Single Family Residential REIT American Homes 4 Rent Sells a Preferred Issue

By: ,

Giant single family residence owner American Homes 4 Rent (NYSE:AMH) has sold a new preferred stock issue.  The issue carries a coupon of 6.50% and shares should begin trading on the OTC Grey market tomorrow (Wednesday). The OTC Grey market ticker is AMHHP.

AMH currently has 3 other preferred stock issues, but all of the 3 are very different from the new issue just sold.  The 3 older issues all trade with a “home price appreciation factor” which is accrued in the price of the shares.  The 3 older issues trade with coupons of either 5 or 5.5%, but trade above par as they have accrued appreciation of the portfolio houses in the price.  Additionally, the older issues have a “coupon penalty” which takes effect 7 years after issuance if the shares are not redeemed.  This penalty coupon is 10%.

The new issue just sold with a coupon of 6.50% has none of the special items of the earlier issues and is just a standard preferred issue with the normal terms-redeemable, at the company’s option, after approximately 5 years and perpetual (meaning there is no maturity date). While this new preferred stock issue is unrated, we believe it to be a high quality issue and it should be of interest to those with a conservative outlook.


Details of this new issue can be found here.

An interesting note on American Homes 4 Rent is that B. Wayne Hughes is the chairman of the board.  Mr. Hughes is the founder of REIT giants Public Storage (NYSE:PSA) and PS Business Parks (NYSE:PSB).  B. Wayne Hughes has an excellent history of running profitable REITs and AMH is no exception.  The company is a giant in the sector of single family residential home REITs and owns almost 48,000 single family properties.  AMH pays a dividend of just 5 cents/quarter on their common shares while Funds from Operations (FFO–which is a REIT measure of profitability) was 23 cents last quarter which leaves substantial cash to be reinvested in the company.

Tim McPartland

Connect with Tim McPartland

Tim McPartland
Tim McPartland is a private investor with over 45 years of investing experience. His analysis, research and writing is devoted to the hunt for income producing securities of all types, but in particular specializing in preferred stocks, exchange traded debt and Master Limited Partnerships.
Search Dividend Investor