Opinions
Michael Missaghie
American Homes 4 Rent
AMH-N
BUY
Jul 09, 2014
$18.170
Stock price when the opinion was issued
REAL ESTATE
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(A Top Pick Apr 30/20, Up 40%) It bounced sharply off the bottom. It's one of the biggest U.S. single-family rental operators. The CAP rate is 4.4%, in line with U.S. apartment operators. Single-family operators should be at a lower CAP rate (or higher value). This is a great business with super earnings growth. He sees 10% growth this year. He likes their business model, which builds its own homes and does so with added efficiencies.
REAL ESTATE
TOP PICK
It rents out over 58 000 single family homes across the U.S. It is unique in that it has its own in-house development pipeline. It can add another 15000 homes on lots that they own or have options on. Their homes are similar quality to ones you could buy from a developer. Has attractive internal rent growth as well as external growth. Trades at a 17% discount to its share value and is a very defensive investment.
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REAL ESTATE
Similar to Tricon, but more diversified. AMH-T is focused on buying single family homes and renting them. 20-25 different cities and are a strong operator. They have to maintain and lease single family homes all over the city. Believes they will be a consolidator as home prices have appreciated in the US. There is an opportunity to build a business based on this through acquisition. The industry is fragmented, but can consolidate over time.