UDR Inc
NYSE:UDR
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UDR Inc
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Greetings. And welcome to UDR's Second Quarter 2020 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.
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 at ir.udr.com. In the supplement, we have reconciled all non-GAAP financial measures to the most directly comparable GAAP measure 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 you 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 statements.
When we get to the question-and-answer portion, we ask that you be respectful of everyone's time and limit your questions to 1 plus a follow-up. Management will be available after the call for your questions that do not get answered during the Q&A session today.
I will now turn the call over to UDR's Chairman and CEO, Tom Toomey.
Thank you, Trent, and welcome to UDR's Second Quarter 2020 Conference Call. On the call with me today are Jerry Davis, President and Chief Operating Officer; Mike Lacy, Senior Vice President of Operations; and Joe Fisher, Chief Financial Officer, who will discuss our results. Senior Executive, Harry Alcock and Matt Cozad will also be available during the Q&A portion of the call.
First, the executive team would like to thank our associates in the field for ensuring UDR's continued strong performance and holding our culture to a high standard through the challenges we have faced these past few months. They are our front-line workers for our company and have definitely adapted to a constantly changing health and regulatory environment, as well as continued the implementation of our next-generation operating platform, all while showing kindness, understanding and accommodation to our residents.
Reflecting on the challenges we have faced over the past 4 months, only strengthens our belief that our next-generation operating platform represents the way that the multifamily business will be managed in the future and will remain a differentiator for UDR for years to come. Throughout this crisis, it has enabled the utilization of a variety of technology solutions to support our associates and engage with residents and have allowed us to take a surgical approach to protect our urban homes, all while continuing to drive controllable expenses. We firmly believe our next-generation operating platform will continue to increase resident satisfaction and engagement, maximize revenues, unlock future cost efficiencies and deliver strong cash flow in years ahead.
Operating a diversified portfolio across numerous geographies and price points, affords us a deep and widespread understanding of the market on those. Mike will provide details later in the call as well as a brief business update.
Cash collections as a percentage of billed revenue are strong at 97.5%, with no deterioration in month-over-month trajectory. Physical occupancy remained solid at approximately 96%. Year-over-year, resident turnover declined 620 basis points during the second quarter. And traffic continued to show well versus last year. These are just a few of the positive sides and an indication that our business is on solid footing to perform relatively well in the future.
It would be easy to rush back into reinstating guidance. But for any guidance range to be useful, we need evidence that core stability in the regulatory environment we face case loads and the impact they have on the cadence of reopening as well as more insights into the economic impact of currently unemployment.
Nevertheless, we have a sound strategy and a team to effectively manage through these uncertain times and are in a position of strength moving forward. Our balance sheet remains healthy with nearly $1 billion in available liquidity. Our dividend is secure, and thanks to our next-generation operating platform, we have the tools to meet all resident expectations as well as enhanced margin and increased shareholder value.
With that, I will turn the call over to Mike.
Thanks, Don, and good afternoon. Starting with second quarter results. Our combined fee store NOI declined by 4% year-over-year, driven by a revenue decline of 2.1% and an expense increase of 2.1%. While not the results we expect coming into 2020, I'm encouraged by blended lease rate growth staying positive during the quarter. Traffic volume remaining above last year at the same time and turnover continuing to trend better than a year ago, all of which help us preserve our rent roll for future periods.
On Page 3 of our press release, we have included details on the sequential and year-over-year decline we realized in our second quarter 2020 combined same-store revenue results.
As you can see, gross rents were positive versus the prior period. However, primary drivers of the 2.1% year-over-year revenue decline included: first, concessions were generally elevated during the quarter, while particularly in urban areas of coastal markets where they reached upwards of 8 weeks at some of. This compares to the market that reopened more quickly with concessions between 2 to 4 weeks on average. Typically, we would see minimal concessions on stabilized assets during peak leasing season. But COVID has been anything but typical with concessions driving a 50 basis point negative contribution to our year-over-year combined same-store revenue.
Second, our physical occupancy declined 50 basis points year-over-year in the second quarter. However, the reletting of approximately 150 corporate units during the quarter in primarily higher coastal market drove second quarter economic occupancy down by an additional 50 basis points. In total, lower economic occupancy accounted for 100 basis points of our year-over-year decline in combined same-store revenue. Importantly, our remaining corporate are well cap, thereby reducing forward economic risks associated with the homes.
Third, our fee income was disrupted due to regulatory constraints and will likely remain that way until the regulatory environment changes. This had a 50 basis point negative impact on year-over-year combined same-store revenue growth.
The final negative driver of the year-over-year decline in combined same-store revenue growth was a bad debt reserve totaling $4.5 million, which negatively impacted our results by 170 basis points. As mentioned in last night's press release, as on our bad debt accrual, second quarter combined same-store revenue and NOI growth would have been negative 0.4% and negative 1.3%, respectively.
Moving on to recent operating terms. On Page 4 of our press release, you can see that blended lease rate growth remained positive during the quarter. Cash collections held up well and more recent traffic and applications continue to compare favorably versus 2019. Additionally, annualized turnover during the second quarter was 620 basis points lower year-over-year, which, along with our next-gen operating platform initiative, limit expense. Our teams in the field and their execution of our surgical approach to pricing homes to serve as much of the credit for generating these resilient results.
Next, high level second quarter operating trends by geography and price volumes include across all of our markets our suburban community generally outperformed urban communities in terms of occupancy, new lease rate growth, renewal rate growth and traffic, more specifically. Physical occupancy in our urban portfolio averaged 96.9% during the quarter compared to 94.6% in our urban community.
Occupancy in certain urban areas of coastal markets experienced the most pressure due to corporate lease exposure and short-term mobility trends because of work-from-home landing. Traffic and turnover remained better at our suburban community. Great growth in our suburban portfolio outpaced our urban portfolio at 1.3% versus negative 30 basis points.
Any questions generally followed on regulation with Los Angeles, Boston and New York. These urban versus suburban trends are similar when analyzing our portfolio across different quality. B quality outperformed A quality and some performed and to similar magnitude as the suburban verse results.
Turning to July. We have not yet closed the book on a month but we expect physical occupancy to average 95.5% to 95.8%. Blended lease rate growth to be flat to down 50 basis points and billed revenue to range around $105 million. As shown on Page 4 of our press release, month-to-month build revenue vary by a couple of million dollars during the quarter due to, one, the timing of some fee and other income items; two, regulatory restrictions that impacted our operations; and three, an increased number of lease expirations in further hit higher ramp submarkets, such as Manhattan, San Francisco proper and Downtown. Moving forward, we expect that gross revenue will continue to be some of until emergency regulations are relaxed, and there's more visibility around office reopenings in [indiscernible].
Now market level results. Demand characteristics in our market have generally neared the [indiscernible] of each market's real, with those markets that had more spective and durable stay homeowners dying mills which. Throughout the pandemic, our nimble approach to pricing our partner in as maximize revenue growth, an important differentiator given that every market has reacted different to, highlighting some specific markets. Nashville, Selina and our Texas market exhibited the strongest price during the second quarter, New York, San Francisco and Boston, with market rents down in the middle to single-digit range. Positively, we have seen markets such as Orlando, Tampa and Orange county proved to be quite resilient throughout the pandemic despite their high exposure to hospitality in retail. We attribute this to our largely suburban and following portfolio markets. New York, San Francisco, both markets that experienced an increase in annualized turnover during the quarter as a result of short-term mobility trends due to work-from-home mandate as well as corporate lease exposure. While residents continue to pay rent, some have allowed their leases to expire and they will revisit the living situation once fiscal job requirements and the time line for office reopenings are better defined. Lower traffic levels in these markets due to more cumbersome regulation has resulted in generally lower occupancy, which has driven higher concession levels. However, mirroring the theme across all of our markets, our beet quality assets are outperforming our rate and suburban communities are outperforming. A good example of this is New York and for occupancy at point in Brooklyn and our One William deal in New Jersey remain in the high 90s.
Moving up to nearly $2 billion of community acquisitions we have made start of 2019 continue to perform relatively well, with cumulative NOI these communities currently tracking above our original underwriting.
Finally, I want to thank our governmental affairs and legal teams for their dedicated work back and day-to-day regulatory changes across our market, being able to efficiently and effectively communicate our comprehensive understanding of eviction moratorium, rent regulation and other regulatory changes to our team in the field has been critical as we continue to surgically price our Park Homes portfolio wise. And to my colleagues in the field, I thank you for your hard work and adaptability and daily changes in regulatory restrictions into our operating strategies. Your jobs have not been, but I appreciate all that you do.
And now I'd like to turn over the call to Jerry.
Thanks, Mike. Good afternoon, everyone. Echoing Tom's comments, our success in today's operating environment would not be possible without our next-generation operating platform. Because we were early in transitioning to an online self-service model, we have benefited from our associates with the enhanced technological tools that our platform provides, including the installation of nearly 37,000 smart homes, which improve operational efficiency and increase resident engagement. These resources have been paramount to our success over the past 4 months given social distancing requirements and state shutdowns.
From a resident perspective, the platform increases ease of use and delivers a self-service model, which has become the new everyday standard in many aspects of our resident slides. From a financial perspective, the platform drives more dollars to our bottom line by expanding our controllable operating margin. This accomplished through efficiency gains via the centralization of certain functions, outsourcing of others, utilization of self-service and the integration of Big Data.
Our focus on achieving these goals has not wavered. I'm proud to say that despite combined same-store revenue declining in the second quarter due to COVID-19, our controlled operating margin remained flat at 84.3%. This was driven by a 2% reduction in total expenses versus a year ago. In particular, combined personnel and repair maintenance costs declined by 1.1% year-over-year, and we realized significant savings in administrative and marketing expenses.
Prior to the pandemic, platform implementation has driven approximately 80 basis points of expansion in our controllable operating margin or nearly half of our stated goals 150 to 200 basis point improvement by the end of 2022. While COVID constrained further margin growth in the second quarter, we're still well ahead of where we would have been without our next-generation operating platform and continue to see long-term benefits, such as a 23% life-to-day production in headcount through natural attrition, a 28% improvement in controllable NOI per associate and a 15% increase in resident satisfaction as measured by NPS scores.
We have realized approximately 60% of our staffing level efficiencies to date and expect to capture the remaining 40% once our customer self-service technology rolls out for the next two years.
Looking ahead, we are rolling out the next phase of our self-service smart device app for residents that will continue to mitigate the need is in our on-site offices, shifting self-guided tours to a web interface versus an app to increase ease of use and integrating more data by supported revenue growth and expense reduction opportunities into our platform. I look forward to updating you on our progress on future calls as we continue to innovate the years ahead.
Bottom line, our next-gen operating platform has allowed us to run rises efficiently and successfully throughout the crisis and puts UDR in a position of strength as we move beyond COVID. A big thank you to everyone in the field and in corporate are continuing to push forward and make our platform success.
With that, I'll turn it over to Jeo.
Thank you, Jerry. The topics I will cover today include our second quarter results, an overview of our bad debt reserves and a balance sheet and liquidity update, inclusive of recent transactions and capital markets activity.
Our second quarter FFO as adjusted per share of $0.51 declined by only $0.01 or less than 2% year-over-year. This $0.03 sequential decrease in FFO per share was primarily driven by $9 million in total company bad debt reserves with $5.5 million of this from residential and $3.5 million from retail, in addition to lower property revenue due to occupancy, concessions and fees, partially offset by lower G&A.
Regarding guidance, as Tom mentioned, we are not reinstituting our full year 2020 guidance outlook at this time, given continued uncertainty around how the coronavirus pandemic will impact the economy and our business. However, as disclosed in our press release, and as Mike discussed, we have presented an operating update to provide stakeholders with additional insights into recent trends.
On to collections and how we are reserving for potential bad debt. As we outlined in our operating update on Page 4 of last night's release, during the second quarter, we built $322.6 million of revenue. As of quarter end, we had collected 96.1% of that revenue, leaving $12.5 million uncollected. We established a bad debt reserve against that uncollected revenue and the amount of $5.5 million or 1.7% of billed revenue. Since quarter end, we have collected additional cash towards second quarter billings, increasing our collection percentage to 97.5%. That leaves our total billed, but not yet collected revenue at $8 million, which set against the $5.5 million reserve, which is $2.5 million or less than $0.01 per share of recognized revenue that has not yet been collected.
We are comfortable with this level of recognized but not yet collected revenue based on our assessment of collection trends, interactions with our residents and the probability of future collections, including approximately $0.5 million of outstanding second quarter rent subject to payment plans that we expect to collect.
Moving on. Our balance sheet remains strong due to ongoing efforts to reduce debt costs, improve liquidity, extended duration and enhance cash flow. As such, we are in a position of strength to weather the continued effects of COVID-19 and the downturn that has accompanied us. So highlights include: first, as of June 30, our liquidity as measured by cash and credit facility capacity, net of our commercial paper balance, was $974 million. When accounting for the roughly $105 million of previously announced forward equity sales agreements, we have nearly $1.1 billion in available capital. Second, the refinancing of our final 2020 debt maturity will close at month end, after which we will have no consolidated debt scheduled to mature through 2022 when excluding principal amortization and amounts on our credit facilities. Additionally, subsequent to quarter end, we issued $400 million, 12-year unsecured debt at an interest rate of 2.1%. Proceeds were used to prepay $246 million of our 4.64% secured debt originally scheduled to mature in 2023 as well as complete our previously announced tender for $117 million, up 3.75% and unsecured debt originally due in 2024. All of these actions have improved our liquidity profile and duration.
Looking further ahead, when excluding balances on our credit facilities, less than 15% of our consolidated debt is scheduled to mature through 2024. Please see attachment 4B of our supplement for further details on our debt maturity profile.
Third, identified 2020 uses of capital and predominantly consist of funding our current development and redevelopment pipelines. The aggregate cost for these projects totals only $308 million or less than 2% of enterprise value, and they are nearly 50% funded with approximately $157 million remaining capital spend over the next several years.
Fourth, our dividend remains secure and is well covered by cash flow from operations. Based on second quarter 2020 AFFO per share of $0.47, our dividend payout ratio was 77%. This implies that our earnings would need to decrease by an additional 20% before approaching cash flow parity.
Taken together, our balance sheet is in great shape. Our liquidity position is strong, and our fourth sources and uses remain very manageable, as is detailed on attachment 15 of our supplement.
Next, the transactions update. First, as previously announced, we sold 2 communities in the Greater Seattle area where combined $143 million at a low 4% cap rate, reflecting pre-COVID pricing. Second, subsequent to quarter end, we funded a $40 million DC commitment for a community in Queens, New York at a 13% yield and with profit participation on a liquidity event, which we expect to occur at approximately 5 years. Construction of the community began 8 months ago and is fully capitalized, including $62 million of developer equity or approximately 18% of the $342 million total project cost.
UDR's investment provides enhanced economics compared to prefilled deals and effectively backfills the upcoming 2021 maturity of our mezzanine loan on the portal in Washington, D.C. which carries an 11% yield and no profit participation.
Moving forward, we remain highly selective with where and how we choose to invest your capital with a focus on both current yield as well as future value creation.
Wrapping up, as is evident on attachment 4C of our supplement, we have substantial capacity before we reached noncompliance with our line of credit or unsecured bond covenants. As of quarter end, our consolidated financial leverage was 34.2% on undepreciated book value, and 30.6% on enterprise value, inclusive of joint ventures. Consolidated net debt to EBITDAre was 6.2x and inclusive of joint ventures was 6.3x, which was slightly elevated due to the still outstanding settlements of our forward ATM proceeds.
With that, I will open it up for Q&A. Operator?
[Operator Instructions]. Your first question comes from the line of Nick Joseph with Citi.
It's obviously a dynamic operating environment. But how do you think about the pricing strategy between offering concessions or holding rates and having potentially lower occupancy?
Nick, this is Jerry. I'll take that one. I would tell you, we've strategically elected to utilize concessions rather than take significant rental rate cuts on new leases in order to maximize and I'm going to repeat that maximize both near-term and long-term results. Keeping lease rates higher, we preserved our rent roll for 2021, which is a key factor in why we did this. Because we take concessions upfront for same-store reporting purposes, we incur the charges at the beginning of the lease term. This is consistent with how we have historically reported and accounted for concessions. We elected during the second quarter to offer no concession, but instead reduce stated rents by an equivalent amount. Our same-store revenue would have been more than 100 basis points higher than we reported. Using our strategy, the difference will be made up over the remaining lease term, and we'll be in a better position at the time of renewal than we would have then if we just cut rate.
To give an example of how this works. I think a lot of people get it. But if you had 2 units and each -- and one was priced at $3,000 per month and 2 months free rent, the second was priced at $2,500 per month and no concession. Both result in 12 months of revenue of $30,000 or effectively at $2,500. In the first 3 months, the unit with the concession would recognize revenue of $3,000 compared to $7,500 for the unit with no concession. And over the next 9-month period, the unit with the concession will pay rent that's $4,500 higher cumulatively. So as we look at it, obviously, we like to keep occupancy at a pretty significant level, like, was in the '96s during the quarter, dropped a bit in July. But when we look at our pricing strategy to maximize that revenue, we elected to go more with the concessions so that when you get to next year, we're going into with higher rent roll, that we'll be able to apply renewal rates too. I think Joe's going to add something if I know a lot of this sector does concessions on a straight-line basis. And I think Joe can walk you through what we would look at with that.
Yes. Perfect. Maybe just some additional clarifications. Jerry gave the example there that if we had simply shifted strategy from our current approach of giving concessions to no concessions in 2Q, but keeping the gap -- the cash reporting methodology that we have for same store, that would have been the up 100 basis points. If we continue to utilize the same concessionary strategy that we have been utilizing, the switch from cash reporting to GAAP reporting or straight-line reporting, we would have had about a 40 to 50 basis point better same-store number. So I just want to clarify that. So take us from a 2.1%, down up to about 1.7% to 1.6% down in same-store revenue on a year-over-year basis.
That's very helpful. And then maybe just in terms of -- in the past, we've talked a lot about your investment model and kind of trying to make better decisions around MSA exposure. I recognize in the near-term, maybe external growth will be a little more muted. But if and when you return to that, how the ability of that model to be dynamic, given all of the changes that we've seen in different MSAs over the last, call it, 6 months?
Yes. It is -- I'll kick it off, and then maybe some others may have some thoughts on this as well. But I'd say one thing we've obviously learned over time and throughout this downturn is diversification is key. So diversification remains a core part of the portfolio strategy. Everything we're seeing today in terms of ability to withstand downturns in certain submarkets, certain markets overall or even A versus B continues to hold true and support the idea of being diversified in nature. So no change there. The quantitative process or the predictive analytics process we've talked about has always been supplemented by the qualitative overlay. And so the idea, both of them is simply that helps you avoid what I'll recent buyers or mentality or kind of got reaction that, I would say, is pretty prevalent in today's environment. And so we continue to have those tools to lean on. I think as we continue to get more data in, obviously, it will influence the quantitative model.
But there's a lot of news out there that we're going to spend time thinking about. There's the binary outcome of place with the vaccine and what that may mean to reopenings and closings in markets. I think the regulatory environment, clearly, more prevalent today than it's been in the past. Things like fiscal health and some of the budgetary shortfalls that you've seen trying to understand those and how municipalities try to correct for that and solve for those shortfalls through different forms of taxation. Ultimately, income migration, trying to figure out where those jobs are going to shift to, if they do, in fact, shift at all. So that's all we're going to come into play. I think the piece that's always forgot about it here. We've talked about a pasta just second derivative flow of capital. At the end of the day, you're going to see supply shift. And you're seeing it today when you look at the permanent start activity, you can look at West, permits are down about 30% from where they were, east down 20-plus percent, both generally flat up 10%. So I think there's already been an outcome on the supply side or is trending towards that shows a shift in capital, and that's an offset to where we think demand is going to be and balances out the rent impact. So I can give you some thoughts. I think at the end of the day, we got to remain patient. Remember, ultimately, we'll see where we come out on the other side of this.
Nick, this is Chris Ens. I just wanted to add 1 or 2 other things on that. I think it's important to note, Joe talked about the quantitative versus the qualitative. on the qualitative side of our portfolio strategy process, we were already incorporating variables like regulatory environment, fiscal health, spoke to market desirability, affordability, et cetera. So as we're kind of digging into out, maybe some of these trends are changing and seeing where they go, both near-term and long term, that's really just going to augment what we already have out there. So I think we're already a little bit ahead of the curve when we're thinking about some of these things. And now we're just seeing how those variables are going to change going forward.
Our next question comes from the line of Rich Hightower with Evercore.
I guess just a follow-up on that prior question. As far as the contribution to the investment process from predictive analytics and some of the particulars there. Look, clearly, the sands are shifting in a lot of ways as you guys have described and alluded to, but you're still investing and making capital allocation decisions on the buy and the sell side. And so are recent deals or deals in the pipeline currently, are those more deal-specific and just about the economics of that particular transaction? Or is there still sort of that macro or predictive analytics overlay that you take into account understanding that COVID is sort of wrecking all the models as we sit here and talk about it?
Yes. Rich, yes, I'd say, historically, we had always had the 2 pillars of the organization to lean on main. The operational platform and all the pieces that go with that as well as the transactional platform and the value created through either a buy or sell a development or DCP. So those haven't changed. So I think when you reference what's in the pipeline today? And are we leaning more on just good old fashion? What can we do on the operational side? Can we make good deals? And what are the economics of those deals? It's probably a little bit more so of that and a little bit more so diverse in terms of the markets that we're looking at today than we have in the past. So trying to figure out opportunities, such as what you saw with the burn and DCP deal. We're not making a bet on New York necessarily and putting a stake in the ground and saying, we're going to, to a large degree, expand our New York exposure. This is a very strong return for the risk that we're taking.
It's one of the few areas that we've seen disruption in this environment, meaning the mezzanine lending space, the construction lending space and the LP equity, the fund development has been disrupted. So us being able to go out there and take advantage of a deal, and you see the returns on that 13% pref. Most of our participating deals that we've done over the last couple of years has been in the 8%, 10%, 9% pref range. So again, another 400 basis points of pref as well as upside participation on a deal that we have $60 million of equity is a little bit lower in the stack than some of the other DCP deals we've done and also from a start standpoint, started 8, 9 months ago. So you could derisk the time line, derisk the buyout and the cost, et cetera. So net-net, I wouldn't take that from a capital allocation standpoint as they bet on New York, it's a safe bet on the return that we think has been derisk to a degree.
Okay. Yes, that's helpful color, Joe. And maybe just to add another quick question on concessions and bad debt accounting. So first of all, did something change about the way you accounted for bad debt or maybe pulled forward some of the write-offs during 2Q? Just any changes quarter-over-quarter that we should be aware of? And then likewise, on the concession side, what drives the choice to go to cash accounting versus a more traditional straight line, just so we understand the decision-making there?
Yes. Understood. So I wouldn't say there's necessarily been a change to the approach, but we have definitely enhanced our approach as we view the collectability of build rents in this environment. Historically, our approach has been that upon a fiction, we would write-off that rents and then go to basically a cash basis recognition of revenue on a go-forward basis. In this environment, given that we're dealing with a completely different regulatory environment than any of us have ever seen, meaning that you have very extended fiction moratoriums. You have extended payback plans in certain markets, such as California, Oregon, Seattle, DC, et cetera, we thought we needed to enhance that process and really try to understand down to the resident level what was their financial situation, what type of regulatory environment are we in with that individual, what has been their payment history, et cetera. So I would say we just put a more robust process around this. We did have write-offs in the quarter as we typically would as individuals move out. But those are hindered by the fact that moratorium are in place.
So the 1.7% or $5.5 million reserve that we put up, we thought that was a very prudent reserve given the number of unknown items that are out there today. So while it's supported by the high degree of collections that we've seen in April that we disclosed and the number of payback plans and we have a number of individuals that continue to put forth efforts to collect, we did think that was the appropriate reserve. I do think -- hopefully, one thing that came out of my commentary was the subsequent collections that we had in July, which continue to away that the accounts receivable balance that we have out there. So we are down to about $2.5 million of recognized but not yet received revenue. I think that's important to think about from your perspective in terms of much risk is out there to the revenue that we've reported. So less than $0.01 per share, only about $2.5 million at this point in time, and we do expect to continue to get collections in over time.
In terms of the second piece of the question, concessions and recognizing those on a cash basis, it is consistent with how we've always approached that. We felt that giving investors the view of cash recognition gives you the best view of what's going on in the market today. It is in compliance with GAAP. It's a non-GAAP metric. And so therefore, we don't have to align perfectly, although we do report on NOI overall and adjust for straight-line per GAAP. So everything there is compliant, as you would expect. So it's complied with this historical approach, no change there.
Your next question comes from the line of Austin Wurschmidt with KeyBanc Capital Markets.
Just getting back on that last point around bad debt. Do we start to see rent collections improvement in the coming months as the non-payers are those impacted by COVID either begin to vacate or you no longer factor them in to, I guess, maybe the build rent number? Like how do the numbers work from that perspective as we think about -- when you report the collection data going forward?
Yes. I think where you're going, Austin, and correct me if I'm wrong, what do you say the non-payers-related COVID. So what we affectionately refer to as squatters here. As those individuals turn in their keys or decide to skip on us or the moratoriums come off as they have in about 20% of our markets. As we can move through that process, those rents may be written off, but they basically net against the reserve that we've put up. So we would not expect a future negative impact to revenue. We've already effectively incorporated through the reserve, we think this quarter for those rents that we previously built.
Okay. That's helpful. I appreciate the thoughts there. Just switching gears a little bit there. So during this past cycle, you guys have been opportunistic on various initiatives on the short-term rentals and rentals, corporate leases. So I'm just curious, if you're reconsidering any of these initiatives, given some of the volatility in those income streams you've seen during the downturn? And what do you think that income stream looks like on a go-forward basis?
Austin, this is Mike. I'll take that. Just to be clear, and I'll back up a little bit. The miss to our other income this quarter was around $1.3 million and it had an impact of negative 0.5% to our total revenue. And just to put it in perspective, again, we have about $10 million in other income. It's 10% of our total revenues and other income was down about 3.5%. So some of these initiatives that we've been very successful at executing over the years, they did take a small hit during the quarter.
And I can tell you the short-term furnace program was about $900,000, our common areas that was about $250,000. And aside from that, our late fees, which were more regulatory mandates put in place, that was down $1.1 million. So when you look at that total, it's around $2.3 million. On the flip side, the parking initiative that we put into play about 2 years ago continues to do well, and that was actually up $500,000 year-over-year, and our transfer lease break fees we're also about $500,000. So in total, we're off, again, by $1.3 million, and some of our more sticky initiatives continue to do well. And we think when things bounce back, we get a vaccine, we did expect that the short-term furnace program as well as our common areas we'll bounce back, too.
And what about some of the others that maybe you don't call into other income like the corporate items and furnished rentals?
Can you repeat that, Austin?
Yes, sure. Maybe some of the other items that don't fall into the other intent bucket, but are still more unique initiatives like the furnished rentals or the corporate leases, are you rethinking those at all?
I don't think so. I think right now, with business travel stalled out, obviously, as Mike just said, we've taken a step back. We do believe that once the economy gets going, the vaccines back in play or is out there, that you'll see short-term rentals come back into play. So right now, again, it's a line of the business that did very well for us for a couple of years. Right now, we -- I think we continue to have a little over 100 residents and short-term first rentals, but that is down from what it was last year. It will continue to be a drag this year. But I think it's a business that served us well, helped us have outsized occupancy compared to peers. And when times are good, it's a good business to be in.
Austin, this is. A little bit of color. It's been good to have the resource on that side of events for corporate rental as an example. Because we can swing that crew, that team around and work renewals we're pricing. So they're familiar with our system, familiar with our products. It's actually given us a boost in terms of resources that we can pivot. The day will come that those businesses will reemerge and they're pivot back to that. And we don't think we're miss a beat when that opportunity. And it's going to be market by market, opening up that gives us that capability.
Your next question comes from the line of Rob Stevenson with Janney Montgomery.
Talk about where the biggest pieces of the new leases that you're currently signing are coming from? Is that people trading down by price point? Or people trading up by unit size within the same market? The people moving from urban to suburban, people moving from the Northeast to the Sunbelt or people living with roommates going solo? Can you characterize where the biggest chunks of your new leases are coming from?
Yes. Rob, it's Mike. I would tell you one of the biggest trends we've seen over the last few months is our occupancy on our studios, that is a little lower than what we're seeing in our 1s and 2s. So what I referenced on our other income, our transfers are up. It's because we're seeing people doubling up in some cases. But as far as migratory patterns and things of that nature, we're not necessarily seeing people coming from different markets. There's still within their own markets. We're seeing them jump around in.
Yes. I do think you're seeing a bit of movement from urban over to suburban. I think when Mike looks at our New York portfolio, for example, our Deal One William is doing quite a bit better than our downtown Manhattan. You're seeing as you go down to Silicon Valley, some movement from Soma down there for pricing reasons as well as to escape some density. But we're not seeing people totally leave the major markets.
Okay. Helpful. And then given Joe's comment earlier about investment. Are you guys willing to take your exposure to DCP higher if you could continue to get 12%, 13% returns? How are you guys thinking about that versus acquisitions or your development starts at this point in the cycle and given what you're experiencing on the operations side?
Yes. Rob, so just to put the sizing of DCP in context, we have disclosure on 12a where we stand today. So you can see on 12B, we're sitting right around $420 million of exposure. I think we're adding burden for $40 million. We got about $10 million of funding remaining for 1,000 Oaks. But you do have 2 negative adjustments to that to take off. Portals out in D.C. for about $50 million that will be coming out sometime in the first half of next year. In addition, while we show it on this page, it's not really a traditional D.C. deal. As we've talked about in the past, it's up in Bellevue, Washington for $140 million or so of accrued total balance. That was really a long with a purchase option.
So we call it bridge loan to get into that purchase option sometime in most likely first half of '21 as well. So once you adjust for all those factors, while we're doing burden, you had those other guys out, we're about a $300 million DCP portfolio. We've consistently talked about being willing to go above $300 million, i.e., the $350 million, $400 million range. So I think as we continue to find opportunities, we've been opportunistic at pivoting in the past between things like DCP, shrinking development on appropriate, shifting to acquisitions, when we have a cost of equity and even doing buyback previously. So I think we'll keep looking for opportunities. And as I said earlier, this is one of the few areas that you're seeing distress, just given that stabilized operating assets financing market is very well and function into that, and you're just really not seeing the stress on that side of the pricing environment. So I think we're happy to do more of that if we can find opportunities.
And how does that evaluate versus an incremental dollar above $400 million there versus an incremental dollar of a 6% development or a 4.5% acquisition? How does that for you guys from a risk and from a long-term standpoint of the portfolio, sort of -- how are you thinking about that?
On the risk returns on DCP today makes the most sense, given that you do have the yield where your location is in the stack. And the fact that there is some distress in that area that allows us to get outsized returns relative to the rest that we're taking. Then products got down to development where we previously delayed 2 projects, the Turban West 3 down in Dallas as well as unit market out in D.C. To get a little bit more visibility on this environment, we've been able to whittle out some cost there. So we probably are going to have starts in the next quarter or 2 on those 2, which combination, about $200 million of additional starts. So I would put those as the next spectrum. And then acquisitions being last, although you really have to whittle through and talk about what type of acquisition you're thinking about, i.e., which markets are you thinking about a lease-up where a developer may want to get out of it earlier and maybe we're willing to take that dilution and that lease-up risk, but get it at a discounted price. So there's cost to every deal that we're going to look at. So we're not going to redline any piece of the investment spectrum.
Rob, this is Toomey. I would emphasize that the one aspect of capital deployment. That is first and foremost, in our mind, is the platform and the value that it creates not just to deal with this environment. But the fact is it will be by de facto probably the way business is conducted in this business going forward. And so the quicker we get that fully implemented and the enhancements in a version 2 as arrowing those up today, I see that as the real differentiator with respect to capital deployment and implementation. The other items come and go. The good news, we've got 20 markets to look at for opportunities. We weigh them against what we think of the market, what we think against the opportunity, and Joe gave you a pretty good insight into our Waterfall of where things fall out in that scheme. The platform is the most critical piece of our capital deployment and execution.
Your next question comes from the line of Neil Malkin with Capital One.
There has been a resurgence of COVID cases over the last months. I'm just wondering if you can talk about how leasing foot traffic has performed or faired with those cases rise? And maybe you can talk about that in the context of your coastal suburban portfolio?
Neil, it's Mike. I can take that. Just generally speaking, our traffic and ad count for the month of July is up around 9% and 7%, respectively. And we did see a little bit of an impact as in the. We were seeing upwards of 15% to 20% at times year-over-year increases in traffic. And when that second wave, if you will, came about in those markets, it was still above year-over-year, probably closer to that 5% to 10% range. But that being said, in some of our other markets, they started to get better. And what we're seeing today is similar. So when you go coast over Sunbelt, I'll tell you, our traffic today coastal, down about 20%. And our Sun Belt is up around 8%. And when you look at the urban verse suburban, traffic is down around 12% to 13% and suburban, it's still positive 7% to 10%.
Okay. Great. Next one I had is related to -- everything going on in the coast, but look at Portland, Seattle, New York, some of these markets are meaningful NOI contributors. I mean there's been significant violent rise, cash, all these things happening. I'm just wondering how, a, you deal with that as a company is in an industry? And b, are you seeing an increase in people sort of moving out because of those things or exiting those reasons, citing that as a reason to move out, seeing an impact in operating fundamentals in any way? Kind of talk about all those things going on, it seems to get more extreme and not less?
Yes, Neil, it's a very good question and one we debate here. And you're trying to operate a company and be compassionate and thoughtful about your interactions with each individual resident. And I think Mike and the entire team have been very accommodating whether that's payment plans or people wanting to move or health reasons. And that's the first place to start. The second, I would disclose, is a challenging -- no question about it. We have weekly calls with the entire associates in the field in Denver and talk through some of the challenges that they're facing on the ground and reassuring that we're going to help them through it. Their safety is first in paramount than our residents. So you manage through that, and that has taken a great deal of time and at the same time, I'm very grateful for the people, if you will, adapting to that environment, which may persist for some period of time, but I do note that the election is over in 3.5 months, COVID will be cured, there will be a vaccine.
And on a long-term basis, we think that the troubles and struggles we have with Joe and Chris have highlighted with respect to the portfolio is people are not going to live in neighborhoods that aren't safe, whatever the political affiliation, whatever. And so honing in on when that piece of the equation get solved and how it gets solved. And will it be solved before the election? Probably not. But we're hopeful it is. If it's not, we're prepared to deal with that. I think it does finally settle itself when there is more communication rationally and things return to a normal cycle and then these cities that are challenged today. When they get their security, their safety solve their transportation, we're all waiting for the vaccine to help us get to the next level.
It doesn't change the long-term dynamic of people wanting and choosing their lifestyle, their balance. So I do believe the urban cities will reemerge. Can't put a timetable on it. But I know the factors that need to be in place for that to happen, and that's what we're honing in on.
No, I appreciate that. I guess just the other part of that question is, are you seeing -- or are you able to discern a different in leasing or setting reasons to move out as some of those issues going on? Or is it kind of harder to that out?
Yes. So a couple of things there, Neil. First of all, no real image to the properties, and we're very thankful that none of our residents and to our associates. We're hard in any of these demonstrations. So that was kind of the first thing. And as far as move-outs, we do track that very closely. We haven't really seen any impact from this and not really seeing on the traffic either. So far, it's been minimal impact.
Your next question comes from the line of Nick Yulico with Scotiabank.
This is Sumit here in for Nick. Couple of questions. One, related to the provision or the reserves that you took. How much of that is related to tenants who requested deferments versus potential credit risks identified by your internal analysis? And then how much of the delinquencies are related to corporate tenants as well as students?
Yes. We'll probably have to follow-up with a little bit more of that detail. But in terms of the payment plans you referenced, we do have approximately $0.5 million related to 2Q, $0.5 million related to 2Q that is on payment plans in the accounts receivable. So it does get locked in there but higher profitability placed on that given payment history from those individuals. The most -- the biggest reserves being taken against by market, it's going to be about 80% in our top 6 markets. Meaning L.A., San Fran, D.C., Orange County, New York and Boston. So the bigger markets or the markets that have more regulatory. Meaning if you take L.A. as an example, that's over 10% of our accounts receivable and a much bigger portion of the reserve, but it's only about a 4% market for us. So certain markets that have more delinquency due to regulatory issues are going to garner more than their lion's share relative to the percentage of the portfolio that they have.
That's interesting, and we've talked about over a number of investors over the last couple of months on calls. Thanks, for example, what's going to happen when the eviction much moratoriums lifted. And to put it in context today, the number of people that if we have the right to go to eviction would be 2%, about 800, okay? So it's not a big number, and there's not a tsunami of eviction pending, but an interesting data point. Mike operations in Florida, there was a 72-hour window where we could move to eviction and we filed. There were 75 residents on that list at the time. And 2/3 of them showed up paid immediately, okay? The other 1/3 said, "Hey, I want to enter into a plan." So I think that same dynamic. I don't know if those percentages will hold, but we're somewhat hopeful that when we can proceed to enforce the contract, we will be compassionate about it. We will try to work with people. But if that is not the case, we expect some have already saved up the money and/or have other means to do so, and they're just using this flow for a variety of other reasons. We'll find out. Florida then to put the eviction moratorium back on and we're complied with the loss. So it's hard for us. I think we've been cautious about the AR balance and the related reserve. And I think that's prudent on our part. We'll see how it plays out.
Understood. And I guess the background on this question was more around something you just spoke about, which is that delinquencies are usually not related to credit risk or default risk overall. I was just wondering at what time do you guys internally say these group of tenants become a part of the reserve or the provision? Because historically, it happened when somebody walked in and said, "I can't pay this month." So I'm just trying to get a sense of that. I think any color you could provide could be good on that?
Yes. So we took what I'll call a three-pronged approach to that and came out at a number of different ways, given the unknowns that exist in this environment and trying to make sure we got to the correct place at the end of the day. We look at it from a typical age receivables approach, where if you were over 2 months delinquent, you had the greatest restore to you. If you were less than that and had been making efforts to make payments, then you would have less and so on and so forth. We looked at it down to the market level of trying to go down to each resident. What is their payment history, what is their AR, and what type of market are they from a regulatory standpoint and adjusting for that. And then we get a very high level top-down approach as well. So you triangulate through all those, and they all came out to about that same place. So hopefully, that gives you a little bit of, call it, the robustness of the process overall and comfort that we got to the right place.
That's really great. And one last one further me. In terms of concession activity, could you help us understand what unit types that 1-bedroom studios, 2 bed, 3 bed? And possibly, what market related to the side are being in are seeing the biggest amount of concession activity?
Sure, Mike. I think what you're going to see is when you go to markets and you go down to that property level, which we've stated before, our surgical approach is you're going to see the concession on all of those unit types. So in places like New York and San Francisco, where the concessionary environment is higher. We are seeing it across the board. That being said, I mentioned earlier on one of the questions that our studios are down more than others. So we're running around 91% occupied on our studio units. And in some cases, we're trying to move those, and we may be doing loss leaders, things like that, just to try to get those leased and moved before the fall.
Our next question comes from the line of Rich Hill with Morgan Stanley.
Quick question for me. Looking at your effective new -- or your effective renewal lease rate growth, it's pretty impressive, particularly given the down in turnover. So I'm wondering if you could just revisit your strategy for duals across. I think you talked about this to some degree on your last earnings call. But just an update as to how you're thinking about that? And if you're thinking about each market individually?
Sure. Thanks for the question. Just to go back to the beginning of kind of cover and what we did, we elected to go out at market at that time. And since then, about 20% of our NOI has been regulated to the point where we have to send out 0% increase. So that means 80% of our NOI, the ability to push to market. So you have the regulatory environment than what we're having and seeing today is what's happening in the markets when they're very concessionary market rents are coming down, we're having to negotiate to some degree. That being said, we had pushed our renewals, and I can tell you, it's between 2.5% to 3% that has been sent out through September. I expect we come in probably about 50 basis points less than that, just based on negotiations and again, the fact that there could be more regulatory restrictions put on us. But it does differ by market. It goes as low as 0% to as high as 5.5%.
Got it. And if we think about your July commentary that effective rents -- combined effective rents are going to be flat to down 50 basis points. I'm sorry if you gave this. But can we assume that the renewals are going to be in the same range and that maybe slight downtick in negative tax territory is going to be driven by new leases?
Yes, I think that's fair. What we're seeing is very similar to what we saw in June. So I would tell you, our new lease growth is probably somewhere between negative 3% to negative 4%, while our renewal growth should hang in there, probably closer to 2.5% to 3%.
Your next question comes from the line of Rich Anderson with SMBC.
So you guys are too nice. I have a tenant. She was 10 minutes -- 10 days late. She is 70 years old, just currently washing my car.
I don't know what the analogy was.
So you know the analogy when you're getting chased by bear, you don't feel you fast the bear, you have it faster than the people that you're with. And I'm wondering if you can apply that to here longer term, where you guys and your peers that are the most financially capable in the business own collectively, maybe about 10% of the apartment units in the country, is there a long-term opportunity where some of the financially vulnerable of the own multifamily real estate could really suffer substantially depending on how long this goes? And that you as an industry in UDR as a company could get materially larger, even if there's not really a negative event from a yield perspective on transactions? So I'm just curious if you're kind of on your is up about getting bigger and all of this at the end of the day?
Rich, it's a really good question and 1 we talk about with respect to how do the REIT's occupy space compared to the privates and where pain will be. Our first thought goes to long-term ability where the customer is to grow cash flow. And hence, the platform was born and our ability to increase our margins. And that's relatively pretty straightforward. You can see our operating margins this last quarter held pretty solid in the 84%, 85% at that range. I can guarantee you that private investors generally going to run 10, 12 bps -- excuse me, 10% to 12% below that because of their inefficiencies, either scale or technology. So we think the long-term play is to have a better operating model for the customer and our cost structure.
On with respect to financial hardship and what it shakes out, I kind of harken back to the like before 5 last recessions I've been through. And they always poke out about the same place. Developers of the first to show the pain. And that is an opportunity for us, either in the DCP front or acquisitions of lease-up and it's not that deep of a pool of capital that's going to compete with us on that front. The real hardship, maturing debt, everybody in the right now was to refi. And I congratulate Joe and the team for $400 million of 12-year paper at 2.1%. You can hang on pretty long time if you're able to stabilize and get to that. So I don't know if there's stabilized assets are going to have a lot of hardship. And then it's a function of where else it might poke out a market, an employer, somewhere in there. I'm not sure the REIT or that competitive on that front because of our leverage profile, first, the PE shops who can use a higher leverage borrowed on an international basis and we'll probably be able to buy a lot of stuff. And I think that's going to play out with this current environment. And so you can see our game plan straightforward platform, long-term cash flow margin, pick off opportunities that the PE shops probably are overlooking or not interested because it doesn't support their investment thesis. Joe, anything to add?
No. Covered all.
This is Jerry. Just on private market values. I mean as Tom mentioned, there's still plenty of capital that's very interested in apartments. I mean interest rates are very low, which is obviously stabilizing apartment values. There is a divergence in markets. We know the markets that are proposing well particularly not urban. Pricing is relatively stable, probably hasn't changed much at all. In some markets like New York and San Francisco, you're not going to have much of a bid. Buyers and sellers are unlikely to come together. So at least in the short term, you're unlikely to see many trades in those assets.
Okay. Great. And then just a quick follow-up. The spread in Texas, California and Florida kind of starts to get real ugly post second quarter. Are you seeing anything there that is troubling second quarter into this period of time now, where the threat of kind of reclosing or whatever just fear generally might be impacting those specific states? Or is it just not? And the answer is no, then we can move on.
And really, the answer is no. They've been very resilient, and I can tell you that traffic really hasn't changed much. So they're doing well.
Your next question comes from the line of Alexander Goldfarb with Piper Sandler.
So just two questions. First, Tom, you mentioned sort of affirmation that people want to live in the urban areas, that people want to come back to the cities. You let on that people want to live and see places. But if I look at like the markets that are really impacted, Boston, New York and San Francisco, in an Francisco had such the lowest COVID certainly in California and in the country, whereas obviously New York speak herself in Boston is a bit elevated. So I guess the question is, how much of this is an absolute belief that these are markets that return more principally New York and San Francisco versus there's a bigger fundamental shift that's gone on because you've had higher COVID and other higher coved cases in other markets where you guys have products, and you're not seeing the same impact of your properties. So what gives you the confidence that like a San Fran and New York property, just those urban metros, not the surrounding areas, but the urban metros will bounce back in the near term?
Alex, I'll take a shot and ask anyone else to clean it up. I guess, the belief I happen is simply that the markets that you cite and statistics are all correct. What's underlying that is the simple fact that businesses have shut down, giving people the option to work from home. That our belief is that when business opens up, whatever the conditions are, that they will reassemble their workforce. And so the theory would be when businesses and cities opened back up, the repopulation of those cities will occur. Our leasing season will be an unusual window, if that were to be fortunate by the end of the year, we're going to have a rush of November and December leases as an example. So we're really hanging around the waiting for businesses and the vaccine to make the connection. If that takes 3 months, 6 months or a year, I think we have to run our company under those conditions. Long term, people sought the urban for lifestyle surrounding. And I would think if I've been in Wyoming buried in my parent's basement, working remotely, but I cannot be anxious enough to get back to the life in what I enjoyed before. First as an example.
Wyoming has good fishing, by the way.
Fair point. I would agree with that and probably not a lot of people to date.
Okay.
That's the long term. You guys, anything to add to that?
Alex, as I talked about earlier on the Fort stress side, the call work that we do it's meant to keep us disciplined. And that meant to keep us away from new jerk reactions and headlines and disruptions such as this. So 4 months ago, New York was the finance hub of the world; San Francisco, the tech hub of the world; Boston, the biotech out of the world. So you go through all that and has that changed? Has the venture capital dollars completely disappeared from those markets? Has the intellectual hub that exists there disappeared? I would say no. Now if you say we'd never find a vaccine for COVID and individuals can never come back to work in an urban environment, then that's a different set of rules. But we're not ready to start investing with conviction based off of that promise at this point in time.
So we think being patient is the appropriate place to be. Some of these outcomes are going to be pretty binary in nature. Do we get it or not. So the financial situation on the other side of that for a lot of these municipals and states. What's the taxation situation? What's the regulatory environment? So it's just too early to make a convicted view one way or the other, which is the beauty of being a diversified portfolio. We don't have to make the call today and say we got to uproot and shift half our portfolio. We feel like we're in a good place. And as long as we stay focused on the platform, we think we're going to win on a relative basis over time. So we're just not there yet. We'll hopefully get there as we get more information. We'll have more condition to speak to, but just not there yet.
Right. But you did say something interesting earlier, which is that a lot of your residents have stayed in the general metro area. So you could have shifting of where people live, still working in the same area, but they're shifting their living habits. Joe, second question is on the regulatory front, the November election coming up in Washington, clearly, potential for the Senate and White House to go Democrat, which would then bring with it a lot more housing regulation. How do you guys feel that your position both from UDR as well as industry to try and spend off ever tightening legislation that we may be coming to, rent control, et cetera?
Yes. I'll maybe start it off, and then maybe Tom or Chris may have something to jump in here. I think, again, we go back to that diversified approach. If we were wholly concentrated in only blue states or red states, perhaps we'd be more exposed to the risk there. So again, diversification helps out. I think the industry as a whole, the trade groups that we work with and support are trying to lobby and help the powers that be understand the need to affordable housing, the need for more supply out there and the need to eliminate some of the red tape and restrictions that exist, and that's at a national state local level. So I think the industry as a whole is doing that and trying to educate. And so I think we're in a good position from that sense.
Chris who oversees the regulatory side as well as has other roles may have additional thoughts on upcoming elections, either on a national basis or even coming down to what we're seeing in state like California or some of the recent regulations that we've seen have been bannered about.
Yes, Joe. I guess a couple of thoughts for me. I think, Alex, there's kind of 2 different types of regulatory as I think about it. We really sit in a number of our coastal markets kind of throughout the pandemic. I would say, first, back in March, April, so early on, I think there were some very valid emergency regulations that were enacted to -- from that COVID hardship, I think as the pandemic progress, some of those valid regulations really became ways of different groups advancing more of their kind of tenant-friendly and personal agendas in assorted markets. Yes.
So we think going ahead and outside, we'll see what happens if the Democrats take a said it and obviously, the presidency. But the things that we're really trying to assess in these markets and obviously, don't roll into the state level and then also the federal level at some point is do these policies eventually expire? When do they expire? And at the end of the day, could they transition from emergency ordinances to some sort of long-term policy? And secondarily, and Joe kind of talked about this in the second derivative. But with the new capital formation in our markets at the end of the day as well, investment. I think as we talked about with some of the stuff, just on the regulatory side, we're going to fight anything that comes up. But it really is too soon to have a definitive view on emergency regulation versus long-term policy, how sticky all that stuff is. But at the end of the day, I think we can probably all agree that none of this helps to improve long-term affordability, which is obviously one of the biggest issues that's pushing a lot of this.
So Alex, I think we could have a separate call at great length on this because it's a great topic. And at the same time, I think when you get past the election, you'll have a little bit more vaccine, cooler heads will prevail. I think a lot of the actions right now are knee-jerk and reactionary. But long term, if you look at cities that flies, they thrive through growing housing stock, variety, affordability, and that is generally brought on by friendly business environment and supply being brought into the market. Those that shut down their supply and capital flow tend to gentrify and become less progressive. So I think people will start to realize, and they watch California, 1 city, housing restrictions, another who lives it, all of a sudden whose tax base grows, where do one people want to live, where is more entertainment, amenities, et cetera, being presented. And they don't have to look far but usually their neighborhood. And we see it time and time again, examples, Huntington Beach, where for 30 years, nothing was built and the city woke up and said, we have availability to build, and we're doing quite well there. First, the surrounding cities that are still shut down. So we're going to have to get smarter about what market we operate in. We have made investments in the government regulation. Chris leads that effort, had a great team. And it helps being thoughtful on a long-term basis, not just reacting to today.
Your next question comes from the line of John Kim with BMO Capital Markets.
Gary and Mike mentioned a ship in strategy that was previously discussed at NAREIT to now prioritize occupancy over holding off on the market concessions. Can you just elaborate what drove a lot in point that drove that change strategy? And also, do you see the current 95.5% occupancy to trough this year?
John, just to be clear, we don't focus on rents or occupancy in a vacuum. So we are trying to maximize total revenue. And what you've seen from us, and you can see in our supplement, some markets are operating at lower occupancy day and some are still operating at a very high occupancy. That being said, the other side of it is our rent and what we're doing with the blends. What we're trying to do is maximize our total earn in for not only the rest of this year, but it's going into next year. So again, we don't -- we do this as a function of trying to optimize the little thing, not either of them in a vacuum.
As far as the occupancy levels, are you willing to go lower to maximize rental revenue?
I think in a couple of our markets where we're still having a little bit more trouble. It's too early to tell kind of where that is. But I will tell you, occupancy has come down a little bit as we've seen move out elevate and in some of the other markets, again, where we have the opportunity to hold rate and push occupancy, we're doing that. So I think today, we're closer to the high 80s in places like Downtown, San Francisco and Downtown, New York City, and it's a little bit more challenging. We could see that come down a little bit over the next 30 to 60 days. But aside from that, it's too early to tell where those go.
I would just add, John, coming off of that comment, a comment that Tom made earlier, we do have approximately 2% of the resident base that we would potentially look to effect today if regulations allowed. So when Mike talks about not managing the occupancy, if we have not Bayer sitting in there, we're not going to be worried about keeping them in from an occupancy standpoint. We're going to be focused on getting them out and getting good high-quality rental payers into the system. So you could see temporary disruptions on a market-by-market basis as you see regulations roll off. So I wouldn't take that as a sign that we're letting occupancy, but it's just managing tiring a total NOI.
Okay. On a similar level, can you discuss your willingness to provide shorter term leases, just given the uncertainty that many tenants may have to find a long-term lease or like 1 year lease?
So the way that our pricing system works today is that we can offer upwards of 3 to, in some cases, 18-month leases. And I can tell you with some of the ordinances and the regulations that have been put in place over the last few months, they limit our ability to do that. So the best example today, San Francisco, you are not allowed to do anything in Downtown proper less than 12 month lease. So we can't do it. In other places, the way that the pricing matrix works, we will open that up. They will pay a premium, depending on where our lease expirations fall. So we are constantly managing that.
Your next question comes from the line of John Velosky with Green Street advisers.
Just one for me. I appreciate you guys keeping the call along here. The DC, Mike, you touched on just trends in San Fran and New York softening into the summer here. But your urban assets, are they assuming the work-from-home time environment persists through the balance of the year and the social cities say shot. DC -- sorry, I'm going to we've got a lot of feedback there. Does DC behave like New York and San Francisco over the balance of this year?
Thanks for the question, John. Let me give you a little color on DC. Obviously, lease-up 19.3% of our same-store NOI. I can tell you our 2Q revenue growth, you saw it was down 1.2%. Our suburban B portfolio has held up relatively well, and it's been positive over the last few months. Our urban struggled the most. And this kind of goes along with a lot of the things we've talked about today is the DC more restricted based on regulatory environment. So we had to go out with 0% renewal at those properties. So again, portfolio in the suburbs, positive. What you're seeing down in the heart of DC is a little bit more of a challenge. And I think a lot of that has to do with the regulatory environment. But I will tell you today, growth remains positive. Our turnover is down, traffic up. So a lot to be excited about in that market compared to somebody like New York City or San Fran.
Yes. I'd say from an intermediate perspective, when you look at continuing claims and job forecast, DC definitely holding up better than the nation as a whole, given they do have a diversified base of employment. But also the government, education, cyber, defense, et cetera, as well as the growing tech seen there. So the demand side probably looks better than our portfolio as a whole over the interim and then supply wise, that's been a little bit difficult in D.C. for most of the cycle. During this downturn, it's one of the markets that you see in permit activity come off by far the most. So to the extent that holds, hopefully, you see a little bit lighter supply picture going forward as well.
Your next question comes from the line of Handell Juste with Mizuho.
Just a couple of quick ones for me. I don't think you mentioned, but what that year for stock buybacks? You mentioned -- you mentioned -- you commented about asset value,, your far liquidity profile. So I'm curious, given your balance sheet, what your here appetite is? And then if disposition as the source of capital, where perhaps you'd be more inclined to call the portfolio?
Haendel, it's Joe. As I said earlier, it's one of the items that we look to in deploying capital. We've been pretty diverse in our approach between platform development, DCP, acquisitions and buyback as recently as 2018. It's not something that today we're jumping out there on. You have seen activity here in the quarter. We do feel very good about the balance sheet and the liquidity, et cetera. But being only about one quarter into this crisis, I'm not sure we have the conviction levels yet to go out there and pursue that avenue from our use of capital perspective. We'd like to see more conviction in the economy, the trajectory there, more conviction in the direction and level of NOI and therefore, future liquidity and debt metrics as well as what we've seen asset values very strongly today, make sure that, that continues to hold in this capital markets environment. So I'm not sure we're quite there yet, but we've shown our ability in the past, and we'll try to do the right thing as we move forward.
Okay. My second question is, so the gap between your better Sunbelt markets in New York City and some of your coastal markets was pretty darn wide to past quarter, right, over 1,000 basis points associated on a same-store. So I'm curious if you guys expect that will be wider here over the next few quarters? And when we could see that gap start to narrow?
Again, Haendel, one thing we're looking at today is when you see July trends versus June trends, the fold, they're very similar. So our traffic continues to improve in a lot of ways on a year-over-year basis. Our new lease growth is very simple to what it was in June. And our renewal growth is impacted a little bit just based on what's happening in the market today as well as the regulatory environment. So that being said, you do have different markets doing different things. I would say it's too early to tell when we look at business is property and market, and we've been encouraged by some of our markets bottomed already. So about 20% of our NOI is in margins that bottomed previous to this month. We've got about 50% of our NOI markets that appear to be bottoming, and that leaves about 30% of the NOI TBD, and that's where we're kind of watching that to see what happened over the next few months.
Our next question comes from the line of Alex Calmes with Zelman & Associates.
Just looking at sinus ending this week and given what you know about your tenant employment makeup, how consequential will additional singles be for collections on a go-forward basis?
Yes. You were a little bit bubbled on our end. Maybe if you could repeat? I think what we were in was for exploration unemployment benefits and impact on resident base?
Correct, correct.
Okay. Perfect. Yes. I guess, when we started in the past, and Mike and Jerry will probably jump in here. When we've looked at our resident base and the need for us to accommodate them and help them out from a rental deferral or payment plan, it's been relatively minimal in terms of the number of residents that have come in and requested that. So while we don't know exactly how many residents are still employed or are on unemployment. The percentage that proactively come to us and requested assistance is under 2%. So I think that gives us a pretty good degree of conviction when we look at collections as well as their own actions that roll-off of unemployment benefits, if, in fact, it does happen for an extended period of time, that our portfolio is still in a good place, given that we're higher income, higher quality overall relative to typical apartment product out there in the market.
Got it. And so looking back at regulation in California, looking at top 21, is there any -- other than the obvious pandemic, where on the ground is different in 2018 when top 21 -- top 1- was rejected? And is there concern around this proposition? Or are you guys -- it will be a similar results?
Sure, Alex. Thanks for the question. This is Chris, again. I'm going to give you just a run down because we can come on update over the last couple of months. So to run that of what's happening there. So for -- across '21, I can tell you right, the coalition and really our plan going forward, we think we're in pretty good shape. I say that for really a couple of reasons. First, I think the coalition is much deeper, and I would say, more widespread participant based than last go around. So back in 2018. Obviously, there's going to still be multifamily owners operators, who are the big guys there, but also affordable housing groups, business organizations, big labor, veterans, boots, et cetera. So much more extensive from that perspective.
I think second, the last update we received from CFRH, California for Responsible Housing, indicated that fundraising has remained strong versus where it was in 2018. And at the same time, we're definitely feeling good on that point as well. And then third, reasonable results, they're about a coined as far as yes, no right now, but they do definitely till more in our favor once before and against arguments are discussed with the polling respondents.
On the and potentially going against us is that it is a presidential election year. We all know that Democrats comprise, I would say, a majority of California's motor base and turnout -- tends to be significantly higher in California and doesn't a lot of states in presidential versus year. So we'll see how that goes. But again, in general, we feel pretty good about where we are right now on '21.
There are no further questions in the queue. I'd like to hand the call back over to Chairman and CEO, Mr. Toomey, for closing comments.
First, let me express thanks for all of you for your interest in UDR and certainly, the extra time today. And I want to wish you be safe and healthy. To our associates on the call, I just want to reiterate in a heartful way, proud of the job you're doing, the adoption, the skill and always want you to know we're here to help in any way, shape or form.
Turning to the business side. We've said it many times. It's a challenging environment. And if you will, a storm on a lot of different fronts. But our strategy remains the same. It's the right one. And what it has adjusted is our tactics. And we will continue to adjust as the environment evolves, proud of the team's ability to adjust to a daily changing environment and executing at a high level. Let us remain constant at UDR, and we'll remain constant in the long-term focus on our cash flow growth, maintaining our diversification, our transparency and certainly managing risk in this environment. With that, we always welcome your questions, dialogue, and we will see you soon. Take care.