Item 8.01. Other Events.
On June 17, 2020, American Homes 4 Rent (the "Company") and American Homes 4
Rent, L.P., the Company's operating partnership (the "Operating Partnership"),
entered into a sales agreement (the "Sales Agreement") with each of Morgan
Stanley & Co. LLC, B. Riley FBR, Inc., BTIG, LLC, BofA Securities, Inc., Cantor
Fitzgerald & Co., Citigroup Global Markets Inc., Evercore Group L.L.C., Goldman
Sachs & Co. LLC, Jefferies LLC, JMP Securities LLC, J.P. Morgan Securities LLC,
Raymond James & Associates, Inc. and Wells Fargo Securities, LLC, as sales
agents (collectively, the "Sales Agents"), each of B. Riley FBR, Inc., BofA
Securities, Inc., Citigroup Global Markets, Inc., Goldman Sachs & Co. LLC,
Jefferies LLC, J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, Raymond
James & Associates, Inc. and Wells Fargo Securities, LLC, as forward sellers
(collectively, the "Forward Sellers"), and each of B. Riley FBR, Inc., Bank of
America, N.A., Citibank, N.A., Goldman Sachs & Co. LLC, Jefferies LLC, JPMorgan
Chase Bank, National Association, Morgan Stanley & Co. LLC, Raymond James &
Associates, Inc. and Wells Fargo Bank, National Association, as forward
purchasers (collectively, the "Forward Purchasers").
Under the terms of the Sales Agreement, the Company may issue and sell from time
to time through or to the Sales Agents or by the Forward Sellers its Class A
common shares of beneficial interest, $0.01 par value per share, having an
aggregate offering price of up to $500.0 million (the "Class A Common Shares").
The Class A Common Shares will be offered and sold through the Sales Agents, as
the Company's sales agents, or the Forward Sellers, acting as agents for the
applicable Forward Purchaser, over a period of time and from time to time in
negotiated transactions or transactions that are deemed to be "at the market"
offerings as defined in Rule 415 under the Securities Act of 1933, as amended
(the "Securities Act"), including sales made by means of ordinary brokers'
transactions, including directly on the New York Stock Exchange or sales made to
or through a market maker other than on an exchange. The Sales Agents, subject
to mutual agreement among the Sales Agents and the Company, may also sell the
Class A Common Shares sold to it as principal by any other method permitted by
law, including, but not limited to, privately negotiated transactions. The Sales
Agents and the Forward Sellers are not required to sell any specific number or
dollar amount of the Class A Common Shares, but each Sales Agent and each
Forward Seller will make all sales using commercially reasonable efforts
consistent with its normal trading and sales practices to sell such Class A
Common Shares (if acting as the Company's sales agent) and all of the borrowed
shares (if acting as agent for the relevant Forward Purchaser) up to the amount
specified, and otherwise in accordance with mutually agreed terms. The Company
also may sell Class A Common Shares to any Sales Agent as principal for its own
account. If the Company sells Class A Common Shares to any Sales Agent as
principal, it will enter into a separate terms agreement setting forth the terms
of such transaction.
The Company or any Sales Agent may at any time suspend the offering of the
Class A Common Shares pursuant to the terms of the Sales Agreement. The offering
of the Class A Common Shares pursuant to the Sales Agreement will terminate upon
the earlier of (i) the sale of the Class A Common Shares subject to the Sales
Agreement (including shares sold by the Company to or through the Sales Agents
and borrowed shares sold by the Forward Sellers) and any terms agreement having
an aggregate gross sales price of $500.0 million and (ii) with respect to the
Sales Agreement or terms agreement, the termination of the Sales Agreement by
the Company, the Sales Agents, the Forward Sellers or the Forward Purchasers as
permitted therein.
The Sales Agreement provides that, in addition to issuance and sale of Class A
Common Shares through the Sales Agents, the Company also may enter into one or
more letter agreements (each, a "Forward Contract") with each of the Forward
Purchasers in a form attached as Exhibit D to the Sales Agreement. On June 17,
2020, the Company entered into separate Forward Contracts with each of the
Forward Purchasers. Under the terms of any Forward Contract, the relevant
Forward Purchaser will, at the Company's request from time to time pursuant to
mutually agreed instructions and a supplemental confirmation (together with the
applicable Forward Contract, a "Forward Sale Agreement"), borrow from third
parties and, through the relevant Forward Seller, sell a number of Class A
Common Shares equal to the number of shares underlying the particular Forward
Sale Agreement. The Company will not initially receive any proceeds from any
sale of Class A Common Shares borrowed by a Forward Purchaser and sold through a
Forward Seller. The Company expects to fully physically settle each Forward Sale
Agreement with the relevant Forward Purchaser on one or more dates specified by
the Company on or prior to the maturity date of such Forward Sale Agreement, in
which case the Company expects to receive aggregate cash proceeds at settlement
equal to the number of shares of the Company's Class A Common Shares underlying
such Forward Sale Agreement multiplied by the then-applicable forward sale price
per share. Although the Company expects to settle any Forward Sale Agreements by
the physical delivery of Class A Common Shares in exchange for cash proceeds,
the Forward Sale Agreements will allow the Company to cash or net-share settle
all or a portion of its obligations. If the Company elects to cash settle any
Forward Sale Agreement, the Company may not receive any proceeds and the Company
may owe cash to the relevant Forward Purchaser. If the Company elects to net
share settle any Forward Sale Agreement, the Company will not receive any cash
proceeds, and the Company may owe Class A Common Shares to the relevant Forward
Purchaser.
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Each Sales Agent will be entitled to a commission at a mutually agreed rate that
will not exceed, but may be lower than, 2.0% of the gross sales price per share
for any Class A Common Shares sold through it. Each Forward Seller will receive
a commission at a mutually agreed rate in the form of a reduction to the initial
forward sale price under the related forward sale agreement that will not
exceed, but may be lower than, 2.0% of the gross sales price of the borrowed
shares sold by such Forward Seller during the applicable forward hedge selling
period for such shares.
The Company intends to contribute the net proceeds from the sale of the Class A
Common Shares to its Operating Partnership, which intends to subsequently use
such net proceeds (i) to repay indebtedness the Company has incurred or expects
to incur under its revolving credit facility, (ii) to develop new single-family
properties and communities, (iii) to acquire and renovate single-family
properties and for related activities in accordance with the Company's business
strategy, and (iv) for working capital and general corporate purposes, including
repurchases of the Company's securities, acquisitions of additional properties,
capital expenditures and the expansion, redevelopment and/or improvement of
properties in the Company's portfolio.
The Class A Common Shares will be issued pursuant to the Company's automatic
shelf registration statement filed with the Securities and Exchange Commission
on June 17, 2020 (File No. 333-239227), a base prospectus, dated June 17, 2020,
included as part of the registration statement, and a prospectus supplement,
dated June 17, 2020, filed with the Securities and Exchange Commission pursuant
to Rule 424(b) under the Securities Act.
The foregoing description of the material terms of the Sales Agreement and the
transactions contemplated thereby does not purport to be complete and is
qualified in its entirety by reference to the full text of the Sales Agreement.
A copy of the Sales Agreement, including the form of Forward Contract, is
attached to this report as Exhibit 1.1 and incorporated herein by reference.
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Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
No. Description
1.1 At-the-Market Issuance Sales Agreement dated June 17, 2020, by and
among the Company, the Operating Partnership, each of Morgan
Stanley & Co. LLC, B. Riley FBR, Inc., BTIG, LLC, BofA Securities,
Inc., Cantor Fitzgerald & Co., Citigroup Global Markets Inc.,
Evercore Group L.L.C., Goldman Sachs & Co. LLC, Jefferies LLC, JMP
Securities LLC, J.P. Morgan Securities LLC, Raymond James &
Associates, Inc. and Wells Fargo Securities, LLC, as sales agents,
each of B. Riley FBR, Inc., BofA Securities, Inc., Citigroup Global
Markets, Inc., Goldman Sachs & Co. LLC, Jefferies LLC, J.P. Morgan
Securities LLC, Morgan Stanley & Co. LLC, Raymond James &
Associates, Inc. and Wells Fargo Securities, LLC, as forward
sellers, and each of B. Riley FBR, Inc., Bank of America, N.A.,
Citibank, N.A., Goldman Sachs & Co. LLC, Jefferies LLC, JPMorgan
Chase Bank, National Association, Morgan Stanley & Co. LLC, Raymond
James & Associates, Inc. and Wells Fargo Bank, National Association,
as forward purchasers.
5.1 Opinion of Hogan Lovells US LLP regarding the legality of the
Class A Common Shares.
23.1 Consent of Hogan Lovells US LLP (included in Exhibit 5.1).
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
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