Greetings, and welcome to UDR's 4th Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Director of Investor Relations, Trent Trujillo.
Thank you, Mr. Trujillo. You may begin.
Welcome to UDR's quarterly financial results conference call. Our press release and supplemental disclosure package were distributed Yesterday afternoon and posted to the Investor Relations section of our website, ir. Udr.com. In the supplement, we have reconciled all non GAAP financial measures to the most directly comparable GAAP measure in accordance with Reg G requirements. Statements made during this call, which are not historical, may constitute forward looking statements.
Although we believe the The expectations reflected in any forward looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be met. A discussion of risks and risk factors are detailed in our press release and included in our filings with the SEC. We do not undertake a duty to update any forward looking statements. When we get to the question and answer portion, We ask that you be respectful of everyone's time and limit your questions to 1 plus a follow-up. Management will be available after the call for your questions that did not get answered during the I will now turn the call over to UDR's Chairman and CEO, Tom Toomey.
Thank you, Trent, and welcome to UDR's 4th quarter 2020 Conference Call. On the call with me today are Jerry Davis, President Mike Lacy, Senior Vice President of Operations And Joe Fisher, Chief Financial Officer, who will discuss our results. Senior Officers Harry Alcock, Matt Cozad and Chris Van Enns We'll also be available during the Q and A portion of the call. Throughout 2020, UDR was able to actively and successfully combat many of the challenges brought on by the pandemic. This was a direct result of our company's strategies, In particular, our diversified portfolio, the versatility of our next generation operating platform, outsized cash flow accretion from our 2019 acquisitions and 2020 capital recycling activities and the ongoing dedication of our UDR teams.
In 2021, Maximizing cash flow remains our primary goal. To achieve this goal, we segment growth drivers into what we can and cannot control. Things we can control include the ongoing rollout and successful implementation of our next generation operating platform, Employing dynamic pricing across our portfolio to maximize revenue growth and utilizing our value creation mechanism, including selling low cap assets and recycling proceeds into accretive uses such as acquisitions with operational upside And DCP Investments. So far this year, these factors have contributed to continued stability in our billed revenue And improvement in occupancy and lease rate growth. Mike will provide more color on our operating trends later in the call.
The early year results, when combined with the strength of our platform, our diversified portfolio across markets and product types And our accretive approach to capital allocation allow us to provide 2021 earnings guidance, which Joe will discuss further. As we move forward, we will continue to closely monitor factors that are out of our control. These include the speed in which vaccinations proceed, what this means to cities reopening and emergency regulations and How these will drive forward rent growth trends. In short, what worked for 2020 should continue to work in 2021. I remain highly confident that we as an industry and a company will be better positioned 12 months from now.
The path to get there will continue to be slow, but the inevitability of a recovery is just a matter of when, not if, in our minds. Moving on. ESG remains a cornerstone of how we operate our business and invest our capital. Over the past 3 years, we have dramatically improved how we report our ESG accomplishments to our stakeholders. I'm proud that this was recognized in late 2020 by Gresby, who named UDR a top performer in ESG among global real estate firms.
Moving forward, our intent is to continue to refine and improve our ESG goals, while also providing comprehensive metrics To our stakeholders as we share our continued success in the years ahead. Last, I've had the honor to lead UDR's team for 20 years, Been active in the apartment industry for 30 years and have lived through multiple cycles. UDR's team has always risen to the challenge just as we did in 2020 and will continue to do so in 2021. I'm confident in the direction of our company, What we are actively doing to improve how we conduct business through the next generation operating platform and our ability to handle any With that, the executive team would like to thank all our associates for their dedication and service, unwavering focus on executing our strategy 2020. And in closing, I'm reminded that every year presents its own set of unique challenges, And I'm confident that the UDR's ability to adapt whatever 2021 may bring.
With that, I will turn the call over to Mike.
Thanks, Tom. Overall, I'm encouraged by our early 2021 results. Portfolio wide traffic, Occupancy and blended lease rate growth are trending in the right direction. However, the timing around widespread vaccination and the resulting reopening of urban areas and relaxation of emergency regulation remains uncertain. Nevertheless, we will continue to leverage our platform to maximize revenue and limit controllable operating expense growth moving forward.
The start and stop effect the virus continues to have on business activity in our coastal markets was reflected in cash same store results during the quarter. Divergence from our previously provided guidance was a result of, 1st, some markets enforcing stricter COVID restrictions around the holidays And the lower traffic and higher than anticipated concession levels that came with those. And second, a modest decline in collections compared to prior quarters, which aligns with the seasonal pattern we have experienced in the past. As such, with concessions accounted for on a cash basis, Year over year combined same store NOI declined by 10.1% year over year, driven by a revenue decline of 5.9% And an expense increase of 4.8%. When accounting for concessions on a straight line basis, combined same store revenue declined to more modest 4.5 With NOI down 8.1%.
These results were in line with our guidance. Please see Page 4 of our press release for drivers of year over year and sequential combined same store revenue growth during the quarter. Encouragingly, our 2019 acquisitions illustrate the operational upside We can realize from integrating our platform. These communities produced sequential revenue growth of 2% from the Q3 to the 4th quarter, compared to a 50 basis point sequential revenue decline for our combined same store communities. Looking ahead, 2021 has started off on better footing.
As a reminder, the key to turning the corner on revenue growth will be sustained traffic, improving occupancy and reduced concession activity. Positively, our occupancy has grown. Concession usage has started to decline and we're operating with minimal or no concessions Across approximately 65 percent of our portfolio. Where we are using them, the average concession level has come down to approximately 3.5 weeks from 4 weeks on average during the Q4. Additionally, billed revenue remains relatively stable, a trend that has been evident since August despite more widespread regulatory measures that impact our business.
Build revenue is one of the major factors that influence our bottom line results, And I'm encouraged by this stability. Combining these year to date 2021 factors with favorable occupancy trends, especially in our harder hit coastal markets. We are now expecting sequential revenue growth to be positive in the Q1 as suggested by our guidance. Strategically, we continue to focus on maximizing revenue growth by pushing rate growth where we can and driving occupancy where necessary. This property and unit specific approach to pricing our homes benefited us greatly during the pandemic, and we anticipate This will continue to do so throughout 2021.
It's important to recall that higher than typical level of concessions we granted during the 3rd And 4th quarters of 2020 negatively affected our earnings for 2021. Even though we have been able to offer a lower level of concession thus far in 2021 As compared to recent months, the straight line effect of amortizing what has already been granted serves as a headwind to FFOA growth. As such, we expect the Q1 will bear the brunt of this impact. Joe will provide additional color in his comments. Moving on, Page 3 of our release and Attachment 15 of our supplement provide combined same store growth guidance for the Q1 and full year 2021.
Additional high level context to how we arrived at these factors is as follows. 1st, 25% to 30% of our NOIs in markets that Fewer business and regulatory restrictions and are therefore effectively open. This bucket includes Tampa, Orlando, Nashville, Dallas, Austin, Richmond, Baltimore and Monterey Peninsula in California, stable to improving fundamentals and positive 2021 revenue growth as anticipated in these markets due to a combination of occupancy gains and positive effective blended lease rate growth. Concessions across these markets have generally remained in the 0 to 4 week range since March. And demand remains strong, which has translated into average physical occupancy of over 97%.
Because demand and occupancy are high in these markets, We are opportunistically pushing market rent growth where appropriate. This may result in a modest decline in occupancy during the first half of twenty twenty one, but it will benefit our future rent roll. Thus far in 2021, we have generated blended lease rate growth of approximately 3% in these markets with occupancy averaging 97.3% as of January 31. 2nd, roughly 55% of our NOIs and markets are partially open where fundamentals have likely bottomed and are showing signs of improvement. Concessions across these markets have generally ranged between 2 to 6 weeks with occupancy holding steady.
Thus far in 2021, we have generated blended lease rate growth of negative 1% to negative 2% in these markets with occupancy averaging 96.5% as of January 31. Last, roughly 15% to 20% of our NOI is in urban areas of coastal markets where emergency regulation and additional restrictions on business activities continue to present challenges. These include Manhattan, San Francisco and Downtown Boston. Concessions across these markets continue to average 48 weeks, but we are still seeing competitors offering up to 12 weeks on new leases. Average occupancy across these markets improved from the mid-eighty percent range during the 3rd quarter to nearly 90% during the Q4, but came at a price.
Thus far in 2021, we have generated blended lease rate growth of negative 1.5% to negative 2% in these markets with occupancy averaging 94% as of January 31. At a high level, we believe widespread vaccination will be the tide that lifts all our shifts in 2021. By the timing of when this occurs and therefore when regulatory and business restrictions are a thing of the past remains difficult to pinpoint. Next, 2020 was a disruptive year in many ways. And with the recent focus on net migration trends within and between markets, It's important to highlight that UDR's 2020 annualized turnover was up only 30 basis points versus 2019.
Most of our markets saw stable to improving retention with the exception of New York, San Francisco and Boston. Our latest analysis of move out data in these three markets shows most of our former residents are staying within relatively close proximity to the urban areas They vacated last year. Approximately 70% of our Q4 2020 move outs in Manhattan, Downtown Boston and San Francisco proper MSA, comparable to 1 year ago and significantly better than Q3 2020. This suggests coastal markets should rebound once health and safety issues are addressed. Finally, I want to thank my colleagues in the field and here in Denver for their dedication and executing our strategy and adapting to a new environment.
The past year has brought a lot of change and the lessons we learned will help shape how we do business and interact with our residents in the future. And now, I'd like to turn the call over to Jerry.
Thanks, Mike, and good afternoon, everyone. Many of our operating successes in 2020 were driven by the ongoing implementation of our next generation operating platform. The platform's self-service components allowed us to stay engaged with our residents, deliver a high level of service, satisfaction throughout the pandemic And limit controllable operating expense growth to just 20 basis points for the year. Our 5 year controllable expenses have average growth of 70 basis points And our improvement in 2020 from already strong expense growth containment reflects a continuation of our constant and consistent focus on driving efficiency in our business. Because this 5 year period overlaps with our platform initiatives, the efficiencies we have generated to date are best illustrated after comparing our nominally positive controllable expense growth over this time frame to more normalized 2.5% to 3 Annual wage inflation growth across our markets.
We expect to realize additional cost control benefits over the next 2 years with the full rollout of the first Phase of our NextGen operating platform. As you will recall, we began the full rollout of Phase 1 of the platform in Nashville and Seattle during the 4th This encompassed automated self touring, our new customer service technology and updated resident app and headcount reductions among other things. So far, the results in these two markets are in line to slightly better On customer service and the new technology deployed has been widely adopted by residents and prospects, which has proven beneficial to our leasing process and resident satisfaction. Of note, during the Q4, 93% of our company wide prospect tours conducted in a self-service or touchless manner. And since the Q2 of 2018, our net promoter score has improved by more than 20%.
To date, we have rolled out the full Platform 1.0 to 6 of our 21 markets with the remainder scheduled throughout 2021. But portfolio wide, approximately 83% or 400 headcount reductions have already occurred Since mid year 2018 in anticipation of these rollouts, we have seen no discernible evidence of disruptions to operations. To date, we have realized 50% of the benefits of Phase 1 of the NextGen operating platform, which is expected to total $15,000,000 to $20,000,000 As we look ahead, we expect to realize an additional 25% of run rate NOI from the platform by year end 2021 and the remainder in 2022. Moving on, we are working hard on planning Phases 1.52.0 of the platform. Primary areas of focus include utilizing more data science to increase resident retention, better directing marketing dollars to optimal sales channels and making the leasing process quicker and easier to complete to name a few.
Post 2022, we anticipate that these objectives should continue to drive margin Expansion. Last, many businesses have moved or in the process of moving toward increased self-service as preferred by their customer base. UDR and eventually the multifamily business are no different. 2020 was a key year for implementing and proving out many of the Technological components of Platform 1.0, but 2021 is the year that we will fully unleash it. A sincere thank you To all of my fellow UDR associates who have embraced this new way of doing business, and I look forward to providing additional updates on our successes in the quarters ahead.
With that, I'll turn it over to Joe.
Thank you, Jerry. The topics I will cover today include our 4th quarter results And guidance for the Q1 and full year 2021, a balance sheet and liquidity update and a summary of recent transactions Capital Markets activity. Our 4th quarter FFO as adjusted per share of $0.49 achieved at the midpoint of our guidance range And combined same store revenue and NOI growth with concessions reported on a straight line basis met our guidance expectations. In regards to collections and residential bad debt, in the Q4, we wrote off $3,500,000 and reserved $4,000,000 of revenue For a combined $7,500,000 or 2.4 percent of residential build revenue. This is based on our assumption I've ultimately collecting 97.6 percent of Q4 revenues or slightly below the 3rd quarter level of 97.7%.
Looking ahead, despite the inherent uncertainty around how the pandemic will impact the economy, the regulatory environment and our business moving forward, We have provided Q1 and full year 2021 guidance. We anticipate full year FFOA per share To range between $1.88 $2 with the $1.94 midpoint representing a 5% year over year decrease, driven by a year over year decrease in straight line NOI, partially offset by accretive financing and transaction activity. We expect full year 2021 year over year combined same store revenue growth of negative 2.5 percent to positive 0.5 percent With concessions on a cash basis and negative 4.5 percent to negative 1.5 percent With concessions on a straight line basis, this difference is due to the residual impact of concessions amortizing during 2021 That were granted in 2020, which as indicated earlier, will also serve as a relative headwind to FFOA growth until concession amortization tapers. In regards to our Q1 2021 FFOA midpoint of $0.47 And the $0.02 per share sequential decline, this is being driven primarily by the straight line effect of amortizing concessions that have previously been granted. Full year guidance assumes a headwind of $0.03 to $0.04 from concession amortization With approximately 2 thirds of the impact expected to be realized during the Q1.
Additional guidance details, including sources and uses expectations, Are available on Attachment 1516E of our supplement. Moving on, our balance sheet Is liquid and fully capable of funding our capital needs due to ongoing efforts to reduce debt cost, Extend duration, enhance liquidity and preserve cash flow. As such, we remain in a position of strength To continue weathering the effects of the pandemic, some highlights include: 1st, as of December 31, our liquidity As measured by cash and credit facility capacity, net of our commercial paper balance was $958,000,000 2nd, after using a portion of the proceeds from our $350,000,000 1.94 percent green bond issuance in the 4th quarter To prepay additional higher cost debt originally scheduled to mature in 2023 2024, we have only $350,000,000 of consolidated debt We're less than 2% of enterprise value scheduled to mature through 2024 after excluding principal amortization and amounts on our credit facilities. Please see Attachment 4B of our supplement for further details on our debt maturity profile. 3rd, We remain thoughtful in our capital allocation decisions, largely funding our recent acquisition and DCP activity through property sales And the proceeds from our previously issued forward equity sales agreements.
Our identified net uses of capital remain minimal and predominantly consist of funding our $491,000,000 development pipeline, which is less than 3% of enterprise value And is over 50% funded with approximately $244,000,000 of remaining capital to spend over the next several years. 4th, our dividend remains secure and is well covered by cash flow from operations. Based on the 2021 AFFO per share midpoint of $1.76 our dividend payout ratio is forecasted to be 82%, resulting in approximately $100,000,000 of annualized free cash flow after accounting for dividend payments. Last, as is evident on Attachment 4C of our supplement, we continue to have substantial capacity under our line of credit And unsecured bond covenants. As of quarter end, our consolidated financial leverage was 35% on unappreciated book value and 31% on enterprise value inclusive of joint ventures.
Net debt to EBITDAre was 6.8 times on both a consolidated basis and inclusive of joint ventures. Taken together, our balance sheet remains healthy, our liquidity position is strong and our forward sources and uses remain very manageable, as is detailed on Attachment 15 of our supplement. Next, a transactions update. From a thematic perspective and irrespective of the macro environment, we continue to believe that our platform and other operating initiatives Help us to generate outsized returns while paying market prices for acquisitions. Funding these acquisitions By selling assets that are attractive to private market buyers, but potentially less platform centric in some cases, only serves to enhance this accretion.
Our Q4 2020 and Q1 2021 acquisitions in Tampa, Suburban Washington, D. C. Suburban Boston are perfect examples of this trading approach, and we continue to evaluate additional opportunities to create value. Some highlights include: 1st, during the Q4 and Q1 to date, We sold or are under contract to sell 3 communities, 1 each in Washington, D. C, Orange County and Los Angeles.
Proceeds total approximately $360,000,000 at share, reflect a low 4% weighted average cap rate And with the sale of all of DTLA in Los Angeles, we have wound down our West Coast Development joint venture. 2nd, during the Q4 and Q1 to date, we acquired 3 communities, 1 each in Washington, D. C, Tampa and Boston for a combined $328,000,000 All three communities are expected to generate outsized returns once fully integrated onto our platform, with the weighted average yield projected to increase from 4.6% in year 1 to 5.3% in year 3. 3rd, subsequent to quarter end, We committed to fund a $30,000,000 DCP investment for a development community in suburban Washington, D. C.
At a 9% yield And with profit participation upon a liquidity event, which we expect to occur in approximately 5 years. The development is fully capitalized and is proximate to 2 other UDR communities. Please refer to yesterday's release for additional details on the recent transactions. With that, I will open it up for Q and A. Operator?
Thank you. At this time, we'll be conducting a question and answer You may press star 2 if you'd like to remove your question from the queue. As a reminder, we ask that you please limit to one question and one follow-up. Our first question comes from Nick Joseph with Citi. Please proceed with your question.
Thanks. I appreciate the comments on the operating platform and dynamic pricing. Just wondering, as you think about markets like Manhattan or San Francisco or Downtown Boston, which I think you said were the challenge, 15% to 20%, do you see the benefits from those Given the disruption currently from concession activity or do you get more of that benefit when the market is more stabilized and acting more normally. Just trying to see how those benefits roll through when the market's really being disrupted?
Hey, Nick, it's Mike here. Last year, we had at the Citi conference, we were able to present what we saw with some of The dynamic pricing and using some of the heat maps and over the last 3 or 4 months Our mid to high rise assets, so it has benefited us quite a bit over the last few months just in terms of Optimizing our rent and occupancy within those markets.
Yes. I would add, Nick, this is Jerry. It's probably got more benefit today On the stabilized suburban markets, especially in the Sunbelt, when you have that much price pressure and concessionary impact from competitors, There's less differentiation based on view and location of the unit. People are just tending to look for The least expensive unit most frequently. So I think you'll see more of that when San Francisco, New York, some of the other urban areas stabilize.
There'll be more benefit, but I think the biggest benefit to date has been on the suburban.
That makes sense. Thanks. And then just on those migration trends that you're talking about with a lot of those residents maybe staying within the MSA, Where are they moving? Are they doubling up? Are they moving back home?
And would you expect it to be those residents who actually move back in, or that Type of resident at least, or
do you think it's going to
be a different resident base that ultimately moves back into some of these more urban areas?
I think it's different by market for what we're seeing today. I'll give you an example. New York City, we're still seeing people moving out closer around, Call it Boston, New Jersey, even Connecticut. And we're staying in touch with those residents and just trying to get an idea of when the city starts to open up more, What their intentions are? So a place like that, we do expect that they'll come back.
And today, we are seeing people come in from outside of the MSA as well. And then when you look at some of our suburban assets down in the Sunbelt, it's a little bit of a different story there.
Thanks.
Our next question comes from Jeff Spector with Bank of America. Please proceed with your question.
Hey, Jeff, you might be on mute.
Can you hear me now?
Yes, you're good.
Great. Sorry about that. Great. Good afternoon. Thanks for taking my questions.
Wanted to circle back to Mike's initial comments on Manhattan, San Fran, Boston Improved occupancy, but it came at a price. And then again, the discussion on 70% stayed within the MSA. Specifically on Manhattan, what are you seeing there? I think you just commented that You're staying in touch with these people to see what their intentions are. I guess in the last month or 2, Have you started to see some of those younger millennials, Gen Z start to come back Manhattan specifically or not yet?
To some degree, we're starting to see it more on our traffic patterns. So our traffic has increased, I would say, over the last 30 to 60 days. A big piece of that was The fact that we started using our partners a little bit more within Manhattan versus call it San Francisco, it's just we found a little bit more success there. And so we're able to capture a little bit more incremental demand from, I think, people from within that market looking for A deal or maybe trying to move into a place that they couldn't necessarily afford before and they can now.
Okay. Thank you. And then my follow-up is just on acquisitions. I think you're guiding to a minimal amount. Everyone's talking about the Sunbelt, but there's a lot of supply there.
Just thinking about the Taking a contrarian view back to Manhattan, let's say, or San Francisco, are you seeing any distress Opportunities for UDR to strike in 2021?
Hey, Jeff. Good morning. It's Joe. I'd say at this point, really not seeing the distressed opportunities. Generally speaking, the only area that we saw distress kind of coming through this has been up on the DCP side, where you did see us do an investment there in the Order another $30,000,000 out in suburban Virginia.
That really just due to the pullback that you saw on construction financing, mezz financing, equity financing For developments. At the
end of
the day, I think for stabilized assets, the GSEs as well as other financing sources remain available. Proceeds may come down a little bit, coverage issues in some of those urban high rise markets might get a little bit more stressed from a coverage perspective, but Overall, not really seeing any signs of distress. I think generally speaking, the urban high rise product pricing might be off 5% to 10%, relative to pre COVID, But overall, not seeing the distress come through.
And Jeff, this is Harry. I'll just add on. I mean, I think I'd say generally in the core of the deals, while there hasn't been a tremendous number To form a definitive opinion, pricing has likely hit bottom and possibly has even started to rebound. Buyers are no longer trading on cap rates, Really are trading relative to replacement costs, and replacement costs continues to increase.
Great. Thank you.
Our next question comes from the line of Nick Yulico with Scotiabank. Please proceed with your question.
Hi, good afternoon. This is Sumit here for Nick. Guys, two questions. One, your San Francisco new lease rate fell by about 3% year over year, which is pretty good compared to some of your peers As well as some of the market reports. And physical occupancy was up 4 10 basis points Q over Q.
So overall, I'm trying to sort of reconcile this against the revenue per occupied unit, which declined 9% Q over Q. I guess, was there a lower impact to economic occupancy in San Francisco in particular? Or were there other elements that drove the sequential The decline versus the improved rate performance, is it a mix issue of some sort?
Sure. Great question. This is Mike. First, just to put in context, San Francisco makes up about 9% of our NOI. We have 40% of our properties, Urban 60%, suburban.
We are seeing market rents, especially in that urban area, down 10% to negative 18%. And in our suburban assets, it's closer to flat to down 5%. I'll tell you the biggest difference on signed new leases It's where we have higher vacancy. So during the Q4, for example, down in the city and SoM area, we were closer to 83% occupied Versus the financing where we ran closer to 95%. So as you can see that you're sitting on more vacancy In the areas where you have more of a depressed rents compared to where we had a little bit more pricing power.
So it goes back to our Asset by asset strategy all along, just trying to make sure that we're optimizing total revenue. And San Francisco is a very good example of that. And I'll tell you the answer to your second question. As it relates to our growth, the biggest piece is in the economic occupancy. And so again, if you look at the Q2, it was down about 1,000 basis points on a year over year basis.
And this market is also one that's historically been Our strongest when it comes to other income growth through initiatives and things like that, whether it's the short term furnished program, amenity rentals. It was fee income was down about 11%, because we just weren't able to do a lot of things that we're accustomed to doing. And again, the last Piece I'd point to is that urban, suburban piece of the equation when you look at San Francisco.
Got it. Got it. Thank you for the color on that. We'll probably take that offline as to what's in the fee income. Always want to know whether there's some sort of app that you guys use to control I see, but that's a different question.
Moving ahead to like, I guess, asset sales. On the West Coast Development JV, you guys had a fixed price option on Olive, at least based on something you said in 2018. And you chose to sell it. And I apologize for the background noise. That's my 4 year old.
Sorry about that. But with DCP, You stated that you're always looking for these assets that you'd like to own and submarkets that you'd like to be in. So What made Olive less platform centric? Just curious to understand whether the pricing what the pricing terms were pre COVID or whether there's Push to reduce exposure to urban area and such markets? Or is it something about the asset?
This is Harry. And the decision was made primarily around asset pricing. And so from our perspective, at the price at which the asset was going to sell in the market, We chose to be a seller based purely on asset pricing. And I can tell you that With the sale of DTLA and now Parallel, we've wrapped up the Wolf JV that we did in 2 phases in 2015 and 2017. Of the 7 total properties, we ended up owning 3 and selling 4.
And again, we were just entirely rational in our thinking about what to buy and what to sell. We achieved an unlevered IRR of 11% on our total $260,000,000 in capital invested, Which is at or above our expectations. In parallel, that in Anaheim that we're going to close that we're going to sell, we actually sold it for, Call it 20% above the price of which we bought out Wolf in 2019. So that was a that ended up being a good trade as well.
Thank you so much for the color guys.
Our next question comes from Austin Wurschmidt with KeyBanc Capital Markets. Please proceed with your question.
All right. Thanks, everybody. So appreciated all the detail you had on the preferences for pushing rate in some of your markets that are a little more stabilized and And as well as the challenges that others are still facing, predominantly those coastal markets. You did mention it's more if and when the Recovery occurs in some of those challenged markets. So I guess what did you incorporate in terms of your guidance as far as the recovery in the coastal markets From a timing perspective, given all the uncertainty, and do you think or did you assume that leasing spreads Across the portfolio can turn positive at some point in the back half of the
year? Yes. Hey Austin, it's Joe. Maybe I'll kick it off with a High level comment just in terms of how we formed the same store NOI guidance and FFOA guidance overall, then Mike can kind of take you through some of the specifics. When you look at that same store NOI cash guidance range of flat to minus 4%, if you just utilize 4Q of 2020 as the starting point To go to that low end of minus 4% NOI, all you need to see is NOI stay static relative to 4Q of 2020.
So basically no improvement from 4Q all the way through 4Q of 2021 gets you to the low end of our range that minus 4% year over year. You get to that midpoint of minus 2%, basically a 2% lift, meaning we have to average about 2% better than where we are at in 4Q. The sequence of that, we've run through a number of different scenarios. Obviously, you have a piece of the portfolio stable and improving, a piece that's in that 20%. But we've run through a number of different scenarios as to when that starts to lift based off vaccinations and reopenings and feel pretty comfortable that it's a pretty good midpoint to put out there at this point.
Yes, Austin, this is Mike. I would add, obviously, the cadence of March reopening will dictate those results, but What we're seeing right now is promising and we expect that traffic will start to return kind of in that 2Q timeframe in places like New York and Boston and Probably traffic starts returning in 3Q, maybe into 4Q for San Francisco and results will follow those trends.
That's really helpful. Appreciate that. And then just one on the acquisitions, which you did highlight, these are some older vintage Kind of higher yielding deals predominantly.
What are you assuming
in terms of a capital plan or incremental dollars To drive that yield over the next couple of years, how should we think about that trending? And then How do you think about, I guess, the recurring CapEx piece to buying and owning some of these older assets versus selling maybe some of the newer stuff It's lower a lower cap rate today.
This is Harry. I'll start and then Joe may jump on. But in terms of the capital spent, of the 3 assets we acquired, one was brand new, coming out of lease up. We did It's located next to another UDR property, so we're able to benefit from platform upside on that one. The other 2, one is 15 years old in Boston.
We'll spend about 16,000 a unit. So that will help drive year 1, but more year 2 and year 3. And likewise, The Tampa acquisition, we're going to spend about $10 a unit on that. So there will be some minor curing of deferred maintenance in addition to A little bit of return CapEx. I think they have a little bit of upside, but that's why 4.6% in year 1 and we'll be up over 5% in the 2nd year.
In terms of recurring CapEx, I think When we buy these assets, we do cure deferred maintenance and put them back into position so that we can own them for 20 years with sort of a normalized Capital spend trajectory. So that in effect, the capital we spend upfront goes into the purchase Price and our initial yield and that allows us to manage recurring CapEx going forward.
Yes. And Austin, just to give a little bit more commentary on the yield I want to make clear that while we have capital plans for the assets and we get a return on that capital, you also have a lot of lift in that NOI stream coming just from Pure blocking and tackling the initiatives and then the overlay of the platform. So relative to the private market operators, in year 1, we get about a 5% lift, Ignoring the influence of market rent growth. And then from there on, as we continue to lay on the platform plus CapEx, you get another 5 plus percent. So we We typically see about a 10% lift over time between ops and capital plans on these new acquisitions.
Yes. One last thing. This is Jerry. Yes. The Tampa deal, which is I believe is the one you're probably referring to, it's over 600 units.
It was really 2 properties that were run separately That are getting merged together. But day 1, we went in with platform staffing levels because we're rolling our Tampa market in at that exact same time. We're in the process right now of putting in smart home technology to enhance it even further. But Yes. I mean, we went from about 12 FT feet feet feet feet feet feet feet feet feet feet feet feet feet feet Es down to about 8 at that community.
As Harry said, you're right to look at some of those older markets and the Sunbelt and think about CapEx, but we're doing HVAC replacements throughout that community, which is one
of the big burdens And it's that there's a
paint job wood replacement that can also impact it. So I think what Harry said is right. I feel good about that property's CapEx Spend over the next 10 years, it will be just like a fairly new property. And as they said, there's a couple of new acquisitions, the one in DC kind of offsets it. We have new development that continues to benefit us on the CapEx side going forward.
So When you sprinkle in some of these older assets like this one, Rogers Forge or Windsor Gardens that we got last year and Addressed it with initial capital expenditures. Most of that's been cured. So I don't think you're going to see If we continue to buy these things and take care of them at times of acquisition and our recurring CapEx.
Great. That's all very helpful. Thank you.
Our next question comes from the line of Rich Hill with Morgan Stanley. Please proceed with your question.
Hey, good afternoon, guys. Joe, you do something that I really appreciate, which is Report numbers or metrics on a cash and GAAP basis. And so I think you're in a unique position to maybe help me and others Think about how these metrics might trend into late 'twenty one into early 'twenty two and maybe even beyond that. So as we think about it on a cash basis, is it fair to say that the concessions that were made in '20 will become pretty material headwinds or tailwinds, excuse me, in late 'twenty one into early 'twenty two. But then there is a scenario in later 2022 where any growth is primarily going to be driven by Base minimum rent growth rather than the concessionary impacts or lack thereof?
Yes. I got you, Raj. Yes. I think that's generally a fair statement. So as you look at the concessions granted in 2020, as of year end, we had $20,000,000 straight line asset that needs to be amortized over time.
We think net net the headwind relative to 4Q is about a Call it $0.03 to $0.04 headwind as we work our way throughout 2021. So you have kind of cash Underperforming GAAP here in 4Q and throughout 2020, we start to crossover in Q1 of 2021. Those will effectively level out and you get a crossover point between New concessions granted and those that have been amortized and then you start to revert as you go through into the back half of the year where cash starts to outperform GAAP. And that's really the strategy that Mike and team have been employing throughout and talking about a lot about in terms of if you believe there's a recovery that's going to take place While you take the upfront concessions, you keep the face rate higher and that helps reduce the revenue growth on the back end, helps you renew A higher number on the back end. So you should see that start to drive relative performance here as we go into the back half.
Got it. That was sort of a lead in to my next question. We noted that your effective lease growth in January, Correct if I'm wrong, turned positive, which is a pretty interesting indicator, at least relative to your peers. So as you think about your diversified Portfolio across geographies and quality, how do you think that sets you up to push rents, true rents, not effective rents? Because we've been Yes.
I think I'm hopeful there will be a time in the not too distant future where we can think about true rents again. How do you think that positions you Outgrow, for lack of a better term, your peers?
Hey, Rich, it's Mike. I think it puts us in a good position. And as As Joe alluded to, that's something we've been focused on for quite some time. And I'll tell you over the last 3 months, we've seen sequential market rent growth In our portfolio and a lot of that has to do with trying to find those pockets where we do have high occupancy and we can start to push Our market rents a little bit because obviously that helps on the renewal side too. And so we're starting to see some promising signs with What we're sending out for renewals going forward and again kind of where our market rents are today.
And it does vary market by market, but It goes back to that asset by asset approach, and I think it's starting to pay dividends.
Got it. I think that's all I had, guys. I'll follow-up
offline Thanks and nice quarter in print.
Thanks, Rich.
Our next question comes from the line of Rich Hightower with Evercore. Please proceed with your question.
Hey, guys. I appreciate all the valuable color so far. Just maybe
to get back to these questions
on the urban core for a second. But I guess To the extent that you did see increased demand and traffic as the Q4 went on and year to date 21, is there anything about the composition of those, the unit mix in terms of what's leasing up
a little faster that might give us
an indication of Who's actually moving into the cities and where they're coming from and what their motivation is? Other Just rents being low, is there anything about studios versus 1 bedrooms and so forth that might fill out the picture there?
Hey, Rich, it's Mike. Yes, we're seeing very similar trends to what we've talked about in the last couple of quarters, Quarterly earning calls and that's our studios are a little bit less occupied than what we're typically seeing in regular cycles. So Nothing really different from that end. I will tell you though one thing that helped us out probably more than anything over the Q4 is When you look at our tours and you look at how many were guided for self guided and all the things that Jerry and the team have done for the platform, Less than 7% of our tours were guided. So the fact that we were able to just get more traffic through the door and really accommodate them, we We're able to push where we otherwise couldn't.
So that's about it on that side.
Okay. I appreciate that, Mike. And then maybe just a little bit bigger picture question, again sticking to the Sort of the more troubled urban core markets, but every few days and yesterday was another one, you see some corporate announcement About sort of a permanent work from home or remote workforce Stands from some large company, they seem to be predominantly located on the West Coast, but not always. At what point do we sort of tally up those anecdotes and maybe change our longer term view about What pros could be in the European Core, what cap rates should be, how we should underwrite, just along those lines, if you don't mind commenting.
Yes. Hey, Rich, it's Joe. We see all those same headlines. We're doing a lot of work on the qualitative side With Import Strad, thinking about things like the business friendliness, the migration of these incomes, where they may ultimately go, I think the Google announcement, Yes. The headline perhaps read negatively, but I think as you go through it, it seemed that it's much more of the anchored to a office approach, which is majority of individuals Continue to come in 2 to 3 days a week.
There are some that will never come in again if they're fully remote and aren't in the location that has a office. I think our approach and thought process throughout this will be we'll return to some degree of normalcy where most employees will be anchored to an office For a set amount of time, one day, 2 days, 3 days or 5 days, whatever it may be. So that will impact obviously how you think about Commute times and locations and submarkets within those MSAs, but it is kind of a rising tide lifts all ships or sinks all ships. So To the extent that you can work from home more, maybe that is beneficial to the suburbs on a temporary basis. But over time, it's going to come back to are these knowledge based Economy drivers, meaning are the technology companies going to remain based to a high degree within those markets?
Are the finance companies going to company is going to stay based to a high degree out in New York and Boston, the life sciences of the world. Are they going to be there? Are they going to help drive income growth over time? And I think we believe they ultimately will, that bias us towards these markets need to remain in our portfolio. Right now, they're probably not the markets that we're Trying to tilt additional capital towards as you've seen through our disposition strategy, we've generally taken more dollars out of those markets than into those markets.
But I think those markets long term have viability. We're not going to rush to the doors and try to exit at this point.
Got it. Thanks,
Joe. Our next question comes from the line of Neil Molchan with Capital One Securities. Please proceed with your question.
Hi, guys. Thanks. Good afternoon. Thanks for taking the question. I guess maybe a continuation on the previous question, maybe for Joe or Mr.
Van Enns. You look at Maybe the Biden administration and potential risks there, slower rollout of the vaccine, companies pushing their kind of back to work from July timeframe to September, October, and then also the migratory patterns you mentioned with the work from home. I mean, Yes. You guys are seem to be hesitant on if you're going to make a call on a shift from the coastal markets. But I just wonder when you kind of look at everything in the Portfolio strategy column, are you do you see this cycle or at least Next couple of years, shifting from selling cap rates that are very depressed In coastal markets, urban markets and moving those to the Tampa's, Nashville's of the world, potentially other markets that have Those are similar attributes where you're seeing all the out migration flow to.
Is that a I mean, are you thinking about those That's sort of the allocation
going forward.
This is Toomey. I'll let Joe and Chris add on to it. But My sense about this is, 1st and foremost, you're right in the middle of the storm. And to try to navigate a different path In the middle of the storm usually means a wreck. So I don't see us adjusting while this is still unsettled where We would adjust any of our capital deployment strategy.
We have a pretty simple game plan. Buy the one next door, overlay the platform, we make money. So we'll stay with that while the storm is occurring. We can debate for hours, all of us, with respect to what's the long term locations of COVID might have with respect to work, our lifestyles and all of those. And what I'd characterize it as this, People in the short term will do everything they can to accommodate their workforce, their customer and their business and have done so.
That doesn't necessarily provide a long term. For example, if you're growing young talent in your thriving dynamic business, It is really hard to do so in a Zoom setting. It is hard to become creative if you've been sitting on a Zoom call for 8 hours, As an example. So the desire to be back together, I see as many surveys talking about businesses working from home And Joe covered the tethered to office element of it. And I see just as many saying we really want to get back in the office.
Colorado today is back at 50%. Frankly, there's a great deal of energy in the building at 50%, walking up and down the hall, seeing people, Checking back in with them and while we are talking to them every week, Zoom, there's a difference when you see them in person. And I think when businesses Get back to having that dilemma of 50%, 25%. They're going to say, heck, we're having a lot more fun together at 50%, why don't we go 75. And the power resides predominantly with the employer to set the tone while listening to their associates and their customers.
And so I just think that to make this call in the next 6 months is foolish. We'll wait and see how it plays out. I do remind myself quite often New York is the capital finance capital of
the world.
San Francisco is the technology innovation of the world. Both are critical to a long vibrant society growing. As a result, those cities are going to come back. Pace, I remember 2000 When we had nineeleven and no one was going to end up in lower Manhattan, I thought it would take 3 years. It took 7.
Maybe I didn't get the timing right, but the end result was they came back and in great numbers. This same thing will happen with post COVID. Sorry about the long answer.
No, no. That's Long is good. I appreciate that, Tom. The other one I had is on the development opportunities. You kind of mentioned some DCP or alluded to DCP opportunities or distress.
But on balance sheet side, Are you seeing any deals come to market, land deals falling out or maybe Sorry, shovel ready projects, where you had a capital partner pull out or something. Are you seeing those opportunities, Potentially a prepurchase buyout and anything like that, just given the more dislocation for the Development on multifamily today.
Well, this is Harry. We're not seeing too much of that. And I mean, you're seeing construction starts Continuing at a fairly high level around the country, there is not a tremendous amount of distress. It's taking longer But I'll tell you the land sellers, by and large, are allowing the developers to extend contracts and that type of thing. The developers We're trying to hang on to those land parcels wherever possible, and so we're not seeing a lot of that type of activity Right now, I mean we do have some land parcels within our existing portfolio that we expect to start over the course of the next year.
So I will start another phase of Vitruvian. We've got a land parcel in Tampa tied up across the street from SLAIT that we acquired last year. We have another phase in the property in Alexandria, Virginia that we should start late this year or early next where we'll add 300 units to an existing In property, so again, a lot of our development starts will also allow us to implement the benefits Of our platform as well.
Appreciate it. Thank you.
Our next question comes from the line of John Kim with BMO Capital Markets. Please proceed with your questions.
Thank you. Here's Juan. You raised unsecured funds at 1.9% back in November. Back then, your stock was trading North of a 5 implied cap rate. And you didn't really have that same disparity in the cost of debt versus equity With industrial data center rates at the time.
But can you just share any color that you have on how bondholders value your cash flows and that risk Versus equity markets other than just being more focused on risks versus growth?
Yes. Hey, John, it's Joe. So In terms of the balance sheet, I think we've done a lot of work both pre COVID and during COVID to continue to enhance our credit profile. Obviously, throughout the cycle, we Lower metrics such as kind of the 5 to 6 times debt to EBITDA, so that in times of distress, we do have the ability to withstand downturns such as this and continue to maintain a High quality cost of capital, maintain the BBB plus BAA ratings. And so, when they I think when our debt holders look at that, they look at, 1, we are in a Sector, that by and large has weathered the storm quite well and from an asset value and capital flow standpoint continues to hold up quite well.
When they look at our metrics, while a lot of individuals get hung up on debt to EBITDA, a lot of our metrics are doing fantastic They've been the last several years. So when you look at 3 year liquidity, look at duration, fixed charge coverage ratio, unencumbered NOI, you kind of go down the list And we've improved a lot of these metrics, especially when we do these refis and prepays as we did earlier this year, the ability to lock in 2% debt for an extended period of time, take out higher cost debt, improve the cash flow growth profile of the company helps as well. So I think overall, There is a scarcity of locations that you can go for high quality yield. And so that investors are generally attracted to us on a relative basis. From an equity perspective, I think you're seeing coming out of last quarter's call exactly what equity investors have been waiting for multi.
It's really about the rate of change. Since last quarter, our sales in the sector have traded quite well as we've gotten closer and closer to the bottom and or that level of I think Mike's commentary on the stability and what we've kind of put out there for guidance. So some improvement relative to 4Q run rate It's kind of what the investors have been waiting for. So I think that's likely, kind of some of the disconnect, if you will, where we were historically versus where we're at today.
So the bond market got it correct.
My second question is on The concessionary environment, just a follow-up from what you discussed earlier, but you discussed today and also a quarter ago that your off that the Market in New York, San Francisco, Boston was 4 to 8 weeks of concession. Since then,
you've built up a lot of
occupancy in those markets. But other than New York, your new lease rates in San Francisco and Boston don't really reflect that you're offering concessions. So I'm wondering, is this just
a timing issue? We're going
to see that new lease growth reflected going forward? Or are you not offering Incentives in most markets?
No, it varies by market. So let's take Boston for example. We went through San Francisco and I'll come back to that one. But For Boston, for us, again, this is about 12% of our NOI. In this market, 70% of our NOI comes from Suburban assets, 1st 30% down in the urban area.
So in the urban area, we are still seeing concessions around But that 70%, we're still offering between 4 weeks and we're having higher occupancy there and not as much Coming through. So I think you'll see some come later as that market starts to bounce, especially in the urban areas. And that goes to what I said with San Francisco as well. Today, we're closer to 90% in the urban area. 1st, the suburbs were over 95%.
If and when those start to bounce back and depending on how much our market rents grow in the meantime will depend on where our new lease growth ends up.
Okay. Thank you.
Our next question comes from the line of Amanda Schweitzer with Baird, please proceed with your question.
Great. Thanks. Following up on your guidance for the full year, what level of bad debt are you Assuming in full year guidance and then does that change as the year progresses? And then finally, I recognize it's early, but have you started to see a seasonal uptick in collections as You've gone through February?
Hey, Amanda, it's Joe. We aren't really going to get into the granularity of Assumptions underline that rev and NOI guidance, just given the number of levers that can be pulled between occupancy rates, etcetera. So I do think it's fair to assume, however, that you do start to see an improvement in bad debt and write offs as you move through the year. So we'd likely start a little bit lower on collections and move higher. At the end of the day, what matters the most here is that we reopen The markets and put people back to work and once you have income coming into their pockets either through a job, additional stimulus, additional unemployment or tax refunds, Hopefully, we see some improvement in that collection data.
In terms of February trends, February trends are really mirroring What we're seeing in November, December, January at this point. So really no tick higher, staying on pace with what we saw previously.
Thanks, John. That's it for me.
Our next question comes from the line of Rob Stevenson with Janney Montgomery Please proceed with your question.
Good afternoon, guys. Joe, the 1% to 4% same store expense guidance is pretty wide, Especially given Jerry's commentary about savings from the operating platform rollout, what pushes you to the top and bottom end of that range?
Yes. Maybe I'll hit on a couple of areas on the non controllable side. Mike can talk to some
of the
controllables. On the non controllable, you have real estate tax obviously being a big component of those numbers. When you look at the valuations that we've received to date, We're right around 60% or so in terms of valuations being locked in for this year, on rates about 35%. So there is still a degree of variability out there. I think the markets probably that you're most concerned on would be those that have lower income tax rates.
So Texas, we don't have much info yet. Florida, Virginia, so there's a couple of areas there as well as rates in the state of California that we're waiting on. So That could push up or down. Insurance is always a wildcard. We know our renewal on the premiums, which is up about 20% For 2021, so we know that number, but about half of the insurance line item is typically claims activity.
So that can always be somewhat volatile. And Mike on the controllable side, probably has some details for you.
Yes. On the controllable side, I think you can expect to see similar To what you've seen in the last couple of years from us, our cost control is in a good place based on what we're doing with the platform and how we're trending as far as Market transitioning, headcount reduction, things of that nature. So I would expect our controllable operating numbers to be very similar to what You saw ahead of us from 2020.
What was the big driver of the 12% repairs and maintenance bump?
It's really this is Jerry. It's really outsourcing. So when you look at it, You saw personnel go down a commensurate amount. So on a blended basis between those 2, they had negative growth when you would have Expected some level of inflationary growth. So it's really outsourcing of maintenance functions for the most part.
Hey, Rob. One other area of expenses to keep an eye on as we move throughout the year is going to be the eviction cost and legal cost. Yes. Our intent remains to continue to work with all residents that are willing to work with us that have been negatively impacted. But as we go through the year and you see some of the regulatory restrictions potentially be lifted, if those residents don't want to get on the payment plans, don't want to Make good on their contractual commitments, then we'll likely have to move forward with eviction processes and that could result in additional expenses.
That said, you're hopefully picking it up on the revenue line item by getting a non payer out of that unit and bringing in some cash flow.
Okay. And then the other question for me is any reason to believe that turnover won't be in the sort of 48 plus or minus percent range that you've been averaging the last few years? And if it changes dramatically from that, how far does it have to go before it really starts impacting you guys on an FFO per share basis?
I think it's still too early to tell exactly where the turnover is going to go, but I will tell you over the last 30, 60 days, we have seen again that Mass exodus, it's not there anymore in some of these major markets. So we do have some signs that it's getting better.
Okay. And then from an FFO impact range, used to be 200 to 300 basis points would result in something like a penny to you guys. Is that still ballpark?
Yes, that's probably right. When you think about it, the average cost of return is plus or minus $3,000 when you factor in vacancy loss differential and New versus renewal rate growth and turn cost. So 1 Percent increase on a 50,000 plus unit portfolio is about $1,500,000 So 2% would be about a penny.
All right. Thanks, guys. Appreciate it.
Our next question comes from the line of Alexander Goldfarb With Piper Sandler, please proceed with your question.
Hey, and good afternoon. Thank you. I'll be quick in this. So two questions here. First, how are you thinking about or not how are you thinking about that, that's stupid to say.
As you guys are talking to your residents To move out in the March to June expirations, how far out are you going with them? So are you talking to the ones who are expiring in like April, May, June? And do you have a sense for how many are going to renew versus how many move out?
So we're talking to more recently, Alex, People have moved out probably over the last 4 or 5 months. They're a little bit more apt to tell us kind of where they're at and where they're Planning ongoing? And we don't know necessarily what that percentage is going to equate to when it comes to future occupancy today, but We are getting a sense that people are sticking around the hoop, if you will, and they will be returning if and when their employers tell them to come back.
Right. But the point is
that your expirations for those months, the upcoming months, you don't have a sense for who's staying and who's going to let their unit lapse?
Yes. So we actually as it relates to our lease expirations, we moved some of that around. So what you'll see from us in The Q1, it's a little bit lower than what we've historically had. And by the time we get to 2Q and 3Q, it starts to inch up a little bit more. And it kind of goes in parallel with what we expect with traffic coming in.
And those are the people that we're trying to target to get them into a unit. And we're trying to Source what they're looking for, where they want to live and work with them in parallel with our incoming prospects.
Okay. So basically, you're just trying to hope that you manage that the move in mess the move out, but right now you don't have a sense for who's going to move. Okay, got it. And then the second question is, in your leases that are expiring in the first half of
this year, do you know
how much above market those are?
I don't have that number in front of me, but I would go back to what I said earlier with 3 months of sequential market rent growth. We've had about 12 months of a gain to lease, and we're very close to crossing over and showing a loss to lease, if that helps.
Okay. Thank
you. If you just think through the comps that we're facing, Alex, you had plus or minus 3 to 4 good months, obviously, in 2020. So that should tell you that you're underwater there for the 1st 3 or 4 months and then hopefully we're hitting the crossover point sometime in 2Q when we're talking to you on the 1Q call.
But Joe, that's obviously portfolio wide. I'm assuming, yes, the real focus market, the big 3 that is still going to be A gain complete, correct, not a loss, please.
In the foreseeable future, yes.
Okay, cool. Thank you.
Thanks, Alex.
Our next question comes from the line of John Pawlowski with Green Street Advisors. Please proceed with your question.
Thanks for keeping the call running. Just quick one on Los Angeles. Occupancy and rate were pretty weak sequentially. Mike, any color in terms of traffic or lease cancellations, lease breakages in O.
Sure, John. That market, as you know, it's only about 3% of our total NOI And it's heavily focused in that Marina del Rey area. So what we're experiencing there is a little bit of weakness, but I'll tell you over the last 30 days, that's another one where we've seen traffic bounce back a little bit. We've had to go upwards of 4 to 6 weeks on concessions to try to drive some of that demand. And then down when you get into the city area, still seeing 8 weeks and occupancy level still around 90% to 92%.
So A little bit different there.
I'll say too, John, just in terms of collections activity, LA is probably the biggest outlier within the portfolio. It does have the California overlay from a regulatory standpoint, which is very resident friendly, But also the city and county overlays that are very resident friendly. So collections there and amount of what we would call squatters Exponentially higher than the rest of the portfolio. So collections are somewhere in the 87, 88 range. And so despite it being Probably our 9th or 10th largest market, from a reserve and bad debt perspective, it's sitting there in the top 5.
So It is difficult in that respect, but also hopefully gives us some hope that as the market reopens, we get those people back to work with some of the regulatory restrictions down the road. Hopefully, you start to get some of that back.
Yes, understood. And then Mike, I wanted to pick up on your comments about The mass exodus getting better in some of these hard hit markets. Can you just take let's zone in on San Francisco. Just in terms of the lease breakages, on a scale of 1 to 10, 10 being Peak COVID, everybody is getting the heck out of the city and one being prior to COVID, everything is fine. Like where are we on this mass exodus type of dynamic?
I would say closer to a 6 and we were probably at 8 or 9 about 60 days ago. And I think that's what you saw When you look at our makeup of our revenue growth during the quarter, our other income was actually positive and that had to do with Transfer and relapse fees in places like that where we saw just an uptick in people dropping keys and paying us, we have seen that come down in the last 30 to 60 days.
Got it. Thank you for your time.
Our next question comes from the line of Dennis McGill with Zelman and Associates. Please proceed with your question.
Hi, good afternoon. Thanks for taking the question. I want to go back to that same point that's been brought up a couple of times. The 70% that moved out stayed within the MSA in those urban areas. And the interesting part for me is that it was pretty stable on a year over year basis.
But you are hearing from others that have more suburban whether it be multifamily or single family rentals that they're seeing much higher application volume from out of state coming into their markets. It just seems like you have a unique perspective to be able to look at both sides of that. So can you maybe round that out to help us understand How much of the rhetoric around state to state moves is real as you see it in your data and how much of it is maybe exaggerated a bit?
Yes. I'll give you a little bit more color. We did talk a lot about move out and we haven't really talked about prospects and move ins. So Just to give you a little bit more color on that, we saw about 23% coming from outside of the MSA. And in places like Nashville, Texas, Florida, Denver, it was closer to 30% where we experienced people coming from outside of the MSA, and that compares to about 20% The year prior, and I'd tell you for us, the one that jumps out to me is DC, we saw the highest number of people coming from outside the MSA And it was pushing close to 40%.
How do you square that with some of the data that would indicate that they're leaving your properties aren't leaving the These aren't leaving the metro. Where are the people coming from that are going into the metros where you're seeing that big year over year spike?
So very different data. The move out data from the people that we're seeing, our residents and where they're going, they have to provide us Very detailed information on where their address is, so we can send them kind of the final account statement. So very accurate information. As far as the people Coming in, it's a little bit harder to understand exactly where they're coming from because they don't have to provide you that information. So we're looking at things like Our Google Analytics to understand our prospects as well as the data that we are able to get from incoming move ins.
And so it's a little bit easier to give The move out data, because again, that's pretty hard concrete data versus the move ins.
Okay.
Yes. I realize it's difficult to triangulate it, but appreciate the perspective. And then just a quick one, Joe, just for comparison points. Historically, all the same store measure that we would have been provided in the supplement and so forth. Would that have been on a cash basis?
Yes, correct. Historically, it provided cash and had Minimal differentials obviously between the 2, but in the highly concessionary, we're in a little bit delta.
Okay, perfect. Thank you, guys.
There are no further questions in the queue. I'd like to turn the call back over to Chairman and CEO, Mr. Toomey, for closing
Let me begin by thanking you for your time and interest in UDR. Yes. We strongly believe that COVID will end just as other crises and challenges have as well. The pace of the recovery though is out of our control. Promising signs is the vaccination rate going from 1,400,000 per day 2 weeks ago to 2,400,000 today.
Vaccination production in March looks to be over 100,000,000 doses. These are certainly encouraging signs, But at the same time, we're reminded that regulation and opening of cities and lifestyles remain challenging and will throughout the year. Our focus, though, remains on our strategic plan, in particular, our cash flow growth, platform execution and capital allocation. And with our team's help, we will be successful. With that, thank you and take care.