UDR, Inc. (NYSE:UDR) Q4 2022 Earnings Conference Call February 7, 2023 1:00 PM ET
Company Participants
Trent Trujillo – Director, Investor Relations
Thomas Toomey – Chairman and Chief Executive Officer
Joe Fisher – President and Chief Financial Officer
Mike Lacy – Senior Vice President, Operations
Chris Van Ens – Vice President, Property Operations
H. Andrew Cantor – Senior Vice President, Acquisitions and Dispositions
Conference Call Participants
Anthony Paolone – JPMorgan
Nick Joseph – Citi
Daniel Tricarico – Scotiabank
Austin Wurschmidt – KeyBanc Capital Markets
Michael Goldsmith – UBS
Joshua Dennerlein – Bank of America
Steve Sakwa – Evercore ISI
Adam Kramer – Morgan Stanley
Juan Sanabria – BMO Capital Markets
Brad Heffern – RBC Capital Markets
Chandni Luthra – Goldman Sachs
Rich Anderson – SMBC
Wes Golladay – Baird
Haendel St. Juste – Mizuho
Rob Stevenson – Janney Montgomery Scott
Connor Mitchell – Piper Sandler
Anthony Powell – Barclays
Tayo Okusanya – Credit Suisse
Operator
Greetings and welcome to the UDR, Inc. Fourth Quarter 2022 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Trent Trujillo, Director of Investor Relations. Thank you, Trent. You may begin.
Trent Trujillo
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 expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurances 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 one plus a follow-up. Management will be available after the call for your questions that did not get answered during the Q&A session today.
I will now turn the call over to UDR’s Chairman and CEO, Tom Toomey.
Thomas Toomey
Thank you, Trent and welcome to UDR’s fourth quarter 2022 conference call. Presenting on the call with me today are President and Chief Financial Officer, Joe Fisher and Senior Vice President of Operations, Mike Lacey, who will discuss our results. Senior officers Andrew Cantor and Chris Van Ens, will also be available during the Q&A portion of the call.
To begin, 2022 was an exceptional year for UDR. First, our same-store revenue growth was near the top of the sector and we achieved record high full year same-store NOI growth of 14% and FFOA per share growth of 16%. Second, we further advanced our already industry leading operating platform by investing in our people, which included establishing a 16-person task force to generate and execute innovation initiatives. Additionally, we engaged in various PropTech and ClimateTech investments. Together, these resources should further expand our peer-leading operating margin into the future.
Third, we adhered to the capital market signals, growing opportunistically when our equity was attractively priced early in the year and actively pivoting to a capital-light strategy when our cost of capital increased. Being a good steward of your capital is paramount. Fourth, while we had next to zero debt maturities in 2022, we continue to reduce leverage, strengthen our balance sheet and enhance our liquidity. And last, we were honored to be recognized by a variety of organizations for our ongoing commitment to our associates, stakeholders and the environment. These include UDR earned a 5-star ESG designation from GRESB, the highest rating possible. Company was named by Newsweek as one of America’s most responsible companies for the second year in a row and institutional investors recognize our ESG program, our board, IRR team and numerous executives being top three in the respective categories among all U.S. REITs. In short, we have the right strategy and leadership in place to continue to propel UDR forward.
Looking ahead to 2023, we are very aware of the wide range of economic scenarios that are forecasted to play out, but we build our strategy around diversification and the ability to perform in any environment. This is well demonstrated by our history of cash flow growth and TSR outperformance, specifically an 11% TSR compounded annual growth rate over my 22 years at UDR. The constant over this time is our focus on what we can control and how that sets up for relative long-term outperformance? This includes: first, the strong relative setup of U.S. multifamily industry. Housing is a needs-based business, supply is stable, demand and traffic remain healthy, job growth has remained positive, rent to income levels are steady, and relative affordability versus single-family ownership and rentership remain near all-time highs, while the cost of capital across the industry continues to improve.
Second, the favorable setup for UDR within the industry. We entered 2023 with approximately 5% earnings, the second highest amongst our peers and the highest in UDR’s history. Innovation initiatives and prudent capital allocation should enhance this growth through margin yield expansion. Furthermore, our balance sheet remains highly liquid with $1 billion of capacity and we have no debt maturing until 2024. And finally, we increased our dividend by a robust 10.5% this year, enhancing our already strong return profile. Taken together, we feel confident that we will effectively manage whatever macro environment we face and continue to produce strong absolute and relative results.
In closing, I am very optimistic on the relative strength of the multifamily industry and UDR’s relative advantages within the industry. We have a strong talented, experienced and innovative team, with a track record of strong relative performance. The key that unlocks our potential is our drive to continue to listen to our associates, our customers and stakeholders, which enables us to determine where we excel, where we can improve and how we can better innovate for the future. To my fellow associates, thank you for all you did during 2022 again to make UDR a successful year and I look forward to what will come in 2023.
With that, I will turn the call over to Mike.
Mike Lacy
Thanks, Tom. The topics I will cover today include our fourth quarter same-store results, early 2023 trends, our full year 2023 same-store growth outlook, including factors that could drive results to either end of our guidance range and an update on our continued innovation and operating efficiencies. To begin, strong sequential same-store revenue growth of 2% drove year-over-year same-store revenue and NOI growth of 12.1% and 14.5% in the fourth quarter.
Results were driven by: first, robust blended lease rate growth of 5.4% was well above historical norms for what is usually our slowest leasing period of the year. This growth locked in our approximate 5% 2023 earn-in, the highest level in our history by more than 200 basis points. Second, sustained strong occupancy of 96.8% exhibited our ability to efficiently convert traffic into signed leases. Third, we remain focused on enhancing our rent roll, which resulted in higher turnover than expected from twice the usual volume of resident skips and evictions. And fourth, collection rates held steady. The number of long-term delinquent residents across our portfolio continues to trend closer to our historical average, with approximately 400 residents today or less than 1% of total units. This is down from over 700 delinquent residents earlier in 2022, helping to reduce our bad debt reserve.
Next, early 2023 results and trends. In my experience, there are four primary indicators that help inform us of the strength of the operating environment. These include leasing traffic, concessions, absolute affordability and relative affordability. Thus far in 2023, we continue to see favorable trends. First, demand remains relatively healthy. Traffic is roughly in line with the elevated levels we saw a year ago and well above the long-term average, but prospective residents are taking longer to make their rental decisions. Second, concessions remain minimal and have been primarily concentrated in certain submarkets of San Francisco and Washington, D.C., averaging around 2 to 3 weeks. Recently, concessions of 1 week on average have appeared in Austin, Dallas and Denver.
Third, our residents’ balance sheet appear to be holding up, portfolio-wide wage growth has largely kept pace with rent growth since COVID began, resulting in steady rent to income levels in the low 20% range. To-date, we have seen scan evidence of residents doubling up. In fact, 42% of our households are single occupants, up slightly compared to pre-COVID levels. And last, relative affordability remains in our favor. Renting an apartment is approximately 50% less expensive than owning a home versus 35% less expensive pre-COVID. Only 8% of move-outs in the fourth quarter were due to home purchase, roughly 30% less than typical.
With this backdrop, blended rate growth for the first quarter is expected to average between 3% and 4%, similar to historical norms and driven by renewal rate growth of 7% to 7.5%. New lease growth of negative 70 basis points in January was slightly below the pre-COVID average, but it is positive in February and we expect further improvement as we enter peak leasing season.
Turning to full year 2023, our same-store revenue and NOI growth guidance is 6.75% and 7.5% respectively at the midpoints. We are also forecasting expense growth of 4.75% at the midpoint, with real estate taxes and insurance, the largest pressure points. Underlying the midpoint of our guidance range is a 2023 blended rate growth forecast of approximately 2% to 3%. We triangulated into this estimate using third-party forecast, input from our field teams and the output from a multifactor rent growth forecasting model we developed internally.
Through our predictive analytics work, we have found that total income growth is the primary driver of market rent growth. Within this model, consensus expectations that job growth will be slightly negative in 2023 are fully offset by the expectation of approximately 3% wage growth. In addition, a declining homeownership rate and slowing, but still positive, consensus real GDP growth should continue to benefit market rent growth this year, offset somewhat by increased new supply.
In short, even if job growth goes slightly negative, we still see a path to positive rent growth in 2023. With this in mind, our 6.75% same-store revenue growth guidance midpoint can be achieved through our approximate 5% earn-in, a 125 basis point contribution using a midyear convention from blended rate growth comprised of new and renewal rate growth of 1.5% and 3.5% respectively, an approximate 50 basis point contribution from our unique innovation initiatives. The high end of 7.75% would be achieved through improved year-over-year occupancy, additional accretion from innovation and blended rate growth similar to the pre-COVID average of 4%, comprised of new and renewal rate growth of 3% and 5%, respectively.
Conversely, the low end of 5.75% reflects a 75 basis point contribution from full year blended rate growth of 1.5% comprised of flat new lease growth and 3% renewals, which is approximately 250 basis points below the pre-COVID average renewal rate. Because of the relative strength of our January and February blended rate growth, we need only nominal blended rate growth of 1% on average through the rest of the year to achieve the low end. For reference, even during past downturns, our lowest trailing four-quarter average renewal rate growth was approximately 2%. Ongoing regulatory challenges could impact our views as 2023 unfolds, but we should have visibility into 65% to 70% of our full year same-store revenue by the end of April. We plan to reassess our guidance assumptions at that time.
Finally, we continue to drive forward on innovation with the intent of further expanding our 300 basis point controllable operating margin advantage versus peers. Initiatives underway are expected to generate at least $40 million in incremental NOI by year end 2025. $5 million to $10 million of this is included in our 2023 same-store guidance ranges and will largely be focused on revenue upside, such as our building-wide WiFi project that enables seamless whole-building connectivity, our customer experience project to enhance satisfaction and drive property-level ROI initiatives, and the expanded use of big data to improve our pricing engine. Innovation has and will continue to drive more dollars to our bottom line as we rollout initiatives across our legacy portfolio and on external growth over time. As an example, on the $2.6 billion of third-party acquisitions we completed between 2019 and 2021, innovation has accounted for an additional 50 basis points in yield expansion above what the market alone would have provided or around $13 million of incremental NOI. This translates to approximately $275 million of value creation.
In closing, a special thanks goes out to all of our teams for their relentless efforts to drive the best results possible across our markets. Your performance in 2022 was exceptional. And with your help, we will continue to leverage new and the innovative tools to drive results in 2023 and beyond.
I will now turn over the call to Joe.
Joe Fisher
Thank you, Mike. The topics I will cover today include our fourth quarter and full year 2022 results and our initial outlook for full year 2023, a summary of recent transactions and capital markets activity, and a balance sheet and liquidity update. Our fourth quarter FFO as adjusted per share of $0.61 achieved the midpoint of our previously provided guidance range. Full year 2022 FFOA as adjusted of $2.33 was 16% higher year-over-year, reflecting the company’s second strongest year of earnings growth in its 50-year history. Similarly, our Board authorized a robust 10.5% increase to our dividend this year, enhancing our total return profile. Based on our AFFO per share guidance, our 2023 dividend of $1.68 reflects a payout ratio of 74%, in line with our historical average.
Looking ahead, our full year 2023 FFOA per share guidance range is $2.45 to $2.53. The $2.49 midpoint represents a 7% annual increase supported by mid to high single-digit forecasted same-store NOI growth. The $0.16 increase versus our full year 2022 result of $2.33 is driven by the following: a $0.20 benefit from same-store and joint venture NOI, a $0.04 benefit from non-same-store communities through the continued successful lease-up of recently developed and redeveloped communities, offset by $0.06 from higher interest expense and a higher average share count, and $0.02 from increased G&A expense and other corporate items.
For the first quarter, our FFOA per share guidance range is $0.59 to $0.61 or a 9% year-over-year increase at the midpoint. The slight sequential decline is driven by higher average share count from the settlement of forward equity agreements at the end of the fourth quarter and the higher interest expense.
Next, a transactions and capital markets update. First, in alignment with our shift towards a capital-light strategy in mid-2022, we made no acquisitions or DCP investments during the fourth quarter. And second, we generated approximately $220 million of capital from dispositions and forward equity settlements. Specifically, during the quarter, we sold 1 community in Orange County, California for approximately $42 million and settled all remaining forward equity sales agreements at roughly $57 per share or a 20% premium to current consensus NAV and a 35% premium to our recent share price. We used the proceeds to further improve our balance sheet and execute approximately $21 million of share repurchases at a 20% discount to consensus NAV and a high 5% implied cap rate.
Next, our investment grade balance sheet remains liquid and fully capable of funding our capital needs. Some highlights include: first, we have only $115 million of consolidated debt or approximately 0.5% of enterprise value scheduled to mature through 2024 after excluding amounts on our credit facilities and our commercial paper program. Our proactive approach to managing our balance sheet has resulted in the best 3-year liquidity outlook in the sector and the lowest weighted average interest rate amongst the multifamily peer group at 3.2%.
Second, we have $1 billion of liquidity as of December 31, providing us ample dry powder and strength. And third, our leverage metrics continue to improve. Debt to enterprise value was just 29% at quarter end, while net debt-to-EBITDAre was 5.6x, down nearly a full turn from 6.4x a year ago and a half turn better versus pre-COVID levels. We expect these metrics to improve further throughout 2023. Taken together, our balance sheet remains in excellent shape. Our liquidity position is strong, we remain selective in our capital deployment with balanced forward sources and uses and we continue to utilize a variety of capital allocation competitive advantages to create value and drive earnings accretion.
With that, I will open it up for Q&A. Operator?
Question-and-Answer Session
Operator
Thank you. [Operator Instructions] Our first question is from Anthony Paolone with JPMorgan. Please proceed with your question.
Anthony Paolone
Thank you. First question is for Mike, you went through some of the markets where you are giving out some concessions. Can you maybe just step back and give us a sense as to which markets you see as being strongest and weakest in the portfolio in ‘23?
Mike Lacy
Yes. Hey, Tony. How you are doing? It’s a good question. I think probably starting at a high level you have heard us talk a lot about just the convergence of trends over the last few months as it relates to both the Sunbelt and the Coast. So let me start there. I think with the Sunbelt, you have heard us talk a little bit about that earn-in. We are right around 6% going into ‘23, the Coast, for us, just over 4%. And when you think about it, East Coast was around 4.5%, the West Coast around 3.75%, the difference in what we are seeing today though, is we are seeing higher market rents as well as a higher loss to lease in the Coast. So we are seeing a little bit more forward strength and leading indicator there, if you will. And what we are experiencing and expect to see is the Sunbelt will probably have higher blends to start the year, and a lot of that is driven due to renewal growth and what’s been sent out in the foreseeable future. That being said, we do think the Coast, given the market rent and locales, could catch up and potentially surpass that sometime midyear. But what it’s coming down to is what we are doing differently. And a lot of this has to do with what we have done with the pricing system, the fact that we are able to see current demand trends coming through the door. We are able to price a little bit more efficiently there. But we are also utilizing a lot of feedback just in terms of what the customers are saying, what our teams are saying. And we think that this is going to continue to drive outperformance as it relates to our customer experience project. So a lot of exciting things to come on the innovation front that will continue to differentiate us.
Anthony Paolone
Okay. Thank you. And then just my follow-up is, you didn’t put much in the guidance with regards to, I guess, nothing on the acquisition side and just very little on the sales. But to the extent capital markets or investment sales markets perk up here the next few quarters, what would you look to either sell or buy?
Joe Fisher
Hey, Tony, it’s Joe. We did not. We took a relatively conservative approach on guidance as we typically do when it comes to sources and uses. So we really look strictly at what do we have identified in terms of development, DCP, redevelopment NOI enhancing spend and then have that funded primarily with free cash flow plus potentially some disposition in the DCP repayment. So pretty conservative on that front. I’d say, as we kind of go through this period of price discovery in the broader market, a number of our team were down to NMHC last week and you still do have a bid/ask spread out there, call it, 10% or 15% with sellers kind of looking for that mid-4s type cap rate, buyers kind of looking for more in the high-4s. So they are still going through this period of price discovery, but I think as we potentially stabilize with debt costs really kind of start to come to an end on the Fed Fund side and then spreads compressing and getting more towards the high 4s, low 5s borrowing cost, we could see more of that price discovery moving forward. If that occurs, I’d say, in terms of uses of capital, where we have been leaning into more so, I think the developer capital program continues to be a great place to put capital to work in this environment, both on new projects within development, but also within potential recap opportunities. So those present a good return, several hundred basis points higher than what we had been doing previously, but also a lower attachment point in terms of loan to values and loan to cost. So we expect us to try to remain active there if we have capital.
On the redevelopment side, we’ve got a pretty big redevelopment pipeline that we continue to build up that has a good opportunity to achieve pretty good returns as well as refresh assets and take advantage of the markets as they start to come back. So those are probably the two bigger pieces. To get there, we are exploring disposition activity in this market. So as always, we are exposing assets to market, including looking for potential JV partners, both on the operating development and developer capital program side. So if and when we have something there to discuss, we will bring it back to the market and talk about it, but we are looking at alternative sources to help us grow in this environment.
Anthony Paolone
Great. Thank you.
Mike Lacy
Thanks, Tony.
Operator
Thank you. Our next question is from Nick Joseph with Citi. Please proceed with your question.
Nick Joseph
Thanks. You touched on the blended rent growth and kind of on the market side, but just from the data you’re collecting and I recognize it’s a lower traffic time period so maybe we can go back for the past few months, is there anything you’re seeing change from a migration trend perspective? Obviously, we’ve seen some better growth in the Sunbelt on that side, but wondering if there is anything changing in the data?
Mike Lacy
Not really, Nick. I’ll tell you, overall, we are seeing less people move out of MSAs, but also less people moving in from outside of the MSA. And just to give you a few stats to put it in perspective, move-outs right now, 25% move-outs from the MSA versus 27% last year. And for move-ins, what we’re seeing, 29% move-ins from outside of the MSA, and that’s versus 31% last year, so not a big difference. And basically, they are back to kind of pre-COVID levels.
Joe Fisher
Yes, I’d say two other things. It’s kind of demographically and you mentioned traffic as well there, Nick. Demographically, one of the big macro tailwinds that I think we have going into this year and help support kind of our outlook is homeownership rate overall. We do expect that to come down. So given the relative affordability dynamic between single-family housing and multifamily housing, we think we do have a tailwind there. So that’s going to help on the demographic or household formation side for multifamily. The other thing, just you mentioned the low traffic period. 4Q was a lower traffic period. I think our traffic got down to about flat year-over-year. So perhaps a little bit less demand in fourth quarter. That said, as you look at year-to-date, I think we’re up 7% or 8% in terms of year-over-year traffic coming here through January and February. So we have seen us kind of come through that typical lull that we see seasonally and seeing traffic come back quite strong at this point.
Nick Joseph
Thank you. And then just, Joe, on your comments on DCP and the attractiveness there, how much of the return hurdles changed relative to the 12 or 24 months ago? And I recognize there is different levels of risk and different structures. So if you can try to just normalize that kind of how has it changed just with higher rates?
Joe Fisher
Yes. It’s – overall, if you look back to what we are doing in terms of the fixed coupon transactions on a typical developer capital program deal over the last several years, that was typically in that 11% to 12% type of targeted return. Today, that’s going to be several hundred basis points higher, so call it 13% to 14% returns on that paper. One of the big differences, though, is where we’re attaching in terms of the risk profile. So if we were in the 80% to 85% loan-to-cost previously, we think there is good opportunities in this market to actually be down in the 75%, up to 80% loan to cost. So you’re getting more return while taking less risk. You are also seeing some of the preeminent developers come back and look for this type of capital. And so you may get better sponsorship within those investments as well as potentially better assets within those investments. So across the board, I think having capital for that bucket in this environment, you’re going to be a little bit more selective and pick and choose pretty good opportunities.
Nick Joseph
Thank you.
Operator
Thank you. Our next question is from Nick Yulico with Scotiabank. Please proceed with your question.
Daniel Tricarico
Hey, it’s Daniel Tricarico with Nick. Tom, you mentioned a wide range of economic scenarios for the year. Looking to get a feel for what type of economic scenarios baked into guidance, whether this is a softer landing with modest job losses. We know you have a more broadly diversified portfolio, which in theory should reduce volatility in your results, but any commentary on your view of the economic outlook would be helpful.
Thomas Toomey
Yes. I mean, first, I’ll call out to Chris Van Ens in the data analytics team in creating a wide range of predictive models for our business and help drive our decisions. I think the baseline midpoint of our assumption assumes about 1 million job loss for the year on a national basis. And then they try to really drill down to four or five more factors, which is really income growth and employment picture that drive our business and pricing power. And through that, back testing it, I think they have come up with about an 83% confidence weighted model that points to the midpoint of our scenario that we’ve outlined for guidance. Joe, Chris, anything you’d add to it, pat on the back?
Joe Fisher
Yes, definitely a pat on the back for Chris, on the predictive analytics side, but John nailed it, it’s a multifactor model. We’re, of course, looking at broader consensus expectations, plus some industry-specific expectations around rent growth. But while a lot of the focus comes into the potential job losses and layoff announcements, the recent job support was quite strong. We still expect to see wage growth throughout 2023, which is the biggest driver of rents within our industry. You also have homeownership rate expectations to come down. And while we focus a lot on the supply outlook within multifamily, which does look to be up slightly, call it, 10% to 20% year-over-year, a broader total housing picture actually should have a supply decrease next year given what’s going on in the single-family market. And so you kind of roll all those up, and you kind of get to a little bit lower expectation than typical. I think Mike talked about needing 2.5% blends. At this point, given we know already now January, February, we only need 2% blends the rest of the year, which is, call it, 150, 200 basis points below historical averages for those 10 months. So we’ve clearly assumed a little bit more of a lower-than-typical dynamic from a macroeconomic standpoint to get to those guidance numbers.
Daniel Tricarico
Great. Thanks for that. A quick follow-up. So you look at new versus renewal pricing in the fourth quarter. It’s a noticeably wide gap for most markets. And, Mike, you gave helpful sensitivity in your opening remarks for 2023, but at what point do you see renewals converge to new lease pricing or is there an expectation maybe to meet in the middle as new lease pricing accelerates? Any thoughts on that dynamic and how you see it playing out for the year?
Mike Lacy
That’s a good question. What we’re seeing today is it’s starting to converge a little bit as we look out into February and March. My expectation is probably by 3Q, you start to see it come down to 100, 200 basis points. Because what we are experiencing and what we expect market rents to continue to increase as we go into leasing season. And we are eating away at that loss to lease. So our renewal growth should come down a little bit, and I think we will probably meet in the middle somewhere.
Daniel Tricarico
Great, thanks.
Operator
Thank you. Our next question is from Austin Wurschmidt with KeyBanc Capital Markets. Please proceed with your question.
Austin Wurschmidt
Yes. Thanks, guys. Just want to touch a little bit on the model. And I was curious if there were any specific periods that you’d point us to where you back tested the model where you saw some significant or notable job losses, but during a period of still attractive wage growth that resulted in market rent growth holding positive?
Joe Fisher
Yes. We’d have to go back and take a little bit more of a deep dive on that. We’ve got the scenarios, but not in front of us. Yes. What comes to mind is if you go back to ‘05, ‘06, and look at the shift to a readership nation, despite the magnitude of job losses, you did see overall rent growth and revenue growth, but we do some extent because even during that dramatic period of time, I think our NOI was down roughly 10%, both as a company and as an industry. So that’s with fairly draconian jobs outlook because you did have another tailwind there from a demographic and household formation perspective. So we’d have to take a little bit deeper dive and look at that, but I do think just being in a needs-based industry, one in which individuals are going to need shelter, and this is the cheapest cost of shelter in this environment relative to single family, you’re going to have any incremental housing that’s formed really biased over into our part of the world. So I think it’s going to be a pretty big tailwind combined with wages going forward.
Austin Wurschmidt
That’s helpful. Appreciate the comments. And then, Joe, going to your comments on kind of evaluating joint venture opportunities, would you characterize these as more one-off opportunities? Or are you guys looking to – or would you consider something more significant like you did historically with MetLife or maybe other partners in the past?
Joe Fisher
Yes. Right now, we’re thinking about it in terms of probably a little bit more like the MetLife joint venture. They have been a phenomenal partner to us for the last 12 years plus. And so finding a partner that thinks like us, views real estate and operations similar to us and as capital grow with us along a number of different avenues. So as we look at exposing a portfolio of assets to the market to potentially find a joint venture partner with, of course, we want to find a partner that will meet the market in terms of pricing and terms, but also then has the capital and the wherewithal to grow with us, both on operations, potential developments over time as well as DCP investments over time. And so we’d like to find that partner. If it takes several partnerships to accomplish that, that would be okay. But it’s a way for us to continue to expand the enterprise, utilize our operational and transaction skill sets to grow accretively and continue to gain scale overall.
Austin Wurschmidt
Appreciate. Thank you.
Operator
Thank you. Our next question is from Michael Goldsmith with UBS. Please proceed with your question.
Michael Goldsmith
Good morning. Good afternoon. Thanks all for taking my question. The breakdown of the range of same-store revenue guidance was helpful. Can you break down the expense growth guidance of 4% to 5.5%? Where are you seeing pressure? And then how much more savings can you see from your centralization and property headcount reduction efforts?
Mike Lacy
Michael, I’ll start with that one, Joe, and can help clean it up if it needs to. But basically, we’re talking about 475 at the midpoint. And I think it’s important to break it down into those components of controllables and non-controllables. So first and foremost, controllable expenses make up just over 50% of the stack at around $250 million. We do expect between 4.5% to 5.5% growth, and we are seeing pressure points on utilities. We are seeing anywhere from about 6% to 6.5% growth in ‘23, and that’s coming off of nearly 8% growth in ‘22. R&M should continue to see a little bit of pressure around 6% to 7% growth for us this year, and that compares to 11% in 2022. Personnel continue to see some efficiencies there. So we’re seeing around 2% to 3% growth, and we were flat in ‘22.
As it relates to non-controllables, this is just under 50% of the stack. We expect around 4% to 5% growth, taxes being in that plus or minus 5% range as well as insurance in that 4% to 5% range. So a little bit of pressure there, but it’s what we are doing, and you asked a very good question, how much more is left. We think there is quite a bit. On the personnel side, we’ve been running with about 30 properties that are unmanned. We expect that to go around 35 to 40 this year. So we are finding efficiencies there. We’re putting in place some technology as it relates to maintenance, and we think we can compress our days vacant on the term side. So we think R&M will be benefiting from that. And then on utilities, we are working on different ROIs that should make us a little bit more efficient with our vacant electric as well as just common area lighting. So we are doing plenty of things. We’re trying to compress these numbers, and we feel pretty good at our 4.75% range.
Joe Fisher
And I do think, too, if you take kind of the what’s next piece and look at revenue, Mike talked about the 50 basis points that’s additive to our guidance expectations this year. I think that’s a big differentiator when you look at what we’ve seen from others put out there in terms of other income expectations. I think just given a little bit more concrete facts behind it as we do have identified projects with that. So that’s a lot of our bulk Internet, our package lockers, third-party parking, tenant deposit, insurance, things of that nature, that’s very well identified. So it’s not a hope that we get that 50 bps, I think it’s a known. And I think that’s a key differentiator for us as we go into ‘23. But also as you look back into ‘22, just to give Mike a pat on the back, we think when all said and down here in fourth quarter, we’re shaping up for the number two overall same-store revenue growth this year, which is a phenomenal outcome given the diversified portfolio that we have. We don’t have as much Sunbelt as some of the others. So coming in number two, I think a prideful fact that’s driven by market selection, submarket selection, everything that’s taken place on the innovation front. So more to come on that for sure.
Michael Goldsmith
That’s really helpful detail. And you talked about the affordability of renting and those that are moving out due to buying a new home is down, I believe, you said 30%. I guess given the slowdown in single-family home price appreciation and signs of stabilization in mortgage rates, do you expect move-outs to purchase a home to rise in ‘23, and so maybe that becomes a little bit more of a pressure as the year progresses?
Joe Fisher
I think, usually, what you see from a psychology perspective is that home prices come down even as affordability improves. You do see a delayed response in terms of that affordability. So when we had the kind of ‘07, ‘08 crisis and that shift to rentership, that was a shift that developed and took place for the next 7 years or so. And so you do have a different psychological impact that sticks with you a lot longer. So I’d expect that trend to stay with us throughout all of 2023.
Michael Goldsmith
Got it. Thank you very much. Good luck this year.
Joe Fisher
Thank you.
Operator
Thank you. Our next question is from Joshua Dennerlein with Bank of America. Please proceed with your question.
Joshua Dennerlein
Hey, guys. Thanks for the time. I noticed in Seattle, effect of new lease growth in 4Q is down 7.4%. Just kind of what are you seeing in that market? And I guess, what’s your expectation built into 2023 for Seattle?
Mike Lacy
Great. Josh, this is Mike. Just starting with kind of our exposure if you will, we are around 6.5% of our NOI in Seattle. A lot of that is in the Bellevue area and the remainder is out in the suburb. So what we experienced during the quarter was strong growth in the suburbs. I mean what we saw was 10% to 12% growth on a revenue basis. Down in Bellevue, we are still in that 5% to 6% range. What we’re experiencing today, rates are coming back a little bit. Over the last few weeks, we’ve seen market rents increase. We’re really not utilizing any concessions in either Bellevue or out in the suburbs, and we expect new lease growth to start to show positive here in February and March, and our blend should be in that 2% to 3% range as we move forward here. And ideally, this is a very seasonal market. What we’ve seen in the past is typically about a 600-basis-point drop off from the third quarter. It was a little bit more pronounced this quarter, but we do expect that, that market will bounce back just given that it’s so seasonal in nature.
Joshua Dennerlein
Okay. I appreciate that color. And then just – appreciate all the info you provided on the same-store revenue guide, just wanted to kind of clarify? I don’t know if I heard it, the occupancy assumption at the midpoint in the high, low end of the range?
Mike Lacy
Yes. We’re expecting roughly flat occupancy. So we’ve been running right around 96.7% as we go into January, February here. I expect more of the same for the foreseeable future. We’re really focused on continuing to drive that rent roll. And so we’re going to be pushing rents for the next few months and see how it all shakes out.
Joshua Dennerlein
Okay. That’s across the range you assume the flat or was there…
Mike Lacy
That’s correct, across the range. Some markets being a little bit higher, some being a little bit lower, but right around that 96.7%, 96.8% is about where we will land.
Joshua Dennerlein
Okay, appreciate that. Thanks, guys.
Operator
Thank you. Our next question is from Steve Sakwa with Evercore ISI. Please proceed with your question.
Steve Sakwa
Yes. Thanks. Good morning. I realize you’re not providing sort of quarterly cadences, but, Mike, could you maybe just talk about how you think revenue growth progresses throughout the year? And I guess I’m just trying to get a sense for maybe where the exit velocity might be as we get sort of towards the end of the year and into ‘24?
Mike Lacy
Yes. We haven’t talked much about the cadence, Steve. But what I would tell you is, the first half of the year should still be relatively strong just given what we’ve done with the earn-in. I mean, obviously, we put a lot of focus on that over the last 6 to 9 months. So I would expect anywhere from 7.5% to 8.5% in the first half. That being said that would imply about a 5.5%, 6.5% in the back half. But we will see what happens with market rent If they continue to go up closer to that high end of the range that we provided, you could see that migrate up. So that’s kind of how we’re seeing it shake out based on everything we’re seeing and experiencing today.
Thomas Toomey
And Mike, how much of your revenue is built in by April?
Mike Lacy
Quite a bit, Tom. So we expect between 65%, 70% of it will be known by the end of April.
Steve Sakwa
Got it. Okay, thank you. And then second question, I guess, Joe, coming back from NMHC, I mean how are you guys thinking about new development starts? And I know you own a bunch of land parcels. I guess where would you today be penciling out new development? And if those yields don’t really work for you, how much higher do the yields need to be in? Is that a function of cost coming down, rents going up? Obviously, it could be a combination of both, but just how do you see development starts maybe unfolding over the next year or so?
Joe Fisher
Yes. Good question. I’d say, number one, just related to the current pipeline, I want to point out. From a cost perspective, we are primarily locked in. So of the three projects still under construction, we’re 95% bought out. And with that 5% remaining risk, we’ve got contingencies in place. So from a cost and return standpoint, feel very good about all the projects on Attachment 9, still kind of trending to the high 5s, low 6s for majority of those deals as they go through lease-up. So that’s on the current pipeline. As we kind of go forward, the one project that we’ve talked about in the past is a Phase 2 Newport Village in Northern Virginia. In the next 30 days, we should get kind of final cost estimates on that and final refinement of return expectations. We fully expect that to be in the kind of mid-5s current type range. And when I say current, that’s current rents on inflated or projected cost and so that should stabilize over time as we go through that somewhere into the low to mid-6s. We think that’s an acceptable level for that project, especially given that it’s a Phase 2 and has ancillary benefits to Phase 1 from a efficiency and padding perspective. So that’s the near-term decision for us. The next decision is probably not going to be for another 6 months plus as we get into the back half of the year, at which time, I think we will have more price discovery and views in terms of cost of capital and best alternatives for that capital, so nothing else near term in terms of growing the pipeline.
Steve Sakwa
Great. Thank you.
Operator
Thank you. Our next question is from Adam Kramer with Morgan Stanley. Please proceed with your question.
Adam Kramer
Hey, guys. Really appreciate all the kind of the color earlier, just framing the high end, low end and midpoints. I was just wondering kind of given the strong renewal growth, even with kind of a new lease decel, where does that loss to lease stand today? And maybe just kind of framing out, could that shift to a gain to lease if renewals kind of do stay in this elevated range with new kind of modest growth?
Mike Lacy
That’s a really good question. I’ll tell you what’s been promising to see is, today, we’re sitting around 2.2 loss to lease. Last month, we were around 1.5. So we’ve actually seen our loss to lease increase, and a lot of that has to do with what we’ve seen with market rents on a sequential basis, go up almost nearly 1%. So even though we’re sending out high renewals and capturing it, we’re pushing our market rents, which gives us the ability to continue to have a relatively high loss to lease. And just to put it in perspective, this time of year, we’re usually around 1.5. So we’re actually a little bit above that. So we feel pretty good about where we’re tracking.
Adam Kramer
That’s great. Thanks. And then just I think there was a question earlier on maybe one of the weaker markets in Seattle. Maybe just the flip side of that question, looking in New York, I mean, 16.3% effective new lease rate growth in the fourth quarter. I guess, what’s kind of driving the continued strength there? I guess maybe the question is, can that continue? And is there a world where maybe that kind of continues to be a really strong market even with new kind of deselling in other markets?
Mike Lacy
Yes. No, I’m glad you asked that. New York feels very strong today. And just to put it in perspective, again, this is about a 7.5% market for us in terms of NOI way. We are heavily focused in the financial as well as Manhattan just around 75%, 80% of our exposure. So what we’re experiencing there is strong demand. So we’ve got traffic up on a year-over-year basis, still running around 98% occupancy, no concessions in the marketplace and really no supply to speak to in the city itself. So New York feels very strong for us. I expect that you’ll continue to see high blends as we move forward into the first quarter and second quarter here. And quite frankly, we think New York could be one of our best markets this year with anywhere from 10% to 12% revenue growth.
Adam Kramer
Thanks, again. I really appreciate it.
Operator
Thank you. Our next question is from Juan Sanabria with BMO Capital Markets. Please proceed with your question.
Juan Sanabria
Hi, thanks for the time. Just curious on what you’re expecting for turnover and bad debt as the year rolls on some noise in out of LA County just curious on how that impacts your business plan or expectations?
Mike Lacy
Yes. Juan, right now, this is Mike. What we expect is turnover to stay pretty relatively flat on a year-over-year basis. It’s up a little bit because we have seen a little bit more on the turnouts due to skips and evictions. I’ll let Joe get into a little bit more on bad debt. But right now, we’re continuing to focus on driving renewal rate growth. We expect we will have a little bit more move-outs due to that. But again, we’re not seeing people move out to buy homes. So that’s helping us offset that. And I do expect turnover to be relatively flat year-over-year.
Joe Fisher
Juan, it’s Joe. So we actually had a number of these questions last night and this morning on bad debt. So we’re still talking through this topic. Hopefully, ‘23 is a little bit different picture for us. But maybe just a recap on our approach, and then I can kind of take you through current trends and outlook. So our approach going back to 2020 when we started COVID, was to consistently estimate what we thought the collectibility for each individual resident was. So we didn’t take a draconian view and simply write off all delinquencies. We didn’t get overly bullish and say we’re going to collect all of it. But we try to think through, be it from cash or be it through government assistance, what the ultimate collectibility was for each of those different groups. So what that resulted in was, when we had government assistance come in, of which I got to give a plug to that team, we ended up getting $60 million of government assistance on behalf of our residents and our investors this period of time, which, I think, if you look at that as a percentage of revenue, probably number one in the space when we took a look at it. So a big plug to those individuals have worked hard on that. But when we had that come in, it wasn’t a positive surprise to our numbers, which means it wasn’t a big benefit this year, also not a headwind as we go into 2023. And so if you look at recent trends, despite the fact that government assistance has been coming off, it was sub $2 million benefit in 4Q. It’s down under $200,000 here in the first quarter. So a de minimis amount, but yet we saw the best in-the-month collections and in-the-quarter collections in 4Q and into January that we’ve seen throughout COVID. So we’re seeing the ability to get higher-paying residents in, find new residents that have the wherewithal and ability to pay as we go through this eviction and [indiscernible] process and ultimately help benefit ‘23 numbers. In terms of the assumption, though, for ‘23, we think it’s relatively flat in terms of total bad debt expense. So maybe a little bit of upside as we work through some of these abilities to get back some of our units, some of the eviction moratoriums burn off. But net-net, we’re thinking it’s probably about a flat benefit in our guidance.
Juan Sanabria
Thanks. Super helpful. And then just on same-store expenses, the guidance for ‘23, what would you say the differential is in expectations between the Coast and the Sunbelt, and the main drivers of that?
Mike Lacy
Biggest difference, what we are seeing today is really around taxes. So we do expect high single digits in the Sunbelt, where we are capped at around 2%, obviously, with our California exposure. So that’s probably the biggest difference. Aside from that, we do see a little bit more pressure as it relates to some of our vendors working down in the Sunbelt, just given the supply pressure down there, you do see more expenses there. But for the most part, it’s pretty tight across the board.
Juan Sanabria
Thank you very much.
Joe Fisher
Thanks, Juan.
Operator
Thank you. Our next question is from Brad Heffern with RBC Capital Markets. Please proceed with your question.
Brad Heffern
Yes. Thanks everybody. Can you walk through what you are seeing in terms of demand in some of the tech markets? Obviously, you mentioned Seattle already, but San Francisco and Austin as well. And is there any noticeable impact that you are seeing from the layoffs?
Mike Lacy
San Francisco today feels pretty good. I will tell you, over the last few weeks, I have seen a little bit more traffic return to that market. But again, I think it’s always good to put this in perspective. That is about 8% of our NOI, 50% our exposure is in that SoMa downtown area, the rest is down the peninsula. I have seen pretty good traffic across the board. I am not really seeing downtown outperform Santa Clara, San Mateo necessarily. It’s pretty good. And I will tell you, it goes back to some of the exposure that we have in these markets. Seattle is just under 15% tech exposure as it relates to our resident base. In San Francisco, it’s actually between 10% and 12%. It’s a much more diversified resident base. And so during the months of November, December, when you heard all the layoffs, we did see people kind of sit back. Demand was a little bit slower as people were just assessing what’s going on. But lately, it does feel, and what we are hearing from the ground is, people are going back to the office. They want to make sure that their faces are being seen, and we are seeing traffic return a little bit.
Joe Fisher
Yes. I think one other thing we saw, obviously, early in COVID, we saw a lot of the dispersion of the tech jobs around the country. Similarly, what we have been taking a look at, and I know there has been a couple of reports out there on the warrant notices related to some of those layoffs. Our business intelligence team has done a lot of special analytics work looking at where those WARN notices are, and you would be shocked to see the distribution of them. So, it’s not just a San Francisco or in Austin and Seattle. When you look at the percentage of those layoffs that are taking place, or a percentage of the workforce in those markets, it’s not nearly as impactful as I think most of us typically think when we see the headlines just based off where certain companies are headquartered. So, there is more of a dispersed impact around our portfolio and as well as markets we are not in.
Brad Heffern
Okay. Appreciate that color. And then in the prepared comments, you mentioned that renters are taking longer to make decisions, even though the traffic levels are basically the same. I was just curious if you could delve into sort of what you meant by that comment and what the implication is?
Mike Lacy
Yes. Brad, I would tell you just to quantify that a little bit. The way we think about it is in terms of vacant days. And so it’s taking about two days longer just to move somebody in after they start trying to figure out where they want to live and when they want to move in, so about two days on average. Other than that, we haven’t seen much of a difference.
Brad Heffern
Okay. Thank you.
Operator
Thank you. Our next question is from Chandni Luthra with Goldman Sachs. Please proceed with your question.
Chandni Luthra
Hi. Thank you for taking my questions. So, you guys talked about inter-market differences between coastal and Sunbelt, but perhaps could you talk about intra-market differences, A versus B, urban versus suburban?
Mike Lacy
Yes. I am happy to go into that a little bit, just to give you an idea of what we are experiencing today and what we did experience. So, as it relates to A versus B, first of all, in ‘22, we did see our As outperform on a revenue basis. And what we expect in ‘23 and what we are seeing today, our Bs are likely to outperform As. As it relates to urban versus suburban, urban outperformed the suburban in 2022. We do expect that to flip as we move through ‘23. And I think just to point to something here, you can see on Attachment 11a, our MetLife portfolio, high-quality, urban in nature, we have 16% growth during the quarter. So, you can see what’s happening there just as it relates to different parts of what we are seeing in our mature portfolio. So, overall, it’s in good shape.
Chandni Luthra
Great. And for my follow-up, in the event that you don’t see viable acquisition or DCP opportunities or we stay in that price discovery mode for longer, how would you think about the appetite for buybacks this year?
Joe Fisher
Yes. We have definitely had the appetite and willingness and ability to pivot over time. So, I think our most recent $50 million buyback that we did in 3Q, 4Q, it was actually our third buyback in the last 5 years. So, we have got a demonstrated history of pivoting when we can. As we get through price discovery, continue to see where the fundamental picture develops, then importantly, what is that source of capital and the price of that capital, as those all come together, I think we will have a better picture on whether or not we have the capacity for buybacks. And if it makes a good risk return trade-off, it was somewhat of a fairly easy decision when we are thinking about it in 3Q and 4Q because we had done the forward equity back in March of ‘22. So, we had proceeds available. We had a set price. We also sold that asset in Southern California. So, I think as we expose some of these assets to market, see where they come in on pricing, we will be able to potentially take proceeds from that to determine do we want to do more operational acquisitions and put that into our platform and get the lift we typically see. Do some of the DCP transactions we talked about earlier, help fund potential development starts and then of course, buybacks will be on that menu as well.
Chandni Luthra
Great. Thank you.
Operator
Thank you. And our next question is from Rich Anderson with SMBC. Please proceed with your question.
Joe Fisher
Hey Rich, check and see if you are on mute.
Rich Anderson
Sorry about that. Can you hear me?
Joe Fisher
You are good.
Rich Anderson
Okay. Sorry about that. I think the question earlier, Sakwa asked about the cadence of performance over the course of the year, and you gave a good answer there. And then when I think about the year ahead, it’s somewhat of a pedestrian year except for the fact that you have this 5% earn-in. So, you are kind of whittling away this great growth profile you had last year. So, when you think about the end of the year, is it the best probability that you will be looking at like a return to CPI plus type of growth in 2024 or what has to happen for – to have another year of above-average growth and for the story to continue, or just curious what the building blocks might be when you are looking at December of this year?
Joe Fisher
Yes. Good question. And obviously, we are not macroeconomists, but we can kind of focus on what we can control and see coming down the pipe. So, I would say two things that are beneficial as you start to go into ‘24. One on the supply side, I mentioned the total housing stock already starting to come down. I think that’s going to only continue when you look at permanent start activity on single-family, and what we are starting to see roll over in terms of permits and starts on the multifamily side. So, you start to bring down total housing stock. The other thing is the relative affordability piece that we have talked about quite a bit, that should be beneficial. So, those all help market rent growth. Beyond that, then you still have innovation, which we talked about that adding 50 basis points here in the 2023 numbers. I think you have at least another year of 50 basis points coming in 2024 when we think about what we have coming, especially on building wide WiFi and some of the other initiatives that will roll into the pipeline. So, I think there is a couple of dynamics that hopefully help get us above inflationary type of numbers as we go into ‘24. And then beyond that, you have still a very strong balance sheet in terms of lack of maturities coming due really in 2024 with only $100 million. So, you don’t have the debt resets. And then we also have capital allocation. We will see where our cost of capital goes, and where we can deploy, but hopefully, some opportunities there.
Rich Anderson
Okay. Great. And just a follow-up, just a quick one. earn-in typically 1% or 2% in a normal year?
Mike Lacy
Yes. Our historical average is right around 1.5%.
Rich Anderson
Okay. And then, Joe, on the DCP, what would you say the exit strategy is for the $480 million of commitments that you have currently in terms of getting paid off or participating in the development? Like is there any change to what you are thinking in terms of strategy as it relates to those investments as it stands today?
Joe Fisher
I wouldn’t say any change overall. When we go into those, obviously, we are looking to make sure we have a partner in an asset that we want to be there with. It’s an asset that we ultimately want to own, and we have done that. I think those have come through maturity over the last – we started that program in 2013, so the last 9 years. And I think we have had about a 50-50 hit rate on buying those out. I would say the only change in dynamic today has to do with as we go through this period of price discovery and figuring out where cost of borrowing is. We have got some upcoming maturities and equity partners that, while they may have been thinking about exiting the asset and either us buying it or selling it to the market, they are maybe looking for a little bit more time to wait to get through that price discovery mode and optimized pricing and economics for themselves and of course, us. So, we are going to work with some partners on potentially extending and making sure we get to a better window to transact. But in terms of our desire to buy out, it’s going to be case-by-case as we move through those.
Thomas Toomey
Hey Rich, this is Toomey. I would just add. Think about it as an option. It’s an option that we get paid for, why we sit there and collect it. So, not a bad position to be in. And if our cost of capital responds, we could be aggressive on that opportunity set because we know it, assets we would want to own. And if it isn’t, we are glad to just cash our check and go away to the next opportunity.
Rich Anderson
Fair enough. Okay. Thanks everyone.
Operator
Thank you. And our next question is from Wes Golladay with Baird. Please proceed with your question.
Wes Golladay
Hey. Good morning everyone. A lot of good things on this quarter and in the year and the outlook, but I just had one, I guess minor negative following up on DCP. It looks like junction was extended. And can you give us a little bit of an update there? Was it just driven by the financing markets? Is the project still under construction? Just a little more details there.
Joe Fisher
Yes. It really goes back to kind of that prior comment and response. It’s just trying to find an optimal window for them to potentially transact. So, they do have certain rights from a senior extension perspective. And so, in some cases, you are going to have borrowers that look to extend for their rights. In other cases, we will work with them and the senior lender to figure out what the right extension is. So, they did extend, and we are still in discussions with them to actually extend even further to ensure that we have perhaps a year or 2 years window by which to evaluate the market and figure out what the exit is.
Thomas Toomey
Wes, Toomey, again. A couple of points to make. We still accrue our prep during that period of time. So second, this particular asset, 20% market rents below pre-COVID. So, it’s still trying to bring itself back. And the truth is Santa Monica is a great market. And so we will see how it plays out. I think it’s again one of those, we like our options. At this juncture, we will see how they play through.
Wes Golladay
Got it. And then I think it was a few quarters ago, you had mentioned when a tenant moves out due to the higher rent increase, you typically have a large move out – move up in rent. Are you still seeing that?
Mike Lacy
We are still seeing it, not to the same level as we saw probably one quarter or two quarters ago, but we are still experiencing that and like to see the same more at least the next one quarter or two quarters.
Wes Golladay
Got it. Thanks everyone.
Operator
Thank you. Our next question is from Haendel St. Juste with Mizuho. Please proceed with your question.
Haendel St. Juste
Hey guys. Thanks for taking the quests. Just two quick ones for me here. Want to follow-up on your comments on the transaction markets. We were at NMHC 2 and heard a lot of chatter about the stalled market, lots of capital willing to buy, but fewer sellers and a pretty sizable bid-ask spread. So, I guess I am curious about how you are thinking about the market clearing cap rates in the current environment and what you are willing to pay? And when do you think we will get back to a more normalized level of transaction activity? Thanks.
Joe Fisher
Yes. I think you are right, we got to mention that 10% to 15% delta in terms of buy/sell price discovery window. And it’s – we are unsure at this point which group is going to move which direction. But I would say you do have a pretty good buyer set out there in terms of unlevered buyer pools or individuals that already have capital raised. They can find pretty compelling IRRs when you are buying in the high-4s, you get to a 8% unlevered IRR. So, be it high net worth pension, closed-end funds, a lot of private capital is definitely efficient around the space. And I think once again, plenty of capital looking to come over to multifamily. So, for us, in terms of our ability or willingness to transact at certain levels, obviously, we are fairly focused from the cash flow accretion standpoint. So, whatever allows us to get cash flow lift, if we could sell at x and then redeploy into assets that are undermanaged and get a day one left with our operating platform, we are more than happy to transact at different cap rate levels as long as that opportunity to redeploy is out there. And so that’s probably the biggest thing we are thinking about in terms of meeting the market and where that pricing comes in.
Haendel St. Juste
That’s helpful. Curious on maybe one set of maybe potential sellers here, I heard a lot of talk about merchant builders who clearly started project during maybe different economic times or different cost of capital and capital expectations. So, curious if you are getting more inbound calls from that set of potential sellers, how you maybe would assess or rank that opportunity? And if that’s an area where we expect to be more active in the coming quarters?
H. Andrew Cantor
Haendel, this is Andrew. Good question. And we did quite – there is the opportunity for DCP recaps, I think in that space. It’s still a little early as it relates to that. We have done a few of them late last year. And we have begun to have some of those conversations, but I still think there is some discovery that needs to take place before we know for sure if those opportunities exist. But it’s definitely a place where we are going to – like Joe mentioned earlier that we have a reduced risk in that scenario where the property will be – have been completed. We will have cash flow. We will have the ability to get a loan that’s not a construction loan, so you can work with the agencies and so on. And so you are in a much safer position on those DCP type transactions, but it’s still been too early, but some additional conversations have been had.
Haendel St. Juste
Got it. Okay. Thank you and back to hear you Andrew.
Operator
Thank you. Our next question is from Rob Stevenson with Janney Montgomery Scott. Please proceed with your question.
Rob Stevenson
Good afternoon. How are you guys thinking about the regulatory environment where the industry’s lobbying time and money needs to be targeted over the next few years? You have got rent control, DOJ going after RealPage, tax is increasing everywhere and the potential for re-imposing eviction moratoriums. How are you guys thinking about this? And what’s most important, where are you targeting most of your efforts and prodding the industry to target theirs?
Chris Van Ens
Hey Rob, it’s Chris. Yes, that’s a really good question. I would say we are fighting on a lot of fronts. You mentioned rent control initiatives, right. We see those in six states or seven states thus far in the 2023 legislative sessions. We are still coming off COVID restrictions, whether that’s eviction moratoriums, couple of holdouts out there, eviction diversion programs, etcetera. And we are working with our trade groups, right. So, the California Apartment Association, places in Maryland, Florida Apartment Association, all that kind of stuff. And we are giving money. I would say rent control is obviously a top priority. The proposition to get rid of Costa-Hawkins in 2024 in California is going to be a top priority, and then everything else. As you think about just cause eviction rules, fee limitations, longer rent increase notice periods, all that kind of stuff that we are seeing, which are going against landlords right now, we are working through, but those are probably lower priorities. So, most of our dollars are once again to go and go are those kind of top one, two, three things, and we are going to be working with the major trade groups to, not only fight the measures, but educate legislators on what a better solution is, right. It should be a supply-based solution. So, that’s kind of where we are working right now.
Rob Stevenson
And what do you guys – sorry.
Thomas Toomey
That’s alright. That is the correct answer, Chris gave, but I want to emphasize the education piece because California, I mean the capital right now of a regulatory landscape that’s all over the place. You actually go to the cities next door that aren’t proposing these and they embrace the idea that new development, new housing stock is a great way to enhance their city. And you take those cities as examples. I mean Huntington Beach, which we have been at for 10-plus years now, it has turned out to be a great city with a refreshed stock and competes very nicely against Newport, which is just the opposite. And so we think the best long-term path is, these cities that are embracing new supply, new product, particularly ESG focused, are going to realize the only way to solve their long-term housing and ESG directives is by opening up the development windows. And we are going to have good conversations along that corridor with a lot of people, and we are seeing responsiveness. And so we are well our capital flow, where those opportunities are embraced.
Rob Stevenson
And I guess the one sort of numerical question, how much when you take a look at it, did you guys lose from the eviction moratoriums dollar-wise or percentage of rent? And if those get re-imposed if job loss is mount, how big of an issue is that going forward in a tougher rental rate environment?
Thomas Toomey
My response would be a lot, but I don’t know the number.
Joe Fisher
Hey Rob, it’s Joe. I do have to know the numbers. So, the write-offs that we had throughout that period of time, we are probably right around $60 million in terms of total write-offs as we came through 2021, ‘22 and even here into ‘23. So, we have seen fairly elevated numbers on that front. That said, I mean it sounds like a big dollar amount, but put it in perspective on $1.6 billion of annual revenue. We are collecting 98.5% of the rents that we are billing. So, we are maybe off 100 basis points from where we would have been at pre-COVID. So, therein lies the opportunity to the extent that eviction moratoriums or diversion programs come off over time. We don’t expect it to. We don’t think we are going to recapture that 100 basis points near-term, but we don’t see a material downside either.
Rob Stevenson
Okay. Thanks guys.
Operator
Thank you. Our next question is from Connor Mitchell with Piper Sandler. Please proceed with your question.
Connor Mitchell
Hey. Thanks for taking my questions. Regarding the D.C. market, the government workers are still working from home. So, could you just comment on how that’s affecting the apartment demand?
Mike Lacy
Yes. D.C. is, obviously, it’s a big market for us. It’s right around 15% of our NOI. I will tell you what we are expecting to see as people start to return to office, hopefully, here in May timeframe. Over the next few weeks, given it’s a 60-day market, we do expect demand to start to pick up a little bit. What we are seeing today just on the floor is concessions a little bit in the 14th Street corridor out in the suburbs, very minimal concession activity. So, again, once people start coming back to the office a little bit more, we think D.C. has some likes to grow and could be a pretty strong market for us in 2023.
Connor Mitchell
Appreciate that. And then my second question, with the increased attention on EV fires [ph], could you guys just put some color on how you are going about upgrading your fire suppression systems, in the garage? Just since EV fires use a lot more water than the average fire?
Joe Fisher
Yes. That may be one to take offline. So, we do have a pretty robust EV rollout program working within our redevelopment team. And so between electrical load, fire suppression, etcetera, you are right, it is a pretty decent cost relative to the ROI that you receive on those. But maybe you wanted to take offline if you want to follow-up, and we can get to our experts in that space to talk you through it?
Connor Mitchell
Yes, appreciate it. Thank you.
Operator
Thank you. Our next question is from Anthony Powell with Barclays. Please proceed with your question.
Anthony Powell
Hi. Good afternoon. Question about how you see your Sunbelt markets progressing this year. Are you seeing good trends there, good demand trends? And could you expect Tampa, Orlando, Nashville and Dallas to see positive new lease spreads in 2023?
Mike Lacy
Hey Anthony, what we are seeing with the Sunbelt today is market rents as well as our loss leases a little bit lower to start the year. That being said, we do expect with seasonality and as we return to just a more normal period of time, market rents will increase as we move forward. But as we started the year off, it’s a little bit lower than what we are seeing on the coastal side of the house.
Anthony Powell
Got it. Thanks. And maybe one just a general question, I think you said your loss lease was increasing in February, traffic trends improved January, February. Doesn’t that suggest that demand may be stronger than people are expecting across the board this year? It seems like things are loosening up across the nation. And how does that impact your overall macro view for the year?
Mike Lacy
Yes, Anthony, I would tell you, we are cautiously optimistic. And a lot of that over the last few weeks has really shown more strength. I will tell you, the start of the year, the first two weeks of January, it was pretty slow. Demand was slow. It typically is given the holidays. But we are hopeful that what we are experiencing over the last few weeks is a trend, and something we will continue to see as we move forward. And obviously, the leasing season is just around the corner. We will have a lot more to talk about here at the Citi Conference as well as we get into 2Q, if you will.
Anthony Powell
Great. Thank you.
Operator
Thank you. Our next question is from Tayo Okusanya with Credit Suisse. Please proceed with your question.
Tayo Okusanya
Hi. Good afternoon. Congrats on the quarter on the solid outlook. Just on the OpEx side, just given that your same-store OpEx growth forecast is pretty much, much lower than most of your peers. I get some of the operational efficiencies you guys are working on. But curious, on the real estate side as well, you only had 2.7% year-over-year growth in ‘21 – as in ‘22, sorry, on any in ‘23, you are kind of forecasting that growth just below 5%, which again seems much lower than your peers. So, I am just trying to understand what’s driving that? Is it you guys just challenging a whole bunch of appraisals, or how do we kind of think through that on the real estate side?
Joe Fisher
Hey Tayo, it’s Joe. So, I would say starting off when you look at what we know today, we actually already know about 40% of our taxes for the year. And so you start to get a pretty good read at this point. And we have an in-house team, but they are also working with consultants in the field. We do challenge or appeal probably about 50% of those on a yearly basis that are available for appeal. When you look at the markets, Mike mentioned earlier, Sunbelt is kind of in that 5% to 10% range is the range that we have factored into expectations at this point. So, we saw more pressure in 2022 as you look through our Texas and Florida markets. We expect that to continue, just given the phenomenal growth that they saw over the last couple of years and the fact that, typically, you are in a little bit of a lag basis. So, even though NOI growth has been a little less proficient this year and valuations with cap rates moving up may have come down a little bit, that’s more of a lagged impact that maybe you see in ‘24. When you get to the coast with Prop 13, you are capped at 2% there for about 30% of our portfolio. So, then that just leaves Seattle plus New York, Boston, D.C., which are actually generally on fiscal years. So, we are right now six months of the growth rate there. So, net-net, it gets us to about a 5% impact for real estate tax for the year.
Tayo Okusanya
Got it. Thank you.
Joe Fisher
Thanks Tayo.
Operator
Thank you. There are no further questions at this time. I would like to turn the floor back over to Chairman and CEO, Tom Toomey, for any closing comments.
Thomas Toomey
Thank you, operator and thanks to all of you for your time, interest and support. Clearly, we remain very enthusiastic about the apartment business and believe the industry has a variety of tailwinds that should lead to another very strong year in 2023. And UDR’s operating capital allocation and innovation advantages should deliver relative outperformance. With that, we look forward to seeing many of you in future non-deal roadshows as well as the Citi Conference. And with that, take care.
Operator
This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.
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