SUMMARY
American Homes 4 Rent ($AMH) is a single family REIT. The market has not been kind to single family REITs this year. For example, Colony American Homes was withdrawn in June and American Residential Properties (ARPI) has performed poorly. ARPI IPO’s at $21 May 8, 2013 and now trades around $17.70.
AMH is based in Malibu, CA, and scheduled a $750 million IPO with a market capitalization of $3.8 billion at a price point mid-range of $17, for Thursday, August 1. 2013.
SIx other IPOs were scheduled for the week of July 29. The full IPO calendar can be found at IPOpremium.
The S-1 filed July 19, 2013. The Manager & Joint Managers are Goldman; BofA Merrill; J.P. Morgan; Wells Fargo Securities. The Co-Managers are Citigroup; Credit Suisse; FBR; Jefferies; Raymond James.
VALUATION
|
Valuation Ratios |
IPO Mrkt |
Price / |
Price / |
Price / |
Price / |
% offered |
|
annualizing Q1 ’13 |
Cap (mm) |
Sls |
Erngs |
BkVlue |
TanBV |
in IPO
|
|
American Homes 4 Rent (AMH) |
$3,825 |
144.9 |
-122.6 |
1.6 |
1.2 |
20% |
|
American Residential Properties (ARPI) |
$569 |
32.1 |
-35.6 |
0.9 |
1.1 |
|
INCONSISTENCY IN THE SEC FILING
Total capitalization: $2.4 billion, page 64 with exclusions
But on page 65 “pro forma net tangible book value as of March 31, 2013 attributable to common shareholders would have been $3,236.0 million”
Total capitalization is always equal to or greater than ‘proforma net tangible book value’ so there appears to be some inconsistency in the total capitalization and pro forma net tangible book value, that is not clearly explained in the SEC filing.
CONCLUSION
Avoid the ARPI IPO. It’s priced at a book value premium to ARPI and there is an inconsistency in the SEC filing.
Use of proceeds
AMH expects to $711 million from its IPO plus $50 million from a concurrent private placement.
Proceeds will be paid to the operating partnership (AMH is a shell company hoping to get dividends from the operating partnerships), to repay $750 million in debt.
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