Mid-America Apartment Communities Inc (MAA) Q4 2020 Earnings Call Transcript

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Mid-America Apartment Communities Inc (MAA 0.02%)
Q4 2020 Earnings Call
Feb 4, 2021, 10:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good morning, ladies and gentlemen. Welcome to the MAA Fourth Quarter and Full Year 2020 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded today, February 4, 2021.

I will now turn the conference over to Tim Argo, Senior Vice President, Finance for MAA.

Tim Argo -- Senior Vice President, Director Of Finance

Thank you, Ashley, and good morning, everyone. This is Tim Argo, Senior Vice President of Finance for MAA. With me are Eric Bolton, our CEO; Al Campbell, our CFO; Rob DelPriore, our General Counsel; Tom Grimes, our COO; and Brad Hill, our Head of Transactions. Before we begin with our prepared comments this morning, I want to point out that as part of the discussion, company management will be making forward-looking statements. Actual results may differ materially from our projections. We encourage you to refer to the forward-looking statements section in yesterday's earnings release and our '34 Act filings with the SEC, which describe risk factors that may impact future results.

These reports, along with a copy of today's prepared comments and an audio copy of this morning's call will be available on our website. During this call, we will also discuss certain non-GAAP financial measures. A presentation of the most directly comparable GAAP financial measures as well as reconciliations of the differences between non-GAAP and comparable GAAP measures can be found in our earnings release and supplemental financial data, which are available on the For Investors page of our website at www.maac.com.

I will now turn the call over to Eric.

H. Eric Bolton -- Chairman and Chief Executive Officer

Thanks, Tim. We appreciate everyone joining us this morning. As detailed in our fourth quarter earnings report, MAA ended 2020 on a positive note, results were ahead of expectations, and we carry good momentum into calendar year 2021. During the fourth quarter, leasing traffic was strong, and we captured 6% higher move-ins as compared to prior year. And despite the normal seasonal slowdown during the holidays, we were able to capture positive blended lease-over-lease rent growth that equaled the prior third quarter with particularly strong renewal lease pricing averaging 5.2% in Q4. Average physical occupancy also remained strong at 95.7% in the fourth quarter, a slight improvement from the performance in Q3. We believe these trends supported by improving employment conditions and the positive migration trends across our footprint positions MAA for continued outperformance into the coming spring and summer leasing season. Overall, conditions are setting up for a solid recovery cycle for apartment leasing fundamental across the Sun Belt over the next three years or so as demand recovers and supply levels moderate a bit into 2022. I believe for several reasons that MAA is in particularly strong position as we head into the recovery part of the cycle. First, we expect that our Sun Belt markets will continue to capture job growth, migration trends and demand for apartment housing that will be well ahead of national trends. While there were clearly favorable Sun Belt migration trends by both employers and households prior to COVID, this past year the trends accelerated.

The primary reasons behind these favorable migration trends, including enhanced affordability, favorable business climates and lower taxes will still be with us well past the point we get the pressures associated with COVID behind us. Secondly, the efforts we have under way this past year implementing change to a number of our processes involving new technology and web-based tools will continue to drive more opportunity for margin expansion. Specifically, steps taken to automate aspects of both our leasing and maintenance service operations will drive more efficiency with personnel cost. We expect to begin harvesting some of those early benefits later this year. Our redevelopment operation aimed at upgrading and repositioning many of our existing properties continues to capture very attractive rent growth and returns on capital. These higher levels of -- the higher levels of new apartment supply introduced into a number of markets over the past year will actually expand this redevelopment opportunity for us over the next couple of years. As outlined in the supplemental schedules to earnings release, we also expanded our new development pipeline in the fourth quarter, with just over 2,600 units now under way.

Our external growth pipeline executed through in-house development, prepurchase of joint venture development projects and the acquisition of existing properties will continue to expand over the next year. In addition to the projects outlined in our current pipeline schedule included in our earnings release, we have predevelopment activity currently under way with sites we own or have tied up in Denver, Tampa, Raleigh and Salt Lake City. Finally, and importantly, our balance sheet remains in a very strong position with ample capacity to support both our redevelopment and our new growth initiatives. Calendar year 2020 was certainly not the year we expected, but MAA's full cycle strategy with a uniquely diversified portfolio across the Sun Belt supported by a strong operating platform and balance sheet position the company to hold up well. Before turning the call over to Tom, I want to also say thank you to our MAA associates for a tremendous year of service and support to our residents, our shareholders and each other. Our strategy is working and our platform capabilities are strong. However, it's your intensity and passion for serving those who depend on our company that enables us to truly excel. Tom?

Thomas L. Grimes -- Executive Vice President, Chief Operating Officer

Thank you, Eric, and good morning, everyone. The recovery we saw beginning in May and June continued across the portfolio through the fourth quarter. Leasing volume for the quarter was up 6%. This allowed us to improve average daily occupancy from 95.6% in the third quarter to 95.7% in the fourth quarter. In addition to the improvement in occupancy, we were able to hold blended rents in the fourth quarter, in line with the third quarter and an 80 basis point increase. All in-place rents or effective rent growth on a year-over-year basis improved 1.3% for the fourth quarter. As noted in the release, collections during the quarter were strong. We collected 99.2% of build rent in the fourth quarter. This is the same result we had in the third quarter of 2020. We've worked diligently to identify and support those who need help because of COVID-19. The numbers of those seeking assistance has dropped over time. In April, we had 5,600 residents on relief plans. The number of participants has decreased to just 491 for the January rental assistance plan. This represents less than 0.5% of our 100,000 units. We saw steady interest in our product upgrade initiatives.

During the fourth quarter, we made progress on our interior unit redevelopment program as well as the installation of our Smart Home technology package that includes mobile control of lights, thermostat and security as well as leak detection. For the full year 2020, we installed 23,950 Smart Home packages and completed just over 4,200 interior unit upgrades. January's collections are in line with the good results we saw in the fourth quarter. As of January 31, we've collected 98.7% of rent build which is comparable to the month end number for the third and fourth quarters of 2020. Leasing volume in January was strong, up 4.9% from last year. Blended lease-over-lease rent growth effective during January exceeded last year's results for the first time since March. Effective blended lease-over-lease pricing for January was positive 2.2%, 40 basis improvement from the prior year. Effective new lease pricing for January was negative 1.8%. This is a 70 basis point improvement from January of last year.

January renewals effective during the month were up 6.3%. Our customer service scores improved 110 basis points over the prior year. This aids to our retention trends, which are positive for January, February and March, as well as lease-over-lease renewal rates for those months, which are in the 5.5 to 6.5 range. Average daily occupancy for the month of January is 95.4%, which is even with January of last year. 60-day exposure, which is all vacant units plus notices through a 60-day period, is just 7.8%. We're well positioned as we move into 2021. Led by job growth, which is expected to increase 3.4% in 2021 versus the 6.1% drop we saw for our markets in 2020, we expect to see the broad recovery in our region and the country continue. We expect Phoenix, Tampa, Raleigh and Jacksonville to be our strongest markets and expect Houston, Orlando and D.C. to recover at a slower rate. I'd like to echo Eric's comments and thank our teams as well. They served and care for our residents and our associates, and they have adapted to new business conditions that drive -- and they drive our recovery. Well done, and thank you, all.

I'll now turn the call over to Brad.

A. Bradley Hill -- Executive Vice President, General Counsel

Thanks, Tom, and good morning, everyone. While most buyers have returned to the market, the lack of available for sale properties continues to restrict transaction volume. Investor demand for multifamily product within our region of the country is very strong. And this supply/demand imbalance is driving aggressive pricing. Due to the robust demand, supported by continued low interest rates, cap rates have compressed further and are frequently in the high 3% and low 4% range for high-quality properties in desirable locations within our markets. We expect to remain active in the transaction market this year. So based on pricing levels we're currently seeing, we're not optimistic that we will succeed in finding existing communities that will clear our underwriting hurdles in 2021. While acquiring will be a challenge, as noted in the earnings guidance, we do plan to come to market with $200 million to $250 million of planned property dispositions this year.

We will redeploy those proceeds into our growing development pipeline, which currently stands at $595 million with eight projects in just over 2,600 units. In the fourth quarter, we started construction on the MAA Windmill Hill in Austin, Texas as well as Novel Val Vista, a prepurchase in Phoenix, Arizona. Both of these are lower density suburban projects that we expect to deliver stabilized NOI yields around 6%, well in excess of our current acquisition cap rates. Despite increased construction costs as well as some supply chain issues related specifically to cabinets and appliances, our development and prepurchase projects remain on budget with no significant delay concerns at this point. We have several other development sites owned or under contract that we hope to start construction on in 2021 and into 2022. We are encouraged that despite facing some supply pressure, our Phase two lease-up property located in Fort Worth continues to lease up at our original expectations as does our soon to be completed Phase two in Dallas, where over 90% of the units have been delivered. Turning to the outlook for new supply deliveries in 2021.

Based on our assessment and the projection data we have, new supply deliveries across our major markets are projected to remain flat with 2020 levels, at 2.8% of existing inventory. Consistent with previous year's, we expect delayed starts, extended construction schedules, canceled projects and overall construction capacity constraints to continue to impact actual supply deliveries to some degree. While clearly, new supply does have an impact on our business, it's just one side of the equation with demand playing a significant role as well. And for reasons Eric mentioned in his comments, we believe the demand for multifamily housing within our region of the country will remain strong and improve this year as the economy continues to recover. When looking at the ratios for expected job growth to new supply deliveries in 2021, we expect leasing conditions in our footprint to improve from last year. Encouragingly, the data on permitting activity and construction starts for our region of the country continue to show activity below prepandemic levels. This group -- this drop in activity will likely lead to a moderating level of new supply deliveries into 2022, setting up for what we believe will be an improved leasing environment beyond this year. That's all I have in the way of prepared comments.

So with that, I'll turn it over to Al.

Albert M. Campbell -- Executive Vp, Chief Financial Officer

Okay. Thank you, Brad, and good morning. Core FFO of $1.65 per share for the fourth quarter produced full year core FFO of $6.43 per share, which represented a 2.7% growth over the prior year and is well above our internal expectations following the breakout of the pandemic. Stable occupancy, strong collections and positive pricing performance were the primary drivers of continued same-store revenue growth for the fourth quarter, which is 1.8% and for the full year, which is 2.5%. As expected, same-store operating expenses for the fourth quarter were impacted by growth in real estate taxes, insurance costs and the continued rollout of the bulk internet program, which is included in utilities expenses. And though some of this pressure will carry into 2021, we expect overall same-store operating expenses to begin moderating this year, which I'll discuss just a bit more in a moment.

Our balance sheet remains in great shape. We had no significant refinancing activity during the fourth quarter, but we continue to fund the development pipeline and internal redevelopment programs. As Brad mentioned, our development pipeline has increased to eight deals with total projected costs of $595 million. During the quarter, we funded $104 million of development costs, leaving less than half or another $259 million remaining to be funded toward the completion of the current pipeline. Though still growing, our pipeline is still is only about 3% of our enterprise value, which is a modest risk, given the overall strength of our balance sheet and a diversified portfolio strategy. As Tom mentioned, we also made good progress toward the -- during the quarter on our internal programs, funding a total of $40 million toward the interior unit redevelopments, Smart Home installations and external amenity upgrades, bringing our full year funding for lease programs to $76 million, which is expected to begin contributing to our growth more strongly late in 2021 and 2022.

We ended the year with low leverage, debt-to-EBITDA of only 4.8 times and with $850 million of combined cash and borrowing capacity under our line of credit. Finally, we provided initial earnings guidance for 2021 with our release, which is detailed in our supplemental information package. Core FFO for the full year is projected to be $6.30 to $6.60 per share, which is $6.45 at the midpoint. The primary driver of earnings performance is same-store revenue growth, which is projected to be around 2% for the year. This growth is based on the expectation of continued improving economic trends and job growth in our markets, as Tom outlined, and we believe these trends will support both stable occupancy levels, averaging around 95.5% for the year. And modestly improving pricing trends through the year, driving effective rent growth for the year of around 1.7%. An additional contribution of 30 to 40 basis points of projected revenue growth for the year is related to the final portion of our Double Play bulk internet program.

We do expect the first quarter to be our lowest revenue growth for the year as it will bear the full impact of 2020's pricing performance growing from there as the -- head from there as improving leasing trends take full effect. Same-store operating expense growth is projected to moderate some as compared to 2020, will continue to be impacted by the rollout of Double Play and higher insurance costs with these costs combining for an estimated 1.4% of the same-store expense growth in 2021. But excluding Double Play and insurance, all other same-store expenses are expected to increase in a more modest 2.5% to 3% range for the full year. And this includes real estate tax growth of 3.75% at the midpoint, which is moderating, but still somewhat elevated. Overhead costs for 2021 are projected to be more normalized, with total overhead expenses expected to be about $107 million for the year, which is a 2.8% increase over the midpoint of our original guidance for 2020. Our forecast also assumes development funding of $250 million to $350 million for the year, primarily provided by projected asset sales of $200 million to $250 million. And given our current forecast, we have no current plans to raise additional equity, and we expect to end the year with our debt-to-EBITDA just below 5 times. So that's all we have in the way of prepared comments.

So Ashley, we'll now turn the call back over to you for any questions.

Questions and Answers:

Operator

[Operator Instructions] We'll take our first question from Sumit Sharma with Scotiabank. Please go ahead.

Sumit Sharma -- Scotiabank -- Analyst

Hi, good morning. Thanks for taking my question. Thank you for providing all the color on the stats in Q4. I guess to kick things off, in terms of the SS rev growth this year, I know you mentioned that Tampa and Phoenix were one of your stronger markets. So just wondering, as you looked at 2020, Phoenix was your strongest performer, Orlando was the weakest, the spread in SS revs was 630 bps. In Q4, that changed, Tampa was better and Orlando was the weakest. So I guess, what's that spread look like in the context of your 2021 guidance of 1% to 3%? And where do you see the most meaningful change in performance in terms of things you already know about.

Thomas L. Grimes -- Executive Vice President, Chief Operating Officer

Yes. I'll start with that one, and I'm going to let Tim or Al wrap up on the forecast. What I would tell you is, as I mentioned in the call, the thing that is most different for us in 2021 is the shift in the swing in jobs, bringing from negative 6.4% to positive 3.4%. And that's going to be the thing that drives us, and that moves across the markets. We see that at the high end, where we'll continue to see markets like Tampa and Raleigh and Phoenix and Jacksonville accelerate, but we'll also see it in places like Orlando and Houston and D.C., which are weaker now, but they will begin to improve as job growth comes to play in those markets.

Albert M. Campbell -- Executive Vp, Chief Financial Officer

Yes. And then just looking for the future what we have in our forecast, the 2% overall, I mean, I think, you just think about the markets and some of the markets that we're thinking will be the strongest, as Tom talked about, mentioned, Phoenix, Raleigh, Tampa, Jacksonville, some of the ones that are going to be OK markets. So they are going to be reasonable. It's still challenging, Atlanta and Dallas, Austin and then some of the more challenging markets, Houston, Orlando and D.C., and I think all of those together and based on the pricing trends we see right now and expect for the year given the job growth come to 2% expectation.

Sumit Sharma -- Scotiabank -- Analyst

Got it. Got it. One more, if you will indulge me on supply. Now you talked about 2021 supply being 25%, price 25% higher and centered in urban and downtown markets or submarkets. I guess we -- the permit levels are less than at lower levels than pre-COVID levels but they are increasing as we've heard from other market participants as well. So keeping that in mind, do you have any insights to share on what types of markets or product or price points that are being emphasized by the new permit. So not the '21 deliveries, but what's being started right now, are they more garden style, more urban, less urban. Any color on that?

A. Bradley Hill -- Executive Vice President, General Counsel

Yes, this is Brad. I would say that, just giving the economics of what we're seeing today, it's really hard to underwrite more urban, high-density products. So I think it's safe to assume that a higher percent of the product that's being developed today is more suburban in nature. But I'd say, having said that, when we look at the spread between the rents of new supply that's coming online versus our properties. That spread is still really good. And as Eric said, that's leading to more redevelopment opportunities for us. So we think that continues. It's hard to say where -- just looking at permitting trends, while they're clearly down versus pre-COVID levels, I would say construction starts are down even more. It's hard to say just from the permitting data, where that supply is located. But my sense is, it's going to be more suburban in nature. But given the economics of where costs are, the rent levels of those are still going to be pretty substantial compared to our current product.

H. Eric Bolton -- Chairman and Chief Executive Officer

This is Eric. Sumit, I'll add to what Brad is saying. I agree. Based on everything that I've seen that it does -- would appear that the majority of a lot of the lease permitting activity is oriented more suburban in nature. But having said that, one of the things that we're really starting to see more evidence of is, frankly, entitlement and permitting is getting more challenging. As more of this multi-housing product heads to the suburbs, we're seeing a lot of -- particularly in the satellite cities, the suburban cities, if you will, that have their own school systems and their own municipal governments. They are becoming very restrictive about what they are allowing in the way of apartment permitting, believing that these additional households will put some level of stress on the infrastructure and we're seeing that the permitting activity is starting to get a lot more restrictive than it ever has been in a lot of these southeastern markets. So I think there is another, if you will, a hurdle starting to develop across some of these southeast markets that will make it increasingly a little bit more challenging to supply some of these suburban locations.

Sumit Sharma -- Scotiabank -- Analyst

Thank you so much for the color. I'll give you my time. Thank you.

Operator

And we'll take our next question from Neil Malkin with Capital One. Please go ahead.

Neil Malkin -- Capital One -- Analyst

Hey, everyone. Good morning.

Thomas L. Grimes -- Executive Vice President, Chief Operating Officer

Hey, Neil. Good morning.

Neil Malkin -- Capital One -- Analyst

So this is the first time, I think that you guys have really called out or Eric, your comments have called out the in migration. Can you just maybe talk to that, what you've seen over the recent months in terms of that sort of out migration from the coast, just given the confluence of bad factors that the coasts are facing, which have been exacerbated by the COVID and work from home. I think last quarter, you laid out some statistics about like, what percentage of your new leases were from out of state. If you can just update us on that and any incremental commentary from the property level managers would be great to hear.

Thomas L. Grimes -- Executive Vice President, Chief Operating Officer

Yes, Neil. It's Tom. I'll jump in on that one, if that's all right. Move-ins from people moving into our footprint from outside of our footprint was 12.2% of total move-ins in fourth quarter. That's the highest we've seen and reflects the steady upward trend that we've seen over the past couple of years. It was -- for context, it was 9.2% in Q1 of '19. So almost a 300 basis point increase. We've seen that steadily happening from '19 on. Just to give you a little bit more color on the Q4 move-ins, New York move-ins -- move-ins from New York state, were up 36%. And apartment searches, we pulled some information from Google, apartment searches in Atlanta were up 60% in New York City. Move-ins from Massachusetts were up 43% and apartments in Raleigh searches were up 68% in Boston. And trends go on from there. The other notable is probably California, which is up 60% and apartments in Austin searches were up 90% in Los Angeles.

H. Eric Bolton -- Chairman and Chief Executive Officer

And Neil, this is Eric. Just to add on to some of that detail that Tom laid out there. I do think that there are a lot of reasons to believe that a lot of this migration trend that we saw the U.S. population to the southeast over the past year, as I mentioned in my comments earlier, a lot of these trends were evident prior to COVID. COVID accelerated those trends somewhat. And I would tell you that, I believe a lot of this -- a lot of the moves that took place during 2020 are pretty sticky in nature. And I think that the trends are likely to continue post COVID. I think you have to recognize a lot of these southeastern markets, they continue to offer all the same attractive qualities that I think started the trend some years back. And what is so -- happening as more employers are bringing more knowledge-based jobs and tech jobs into this region of country, the employment base is really starting to further diversify. And of course, work from home and these knowledge-based jobs allows a lot more remote working, which I think is also working in our favor.

And so I think that a combination of just how these economic trends have been building, frankly, in these job and migration trends have been building for the last 10 years or so, recognizing -- accelerated a little bit last year, but those trends were in place well before COVID, and I think we'll continue past COVID. The affordability of the region, particularly as it relates to housing, continues to, I think, be very, very attractive and will become even more so over the next 10 years. And I think we also have to recognize that these Sun Belt markets are continuing to become very desirable places to live. And what Nashville and what Austin and what Raleigh have to offer people today versus where they were 20 years ago is night-and-day difference. And so I'm very optimistic that we are at the beginning of some continued very favorable trends for housing needs throughout this region of the country.

Neil Malkin -- Capital One -- Analyst

Thank you. Eric, so I guess what you're saying is, you think it would be -- it will take longer or it may not happen for the people who have moved to your area to make the track back to the coastal urban city?

H. Eric Bolton -- Chairman and Chief Executive Officer

Yes. I think the idea that once a vaccine is in place, and if you will, society returns to normal, the idea that there's going to be this giant reversal of population shift back to the gateway markets. I think that's a ridiculous argument. I don't think that's going to happen. Those trends were in place to the Southeast and Sun Belt markets before COVID. COVID accelerated a little bit. And I think those trends are going to be -- and we learned a lot last year, and employers learned a lot and households learned a lot. And I think the attractiveness of this region is only was -- is better understood today than it ever has been. And I think these trends are going to continue.

Neil Malkin -- Capital One -- Analyst

That's great. Other one from me, the single-family market has been very strong. You have new and existing home sales and mortgage applications at multiyear highs. Just wondering -- and obviously, you guys are theoretically more exposed to that sort of risk, just given the relative affordability. Have you seen any uptick in move-outs for home purchases or home rentals or anything like that, that would give you some reticence just in terms of potential demand erosion, let's say, over the next 12 months?

Thomas L. Grimes -- Executive Vice President, Chief Operating Officer

Hey Neil, it's Tom. I mean nothing -- I mean, 0 reticence, I would say. We're quite pleased with the way the market conditions are going at this point. I mean the fourth quarter, home buying this time was up slightly by like three percentage points as a move-out reason or about 200 move-outs on total. So I mean, we saw a little bit there. But as you look forward, our accept rates are at their normal levels. So we're not seeing turnover go up over time there. And home renting is flat again. So that continues not to be a major factor. We agree with you that the overall home buying market certainly getting stronger. And we wouldn't be surprised to see that tick up from time to time, but it's really reflective of a strong jobs market and a good economy and that produces jobs. And frankly, jobs are the thing that drive our business. So that would be my thought thus far.

Neil Malkin -- Capital One -- Analyst

Alright, thank you guys for the time and love the Sun Belts.

Thomas L. Grimes -- Executive Vice President, Chief Operating Officer

Thank you, Neil. We do too.

Operator

We'll take Our next question from Nick Joseph with Citi. Please go ahead.

Michael Bilerman -- Citi -- Analyst

Hey, It's Michael Bilerman here with Nick. So I had a question and Nick would add another one as well. Eric, as you think about, and I know how positive you are on the current markets in the Sun Belt, and all the trends that have been accelerated away from the gateway market. You inherited D.C. when you bought Post, I don't know if it was a gift with purchase or whatever, but you got some exposure to some coastal exposure in the Northeast. What would make you come in and want to buy or develop in gateway markets? I guess at what point does the risk/reward, what needs to happen, A, from a diversification standpoint, is it trends? Is it relative values? Growth profiles? I guess where is your mindset about that today because if everyone is zigging, maybe you want to zag. And maybe there would be a good opportunity from a value perspective there?

H. Eric Bolton -- Chairman and Chief Executive Officer

Well, Michael, I would tell you that my principles and sort of the philosophy that I've always had in terms of how we will think about deploying capital is really -- continues to be grounded in the overriding belief that the most important thing that we are charged with doing is deploying capital in a manner to create the highest recurring quality revenue stream and earnings stream that we can, to pay a steady growing dividend, throughout the cycle and if you will, in creating a optimized sort of full cycle performance profile. At the end of the day, I think REIT shareholder capital over time, over a long period of time is largely rewarded through steady earnings growth, obviously, and particularly dividend growth. And having said that, I've always believed then that the best way to accomplish that performance objective and that profile is, deploy capital where demand is likely to be the best and the strongest and growing in a consistent fashion over a long period of time. I get it that the southeast markets for years, the argument and criticism was that there are lower barriers to supply and new supply can come in and oversupply a market. What I would tell you is, what supply causes, it causes moderation.

What demand causes is steady earnings growth over time. And a falloff in demand can have catastrophic consequences. And an oversupplied market is unlikely to be catastrophic in nature. It can be weak for a year or two but it's unlikely to trigger a massive -- sort of upset your earnings stream, which can put a company in trouble, create dividend stress and things of that nature. So I've always believed that these Sunbelt markets offer the performance profile that we're after. And that's what we should be doing and where we should focus our capital. So it's a very long answer to your question. But no, we have no interest in now using this opportunity to go into these gateway markets. I don't think our -- what we're trying to do for capital -- for shareholder capital would not be sufficiently rewarded for pursuing that. At this point, we don't see a reason to do that and we like what we're doing.

Michael Bilerman -- Citi -- Analyst

How do you think about just the risk/reward from a return perspective, right? I think you're extraordinarily fortunate to be so heavy in these markets, having built the platform that you've done through a lot of hard work and acquisitions and M&A and development. But there's a lot of capital chasing these markets too, right, which is going to drive down returns overall. And I'm not ignoring the fact that the demand is extraordinarily strong, but is there a financial side of it, too, that, as money is coming out of these gateways that you could create a better total return by deploying capital or reallocating capital in the portfolio? Or is that just not -- in your view, the demand is not there, so I'm not going to -- it doesn't matter if I can get 100 basis points or 200 basis points higher initial return out of it?

H. Eric Bolton -- Chairman and Chief Executive Officer

No. No, I get your point. And I mean, obviously, I think it depends somewhat on your investment horizon. As you think about risk return, risk/reward/return, I think, clearly, there's going to be opportunities that are going to emerge in some of these gateway markets, where you can go in and deploy capital and make an investment and create an exceptional return on your investment. I think it somewhat depends on your horizon and how long you want to think about the capital being deployed in that market. Again, from our perspective, we're very long-term investors, very long term holders, and we're trying to create an earnings profile from that investment action to match up well in terms of how we're trying to perform for capital over a long period of time. And so we just don't believe that, with that horizon that we're working with and that objective that we're shooting for, that the gateway markets really align for us in the way we want to try to perform for capital. I'm not suggesting that focusing on those markets is wrong. And I think there are -- there's certainly ways to make a lot of money in those markets. But I think you have to think about your horizon, perhaps a little bit differently.

And I will say that, while we continue to see capital coming into these markets, I think that there were times where these gateway markets over the last -- and you know this, over the last 10 or 15 years, I mean, just attracting enormous amount of capital and a lot of international capital sometimes that I think was really motivated by, now someone who're looking for a great return on their capital, in some cases, is looking for a place to preserve capital, if you will. And so you get a lot of different influences on some of these bigger gateway markets, and particularly with international capital that can, I think, create some distortions from time to time in terms of assets are being priced relative to the long-term earnings potential of the investment. So we just see volatility and other aspects of those markets. Now those gateway markets just don't really match up well to how we're trying to perform for capital, and we're going to continue to focus on it the way we do.

Nick Joseph -- Citi -- Analyst

Thanks. Appreciate that. And this is Nick. Just one other question on guidance. The first quarter range is pretty wide. Obviously, we're a month into the quarter, and there are fewer leases that are signed and recognized, still the uncertainty, but just wondering if you can walk through how you could end up at the high end or the low end? And then specific to your same-store revenue comment, where you expect same-store revenue to be in the first quarter? I know you said it should be the lowest point of the year?

Albert M. Campbell -- Executive Vp, Chief Financial Officer

Yes, Nick, this is Al. I think just overall, I mean, just given the uncertainty that's in the marketplace, I think that the first quarter being the first quarter of the year and where you have the most uncertainty. I think the range was just to reflect that. And I think the driver for the forecast for the whole year is based on revenue performance. And so I think that's the key to be the top or the bottom of the range and really for the year or for the quarter. And I think the first quarter, as talked about a little bit in the comments, is expected to be the lowest revenue quarter for the year, but that's really reflecting effective rent per unit, which is a combination, which is backward or trailing indicator, which is a combination of the pricing you did last year, plus what you're doing this year. And so we're expecting improving pricing trends, but the first quarter will be the lowest revenue quarter because it will reflect really, the bulk of last year's pricing, which was 1.3% on average, and we certainly expect that to be higher in 2021 based on the forecast we're putting together. So that's really the key factor. I hope that answers your question.

Nick Joseph -- Citi -- Analyst

It does. Thank you.

Operator

We'll take our next question from Rob Stevenson with Janney. Please go ahead.

Rob Stevenson -- Janney -- Analyst

Hi, good morning guys. Tom, there was nearly an 800 basis point delta between the new lease rate and the renewals. How sustainable is that type of spread? And given that pricing is out there in the Internet, why aren't residents pushing you guys harder on renewals?

H. Eric Bolton -- Chairman and Chief Executive Officer

The spread is always going to be kind of the widest at this time of the year, Rob, because new lease pricing is at its most challenged. But that delta and that delta will close over time, but that gap will always be there. And the -- really, the variation is with a new renter, they have a level of leverage because they're shopping, and they can move anywhere and their switching. Costs are really the same. If we have done our job and provided good resident service in taking care of the residents and, frankly, a pretty challenging time, we've earned the opportunity because we've created for value to charge a little bit more. And so that is where we have the most pricing power because we've worked with them, we've earned them and their switching costs are a little bit higher. So that delta that you talk about has always been there. It is widest in this time of year, and it will be tightest in the summer months, but we expect that, and we plan for that. And we ask our residents for a little more to reflect the value that we've created for them.

Rob Stevenson -- Janney -- Analyst

And implied in the guidance for the year, I mean where are you guys thinking that new lease versus renewals winds up coming in? We're talking about something that's more or less flat on new leases or still negative there? And how significant should the or is the guidance anticipating renewals being?

Tim Argo -- Senior Vice President, Director Of Finance

Rob, this is Tim. I think what we would expect overall is that new lease pricing, probably slightly negative. It will -- it's very seasonal, as Tom mentioned and depends on the sort of the leading edge of demand. So you'll see pretty negative in Q1. Q4 moved to positive as we get into the summer. But I think over the average, probably a little bit negative. And then renewals kind of hanging in there like they have anywhere in that 5% to 6% range and again, varying some with a little bit higher in the summer, a little bit weaker in the fall and winter.

Rob Stevenson -- Janney -- Analyst

Okay. And then the other one for me is, you guys did, call it, $424 million of revenues in 2020. How much of that is nonresidential, so retail, commercial, other spaces at your properties? And where did that wind up coming in versus expectations a year ago? I mean what was the negative delta? How significantly was that impacted over the last year versus what you would have expected this time a year ago?

Albert M. Campbell -- Executive Vp, Chief Financial Officer

I think the major component that's outside of residential is really just commercial. It's only about 1.5% of our revenue stream. So it's really minor overall, Rob. And so we've had pretty good performance. I mean we've looked at our tenants, and we certainly have some programs to sort of -- or rent where we needed, but we had good collection and a lot of our tenants are very strong and have strong businesses that been able to continue paying well. And so it's -- so collections have been good. So it hasn't even on a small number, hasn't -- we've had pretty good performance still, on a relative basis.

Rob Stevenson -- Janney -- Analyst

And the occupancy there? I mean are you guys fairly full? Is that sort of -- is that half full? I mean how are you guys sort of characterizing even though it's a small percentage, given that it's also amenity space for some of your tenants as well, I assume.

Robert J. DelPriore -- Executive Vice President, General Counsel

Rob, it's Rob DelPriore. The -- we're sitting at about 85% to 90% occupied, and we've collected about 90% of the revenues in cash on the commercial side.

Rob Stevenson -- Janney -- Analyst

Perfect. Thanks, guys. Appreciate it.

Operator

We'll take our next question from Amanda Sweitzer with Baird. Please go ahead.

Amanda Sweitzer -- Baird -- Analyst

Great. Thanks. Good morning everyone. Can you talk a little bit more about what you're seeing today in terms of construction financing? Have you seen the large money center banks come back to your market at all? And then how development loan terms changed relative to pre-COVID, both in terms of interest rates and then LTVs?

A. Bradley Hill -- Executive Vice President, General Counsel

Yes, Amanda. This is Brad. I'd say that the construction financing is really kind of a mixed bag. I think it depends on a few things. One, the markets that folks are looking in. Certainly, some markets are easier to get financing in or less hard to get financing in than others. Then I think it also depends on the sponsor. I mean I think what we're seeing is generally for the larger developers, the strong sponsors that historically have had pretty good pipelines. They're still able to get financing. But I think the smaller developers that do just a handful of deals a year, they're not as strong. They don't have as strong a relationship with the banks, or having a little bit tougher time getting their debt financing lined up.

So that certainly has been an impact in financing, and that also certainly leads to some of our prepurchase opportunities. In terms of loan terms, we're seeing, call it, 10-year rates in that 4%, 4.5% range for construction financing, which I think is still decent at the moment. Really, the only change that we've -- or the biggest change we've seen in construction or in financing, not construction financing, but is really has to do with the low cap rates that we're currently seeing for these stabilized assets. The low cap rates are starting to drop some LTV movement in order for debt service coverage ratios to continue to be held. So we are seeing loan to values come down a bit. We're not seeing any impact yet on pricing, but we'll really just see how that unfolds later this year as more opportunities come to market. But that's basically what we're seeing at the moment.

Amanda Sweitzer -- Baird -- Analyst

That's helpful. And then on your comments about that cap rate compression, what's kind of a reasonable assumption for a cap rate for your targeted dispositions this year?

A. Bradley Hill -- Executive Vice President, General Counsel

I think for our dispositions, given that we're selling our Jackson, Mississippi portfolio, which we had on the market last year is 30-, 35-year-old product in a tertiary market. You're talking five to 5.5 cap rate for what we'll look to sell this year. We're looking to sell properties that really don't line up as well with our overall growth strategy. It's going to tend to be older property in some of these smaller markets initially, where really the after capex, cash flows are really not what we're looking for and then the long-term growth is obviously not what we're looking for as well. But on a historical basis, the cap rates for these properties are still really, really good at the moment, but I'd say five to 5.5.

Amanda Sweitzer -- Baird -- Analyst

Okay. That's it for me. Thanks for the time.

Operator

And we'll go next to Alex Kalmus with Zelman & Associates. Please go ahead.

Alex Kalmus -- Zelman & Associates -- Analyst

Alright, thanks for taking my question. Quick one on stimulus checks. Given your market backdrop, the stimulus onetime payments will likely go further for your residents than compared to the urban environment. So limited historical perspective, how do you think these will play out in terms of your rent negotiations this year?

H. Eric Bolton -- Chairman and Chief Executive Officer

I would think any stimulus check is going to help that situation. But we're frankly in such a strong position on that with our collection rate where it is, it will help close the gap to get us back to last year and would be welcomed, but it would just primarily help a little bit.

Alex Kalmus -- Zelman & Associates -- Analyst

Got it. Thank you. And just touching upon the recurring capex. I noticed year-over-year, there was a little jump there. Can you provide some additional color and what drove the increase.

Albert M. Campbell -- Executive Vp, Chief Financial Officer

I think recurring capex can be -- it can be the timing of certain jobs with some of the significant jobs like paint jobs and some of the things of that nature. I think over time, we expect for -- we put recurring and revenue-enhancing together, and we'd expect to spend, call it, $1,100 to $1,200 per unit, those two together in 2021, which is fairly significant to what 2020 was, but somewhere in that field for the long term.

H. Eric Bolton -- Chairman and Chief Executive Officer

Yes. And I would add, we had a little bit bigger jump from '19 to '20 in recurring capex. But for '21, we're projecting a very modest increase in terms of recurring capex.

Alex Kalmus -- Zelman & Associates -- Analyst

Got it. Thanks very much.

Operator

We'll take our next question from John Kim with BMO Capital Markets. Please go ahead.

John Kim -- BMO Capital Markets -- Analyst

Thank you. On your prepared remarks, you mentioned blended lease growth rate was 2.2% in January, you expect improving pricing trends this year. But then effective rental growth of 1.7% for the year. Assuming that these are apples-to-apples numbers, you're pretty close to it. Why will that effective rent growth for the year be higher?

Albert M. Campbell -- Executive Vp, Chief Financial Officer

Well, John, this is Al. The effective rent growth, we talked a moment ago about that a bit. I think that's more of a trailing indicator. It's a combination of all the leases you have in place right now. And so the pricing performance we have for 2020 was 1.3% on average. And so we're projecting for 2020 is certainly higher than that. I think you could do the math. But this is a rough approach. But in a pretty easy way to look at it is, take half of what we did in 2020 and half of what we expect to do in 2021 and that will drive your effective rent growth to 1.7%. So you can do the math on it back end too. We're expecting something in the -- a 2% to 2.5% range on pricing in the first quarter was -- I mean the January was a good indication toward that.

H. Eric Bolton -- Chairman and Chief Executive Officer

If you take what Al just said, if you take half your lease-over-lease performance, blended lease-over-lease performance for '20 and half of your blended lease-over-lease performance for '21, collected or together, that comprises what your effective will be for the year.

Albert M. Campbell -- Executive Vp, Chief Financial Officer

And that's the back of the envelope way to do it. But I think if you do that, given that we have leases on average of a year, that works out pretty close, and you can get to where we are on our forecast.

John Kim -- BMO Capital Markets -- Analyst

Okay. Your redevelopment pipeline, it sits up 15% sequentially this quarter. Can you just remind us how long you think it will take to complete this 10,000 to 15,000 units of redevelopment?

Thomas L. Grimes -- Executive Vice President, Chief Operating Officer

In terms of the pipeline going forward, we'll do over 5,000 units in '21 toward that. But what we found, John, over time is that, as we move forward, our product ages another year and new supply is brought into the market. So I would be surprised if we ever blew through our potential on that. But at this rate, it'd be about three years, but I would expect us to see the pipeline grow over time as new properties are added to it, as market conditions change, product added -- product is added and product ages.

Albert M. Campbell -- Executive Vp, Chief Financial Officer

And John, just to add to what Tom was saying that, as he's mentioned there's new product comes into the market, that really, what that does is that it expands our opportunity for redevelopment. And historically, at least over the last number of years, where the redevelopment opportunity for us has been the best has been in some of our more urban oriented locations, which is really where the opportunity largely lies in portfolio now, particularly with the legacy Post portfolio. But as new supply begins to -- over the next few years, if it is more oriented toward the suburban locations, that's actually going to expand our field of opportunity for more extensive redevelopment out in the suburb components of the portfolio because obviously, this new product is coming in at a price point that is well above our existing product and with comparable locations and comparable appeal in that regard, we can go in and make these investments with kitchen and bath upgrades and create a very competitive product. And so offer the market, the renter market a slight discount to the newer product and get great returns on capital and get great lease-up success with it. So we think that this is a real opportunity for us over the next few years, and we expect it to stay at the same high level for the next three or four years for sure.

John Kim -- BMO Capital Markets -- Analyst

Is 99% a good run rate as far as what you'd expect as, as far as the effective rental growth for the pipeline?

Albert M. Campbell -- Executive Vp, Chief Financial Officer

I'm sorry. Say that again.

John Kim -- BMO Capital Markets -- Analyst

The 19.5% rent growth that you have?

Albert M. Campbell -- Executive Vp, Chief Financial Officer

Yes. Yes. Yes.

Tim Argo -- Senior Vice President, Director Of Finance

Yes. Yes. Those are -- I mean we're -- we test, and we would expect that return to continue, absolutely.

John Kim -- BMO Capital Markets -- Analyst

Okay. Great. Thank you.

Operator

And we will take our next question from Zach Silverberg with Mizuho. Please go ahead.

Zach Silverberg -- Mizuho -- Analyst

Hey, good morning. Thanks for taking my question. Could you guys just talk about the opportunity set on your development pipeline after the two new starts, you're up to about. It was $600 million properties under development, what type of terms are you underwriting? And sort of how does that compare to the acquisition market in those specific markets?

A. Bradley Hill -- Executive Vice President, General Counsel

Yes, Zach, this is Brad. I think Eric touched on it a bit in his comments. We do have a number of sites that we're currently working on predevelopment work on. We've got some that are owned, some that are under contract. I'd say in terms of the terms they were underwriting, not a lot different than what we've underwritten previously. We are fortunate in our markets that the rents have continued to hold up within our markets. So we're not having to make some aggressive assumptions with rent trending or some large recovery in rent in our underwriting.

So the two that we just started, as I said in my comments, we're still looking at north of a 6% yield. And certainly, that compares very favorably when you look at Class A brand-new products in our markets, what they're trading at today. So we continue to believe in that. We have another own site that we purchased in Denver. We hope to start in 2022. We're working on a site in Tampa, a site in Raleigh. Those are likely 2022 sites as well. And then we have under our prepurchase platform, where we've got one in Salt Lake City that we hope to start in the second quarter and then another site in Denver in our prepurchase platform that we're hopeful will start in the third quarter of this year. So...

Zach Silverberg -- Mizuho -- Analyst

Got you. I appreciate the color. And in your prepared remarks, you mentioned it was about 3%, I think of gross assets and there was moderate risk. Sort of what is the maximum and minimum risk you're willing to slide the lever on in between development?

Albert M. Campbell -- Executive Vp, Chief Financial Officer

I think we've discussed historically somewhere around 4% to 5% would be a range that we would look at. I think -- but when you're looking at your actual pipeline relative to your enterprise value, another aspect of risk is how much is unfunded. And so I'd point to this fact that we have $600 million sort of going right now. We only have a fairly small amount that's unfunded. So I think those two factors together is what you will consider. So we're definitely at the low end of the risk range on that right now, and you'll see our pipeline grow a bit 2021, as Brad talked about in early 2022, but certainly a modest risk program, given our profile.

Zach Silverberg -- Mizuho -- Analyst

Thank you.

Operator

And we'll go next to Rich Anderson with SMBC. Please go ahead.

Rich Anderson -- SMBC -- Analyst

Thanks. Good morning, everybody. And of course, Eric, I didn't expect you to open up the comments suggesting that everyone is going to move out of the Sunbelt next year. So no surprise there. But if you do look at the statistics, in the period after the last great recession, 2010 time frame, the migration out of New York, for example, substantially slowed. And you can argue that there are some real bargains in a lot of other areas that you're not in, that could entice people perhaps even more this time around than then. Again, it's never been positive in migration. Really, I don't think that's ever happened with the Sunbelt into a market like New York, but it probably will normalize. And so when you mentioned this 12.2% of total leasing is moving from outside your footprint, how much is that impacting your growth profile? Because you really probably don't want to hang your hat on that type of level for very long.

H. Eric Bolton -- Chairman and Chief Executive Officer

No. I mean, I think that we still believe that a lot of the growth that we will have in demand, if you will, will be people that have been in the Sunbelt, we'll stay in the Sunbelt organic, if you will. So I don't disagree that the 12% -- go back two years ago, before COVID, the move-ins from outside of our footprint were a little over 9%. So even compared to where we are today with COVID, it's only moved up from 9% of our move-ins from outside the footprint to 12% of the -- so I -- your point is valid in that sense. It hasn't changed radically. But I just -- I feel like that what we're going to find is that over the next -- I think there's real fundamental shift that has -- that was in place, if you will, to some degree before COVID as employers and job seekers, if you will, were continually drawn to this region of the country as a consequence of all the things that you know about. And I just believe that those factors have not moderated. They have not lessened. COVID accelerated them a little bit, but those trends are going to continue well past COVID. And I think that what we're finding that is, particularly as some of this millennial generation continues to age. They've moved in up in their career.

They've moved into jobs increasingly that I think offer the ability to be more remote than they have been in the past. That drive that they had to be in New York and work 60, 70 hours a week that was then. They're in a different place now. And I just -- I feel like that a combination of, frankly, the aging millennial generation and how their lifestyle needs evolve and desires change as well as retiring baby boomers, who are looking for change and looking for more affordable living. Those two big slugs of the demographics of the U.S., the millennials and the retiring baby boomers, those are huge numbers. And as those two age demographics evolve, I think the Sunbelt stands to benefit more so than some of the higher cost coastal markets. And so I heard somebody suggest that, yes, the coastal markets are going to -- the gateway markets are going to come back. But they're probably going to come back a little bit cheaper and a little bit younger than they were before. And I think there's probably some truth to that.

Rich Anderson -- SMBC -- Analyst

Okay. Good enough. That's good color. And then my second question, perhaps, well, maybe on the uncomfortable side, but I never shy away from that. You had some sort of C-suite succession activity in some of your peers, Essex, UDR, Avalon Bay. And I wonder, to your credit, Eric, you have made MAA not an ever-golden show. You have a great bench there. And I think everyone recognizes that. But can you talk about how much this team right now today looks to be in place for the next, at least few, 3, four years? Or we can talk about the succession plan that's perhaps in place for you and others, how that dialogue is happening at the Board level? Thanks.

H. Eric Bolton -- Chairman and Chief Executive Officer

Okay. Well, we can take a poll around the table right now, if you want, but we won't do that. What I would tell you, Rich, is it's a very active topic at the Board level. We discuss it to some degree, at every meeting. There's active planning that's under way and continues to this day. I will tell you that, I feel great and have no plans to do anything different. I don't play golf. And don't really have anything else to do. So I'm focused and plan to continue in that way for some time. But as you point out, we've got a great team, great bench strength. The company has been through a lot in the last seven to eight years. The team has really come together. And so we're developing and focus on leadership development and leadership succession. But frankly, we don't see a lot of change on the near-term horizon. Okay. Great.

Thomas L. Grimes -- Executive Vice President, Chief Operating Officer

Rick, just a real quick point on what we're hanging our hat on. As you mentioned earlier, I mean, supply is going to be pretty much the same. Job growth in 2020 was negative 6.1% in our market. It's going to be plus 3, 4. That 900 basis point swing in job growth is really what we're hanging our hat on for near-term growth.

Rich Anderson -- SMBC -- Analyst

Thank you, guys. Appreciate it.

Operator

We'll take our next question from Rick Skidmore with Goldman Sachs. Please go ahead.

Rich Anderson -- SMBC -- Analyst

Hey Eric, just a question, just with regards to how you think about development going forward and the shift in perhaps working from home and people wanting more space. Are you changing the design of the developments? And does that change the economics in terms of how you think about returns as you go forward? Thanks.

H. Eric Bolton -- Chairman and Chief Executive Officer

Rick, I mean we are a little bit more focused on creating workspace areas, nooks and things of that nature in a number of our apartments. And we're also very much more oriented toward outdoor amenity areas in shared office sort of configurations in some of our leasing centers. Frankly, it's not really having much of an impact on our overall cost of build-out. And we certainly think that there's a lot of reason to continue to introduce more of the support for work from home, but no real significant change in terms of the cost impact for us.

Rich Anderson -- SMBC -- Analyst

Thank you.

Operator

We'll take our next question from Austin Wurschmidt with KeyBanc. Please go ahead.

Austin Wurschmidt -- KeyBanc -- Analyst

Hey, good morning everybody. Could you give us the actual data around what the ratio of jobs to new supply is in 2021 for your markets versus maybe 2019 and some historical averages, if you have that with you?

H. Eric Bolton -- Chairman and Chief Executive Officer

Yes, of course. For our group, the jobs to completion ratio last year was negative 8.1%. It swings to positive $7.1 million. And I think we've consistently found that 5:1 is a place where we can grow rents. So it's a substantial shift and sort of the key to our rent growth aspirations.

Austin Wurschmidt -- KeyBanc -- Analyst

Yes. Appreciate the data point. And I think it kind of really goes to some of the questions that I've heard asked, and maybe, Eric, your tone, just on the recovery in your market seems pretty upbeat. But yet, when you kind of take where fourth quarter same-store revenue growth was, and you look at the midpoint of the guidance, you layer in the accelerating redevelopment. I guess one of the questions we have, and I think others are driving at is, why isn't that driving a little more reacceleration other than just the earn-in of last year's effective rents. Is there anything else you've assumed in guidance, higher turnover, lower occupancy that's contributing to maybe a more muted reacceleration in 2021?

H. Eric Bolton -- Chairman and Chief Executive Officer

No. I think that what you have to recognize is that getting the revenue impact of pricing changes takes time and it takes time to go up, and it takes time to go down. We went into the 2020 with some of the highest earned-in leasing performance that we've ever had, and that allowed effective rent per unit to remain fairly strong, if you will, throughout 2020, which was hugely helpful. I remember late in 2019, if people asking me, what I'm worried about. And I've said, I'm worried about the slowdown. I'm worried about something happening with the economy. And in preparation for that worry, the best thing we could do is, grow rents as hard as we could, even at the expense of giving up a little bit of occupancy and allow that compounding benefit to be there as a protective performance on revenues, should we see the economy weaken and that certainly helped us this past year. So what I would tell you is, I mean, there are two things that play here that I think are going to cause the recovery process, recovery slope to be steady as opposed to being a real steep up-up curve, if you will. One is, we are still battling supply issues, and we will have those supply issues throughout 2021, pretty consistent with what we saw in 2020. And we think it actually peaks in the first part of the year and probably starts to moderate a little bit toward the back half of the year, but that's well after we get past the peak leasing season for 2021.

So -- and then as we pointed out, the supply picture, I think, improves as we get into 2022 and beyond, at least for a couple of years. I think probably by the time we get to '24, '25, it starts to accelerate again as a consequence of what we see happening with permitting today. But the other factor that is at play here is that, we are still now carrying and the first quarter of this year is going to reflect the full negative impact of the pricing performance that we had to do during the spring and summer leasing season of 2020 when it was at its weakest. And so that -- all that's going to continue to roll through the portfolio and it will peak, we believe, in the first quarter. But as we get into the spring and summer leasing season of 2021, where we do believe that the leasing environment, it will be much more positive and better than we will again start to compound that improvement in terms of our revenue performance, and it will build, and it will build by the time we get into late 2021, and particularly as we get into 2022. So that -- those two things sort of supply pressure, but particularly sort of the compounding effect of lease-over-lease pricing and what it does to revenues, it takes time for that to work through the system.

Austin Wurschmidt -- KeyBanc -- Analyst

No, that's very helpful. And then you guys mentioned the -- where you expect cap rates on dispositions this year for the assets that you have teed up. Where would you pay cap rates today just kind of across your markets? And I'm curious if you have a sense of maybe what type of growth buyers are underwriting and how far off you think you are on assets that you're betting on?

A. Bradley Hill -- Executive Vice President, General Counsel

Well, Austin, this is Brad. I would say talking about cap rates across our markets. Certainly, as I mentioned, it's very aggressive on new assets for these Class A new assets in our markets that we're looking at. I would say from a growth aspect, it's hard to pinpoint what the other folks are certainly underwriting. I would say one of the things that's driving the difference in valuation, it really is leverage. Certainly, our leverage level is a lot different than high-levered buyers that are looking for 65% to, call it, 80% leverage on some of these deals and given where interest rates are. That's a big difference in the valuation of these assets. And so I'd say that's probably one of the levers that's having a biggest impact on our ability to be able to compete with those folks.

Austin Wurschmidt -- KeyBanc -- Analyst

That makes sense. Any sense where maybe the cap rate spread is versus long-term interest rates versus a couple of years ago? Has that tightened at all in your markets?

A. Bradley Hill -- Executive Vice President, General Counsel

I think it's certainly pretty low. I think if we're seeing interest rates right now in the 3.5% -- 3% to 3.5% range, it's probably come up a little bit in the last 30, 60 days or so. And you're still seeing, again, cap rates in the low 3s -- or high 3s, low 4s. That spread is certainly low right now. And yes, we'll just have to see as interest rates move a little bit more and these LTVs change a little bit, how that filters through in pricing, we just don't know right now. There's so little assets coming to market that they're able to still find a buyer for most of these assets. But as the supply of these properties pick up and come to market, we'll just have to see if there's an impact to pricing once that picks up and the supply/demand on investments here changes a bit.

Austin Wurschmidt -- KeyBanc -- Analyst

Got it. That's very helpful. Thank you.

Operator

We'll move next to John Pawlowski with Green Street. Please go ahead.

John Pawlowski -- Green Street -- Analyst

Just one question for me. Tom, last few quarters, the smaller markets have really outperformed your larger metros. Are you seeing notable -- the same notable in-migration trends in the Alabamas and Memphis, Greenville? Or is this just more of a factor of more supply hitting the larger metros a little harder?

Thomas L. Grimes -- Executive Vice President, Chief Operating Officer

I think -- I mean, we're seeing the increase in in-migration sort of everywhere, and you do have it in places like Greenville, but it's consistent, and it's been the same thing than it has been before. Things like BMW and BASF and Michelin and those large international manufacturing conglomerates that are in those in those places. But it is -- so it is those are holding -- that is continuing. And then obviously, we're seeing strong results out of some of the larger markets that are like Phoenix and Raleigh. But the spread of in-migration is fairly widespread. Even Huntsville is picking up some of it because of the NASA expansion.

H. Eric Bolton -- Chairman and Chief Executive Officer

And John, I would add to what Tom is saying is that, yes, I mean, we do see the supply pressure more pronounced generally in the bigger markets. And that historically has always been the case, which is why we've always intentionally embraced a good component or a percentage of the portfolio to be invested in some of these secondary markets. We think that, that secondary market exposure does provide some downside protection to our performance profile against the pressures that often come from time to time from supply. And so those secondary markets we're doing exactly what we thought they would do during this phase of the cycle.

Thomas L. Grimes -- Executive Vice President, Chief Operating Officer

Yes. Sorry, John, I misheard a bit there. And then I'd also add in, the supplies you expect and largely know on those large markets tends to be more urban inter looping suburban balance that we have has helped us there as well.

John Pawlowski -- Green Street -- Analyst

Okay. Thank you very much.

Operator

We will take our final question Buck Horne with Raymond James. Please go ahaed.

Buck Horne -- Raymond James -- Analyst

Yeah. Thanks for keeping the call going along. I appreciate it. I'm going to ask one question then. Single family rentals. Thinking about, you've seen a lot of homebuilders validate the concept getting into purpose-built communities of single-family rentals that can operate like horizontal apartments with an amenity, maybe in more kind of outlined locations, but definitely Sunbelt. Does a concept like a purpose-built single-family rental community potentially offer you anything attractive in terms of diversifying the product mix? Or how do you think about that concept going forward?

H. Eric Bolton -- Chairman and Chief Executive Officer

Buck, it is something that we've been talking about a bit. I do think that if you get a purpose-built single-family rental community, where you get, if you will, all the homes in a very organized, defined sort of community footprint, on the lines what you just described kind of a horizontal multifamily plan, if you will, then, yes, we think that there may be some logic to that. We are -- we've seen a few examples from time to time. And should -- right now, of course, that kind of opportunity is attracting a ton of capital. So pricing is pretty competitive. But should the opportunity present itself for something that along the lines of what you're describing, it would be something we would take a hard look at for sure.

Buck Horne -- Raymond James -- Analyst

Alright. Great. Thanks for the rest guys. Appreciate it.

H. Eric Bolton -- Chairman and Chief Executive Officer

Thanks, Buck.

Operator

There are no further questions. I will return the call to MAA for any closing remarks.

Tim Argo -- Senior Vice President, Director Of Finance

No further comments. So appreciate everyone joining us this morning. And let us know if you have any additional questions. Thanks.

Operator

[Operator Closing Remarks]

Duration: 77 minutes

Call participants:

Tim Argo -- Senior Vice President, Director Of Finance

H. Eric Bolton -- Chairman and Chief Executive Officer

Thomas L. Grimes -- Executive Vice President, Chief Operating Officer

A. Bradley Hill -- Executive Vice President, General Counsel

Albert M. Campbell -- Executive Vp, Chief Financial Officer

Robert J. DelPriore -- Executive Vice President, General Counsel

Sumit Sharma -- Scotiabank -- Analyst

Neil Malkin -- Capital One -- Analyst

Michael Bilerman -- Citi -- Analyst

Nick Joseph -- Citi -- Analyst

Rob Stevenson -- Janney -- Analyst

Amanda Sweitzer -- Baird -- Analyst

Alex Kalmus -- Zelman & Associates -- Analyst

John Kim -- BMO Capital Markets -- Analyst

Zach Silverberg -- Mizuho -- Analyst

Rich Anderson -- SMBC -- Analyst

Austin Wurschmidt -- KeyBanc -- Analyst

John Pawlowski -- Green Street -- Analyst

Buck Horne -- Raymond James -- Analyst

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