Benjamin W. Schall
Chief Executive Officer and President at AvalonBay Communities
Thank you, Jason, and thank you to everyone for joining us on the call today and for your engagement. Kevin, Matt, Sean and I will provide some initial commentary, and then we will open the session up for questions. I want to start by thanking the AVB associate base, 3,000 strong, for all their contributions throughout 2021. Thanks to your commitment, we produced strong business results and embarked on our next phase of growth by ramping up our development and investment activity, all while navigating the challenges presented by the pandemic.
Thank you especially to everyone working on-site, at our communities and construction projects and to our human resource teams for all you do to support each other, serve prospects and residents and build for our future. Turning to the presentation. Slide four provides a summary of our success and strong finish to 2021. On the operating side, in the fourth quarter, we delivered a 12.4% increase in core FFO and a 4.7% increase in same-store revenue. On a cash basis, same-store revenue increased 8.3%.
This momentum continues in the new year as we build on our strong operating foundation with healthy occupancy levels, low resident turnover and strong embedded revenue growth. We also successfully ramped our investment activity in 2021 with almost $2 billion of new development starts and acquisitions and with the bulk of this capital funded by dispositions and incremental debt financing at a historically low cost of capital. In an otherwise low-yielding environment, our development capabilities allow us to generate significant value and meaningful incremental NOI growth on top of the internal growth generated by our operating portfolio.
As shown on slide five, we completed $1.1 billion of projects in 2021 with an expected $65 million of new NOI upon stabilization. At a development yield of 6% and with a 230 basis point spread to an estimated market cap rate of 3.7%, these communities have created $650 million in value. That's a very robust 60% value creation margin. As Matt will describe further, we expect to start an additional $1 billion to $1.250 billion of development projects this year at projected yields of 5.5% to 6%, and we control a growing development rights pipeline, which will set the stage for continued accretion and value creation from our development platform for many years to come.
As we continue to invest and grow, we're also optimizing the earnings growth and long-term value of our existing portfolio. A large component of this optimization is the selling of older assets with slower growth profiles and redeploying that capital into our expansion markets. During 2021, as highlighted on slide six, this led to our acquisition of $725 million of assets with an average age of three years at a 3.8% cap rate and the disposition of $865 million of assets with an average age of 26 years at a 3.7% cap rate. The bulk of our acquisitions were, and will continue to be, in our expansion markets, which, over time, across Southeast Florida, Denver, Austin, Dallas, Charlotte and Raleigh-Durham, we see us having the potential to grow to become 20% to 25% of our portfolio through a combination of development and acquisitions.
These expansion markets share many of the same characteristics as our established markets, including concentrations of knowledge-based workers and strong housing fundamentals. They also provide portfolio diversification and increased exposure to longer-term population shifts. Still, most of our portfolio and new development capital in the long term will be in our established markets where we have a high-quality portfolio of assets situated in regions that we believe will continue to thrive as vibrant centers of innovation, education, technology and with strong job and income profiles and in regions where we continue to leverage our long tenure with some of the strongest operating and development teams in the multifamily industry. Turning to slide seven.
We continue to make significant investments in technology and innovation as we evolve our operating platform in order to provide enhanced value to prospects and residents while achieving operating efficiencies and driving new sources of revenue. We've generated approximately $10 million of incremental NOI from our initiatives already deployed and are about 1/3 of the way to delivering our target of 200 basis points of margin improvement or $40 million to $50 million of NOI to the bottom line.
Finally, I want to emphasize our continual investment in our people and our leadership in ESG. Starting with ESG, our goal is to keep AvalonBay on the forefront as a leader in sustainability and corporate responsibility in an area of increasing importance for our residents, associates and investors. As an output of this corporate leadership, we have been recognized by various entities as ESG leaders, as shown on slide eight, and including the NAREIT Leader in the Light Award as the top-ranked multifamily REIT for ESG leadership.
And most importantly, we continue to invest in our people and our culture. AvalonBay is an amazing place because of its people, and we're extremely focused on fostering an inclusive and diverse culture that attracts, retains and provides growth opportunities to our people. We're excited for the year ahead, are fortunate to have a deeply dedicated team of associates, and we entered the year with our foot forward and in growth mode.
With that, I'll turn it to Sean to talk further about our operating results and tailwinds heading into 2022.