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American Homes 4 Rent (AMH) Q2 2019 Earnings Call Transcript

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American Homes 4 Rent (NYSE: AMH)
Q2 2019 Earnings Call
Jul 30, 2019, 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Greetings, and welcome to the American Homes 4 Rent Second Quarter 2019 Earnings Conference Call. [Operator Instructions] I'd now like to turn the conference over to your host , Stephanie Heim.

Thank you. You may begin.

Stephanie G. Heim -- Executive Vice President, Counsel and Assistant Secretary

Good morning. Thank you for joining us for our second quarter 2019 earnings conference call. I'm here today with David Singelyn, Chief Executive Officer; Jack Corrigan, Chief Operating Officer; and Chris Lau, Chief Financial Officer of American Homes 4 Rent.

At the outset, I need to advise you 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, July 30, 2019. We assume no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

A reconciliation to GAAP of the non-GAAP financial measures, we are providing on this call is included in our earnings press release. 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.americanhomes4rent.com.

With that, I will turn the call over to our CEO, David Singelyn.

David P. Singelyn -- Chief Executive Officer and Trustee

Thank you Stephanie. Good morning, and welcome to our second quarter 2019 earnings conference call. Beginning with operations, I'm extremely pleased with our results in the second quarter. Core FFO was $0.28 per share, up 7% from the second quarter of last year. This increase reflects our strong market fundamental, in a property management platform, focused on controlling expenses, while maintaining our assets and providing a quality customer experience.

On a macro level, the single-family rental market is as strong as I've seen, driven by robust population and employment trends in our markets, rental demand for our homes continues to be healthy, which supports our high occupancy rates and continued growth in rents. To highlight this point, let me touch on several metrics that support what we are seeing on the ground.

First, our typical resident is a family with children and a head of household in their 30s. Families often desire a single-family home and in today's environment, with high down payment requirements and more transient job market and reduced tax benefits from homeownership, more of today's households are opting to rent, while the national homeownership rate is flat or declining, the US is on pace to add 2.2 million households this year, benefiting the single-family rental demand.

Second, we've tailored our portfolio to focus on markets with outsized growth drivers. Employment growth in our markets is 25% higher than the national average, and the population growth in our markets is more than twice the national average. Third, we saw prospective residents showings per available property in our portfolio increase more than 20% year-over-year in the second quarter of 2019. Fourth, according to recent research from John Burns Real Estate Consulting and Freddie Mac, 50% of older millennial renters prefer to stay as long as possible, and 71% of these renters think it is more affordable to rent than own.

Further, over the last four years, the number of renters stating that they intend to purchase a home has trended down from 35% to 24%. This confirms the trend that many current renters do not see value in owning a home, even if they can afford to buy a home.

Finally, our portfolio is diversified by design, operating in 22 states. Single-family rental rate appreciation has been more stable than home price appreciation. Since the mid 1980s, single-family rents have never declined on a national basis, while home prices have dropped at least six different years.

Additionally, during the Great Recession, single-family rents fell in some markets such as Charlotte and Atlanta, and never declined in other markets, like Tampa. Single-family rents proved to be far more stable than most other real estate classes. With regard to our strategic growth, we remain focused on our AMH development program, as the best risk-adjusted opportunity to invest our capital for profitable growth.

We believe this program is a game changer for our industry, developing homes that are purpose-built for the rental market, designed for durability and lower cost to maintain and providing near-term and long-term accretion to growth in net asset value. We are now nearly three years into this program, designing and fine-tuning our prototype homes, building our teams, establishing relationships with vendors, testing market acceptance and piloting the cluster rental homes with the neighborhoods for additional market efficiencies.

Further, we are building homes in markets and neighborhoods where we currently operate, adding scale to our existing platform. From an economic perspective, we are building new homes at a lower investment cost than we could acquire a similar home. These new homes are built with our rental program in mind, which combined with new appliances and systems will result in future lower cost to maintain, than the cost to maintain most existing homes. Our program continues to ramp-up, and we have yet to realize its full benefits.

In summary, resident acceptance has justified our development product, initial returns are in line or better than originally projected, and we continue to explore ways to expand this program, while remaining vigilant on market selection and balancing our capital commitment and risk. Perhaps, the best evidence that building for rent is changing the housing market landscape, is that we are now seeing traditional homebuilders developing purpose-built rental homes, as an alternative channel, and to meet the diversity of market demand in the current environment.

Next, as you may have seen, last week, we filed an amendment to the resale prospectus we filed in February. The sole purpose of the amendment is to update the prospectus concerning stock sales by the [Phonetic] needs executives made in connection with the repayment of certain loans, previously made by company affiliates. To be clear, this filing is only related to the sales already announced and completed in the first half of 2019, and all affiliate loans have been repaid. Management retains a substantial ownership stake in the company and is committed to alignment of interest with shareholders.

In closing, I am very pleased with our results in the first half of 2019. Our portfolio is structurally full, our development growth channels are maturing and our balance sheet is strong, positioning us to take advantage of opportunities that will arise. As we sit here today, we have huge opportunities in front of us and I'm confident that we'll sustain our momentum over the long-term.

We operate within a huge industry that is still in the early stages of transition to an institutional asset class, professional ownership, and management accounts for a tiny fraction of the overall single-family rental market, which gives us a long runway for growth.

As previously mentioned, household formations remains strong, and new housing supply isn't sufficient to meet demand in most markets. Even with the recent decreases in home mortgage interest rates, we are seeing sustained rental demand as families value our well-located homes and the flexibility that renting provides.

Finally, our sector is resilient with recession resistant attributes. Housing is a non-discretionary need, and our platform should produce solid results through all economic cycles.

And now, I'll turn the call over to Jack.

John Corrigan -- Chief Operating Officer and Trustee

Thank you, Dave, and good morning everyone. As we have mentioned previously, operational excellence is one of the four cornerstones of our company. From our leasing teams to our maintenance teams of throughout our entire organization, we are committed to establishing best practices to maximize efficiencies and drive bottom line results.

Our second quarter results are directly tied to this relentless focus. Demand for our homes remains strong, allowing us to push both occupancy and rental rates or a same-home portfolio during the second quarter, we achieved a 95.7% Average Occupied Days Percentage, up 40 basis points from the second quarter of 2018, and up 20 basis points sequentially.

Average monthly realized rent was up 3.7%, resulting in a quarter-over-quarter increase in same-Home core revenues of 4.4%. Additionally, our focus on customer service continues to provide benefits by reducing turnover. For the second quarter, turnover was down 20 basis points compared to last year and on a trailing 12 month basis, this represents our 10th consecutive quarter of improved retention. We are proud of this trend, but at this point, bear in mind, that our portfolio is structurally full and frictional vacancy from the timing of move-outs and move-ins, in any given month or quarter may vary. While July is not yet closed, we continue to see strong demand, however, move-outs have trended slightly higher than last year, which can result in downtime as homes are made ready for a new resident. Turning to operating expenses.

Second quarter 2019 core property operating expenses from Same-Home properties were up 5.8% year-over-year. The most significant factor driving expenses higher was a 6.4% increase in property taxes, which Chris will discuss later. For the second quarter, repairs and maintenance and turnover costs were up 4.7% and recurring capital expenditures were up 18.6%. The above average increase in capital expenditures was driven by two factors.

First, our planned expansion of our preventative maintenance program relative to the second quarter of 2018. And second, storm damages, specifically higher roofing, landscaping and sensing costs due to unusually high rainfall and windstorms in certain markets toward the end of the quarter. Year-to-date, our average repairs and maintenance turnover costs and recurring capital expenditures are $1,064 per home, up 4.5% over the first half of 2018 and within our range of expectations. Turning to growth, as Dave mentioned, our strategy is focused on our built-for-rent programs, as the best risk-adjusted opportunity for accretive growth.

These programs are ramping up, which should have increasing benefits to the bottom line, as we move through late 2019 and into 2020. Consistent with our expectations during the second quarter of 2019, we added 144 homes for a total investment of approximately $42 million. 136 of these homes totaling approximately $40 million were added through our built-for-rent programs. For 2019, we remain on track to take $300 million to $500 million of homes into inventory, with the majority still expected to be from our built-for-rent pipeline and the rest from our other channels.

Further, we expect to invest an additional $200 million to $400 million into our development pipeline in 2019 for future year deliveries. Turning to asset management. We continue to evaluate our assets and strategically prune our portfolio where it makes sense for operational reasons, and to recycle capital into opportunities with better long-term returns. During the second quarter, we sold 433 homes for approximately $83 million and at June 30, 2019 we had approximately 1660 homes held for sale, which we expect to generate between $325 million and $375 million of net proceeds over the course of this year and next. In summary, it was a solid quarter and in line with our expectations.

We look to finish out the remainder of the year strong, continuing to provide a superior customer experience for our residents.

Now, I will turn the call over to Chris.

Christopher C. Lau -- Chief Financial Officer

Thanks Jack. In my comments today, I'll briefly touch on our second quarter operating results, update you on our balance sheet and conclude with a review of our 2019 guidance. Before covering our operating results, I'd like to remind you that certain of our 2018 metrics are presented on an informed basis, consistent with the new lease accounting standard that was adopted this year, and that you can find all applicable reconciliations in the back of our supplemental information package.

And now, getting into our operating results. For the second quarter of 2019, we generated net income attributable to common shareholders of $22.5 million or $0.08 per diluted share. This compares to a net loss of $15.2 million or $0.05 per diluted share for the second quarter of 2018. Also for the second quarter of 2019, core FFO was $98.2 million or $0.28 per FFO share and unit, as compared to $91.9 million or $0.26 per FFO share and unit, for the same quarter last year.

Adjusted FFO was $86.8 million in the second quarter of 2019, as compared to $82 million for the second quarter of 2018. On a per share basis, adjusted FFO was $0.25 FFO share and unit for the second quarter of 2019, compared to $0.23 per FFO share and unit for the second quarter of 2018. Also, of note, for the quarter, I'd like to provide you with a further update on property taxes, since our June Investor Presentation. At this point, we've now received assessed property tax values for over 50% of the portfolio and are continuing to see assessment increases in certain jurisdictions that are higher than our initial expectations at the start of the year.

For reference, some of the notable states with outsized increases are Texas, Indiana and Georgia. As always, we are already extremely active on the property tax value appeals front and have filed or expect to file over 20,000, individual property tax value appeals, this year. As a reminder, our historical success rate on appeals has been about 40% to 45% but each year is different and we won't begin to know the outcome of this year's appeals efforts until the results trickle in throughout the third and fourth quarter.

Additionally , keep in mind that we have not received 100% of our assessed property tax values, and the any annual changes to local property tax millage rates are typically released in the third and fourth quarters. However, based on currently available information and input from our local team of property tax experts, we now expect full year property tax expenses to likely increase in the high 5% range compared to our initial expectations at the start of the year, which was an increase of 4% to 5%.

And in just a minute, I'll tie all of this into our full year guidance expectations. However, before that I'll give you a quick update on our balance sheet. At the end of the quarter, we had approximately $2.9 billion of total debt with a weighted average interest rate of 4.4% and a weighted average term to maturity of 13.6 years. Our net debt to adjusted EBITDA was 4.7 times, and debt plus preferred shares to adjusted EBITDA was 6.6 times.

And as a reminder, we don't have any debt maturities, other than regular principal amortization until 2022. In terms of liquidity and funding sources going forward, at the end of the second quarter, we had $119 million of unrestricted cash on the balance sheet and our $800 million revolving credit facility was fully undrawn. We generate approximately $275 million of annual retained cash flow and our disposition program is on track to generate approximately $200 million of recyclable capital this year.

Our balance sheet continues to be a key differentiator, and consistent with our strategic cornerstones provides us with an extremely solid foundation to continue accretively growing our portfolio. Finally, I'd like to provide you with some current thoughts on our full year guidance ranges, which remained unchanged in last evening's release. First off, we are very pleased with our year-to-date operating performance and believe full year same-home revenues are tracking, at or above, the midpoint of our full year guidance range.

However, we are mindful of the fact that our heaviest move out period, being the third quarter is still ahead. Next, I mentioned previously that our current expectation for full year same-home property tax expense growth is now in the high 5% range. Taking this into consideration, with other expense categories, we now believe, full year same-home core property operating expenses are trending toward the high end of our guidance range of 3.5% to 4.5%.

With that said, I'll remind you that property taxes, which represent our largest expense category will continue to remain fluid, as we receive our remaining assessed values, current year property tax rates and the results of this year's appeals campaign. Overall, we are proud of our results, so far this year. And taking into consideration, our current views on Same-Home, core revenues and property operating expenses we remain confident in our bottom line, full-year guidance ranges of same home NOI growth, same NOI after capex growth and Core Funds from Operations.

That concludes our prepared remarks, and we'll now open the call to your questions. Operator?

Questions and Answers:

Operator

Great, thank you. At this time, we'll be conducting a question-and-answer session. [Operator Instructions]. Our first question is from Nick Joseph from Citigroup. Please go ahead.

Nick Joseph -- Citigroup -- Analyst

Thanks. Let me start on the development program. Just looking for more color on the cadence of the deliveries, so how many homes do you expect that will cost -- do you expect to deliver in the third quarter, and then also in the fourth quarter.

John Corrigan -- Chief Operating Officer and Trustee

Well, for the remainder of the year, we expect to deliver about 700 to 900 more homes. it will be heavily weighted toward the fourth quarter, we currently have about 500 in vertical construction. All of those, we expect to deliver by the end of the year, and then we have some in horizontal construction that we would also expect to deliver by the end of the year.

David P. Singelyn -- Chief Executive Officer and Trustee

Hey Nick, it's Dave, let me just add a couple of things. Some of these things, you've heard, but the history of our development program, as we did a test and once that test was done, we decided to roll it out, and at that point, we had to go look for land. So, we had a little bit of a gap, because you have to get the land before you can start the process. We mentioned at the beginning of the year that we expected to be in that 1,000 home plus or minus for the year, but it was going to be very, very back weighted, and that's exactly where we are.

We are where we expect to be, we are building the teams out in the market places that we want to acquire and develop homes, acquiring the land and are very well-positioned for the back half of this year, really toward the back half, and more importantly for 2020 and 2021.

Nick Joseph -- Citigroup -- Analyst

Thanks. So, then how do you think about lease up? Are you seeing an opportunity to pre-lease any of the development homes or how long does it typically take for a renter to move in, and begin paying rent after you deliver a home?

David P. Singelyn -- Chief Executive Officer and Trustee

Once we deliver our home, it's -- the average leasing time is about 20 days, and then another 10 days or so from lease to move in -- from signed lease to move in.

Nick Joseph -- Citigroup -- Analyst

Thanks.

John Corrigan -- Chief Operating Officer and Trustee

Thanks Nick.

Operator

Our next question here is from Shirley Wu from Bank of America. Please go ahead.

Shirley Wu -- Bank of America -- Analyst

Hey, good morning guys. So, a follow on the built-for-rent. Guess, it's been almost three years now since you started this program. Could you give us an update in terms of, let's say the premiums you get on these properties versus your traditional portfolio? And also, could you talk a little bit about the land bank, you have for this program, and how you intend to expand it over, call it, the next year to two years?

John Corrigan -- Chief Operating Officer and Trustee

Yes. We get approximately a 5% premium, some developments more, some less. But, as far as the lots, it really depends on whether you're buying vacant developed lots which are ready to build on, or just lots -- pretty much raw land that you're -- you got to do all the horizontal work. So the -- our total lots that we need to have to deliver the cadence we expect is about -- we need about 6,000 lots an inventory, and right now, we're at...

Christopher C. Lau -- Chief Financial Officer

Up 3600. It's Chris. You can get this out of the Q from other past quarters or this quarter's Q that will be filed later this week, but that's probably just about $150 million of land on the balance sheet, which translates into about 3,600 lots at the moment.

Shirley Wu -- Bank of America -- Analyst

Got it. So, it's interesting because I think previously you mentioned that you would typically only buy plots of land that you can build on vertically, but now you're also doing the horizontals as well?

John Corrigan -- Chief Operating Officer and Trustee

No. I don't think we ever said that. What we said is, would be entitled for development. So, you buy land or you go into escrow on land and you make sure all the entitlements are there for you to build before you actually close on it. So that, that we don't buy anything without being sure of the entitlements.

Shirley Wu -- Bank of America -- Analyst

Got it. And a quick pivot to maybe Chris on expenses. So, you noted that your real estate taxes are now trending toward the higher end of this 4% or 5% range -- the 5% and your success rate for appeals, but you'll typically be 45%. Could you give us a rough estimate as to how much lower those appeals came down in your previous years for those successful appeals?

Christopher C. Lau -- Chief Financial Officer

It's difficult to translate it into an exact dollar amount, because it really does vary year-to-year. But, what I can say is both when we start the guide at the beginning of the year, and as we recalibrate it now, with all the information that we have in hand, we take into account, kind of a reasonable and I would say conservative level of success rates on those appeals, and so that's all factored into our adjusted expectation. I would balance that by saying, as I mentioned in my prepared remarks, we have a very good track record on appeals, and I think a good adherence in our ability to predict them. But, you don't actually have the results of those appeals back until kind of throughout the third and the fourth quarter.

Shirley Wu -- Bank of America -- Analyst

Great. Thanks for the color.

Operator

Your next question is from Ryan Gilbert from BTIG. Please go ahead.

Ryan Gilbert -- BTIG -- Analyst

Hi, thanks guys. Just another one on the development program, it looks like you're going to deliver around 20% of the total deliveries for the year in the first half and 80% the second half. Looking to 2020, is that -- is it fair to kind of extrapolate that cadence broadly to the 2020 or 2021 deliveries?

John Corrigan -- Chief Operating Officer and Trustee

Well, I would say that the 2020 deliveries will still be back ended, but not as back-ended as 2019 and by 2011, I think it will be pretty even flow.

Ryan Gilbert -- BTIG -- Analyst

Okay.

David P. Singelyn -- Chief Executive Officer and Trustee

This is Dave, let me just add, what we're saying is that, we are still ramping up. It's a multi-year ramp-up, and you'll continue to see that ramp up through 2020, but the first half of 2020 is going to be significantly higher than the first half of 2019.

Ryan Gilbert -- BTIG -- Analyst

Okay, great. And then, on the increase in move-outs that you saw in July. We've noticed on the homebuilding side that more homebuilders are accelerating the shift to entry-level products. So, I'm wondering if you're being -- you're seeing any markets where you're being impacted from higher levels of affordable supply that would be competing directly with your product?

John Corrigan -- Chief Operating Officer and Trustee

I'm sure there is some that competes, but we aren't seeing abnormal level of competition that way. What we really saw was, we went through a heavy lease-up period last year in February through May, and we just had a lot more of the -- our biggest move out percentages are on the first year -- after the first year lease and they usually -- a lot of them go month-to-month until the kids are out of school when they want to move-out. So, I think you just see more properties that had lease expirations in March, April, May, and they went month-to-month for a month or two, but I don't think it's related to anything other than that.

David P. Singelyn -- Chief Executive Officer and Trustee

Just to add a little bit to that. The seasonality of our business is typically -- you're going to see a little bit more move-outs in the middle of the summer. It's kind of what we're seeing. We today are essentially full and a small increase in the frictional vacancy of move-outs in any one month is going to have a little bit of an impact. Jack's comment, so we did see a little bit more move-outs in July. I don't want it to be taken that it's a significant change. It's very comparable to last year, so July move out numbers, it is a slight tick up, but it's pretty comparable.

Ryan Gilbert -- BTIG -- Analyst

Okay, great. Thanks very much.

Operator

Our next question is from Steve Sakwa from Evercore ISI. Please go ahead.

Steve Sakwa -- Evercore ISI -- Analyst

Thanks. I guess, Chris, just to circle back on the top line. You're trending at least in the first half, above the high-end of the range currently, and your commentary was kind of midpoint or better, and I'm just trying to sort of figure out how sort of worried are you about the occupancy trend. It seems like you've locked in a lot of good rent growth, both on new leases and renewals. So, I'm just trying to sort of play a little devil's advocate to hit the middle of the range, you'd need to see about a 60 basis point or more than that, maybe 100 basis point slippage in the second half of the year. I'm just trying to sort of reconcile that large of a decline with what you posted in the first half?

Christopher C. Lau -- Chief Financial Officer

Yes. So good question Steve. I would say, couple of thoughts come to mind. One, even though we let the guide formally unchanged, I think it's important to keep in mind, some of my commentary for prepared remarks in terms of where we think we're tracking in that range, and that we believe that we're tracking at or above the midpoint on a full-year basis. And then second, as we think about the top line throughout the year. I think, it's really important that we keep in mind the prior-year comp set, and the fact that we had a pretty soft occupancy comps in the first half of 2018, which normalized to more stable levels in the back half of the year, and no surprise there and that was all taken into consideration when we set the guide at the start of the year, on a full year basis. So, we just need to keep that in mind, the prior year occupancy comps as we think about revenue growth, first half of the year versus second half of the year.

And then lastly, as we're thinking about the guide overall, we need to also keep in mind that as Jack pointed out, the third quarter in general is the toughest time of year, just from a move out perspective, and we're right in the middle of that right now, and still have that ahead of us in the third quarter. And so, we're keeping that in mind, and we recognize revenues are tracking well, which we're happy with. But, we're also going to be very prudent in terms of how we evolve the guide throughout the year.

Steve Sakwa -- Evercore ISI -- Analyst

I guess, just to follow up a little bit. Are you doing anything differently on the renewal rates today in terms of trying to kind of manage that move out or the turnover rates, and are you sort of pushing harder on rent and maybe creating a little bit more turnover and a little bit more vacancy in the portfolio to capture higher rents or...?

David P. Singelyn -- Chief Executive Officer and Trustee

No. I would say that we're taking the same approach that we have in the past. We about a year and a half ago, we started pushing our renewal rates a little bit, we went from kind of the low threes to around four on average, but -- and that probably weights a little bit on releasing spreads because the rents are already high when they expire. But overall, we're pretty consistent with where we've been the last couple of years.

Steve Sakwa -- Evercore ISI -- Analyst

Okay. And then, Chris, just secondly on R&M, I know it was up about 4.7 [Phonetic] in the quarter that can bounce around quarter-to-quarter, just based on some of the timing, how do you think about that maybe in the back half of the year?

Christopher C. Lau -- Chief Financial Officer

Yeah. No, I mean I would say -- you're right, it can bounce around a little bit, but it's 4.7 [Phonetic]. Keep in mind that's pretty much right on top of what we were expecting and what our thoughts are on a full year basis, which was kind of in the 4s [Phonetic] or so on the expense component of our cost to maintain, and I would say -- I would put that kind of all into the equation as we think about expenses overall, and if you recall, at the start of the year we kind of spoke to our components of expenses, in terms of two categories, one being property taxes and then two being kind of everything else, including the expense component of cost to maintain and our thoughts around that component of expenses, which is kind of in the 3% to 4% on a full year basis. And we think we're tracking well in that piece of expenses and that's what's gone into kind of the thought process, balancing with property taxes and our view on overall expenses on a full year basis now.

Steve Sakwa -- Evercore ISI -- Analyst

Okay, thanks, that's it from me.

Christopher C. Lau -- Chief Financial Officer

Sure. Thanks Steve.

Operator

Your next question here is from John Pawlowski from Green Street Advisors. Please go ahead.

John Pawlowski -- Green Street Advisors -- Analyst

Thanks. Continuing on that Steve's expense question there, I would just like more color on Jack's prepared remarks that unusually high rainfall is causing greater than expected, was it capex pressure, so R&M and turn costs are in line with expectations and capex is higher? Is that fair?

Christopher C. Lau -- Chief Financial Officer

That's right. Let me give you a little more color on the numbers and then Jack can provide more operational insight, if you like. So, good question, as we think about capex overall and the quarterly year-over-year change let's kind of unpack kind of the pieces here. The component that was attributable to the storm-related items that Jack was referring to is kind of in the ballpark of about $400,000 or so, and so you separate that out and then look at the remainder of the increases, really two things going on there. Regular way increase in capex and then the planned investment into our preventative maintenance program.

To give you a rough order of magnitude, the dollars into our preventative maintenance program for this quarter were about $500,000 to $600,000 which was right on top of what we were expecting, to expand into the program this quarter, and then if you hold constant for that preventative maintenance in the storm damages, that leaves just under a 5% increase in kind of the all other regular way components of capex, which is right on top of what our expectations were.

John Corrigan -- Chief Operating Officer and Trustee

Yes. And, I'll just add on the preventative maintenance program. Just a reminder, that's our in-house maintenance program primarily for the exterior of the homes, which is mostly painting the exterior of homes that have gotten a little aged. So, that program, we started in 2017 and completed the roll out of it in 2018. So, you're seeing a higher number in 2019 compared to what we had in the second quarter of 2018.

Christopher C. Lau -- Chief Financial Officer

And John, if I can just make one more point, real quick. On the storm damages, I just want to highlight the fact that I'm sure everyone recalls at the start of the year when we initiated the guide, in that guide we included a consideration for weather type events throughout the year. Knowing that in each year, history would tell us that more often than not, there's some type of weather-related costs in that year. It's difficult to predict when they're going to fall, and where they're going to all, but this is a perfect example of things like that can come up in the portfolio throughout the year, and I think speaks to kind of the importance of having that component in the guide at the start of the year.

John Pawlowski -- Green Street Advisors -- Analyst

Okay, and then this rainfall doesn't change the guide is what you're saying?

Christopher C. Lau -- Chief Financial Officer

That's right, because this is just kind of a component of the weather related kind of consideration in the guide, at the start of the year.

John Pawlowski -- Green Street Advisors -- Analyst

Okay. And then maybe just talk maybe Dave, longer term as you and your peers learn how to operate this business, as you see just the revenue expense side evolve; is the current head count in the field and the current salaries in the field for the current portfolio rightsized or is there anything structurally need to change for AMH going forward, to keep revenue expense trends consistent?

David P. Singelyn -- Chief Executive Officer and Trustee

Yeah John, it's a good question, and one of the things that you've probably seen in this year's numbers; execution is becoming much more consistent period to period, and if you look at our property management area, we've done a number of things; we've talked about it last year to ensure that the -- we have shored up what we need in the field area. As we maintain -- get to a place where we are completely -- well, we're stabilized full, there is a couple of areas that we can become a little more efficient on the leasing side.

With that said, we may actually add a couple of additional people on the maintenance side to respond quicker to a couple of things. All of these changes I am talking about are very, very minor and you're not really going to see much of it in the numbers. So, I like where we are today, it's taken a number of years to stabilize our platform. There was no blueprint when we started, but our systems are -- there is opportunities to improve, but we've done a lot of work on systems in getting the right people in the right position. So, I like where we are today.

John Pawlowski -- Green Street Advisors -- Analyst

Okay, thank you.

Christopher C. Lau -- Chief Financial Officer

Yeah. Thanks John .

Operator

Our next question is from Rich Hill from Morgan Stanley. Please go ahead.

Richard Hill -- Morgan Stanley -- Analyst

Hey Chris. I want to come back to the comments that you made about property taxes, I think you said that they were coming in around 6.5% or so for the quarter, which maybe surprised me a little bit, given what we're seeing for HPA across the United States, that seemed like it was toward the high end. So, I'm wondering if there's anything specific to your markets that's driving the tax increases to the high end of what we're seeing nationally, and do you expect that to turn lower over the next couple of years?

Christopher C. Lau -- Chief Financial Officer

Nope. Good morning Rich, good question. So, a couple of things. If you go back to one of my comments in prepared remarks, our recalibrated view of property taxes on a full year basis are now expected to be in the high 5s. So, not the mid-6s that you see in the quarter. And the reason for what you're seeing in the quarter. If you just think about kind of the way that property taxes get accrued throughout the year, in the first quarter we had accrued one-fourth of what our expectation for property taxes was on a full year basis at the start of the year.

And then, as we needed to adjust up that expectation in the second quarter, you essentially have a little bit of a true-up, if you will from the first quarter that was accrued at the beginning of the year -- property tax expectation. So, I would expect that 6.4% to trend down as we get through the back half of the year, and on a full year basis as I mentioned, we're expecting something in the high 5s.

Richard Hill -- Morgan Stanley -- Analyst

Okay, that's helpful. And so, your preventative maintenance program, obviously, you have to spend money now to save money in the future. But, how much and sort of a same-store expense basis going forward, do you think that preventative program will help you? Is there any way you can maybe quantify that without giving guidance?

John Corrigan -- Chief Operating Officer and Trustee

That would be difficult to quantify, but if you didn't do it, it's going to increase your -- one of the things that we were doing is doing those -- doing the exterior work on the turns and sometimes you catch it too late, when you're doing it on the turn. So, we're categorizing which homes need to have more immediate need as we make a visit to the homes, and trying to get -- catch the work before it gets to be a problem. The -- so, it should in the long run save us -- in the short run, you're pushing up the expenditures. But, you're maintaining the house in a, I think a more effective way, in a more cost effective way.

Richard Hill -- Morgan Stanley -- Analyst

Okay, got it. And David just -- I'm sorry, go ahead .

John Corrigan -- Chief Operating Officer and Trustee

I mean, a couple of things that we're talking about, it's paint and depth, paint is on wood product, it's a lot cheaper to routinely paint it as opposed to I get it dry rot and have to replace it. But, there is also a second benefit here, and that second benefit is it keeps the houses looking fresh, and it helps marketability. So, there is two pieces of benefit to the preventative maintenance program. The other benefit to it is, we can do the exterior work without having to schedule it with tenants. So, we don't have to wait till the house is empty, and a lot of the tenants like us coming out and fixing up the home without being asked.

Richard Hill -- Morgan Stanley -- Analyst

Got it. So David, just one quick follow-up question from your prepared remarks. We get a lot of questions about this, but I think you said single -family rental rates have never declined in the market. Did I hear that correctly?

John Corrigan -- Chief Operating Officer and Trustee

On a national basis, rental rates on a national basis, on average have not declined any time over the last -- since the 1980s. And if you want, we can direct you to some of the sources for that.

Richard Hill -- Morgan Stanley -- Analyst

Yes, let's follow up offline. Thank you very much, I appreciate your time guys.

David P. Singelyn -- Chief Executive Officer and Trustee

Thanks Rich.

Operator

Your next question here is how Haendel St. Juste from Mizuho. Please go ahead.

Haendel St. Juste -- Mizuho -- Analyst

Hi, I guess a quick easy one first. Phoenix, what's going on there? What drove the big jump in the new lease rate growth?

John Corrigan -- Chief Operating Officer and Trustee

Phoenix has been pretty strong for quite some time, and one of the advantages to Phoenix is that it has relatively low rents compared to the rest of the market, so a $50 or $75 increase is a higher percentage.

Haendel St. Juste -- Mizuho -- Analyst

Okay. So, 14% stand out number, but not a number that -- well, maybe a number that we could see again some double-digit type of figure in the -- it seems like it's a number that's, I wouldn't say recurring or recoverable, but it's not -- given the absolute level in rates, certainly an opportunity for outsized rate growth versus the rest of your market?

John Corrigan -- Chief Operating Officer and Trustee

Right. I think last year, I'm looking at the schedule here last year, releasing rates in the second quarter in Phoenix were 11.5% higher. So, I don't expect double-digit growth in perpetuity. But, we've had pretty good success there the last few years.

Haendel St. Juste -- Mizuho -- Analyst

Okay. What percentage of the portfolio today is on a month-to-month basis, meaning leases have -- I guess technically expired, but the tenants remain in the homes, and what type of rate growth are you contractually getting from those leases?

Christopher C. Lau -- Chief Financial Officer

It's just under, call it 4% and change to the total portfolio currently.

John Corrigan -- Chief Operating Officer and Trustee

Yes, so about 2,000 homes. And what we -- our current program is when they go month-to-month, whatever we would have raised them to, if they find a renewal year lease plus 10%. So...

Haendel St. Juste -- Mizuho -- Analyst

Got it. And that's in the [Indecipherable]. Okay.

Christopher C. Lau -- Chief Financial Officer

That actually -- that number was overall Haendel, and if you're interested in tracking it, you can get it in the back at the supplemental, on page 20 in the lease expiration schedule.

John Corrigan -- Chief Operating Officer and Trustee

So, we do not include that 10% premium in the renewal spreads, and nor do we include it on either side. We don't include the 10% premium in the spreads.

Haendel St. Juste -- Mizuho -- Analyst

Okay, thanks for clarifying that. And then, I guess back to an earlier question on the retention in the portfolio, the outsized growth, the favorable dynamics, household formation. I guess I'm curious, why aren't you guys pushing rates, a bit more? I see you're getting about 6% on average, on new leases leased, during this quarter. Understand, you not wanting to necessarily force turnover, but how much of a band, perhaps, are you willing to test pushing rate, are you doing that in any given market? I guess, I'm just curious, how much more you could perhaps be getting on rents here given the strong turnover and the industry dynamics?

John Corrigan -- Chief Operating Officer and Trustee

It's really looked at house-by-house, market-by-market, so if you have three houses that are being leased by other competitors. If you place yours as the highest rent in the group, you're going to be the last one to lease. So, you really are judging these things house-by-house, market by market, and that's why you see the differential in the different markets on what the spreads are. As far as renewal rates, we try to be a little conservative, you see 6% increase on renewals in Phoenix versus 14% on releasing. Yes. We might be able to get a little more on renewals, but you're probably going to leave a pretty sour taste in your residents' amount.

Haendel St. Juste -- Mizuho -- Analyst

Okay, OK. And then just one more, Chris, I can go back to just the OpEx guidance, we've talked about the issue, real estate taxes. But I guess, I'm more curious bringing in last year's experience, and in the year where I remember around this point in time, there was questions on the guidance, you subsequently raised the same-store expense guidance later in the year. I think you actually missed on the third quarter, ended up raising the guidance -- the same-store in that third quarter period.

So, I guess I'm curious, given all that's going on around us, how much confidence do you have that you won't need to raise that same-store expense guidance, at least just the lower portion of it, in light of last year's experience and the ongoing industry headwinds?

Christopher C. Lau -- Chief Financial Officer

Yes, I would say two thoughts there, and I think that this really applies to our approach to the guide overall, not just with respect to expenses, but I think you're hearing from us, in our tone, that we're very comfortable and confident in our ranges and we're approaching this year, how we evolve those ranges throughout the year, very prudently, and I think that's applied to both the topline and expenses, as well. But, I think it's also important to keep in mind that some of the comments in prepared remarks around where we believe we are tracking within those ranges, and just again to remind everyone on the top line, we believe we're tracking at or above the midpoint, and then on expenses, taking into consideration the recalibration on property taxes, we believe will be in the upper half of our expense range -- that total range is 3.5% to 4.5%.

Haendel St. Juste -- Mizuho -- Analyst

Thanks Chris.

Christopher C. Lau -- Chief Financial Officer

Thanks Haendel.

Operator

Our next question here is from Hardik Goel from Zelman Associates. Please go ahead.

Hardik Goel -- Zelman Associates -- Analyst

Hi guys, thanks for taking my question. I wanted to focus a little bit on just overhead costs. And, if I look at property management and G&A, as a percentage of revenue, those are both up year-over-year more so, property management. I know, you guys have put in a program to increase efficiencies, what's going on there, so 8% of revenue roughly, it was 7.5% last year?

John Corrigan -- Chief Operating Officer and Trustee

I'll take part of it, and Chris can answer anything else that he sees. But, one of the things we had -- we were poached quite a bit last year, and it cost us in, in our turn times. And so, we and so we have a more generous pay package for our people this year. That's probably a good portion of the percentage increase. The other thing that we did this year versus last year, I think we talked about on last quarter's call is we hired basically a SWAT team, so that when we do get poached and people leave in the field we're not left with nobody there. We move the SWAT team to pick up the slack. So, I think we are fully utilized in May, June and July.

Christopher C. Lau -- Chief Financial Officer

Yeah, and Hardik let me give you a couple of other thoughts, also. I think it's helpful to kind of -- I think you're looking at the numbers in the back of the supplemental that we calculate in the platform efficiency percentage. In terms of understanding them, I think it's helpful to also break them apart and think about property management and G&A separately.

And I would say, on property management, especially if you look at it on a same-home basis and you look at it on a full year-over-year basis, you'll see that we're up 40 basis points year-over-year. So, even though we are making some of those investments in the platform that Jack mentioned, overall we're tracking pretty well on a full year basis.

And then on G&A, it's been a couple of quarters since we talked about this, but I think it's helpful to go back to some of our commentary when we initiated the guide at the start of the year. And recall that, one of the components of this year's G&A on a year-over-year basis was the exact comp reset that we had at the start of the year, and as a reminder, the cash impact to this year's G&A -- let's call it about $2.5 million or so, and then if you hold constant for that, that implies kind of a 1% to 2% increase in kind of comparable G&A, year-over-year.

And, on a full year basis, again if you go back to our comments at the start of the year, we were expecting a full year G&A to be $37 million to $38 million, and if you take -- and this is excluding stock comp -- and if you take half of that through the first half of the year, and compare that to where G&A is running year-to-date, we're right on top of what our expectations were.

Hardik Goel -- Zelman Associates -- Analyst

All right, thanks. That's all from me.

Christopher C. Lau -- Chief Financial Officer

Thanks Hardik.

Operator

Your next question is from Douglas Harter from Credit Suisse. Please go ahead.

Douglas Harter -- Credit Suisse -- Analyst

Thanks. Given the attractiveness of the built-to-rent. Can you talk about what it would take to kind of want to ramp the number of homes and the size of that portfolio, and whether that capital could come in the form of JVs or raising additional capital?

David P. Singelyn -- Chief Executive Officer and Trustee

Yeah, it's Dave. There is a couple of things about the development program and ramping up. One is that, as we've mentioned earlier on this call, it does take a little longer to ramp up this program than it does the acquisition program. We -- so, you really have to look at your ability to execute and then you look at the capital. On the ability to execute, we are ramping up, we have staffed a number of markets after our initial tests, and have been out actively acquiring the land.

On the joint venture side, there is a lot of interest in the investment community on growth programs in single-family rentals. There -- it's in all three channels of acquiring existing asset, national builders as well as in-house development. We are seeing interest in all of those areas, and we are considering that as well as the fact that we have a significant pipeline of capital ourselves through retained cash flow or about $280 million for this year is the target, as well as we have additional debt capacity as our EBITDA grows, even -- and we have the additional debt capacity, even with the credit rating restrictions that we have or guidelines that we have.

So, we have a lot of different ways to finance it. It is a program that we do want to ramp up. We are ramping up and you're seeing the -- you'll see the result of that toward the latter half of this year, and primarily in 2020.

Douglas Harter -- Credit Suisse -- Analyst

Thank you.

Operator

Your next question is from Jade Rahmani from KBW. Please go ahead.

Ryan Tomasello -- KBW -- Analyst

Hi, everyone. This is actually Ryan Tomasello on for Jade. Was wondering, if you're seeing any discernible impacts in your markets from the iBuyers, whether that be in terms of competition for new acquisitions or using them as an attractive channel for efficient disposition of your assets?

John Corrigan -- Chief Operating Officer and Trustee

Yeah. We've used them for efficient disposition of assets and we don't see that much in terms of competition, other than for people. Remember that we are still acquiring through the channel of existing homes, but a lot of our growth is coming through new homes, and so we don't have a lot of competition for product in acquiring assets that they are impacting us.

Ryan Tomasello -- KBW -- Analyst

And then on the new build program, can you tell us what percentage of the portfolio is new construction today and over time, if you have a target for the percentage of the portfolio or where you, in general, could see that going?

John Corrigan -- Chief Operating Officer and Trustee

Yeah, it's a very small percentage at this point, probably in that 2% to 2.5% of the portfolio range, but I would expect that to grow and we're currently staffed to grow at a level of about 3,000 homes a year.

Ryan Tomasello -- KBW -- Analyst

And just last -- one last one, if I could. I'm not sure if you gave it in your prepared remarks, but can you discuss the trends you're seeing in turnover times, where those are running today versus a year ago, and if you have any internal targets for that metric over time?

Christopher C. Lau -- Chief Financial Officer

Yeah. Ryan, it's Chris. I can give you where we're tracking in the quarter and Jack could speak to targets. For the second quarter turn days, keep mind income "turn days" this is full cash to cash, ran call it in the mid-40s, 44 days or so. And a year ago, we were at a higher 40s, so trending favorably on a year-over-year basis.

John Corrigan -- Chief Operating Officer and Trustee

Yes. The marketing times are coming down, lease to sign is pretty close to where it was a year ago, and then the move-out to rent-ready date has moved up a little bit, just the more we exercise our resilient flooring program, it's going to weigh it that up a little bit, because it on average takes about seven days longer to contract that out.

Ryan Tomasello -- KBW -- Analyst

And where do you expect that average to go over time?

John Corrigan -- Chief Operating Officer and Trustee

Over time, I would expect it to be -- depending on time of year, because the marketing time later in the year is not as fast as it is, this time of the year, anywhere from 30 days to 35 day during the peak leasing season to 50 days in the non-peak.

Ryan Tomasello -- KBW -- Analyst

Great, thanks for taking the questions.

Christopher C. Lau -- Chief Financial Officer

Thanks Ryan.

Operator

Next question here is from Drew Babin from Robert W. Baird. Please go ahead.

Drew Babin -- Robert W. Baird -- Analyst

Hey, good morning, a good percentage of your inventory additions year-to-date have been in Jacksonville. So, wanted to touch on that market, and obviously it's a large market geographically, and I imagine there's a decent amount of affordable home inventory at least on the outskirts, but sort of what are you seeing there; is your investment maybe more infill, and is that going to continue to be a big investment market for the remainder of this year?

John Corrigan -- Chief Operating Officer and Trustee

It will continue to be a big investment market. But the -- I think the main reason you're seeing a little outsized investment there is, it's one of the first markets that we entered into in terms of development, so it's further along and we've delivered more houses there than in the other markets.

Drew Babin -- Robert W. Baird -- Analyst

Okay. And can you remind us from a demand growth perspective, kind of what's attractive about the market, any employers that are adding jobs there, sort of what the long-term play is?

John Corrigan -- Chief Operating Officer and Trustee

Yeah. It's got significantly higher than average population growth -- job growth, and just fairly low unemployment rate. So, it's got the demographic growth characteristics that we like, and it's within the portfolio. It's -- the demand has been strong there consistently for six years.

Drew Babin -- Robert W. Baird -- Analyst

Okay, thanks for that. And just one more from me

Kind of on the opposite end of your development spending, the $200 million to $400 million that you're spending this year, on deliveries that will come in 2020. What markets are sort of the tail end of that where we might see more deliveries next year relative to this year?

David P. Singelyn -- Chief Executive Officer and Trustee

When we opened, we hired somebody right at the beginning of 2018 to open up markets on the western part of the United States. So, the ones that are a little later to open that we're going to be building or are building; are Salt Lake City, Las Vegas, Denver, Boise, Seattle and then, we have a fairly sizable development in the Austin region, Austin, San Antonio regions, so you'll see some there. For the rest of the year, it's probably going to be primarily of the Southeast, which is where we started our development program.

Drew Babin -- Robert W. Baird -- Analyst

Great. Thanks for the color.

Operator

Your next question is from Ryan Gilbert from BTIG . Please go ahead.

Ryan Gilbert -- BTIG -- Analyst

Hey, thanks for taking the follow-up guys. Just a quick one on the National Builder Program. I know the preferences to negotiate wholesale prices on bulk sales, but I'm wondering if there are any markets where the rent growth has been strong enough or overall rents are just high enough that you can walk directly into the sales center by just at list price from a salesperson?

John Corrigan -- Chief Operating Officer and Trustee

We could. It's just the economics on the way, we're doing it are much better, and the finishes when we negotiate it far enough in advance, so we can get our hard flooring in and set it up the way with our specifications to a greater extent than, if just buying off the rack.

David P. Singelyn -- Chief Executive Officer and Trustee

Ryan, it's Dave. Let me just add, the homebuilders and we have had discussions, it's becoming a much more viable partnership for both of us, and it's in a development stage where we are working well with them, they are now working with us on our finishes, the close out of some of the developments, we can't help them there, we do get some significant discount , but we -- it's a program that was slow to get going, and there is a lot of interest by a lot of homebuilders today, and we're looking to take advantage of that as well.

Ryan Gilbert -- BTIG -- Analyst

Thank you.

Operator

[Operator Closing Remarks]

Duration: 63 minutes

Call participants:

Stephanie G. Heim -- Executive Vice President, Counsel and Assistant Secretary

David P. Singelyn -- Chief Executive Officer and Trustee

John Corrigan -- Chief Operating Officer and Trustee

Christopher C. Lau -- Chief Financial Officer

Nick Joseph -- Citigroup -- Analyst

Shirley Wu -- Bank of America -- Analyst

Ryan Gilbert -- BTIG -- Analyst

Steve Sakwa -- Evercore ISI -- Analyst

John Pawlowski -- Green Street Advisors -- Analyst

Richard Hill -- Morgan Stanley -- Analyst

Haendel St. Juste -- Mizuho -- Analyst

Hardik Goel -- Zelman Associates -- Analyst

Douglas Harter -- Credit Suisse -- Analyst

Ryan Tomasello -- KBW -- Analyst

Drew Babin -- Robert W. Baird -- Analyst

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