Good morning, ladies and gentlemen, and welcome to the MAA First Quarter 2021 Earnings Conference Call. Afterwards, the company will conduct a question-and-answer session. As a reminder, this conference call is being recorded today, April 29th, 2021. I will now turn the call over to Tim Argo, Senior Vice President of Finance of MAA, for opening comments. Please go ahead.

Thank you, Christy, 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 would like 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'll now turn the call over to Eric.

Thanks, Tim, and good morning. We are encouraged with the solid start to the year as core FFO results were well ahead of our expectations. A recovery in rent growth is clearly getting started. Our overall blended rents on a lease-over-lease basis are running slightly ahead of last year, and our forecast is for continued improvement. A combination of the recovery within the Sunbelt economies that is just starting to build, coupled with the continued migration of employers and jobs to this region, are driving higher level of demand across our portfolio. We like the trends that we're seeing as we head into the important summer leasing season. Our teams are off to a strong start this year with our unit interior redevelopment program, the rollout of our Smart Home technology platform as well as several new projects aimed at full repositioning of communities to higher price points. We're excited about the upside in rent growth to capture from all three of these programs. It was about this time last year when we hit the pause button on these projects in order to protect residents and staff during the initial months of COVID, and we expect to make solid progress this year. Our new development platform continues to expand, and we're excited to have closed this month on our first opportunity in the Salt Lake City market.

Thank you, Eric, and good morning, everyone. The recovery continued across the portfolio for the first quarter. Leasing volume for the quarter was up 16%. This drove blended pricing achieved during the quarter up 2.7%. This is even with the very strong start we had in the first quarter of 2020 and up 200 basis points from the fourth quarter. In addition, we were able to maintain strong average daily occupancy of 95.7%, and all-in place rents or effective rent growth on a year-over-year basis improved to 1.3% in the first quarter. Collections during the quarter were strong. We collected 99.1% billed rent in the first quarter. We've worked diligently to identify and support those who need help because of COVID-19. The number of those seeking assistance has dropped over time. In April of last year, we had 5,600 residents on relief plans. The number of participants has decreased to just 325 for the April of this year rental assistance plan. This represents only 20 basis points of April billed rent. We saw steady interest in our product upgrade initiatives. We're off to a strong start for the year on our interior unit redevelopment program as well as installation of our Smart Home technology package that includes mobile controlled lights, thermostat in security as well as leak detection.

Thanks, Tom, and good morning, everyone. Investor demand for multifamily product within our region of the country remains strong. However, a lack of properties for sale is causing a supply demand imbalance that continues to drive already aggressive pricing. This robust investor demand supported by continued low interest rates has further compressed cap rates, which are frequently in the mid-3% and low 4% range for high-quality properties in desirable locations within our markets. Transaction cap rates on closed projects that we underwrote were down 25 basis points from last quarter and down 50 basis points from first quarter of 2020.

Okay. Thank you, Brad, and good morning, everyone. Core FFO per share performance of $1.64 for the first quarter was $0.05 per share ahead of the midpoint of our guidance. As expected, operating trends continued to improve through the quarter, producing same store revenue and NOI performance that was slightly ahead of our forecast, providing about $0.01 per share on favorability for the quarter. We continue to expect stable occupancy and strong pricing trends to have a growing impact on effective rents over the remainder of the year. But keep in mind that only about 20% of our leases were effective in the first quarter, and we still have the majority of our leases to be signed during the summer leasing season in the second and third quarter. The remaining favorability came from overhead and interest expense, which were both lower than projections for the quarter. So overhead costs are expected to grow more in line with our original projections as the year progresses as our travel and other activities move toward more normalized levels. Winter storm Uri impacted a portion of our portfolio during the quarter, where unusually cold temperature and electrical outages led to frozen pipes and damage at a number of our Texas communities. Our operating teams worked hard to take care of our residents and get affected units back online quickly. We incurred some casualty losses during the first quarter related to the storm. We established a receivable for the vast majority of the costs, which are expected to be reimbursed through insurance coverage. Net earnings impact to MAA during the quarter was only about $765,000, primarily related to down units. Our balance sheet remains in great shape. During the quarter, we paid off the $118 million of secured mortgages at an expiring rate of 5.1%. We also funded an additional $64 million of cost toward completion of our development pipeline, which, at quarter end, included seven communities with total projected cost of $528 million, of which $193 million remains to be funded. As Brad mentioned, we acquired two land parcels in April as part of repurchase development deals, which should begin construction later this year. And as discussed previously, we expect our development pipeline to grow to around $800 million by year end, which is well within our development autonomous limits.

Christy, are you there?

First question is from John Kim with BMO Capital Markets. Please go ahead.

Thank you. On your effective lease rates, they were growing steadily throughout each month in the first quarter, and it sounds like April is coming in at 5%. How does that compare to your original projections when you came up with guidance for the year?

Yes, John, this is Al. I think Tim and I can both tag team on this one. But I think as we talked about, we had expected to have strong pricing trends in our forecast for the year, and if you take our pricing expectations are built in our forecast, it's somewhere around 2.5% blended for the full year. I think if you take a look at what happened last year, which was about 1.3% pricing, you add what we expect this year, which in terms of revenue, at about half of that production. And you can blend those two together and come up with 2% basis point that we have in our overall revenue. So we're certainly encouraged by the trends that we see in the pricing that Tom talked about. But remember, as we talked about, we've only had about 20% of our leases effective now, and we've got a lot of leases to come in the second and third quarter, so a long way to go yet. And we'll take another look at that in the second quarter.

And we did plan for a return to sort of normal seasonality. So we expected it to be accelerating during this time and kind of move, call it, January through July to be accelerating, then start to trend back down a little bit with normal seasonality.

So is the April data, is that coming off an easier comp from last year? And you expect that to trend down? Or is it - with seasonality high in the second and third quarter, you expect it to be...

Certainly, on new leases, April was kind of the first month last year, where we saw the weakness. So we're getting some good comparability there. But we would expect it to continue to grow from there and kind of return to that seasonality. So I think to Al's point, it's certainly encouraging with the trends we're seeing, and we'll see how it plays out over the next quarter or so.

My second question is on the pre-purchase development program. What are the initial stabilized cap rates that you expect to have from that program? And how does that compare to the development yield?

Yes. John, this is Brad. So our pre-purchase yields are generally in line with our overall development expectations. So there's really no difference in yields between those two platforms. But I will say, the deals that we have, the seven deals on the books right now, those are generally yielding about 6%. We have seen some pressure relative to construction costs. There's a lot of publications about that. But we would expect around 10 to 20 basis points reduction in costs associated with that. But that's somewhat offset by - if you just look broadly at our footprint in our region of the country, rents continue to do very, very well. So we expect some of that increase in cost and the impact there to be offset by what we expect rents to do within our region.

Thank you.

The next question is from Brad Heffern with RBC Capital Markets. Please go ahead.

Just following up on the April lease numbers again. Is the differential between the renewals and the new leases about what you would expect it to be in sort of a normal market for this time of the year? Or is there still some COVID impact that's hitting those numbers?

Yes. That is Brad, it's Tom. If things are looking pretty normal, and we would expect to have that gap between new lease and renewal rate at this point in time. It's widest in the winter and then it begins to narrow and tighten in the summer.

Okay. Got it. And then sort of philosophically, I mean, it's been a long, long time since MAA has done any equity issuance. I'm curious, with the market sort of implying a lower cost of equity at this point, whether you would ever think it would make sense to raise money and maybe accelerate development or maybe if you found attractive acquisition opportunities. Or will you continue to sort of just recycle capital and use the cash generated by the business?

Brad, this is Eric. At the moment, we believe that the pace under which we're able to find opportunity and deploy capital, coupled with the asset sales that we're going to continue to progress on, we don't see a need for equity. I think it's obviously something we continue to monitor. If the acquisition market began to change in some fashion that really yielded a lot more external growth opportunity, we'd have to revisit that point. But for the moment, we believe that between the recycling and the deployment opportunities we have, and the capacity we have on the balance sheet, we like where we are and don't feel a need to tap the equity markets.

Okay, thank you.

And the next question is from Austin Wurschmidt with KeyBanc. Please go ahead.

Similar to the last question, I mean, recognizing that competition for assets is really strong and cap rates are low. But given some of the growth you're seeing and the strength in sort of the economic recovery here, I mean, have you considered changing your underwriting and getting a little bit more aggressive in growth in some of the acquisition deals that you're taking a look at?

Well, I mean, this is Eric. I mean, we constantly challenge our thinking a bit on our underwriting and make sure that we're being as realistic as we can be in what we expect rent growth to do. And so I think that at the end of the day, we're looking at adding stabilized yields to our portfolio that will increase the overall earnings potential of the portfolio long term. And I think that right now, what we see happening on the acquisition side, frankly, requires a level of reach and a level of assumption for a very long period of time that we have a hard time sort of getting comfortable with. We can make the numbers work on both the pre-purchase program and on the new development. Certainly, it's dilution associated with the lease-up and the construction process there. But once those assets get fully stabilized, I mean, the yield is there pretty quick. On the acquisition front, I think right now, frankly, you would have to be comfortable with, I believe, a level of dilution that is longer, frankly, than what we're able to do on the development front and pre-purchase front. So we think we're pushing it in terms of assumptions about as hard as we should, and beyond what we're doing right now would require a level of reach that, frankly, we're just not comfortable with.

Understood, and appreciate the thoughts. And then just going back to guidance. I mean, we touched on lease rates a bit. And given how strong they've been, it sounds like occupancy is also continuing to ramp into April. So can you just kind of walk through the assumptions there for the back half of the year and how you're thinking occupancy trends through the balance of the year?

Yes. So occupancy going into the year, we dialed in about a 10 basis point drop in occupancy compared to last year as we focus on pushing pricing. So with somewhere around 95.5%, 95.6% or so. So kind of given where Q1 was and where we stand right now, we feel good about that. So we'd expect that to be pretty steady, and again, focus given this environment, focus a little more on pushing rents where we can and kind of hold occupancy where it is.

Got it. Appreciate it, thank you guys.

The next question is from Amanda Sweitzer with Baird. Please go ahead.

Your revenue growth recently by some of your smaller markets. Are there any differences between rent income metrics in those markets relative to the larger markets? Or anything else that would impact your ability to continue pushing those large rent increases going forward?

No. Amanda, the rent to income ratios in our small market is right or small markets is in line with those larger markets. So we feel like the opportunity will continue there. Not worried about that at all.

Okay. And then it's relatively small dollars, but you had another double-digit increase in marketing expenses this quarter. Is that being caused by competitive new supply or driven by any specific markets? And do you expect similar rates of increase going forward?

Yes. And I think on expenses for the year, we'll see this. There's a little bit of variability in prior year comparisons. But for the full year, marketing will be at or below 3%. And it's a combination of things. It is both our lead generating activities, but some of the pressure this - or some of the expense in this quarter was bringing online some new tools as it relates to online lead nurturing in our call center solutions, which are helping keep our - which will help keep our personnel costs flat for the year.

thanks, appreciate the time.

Next question is from Alex Kalmus with Zelman & Associates. Please go ahead.

Looking at move-ins from out of state, what did that percentage look like in the first quarter? And how is that trending versus history? I believe last quarter was 12.2% and was at the highest rate. So curious how that's trending.

Yes. That's continued on. It's right at the same percentage, and that trend is up from - we've been tracking that for a couple of years. Low point was in Q1 of 2019, where it was 9.2%. So it's still about a 290 basis point increase or so, and that trend is continuing.

I would add, Alex, this is Eric, that that's at a portfolio level. And so some of our secondary markets, it tends to be a little bit below that average, whereas you start to look at some of the markets like Austin, Phoenix, Raleigh, some of the markets that are more likely to be benefiting from some of the migration out of California and places like that, it tends to be a little bit higher. As an example, in the first quarter, our move-ins from out of state in Phoenix would double that number. Over 24% of our move-ins in Phoenix in the first quarter came from out of state.

Got it. Thank you for the color. Another - just a question on the development. So the yields are around 6%. What is the spread versus a traditional cap rate on acquisitions today? And is that a similar spread as historical? Or has that spread gotten tighter or expanded because of what we're seeing in the acquisition market?

Yes. Alex, I would say the spread is 100, 150 basis points on average. And given just the amount of capital that's looking for acquisitions right now and how that's driven down the cap rates and yields on acquisitions. And certainly, development has been impacted a little bit by construction costs. But I would say in my - as I said in my opening comments, cap rates are down 50 basis points year-over-year. So I would say the spread has probably gotten a little bit bigger, given how much the yields on existing acquisitions have compressed.

Great, thank you.

The next question is from Neil Malkin with Capital One Securities. Please go ahead.

First question, bigger picture question, Eric, maybe for you. When you think about the Sunbelt markets and how clearly you guys are going to get a bigger portion of the pie of existing and then future employees with all the corp. relocations, etc.? When you look at your multiple growth drivers, lower balance sheet and where cap rates are trading in the market. I mean, is it fair to say that you guys are undervalued even at current levels, and really, there should be a rerating, particularly across Sunbelt markets and a portfolio like yours?

Well, Neil, I do think that at least from what we see that the dynamics that are sort of driving job growth, and ultimately, our ability to drive rent growth as compared to the non-Sunbelt markets. I think that, that overall sort of dynamic has clearly begun to shift. And that shift was under way, certainly somewhat prior to COVID. And as much has been reported on, I think COVID accelerated a lot of those trends. And so I think that, that's one factor that would suggest to me that the demand dynamics and the driver of rent growth dynamics for Sunbelt versus non-Sunbelt, I think it's a new day in that regard. The second thing I would tell you is that, I think, cap rates have begun to adjust a bit in terms of how real estate is being priced in gateway versus Sunbelt markets. I think for many, many years that a lot of investor demand really drove cap rates down in a lot of these gateway markets, particularly a lot of international capital that, frankly, was just more familiar with and more knowledgeable of some of these bigger gateway markets. I think, again, the last few years, particularly, the past year, has begun to, I think, open eyes in the investment community a bit about the shifts that are going on in the US regarding job growth and population trends and taxes and all the other sort of factors that continue to favor the Sunbelt. And I think international capital is also paying attention to that. And I think as a consequence of that, I think the historic delta between cap rates for gateway versus non-gateway markets, I think that those cap rates have compressed certainly today. And I think they will remain more compressed or that gap will be more narrow than it has been historically. So I think there is some logic to what you're saying for both of those reasons, and I think the next few years will tell a lot about how these companies are able to perform, the platform is able to perform and how investor appetite continues to evolve. And I do think that there is some logic to what you used to think about five or six years ago in terms of pricing of real estate in Sunbelt markets versus where we should be pricing it today on a relative basis to non-Sunbelt. It's a different day.

Yes. I totally agree. It's a great day. Next question is about the operating side. A lot of, I think, recent conversations about technology and how that's shaping kind of the new wave of sort of institutional asset management, property management. Can you just kind of talk about what technology looks like for you guys and how you think about it, say, over the next three years in terms of implementing enhancements to the revenue maximization, I mean? And then on the expense side, just like with how you think leasing is going to be, property level headcount, anything along those lines would be really interesting and I think something that we need to be on a look out for over the next couple of years.

Neil, I'll kind of give you a high-level overview of, and you're correct. I mean, there's a transformation under way in our business. Currently, what we have rolling is an expanded - call center solution is out and that allowed us to make some staffing headcount reduction changes about how leasing phone calls are handled on-site. We've also deployed a lead nurturing software, which is automated prospect engagement technology, so to interact with the prospects earlier in the sales process and automates the follow ups. We've upgraded the virtual touring. We've implemented mobile inspections, which really makes it a lot clearer to the resident, the condition of their apartment when they move in, and then clearly document the deficiencies if they move out. That's helped us with speed of inspection as well as clarity on billing and resident satisfaction. We're midway through deploying our mobile maintenance solution, which will give us some efficiency on that side of the business. What's coming next, has improved. I mean, we've got self-touring, but automating that process. We've got some tests ongoing with improved multi-location sales support, covering one property from another one. And I would expect the things we have under way right now built into the 2021 budget is a 30 positions or about 3% of our office staff. This will be handled through attrition. And then I would expect through attrition and automation, we see another 30 to 50 headcount reduction in 2022.

Okay. So you're saying 30 this year and then 30 to 50 next year?

Yes. At this point, it's an evolving process.

Sure, sure. Yeah, no, I appreciate that. Thank you.

Our next question is from John Pawlowski with Green Street. Please go ahead.

Thanks. Brad, one follow-up on your comments on the yield compression on development, the 20 basis point deal compression, is that on projects that you've already started or about to start? Or is that on kind of new land you're currently sourcing?

Yes. That's on new, John. So the projects that we have under construction right now, those are intact. No impact on construction costs or anything like that. Those are locked in when we start construction. Those returns in rents and lease up, as I made a point in my comments, are all on schedule. So those are intact. So my reference really was to the impact of costs related to new starts that we would have today and new underwritings that we have today on the development side.

Okay. And these construction cost pressures continue improve more structural and less transient, you have the supply chain bottlenecks continuing, do you sense that it will be finally enough to break the fever on starts? If we're talking this time next year or probably not giving the spread to cap rates?

John, this is Eric. I certainly hope so, but I don't know. I'm skeptical that certainly that the pressures that we've seen thus far are sufficient to have any meaningful impact to slowing the interest level on development at the moment because of the fact that we are seeing the demand growth and the rent growth opportunity continue to improve and get stronger. And I think that's fueling a level of tolerance and optimism on the underwriting side and the ability to withstand some level of cost increase. Where I think that you could see - and the other thing I would also add, as long as cap rates continue to remain as low as they are, providing the developer the opportunity to exit at today's cap rate environment, I think that - again, that, that supports, at some level, the ability to withstand some increase in cost. One of the things, though, that we're beginning to see increasingly affect development more than anything other than land cost is just the permitting and zoning processes are getting increasingly difficult. And I think that as we continue to see some of these Sunbelt markets facing much population growth and demand growth and some of these infrastructures start to get under a little pressure, I think you may see a little bit more stringent behavior out of some of the local governments and zoning and permitting folks to be a little bit more restrictive than they have been in the past. And I think that probably as much, as anything else, may start to moderate things. I'm comfortable that with all the things that I just went through, that it's likely that supply is not likely to materially increase the levels that we see happening right now. I think the pipelines are full and there's just too much pressure at this point to see any material increase in supply pressure. But I think we're a ways away from seeing a material decline in pressure.

Understood. Final question for me. Al, you mentioned the down units in Texas. Could you give us a sense for just kind of the revenue impact these coming months or quarters from these down units, acknowledging it's small on the grand scheme of things?

I'll just start with that, and I think Tom can answer that. I think what we'd say is, teams - as we talked about in the comments, teams worked very hard to get the vast majority of those units online quickly. And I'd say, as we get through the end of April, we have a very few left, only a handful of units that are down. So overall, as you've seen, what I talked about in my comments, the impact, you've seen the majority of that impact in the first quarter already, John. A little bit will trail, but most of that has been handled. Maybe Tom, you might?

Yes, no, John. I mean, we had a total of 251 down as a result of the freeze, 107 of those are already back up. And the remainder will be up shortly. We had a lot more with damage, but the teams were able to service those units without generating turnover in it. So they didn't go to down status.

Okay, thank you.

And our next question comes from Nick Yulico with Scotiabank.

Two questions. First, on the concession impact to your portfolio currently, I don't think you break that out unless I missed it. Can you just give us a feel for concessions, how much they're impacting your effective rents right now? And kind of your assumption about how - if you get a benefit from removing those concessions, how that helps rental pricing later this year? How are you thinking about that?

Yes, Nick, I'll give you a quick overview. And as you know, we price on a net effective basis. So concessions are really only used when the immediate comps in the submarket are using them. And our concessions are in the lease-over-lease rates that we share with you. But where we're doing at concessions, for the same store group peaked in third quarter of this year at 1.2% of net potential, and it's dropped to just 80 basis points of net potential for the first quarter of this year. So that's just sort of following this general trend of improved pricing power.

I'll add to that, Nick, that our same store revenue results, the way we reported includes those being spread over the life of the lease.

Okay. Great. Just my other question was on in migration to your markets. You have cited this in the past, you gave some data. I don't think you gave an update today. But in terms of move and benefit from sort of outside of your markets, people coming to your portfolio from coastal areas, etc., you also gave some stats in the past about searches for rentals in cities such as Atlanta. So I guess, I'm just wondering if you have an update on that. And also whether that benefit has changed at all because, obviously, we're starting to see some improvement in occupancy in coastal markets. So just trying to understand how that's impacting your portfolio.

The trend has continued. It was in 2019, it was 9.2% of our move-ins from around the market. It's moved up to 12% alone in the first quarter. That's about where it was for the fourth quarter. And then we're still seeing them high demand of search rates. And as Eric pointed out earlier, that's at a portfolio level read. And some of our secondary markets get a little less of that in migration. In place - for instance, in a place like Phoenix, it was double that rate of in migration from out of area. So very much - that trend is very much alive and a big part of the bright future of the Sunbelt.

Great, thank you everyone.

And our next question is from Nick Joseph with Citi. Please go ahead.

How are you thinking about the further build out of Salt Lake City and how large could that market become?

Nick, this is Brad. As we said, when we first started looking at Salt Lake, for operational efficiencies, we'd like to get that market to, call it, six to eight projects in the first stage for us, given just the dynamics of Salt Lake City is to go in there and partner with a developer who has a presence there and an ability to quickly add through development two or three, four projects. And then the next phase we'll be trying to buy through acquisitions, with the final step being our development team perhaps coming in there and building from the ground up. So we're well under way with that with a new project that we have announced there. As I said, we have a development partner that we're partnered with there that has a partner in the market. So they're actively looking and evaluating new sites, and we're hopeful that we can quickly add to our presence there.

Are there any other deals currently in the pipeline?

Not for Salt Lake City, no. There's one land site that is currently under LOI, but there's not one that's imminent at the moment.

And then are there any other new market entries expected in the near term?

Nick, this is Eric. Nothing specific. I mean, we continue to look at opportunities in some other markets. But at the moment, beyond what Brad just mentioned, we're working some land sites in Tampa. We're controlling a land site in the Research Triangle in the Raleigh-Durham area at the moment. We've got another couple of sites in Denver that we're working. But it's still all within our same footprint at the moment.

Thank you.

And the next question is from Rob Stevenson with Janney. Please go ahead.

Just to follow-up, I mean, how many projects other than the two that you guys brought on the land deals do you expect to start in 2021 this year from a development standpoint?

Rob, this is Brad. We have two that we're hopeful we can start this year. But again, those are in due diligence, so obviously, anything can happen at any point in time with those. But that's at this point what we're working toward. As we mentioned, we do have other sites under control and under contract, but those are more likely 2022 starts.

We've got a 27-acre site in Denver area called Central Park, east of the old Stapleton Airport area that we are currently doing predevelopment on. And we would hope to be able to start that late this year, the Phase 1. It will be a three-phase project. So it will be a big project for us. So we're hopeful we can get that one started late this year, in addition to the two I've mentioned in Salt Lake and in - the new one in Atlanta.

And what's the rough construction costs expected on the two that you're about to start here?

So let's see. I got it right here. Yes. Salt Lake City, the project is I think it's $94 million.

Both of them are right around $90 million.

Yes. $90 million for Salt Lake City, $94 million for West Midtown.

Okay. And so you're going to have the Arizona project delivering here. And so that will come out, you'll replace that with two other projects. And so, at least temporarily, until you get the back half of the year and you start to deliver more of the other ones, your pipeline will go up to somewhere in the neighborhood of about $600 million is the way to think about it?

Well, I think we talked about around - follow that math, how you got there. But what I would say is, as I talked about a bit in the call, we would expect once we start these, the deals they are talked about and a couple that are possible, we kind of put in a couple of potential starts, as Eric talked about, the rest of the year beyond what Brad has talked about. And we could see easily our pipeline getting to what's committed, what's the project, their total cost, what's under way being about $800 million or so about year-end. Yes, a big difference. Slipped a couple of the numbers there, but the $800 million or so. And that's certainly well within the tolerance range that we've talked about in the past. So that's what we're expecting.

Okay. And then Al, what's the ongoing cost from the high-speed bulk cable package? You guys noted in the release that it's 80 basis points hit same store expense growth. I mean, how far into the future does that continue? When does that start to really sort of burn down or runoff, etc.?

I'll let Tim give you the details on that. We'll get pretty close to the end.

Yes. I think for the full year, we're expecting that to be, call it, 70 basis points of expense impact in 2021. And certainly, we're getting revenue impact on it as well. It will have a little bit of outsized impact in next year, but not to the level of 70. And then I think as we get to 2023, it becomes a sort of a normal line item, if you will.

Okay. And then last one for me. Tom, any markets stronger or weaker than you guys had expected thus far in 2021?

Yes. I mean on the stronger side, I would put Orlando in that bucket. They were on my, a little bit of a, laggard list. But as far as the shift in blended pricing from Q4 to Q1, they're up like 430 basis points on a blended pricing basis. And it is good to see Orlando catch its gear again. The theme Disney opened now last two theme parks, maybe it was a month ago, and really the feedback we're getting is that's brought hospitality back. And restaurant is back, and it is moving along again. It's very encouraging to see the improvement in Orlando.

And anything weaker than you expected thus far?

No. The push forward has been pretty positive. I mean we're still worried about DC and Houston. They are recovering, but at a slower pace.

Okay, thanks guys.

It appears we have no further questions. I'll return the floor to our presenters for any closing remarks.

Okay. Well, thanks, everyone, for joining us this morning. And obviously, if you have any follow-up questions, feel free to reach out to us any time. Thank you.

This will conclude today's program. Thanks for your participation. You may now disconnect and have a great day.