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S&P 500   4,981.80
DOW   38,612.24
QQQ   425.61
Palo Alto Networks, Keysight fall; Garmin, Toll Brothers rise, Wednesday, 2/21/2024
66,000% upside on tiny biotech? (Ad)
Applied Materials stock is Ray Dalio's favorite in this new cycle
Palo Alto Networks aims at cyber security leadership
66,000% upside on tiny biotech? (Ad)
Spotify sounding better to analysts as company tunes into profits
3 Reasons the Capital One-Discover merger is a big deal
66,000% upside on tiny biotech? (Ad)
How major US stock indexes fared Wednesday, 2/21/2024
Bears covered shorts on this ETF, 3 stocks to pop on the shift
S&P 500   4,981.80
DOW   38,612.24
QQQ   425.61
Palo Alto Networks, Keysight fall; Garmin, Toll Brothers rise, Wednesday, 2/21/2024
66,000% upside on tiny biotech? (Ad)
Applied Materials stock is Ray Dalio's favorite in this new cycle
Palo Alto Networks aims at cyber security leadership
66,000% upside on tiny biotech? (Ad)
Spotify sounding better to analysts as company tunes into profits
3 Reasons the Capital One-Discover merger is a big deal
66,000% upside on tiny biotech? (Ad)
How major US stock indexes fared Wednesday, 2/21/2024
Bears covered shorts on this ETF, 3 stocks to pop on the shift
S&P 500   4,981.80
DOW   38,612.24
QQQ   425.61
Palo Alto Networks, Keysight fall; Garmin, Toll Brothers rise, Wednesday, 2/21/2024
66,000% upside on tiny biotech? (Ad)
Applied Materials stock is Ray Dalio's favorite in this new cycle
Palo Alto Networks aims at cyber security leadership
66,000% upside on tiny biotech? (Ad)
Spotify sounding better to analysts as company tunes into profits
3 Reasons the Capital One-Discover merger is a big deal
66,000% upside on tiny biotech? (Ad)
How major US stock indexes fared Wednesday, 2/21/2024
Bears covered shorts on this ETF, 3 stocks to pop on the shift

UDR Q1 2022 Earnings Call Transcript


Listen to Conference Call View Latest SEC 10-K Filing View Latest SEC 10-Q Filing

Participants

Corporate Executives

  • Trent Trujillo
    Senior Director, Investor Relations
  • Thomas W. Toomey
    Chairman and Chief Executive Officer
  • Michael D. Lacy
    Senior Vice President, Property Operations
  • Joseph D. Fisher
    Senior Vice President and Chief Financial Officer
  • H. Andrew Cantor
    Senior Vice President, Acquisitions and Dispositions
  • Chris Van Ens
    Vice President

Analysts

Presentation

Operator

Greetings, and welcome to UDR's First Quarter 2022 Earnings Call. [Operator Instructions] As a reminder, this conference call is being recorded.

It is now pleasure to introduce your host, Senior Director of Investor Relations, Trent Trujillo. Thank you, Mr. Trujillo, you may begin.

Trent Trujillo
Senior Director, Investor Relations at UDR

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 measures 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 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 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 W. Toomey
Chairman and Chief Executive Officer at UDR

Thank you, Trent, and welcome to UDR's first quarter 2022 conference call. Presenting on the call with me today are Senior Vice President of Operations, Mike Lacy and Chief Financial Officer, Joe Fisher, 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.

Let me start off by saying this remains the strongest operating environment that I or any of my fellow associates at UDR have ever encountered. Demand remains robust, turnover continues to decline, blended lease rate growth has continued to accelerate from already elevated levels, and new supply growth remains relatively stable. These factors when combined with the accretion we are seeing from our repeatable operating and capital allocation competitive advantages drove our strong first quarter results and full-year guidance raises as outlined in yesterday's earnings release.

We as an industry do continue to face a variety of challenges, many of which are out of our control. First, inflation. On balance inflation is a net positive as wage increases correlate to rent growth and rising hard cost mean higher replacement cost and increased asset values. The downside is tired personnel and repair and maintenance cost, G&A increases to attract and retain associates, and rising interest rates.

We have effectively mitigated these negative factors through, one, our platform efforts that constrained controllable expense growth below inflationary levels. And two, proactive debt management whereby over the past three years, we have increased our duration and have a minimal debt maturities prior to 2025.

Second, ongoing regulatory restrictions elongated grace periods once restrictions are removed and backlog court systems continue to hamper our ability to efficiently run our business. The current environment is decidedly better than in 2020, 2021 and while our ultimate collections rate have been between 98% to 98.5%, this is over 100 basis points below our pre-COVID levels.

And last, how current geopolitical risk may ultimately impact the US economy and consumer remains to be seen.

Given this, at UDR, we continue to focus on what we do control, which includes first, utilizing operating and capital allocation competitive advantages when opportunities present themselves. These unique capabilities drive our top and bottom-line growth and enhance our sizable controllable operating margin advantages versus public and private peers.

Second, continually innovating to find the most profitable and efficient ways to conduct our business that are wins for our associates, the company, our residents, and our stakeholders. And third, ensuring that we continue to cultivate and enhance our already vibrant, inclusive, and engaging culture as it is and will remain the cornerstone of our success.

All in all, I'm excited as I've ever been about our prospects for 2022 and 2023. To all associates listening, keep up the great work and know that the senior management deeply values what you're continue to accomplish.

Moving on, we continue to build on our position as a recognized global leader in ESG with our commitment to investing in multiple climate tech and ESG-focused funds. These investments should help identify both in the apartment home and property wide solutions to better address climate change and lower our carbon footprint.

Similarly, our commitment to adopt SBTi this year along with extensive company wide resources we already dedicated to enhance our sustainability will help to further refine our long-term ESG strategy.

In closing, we remain very optimistic on the strength of the multifamily industry, as well as the ultimate and resiliency of the American economy and consumer. We have the right strategy, competitive advantages, and a team in place to capitalize on the opportunities set that lies ahead of us. I look forward to when we can share another update with you. That most likely will be at NAREIT.

And with that, I will turn it over to Mike.

Michael D. Lacy
Senior Vice President, Property Operations at UDR

Thanks, Tom. To begin, strong Same-Store cash revenue growth of 10.8%, top the range of 10% to 10.5% we provided in early March. Key components of this result and our year-over-year Same-Store cash NOI growth of 14% included first, quarterly effective blended lease rate growth of over 14%. Our blended growth accelerated each month during the quarter. It was 240 basis points higher than what we achieved during the fourth quarter and benefited from minimal concessions granted.

Second, weighted average occupancy held strong at 97.3%, 100 basis points higher than a year ago. And third, annualized turnover was only 34%, decreasing by 530 basis points versus a year ago and 570 basis points below our historical first quarter turnover rate.

These favorable trends have continued into the second quarter. Blended lease rate growth has continued to accelerate to 16% to 17% in April, with new lease growth of more than 18% and renewals of better than 15%. This is driven by robust widespread demand and our ongoing ability to capture in place 10% to 11% portfolio average loss-to-lease.

Occupancy shows no signs of deterioration as alternative housing options like single-family rentals and for sale homes have become even less affordable versus multifamily. Based on current rents versus the cost of homeownership, it is 45% less expensive versus 35% pre-COVID to rent than own across UDR markets. And turnover remains light in April thus far.

All else being equal, we expect second quarter blended lease rate growth to range within 15% and 18%, occupancy to average 97% to 97.3%, and annualized turnover to remain well below prior year levels due to a combination of higher demand and our continued focus on the resident experience.

These trends combined with the fact that we now have good visibility on 65% to 70% of our full-year rent rollout gave us the confidence to meaningfully increase our full-year 2022 Same-Store revenue and NOI guidance ranges. We now expect to achieve midpoint growth of 9.75% for Same-Store revenue and 12.5% for Same-Store NOI on a straight-line basis.

Relative to our prior full-year 2022 outlook, the drivers of our improved guidance ranges are as follows. First, we expect full-year effective blended lease rate growth of approximately 9% to 11%, which is 3% higher at the midpoint compared to our prior assumption. For the first half of 2022, we expect blended lease rate growth in the 15% to 16% range, implying a range of 4% to 6% in the second half. Across our portfolio and excluding the approximately 7% to 8% of NOI that remains subject to limits on renewal increases, we continue to see growth rates converge irrespective of market, location within the market, or asset quality.

Second, we continue to expect occupancy to remain relatively high and average 97.2% to 97.4% or a 10 to 30 basis point improvement over full-year 2021 results. And third, we still expect controllable expenses to be limited to 2% to 3%. This is 100 basis points below that of our overall Same-Store expense growth guidance, which we increased by 50 basis points at the midpoint, primarily due to rising insurance costs.

Our updated guidance continues to imply a second half slowdown in blended lease rate growth as we approach more difficult prior year comps and regulatory restrictions on renewal rate growth remain in certain markets. There is little at present suggesting a deterioration in multifamily fundamentals. So any upside to this expectation would have a modestly positive impact on 2022 results with the majority occurring to 2023 via higher earnings as we move throughout this year. Based on current guidance, our implied 2023 earnings would be in the low-to-mid 3% range or approximately 50 to 100 basis points above our highest earnings over the past decade.

Moving on, collections continue to trend above 98% over time. And our 2022 guidance assumes we'd ultimately collect 98% to 98.5% of billed revenue. Our governmental affairs team continuously monitors the regulatory backdrop and works with our teams in the field to develop action plans that address the less than 1% of our residents who remain long-term delinquents [Phonetic]. This proactive approach benefits residents, the company, and our stakeholders.

Finally, our ongoing innovation continues to bear fruit. Today, our 250 basis points controllable operating margin advantage versus peers at a similar rent level has generated over $20 million of incremental NOI on our legacy communities. In addition, our unique self-service model combined with our other capital allocation competitive advantages and strong market growth has supported year one NOI that is 7% above our initial expectations for more than $1.5 billion of late 2020 and '21 third-party acquisitions. This equates to a weighted average current yield of 5%, up from mid-fours at the time of acquisition.

Given our embedded loss-to-lease and favorable market rent trends, we see a path to achieving our original underwritten year three yields in the mid-to-high 5% range, roughly one year ahead of schedule.

Looking ahead we will continue to find ways that our ongoing innovation can beneficially impact our bottom-line, as well as our resident's experience with UDR. As we have spoken in the past, we believe improving the resident experience increases retention, drives pricing power higher through pricing engine optimizations, reduces controllable expense growth in the form of fewer vacant days, and can lead to UDR assessing a larger portion of our resident's wallet through ancillary services.

We remain confident in our ability to achieve our target of at least $20 million of incremental run rate NOI over the next 24 months through these initiatives, while also progressing towards capturing much more over the long-term.

In closing, 2022 is off to an incredible start, which deserves a sincere thank you to all my colleagues for their hard work and the innovative ideas that keep our company operating at a high level.

And now, I'll turn over the call to Joe.

Joseph D. Fisher
Senior Vice President and Chief Financial Officer at UDR

Thank you, Mike. The topics I will cover today include our first quarter 2022 results and our updated outlook for full-year 2022, a summary of recent transactions in capital markets activity, and a balance sheet and liquidity update.

Our first quarter FFO as adjusted per share of $0.55 achieved the high-end of our previously provided guidance range and was supported by strong Same-Store revenue growth and further accretion from our 2021 acquisitions. For the second quarter, our FFOA per share guidance range is $0.55 to $0.57 or an approximately 2% sequential increase at the midpoint. This is supported by continued positive sequential Same-Store NOI growth and accretion from recent capital allocation activities, partially offset by increased interest expense and higher G&A as we have enacted wage increases to better ensure employee retention at all levels.

These same drivers led us to increase our full-year 2022 FFOA and Same-Store guidance ranges. We now anticipate full-year FFOA per share up $2.25 to $2.31. The $2.28 midpoint represents $0.02 or a 1% increase versus our prior full-year guidance, and a 13.5% increase versus full-year 2021. The increase versus prior 2022 guidance is driven by the following, a $0.04 benefit from improved NOI offset by approximately $0.01 each from higher interest expense and increased G&A expense.

For Same-Store guidance, we have increased our full-year revenue and NOI growth ranges on a straight-line basis by 125 basis points and 150 basis points respectively, from 9.0% to 10.5% and 11.5% to 13.5%. Due to lower realized and expected concessions for the rest of the year, we increased our full-year Same-Store revenue and NOI growth ranges on a cash basis by a higher amount of 175 basis points. This narrowed the prior 100 basis point delta between our cash and straight-line Same-Store revenue guidance ranges to 50 basis points. Additional guidance details, including sources and user's expectations are available on Attachments 14 and 15D of our supplement.

Next, a transactions in capital markets update. After completing $1.5 billion of accretive acquisitions in 2021, our first quarter external growth activity was primarily focused on DCP investments and development. First, during the quarter, two DCP investments were redeemed. UDR's investment in the projects totaled $58 million for which we received life-to-date proceeds of $91 million, resulting in a weighted average IRR of 14%. We used a portion of the proceeds to fully fund a new $12 million DCP investment with an 8.25% yield as part of the recapitalization of a stabilized community. We have a strong pipeline of DCP opportunities currently under evaluation.

Second, we delivered initial apartment homes at three of our active developments one each in Denver, suburban Philadelphia, and suburban Dallas. The expected weighted average stabilized yield for these communities is approximately 7.2%. We also replenished and grew our development pipeline with two additional starts, one each in Tampa and suburban Dallas of Vitruvian Park for a total budgeted cost of approximately $188 million. We believe both projects will be highly value add. Additionally, we are scheduled to close on the acquisition of a land site in Southeast Florida that is entitled for 300 plus apartment homes.

Third, we commenced unit additions at 2000 Post in San Francisco. We have experienced strong demand for our unit additions at 388 Beale in the same market and continue to evaluate similar opportunities across our portfolio. Across three active projects, we are adding 58 apartment homes with expected IRRs in the mid-teens. Moving forward, we anticipate expanding our redevelopment and densification pipeline to take advantage of the ongoing strength we are seeing in the market.

All told, we have a healthy and growing pipeline of DCP, land, and development opportunities. We also continue to evaluate wholly-owned acquisitions and target markets, utilizing our portfolio strategy and predictive analytics frameworks. To accretively match from these future uses of capital, we entered into a $400 million forward equity agreement during the quarter. Please refer to yesterday's release for additional details on recent transactions and capital markets activity.

Moving on, during the quarter and subsequent to quarter end, we further enhanced our ESG leadership by committing to invest a total of $20 million into several Strategic ESGs and Climate Technology Funds. The investments within these funds are intended to be directed toward identifying in-home, property-wide and more general innovative real estate technologies that are intended to help UDR, our residents, and others reduce our collective carbon footprint.

Finally, our investment grade balance sheet remains liquid and fully capable of funding our capital needs. Some highlights include, first, we have only $290 million of consolidated debt or just over 1% of enterprise value scheduled to mature through 2025 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 three-year liquidity outlook in the sector and the lowest-weighted average interest rate amongst the multifamily peer group at 2.8%.

Second, as of March 31, our liquidity totaled $1.7 billion and provides us ample dry powder to continue to accretively grow the company as we identify opportunities. And last, our leverage metrics continue to improve. Debt to enterprise value was just 22% at quarter end, while net debt-to-EBITDA was 6.4 times down from 7 times a year ago and remains on track for approximately 6 times by year end.

Taken together, our balance sheet remains in excellent shape, our liquidity position is strong, our forward sources and uses remain balanced, and we continue to utilize a variety of capital allocation competitive advantages to create value.

With that, I will open it up for Q&A. Operator?


Questions and Answers

Operator

[Operator Instructions] Our first question comes from the line of Nick Joseph with Citi. Please proceed with your question.

Nick Joseph
Analyst at Smith Barney Citigroup

Thanks. We've heard from some of your peers about delinquency and collection issues in Southern California specifically. And I recognize there's different submarket footprints and different kind of bad debt assumptions embedded in guidance. But just on the ground, what do you see in Southern California for your portfolio specifically, in terms of collections?

Joseph D. Fisher
Senior Vice President and Chief Financial Officer at UDR

Hey, Nick, it's Joe. Similar to our peers that have spoken to it in EQR here a couple of hours ago, we are seeing something a little bit similar. We do have a decidedly lower exposure to Los Angeles but our Orange County portfolio has seen similar trends. It does seem to be specific to Southern California, where we do have a little bit more of a B-quality portfolio and lower income portfolio than in Northern California. So we saw, AR balances take up about $1 million on a quarter-over-quarter basis. Some of that's due to typical seasonality. We usually do see January and February collections a little bit lower than trend. But we also saw applications for government assistance pick up about $1 million as well on a quarter-over-quarter basis. So it's similar to what you heard, I think, at EQR is.

I think there were a number of residents that had been payers in the past that simply stop paying and trying to take advantage here before government assistance funds will expire here in end of March. So to-date, here early in April, cautiously optimistic. It was kind of dug into it a little bit more that those individuals are reverting towards paying in some cases. So I think by the time we get out to June NAREIT, we'll have a little more commentary for you on the trends that we're seeing there.

Nick Joseph
Analyst at Smith Barney Citigroup

Thanks. That's very helpful. I think you talked about the commitment you've made to the prop tech in climate-related funds. How did you think about sizing those commitments? And then, what are your financial? And I think you touched on some of the strategic goals but what should investors expect out of those investments?

Joseph D. Fisher
Senior Vice President and Chief Financial Officer at UDR

I guess, if you go back over time and look at what we've tried to accomplish here with the first two RET funds. Of course, there is the financial and investment return that we expect to get out of the fund. But more importantly, the $5 billion of revenue, the $400 million of expenses, the capital allocation and platform benefits. That's really what we've been focused on with the RET funds and you've seen a number of examples of that throughout, over the last couple of years. This is really an expansion of that. So when you look at the strategic fund, that $25 million commitment, similar consortium of investors and limited partners there that are focused on a more permanent capital type of vehicle for big picture technologies that will benefit the entire industry. So think along the lines of CRMs, ILSes, pricing engines, maintenance and pricing. So some of those type of items more on the strategic side.

When we get into the climate side, you can see that $10 million commitment we made in the quarter. In addition, press release went out last Friday by RET along with Essex and ourselves giving out the numbers of a Housing Impact Fund. So another $10 million investment there. What we're really trying to do there is we've laid out our commitment to SBTi and our plans to move forward with that advance our industry-leading ESG efforts that we already have in place.

This allows us to just get more focused on that. So looking at in-home tech, outside-of-home tech, and really having experts that we can tap into on a daily basis that give us access to a lot of the different types of technologies that are going to impact ESG on a go-forward basis and our carbon footprint on a go-forward basis. So that's really what we're focused on on those.

Nick Joseph
Analyst at Smith Barney Citigroup

Thank you.

Operator

Our next question is from Steve Sakwa with Evercore. Please proceed with your question.

Steve Sakwa
Analyst at Evercore ISI

Thanks. I -- yes, it's still good morning out there. I just wanted to circle back on Mike's comments about the blended growth. I think you said 15% to 16% in the first half, but 4% to 6% in the second half. And I realize comps get a lot tougher and maybe concessions are playing a role where concessions had really burned off maybe by the middle of the year. And so, I guess, what I'm really trying to get at is what is the underlying assumption about market rent growth within your framework for this year? And maybe how has that changed or what's the -- maybe potential upside to the guidance numbers of market rent growth is faster than what you're currently expecting?

Michael D. Lacy
Senior Vice President, Property Operations at UDR

Hey, Steve, it's Mike. I appreciate it. To your point, let me just back up a little bit. You're right, we did say around 14% blend in the first quarter and move that to around 15% to 18% in the second quarter. And when you look at that, we did provide 15% to 16% in the first half. That compares to the 10% to 11% we previously guided to. And now we think that back half is around 4% to 6%, when previously it was around 4%. The way we look at it is basically trending our market rents. So when you think about how it should play out over the next, call it 6 to 9 months, we've looked at previous pre-COVID numbers and it was right around the -- 2023. So it was right around 4% to 6% and again, we think that it's historical numbers, Steve. It should play out that way. We'll see how it ends up.

But what I would tell you is 2022, it's going to make a minimal impact at this point if it's even when, call it 5% higher. It's really going to start playing out in 2023. And I made that point in my original remarks that it should be upwards of 3% earning, which would be the highest I've seen in my 16-year career here at UDR.

Steve Sakwa
Analyst at Evercore ISI

Right. And I realize I'm putting the cart before the horse or getting ahead of myself as you think about next year and full-year numbers, but that earning will obviously grow over time as these spreads that you're talking about sort of play out and unfold. I mean, how does the earning typically change sort of from this point forward if all of your expectations get hit? Does that earning typically double, does that earning go up 50% from here? Like, how do we sort of think about the exit rate going into next year?

Michael D. Lacy
Senior Vice President, Property Operations at UDR

No, it typically grows. It really depends on what happens in the third quarter. So with the highest exploration period of time, what kind of gross, and it's really on a gross basis, not an effective basis. What we get at that period of time will really start to impact what that earning is next year or so. Again, we're pretty optimistic that that 4% to 6%. It could trend higher. And if it does, that will lead to a higher earning next year.

Thomas W. Toomey
Chairman and Chief Executive Officer at UDR

Hey, Steve, this is Toomey. I think one factor that's making it hard to forecast is the record low turnover numbers that we're having right now. And as we come in the prime leasing season does that tick up with these types of price increases? And we've being seeing no sign of that in our notices that we sent out. And so that kind of points to the higher side of it, if you will. And everybody else is having the same experience, low turnover. They have more confidence in raising that market rent number and that's -- Mike just hedging as that's the right way, which is how much to be able to press gross rent with a low turnover number and if this turnover stays. Traffic has been extraordinarily strong. So I think that's partly technology. Nobody is moving and we feel pretty damn good about it. But as I think, Mike started with, what's most important at this point in time with 65% of the revenue already figured out for '22 is what's holding us back how we setting up '23 and '23 looks pretty damn strong right now.

Steve Sakwa
Analyst at Evercore ISI

Great, thanks. That's it for me.

Operator

Our next question is from Anthony Paolone with J.P. Morgan. Please proceed with your question.

Anthony Paolone
Analyst at J.P. Morgan

Yeah, thanks. My first question relates to development, you picked up some land and you're starting some things. Can you talk about how you're underwriting rents from these levels, as you think about delivering development in a couple of years? And also opex and where cash-on-cash return hurdles need to be in the face of just higher inflation financing costs, et cetera?

Joseph D. Fisher
Senior Vice President and Chief Financial Officer at UDR

Yeah. Hey, Tony, good to hear from you. Let me start with current development pipeline because I do want to mention what's going on there. So we did add a couple of new starts here in the quarter, so taking that pipeline up to around $700 million. If you kind of bifurcate that into two groups. You look at the lease up deals are gone fantastically well. We're kind of mid-to-high six of stabilized yields at this point, so pretty great performance on those. The newer starts kind of trending towards the higher-fives, low-sixes, so pretty consistent with where we've historically been. But importantly, on your question around cost and inflation, majority of those cost on that $700 million pipeline are fully bought out at this point. I think we only have about $10 million of hard costs that remain to be bought out and we're carrying a contingency in the high-single digits for that one. So, seeing minimal risk [Technical Issues] cost per standpoint on those.

If you think about what we have coming up in terms of new land, we bought a or are in the process of a parcel in Fort Lauderdale. We've also got a number of opportunities that we kind of started to allude to with the equity raise and some of the upcoming uses of capital. But we've got Southern California, Inland Empire, Denver, DC, as well as Dallas. And so, we've got a pretty robust pipeline we're working through on the land side. What I'd say is near-term, definitely underwriting above inflationary type of cost increases. We have seen pretty substantial cost increases over the last 12 months. A lot of that on the hard cost side and a lot of that driven by labor in some of those hotter Sunbelt markets, if you will.

But from a yield standpoint, we're holding pretty close to where we've historically been. Current yields are kind of 5.25-ish and on a stabilized basis kind of high-fives by 75%, 76%. So when you think about the value creation margin, it's still commensurate with what we've talked about historically when you look at day 3.5 to 4 cap type of market. We're still looking at 150, 200 basis points of margin or value creation, which is in line with history. So we got a little bit juicy there for a while when cap rates compressed and yields held up. But now we're back to normalcy.

Anthony Paolone
Analyst at J.P. Morgan

Okay. That's real helpful. And those -- and to get into those fives yields going in, do you have to do much with rents compared to where they are today?

Joseph D. Fisher
Senior Vice President and Chief Financial Officer at UDR

So 5.25, the way we look at it on a current trend to base -- or a current basis, that's a current rent to the market for what that asset would attain today, relative to a trended cost basis. And so having an above inflationary cost trend on that. So that gets you to 5.25. If we keep those costs where they're at and as we go through development and lease up and get the stabilization, we'd expect those rents to grow and get long-term averages of plus or minus 3% that gets you to roughly 5.75.

Anthony Paolone
Analyst at J.P. Morgan

Okay, great, thanks for that and then I'll just stick with you for just one second question. The bad debts. Did you have a number for the first quarter, I may have missed it, just on a percentage basis? I guess, net of any reversals or the government stuff. I don't -- I didn't catch that.

Joseph D. Fisher
Senior Vice President and Chief Financial Officer at UDR

Yes. So what we effectively had when you look at the combination of write-offs plus reserves, we've been able to go back over time throughout the last couple of years. And collections over time, typically get it to plus or minus 98.3% in this environment. And so you can think about a net bad debt number of 1.7% between a combination of write-offs in the quarter and incremental reserves, if there aren't any to that extent. When you look at our bad debt versus reserves in the quarter, accounts receivable was just over $24 million, about $1 million quarter-over-quarter increase. The reserve against that came down slightly to roughly $12 million, so about 50% reserved. The reason it came down was because we continue to have better and better history over time of getting to that 98 plus percent number over time.

The other way I'd kind of think about it is, you have $12 million of unresolved risk. So the way we get comfortable with that is if you look at three different buckets, we've got about $11 million out there in government assistance applications, which we believe are close to money good over time. There's just delays within those processes. You have another $7 million of partial payers over time. So those are individuals that have demonstrated a willingness and ability to try to make good on their rental payments, but sometimes it just takes them longer than normal. And so we think over time, those will start to come in. Maybe not to the 100% degree but definitely some of those will come in. And then you have about $6 million of long-term delinquents which are the residents that despite all of our efforts to work with them on government systems, on payment plans, on relocation options, things of that nature, they have really settled in. And so those are the individuals that we're trying to continue to work with. But if they choose not to, then those are the ones that will be going to court with and trying to get those units back over time.

Thomas W. Toomey
Chairman and Chief Executive Officer at UDR

Tony, just to add, this is Toomey. I think the bad debt, this whole system we've been through over the last couple of years. The team has done an exceptional job of getting out in front of the government aid, getting in front of our residents, understanding where the situation is, work with the people we can work with. And for the ones that, to be a little French, squatting on us, the court systems are starting to open and they see that piece of the equation. So I think as the year goes by, that gets back, if it's 98&, 98.5% collection type process. I'm not sure we'll get back to our pre-COVID window of 99.5%. I think it's just going to be challenging with some of these municipalities to get there. So if I'm thinking about '23, I think we're generally running in our mind at 98.5% next year, with the hope that we get 50 bps above that. And then that will be next year. This year, I think the story is just not over and it's just grinding out.

Anthony Paolone
Analyst at J.P. Morgan

Okay, that's helpful. Thanks for the '23 look there.

Operator

Our next question is from Nick Yulico with Scotiabank. Please proceed with your question.

Nicholas Yulico
Analyst at Scotiabank

Hi, everyone. Thanks. In terms of the guidance. First question is just on interest expense, bad debt going up. Joe, maybe you could talk about what drove that higher?

Joseph D. Fisher
Senior Vice President and Chief Financial Officer at UDR

Hey, Nick. It really has to do with the floating rate side of the equation. So we've done a pretty exceptional job over the last two to three years, going after our maturity profile, doing [Technical Issues] and lower cost debt down to the 2% to 2.5% range versus the kind of low-to-mid threes in place today. [Technical Issues] So we've done a great job on that front. So it doesn't have to do with anything that we had planned in terms of new issuance or reapply activity. It's all floating rate oriented. And so we've got about $400 million plus or minus of floating out there, call it 6% to 7% of total debt stack. And so as the curve is really obviously ticked higher here to start the year with a Fed rate hike expectations. We just updated for where the curve is expected to be. And so add about a $2.5 million or 0.006 to 0.007 of $0.01 impact on the outlook here.

Nicholas Yulico
Analyst at Scotiabank

Okay, got it. And then I guess, as we think about there is some moving parts for the rest of the year in terms of you may raise debt or you may not. I think you have that guidance range of zero to $250 million of debt issuances. You have that swap expiring on a piece of the term loan. Commercial paper rates presumably going up. I guess maybe for those pieces, if you could just give a feel for if that's already factored into guidance or if there is also a chance that may be interest expense could creep higher than guidance because of some of those issues?

Joseph D. Fisher
Senior Vice President and Chief Financial Officer at UDR

Yeah. I feel pretty good now at this point in terms of where we're at. We have a little bit of cushion in there most likely if we got another 25 or 50 basis point raise beyond current expectations. The term loan and the swap associated with that is definitely in there. You did mention we do have the term loan swap for another 50% of that termed out for a couple of more years at a fairly low rate. So that is locked in. The swing factor on debt is simply going to be, do we have the equity deployed and do we ultimately lever some of that equity, given the capacity that we're creating here right now? That's up for discussion. Given the additional debt issuance isn't necessarily accretive in this environment. And so we've accounted for a potential range there in terms of zero to $250 million but not necessarily certain that we'll act on it. We're going to evaluate the environment as we go forward later in the year.

Nicholas Yulico
Analyst at Scotiabank

Okay, very helpful. Thanks.

Thomas W. Toomey
Chairman and Chief Executive Officer at UDR

Sure.

Operator

Our next question is from Brad Heffern with RBC Capital Markets. Please proceed with your question.

Brad Heffern
Analyst at RBC Capital Markets

Yeah. Hey, everyone. Obviously, you took up the acquisition guidance this quarter without anything actually getting done in the first quarter. Can you talk about the pipeline and also your thoughts on your expectations for accretion just given the negative leverage environment?

Joseph D. Fisher
Senior Vice President and Chief Financial Officer at UDR

Yes. Hey, Brad, it's Joe. So yeah, I think stepping back a little bit. Yeah, we did do the equity here in the first quarter towards the end of the quarter, $400 million at just about $57.57 net. And so what we saw at that point in time was a increasing opportunity across all of our value creation arms between Developer Capital Program, redev, development and acquisitions. So after kind of six months of no equity issuance, de minimis external growth, where we sat back and really just couldn't find opportunities that fit with what we were trying to do from a platform perspective and an accretion perspective, we are starting to see more of those opportunities today. So we felt it was the right time to do the equity.

That took across each of those. Within the Developer Capital Program, we did announce a recap transaction there in the quarter. But beyond that, we do have a plus or minus $100 million pipeline of opportunities there that we think will get some or hopefully all done over the next 12 months. And so we do feel very good about continued deployment on the DCP side.

On development side, we mentioned the Fort Lauderdale land acquisition. And in a prior question mentioned, we've got $100 plus million of other land sites that we're working through various points in the process on. And so that will add to the uses, as well as forward uses and capacity there. And then, on the acquisition side, we've got a deal tied up in suburban Boston right now that is in the low-fours forward cap rate range that, yeah, checks a lot of the boxes that we've talked about previously in terms of the operational upside, the platform efficiencies, the capital expects -- expenditure programs, et cetera.

And so, between all of those, you've already got plus or minus $400 million of identified uses. And so that and use of another $700 million there that we hope to utilize for acquisitions as the market continues to come our way.

Brad Heffern
Analyst at RBC Capital Markets

Okay, got it. And has there been any noticable change in competition as you're looking at new acquisition?

H. Andrew Cantor
Senior Vice President, Acquisitions and Dispositions at UDR

Hey, this is Andrew. I just was out of ULI, which provides great market check out of San Diego and what I can report back to you is that there is a very active market that we're participating in. There is a continued wall of capital looking to increase their exposure to apartments. Listings on new deals is not diminishing. In fact there's a record number of deals year-to-date, it's up about 60% over 2021. And in it, as we know, there's continued great fundamentals. What we're starting to see as it relates to the pricing side is, is it really varies based on location and asset quality and buyer type. The buyers are being a bit more patient and looking to be opportunistic with pricing re-trades and sellers are seeing thinner buyer pools due to the abundance of options available in the market. This has impacted the sellers ability to push pricing after initial bids have been received. Movement in interest rates is clearly the largest driver that is impacting pricing and therefore, levered buyers are seeing more of an impact on pricing. Unlevered buyers and low-levered buyers are still very vibrant in the market.

In our markets, we're seeing the market, as Joe mentioned, come to us, we're seeing pricing flat to down as much as 10%. Although as always, it depends on the property in the market. We're seeing the biggest changes in assets that have run the most in pricing recently and those that are attracting buyers that are using the highest leverage points. On average, cap rates compressed roughly 100 basis points over the last year to kind of that 3.25% to 3.75% range as buyers were able to underwriting capture the significant mark-to-market in the rent rolls. Today, we're seeing cap rates closer to 3.5% to 4% and a little bit higher.

Markets like San Francisco and New York haven't been as impacted as they continue to have runway of rent growth versus communities in the Sunbelt that have already benefited from significant rental increases in the run rate over the last several quarters. And what I'd end with is it's important to remember that although pricing has recently moved, like I said, flat to slightly down over almost all assets across our markets and across the country has seen a rapid increase in pricing. And even today with those pricing changes are still more valuable than they were 8 to 10 months ago.

Brad Heffern
Analyst at RBC Capital Markets

Got it. Thank you.

Operator

Our next question is from Austin Wurschmidt with KeyBanc. Please proceed with your question.

Austin Wurschmidt
Analyst at KeyBanc Capital Markets

Yeah, thanks guys. So on the last call you guys talked about entering 2023 with a mid-to-high-single digit loss-to-lease. And I was just curious if the updated guidance assume that you recapture some of that loss-to-lease? And so you'd be entering next year I guess, at a lower loss-to-lease position or if you still think that you could be within that range?

Michael D. Lacy
Senior Vice President, Property Operations at UDR

Hey, Austin, it's Mike. We actually still think we're in that range as of right now because with the updated guidance in that back half, we do think market rents are slightly higher than what we provided last quarter. So that will help with that loss-to-lease as we enter next year.

Austin Wurschmidt
Analyst at KeyBanc Capital Markets

Got it. And then, I was just curious if you could talk about where you guys are seeing construction pick up. I mean, yourselves and a number of others had started to pick up a little bit on the development side. But when you look across all your markets, where do you see that picking up the quickest? And at what point do you think you start to see supply pick up in any meaningful fashion that it could maybe hinder your ability to thrive there?

Joseph D. Fisher
Senior Vice President and Chief Financial Officer at UDR

Yeah, hey, Austin, it's Joe. I think near-term, feel very good about the supply picture in terms of relatively constrained this year and our markets and submarkets were up right 10% to 20% but that's only about 1.7%, 1.8%, 1.9% of stock. So very, very manageable level, especially given the level of demand that we're seeing out there. So no real concerns near-term. There's obviously some markets that as a percentage of stock or year-over-year growth are a bit more concerning. So a couple of the Sunbelt markets have percentage of stock up on the 5%, 6%, 7% range. Some of our coastal markets have a little bit of residual impact like a New York or Seattle that still have some supply coming through from kind of pre-COVID starts. But I think that starts to dissipate when you look at the coast on a go-forward basis next year.

So permits obviously dropped off quite a bit during the downturn in the coastal markets as capital continued to flow into Sunbelt and therefore, development dollars and permits were flowing into Sunbelt. So you could start to see more pressure in the Sunbelt. Permit wise, they're still up 40% versus pre-COVID, so your price needs some pressure there. Come in markets like Raleigh and Atlanta and Charlotte that were not in, as well as Austin and Nashville continue to see some supply pressures but balanced with really good demographic and population growth. And if I may say income growth there, which they haven't seen over time. So hopefully ability to absorb some of that supply. But generally speaking, the supply is pretty well constrained at this point in time.

Thomas W. Toomey
Chairman and Chief Executive Officer at UDR

Hey, Austin, it's Toomey. I think Joe did a great job of running down the market. A couple of things to really weigh is housing as an industry. And you've seen it most recently in the single-family side, where the overall demand for household formations was about $4 million annually and we're still producing about $2 million. Single-family is taken a little bit of a hit lately with the rate increases, the price run-ups. And so, that always pushes people or keeps them in their apartments longer. And honestly, I'm not overly worried about the supply equation, given that single-family probably has to take a pause, if not retreat and that's going to give us at least to a strong '22 head into '23. Again, another wind in our back. It looks favorable for us. So -- and with the difficulty in trying to build in this climate, it's going to slow down that supply equation. I think it's all going to translate into a pause on the supply side, not an acceleration. We're trying to work our butts off to try to keep it at this level. That's going to translate to pricing power on Mike's side of the operational equation. So, we feel really good about that part of the business. And that demand side, we're seeing strong demand. I mean, strong would be polite. Extraordinarily strong demand across all of our markets still.

Austin Wurschmidt
Analyst at KeyBanc Capital Markets

Yeah. Thanks for all the detail.

Operator

Our next question is from Rich Hill with Morgan Stanley. Please proceed with your question.

Richard Hill
Analyst at Morgan Stanley

Hey, good afternoon, guys. I want to come back to this question about or the topic about earnings. And the reason I focus on it is because there's a lot of focus on rate of change. So I think the comment that you're making is really important. I just want to make sure I understand it and I'm unpacking it correctly. I think what you're suggesting is while the rate of change might beginning -- might begin to decelerate, rents are still rising in absolute terms and that creates embedded growth in '23 as a starting place of around 3%. And then you have growth on top of that based upon wherever you can take occupancies and leasing spreads. Is that -- is that the right way of thinking about it? And hopefully, I'm not asking a painfully naive and dumb question, but if you can just help me unpack it a little bit more that would be helpful?

Thomas W. Toomey
Chairman and Chief Executive Officer at UDR

No, Rich. I think you just nailed it right on the head. That's the way we think about it. And as we think about that back half again, a lot of that is going to be gross rents. So when we entered this year, back half of last year, it was mainly effective. And a lot of that was the burn off of concessions. But as we move forward, we're going to continue to see these market rents rise in some of these markets. For example, San Francisco, Boston, Seattle, and DC even to some extent, are off the charts right now compared to what we've historically experienced at this time of year. And so as you have that and you go into some of those higher LEM periods of time, that's going to start building up your '23, as well as help you out a little bit in the back half of 2022.

Richard Hill
Analyst at Morgan Stanley

Yeah. I understand it's an earnings power statement which makes a ton of sense. Can I ask one follow-up question on renewal spreads? Your renewal spreads are super impressive, especially in April. Maybe walk us through why you're able to push those renewals as much as you can? I suspect some of it has to do with the record low turnover and tenants just willing to accept a renewal as the burden hands better than two in a bush. Can you just walk through that dynamic and what you're hearing with negotiations?

Thomas W. Toomey
Chairman and Chief Executive Officer at UDR

It's a really good question. It's -- again, you've hit it right on the head. What we're experiencing is with these market rents rising the way that they have been and we really pushed hard coming out of the gate in January, February. That allowed us to push aggressively on our renewals because on the new side of the equation as well in the market rents, they were supporting those growth rates. So as we've gone out there and we said a couple of months ago, we are going to be spending on that 14% to 15% range. Thankfully, market rents continue to move the way they were going and it allowed us to not to negotiate with a lot of our residents because frankly the markets have been increasing such an incredible rate. So you have that. I will tell you do have low turnover, which continues to support that. As we move forward, we're definitely anniversarying off of some higher numbers, especially as it relates to the Sunbelt, so you'll have to see how that plays out. But right now we're still spending out anywhere from 14% to 15% through July at this point.

Joseph D. Fisher
Senior Vice President and Chief Financial Officer at UDR

Hey, Rich, it's Joe. Just a follow-up on that. While there is a lot of either cyclical or structural dynamics here at play in terms of the record low turnover levels, the relative affordability and reasons to want to live in apartments. I do think it's important to not lose track of what it is that Mike and team are doing differently. And I know you were kind enough to host us in Chicago last December and spend a lot of time another platform on what we're focused on customer experience. But I think that's starting to bear fruit as well in terms of the data that we're utilizing to understand resident decisions, changing our actions and activities on a day-to-day basis. So that we can actually give them a better experience, address issues that they may be having, and ultimately change the outcomes for that resident, and entice them to stay. It's not just about rent and how much they're paying out of their pocket each month. It's about what is the experience they have with us, do they like being there, do they like the neighborhood, do they like the people. And so we're doing a lot of work behind the scenes on that and so there are some UDR specific factors that I think play into those in terms of that retention number.

Richard Hill
Analyst at Morgan Stanley

Yeah, I think that's a really good point and hopefully trends relaying to use the number of prop tech investors that want to speak to UDR specifically on what you're doing different. So get ready for more of those.

Joseph D. Fisher
Senior Vice President and Chief Financial Officer at UDR

We're happy to help.

Richard Hill
Analyst at Morgan Stanley

All right, guys. Talk soon. Thank you.

Operator

Our next question is from John Pawlowski with Green Street. Please proceed with your question.

John Pawlowski
Analyst at Green Street

Thanks for the time. Andrew, I wanted to come back to your comments on you're starting to see and your industry colleagues are starting to see pricing flat to down 10%. Can you give us a sense for how broad-based that is? Is it the hand -- small handful of deals getting kicked to you or are you starting to see a broader trend?

H. Andrew Cantor
Senior Vice President, Acquisitions and Dispositions at UDR

Yeah, yeah. What we're starting to see more broadly is that the buyer pools are thinner like I talked about. So when you're getting more -- you're seeing less of the pricing move above the -- or get to the levels that we saw earlier in the year. In general, the best assets are still pricing flat to slightly up. But it's really those assets that are further out that benefited from the demand in the marketplace. So those are the ones, the ones that you are looking at but you are not paying as much attention to, are the ones that are seeing the larger price changes on. But the ones that we've been buying in the core assets have had a much smaller number of reductions. They're much closer to the 0%.

John Pawlowski
Analyst at Green Street

Okay, makes sense. And then just a few questions on revenue enhancing capex. And so you guys have had last 7 to 10 years have been quite steady and just in terms of the revenue enhancing capex ticket being open. Have you looked at -- now you have a very long time series of the spend, have you looked at how kind of all-in unlevered IRRs are compared to other alternatives out there just buying additional buildings. And so I'm just curious in terms of durability of the cash flow differently, you guys would get a pop on year one rent. But how would that kind of all-in economics stand up versus alternatives?

Joseph D. Fisher
Senior Vice President and Chief Financial Officer at UDR

Yeah. Hey, John. It's a -- I'll say, it depends. So you're going to have a broad range within the spectrum in terms of, if you do unit additions such as what we're doing on Attachment 10, and you have got that perpetual life infrastructure that you're putting in place. Obviously, the cash-on-cash return to need day one to achieve the cost of capital is much lower [Technical Issues] about the other new spectrum and do shorter duration NOI or revenue enhancing capex. So a K&B [Phonetic] program that may be a 8 to 12-year useful life. You're going to need a higher cash-on-cash return upfront and still get to what we really target, which is 150, 200 basis points above our cost of capital from an IRR perspective. And so, we do a pretty active monitoring process throughout the year. Mike's team, all the deals that our due to start the year, they're constantly killing off and canceling deals that are attaining the rent premiums that we are initially underwriting. And then they'll bring new deals to the table as different markets move and we think we can get pricing power and upside on alternative investment options. And so we try to be pretty disciplined around it. I'll say the challenge within that is always, how does that premium hold up over time and you're 8 or you're 12 or you're 15. There is a little bit of art, not just science involved in all of this, but I do think we've got a pretty phenomenal track record on that front.

John Pawlowski
Analyst at Green Street

Okay. Maybe you can talk more on it in NAREIT. Just final question for me. Given this has been very recurring at seven straight years, you spent over $40 million per year in revenue enhancing capex. At what point do you have to disclose that or include that in the FFO as recurring?

Joseph D. Fisher
Senior Vice President and Chief Financial Officer at UDR

I think the industry standard approach has been what's considered more than maintenance side. And so what's asset quality, what's turnover capex, I would say is generally not something that we have discretion over. Those are dollars that you need to spend year in and year out. What we're doing from a NOI enhancing perspective is trying to change that property. So hoping to take it from a B-minus to a B-plus if you will. And so trying to upgrade the quality of that property. That's not something that we have to do year in and year out. We can, of course, choose to turn off that circuit. So I think our disclosures are pretty consistent with how the industry looks at it. That said, I know yourself and others, as well as ourselves internally, spend a lot of time looking at full capex loads and looking at those, not just on a per unit but as a percentage of NOI basis, which I think is important. So when we benchmark ourselves versus our public peers and where our portfolio should be, we do find that recurring plus NOI enhancing is right down the middle.

John Pawlowski
Analyst at Green Street

Okay. Thank you.

Joseph D. Fisher
Senior Vice President and Chief Financial Officer at UDR

Thanks, John.

Operator

Our next question is from Neil Malkin with Capital One Securities. Please proceed with your question.

Neil Malkin
Analyst at Capital One Securities

Hi, everyone. Thanks. First one, just in terms of capital allocation. The Southeast Florida parcel, I don't think you have any investments there, assets there. Typically, you guys are more of a -- kind of cluster it, use the synergies and scale of the market and the operations to get to the maximum profitability NOI. Is your plan to increase your presence into the Fort Lauderdale through Southeast market post the potential development? Thanks.

Joseph D. Fisher
Senior Vice President and Chief Financial Officer at UDR

Yeah. Hey, Neil, it's Joe. So we do actually have one asset down there that we've had for a fairly extended period of time. It's a little bit buried in terms of ability to see it on our typical market disclosures. We group that into the other market category. So if you go to Attachment 7A within the supp, you can see we do have a Palm Beach asset there of 636 homes. So we've had exposure there. It's a market that -- between Broward and Palm, we've kept our eye on that market for a while and have been trying to find opportunities. So the hope would be that we could continue to grow that exposure over time. But we've liked that market for a while. Just finally found an opportunity that worked for us.

Neil Malkin
Analyst at Capital One Securities

Okay. And then, let's see. Yeah. The other one for me is on SmartRent. I know that obviously, they are a big part of your next-gen ops platform. I'm just wondering what the -- as far as the share price performance, are you concerned about them as a going concern entity, just again given that you rely very heavily on those -- on their software platform to sort of run your business? Or are you confident in their liquidity and just not an issue?

Joseph D. Fisher
Senior Vice President and Chief Financial Officer at UDR

I would say at this point in time, absolutely no concerns from a going concern perspective. I know that their share price has come off from when they did the SPAC. And so that has impacted in terms of the mark-to-market on our investment there. Yeah, I think the valuation on our books today is roughly $55 million or so, off of a $5 million investment. So when that gets to mark the next quarter, it probably comes down a little bit more. But from a going concern perspective, absolutely not. Their concern -- continue to perform for us, continue to do installs as we expect, so no operational concerns, no install concerns. The products work fantastically well for us across the board. Not just on expense savings efforts, but also on the self-touring. So don't see any issues there. And when you look through at their balance sheet from a cash and liquidity perspective, no concerns there either. Obviously, they're just not immune to supply chain disruptions, which I think has had an impact on valuation and multiple, as has the drawdown in broader tech. So definitely don't think that's a going concern issue.

Thomas W. Toomey
Chairman and Chief Executive Officer at UDR

Neil, this is Toomey. That question dovetails into risk management. And with any of our technology, and we've always looked at it and said, if there is a hiccup, are we able to sustain our business model, our interaction with our customer? And I can assure you with respect to SmartRent, we work hand in hand with them on being able to sustain our business model should there be any disruption by a third-party vendor in any part of our business. And so I think that's just good risk management. Everybody understands it in the industry. And SmartRent's very cooperative. And to emphasize on Joe's point about a going concern, we're not going to comment on another company's business, but what I will say, that product is industry-leading and will only continue to grow in penetration and usage. And so when the supply chain aspects are solved, none of us know that. If you do, tell me. They're going to go right back to the races because their book of business is huge.

Neil Malkin
Analyst at Capital One Securities

Sure. Thank you, guys.

Operator

Our next question is from Juan Sanabria with BMO Capital Markets. Please proceed with your question.

Juan Sanabria
Analyst at BMO Capital Markets

Hi, thanks for the time. Just an extra question on renewals and I guess, affordability. Chris, I think you said in your prepared remarks that renewal growth should slow, given some pressure across some markets. Maybe just hoping you could expand on that, as well as comment on where renewals are being sent out for maybe June, I think you maybe have a sense for that or those have gone out? And just how affordability is at this point, given some of the precipitous increases we've seen in the blended lease rates across the board.

Michael D. Lacy
Senior Vice President, Property Operations at UDR

Hey, Juan, it's Mike. I'll take that. So just as it relates to the affordability piece, I'd tell you those rent to income ratio is something we watch very closely. They haven't really changed a whole lot with wage increases happening at the rate that they're across all of our markets, we feel pretty good about that. But what I mentioned with some of the renewal increases as we move forward, we are sending out again in that 14% to 15% range as a whole. But we are seeing some of the markets where you're seeing a little bit more pressure, a little bit more turnover as it relates to rent increases. And just to give you an example. You look at a place like Tampa for us, where we've had very strong rent growth. We're going on almost two years of pushing out double-digit renewal increases. We think that there's going to be a little bit more pressure as we go into 3Q, 4Q because that's when we started pushing so hard last year.

And I'll tell you, when we get into some of this data, some of the big data that we have here, we are noticing that in a place like Tampa, where we have longer tenured residents, they're moving out quicker than, say, some of these shorter tenured residents. And on the flip side, in a place like Norcross, it's the opposite. So in New York, you have people that came in over the last year or so. They got a huge concession. You are seeing them move out at a higher rate than some of the people that have been with us for over two years, for example.

So those are just some of the metrics we continuously watch and we'll continue to watch them as we move forward. And I think as we get into NAREIT, we'll have a lot more information on what's being sent out, and what we're signing as we go into cost [Technical Issues].

Joseph D. Fisher
Senior Vice President and Chief Financial Officer at UDR

I think, Juan, just as you think about that affordability piece, Mike went through the rent to income. But thinking more broadly than just multifamily in isolation, I would say the affordability relative to single-family has improved dramatically. And so while our rent to income versus pre-COVID are plus or minus the same. That relative affordability versus single-family [Technical Issues] 35% cheaper to about 45% cheaper. So a huge swing there given home price appreciation, combined with where interest rates have moved recently. And so multifamily wins on that metric every time.

Juan Sanabria
Analyst at BMO Capital Markets

So is the way to think about what you talked about in Tampa that the people who maybe moved down with a higher income at least initially, maybe from New York, had a much bigger budget to spend and therefore drove up rents. Rent to income ratios, did it move because they were coming in at a much higher price point I guess, given their income. But that may be is that benefit is subsiding and you don't really have that arbitrage as much going on. Is that kind of what's going on?

Michael D. Lacy
Senior Vice President, Property Operations at UDR

Yeah, it's a good way to look at it. And we think that they are a little bit more stickier. We think they've created a lot more job down there. The wage growth has been incredible. So that's helping out as well. So that's just some of the experience. And again, it's only a couple of months of information right now. So it's not necessarily a trend yet, but it's something we're definitely starting to watch.

Thomas W. Toomey
Chairman and Chief Executive Officer at UDR

Toomey. Just to give you a couple of data points that are helpful. One, it's great that Mike has all this data at his access and look at how he's pricing and thinking about the future, with respect to turnover, pricing power, what a resident composition is. But on the rent income piece, with record low turnovers, our average resident's 34 years old. They've been with us on average 28 months. And so over that 28-month period, I can guarantee you that they've gotten a few raises. Their positions have improved. So income growth is a huge driver of potential pricing power. And we -- as you can see in our G&A number, we're handing out raises and that's what it takes and if you've hired anybody lately you've probably been a little shocked at the sticker. So wage growth in America, we haven't seen this type. I can't remember ever seeing this type of numbers moving. So I think that embedded resident, who has been with us for three, four years has done really well and has the ability to pay these higher rents. And that's hard to capture in the real-time database.

Juan Sanabria
Analyst at BMO Capital Markets

Got it. Thank you very much.

Operator

Our next question is from Joshua Dennerlein with Bank of America. Please proceed with your question.

Joshua Dennerlein
Analyst at Bank of America

Hey, everyone. I want to explore a similar topic. In the opening remarks, you mentioned that renting across your portfolio or within your markets is I think 40% cheaper than owning across those markets. I guess, what's the long-term average? Maybe how should we read into this? Does this imply we'll see rents kind of keep climbing till you get to that more normalized level or maybe it's just not even mean reverting? Thanks.

Joseph D. Fisher
Senior Vice President and Chief Financial Officer at UDR

Yes, I think the long-term average is plus or minus 35% cheaper when you look across our markets. And that's really looking at kind of trailing 10-year type of number. So I think when you get to these levels of extremes, we go back to financial crisis when homeownership picked out around 69%, dropped in the low 60s. And so you went from a homeownership nation to more of a rentership in terms of household formation. And so, I think they could use that as an example. I think it bodes well in terms of as new household formations are formed, rentership should gain more than their fair share of that housing and that demand itself. I think it's another tailwind is as we kind of head into '23 and look at population growth, income growth, hopefully improved immigration policy, the relative of affordability is definitely a tilt in our favor. And so I think it's just more of a long-term benefit for us hopefully.

Joshua Dennerlein
Analyst at Bank of America

Okay. And any particular market kind of stand out, if you look at it on a market by market basis or just portfolio-wide?

Joseph D. Fisher
Senior Vice President and Chief Financial Officer at UDR

Yeah. We've looked at both individual markets and obviously from a bigger picture portfolio perspective. I think it's interesting when you look at some of the coastal markets. Yeah, that dynamic has actually improved a little bit versus long-term averages. So coastal markets always are significantly more expensive to own than rent. And that's why move to even a little bit more so then the average in terms of rentalships favor. And then, if you go down to some Sunbelt still has improved, but probably not quite as dramatically.

Joshua Dennerlein
Analyst at Bank of America

Got it.

Joseph D. Fisher
Senior Vice President and Chief Financial Officer at UDR

We can do a follow-up call. I think I'd go market by market.

Joshua Dennerlein
Analyst at Bank of America

Yeah, that'd be interesting. Thank you.

Operator

Our final question comes from the line of Connor Mitchell with Piper Sandler. Please proceed with your question.

Connor Mitchell
Analyst at Piper Sandler Companies

Hi, thank you. Thank you for taking my question. So I have two questions. First, so you're running at about 97% occupancy and recently raised $400 million, both of which sounds like positioning the company for potentially tougher times ahead. At the same time, you guys sound enthusiastic on new investment. So can you help us understand are you leaning more towards offense or a defensive position?

Joseph D. Fisher
Senior Vice President and Chief Financial Officer at UDR

Yeah. Hey, Connor, it's Joe. So I definitely wouldn't say that the raising of equity signals that we're positioned for more defensive times ahead. If you go back to what we did last year where we issued $1 billion plus of capital and invested those [Technical Issues] to third-party transactions, we did that because we had a good cost of capital and opportunities that was accretive for investors. And those assets now that we bought is in a low-fours and thought they'd grow over time. On a mark-to-market basis, I think we're up to about mid-to-high-fives yield at this point in time. So that's done fantastically well. I don't know if this next round of capital deployment is going to be quite as accretive but we hope that it will. We've got a lot of unique value creation drivers that's -- when we find the opportunity set out there, which times are difficult. It takes a lot of effort but if we can find them, then we're more than happy to raise that equity.

I think on the 97% side, I don't think that's necessarily a defensive mechanism. We've consistently run above 97% over the last several years, other than kind of early in the COVID crisis. We think we can actually run higher than that over time. When you look at what we're doing in terms of try and compress vacant days and how we're trying to retain more residents through the customer experience, and then continue to augment and reengineer the pricing engine. We don't see why that number doesn't actually go higher. We're not actually sacrificing anything on the rental revenue side. And so, I think that number should tick higher over time. So I'd definitely say, we're not positioned defensively. That said, we're very cognizant of the risks that are out there right now.

Connor Mitchell
Analyst at Piper Sandler Companies

Okay. Yeah. That's helpful. And then my second question is the apartment community has been pretty well organized in California to advocate for open markets and against rent control. Are you seeing this banding together effort in other markets like New York, Boston, DC, et cetera to advocate similarly?

Chris Van Ens
Vice President at UDR

Yeah, Connor. That's a good question. This is Chris. I mean, obviously CAA is very well funded, they're very well connected. They're probably the preeminent organization, apartment organization, the state level around the country. But you see a lot of cohesion in the State of Washington, for example. You mentioned New York with the revenue year on RSA. A lot of the large players advocate with them with our dollars, with our time, all that kind of stuff. The exact same thing down in DC, Maryland, Florida. I think all of us are very involved really in every market. And it's different than 5 to 10 years ago. 10 years ago if you thought about things like rent control, just cause eviction, et cetera. There were a number of states largely in the Sunbelt that you just didn't even asked to pay attention to. That has changed. We're not seeing a lot of action in those states yet. But there is definitely more discussion on the topic. So yeah, we are heavily involved. All of our public peers are heavily involved. And once again, we have to keep on educating people, the decision makers, the voters about why rent control is not the most effective way to address affordability issues.

Connor Mitchell
Analyst at Piper Sandler Companies

All right. Also, helpful. Thank you.

Operator

There are no further questions in the queue, I'd like to hand the call back over to Chairman and CEO, Mr. Toomey for closing comments.

Thomas W. Toomey
Chairman and Chief Executive Officer at UDR

Thank you for all of you and your time and interest in UDR. I started off the call with the strongest operating environment in my career and I cannot reemphasize that that this is one -- yeah, it is the strongest, no question about it. But looking over the Q&A and the topics and we appreciate all of your interest and those questions. I see a trend towards what are the short-term aspects of our business and how is it performing. And we can appreciate your interest in that level, but I also think it gives us an opportunity to focus on what's the long-term value creation. And the industry is in great position. A lot of participants are doing very well, creating a lot of value.

And as we look at UDR and its uniqueness and how we can sustain that and provide exceptional returns, it always starts with the culture of the enterprise. And the culture is very strong. We've done come through COVID and prospered well during that environment. It -- also, the processes that we use, both decision making, disciplined and data. I think the things that make us unique and different is our innovation or technology being applied and delivering margin advantage. And lastly, having a broad set of opportunities and value creators, whether that's market exposure or different programs to create value through all cycles. And that is the value of an enterprise. If they can manage all cycles and continue to create value throughout.

I'd like to thank all of my associates, fellow associates. Strong quarter. We're approaching the prime leasing season. Excited about it. What the platform is going to be able to do and continue to grow. And with that, I'll close and say, we look forward to seeing a lot of you at NAREIT in a few weeks. And take care.

Operator

[Operator Closing Remarks]

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