American Homes 4 Rent (AMH) CEO David Singelyn on Q1 2022 Results - Earnings Call Transcript - Seeking Alpha

American Homes 4 Rent (NYSE:AMH) Q1 2022 Earnings Conference Call May 6, 2022 12:00 PM ET
Company Representatives
David Singelyn – Chief Executive Officer
Jack Corrigan – Chief Investment Officer
Bryan Smith – Chief Operating Officer
Chris Lau – Chief Financial Officer
Nick Fromm – Senior Manager of Investor Relations
Conference Call Participants
Nick Joseph – Citigroup
Adam Kramer – Morgan Stanley
Jaun Sanabria – BMO Capital Markets
Brian Spahn – Evercore ISI
Joshua Dennerlein – Bank of America
Sam Choe – Credit Suisse
Haendel St. Juste – Mizuho
Jade Rahmani – KBW
Dennis McGill – Zelman & Associates
Linda Tsai – Jeffries
John Pawlowski – Green Street
Austin Wurschmidt – KeyBank
Buck Horne – Raymond James
Chandni Luthra – Goldman Sachs
Brad Heffern – RBC Capital Markets
Michael Bilerman – Citigroup
Operator
Greetings! Welcome to American Homes 4 Rent First Quarter 2022 Earnings Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. Please note, this conference is being recorded.
I will now turn the conference over to Nick Fromm, Senior Manager of Investor Relations. Please begin.
Nick Fromm
Good morning. Thank you for joining us for our first quarter 2022 earnings conference call. With me today are David Singelyn, Chief Executive Officer; Jack Corrigan, Chief Investment Officer; Bryan Smith, Chief Operating Officer and Chris Lau, Chief Financial 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 May 6, 2022. 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.
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.americanhomes4rent.com.
With that, I will turn the call over to our CEO, David Singelyn.
David Singelyn
Thank you, Nick. Good morning everyone and thank you for joining us today. Before I could get started, I want to take a moment to think Jack Corrigan for his contribution to the American Homes 4 Rent over the past decade. As many of you know, Jack recently announced his upcoming retirement from his role as Chief Investment Officer. Jack and I have been friends and colleagues for over 30 years, and I am proud of what we have been able to build together.
In 2011 Wayne Hughes, our Founder and Former Chairman and I invited Jack to join us as one of the original partners in our new single-family rental venture. Jack quickly built an acquisition team of talented and determined professional who shared our vision. During Jack’s 11 years with American Homes, the team has always come first for him. He engaged, inspired and cultivated a world class team, whose leadership will now report directly to me.
Jack, although you will be transitioning away from your day-to-day responsibilities, I look forward to your continued thought leadership as one of our trustees. I wish you all the best in your retirement.
And now, I’ll turn the call over to you for some comments.
Jack Corrigan
Thank you, Dave. As I reflect on the last 11 years at American Homes 4 Rent, three words came to mind. The first word is “proud.” I’m proud of the team that we built that continues to share our vision and the development of many of the leaders we have today. I’m proud of leading what is arguably the first fully integrated platform in our industry. I’m proud of contributing to the rehabilitation of many neighborhoods and creating thousands of jobs in the process. And I’m proud of doing our part to alleviate the current housing shortage through our development team.
Second, “I am grateful.” I’m grateful to Wayne Hughes’s for his sage guidance throughout the years. I’m grateful for all of the team members who helped make the business and asset class a reality. And I’m grateful to all of you, the investment community who continues to support us and believe in our vision.
Finally, and most importantly, I am confident that I’m leaving the day-to-day operations of our growth programs in great hands. Thank you again Dave. It’s been a fantastic ride and I’m looking forward to continue serving with you on the Board of Trustees.
David Singelyn
Thanks again, Jack, and now on to the quarter. On our February call, I discussed the strong foundation we built at American Homes 4 Rent, and our focus for the next 10 years as we reinforce our position as the market leader in delivering consistent and outsized earnings growth. With American Homes at the forefront, single-family rentals have become a highly sought after housing options, as more and more households recognize that homes are no longer centered around ownership.
Our strong first quarter performance was in line with our expectations, core FFO per share increased 18.8%, compared to the first quarter of 2021. This highlights the insatiable demand for our rental homes, as well as the power of our vertically integrated operations platform, best in class teams and external growth programs.
As we mentioned in February, we are focused on three areas in 2022: Growth, technology and ESG. Beginning with growth, providing high quality housing options is more important than ever before. Our three pronged growth strategy with our internal development program as the foundation allows us to do just that.
Our country’s housing shortage prices was years in the making, and will likely take years if not decades to fix. This coupled with changing lifestyle preferences per household makes our communities more desirable than ever. At American Homes 4 Rent we are doing our part by developing premier build-to-rent communities which is adding to our country’s housing stock, while offering families a superior housing and lifestyle option.
Additionally, we continue to see attractive opportunities to acquire well located homes through our acquisition channels. However, given our nation’s record home price appreciation and rapidly rising mortgage rate environment, we recognize that the landscape of future opportunities may be changing. And while it’s too early to speculate on potential opportunities ahead, our balance sheet puts us in a perfect position to take advantage of them as they may arise. In a moment Chris will review our recent highly successful equity and debt offering that now fully fund our growth programs for the remainder of the year.
Moving to technology. We are a culture of constant innovation and have been working on developing next generation systems that further enhance our platform and the resident experience. We recently announced key partnerships that demonstrate our commitment to technology and our recognition that new ideas maybe develop either internally or through collaboration with partners across the ever changing prop tech space.
And now turning to our third focus, ESG. Sustainability is the principle that we take very seriously. To ensure we have a positive impact on our residents, team members and planet, as such we are executing a multi-faceted ESG strategy that is aligned with our business goals. Currently our ESG focus is primarily centered around energy. As an example, we are incorporating energy efficient solutions throughout our new developed homes.
Each one of our new homes is first tested and certified. In 2021 energy efficient home specifications like energy star appliances, LED lighting, tankless water heaters and low flow plumbing fixtures made our new homes approximately 40% more efficient than the benchmark and over 50% more energy efficient than the average home in the country.
In addition, we are currently installing solar on our community amenity centers. This proactive approach is another example of our ESG leadership in the single family rental sector. Recently we were recognized as a top ESG regional performer by Sustainalytics, certified as a great place to work, and were named as one of America’s most responsible companies and most trusted companies by Newsweek and Statista.
In closing, our first quarter reflects another period of strong, stable and consistent results and our outlook for the business remains robust. American Homes 4 Rent is the thought leader in the single-family rental space and we will continue leading the chart and shaping the industry.
And now, I’ll turn the call over to Bryan.
Bryan Smith
Thank you, Dave. As expected 2022 is off to a strong start. The demand backdrop for our Class A rental homes continues to be robust. During the first quarter showings for rent ready home remained at historically high levels and retention continued to improve.
In the first quarter we delivered another round of consistent results. SameHome average occupied days was 97.5% and rental rate growth showed continued strength with new, renewal and blended spreads of 12.3%, 7.5% an 8.8% respectively, which drove 8.9% SameHome core revenue growth for the quarter.
Core operating expenses came in as expected with year-over-year R&M and turnover growth appearing slightly elevated given the timing of our prior year quarterly comps. Full year expectations for expenses remain unchanged, and we expect these growth rates to moderate for the balance of 2022. All of this resulted in impressively strong SameHome core NOI growth of 10.8% for the quarter.
April operations showed continued strength as the demand for homes remains high. SameHome Average Occupied Days was 97.4%, and we posted new and renewal spreads a 14.2% and 7.6% respectively. This resulted in blended rate growth of 9.3% for the month. We are on track to deliver solid operating results and we expect a strong year as contemplated in our existing guidance.
Although the company is performing at a high level across the board, we still see opportunities to further strengthen our platform and improve the resident experience. Our platform has been designed based on feedback from our residents and employees. In the past, we have mostly relied on internal surveys at each of the resident touch points.
To supplement this feedback, we partnered with a leading third party customer experience company to deploy our most comprehensive satisfaction survey to-date. This survey was completed by over 6,000 households across 20 cities and included some of our own residence, as well as residents of other single and multi-family operators. The feedback confirmed much of our strategy, regarding site selection and our streamline processes. It also identified focus areas to improve our resident satisfaction scores, which we are incorporating into our next generation system.
For example, the survey showed that the most important factors of the leasing process are convenience and speed, and our soft guided showings were at the top of their preference list. We have one of the few leasing platforms that enable the customer to enter a vacant home as a prospect and leaving as a residence. Further, the respondents confirmed that space for a home office with a key differentiating attribute in their decision making process. Most importantly, the common thread throughout the feedback was the importance of clear and timely communication. And this is precisely the focus of our mobile first, next generation system that includes convenient multi-channel communication options for our residents.
In summary, we’re off to a great start and look forward to another strong operational year. I thank our team for their hard work and dedication as we approach the upcoming leasing season. On a personal note, I would like to thank Jack for his outstanding leadership. Jack and I have worked very closely together for the past 11 years as American Homes 4 Rent has grown from a few houses to nearly 60,000. Jack, I’m grateful for your mentorship and friendship.
I’ll now turn the call over to Chris.
Chris Lau
Thanks Bryan and good morning everyone. I’ll cover three areas in my comments today. First, a quick review of our quarterly results; second, an update on our balance sheet and recent capital markets activity; and third, I’ll close with a few comments around our unchanged 2022 guidance.
Starting off with our operating results, consistent with our expectations we delivered another quarter of steady execution and strong earnings growth with net income attributable to common shareholders of $55.9 million or $0.16 per diluted share. On an FFO share and unit basis we generated $0.38 of core FFO representing 18.8% year-over-year growth and $0.35 of adjusted FFO representing 20.5% year-over-year growth.
Underlying the strength with another quarter of consistent operational performance, generating 10.8% SameHome core NOI growth, as well as continued strong execution from our growth programs, adding a total of 1,131 homes to our wholly owned portfolio and 127 homes to our joint venture portfolios, the sum of which included 452 homes delivered from our AMH Development Program. More specifically, the 1,131 homes added to our wholly owned portfolio represented a total investment of $414 million and included 325 homes from our AMH Development Program and 606 homes from our acquisition channels.
Additionally, during the quarter we attractively acquired the outside interest in 200 AMH Development homes that were previously held in our first development joint venture, and on the disposition side, we sold 169 properties during the quarter generating total net proceeds of approximately $50 million.
Next, I’d like to turn to our balance sheet and share a few updates around recent capital markets activity. At the end of the quarter our net debt including preferred shares to adjusted EBITDA was 6x. We had $57 million of cash on the balance sheet and a $1.25 billion revolving credit facility at a $410 million drawn balance.
On the capital markets front, this was a busy, but strategically important quarter for us as we raised an impressive $1.7 billion and have now funded the entirety of this year’s external capital needs. First, as we talked about on our last earnings call, during the quarter we raised $864 million in an oversubscribed common equity offering. As a reminder, as part of the offering we issued $13 million shares or approximately $488 million on a forward basis. These forward shares remain outstanding at the end of the first quarter and will be utilized over the course of 2022 as we match funding against our investment programs.
And second after quarter end, we issued $900 million in a highly oversubscribed dual-tranche unsecured bond offering consisting of $600 million of 3.625% 10 year bonds and $300 million of 30 year bonds priced at 4.3%. Additionally, consistent with our capital plan assumptions outlined at the start of the year, after quarter end we redeemed our $155 million, 5.875% Series F perpetual preferred shares.
Lastly, before we open the call to your questions, I wanted to briefly touch on our 2022 guidance which remained unchanged in yesterday’s earnings press release. Without question, we delivered a strong first quarter performance and continue to see robust momentum heading into the second quarter. However, much of the strength was already contemplated in our full year outlook that was initiated just a few months.
With that in mind and considering that the spring leasing season still ahead of us, we are maintaining our previously provided full year earnings guidance, which as a reminder continues to lead the SFR industry with core FFO per share growth of 14.7% at the midpoint, demonstrating the consistent power of the AMH platform.
Finally, I’d like to share one final sincere thank you to Jack. We will miss you on a day-to-day basis, but look forward to your continued leadership from the Board.
And with that, we’ll open the call to your questions. Operator.
Question-and-Answer Session
Operator
Thank you [Operator Instructions]. Our first question is from Nick Joseph with Citigroup. Please proceed.
Nick Joseph
Thanks. Maybe starting just on development broadly, curious what you’re seeing in terms of cost pressures and just any timing or potential delays on deliveries versus initial expectations.
David Singelyn
Yeah, good morning Nick, its Dave. With respect to our development program, it is on track as we outlined it a couple of months ago. Our deliveries, our supply chain is – we’ve got – it’s well built out. Most of the product is committed for for the balance of this year and the deliveries are on the pace that we expected at the beginning of the year.
So on the cost side, the majority of the costs are already in the portfolio, are in – committed for this year’s deliveries and so our development program is right on track. The benefit of our development program is today the acquisition program is a little bit more in flux with the rising interest rates. But input costs are very stable right now on the development side. It may actually get more favorable if the home builders see demand reductions.
Nick Joseph
Thanks. That’s very helpful, and that leads to my second question which is the acquisition markets. You mentioned interest rates moving up, mortgage rates moving up. What are you seeing in terms of the peace of acquisition and how does that play into the strategy just given some of the macro economic uncertainty.
David Singelyn
Yeah, well, as you indicated, your right, there’s of lot change that’s occurring today. But the first quarter, we had a very, very strong quarter of acquisitions. The interest rate and the market forces, those changes are very, very recent. Really haven’t worked through the market place, but we are watching and reviewing our acquisition, input parameters frequently, not monthly anymore, we’re down to weekly. So there may be adjustments, but it is very dynamic. But it’s a little too early to predict where those will end up.
The market has a way of stabilizing, so we may see a tremendous opportunity. Let me just remind you, this is really the benefit of having three ways of acquiring. And having a capital already in the bank. So we expect there’ll be some opportunities as the market repositions itself. We are well positioned to take advantage of those, but our development program, our key growth program is not impacted. The input prices is more tied to inflation, not to interest rates.
Chris Lau
Nick, and this is Chris. I would just and underscore Dave’s point that between the January equity offering and then last month’s bond offering before rates really took off, it put the balance sheet just in a great spot where we can be nimble and flexible, but be ready to go if opportunities present themselves.
Nick Joseph
Thank you, and congratulations Jack!
Jack Corrigan
Thank you, Nick.
Operator
Our next question is from Richard Hill with Morgan Stanley. Please proceed.
Adam Kramer
Hey, you have Adam on for Rich. And good morning guys. Just wanted to kind of ask about, your renewals. And I recognize they had accelerated a little bit here in kind of the April discloser versus the first quarter, and first quarter was a little bit above kind what you disclosed in the December quarter. I wanted to kind ask, you know how you kind of managed the business around renewals? If there is kind of sealing or a cap that you guys are going to win push past and just kind of your thoughts I guess around the renewal spreads.
Bryan Smith
Yeah, thanks Adam, this is Bryan. We don’t have a specific cap, internal cap. We are managing the revenue line holistically and we’re also being responsible in our renewal offers. Our retention, as our renewal increases have continued to accelerate, our retention has remained strong too, giving us confidence that we’re making the right decision from that side.
No caps, we’re looking at each one individually, remaining responsible to our residents. Our long term residents are very valuable to us and we’re managing that line holistically, really – I think you’ve done a really nice momentum. If you look at the entire revenue line, where the mid-point of our guidance contemplates 100 basis points acceleration from last year, which was really strong as well.
So no caps looking at an individually and really proud of, and happy with the progress we’re making on that side.
Adam Kramer
That’s great guys. And then just a follow-up on bad debt. I know some peers have kind of mentioned bad debt. You are kind of more of a focus now. I mean I recognize kind of your geographic exposure is, it’s different than peers, so fully recognize that.
I was wondering if there is kind of anything to highlight from the first quarter with regards to bad debt that maybe kind of varied from your expectation going into the year.
Chris Lau
Good morning, Adam. Chris here, if I can jump in. Generally speaking, I’d say consistent with our expectations, our collection trends really held pretty strong into the first quarter and the start of the year. With as you – I’m sure you saw bad bet landing just about 1.2% for the quarter.
If you think about the components of them, as expected we continue to see a gradual reduction in rental assistance payments. We were expecting that coming into the year, but we are seeing that parallel, by an improving collections picture overall. As you know – as we all know our collection practices have now returned to normal and the broader job market remains strong.
So based on where we sit here today, our full year outlook remains generally the same as the start of the year with the expectation that our collections and bad debt levels continue their – I’ll call it, gradual return to normal over the course of this calendar year.
Adam Kramer
Great! Thanks so much for the time guys.
David Singelyn
Thanks Adam.
Operator
Our next question is from Jaun Sanabria with BMO Capital Markets. Please proceed.
Jaun Sanabria
Hi! Good morning! Thanks for the time. Just wondering if you guys could speak to tenant price sensitivity. Any signs? It doesn’t sound like on the renewal side at least given your strong retention. But any signs that made you less ancillary revenues or people not choosing to upsize or supersize if you will on various options you provide them, given the changing macro backdrop.
Bryan Smith
Hi Jaun! This is Bryan. We are not seeing price sensitivity per se in the marketplace. You look at the great, releasing rate growths that we posted in April and the strong renewal increases. We are not seeing a ton of price sensitive, and where we are, we are quickly adjusting our prices on the releasing asks. With regards to some of the other components on the fee side, no change in the way that those have been approached by our residents.
Jaun Sanabria
Great! And then you mentioned the survey in your prepared remarks and some areas of improvement. I was hoping you could maybe flush those out and how those may impact the P&L or performance and growth going forward?
Bryan Smith
Sure. The survey was really a wonderful tool for us. Not only did it give us good insight now, but it sets a baseline going forward. Traditionally we’ve been really focused on feedback from our own residents through internal surveys at the various touch points, and this is the first time we went outside and surveyed not only our own residents, but other renters who are renting from other institutions and mom-and-pops. So I feel like we’ve got some really good feedback.
A lot of its supported our – really the key tenets of our strategy, importance of location, proximity, the quality of schools, etc. We went down to a level and actually surveyed on specific property attributes, and some of the attribute feedback really supported our move to the hard surface flooring as an example. So there was some very good insight that came from that.
In terms of areas for improvement, I think the key underlying theme as I mentioned in my prepared remarks was the importance of communication across all the renter market. I think we do a good job of communicating now, offering online tools, a better ability to communicate electronically with our residents the most. But we still see that as a potential differentiator going forward.
So as we think about the importance of our next generation system, improvements in communication, the ease of communication is really the center of it. I think that’s the thing that’s supporting our strategic direction there, and that’s what we’re really focused on delivering next year when that new platform comes out.
Jaun Sanabria
Thanks. Just a quick tangential. Any insights on incremental services you could offer as a result of that survey?
David Singelyn
Yeah, not specifically. The preferences really were around attributes, home location. We were surprised that the smartphone technology really was lower on the preferential list than many people would expect.
Jaun Sanabria
Thanks very much.
David Singelyn
Thanks Jaun. Good to have you back in the queue these days.
Operator
Our next question is from Brian Spahn with Evercore ISI. Please proceed.
Brian Spahn
Hi! Thank you. So a couple of quarters ago you talked about reducing you’re going in yield targets to capture more opportunities, and I’m just curious, are you seeing any pressure there now in the other direction just given where the tenure sits today and increased financing costs?
David Singelyn
Thanks Brian, its Dave. As I mentioned when we were talking to Nick, yes it’s a very dynamic market today. And the fact that we basically – we have three different growth channels allows us to remain active in our growth programs. Our development program today is going to show its strength and benefits to our organization. We’ve mentioned over and over that the development program gives us a growth channel when there is disruptions in the market place, providing us high quality homes at significantly higher yields than the other growth channels.
But as you indicate, there is a lot of change. That change is very, very recent. It’s mainly in the last week, maybe in the last month and the acquisition channels take time to reestablish themselves. So we are monitoring it. We are having frequent meetings, much more frequent than we normally do to basically adjust to what this new market place it’s going to look like.
When there is disruption, there is many times significant opportunities that will come out of it and as Chris indicated a little bit earlier, our balance sheet is well positioned to take advantage of those opportunities that make may arise in the future.
Brian Spahn
Got it, thanks. And as you think about adding to your land bank, what markets look the most attractive to you today and where are you kind of seeing the most opportunities?
David Singelyn
Yeah, you know having a diversified portfolio and a diversified development program allows us to grow in many markets. We are actually trying to fill in some of the markets that we opened up recently. We are starting now to deliver homes in all 16 of our development markets, and so what we are seeing is in area is similar to what we are seeing in the acquisition. It’s too new to see how the land is being adjusted, but the land is a small component of the overall cost. 15% to 25% depending on where you are, and the other input costs are pretty well established already for the balance of this year.
So we’re – our development land portfolio has grown this year. We are up to about 20,000 in total that we control, either through owning them outright though auction agreements or we have them under contract. 14,000 of them we actually own or have auctioned. So we’re in good position for the next few years growth program, out of our development program.
Brian Spahn
Alright, thanks very much.
David Singelyn
Yes, thanks Brian.
Operator
Our next question is from Joshua Dennerlein with Bank of America. Please proceed.
Joshua Dennerlein
Hey everyone! Just wanted to explore your opening remarks on the ESG front, in particular the solar panel. So how quickly is that something you can deploy and is that something you are just adding to new construction or something you’re going to put on existing assets?
David Singelyn
Hi Josh! Its Dave again. The ESG and the energy side and the solar side, it’s really about the energy management, about reducing the greenhouse gases and carbon emissions. It starts with the amount of energy used as you heard in prepared remarks. Our new developed homes utilize 50% less energy than the average U.S. home. And when you go through and you look at our sustainability report that we just released, we outlined all of the greenhouse gases that we do use on both, Scope 1, 2 and 3 levels. Our portfolio of total homes uses 10% less than a similar portfolio geographically of average U.S. homes.
But with respect to solar and alternative energy sources, it’s an area that is very, very state and actually very local dependent. And how the utilities operate and how the utility and energy rules in that state work.
We have hired a – you saw a press release about a month ago where we talked about a relationship we have with a group called Elevation and they are working through each and every one of the markets that we’re in, and they are looking at solar from both a new home basis, as well as existing homes. But at the end of the day we have to look at the balance of putting solar on the homes, as to what the profitability and ability to recover some of the costs of that solar as well, and it’s a deep analysis.
We are putting solar on assets that are ours already, where you don’t have to look at how you recover the cost, because we are the beneficiaries of that. So whether it’s amenity senators or the like, we’re already installing solar throughout our portfolio.
Joshua Dennerlein
Alright, it will be interesting to watch. Maybe just one follow-up, as part of that kind of customer survey that you mentioned before, was solar in kind of I guess alternative energy part of that survey or is that something that maybe you’ll add in the future. It’ll be interesting to kind of see what your tenants think about it.
Bryan Smith
Hi Josh! This is Bryan. It was included, solar wasn’t specifically included, but environmental friendliness was and it ranks surprisingly low on their preference list. It was down in the bottom. So I think it’s something that we’re going to watch. And as I mentioned before, this survey will provide a nice baseline. So we’re going to look and see how we exactly asked that question and see if there’s any changes going forward as our program evolves.
Joshua Dennerlein
Thanks Bryan!
David Singelyn
Thanks Josh.
Operator
Our next question is from Sam Choe with Credit Suisse. Please proceed.
Sam Choe
Hi guys! I just wanted to touch on the 200 homes that you acquired from the JV. Just the decision around that and how those homes kind of fit in you on balance sheet rental portfolio?
David Singelyn
Yeah. Good morning Sam! It’s Dave. The 200 homes that we acquire were from our first development joint venture. These are homes that we built. These are homes that are the high quality homes that our – have the maintenance, long term maintenance characteristics that we’re looking for. The superior finishes, that most – they would be deemed to be superior finishes by most home builders. So they are a very high quality asset, and it really demonstrates one of the benefits of a joint venture and that is you can acquire those homes as the joint venture partner is looking to monetize.
And that’s really what this transaction was, was the ability for our joint venture partner to monetize, for us to acquire the homes at a, what I would deem to be a very fair price to both parties for the quality of the asset. So it’s the transaction that, I think it really demonstrates the power and benefit of our joint ventures.
Sam Choe
Okay, that’s really helpful. One more for me, just on the collection side. I know that your residential peers faced pressure in the California market. I don’t think your exposure is that high, but just want to check what were your exposure stands in those markets.
David Singelyn
Our California exposure?
Sam Choe
Yeah, I think most of…
David Singelyn
Is that the question?
Sam Choe
Yeah, yeah exactly and I think most of those are identified for disposition, am I correct?
David Singelyn
Yes, less than 1% of our assets are in California.
Sam Choe
Got it, okay. Thank you so much and Jack congrats!
Jack Corrigan
Thank you, Sam.
Operator
Our next question is from the Haendel St. Juste with Mizuho. Please proceed. Haendel, are you on.
David Singelyn
Haendel, are you there?
Operator
Please check and see if you have your line muted.
Haendel St. Juste
Hello!
Operator
There you go, thank you.
David Singelyn
We can hear you. Good morning, Haendel.
Haendel St. Juste
Alright. Before my question, I wanted to say to Jack, it’s been a pleasure working with you and getting to know you the past eight years, it’s been a trailblazer. You taught me a ton and you will be missed my friend.
My question…
Jack Corrigan
Thank you very much, Haendel.
Haendel St. Juste
My question maybe to you is, you know I tried a few times before, but perhaps now that you’ve got one foot out, maybe two feet out the door, perhaps your thoughts on third party management industry here. It’s been evolving and developed quite a bit of expertise, a very strong operating platform, of which obviously you’ve been a great instrumental part and so, curious if you are now at a point where you’d consider it and how we should perhaps think about the opportunity sets there. Thanks.
David Singelyn
Yeah, Haendel this is Dave. Third party management is definitely an area that we are looking at. It provides economic benefits, it provides intangible benefit. We don’t have anything to announce this time, but it is an area that we are seriously evaluating and considering.
Haendel St. Juste
Okay, fair enough. A follow up on the unconsolidated JVs. You guys did buy 200 homes this past quarter. I guess I’m curious on the opportunity going forward, maybe how steady of a course of acquisition could that buying and the unconsolidated JVs become. Thanks.
David Singelyn
I think it’s a source of opportunity. I don’t know I would use the word consistent is a negotiated transaction when they have a monetization need, and we will be there with a desire to acquire them. So this was a great transaction for us, and if there is an opportunity to acquire more, we will be there in discussions.
Haendel St. Juste
Okay, one last one maybe for you Bryan. Subject of loss the lease. I don’t think you got provided. I figure maybe you could provide what that figure is, but I guess I’m more curious on the calculation too. The last I recall, I think your figure was somewhere in the low double digits, some of your peers closer to 20%. I’m not asking you to explain their figures, but maybe give us some color on how you calculate your figure? How you define market rent? Thanks.
Bryan Smith
Sure. Thanks Haendel. Our loss to lease is consistent with what we talked about last quarter, low double digits. Our calculation is simple. The lease rate as compared to the existing market rate and we calculate the market rate through using a couple of different external data sources, plus our own internal expectations adjusted for timing, seasonality and supply level of the individual markets. But it’s remained consistent quarter-over-quarter, low double digits.
Haendel St. Juste
And just to be clear, when you say market, your MSA submarket specific, just maybe how you’re trying to define or triangulate to the market? Thanks.
Bryan Smith
Yeah, we’re down to the neighborhood level in our analysis. So those inputs are coming in from our proprietary data, and then we are incorporating those into external data sources. So we feel pretty good about it, about those estimates, but there’s a lot of us support behind them.
Haendel St. Juste
Okay. Thank you, guys.
David Singelyn
Thanks Haendel.
Operator
Our next question is from Jade Rahmani with KBW. Please proceed.
Jade Rahmani
Thanks very much. In terms of the current market conditions, are you seeing investors already pull back from the market in the home acquisition environment, keeping in mind that you know the vast majority of such investors are not institutional well capitalized. Like American Homes 4 Rent that tend to be much smaller and also big proportion is fix and flip.
David Singelyn
Yeah, good morning Jade. The market changes are very, very recent and it takes a little bit of time before investors of all sizes react. So I expect it will be some impact from the market changes, to be able to sit here and say today that we’ve actually seen it in practice, no, I think it’s a little early. But it is very, very dynamic out there today.
Jade Rahmani
Thanks very much. And in terms of your own capital plan, are you slowing the pace of acquisition in terms of existing homes that you acquired through the MLS?
David Singelyn
Yeah, as I indicated previously, it’s something that we are evaluating very, very frequently as the market is changing. As of this time, no, we are still comfortable with our guidance, but we will keep you apprised as the market continues the change.
It actually may give us more opportunity as the market changes, but right now I would say our guidance is still intact.
Jade Rahmani
Thanks very much.
David Singelyn
Thanks Jade.
Operator
Our next question is from Dennis McGill with Zelman & Associates. Please proceed.
Dennis McGill
Hi! Thank you, guys. Dave, just to continue on that discussion. When you are talking about things changing and monitoring, you guys are sitting down and looking at this more regularly now. What particularly are you more focused on? Is it the cost of financing, the cost of capital that could change the values that are out there or are you thinking about some of the economic risk to tenants and household. Because I’m trying to balance that against the comment you start off with about it taking decades to sort through a supply shortage.
David Singelyn
You know you need to start with the fact that demand for housing and demand for single family homes is so robust today, and everybody needs a housing source, so demand is there. And as Bryan has indicated, not only is demand there, but we are seeing the inflation of the country push through and pull through housing as well. When we talk about acquisitions, what we are talking about is our cost of capital and matching that to what the opportunity set is in the country at a given time. And so as we are looking at it, we are taking up a little bit of our buy boxes and evaluating what the opportunity set is against that.
Dennis McGill
Okay, that makes sense. And then maybe for Bryan, you mentioned I think that renewals in April were up 7.6% and first we’re obviously 7.5%. Typically I’d think you’d see maybe a little bit of seasonal bump there, but also with the lost to lease, thinking that maybe there was some more acceleration. Is that a number that you feel like his sort of capped out in any loss to lease which has come more in duration versus seeing further acceleration and renewals, or is April kind of a one month pause and then you’ll see some acceleration after that. Just wondering if you have any thoughts there?
Bryan Smith
Thank you, Dennis. I don’t think we’re ready to say this, that its topped out. There are a lot of factors that come into the renewal pricing and we’re really pleased with not only the increases that we’re getting, but also the high levels of retention that we’re seeing to.
And as we enter the prime leasing season, we’re going to continue to adjust those offering rates as necessary and manage really the whole revenue line. You know our expectations for the full year for renewals is going to be somewhere in the mid-7s I thank, which is really strong considering that’s on top of a strong year last year as well.
Dennis McGill
Okay, makes sense. And then Chris one for you, we’ve talked about this in the past, but the gap between your blended rent growth over the last year and the average rent increase at least on a same store pool sort of widening out a little bit. Can you just explain maybe what’s causing that and what you think about that differential going forward? Will that start to shrink back down?
Chris Lau
Yeah, sure. Good morning, Dennis. Yeah look, there’s an ebb and flow to it, and I would start by just reminding that there’s always – as you pointed out, there is always some level of natural delta between spreads and how that pulled through into change in average monthly realized rents.
You know keep in mind, a couple of obvious statements here, but of course you need to factor in the mix between new and renewals, which today is increasingly skewed towards renewables given our record, low turnover rate which is a good thing. So that’s a factor. And then two, we of course need to factor in the downtime between residents on turning homes as those new lease spreads as you know are quoted simply on a lease over lease basis.
And then lately, there’s just a number of other small factors that kind of go into it. There is the mix of month-to-month lease, there is the mix of short term lease, and then there is the impact of any household that may be working their way through the eviction process that could be counted in physical occupancy, but are not economically vacant to the recognized revenue launch.
Just another small friction point there, and I don’t mean to get too much into details, but just to point out, there’s a lot of moving pieces. But if you think about it over again, there is always some level of delta and I would just kind of close by saying that as we think about our first quarter average monthly realized rent growth, it played up very similar to what we are expecting and what our guidance expectations are, which as a reminder is in the high 7s on a full year basis for growth in average monthly realized rent.
Dennis McGill
Those details are helpful. So as we think about it and model it, since we don’t have a lot of that transparency, would you suggest that that phase is similar cap or is that something you’d expect to shrink as some of those nuances play out?
David Singelyn
You know, at this point in time I would probably hold it constant to where it is right now, just because as you can tell there’s so many different moving pieces to it that it’s kind of difficult to predict each one of those. So I would hold a constant to where it is now and you can see that reinforced by where we have our guidance set on changing average monthly realized rents.
Dennis McGill
Okay, perfect! Good luck guys!
A – David Singelyn

Thanks Dennis!
Operator
Our next question is from Linda Tsai with Jeffries. Please proceed.
Linda Tsai
Hi! Good morning! It seems that you collect a lot of data. Is there any way to tease out how much the demand for your homes is due to home ownership affordability versus the desire to rent?
A – Bryan Smith

Hi Linda! This is Bryan. I don’t know if we can specifically tease out that information. Really the demand indicators that we’re following just support the strength that we continue to talk about. Our website activity is up 25% year-over-year as an example; our leasing call volume is up; all of the indicators are pointing positive. And then if you look at the move out reasons and where our residents are going, where they move out, there’s really no much change to home ownership. So even though we’re not teasing out that specific data point, we feel really good about demand and sustainability.
And there’s one last data point that I did want to add. There was a recent study by John Burns regarding the lease affordability as it relates to cost of ownership, and in our markets, that sits at about an 8% discount. It’s about 8% cheaper to rent than it is to own in our market place, so maybe that data point gives you a little bit of color.
A – David Singelyn

And Linda, this is Dave. I’ll add one more data point, and that is our average household income of our residents is in the six digits. It’s well over $100,000. That means they have the financial wherewithal in most cases to own a house. The desire is to have the flexibility and the freedom of what – and quite honestly the high quality homes and the convenience of what our homes offer. So there are people that choose single family homes due to the characteristics of single family homes, and that’s evident in the numbers of single family homes today versus 10 years ago. It’s risen by 4 million homes from 13 million to 17 million, so.
Linda Tsai
Thanks. And then on the topic of the spring leasing season, can you give us some sense of traffic. Last quarter you said applications from New Jersey, New York were up 33% and non-AMH leads were up 12%. Any color on how those numbers are trending?
A – David Singelyn

Yeah, those migration trends are holding. We’re still seeing a really good migration from California into our markets. The beneficiaries generally are the west coast markets, but there’s some benefit to Texas as well. And you think about the migration activity, it’s still not over 100% pre-pandemic levels. So it has held and is going to give us good confidence for continuing to push rents and have higher – maintain high occupancy.
Linda Tsai
Thanks. Just one last one, can you discuss the competitive environment when you’re purchasing through MLS / the traditional acquisition channel? You know how often are you coming up against other institutional buyers in AMH markets and if you end up negotiating with each other to the extent – you know do you end up negotiating with each other that you’re able to identify them as another bidder?
A – David Singelyn

Yeah, this is Dave. Generally you don’t identify them as another bidder while you are in the bidding process. We make offers. We underwrite homes in many, many states that our competitors are not, as the value of having a well-diversified portfolio and being in 22 states more than 30 markets. We will see after the fact who the buyers are. We do review all of our – where we have had any interest, and we can see who actually closes on the home. But you generally don’t know why you’re in the bidding process. It’s not like the auction process where you’re standing at the courthouse steps and you know who’s bidding against you.
Linda Tsai
Thank you.
Operator
Our next question is from John Pawlowski with Green Street. Please proceed.
John Pawlowski
Thank you. Dave, can you share the cap rate on the 200 home bulk acquisition and what market that was in?
A – David Singelyn

Yes. So the cap rate with the in-place rents in going to be in the low fours and the market rents is going to be mid to high fours.
A – Chris Lau
And John, I think you asked market composition. The 200 homes, largely southeast Atlanta, Jacksonville, Charlotte and Nashville, and then there was a small sprinkling of Salt Lake in there as well.
John Pawlowski
Okay, great. Bryan, just a few market level questions. Could you give me some color on Charleston and Columbus that kind of 250 basis points year-over-year decline in occupancy in Charleston with a little under 200 basis points in Columbus, while generating below average leasing spreads, so any color in those markets?
A – Bryan Smith

Sure, sure. Yeah overall our occupancy improved year-over-year by about 20 basis points. Charleston, it’s not one of our larger markets, but it is susceptible to move-outs. We had a little bit higher move out than we anticipated. Part of that is due to its reliance on the military community. The good news there is we had positive absorption and saw a nice improvement into April, so I would look at it as a temporary pullback.
When you think about Columbus, Columbus is a fantastic market that’s seen a ton of growth lately, and again, it’s just the timing of some move-outs and we’ve seen recovery there as well into April.
John Pawlowski
Okay, thank you.
David Singelyn
Thanks John.
Operator
Our next question is from Austin Wurschmidt with KeyBank. Please proceed.
Austin Wurschmidt
Great! Thank you. Dave, I was curious if you have any markets that you’ve seen higher inventory of homes on the market and those homes staying on the market for a longer length of time than this time last year.
David Singelyn
No, I don’t know that there is as of the two, three weeks ago when we’ve looked at the dates. I don’t think there’s any market that has got a long gated days on market. Now, will that change? Potentially it will change, but this is again where the market dynamics are very, very recent and I would expect we will see it, but I don’t have any evidence of it yet, because of how recent it is.
Austin Wurschmidt
Yeah, that’s fair. But I guess with the balance sheet in a great position to fund sort of the current plan, have you considered trying to sell additional assets to have some excess dry powder to the event – you know in the event you can take advantage of pricing today. But then also, you know on the other side, on the buy side, if there is any change in pricing that may be you’ll have more attractive opportunities later this year.
A – David Singelyn

Yeah, you know dispositions are really more a function of our asset management process and looking at where we – you know evaluating those assets that we believe in the future will not have the same growth programs or may have some structural issues that we would like to sell. We may decide to get out of a market. Again, we are looking at that on a very frequent basis. We don’t look generally at our disposition program as a source of capital. It does give us a source of capital, that’s the secondary benefit.
Austin Wurschmidt
Got it! And then just last one for me. I think most of the focus has been around renewals, which I recognize is the more significant component of the blended lease rate mix and you know particularly given the lower turnover, but I believe your guidance assumed the lease rates would average in the high 90% range and you had occupants in the lower 97% range.
So it seems like, even if you lose some occupancy from this point, that you’ll recapture the hire and new lease rate that you’ve seen accelerate since the first quarter. I’m just wondering if there’s anything I’m missing or that might – you know what might drive new lease rates drastically lowered to get you down to that high 9% average you’ve assumed in guidance. Thank you.
A – Bryan Smith

Yeah, thank you Austin. This is Bryan. We’re really pleased with the new lease rate growth through the first quarter and then continuing into April, and our expectations for the full year are that new leases will be in the 10’s. So we’re predicting to be a little bit ahead of where we thought initially, but not materially. A lot of it again goes back to the strength of demand, and also us recognizing that historically there has been some seasonality in our business and towards the back half of the year, maybe a little bit of moderation off of the 14 we posted in April.
Austin Wurschmidt
Thanks for the detail.
Operator
Our next question is from Buck Horne with Raymond James. Please proceed.
Buck Horne
Hey! Good morning! Thanks and congratulations Jack on the early retirement; well-deserved and well earned.
Jack Corrigan
Thanks Buck!
Buck Horne
Yeah, thank you. Curious if you’ve seen any changes recently in out of market migration or lease applications from out of market tenants. Any change in that flow of people?
A – Bryan Smith

Hi Buck! Its Brian. No, it’s still strong. I talked earlier on the call about the California migration which is quite significant. It’s still holding on the east coast as well. From out of state we’re still at over 80% higher than we were pre-pandemic, so those trends are continuing. It’s really benefiting states like North Carolina, on that side of the portfolio, but yeah, we’re seeing it continue. It’s been a nice bump to the level of demand and really get high tenant quality as well.
Buck Horne
Awesome! Thank you! And lastly I wanted to follow up on the commentary around the third party management potential. Just wondering if you could add any contours around what you could do or theoretically what the possibilities are there? What kind of capacity do you guys have already with your infrastructure to manage significantly more homes?
David Singelyn
Yeah, Buck its Dave. There’s two elements, maybe three elements to the third party management platform and the biggest limiter is what you were inferring to, and that’s how many homes can you manage. That is the piece that today I would say we have – that is its fully developed. Bryan’s property management platform can add a significant number of homes, the systems are in place, and the people are in place, and the people that we would need to add are individuals that we add each and every day, anyways as we’re growing.
We’re looking at the owner side, in the management and the owner side, as well as some of the regulatory environment around it as well at this point.
Buck Horne
Okay, thank you.
A – David Singelyn

Thanks Buck!
Operator
Our next question is from Chandni Luthra with Goldman Sachs. Please proceed.
Chandni Luthra
Hi! Thank you for taking my question. First of all Jack, congratulations and good luck!
Jack Corrigan
Thanks a lot Chandni!
Chandni Luthra
Great! Two quick ones from me. Did you guys see or are you seeing any acceleration in move outs to purchase homes? Is there any rush to lock in rates?
A – Bryan Smith

Hi Chandni! This is Bryan. We’re not seeing any change in move outs to buy homes. As our retentions improved, our move outs have gone down and that’s the portion that are leaving to buy houses, has not really changed much over the past year plus.
Chandni Luthra
Understood! And second on very quickly, in terms of regulations, obviously you know it has been quite debated and constant narrative on this dynamic in the media and news circles, but anything you are seeing or doing differently to manage headline risk, anything that’s concerning you?
A – David Singelyn

Well, this is Dave. Regulatory risk we have mentioned is a risk of this company from day one. We provide housing, we provide a item that every American, every American citizen needs or American resident needs, and that’s going to bring scrutiny, and so is oversight something that’s new? No, or regulatory reviews something that’s new? No.
What we have said over and over is that we attempt to do everything the right way, whether it’s how we treat our residents, a little bit of how we look at pricing, a little bit of how we deal with natural disasters, how we interact with our employees, and you can see some of that outlined in our sustainability report. And I believe that coupled with the fact, that we may be the only single – we are the only single family rental company that manages homes that is actually adding to the solution of the housing shortage in America, and all of that has worked very, very well with us.
We have regulatory inquires. Yeah, we’ll couple that to our industry related. We’ve been asked to provide some information, but we’ve had no investigations that – have no investigations at this time, and so for us regulatory matters will exist as long as we’re around. We have a Director of Government Affairs that helps educate our politicians or our local communities, because it’s all about education. And so we don’t have anything that concerns us personally, but it’s something that we do have to keep our eye on.
Chandni Luthra
Thank you so much for your color comments.
David Singelyn
Thanks Chandni!
Operator
Our next question is from Brad Heffern with RBC Capital Markets. Please proceed.
Brad Heffern
Hey everyone! I just have one two-parter for Chris. G&A’s been elevated the past couple of quarters. So can you give any color on the trajectory there for the rest of the year? And then, has there been any change in thinking about the potential redemption of the next tranche of preferred just given – you know I know there’s capital locked in for that, but has permanent capital become more attractive?
A – David Singelyn

Yeah, good morning Brad! First, on G&A. Very consistent with what we talked about last quarter and what was contemplated in guidance. General expectation is that we’ll likely see a full year G&A increase this year, and call it the plus or minus 10% area with really two components included in there.
One, the inflationary component that we ball-parked to be around, call it 7% or so this year; and then in addition to that, there are a couple of very important strategic investments that we’re making this year into a number of our corporate areas. For example, our technology platform, our ESG efforts and then our focus on government affairs, and all that’s tracking very consistent with what our expectations were at the start of the year.
And then on the preferreds, you have a great point. You know as I’m sure you saw, we’ve already announced and enclosed the call or closed the calling in redemption of the Series S; those are done at this point. On the GE’s, you know look, as of right now guidance still contemplates that those are going to be redeemed, but you know small enough that they are not really needle moving either way, but I agree with you. It’s something that we’re watching very closely and we’re thinking about it relative to where the capital markets and cost of capital trend over the next couple of months.
But it underscores one of the great benefits of preferreds, and that they truly represent perpetual capital, so there’s no actual maturity or forced decision that we have to make. But we’ve got the luxury if you will of unilateral optionality, where if it makes sense we can call them in or if it doesn’t make sense relative to where the markets and cost of capital considerations are at the time, we can continue to let them sit out there and we’ll have that option available to us.
But anyways, if you think about the year at this point, I would say that the GE’s are small enough that we’re not really terribly needle moving either way from an earnings and/or guidance impact standpoint.
Brad Heffern
Okay, thank you.
A – David Singelyn

Thanks Brad!
Operator
And our final question will be from Nick Joseph with Citigroup. Please proceed.
Michael Bilerman
Hey! Its Michael Bilerman here with Nick. You know Dave, I guess if you step back, obviously the cost to own has risen pretty substantially, just not only given HPA, but given the moves in rates. And you know when you think about where rates are today and I mean this happened a couple of times over the last 30 years, you know probably the in place mortgage rates for all outstanding single family mortgages is likely well below where current mortgages are, which could impact sort of movement outside of normal needs that drive movement in America.
I guess how do you sort of see this evolving if rates continue to stay elevated and housing prices stay elevated because of all the construction cost pressures that you’ve talked about, Oh by the way, which is more like 15% to 20%. So just how do you think it’s going to revolve, and I recognize we’re going into an unprecedented time which we have some history of insight, but how do you sort of see it panning out?
David Singelyn
Yeah, so Michael to unpack to your question, there’s a couple of areas. Let’s start with demand for our product and then we’ll talk about the cost of the development side.
The demand for our product today is very, very strong. We are under supplied in housing in the United States, and the demand for our products gets stronger as you indicate. Home builders see a change in the demand due to home affordability resulting from rising interest rates.
The rising interest rates impact the home values. What we have talked about for years is a benefit of our development program, is having three prompts to growth means that you have ways to grow in most economic cycles, and the input cost of the cost of building, the lumber, all the other materials are really tied to a demand equation themselves, and as home builders see the demand for their products, their new homes, that’s going to put less demand on the input cost and that should be favorable to us.
But if you look at just the input cost for 2022, the majority of those costs are locked in. If you look at probably what’s the largest cost, it’s going to be lumber, and lumber costs for homes that we’ll be delivering in the second quarter are about the same cost as what you see in the first quarter. The homes in the third quarter will be about $2000 higher, but the fourth quarter will be lower than what we have in the first quarter. So we are actually seeing the input costs right now for everything that we have walked in, pretty stable to where they have been.
Keep in mind that rental rates are rising as well, and so if you look at the deliveries that we have in the first quarter of this year, they are about 5-8, 5-9 [ph]. But when you break it down and look at it and analyze it, those markets that we’ve been delivering homes consistently, those more stable markets, we delivered over 6% yields, where you know we delivered less than 6% yields in the new markets that we are delivering in. Those markets that are just delivering their first homes, that don’t have the scale benefits yet built into them, that scale benefit will come as we start delivering more homes in those markets.
So today you know the cost, the largest inflator cost right now is the land. It’s probably up 20%, 25%. If you look at the average of all the other input costs, and it’s a big blend of items, it’s up about 10%. So the whole thing is blending up to about 12.5% higher.
Michael Bilerman
You seem to have taken a lot about the cost. You know I guess my question Dave was more akin to how the housing market and movement of people is going? You know how you sort of see it evolving a little bit, you know just from a liquidity standpoint point, right. I mean people with their costs, their indebted current cost is so low. For them to go out and buy a new home, that’s likely going to cost as much as it is, but with the mortgage rate it’s going to be much higher. I just wonder whether that’s going to stymie the market a little bit and how does it eventually sort of work its way out?
A – David Singelyn

Yeah well, the other – I mean there’s a lot of factors in there and it starts that you have 4 million to 8 million households that don’t have housing today and there’s a lack of quality housing. And so if I understand your question, I think you’re really talking about the movement of households from one housing source to another.
There will be people that probably are going to get locked into some of their homes today, but there’s – for me this is going to increase the demand for single family rental homes. At worse it’s going to maintain the demand that we see today, which you know is the strongest demand we’ve seen in 10 years since we’ve been doing this, and we still haven’t solved the problem, the housing issue of how do we house 4 million households.
And so anymore product, that product is going to probably get stymied a little bit on the home building side and that’s just going to further increase the demand for single family rentals, because these people need to – and multifamily, these people need somewhere to go.
Michael Bilerman
Yeah. Last question, just you guys issued bonds in the quarter. You took those out, I think at about $0.97 at par. You know typically most companies will sort of go out with a yield that they think is attainable and price those bonds accordingly. Just go through the mechanics of why you chose to do it that way, sort of the income statement impact the amortization of the less proceeds effectively by doing that. So just walk through a little bit the decision to do that.
A – Chris Lau

Yeah, sure Michael; Chris here. You know I think you’re exactly right, and keep in mind it’s common place for all bond coupons to get rounded off using an issuance discount to the nearest logical number, oftentimes expressed in eights or so. You know in our case, given the strength of the capital position and the fact that our external capital needs have now been funded for ’22, I mean we’re able to round our coupon down a touch more on this offer and be at a discount. But at the end of the day I think you’re on exactly the right track. In terms of income statement impact, whether it comes through in coupon interest rate or amortization of that discount, it’s all included as part of financing cost to FFO.
Michael Bilerman
Right, to FFO you’re going to have the same – you know but obviously there’s some I guess cash differential and you know for those uneducated on how a bond map works, the headline rate is different than a yield to maturity, and I think there was a fair amount of confusion in the market that we, given the coupon spread, that a yield to maturity spread that was much narrower relative to your closest peer, in addition to the 10 year moving, about 10 to 15 basis points over the course of that week. So I think just understanding whether it was a one-off or a way that you just went about it, it was just helpful to clarify.
David Singelyn
Yeah, so I’m going to agree and there’s a number of components and your right. I mean deals won’t move from week-to-week and day-to-day based on treasuries and end market movements and spreads.
At the end of the day, if you look at rate versus coupon rate it’s still sub 4%. 3.925 I think was rate before discount if I recall correctly, off the top of my head and probably the most comparable data point if you’re trying to compare across deals, is ultimately credit spreads, right, because that you know you can’t control and underlying treasury and I think if you – and again, not to get too much into the numbers of comparing us versus other deals around the market nearby our transaction, but I think when you look through to credit spread, you’ll see that our deal price is tighter other – you know relative to others that were near us and I think that’s a reflection of credit profile and the balance sheet and the fact that our credit ratings are also on positive outlook as well.
Michael Bilerman
Yeah, I mean I think that’s exactly right. I think you know normal cases, they stay adjusted in the spread over the course of the marketing, where most of them use your discounts or in some cases a premium you know are in the basis points, not in a 3% type discount. So it was unusual relative to bonds that have been issued in the past low reit sector and I just wanted to clarify sort of the drivers of your decision in doing that, and it’s helpful.
Okay, thanks Chris! And congratulations Jack! Sorry. Take care.
Jack Corrigan
Thank you, Michael.
Operator
We have reached the end of our question-and-answer session. I would like to turn the call back over to David for closing comments.
David Singelyn
Thank you, operator, and thank you for your time today. In closing, I’ll reiterate what Michael and I were talking about. The demand for our homes remains robust and thanks to a recent capital raise, the company is in a great position to execute on our growth programs this year. So we’ll talk with you next quarter. Have a great day!
Operator
Thank you. This does conclude today’s conference. You may disconnect your lines at this time and thank you for your participation.

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