Good day, ladies and gentlemen, and welcome to the Extra Space Storage Incorporated Q4 2016 Earnings Conference Call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time. As a reminder, today's conference is being recorded. I would now like to introduce your host for this conference call, Mr.
Jeff Norman. You may begin.
Thank you, Kevin. Welcome to Extra Space Storage's 4th quarter year end 2016 earnings call. In addition to our press release, we have furnished unaudited supplemental financial information on our website. Please remember that management's prepared remarks and answers to your questions may contain forward looking statements as defined in the Private Securities Litigation Reform Act. Actual results could differ materially from those stated or implied by our forward looking statements due to risks and uncertainties associated with the company's business.
These forward looking statements are qualified by the cautionary statements contained in the company's latest filings with the SEC, which we encourage our listeners to review. Forward looking statements represent management's estimates as of today, Wednesday, February 22, 2017. The company assumes no obligation to revise or update any forward looking statements because of changing market conditions or other circumstances after the date of this conference call. I would now like to turn the call over to Joe Margolis, Chief Executive Officer.
Hello, everyone. It was another strong year for Extra Space. We executed at a high level and produced great results coming off 2015, the best year for storage. 2016 same store revenue increased 6.9% and NOI grew 9.2%. FFO per share as adjusted increased by 23%.
For the Q4, same store revenue growth was 5.2% and we were able to decrease year over year expenses by 2.1%, resulting in NOI growth of 7.9%. FFO per share as adjusted increased by 18%. Our FFO growth was driven by property performance, accretive acquisitions, joint ventures, 3rd party management and an optimized balance sheet. We are focused on using all of these tools to continue to grow shareholder value. As we expected, revenue growth moderated throughout 2016 as the benefit from growing occupancy went away and street rate growth trended from peak levels to more historically normal levels by year end.
Despite the moderation, the fundamentals of the storage sector remain positive. While we saw deacceleration of revenue growth in certain markets, we are also encouraged to observe reacceleration in other MSAs, demonstrating the cyclical nature of markets. We continue to enjoy the benefits of a well balanced diversified portfolio and operational scale. In the Q4, we acquired 27 wholly owned stores for a total purchase price of $316,000,000 This includes the buyout of a joint venture partner's interest in 11 stores, which we announced on our last call. For the year, we invested $1,100,000,000 in acquisitions.
The large majority of these transactions were not broadly marketed and came from joint ventures, our 3rd party managed portfolio or through other relationships. I would now like to turn the time over to Scott Stubs.
Thanks, Joe. Last night, we reported FFO as adjusted of $1.03 per share, exceeding the high end of our guidance by $0.05 The beat was the result of 3 factors. 1st, outperformance by our 2015 acquisitions, including SmartStop and our C of O deals. 2nd, timing of our Q4 2016 acquisitions that closed earlier than anticipated. And 3rd, lower property and G and A expenses.
For the year, FFO as adjusted was $3.85 per share, also exceeding the high end of our guidance by $0.05 Occupancy for the same store pool ended the year at 92%, an 80 basis point decrease from the end of 2015. This includes the impact of 6 expansion projects, which were completed during the quarter. Excluding the additional vacancy created in these 6 stores, our ending occupancy would have finished 20 basis points higher at 92.2%. During the quarter, we completed a $1,200,000,000 unsecured credit facility. To date, we have drawn $662,000,000 The 5 7 year tranches have delayed draw features and we will access the remaining available term balances as needed to finance future acquisitions and to pay off debt.
The unsecured facility further diversifies our capital structure and reduces our average interest rate. Our goals include having access to multiple types of capital, laddering our maturities and maintaining financial flexibility. This credit facility helps accomplish these goals. Last night, we provided guidance and annual assumptions for 2017. Our new same store pool will increase by 168 stores for a new total of 732.
We expect the change in the same store pool to positively impact our revenue growth by an average of 50 basis points over the year. For 2017, our acquisition guidance includes $325,000,000 in wholly owned stores. We also project $225,000,000 in joint venture acquisitions with approximately $75,000,000 in capital to be contributed by Extra Space. This results in total investment in 2017 of $400,000,000 approximately half of which is currently identified. Our guidance assumes the remaining balance we waited to the back half of the year.
Seller pricing expectations are still high and we are committed to being disciplined in only transacting prices that are accretive for our shareholders. Our full year FFO as adjusted is estimated to be $4.15 to $4.24 per share. Our guidance includes $0.08 of dilution from our C of O stores and additional $0.08 from value add acquisitions for a total of $0.16 I'll now turn the time back to Joe.
Thank you, Scott. During 2016, there was significant focus on new supply and deacceleration of revenue growth. The effect these issues have on same store NOI is an appropriate topic to focus on, but not to the exclusion of FFO growth and the overall health of the industry. But I will make a few comments on these areas of concern. First, we are seeing new supply.
This supply is generally concentrated in certain markets, but there are many other markets that have minimal new supply. We benefit from our highly diversified portfolio, which reduces the volatility of cyclical markets. Much of the new supply delivered early in the development cycle has had minimal or only temporary impact on our stores due to pent up demand, and not one of our MSAs experienced negative revenue growth for the year. But our heads are not in the sand. We recognize that new supply may have greater impact as we get further into the development cycle, and we have factored that into our guidance.
Also, the development cycle has presented opportunities. We are adding new purpose built assets in key markets. These stores are performing well and adding value to our portfolio. We are also managing many newly constructed assets on a 3rd party basis, which provide fee income, strengthen our brand and increase our scale. 2nd, demand is steady.
Traffic to our stores, website and call center remains consistent and our ability to capture customers is greater than that of the smaller operators. We expect 2017 same store revenue growth and NOI growth in the 4% to 5% range, which we believe will be better than nearly all real estate sectors. 3rd, we have other tools that contribute to our FFO growth. We acquired almost $3,000,000,000 of assets in the last 2 years, and our CO deals will add to our growth in the future. We will continue to acquire assets, but only if we can do so accretively given current capital and market conditions.
We will expand our 3rd party management platform, and we will utilize the most advantageous forms of capital to grow the company and maintain a flexible balance sheet. This is the formula we have used to become the best returning REIT in the U. S. Over the past 10 years, and we will continue to execute on this strategy in a disciplined and focused manner. Let's now turn the time over to Jeff to start our questions and answer session.
Thank you, Joe. In order to ensure we have adequate time to address everyone's questions, I would ask that everyone keep your initial questions brief. If time allows, we will address follow on questions once everyone has had the opportunity to ask their initial questions. With that, we'll turn it over to Kevin to start Q and A.
Our first question comes from George Hoglund with Jefferies.
Hey, good morning guys or good morning out there. What's the current level of street rates on a year over year basis?
George, this is Scott. Our street rates year to date for January February have been between 3% 4%, which I would tell you is a fair amount different than some of the reports that are out there, but we've seen solid street rates year to date.
Okay. And what level of existing customer increases are you able to push through in January February?
We continue to push at the same rates, high single digits.
Okay. And then just can you comment on a couple of the markets that were had negative same store NOI performance for the quarters, Houston, St. Louis and Sarasota?
It's partly just the cyclical nature of the markets. Houston has seen some new supply. It's also a market condition in Houston in particular. And I would also tell you that those markets are immaterial. Some of those have experienced taxes, but when I'm talking there, I'm talking more in terms of revenue.
But all of those markets, I would tell you, are immaterial in terms of our overall revenue.
Okay. Thanks. Thanks, George.
Our next question comes from Smedes Rose with Citigroup.
Hi, thanks. I wanted to ask you, your revenue increases that you're projecting same store 4% to 5%, is that primarily driven by revenue increases, rate increases? And where do you sort of see occupancy going by year end 2017 from the 19th quarter that you ended this year?
Yes, I would tell you our occupancy assumptions for the year are that in our core pool, it's essentially flat, plus or minus a small amount. In the new same store pool, which includes SmartStop, it is up slightly, but not a material amount. So the majority of that growth is coming from street rate growth and a small amount from occupancy from SmartStop.
Okay. Thank you. And then the other thing is just could you update us on what you're seeing of total new supply across your portfolio? And I guess maybe specifically just as you look at the top five markets, which I think are comprised of over 50% of your NOI, maybe if you could drill down a little bit there, so LA, New York, DC, Boston and San Francisco?
Sure. Thank you, Smedes. So, overall CoStar is reporting about 900 stores to be delivered in 2017 and I'm sorry, CBRE, my mistake. And that's as good a number as we can come to. We've looked at 8 of our top markets in-depth and tried to aggregate as many different data sources as well as our people on the ground and brokers and our partners.
And that accounts to a little over 40% of our NOI. And we found 360 stores in those markets that were either newly completed under construction, under construction or in some stage of the planning process. About half of those stores competed with our stores in that market. So we are certainly seeing new deliveries competing with some of our stores and we're seeing other markets where we don't have the same level of competition. The most difficult thing is of those 360 stores, 135 of them are somewhere in the planning process and we see a significant level of those stores fall out due to inability to get permits or financing or some other reason.
Okay. Thank you.
Thanks, Smedes.
Our next question comes from Juan Santabria with Bank of America.
Hi. Just following up on that supply question from Smedes. Can you help us benchmark that 360? I mean, do you have a sense of what that was at this point last year? And as part of that question, any views on how supply looks at this point for 2018 relative to 2017?
Do you expect it to be flat, higher or lower?
It's a really good question and it varies significantly by market. So for example, if you look at Chicago, where we would identify 41 new stores, 23 of those have already been delivered. So you're already deeper into the cycle with more stores delivered than being planned. Dallas is maybe on the other end where we've identified 83 stores and only 39 of them have been delivered. So it really varies widely by market.
Our sense is that there will be fewer deliveries in 2018 than 2017. Certainly, CBRE believes that as well. I think their number was 400, but time will tell.
Okay, great. And then just back on the same store revenue guidance. What are the street rate growth expectations, I guess, as we go through 2017? And is there a skew in how in the same store revenue growth over the course of the year? Is it accelerating or decelerating as the year progresses?
Our guidance assumes that it decelerates a little bit more. So you're going to start the year slightly higher than we end the year. And the Smart Stop pool actually start a fair amount higher with coming up against tougher comps at the end of the year. So, it will show more deceleration in that particular pool of properties, but overall slight deceleration.
And then any color on the street rate growth that you're kind of assuming as the year goes particularly into peak leasing?
I would tell you it's going to be 3% to 5%. It's going to depend a little bit on strength of the market and your occupancy.
Thank you.
Thanks, Juan.
Our next question comes from Gaurav Mehta with Cantor Fitzgerald.
Yes, great. Thanks. So following up on that deceleration comments for same store revenue 2017, would you expect it to stabilize in second half of twenty seventeen or would you expect it to continue to decelerate?
We would expect it to stabilize in 2017 in the second half.
Okay.
And again, the rate of deceleration has slowed. You're not seeing it drop a significant amount quarter over quarter, but we are estimating it will continue to decline slightly throughout the year.
Okay. And I think in your prepared remarks, you mentioned that you are seeing reacceleration in some MSAs. Can you talk about which MSAs those are? And do you expect that to be sustainable?
Yes. The examples I would point you to, in particular, Chicago, Denver and Philadelphia. All three markets have seen reacceleration. Denver in our same store pool was slightly negative, but in the bigger pool, it was positive and it's come back from being negative.
Okay. Thank you.
Thanks, Rob.
Our next question comes from Todd Thomas with KeyBanc Capital Markets.
Hi, thanks. Just following up on the revenue growth guidance. What's in the model for effective move in rates? How are discounts and free rent trending and then what's in the model?
So discounts are up slightly year over year, but it's probably a little bit more in line with your rate growth. So if your rates are up 3% to 5%, your discounts are automatically going to be 3% to 5%, but they're up slightly above that. And no not a significant effect. So it's mainly coming from rate this year.
Okay. And then in terms of new supply, I mean, can you talk about your appetite for C of O deals and lease up properties here? Maybe just give us a sense for how large the 2017, 2018 2019 pipelines might be for extra space?
Yes, we've become as we get deeper into the development cycle, we've become increasingly more selective for CO deals. As I said earlier, there are some markets that if we can find deals where there's various entry and no limited new supply and we're getting compensated, we would certainly look at that deal. I would think the pace of our investment in CO deals will moderate probably significantly. But we're very comfortable with the deals we've had. We've done very full due diligence.
We've underwritten them conservatively and performance to date has proven that out, if you look at how our stores perform. We also have a target cap of 3% on the amount of dilution. C of O stores will in aggregate contribute or detract from our performance. So we want keep within that cap. And then the last thing I'd point out with respect to our appetite for COs is we've executed a number of these deals in a joint venture format, which both reduces the risk to us and increases our returns.
Okay. And just lastly, looking at a couple of other markets and just thinking about the occupancy year over year decrease that you've seen portfolio wide. But looking at some of the other markets like Boston, LA, San Francisco, some of your top markets, occupancy is lower year over year and that year over year negative spread actually grew larger in the quarter, worsened a little bit. Are you thinking about occupancy differently than you have in the past as you think about maximizing revenue or is occupancy coming down as a result of new supply in these markets? What's sort of happening here?
I think it's market by market. California had a really tough comp the prior year. I would tell you, we're not necessarily thinking any differently in terms of occupancy. It's obviously important in our model to drive revenue. But I would tell you we lost a little bit of occupancy, but we kept some rate.
So the fact that our street rates are up 3% to 4% is a good thing. Our bottom line is to grow revenue, and occupancy is a big part of that. It's possible that going forward into the New Year, our budgets and our guidance assumes that we spend a little bit more on marketing also.
Great. Thank you.
Thanks, Todd.
Our next question comes from Jeremy Metz with UBS.
Hey, guys. As you think about that
sort of slowing towards the long term average from here and stabilizing starting in the back half of the year, In terms of some of your markets where revenues and NOI have moved negative or even just below the larger portfolio average, have you seen anything in particular from revenue management to give you confidence in your ability to react faster and therefore recover quicker back to that long term average or even just stabilize at that average versus moving below the long term average, which is something I think a lot of people wonder about and worry about?
Yes, we're consistently trying to improve the inputs to our revenue management system and its ability to both react and predict market conditions and how to optimize revenue in that. So I think we'd be the first to say that last year in Denver, our reaction was not optimal and we've learned from that and we continue to try to improve.
Okay. So some of what you've learned from Denver is actually already playing out and then helping overall in terms of what's going on in the current portfolio. That's fair?
Absolutely. Yes. I believe so. I don't want to ever say that our learning is done and we'll continue to try to make the machine better and make sure that when it doesn't work there's human input. But yes, we're better than we were last year.
Okay, great. And then Scott, in terms of longer term funding plans, you have the $400,000,000 of investment activity in guidance, plus call it another $200,000,000 $300,000,000 of debt maturing. You obviously have room on the line, some capacity from the unsecured notes you issued in October that you talked about in your opening remarks. I think you still have a couple of 100,000,000 on the ATMs. I'm just wondering what's baked into guidance in terms of further capital raises, if anything, and then just longer term funding plans for some of that activity?
Yes. Our guidance assumes $100,000,000 of OP or some type of equity. We've just included in there as OP. And then from there, it assumes that the rest is with debt. And if you look at the growth in NOI, I would tell you our ratios remain the same.
So we're not looking to lever up and we'll look to remain our keep our leverage ratio similar to where they are today. Thanks guys.
Thanks Jeremy.
Our next question comes from Gwen Clark with Evercore.
Hi, good afternoon. Going back to rate growth, I think you said it should be up 3% to 5% for the total pool. Can you talk about what your expectation would be for the 2015 acquisitions such as SmartStop?
Yes. They will be higher than that, but you're going to grow your revenue at those in that portfolio from a combination of rate as well as occupancy. So if you think of street rates in a portfolio where you're trying to push occupancy, you will get more from occupancy than you will from street rates and you'll also get more from moving your existing customers up to the current market rates. So it's going to be a little bit different in terms of mix, but I would say overall that's why I'm saying 3% to 5% and that's obviously a range depending on market conditions, but SmartStop will get more through occupancy and more from existing customers than the other pool.
Okay. That's helpful. I guess moving on to a bigger picture question. One of the questions that I feel like everyone's been asking is the trajectory for NOI growth and that was touched upon earlier. But can you talk about the scenario which could actually drive overall same store NOI growth negative in say 2018 or 2019?
It's tough to even fathom that. I think that from our perspective, the only time we've ever been negative was in the Great Recession. It's a recession that was bigger than I think most people are going to see in their lives. And we were, call it, 3% negative in 2,009. And then we are positive Q1 of the next year.
Now today is not the exact same market as that, but I would tell you I think it's going to take a pretty big event for everything to be negative for the year.
Okay. So it seems like it'd be fair to say that the new supply which is probably going to hit in 2018 isn't really enough in your mind to drive it like to a hard landing of negative growth?
It's really hard to say what the level of new supply that's going to hit in 2018 2019 is. I would tell you that if there is continued delivery of new supply, it probably means the industry remains pretty healthy.
Okay. That is helpful. Thanks very much.
Thanks, Gwen.
Our next question comes from Jonathan Hughes with Raymond James.
Hey, good afternoon guys. Could you just talk about the level of demand you're seeing in January? One of your peers mentioned they had a really strong start to the year and a homebuilder this morning mentioned they've seen a release of pent up demand for housing. I'm just curious if you're seeing similar trend of increased demand so far this year?
Yes. I can't really comment on what our peers have seen, but I can say that we have seen demand to be relatively flat. It's stable.
Okay. So no outsized growth in the 1st 6 weeks of the year?
Nothing significant.
Okay. And then just one more for me. One of your competitors quantified the impact of new store openings on projected revenue growth at about 200 to 2 50 basis points below the portfolio average. Does your guidance include a similar impact at stores exposed to new supply?
Our guidance includes the impact of stores that are being added. So I can't comment on what they're seeing, but we have taken into account where we have a new store coming online near one of our existing stores.
Okay. That's it for me. Thanks guys.
Thanks, Jonathan.
Our next question comes from Ryan Burke with Green Street Advisors.
Just a couple of questions on the development pipeline. Joe, your comments earlier about slowing development probably as we move forward do contrast a little bit with the fact that the development pipeline increased in size pretty meaningfully this quarter. Can you reconcile those two dynamics? And then second question is just scanning the 2018 projected openings. It does seem like there's a greater percentage of properties that are located, I don't want to call them in secondary markets perhaps, but maybe non major metro areas.
Yes. Sorry, finish your question.
Just curious of the strategy there, if it is a strategy or if it just happens to the outcome of what was available?
Yes. I would tell you the jump in the pipeline comes from us putting certain properties now under contract that we are doing with the joint venture partner in a couple of areas of the country. 1 is in the Northwest and the other one is in the New Jersey, kind of New York City down to Philadelphia markets. And those are all joint ventures that we've been discussing and looking at for a year to 2 years, and they actually just went under contract this quarter. And so we've had the kind of the policy or the standing that we don't want to talk about them unless they're under contract.
So this was just kind of an odd quarter where many of those went under contract even though we've been talking about those for a long time.
Okay. So pipeline is kind of in place, but if things play out the way that you think they might in terms of operating fundamentals etcetera, we should expect the pipeline to not grow significantly for the out years beyond 2018?
I think that's correct. That's my comments about increasing selectivity Yes. In future years is that's what I was trying to drive at.
Okay. That's all I had. Thank you.
Thanks, Ryan.
Thank you.
Our next question comes from Wes Golladay with RBC. Hey, everyone. Looking at the
expansion projects, where are those located? And do you have much more of those planned for this
year? So we have a few of those. One is on Long Island. We have one in Chicago, one in Salt Lake City are kind of the bigger ones. And we have ongoing expansions all the time.
This was an odd one. Typically, you'd pull them out of your same store group, but they completed quicker than we expected. And so part of that was just timing. And we felt like rather than changing the same store group in the Q4, we would just leave them in and talk to it. But we always have expansions going on.
Okay. And then, trying
to look at supply, I mean, how should we view it? I mean, we always talk about the nominal store count, but is there what do you see as a manageable supply level on a percentage of the square facilities? Is it like a 4% to 5%, you mentioned the pent up demand. Are there any markets where there's large clusters that you're concerned about? And the other markets you're like, well, it's not a big deal?
How should we view it from a I guess, from the cluster point of view?
Yes. So overall, I would tell you on a national level, I think that equal to population growth is healthy and you've got to look at square footage versus store count because stores today are being built bigger than they were before. I think that there are certain markets we're clearly concerned about and watching closely and there's other markets where you just have not seen supply come. On the West Coast, California has seen very little new supply compared to the population. Texas has seen a fair amount, Atlanta, anywhere where it's easy to entitle things, you've seen supply.
Okay. And would it be fair to say that you're going to
try and expand more in the supply constrained markets? Is that where you guys would target those?
Absolutely.
Okay. Thank you.
I mean from our perspective, you're always going to look for low saturation population per square foot per population.
Thanks a lot.
Our next question comes from Todd Stender with Wells Fargo.
Hi, thanks. And Scott, I think you gave some color on SmartStop, but I just wanted to see or if you talked about how it's performing relative to plan. And just as a reminder, when does that begin to show up in the same store pool?
So it goes in January 1, 2017. It's in there and that's what's causing the outsized growth. And compared to plan, it is performing a fair amount ahead of our underwriting.
You said on the occupancy, I think you guys were bifurcating it at one point, maybe in a presentation?
In a presentation, we bifurcated it. Going forward, it goes into our same store pool this year, so 2017. And like I said, it continues to outperform our underwriting.
Okay. Thank you. And just get an update maybe on paid search costs, as much detail as you can on how much you're budgeting for Google search this year and maybe any changes in strategy as you head into the spring leasing season?
Yes. Our budgets assume a 6% increase in marketing, which last year we were actually down slightly. So it's a tough comp, it's up against. But cost, we continue to try to be more effective and more efficient. But reality is, as more people are bidding, so costs are going up.
So we need to try to keep the cost per acquisition down.
Is that a reflection of the Google, their rates are up and maybe utilization is down? What how do you look at that? So
Google rates going up are just there's more people bidding, which drives the rates up. Utilization, people use paid search consistently. So we found it's a good way to drive traffic. We'll continue to spend money on paid search.
Okay. Thank you.
Thanks, Todd.
Our next question comes from Vikram Mehrotra with Morgan Stanley.
Thank you. So I wanted to just get a sense of as new supply is coming online or the markets where you are seeing new supply, what are competitors doing in terms of maybe discounts offering? How are they driving tenants into their properties versus the existing your existing properties or even peers' properties?
I can tell you how we react and I would tell you that that depends on a little bit of the velocity. So if the store comes in and for instance, we opened a store in Venice, California, the store filled up in 6 months, I would tell you a store that competes with that store shouldn't have done anything. They should have just weathered the storm. So typically when we open a new store, a CO store, we'll open it with rates 10% to 20% below market and we'll discount every single rental. So it really depends on velocity, lease up velocity when you make a decision on what you're going to do with the store.
Okay. That makes sense. And then just your comment on supply having sort of minimal impact, I guess, so far. What either tactically or from the revenue management system, what factors could drive street rate growth materially lower from here and vice versa? Could you see reacceleration post 2017?
So street rate changes, I would tell you, are just one of the factors in the model. If you want to drive occupancy, the way you drive occupancy is your lower rates, you increase paid search spend and you increase discounts. So it's just one of the levers. So it's going to depend obviously on your occupancy and your revenue growth. It's just one of the factors in that.
Okay, great. Thank you.
Thanks, Vikram.
Our next question comes from Neil Malkin with RBC Capital Markets.
Hey guys, thanks for taking the question. First, what is the premium to move out above move ins in the Q4? And then what are you seeing in January?
Yes. So if you look at our when we talk about premium on move outs, we don't talk about the rent roll down. What we're talking about is our average in place rent compared to our average street rate. And I would tell you that on average for the year, it's mid to high single digits depending on the time of the year. So in other words, when we're raising rates in the summer, that roll down or that negative mark is lower.
But everybody does not move out in equal. What I'm saying is you have more churn. Our median length of stay is 6 to 7 months, but our average length of stay is 14 months. So you have a group of units that are constantly churning that have a very short length of stay. So many of those customers never received a rate increase or received one rate increase and some of those moved in below street rates.
So when they move out, it's actually very little impact and also you have a large number of those that churn all the time. So our negative mark to market is different than our in place rents compared to our street rates.
Okay. And then do you have a sense about what your portfolio of gains or leases? So just kind of putting into terms the in place versus market. Would you say it's mid single digit or?
I'm not sure I understand the question, Neil.
So like if everyone were to move out and replace with marketing your portfolio, I mean, what would the roll down look like?
I would tell you it's where our average leases are fairly close to market and it's property by property.
Okay. And then last one for me. Go ahead, sorry.
No, go ahead.
You guys have commented for probably about 24 months now that the pace of lease up development and your CFO deals are well ahead of long term trends. Are you seeing that abate at all? Or is lease up still very the pace is pretty aggressive? I mean, just given the supply new supply coming out, are you seeing those timelines elongate?
Yes, that's a good question. So the earliest CFOs we delivered leased up within a year, most of them, just way ahead of historical norms in underwriting. The more recent deals are leasing up between 1 2 years on average. So certainly the pace of lease up has slowed down, but we've underwritten all of these deals at 36 to 42 months. So they're not leasing up as fast as they were, but they're still leasing up generally ahead of our projections.
Thank you.
Thanks, Neil.
Our next question comes from Gwen Clark with Evercore.
Hi. So I just have 2 hopefully quick follow ups. On G and A, can you remind us how much I guess it costs when you put a managed asset into the pool?
So we actually have not just put that out to the public is something we'll consider looking at. But we put a management fee into our properties that is what we consider a cost to manage when we underwrite.
Okay. That's helpful. And then just next, can you just walk us through the performance of the New York City borough?
Sure. So the 5 boroughs as opposed to our New York MSA, which includes Northern New Jersey and Long Island, had revenue growth in the 4th quarter under 2% and for the year under 5%, about 4.7%.
Okay. That's helpful. Thank you.
Thanks, Gwen.
And I'm not showing any further questions at this time. I'd like to turn the call back over to our host.
Thank you everybody for joining our call. We appreciate your questions and look forward to speaking next quarter. Thanks.
Ladies and gentlemen, this does conclude today's presentation. You may now disconnect.