American Homes to price $100 million perpetual convertible preferreds at 5%

By Stephanie N. Rotondo

Phoenix, Oct. 9 - American Homes 4 Rent plans to price $100 million of perpetual convertible preferred shares with a 5% dividend, according to a regulatory filing.

The series A participating preferred shares are expected to pay their first dividend Dec. 31, 2013 and cannot be called or converted until Sept. 30, 2017. After that date, American Homes can call the preferreds for cash or force conversion.

The initial $25.00 per share liquidation preference may be increased by an additional amount, or Home Appreciation Amount. The Home Appreciation Amount is calculated as 50% of the cumulative change in value from June 30 of an index that tracks the purchase prices of single-family homes located in the issuer's top 20 markets, based on Federal Housing Finance Agency data. It will be capped to give a maximum internal rate of return including dividends of 9% up to Sept. 30, 2020 and will not accrue further after that date.

Proceeds will be used to repay debt incurred or expected to be incurred under its credit facility, to acquire and renovate single-family properties and for general corporate purposes.

Raymond James and Jefferies are joint bookrunners of the deal.

The company plans to list the shares on the New York Stock Exchange under the ticker symbol "AMHPA."

Malibu, Calif.-based American Homes 4 rent is a real estate investment trust. As of July 31, the company owned 19,825 single-family homes for an estimated total investment of $3.4 billion.

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