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American Homes 4 Rent reported Q2 '14 FFO.

The REIT continues to offer hidden value to investors.

The growing FFO was anticipated to provide material value to investors during 2014.

Similar to the update on Silver Bay Realty Trust (NYSE:SBY), American Homes 4 Rent (NYSE:AMH) has generally seen all investor interest dissipate at the point the REITs are starting to generate decent profits. For Q2 '14, American Homes reported FFO grew to $35.3 million, or $0.15 per share, from $0.12 in the prior quarter. The company continues to acquire homes, with the total portfolio growing to 27,173 at the end of June, an increase of 1,668 homes. The rent-ready homes had nearly 95% occupancy rates, and the total portfolio occupancy rate sat at 87% at the end of July, following the purchase of Beazer Rental Homes and further acquisitions during the month. In addition, the company continues to pass-through rent increases, now approaching 4% on an annual basis.

The renter of single-family homes continues to improve operations, with strong sequential gains in almost all operating metrics as the portfolio of homes continues to season. American Homes doesn't provide an estimated NAV similar to Silver Bay Realty, making a comparison of the values difficult. In total, the stock now trades close to the book value, but the key ownership markets have seen a reported home price appreciation of roughly 12% since the end of 2012. Those gains applied to owned properties would easily increase the NAV. Not to mention, any ability to acquire the houses at a discount to estimated market value would add value.

The investment thesis in the original article "American Homes 4 Rent Offers Intriguing Value" suggested that investors would mostly ignore the improving operations in the sector. The REIT should easily increase distributions before long, with the FFO soaring and the current distribution rate only $0.05 on a quarterly basis. The REIT is attractively priced, but the price likely won't appreciate until the yield increases beyond the current 1.1% level.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

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