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Bryan Smith

Thank you, Nick. Good morning, everyone, and thank you for joining us today. Before we begin, I'd like to take a moment to express our sympathies for those impacted by the recent wildfires in California. Not only is the LA community near and dear to our hearts, but it is also home to many of our team members and one of our corporate offices.
We were fortunate that there was no impact to our operations, but it's been heartbreaking to see the disruption. Today marks my first earnings call since taking over as CEO. Our consistent outperformance over the past few years within the residential sector is a direct result of our relentless focus, which will not change. Over the past decade, we have strategically created a portfolio of high-quality assets in superior locations.
On the growth front, we have a vertically integrated development program that allows us to accretively invest in all cycles, while remaining patient and disciplined across our other growth channels. And we will lean into innovation across our entire platform, introducing industry-leading technology solutions that allow us to continue to efficiently deliver the best resident experience in our industry.
Our ability to remain focused and execute on this strategy has driven outstanding results, and we continue to be well positioned for the future. From a macro perspective, the single-family residential sector continues to benefit from strong, long-term fundamentals, including limited supply of quality housing, a wide affordability gap and outsized population growth in our markets.
And with our disciplined and focused approach, we expect to extend our track record of consistent outperformance within the space. The future at AMH is bright. And I, alongside our outstanding leadership team, I'm excited to lead this great company through the next chapter of its journey. AMH had a strong finish to 2024, capping off another year of outperformance with 6.6% growth in core FFO per share.
Consistent with the year-end strategy we outlined on our last call, the teams optimized revenue and strength in occupancy during the fourth quarter. While we typically do not focus on sequential, monthly changes in occupancy and rate, the chronology over the past quarter is important.
Notably, we picked up occupancy in the final two months of the quarter, which is atypical for the end of the year. We also hit an inflection point for rate in November, giving us confidence in our trajectory heading into the new year. This translated into 4% same-home core revenue growth, which was in line with our expectations for the quarter and contributed to our full year core revenue growth of 5%.
Turning to expenses. Core operating expense growth was 4.8% for the fourth quarter and 4.3% for the full year, reflecting excellent execution by the teams who were able to control the controllables throughout the year. In addition, we received better-than-expected news on the property tax front, that Chris will address in a moment. All of this resulted in 3.6% and 5.3% same-home core NOI growth for the fourth quarter and full year, respectively.
Turning to 2025. The leasing momentum from the fourth quarter has continued through January and into February, giving us confidence for the year ahead. For the month of January, same-home average occupied days was 95.6%. New lease spreads accelerated to 0.7%, while renewal growth held steady at 4.5%. This resulted in blended rate growth of 3.3% for the month. Looking ahead to the top line in 2025, our same-home core revenue growth outlook is 3.5% at the midpoint on a full year basis.
On the occupancy front, we expect the usual seasonal curve to play out over the course of this year with full year average occupancy landing in the low 96% area, which is similar to last year and what we consider the normalized long-term run rate for our portfolio.
On the rate front, we expect average monthly realized rent growth in the high 3% area, which breaks down to approximately a 2% earn-in from last year's leasing activity and the partial year contribution from 2025 blended spreads expected to be in the high 3% area.
Lastly, bad debt is forecasted to be in the low 1% area in 2025, which will be a modest offset to the other revenue building blocks. Chris will cover the remainder of guidance in a moment. On the investment front, development continues to be our primary growth channel. Since launching our internally managed development program in 2017, we have built over 12,000 homes in 200 communities, adding much needed supply to the national housing stock.
We are proud to be part of the solution in addressing the nation's shortage of quality housing. Similar to 2024, we plan to deliver approximately 2,300 homes in the current year. As rent growth accelerates in the spring leasing season, we expect initial yields to gradually improve, averaging in the mid-5% area on a full year basis.
This is similar to the going-in yields of our 2024 deliveries, which landed a touch below our most recent program expectations. Our newly built homes remain the highest and best use of our internally generated and recycled capital, a testament to their superior quality, location, and long-term return profiles. Outside of development, our expectations do not include any material traditional or national builder acquisitions this year because of the current pricing and cost of capital environments.
We will stay true to our buy box and remain patient on the growth side, pursuing incremental opportunities only when they make sense. And when they do arise, as we demonstrated with our portfolio acquisition of nearly 1,700 homes this past quarter, we have the experience and infrastructure to quickly integrate a large number of homes onto our platform. Finally, we will continue to lean into our disposition program as properties become unencumbered through the refinancings of our remaining securitizations.
This will allow us to continue to optimize our portfolio, while consistently recycling capital at attractive economics. Before I hand the call off, I'd like to highlight some of our recent organizational changes. With our CEO transition complete, I want to congratulate Dave once again, on his retirement as he concludes his advisory period and finishes out his final term on our Board of Trustees.
We are grateful for his leadership and wish him all the best. Additionally, I am proud to announce the promotions of three key members of our leadership team. First, Sara Vogt-Lowell has been elevated to Chief Administrative Officer in addition to her current role as Chief Legal Officer and remains a named Executive Officer of AMH, alongside Chris and me.
Second, Zack Johnson has been promoted to EVP, Chief Investment Officer. And third, Lincoln Palmer, who will be joining us today for the Q&A portion of the call has been promoted to EVP, Chief Operating Officer.
All three have been integral members of our team for more than a decade. With this leadership team firmly in place and our relentless focus on execution we're well positioned to extend our track record of outperformance. Now I'll turn it over to Chris.

Christopher Lau

Thanks, Brian, and good morning, everyone. I'll cover three areas in my comments today. First, a brief review of our year-end results; second, an update on our balance sheet and recent capital markets activity; and third, I'll close with an overview of our 2025 guidance.
Beginning with our operating results, we closed out 2024 with another strong performance focused on the core of our business, generating net income attributable to common shareholders of $123.2 million, or $0.33, per diluted share and $0.45 of core FFO per share unit representing 5.7% year-over-year growth.
And for the full year, we generated net income attributable to common shareholders of $398.5 million, or $1.08, per diluted share and $1.77 of core FFO per share in unit, representing 6.6% year-over-year growth, once again leading the residential sector. From an investment standpoint, during the quarter, we delivered 463 total homes from our AMH Development program. This was comprised of 339 homes and 124 homes delivered to our wholly owned and joint venture portfolios, respectively.
On a full year basis, we delivered a total of 2,356 AMH-development properties, which was modestly better than the midpoint of our expectations. Outside of development, as previously mentioned, we acquired a nearly 1,700 home portfolio during the fourth quarter for approximately $480 million. Integration of the portfolio is on track as we continue to bring performance at the homes up to AMH standards over the course of 2025.
On the dispositions front, we saw another quarter of robust activity, selling 587 properties generating roughly $180 million of net proceeds. For the full year, we sold 1,705 properties for total net proceeds of approximately $530 million at an average disposition cap rate in the mid-3% generating a highly attractive source of recycled capital for reinvestment into our development program, which is a meaningful differentiator in today's cost of capital environment.
Next, I'd like to turn to our balance sheet and recent capital activity. At the end of the year, our net debt, including preferred shares to adjusted EBITDA was 5.4 times. Our $1.25 billion revolving credit facility was fully undrawn, and we had approximately $200 million of cash available on the balance sheet, which included a portion of the proceeds from our well-timed unsecured bond offering during the month of December.
The transaction was meaningfully oversubscribed, effectively hedged to a 5.08% interest rate and raised total gross proceeds of $500 million that has or will be used to fund a portion of our 2024 portfolio acquisition and 2025 capital needs. Additionally, during the fourth quarter, we also took down approximately 3 million [forward ATM] shares, generating net proceeds of approximately $110 million. As a reminder, these shares were previously sold under our ATM program during the first quarter at an average sales price of $37.03 per share.
Next, I'd like to share an overview of our initial 2025 guidance. For full year 2025, we expect core FFO per share unit of $1.80 to $1.86, which at the midpoint represents year-over-year growth of 3.4%. And for the same home portfolio, at the midpoint, our expectations contemplate core revenues growth of 3.5%, which Bryan discussed a few minutes ago, along with core property operating expense growth of 4% driven by property tax growth in the mid-4% area, representing another year of moderation and a mid-3% growth on all other expenses driven by modestly negative insurance expense growth based on our successful renewal campaign and another year of tight expense controls.
Putting together, our same-home portfolio revenue and expense growth expectations, we expect 2025 same-home core NOI growth of 3.25% at the midpoint. From an investment standpoint, we expect another year of consistent and predictable growth from our development program. Similar to last year, in 2025, we expect to deploy between $1 billion and $1.2 billion of total capital, adding between 2,200 and 2,400 newly constructed AMH development properties to our wholly owned and joint venture portfolios.
Specifically for our wholly owned portfolio, at the midpoint of our ranges, we expect to invest approximately $900 million of AMH capital, consisting of $750 million or 1,900 homes added from our development program along with $150 million of combined investments into our wholly owned development pipeline pro rata share of JV investments and property enhancing CapEx programs.
Importantly, our AMH growth capital requirements for the upcoming year remain strategically sized to require minimal, if any, newly raised external capital. For 2025, we expect to fund our $900 million of AMH Capital primarily through a combination of retained cash flow, approximately $200 million of cash on the balance sheet and $400 million to $500 million of recycled capital from dispositions.
Lastly, in addition to our growth programs, we have our final two securitization loans that we expect to refinance in 2025 prior to their anticipated repayment dates. As a reminder, these securitizations have a combined principal balance of approximately $925 million with an average interest rate of 4.24%. In terms of timing, we've already delivered our notice to pay off the 2015-SFR1 securitization in April and will likely target repayment of the 2015-SFR2 securitization during the second half of the year.
Following repayment of our 2015 securitizations that we expect to refinance into the unsecured bond market over the course of 2025, our balance sheet will become 100% unencumbered. This represents an important credit rating milestone that has been nearly 10 years in the making. And before we open the call to your questions, I wanted to close with a few wrap-up thoughts.
As Bryan highlighted at the start, our track record of a residential sector outperformance is no accident. It's the result of a disciplined strategic approach across all aspects of AMH. Our relentless focus on the core of our business continues to set us apart, which was on full display this past year.
As a couple of highlights, in 2024, we expanded same-home NOI margins and produced best-in-class residential sector NOI growth, while continuing to accretively grow our portfolio through our unique AMH development program and the value unlocking fourth quarter portfolio acquisition, ultimately translating into full year core FFO growth per share of 6.6% that once again led the residential sector and outperformed our expectations from the start of the year by over 200 basis points.
And as we head into 2025, I'm confident that our disciplined strategy and relentless focus on the core of our business will continue to set us apart and position us for another year of AMH value creation. And with that, we'll open the call to your questions. Operator?

Question and Answer Session

Operator

(Operator Instructions) Juan Sanabria, BMO Capital Markets.

Juan Sanabria

Just hoping you could talk a little bit about your expected development yields in '25, I think you said in the mid-5s. And what, if anything is assumed in that with regards to tariffs, particularly around lumber from Canada knowing that that's a material input. And just kind of your thoughts about how you can navigate that or how you're trying to hedge that risk, if at all?

Bryan Smith

It's Bryan. Yes. Regarding our yields in 2025, our expectations, as I mentioned in my prepared remarks, is that the yields will kind of accelerate as we get into the spring leasing season. The end of Q4 or the end of '24 and the beginning of '25, you see a little bit of the effect of some of the pricing changes we made at the transition from Q3 to Q4 of last year, will be a little bit of a carryover into Q1.
And then as the year progresses, we expect those rents to really pick back up and accelerate into the back half of the year. One small thing to note, it's important that we manage inventory in these development communities well because we're going to be delivering new houses in many of these communities. We need to make sure the timing and strategy of release is optimizing revenue as well.
And then on the tariff and immigration front, we're all following what's happening very closely. There's a lot of different things changing kind of on a daily basis. We are recognizing that labor and material increases could be a headwind. There are a lot of different things at play here. There's some good things that we have as one of the nation's top 40 homebuilders, and our ability to monitor and respond to this changing environment.
Notably, though, on our development deliveries for 2025, over half of our planned new home deliveries are already baked in, in terms of cost on vertical and contracted labor. So we're in a good position entering the first half of the year. But we're paying close attention to how that kind of evolves as we get through the first quarter.

Juan Sanabria

Great. And then just as a follow-up, hoping you could talk about kind of the latest views on supply. Is that changing in terms of markets you're watching and your thoughts on -- we've obviously seen a pickup in homes for sale that aren't necessarily clearing that are kind of sitting there and how that's impacting your pricing power in the traditional SFR market with maybe the shadow supply.

Bryan Smith

Yes. Supply with our asset type is a little bit trickier than maybe it would be on the multifamily side. we track it from a number of different external data sources, and we have some very strong internal data, too, just some projections of expirations and kind of expectations for how markets are going to react. Supply for our portfolio, it's one of the benefits of having the diversified portfolio footprint and that we have many, many markets, some of which haven't really seen much supply pressure over the past few years at all.
The Midwest comes to mind, Carolinas as well. And then the areas that have been impacted, we've been talking about them for many quarters now, thinking about the Southwest. We haven't seen a major change of late, but we are seeing some really nice signs of life in a couple of markets. Specifically in Phoenix, we're getting a really nice occupancy pick up as we get into the new year of Q4. So there may be a little bit of an easing of supply pressures there.
But again, it's hard to tell exactly, but we are seeing some favorable signs. The same thing is true to some of the pressures that we talked about in the Tampa area, which I think is one of the markets where you've seen a lot of for-sale product pressure too .

Operator

Eric Wolfe, Citibank.

Eric Wolf

If you look at your occupancy guidance, it suggests that occupancy rise is about 50 to 60 bps on average from current levels. Are you seeing any sort of forward indicators in terms of leasing that this increase should happen over the next couple of months? And should we expect your blended rate growth to be a little bit more muted over this time frame just as you build that occupancy?

Bryan Smith

Eric, it's Brian. We're seeing some really good signs as we entered the year. If you remember to our last call, we were very strategic about our desire to get really fully occupied to prepare for 2025. It's part of the initiatives that we put out in Q4 where we picked up occupancy in both November and December, traditionally kind of slower times of the year for us. That success, that level of demand and leasing activity has continued into Q1.
Our January new lease rates accelerated a little bit as we get into February. We're expecting a pickup in occupancy there as well off of January. And we're looking for really good momentum as we get through Q1 into Q2, which is kind of the prime-time season for us. As we're going through that, if you want to think about our expectations for new lease rate growth in Q1, they are moving in the right direction. We have a great trajectory moving off of some of the inflection point in November and to flat in December, positive into January.
And we're expecting similar gains into February and March. So it's definitely moving in the right direction, and we're well positioned for strength in the spring leasing season.

Eric Wolf

Got it. That's helpful. And then I don't know if you mentioned this in the prepared remarks, sorry if I missed it, but you mentioned the high three's blended rent growth expectations. Could you kind of break that out between new and renewals? And if you can, sort of what's underpinning the new lease projection?
Is it based on third-party forecasts from John Burns Consulting, is it based on the buildup from your markets? What are you basing that new lease projection on?

Bryan Smith

Yes, sure. So to break it out for our expectations for '25, we're looking at new leases for the year in the 3% area and renewals in the 4% area. Specifically on the new lease side, there are a couple of components there. We have probably a similar loss to lease this quarter as we had last quarter in the low single digits. And then market rent growth across our markets somewhere in the 3% range for the year. And that kind of builds up our expectation.

Operator

Jamie Feldman, Wells Fargo.

Jamie Feldman

Great. I guess maybe to put a finer point on the rent growth expectations. Can you talk about like maybe your weakest markets in your best market, if you were to answer that same question, what you think the delta could be in terms of how strong or how weak the rent growth could be and maybe benchmark here -- maybe just highlight which of those markets you're talking about?

Bryan Smith

Yes. Thanks, Jamie. This is Bryan. We have a pretty wide range. If you go back to the inflection point in November, we had rent growth as high as in excess of 6% in some markets. So there is variability across the portfolio. As we get into next year, I think we're looking for continued success in some of the markets that posted great results last year, notably the Midwest and the Carolinas.
We've got really good movement in a couple of other maybe smaller markets. You can see positive rent growth in Savannah and Charleston. So we're expecting a continuation of that. And then in terms of other kind of building blocks and expectations for the year, like I said, we're seeing great signs of life in Phoenix. And some of the other markets that had a little bit of a pullback as we exited '24.

Jamie Feldman

Okay. And then I know you didn't include acquisitions and guidance. But as you I guess a two-parter as you unencumber assets and you have more liquidity to put capital to work, do you think that will be a factor that drives you to do more acquisitions? And maybe if you could just cover a little bit more why not have more acquisitions in your guidance? And are there just not portfolios out there? Or do you think they might come to market and you're just not ready to include getting any of those done?

Christopher Lau

Yes. Jamie, it's Chris here. look, like we've talked about all the time. We absolutely keep our finger on the pulse of everything that's going on from an acquisition market perspective. And look, I think about it in two different categories, we can think about in terms of one-off acquisitions or portfolios.
In terms of one-offs, again, we keep our finger on the pulse there. I would say we're kind of a ways off in terms of where we would find that market attractive to be transacting at. But again, we watch it closely. Just to give you a little bit of color in terms of what we're seeing this past quarter through our network of national builder relationships, we screened upwards of 15,000 newly constructed national builder properties.
And as we looked at those, we found that something like over 80% of them fell outside of our disciplined AMH buy box in terms of location, quality and then importantly, single-family detached product type. And for even those that did hit our buy box, average yield on those was somewhere in the mid-4s, which I think really underscores the importance of the development program, and its ability to consistently and predictably provide pathway to growth.
And then in terms of the second piece, portfolios, again, no different than what we've talked about in the past. We are optimistic on the number of assembled portfolio opportunities that we know are out there. And what we especially like about those types of opportunities is our potential to unlock value in them, bringing them up to our standards on the AMH platform just like we're doing currently with the portfolio we acquired in the fourth quarter. But at the same time, we recognize that there's a variety of quality levels in many of those portfolios out there. And again, we are unwavering on our commitment to the AMH buy box.

Operator

Steve Sakwa, Evercore ISI.

Steve Sakwa

I guess on the bad debt, you guys aren't really looking for much of an improvement. I'm just curious kind of why and are there certain markets that are holding you up from seeing better improvement on that figure.

Christopher Lau

Chris here. I can start and then maybe Lincoln can fill in some color at the market level. But look, I would say, overall, the collections narrative is largely unchanged, right? You heard it in prepared remarks and in the release, our expectation is that, that debt continues to run slightly elevated, in the low ones over the course of '25 kind of similar to how we are exiting '24, which is largely being driven still by a few remaining municipalities and court systems that like we talked about last year, continue to process at slower than typical time lines.
And so look, I would say, taking a step back, we would love to see this be an area of upside against our guide, but recognizing that some of the processing time lines are out of our control, I think we're going to hold our view kind of similar to where we're running currently until we start to see some of that timing actually move. In terms of some color on the ground, I'm sure Lincoln can share a few additional details.

Lincoln Palmer

Yes, Steve. From a market perspective, the vast majority of our markets are operating from a bad debt perspective, very close to our long-term expectations for a sub-1% run rate. Most of it that we're seeing is from a few select markets. Atlanta is kind of the prime example. And even in Atlanta, it really boils down to a few counties.
So as we get those counties moving, we're working with the local jurisdictions, the best we can to get those time frames shortened. And as we have success of doing that, we'll see some improvements in the bad debt. But what you're seeing in the guide is us reflecting what we can see in the market today.

Steve Sakwa

Okay. And then maybe just coming back to some of the questions, Bryan, on development, whether it's the tariffs or just incremental supply from other builders. I guess the 5.5 I guess, maybe seems a little bit like a low return to get, especially where bond yields are today and certainly where your stock is trading. So like how do you think about that overall return? Is it sort of against the marginal cost of capital? Or is it the fact that you can sell assets in the sub-four cap rate that's given you confidence to keep building at 5.5.

Bryan Smith

Yes. Thanks, Steve. There's a lot of different things that we want to address on that question. But I want to start with the 5.5% yield and make sure everybody recognizes that's the going in yield. And that's a going in yield that doesn't include special incentives, leasing incentives and so forth.
It's what we're getting on houses as they're being delivered into active construction projects in many cases. These are not stabilized yields. We've seen really nice movement as the community start to stabilize in homes for guests and age and the communities mature a little bit. The 5.5% is going in.
From a long-term perspective, we really like what we're seeing from the development, the AMH Development homes and it's a great return. It's a great long-term program. And the numbers that we cited today we're holding ourselves to a very high standard at the going-in level.

Christopher Lau

And then Steve, Chris here. I think implied in your question is bringing up a really good reminder around the importance of how we have strategically sized the development program. I know we've talked about this a lot, but we've intentionally sized our pipeline such that any year's development deliveries and spend is fundable without the need for built-in equity, right?
This year is a perfect example or any of the past years, right, where the primary funding building blocks of the development program is retained cash from the portfolio, from the business, some level of recycled capital from the disposition program, which today we know is screening very attractively. And then modest levels of incremental debt as debt capacity grows on the balance sheet.
So again, sized strategically to consume minimal amounts of external capital and then importantly, no equity needs.

Operator

Jeff Spector, Bank of America.

Jeffrey Spector

Follow-up to that conversation, I guess, two parts would be, first, Bryan, I don't think you said stabilized yield. And then second, maybe Chris, could you bring in your comments from your opening remarks around expanding your margins? I assume there's some also benefit there on new development.

Bryan Smith

Yes. Thanks, Jeff. I didn't give a comment on exact, stabilized yields. We're still looking forward to getting a little bit more homes into the same home pool as an example before we start to cite those separately. But what I can tell you is that they're moving in the right direction. The expense controls are at least as good as what we thought they would be. The leasing and uptake has been fantastic.
And I want to kind of remind everyone, too, these are extremely high-quality homes, purpose-built for rentals. They're durable. They're highly upgraded off of a normal starter home. They're in great locations. This is exactly the type of home that we want to be owning and managing and you cannot buy these houses at these prices anywhere in the market. So we're really, really happy with the long-term prospects of these.

Christopher Lau

Yes. Jeff, Chris here. I appreciate the question on the NOI margin expansion. It's an important point and a really important part of our view going forward that we talk a lot about in our view of the opportunity for margin expansion over time, and we see it coming from a couple of different areas. The development program absolutely comes to mind in terms of the more efficient and higher NOI margins coming out of that product.
And that will have more and more benefit over time as we deliver more, those properties stabilize, and they can ultimately age their way into the same-home pool. That's category number one. Category number two really comes back to a lot of the really smart and strategic decisions we're making from an asset management perspective and ultimately translating into what is fueling our disposition program. One of the great parts of our asset class is its granularity and our ability to fine-tune at the unit level, which is very powerful over time and that we see being beneficial to margins over time as well.
And then finally, the last piece to come back to, and we saw this very clearly in 2024 is the opportunity to continue to move margins higher over time at the core of the business out of the core of the portfolio. And the setup there as we think about it, like we've talked about many times before, is the opportunity to drive inflationary plus growth from a top line perspective, given fundamental tailwinds of the asset class and our operating platform and then ultimately, holding the line on expenses as tight as we can. I think we did a fantastic job on that in 2024, translating into 20 basis points of margin expansion in '24

Jeffrey Spector

And then my second question, my follow-up, I just wanted to confirm in terms of opportunities and acquisitions are you starting to get more incoming from homebuilders? Or it's too early really to see that? And I'm just pointing to the softening home sales.

Christopher Lau

Yes. Thanks, Jeff. Chris here again. I would say a little bit too early, but at the same time, I mentioned this a couple of minutes ago on one of the other questions. We have very well-established robust relationships with all of the large builders out there. And this quarter, I know I just mentioned this, but this quarter, as an example, we looked at and screened over 15,000 newly constructed properties.
So I think it's a little bit early. We're watching it closely. But again, I would underscore the fact that we have very mature relationships with all the builders. We've been very active with them in the past, and we will continue to watch it really, really closely.

Operator

Haendel St. Juste, Mizuho Securities.

Haendel St. Juste

I wanted to follow up a little bit on your renewals guide. I think you said it was 4%. It seems a little conservative given where you've been in recent years, high six's in '23, mid- five's for '24. So I'm curious if you're seeing any signs of perhaps pricing fatigue, uptick in turnover? Just trying to understand how your pricing power could be evolving here.

Bryan Smith

Haendel, it's Bryan. Yes, we're really pleased with the results that we've had over the past couple of years, as you cited. And our retention is very strong. All the signs that we're seeing coming into the year are positive. If you looked at our pickup and retention last year, the programs are working.
Our Resident 360 investment, which included a significant investment in the communication platform around renewals and kind of the lease administration piece, I think is paying some dividends. We're having fantastic customer review scores that are contributing to kind of sustained high levels of retention.
And then you look at the results that we posted, we mentioned on my prepared remarks of 4.5% renewal rate growth in January, we're expecting that to continue through Q1 and then typically see a slight moderation into Q2 for renewals as that's the really high activity period. But we feel that 4% area is a good investment for this year, all things considered with market rent growth and loss to lease.

Operator

Rich Hightower, Barclays.

Richard Hightower

And congrats to Dave, if he is on the line with us. So I just want -- I want to dig into property taxes for a minute, and obviously, you're getting some relief kind of relative to years past. And just help us understand the key drivers there? Is some of it based on timing around rivals in certain states?
And then, I guess, maybe on the flip side, have you given any thought to the impact given the possible likelihood, I guess, that state budgets and municipal budgets could be affected negatively going forward if federal reimbursements and contributions to those budgets falls kind of along the lines of things we've been reading.

Christopher Lau

Yes. Sure. Thanks, Rick. Chris here. Look, property taxes overall, I think we were really pleased with how things trended over the course of the year, largely in the direction that we were expecting, and we received some nice final year-end information towards the end of the year.
Just to put a finer point on that, some of that information that we received towards the end of the year was notably out a few -- out of a few of our larger states, including Texas, Florida and Georgia where final values and then a little bit on the rate side as well landed a touch better than our previous expectations, which is really what drove the full year down into the 5% area or so.
Like I said, we shared in the prepared remarks, we expect that to moderate a touch further into '25. And that's largely coming from the value side of the equation, which is landing back into what is our long-term run rate of 4% to 5% for property tax growth, right? So we're kind of back to a long-term run rate at this point. And then to your point, in terms of budgetary pressures, definitely something that we're watching very closely.
With that said, we see the larger driver here being on the value side. But nonetheless, it's something that we watch closely. In particular, we're watching it in Texas, like we've talked about plenty of times, the Texas property tax reform back in 2022 has now expired.
And we know that a new property tax relief will need to be repassed for '25 and '26, which as an update is completely supported by both Governor Abbott and then State Congress, really is a top priority for a portion of the state's budget surplus, which I think latest estimates are like $24 billion.
And so it's things like that, that we are watching very closely. But all things considered, we feel good about the setup going into '25 and the fact that we're expecting to see additional moderation back into the 4% to 5% area.

Richard Hightower

Okay. Great. Great color. And just maybe a quick follow-up. I don't think we spend a lot of time on the call talking about non-rental revenue, other income opportunities for the year, maybe just run through what you guys are seeing on that front.

Christopher Lau

Sure. Yes, contemplated in the guide and even taking a step back to '24 , modest contribution from a same-home perspective, I think, in '24, contributed 8 to 10 basis points of same-store revenue contribution, something like that. We'd expect modest growth in that line item into '25 as well, maybe a touch below '24 or so, think of it kind of growing in line with the broader rent growth.

Operator

John Pawlowski, Green Street.

John Pawlowski

Bryan, I want to go back to the conversation about how yields on the development, basically, shift beyond year one. I know stabilization of the most recent vintages of deliveries is still an unknown. But you've been at it for about eight years build to rent. So you should have, I would think, a decent sample size of earlier vintages of homes. And can you just give us a sense how different like a year three yield is versus initial yield on the earliest vintages of homes?

Bryan Smith

Yes. Thanks, John. Just in terms of just getting everything calibrated right, the early years were kind of small test phases. So we've been running full speed for less than that entire time period. But I talked earlier in the call about what the yields look like going in. And then as these communities stabilize, construction traffic exits, they're fully leased as they turn.
Like I said before, we're having fantastic experience on the expense side, a little bit better than we even though in terms of cost of turn and speed to turn. Occupancy and rates have held consistent with expectations. We've talked about some of the increases we've seen in time. So as these projects stabilize, those yields are migrating out of the five's and into the six's and performing very well from a long-term perspective.

John Pawlowski

Okay. Does that into the six's type trajectory account for a stabilized expense load in these homes that just may have not turned or seen property tax resets?

Bryan Smith

Yes, it does. It does. I'm talking about ones that have matured enough to experience both of those things.

Christopher Lau

Yes. John, by year three or so, property taxes will have settled in and stabilized up and you do have turn activity going on by year three.

Operator

Adam Kramer, Morgan Stanley.

Adam Kramer

I just wanted to ask about the Midwest exposure. I think this has kind of been the source of strength for the market, and I think it's expected to be going forward as well. So if you think about some of the Midwest markets, if you could maybe attribute the strength. And I don't know if it's kind of on the existing home sale side, on the lack of new homes available, maybe it's kind of still COVID catch-up play in some ways. Maybe just talk about the Midwest and kind of what are some of the drivers of strength in these markets?

Bryan Smith

Yes. Thanks, Adam. This is Bryan. I think probably the easiest way to look at the performance of our Midwest portfolio is to talk about really the quality of assets and the single-family detached. Midwest is characterized by large yards. And we were really particular about what locations we wanted to invest in. We've seen a really nice pickup over the past few years with migration into these markets for high-quality of life moves.
And the reality is there's just not a lot of supply of equal level quality product. There may be supply on the outskirts of lower levels, apartments and so forth. But in terms of the type of home, the quality of home that we have, we're unique in that aspect. One other thing to note too, with the portfolio transaction that we closed at the end of last year, we were really pleased that we were able to add some homes to those high-quality Midwest markets that really has been kind of difficult to grow.

Adam Kramer

Great. And maybe just kind of a more general one looking ahead to 2025. I'm wondering if you could maybe kind of frame the year, right? I think you kind of gave the blended rent growth numbers, the new and renewal, the occupancy expectations. But if you were to just kind of, take a step back, think about this year relative to maybe pre-COVID years, and I know there's kind of limited history in the public markets there.
But would you kind of categorize this year as a normal year normal seasonality? And what can kind of drive this year to progress differently than maybe a normal year?

Bryan Smith

Yes. Thanks, Adam. In terms of normal, probably the easiest way to look at it, our rent growth expectations aren't that dissimilar to what we saw pre-COVID, and that's really a snapshot of just this year. That's not really our long-term perspective necessarily. But what is different is our expectation for occupancy?
If you remember kind of pre-COVID levels, we're always talking about the 95% area. And there's just been a number of different changes in our industry and with our platform. that have given us confidence that 96% -- 95% expectation has been moved to 96%.
That's really the main difference in terms of how the rate trajectory plays out for the year. we're going to do the best that we can. We're well positioned on the new lease side, but the estimates that we have right now are a good fit for expectations of market rent growth and loss to lease, as I mentioned earlier.

Christopher Lau

Yes. And then, Adam, Chris here, I would just add since you kind of asked the question also in terms of kind of the broader context of outlook overall. Again, like Bryan just said, and we've been saying since the start here, we're in a great spot and in a position of strength. And because of that, we feel really good about our outlook in the guide for the year ahead, especially relative to the broader residential landscape.
And look, at the end of the day, it is our objective, and we'd love to be able to deliver some nice updates against the guide over the course of the year. And as I think about the shape of those opportunities, I would say those opportunities are very similar to the focus areas from 2024. We talked about this a minute ago, but bad debt comes to mind. We'd love to be able to see some improvement there that would represent area or opportunity for upside.
And then our objective, no different than any other year, but very similar to '24 in particular, is to capture as much upswing as possible on the front end of the leasing curve, and then deliver the tightest expense controls that we can, again, all of which the team did a fantastic job in '24, and that's our objective again in '25.

Operator

Julien Blouin, Goldman Sachs.

Julian Blouin

I guess on the demand front, can you sort of walk us through what you're seeing in your internal metrics? I guess, how is engagement trending versus maybe a year ago or two years ago? How our sort of household incomes of new incoming tenants looking? Anything you can help sort of frame on the demand side?

Lincoln Palmer

Thanks, Julien. This is Lincoln. We continue to see really strong incoming residents from a financial perspective, stated income is running north of 150,000 still, income to rent ratio is in the 5.5 times. So we're really happy with our resident base. The encouraging thing coming off of what Chris and Bryan have already talked about out of our kind of strategic stabilization of occupancy in the fourth quarter is that we're seeing great trajectory into January and February.
Nearly all of our markets are trending very well from both the occupancy and rate perspective. But even more encouraging is to see some of the leading indicators. One of those is foot traffic in our homes. So we saw kind of a 30% pickup from the end of fourth quarter into January and people visiting our homes, and that has to do with the return of activity that we've already talked about.
And then year-over-year, that activity is about 15% higher than it was last year. So it gives us a lot of confidence going into the remainder of the year that we're going to see a very strong leasing season.

Julian Blouin

Awesome. That's very helpful. And when we think about the new lease rate growth assumption for the year at 3%, it does seem to bake in quite a meaningful sequential improvement in new lease spreads versus where we are in January. I guess what's sort of giving you that confidence that we're going to see that strong ramp. I guess it does sort of seem a little bit more similar to pre-COVID seasonality. Is there anything you're seeing so far in February that's sort of encouraging you?

Bryan Smith

Yes. Thanks, Joe. This is Bryan. It really comes back to the demand momentum that Lincoln is talking about. The fact that our portfolio is well positioned from an occupancy perspective and also a testament to the quality type of asset and the location of our homes. So we're in a really good place to be optimistic about continued rate growth and even occupancy pickup as we migrate into the spring leasing season.

Operator

Brad Heffern, RBC Capital Markets.
All right. We may have lost Brad, but please enter the queue if you're still there. Daniel Tricarico, Scotiabank.

Daniel Tricarico

Question on interest expense for Chris. First, kudos on the bond timing. Can you just talk to what's in the current plans on paying down the securitizations. Do you expect to issue unsecured concurrently or maybe say a bit more flexible utilizing the line balance and how that all rolls into interest expense expectations for the year and the math behind the $0.09 dilution from financing costs in the FFO bridge.

Christopher Lau

Yes. Fantastic question. Daniel. So in terms of timing on the securitizations, as I mentioned in prepared remarks, our expectation is that the first of the two will be paid off in April. And the expectation is that the second will be paid off in the second half of the year, anticipated repayment date falls in October, so I'd expect probably a little bit before that.
Base case plan is to refinance those into the unsecured bond market, which is what we have contemplated in guidance, right? It is that refinancing on an unsecured basis that we'll be bringing the balance sheet to 100% unencumbered, as I mentioned, very important milestone.
And contemplated in the guide is two unsecured bond executions. Timing is a little bit difficult to pay. It will be dependent on market conditions. Best guess, we could assume one in the first half of the year, one in the second half of the year. But again, it depends on market conditions.
Today, new issue cost of 10-year unsecureds depending on where treasuries are today, probably a touch over mid-five's or so. We've contemplated something in that area, actually a touch higher in the guide. But to your point, look, we've got great flexibility. The credit facility is fully undrawn with total capacity of $1.25 billion, which would provide additional flexibility for runway if we weren't liking what we were seeing in the bond market.
But base case assumption would be two bond market executions over the course of the year. And then to your point on what's contemplated in the bridge in guidance, another great question. Let me break it down into a couple of different pieces for you. The right building blocks is, call it about 2p. Just in terms of growth financing, that's the annualization of some of the ATM shares that we sold on a forward basis, early in '24 that we just took down and then a little bit of modest incremental debt over the course of '24 annualizing into this year.
So that's two out of the 9p. And then you can think of about 4p of the 9p being financing cost on the bulk portfolio we acquired in the fourth quarter. And then that leaves $0.03 of refinancing headwind in the 9p. And as you're thinking about the math on those 3p, don't forget that includes both kind of the annualization of '24 refinancing activities and then partial year consideration for this year's refinancing activities.

Daniel Tricarico

And just a high-level follow-up for Bryan. I know you've been formally prepping to take the reins for maybe a year now, but any early insights you can share on the business, steps you've taken or plan to take that's different or incremental to the company.

Bryan Smith

Yes. Thanks, Daniel. The transition went very well, and I have a lot of gratitude to Dave for making that really smooth. We have a great strategy. We have a great business. There are a number of really strong things in our favor. I talked about some of them in my prepared remarks, just the industry itself has a lot of blue sky ahead. So I'm very energized and excited about going forward.
In terms of major changes, we've got an excellent strategy to focus on executing, and we're going to continue to focus on the core business, the resident and continued innovation and optimization. So no major changes, just very excited and optimistic about the future

Operator

Linda Tsai, Jefferies.

Linda Yu Tsai

You said over half of your costs are baked in for development at this point in the year. Is this typical? Or does it vary? And then what costs aren't baked in?

Bryan Smith

Yes. By baked in I mean contracted, we have active construction occurring on half of our expected deliveries for 2025, which means we've already locked in pricing for some of the materials and labor and so forth. And I think that time frame is typical. We start these communities.
We contract with the subcontractors; we begin managing off of those bids. So when you think about kind of the timing and the effect in the event that there are kind of some constraints on the tariff side or the employment side probably show up more in the second half of the year.

Linda Yu Tsai

And then you also earlier highlighted outperforming 2024 core FFO growth by over 200 bps, do you view the 200 bps as an achievable benchmark for this year? And then what would be some of the risks to potentially achieving this outperformance?

Christopher Lau

Linda, Chris here, I kind of chuckle. Look, I would encourage you to look at the range that we've contemplated in the guide, which is our range of expectations, upper end [at] $1.86 is into the five's or so. So I would frame it that way.
And then as I mentioned a couple of minutes ago in terms of how we think about shape of the guide over the course of the year, our objective no different than any year is to be able to do our best to outperform and be able to deliver nice updates against the guide again over the course of the year.
And I think '24 was a good example of great execution and great execution against our expectations as of the start of the year.

Operator

Austin Wurschmidt, KeyBanc Capital Markets.

Austin Wurschmidt

Just going back to development for a minute. If you were to see construction costs increase faster than rents from here and kind of all else equal around cost of capital, I guess, what yield does development become less attractive where you consider flexing the size of the development platform down and how easily and quickly can you dial that back?

Bryan Smith

Austin, this is Brian. Yes. I want to start by just reminding everyone, I talked about it earlier, but the yields that we've been citing [are going in]. And our development product, our deliveries and the program itself just is fantastic over the long term -- from a long-term perspective.
If there was a case where there was the effect of the tariffs and some of the labor issues that people have been talking about, we're talking about based on estimates from the National Association of Homebuilders and other experts within the field, you're talking about something in the neighborhood of 2% range on total home cost for us this year. So we're not talking about a huge needle mover. And there are a bunch of other factors at play. It's difficult to predict.
Maybe those changes in costs affect activity, maybe we're able to shift some of our purchasing patterns and some of the materials we put in to mitigate a little bit of that increase. But again, we're not expecting a massive change there. And then from the perspective of whether the returns are attractive, I can say unequivocally that they are from a long-term perspective.

Austin Wurschmidt

That's helpful. And then if we started to see a pickup in the for-sale market, I mean how confident are you that you can sustain kind of the higher occupancy you've achieved following -- coming out of the pandemic. And are you concerned at all that you start to get a pickup and move out for home purchases and the impact that could have on total revenue and even expense growth?

Bryan Smith

Yes. The move-out to buy has always been and remains our largest reason from our residents who are moving out. Changes in the for-sale market will have some effect, the effect, though might not be as dramatic as people think. Even when the cost of owning a home was the same as the cost of rent, we still fared very well from a retention perspective.
And that gap is enormous right now, especially in the markets that are starting to have a lot of activity, a slight drop in asking rates on house doesn't do much to bridge the 28% affordability gap. So we're in good shape going into this year. In the meantime, we're bolstering our offering and making sure that we're really focused on the resident experience so that they see renting from us as being super convenient. And it's difficult to replace that level of service on a home that you own yourself .

Operator

Michael Goldsmith, UBS.

Michael Goldsmith

First question is on renewals. Are you seeing any tenant pushback on renewals, just kind of within the context of the 4% renewal rate.

Bryan Smith

Yes. Thanks, Michael. We haven't seen any change. If you notice, we had a really nice pickup in retention as we exited last year. We don't have a huge band of negotiations. Our pricing and the way that we offer renewals is very supportable. And the improvements in the communication have made that process a lot easier for both us and the resident. We're not seeing a lot of pushback, and we're not seeing any excess negotiation as we get into 2025.

Michael Goldsmith

That was helpful. And then just as a follow-up. Have you seen any changes on the regulatory front?

Bryan Smith

We haven't. I mean our performance historically really hasn't varied much with changes in the regulatory environment. We have very high-quality operations. We're focused on being proactive and transparent with our residents and other stakeholders. So we haven't seen anything. There's a lot of different things going on, but nothing that has affected us of yet.

Operator

Brad Heffern, RBC Capital Markets.

Brad Heffern

I just have one given we're past the top of the hour. I guess on [days to re-resident], are there any stats that you can give on that and how it's trended, the turnover number continues to move lower, but then occupancy also came down in the fall. So it just seems like the homes have to be sitting on the market for longer for that to make sense. Just trying to get a sense of the scale of that and if it's abnormally long versus maybe pre-COVID levels.

Bryan Smith

Yes. Thanks, Brad. You're identifying really exactly what we talked about with the slowdown in activity that we saw exiting the third quarter. And the difference in retenanting the expansion in Q4 was really just a catch-up of that as we picked up occupancy in November and December. We expect it to return to kind of consistent numbers and compress down as we get into the spring leasing season.

Operator

John Pawlowski, Green Street.

John Pawlowski

Bryan, one question for you on corporate governance. I think the Board -- the size of the Board is now 13. What's the right long-term number of directors for AMH and how long will it take to get there?

Bryan Smith

John, I think these are decisions that are to be considered by our Board in its entirety and that is a focal point in terms of the right number and the right composition. But those are the types of things that they've been discussing at length in the NCG committee as an example. I'll let them decide exactly where that comes out, but it is something that we're focused on and watching.

Operator

Omotayo Okusanya, Deutsche Bank.

Omotayo Okusanya

Yes. Bryan, again, congrats on the CEO role. Again, while you and Dave have been long-term partners in the business, just curious if you're thinking about things any differently from the way Dave thought about it now that your kind of in the driver seat. I'm also very curious what kind of feedback you are getting from the Board now that you are officially a Board member as well.

Bryan Smith

Thanks, Tayo. In terms of any changes in strategy, we're very fortunate at AMH to have a leadership team that's been together through the formative years of the company in excess of a decade. We've been working in lockstep from the very beginning. Our strategy is sound. We've done some really good things that we're continuing to lean into in the core of the business, on the development program.
So in terms of major changes, we don't anticipate anything just really continuing to do what we do very well. I would expect to see a continued focus on innovation and optimization, the resident and the resident experience at the center of everything that we do and focus on our core business has allowed us to have excellent performance of late and expectations for that to continue.

Operator

Jesse Lederman, Zelman & Associates.

Jesse Lederman

So you mentioned earlier that there has been a number of different changes across the industry and in the AMH platform, specifically that makes you confident the new norm for occupancy is more in the 96% range than 95%. Could you just talk a little bit more about what those changes have been both in the industry and specifically at AMH.

Bryan Smith

Yes. Thanks, Jeff. Starting with the industry. I think SFR as a whole, people are starting to appreciate the value proposition of a home in a yard, and in a garage, an extra space as opposed to -- historically, multifamily was really the main choice for families that we're going into their 30s and started to expand.
So I think there's a general improvement in appreciation of that. People are looking for it when they move to new areas as an example. And then all of the institutional operators have been very focused on the resident experience, which wasn't a focus in the specific industry prior to these changes over the past few years. We're very excited about the product that we have. We think that the additions that we've made not only to the platform, but specifically on technology have allowed us to be faster and more efficient.
Just as an example, it's very easy and frictionless to lease a house from us today. So that is going to bolster occupancy. We've done a very good job of communicating with our residents and providing an excellent services platform, which is going to improve retention. And I could go down the list of each of the line items to show areas that we've improved over time. All of these lead to our improved expectations of a new kind of 96% level of occupancy.

Operator

Thank you. There are no further questions at this time. I would like to pass the call back over to Bryan for closing remarks.

Bryan Smith

Yes. Thank you for your time today. I look forward to talking to you again soon on our next quarter's call. Have a great day.

Operator

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.