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Greetings, and welcome to the AMH Second Quarter 2025 Earnings Conference Call. [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to introduce you to your host, Nicholas Fromm, Director of Investor Relations. Thank you, Nick. You may begin.

Good morning, and thank you for joining us for our second quarter 2025 earnings conference call. With me today are Bryan Smith, Chief Executive 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, August 1, 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. 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, Bryan Smith.

Welcome, everyone, and thank you for joining us today. We had another great quarter, driven by our continued commitment to the AMH strategy. Our year-to-date results reinforce that we are focused on the right things: Adding value and growing earnings across all areas of the business. We do that by focusing on 3 key areas: First, operational excellence, where we leverage in-house technology to support efficient execution and deliver a superior resident experience; second, portfolio optimization where data drives our asset management and investment decisions on markets, locations, asset type and quality; and third, prudent capital acumen where we prioritize a high-quality investment grade balance sheet that provides flexibility and diverse access to capital as we remain committed to our AMH Development program. And our strategy is working. As outlined in last night's press release, we increased our full year Core FFO per share guidance by $0.03 to $1.86 at the midpoint, now representing 5.1% growth. This guidance increase once again positions us to the top of the residential sector. Demand for high-quality, well-located AMH homes remains strong. In the second quarter, foot traffic was up more than 5% year-over-year, driving solid leasing and rate growth. With more and more people coming directly to amh.com to start their search for a new home. This translated into second quarter Same-Home average occupied days of 96.3% and new renewal and blended rental rate spreads of 4.1%, 4.4% and 4.3%, respectively. Together with better-than-expected collections, Same-Home core revenue growth was 3.9% for the quarter. These results reflect the strength of our revenue management strategy, which includes our lease expiration management initiative that we discussed last quarter. On the expense front, Core operating expense growth was 3.6%, leading the Same-Home Core NOI growth of 4.1% for the quarter. Overall, the second quarter was a great example of outstanding execution by the teams across all areas of the business. After a successful spring leasing season, our team shifted their focus to managing inventory ahead of the move-out season. For July, leasing activity remained steady with Same-Home average occupied days of 96.1% and new renewal and blended spreads up 3.6%, 3.9% and 3.8%, respectively. Importantly, as we think about the balance of the year, we expect the seasonal curve in 2025 to be flatter than 2024. And as we continue to execute on our revenue optimization objectives. With the flatter seasonal curve, we expect leasing to seasonally moderate less than the third and fourth quarters than they did last year with blended spreads remaining in the high 3% area for the balance of the year. Turning to external growth. We remain committed to our prudent and disciplined approach. AMH Development remains the backbone of our growth programs and is on track to meet this year's delivery expectations with initial yields continuing to improve on newly delivered homes. On the acquisitions front, we review thousands of assets each month across our 30-plus markets. While the vast majority still did not meet our buy box, we are seeing some encouraging signs, including bid-ask spreads beginning to move in the right direction from certain homebuilders. To close, our year-to-date results underscore the enduring success of the AMH strategy, and the team's outstanding execution. And with our continued focus on operational excellence, portfolio optimization and prudent capital acumen, we are well positioned as the market leader in the single-family rental industry. With that, I will turn the call over to Chris.

Thanks, Bryan, and good morning, everyone. Like always, I'll cover 3 areas in my comments today: First, a review of our solid quarterly results; second, an update on our balance sheet and recent capital activity; and third, I'll close with commentary around our increased 2025 guidance. Starting off with our operating results. This quarter was an excellent example of the power of the AMH strategy and our ability to create value and grow earnings across all areas of the business. For the quarter, we reported net income attributable to common shareholders of $105.6 million or $0.28 per diluted share. On an FFO share and unit basis, we generated $0.47 of Core FFO, representing 4.9% year-over-year growth and $0.42 of adjusted FFO, representing 6.3% year-over-year growth. And in addition to our strong execution this quarter, we also received favorable property tax news out of the state of Texas. As many of you recall, the 2022 Texas property tax reform that lowered a portion of the state's property tax rates expired at the beginning of 2025. Since then, after much deliberation, the state recently passed a new round of property tax relief that once again lowers property tax rates for 2025 and 2026 that has been positively reflected in our updated full year outlook that I'll talk about in a few minutes. Turning to investments. For the second quarter, our AMH Development program delivered a total of 636 homes to our wholly owned and joint venture portfolios. It was right on track with our expectations and continues to demonstrate our unique ability to create value in an otherwise challenging acquisition environment. To demonstrate this point, during the quarter, our team reviewed tens of thousands of potential acquisition properties. The vast majority of these properties still do not meet our disciplined buy box criteria and we ultimately acquired a total of just 5 homes during the quarter. On the other hand, we continue to be active on the portfolio optimization front. Selling 370 properties in the second quarter for approximately $120 million of net proceeds at an average economic disposition yield in the high 3% Next, I'd like to turn to our balance sheet and recent capital activity. At the end of the quarter, our net debt, including preferred shares to adjusted EBITDA was down to 5.2x. Our $1.25 billion revolving credit facility was fully undrawn, and we had $323 million of cash available on the balance sheet, which includes partial proceeds from our second quarter bond offering. During the month of May, we took advantage of a narrow market opportunity to raise $650 million in a 5-year bond offering priced at a coupon of 4.95%, these 5-year bonds provide a perfect complement to our existing maturity profile, reflect a better than previously expected coupon and will be used to fund a portion of this year's anticipated securitization repayments. And along those lines, after the end of the quarter, we delivered our notice to pay off our final securitization 2015-SFR2. After the payoff, which we expect to close during the third quarter our balance sheet will become 100% unencumbered with 0 maturities until 2028. And next, I'll cover our updated 2025 earnings guidance, which was positively revised across the board in yesterday's earnings press release. Starting with the Same-Home portfolio, recognizing our strong leasing performance and improved bad debt outlook that we now expect to approximate 100 basis points on a full year basis, we've increased the midpoint of our full year core revenue growth expectation by 25 basis points to 3.75%. And on the expense side, although the majority of Property Tax information is typically received over the course of the third and fourth quarters given the recent favorable taxes update, we've reduced the midpoint of our full year core expense growth expectation by 25 basis points to 3.75%. Collectively, this translates into an overall increase of 50 basis points to the midpoint of our full year Same-Home Core NOI growth expectations to 3.75%. Additionally, outside of the Same-Home portfolio, our teams have done a great job delivering solid operational execution, highlighted by our new communities across all of our AMH development markets. And other combined with the modest upside from our opportunistically timed and well-executed second quarter bond offering, we have increased the midpoint of our full year 2025 Core FFO per share expectations by a total of $0.03. Our new midpoint of $1.86 per share now reflects the high end of our previous range and represents a year-over-year growth expectation of 5.1% and which, as Bryan mentioned earlier, once again positions AMH at the top of the residential sector. And before we open the call to your questions, I'd like to share a little more context on the strength of this quarter. It wasn't just a strong leasing season. This quarter was a reflection of the strength of the AMH strategy and our relentless focus on creating value across all aspects of the business from operational excellence, to portfolio optimization and prudent capital acumen, all of which contributed to the success of this quarter and our meaningfully improved full year earnings outlook. Thank you to the team for making the AMH strategy possible. And now Bryan and I will open the call to your questions. Unfortunately, Lincoln Palmer was briefly called away for a family emergency and won't be able to join us today. We send our thoughts and support his time with his family. And with that, Operator, we're ready to open the line.

[Operator Instructions]. Our first question comes from the line of Juan Sanabria with BMO Capital Markets.

Just hoping, Chris, maybe you could expand upon the seasonal changes you're expecting in the second half of this year versus last year and the implications for both rate and blended spreads.

Chris here. A good question. I know very topical for a lot of folks. Let me share a couple of thoughts just in general on the curve to come to mind. Let me talk about before, we spent a lot of time analyzing the shape of our seasonal curve in general. And in particular, we've really been focusing on what our curve has looked like on a long-term basis versus more COVID and kind of COVID recovery time frame. And what we found is that with all things COVID related, turns really got distorted and we saw an atypical elongating of our seasonal curve over the last couple of years. By contrast, if you look at our stabilized business prior to COVID, we really saw that the seasonal curve tended to peak out kind of late May, early June, and that's exactly what we saw this year. And then on top of that, as we've been talking about, one of our key objectives for this year was to help flatten the shape of the seasonal curve. So that we can avoid the type of steep leasing deceleration we saw in the back of 2024. And we've been really successful accomplishing that this year through the lease expiration management initiative. Where we've shifted expirations from what was called 50-50 before first half, second half of the year to what is more now 60% in the first half of the year, 40% in the back half of the year. And what that's done for us is it's really enabled us to capture more new leasing opportunities during prime leasing season. And importantly, it has shifted move-outs away from the third and fourth quarters, which we expect to translate into less leasing deceleration this year, as you pointed out. And if you want to illustrate that with some numbers, if we look at new lease spreads from, call, let's say, the middle of the year to the end of the year, in 2024, we saw over 600 basis points of new lease deceleration from middle of the year to end of the year. By contrast, this year, we're expecting to only see about 150 basis points of seasonal deceleration, which puts us in a really great spot and makes us opportunistic as we head into the back of the year.

That's fantastic. And then just as my follow-up, hoping you could talk a little bit more about the acquisition environment. It seems like bid-ask spread is closing some of the homebuilders. But just curious if you could expand on that and then talk a little bit about aforementioned in prior calls, bulk or portfolio acquisition opportunities with the kind of existing stable homes.

Yes. Thanks, Juan. This is Bryan. In my prepared remarks, I talked a little bit about what we're seeing on the ground from a national builder opportunity perspective. And I think it's been 4 or 5 quarters in a row where we've seen a lot of volume of deals come across our desk, but really not much change in willingness to negotiate on price and lot of those deals didn't meet our buy box, and we've talked about how kind of wide we were on price to make it fit our yield objectives. We see a little bit of a change of late. And it's not completely across the board, but from some of the large national builders and some of the markets that have maybe a little bit of extra supply, we're seeing an expanded willingness to negotiate on price. And it gives us a lot of optimism as we get into the back half of the year on that particular acquisition channels potential. But I wanted to make sure that we highlighted the fact that we are sensing a meaningful change.

Our next question comes from the line of Jamie Feldman with Wells Fargo.

I guess just thinking about the change in the outlook for core revenue growth. Can you just talk about any other pieces? I know you talked about blends fixing the seasonal curve. Any other -- any other pieces of that calculation that have moved? And anything you can address in terms of how market conditions have changed across your markets better or worse?

Yes. Sure, Jamie, Chris here. I can start overall and then if Bryan wants to fill in anything else at the market level. Just as a reminder, overall revenue outlook increased 25 basis points at the mid to [$375 million] with the real driver being improved full year bad debt outlook, like I mentioned in the prepared remarks that we now expect to approximate 1% or so on a full year basis. That's further supported by the really strong year-to-date leasing activity we've seen, where we still expect to see full year average monthly realized rent growth and call it the high 3s. And then our unchanged full year occupancy outlook in the low 96s, which like we've been talking about, reflects less deceleration in the back half of the year compared to 2024 as we see the benefits of our lease expiration management program. And all those pieces will get you back to the increased outlook of [$375 million] at the mid.

And then, Jamie, this is Bryan. From a market perspective, we're really pleased with what we're seeing in our Florida markets as an example. It's been well documented that there's some supply pressures there, but our Florida portfolio is holding up really well. It really gives us additional confidence on the flattening of that curve to see occupancy in Q2 in excess of 90% in that region and really good demand. So we're optimistic about the back half on some of our major markets.

Okay. It actually leads to the second question, which is you had very strong results in the Midwest. Seattle, but you look at where you're acquiring more and it is some of those Florida markets and some of the heavier homebuilder markets. Can you just talk about that strategy? And do you think over time, the Midwest markets weaken and those other markets get stronger, just in general, why be growing in markets that do have more supply risk.

Yes. I mean, commentary specifically on the Midwest. We've really enjoyed strong performance in our Midwestern markets for a long time. You're looking at a snapshot of today, they're still characterized by very low supply, especially supply of the quality of home and the quality of location that we have in our portfolio. And we don't see that stopping anytime soon. If you look at the relative affordability across different markets in the United States, the Midwestern markets are comfortably within the top 10. So people are still able to move there and have a high quality of life. And our specific portfolio there, as I mentioned, is extremely well located, good school districts, homes with yards, single-family detached close to the commercial centers, our scattered set portfolio there has performed extremely well, and I expect that to continue. It's a similar commentary on Seattle. Seattle has a couple of different characteristics in the Midwest. Again, very low supply, especially at the entry level and the pricing levels that we're leasing our homes at Seattle though, on contrast to the Midwest is really expensive to own a home. It's about twice as expensive to own versus rent comparable products. And our development program continues to deliver nicely into that marketplace. So we expect a long-term continued success there just with the economic engine. And we expect the Midwest to continue to produce certainly through any sort of future that we can see.

Our next question comes from the line of Steve Sakwa with Evercore ISI.

Bryan, you talked about kind of the homebuilders willing to negotiate on price. Can you -- but I don't think you've really kind of done much yet. But like where do you see that spread for the deals you're looking at with them against your development pipeline? And I guess at what point would the development pipeline perhaps slow down if you could buy more kind of new products from the homebuilders?

Yes. Thanks, Steve. That's a great question. It's interesting, the price changes that we've seen are generally characterized by being in markets where we're not developing, we don't have the AMH development program. But in the markets where we do have those programs, it's critical to make sure that we're comparing apples-to-apples. So the inventory that we're seeing in our development markets is not as well located, and it's not as high of a quality of build. And in many cases, it's characterized by being attached or townhomes. So it's a different product in our 15 development markets. But it's one of the benefits of having a diversified portfolio footprint and that we can look at opportunities across all 30-plus markets. And we're seeing the price movement in our nondevelopment markets. In terms of how far it needs to move before we do anything meaningful, our calculation -- yield calculations on the ask prices today aren't that different than what we talked about last quarter. Thinking about yields in the high 4s, and we need to see a meaningful move off of that to be able to do anything of volume, maybe somewhere in the neighborhood of approaching 20%.

Our next question comes from the line of Eric Wolfe with Citibank.

Apologies if I missed this, but could you talk about where occupancy was in July and you mentioned that you expected a flatter seasonal curve than normal in the back half on blended lease rates and how that might also translate into the sort of a lower occupancy change as well. I think last year, your occupancy was down like 120 bps from top to bottom. So I was just curious what that might look like this year.

Yes. Thanks, Eric. Chris detailed some specifics on the curve expectations for the year, really as they pertain to rate. I think the key point as it pertains to occupancy and our outlook for the balance of the year is really centered around our lease expiration management program and the benefits that we're expecting to see with dramatic reduction in lease expirations and therefore move outs. That gives us more power, not only on the pricing side, but to be able to preserve occupancy and maybe a slightly slower demand environment due to seasonality.

And Eric, you're right, less -- this is Chris here. Less deceleration on the occupancy side as well. As you probably saw, first half of the year, Same-Home occupancy was 96.2% the guide contemplates full year Same-Home occupancy in the low 96%. As you can see, we're expecting a little bit of seasonal moderation in the back half of the year but not a ton. By contrast, if you look at same time last year, call it, June-ish through end of the year, we saw about 100 basis points of occupancy moderation. So much flatter as we see the benefits of lease expiration management.

Got it. And July, I guess, was consistent with that sort of the low 96% range?

Yes, July was 96.1%, holding strong.

Our next question comes from the line of Haendel St. Juste with Mizuho Securities.

So I guess, Bryan, there's been, I guess, lots of concern, let's call, about the development platform this year with lower yields versus last year, some concerns about tariffs and higher input costs. But you guys have been able to raise the guide partially this year because of some better outcomes in development pipeline. And you mentioned yields, I think, were up a little bit. So I guess, I was hoping you could talk a little bit more on how you've been able to achieve that? Is it better lease up? Is it less cost inflation than feared? And then maybe, what are your expectations for development yields over the near term?

Yes. Thanks, Haendel. I think you covered a lot of it. I'll break it down a little bit. First of all, the change in our expectations on the contribution of development outside the Same-Home was really due to outstanding execution by the team and quick lease up. There are a lot of different factors at play here. We've put some new initiatives in that are starting to take hold on the pre-leasing side, and premarketing. We saw some of that benefit early on. And importantly, we were able to lease through a little bit of backlog carried over from last year, quickly in delivering communities, so we could maintain pricing power, matching deliveries with demand. So it's been a very important move strategically for us as well. In relation to yield expectations for this year, as I said in my prepared remarks, we're on track for what we expected initially of the mid-5 yields for '25 deliveries starting in the low 5s and kind of progressing nicely through the year. There are a couple of things that we see there. On the cost side, the team has done an outstanding job of managing costs. We've been looking at this implication of potential tariffs. It's been a hot topic for a long period of time. And any increases that we may have seen or will see from tariffs are being more than offset by improvements in the labor market due to kind of decreased activity, plus some efficiencies that our teams are gaining as they become more established in a particular marketplace or through value engineering and architecture. There's a lot of good things going into play. And you're putting all these things together, and we're controlling our vertical costs very well. In fact, our vertical costs for construction on the new development arm are flat year-over-year. And we're expecting that flat -- no change in that as we exit '25 and begin 2026. So it's really coming in and working out as planned, and it gives us a lot of confidence going into next year.

Appreciate. That's great color. Chris, maybe one for you just on the property tax side. You mentioned the nice boost from lower the Texas initiatives. I guess, I know we're still waiting a bit from -- for other states, key states like Florida and Georgia. So I guess I'm curious what you are expecting or kind of embedded in the guide for that? And then what do you guys see as maybe a long-term run rate for real estate taxes?

Yes. Good questions. And I think you said it exactly right in part of your question in that a reminder for everyone, we're still really only halfway through the property tax year. At this point, we've received initial assessed values for really only a little over half of the portfolio or so. As I'm sure everyone recalls that really then starts the beginning of the appeals process that runs over the course of summer and then into the early fall. And then a reminder that we still receive the remainder of our values over the course of the third quarter and then the majority of tax rates aren't received until the fourth quarter. So we're still early with the exception of the favorable Texas news, which I mentioned, and you just pointed out, that really was the driver of the revision to our full year property tax outlook at this point, which, as a reminder, is in the high 3s, or so. And then the only other color that I can add at this point is that it's still very early. But based on some of the earliest rounds of initial assessed values that we've seen, we see a little bit of reason for optimism that there's a chance values could trend a touch better than we are expecting this year. But I caveat that by saying it's early, and we'll have to give you another update on this front next quarter. And then to your point, in terms of longer-term run rate, like we've talked about several times, long-term average property tax growth for us is 4% to 5%. And in the high 3s, but we're kind of on the lower edge of long-term average. And as we think forward, tough to predict '26 or beyond at this point, but we do know that rate of home price appreciation continues to moderate. And we see that as being a potentially favorable setup to property taxes looking forward.

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

Great. Chris, you guys have had this really good strategy around disposing of all homes that is really low cap rates. Wondering now with sort of getting to the end of the secured debt sort of coming off and sort of that freeing up homes to dispose. Wondering sort of how many homes you guys think you have left here to potentially still sell. And sort of what the longer term, I guess, sort of outlook is for that disposition strategy that you guys have employed? And I guess along similar lines, net debt to EBITDA, I think, is 5.2% in the quarter. I would imagine it's below the midpoint of your sort of target range. So how you're sort of thinking about managing the net debt-to-EBITDA sort of managing the balance sheet in terms of trade-off of these dispositions.

Yes. Great questions. I can start with the first piece of it in terms of what we see for opportunity going forward, especially as we are releasing previously collateralized homes out of the securitizations. A couple of reminders, last year 2024, we paid off 2 securitizations that freed up about 9,000 homes that had been encumbered for about the past 10 years or so. This year, through our 2 securitization payoffs, we'll be freeing up another 9,000 homes or so. So 18,000 homes we've -- our hands have been somewhat tied from an asset management perspective for the last 10 years or so. A lot of observations we've made in there from an asset management perspective that we'll be able to execute on going forward. I think we've maybe shared this before. Best guess at this point, there could be 10% -- maybe 10% to 15% of those homes that may ultimately become very attractive disposition candidates over the next couple of years. They're not going to work through the disposition system immediately. As everyone knows, these homes are being sold via the MLS, which means we let leases roll, residents move out, those homes going to the MLS, which naturally creates a little bit of a runway ahead of us. Creating great capital recycling opportunity for the next several years as we think about recycling into the development program and otherwise. And then to your point on leverage, you're right. leverage continues to tick down low 5 today. We're generally comfortable with and targeting net debt-to-EBITDA somewhere in the 5s which means we've got great capacity on the balance sheet to take advantage of incremental growth opportunities that we're watching very, very closely. And that could be in the form of incremental development. We're watching all things from an acquisition perspective very closely. Bryan talked about what we're seeing in terms of the dialogue with our national builder relationships. And then as everyone knows, we're very bullish on and watch the portfolio consolidation market very closely.

Great. That's really helpful. And just maybe sort of the lease exploration initiative, I think you gave a helpful update on that earlier. Just wondering, is that process sort of done? Or is there more to go with that initiative?

Thanks, Adam. It's -- we're really pleased with the results that we've seen with that initiative, but it's really just starting. And it's going to be extended into other areas of the business. For example, right now, it's just focused on renewals and making some movements between the different months. But ultimately, it will be extended into optimizing initial leases. And I think it will be a powerful tool as well as we manage communities. They have some slightly different dynamics where you have couple of hundred homes in a single community, the expirations and timing is going to be really important. So there's optimization opportunities there as well. And then as we get better and better at this to the exploration management isn't just about moving things into the right season, but it's about moving expirations into the right weeks into the right days in individual markets. So there's a lot of additional sophistication that we expect to put into the program over time.

Our next question comes from the line of Jeff Spector with Bank of America.

Great. In your opening remarks, you touched on several times the operational excellence, and we saw you in March and I know you talked a lot about your company-specific initiatives with AI advancing rapidly here, I'm just curious how these advances are helping you with those operating initiatives.

Yes. Thanks, Jeff. It's a -- great question, and it's really nice insight into some of the success we've had on the leasing side as an example. We talked in the past about our focus on technology and giving new technology tools to our teams to not only improve the resident experience, but accelerate leasing and there's benefits across the board. Our initial foray into how we're leveraging AI is starting on the leasing front. And we fully implemented a front-end system that is a fantastic thing for the residents. It's allowed us to provide answers to any prospects question, 24/7, managing huge volumes. And what it's done is it's freed up our license leasing professionals to be able to spend more time with the residents -- incoming residents, making sure that they're solving for their housing needs rather than just allowing them to what's available. So there's a lot of good benefits that you're seeing there. I talked a little bit earlier, too, about our pre-leasing initiative. AI is empowering that as well. And you can see some of the success we've had in the lease-up of the new home -- of the new development homes and just to put it in the proper context, that lease-up has occurred with this better engine without the use of concessions and some markets that have supply and where concessions are common, so there are a lot of good things. The AI benefits will be seen on the leasing side first. In the future, we're optimistic about applications into improvements in the communication platform with our residents. There's some really good things that are in the work. We haven't completed the rollout there yet. And then ultimately, I think the AI improvements and the new tools that we're able to to put in the hands of our field teams will make the maintenance experience not only much better, but much more efficient. So we're very excited about the possibilities to come on that side.

And then in terms of your company just getting more aggressive in leveraging these initiatives, the platform, your team, what you're learning from your developments I continue to read about more and more money, lower cost capital looking to invest in single-family rentals. And I know you've discussed you decided to stop the third-party management. Just curious with the changes in your cost of capital, any reconsideration there to for this way, your company gets even more aggressive in a smart way, but more aggressive leveraging this lower cost of capital out there in your platform?

Yes, Jeff, I think we've talked in the past about how we tested a third-party property management initiatives and some potential benefits there. We spent a couple of years managing exactly the type of homes that we thought fit well into that model. And our conclusion was pretty simple. We have such opportunity within our development program with optimizing the way we manage communities with improvements that we can make in our services platform that we felt that the best thing to do strategically was to focus on those opportunities in the near term. Over the long run, it's definitely possible that we would be able to leverage our platform in other ways. But as we sit here today, the opportunities are just too great internally in front of us to focus on anything else.

Our next question comes from the line of Julien Blouin with Goldman Sachs.

Yes. So I just wanted to touch on the new lease side. So it looks like trends into July are holding up a lot better than last year, and it sounds like you're expecting a lot less seasonal decel into the back half of the year. How much of that is driven by the lease expiration management that you're doing versus how much of that is maybe seeing signs of better pricing power as maybe some of the competitive supply pressures are starting to ease?

Yes. Thanks, Julien. It's a combination of a number of different things. The lease expiration management where we have relief from move-outs hasn't really started yet, so it hasn't shown up in any of our pricing power. But it is a factor into our confidence for the back half of the year. We're seeing some really good pricing power in some of our markets. You look at the outstanding performance. We talked about it on the call earlier of Seattle, Midwest has been fantastic. It's a testament to our diversified portfolio footprint. There are some markets that are pressured, but it represents a very small proportion of our portfolio. So we're doing good things on the management side. I think our revenue optimization has matured at lately price homes, marketing is a little bit better. So a lot of good things at play. And then I would expect to see the benefits from the lease expiration management program later on in the year.

Got it. That's helpful. And Bryan, we've seen your main SFR peers and some of the apartments run up pretty wide gaps between new and renewal rates versus those metrics that stayed a lot closer together in your portfolio. I wanted to check if that feels like a bit of a strategic choice on your end. Does it feel like maybe you're holding back a bit on renewals because you don't feel like it's healthy to have those wide gaps? Or is there maybe an impact to renewal rates from your lease expiration management strategy?

I think that's a great question. And it goes to the core of our strategy, especially as the way we manage renewals and how we think about them, we want to make sure that our residents are getting great value and that they know that they're getting great value. So those renewal rates have to be tied into current market rates, adjusting for any sort of kind of delay in terms of sending those out 60 or 90 days before they need to be executed. There's some seasonal effects. But we want to make sure that any offer we make to our residents is a very good value to them and holds up from a market rent perspective. And as such, you're seeing the sophistication that we have on pricing is another contributor to those type bands. But we've improved the way we communicate with our residents and quite often, through a dialogue with them on a renewal offer, it's a very easy explanation as to why this is a good thing to renew, and you're getting good value.

Our next question comes from the line of David Segall with Green Street.

When you did your analysis of historical leasing trends, I'm curious what you thought about how the history of turnover rates used to be a higher level of turnover than what you've seen since 2020? And how does that inform your views of what turnover should look like going forward?

Yes, I appreciate the question, David. Chris here and then Bryan can add in, if you like, too. I think ultimately, what you're seeing in the first half of this year is really timing associated with lease expiration management, right? As we know, we've been shifting strategically shifting expirations from the back half of the year to the front half of the year to align with leasing season. But as we look at the data on a quarter-by-quarter basis, the actual retention rate, the percentage of residents choosing to stay with us has remained relatively consistent. So it's really timing related in terms of shifting of overall expirations and then in turn move outs. And we would expect that to moderate down in the back half of the year. And on a full year basis, our view around turnover rate is pretty similar to last year. And turnover days, days to re-resident as well. And you can see that reflected in the fact that our view on occupancy on a full year basis is relatively flat year-over-year.

Great. And it looks like fee income has been growing at a double-digit percentage in the first half. I'm curious what specific aspects of fees are driving that? And how sustainable is that into the back half of the year?

Yes. That's really timing related as well. As you know, fee line typically correlates with leasing volume and as we've seen a greater proportion of leasing volume in the first half of the year, given shifting an optimization from lease expiration management we've seen fees shift accordingly. As we get into the back half of the year, we'd expect that to moderate back down. And generally speaking, in the guide, we're contemplating fees to run relatively similar to growth in rents.

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

Maybe I can place to start is just can you provide an updated assessment of remaining supply impact across the portfolio?

Yes. Thanks, Michael. If you look across our 30-plus markets, we're seeing very limited supply in the vast majority. I talked a little bit earlier about a couple of markets that had outstanding performance in the Midwest. Seattle, where there's just a clear shortage of quality housing, certainly housing that's comparable to what we're offering on the rental side. And then if you flip it to the markets that have been widely discussed where there has been some additional supply pressure, thinking about Phoenix, thinking about Texas, thinking about some of the markets in Florida, we're performing very well in those markets. The additional supply in Florida hasn't had much of effect of us from an occupancy perspective, maybe a little bit in rate but our performance there has been outstanding. And even in Phoenix, where there's a lot of supply pressure, again, we'll document and we're still in excess of 95% occupancy. And it's just a matter of time until that gets absorbed. One of the key factors that we have not only the benefits of the diversified geographical footprint, but it has to do with our product type and location within these markets. And that's why you're seeing really the durability of our portfolio where others might be pressured.

Got it. And as a follow-up, occupancy remains above the pre-COVID levels. Is there an ideal occupancy level for the portfolio if we do see a stronger housing market, good occupancy tick back down as move out to buy a home rise and turnover increases.

Yes, I think the way we're looking at it pre-COVID kind of the expectation was 95% range, and we've talked about it since the end of the pandemic that those new expectations have been increased to 96% range. There are a number of different factors that support that. We're doing a better job of execution. I think the value proposition is being more appreciated the difference in cost of owning versus renting is one of the contributing factors. Over time, we would expect to be able to maintain that. That's kind of our long-term goal. And if you look at the way that the first half of the year played out or alluded a bunch of additional expirations into the first half and add incremental move-outs, we were still able to maintain a very high level of occupancy which is a testament to a couple of different things, the depth of the demand; and second, our team's ability to execute turn these homes quickly and get them back up and leased up in the marketplace. So in the event of some changes in the for-sale marketplace, we would expect to be able to adjust to any impact, and I would expect us to be able to preserve occupancy as well.

Our next question comes from the line of Linda Tsai with Jefferies.

Could you give us an update on resident income to rent ratios? Are you seeing resident incomes trend higher in your portfolio for new residents?

Yes. Thank you, Linda. We're really pleased with what we're seeing from our incoming residents. It seems to tick up a little bit each month or each quarter, I guess, but our ratios are still very strong income to rent in excess of 5x. And we've seen stated household income for move-ins in Q2 accelerate past the $150,000 household mark that we talked about last quarter. And at the same time, credit scores are still remaining strong. So we're very pleased with the level of income and the strength of the incoming residents.

And then I think you referenced this a little earlier, but more explicitly, what's your view on the ability for home sales to recover more meaningfully in 2026? And what would be the potential impacts on AMH's portfolio?

Yes. In terms of predicting the likelihood that's a difficult one, but in the event that it does or when it does, I think it's good for everything. I think a healthy housing market is positive across the board. It's positive to the economy. Specific to our business. I think you'd probably see a change in some of the homes that are currently being offered to for rent, some of the shadow supply that has peaked in some of the Texas markets as an example. So there are some benefits from that side. Increased activity is good, our ability to process move-outs and re-lease these homes into a very deep level of demand gives us confidence that we can preserve the occupancy, and we expect with the affordability gap to, to be able to continue to have pricing power.

Our next question comes from the line of Brad Heffern with RBC Capital Markets.

On the acquisition front, you talked about homebuilders already, but I was wondering if you could talk through what you're seeing either on portfolio deals or first scattered side as well.

Yes, sure. Brad. Chris here. Look, on the portfolio side, for starters, not a lot to talk about on the scattered site side. But on portfolios, definitely something that we watch very closely. We're very optimistic on the number of assembled portfolios that we know are out there. And no different than we've talked about before. What we especially like about those opportunities is the potential to uniquely unlock value by bringing those portfolios onto our platform. Just like we're currently doing with the portfolio we acquired in the fourth quarter. In terms of activity out there, I think we shared this before, there's a number of discussions and dialogues more broadly going on out there in the market kind of end of '24 heading into '25. It does feel like a number of those have kind of slowed down just given some of the uncertainty in the environment. But we know that those assembled portfolios are out there. Ultimately, they're going to need exit and liquidity. And us and our platform provide a very valuable solution for them. We can cast a nice broad net, given the diversification of our portfolio. And like we talked about a couple of questions ago, great capacity off of the balance sheet in terms of leverage capacity. And I think we're very optimistic on those types of opportunities, but I would remind everyone that we are also very disciplined on the buy box but for the right opportunities, we're very bullish on them.

Okay. Got it. And then I was wondering if you could talk about what you're seeing on the land side. The lots under control seem to go down every quarter. So I'm wondering, is that just a reflection of land pricing being unattractive? Or are you trying to resize the book there?

Yes. Thanks, Brad. On the land side, what you're seeing with the decrease in the pipeline is really by design a few years ago, we had a very robust pipeline. We felt it was a great luxury coming into all the different changes that we're seeing in the marketplace. But the size of it today is more appropriate for our expectations on kind of delivery pace of the 2,300 or so per year. There's been some optimization of that pipeline but it sits at a healthy level today. In terms of what the land market looks like, it's been surprisingly resilient from a pricing perspective, but some observations on the ground for us are we're seeing more deals of the higher- quality land opportunities. Before last few quarters, I would say, could be characterized by maybe tertiary locations, slightly inferior. We're starting to see better quality. And we're also seeing an increased willingness from the sellers on flexibility for stage of delivery. And what I mean by that is what stage in terms of horizontal development that these lots are going to be delivered to us. So there's been some change on that side, which we're happy about. Going forward, at this point in the near term, we're going to be replenishing based on deliveries to kind of maintain that healthy level where it sits now.

Our next question comes from the line of Jesse Lederman with

Another question on the land market. Obviously, homebuilders of late have been focused on tying up land via option. Curious what your appetite for that would be, for example, I guess, on deals that you've tied up over the last few years with the for-sale market slowing presumably, if you had them tied up via option, you'd have the ability to go back and renegotiate which could be a solid tailwind relative to your underwriting at that time. So curious your thoughts on that vis-a-vis buying them out right.

Yes. Thanks, Jesse. We're flexible across really all options in terms of how we take down land. We have agreements where we have flexibility. We have some, as I said earlier in my previous remarks, it may be more developed finished lots are coming back to the marketplace that something we haven't seen in a long time. We're very flexible in on for really trying to find the best way to get the best real estate, the best land as quickly as we can into vertical and ultimately producing homes. So our team is very creative. We've talked about it in the past, the team has a very extensive public homebuilding experience and expertise on exactly how to structure these land deals and they're doing a very good job of that. One other interesting point on the land side that we're seeing a slight change in is we have been in discussions for finished lot takedowns from some of the homeowners and some of the land developers. And those opportunities didn't exist 2 or 3 quarters ago. So anyway, all options are in play, but it's one of the benefits of controlling the entire department, the full vertical, and we look forward to optimizing that, too.

And Jesse, you may recall, we've been active on the optioning front over the past couple of years. We've had 1,000, 2,000 lots or so option over the last couple of years. Definitely a valuable tool that we've used, also, as I'm sure you know, option in capital is expensive, right? Average optioning capital is double digits plus these days. So as Bryan's point is we're looking at everything that's out there, commonly that the math can skew in favor of the balance sheet, just given relative cost of capital delta, but it's definitely something that we've used in the past and continue to watch very closely.

Our next question comes from the line of Tayo Okusanya with Deutsche Bank.

Congrats on a solid quarter. I just wanted to ask on the regulatory front, whether at the federal state or local level anything that's kind of doubling up that you guys are watching and that maybe investors should be aware of?

Thanks, Tayo. It's -- we're paying very close attention to what's happening at the local, state and federal level. We don't have anything really new to report. There's been some favorable developments. We talked about them in the past. Last year, there were some very favorable antitrust passer legislation that was passed. And on the flip side, I think everyone is aware of some of the changes in Washington State that we talked about on our last call. But since then, nothing really new to note other than the fact that internally, we're very invested in our government affairs program and our strategy of making sure we get the word out that AMH in particular, is part of the housing solution. We're bringing new supply into the marketplace that helps to address this housing shortage. And I think we're doing a better job of getting the word out, but we still have a long way to go.

Our next question comes from the line of Jade Rahmani with KBW.

This is Jason Sabshon for Jade. I'd be curious to hear your thoughts around seniors housing in the active adult segment. Are you interested in targeting any acquisitions there or developing active adult communities within your built-to-rent strategy? And also, if you have any data on what share of your renters belong to this segment, that would also be helpful.

Jason, senior housing is something that we've talked about from time to time over the last decade, there's a couple of points that I think are important. As I mentioned earlier on the call, we have so much opportunity with what we're doing, just staying close to the core AMH strategy. And although senior housing might be something that we look at in the future, there's nothing kind of in the near term that we're going to be acting on that side. In terms of the data, the demographic data of our resident base, we haven't looked at the exact breakdown by different age cohort. The interesting part that we track those from the incoming residents, the average age of those households is 38, and it's been relatively consistent for a long period of time. So there might be -- might be a gap between that and the senior housing question.

Got it. And then separately, do you see the company holding a similar amount of land under development as a percentage of assets over the long term as to what's currently on the balance sheet?

Yes. This is Chris. We're in the right area. As Bryan mentioned, the land pipeline in general, has matured very nicely. And as we think about that as a percentage of the balance sheet, we've been very vocal from the start that we are committed to maintaining all things development, land and in-process construction to a single-digit percentage of the balance sheet, which I do not expect to see changing going forward.

Our last question comes from the line of Austin Wurschmidt with KeyBanc Capital Markets.

On the lease exploration optimization, what do you think the free cash flow benefit from your recent efforts are and what that value creation potential looks like. And while you guys have spent a lot of time discussing the seasonal impact in the back half of the year, I guess how should we think about then the seasonal ramp into the spring and early summer versus what that's looked like historically?

Yes. Thanks, Austin. From a high-level perspective, the lease expiration management initiative is really wrapped into the way that we're optimizing revenue as a company. We see benefits on the occupancy side, clearly on the rate side because of taking homes out into better pricing environments it's really an example of a lot of the things that we're doing to optimize the entire revenue line. In terms of putting an exact figure on in quantifying the current benefit that would be difficult to do, but it's wrapped into a larger initiative that is going to give us really good momentum for years to come.

Yes. A couple of other nice benefits just so you're aware. As you think about the shifting of leasing to the front half of the year. One, it gives us increased visibility to leasing spreads and activity earlier in the year; two, it increases the proportion of new leasing opportunities we can capture in the strength of spring. And then three, it minimizes or it lessens the proportion of new leases being captured in the slower back half of the year which will favorably translate into earn-in effect into the following year as well. So holistically, great win-win program all the way around.

Yes. No, makes a lot of sense. I guess do you think while it hasn't necessarily translated into improving retention, does it drive down that days to re-resident because of the traffic that you see during that window early in the year?

Over time, that's definitely part of the expectation, right? We're taking back vacant units during the strength of the spring leasing season, which over time our expectation is that should, on the margin, be benefiting days to re-resident.

Can you just remind us what that days to reresidence for you guys as it currently stands, so we can think about it over time?

Yes, sure. It varies over the course of the year. If you want to think about the second quarter, it's in the low 40s or so days to re- resident, which is fairly similar year-over-year.

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

Thank you for your time today. We really appreciate the continued interest in AMH and look forward to speaking with you next quarter.