American Homes 4 Rent
For the period ended Dec 31, 2023. Filed Feb 23, 2024.
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FY2023 · Filed Feb 23, 2024
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Reports of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Trustees of American Homes 4 Rent
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of American Homes 4 Rent (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 23, 2024 expressed an unqualified opinion thereon.
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
| Real estate assets, net | |
| Description of the Matter | As of December 31, 2023, the Company had total real estate assets, net of $11.8 billion, consisting of single-family properties in operation, single-family properties in development and development land, and single-family properties and land held-for-sale. As explained in Note 2 to the consolidated financial statements, the Company capitalizes costs to prepare single-family properties to be leased and for the development of single-family properties through its internal construction program. From time to time, the Company identifies single-family properties to be sold. At the time such properties are identified, the Company evaluates whether such properties should be classified as held for sale.Given the number of homes and the volume and nature of the different transactions affecting the recognition, measurement and classification of real estate assets, performing audit procedures to evaluate the accounting for real estate assets was challenging and required an increased extent of audit effort. |
|---|---|
| How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over management’s accounting for real estate assets, including controls over capitalization of costs, dispositions and classification of the Company’s properties. Our procedures included testing of management’s controls over the completeness and accuracy of underlying data used in the operation of the controls. To test the existence, measurement and presentation and disclosure of real estate assets, we performed audit procedures that included, among others, selecting a sample of costs capitalized during the year, including development costs, and evaluating the accuracy and classification of recorded amounts, evaluating the methodologies utilized to capitalize soft costs including interest and payroll costs, and selecting a sample of properties completed during the period and verifying that they were accounted for appropriately when placed into service. As it relates to dispositions, we selected a sample of properties disposed during the year and evaluated the terms and conditions of the sales contracts to assess whether the sale was properly recorded, including the removal of assets from the accounting records and related gain or loss on sale. We also selected a sample of properties classified as held for sale and evaluated whether the properties met the criteria to be classified as held for sale as of December 31, 2023 and selected a sample of properties sold after December 31, 2023 and evaluated whether each property was properly classified as either held for sale or held for use as of December 31, 2023. |
/s/Ernst & Young LLP
We have served as the Company’s auditor since 2016.
To the Partners of American Homes 4 Rent, L.P.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of American Homes 4 Rent, L.P. (the Operating Partnership) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income, capital and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Operating Partnership at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles.
These financial statements are the responsibility of the Operating Partnership’s management. Our responsibility is to express an opinion on the Operating Partnership’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Operating Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Operating Partnership is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Operating Partnership’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
| Real estate assets, net | |
| Description of the Matter | As of December 31, 2023, the Company had total real estate assets, net of $11.8 billion, consisting of single-family properties in operation, single-family properties in development and development land, and single-family properties and land held-for-sale. As explained in Note 2 to the consolidated financial statements, the Company capitalizes costs to prepare single-family properties to be leased and for the development of single-family properties through its internal construction program. From time to time, the Company identifies single-family properties to be sold. At the time such properties are identified, the Company evaluates whether such properties should be classified as held for sale.Given the number of homes and the volume and nature of the different transactions affecting the recognition, measurement and classification of real estate assets, performing audit procedures to evaluate the accounting for real estate assets was challenging and required an increased extent of audit effort. |
|---|---|
| How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over management’s accounting for real estate assets, including controls over capitalization of costs, dispositions and classification of the Company’s properties. Our procedures included testing of management’s controls over the completeness and accuracy of underlying data used in the operation of the controls. To test the existence, measurement and presentation and disclosure of real estate assets, we performed audit procedures that included, among others, selecting a sample of costs capitalized during the year, including development costs, and evaluating the accuracy and classification of recorded amounts, evaluating the methodologies utilized to capitalize soft costs including interest and payroll costs, and selecting a sample of properties completed during the period and verifying that they were accounted for appropriately when placed into service. As it relates to dispositions, we selected a sample of properties disposed during the year and evaluated the terms and conditions of the sales contracts to assess whether the sale was properly recorded, including the removal of assets from the accounting records and related gain or loss on sale. We also selected a sample of properties classified as held for sale and evaluated whether the properties met the criteria to be classified as held for sale as of December 31, 2023 and selected a sample of properties sold after December 31, 2023 and evaluated whether each property was properly classified as either held for sale or held for use as of December 31, 2023. |
/s/Ernst & Young LLP
We have served as the Operating Partnership’s auditor since 2017.
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