American Homes 4 Rent Q1 2025 Earnings Report

American Homes 4 Rent EPS Results

• Actual EPS: $0.46
• Consensus EPS: $0.45
• Beat/Miss: Beat by +$0.01
• One Year Ago EPS: $0.43

American Homes 4 Rent Revenue Results

• Actual Revenue: $459.28 million
• Expected Revenue: $449.00 million
• Beat/Miss: Beat by +$10.28 million
• YoY Revenue Growth: +8.40%

American Homes 4 Rent Announcement Details

• Quarter: Q1 2025
• Date: 5/1/2025
• Time: After Market Closes
• Conference Call Date: Friday, May 2, 2025
• Conference Call Time: 12:00PM ET

American Homes 4 Rent (NYSE:AMH) operates as a real estate investment trust. It engages in the acquisition, renovation, leasing, and operating of single-family homes as rental properties. The company was founded by Bradley Wayne Hughes, Sr. on October 19, 2012 and is headquartered in Las Vegas, NV.

American Homes 4 Rent Q1 2025 Earnings Call Transcript

Key Takeaways

• AMH delivered $0.46 core FFO per share in Q1, up 6.6% year-over-year, driven by sequential acceleration in top-line metrics.
• Same-home average occupied days rose to 95.9%, fueling 4.3% core revenue growth and 4.4% core NOI growth for the quarter.
• The new lease expiration management initiative successfully aligned expirations with peak leasing season, boosting occupancy and monthly rent spread acceleration.
• If tariffs on steel and aluminum persist, AMH estimates a potential 2–3% headwind to delivered home costs, with impacts visible late in the year.
• AMH maintained its 2025 guidance despite economic uncertainty, ending Q1 with net debt/EBITDA of 5.3×, $70 million in cash, and an S&P credit rating outlook upgrade to positive.

Presentation

[Operator]

Greetings, and welcome to the AMH First Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce you to your host, Nicholas Frum, Director of Investor Relations. Thank you, Nicholas. You may begin.

[Nick Fromm, Director of Investor Relations at American Homes 4 Rent]

Good morning, and thank you for joining us for our first quarter twenty twenty five earnings conference call. With me today are Brian Smith, Chief Executive Officer Chris Lau, Chief Financial Officer and Lincoln Palmer, Chief Operating Officer. Please be advised that this call may include forward looking statements. All statements other than statements of historical fact included in this conference call are forward looking statements that are subject to a number of risks and uncertainties that could cause actual results to differ materially from those projected in these statements. These risks and other factors that could adversely affect our business and future results are described in our press releases and in our filings with the SEC. All forward looking statements speak only as of today, 05/02/2025. We assume no obligation to update or revise any forward looking statements whether as a result of new information, future events or otherwise, except as required by law.

[Nick Fromm, Director of Investor Relations at American Homes 4 Rent]

A reconciliation of GAAP to non GAAP financial measures is included in our earnings press release and supplemental information package. As a note, our operating and financial results, including GAAP and non GAAP measures, are fully detailed in our earnings release and supplemental information package. You can find these documents as well as SEC reports and the audio webcast replay of this conference call on our website at www.amh.com. With that, I will turn the call over to our CEO, Brian Smith.

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

Welcome everyone and thank you for joining us today. As expected, we had a strong start to 2025. Our top line metrics have sequentially accelerated each month since the start of the year, driving zero four six dollars of core FFO per share for the first quarter, which represents growth of 6.6% over the same period last year. A lot has happened in the broader economic environment since we exited the first quarter. Despite this recent market uncertainty, our confidence in strong sector fundamentals and our proven business model remains high.

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

First, housing is a basic need and our high quality well located homes continue to be prioritized by American families. Second, the supply and demand imbalance persists. The U. S. Is still short millions of quality homes and through our unique in house development program, we continue to deliver new inventory to an undersupplied market.

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

In fact, we were recently recognized as the thirty seventh largest homebuilder in the country by Builder Magazine, up from thirty ninth last year. And demand isn't slowing. As millennials continue to age into household formation years, they're driving sustained interest in our homes as they seek out the benefits of single family living without the burdens and cost of homeownership. Finally, AMH's focus on the resident experience is unmatched. Our residents choose us for our prime locations, high quality homes and outstanding service.

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

This results in an industry leading customer experience that is reflected in our national Google score from the first quarter of '4 point '7 out of five stars. Simply put, AMH is well positioned for strength and resiliency because of our investment grade balance sheet, diversified portfolio footprint, leading operating platform and strong resident base. This brings me to our first quarter results. Same home average occupied days continued to strengthen to 95.9% and we delivered new renewal and blended rental rate spreads of 1.4%, four point five % and three point six % respectively. Together these drove same home core revenue growth of 4.3% for the quarter.

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

Core operating expense growth came in at 4.2% driving same home core NOI growth of 4.4% for the quarter. Notably, we were successful on two key revenue optimization objectives this quarter. First, we began to see the results of our lease expiration management initiative, which is designed to strategically align lease expirations with the heightened demand of peak leasing season. Second, we successfully grew occupancy by 50 basis points while absorbing the timing of move outs that resulted from our lease expiration initiatives. This is a testament to the demand for our high quality well located homes and the resiliency of our resident retention, which remains in excess of 70%.

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

Importantly, we accomplished these objectives while also accelerating new lease rate growth each month, which continues to be at the top of the residential sector. Turning to April, leasing activity continues to strengthen. Same home average occupied days was 96.3% and new lease spreads accelerated by 170 basis points over March to 3.9%. Renewal and blended leasing spreads were 4.44.3% respectively, which is consistent with our expectations at the start of the year. Turning to our investment programs, the quarter landed as expected for development deliveries and their initial yields, which were in the low 5% area.

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

As we outlined on our last call, we expect yields to increase as we move through peak leasing season, averaging to the mid 5% range for 2025. As a note, given the timing in the year, we do not expect any potential impacts from tariffs to materially affect full year deliveries and their associated yields in 2025. In addition, there are no changes to acquisition expectations or the pace of dispositions this year. We are remaining patient until attractive opportunities present themselves and we will continue to lean into the disposition program for the time being. To close, our strong first quarter performance reflects both disciplined execution and continued demand for our high quality and well located homes.

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

With that, I will turn the call over to Chris.

[Christopher Lau, CFO & Senior EVP at American Homes 4 Rent]

Thanks, Brian, and good morning, everyone. As usual, I'll cover three areas in my comments today. First, a review of our quarterly results second, an update on our balance sheet and third, I'll close with a few thoughts around our unchanged 2025 guidance. Starting off with our operating results, we delivered a strong start to the year with net income attributable to common shareholders of 110,000,000 or $0.30 per diluted share. On an FFO share and unit basis, we generated $0.46 of core FFO, representing 6.6% year over year growth and $0.42 of adjusted FFO, representing 5.4 year over year growth.

[Christopher Lau, CFO & Senior EVP at American Homes 4 Rent]

From an investment perspective, our development program continues to perform in line with expectations and delivered a total of five forty five homes to our wholly owned and joint venture portfolios during the quarter. Specifically for our wholly owned portfolio, we delivered four twenty four homes for a total investment cost of approximately $173,000,000 Additionally, consistent with our plan, we continue to lean into our disposition program, selling four sixteen properties in the quarter, generating approximately $135,000,000 of net proceeds at an average economic disposition yield in the 3%. Next, I'd like to turn to our balance sheet. At the end of the quarter, our net debt including preferred shares to adjusted EBITDA was 5.3 times. We had approximately $70,000,000 of cash available on the balance sheet and we had a $410,000,000 drawn balance on our revolving credit facility.

[Christopher Lau, CFO & Senior EVP at American Homes 4 Rent]

Additionally, as discussed on our last call, we fully repaid our twenty fifteen SFR1 seconduritization at the end of the first quarter using cash from the balance sheet and capacity from our revolving credit facility that we expect to opportunistically refinance into the unsecured bond market over the course of 2025. And finally, I'm happy to share that S and P Global recently revised AMH's credit rating to positive outlook. This underscores our relentless commitment to prudent balance sheet management and a continually improving credit rating profile over time. Lastly, before we open the call to your questions, I wanted to briefly touch on our 2025 outlook. As expected, the year is off to a strong start with healthy demand and strong leasing activity.

[Christopher Lau, CFO & Senior EVP at American Homes 4 Rent]

That said, the bulk of the spring leasing season is still ahead of us, and we remain mindful of the quickly evolving landscape of potential economic uncertainty ahead. With that in mind, we've left our 2025 guidance unchanged and would like to share a few reminders on the demonstrated strength and resiliency of AMH. Simply put, housing is a necessity. And to this day, our country still needs more high quality options. On top of that, the AMH portfolio has been thoughtfully constructed with a strategic focus on high quality markets and intentional geographic diversification.

[Christopher Lau, CFO & Senior EVP at American Homes 4 Rent]

Our resident base has proven its durability and resiliency, and the consistency and predictability of the AMH operating platform is unmatched, which we believe will continue to position us for strength and further separate AMH going forward. And with that, thank you again for your time, and we'll open the call to your questions. Operator?

[Operator]

Session. So that we may address questions from as many participants as possible, we ask that you limit yourself to one question and one follow-up. If you have additional questions, you may re queue and time permitting, those questions will be addressed. One moment please while we poll for questions. Our first question comes from the line of Jamie Feldman with Wells Fargo. Please proceed.

[Jamie Feldman, Managing Director, Head of REIT Research at Wells Fargo]

Great. Thanks for taking my question. I wanted to I was hoping you could dig more into the strength in your Midwest markets. You've outsized rent growth there. We're curious if that's more of a catch up versus the Sunbelt given high rent growth in the Sunbelt markets during COVID.

[Jamie Feldman, Managing Director, Head of REIT Research at Wells Fargo]

What do you think these markets could continue to outperform on a multiyear outlook? And with that backdrop, what's your appetite to grow your land bank and your development pipeline there given most of your lands in more Southern markets?

[Lincoln Palmer, COO at American Homes 4 Rent]

Thanks, Jamie. I'll make a couple of comments on the Midwest markets themselves, and I'll pass to Brian for comments on potential portfolio expansion. The Midwest, as you mentioned, continued to be a fantastic market for us. We saw that continue into April. New lease spreads there were almost 9% off of 5.8% for first quarter.

[Lincoln Palmer, COO at American Homes 4 Rent]

So great acceleration. As far as what's driving the activity there, we really think it's because of the quality of life and the affordability of those markets. It's part of the reason why we are there. And we just continue to see some migration patterns that look look great going into the Midwest. And I think in addition to the people that are going to that area, we're also seeing people who just value the AMH platform.

[Lincoln Palmer, COO at American Homes 4 Rent]

They value our quality product. They value the areas that we're in. So I'll let Brian comment on the portfolio.

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

Hi, Jamie. This is Brian. In terms of expansion, there's a couple of interesting points. One, if you noticed, we do have a land pipeline in the Columbus market. We're very excited about getting those lots prepared and developed and into the system.

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

It's been a fantastic market for us, so we're looking forward to the results there. And then another one of the benefits to the portfolio deal that we did at the end of last year was we got to add to the Indianapolis portfolio in a time where it's been really difficult through other channels. So yes, we are actively looking for ways to continue to expand our footprint there, but we're doing it responsibly.

[Jamie Feldman, Managing Director, Head of REIT Research at Wells Fargo]

Okay. Thank you for that. And then can you talk about the puts and takes of the heavy presence of public builders in North Florida and Texas, specifically the increased competition for more build to rent supply, also entry level single family homes with rate buy downs? And does this provide an opportunity for external growth or more of a headwind on demand and competition?

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

Yes. There are a number of different things at play there. You can see the effect of some of the build for rent supply and some of the for sale supply and the performance of the San Antonio market over the past, call it, year or so. We're seeing in Texas there, a little bit in Austin as well. The portfolio is still performing well, but the effect of that additional supply is peaking through.

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

With regards to Florida, we've there's been a lot of discussion around Tampa and North Florida. And we're seeing pretty good activity there despite the dynamics of the for sale market and some of the additional supply. We believe that's going to be temporary in nature. There are good indications that built rent supply may have peaked, and you can see it in some of the improvements in occupancy, not just in the Texas and Florida markets, but in Arizona as well.

[Operator]

Thank you. Our next question comes from the line of Steve Sakwa with Evercore ISI. Please proceed.

[Steve Sakwa, Senior Managing Director & Senior Equity Research Analyst at Evercore ISI]

Yes, thanks. I guess good morning out there. Are you doing anything I guess proactively to kind of adjust the leasing strategy at this point? I realize the uncertainty out there has grown, but the fundamentals on the ground today still seem to be quite strong. So I just wasn't sure if you were kind of redirecting the field to do anything differently?

[Steve Sakwa, Senior Managing Director & Senior Equity Research Analyst at Evercore ISI]

Or is it pretty much business as usual until you see meaningful changes in the leasing dynamics?

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

Yes. Thanks, Steve. This is Brian. We have made some changes, as I talked about in prepared remarks. And obviously, we didn't anticipate some of the things that are happening in the current environment.

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

But we had a couple of revenue optimization initiatives that are starting to show. Notably, our lease expiration management initiative is an evolution of our revenue management objectives. And you can see that in the additional move outs that we saw in first quarter. The strategy there is very simply one where we're trying to move expirations into the period of the year that exhibits higher demand and potential for higher rate growth. So that's going to change over kind of our approach historically.

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

In terms of what's happening today and in reaction to changes in the current market, we're seeing fantastic demand that has produced really good results, accelerating April and looking great for Q2. It hasn't led us to make any changes on the ground. Incoming applicants and prospects, the quality has been consistent with what we've seen over the past four or five months.

[Steve Sakwa, Senior Managing Director & Senior Equity Research Analyst at Evercore ISI]

Okay. And then as it relates to the development, I can appreciate the fact that most of the pipeline for this year is built out or committed on price. How do you think about the price risk into next year on the Camden call just finished up? They talked about a very de minimis sort of price increase from kind of the tariffs as they sit here today. Is that sort of your expectation if things were to play out as is that cost increases would be say sub 5%?

[Steve Sakwa, Senior Managing Director & Senior Equity Research Analyst at Evercore ISI]

Or do you feel like there's more pressure on pricing if tariffs stayed where they are?

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

Yes. Thanks, Steve. We're looking very closely at that, and it seems to be changing quite often. But in the event that things are sticky over the long term as they stand now, based on our discussions with other homebuilders and talking with NAHB and so forth, the effect on the tariffs on our development program in particular, we're estimating to be in the 2% to 3% range on our total home delivered home basis. So it is small, and that's partly due to the fact that there's a lot of labor and there's a bunch of other components that come in.

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

And the materials that are being that are subject to tariffs represent a small portion. If they hold, they will have the effect won't really be seen until the end of the year. A lot of our pricing is already locked in for 2025. So we're talking about kind of further down the line and, again, less clarity into whether these are going to continue to stick.

[Operator]

Thank you. Our next question comes from the line of Haendel St. Juste with Mizuho Securities. Please proceed.

[Haendel Emmanuel St. Juste, Managing Director, Senior REIT Analyst at Mizuho Americas]

Hey there, guys. Good morning to you. Maybe just a follow-up on the last question from Steve there. Just can you remind us what percentage of your development costs for home are labor related? You mentioned that there's more labor availability.

[Haendel Emmanuel St. Juste, Managing Director, Senior REIT Analyst at Mizuho Americas]

Curious if there's a sense that there could be some relief or maybe a benefit on that front. Thanks.

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

Thanks, Sandal. This is Brian. It's not an exact estimate, but if you think about the vertical costs, roughly 55% is labor, 45% materials. It varies a little bit here and there. Thinking about it in terms of nearly an even split, and that's on vertical, not including land.

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

And horizontal costs obviously have a larger labor component as well.

[Haendel Emmanuel St. Juste, Managing Director, Senior REIT Analyst at Mizuho Americas]

That's fair. I guess we'll monitor and see how that this evolves on the labor front. My other question was tied to the uptick in turnover in the first quarter, anomaly versus your peers, but again understanding that you have the strategic initiative that you're employing here. Guess I'm curious if you have a sense of how much turnover maybe would have been without the program and perhaps help us understand how much longer we could be seeing higher turnover from this program? Thanks.

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

Yes. Thanks, Haendel. I want to make a distinction between turnover and retention. The turnover we had higher turnover in Q1 because of the lease expiration management initiative, but our retention remained consistent, remained the same as what we saw last year and what our expectations were for the year. So it's really a timing issue.

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

You saw it in the first quarter. There'll be a continuation of that to a certain extent in the second quarter as we're pulling that kind of the ratio of expirations more heavily into the first first two quarters to match those demand levels. But, yeah, the the increase in turnover is nearly completely attributable to that to that initiative.

[Operator]

Thank you. Our next question comes from the line of Eric Wolf with Citi. Please proceed.

[Nick Joseph, Analyst at Citigroup]

Thanks. It's Nick Joseph here with Eric. Recognize it's early in the year and the macro uncertainty that you're seeing, but just given the results through April on same store revenue, if you hit the midpoint of guidance, it assumes a deceleration of about 100 basis points for the remainder of the year. Is that just conservatism given everything that we've talked about? Or are there headwinds in the back half of the year either on other income or occupancy or other things that we should be mindful of?

[Christopher Lau, CFO & Senior EVP at American Homes 4 Rent]

Yeah. Hey, Nick. Chris here. You know, look. I think you you you led kind of part with part of the answer.

[Christopher Lau, CFO & Senior EVP at American Homes 4 Rent]

You know, look. No question. We are watching the economic environment extremely closely. But even if you hypothetically held that to the side, I would just remind everyone that it's also still early in the year. Right?

[Christopher Lau, CFO & Senior EVP at American Homes 4 Rent]

We very much had a great start, and are really encouraged by the activity, and the demand we've seen along with our early spring leasing results that Brian was talking about in prepared remarks that continue to accelerate into the peak of leasing season. But that's really the key point, right? Peak leasing season is still ahead of us. And with that in mind, no different than past years. At this point, it's just a little bit too early to be talking about the guide.

[Christopher Lau, CFO & Senior EVP at American Homes 4 Rent]

But with that said, we very much look forward to sharing additional updates as we progress throughout the balance peak leasing season, and importantly, get to the end of the second quarter.

[Nick Joseph, Analyst at Citigroup]

Makes sense. And then I know you collect a lot of data. Are you seeing anything from the data you collect of a weakening consumer or weakening demand?

[Lincoln Palmer, COO at American Homes 4 Rent]

Thanks, Eric. This is Lincoln. We haven't seen any indications so far of weakening in demand or in consumer behavior. As we go into April, we saw foot traffic increase in our homes from first quarter to April. We saw leasing improve year over year.

[Lincoln Palmer, COO at American Homes 4 Rent]

That's on top of kind of the improved month over month rate growth and occupancy that we saw. So we have no concern so far.

[Operator]

Thank you. Our next question comes from the line of Adam Kramer with Morgan Stanley. Please proceed.

[Adam Kramer, Analyst at Morgan Stanley]

Hey. Good morning, guys. Thanks for the time here. Look. I I think the April results, you know, kind of showed you were able to push occupancy, build occupancy at the same time as pushing rents.

[Adam Kramer, Analyst at Morgan Stanley]

I was wondering as you kind of sit here today, kind of what's what's the priority here? Is it to kind of further build occupancy, or do you feel pretty good with where occupancy is today and, you know, you kind of shift to to being able to push on on the newly side a little bit more?

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

Hey, Adam. This is Brian. Yeah. It's it's always a balance in in revenue optimization, and the timing, the seasonality of the business really plays into that as well.

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

Was really the impetus for our movement with this lease expiration management program. We don't have specific targets for either, but we're looking at the right balance as we get into the spring leasing season. And then once we enter that season, which we see a peak of re leasing rate growth and generally a peak in occupancy, we spend the balance of the year trying to preserve those occupancy levels and be really thoughtful about maintaining good strength coming in as we exit the year. So the way we're seeing it this year is maybe a little bit of a flattening of the occupancy curves as to what we saw last year. But the end, net net consists of that occupancy with twenty twenty four.

[Adam Kramer, Analyst at Morgan Stanley]

Great. And maybe just a higher level question here. When you think about your BTR portfolio, your development portfolio, I I think you're over 10,000 homes at this point. Is there any kind of noticeable difference in the demographics between, you know, the the kind of residents in in the development homes versus the kind of scattered site traditional SFR homes? Any kind of demographic differences, be it age, be it kind of number of people in the household, children, etcetera?

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

Yeah. This is Brian. Surprisingly, we've seen a lot of consistency from the incoming affluent profile between built rent and the scattered site. We haven't seen much of a difference. Obviously, in some cases, rents are a little bit higher on some of the brand new product relative to some of the older product in markets like Atlanta.

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

So there'll be a little bit of a difference in income, but the ratios are still very strong. Our incoming residents, the age demographics, household makeup has been remarkably consistent over the past decade with the changes in incomes maybe slightly outpacing rent growth, So a little bit of improvement from that side, everything else has held pretty constant.

[Operator]

Thank you. Our next question comes from the line of Jeff Scepter with Bank of America. Please proceed.

[Jeffrey Spector, Managing Director at Bank of America]

Great. Thank you. Just to follow-up on guidance. April payrolls did come in stronger than expected today. I guess, you talk about the potential or historical lag between the labor market weakening and its impact on your business and demand trends?

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

Hey, Jeff, this is Brian. The impact on demand trends, we haven't seen that direct of a reaction to any changes in job reports or any kind of immediate effects of macro changes. I think it's for a couple of reasons. One, you look at our product and the fact that housing is fundamental need and we have supply issue in these good markets that comprise our portfolio on kind of the high end. Then finally, as you get down to kind of the street level, the demand backdrop is so strong.

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

We have such a depth of demand. The way that we lease homes is you can think of it in terms of a first in process, but there's a bunch of demand behind that. So we just we haven't seen any effects of movements in either direction. I think the strength of the labor market may have more of an effect on cost of labor and increases and so forth over the long run, but nothing in the immediate.

[Jeffrey Spector, Managing Director at Bank of America]

Sorry. And I meant really just trying to get back to like thinking about the historical lag, meaning it's obviously we're seeing a lot of strength through April. The jobs number came in strong. As we again, we think about the guidance for this year and what could potentially change that or change the trajectory of demand, right, what would be the lag between if we saw weakening in the labor market and an impact on your business? Is that historically three months, six months, twelve months?

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

It's difficult to put a fine point on it for a bunch of different reasons. I was talking through some of the merits of SFR, but one of the things that we haven't talked about on the call yet is just the difference in the unaffordability of owning a home, as one example. That probably has a bigger effect than anything else. Think about the cost of owning similar homes to the ones that we're delivering in the development program. Mortgage rates are extremely high.

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

You've got the issue of insurance, which is runaway in places like Florida, maintenance, So it's very difficult to draw a direct correlation between labor that's any stronger than what you'd see on the affordability measure.

[Operator]

Thank you. Our next question is with Rich Hightower with Barclays. Please proceed.

[Rich Hightower, Managing Director, U.S. REIT Research at Barclays]

I'll take Rich Tower as my queue here guys. I just want to talk about CapEx for a second here. So if I go to just recurring CapEx for home, it was up quite a lot year on year, but then obviously, down quite a lot as we kind of look sequentially over the prior four quarters. So just maybe talk a little bit about the movement, maybe the seasonality in those figures and how just looking at the age of the portfolio, how that metric factors into the decision to sell a property? And when you say you're selling at a kind of an implied three ish cap rate to an end user, does that factor in CapEx you're not spending in the way you think about that metric? Just give me a little more color on that topic.

[Lincoln Palmer, COO at American Homes 4 Rent]

Yeah. Thanks, Rich. This is Lincoln. What you're seeing is a mix of a couple of things. One is we're coming off of a very low comp from first quarter of last year, so that's part of the difference.

[Lincoln Palmer, COO at American Homes 4 Rent]

And then the second part is what Brian talked about, that lease expiration management program that we've initiated that is aligning those expirations with our demand curve. Those incremental move outs in the quarter drove much of that CapEx. And as we pointed out, we ran consistently low for the last several quarters. And setting aside kind of those two issues, we imagine that the run rate for CapEx to be in line with our return.

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

Yeah. And Rich, this is Brian. You're exactly right. There's a very clear correlation between age and the CapEx needs within our portfolio. It's one of the benefits that we've talked about on the new development side, where not only are we bringing new homes into the portfolio to help with the average age, but these are also purpose built for long term durability with extra investments into some really kind of expensive kind of heavier CapEx areas surrounding HVAC roofs as an example.

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

So what's coming into the portfolio should have a much better long term CapEx profile, but certainly a dramatic better in the near term. And then when you look into the way that we're evaluating homes through asset management, evaluate them for disposition. CapEx age is a factor. It's one of the inputs that we do look at. Are a number of different things.

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

Location is probably the top. But getting the noncore assets out, including some homes that are old and might have kind of an expected heavy CapEx burden going forward, would certainly be a factor. And then when we talk about the three CapEx, we're looking at that from the buyer's perspective. And more importantly, you need to understand who we're selling to, and that's the end user. So it's really a difference in use.

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

We're selling good homes into the market. You can see by the disposition prices that we're getting. There's not a ton of deferred CapEx in there, but it is a consideration when we're evaluating individual homes.

[Rich Hightower, Managing Director, U.S. REIT Research at Barclays]

That's great. I'm impressed. I think you guys got every single part of my multipart question there. And then I think just a follow-up in terms of AMH acquiring properties sort of in the the in the open market. I mean, do do you guys remind me.

[Rich Hightower, Managing Director, U.S. REIT Research at Barclays]

Do you guys buy anything directly from other homebuilders? Or is the fact that you have in house development, somehow is there somehow a gating factor that would prevent that from really being sort of an active source of acquisitions for you guys? Just tell me how that works.

[Christopher Lau, CFO & Senior EVP at American Homes 4 Rent]

Yeah. Sure, Rich. Chris here. Over the years, we've and cultivated a very large network of relationships with all of the major homebuilders out there. And we very much actively monitor and keep our finger on the pulse of all aspects of the acquisition market.

[Christopher Lau, CFO & Senior EVP at American Homes 4 Rent]

To give you a little bit of color on what's going on right now, we have seen a pretty notable uptick in builder inventory opportunities. Just to give you some numbers to illustrate the point, this quarter, through that network of national builder relationships, we screened plus or minus 25,000 newly constructed national builder properties, which is a pretty considerable increase. Last quarter, I want to say we screened something more like 15,000 opportunities, so a pretty big uptick quarter over quarter. But similar to our last update, as we screened those properties this quarter, we found that over 80% of them or so fell outside of our disciplined buy box in terms of location, quality, and then importantly, family detached property type, with the remainder of the homes that did come close to our our buy box, with yield averaging, you know, somewhere in the fours, when you use our methodology for underwriting that we consistently apply to both acquisition opportunities and development, which I think really underscores the importance of the development program. Right? The development program provides us the ability to consistently and predictably grow with properties of just unmatched quality and location that you can't buy anywhere else.

[Operator]

Thank you. Our next question comes from the line of David Segal with Green Street. Please proceed.

[David Segall, Senior Analyst at Green Street Advisors, LLC]

Hi, thank you. Maybe just following up on that, if pricing for those assets is in the four handle range, how does that compare to nearby suburban apartment product?

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

David, this is Brian. Think my understanding of cap rates for suburban multifamily would be consistent in kind of the high 4s. But we watch multifamily, but we're not experts in the acquisition market for that.

[David Segall, Senior Analyst at Green Street Advisors, LLC]

Great. And I'm curious about what you think the kind of fair run rate occupancy is for the SFR business? Since prior to the 2020, you're averaging around 95% occupancy. Since then, you've had a few years at 97% or higher. Last year was low 96 and sounds like you're expecting similar this year.

[David Segall, Senior Analyst at Green Street Advisors, LLC]

But what do you think the long run fair occupancy level is?

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

Dave, that's a really good question. It's something that we're thinking about. And you can see of the things that we're discussing this quarter, like the lease expiration management initiative that are kind of addressing that. I've talked about it on prior calls where you're exactly right, ninety five percent was kind of the norm, call it, pre COVID. And now our expectations kind of move the bar up into the ninety six percent range.

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

And there's a number of different reasons for that. One, I think there's a greater appreciation for single family rentals, especially those that are professionally managed. So I think there's recognition from the consumer. And then specifically to AMH, our platform's improved. And we're starting to see a lot of appreciation for our services side of the business.

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

The convenience, You can see it in our Google review scores, our customer service scores that I cited in prepared remarks. So there are a lot of good things that are working in our favor that would support long term expectations in the 96% area.

[Operator]

Thank you. Our next question comes from the line of Brad Heffner with RBC Capital Markets. Please proceed.

[Brad Heffern, Director at RBC Capital Markets]

Yes, thanks. On the leasing spreads to start the year, it's obviously been a number of years since we've seen kind of a typical leasing trajectory. Can you just frame what we've seen so far this year? I'm suspecting you'll say that it's above average, but how does it look compared how would you you would typically expect it in a normal year?

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

Brad, you're exactly right. The last, call it, six months or so haven't been typical when you think about the seasonality. COVID wasn't typical either. There's been a lot of movement around. But it is common to pick up, to have rate improvement.

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

As you enter the New Year, demand picks up strongly into January, foot traffic picks up, the activity, applications, leasing, everything accelerates as you get into the spring leasing season. So the normal trajectory of pick up January into, call it, maybe the MayJune area where you see the peak, potentially April, depending on the year, We're seeing that. And then it's just a question of how steep that curve is. Last year, we had really nice movement in the beginning of the year and then saw some changes in the back half of the year that were a little bit different than normal expectations. And our expectation this year is to have maybe a little bit of a flatter curve and protect the back half of the year differently.

[Brad Heffern, Director at RBC Capital Markets]

Okay. Got it. And then on the development program, you reiterated the 5.5% yield. It does seem pretty tight to acquisition opportunities in kind of the high 4s. I guess, what's the yield premium that you need over other growth options for that program?

[Brad Heffern, Director at RBC Capital Markets]

And then do you see the benefits of the consistency and all the other things that you talk about with that sort of offsetting maybe the normal development math that we would normally think of, of like 100 or 150 basis point spread?

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

Yes. Thanks, Brad. There are a number of different things. I'm going to start with what we're delivering through our development program and the quality and the locations. These are homes that you just couldn't buy.

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

You certainly couldn't buy the locations. And then when you add the fact that these are purpose built to our specifications, you're incorporating over a decade of experience from the rental side, a very, very in-depth analysis into what our residents and consumers are looking for. And we've optimized that delivery not only in the way that it's designed but in the materials that we're putting in. There we saw some great opportunities to come in and put in upgraded materials that are strong from a maintenance and durability perspective and also really appreciated by the residents. So we're building a little bit of a different house.

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

And second, we're we're very focused on single family detached. I've talked about it in prior calls. And a lot of the built to rent, a lot of the other product out there is is townhome in nature. If I remember John Burns' estimates that around 20% of build to rent deliveries were single family detached in some of the markets. So what we're delivering is a slightly different product.

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

The locations are outstanding. It's not the same location or product that's being offered by the national builders. So when you look at the yield premium, if we were to try to go out and buy what we're buying, we're getting at least a hundred basis point premium on top of that. Then we're also talking about the yields going in, day one yields as those homes are being delivered, in many cases, into actively delivering communities and active construction sites.

[Christopher Lau, CFO & Senior EVP at American Homes 4 Rent]

Brad, it's Chris here. Just to illustrate know, the few more data points, you know, probably the the better way if we're looking to compare yields, between development versus acquisition opportunities is to look at the the things and opportunities that we're evaluating in the market right now. Right? I I already talked about the fact that we screened, you know, 25,000 national builder opportunities this quarter. When when you look at yields on those using our measuring stick, those yields, as I mentioned, are are somewhere in the fours.

[Christopher Lau, CFO & Senior EVP at American Homes 4 Rent]

Today, as we're thinking about new land going into the development program, there's a few places where we're backfilling land into the pipeline to refill projects that are being delivered. And new land that we're looking at is into the area or six plus area. Right? So pretty meaningful difference between the two when you're using a comparable measuring stick on both sides. And then the other thing that I'd just remind you of is that we're thinking about, you know, the development program and the sizing of it.

[Christopher Lau, CFO & Senior EVP at American Homes 4 Rent]

It's really important to keep in mind the capital sourcing of it. Right? And and the fact that I know that we've kind of broken record at this point, but it's it's a really important one, is that we have the program strategically sized such that any given year of of development capital needs is fundable through a combination of retained cash flow from the business, recycled capital from dispositions, which right now in this environment, scream very attractively, and then a modest level of debt capacity that grows each year off of the balance sheet as EBITDA grows.

[Operator]

Thank you. Our next question comes from the line of Daniel Tricarico with Scotiabank. Please proceed.

[Daniel Tricarico, Associate Director - Equity Research at Scotiabank]

Yes. Thanks for the time. Chris, looking for an update on the FFO bridge you provided in the Q4 release, the $09 headwind from financing costs. Obviously, there's still some work to do on that front. Curious how you're thinking about that today, where you could issue unsecured?

[Daniel Tricarico, Associate Director - Equity Research at Scotiabank]

And also, you had the anticipated repayment date in April, for the twenty fifteen-one, but along the line to repay it. So curious if there's anything to read into there. Thanks.

[Christopher Lau, CFO & Senior EVP at American Homes 4 Rent]

Great question. And I would start by saying no real changes from a capital plan perspective or expectations on the year, recall that the zero nine dollars that you pointed out, there's a couple of different pieces there. There's a couple of pennies from just regular way growth in terms of financing cost. There's the incremental cost from the fourth quarter portfolio that we acquired. That's about $04 of the $09 And then I think it was about $03 or so that was in there in terms of refinancing of the securitizations.

[Christopher Lau, CFO & Senior EVP at American Homes 4 Rent]

You're exactly right. We have two securitizations that we expect to repay over the course of this year. As you point out, one of which we repaid at the end of the first quarter, the second of which we expect to repay in the back half of this year. Importantly, as that second securitization for this year is paid off, that's our last one, which means the balance sheet will become 100% unencumbered at that point, big milestone for us. And then importantly, over the course of this year, as those two securitizations are paid off, that will free up about 9,000 homes or so that can now be freely reviewed reviewed by our asset management and disposition program.

[Christopher Lau, CFO & Senior EVP at American Homes 4 Rent]

So great opportunity there to continue to attractively recycle capital and optimize the portfolio. In terms of refinancing of those, the game plan remains the same. Refinancing into the unsecured bond market, call it one to two trips to the bond market over the course of this year is what we're contemplating, what's factored into the guide, and it's still our expectations. As we all know, April had was a volatile month terms of bond market conditions. It does feel like the last week or so settled down a touch.

[Christopher Lau, CFO & Senior EVP at American Homes 4 Rent]

There was a REIT issuer in the marketplace yesterday. It sounds like that deal went very well, and so I think that that's a good sign for the market. And we're going to be very prudent and opportunistic as we think about bond market windows over the balance of this year. Today, if we were to issue in the market, hard to say exactly, but I'd guesstimate top high fives or so in terms of new issue ten year unsecured debt.

[Daniel Tricarico, Associate Director - Equity Research at Scotiabank]

Helpful, Chris. Thanks. And I wanna follow-up on Steve's question from earlier. Brian, on on the q one call, you you said half of the vertical and contracted labor for twenty five deliveries have been spoken for ahead of the, the tariffs. So I'm curious what percentage of the remainder of '25 and '26 are spoken for today?

[Daniel Tricarico, Associate Director - Equity Research at Scotiabank]

And then on the 2% to 3% impact you mentioned earlier, can you just give some more details on the magnitude of increase for the bigger drivers of that?

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

Sure. Yes. We had a rough estimate on the first call of half, and I think that's been kind of pushed back until later in the year. It's difficult to pinpoint it with active developments in different stages, but I would think of it as less than a half year effect. And what we're talking about, too, is the event that these tariffs stick as currently planned and they're shifting and adjusting so frequently, it's difficult to really put a fine point on it.

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

But if I did just think through it, I'd probably shift that half to effects maybe being seen towards the end of the third quarter. So quarter, quarter plus would be my guess. And then as you get into 2026, it's pretty far out there. So I hesitate to speculate too much on how much of that's going to remain in the next year because there are a ton of other factors at play, too. If there's stickiness in these price increases, does it affect builder appetite?

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

Does it affect other aspects of the business? So it starts to get a little bit long on the assumption side.

[Operator]

Thank you. Our next question comes from the line of Michael Goldsmith with UBS. Please proceed.

[Michael Goldsmith, US REITs Analyst at UBS Securities LLC]

Good afternoon. Thanks a for taking my question. I think we talked a little bit earlier about the demographics of Developed versus Scattersight, but maybe you could talk a little bit about any difference in performance there. And do you see any difference in rent growth or turnover? Maybe said another way, do people stay longer in a new home?

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

Yes. Thank you. This is Brian. We're taking a look at let me start by going back to the development, the way that we talk about kind of initial yields and then the concept of stabilized communities because I think they're very different. The communities, once they're stabilized, the construction traffic is gone, the amenity centers are complete, and they start to kind of operate as you would expect from a longer term basis without the distractions of a lot of the other things. So if you take a look at those, and those comprise some of the ones that are in the same home pool for 2025, we're seeing, as expected, a much lower cost to maintain. They're quicker to turn. The rate growth is consistent with the scattered site at this point, but we see upside in that going forward. And then on the retention side, it's important that as they continue to season, we'll see improvements as some of the longer term tenants really stay in these communities. So nothing dramatically different there, but early conclusions support our thesis on the cost and the speed to turn side.

[Michael Goldsmith, US REITs Analyst at UBS Securities LLC]

Got it. And then just a quick follow-up here. You maintained your guidance for same store revenue and expense, but just wondering if there were any kind of under the hood changes in the buildup or assumptions where there may be some offsetting pieces.

[Christopher Lau, CFO & Senior EVP at American Homes 4 Rent]

Michael, Chris here. Not particularly. I would say on on both sides, you know, things are are going pretty according to plan, as we're building into the peak of leasing season in terms of the top line. Building blocks, largely still unchanged. Full year outlook, 3.5% at the midpoint.

[Christopher Lau, CFO & Senior EVP at American Homes 4 Rent]

Both Brian and Lincoln talked a little bit about still expecting occupancy on a full year basis, low 96s. That's pretty flat year over year. At this point, still seeing an average realized rent growth in the high 3s or so into currently bad debt in the low ones on a full year basis. So building blocks largely unchanged there. And similar story on the expense side.

[Christopher Lau, CFO & Senior EVP at American Homes 4 Rent]

Full year outlook still unchanged at 4%. As we know, property taxes are essentially back to long term average at this point in the 4% to 5% area. Obviously, we'll receive more property tax information over the balance of the year. First quarter is a pretty quiet property tax information period. Insurance renewal is done at this point, and we see the balance of expenses and controllable still being mid single digits.

[Christopher Lau, CFO & Senior EVP at American Homes 4 Rent]

So fairly similar to what our expectations were overall and the individual building blocks on a full year basis.

[Operator]

Our next question comes from the line of Jesse Letterman with Zelman and Associates.

[Jesse Lederman, Associate Director at Zelman & Associates]

Questions on the development pipeline, but maybe thinking a little bit further out. So current deliveries have been a little bit heavier in Florida and the Sunbelt, obviously, based on investment decisions in land that was bought several years ago. And as you think several years from now based on land you're acquiring today, where should we expect growth in the portfolio to come from a geographic perspective?

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

Yes. Thanks, Jesse. This is Brian. Goes back to one of the first questions on the call. There are certain areas that we're focused on.

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

You can see development coming into Columbus further down the pipeline. In terms of specifics, we're constantly evaluating through our asset management program, our land holdings and whether we're matching and allocating to the right areas. I would consider over the long run, we're very pleased with the markets that we're delivering in. If there's any change, we could probably see an acceleration into the Carolinas. Midwest is going to be really good going forward.

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

But there's a bunch of different things to balance. We're matching that investment with demand and also with the availability of land and the type of opportunities that we see. We remain very, very focused on location and a specific buy box. So there's a number of different things at play. But I would expect to see continued investment in the markets that we're investing in now and maybe a little bit of a refocus into Carolinas and potentially a slight uptick in the Midwest.

[Jesse Lederman, Associate Director at Zelman & Associates]

Okay. That's really helpful. Second question is on the portfolio acquisition from last year. Just curious how that's trending relative to your expectations. I know you're assuming some growth in the yield based on assimilating that into your platform.

[Jesse Lederman, Associate Director at Zelman & Associates]

Just curious on how that's trending thus far, though it's early. Any color there would be great. Thanks again.

[Christopher Lau, CFO & Senior EVP at American Homes 4 Rent]

Yes, sure. Thanks, Jesse. Chris here.

[Christopher Lau, CFO & Senior EVP at American Homes 4 Rent]

Update is fairly similar to last quarter. You're right. It's early, but things are going really well so far. At this point, we're now done with our transition plan, moving properties onto the AMH platform. And we're quickly getting to work, as you point out, bringing performance of those properties up to our standards, where we know there's a lot of opportunity to create value, right?

[Christopher Lau, CFO & Senior EVP at American Homes 4 Rent]

As we think about opportunities to improve collections and bad debt, overlay our best in class revenue optimization program, and then importantly, implement, you know, our caliber of of cost controls, all of which we see occurring over the course of this calendar year. That was the plan at the start, with the portfolio really hitting stabilization by the end of this year. So punch line is going well so far, everything on track.

[Operator]

Thank you. Our next question comes from the line of Austin Wergersmith with KeyBanc Capital Markets. Please proceed.

[Austin Wurschmidt, Senior Equity Research Analyst at KeyBanc Capital Markets]

Great. Thanks and hello out there. Just curious if you guys continue to see an improvement in your cost of equity, if there's any parts of the business that you'd lean into a little more from a capital allocation perspective, acquisitions, obviously, development? And just wondering if the hurdle rate returns have changed at all just taking into account the greater uncertainty in the economic backdrop.

[Christopher Lau, CFO & Senior EVP at American Homes 4 Rent]

Hey, Austin. Chris here. You know, look, I would start by reiterating what I mentioned a couple minutes ago, as we think about, you know, the core of our growth being the development program. Again, reminder, intentionally sized so that it does not require equity. So that then equity or incremental debt for that matter become opportunistic weapons exactly as you point out.

[Christopher Lau, CFO & Senior EVP at American Homes 4 Rent]

As we think about prioritization of incremental capital opportunities, it depends. Right? And it's all relative at the time. But I would say, you know, there's opportunity to to potentially do more from a development standpoint, national builder opportunities. As I mentioned, you know, we're screening a lot of those.

[Christopher Lau, CFO & Senior EVP at American Homes 4 Rent]

Of course, we continue to keep our finger on the pulse of the MLS. It feels like that's a ways off, we watch it closely. And then the last point that I would make is the additional portfolio opportunity side of the business. Right? We've talked about this before, but we're very optimistic on the number of assembled portfolio opportunities that we know are out there.

[Christopher Lau, CFO & Senior EVP at American Homes 4 Rent]

Right? And what we especially like about those, like we're just talking about on the last question from Jesse, is the potential to uniquely unlock value by bringing those types of portfolios onto the AMH platform. Right? I think the fourth quarter acquisition is just the perfect example of the value that we can create there. As I say that, I probably should remind that we also recognize that there is a variety in quality levels out there in many of the assembled portfolios.

[Christopher Lau, CFO & Senior EVP at American Homes 4 Rent]

And as everyone knows, we are unwavering on our commitment to the AMH Buy Box. But again, we love the idea of this portfolio opportunities down the road when they meet our Buy Box and then importantly at the right pricing levels relative to our then cost of capital.

[Austin Wurschmidt, Senior Equity Research Analyst at KeyBanc Capital Markets]

And then just pivoting a little bit to an earlier question about the pricing dynamics going on between Midwest versus Sunbelt. You also had some commentary on affordability gap of, versus owning a home. I guess how does the affordability stream from just a rent to income perspective regionally and and within some of your larger core markets?

[Lincoln Palmer, COO at American Homes 4 Rent]

Yeah. Thanks for the question. This is Lincoln again. It's interesting how these, dynamics work across the portfolio. For for the vast majority of the portfolio, we're seeing kind of the same dynamics as we we have been in the past with continued affordability to rent versus buy.

[Lincoln Palmer, COO at American Homes 4 Rent]

One interesting call out in the data that we're seeing is in our Midwest markets as an example, we have the smallest delta. So it's been interesting to watch. I think that's just another indication that it's a desirable place to live and there's opportunity there for families to to have quality housing. Other places where the gaps are biggest, is, Salt Lake City as an example, is is running around 40%. And then rest of the market's kind of averaging to to around that that thirty thirty mark, twenty seven twenty seven to 30.

[Lincoln Palmer, COO at American Homes 4 Rent]

So overall, we're we're just pleased with the fact that we continue to see strength despite some of the changes in in the dynamics around the available homes. That's been a big question from the home buying side. And we continue to see people just value AMH in our homes and our locations and come into our portfolio, especially during these times of more affordability.

[Operator]

Thank you. Our next question comes from the line of Linda Tsai with Jefferies. Please proceed.

[Linda Tsai, Senior Analyst at Jefferies]

Yes. Hi. Any additional color you could share on your lease management initiative? How much improvement do you foresee in rate or any other benefits you could quantify? And how long is the tail for this improvement?

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

Hi, Linda. This is Brian. Yep. The benefits are are are pretty simple for us. If if you wanna talk about rate and and keep in mind, this is part of really a broader revenue optimization focus that we've been talking about for a long time.

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

There is upside to the program. What we've implemented today really applies to the way we're treating renewals and the timing and length of those renewal options. Ultimately, we will advance that to initial new leases, but at the current time, it's just focused on the renewal side of the business. We're looking today at balances somewhere in the neighborhood of maybe 60% of the leases expiring in the first half of the year. And if you look at the re leasing rate growth between kind of the peak of spring leasing season and some of the fringe seasons, you can kind of back into some of the benefits that we would see there.

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

And then when those come due the following year, those benefits continue to accrue in the event of a move out. So there's a bunch of different positives associated with the program. I don't have an exact perfect balance because it's going to be a moving target. But just the starting point of recognizing the seasonality of the business, the difference in pricing power between the months, who our target, residents are, this is a very good start.

[Linda Tsai, Senior Analyst at Jefferies]

Is it a multiyear improvement where the, benefit is larger initially? And then, you know, as it grows, it sort of tapers down over time?

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

Yeah. Well, again, it's part of a broader initiative. So in in the in the current year, you might carry a little bit of extra vacancy during the the the move out period, but you make up for it in better rates. So there are a bunch of kind of counterbalancing factors. But, again, part of a broader initiative, this matches kind of work and demand and timing.

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

And the other note that I haven't made yet, this isn't something that we're forcing on our residents. This is something that's very good for our residents too. We're giving them choices, and they're selecting into this. So it it it matches their needs as well, which over the long run will will be a huge benefit too.

[Operator]

Thank you. Our next question comes from the line of Omotayo Okusanya with Deutsche Bank. Please proceed.

[Omotayo Okusanya, Managing Director at Deutsche Bank]

Hi. Yes. Good afternoon. Most of my questions have been answered, but quick one on repairs and maintenance. Just curious how that you expect that to trend over the course of the year just given some other concerns about tariffs and potential impact on material costs and things of that nature.

[Christopher Lau, CFO & Senior EVP at American Homes 4 Rent]

Yes. Sure, Tayo. Chris here. I touched on it a bit, when I was covering kind of the full year outlook on expenses. But as we think about controllables overall, look, exactly as you said, we're watching the evolving tariff situation very closely.

[Christopher Lau, CFO & Senior EVP at American Homes 4 Rent]

But we remain encouraged by a couple of things. One, just the sheer level of the proportion of work that we are able to perform in house with our own AMH personnel and then also the maturity and versatility of our supply chain that the team has worked really hard to develop and invest into over the years. And so at this point, full year outlook on controllables, still unchanged, contemplates mid single digit, call 4% to 5% overall growth for the full year. Would just be one call out that general expectation is that we would see first half of the year running slightly above full year average given the strategic timing of move outs from our lease expiration management program. But, you know, again, we'll continue to keep everyone updated, on on tariff and supply chain over the course of the year as we all have have more clarity.

[Omotayo Okusanya, Managing Director at Deutsche Bank]

That's helpful. Then if I may ask another one, just Washington State, again, they have this proposed new rent control policy, but they kind of included everyone except single family for rent. Just kind of curious whether that was more from a lobbying perspective where you guys were excluded, if you have any kind of thoughts about why SFR's in particular were excluded from that initiative.

[Lincoln Palmer, COO at American Homes 4 Rent]

Yeah. Thanks for the follow-up question. This is Lincoln. Our government affairs team is constantly watching these developments across the country. And in conjunction with our legal team, we're we're drafting adaptations to our business to make sure that we can be compliant.

[Lincoln Palmer, COO at American Homes 4 Rent]

My understanding is is that this one hasn't been signed yet, although it has passed both houses. The the mechanics of it are essentially rents are capped at the the lesser of seven plus CPI or 10%. And there is a carve out for newer homes that are that are built within the last twelve years, which which bodes well for our development program. My understanding is that this does apply to our business outside of that. So we're watching it carefully.

[Lincoln Palmer, COO at American Homes 4 Rent]

We have been undeviating in our message that the country needs more housing. AMH is where we're proud to be a part of the solution as a provider of rental housing and as the nation's thirty seventh largest homebuilder. Despite best intentions, this and other regulations like it are only going to serve to discourage investment in housing of all types and negatively impact affordability, especially for the third of Americans that choose to rent. We're going to continue to adapt. In the meantime, we're going to just be focused on being part of the solution.

[Operator]

Thank you. Our last question comes from the line of Steve Sakwa with Evercore ISI. Please proceed.

[Steve Sakwa, Senior Managing Director & Senior Equity Research Analyst at Evercore ISI]

Yes, thanks. Just one quick follow-up and if I missed it, I apologize. Did you guys touch on bad debt? It was up about 18% in the quarter and it's running maybe close to 1%. I know your peer reported a number that was probably closer to 70 basis points and theirs was down year over year. So just anything going on bad debt?

[Christopher Lau, CFO & Senior EVP at American Homes 4 Rent]

Yes. Steve, Chris here. Good question. We actually did not touch on that yet. I would say as we think about general collection trends and activity so far in the year, things are feeling good.

[Christopher Lau, CFO & Senior EVP at American Homes 4 Rent]

You're right, first quarter bad debt landed at 1%. A touch above same quarter last year, but keep in mind, last year moved around a little bit, 20 basis points down sequentially over the fourth quarter. The one thing that I would remind is thinking about the year overall. Don't forget that collections and bad debt typically have correlation with the seasonal leasing curve. And first quarter is typically one of the lower points for bad debt over the course of the full calendar year.

[Christopher Lau, CFO & Senior EVP at American Homes 4 Rent]

Zooming out a little bit more, collections feeling good, but we still haven't seen much change in the past couple of months with those few remaining municipalities and court systems that we've been talking about that continue to process at lower than typical or slower than typical time lines. So we feel good about the beginning of the year. But at this point, as we think about the full year, our outlook in the low ones still feels about right for now. That's what we have contemplated in the guide, and we'll continue to keep you updated as we progress throughout the second quarter.

[Steve Sakwa, Senior Managing Director & Senior Equity Research Analyst at Evercore ISI]

Great. Thanks. That's it for me. Thanks, Deepa.

[Operator]

Thank you. There are no further questions at this time. I'd like to pass the call back over to management for any closing remarks.

[Bryan Smith, CEO & Trustee at American Homes 4 Rent]

Yes. Thank you all for your time today. Hope everyone has a good weekend and I look forward to seeing many of you next month at NAREIT. Thank you.

[Operator]

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Participants

Executives

• Nick Fromm, Director of Investor Relations
• Bryan Smith, CEO & Trustee
• Christopher Lau, CFO & Senior EVP
• Lincoln Palmer, COO

Analysts

• Jamie Feldman, Managing Director, Head of REIT Research at Wells Fargo
• Steve Sakwa, Senior Managing Director & Senior Equity Research Analyst at Evercore ISI
• Haendel Emmanuel St. Juste, Managing Director, Senior REIT Analyst at Mizuho Americas
• Nick Joseph, Analyst at Citigroup
• Adam Kramer, Analyst at Morgan Stanley
• Jeffrey Spector, Managing Director at Bank of America
• Rich Hightower, Managing Director, U.S. REIT Research at Barclays
• David Segall, Senior Analyst at Green Street Advisors, LLC
• Brad Heffern, Director at RBC Capital Markets
• Daniel Tricarico, Associate Director - Equity Research at Scotiabank
• Michael Goldsmith, US REITs Analyst at UBS Securities LLC
• Jesse Lederman, Associate Director at Zelman & Associates
• Austin Wurschmidt, Senior Equity Research Analyst at KeyBanc Capital Markets
• Linda Tsai, Senior Analyst at Jefferies
• Omotayo Okusanya, Managing Director at Deutsche Bank