American Homes 4 Rent Announces Pricing of Public Offering of $500 Million of 5.500% Senior Notes due 2034

Rhea-AI Summary

American Homes 4 Rent (NYSE: AMH) has announced the pricing of a $500 million public offering of 5.500% senior notes due 2034. The notes will be issued at 99.455% of par value with semi-annual interest payments starting January 15, 2025. Maturity is set for July 15, 2034. The offering is expected to close on June 26, 2024, subject to customary closing conditions.

The proceeds will be used to repay outstanding debts, including the 2014-SFR3 asset-backed securitization notes, and for general corporate purposes like property acquisitions and improvements. Leading financial institutions including BofA Securities and J.P. Morgan are managing this offering.

Positive

• Successful pricing of $500 million senior notes, indicating strong market demand.
• Interest rate of 5.500% is competitive.
• Proceeds will be used to repay outstanding debts, improving financial stability.
• Funds allocated for property acquisitions and improvements, potentially enhancing asset value.

Negative

• Issuing notes at 99.455% of par value, indicating a slight discount.
• Increased debt obligations with the issuance of new notes.

Financial Analyst

The issuance of $500 million of 5.500% Senior Notes due in 2034 by American Homes 4 Rent reflects a strategic move to manage their capital structure more efficiently. This allows the company to refinance existing debt, potentially reducing their average cost of borrowing, especially given the current interest rate environment. The allocation of proceeds for general corporate purposes including property acquisitions and developments signals an intent to expand their asset base and invest in growth, which could be favorable for long-term shareholders. However, investors should monitor the company's debt levels and its ability to service this new debt. The Notes being issued at 99.455% of par value indicates a slight discount, which may attract investors seeking steady income. It's important to consider the 10-year maturity and compare this rate with other fixed-income opportunities in the market.

Market Research Analyst

This public offering can be seen as a signal of confidence from American Homes 4 Rent in the strength of the housing market and their business model. By securing long-term funding, the company aims to capitalize on opportunities in property acquisitions and improvements. Given the company's portfolio focus, the allocation towards redevelopment and expansion could improve property values and rental income streams over time, which would benefit stakeholders. The 5.500% coupon rate is attractive in the current market climate, potentially appealing to income-focused investors. However, it’s important to keep an eye on how effectively the company utilizes these funds to drive growth and enhance shareholder value.

LAS VEGAS, June 18, 2024 /PRNewswire/ -- American Homes 4 Rent (NYSE: AMH) (the "Company") today announced that its operating partnership, American Homes 4 Rent, L.P. (the "Operating Partnership"), has priced an offering of $500 million aggregate principal amount of 5.500% Senior Notes due 2034 (the "Notes"). The Notes will be issued at 99.455% of par value with a coupon of 5.500% per annum. Interest on the Notes is payable semi-annually in arrears on January 15 and July 15 of each year, commencing January 15, 2025. The Notes will mature on July 15, 2034. The offering is subject to the satisfaction of customary closing conditions and is expected to close on or about June 26, 2024.

The Operating Partnership intends to use the net proceeds from the offering for the repayment of outstanding indebtedness, which may include the repayment or voluntary prepayment of all or a portion of the outstanding 2014-SFR3 asset-backed securitization notes, as well as general corporate purposes, including, without limitation, property acquisitions and developments, the expansion, redevelopment and/or improvement of existing properties in the Company's portfolio, other capital expenditures, working capital and other general purposes.

BofA Securities, Inc., J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and Wells Fargo Securities, LLC are acting as joint book-running managers and representatives of the underwriters for the offering, and PNC Capital Markets LLC, Raymond James & Associates, Inc., Citigroup Global Markets Inc., Mizuho Securities USA LLC and Scotia Capital (USA) Inc. are acting as book-running managers for the offering. Regions Securities LLC, U.S. Bancorp Investments, Inc., RBC Capital Markets, LLC and Samuel A. Ramirez & Company, Inc. are acting as co-managers for the offering.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any offer or sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful before registration or qualification thereof under the securities laws of any such state or jurisdiction. 

The offering is being made pursuant to an effective shelf registration statement filed with the Securities and Exchange Commission (the "SEC") and only by means of a prospectus and prospectus supplement.  Copies of the preliminary prospectus supplement relating to the offering and the final prospectus supplement, when available, may be obtained by visiting EDGAR on the SEC's website at www.sec.gov or from BofA Securities, Inc., 201 North Tryon Street, NC1-022-02-25, Charlotte, NC 28255-0001, Attn: Prospectus Department, by telephone at 1-800-294-1322 or by email at dg.prospectus_requests@bofa.com; J.P. Morgan Securities LLC, Attn: Investment Grade Syndicate Desk, 383 Madison Avenue, New York, NY 10179, or by telephone at 1-212-834-4533 (collect); Morgan Stanley & Co. LLC at 1585 Broadway, 29th Floor, New York, New York 10036, attention of Investment Banking Division, facsimile: (212) 507-8999 and Wells Fargo Securities, LLC, Attn: WFS Customer Service, 608 2nd Avenue South, Suite 1000, Minneapolis, MN 55402, at 800-645-3751 or email: wfscustomerservice@wellsfargo.com. 

About AMH

American Homes 4 Rent (NYSE: AMH) is a leading large-scale integrated owner, operator and developer of single-family rental homes. We're an internally managed Maryland real estate investment trust (REIT) focused on acquiring, developing, renovating, leasing and managing homes as rental properties. Our goal is to simplify the experience of leasing a home and deliver peace of mind to households across the country. As of March 31, 2024, we owned nearly 60,000 single-family properties in the Southeast, Midwest, Southwest and Mountain West regions of the United States.

Forward-Looking Statements

This press release contains "forward-looking statements" that relate to beliefs, expectations or intentions and similar statements concerning matters that are not of historical fact and are generally accompanied by words such as "estimate," "project," "predict," "believe," "expect," "anticipate," "intend," "potential," "plan," "goal," "outlook," "guidance" or other words that convey the uncertainty of future events or outcomes. Examples of forward-looking statements contained in this press release include, among others, the Operating Partnership's ability to complete the offering and the intended use of net proceeds. The Operating Partnership has based these forward-looking statements on its current expectations and assumptions about future events. While the Operating Partnership's 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 the Operating Partnership's control and could cause actual results to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company or the Operating Partnership undertakes no obligation to update any forward-looking statements to conform to actual results or changes in their expectations, unless required by applicable law. For a further description of the risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks relating to the business of the Company in general, see the Company's and the Operating Partnership's Annual Report on Form 10-K for the year ended December 31, 2023, and in the Company's and the Operating Partnership's subsequent filings with the SEC.

AMH Contact:

Nicholas Fromm
Investor Relations
Phone: (855) 794-2447
Email: investors@amh.com  

 

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SOURCE AMH

FAQ

What is the interest rate for American Homes 4 Rent's new senior notes?

The interest rate for American Homes 4 Rent's new senior notes is 5.500% per annum.

When will the interest payments for AMH's new senior notes start?

Interest payments will start on January 15, 2025, and will be paid semi-annually thereafter.

What is the maturity date for American Homes 4 Rent's newly issued senior notes?

The senior notes will mature on July 15, 2034.

What will American Homes 4 Rent use the proceeds from the senior notes offering for?

The proceeds will be used to repay outstanding debts and for general corporate purposes, including property acquisitions and improvements.

When is the expected closing date for AMH's senior notes offering?

The closing date for the senior notes offering is expected to be on or about June 26, 2024.