limited partnership interests in the Operating Partnership are accounted for as partners’ capital in the Operating Partnership’s financial statements and as noncontrolling interests in the Company’s financial statements. The noncontrolling interests in the Operating Partnership’s financial statements include an outside ownership interest in a consolidated subsidiary of the Company, which was liquidated during the second quarter of 2018. The noncontrolling interests in the Company’s financial statements include the same noncontrolling interests at the Operating Partnership level, as well as the limited partnership interests in the Operating Partnership. The differences between shareholders’ equity and partners’ capital result from differences in the equity and capital issued at the Company and Operating Partnership levels.
To help investors understand the differences between the Company and the Operating Partnership, this report provides
separate consolidated financial statements for the Company and the Operating Partnership; a single set of consolidated notes to such financial statements that includes separate discussions of each entity’s debt, noncontrolling interests and shareholders’ equity or partners’ capital, as applicable; and a combined Management’s Discussion and Analysis of Financial Condition and Results of Operations section that includes discrete information related to each entity.

This report also includes separate Part I, Item 4. Controls and Procedures sections and separate Exhibits 31 and 32 certifications for each of the Company and the Operating Partnership in order to establish that the requisite certifications have been made and that the Company and the Operating Partnership are compliant with Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934 and 18 U.S.C. §1350.
In order to highlight the differences between the Company and the Operating Partnership, the separate sections in this report for the Company and the Operating Partnership specifically refer to the Company and the Operating Partnership. In the sections that combine disclosure of the Company and the Operating Partnership, this report refers to actions or holdings as being actions or holdings of the Company. Although the Operating Partnership is generally the entity that directly or indirectly enters into contracts and joint ventures and holds assets and debt, reference to the Company is appropriate because the Company is one business and the Company operates that business through the Operating Partnership. The separate discussions of the Company and the Operating Partnership in this report should be read in conjunction with each other to understand the results of the Company on a consolidated basis and how management operates the Company.

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

|  |  | Page
|  | CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS | i
PART I |  | FINANCIAL INFORMATION |
Item 1. |  | Financial Statements (Unaudited) | 1
|  | American Homes 4 Rent |
|  | Condensed Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018 | 1
|  | Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2019 and 2018 | 2
|  | Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2019 and 2018 | 3
|  | Condensed Consolidated Statements of Equity for the three and nine months ended September 30, 2019 and 2018 | 4
|  | Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018 | 8
|  | American Homes 4 Rent, L.P. |
|  | Condensed Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018 | 10
|  | Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2019 and 2018 | 11
|  | Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2019 and 2018 | 12
|  | Condensed Consolidated Statements of Capital for the three and nine months ended September 30, 2019 and 2018 | 13
|  | Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018 | 15
|  | American Homes 4 Rent and American Homes 4 Rent, L.P. |
|  | Notes to Unaudited Condensed Consolidated Financial Statements | 17
Item 2. |  | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 32
Item 3. |  | Quantitative and Qualitative Disclosures About Market Risk | 48
Item 4. |  | Controls and Procedures | 49
PART II |  | OTHER INFORMATION |
Item 1. |  | Legal Proceedings | 50
Item 1A. |  | Risk Factors | 50
Item 2. |  | Unregistered Sales of Equity Securities and Use of Proceeds | 50
Item 3. |  | Defaults Upon Senior Securities | 50
Item 4. |  | Mine Safety Disclosures | 50
Item 5. |  | Other Information | 50
Item 6. |  | Exhibits | 50
|  | Signatures | 52

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Various statements contained in this Quarterly Report on Form 10-Q of American Homes 4 Rent (“AH4R” or “the General Partner”) and of American Homes 4 Rent, L.P. (“the Operating Partnership,” “our operating partnership,” or “the OP”) including those that express a belief, expectation or intention, as well as those that are not statements of historical fact, are forward-looking statements. These forward-looking statements may include projections and estimates concerning the timing and success of specific projects and our future operations, revenues, income and capital spending. Our forward-looking statements are generally accompanied by words such as “estimate,” “project,” “predict,” “believe,” “expect,” “intend,” “anticipate,” “potential,” “plan,” “goal” or other words that convey the uncertainty of future events or outcomes. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These and other important factors, including those discussed or incorporated by reference under Part II, Item 1A. “Risk Factors”, Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report and in our Annual Report on Form 10-K for the year ended December 31, 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—FINANCIAL INFORMATION
ITEM 1. Financial Statements
American Homes 4 Rent
Condensed Consolidated Balance Sheets
(Amounts in thousands, except share data)

| September 30, 2019 |  | December 31, 2018
| (Unaudited) |  |
Assets |  |  |  |  |
Single-family properties: |  |  |  |  |
Land | $ | 1,736,130 |  |  | $ | 1,713,496 |
Buildings and improvements | 7,612,612 |  |  | 7,483,600 |
Single-family properties in operation | 9,348,742 |  |  | 9,197,096 |
Less: accumulated depreciation | (1,389,216 | ) |  | (1,176,499 | )
Single-family properties in operation, net | 7,959,526 |  |  | 8,020,597 |
Single-family properties under development and development land | 262,138 |  |  | 153,651 |
Single-family properties held for sale, net | 247,529 |  |  | 318,327 |
Total real estate assets, net | 8,469,193 |  |  | 8,492,575 |
Cash and cash equivalents | 171,209 |  |  | 30,284 |
Restricted cash | 126,801 |  |  | 144,930 |
Rent and other receivables, net | 36,302 |  |  | 29,027 |
Escrow deposits, prepaid expenses and other assets | 182,894 |  |  | 146,034 |
Deferred costs and other intangibles, net | 7,777 |  |  | 12,686 |
Asset-backed securitization certificates | 25,666 |  |  | 25,666 |
Goodwill | 120,279 |  |  | 120,279 |
Total assets | $ | 9,140,121 |  |  | $ | 9,001,481 |
Liabilities |  |  |  |  |
Revolving credit facility | $ | — |  |  | $ | 250,000 |
Term loan facility, net | — |  |  | 99,232 |
Asset-backed securitizations, net | 1,949,002 |  |  | 1,961,511 |
Unsecured senior notes, net | 888,113 |  |  | 492,800 |
Accounts payable and accrued expenses | 295,544 |  |  | 219,229 |
Amounts payable to affiliates | 273 |  |  | 4,967 |
Total liabilities | 3,132,932 |  |  | 3,027,739 |
Commitments and contingencies (see Note 12) |  |  |  |  |
Equity |  |  |  |  |
Shareholders’ equity: |  |  |  |  |
Class A common shares ($0.01 par value per share, 450,000,000 shares authorized, 300,075,999 and 296,014,546 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively) | 3,000 |  |  | 2,960 |
Class B common shares ($0.01 par value per share, 50,000,000 shares authorized, 635,075 shares issued and outstanding at September 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 September 30, 2019 and December 31, 2018) | 354 |  |  | 354 |
Additional paid-in capital | 5,788,950 |  |  | 5,732,466 |
Accumulated deficit | (473,893 | ) |  | (491,214 | )
Accumulated other comprehensive income | 6,862 |  |  | 7,393 |
Total shareholders’ equity | 5,325,279 |  |  | 5,251,965 |
Noncontrolling interest | 681,910 |  |  | 721,777 |
Total equity | 6,007,189 |  |  | 5,973,742 |
Total liabilities and equity | $ | 9,140,121 |  |  | $ | 9,001,481 |

The accompanying notes are an integral part of these condensed consolidated financial statements.
1

American Homes 4 Rent
Condensed Consolidated Statements of Operations
(Amounts in thousands, except share and per share data)
(Unaudited)

| For the Three Months Ended September 30, |  | For the Nine Months Ended September 30,
| 2019 |  | 2018 |  | 2019 |  | 2018
Revenues: |  |  |  |  |  |  |  |  |  |  |
Rents and other single-family property revenues | $ | 293,064 |  |  | $ | 278,187 |  |  | $ | 850,672 |  |  | $ | 797,732 |
Other | 5,240 |  |  | 1,865 |  |  | 8,696 |  |  | 4,807 |
Total revenues | 298,304 |  |  | 280,052 |  |  | 859,368 |  |  | 802,539 |
Expenses: |  |  |  |  |  |  |  |  |  |  |
Property operating expenses | 119,791 |  |  | 113,600 |  |  | 331,066 |  |  | 313,430 |
Property management expenses | 22,727 |  |  | 18,865 |  |  | 65,086 |  |  | 56,468 |
General and administrative expense | 11,107 |  |  | 9,265 |  |  | 31,028 |  |  | 28,173 |
Interest expense | 31,465 |  |  | 30,930 |  |  | 95,951 |  |  | 92,209 |
Acquisition and other transaction costs | 651 |  |  | 1,055 |  |  | 2,455 |  |  | 3,687 |
Depreciation and amortization | 82,073 |  |  | 79,940 |  |  | 246,074 |  |  | 237,562 |
Other | 2,610 |  |  | 1,069 |  |  | 5,148 |  |  | 3,520 |
Total expenses | 270,424 |  |  | 254,724 |  |  | 776,808 |  |  | 735,049 |
Gain on sale of single-family properties and other, net | 13,521 |  |  | 4,953 |  |  | 32,895 |  |  | 10,449 |
Loss on early extinguishment of debt | — |  |  | — |  |  | (659 | ) |  | (1,447 | )
Remeasurement of participating preferred shares | — |  |  | — |  |  | — |  |  | 1,212 |
Net income | 41,401 |  |  | 30,281 |  |  | 114,796 |  |  | 77,704 |
Noncontrolling interest | 4,099 |  |  | 2,881 |  |  | 11,129 |  |  | 845 |
Dividends on preferred shares | 13,782 |  |  | 12,223 |  |  | 41,346 |  |  | 38,804 |
Redemption of participating preferred shares | — |  |  | — |  |  | — |  |  | 32,215 |
Net income attributable to common shareholders | $ | 23,520 |  |  | $ | 15,177 |  |  | $ | 62,321 |  |  | $ | 5,840 |
Weighted-average common shares outstanding: |  |  |  |  |  |  |
Basic | 300,580,978 |  |  | 296,214,509 |  |  | 298,974,146 |  |  | 292,656,914 |
Diluted | 301,032,855 |  |  | 296,967,649 |  |  | 299,479,234 |  |  | 293,319,245 |
Net income attributable to common shareholders per share: |  |  |  |  |  |  |
Basic | $ | 0.08 |  |  | $ | 0.05 |  |  | $ | 0.21 |  |  | $ | 0.02 |
Diluted | $ | 0.08 |  |  | $ | 0.05 |  |  | $ | 0.21 |  |  | $ | 0.02 |

The accompanying notes are an integral part of these condensed consolidated financial statements.
2

American Homes 4 Rent
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Amounts in thousands)
(Unaudited)

| For the Three Months Ended September 30, |  | For the Nine Months Ended September 30,
| 2019 |  | 2018 |  | 2019 |  | 2018
Net income | $ | 41,401 |  |  | $ | 30,281 |  |  | $ | 114,796 |  |  | $ | 77,704 |
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 | (241 | ) |  | (241 | ) |  | (722 | ) |  | (602 | )
Other comprehensive (loss) income | (241 | ) |  | (241 | ) |  | (722 | ) |  | 8,951 |
Comprehensive income | 41,160 |  |  | 30,040 |  |  | 114,074 |  |  | 86,655 |
Comprehensive income attributable to noncontrolling interests | 4,063 |  |  | 2,835 |  |  | 11,018 |  |  | 2,269 |
Dividends on preferred shares | 13,782 |  |  | 12,223 |  |  | 41,346 |  |  | 38,804 |
Redemption of participating preferred shares | — |  |  | — |  |  | — |  |  | 32,215 |
Comprehensive income attributable to common shareholders | $ | 23,315 |  |  | $ | 14,982 |  |  | $ | 61,710 |  |  | $ | 13,367 |

The accompanying notes are an integral part of these condensed consolidated financial statements.
3

American Homes 4 Rent
Condensed Consolidated Statements of Equity
(Amounts in thousands, except share data)
(Unaudited)

| Class A common shares |  | Class B common shares |  | Preferred shares |  |  |  |  |  |  |  |  |  |  |  |
| Number of shares |  | Amount |  | Number of shares |  | Amount |  | Number of shares |  | Amount |  | Additional paid-in capital |  | Accumulated deficit |  | Accumulated other comprehensive income |  | Shareholders’ equity |  | Noncontrolling interest |  | Total equity
Balances at December 31, 2017 | 286,114,637 |  |  | $ | 2,861 |  |  | 635,075 |  |  | $ | 6 |  |  | 38,350,000 |  |  | $ | 384 |  |  | $ | 5,600,256 |  |  | $ | (453,953 | ) |  | $ | 75 |  |  | $ | 5,149,629 |  |  | $ | 726,195 |  |  | $ | 5,875,824 |
Share-based compensation | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 975 |  |  | — |  |  | — |  |  | 975 |  |  | — |  |  | 975 |
Common stock issued under share-based compensation plans, net of shares withheld for employee taxes | 59,187 |  |  | 1 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (409 | ) |  | — |  |  | — |  |  | (408 | ) |  | — |  |  | (408 | )
Repurchase of Class A common shares | (1,804,163 | ) |  | (18 | ) |  | — |  |  | — |  |  | — |  |  | — |  |  | (34,951 | ) |  | — |  |  | — |  |  | (34,969 | ) |  | — |  |  | (34,969 | )
Distributions to equity holders: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Preferred shares (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, 2018 | 284,369,661 |  |  | $ | 2,844 |  |  | 635,075 |  |  | $ | 6 |  |  | 38,350,000 |  |  | $ | 384 |  |  | $ | 5,565,871 |  |  | $ | (462,504 | ) |  | $ | 9,508 |  |  | $ | 5,116,109 |  |  | $ | 724,541 |  |  | $ | 5,840,650 |
Share-based compensation | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 943 |  |  | — |  |  | — |  |  | 943 |  |  | — |  |  | 943 |
Common stock issued under share-based compensation plans, net of shares withheld for employee taxes | 164,671 |  |  | 1 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 3,067 |  |  | — |  |  | — |  |  | 3,068 |  |  | — |  |  | 3,068 |
Redemption of Series C participating preferred shares into Class A common shares | 10,848,827 |  |  | 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, 2018 | 295,383,159 |  |  | $ | 2,954 |  |  | 635,075 |  |  | $ | 6 |  |  | 30,750,000 |  |  | $ | 308 |  |  | $ | 5,630,321 |  |  | $ | (494,326 | ) |  | $ | 9,267 |  |  | $ | 5,148,530 |  |  | $ | 720,232 |  |  | $ | 5,868,762 |

4

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 June 30, 2018 | 295,383,159 |  |  | $ | 2,954 |  |  | 635,075 |  |  | $ | 6 |  |  | 30,750,000 |  |  | $ | 308 |  |  | $ | 5,630,321 |  |  | $ | (494,326 | ) |  | $ | 9,267 |  |  | $ | 5,148,530 |  |  | $ | 720,232 |  |  | $ | 5,868,762 |
Share-based compensation | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 832 |  |  | — |  |  | — |  |  | 832 |  |  | — |  |  | 832 |
Common stock issued under share-based compensation plans, net of shares withheld for employee taxes | 513,060 |  |  | 5 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 8,224 |  |  | — |  |  | — |  |  | 8,229 |  |  | — |  |  | 8,229 |
Issuance of perpetual preferred shares, net of offering costs of $4,022 | — |  |  | — |  |  | — |  |  | — |  |  | 4,600,000 |  |  | 46 |  |  | 110,932 |  |  | — |  |  | — |  |  | 110,978 |  |  | — |  |  | 110,978 |
Distributions to equity holders: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Preferred shares (Note 10) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (12,223 | ) |  | — |  |  | (12,223 | ) |  | — |  |  | (12,223 | )
Noncontrolling interests | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (2,768 | ) |  | (2,768 | )
Common shares ($0.05 per share) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (14,846 | ) |  | — |  |  | (14,846 | ) |  | — |  |  | (14,846 | )
Net income | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 27,400 |  |  | — |  |  | 27,400 |  |  | 2,881 |  |  | 30,281 |
Total other comprehensive loss | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (241 | ) |  | (241 | ) |  | — |  |  | (241 | )
Balances at September 30, 2018 | 295,896,219 |  |  | $ | 2,959 |  |  | 635,075 |  |  | $ | 6 |  |  | 35,350,000 |  |  | $ | 354 |  |  | $ | 5,750,309 |  |  | $ | (493,995 | ) |  | $ | 9,026 |  |  | $ | 5,268,659 |  |  | $ | 720,345 |  |  | $ | 5,989,004 |

5

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, 2018 | 296,014,546 |  |  | $ | 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 taxes | 77,830 |  |  | 1 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (761 | ) |  | — |  |  | — |  |  | (760 | ) |  | — |  |  | (760 | )
Redemptions of Class A units | 500,000 |  |  | 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, 2019 | 296,592,376 |  |  | $ | 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 taxes | 645,567 |  |  | 6 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 10,257 |  |  | — |  |  | — |  |  | 10,263 |  |  | — |  |  | 10,263 |
Redemptions of Class A units | 2,589,846 |  |  | 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, 2019 | 299,827,789 |  |  | $ | 2,998 |  |  | 635,075 |  |  | $ | 6 |  |  | 35,350,000 |  |  | $ | 354 |  |  | $ | 5,784,398 |  |  | $ | (482,354 | ) |  | $ | 7,062 |  |  | $ | 5,312,464 |  |  | $ | 683,059 |  |  | $ | 5,995,523 |

6

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 June 30, 2019 | 299,827,789 |  |  | $ | 2,998 |  |  | 635,075 |  |  | $ | 6 |  |  | 35,350,000 |  |  | $ | 354 |  |  | $ | 5,784,398 |  |  | $ | (482,354 | ) |  | $ | 7,062 |  |  | $ | 5,312,464 |  |  | $ | 683,059 |  |  | $ | 5,995,523 |
Share-based compensation | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,288 |  |  | — |  |  | — |  |  | 1,288 |  |  | — |  |  | 1,288 |
Common stock issued under share-based compensation plans, net of shares withheld for employee taxes | 48,210 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 660 |  |  | — |  |  | — |  |  | 660 |  |  | — |  |  | 660 |
Redemptions of Class A units | 200,000 |  |  | 2 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 2,604 |  |  | — |  |  | 5 |  |  | 2,611 |  |  | (2,611 | ) |  | — |
Distributions to equity holders: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Preferred shares (Note 10) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (13,782 | ) |  | — |  |  | (13,782 | ) |  | — |  |  | (13,782 | )
Noncontrolling interests | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (2,601 | ) |  | (2,601 | )
Common shares ($0.05 per share) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (15,059 | ) |  | — |  |  | (15,059 | ) |  | — |  |  | (15,059 | )
Net income | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 37,302 |  |  | — |  |  | 37,302 |  |  | 4,099 |  |  | 41,401 |
Total other comprehensive loss | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (205 | ) |  | (205 | ) |  | (36 | ) |  | (241 | )
Balances at September 30, 2019 | 300,075,999 |  |  | $ | 3,000 |  |  | 635,075 |  |  | $ | 6 |  |  | 35,350,000 |  |  | $ | 354 |  |  | $ | 5,788,950 |  |  | $ | (473,893 | ) |  | $ | 6,862 |  |  | $ | 5,325,279 |  |  | $ | 681,910 |  |  | $ | 6,007,189 |

The accompanying notes are an integral part of these condensed consolidated financial statements.
7

American Homes 4 Rent
Condensed Consolidated Statements of Cash Flows
(Amounts in thousands)
(Unaudited)

| For the Nine Months Ended September 30,
| 2019 |  | 2018
Operating activities |  |  |  |  |
Net income | $ | 114,796 |  |  | $ | 77,704 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
Depreciation and amortization | 246,074 |  |  | 237,562 |
Noncash amortization of deferred financing costs | 5,965 |  |  | 5,838 |
Noncash amortization of discounts on debt instruments | 345 |  |  | 2,984 |
Noncash amortization of cash flow hedging instrument | (722 | ) |  | (602 | )
Noncash share-based compensation | 3,509 |  |  | 2,750 |
Provision for bad debt | — |  |  | 6,365 |
Loss on early extinguishment of debt | 659 |  |  | 1,447 |
Remeasurement of participating preferred shares | — |  |  | (1,212 | )
Equity in net earnings of unconsolidated joint ventures | (771 | ) |  | (423 | )
Net gain on sale of single-family properties and other | (32,895 | ) |  | (10,449 | )
Loss on impairment of single-family properties | 3,083 |  |  | 2,796 |
Other changes in operating assets and liabilities: |  |  |
Rent and other receivables | (9,468 | ) |  | (16,314 | )
Prepaid expenses and other assets | (2,741 | ) |  | (7,427 | )
Deferred leasing costs | (3,244 | ) |  | (9,556 | )
Accounts payable and accrued expenses | 95,502 |  |  | 87,438 |
Amounts payable to affiliates | 323 |  |  | (2,438 | )
Net cash provided by operating activities | 420,415 |  |  | 376,463 |
Investing activities |  |  |  |  |
Cash paid for single-family properties | (77,883 | ) |  | (333,082 | )
Change in escrow deposits for purchase of single-family properties | (4,543 | ) |  | (2,194 | )
Net proceeds received from sales of single-family properties and other | 151,502 |  |  | 47,757 |
Proceeds received from hurricane-related insurance claims | 2,171 |  |  | 4,000 |
Investment in unconsolidated joint ventures | (4,768 | ) |  | (3,800 | )
Distributions from joint ventures | 17,393 |  |  | 36,251 |
Renovations to single-family properties | (19,332 | ) |  | (40,898 | )
Recurring and other capital expenditures for single-family properties | (52,067 | ) |  | (40,470 | )
Cash paid for development activity | (236,398 | ) |  | (149,475 | )
Other purchases of productive assets | (171 | ) |  | — |
Net cash used for investing activities | (224,096 | ) |  | (481,911 | )
Financing activities |  |  |  |  |
Proceeds from issuance of perpetual preferred shares | — |  |  | 115,000 |
Payments of perpetual preferred share issuance costs | — |  |  | (3,750 | )
Repurchase of Class A common shares | — |  |  | (34,969 | )
Proceeds from exercise of stock options | 11,105 |  |  | 9,417 |
Payments related to tax withholding for share-based compensation | (834 | ) |  | (546 | )
Payments on asset-backed securitizations | (16,287 | ) |  | (15,669 | )
Proceeds from revolving credit facility | — |  |  | 155,000 |
Payments on revolving credit facility | (250,000 | ) |  | (295,000 | )
Payments on term loan facility | (100,000 | ) |  | (100,000 | )
Payments on secured note payable | — |  |  | (49,427 | )
Proceeds from unsecured senior notes, net of discount | 397,944 |  |  | 497,210 |
Settlement of cash flow hedging instrument | — |  |  | 9,628 |
Distributions to noncontrolling interests | (10,701 | ) |  | (8,303 | )
Distributions to common shareholders | (59,832 | ) |  | (43,524 | )
Distributions to preferred shareholders | (41,346 | ) |  | (41,178 | )
Deferred financing costs paid | (3,572 | ) |  | (5,100 | )
Net cash (used for) provided by financing activities | (73,523 | ) |  | 188,789 |
Net increase in cash, cash equivalents and restricted cash | 122,796 |  |  | 83,341 |
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) | $ | 298,010 |  |  | $ | 266,164 |

8

American Homes 4 Rent
Condensed Consolidated Statements of Cash Flows (continued)
(Amounts in thousands)
(Unaudited)

| For the Nine Months Ended September 30,
| 2019 |  | 2018
Supplemental cash flow information |  |  |  |  |
Cash payments for interest, net of amounts capitalized | $ | (93,901 | ) |  | $ | (80,942 | )
Supplemental schedule of noncash investing and financing activities |  |  |  |  |
Accrued property acquisitions, renovations and development expenditures | $ | 14,822 |  |  | $ | (107 | )
Transfers of completed homebuilding deliveries to properties | 107,445 |  |  | 64,867 |
Property and land contributions to an unconsolidated joint venture | (18,599 | ) |  | (40,942 | )
Note receivable related to a bulk sale of properties, net of discount | 29,474 |  |  | — |
Redemption of participating preferred shares | — |  |  | (28,258 | )
Accrued distributions to affiliates | — |  |  | (129 | )
Accrued distributions to non-affiliates | 59 |  |  | (1,773 | )

The accompanying notes are an integral part of these condensed consolidated financial statements.
9

American Homes 4 Rent, L.P.
Condensed Consolidated Balance Sheets
(Amounts in thousands, except unit data)

| September 30, 2019 |  | December 31, 2018
| (Unaudited) |  |
Assets |  |  |
Single-family properties: |  |  |
Land | $ | 1,736,130 |  |  | $ | 1,713,496 |
Buildings and improvements | 7,612,612 |  |  | 7,483,600 |
Single-family properties in operation | 9,348,742 |  |  | 9,197,096 |
Less: accumulated depreciation | (1,389,216 | ) |  | (1,176,499 | )
Single-family properties in operation, net | 7,959,526 |  |  | 8,020,597 |
Single-family properties under development and development land | 262,138 |  |  | 153,651 |
Single-family properties held for sale, net | 247,529 |  |  | 318,327 |
Total real estate assets, net | 8,469,193 |  |  | 8,492,575 |
Cash and cash equivalents | 171,209 |  |  | 30,284 |
Restricted cash | 126,801 |  |  | 144,930 |
Rent and other receivables, net | 36,302 |  |  | 29,027 |
Escrow deposits, prepaid expenses and other assets | 182,894 |  |  | 145,807 |
Amounts due from affiliates | 25,666 |  |  | 25,893 |
Deferred costs and other intangibles, net | 7,777 |  |  | 12,686 |
Goodwill | 120,279 |  |  | 120,279 |
Total assets | $ | 9,140,121 |  |  | $ | 9,001,481 |
Liabilities |  |  |
Revolving credit facility | $ | — |  |  | $ | 250,000 |
Term loan facility, net | — |  |  | 99,232 |
Asset-backed securitizations, net | 1,949,002 |  |  | 1,961,511 |
Unsecured senior notes, net | 888,113 |  |  | 492,800 |
Accounts payable and accrued expenses | 295,544 |  |  | 219,229 |
Amounts payable to affiliates | 273 |  |  | 4,967 |
Total liabilities | 3,132,932 |  |  | 3,027,739 |
Commitments and contingencies (see Note 12) |  |  |
Capital |  |  |
Partners’ capital: |  |  |
General partner: |  |  |
Common units (300,711,074 and 296,649,621 units issued and outstanding at September 30, 2019 and December 31, 2018, respectively) | 4,463,982 |  |  | 4,390,137 |
Preferred units (35,350,000 units issued and outstanding at September 30, 2019 and December 31, 2018) | 854,435 |  |  | 854,435 |
Limited partner: |  |  |
Common units (52,026,980 and 55,316,826 units issued and outstanding at September 30, 2019 and December 31, 2018, respectively) | 680,708 |  |  | 720,384 |
Accumulated other comprehensive income | 8,064 |  |  | 8,786 |
Total capital | 6,007,189 |  |  | 5,973,742 |
Total liabilities and capital | $ | 9,140,121 |  |  | $ | 9,001,481 |

The accompanying notes are an integral part of these condensed consolidated financial statements.
10

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,
| 2019 |  | 2018 |  | 2019 |  | 2018
Revenues: |  |  |  |  |  |  |
Rents and other single-family property revenues | $ | 293,064 |  |  | $ | 278,187 |  |  | $ | 850,672 |  |  | $ | 797,732 |
Other | 5,240 |  |  | 1,865 |  |  | 8,696 |  |  | 4,807 |
Total revenues | 298,304 |  |  | 280,052 |  |  | 859,368 |  |  | 802,539 |
Expenses: |  |  |  |  |  |  |
Property operating expenses | 119,791 |  |  | 113,600 |  |  | 331,066 |  |  | 313,430 |
Property management expenses | 22,727 |  |  | 18,865 |  |  | 65,086 |  |  | 56,468 |
General and administrative expense | 11,107 |  |  | 9,265 |  |  | 31,028 |  |  | 28,173 |
Interest expense | 31,465 |  |  | 30,930 |  |  | 95,951 |  |  | 92,209 |
Acquisition and other transaction costs | 651 |  |  | 1,055 |  |  | 2,455 |  |  | 3,687 |
Depreciation and amortization | 82,073 |  |  | 79,940 |  |  | 246,074 |  |  | 237,562 |
Other | 2,610 |  |  | 1,069 |  |  | 5,148 |  |  | 3,520 |
Total expenses | 270,424 |  |  | 254,724 |  |  | 776,808 |  |  | 735,049 |
Gain on sale of single-family properties and other, net | 13,521 |  |  | 4,953 |  |  | 32,895 |  |  | 10,449 |
Loss on early extinguishment of debt | — |  |  | — |  |  | (659 | ) |  | (1,447 | )
Remeasurement of participating preferred units | — |  |  | — |  |  | — |  |  | 1,212 |
Net income | 41,401 |  |  | 30,281 |  |  | 114,796 |  |  | 77,704 |
Noncontrolling interest | — |  |  | — |  |  | — |  |  | (259 | )
Preferred distributions | 13,782 |  |  | 12,223 |  |  | 41,346 |  |  | 38,804 |
Redemption of participating preferred units | — |  |  | — |  |  | — |  |  | 32,215 |
Net income attributable to common unitholders | $ | 27,619 |  |  | $ | 18,058 |  |  | $ | 73,450 |  |  | $ | 6,944 |
Weighted-average common units outstanding: |  |  |  |  |  |  |
Basic | 352,714,480 |  |  | 351,564,662 |  |  | 352,362,220 |  |  | 348,007,067 |
Diluted | 353,166,357 |  |  | 352,317,802 |  |  | 352,867,308 |  |  | 348,669,398 |
Net income attributable to common unitholders per unit: |  |  |  |  |  |  |
Basic | $ | 0.08 |  |  | $ | 0.05 |  |  | $ | 0.21 |  |  | $ | 0.02 |
Diluted | $ | 0.08 |  |  | $ | 0.05 |  |  | $ | 0.21 |  |  | $ | 0.02 |

The accompanying notes are an integral part of these condensed consolidated financial statements.
11

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,
| 2019 |  | 2018 |  | 2019 |  | 2018
Net income | $ | 41,401 |  |  | $ | 30,281 |  |  | $ | 114,796 |  |  | $ | 77,704 |
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 | (241 | ) |  | (241 | ) |  | (722 | ) |  | (602 | )
Other comprehensive (loss) income | (241 | ) |  | (241 | ) |  | (722 | ) |  | 8,951 |
Comprehensive income | 41,160 |  |  | 30,040 |  |  | 114,074 |  |  | 86,655 |
Comprehensive loss attributable to noncontrolling interests | — |  |  | — |  |  | — |  |  | (259 | )
Preferred distributions | 13,782 |  |  | 12,223 |  |  | 41,346 |  |  | 38,804 |
Redemption of participating preferred units | — |  |  | — |  |  | — |  |  | 32,215 |
Comprehensive income attributable to common unitholders | $ | 27,378 |  |  | $ | 17,817 |  |  | $ | 72,728 |  |  | $ | 15,895 |

The accompanying notes are an integral part of these condensed consolidated financial statements.
12

American Homes 4 Rent, L.P.
Condensed Consolidated Statements 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 |  |  |  |
| Number of units |  | Amount |  |  | Number of units |  | Amount |  |  |  |
Balances at December 31, 2017 | 286,749,712 |  |  | $ | 4,248,236 |  |  | $ | 901,318 |  |  | 55,350,153 |  |  | $ | 727,544 |  |  | $ | 75 |  |  | $ | 5,877,173 |  |  | $ | (1,349 | ) |  | $ | 5,875,824 |
Share-based compensation | — |  |  | 975 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 975 |  |  | — |  |  | 975 |
Common units issued under share-based compensation plans, net of units withheld for employee taxes | 59,187 |  |  | (408 | ) |  | — |  |  | — |  |  | — |  |  | — |  |  | (408 | ) |  | — |  |  | (408 | )
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, 2018 | 285,004,736 |  |  | $ | 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 taxes | 164,671 |  |  | 3,068 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 3,068 |  |  | — |  |  | 3,068 |
Redemption of Series C participating preferred units into Class A units | 10,848,827 |  |  | 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, 2018 | 296,018,234 |  |  | $ | 4,395,806 |  |  | $ | 743,457 |  |  | 55,350,153 |  |  | $ | 720,232 |  |  | $ | 9,267 |  |  | $ | 5,868,762 |  |  | $ | — |  |  | $ | 5,868,762 |
Share-based compensation | — |  |  | 832 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 832 |  |  | — |  |  | 832 |
Common units issued under share-based compensation plans, net of units withheld for employee taxes | 513,060 |  |  | 8,229 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 8,229 |  |  | — |  |  | 8,229 |
Issuance of perpetual preferred units, net of offering costs of $4,022 | — |  |  | — |  |  | 110,978 |  |  | — |  |  | — |  |  | — |  |  | 110,978 |  |  | — |  |  | 110,978 |
Distributions to capital holders: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Preferred units (Note 10) | — |  |  | — |  |  | (12,223 | ) |  | — |  |  | — |  |  | — |  |  | (12,223 | ) |  | — |  |  | (12,223 | )
Common units ($0.05 per unit) | — |  |  | (14,846 | ) |  | — |  |  | — |  |  | (2,768 | ) |  | — |  |  | (17,614 | ) |  | — |  |  | (17,614 | )
Net income | — |  |  | 15,177 |  |  | 12,223 |  |  | — |  |  | 2,881 |  |  | — |  |  | 30,281 |  |  | — |  |  | 30,281 |
Total other comprehensive loss | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (241 | ) |  | (241 | ) |  | — |  |  | (241 | )
Balances at September 30, 2018 | 296,531,294 |  |  | $ | 4,405,198 |  |  | $ | 854,435 |  |  | 55,350,153 |  |  | $ | 720,345 |  |  | $ | 9,026 |  |  | $ | 5,989,004 |  |  | $ | — |  |  | $ | 5,989,004 |

13

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, 2018 | 296,649,621 |  |  | $ | 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 taxes | 77,830 |  |  | (760 | ) |  | — |  |  | — |  |  | — |  |  | — |  |  | (760 | )
Redemptions of Class A units | 500,000 |  |  | 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, 2019 | 297,227,451 |  |  | $ | 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 taxes | 645,567 |  |  | 10,263 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 10,263 |
Redemptions of Class A units | 2,589,846 |  |  | 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, 2019 | 300,462,864 |  |  | $ | 4,450,967 |  |  | $ | 854,435 |  |  | 52,226,980 |  |  | $ | 681,816 |  |  | $ | 8,305 |  |  | $ | 5,995,523 |
Share-based compensation | — |  |  | 1,288 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,288 |
Common units issued under share-based compensation plans, net of units withheld for employee taxes | 48,210 |  |  | 660 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 660 |
Redemptions of Class A units | 200,000 |  |  | 2,606 |  |  | — |  |  | (200,000 | ) |  | (2,606 | ) |  | — |  |  | — |
Distributions to capital holders: |  |  |  |  |  |  |  |  |  |  |  |  |
Preferred units (Note 10) | — |  |  | — |  |  | (13,782 | ) |  | — |  |  | — |  |  | — |  |  | (13,782 | )
Common units ($0.05 per unit) | — |  |  | (15,059 | ) |  | — |  |  | — |  |  | (2,601 | ) |  | — |  |  | (17,660 | )
Net income | — |  |  | 23,520 |  |  | 13,782 |  |  | — |  |  | 4,099 |  |  | — |  |  | 41,401 |
Total other comprehensive loss | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (241 | ) |  | (241 | )
Balances at September 30, 2019 | 300,711,074 |  |  | $ | 4,463,982 |  |  | $ | 854,435 |  |  | 52,026,980 |  |  | $ | 680,708 |  |  | $ | 8,064 |  |  | $ | 6,007,189 |

The accompanying notes are an integral part of these condensed consolidated financial statements.
14

American Homes 4 Rent, L.P.
Condensed Consolidated Statements of Cash Flows
(Amounts in thousands)
(Unaudited)

| For the Nine Months Ended September 30,
| 2019 |  | 2018
Operating activities |  |  |
Net income | $ | 114,796 |  |  | $ | 77,704 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
Depreciation and amortization | 246,074 |  |  | 237,562 |
Noncash amortization of deferred financing costs | 5,965 |  |  | 5,838 |
Noncash amortization of discounts on debt instruments | 345 |  |  | 2,984 |
Noncash amortization of cash flow hedging instrument | (722 | ) |  | (602 | )
Noncash share-based compensation | 3,509 |  |  | 2,750 |
Provision for bad debt | — |  |  | 6,365 |
Loss on early extinguishment of debt | 659 |  |  | 1,447 |
Remeasurement of participating preferred units | — |  |  | (1,212 | )
Equity in net earnings of unconsolidated joint ventures | (771 | ) |  | (423 | )
Net gain on sale of single-family properties and other | (32,895 | ) |  | (10,449 | )
Loss on impairment of single-family properties | 3,083 |  |  | 2,796 |
Other changes in operating assets and liabilities: |  |  |
Rent and other receivables | (9,468 | ) |  | (16,314 | )
Prepaid expenses and other assets | (2,741 | ) |  | (7,427 | )
Deferred leasing costs | (3,244 | ) |  | (9,556 | )
Accounts payable and accrued expenses | 95,502 |  |  | 87,438 |
Amounts payable to affiliates | 323 |  |  | (2,438 | )
Net cash provided by operating activities | 420,415 |  |  | 376,463 |
Investing activities |  |  |
Cash paid for single-family properties | (77,883 | ) |  | (333,082 | )
Change in escrow deposits for purchase of single-family properties | (4,543 | ) |  | (2,194 | )
Net proceeds received from sales of single-family properties and other | 151,502 |  |  | 47,757 |
Proceeds received from hurricane-related insurance claims | 2,171 |  |  | 4,000 |
Investment in unconsolidated joint ventures | (4,768 | ) |  | (3,800 | )
Distributions from joint ventures | 17,393 |  |  | 36,251 |
Renovations to single-family properties | (19,332 | ) |  | (40,898 | )
Recurring and other capital expenditures for single-family properties | (52,067 | ) |  | (40,470 | )
Cash paid for development activity | (236,398 | ) |  | (149,475 | )
Other purchases of productive assets | (171 | ) |  | — |
Net cash used for investing activities | (224,096 | ) |  | (481,911 | )
Financing activities |  |  |
Proceeds from issuance of perpetual preferred units | — |  |  | 115,000 |
Payments of perpetual preferred unit issuance costs | — |  |  | (3,750 | )
Repurchase of Class A common units | — |  |  | (34,969 | )
Proceeds from exercise of stock options | 11,105 |  |  | 9,417 |
Payments related to tax withholding for share-based compensation | (834 | ) |  | (546 | )
Payments on asset-backed securitizations | (16,287 | ) |  | (15,669 | )
Proceeds from revolving credit facility | — |  |  | 155,000 |
Payments on revolving credit facility | (250,000 | ) |  | (295,000 | )
Payments on term loan facility | (100,000 | ) |  | (100,000 | )
Payments on secured note payable | — |  |  | (49,427 | )
Proceeds from unsecured senior notes, net of discount | 397,944 |  |  | 497,210 |
Settlement of cash flow hedging instrument | — |  |  | 9,628 |
Distributions to common unitholders | (70,533 | ) |  | (51,827 | )
Distributions to preferred unitholders | (41,346 | ) |  | (41,178 | )
Deferred financing costs paid | (3,572 | ) |  | (5,100 | )
Net cash (used for) provided by financing activities | (73,523 | ) |  | 188,789 |
Net increase in cash, cash equivalents and restricted cash | 122,796 |  |  | 83,341 |
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) | $ | 298,010 |  |  | $ | 266,164 |

15

American Homes 4 Rent, L.P.
Condensed Consolidated Statements of Cash Flows (continued)
(Amounts in thousands)
(Unaudited)

| For the Nine Months Ended September 30,
| 2019 |  | 2018
Supplemental cash flow information |  |  |
Cash payments for interest, net of amounts capitalized | $ | (93,901 | ) |  | $ | (80,942 | )
Supplemental schedule of noncash investing and financing activities |  |  |
Accrued property acquisitions, renovations and development expenditures | $ | 14,822 |  |  | $ | (107 | )
Transfers of completed homebuilding deliveries to properties | 107,445 |  |  | 64,867 |
Property and land contributions to an unconsolidated joint venture | (18,599 | ) |  | (40,942 | )
Note receivable related to a bulk sale of properties, net of discount | 29,474 |  |  | — |
Redemption of participating preferred units | — |  |  | (28,258 | )
Accrued distributions to affiliates | — |  |  | (129 | )
Accrued distributions to non-affiliates | 59 |  |  | (1,773 | )

The accompanying notes are an integral part of these condensed consolidated financial statements.
16

American Homes 4 Rent
American Homes 4 Rent, L.P.
Notes to Unaudited Condensed Consolidated Financial Statements
Note 1. Organization and Operations
American Homes 4 Rent (“AH4R”) is a Maryland real estate investment trust (“REIT”) formed on October 19, 2012, for the purpose of acquiring, 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 Partnership,” “our operating partnership” or “the OP”) is the entity through which the Company conducts substantially all of our business and owns, directly or through subsidiaries, substantially all of our assets. References to “the Company,” “we,” “our” and “us” mean collectively, AH4R, the Operating Partnership and those entities/subsidiaries owned or controlled by AH4R and/or the Operating Partnership. As of September 30, 2019, the Company held 52,537 single-family properties in 22 states, including 1,439 properties classified as held for sale.
AH4R is the general partner of, and as of September 30, 2019 owned an approximate 85.2% common partnership interest in, the Operating Partnership with the remaining 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 OP units.
Note 2. Significant Accounting Policies
Basis of Presentation
The condensed consolidated financial statements are unaudited and include the accounts of AH4R, the Operating Partnership and their consolidated subsidiaries. The condensed consolidated financial statements of the Operating Partnership include the accounts of the Operating Partnership and its consolidated subsidiaries. Intercompany accounts and transactions have been eliminated. The Company consolidates real estate partnerships and other entities that are not variable interest entities (“VIEs”) when it owns, directly or indirectly, a majority interest in the entity or is otherwise able to control the entity. The Company consolidates VIEs in accordance with Accounting Standards Codification (“ASC”) No. 810, Consolidation, if it is the primary beneficiary of the VIE as determined by its power to direct the VIE’s activities and the obligation to absorb its losses or the right to receive its benefits, which are potentially significant to the VIE. Entities for which the Company owns an interest, but does not consolidate, are accounted for under the equity method of accounting as an investment in an unconsolidated subsidiary and are included in escrow deposits, prepaid expenses and other assets within the condensed consolidated balance sheets. The ownership interest in a consolidated subsidiary of the Company held by outside parties, which 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
17

December 31, 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 statement 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, 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.
Accounting Pronouncements Adopted January 1, 2019
In February 2016, 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. 2018-11, Leases (Topic 842) Targeted Improvements, which provides lessors with a practical 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 both the timing and pattern of 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 an operating lease. As issued, ASU No. 2016-02 required modified retrospective application for all leases existing as of, or entered into after, the beginning of the earliest comparative period presented in the consolidated financial statements, with certain practical expedients available. ASU No. 2018-11 simplifies the transition requirements by providing companies an option to initially apply the new lease requirements as of the date of adoption and recognize a cumulative effect adjustment to the opening 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 is effective for the Company for annual reporting periods beginning after December 15, 2018, and for interim periods within those annual periods, with early adoption permitted.
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 nine months ended September 30, 2018, the Company would have expensed an additional $2.4 million and $5.8 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. Additionally, when collectibility is not deemed probable, we write-off the tenant’s receivables and limit lease income to cash received. Prior to the adoption of the new lease accounting standard, the Company classified bad debt expense as property operating expenses 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
18

of the fiscal year of adoption. The Company adopted this guidance effective 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 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 its financial statements.
In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820) Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, which eliminates, 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 fair value hierarchy. Companies will also be required to disclose the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The guidance is effective for fiscal years beginning after December 15, 2019, and for interim periods within those annual periods with early adoption permitted. The amendments on the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The Company is currently assessing the impact of the guidance on its financial statements.
In August 2018, the FASB issued ASU No. 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 aligns the requirements for capitalizing implementation costs incurred in a 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 hosting arrangement that is a service contract will be amortized over the term of the hosting arrangement, beginning when the module or component of the hosting arrangement is ready for its intended use. The guidance is effective for fiscal years beginning after December 15, 2019, and for interim periods within those annual periods with early adoption permitted. The amendments in this ASU should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company does not expect the adoption of this guidance to have a material impact on its financial statements.
Note 3. Cash, Cash Equivalents and Restricted Cash
Restricted cash primarily consists of funds held related to resident security deposits, cash reserves in accordance with certain loan agreements and funds held in the custody of our transfer agent for the payment of distributions. Funds held related to resident security deposits are restricted during the term of the related lease agreement, which is generally one year. Cash reserved in connection with lender requirements is restricted during the term of the related debt instrument.
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The following table provides a reconciliation of cash, cash equivalents and restricted cash per the Company’s and the Operating Partnership’s condensed consolidated statements of cash flows to the corresponding financial statement line items in the condensed consolidated balance sheets (in thousands):

| September 30, |  | December 31,
| 2019 |  | 2018 |  | 2018 |  | 2017
Cash and cash equivalents | $ | 171,209 |  |  | $ | 110,138 |  |  | $ | 30,284 |  |  | $ | 46,156 |
Restricted cash | 126,801 |  |  | 156,026 |  |  | 144,930 |  |  | 136,667 |
Total cash, cash equivalents and restricted cash | $ | 298,010 |  |  | $ | 266,164 |  |  | $ | 175,214 |  |  | $ | 182,823 |

Note 4. Real Estate Assets, Net
The net book value of real estate assets consisted of the following as of September 30, 2019 and December 31, 2018 (in thousands):

| September 30, 2019 |  | December 31, 2018
Occupied single-family properties | $ | 7,597,689 |  |  | $ | 7,448,330 |
Single-family properties recently acquired | 34,304 |  |  | 212,870 |
Single-family properties in turnover process | 262,979 |  |  | 294,093 |
Single-family properties leased, not yet occupied | 64,554 |  |  | 65,304 |
Single-family properties in operation, net (1) | 7,959,526 |  |  | 8,020,597 |
Development land | 155,505 |  |  | 97,207 |
Single-family properties under development | 106,633 |  |  | 56,444 |
Single-family properties held for sale | 247,529 |  |  | 318,327 |
Total real estate assets, net | $ | 8,469,193 |  |  | $ | 8,492,575 |

(1) | Single-family properties in operation, net as of September 30, 2019 and December 31, 2018 included $0.4 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.

Depreciation expense related to single-family properties was $78.3 million and $75.2 million for the three months ended September 30, 2019 and 2018, respectively, and $233.7 million and $224.7 million for the nine months ended September 30, 2019 and 2018, respectively.
The following table summarizes the Company’s dispositions of single-family properties and land for the three and nine months ended September 30, 2019 and 2018 (in thousands, except property data):

| For the Three Months Ended |  | For the Nine Months Ended
| September 30, 2019 |  | September 30, 2018 |  | September 30, 2019 |  | September 30, 2018
Single-family properties: |  |  |  |  |  |  |
Properties sold | 341 |  |  | 95 |  |  | 954 |  |  | 311 |
Net proceeds (1) | $ | 64,014 |  |  | $ | 17,352 |  |  | $ | 179,465 |  |  | $ | 46,994 |
Net gain on sale | $ | 13,506 |  |  | $ | 3,458 |  |  | $ | 32,655 |  |  | $ | 8,816 |
Land: |  |  |  |  |  |  |
Net proceeds | $ | 316 |  |  | $ | 263 |  |  | $ | 1,511 |  |  | $ | 763 |
Net gain on sale | $ | 15 |  |  | $ | 82 |  |  | $ | 240 |  |  | $ | 220 |

(1) | Total net proceeds for the nine months ended September 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 $2.7 million of hurricane-related insurance claims receivable and $0.8 million of non-tenant receivables as of September 30, 2019, compared to $4.9 million of hurricane-related insurance claims receivable as of December 31, 2018.
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Rents and other single-family property revenues consisted of the following for the three and nine months ended September 30, 2019 and 2018 (in thousands):

| For the Three Months Ended |  | For the Nine Months Ended
| September 30, 2019 |  | September 30, 2018 |  | September 30, 2019 |  | September 30, 2018
Rents from single-family properties (1) | $ | 293,064 |  |  | $ | 231,324 |  |  | $ | 850,672 |  |  | $ | 676,558 |
Fees from single-family properties | — |  |  | 2,711 |  |  | — |  |  | 8,298 |
Tenant charge-backs | — |  |  | 44,152 |  |  | — |  |  | 112,876 |
Rents and other single-family property revenues | $ | 293,064 |  |  | $ | 278,187 |  |  | $ | 850,672 |  |  | $ | 797,732 |

(1) | For the three and nine months ended September 30, 2019, rents from single-family properties included $48.3 million and $123.6 million, respectively, of variable lease payments for tenant charge-backs, which are primarily related to cost recoveries on utilities, and $3.7 million and $10.2 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 September 30, 2019 and December 31, 2018 were as follows (in thousands):

| September 30, 2019 |  | December 31, 2018
2019 | $ | 214,250 |  |  | $ | 446,745 |
2020 | 324,046 |  |  | 4,857 |
2021 | 9,851 |  |  | 251 |
2022 | 244 |  |  | 98 |
2023 | 40 |  |  | 19 |
Thereafter | 30 |  |  | — |
Total | $ | 548,461 |  |  | $ | 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 September 30, 2019 and December 31, 2018 (in thousands):

| September 30, 2019 |  | December 31, 2018
Escrow deposits, prepaid expenses and other | $ | 40,320 |  |  | $ | 38,642 |
Investments in joint ventures | 63,169 |  |  | 56,789 |
Notes receivable | 36,706 |  |  | 6,012 |
Commercial real estate, vehicles and FF&E, net | 42,699 |  |  | 44,591 |
Total | $ | 182,894 |  |  | $ | 146,034 |

Depreciation expense related to commercial real estate, vehicles and furniture, fixtures and equipment (“FF&E”), net was $2.0 million and $1.8 million for the three months ended September 30, 2019 and 2018, respectively, and $5.7 million and $5.2 million for the nine months ended September 30, 2019 and 2018, respectively.
Investments in Joint Ventures
In August 2018, the Operating Partnership entered into a 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, which was subsequently amended and upsized to $312.5 million in July 2019. 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 September 30, 2019 and December 31, 2018, the balance of the Company’s investment in the joint venture was $26.0 million and $18.0 million, respectively, which is included in escrow deposits, prepaid expenses and other assets on the condensed consolidated balance sheets.
The Company provides property management and development services to certain unconsolidated joint ventures, which are considered to be related parties. Management fee income from these joint ventures was $1.0 million and $0.3 million for the three
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months ended September 30, 2019 and 2018, respectively, and $2.4 million and $0.7 million for the nine months ended September 30, 2019 and 2018, respectively, and was included in other revenues within the condensed consolidated statements of operations.
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 September 30, 2019, the secured note receivable, net of a $1.0 million discount, had a balance of $29.7 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 7. Deferred Costs and Other Intangibles, Net
Deferred costs and other intangibles, net, consisted of the following as of September 30, 2019 and December 31, 2018 (in thousands):

| September 30, 2019 |  | December 31, 2018
Deferred leasing costs | $ | 5,301 |  |  | $ | 11,912 |
Deferred financing costs | 11,244 |  |  | 11,246 |
Intangible assets: |  |  |  |  |
Database | 2,100 |  |  | 2,100 |
| 18,645 |  |  | 25,258 |
Less: accumulated amortization | (10,868 | ) |  | (12,572 | )
Total | $ | 7,777 |  |  | $ | 12,686 |

Amortization expense related to deferred leasing costs, the value of in-place leases, and database intangibles was $1.8 million and $2.9 million for the three months ended September 30, 2019 and 2018, respectively, and $6.7 million and $7.7 million for the nine months ended September 30, 2019 and 2018, respectively, and was included in depreciation and amortization within the condensed consolidated statements of operations. Amortization of deferred financing costs that relate to our revolving credit facility was $0.5 million for each of the three month periods ended September 30, 2019 and 2018, and $1.5 million for each of the nine month periods ended September 30, 2019 and 2018, and was included in gross interest, prior to interest capitalization (see Note 8).
The following table sets forth the estimated annual amortization expense related to deferred costs and other intangibles, net as of September 30, 2019 for future periods (in thousands):

| Deferred Leasing Costs |  | Deferred Financing Costs |  | Database |  | Total
Remaining 2019 | $ | 1,073 |  |  | $ | 495 |  |  | $ | 75 |  |  | $ | 1,643 |
2020 | 1,101 |  |  | 1,969 |  |  | 132 |  |  | 3,202 |
2021 | — |  |  | 1,964 |  |  | — |  |  | 1,964 |
2022 | — |  |  | 968 |  |  | — |  |  | 968 |
Total | $ | 2,174 |  |  | $ | 5,396 |  |  | $ | 207 |  |  | $ | 7,777 |

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Note 8. Debt
All of the Company’s indebtedness is debt of the Operating Partnership. AH4R is not directly obligated under any indebtedness, but guarantees some of the debt of the Operating Partnership. The following table presents the Company’s debt as of September 30, 2019 and December 31, 2018 (in thousands):

|  |  |  |  | Outstanding Principal Balance
| Interest Rate (1) |  | Maturity Date |  | September 30, 2019 |  | December 31, 2018
AH4R 2014-SFR2 securitization | 4.42% |  | October 9, 2024 |  | $ | 487,163 |  |  | $ | 491,195 |
AH4R 2014-SFR3 securitization | 4.40% |  | December 9, 2024 |  | 502,713 |  |  | 506,760 |
AH4R 2015-SFR1 securitization (2) | 4.14% |  | April 9, 2045 |  | 527,941 |  |  | 532,197 |
AH4R 2015-SFR2 securitization (3) | 4.36% |  | October 9, 2045 |  | 458,406 |  |  | 462,358 |
Total asset-backed securitizations |  |  |  |  | 1,976,223 |  |  | 1,992,510 |
2028 unsecured senior notes (4) | 4.08% |  | February 15, 2028 |  | 500,000 |  |  | 500,000 |
2029 unsecured senior notes | 4.90% |  | February 15, 2029 |  | 400,000 |  |  | — |
Revolving credit facility (5) | 3.22% |  | June 30, 2022 |  | — |  |  | 250,000 |
Term loan facility (6) | N/A |  | N/A |  | — |  |  | 100,000 |
Total debt |  |  |  |  | 2,876,223 |  |  | 2,842,510 |
Unamortized discounts on unsecured senior notes |  |  |  |  | (4,264 | ) |  | (2,546 | )
Deferred financing costs, net (7) |  |  |  |  | (34,844 | ) |  | (36,421 | )
Total debt per balance sheet |  |  |  |  | $ | 2,837,115 |  |  | $ | 2,803,543 |

(1) | Interest rates are as of September 30, 2019. Unless otherwise stated, interest rates are fixed percentages.

(2) | The AH4R 2015-SFR1 securitization has an anticipated repayment date of April 9, 2025.

(3) | The AH4R 2015-SFR2 securitization has 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 and the Company had approximately $4.8 million and $1.1 million committed to outstanding letters of credit that reduced our borrowing capacity as of September 30, 2019 and December 31, 2018, respectively. The revolving credit facility bears interest at the London Inter-Bank Offered Rate (“LIBOR”) rate plus 1.20% as of September 30, 2019. LIBOR is expected to be discontinued after 2021 and the Company expects to replace the contractual reference rate with an appropriate alternative. The Company does not expect this modification to have a material impact on its financial statements.

(6) | The term loan was fully repaid in June 2019.

(7) | Deferred financing costs relate to our asset-backed securitizations, term loan facility and unsecured senior notes. Amortization of deferred financing costs was $1.5 million for each of the three month periods ended September 30, 2019 and 2018 and $4.5 million and $4.4 million for the nine months ended September 30, 2019 and 2018, respectively, which was included in gross interest, prior to interest capitalization.

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

Remaining 2019 | $ | 5,179 |
2020 | 20,714 |
2021 | 20,714 |
2022 | 20,714 |
2023 | 20,714 |
Thereafter | 2,788,188 |
Total debt | $ | 2,876,223 |

Unsecured Senior Notes
In January 2019, the Operating Partnership issued $400.0 million of 4.90% 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 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 $2.6 million and a $2.1 million discount, and before offering costs of $1.0 million. The Operating Partnership used the net proceeds from this issuance to repay amounts outstanding on our revolving credit facility and for general corporate purposes. The 2029 Notes are the Operating Partnership’s unsecured and unsubordinated obligation and rank equally in right of payment with all of the Operating Partnership’s existing and future unsecured and unsubordinated indebtedness. The Operating Partnership may redeem the 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
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maturity date), the redemption price will be equal to 100% of the principal amount of the 2029 Notes being redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date.
Interest Expense
The following table displays our total gross interest, which includes fees on our credit facilities and amortization of deferred financing costs, the discounts on unsecured senior notes, and capitalized interest for the three and nine months ended September 30, 2019 and 2018 (in thousands):

| For the Three Months Ended |  | For the Nine Months Ended
| September 30, 2019 |  | September 30, 2018 |  | September 30, 2019 |  | September 30, 2018
Gross interest | $ | 34,213 |  |  | $ | 32,344 |  |  | $ | 104,046 |  |  | $ | 97,422 |
Capitalized interest | (2,748 | ) |  | (1,414 | ) |  | (8,095 | ) |  | (5,213 | )
Interest expense | $ | 31,465 |  |  | $ | 30,930 |  |  | $ | 95,951 |  |  | $ | 92,209 |

Note 9. Accounts Payable and Accrued Expenses
The following table summarizes accounts payable and accrued expenses as of September 30, 2019 and December 31, 2018 (in thousands):

| September 30, 2019 |  | December 31, 2018
Accrued property taxes | $ | 123,764 |  |  | $ | 40,566 |
Resident security deposits | 85,644 |  |  | 83,406 |
Prepaid rent | 22,945 |  |  | 22,506 |
Accrued construction and maintenance liabilities | 15,113 |  |  | 18,371 |
Accrued interest | 12,875 |  |  | 16,413 |
Accounts payable | 410 |  |  | 195 |
Accrued distribution payable | 59 |  |  | 12,809 |
Other accrued liabilities | 34,734 |  |  | 24,963 |
Total | $ | 295,544 |  |  | $ | 219,229 |

Note 10. Shareholders’ Equity / Partners’ Capital
When the Company issues common or preferred shares, the Operating Partnership issues an equivalent number of units of partnership interest of a corresponding class to AH4R, with the Operating Partnership receiving the net proceeds from the share issuances.
At-the-Market Common Share Offering Program
The Company established an at-the-market common share offering program under which we can issue Class A common shares from time to time through various sales agents up to an aggregate of $500.0 million (the “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. As of September 30, 2019, no shares have been issued under the At-the-Market Program and $500.0 million remained available for future share issuances.
Share Repurchase Program
In February 2018, the Company’s board of trustees re-authorized our existing share repurchase program, authorizing the repurchase of up to $300.0 million of our outstanding Class A common shares and up to $250.0 million of our outstanding preferred shares from time to time in the open market or in privately negotiated transactions. The program does not have an expiration date, but may be suspended or discontinued at any time without notice. All repurchased shares are constructively retired and returned to an authorized and unissued status. The Operating Partnership funds the repurchases and constructively retires an equivalent number of corresponding Class A units. During the nine months ended September 30, 2019, we did not repurchase and retire any of our shares. During the nine months ended September 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 program, at a weighted-average price of $19.36 per share and a total price of $34.9
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million. As of September 30, 2019, we had a remaining repurchase authorization of up to $265.1 million of our outstanding Class A common shares and up to $250.0 million of our outstanding preferred shares under the program.
Preferred Shares
As of September 30, 2019 and December 31, 2018, the Company had the following series of preferred shares outstanding (in thousands, except share data):

|  |  |  |  |  |  |  | September 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 |

Distributions
The Company’s board of trustees declared the following distributions during the respective quarters. The Operating Partnership funds the payment of distributions, and the board of trustees declared an equivalent amount of distributions on the corresponding Operating Partnership units.

|  | For the Three Months Ended
Security |  | September 30, 2019 |  | June 30, 2019 |  | March 31, 2019 |  | September 30, 2018 |  | June 30, 2018 |  | March 31, 2018
Class A and Class B common shares |  | $ | 0.05 |  |  | $ | 0.05 |  |  | 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 |  |  | 0.41 |  |  | 0.41 |
6.350% Series E perpetual preferred shares |  | 0.40 |  |  | 0.40 |  |  | 0.40 |  |  | 0.40 |  |  | 0.40 |  |  | 0.40 |
5.875% Series F perpetual preferred shares |  | 0.37 |  |  | 0.37 |  |  | 0.37 |  |  | 0.37 |  |  | 0.37 |  |  | 0.37 |
5.875% Series G perpetual preferred shares |  | 0.37 |  |  | 0.37 |  |  | 0.37 |  |  | 0.37 |  |  | 0.37 |  |  | 0.37 |
6.250% Series H perpetual preferred shares |  | 0.39 |  |  | 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 LLC”) members in units in the Operating Partnership. Former AH LLC members owned 51,429,990 and 54,243,317, or approximately 14.6% and 15.4%, of the total 352,738,054 and 351,966,447 Class A units in the Operating Partnership as of September 30, 2019 and December 31, 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 596,990 and 1,073,509, or approximately 0.2% and 0.3%, of the total 352,738,054 and 351,966,447 Class A units in the Operating Partnership as of September 30, 2019 and December 31, 2018, respectively.
The following table summarizes the income or loss allocated to noncontrolling interests as reflected in the Company’s condensed consolidated statements of operations for the three and nine months ended September 30, 2019 and 2018 (in thousands):

| For the Three Months Ended |  | For the Nine Months Ended
| September 30, 2019 |  | September 30, 2018 |  | September 30, 2019 |  | September 30, 2018
Net income allocated to Class A units | $ | 4,099 |  |  | $ | 2,881 |  |  | $ | 11,129 |  |  | $ | 1,104 |
Net loss allocated to noncontrolling interest in a consolidated subsidiary | — |  |  | — |  |  | — |  |  | (259 | )
Total noncontrolling interest | $ | 4,099 |  |  | $ | 2,881 |  |  | $ | 11,129 |  |  | $ | 845 |

Noncontrolling interest as reflected in the Operating Partnership’s condensed consolidated statements of capital consisted solely of the outside ownership interest in a consolidated subsidiary of the Operating Partnership, which was liquidated during the second quarter of 2018. Income and loss allocated to the Operating Partnership’s noncontrolling interest is reflected in noncontrolling
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interest within the Operating Partnership’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’s condensed consolidated balance sheets are reflected as limited partner capital in the Operating Partnership’s condensed consolidated balance sheets.
2012 Equity Incentive Plan
The Company’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”), the Operating Partnership issues an equivalent number of Class A units to AH4R and non-management members of our board of trustees.
During the nine months ended September 30, 2019 and 2018, the Company granted stock options for 20,000 and 140,000 Class A common shares, respectively, and 345,334 and 304,400 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 nine months ended September 30, 2019 and 2018 generally vest over a 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 nine months ended September 30, 2019 vest over a one-year service period.
The following table summarizes stock option activity under the Plan for the nine months ended September 30, 2019 and 2018:

| Shares |  | Weighted-Average Exercise Price |  | Weighted-Average Remaining Contractual Life (in years) |  | Aggregate Intrinsic Value (1) (in thousands)
Options outstanding at January 1, 2018 | 3,052,450 |  |  | $ | 16.65 |  |  | 6.9 |  | $ | 16,421 |
Granted | 140,000 |  |  | 19.40 |  |  |  |  |  |
Exercised | (684,875 | ) |  | 16.04 |  |  |  |  | 4,388 |
Forfeited | (112,750 | ) |  | 17.84 |  |  |  |  |  |
Options outstanding at September 30, 2018 | 2,394,825 |  |  | $ | 16.92 |  |  | 6.4 |  | $ | 12,388 |
Options exercisable at September 30, 2018 | 1,659,050 |  |  | $ | 16.23 |  |  | 5.7 |  | $ | 9,521 |
Options outstanding at January 1, 2019 | 2,252,275 |  |  | $ | 16.92 |  |  | 6.1 |  | $ | 7,713 |
Granted | 20,000 |  |  | 20.48 |  |  |  |  |  |
Exercised | (698,525 | ) |  | 15.90 |  |  |  |  | 5,772 |
Forfeited | (12,350 | ) |  | 20.80 |  |  |  |  |  |
Options outstanding at September 30, 2019 | 1,561,400 |  |  | $ | 17.39 |  |  | 5.6 |  | $ | 13,275 |
Options exercisable at September 30, 2019 | 1,194,750 |  |  | $ | 16.76 |  |  | 5.0 |  | $ | 10,907 |

(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 grant 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 nine months ended September 30, 2019 and 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 | %

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The following table summarizes the activity that relates to the Company’s restricted stock units under the Plan for the nine months ended September 30, 2019 and 2018:

| 2019 |  | 2018
Restricted stock units at beginning of period | 372,375 |  |  | 243,875 |
Units awarded | 345,334 |  |  | 304,400 |
Units vested | (111,000 | ) |  | (80,125 | )
Units forfeited | (11,900 | ) |  | (69,100 | )
Restricted stock units at end of period | 594,809 |  |  | 399,050 |

The Company’s noncash share-based compensation expense relating to corporate administrative employees is included in general and administrative expense and the noncash share-based compensation relating to centralized and field property management employees is included in property management expenses. The following table summarizes the activity that relates to the Company’s noncash share-based compensation expense for the three and nine months ended September 30, 2019 and 2018 (in thousands):

| For the Three Months Ended |  | For the Nine Months Ended
| September 30, 2019 |  | September 30, 2018 |  | September 30, 2019 |  | September 30, 2018
General and administrative expense | $ | 938 |  |  | $ | 491 |  |  | $ | 2,520 |  |  | $ | 1,609 |
Property management expenses | 350 |  |  | 341 |  |  | 989 |  |  | 1,141 |
Total noncash share-based compensation expense | $ | 1,288 |  |  | $ | 832 |  |  | $ | 3,509 |  |  | $ | 2,750 |

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Note 11. Earnings per Share / Unit
American Homes 4 Rent
The following table reflects the Company’s computation of net income per common share on a basic and diluted basis for the three and nine months ended September 30, 2019 and 2018 (in thousands, except share and per share data):

| For the Three Months Ended |  | For the Nine Months Ended
| September 30, 2019 |  | September 30, 2018 |  | September 30, 2019 |  | September 30, 2018
Numerator: |  |  |  |  |  |  |  |  |  |  |
Net income | $ | 41,401 |  |  | $ | 30,281 |  |  | $ | 114,796 |  |  | $ | 77,704 |
Less: |  |  |  |  |  |  |
Noncontrolling interest | 4,099 |  |  | 2,881 |  |  | 11,129 |  |  | 845 |
Dividends on preferred shares | 13,782 |  |  | 12,223 |  |  | 41,346 |  |  | 38,804 |
Redemption of participating preferred shares | — |  |  | — |  |  | — |  |  | 32,215 |
Allocation to participating securities (1) | 48 |  |  | 20 |  |  | 122 |  |  | 66 |
Numerator for income per common share–basic and diluted | $ | 23,472 |  |  | $ | 15,157 |  |  | $ | 62,199 |  |  | $ | 5,774 |
Denominator: |  |  |  |  |  |  |
Weighted-average common shares outstanding–basic | 300,580,978 |  |  | 296,214,509 |  |  | 298,974,146 |  |  | 292,656,914 |
Effect of dilutive securities: |  |  |  |  |  |  |
Share-based compensation plan (2) | 451,877 |  |  | 753,140 |  |  | 505,088 |  |  | 662,331 |
Weighted-average common shares outstanding–diluted (3) | 301,032,855 |  |  | 296,967,649 |  |  | 299,479,234 |  |  | 293,319,245 |
Net income per common share: |  |  |  |  |  |  |  |  |  |  |
Basic | $ | 0.08 |  |  | $ | 0.05 |  |  | $ | 0.21 |  |  | $ | 0.02 |
Diluted | $ | 0.08 |  |  | $ | 0.05 |  |  | $ | 0.21 |  |  | $ | 0.02 |

(1) | Unvested restricted stock units that have nonforfeitable rights to participate in dividends declared on common 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 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 September 30, 2019 and 2018 excludes an aggregate of 159,599 and zero potentially dilutive securities, respectively, and for the nine months ended September 30, 2019 and 2018 excludes an aggregate of 155,179 and zero potentially dilutive securities, respectively, which include common shares issuable for 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 OP units would have no net impact on the determination of diluted earnings per share.

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American Homes 4 Rent, L.P.
The following table reflects the Operating Partnership’s computation of net income per common unit on a basic and diluted basis for the three and nine months ended September 30, 2019 and 2018 (in thousands, except unit and per unit data):

| For the Three Months Ended |  | For the Nine Months Ended
| September 30, 2019 |  | September 30, 2018 |  | September 30, 2019 |  | September 30, 2018
Numerator: |  |  |  |  |  |  |  |  |  |  |
Net income | $ | 41,401 |  |  | $ | 30,281 |  |  | $ | 114,796 |  |  | $ | 77,704 |
Less: |  |  |  |  |  |  |
Noncontrolling interest | — |  |  | — |  |  | — |  |  | (259 | )
Preferred distributions | 13,782 |  |  | 12,223 |  |  | 41,346 |  |  | 38,804 |
Redemption of participating preferred units | — |  |  | — |  |  | — |  |  | 32,215 |
Allocation to participating securities (1) | 48 |  |  | 21 |  |  | 122 |  |  | 66 |
Numerator for income per common unit–basic and diluted | $ | 27,571 |  |  | $ | 18,037 |  |  | $ | 73,328 |  |  | $ | 6,878 |
Denominator: |  |  |  |  |  |  |
Weighted-average common units outstanding–basic | 352,714,480 |  |  | 351,564,662 |  |  | 352,362,220 |  |  | 348,007,067 |
Effect of dilutive securities: |  |  |  |  |  |  |
Share-based compensation plan (2) | 451,877 |  |  | 753,140 |  |  | 505,088 |  |  | 662,331 |
Weighted-average common units outstanding–diluted (3) | 353,166,357 |  |  | 352,317,802 |  |  | 352,867,308 |  |  | 348,669,398 |
Net income per common unit: |  |  |  |  |  |  |  |  |
Basic | $ | 0.08 |  |  | $ | 0.05 |  |  | $ | 0.21 |  |  | $ | 0.02 |
Diluted | $ | 0.08 |  |  | $ | 0.05 |  |  | $ | 0.21 |  |  | $ | 0.02 |

(1) | Unvested restricted stock units that have nonforfeitable rights to participate in dividends declared on common 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 effect of potentially dilutive securities issuable upon the assumed exercise of stock options.

(3) | The computation of diluted earnings per unit for the three months ended September 30, 2019 and 2018 excludes an aggregate of 159,599 and zero potentially dilutive securities, respectively, and for the nine months ended September 30, 2019 and 2018 excludes an aggregate of 155,179 and zero potentially dilutive securities, respectively, which include common units issuable for unvested restricted stock units, because their effect would have been anti-dilutive to the respective periods.

Note 12. Commitments and Contingencies
As of September 30, 2019, the Company had commitments to acquire 13 single-family properties for an aggregate purchase price of $3.5 million, as well as $65.3 million in purchase commitments that relate to both third-party developer agreements and land for our internal construction program. As of December 31, 2018, the Company had commitments to acquire 88 single-family properties for an aggregate purchase price of $25.3 million, as well as $58.1 million in purchase commitments that relate to both third-party developer agreements and land for our internal construction program.
As of September 30, 2019 and December 31, 2018, the Company had sales in escrow for approximately 288 and 78 of our single-family properties, respectively, for aggregate selling prices of $51.9 million and $13.6 million, respectively.
As of September 30, 2019 and December 31, 2018, the Company, as a condition for entering into some of its development contracts, had outstanding surety bonds of approximately $9.9 million and $5.1 million, respectively.
We are involved in various legal and administrative proceedings that are incidental to our business. We do not believe these matters will have a material adverse effect on our financial position or results of operations upon resolution.
On January 16, 2018, we received a letter from the staff of the SEC stating that it is conducting an investigation captioned “Trading in Silver Bay Realty Trust Corp.” The letter enclosed a subpoena that requested us to produce certain documents and communications, including those related to our communications 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 have been cooperating fully with the SEC in connection with this matter and have provided analyses supporting our belief that, among other things, the information provided to us by Silver Bay prior to our purchases and sale of Silver Bay stock was not material non-public information. In the event we are unable to persuade the SEC that no improper trading occurred, the Company currently believes that
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were a negotiated resolution with the SEC to occur, any monetary payment associated with such a negotiated resolution would not be material to the Company’s financial position. There is no assurance that a mutually agreeable negotiated resolution could be achieved.
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.
Our revolving credit facility, term loan facility and asset-backed securitizations are 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 unsecured senior notes are also financial instruments which are classified as Level 2 in the fair value hierarchy as their fair values 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 September 30, 2019 and December 31, 2018 (in thousands):

| September 30, 2019 |  | December 31, 2018
| Carrying Value |  | Fair Value |  | Carrying Value (1) |  | Fair Value
AH4R 2014-SFR2 securitization | $ | 480,717 |  |  | $ | 492,792 |  |  | $ | 483,790 |  |  | $ | 494,820 |
AH4R 2014-SFR3 securitization | 496,024 |  |  | 512,582 |  |  | 499,108 |  |  | 511,450 |
AH4R 2015-SFR1 securitization | 520,619 |  |  | 534,231 |  |  | 523,865 |  |  | 534,666 |
AH4R 2015-SFR2 securitization | 451,642 |  |  | 468,015 |  |  | 454,748 |  |  | 467,303 |
Total asset-backed securitizations (1) | 1,949,002 |  |  | 2,007,620 |  |  | 1,961,511 |  |  | 2,008,239 |
2028 unsecured senior notes, net | 493,390 |  |  | 539,945 |  |  | 492,800 |  |  | 479,730 |
2029 unsecured senior notes, net | 394,723 |  |  | 455,664 |  |  | — |  |  | — |
Total unsecured senior notes, net (1) | 888,113 |  |  | 995,609 |  |  | 492,800 |  |  | 479,730 |
Revolving credit facility (2) | — |  |  | — |  |  | 250,000 |  |  | 250,000 |
Term loan facility (1) (2) | — |  |  | — |  |  | 99,232 |  |  | 100,000 |
Total debt | $ | 2,837,115 |  |  | $ | 3,003,229 |  |  | $ | 2,803,543 |  |  | $ | 2,837,969 |

(1) | To conform with current year presentation, the carrying values of the asset-backed securitizations, unsecured senior notes and term 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 December 31, 2018. The carrying values of the unsecured senior notes, net remain presented net of unamortized discounts.

(2) | As our revolving credit facility and term loan facility bear interest at a floating rate based on an index plus a spread (see Note 8), management believes that the carrying values (excluding deferred financing costs) of the revolving credit facility and term loan facility reasonably approximate 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 considered 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 considered 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. On April 5, 2018, the Company redeemed all outstanding participating preferred shares through a conversion of those participating preferred shares into Class A common shares. As a result of the redemption, 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 in excess of the original equity carrying value of the Series C participating preferred shares as of the redemption date.
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The following table presents changes in the fair values of our Level 3 financial instruments that were 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 nine months ended September 30, 2018 (in thousands):

Description |  | January 1, 2018 |  | Conversions |  | Remeasurement included in earnings |  | September 30, 2018
Liabilities: |  |  |  |  |  |  |  |  |  |  |
Participating preferred shares derivative liability |  | $ | 29,470 |  |  | $ | (28,258 | ) |  | $ | (1,212 | ) |  | $ | — |

Note 14. Subsequent Events
Subsequent Acquisitions
From October 1, 2019 through October 31, 2019, the Company added 78 properties to its portfolio for a total cost of approximately $19.6 million, which included 73 homes developed through our new construction channels.
Subsequent Dispositions
From October 1, 2019 through October 31, 2019, the Company disposed of 116 properties for aggregate net proceeds of approximately $20.9 million.
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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of 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
We 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 we conduct substantially all of our business and own, directly or through subsidiaries, substantially all of our assets. We commenced operations in November 2012.
As of September 30, 2019, we owned 52,537 single-family properties, in selected sub-markets of metropolitan statistical areas, or MSAs, in 22 states, including 1,439 properties held for sale, compared to 52,783 single-family properties in 22 states, including 1,945 properties held for sale, as of December 31, 2018, and 52,464 single-family properties in 22 states, including 1,865 properties held for sale and 401 properties identified for future sale as of September 30, 2018. As of September 30, 2019, we had commitments to acquire an additional 13 single-family properties for an aggregate purchase price of $3.5 million, as well as $65.3 million in purchase commitments that relate to both third-party developer agreements and land for our internal construction program. As of September 30, 2019, 48,868, or 95.6%, 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) as of December 31, 2018, and 47,551, or 94.7%, of our total properties (excluding properties held for sale and identified for future sale) as of September 30, 2018. Our portfolio of single-family properties is 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 September 30, 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
Atlanta, GA |  | 4,780 |  |  | 9.4 | % |  | $ | 177,771 |  |  | 2,161 |  |  | 17.2 |  | 2015
Dallas-Fort Worth, TX |  | 4,307 |  |  | 8.4 | % |  | 164,655 |  |  | 2,116 |  |  | 15.6 |  | 2014
Charlotte, NC |  | 3,662 |  |  | 7.2 | % |  | 192,010 |  |  | 2,093 |  |  | 15.6 |  | 2015
Phoenix, AZ |  | 3,089 |  |  | 6.0 | % |  | 174,292 |  |  | 1,835 |  |  | 16.0 |  | 2015
Houston, TX |  | 3,070 |  |  | 6.0 | % |  | 164,104 |  |  | 2,094 |  |  | 13.8 |  | 2014
Indianapolis, IN |  | 2,809 |  |  | 5.5 | % |  | 153,180 |  |  | 1,930 |  |  | 17.0 |  | 2013
Nashville, TN |  | 2,745 |  |  | 5.4 | % |  | 211,064 |  |  | 2,113 |  |  | 14.8 |  | 2015
Jacksonville, FL |  | 2,220 |  |  | 4.3 | % |  | 174,873 |  |  | 1,939 |  |  | 14.5 |  | 2014
Tampa, FL |  | 2,173 |  |  | 4.3 | % |  | 196,141 |  |  | 1,944 |  |  | 15.1 |  | 2014
Raleigh, NC |  | 2,042 |  |  | 4.0 | % |  | 183,088 |  |  | 1,874 |  |  | 14.8 |  | 2014
All Other (2) |  | 20,201 |  |  | 39.5 | % |  | 190,423 |  |  | 1,913 |  |  | 16.0 |  | 2013
Total / Average |  | 51,098 |  |  | 100.0 | % |  | $ | 182,957 |  |  | 1,985 |  |  | 15.9 |  | 2014

(1) | Excludes 1,439 single-family properties held for sale as of September 30, 2019.

(2) | Represents 25 markets in 21 states.

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The following table summarizes certain key leasing metrics as of September 30, 2019:

|  | Total Single-Family Properties (1)
Market |  | 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 |  | 94.5 | % |  | $ | 1,616 |  |  | 12.0 |  | 6.4 |  | 5.2 | %
Dallas-Fort Worth, TX |  | 95.1 | % |  | 1,764 |  |  | 12.1 |  | 6.2 |  | 2.8 | %
Charlotte, NC |  | 95.0 | % |  | 1,602 |  |  | 12.4 |  | 6.7 |  | 3.6 | %
Phoenix, AZ |  | 96.1 | % |  | 1,436 |  |  | 12.0 |  | 5.9 |  | 7.6 | %
Houston, TX |  | 94.9 | % |  | 1,648 |  |  | 12.3 |  | 6.6 |  | 2.3 | %
Indianapolis, IN |  | 95.3 | % |  | 1,433 |  |  | 11.9 |  | 6.4 |  | 4.0 | %
Nashville, TN |  | 93.8 | % |  | 1,749 |  |  | 12.0 |  | 6.5 |  | 2.9 | %
Jacksonville, FL |  | 94.5 | % |  | 1,590 |  |  | 12.1 |  | 6.4 |  | 3.7 | %
Tampa, FL |  | 94.6 | % |  | 1,724 |  |  | 12.1 |  | 6.4 |  | 3.2 | %
Raleigh, NC |  | 94.7 | % |  | 1,532 |  |  | 12.0 |  | 6.3 |  | 3.8 | %
All Other (6) |  | 95.6 | % |  | 1,680 |  |  | 12.0 |  | 6.6 |  | 4.2 | %
Total / Average |  | 95.2 | % |  | $ | 1,641 |  |  | 12.1 |  | 6.5 |  | 4.0 | %

(1) | Leasing information excludes 1,439 single-family properties held for sale as of September 30, 2019.

(2) | For the three months ended September 30, 2019, Average Occupied Days Percentage represents the number of days a property is 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 September 30, 2019, Average Monthly Realized Rent is calculated as the lease component of rents and other 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.

(5) | Represents the percentage change in rent on all non-month-to-month lease renewals and re-leases during the three months ended September 30, 2019, compared to the annual rent of the previously expired non-month-to-month lease for each property.

(6) | Represents 25 markets in 21 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, our pace of property acquisitions and the time and cost required to gain access to and renovate the properties, our pace and cost of newly acquired or developed properties, the time to lease a newly acquired or developed property at acceptable rental rates, occupancy levels, rates of tenant turnover, the length of vacancy in properties between tenant leases, our expense ratios, our ability to raise capital and our capital structure.
Property Acquisitions, Development 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. Recently, we have focused on developing properties through our internal construction program and acquiring newly constructed homes from third-party homebuilders. Opportunities from these new construction channels are impacted by the availability of vacant developed lots, development land assets and inventory of homes currently under construction or newly developed. Our level of investment activity has fluctuated based on the number of suitable opportunities and the level of capital available to invest. During the quarter ended September 30, 2019, we acquired or developed 244 homes, including 9 homes acquired through broker acquisitions and 235 homes acquired through new construction channels, of which 156 homes were developed through our internal construction program, and sold 341 homes.
During 2018, we identified approximately 1,500 properties to be disposed from six of our smaller markets that we are exiting based on market analysis. Our remaining properties held for sale were identified based on sub-market analysis, as well as individual property-level operational review. As of September 30, 2019 and December 31, 2018, there were 1,439 and 1,945 properties classified as held for sale. We will continue to evaluate our properties for potential disposition going forward as a normal course of business.
Property Operations
Homes added to our portfolio through new construction channels include properties developed through our internal construction program and newly constructed properties that we acquired from third-party homebuilders. Rental homes developed
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through internal construction channels involve substantial up-front costs, time to acquire and develop land, and time to build the rental home before the home becomes income producing. This process is dependent upon the nature of each lot acquired and the timeline varies primarily due to land development requirements. Once land development requirements have been met, on average it takes approximately 4 to 6 months to complete the rental home construction process. Our internal construction program is managed by our team of development professionals that oversee the full rental home construction process including all land development and work performed by subcontractors. We typically incur costs between $200,000 and $350,000 to acquire and develop land, and build a rental home. Homes added from our new construction channels are available for lease immediately upon or shortly after receipt of certificate of occupancy.
Homes added to our portfolio through traditional acquisition channels require 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 to prepare our homes for rental can impact our financial performance and varies among properties based on several factors, including the source of acquisition channel and age and condition of the property. On average, it takes approximately 40 to 60 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 acquiring or developing a new property through our new construction channels or after completing the renovation process for a traditionally acquired property. 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 40 to 60 days to complete the turnover process.
Revenues
Our revenues are derived primarily from rents collected from tenants for our single-family properties under lease agreements 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 turn 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 $60,000 to $120,000 and primarily consist of families with approximately two adults and one or more children.
Our rents and other single-family property revenues are comprised of rental revenue from single-family properties, fees from our single-family properties rentals and “tenant charge-backs,” which are primarily related to 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. Based on our Same-Home population of properties, the year-over-year increase in Average Monthly Realized Rent per property was 3.6% for the three months ended September 30, 2019, and we experienced turnover rates of 11.0% for both the three months ended September 30, 2019 and 2018. Based on our Same-Home population of properties, the year-over-year increase in Average Monthly Realized Rent per property was 3.6% for the nine months ended September 30, 2019, and we experienced turnover rates of 29.5% and 30.7% for the nine months ended September 30, 2019 and 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 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.
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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 our 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. 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. We 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, 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 $41.4 million for the three months ended September 30, 2019, compared to net income of $30.3 million for the three months ended September 30, 2018. Net income totaled $114.8 million for the nine months ended September 30, 2019, compared to net income of $77.7 million for the nine months ended September 30, 2018. These improvements were primarily attributable to higher revenues resulting from a larger number of occupied properties and higher rental rates, which were offset in part by higher property operating expenses and property management expenses, and an increase in gain on sale of single-family properties and other, net.
As we continue to grow our portfolio with a portion of our homes still recently developed, acquired and/or renovated, we distinguish our portfolio of homes between Same-Home properties and Non-Same-Home and Other 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 non-stabilized, as an entire group, until (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. After such time has passed, properties acquired through 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 total revenues, excluding expenses reimbursed by tenant charge-backs and 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.
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 shares 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 and other transaction costs incurred with
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business combinations and the acquisition or disposition of properties, (8) noncash share-based compensation expense, (9) interest expense, (10) general and administrative expense, (11) other expenses and (12) other revenues. We believe Core NOI provides useful information to investors about the operating performance of our single-family properties without the impact of certain operating expenses that are reimbursed through tenant charge-backs.
Core NOI and Same-Home Core NOI 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 or loss or net cash flows from operating activities (as computed in accordance with GAAP).
Comparison of the Three Months Ended September 30, 2019 to the Three Months Ended September 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 three months ended September 30, 2019 and 2018 (in thousands):

| For the Three Months Ended September 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 | $ | 188,938 |  |  |  |  |  | $ | 54,915 |  |  |  |  |  | $ | 243,853 |  |  |  |
Fees from single-family properties | 2,837 |  |  |  |  |  | 820 |  |  |  |  |  | 3,657 |  |  |  |
Bad debt expense | (2,162 | ) |  |  |  |  | (590 | ) |  |  |  |  | (2,752 | ) |  |  |
Core revenues | 189,613 |  |  |  |  |  | 55,145 |  |  |  |  |  | 244,758 |  |  |  |
Property tax expense | 33,803 |  |  | 17.8 | % |  | 9,979 |  |  | 18.1 | % |  | 43,782 |  |  | 17.8 | %
HOA fees, net (2) | 3,400 |  |  | 1.8 | % |  | 1,198 |  |  | 2.2 | % |  | 4,598 |  |  | 1.9 | %
R&M and turnover costs, net (2) | 17,543 |  |  | 9.3 | % |  | 4,654 |  |  | 8.4 | % |  | 22,197 |  |  | 9.1 | %
Insurance | 1,726 |  |  | 0.9 | % |  | 557 |  |  | 1.0 | % |  | 2,283 |  |  | 0.9 | %
Property management expenses, net (3) | 15,972 |  |  | 8.4 | % |  | 5,030 |  |  | 9.1 | % |  | 21,002 |  |  | 8.6 | %
Core property operating expenses | 72,444 |  |  | 38.2 | % |  | 21,418 |  |  | 38.8 | % |  | 93,862 |  |  | 38.3 | %
Core NOI | $ | 117,169 |  |  | 61.8 | % |  | $ | 33,727 |  |  | 61.2 | % |  | $ | 150,896 |  |  | 61.7 | %

| For the Three Months Ended September 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 | $ | 182,528 |  |  |  |  |  | $ | 48,796 |  |  |  |  |  | $ | 231,324 |  |  |  |
Fees from single-family properties | 2,124 |  |  |  |  |  | 587 |  |  |  |  |  | 2,711 |  |  |  |
Bad debt expense | (2,159 | ) |  |  |  |  | (590 | ) |  |  |  |  | (2,749 | ) |  |  |
Core revenues | 182,493 |  |  |  |  |  | 48,793 |  |  |  |  |  | 231,286 |  |  |  |
Property tax expense | 31,449 |  |  | 17.2 | % |  | 9,158 |  |  | 18.9 | % |  | 40,607 |  |  | 17.6 | %
HOA fees, net (2) | 4,012 |  |  | 2.2 | % |  | 1,286 |  |  | 2.6 | % |  | 5,298 |  |  | 2.3 | %
R&M and turnover costs, net (2) | 15,638 |  |  | 8.6 | % |  | 4,293 |  |  | 8.8 | % |  | 19,931 |  |  | 8.6 | %
Insurance | 1,675 |  |  | 0.9 | % |  | 498 |  |  | 1.0 | % |  | 2,173 |  |  | 0.9 | %
Property management expenses, net (3) | 15,354 |  |  | 8.4 | % |  | 4,311 |  |  | 8.8 | % |  | 19,665 |  |  | 8.5 | %
Core property operating expenses | 68,128 |  |  | 37.3 | % |  | 19,546 |  |  | 40.1 | % |  | 87,674 |  |  | 37.9 | %
Core NOI | $ | 114,365 |  |  | 62.7 | % |  | $ | 29,247 |  |  | 59.9 | % |  | $ | 143,612 |  |  | 62.1 | %

(1) | Includes 40,517 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.

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The following are reconciliations of core revenues, Same-Home core revenues, core property operating expenses, Same-Home core property operating expenses, Core NOI, and Same-Home Core NOI to their respective GAAP metrics for the three months ended September 30, 2019 and 2018 (amounts in thousands):

| For the Three Months Ended September 30,
| 2019 |  | 2018
| (Unaudited) |  | (Unaudited)
Core revenues and Same-Home core revenues |  |  |
Total revenues | $ | 298,304 |  |  | $ | 280,052 |
Tenant charge-backs | (48,306 | ) |  | (44,152 | )
Other revenues | (5,240 | ) |  | (1,865 | )
Bad debt expense | — |  |  | (2,749 | )
Core revenues | 244,758 |  |  | 231,286 |
Less: Non-Same-Home core revenues | 55,145 |  |  | 48,793 |
Same-Home core revenues | $ | 189,613 |  |  | $ | 182,493 |

Core property operating expenses and Same-Home core property operating expenses |  |  |
Property operating expenses | $ | 119,791 |  |  | $ | 113,600 |
Property management expenses | 22,727 |  |  | 18,865 |
Noncash share-based compensation - property management | (350 | ) |  | (341 | )
Expenses reimbursed by tenant charge-backs | (48,306 | ) |  | (44,152 | )
Bad debt expense | — |  |  | (2,749 | )
Internal leasing costs (1) | — |  |  | 2,451 |
Core property operating expenses | 93,862 |  |  | 87,674 |
Less: Non-Same-Home core property operating expenses | 21,418 |  |  | 19,546 |
Same-Home core property operating expenses | $ | 72,444 |  |  | $ | 68,128 |

Core NOI and Same-Home Core NOI |  |
Net income | $ | 41,401 |  |  | $ | 30,281 |
Gain on sale of single-family properties and other, net | (13,521 | ) |  | (4,953 | )
Depreciation and amortization | 82,073 |  |  | 79,940 |
Acquisition and other transaction costs | 651 |  |  | 1,055 |
Noncash share-based compensation - property management | 350 |  |  | 341 |
Interest expense | 31,465 |  |  | 30,930 |
General and administrative expense | 11,107 |  |  | 9,265 |
Other expenses | 2,610 |  |  | 1,069 |
Other revenues | (5,240 | ) |  | (1,865 | )
Internal leasing costs (1) | — |  |  | (2,451 | )
Core NOI | 150,896 |  |  | 143,612 |
Less: Non-Same-Home Core NOI | 33,727 |  |  | 29,247 |
Same-Home Core NOI | $ | 117,169 |  |  | $ | 114,365 |

(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 6.5% to $298.3 million for the three months ended September 30, 2019 from $280.1 million for the three months ended September 30, 2018. Revenue growth was primarily driven by continued strong leasing activity, as the average number of occupied homes in our portfolio grew to 48,990 homes for the three months ended September 30, 2019 compared to 47,655 homes for the three months ended September 30, 2018, as well as higher rental rates. This was partially offset by a $2.8 million reclassification of bad debt expense during the three months ended September 30, 2019, which was included in total revenues as a result of the adoption of the new lease accounting standard on January 1, 2019.
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Property Operating Expenses
Property operating expenses increased 5.4% to $119.8 million for the three months ended September 30, 2019 from $113.6 million for the three months ended September 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 $2.8 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 September 30, 2019 and 2018 were $22.7 million and $18.9 million, respectively, which included $0.4 million and $0.3 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.
Core Revenues from Same-Home Properties
Core revenues from Same-Home properties increased 3.9% to $189.6 million for the three months ended September 30, 2019 from $182.5 million for the three months ended September 30, 2018. This increase was primarily attributable to higher Average Monthly Realized Rent per property, which increased 3.6% to $1,635 per month for the three months ended September 30, 2019 compared to $1,578 per month for the three months ended September 30, 2018, as well as higher fees from single-family properties resulting from operational enhancements to our fee structure.
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 6.3% to $72.4 million for the three months ended September 30, 2019 from $68.1 million for the three months ended September 30, 2018. Same-Home core property operating expenses as a percentage of Same-Home core revenues increased to 38.2% for the three months ended September 30, 2019 from 37.3% for the three months ended September 30, 2018. The increase in Same-Home core property operating expenses as a percentage of Same-Home core revenues was driven mostly by higher property tax expense related to outsized 2019 valuation increases and higher repairs and maintenance and turnover costs, net primarily due to multiple hurricane and weather-related events, resulting in $1.0 million of expenses for the three months ended September 30, 2019.
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 September 30, 2019 and 2018 was $11.1 million and $9.3 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.
Interest Expense
Interest expense increased 1.7% to $31.5 million for the three months ended September 30, 2019 from $30.9 million for the three months ended September 30, 2018. This increase was primarily related to the unsecured senior notes issued in January 2019, partially offset by the payoff of the term loan facility in June 2019, the payoff of the exchangeable senior notes in November 2018 and an increase in capitalized interest.
Acquisition and Other Transaction Costs
Acquisition and other transaction costs were $0.7 million and $1.1 million for the three months ended September 30, 2019 and 2018, respectively, which primarily related to costs associated with purchases of single-family properties, including newly constructed properties from third-party builders, as well as costs associated with the disposal of certain properties or portfolios of properties.
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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 2.7% to $82.1 million for the three months ended September 30, 2019 from $79.9 million for the three months ended September 30, 2018 primarily due to growth in our average number of depreciable properties.
Other Revenues
Other revenues were $5.2 million and $1.9 million for the three months ended September 30, 2019 and 2018, respectively, which primarily related to interest income on short-term investments, insurance recoveries, fees from unconsolidated joint ventures, and equity in earnings/(losses) from unconsolidated joint ventures.
Other Expenses
Other expenses were $2.6 million and $1.1 million for the three months ended September 30, 2019 and 2018, respectively, which primarily related to impairments on properties held for sale and expenses related to joint ventures.
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Comparison of the Nine Months Ended September 30, 2019 to the Nine Months Ended September 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 nine months ended September 30, 2019 and 2018 (in thousands):

| For the Nine Months Ended September 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 | $ | 563,082 |  |  |  |  | $ | 160,126 |  |  |  |  | $ | 723,208 |  |  |
Fees from single-family properties | 7,625 |  |  |  |  | 2,538 |  |  |  |  | 10,163 |  |  |
Bad debt expense | (4,813 | ) |  |  |  | (1,447 | ) |  |  |  | (6,260 | ) |  |
Core revenues | 565,894 |  |  |  |  |  | 161,217 |  |  |  |  |  | 727,111 |  |  |  |
Property tax expense | 98,971 |  |  | 17.5 | % |  | 30,655 |  |  | 19.0 | % |  | 129,626 |  |  | 17.8 | %
HOA fees, net (2) | 11,834 |  |  | 2.1 | % |  | 4,102 |  |  | 2.5 | % |  | 15,936 |  |  | 2.2 | %
R&M and turnover costs, net (2) | 46,024 |  |  | 8.2 | % |  | 13,138 |  |  | 8.3 | % |  | 59,162 |  |  | 8.2 | %
Insurance | 5,089 |  |  | 0.9 | % |  | 1,659 |  |  | 1.0 | % |  | 6,748 |  |  | 0.9 | %
Property management expenses, net (3) | 46,078 |  |  | 8.1 | % |  | 14,052 |  |  | 8.7 | % |  | 60,130 |  |  | 8.3 | %
Core property operating expenses | 207,996 |  |  | 36.8 | % |  | 63,606 |  |  | 39.5 | % |  | 271,602 |  |  | 37.4 | %
Core NOI | $ | 357,898 |  |  | 63.2 | % |  | $ | 97,611 |  |  | 60.5 | % |  | $ | 455,509 |  |  | 62.6 | %

| For the Nine Months Ended September 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 | $ | 542,067 |  |  |  |  | $ | 134,491 |  |  |  |  | $ | 676,558 |  |  |
Fees from single-family properties | 6,309 |  |  |  |  | 1,989 |  |  |  |  | 8,298 |  |  |
Bad debt expense | (5,087 | ) |  |  |  | (1,278 | ) |  |  |  | (6,365 | ) |  |
Core revenues | 543,289 |  |  |  |  |  | 135,202 |  |  |  |  |  | 678,491 |  |  |  |
Property tax expense | 93,159 |  |  | 17.1 | % |  | 26,549 |  |  | 19.6 | % |  | 119,708 |  |  | 17.6 | %
HOA fees, net (2) | 11,254 |  |  | 2.1 | % |  | 3,366 |  |  | 2.5 | % |  | 14,620 |  |  | 2.2 | %
R&M and turnover costs, net (2) | 43,956 |  |  | 8.1 | % |  | 13,427 |  |  | 9.9 | % |  | 57,382 |  |  | 8.5 | %
Insurance | 4,803 |  |  | 0.9 | % |  | 1,363 |  |  | 1.0 | % |  | 6,166 |  |  | 0.9 | %
Property management expenses, net (3) | 45,342 |  |  | 8.3 | % |  | 12,110 |  |  | 9.0 | % |  | 57,453 |  |  | 8.4 | %
Core property operating expenses | 198,514 |  |  | 36.5 | % |  | 56,815 |  |  | 42.0 | % |  | 255,329 |  |  | 37.6 | %
Core NOI | $ | 344,775 |  |  | 63.5 | % |  | $ | 78,387 |  |  | 58.0 | % |  | $ | 423,162 |  |  | 62.4 | %

(1) | Includes 40,517 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.

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The following are reconciliations of core revenues, Same-Home core revenues, core property operating expenses, Same-Home core property operating expenses, Core NOI, and Same-Home Core NOI to their respective GAAP metrics for the nine months ended September 30, 2019 and 2018 (amounts in thousands):

| For the Nine Months Ended September 30,
| 2019 |  | 2018
| (Unaudited) |  | (Unaudited)
Core revenues and Same-Home core revenues |  |  |
Total revenues | $ | 859,368 |  |  | $ | 802,539 |
Tenant charge-backs | (123,561 | ) |  | (112,876 | )
Other revenues | (8,696 | ) |  | (4,807 | )
Bad debt expense | — |  |  | (6,365 | )
Core revenues | 727,111 |  |  | 678,491 |
Less: Non-Same-Home core revenues | 161,217 |  |  | 135,202 |
Same-Home core revenues | $ | 565,894 |  |  | $ | 543,289 |

Core property operating expenses and Same-Home core property operating expenses |  |  |
Property operating expenses | $ | 331,066 |  |  | $ | 313,430 |
Property management expenses | 65,086 |  |  | 56,468 |
Noncash share-based compensation - property management | (989 | ) |  | (1,141 | )
Expenses reimbursed by tenant charge-backs | (123,561 | ) |  | (112,876 | )
Bad debt expense | — |  |  | (6,365 | )
Internal leasing costs (1) | — |  |  | 5,813 |
Core property operating expenses | 271,602 |  |  | 255,329 |
Less: Non-Same-Home core property operating expenses | 63,606 |  |  | 56,815 |
Same-Home core property operating expenses | $ | 207,996 |  |  | $ | 198,514 |

Core NOI and Same-Home Core NOI |  |  |
Net income | $ | 114,796 |  |  | $ | 77,704 |
Remeasurement of participating preferred shares | — |  |  | (1,212 | )
Loss on early extinguishment of debt | 659 |  |  | 1,447 |
Gain on sale of single-family properties and other, net | (32,895 | ) |  | (10,449 | )
Depreciation and amortization | 246,074 |  |  | 237,562 |
Acquisition and other transaction costs | 2,455 |  |  | 3,687 |
Noncash share-based compensation - property management | 989 |  |  | 1,141 |
Interest expense | 95,951 |  |  | 92,209 |
General and administrative expense | 31,028 |  |  | 28,173 |
Other expenses | 5,148 |  |  | 3,520 |
Other revenues | (8,696 | ) |  | (4,807 | )
Internal leasing costs (1) | — |  |  | (5,813 | )
Core NOI | 455,509 |  |  | 423,162 |
Less: Non-Same-Home Core NOI | 97,611 |  |  | 78,387 |
Same-Home Core NOI | $ | 357,898 |  |  | $ | 344,775 |

(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 7.1% to $859.4 million for the nine months ended September 30, 2019 from $802.5 million for the nine months ended September 30, 2018. Revenue growth was primarily driven by continued strong leasing activity, as our average occupied portfolio grew to 48,667 homes for the nine months ended September 30, 2019 compared to 47,255 homes for the nine months ended September 30, 2018, as well as higher rental rates. This was partially offset by a $6.3 million reclassification of bad debt expense during the nine months ended September 30, 2019, which was included in total revenues as a result of the adoption of the new lease accounting standard on January 1, 2019.
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Property Operating Expenses
Property operating expenses increased 5.6% to $331.1 million for the nine months ended September 30, 2019 from $313.4 million for the nine months ended September 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 $6.3 million reclassification of bad debt expense associated with the adoption of the new lease accounting standard.
Property Management Expenses
Property management expenses for the nine months ended September 30, 2019 and 2018 were $65.1 million and $56.5 million, respectively, which included $1.0 million and $1.1 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.
Core Revenues from Same-Home Properties
Core revenues from Same-Home properties increased 4.2% to $565.9 million for the nine months ended September 30, 2019 from $543.3 million for the nine months ended September 30, 2018. This increase was primarily attributable to higher Average Monthly Realized Rent per property, which increased 3.6% to $1,618 per month for the nine months ended September 30, 2019 compared to $1,562 per month for the nine months ended September 30, 2018, a rise in the Average Occupied Days Percentage, which increased to 95.4% for the nine months ended September 30, 2019 compared to 95.1% for the nine months ended September 30, 2018, as well as higher fees from single-family properties resulting from operational enhancements to our fee structure.
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 4.8% to $208.0 million for the nine months ended September 30, 2019 from $198.5 million for the nine months ended September 30, 2018. Same-Home core property operating expenses as a percentage of total Same-Home core revenues increased to 36.8% for the nine months ended September 30, 2019 from 36.5% for the nine months ended September 30, 2018. This increase in Same-Home core property operating expenses as a percentage of Same-Home core revenues was driven mostly by higher property tax expense related to outsized 2019 valuation increases and higher repairs and maintenance and turnover costs, net.
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 nine months ended September 30, 2019 and 2018 was $31.0 million and $28.2 million, respectively, which included $2.5 million and $1.6 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.
Interest Expense
Interest expense increased 4.1% to $96.0 million for the nine months ended September 30, 2019 from $92.2 million for the nine months ended September 30, 2018. This increase was primarily related to the unsecured senior notes issued in February 2018 and January 2019, partially offset by the payoff of the secured note payable in May 2018, the paydown and payoff of the term loan facility in June 2018 and June 2019, respectively, the payoff of the exchangeable senior notes in November 2018 and an increase in capitalized interest.
Acquisition and Other Transaction Costs
Acquisition and other transaction costs were $2.5 million and $3.7 million for the nine months ended September 30, 2019 and 2018, respectively, which primarily related to costs associated with purchases of single-family properties, including newly constructed properties from third-party builders, as well as costs associated with the disposal of certain properties or portfolios of properties.
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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 3.6% to $246.1 million for the nine months ended September 30, 2019 from $237.6 million for the nine months ended September 30, 2018 primarily due to growth in our average number of depreciable properties.
Other Revenues
Other revenues were $8.7 million and $4.8 million for the nine months ended September 30, 2019 and 2018, respectively, which primarily related to interest income on short-term investments, insurance recoveries, fees from unconsolidated joint ventures and equity in earnings/(losses) from unconsolidated joint ventures.
Other Expenses
Other expenses were $5.1 million and $3.5 million for the nine months ended September 30, 2019 and 2018, respectively, which primarily related to impairments on properties held for sale and expenses related to joint ventures.
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, 2018. For a discussion of recent accounting pronouncements, see Note 2.
Income Taxes
AH4R 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”), commencing 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. Provided that we qualify as a REIT and our distributions to our shareholders equal or exceed our REIT taxable 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.
Qualification 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, we would be subject to U.S. federal income tax and state income 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. Certain 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 which are subject to U.S. federal, state and local taxes on their income at regular corporate rates. The tax years from 2014 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 its income. Instead, each of the 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.
Accounting 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
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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 September 30, 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 and our current policy of distributing approximately all of our REIT taxable income (determined without regard to the deduction for dividends paid).
Liquidity and Capital Resources
Our liquidity and capital resources as of September 30, 2019 included cash and cash equivalents of $171.2 million. Additionally, as of September 30, 2019, we had no outstanding borrowings under our revolving credit facility, which provides for maximum borrowings of up to $800.0 million, of which $4.8 million was committed to outstanding letters of credit.
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 common 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 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, AH4R 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) 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. We expect to use our NOL to reduce our REIT 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 deduction for dividends paid).
Cash Flows
The following table summarizes the Company’s and the Operating Partnership’s cash flows for the nine months ended September 30, 2019 and 2018 (in thousands):

| For the Nine Months Ended September 30,
| 2019 |  | 2018
Net cash provided by operating activities | $ | 420,415 |  |  | $ | 376,463 |
Net cash used for investing activities | (224,096 | ) |  | (481,911 | )
Net cash (used for) provided by financing activities | (73,523 | ) |  | 188,789 |
Net increase in cash, cash equivalents and restricted cash | $ | 122,796 |  |  | $ | 83,341 |

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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 expenses and general and administrative expenses.
During the nine months ended September 30, 2019, net cash provided by operating activities was $420.4 million, which included cash from operations of $340.0 million and other changes in operating assets and liabilities of $80.4 million. Net cash used for investing activities was $224.1 million, which primarily consisted of cash outflows of $236.4 million related to cash paid for development activity, which consisted of land held for development, land development and homebuilding construction in progress, $82.4 million related to the acquisition of properties, $52.1 million of recurring and other capital expenditures for single-family properties and $19.3 million of renovation costs to prepare our properties for rental, partially offset by cash inflows of $151.5 million related to net proceeds received from sales of single-family properties and other assets and $17.4 million of distributions from joint ventures. Renovation costs typically include paint, flooring, appliances, landscaping and other improvements. Net cash used for financing activities was $73.5 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, $111.9 million for distributions and $16.3 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 nine months ended September 30, 2019 was $122.8 million.
During the nine months ended September 30, 2018, net cash provided by operating activities was $376.5 million, which included cash from operations of $324.8 million and other changes in operating assets and liabilities of $51.7 million. Net cash used for investing activities was $481.9 million, which primarily consisted of cash outflows of $335.3 million related to the acquisition of properties, $149.5 million related to cash paid for development activity, $40.9 million of renovation costs to prepare our properties for rental and $40.5 million of recurring and other capital expenditures for single-family properties, partially offset by cash inflows of $47.8 million in net proceeds received from sales of single-family properties and other assets and $36.3 million of distributions from joint ventures. Renovation costs typically include paint, flooring, appliances, landscaping and other improvements. Net cash provided by financing activities was $188.8 million, which primarily consisted of cash inflows of $497.2 million in proceeds from the issuance of unsecured senior notes, net of a discount, and $111.3 million of net proceeds from the issuance of perpetual preferred shares, partially offset by cash outflows including $240.0 million of net payments on our revolving and term loan credit facilities, $93.0 million for distributions, $49.4 million for payments on our secured note payable and $35.0 million for Class A common share repurchases. The net increase in cash, cash equivalents and restricted cash during the nine months ended September 30, 2018, was $83.3 million.
Unsecured Senior Notes
In January 2019, the Operating Partnership issued $400.0 million of 4.90% 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 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 $2.6 million and a $2.1 million discount, and before offering costs of $1.0 million. The Operating Partnership used the net proceeds from this issuance to repay amounts outstanding on our revolving credit facility and for general corporate purposes. The 2029 Notes are the Operating Partnership’s unsecured and unsubordinated obligation and rank equally in right of payment with all of the Operating Partnership’s existing and future unsecured and unsubordinated indebtedness. The Operating Partnership may redeem the 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 principal amount of the 2029 Notes being redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date.
At-the-Market Common Share Offering Program
The Company established an at-the-market common share offering program under which we can issue Class A common shares from time to time through various sales agents up to an aggregate of $500.0 million (the “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. As of September 30, 2019, no shares have been issued under the At-the-Market Program and $500.0 million remained available for future share issuances.
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Share Repurchase Program
In February 2018, the Company’s board of trustees re-authorized our existing share repurchase program, authorizing the repurchase of up to $300.0 million of our outstanding Class A common shares and up to $250.0 million of our outstanding preferred shares from time to time in the open market or in privately negotiated transactions. The program does not have an expiration date, but may be suspended or discontinued at any time without notice. All repurchased shares are constructively retired and returned to an authorized and unissued status. The Operating Partnership funds the repurchases and constructively retires an equivalent number of corresponding Class A units. During the nine months ended September 30, 2019, we did not repurchase and retire any of our shares. During the nine months ended September 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 program, at a weighted-average price of $19.36 per share and a total price of $34.9 million. As of September 30, 2019, we had a remaining repurchase authorization of up to $265.1 million of our outstanding Class A common shares and up to $250.0 million of our outstanding preferred shares under the program.
Off-Balance Sheet Arrangements
We have no material obligations, assets or liabilities that would be considered off-balance sheet arrangements.
Additional Non-GAAP Measures
Funds from Operations (“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 definition approved by the National Association of Real Estate Investment Trusts (“NAREIT”), which defines FFO as net income or loss calculated in accordance with GAAP, excluding 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 adjustments for unconsolidated partnerships and joint 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 and other transaction costs incurred with business combinations and the acquisition or disposition of 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 fair value adjustments associated with remeasuring our participating preferred shares derivative liability to fair 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) capitalized leasing costs incurred during the period. 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.
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 provides 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 provide useful information to investors because 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 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.
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The following is a reconciliation of the Company’s net income 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 nine months ended September 30, 2019 and 2018 (in thousands):

| For the Three Months Ended September 30, |  | For the Nine Months Ended September 30,
| 2019 |  | 2018 |  | 2019 |  | 2018
| (Unaudited) |  | (Unaudited) |  | (Unaudited) |  | (Unaudited)
Net income attributable to common shareholders | $ | 23,520 |  |  | $ | 15,177 |  |  | $ | 62,321 |  |  | $ | 5,840 |
Adjustments: |  |  |  |  |  |  |  |  |
Noncontrolling interests in the Operating Partnership | 4,099 |  |  | 2,881 |  |  | 11,129 |  |  | 1,104 |
Net (gain) on sale / impairment of single-family properties and other | (11,871 | ) |  | (4,393 | ) |  | (29,812 | ) |  | (7,653 | )
Adjustments for unconsolidated joint ventures | (325 | ) |  | — |  |  | 976 |  |  | — |
Depreciation and amortization | 82,073 |  |  | 79,940 |  |  | 246,074 |  |  | 237,562 |
Less: depreciation and amortization of non-real estate assets | (1,991 | ) |  | (1,845 | ) |  | (5,902 | ) |  | (5,462 | )
FFO attributable to common share and unit holders | $ | 95,505 |  |  | $ | 91,760 |  |  | $ | 284,786 |  |  | $ | 231,391 |
Adjustments: |  |  |  |  |  |  |  |  |  |  |
Internal leasing costs (1) | — |  |  | (2,451 | ) |  | — |  |  | (5,813 | )
Acquisition and other transaction costs | 651 |  |  | 1,055 |  |  | 2,455 |  |  | 3,687 |
Noncash share-based compensation - general and administrative | 938 |  |  | 491 |  |  | 2,520 |  |  | 1,609 |
Noncash share-based compensation - property management | 350 |  |  | 341 |  |  | 989 |  |  | 1,141 |
Noncash interest expense related to acquired debt | — |  |  | 973 |  |  | — |  |  | 2,810 |
Loss on early extinguishment of debt | — |  |  | — |  |  | 659 |  |  | 1,447 |
Remeasurement of participating preferred shares | — |  |  | — |  |  | — |  |  | (1,212 | )
Redemption of participating preferred shares | — |  |  | — |  |  | — |  |  | 32,215 |
Core FFO attributable to common share and unit holders | $ | 97,444 |  |  | $ | 92,169 |  |  | $ | 291,409 |  |  | $ | 267,275 |
Recurring capital expenditures (2) | (12,475 | ) |  | (11,467 | ) |  | (30,665 | ) |  | (27,342 | )
Leasing costs | (1,115 | ) |  | (3,722 | ) |  | (3,244 | ) |  | (9,556 | )
Internal leasing costs (1) | — |  |  | 2,451 |  |  | — |  |  | 5,813 |
Adjusted FFO attributable to common share and unit holders | $ | 83,854 |  |  | $ | 79,431 |  |  | $ | 257,500 |  |  | $ | 236,190 |

(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 EBITDAre / 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. EBITDAre is a supplemental non-GAAP financial measure, which we calculate in accordance with the definition approved by NAREIT by adjusting EBITDA for the net gain or loss on sales / impairment of single-family properties and other 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 and other transaction costs incurred with business combinations and the acquisition or disposition of properties, (2) noncash share-based compensation expense, (3) hurricane-related charges, net, which result in material charges to the impacted single-family properties, (4) gain or loss on early extinguishment of debt, (5) gain or loss on conversion of shares and units and (6) noncash fair value adjustments associated with remeasuring our participating preferred shares derivative liability to fair value. Adjusted EBITDAre after Capex and Leasing Costs is a supplemental non-GAAP financial measure calculated by adjusting Adjusted EBITDAre for (1) recurring capital expenditures and (2) leasing costs. We believe these metrics provide useful information to investors because they exclude the impact of various income and expense items that are not indicative of operating performance.
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The following is a reconciliation of net income or loss, as determined in accordance with GAAP, to EBITDA, EBITDAre, Adjusted EBITDAre and Adjusted EBITDAre after Capex and Leasing Costs for the three and nine months ended September 30, 2019 and 2018 (in thousands):

| For the Three Months Ended September 30, |  | For the Nine Months Ended September 30,
| 2019 |  | 2018 |  | 2019 |  | 2018
| (Unaudited) |  | (Unaudited) |  | (Unaudited) |  | (Unaudited)
Net income | $ | 41,401 |  |  | $ | 30,281 |  |  | $ | 114,796 |  |  | $ | 77,704 |
Interest expense | 31,465 |  |  | 30,930 |  |  | 95,951 |  |  | 92,209 |
Depreciation and amortization | 82,073 |  |  | 79,940 |  |  | 246,074 |  |  | 237,562 |
EBITDA | $ | 154,939 |  |  | $ | 141,151 |  |  | $ | 456,821 |  |  | $ | 407,475 |
Net (gain) on sale / impairment of single-family properties and other | (11,871 | ) |  | (4,393 | ) |  | (29,812 | ) |  | (7,653 | )
Adjustments for unconsolidated joint ventures | (325 | ) |  | — |  |  | 976 |  |  | — |
EBITDAre | $ | 142,743 |  |  | $ | 136,758 |  |  | $ | 427,985 |  |  | $ | 399,822 |
Noncash share-based compensation - general and administrative | 938 |  |  | 491 |  |  | 2,520 |  |  | 1,609 |
Noncash share-based compensation - property management | 350 |  |  | 341 |  |  | 989 |  |  | 1,141 |
Acquisition and other transaction costs | 651 |  |  | 1,055 |  |  | 2,455 |  |  | 3,687 |
Loss on early extinguishment of debt | — |  |  | — |  |  | 659 |  |  | 1,447 |
Remeasurement of participating preferred shares | — |  |  | — |  |  | — |  |  | (1,212 | )
Adjusted EBITDAre | $ | 144,682 |  |  | $ | 138,645 |  |  | $ | 434,608 |  |  | $ | 406,494 |
Recurring capital expenditures (1) | (12,475 | ) |  | (11,467 | ) |  | (30,665 | ) |  | (27,342 | )
Leasing costs | (1,115 | ) |  | (3,722 | ) |  | (3,244 | ) |  | (9,556 | )
Adjusted EBITDAre after Capex and Leasing Costs | $ | 131,092 |  |  | $ | 123,456 |  |  | $ | 400,699 |  |  | $ | 369,596 |

(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 About Market Risk
Interest Rate Risk
During the nine months ended September 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 September 30, 2019, the Company had no outstanding variable rate debt and therefore no exposure to interest rate risk on its current borrowings.
There have been no other material changes to our market risk from those disclosed in section Part II, Item 7A entitled “Quantitative and Qualitative Disclosures About Market Risk” of our Annual Report on Form 10-K for the year ended December 31, 2018.
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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 September 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 Chief Executive Officer and Chief Financial Officer of its general partner, 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 the Chief Executive Officer and Chief Financial Officer of its general partner, 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 Chief Executive Officer and Chief Financial Officer of the Operating Partnership’s general partner 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 Operating Partnership’s internal control over financial reporting during the quarter ended September 30, 2019, that have materially affected, or are reasonably likely to materially affect, the Operating Partnership’s internal control over financial reporting.
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PART II—OTHER INFORMATION
ITEM 1. Legal Proceedings
For a description of the Company’s legal proceedings, see Note 12.
ITEM 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, 2018, in Part I, Item 1A, Risk 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, 2018.
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
ITEM 3. Defaults Upon Senior Securities
None.
ITEM 4. Mine Safety Disclosures
Not applicable.
ITEM 5. Other Information
None.
ITEM 6. Exhibits
The exhibits listed below are filed herewith or incorporated herein by reference.

Exhibit Number |  | Exhibit Document
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 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.)
3.4 |  | 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.)
3.5 |  | 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.)
3.6 |  | 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.)

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Exhibit Number |  | Exhibit Document
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.)
4.4 |  | 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 as of February 7, 2018, between American Homes 4 Rent, L.P. and U.S. Bank National Association, as trustee (Incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed February 7, 2018.)
4.6 |  | First Supplemental Indenture, dated as of February 7, 2018, among American Homes 4 Rent, 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 February 7, 2018.)
4.7 |  | Form of Global Note representing the Notes (Incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K filed February 7, 2018.)
4.8 |  | Second Supplemental Indenture, dated as of January 23, 2019, among American Homes 4 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.)
4.9 |  | Form of Global Note representing the Notes (Incorporated by reference to and included in Exhibit 4.3 to 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
104 |  | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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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/ Christopher C. Lau
Christopher C. Lau
Chief Financial Officer
(Principal Financial Officer and duly authorized signatory of registrant)
Date: November 8, 2019

AMERICAN HOMES 4 RENT, L.P.
By: American Homes 4 Rent, its General Partner
/s/ Christopher C. Lau
Christopher C. Lau
Chief Financial Officer
(Principal Financial Officer and duly authorized signatory of registrant)
Date: November 8, 2019

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