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UDR Inc (NYSE:UDR)
Q4 2019 Earnings Call
Feb 12, 2020, 1:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Greetings, and welcome to UDR's Fourth Quarter 2019 Earnings Call. [Operator Instructions]

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

Trent Trujillo -- Director-Investor Relations

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 financial 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 any duty to update any forward-looking statement.

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 on the call.

I will now turn the call over to UDR's Chairman and CEO, Tom Toomey.

Thomas W. Toomey -- Chairman and Chief Executive Officer

Thank you, Trent, and welcome to UDR's fourth quarter 2019 conference call. On the call with me today are Jerry Davis, President and Chief Operating Officer; and Joe Fisher, Chief Financial Officer, who will discuss our results, as well as senior officers, Warren Troupe and Harry Alcock, who will be available during the Q&A portion of the call. Our fourth quarter results highlighted by robust same-store NOI growth of 4.1%, and FFO as adjusted per share growth of 7%, continued to demonstrate strong execution across all aspects of our business.

To recap, 2019 was a very good year for UDR and our shareholders. First, we continue to perform well on operations, which drove approximately 65% of our 2019 FFOA per share growth. The year was highlighted by the ongoing development and execution of our NextGen Operating Platform, which allows our current and prospective customers to engage with us, online and in a self-service manner they have demanded across most aspects of their lives. Second, our capital sourcing and allocation remained disciplined, using equity priced at a premium to NAV and low-cost debt to accretively grow our business through $1.8 billion in acquisitions. These acquisitions have significant operational and investment upside in markets targeted for expansion, and will produce outsized FFOA growth in 2020 and beyond. Third, we wound down KFH JV and halved our relationship with MetLife via accretive asset swap. These actions simplified our business and added more high-quality real estate on balance sheet. Fourth, we proactively and accretively derisked our enterprise through well-timed issuance and prepayments that extended our duration and improved our liquidity. And last, we accomplished these goals, while dramatically improving our resident satisfaction scores, maintaining strong employee engagement, and completing a wide variety of ESG-related initiatives that enhanced our returns. In summary, 2019 was a very good year and representative of what investors can expect from UDR, as we continue to execute our long-term strategies. My thanks to the UDR team for their hard work, in making 2019 a very special year.

Turning to 2020. Our business is strong as the fundamental landscape for apartments, look like it will be fairly similar to that of 2019. Specifically, we expect a relatively robust economy and balanced supply demand environment that against volatility that we have all come to see as normal. But whatever the macro environment, we believe we have the right strategy portfolio and team in place to grow FFOA and the dividend per share at an elevated rate over time, sort of a variety of value creation mechanisms. For 2020, we are expecting 6% FFOA per share growth at the midpoint of our guidance, and announced a 5% year-over-year increase in our dividend per share.

Last, Warren Troupe, our Senior Executive Vice President, will be transitioning to a consulting role with UDR, effective April 1. I have worked closely with Warren for 18 years, and I'm thankful that UDR and its investors will continue to reap the benefits of his expertise in transactions, legal, risk management, and capital markets activities for years to come.

With that, I will turn the call over to Jerry.

Jerry A. Davis -- President and Chief Operating Officer

Thanks, Tom, and good afternoon, everyone. We're pleased to announce another quarter and full year of strong operating results. Fourth quarter same-store revenue, expense and NOI growth rates were 3.3%, 1.3% and 4.1%. Full-year 2019 same-store growth rates were 3.6%, 2.5% and 4% respectively.

As Tom alluded to in his prepared remarks, UDR's primary operating objectives are to consistently generate above peer average same-store growth, while also expanding our operating margin, both of which drive FFOA per share growth over time. Over the years, we have successfully executed these objectives in a variety of ways. Prior to 2019, we primarily focused on top-line growth initiatives such as, parking, short-term furnished rentals, and common area rentals. In 2019, these top-line growth initiatives continue to produce outstanding results. But we also pivoted our strategy to more actively minimize controllable expense growth through the implementation of our NextGen Operating Platform.

Why did our focus shift? Three reasons. First, our customer increasingly expects to conduct business with us on their time. Across a wide variety of industries, intuitive, easy-to-use self-service apps have come to define high-quality service. Interacting with our customers should be no different, which is why the backbone of our NextGen Operating Platform is built on self-service.

Second, centralizing certain operating functions, outsourcing others, providing better self-service to our current and prospective customers, and more actively utilizing the data we collect, will result in greater efficiencies throughout our cost structure. By 2022, we expect these efforts will expand our controllable margin by 150 basis points to 200 basis points, which translates into $15 million to $20 million in incremental run rate NOI or $300 million to $450 million in value creation at 22 times multiple.

Third, the consistent adoption and execution of operating initiatives to boost revenue growth, constrain expense growth, and enhance FFOA per share growth is ingrained in UDR's cultural DNA. But the NextGen platform is and will remain somewhat of a distraction to our teams in the field and at corporate, until fully implemented by the end of 2021. As we consider the sequencing of growth initiatives over the coming years, cost efficiency will be the focal point in 2020 with additional revenue growth initiatives beginning to come online in 2021 and beyond, once our property technology and data analytics platforms are fully built out.

Moving on, we are now a year-and-a-half into the implementation of the platform, and have achieved approximately 25% of the original underwritten NOI improvement. Thus far, our controllable margin has expanded by 60 basis points and site-level headcount has been reduced by more than 15% through natural attrition. After reducing our same-store controllable expenses by 0.4% in 2018, 2019 controllable expense growth was just 0.9%, resulting in an average annual growth of only 0.3% over the last two years, versus 1.8% for the peer group. For 2020, we expect our controllable expense growth to be at or below this level.

At the same time, 2019 resident satisfaction scores improved by 11%, and we anticipate further improvement in 2020. As such, expanding our margin through cost and headcount reductions is clearly not resulting in that -- in a decline in actual or perceived customer service, rather it is more efficiently delivering a superior all around experience to our customers. Our NextGen Operating Platform is proving to be a win-win for UDR, our associates, our residents and our investors. We are excited to update you on continued progress -- on our continued progress and expected economics throughout 2020 and beyond.

Next, 2020 has started well. Occupancy remains high at 96.9% and our $1.8 billion of 2019 acquisitions are ahead of underwriting expectations. As a reminder, we expect the weighted average yield on these acquisitions to improve from a trailing 4.7% of purchase to above 5.5% by year three. These accretive investments will continue to drive our FFO growth and value creation for years to come.

Looking ahead, full-year 2020 same-store revenue, expense and NOI growth ranges are 2.7% to 3.7%, 2.2% to 3%, and 2.9% to 3.9% respectively. Drivers of our revenue growth include higher rents, including SmartHome contribution and slightly higher occupancy, offset by a lower contribution from other income, as a growth rates from initiatives rolled out over the past several years, such as parking, short-term furnished rentals moderate, and lower utility expenses reduce our reimbursement revenue.

It is important to note that as 2020 unfolds, our quarterly same-store growth rates will be higher than our year-to-date same-store growth rates as 2019 acquisitions move into our quarterly same store pools. In addition, the MetLife JV communities, acquired in 2019, are included in our full-year 2020 same-store pool. These are not expected to significantly impact same-store growth rates. Their inclusion will provide more transparency through 2020, beginning with our first quarter supplement.

At the market level, we expect 2020 top-line growth rates will exhibit less variability and then years past. The Monterey Peninsula, Portland and Boston markets are forecast to grow same-store revenue at a rate above the high-end of our 2.7% to 3.7% portfolio growth rate range in 2020. New York, Baltimore, and Orange County should come in below the low end. All other markets are forecast to grow revenue within the callers of our portfolio growth ranges.

Regarding accelerating versus decelerating markets in 2020 versus 2019, we expect that Portland, Tampa and New York will generate the highest year-over-year acceleration in 2020 same-store growth, and San Francisco, Seattle and Baltimore are forecast to decelerate the most.

In closing, I would like to thank all UDR associates in the field and at corporate for producing another year of robust operating growth, successfully integrating $1.8 billion of acquisitions, and continuing to embrace the future in the form of our NextGen Operating Platform. 2019 was an eventful and very rewarding year. I'm immensely proud of each of you.

With that, I will turn it Over to Joe.

Joseph D. Fisher -- Senior Vice President-Chief Financial Officer

Thank you, Jerry. The topics I will cover today include our fourth quarter and full-year 2019 results, full-year 2020 guidance expectations, transactions and capital markets update, and a balance sheet update.

Our fourth quarter earnings results came in at the midpoints of previously provided guidance ranges. FFO as adjusted per share was $0.54, approximately 7% higher year-over-year, and driven by strong same-store and lease-up performance, accretive capital deployment, and lower interest rates. Full-year FFOA per share was $2.08, representing year-over-year growth of over 6%, and driven by factors similar to our quarterly results.

Next, our full-year 2020 guidance. Full-year FFOA per share guidance is $2.18 to $2.22, driven by continued strong operations, 2019 capital deployment and interest expense savings. Primary drivers of the $0.12 of growth between our 2019 FFOA of $2.08 and our 2020 midpoint of $2.20 per share include; a positive impact of approximately $0.07 from same-store stabilized JVs and commercial operations; a positive impact of approximately $0.05 from transactional activity, DCP, development and redevelopment; a positive impact of approximately $0.03 from lower financing costs; flat year-over-year G&A and a negative impact of approximately $0.03 from a variety of other corporate items, including ground lease resets and the amortization of certain NextGen Operating Platform investments. A full guidance update, including sources and uses expectations, and first quarter guidance ranges, is available on Attachment 15 of our supplement.

Moving on to transactions and capital markets. During 2019, we acquired approximately $1.8 billion communities at share, at a weighted average trailing yield of 4.7%, with equity priced at a premium to NAV and low-cost debt. As Jerry mentioned in his prepared remarks, we see this weighted average yield growing to about 5.5% by year three, generating an additional 10% NOI growth above and beyond the 3% annual market rent growth we used in our underwriting. This encapsulates UDR's value proposition, when we are able to overlay our well-tuned operating platform, combined with targeted capex investment on under-managed assets that are located markets targeted for expansion. In short, we can buy assets at market prices, that drive above-market returns and growth over time. We utilized this value creation equation, again, subsequent to quarter end, by purchasing The Slade at Channelside, a 294-home community in Tampa, for $85 million or $290,000 per home. Similar to our 2019 acquisitions, we anticipate Slade's yield growing from 4.6% in year one to 5.3% by year three.

Next, during the quarter, we pre-funded the majority of the acquisition of Brio, a 259-home community in Bellevue, Washington, on which we have a $170 million fixed purchase price option in 2021, with a $115 million note at a 4.75% interest rate. This property is contiguous to our existing elements, and elements to properties in Bellevue. And after stabilization, will be operated as a phase of those properties, thereby garnering operating efficiencies.

Regarding the Developer Capital Program, subsequent to quarter end, we exercised our purchase option to buy the 51% we did not already own of The Arbory, a West Coast Development JV community with 276 homes in suburban Portland. Our cash outlay for the transaction totaled $54 million, including the pay-off of debt. The Arbory is expected to generate a year one FFO yield of approximately 5.4% on our all-in blended price.

Finally, on the topic of transactions, during the fourth quarter, we closed a $1.8 billion UDR/MetLife joint venture transaction that was originally announced in August, which effectively halved our relationship with MetLife. We believe this deal was a win-win for both sides and continue to value our partnership with Met.

Turning to 2020. We will remain disciplined with our capital sourcing and allocation, and pivot to investments that provide the best risk-adjusted return, should we have an advantageous cost of capital and can match fund. If further external growth opportunities present themselves in 2020, we will continue to evaluate all capital sources. Currently, we have approximately $300 million of assets being marketed for sale.

Regarding capital markets, in December, we settled all 1.3 million shares sold under our previously announced forward sales agreement at a forward price of $47.41, for net proceeds of $63.5 million. No additional equity was issued during or subsequent to the quarter. During the fourth quarter, and as previously announced, we continued to take advantage of the low interest rate environment by issuing $400 million of unsecured debt, at a weighted average effective rate of 3.1% with a weighted average 13.9 years to maturity. $300 million of this debt qualified as a green bond, and represented our first use of this ESG-friendly product. Proceeds were used to prepay $400 million of 4.65% unsecured debt. Please see our supplement for further details on our transactional and capital markets activity.

Moving on to the balance sheet. At quarter end, our liquidity, as measured by cash and credit facility capacity, net of the commercial paper balance, was $867 million. Our consolidated financial leverage was 34% on undepreciated book value, and 26% on enterprise value, inclusive of joint ventures. Consolidated net debt-to-EBITDAre was 6.1 times, and inclusive of joint ventures was 6.0 times. Our consolidated leverage metrics at year-end looks slightly elevated, due to only having one-month of NOI from the acquired MetLife communities set against the full debt load of those communities. Normalizing for this would bring our consolidated net debt-to-EBITDAre down to approximately 5.8 times and within our targeted range.

Over the next three years, less than 3% of our debt comes due, after excluding our commercial paper facility and working capital credit facility. Additionally, our weighted average duration is now over seven years. Both of these put us in an advantageous position regarding three-year liquidity. We remain comfortable with our credit metrics, and don't plan to actively lever up or down.

Moving on, in conjunction with our release yesterday, we announced a 2020 annualized dividend per share of $1.44, a 5.1% increase over 2019. Last, we would like to officially welcome Trent Trujillo to the UDR team, as our Director of Investor Relations. Trent will be running our day-to-day Investor Relations, and we are happy to have him on board.

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

Questions and Answers:

Operator

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions]

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

Nick Joseph -- Citi -- Analyst

Thanks. Jerry, you talked about the same-store revenue growth assumptions. What's embedded in guidance in terms of blended lease rate growth, and if you can discuss new and renewals expected in 2020?

Jerry A. Davis -- President and Chief Operating Officer

Yes, Nick, this is Jerry. Blended lease rate growth is expected to be fairly comparable to last year, right around that 3% range, with renewals and [Indecipherable] probably in that 1% or so range. And what was your second question?

Nick Joseph -- Citi -- Analyst

No. That was -- that entire question, I was then going to ask about, the new lease rate growth in fourth quarter. We saw it turn negative, and the spread between that and the previous year widen. So I was wondering if you could provide some more color on that.

Jerry A. Davis -- President and Chief Operating Officer

Yeah. Really when you look at that, Nick, 4Q '18 was a pretty exceptional year, where you didn't see the normal seasonal softness that we witnessed in prior years. We look at 4Q '19, new lease rate growth was negative 0.5% that compares to negative 0.5% in 4Q '17, and to a flat in 4Q '16. So '18 at 1% was more of the aberration in that quarter. We didn't feel the effects of new supply that we've seen in the other three years in the past for. I would say, when you look at January though, we've seen a normal seasonal acceleration. Blended growth is up 2.4%, which is higher than it was in the fourth quarter, but honestly at 60 basis points higher than it was in December. So you are seeing good sequential monthly acceleration, but it still is 40 basis points less than it was in January of last year.

Nick Joseph -- Citi -- Analyst

Thanks. That's helpful.

Operator

Our next question comes from the line of Nick Yulico with Scotiabank. Please proceed with your question.

Nick Yulico -- Scotiabank -- Analyst

Thanks. Just going through the guidance, Jerry, just a couple of questions. I think you said that for 2020, obviously the same-store pool is changing a lot. But did you say that there is no real benefit or detriment from having a higher pool, meaning that if you didn't change the pool, your same-store numbers would be similar?

Jerry A. Davis -- President and Chief Operating Officer

Yeah, what I said was, inclusion of the MetLife portfolio into the full-year same stores. The delta to revenue and expenses is fairly immaterial. What we're really saying is, as you see the sequential or each quarterly growth rate as the year rolls on, acquisitions that we made last year will be rolling into the pool. So those are expected to have higher growth rates in the full year pool same stores.

Joseph D. Fisher -- Senior Vice President-Chief Financial Officer

Hey, Nick, this is Joe. Maybe just to add to that a little bit in terms of MetLife, that goes back to one of the reasons that we had talked about in terms of why we liked the assets that we acquired. I mean -- and that they had less near-term supply pressure. So I think investors are used to see a MetLife portfolio under perform a little bit relative to the legacy same store, but to -- per Jerry's comments you're seeing that the MetLife assets that we acquired are right there in line with our same-store legacy portfolio. And we'll end up breaking that out for you on Attachment 5 starting in 1Q of '20. So you can say legacy MetLife, as well as the combined, which is what we guided to.

Nick Yulico -- Scotiabank -- Analyst

Okay, that's helpful. And then I don't know if I missed this, but can you quantify what the impact is from rent control initiatives in New York and California on 2020 same-store revenue?

Jerry A. Davis -- President and Chief Operating Officer

Yeah. So it's in that 10 basis points to 15 basis point range. I think back in the third quarter, we told everybody New York was $500 to $1 million range, maybe 1482 [Phonetic]. We did the calculation after they came out, is about $300,000 or so. And then the other thing that's impacting us a little bit is anti-gouging laws that went into effect in California with response to wildfires in the fourth quarter, had a bit of an effect on 2020 as far as short-term furnished rentals in California of a couple of hundred thousand dollars.

Nick Yulico -- Scotiabank -- Analyst

Okay. Just one last question is, going back to 2019, the final number on same-store NOI growth, it looks like you ended up hitting the bottom of your guidance range. And I think you also -- you've revised it up a little bit that range in the third quarter. So what happened, it ended up driving you the low-end of the revised range?

Jerry A. Davis -- President and Chief Operating Officer

Yeah. There was really a couple of things primarily, one is we had two significant buyers in the portfolio that took 40 to -- in October, that took somewhere in the 40 unit to 50 unit range out of service for the entire quarter, which drove down our occupancy a bit. Secondly, as I said on the California anti-gouging laws that were put in place from late October through late November, it had not only an effect on short-term furnished rental income in the first quarter of 2020, but also some impact in the last month or two of 2019. And we had elevated levels of insurance expense as well as some elevated electricity costs.

Nick Yulico -- Scotiabank -- Analyst

All right. Thanks, everyone.

Trent Trujillo -- Director-Investor Relations

Thank you.

Operator

Our next question comes from the line of Shirley Wu with Bank of America. Please proceed with your question.

Shirley Wu -- Bank of America -- Analyst

Hey guys, thanks for taking the questions. So I guess my first question has to do with occupancy. So this coming year you're thinking a little bit higher in occupancy. Is that a function of kind of bringing those 40 units to 50 units back online? Or is that a little bit of a shift in strategy in maintaining your occupancy by pulling back on rates?

Jerry A. Davis -- President and Chief Operating Officer

It's really not pulling back on rates. I'd tell you we're -- as we get more information on data analytics, the third phase of our platform is data science. And there is a couple of things we've been able to determine as we've had first looks at this. We think are going to allow us to reduce the number of days units at vacant from when a resident moves out and when they move in. Every day, we can reduce that. It's about 12 basis points of occupancy pickup. So it's really more focused on that than anything with playing with rate versus occupancy.

Shirley Wu -- Bank of America -- Analyst

Got it. That's helpful. And so my second question is on your SmartHome initiative. So you guys have gotten around 60% of the home so far. So can you talk a little bit about your -- the cadence in 2020? And the contribution to revenue growth from this initiative?

Jerry A. Davis -- President and Chief Operating Officer

Yeah. In 2020, our expectation is to add another, call it, 7,000 homes to 10,000 homes, probably most of those will be completed in the first half of this year. So as the earning comes in, the expectation when you look at how much it's going to contribute to that, portion of rent growth is, call it 60 basis points, when you factor in the follow through from what we did last year as well as the new leases that go into effect in 2020.

Shirley Wu -- Bank of America -- Analyst

Perfect. Thank you.

Operator

Our next question comes from the line of Rich Hightower with Evercore ISI. Please proceed with your question.

Rich Hightower -- Evercore ISI -- Analyst

Hey, good morning, guys.

Jerry A. Davis -- President and Chief Operating Officer

Good morning.

Rich Hightower -- Evercore ISI -- Analyst

Just a quick question on NextGen OP, and there is an impact to FFO, and then you're going to capitalize certain parts of the total costs. So can you just walk us through sort of the accounting there? And maybe how much of the amortization of certain expenses are hitting [Phonetic] FFO, and just break it down that really quickly?

Joseph D. Fisher -- Senior Vice President-Chief Financial Officer

Yeah, Rich, it's Joe. So in terms of the, call it, $30 million that we've laid out for expenditures for the platform, that's being spent in 2019 and 2020. We ended up capitalizing that. And depending on the actual investment, it typically averages out to about five years to six years of amortization. So once that's prepared and ready to be put into service, we start the amortization period, which is really starting to kick in here in the first quarter, as we bring more of the process or project online. In terms of the impact, it starts out at, call it, between $0.01 and $0.02 this year, and ramps up to around $0.02 on a go-forward basis, until it burns off and we kind of eat through it also. It's a non-cash impact. It's just non-OREO depreciation that works against us from a FFOA point.

Rich Hightower -- Evercore ISI -- Analyst

Got it. Okay. Thanks for that, Joe. And then maybe just a little bit bigger picture question, as we contemplate 2020. If you had to pick one or two factors maybe across supply growth, job growth or changing customer preferences, as we think about maybe move out to home purchases and things like that. Where do you think the biggest risk to your forecast could be at this time?

Joseph D. Fisher -- Senior Vice President-Chief Financial Officer

Yeah, I think, more so on the job and the wage front. Yeah, I think on the supply side, we have a pretty good handle in terms of where we're leveling out there, in terms of supply being up, call it, flat to up 10% in our markets. On the rational pricing front, we really haven't seen any on a marketwide basis. Of course, there is some of that taking place on a sub-market specific basis. So I think we have a good handle on the supply front. The demand front is where we'd be more concerned, either to the upside or downside that could drive pricing power in either direction. But obviously, the jobs report in the last couple of months have been fairly strong. Wages have been strong. Hours have been strong. So we feel good about it at this point, but that's probably the bigger variable for this year.

Rich Hightower -- Evercore ISI -- Analyst

Got it. Thank you, Joe.

Operator

Our next question comes from the line of John Kim with BMO Capital Markets. Please proceed with your question.

John Kim -- BMO Capital Markets -- Analyst

Thank you. Just to clarify the same-store results that you have this year. So it sounds like the quarterly results would be higher than the full-year figure, just given the acquisitions from last year being added to the pool. And I was wondering if you could just quantify what that difference may be, if you averaged the quarterly's versus the full year?

Jerry A. Davis -- President and Chief Operating Officer

I don't have that number right in front of me. We'll probably have to give you a call back with that once Joe has it.

Joseph D. Fisher -- Senior Vice President-Chief Financial Officer

It's -- we'll come back to you on quarterly impact, but you'll probably see between 10 bps and 20 bps pickup between quarterly pool and full-year pool, as we go throughout the year.

John Kim -- BMO Capital Markets -- Analyst

Okay. I guess it's been a couple of months since the press reported your interest in the Mack-Cali's multi-family portfolio, and obviously it's not on your guidance. But do you want to describe what the situation is like as far as your relationship to the deal that was reported?

Joseph D. Fisher -- Senior Vice President-Chief Financial Officer

Hey John, its Joe. Obviously, not going to make any comments on rumors that are out there in the market. So I don't think we're in a position to talk on that front. I guess what we would say is, generically when it comes to external growth and capital deployment we've laid out a pretty clear set of parameters by which we have operated and tend to continue to operate, be that -- I can assure we get near -term FFO growth and accretion, make sure that we're match funded, leverage neutral, risk neutral, and making sure the assets we look to acquire have NOI and platform upside to help drive some of that accretion. So none of that has really changed the other piece with external growth to think about. We've talked in the past about development pipeline, where we want that to trend toward. We spent most of the cycle at a $1 billion plus. We've talked about getting back to 2% to 3% of enterprise value. I think when you look at the current pipeline of $300 million plus land that we have and opportunities that we have internally, I think we have a good path to get back to that. So that's kind of the comments we can make an external growth at this time.

John Kim -- BMO Capital Markets -- Analyst

Okay. Understood. Thank you.

Operator

Our next question comes from the line of Rob Stevenson with Janney Montgomery Scott. Please proceed with your question.

Rob Stevenson -- Janney Montgomery Scott -- Analyst

Good afternoon, guys. Jerry, when you guys did your budgeting for 2020, what markets had the widest base between the likely top and bottom in terms of possible outcomes on same-store revenue?

Jerry A. Davis -- President and Chief Operating Officer

Yeah, probably Seattle. Seattle is one, every year you look at [Indecipherable] and that was projected to have significant supply impact, but job growth always seems to come in, and surprise to the upside, we also have been a very adept in recent years to push through and get high penetration levels on our other income initiatives. But it's one of those -- I can tell you, for example, in Redmond, we have one asset. There's a couple of thousand units coming online there. Right now, we're not feeling as much of an impact from that as you would have expected. So it's just interesting to watch, especially on the east side of metro Seattle. Their ability to both take the supply, but because of the significant job growth that you see in places like Bellevue, Redmond, Kirkland, then it gets absorbed so quickly at such high rates. This past quarter our Bellevue assets had revenue growth of 5.2%.

Now you look at Amazon, which has jumped across like Washington to there, and there is, they have 2,000 jobs in Bellevue today. Going to increase it by another 2,500 by the end of this year. And I believe they've taken well over 3 million square feet to 3.9 million square feet of space that could accommodate eventually 25,000 associates on that side, of the lake. You compound that with other tech companies that are coming over into the east side, whether it's Facebook, Microsoft expanding their campus, Google. Things just go very strong. So that would be the one that I would say probably has the widest variance followed by San Francisco. We've told you fourth quarter, we began to see or feel the impact of new supply both in SoMa as well as down in Santa Clara. San Francisco is another market that if you don't feel irrational pricing that we're not feeling it yet today, that job growth and its quality job growth can absorb those units very quickly. So that's another one, I would say, that can surprise to the upside.

Rob Stevenson -- Janney Montgomery Scott -- Analyst

Okay. And then when you guys look at supply in your California markets over the next whatever 18 months, 24 months or whatever you guys have good data on, how much of the stuff has condo maps? And do you guys expect that the various legislation of ballot initiatives in California going to make condo projects and/or conversions more attractive, which can also help a little bit on the supply side on the rentals?

Joseph D. Fisher -- Senior Vice President-Chief Financial Officer

Hey, Rob, it's Joe. So when we look at a supply, when we track the permitting data that is out there, I'd say California generally is probably one of the markets that has trended lower from a permitted activity. So over the last three months to six months, you've seen permits nationally took higher, really led by more of the Sunbelt markets, and a little bit on the East Coast. But West Coast has been looking better. As it relates to the condo mapping, we have not gotten to that level of detail to figure out how much of that supplier permit activity is related to that. So really no comments on that front.

Rob Stevenson -- Janney Montgomery Scott -- Analyst

Okay. Because -- presumably, your high-rise stuff in these West Coast markets is stuff that where if you have supply coming online, is probably the easiest to do condos, right? I mean, and so some of your supply, if you're going to get hit with would make the best condo conversions or condo sales just right out of the box, if that's [Indecipherable]

Joseph D. Fisher -- Senior Vice President-Chief Financial Officer

Yeah, potentially.

Rob Stevenson -- Janney Montgomery Scott -- Analyst

Okay. Thanks, guys.

Operator

Our next question comes from the line of Wes Golladay with RBC Capital Markets. Please proceed with your question.

Wes Golladay -- RBC Capital Markets -- Analyst

Hi guys, just few DCP questions for you. What are your expectations for Alameda Point Block?

Harry G. Alcock -- Senior Vice President-Chief Investment Officer

Well, this is Harry. Right now, we have a land loan in this project that we've had for a couple of years. The land loan matures at the end of March. The developer continues to work through final pricing and the like. We have a -- an option upon satisfying certain conditions to provide sort of permanent DCP in that, but we're not in a position yet to be able to comment on it.

Rob Stevenson -- Janney Montgomery Scott -- Analyst

Okay. And a potential extension may happen. Would that be a potential assumption there?

Thomas W. Toomey -- Chairman and Chief Executive Officer

Wes, this is Toomey. Certainly, that would be one consideration we'll look at what Harry highlighted when the numbers come in. But what we're excited about Alameda is, in August, I believe the ferry starts its operations. And so that whole corridor is going to be activated. And we like the price point relative to the markets around it. So I think it's going to be an area to keep your eye on, and we're hopeful we can find a deal inside of that.

Harry G. Alcock -- Senior Vice President-Chief Investment Officer

And Wes, I guess, [Indecipherable] the project itself is made

Thomas W. Toomey -- Chairman and Chief Executive Officer

I guess I'll just comment, the project itself has made tremendous progress in terms of infrastructure, in terms of -- and the road now connecting the risk develop needed to the waterfront. The first market rate apartment project has started construction. The first two townhome order sale projects has started construction. So, it is now turned into real viable project at this point.

Wes Golladay -- RBC Capital Markets -- Analyst

Okay. And then looking at Brio, could you just -- bought that asset today, and on the lease-up yourself looks like you guys would do a much better job on the lease-up in the developers. How do you think about that versus a -- doing a secured loan for you?

Jerry A. Davis -- President and Chief Operating Officer

Well, this is Jerry. So the structure is that we funded $115 million at 0.7% with an option to acquire the property one-year post TCL which happened sometime next year. UDR, if we are managing the lease-up, we get some significant operational synergies. The structure allows us to mitigate lease-up dilution, while still managing the lease-up, it gives us a fixed price option next year. We fund 75% of the purchase price today. Now we've done business with this developer in the past, we like the asset and the location.

Thomas W. Toomey -- Chairman and Chief Executive Officer

Yes, you know what I would add to that. Here you said, we'll get synergies. Just much -- this deal is in Bellevue. I just gave you an update of all the positive things happened over in Bellevue, Kirkland. But -- you know what makes this deal more enticing to us is its contiguous to two additional phases of the elements buildings that were built by the same developer. We have pricing differential between Rio and the 10-year and I guess nine-year-old product that will be run with. But -- you'll get synergies, we think we'll be able to run these properties upon stabilization maybe one extra person in the office and one extra person in maintenance. So, quite a bit of a benefit been located right there -- I mean -- able to lay on our operating platform.

Wes Golladay -- RBC Capital Markets -- Analyst

Yes, makes a lot of sense. Thank you.

Operator

Our next question comes from the line of Austin Wurschmidt with KeyBanc Capital Markets. Please proceed with your question.

Austin Wurschmidt -- KeyBanc Capital Markets -- Analyst

Hi, good morning. Jerry, you mentioned that you plan to turn the focus back to revenue initiatives in 2021, you will still be reaping the benefits I guess from the expense efficiencies over the next three years. But can you give us a sense of what those new revenue initiatives are that you're exploring and the potential magnitude of that opportunity?

Thomas W. Toomey -- Chairman and Chief Executive Officer

Hi Austin, this is Toomey. Maybe I'll step back and I'll get to let Jerry answer that question. But a couple of things coming to mind, and -- I've been at this 25 plus years and I have seen over that trend developments -- excuse me -- investors focus shift away from development capabilities, consolidations, market mix through the last five years has probably been around revenue, but our strategy and our view is always been that long-term value creation share price appreciation comes from cash flow growth, and you've got seven companies today that are really good and you can see it in the convergence of our revenue on top of each other and very little differentiation. But ultimately, starting in 2017, we started to look at it and say, where is our customer going, where is our margins going, because mature businesses eventually arrive at that conclusion and after 2017 [Phonetic] concluded and started implementing in 2018 [Phonetic], operating platform and whether you have a $1 billion of revenue or $3 billion, 100 basis points to 300 basis point margin expansion is a heck of a lot of value on the table. And I'm really happy that we're after that. You can see our progress that Jerry and team are reporting on that front. And I think the best days lie ahead. But when I look back at the last years, one thing I'm struck by is in '18 we grew cash flow 6%, '19 6%, and '20 at the mid point 6%. I'd like to keep that trend going. And I think what Jerry and the team are all working on with respect to the initiatives in the platform certainly are going to be the biggest driver of that going forward. So I think the industry is arriving at a new door of opportunity. We're all going to go through it. There is no doubt in my mind about that because our customers already step through that door and how we implement it, and the speed which we implement it will be the differentiating point. But you talked about revenue and potentials off of the platform, I'll kick it back to Jerry and let him talk about where he's headed.

Jerry A. Davis -- President and Chief Operating Officer

Yes, I'll answered some of this earlier, but when we look at the data science component of the NextGen operating platform, I'd say everybody here that's got a first glimpse of it, has gotten pretty excited. We see opportunities to better price our homes. When you can see things especially through heat maps opportunities jump off the page at you and you can just identify and really quantify where there's opportunities that your missing when information was either in a spreadsheet or I'm just not quite as visible. The other thing I think we're going to be able to do much better job on is improving resident retention as we are able to accumulate more information about our residents and where the best place we can go acquire those residents in the future, I think it's going to help us drive down turnover increased retention. And I think we're also going to be able to gain more and more data, compare communities to each other, find best practices to reduce the time it takes to reoccupy homes or the way we always say let's reduce the number of vacant days.

So I think what you're going to see is most of it's going to come on the true occupancy and rent side not other income initiatives that we're going to find through this data science.

Austin Wurschmidt -- KeyBanc Capital Markets -- Analyst

That's helpful. I appreciate all the commentary and thoughts there. And I guess that kind of goes a little bit into the next question. Given the ability to acquire market cap rates and generate upside and cash flow growth, at this point your acquisitions though have been largely one-off more surgical opportunities over the last couple of years and spread out fairly well geographically, but just wondering if there are any markets where you feel like you're significantly under exposed or under indexed to that you'd like it take a little bit more of a concentrated run at potentially through a larger transactions or a series of one-offs?

Joseph D. Fisher -- Senior Vice President-Chief Financial Officer

Yes, Austin, it's Joe. Yes, I think our diversified approach continues to stand in terms of when we deploy capital over the last 12 months to 18 months, you've seen us all up and down the East Coast, you've seen us down in the Florida markets. We just talked about -- we [Indecipherable] at Seattle. I do think we'd like to be more active in SoCal but trying to of map out the risk reward and the cap rates get there which are fairly compressed. So I think you'll see us continue to be diversified in the approach and spread our bets and try to match fund those and go get the NOI upside on the platform.

Jerry A. Davis -- President and Chief Operating Officer

Austin, I'd just say, there is a lot of opportunity when you think about our footprint today and the buying the one next door, buying the one down the street, we don't lack for an opportunity set, we just have to be very disciplined about making sure that we accrete the value and not the seller. And so we're going to stay focused on what we've been doing and it's worked.

Austin Wurschmidt -- KeyBanc Capital Markets -- Analyst

Understood. Thanks guys.

Operator

Our next question comes from the line of Rich Hill with Morgan Stanley. Please proceed with your question.

Rich Hill -- Morgan Stanley -- Analyst

Hi, guys. Hi, Joe, I think this might be a question for you given maybe a little bit of a guidance question. But it sounds like you guys are getting much, much smarter on your next-gen OP, big data. So I'm wondering as we think about that 3.4% full-year NOI guide, how are we supposed to think about that cadence. Is it still very time to leak peak leasing season, or are we supposed to think that as you get smarter and more efficient that we're going to start to see some acceleration in the back half of the year?

Joseph D. Fisher -- Senior Vice President-Chief Financial Officer

Hi, Rich. It's Joe. Yes, we've traditionally not provided quarter-by-quarter guidance as it relates to same store. So, probably not going to start at this point, we provided 1Q FFO guidance. So if I gonna [Phonetic] leave it at that, and then you'll see the cadence developed throughout the year.

Rich Hill -- Morgan Stanley -- Analyst

I figured I'd try, Joe. [Speech Overlap] Understood. So coming back to the development, I think we've chatted in the past that maybe that could get up to $500 million versus the $1 billion at the peak. So, and I think you've referenced some land deals are starting to pencil out a little bit more, can you just walk us through what's driving that increase and development potentially?

Joseph D. Fisher -- Senior Vice President-Chief Financial Officer

Maybe just some quick historical context, maybe Harry will jump into. We had been at $1 billion plus for most of the cycle. And so we've been very disciplined around making sure we get that 150 basis point, 200 basis points. We have been focused on maintaining $1 billion at all costs. So you saw the $1 billion shrink to zero kind of from the 2016 to 2019 timeframe as deals completed. At this point in time, we've been working on land for quite a while. You saw the Denver parcel that we acquired last year, you saw the union market deal in DC that we acquired last year, both of which have been worked on for an extended period of time. Today, we got the $300 million pipeline across three deals. Union market is not in the active pipeline as of quarter-end, but we expect it to be shortly. It's about a $140 billion [Phonetic] plus or minus deal. So that will take the pipeline up. In addition, Vitruvian through the MetLife transaction where we had Vitruvian West 1 and now 2 [Phonetic] in the pipeline.

We've been getting good yields of those on the mid-sixs and so we have Vitruvian West 3 that we think we'll be able to move forward with here in short order. So that will get you back to plus or minus $0.5 billion. I think depending on circumstances, cost capital and opportunities, that probably took a little bit higher than that in that 2% to 3% range of enterprise. So call it $5 million, $6 million, $7 million, $100 million [Phonetic]. But that's easy to fund when you think about the cadence of it and the free cash flow that we throw off of $125 million, $150 million [Phonetic] a year, the leverage capacity that we have in each and every year and then the dispositions that we typically put out there is normal course business. So definitely not anything insurmountable from a funding standpoint.

Rich Hill -- Morgan Stanley -- Analyst

Got it. And just for clarification, this is an addition to and not lieu of the CDP program right?

Joseph D. Fisher -- Senior Vice President-Chief Financial Officer

It's a stand-alone. So when we talk about $500 million to $100 million [Phonetic] that is typically ground-up consolidated development that we're speaking to. When you look at DCP, we've traditionally thrown out there kind of the $300 million, $350 million, $400 million type of number of which we sit in the high-twos today. So we have some capacity to add there as well.

Rich Hill -- Morgan Stanley -- Analyst

Got it. I'm sorry for the confusing question, what I really meant was, you wouldn't be reducing your development capital program to increased development, there would be development increasing while the development capital program stays where it is may be increasing a little bit more?

Joseph D. Fisher -- Senior Vice President-Chief Financial Officer

Correct.

Rich Hill -- Morgan Stanley -- Analyst

Okay, thank you guys.

Operator

Our next question comes from the line of Alexander Goldfarb with Piper Sandler. Please proceed with your question.

Alexander Goldfarb -- Piper Sandler -- Analyst

Hi, good morning out there. First just congrats to Warren. So, well done. So two questions. Jerry, on the smart home technology front, in answering one of the earlier questions you mentioned the revenue opportunities, occupancy and expenses. Expenses I guess, obviously you guys have talked about personnel retention being able to retain your better employees and not have to go through the people who are cycling in and out. But as far as occupancy and rent, you guys are like 96% plus, the industry has had YieldStar or LRO, adding number of the pricing systems and you said that this really isn't about driving other income. Can you just elaborate more where this smart home -- I get it on the operational on the expense side, but where on the on the revenue side, if you've had really good occupancy and you've had really good rent growth through the system is where the smart home will help you grow on the revenue side?

Jerry A. Davis -- President and Chief Operating Officer

On reality SmartHome, we get a rent increase at new lease terms, call it that $20 range. We do think there is efficiency that we gain either through our maintenance people, our prospective residents being able to do some kind tours and be able to utilize the Smart Homes. Implementing leak detection devices drives down RNM as well as insurance costs.

But I don't foresee Smart Homes are going to drive occupancy. I think there is that rent pickup that you get as you add that amenity that again allows a lot more flexibility for entering your apartment, dog sitter or somebody like that have access to it.

But when we look back as we have installed these Smart Homes and look at what our market rent has done in those communities from the time before we installed till after we are comfortable that we are getting that $20, $25 pop in rents.

Alexander Goldfarb -- Piper Sandler -- Analyst

Okay. And then, Joe, just the perfunctory rent control obviously the latest from Albany is if they are looking at CPI plus three, which is, you know, light better than the CPI plus one and a half, but still obviously would not be a positive thing. Maybe you can just give your latest thoughts on what will happen in Albany and then also how that is affecting you guys looking at New York City, if you are still actively looking in New York or if you are interested in the region is now exclusively in the suburbs.

Joseph D. Fisher -- Senior Vice President-Chief Financial Officer

Hey Alex. So maybe just to clarify on Albany, you may have more information than we do on this, but I think the way we looked at it, it was the greater of CPI times 1.5 [Phonetic] or 3%. So it seemed like they were setting a 3% floor on renewals, but you still have vacancy decontrol. So, just want to clarify that.

So if that is the scenario and you still have vacancy decontrol, you still have the upside on news and you get 3% renewals as a floor. It is not what we would ideally like to see. You know, we would like to see a more constructive discussion around public, private partnerships, up zoning densification, less regulation, things of that nature.

But it is a factor that plays into our thinking when we are thinking about New York City and allocation there, as well as the broader region as well. It goes in a qualitative factor but that is pretty consistent nationally as well. You know, we are seeing increased activity nationally, and so it goes into our thinking everywhere, but that is why we like to diversify the platform that we have.

Alexander Goldfarb -- Piper Sandler -- Analyst

But would you still consider buying in New York or you are more focused on Jersey?

Joseph D. Fisher -- Senior Vice President-Chief Financial Officer

We would still consider New York. We would consider New Jersey as you saw with One William last year. New Jersey also is talking about CPI plus 5% I believe. So, I think there is a number of markets out there that are looking at that. So we will take into account each time we look at a transaction.

Alexander Goldfarb -- Piper Sandler -- Analyst

Thanks Joe.

Operator

Our next question comes from the line of Neil Malkin with Capital One Security. Please proceed with your question.

Neil Malkin -- Capital One Security -- Analyst

Hi guys, thanks. First, I want to touch on capital allocation. Given your track record, very good operating ability and capital costs both on equity and debt that are favorable. Just maybe could you talk about why the acquisition or potential acquisition outlook in your guidance was pretty light and also, if you have anything you are potentially looking at right now, that would be great.

Joseph D. Fisher -- Senior Vice President-Chief Financial Officer

Hey Neil it is Joe. In terms of guidance, historically, our practice has been to not guide a speculative activity. If you go back to our guidance last year, clearly, we surpassed that from an acquisition standpoint, we were able to find creative opportunities and match fund those with well priced equity and debt. So the acquisition guidance you see there on attachment $140 million [Phonetic]. That is really just for Slade channel side that we announced, as well as the buyout of our group with joint venture.

So going forward, we will continue to do what we have done over the last 12 or 18 months, which is, look at the pipeline try to find opportunities that can drive additional upside as we did this year, and drive more earnings accretion and growth. And if we can do that, we will figure out where to pivot toward in terms of the source of capital.

I did mention that we have $300 million of assets in the market today. So, generally normal course business for us, but we have a pretty diverse slot of markets and cap rate rentals that we are looking at. And we like the feedback we are getting so far. So we are looking at that as well as a source of capital.

Neil Malkin -- Capital One Security -- Analyst

Okay. But you can't-I mean, you are talking about $300 million of assets on the black cell but I mean, in terms of you know the pipeline or the pool of assets that are potential acquisition candidates, I mean, has that trended higher just in terms of how the market flows or your cost of capital?

Joseph D. Fisher -- Senior Vice President-Chief Financial Officer

I think we are saying back in November, the pipeline had dried up a little bit. But I don't know if you were down at NMHC. The other week, typically, that is when you start to see more activity coming to market. So typically, pipeline starts to pick up around that time, so we would expect to see more deals coming to market but again, we are going to keep disciplined around the parameters that we got to see and not just simply go out there and buy just to utilize a cost of capital.

Neil Malkin -- Capital One Security -- Analyst

Okay, thanks. And the other one for me is, could you just talk about your outlook for supply in Northern California and Seattle? The data vendors, there seems to be a fair amount of disconnect between data vendors. What ethics this talks about? I'm just wondering what you are seeing in those markets or what you expect to see for 2020.

Joseph D. Fisher -- Senior Vice President-Chief Financial Officer

I think when you look at both Northern California and Seattle, when we look at third-party data, permit data in terms of the regression approach that we take and then talking to individuals on the ground, as we work through our budget process, both of those markets are expected to be up generally, Seattle's a little bit more flattish at a market level.

San Fran overall probably a little bit more first half weighted depending on the slippage that we see there. And then when you flip over to kind of the longer term look, and think about what we would see going forward, the permitting activity in Northern California has dropped off quite a bit more over the last three to six months versus where it had trended. Whereas Seattle has remained a little bit more static.

Neil Malkin -- Capital One Security -- Analyst

Thank you.

Operator

Our next question comes from the line of Hardik Goel with Zelman & Associates. Please proceed with your question.

Hardik Goel -- Zelman & Associates -- Analyst

Hi guys, thanks for taking my question. Joe, maybe this one is for you. You mentioned your balance sheet or your leverage is at 5.8 times, if I calculate the full run rate of cash flow, the JV deal, you guys closed in the fourth quarter? At 5.8 [Phonetic], if you were to acquire something that is $2 billion portfolio I'm not saying it is the Matt Kelly one or not. But if you were to take down a deal like that. How much more could you lever up or what is the appetite to lever up, if you have an opportunity like that, that make sense? And is the current leverage kind of inhibiting you or driving you to not make those decisions, because of where it is?

Joseph D. Fisher -- Senior Vice President-Chief Financial Officer

Maybe it is good to just kind of layout what we communicate in the past in terms of the goals on the balance sheet. We have talked about five to six times debt to EBITDA, fairly consistently, and our desire to stay within that range. The plan calls for that. So I guess if you say, on a justice basis, we are at 5.8 times, I guess you could say that we have the ability to lever up point two times to get to our plan, or stay within the range we have laid out.

So we really don't have any intent or desire to lever up at this point in time. We like being the solid BBB plus, BAA1, like the cost capital that affords us. And we have really been focused beyond debt-to-EBITDA on a lot of other metrics, i.e. fixed charge free cash flow, duration for three year liquidity, etc. So, in totality, I think it is important to take a holistic approach to thinking about the balance sheet. Not just walking in on that debt-to-EBITDA metric, which did tick up, but obviously due to one-time issues related to MetLife time and so I wouldn't say you should expect us to lever up for transactions.

Hardik Goel -- Zelman & Associates -- Analyst

Got it. I guess maybe taking in a slightly different way. If it was to be an attractive deal out there that required a lot of capital, you would need to also have the cost of equity to kind of take it down, because as you mentioned, your balance sheet only allows you to 0.2 times?

Joseph D. Fisher -- Senior Vice President-Chief Financial Officer

It is either an attractive cost of equity or we have dispositions. We have free cash flow, we have other levers to pull as we look out over the next two to three year business plan. So it is not always cost of equity when multiple sources of capital they tap into.

Hardik Goel -- Zelman & Associates -- Analyst

Got it. Thanks Joe that is helpful.

Operator

Our next question comes on the line of Haendel St. Juste with Mizuho Securities. Please proceed with your question.

Haendel St. Juste -- Mizuho Securities -- Analyst

Hi, I guess -- good afternoon. I guess most of mine have been asked, but I have got a couple of market specific questions. First on Boston Market. A market that you guys have outlined, you expect to grow at a pace better than the overall portfolio assets. A market that is expecting to see a lot of supply come online this year. So just curious and by the way in the urban core, where I believe you do have a number of assets. So just curious what gives you the confidence for that kind of statement facing that kind of supply? And then maybe some comments on the lease-up over at Garrison?

Jerry A. Davis -- President and Chief Operating Officer

Hi Haendel, this is Jerry. I think we would agree with your assessment that there is going to be supply pressures downtown. We are feeling that Seaport. We felt it there in the fourth quarter where Pier 4 had revenue growth of just 2.1%. Our properties though that are in the North shore as well as down in the South port should encounter our less supply pressures and do better.

So it is really going to be dependent on which assets you are looking at. The only property that is in our same-store pool that is downtown is Pier 4 for full-year same-store. So again, we would agree that there is going to be supply downtown. There is going to be a bit less when you get out to the suburbs, especially when you are looking at some of the B product that we have that is up in the North shore.

Garrison lease up is just doing well. It is 82% to 84% physically occupied. We finished the renovation of the amenity building that was part of that [Indecipherable]. We are looking to reengage on a unit turns again in the next couple of months.

And we anticipate, while we are leasing up against a lot of new supply that a location in the back bay is highly desirable. I think is, the construction moves out of that small area or site, meaning the construction that we do during the renovation period that it is going to be a great asset.

Haendel St. Juste -- Mizuho Securities -- Analyst

I appreciate that. Jerry, what type of spread are you projecting or as you think about the revenue outlook for Boston in terms of the urban versus suburban?

Jerry A. Davis -- President and Chief Operating Officer

Spread between those is, I think it is about a 200 basis points.

Haendel St. Juste -- Mizuho Securities -- Analyst

Okay. Thank you for that. And second question on Baltimore. I recall spending a lot of time last year, last summer I think we visited talking about your market predictive model and how it was leading you to be a bit more enthusiastic about Baltimore, a market where a lot of your peers seem to be shying away from. So, can you talk a bit more about what you are seeing in Baltimore today leading you to call out of the market that you expect to see some of the most deceleration. It doesn't look like there is a lot of supply coming online in that market this year. So maybe you can talk about what has perhaps changed in your view on Baltimore over the last six or so months and what was perhaps underappreciated in your market revenue model.

Joseph D. Fisher -- Senior Vice President-Chief Financial Officer

Alex it is Joe. And then I will kick it over to Jerry for some more specifics. [Technical Issue] As it relates to the predictive analytics piece and how we were looking at that a year ago and what drove us to think about that. You know, that is a quantitative approach, so it shines a light on markets that we think are set for our performance.

But you still have to take a qualitative approach and make sure that the expectations on the ground actually meet up with what the model or the machine tells you. So things that got us excited about Baltimore, historically it has had very stable job growth typically in-line with national averages.

We have seen that continue from an affordability standpoint, one of the most affordable East Coast cities out there, you know, job diversification wise, when you look at it, especially in the cyber security and defense side, very strong there, but they also have a good biomedical, healthcare, education government.

So you have a good stabilizing factor in terms of volatility performance in Baltimore, which is good from a portfolio of construct standpoint. And then you have a very highly educated workforce, you know, their Top 10 in STEM jobs, Top 10 in graduate degrees as a percentage of workforce. So there are a lot of things that were going for the MSA as a whole.

And then you obviously have to narrow it down to a sub market-which is what we did with Roger Sports. So we are not necessarily in Baltimore proper. So we had to pick the right sub market. So that is kind of what led us there over the long-term. You know, short-term volatility obviously comes through in results, but it is more of a long-term play. So maybe if Jerry wants to close it out.

Jerry A. Davis -- President and Chief Operating Officer

Yes, I would just add it is one of the markets we see where there is going to be elevated supply this year versus last year, a couple thousand units. When we look at our sub markets got about 700 of those units are coming within a mile of our property in the Towson area.

So last year we did 3.1% revenue growth, this year we expect it to be down in the twos. So again, I think as Joe said, we like the market but that is more of a mid and long-term not any -- how is it going to come here? And I think over the next year, we are going see [Technical Issue].

Haendel St. Juste -- Mizuho Securities -- Analyst

Got it. Thank you.

Operator

Our next question comes from the line of John Guinee with Stifel. Please proceed with your question.

Thomas W. Toomey -- Chairman and Chief Executive Officer

Hey John, are you there? You might be on mute. Operator do we have anyone else left in the queue?

Operator

Yes we do. Our next person in queue is John Pawlowski with Green Street Advisors. Please proceed with your question.

John Pawlowski -- Green Street Advisors -- Analyst

Thanks a lot for the time. Harry, hoping you could describe for us on the DCP front and a bit intense year-end. Just last three to six months how the competition has fared one way or the other?

Harry G. Alcock -- Senior Vice President-Chief Investment Officer

Sure, John, I think you have seen supply has been relatively stable. There continues to be demand from developers. There is also additional competition from a number of dead funds. It has been the same the past 12 or 18 months, we are continuing to find opportunities that sort of fit our parameters in terms of assets that we want to own long-term. They fit our return hurdles. You saw us close a deal in Oakland last year. We have others that we are looking as we look to not only back build our historic pipeline, but also add incremental.

John Pawlowski -- Green Street Advisors -- Analyst

As the pricing within that solid deal flow as a pricing on deals become more competitive?

Harry G. Alcock -- Senior Vice President-Chief Investment Officer

I think there are circumstances where it has been. Again, just as you have more players in the space but the deals we are doing, we are underwriting a consistent IRR. We are always looking for deals that fit our parameters. So our expectation is that the transactions we enter into the returns will be very consistent to what we have done historically.

John Pawlowski -- Green Street Advisors -- Analyst

Okay. Thanks.

Operator

[Operator Instructions] There are no further questions in the queue. I would like to hand the call back to Mr. Toomey for closing remarks.

Thomas W. Toomey -- Chairman and Chief Executive Officer

Well, a quick closing. I want to thank you for your time and interest in UDR. Clearly, you can hear that we are excited about 2020 and certainly our future beyond that. We have the right team, the right plan. Just look forward to executing on it. And we look forward to seeing many of you in the conferences in the near future. Take care.

Operator

[Operator Closing Remarks]

Duration: 72 minutes

Call participants:

Trent Trujillo -- Director-Investor Relations

Thomas W. Toomey -- Chairman and Chief Executive Officer

Jerry A. Davis -- President and Chief Operating Officer

Joseph D. Fisher -- Senior Vice President-Chief Financial Officer

Harry G. Alcock -- Senior Vice President-Chief Investment Officer

Nick Joseph -- Citi -- Analyst

Nick Yulico -- Scotiabank -- Analyst

Shirley Wu -- Bank of America -- Analyst

Rich Hightower -- Evercore ISI -- Analyst

John Kim -- BMO Capital Markets -- Analyst

Rob Stevenson -- Janney Montgomery Scott -- Analyst

Wes Golladay -- RBC Capital Markets -- Analyst

Austin Wurschmidt -- KeyBanc Capital Markets -- Analyst

Rich Hill -- Morgan Stanley -- Analyst

Alexander Goldfarb -- Piper Sandler -- Analyst

Neil Malkin -- Capital One Security -- Analyst

Hardik Goel -- Zelman & Associates -- Analyst

Haendel St. Juste -- Mizuho Securities -- Analyst

John Pawlowski -- Green Street Advisors -- Analyst

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