President, Chief Executive Officer & Director at AvalonBay Communities
Thanks, Kevin. As we look forward, we wanted to emphasize a number of additional tailwinds, as described on Slide 14, that support continued value creation and our strong earnings outlook.
To start and focusing in on development, Slide 15 highlights the historical spread between our development yields and stabilized cap rates, a core measure of how we generate meaningful value for shareholders through our industry-leading development platform. With our strong balance sheet and match funding approach, we're able to ratchet down or ratchet up our start activity at particular points in time but do so in a way that provides consistent incremental value creation and earnings growth.
On completion so far this year, projects at yesterday's cost and today's rents, we are realizing an exceptionally strong spread between stabilized yields and current cap rates of over 200 basis points, generating significant value creation and earnings growth. For projects in our development rights pipeline, we're seeing this spread range from 100 to 200 basis points based on our most current underwriting which we believe continues to provide appropriate risk-adjusted returns.
In the near term, as shown on Slide 16, our developments underway are expected to provide meaningful incremental earnings with roughly $125 million of incremental NOI to come from these projects over the next 2 to 3 years.
Moving to Slide 17. And as we previously outlined, we are in the midst of transforming our operating platform with significant investments in innovation and technology that we expect to generate 200 basis points of margin improvement or $40 million to $50 million of NOI. Slide 17 provides incremental disclosure on certain of these initiatives, including the projected progress year-by-year with $20 million of additional revenue associated with the rollout of bulk Internet, managed WiFi and smart home technology and an additional $20 million in expense savings to come from the digitization of a number of customer experiences, including self-touring, maintenance, renewals and others.
We also introduced our structured investment program last quarter which is off to a solid start. As shown on Slide 18, we've closed our first 2 investments, providing preferred equity to third-party developers on new construction projects. By leveraging our intimate knowledge of development, construction and operations, we believe that we can achieve attractive risk-adjusted returns on $300 million to $500 million of capital, a book of business we will build up over time and providing incremental earnings growth.
Before closing, I also want to highlight, as shown on Slide 19, our continued ESG leadership given the recent publication of our 11th Annual Corporate Responsibility Report. On the E, we are one of the first REITs to set numeric, science-based targets for emission reductions and we're proud that we've achieved actual reductions through these initiatives, 30% reductions in Scope 1 and Scope 2 emissions and 20% reductions in Scope 3 emissions, so far. On the S, our investments in our people and culture, including advancing our inclusion and diversity initiatives, remain a priority with progress being made and more to come. We also continue to invest in our local communities through volunteer time and direct donations, a key part of how AvalonBay associates connect around our evergreen culture, including our spirit of caring.
In closing, on Slide 20 with a summary of our key takeaways. We're very pleased with our operating results to date, have meaningfully lifted our earnings expectations for the year and believe that there are a number of tailwinds specific to AvalonBay that set the table for strong continued growth looking ahead.
And with that, I'll turn it to the operator to facilitate questions.