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American Homes 4 Rent, American Residential Properties complete merger

A single-family rental giant is born

In a move that creates a giant in the single-family rental space, American Homes 4 Rent and American Residential Properties announced Tuesday that the companies finalized their merger, which was first announced in December.

According to a release from the companies, the merger “enhances the size” of American Homes 4 Rent, which was already the “largest publicly traded single-family rental company.”

With the merger complete, American Homes 4 Rent now owns more than 47,000 homes in 22 states with at least 1,000 homes in each of 17 markets across the country, representing approximately 81% of the homes in all markets, and at least 2,000 homes in each of eight markets, the company said.

Under the terms of the merger agreement, American Homes 4 Rent issued approximately 38 million common shares and limited partnership units and assumed or repaid a total of approximately $0.8 billion of American Residential Properties' debt.

The companies said that the total transaction value of the deal was approximately $1.3 billion.

In the merger, each share of American Residential Properties' common stock and each limited partnership unit in its operating partnership was exchanged for 1.135 common shares or limited partnership units of American Homes 4 Rent.

According to the companies, American Residential Properties' stock and unit holders now own approximately 12.7% of the outstanding common shares and units of American Homes 4 Rent.

With the deal complete, American Homes 4 Rent said that it now has a total market capitalization of approximately $8 billion and an aggregate real estate cost basis of approximately $8 billion.

This deal merges two of the fastest-growing companies in the housing economy. American Homes 4 Rent ranked No.1 in revenue growth in HW's 2014 Fast50 program, growing its revenue an astounding 2,962% from 2012 to 2013.

The company then followed that up with 299% revenue growth from 2013 to 2014, landing it in the No. 2 spot for the 2015 Fast50.

American Residential Properties moved from the No. 5 spot on the 2014 list to the No. 3 spot this year with 128% growth.

"We are delighted to announce the completion of our merger with American Residential Properties, further establishing American Homes 4 Rent as the largest publicly traded owner and operator of single-family rental homes," said David Singelyn, American Homes 4 Rent's Chief Executive Officer.

"American Residential Properties owned a high-quality portfolio of homes that fit strategically in our markets, offering significant opportunities to capture further operating efficiencies on the combined platform,” Singelyn continued. “Moving ahead, we look forward to the rapid integration of the two platforms and to creating additional value for the shareholders of the combined company, while strengthening our position as a premier company in the single-family rental sector."

Part of creating value for shareholders will be through the achievement of “operational efficiencies,” the companies said, in the form of “reducing duplicate expenses for executive and supervisory property management personnel, management information systems and other general and administrative functions.”

With the deal now complete, American Homes 4 Rent common shares will continue to trade on the New York Stock Exchange under the ticker symbol “AMH,” while American Residential Properties common stock is now no longer traded on the NYSE.

According to the companies, some of the homes that will be acquired from American Residential as part of the merger do not “meet the criteria” of American Homes 4 Rent.

American Homes 4 Rent said that it plans to sell those homes “as soon as practicable” after the merger.

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