LAS VEGAS - American Homes 4 Rent (NYSE: NYSE:AMH), a $15.9 billion market cap real estate investment trust specializing in single-family rental homes with annual revenue of $1.7 billion, has announced the pricing of a $500 million senior notes offering. According to InvestingPro data, the company maintains a healthy 2.72% dividend yield and has raised its dividend for 4 consecutive years, making it an interesting player in the REIT sector. The notes, which carry a 5.250% interest rate and are due in 2035, will be issued at 99.484% of their par value.
Interest on these notes is set to be paid semi-annually, starting on March 15, 2025, with the first payment date being September 15, 2025. The notes are expected to mature on March 15, 2035, and their issuance is subject to customary closing conditions. The transaction is anticipated to close around December 9, 2024.
The operating partnership of American Homes 4 Rent plans to allocate the net proceeds from this offering towards repaying existing debt. This may include paying off amounts on its revolving credit facility and potentially prepaying some of its asset-backed securitization notes from 2015. Additionally, funds may be used for general corporate purposes, which encompass property acquisitions, development, and improvements, as well as other capital expenditures and working capital needs.
Several financial institutions are managing the book-running for the offering, including J.P. Morgan Securities LLC, BofA Securities, Inc., PNC Capital Markets LLC, and Wells Fargo (NYSE:WFC) Securities, LLC. Other firms, including Citigroup (NYSE:C) Global Markets Inc. and Morgan Stanley (NYSE:MS) & Co. LLC, among others, are also participating as book-running managers or co-managers.
The offering is made under an effective shelf registration statement with the Securities and Exchange Commission. Interested parties can obtain copies of the prospectus and related documents through the SEC's EDGAR service or directly from the managing financial institutions.
As of the end of the third quarter of 2024, American Homes 4 Rent owned nearly 60,000 single-family properties across various regions in the United States. The company maintains a GOOD financial health score according to InvestingPro, which offers comprehensive analysis through its Pro Research Reports, available for over 1,400 US stocks including AMH. While currently trading at $37.69, InvestingPro's Fair Value analysis suggests the stock may be overvalued at current levels. The company's press release includes forward-looking statements regarding the completion of the offering and the intended use of the proceeds. These statements are subject to various risks and uncertainties, and the company does not undertake any obligation to update them.
This news article is based on a press release statement.
In other recent news, American Homes 4 Rent reported robust financial results for the third quarter, with a 4.4% year-over-year revenue growth and a 5.4% increase in core net operating income. The company's development program is set to deliver 2,300 homes this year, having already acquired 1,700 homes for $480 million, with a projected 6% net operating income. Despite challenges such as hurricane impacts, it reported net income of $73.8 million, or $0.20 per diluted share, and revised its 2024 guidance to include core funds from operations of $1.77 per share.
Investment firm Evercore ISI upgraded American Homes 4 Rent from "In Line" to "Outperform", suggesting a potential return of approximately 16%. The upgrade was prompted by expectations that high mortgage rates will continue to fuel demand for single-family rentals, potentially increasing the company's pricing power in 2025 and beyond.
However, Keefe, Bruyette & Woods adjusted the price target for American Homes 4 Rent to $38 from the previous $39, while maintaining a Market Perform rating on the stock. This adjustment followed the company's third-quarter results, which surpassed expectations due to improved property revenue and reduced property operating expenses.
These recent developments indicate a robust performance by American Homes 4 Rent, driven by strategic acquisitions and development programs. The company remains optimistic about capturing market demand and maintaining strong performance into 2025.
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