Feb 2, 2017
Operator
Good morning, ladies and gentlemen. Welcome to the MAA Fourth Quarter 2016 Call.
During the presentation, all participants will be in a listen-only mode. Afterwards, the company will conduct a question-and-answer session.
As a reminder, this conference is being recorded today, February 2, 2017. I will now turn the conference over to Tim Argo, Senior Vice President, Finance for MAA.
Please go ahead, sir.
Tim Argo
Thank you, Tanisha, and good morning. This is Tim Argo, SVP of Finance for MAA.
With me are Eric Bolton, our CEO; Al Campbell, our CFO; and Tom Grimes, our COO. Before we begin with our prepared comments this morning, I want to point out that as part of the discussion, company management will be making forward-looking statements.
Actual results may differ materially from our projections. We encourage you to refer to the safe-harbor language included in yesterday’s press 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.
Reconciliations to comparable GAAP measures can be found in our earnings release and supplemental financial data. I’ll now turn the call over to Eric.
Eric Bolton
Thanks, Tim, and good morning, everyone. As recap in yesterday’s earnings release, we had a busy end to 2016.
A significant amount of our focus was, of course, in completing the close of the merger with Post Properties. Our merger was closed fully in line with our original expectations.
And we had a successful launch at day one consolidated operations on December 1. In addition to our merger activity, during the quarter we were also successful closing on the sale of an additional five properties and completed the acquisition of a new lease-up property in the Charleston, South Carolina market.
And finally, during the quarter, we continue to make good progress on our development and lease-up activities, capturing solid Same Store results and delivering overall core FFO results that were slightly ahead of our expectations. With the merger transaction now closed and our operating reporting systems producing consolidated information, our attention now turns to completing the full integration of all support reporting systems, reconciling more detailed policies and procedures, and ultimately positioning our platform to fully harvest the long-term benefits of the merger.
I want to thank our team of associates who are performing at a high level during a very busy time for our company. We’ve been through this merger process before and have developed a lot of strength and capabilities that are clearly on display.
Upon announcing our merger with Post, we outlined the fact that we expected the first year of consolidated operations would include some initial earnings dilution as we introduced three key variables that would have a near-term dilutive impact on year-one earnings. Specifically, those variables were the fact that we were bringing a $480 million development pipeline onto the balance sheet that was not yet productive.
Secondly, we acquired a portfolio of properties exposed to different submarkets that for the near-term would be facing higher supply pressure. And finally, that in combining the two balance sheets, we were meaningfully strengthening the MAA balance sheet through deleveraging the company by over 600 basis points.
As outlined in our earnings release, our initial guidance for 2017 projects FFO per share of $5.72 to $5.92 or $5.82 at the midpoint, which includes $0.15 per share of non-recurring merger and integration costs that we expect to incur as we wrap up consolidation activities. It’s important to note that excluding the non-recurring merger and integration costs from both 2016 results and our 2017 forecast, the midpoint of our forecast represents only a 1.9% decline from prior year.
This is despite the short-term pressure from the three factors just noted that will dilute our earnings in 2017. This is a better result than we expected.
Our work to date on consolidating and reconciling property operations between MAA and Post has us even more enthused about the opportunity surrounding the long-term value proposition from this merger. Our work to date on the consolidation of back-office systems, reconciliation of property-level practices, rework of existing contracts to acquire the benefits of our enhanced scale and the initiation of significant unit interior redevelopment opportunities, cause us to remain very excited about the merger.
We expect the NOI margin enhancement opportunities we’ve previously discussed to become increasingly evident as we approach the end of this year and into 2018. In addition, we remain confident that $20 million of G&A and overhead synergy opportunity that we previously identified will be fully captured in 2018.
Tom will discuss in more detail what we are seeing in the way of leasing conditions across the portfolio. Overall demand remains strong.
We expect the well-documented pick-up in new supply trends will cause some moderation in rent growth versus prior year. Our combined adjusted Same Store revenue guidance of 3% to 3.5% is largely a result of expected rent growth and we expect to hold continued strong occupancy at around 96%, consistent with our performance in 2016.
Demand for apartment housing remains strong across our markets with leasing traffic consistent to what we’ve been experiencing over the past year. Resident turnover or move-outs in the fourth quarter were down as compared to prior year.
Encouragingly, based on the trends we see with new permitting and starts across the majority of our markets, coupled with the feedback we receive from developers who find today’s construction financing market significantly more challenging, we remain optimistic that our markets will continue to hold up well as employment markets and wage growth continue to support solid demand. As noted in yesterday’s earnings release, we were successful in acquiring one property in the fourth quarter.
The acquisition has attributes consistent with essentially each of the deals we’ve acquired over the past couple of years, namely a high-end newly developed property by a regional developer undergoing initial lease-up in a submarket seeing near-term supply pressure, which created an opportunity for compelling acquisition. We continue to look at a number of additional opportunities and find that overall cap rates appear to be holding up and generally in line to what we’ve seen over the past year.
Our guidance for acquisitions in 2017 is in line with performance in 2016. But we remain hopeful that as year unfolds, we may see more opportunities that meet our long established disciplined approach to deploying capital.
That’s all I have in the way of prepared comments. And I’ll now turn the call over to Tom.
Thomas Grimes
Thank you, Eric, and good morning, everyone. Our fourth quarter Same Store NOI performance for legacy MAA at 4.2% was driven by revenue growth of 3.6% over the prior year.
On a sequential basis, we matched last year’s strong seasonal revenue result and declined just 20 basis points from the third quarter to the fourth. The top line was driven by rent growth, as all-in place effective rents increased 3.9% from the prior year.
Occupancy exposure trends are strong. January’s average daily physical occupancy of 96% matched January of last year.
Our 60-day exposure, which is current vacancy plus all notices for a 60-day period is just 7.3%. As expected, our pricing trends are showing some sign of moderation.
During the quarter, blended lease prices on a lease over lease basis increased 2%. On the market front, the vibrant job growth of the large markets is driving strong revenue results.
They were led by Fort Worth, Atlanta and Orlando. The secondary markets continued their study revenue performance.
Revenue growth in Memphis, Greenville and Charleston stood out. In both portfolios, Houston remains our only market-level worry bead.
After the merger, Houston represents just 3.6% of our portfolio. We will continue to monitor closely and protect occupancy in this market.
At the end of January, our combined Houston market’s daily occupancy was 94.3% and 60-day exposure was just 7.3%. Renter demand remains steady and our current residents continue to choose to stay with us.
Move-outs for the portfolio were down for the quarter by 9% over the prior year and turnover dropped again to a low 50.3% on a rolling 12-month basis. Move-outs to home buying dropped 5% and move-outs to renting a house declined 14%.
The integration of Post is off to a good start. Progress is being made reconciling our pricing platform.
We’ve centralized our pricing process and are now aligning pricing practices. On the redevelopment front, opportunities that have been identified are greater than we initially expected.
On the Post portfolio, we believe we have a pipeline of 1,300 units. We have already begun to upgrade units in the Post portfolio and look forward to updating you further throughout the year.
For the MAA portfolio, during the quarter we completed 1,300 interior unit upgrades, bringing our total units redeveloped for this year to just over 6,800. On legacy MAA, our redevelopment pipeline of 15,000 to 20,000 units remains robust.
On a combined basis, our total redevelopment pipeline is in the neighborhood of 30,000 units. Our active lease-up communities are performing well.
Rivers Walk’s stabilized - Rivers Walk Phase II stabilized on schedule in the fourth quarter. Post Parkside at Wade is 61% leased and on schedule to stabilize in the third quarter of this year.
Colonial Grand at Randal Lakes Phase II in Orlando is 69% leased and on schedule to stabilize at the end of this year. Post Afton Oaks is 15% leased and in line with our expectations.
Given the conditions in Houston, we have planned for it to stabilize in the second quarter of 2018. Our new acquisition community in Charleston is on track.
And finally the Retreat at West Creek Phase II which has not delivered yet, but it’s already an incredibly good 84% pre-leased. We are pleased with our progress thus far in the Post merger.
The operating structure of the combined companies is in place and functioning well. There is a high degree of overlap in both systems and markets.
The combined team is quite capable and we are confident that by reconciling the practices between the two companies that we will fully capture the opportunities of this merger. Al?
Albert Campbell
Thank you, Tom, and good morning, everyone. I’ll provide some additional commentary on the company’s fourth quarter earnings performance, the balance sheet activity, and then finally on the initial guidance for 2017.
Net income available for common shareholders was $0.44 per diluted common share for the quarter. Core FFO for the quarter was $1.50 per share which was $0.01 per share above the midpoint of our previous guidance, despite $0.02 of dilution from the Post merger, which was not included in the previous guidance.
Operating performance for the quarter continued to be strong in line with our expectations. Interest expense and disposition timing combined produced majority of the $0.03 per share favorable performance for the quarter, which was partially offset by the $0.02 per share dilution from the Post merger.
For AFFO for the quarter was $1.40, which represents of 4.5% growth over the prior year, despite the Post dilution. Core FFO for the full-year was $5.91 per share, which represents 7% growth over the prior year.
Core AFFO for the year was $5.29 per share, which represents 10% growth over the prior year. And very healthy 62% dividend payoff ratio for the year, which is well below the sector average.
During the fourth quarter, we acquired one community for $70 million, and sold five communities for $113 million in gross proceeds completing our capital recycling plans for the year. Total gains of $32 million will recognize related to the dispositions during the fourth quarter.
For the full-year, five acquired communities combined totaled $334 million of capital investments. Our 12 communities were sold producing combined gross proceeds of $265 million, and $80 million of recorded gains on sale.
We also funded $16 million of additional development costs during the quarter, bringing total development funding for the year to $59 million. Our total development pipeline year-end now contains nine communities including the six acquired from Post, with total expected development cost of $562 million of which $200 million remains to be funded.
We expect NOI yields to average around 6.4% once these communities are completed and stabilized. During the fourth quarter, we completed several important financing goals for the company.
First, we assumed over $900 million of debt in the Post merger with very minimal transfer costs. In conjunction with this, we expanded our credit facility to $1 billion from $750 million and refinanced $300 million term loan acquired from Post to extend the maturity date and improve the terms.
And also as mentioned in our prior quarter release, we postponed our original plans for bond deal in late 2006. This allowed the Post merger to close and enabled us to capture the benefits of additional balance sheet strength from the combined balance sheets prior to completing a new deal.
Immediately following the merger, Standard & Poor’s did upgrade our investment grade rating to BBB plus from BBB, which improved our current pricing and several of our borrowings, including our credit facility in term loans, and our expected pricing for future bond deals. At year end, our leveraged defined as debt to total assets for our public bond covenants was 33.9%, which is 700 basis points lower than the previous year.
And unencumbered assets were over 80% of gross assets. We also had over $540 million of combined cash and capacity under our unsecured credit facility to provide protection to support our business plans.
Finally, we did provide initial earnings guidance for 2017 with release you will notice that we are providing guidance for net income for diluted common share, which is reconciled to FFO and AFFO in the supplement. Also given the recent industry focus to a one common non-GAAP earnings measure and a desire to simply our earnings presentation.
We are providing FFO guidance only on a NAREIT-defined basis for 2017. Of course, we will continue to clearly disclose significant noncore items such as merger integration costs and a mark-to-market debt adjustment in order to allow modeling as desired.
Net income per diluted common share is projected to be at $1.82 to $2.02 for the full year 2017. FFO is projected to be $5.72 to $5.92 per share or $5.82 with the mid-point, which includes $15.0 per share merger integration costs.
AFFO is projected to be $5.12 to $5.32 per share or $5.22 at the mid-point. The primary driver of 2017 performance is expected to be the combined adjusted same store NOI growth which is projected to be 3% to 3.5% based on 3% to 3.5% revenue growth and 3% to 4% operating expense growth.
Our revenue projections include continued strong occupancy levels averaging about 96% for 2017 combined with average rental pricing in the 3% to 3.5% range for the year. We expect operating expenses to remain under control with real estate tax is the only area that expect to pressure which are projected to continue growing in the 5% to 6% range for the year.
We expect acquisition volume to range between $300 million and $400 million with disposition buying range between $125 million and $175 million for the year. We expect to fund between $150 million and $250 million of development cost during 2017 projecting to fully complete six of the nine communities currently under construction.
Given our expectation of generating $90 million to $100 million of internal generated cash flow in 2017 along with the anticipated asset dispositions for the year. We do not currently have plans with the new equity during 2017.
Our guidance assumes we incur additional $16 million to $20 million of merger and integration cost in 2017 and capture a full $20million of overhead synergies on a run rate basis by the yearend. We also expected to gain capturing additional NOI synergies primarily in the later part of the year as operating practices and platforms become more integrated.
So that’s all that we have in the way of prepared comments Tanisha. We’ll turn the call back over to you for questions.
Operator
Thank you. [Operator Instructions] and we’ll go ahead and take our first question from Rob Stevenson with Janney.
Please go ahead. Your line is open.
Robert Stevenson
Good morning guys. Tom, can you talk a little bit around the same store revenue guidance in terms of what markets are likely to be materially above the sort of range and then what markets other than Houston expected to be sort of below the sort of low end of the range, and where you have some concerns even if it’s not going to be Houston level concerns, but where you’re continuing to see weakening results for 2017.
Thomas Grimes
I’ll start with sort of the strongest of the bunch, and frankly, it lines up pretty well with what 2016 results were, but I would expect things out of Atlanta, Orlando, Phoenix, Raleigh, Tampa, Jacksonville, Charleston and Memphis. If I can’t not mention Memphis, Houston as a slower one and remind that it’s just 3.5% of the portfolio.
And then on the slower but frankly we like some of the fundamentals out of it are DC and Savannah. I think both of those have the - those will start a little slower, but I think they both have attributes that give us optimism towards the back half of the year.
Robert Stevenson
Okay. And then what markets do you think at this point in time have the widest variability in potential results for 2017?
Thomas Grimes
That is relatively I would say hard to predict. Of course, Rob I think the supply side of the equation is relatively clear and their demand stays on as expected.
I would tell you that will roll out about as we would expect if we have some sort of shock to the system in some way like we did with the oil shock in Houston that would change volatility. I’m just not very good at seeing those shocks coming around.
But right now, we would expect them to be in those ranges.
Robert Stevenson
Okay. And then Eric, what are you guys thinking at this point in terms of new development starts in 2017 even if they’re sort of fourth quarter sort of loaded.
I mean, what do you - given what you acquired potentially in cost and what you had working on mid America. I mean, what does 2017 look like for starts for you guys?
Eric Bolton
The only project that I think you may see is start in 2017 is a phase 2 opportunity we’re currently looking at associated with the acquisition we made in the fourth quarter in the Charleston market, 1201 Midtown is the name of the property. We have an adjacent parcel of land there they were currently looking at, other than that I don’t envision of starting anything new in 2017.
Currently the combined development pipeline now represents roughly 3% to 4% of our enterprise value. I think that will probably scale down a little bit over the coming year to two years as we bring some product online, and we’re going to be active in the market looking for opportunity you may see us acquire land site or too, but I would not see a starting anything this year and probably we would be back half of 2018 before you would see us likely start something.
Robert Stevenson
Okay. And then now, the 3% to 3.5% revenue - Same Store revenue growth guidance that’s just a Mid-America portfolio or that includes post?
Albert Campbell
No, that includes post. I may just clarify that Rob, it’s a great question is the guidance that we put out is on a adjusted combined Same Store basis we’re in line with that, because it’s both portfolios added together as if we owned Post in both years.
We have the numbers so we - and we know that’s what interest peoples who want to show that, and there are technical Same Store is properties that we’ve owned for two years. So that guidance is based on adjusted Same Store performance as if we own both 3% to 3.5% combined, obviously that’s with Post coming out of the gate lower than MAA beginning the year, and as we worked in the back part of the year capturing some of the synergies tried closing that gap, but that’s a combined basis.
Robert Stevenson
For the full year how material is the difference if you were providing guidance for just the Mid-America portfolio and then for the Post portfolio.
Eric Bolton
The back end - there is a back half on Post it make up for the first-half…
Albert Campbell
No, it doesn’t make up Robert, but tightens the gap. So in the zero 15 basis points range for the full year but when you’re done, because of the performance that we expect to capture from some of the things that Tom and his team doing on pricing and expenses that you will see more in the third and fourth quarters of the year.
Robert Stevenson
Okay. And then just lastly, how much of the $0.15 or so from a noncore perspective is sort of frontend loaded or is that sort of ratably throughout the year sort of $3.5, $4.0 a quarter.
Albert Campbell
No, it’s sort of frontend loaded. I would call it 40-30 15-15 if I were modeling it, Rob.
And that’s just because half of that is people, that are staying with us to help us integrate these systems that are identified as interim or part time. And as their projects are completed and they began to roll off, you will see that come down.
So I would go with 40-30 15-15 range.
Robert Stevenson
Okay. Thanks guys.
I appreciate it.
Operator
Thank you. And we’ll go ahead and take our next question from Nick Joseph.
Please go ahead. Your line is open.
Nick Joseph
Thanks. Just want to go back to one of the previous questions to clarify.
So Same Store revenue for the combined company is 3% to 3.5%. How do that breakdown between Post and MAA legacy portfolio.
Albert Campbell
MAA legacy portfolio for the full year - well, two things at segment, at the beginning of the year Post is starting up lower, but for capturing synergies and things by the end of the year they close that gap, so they’re still below but the gap is much tighter. So full year call it between 0 and 50 basis point spread that time we done at the end of the year.
Nick Joseph
Okay. So just to clarify Post is zero to 50 basis points dilutive throughout the year at different place.
Eric Bolton
Yes.
Thomas Grimes
And Nick, this is Tom, one point to add is that the Post portfolio represents about 25% to 30% of our total Same Store portfolio, so that can help you do the balancing that.
Eric Bolton
Good point.
Nick Joseph
Perfect, thanks. And then Eric, I’m just wondering what are your thoughts on the DC market and if it’s a long-term market for you.
Eric Bolton
To be determined, I would tell you, Nick, we’re pretty excited about the properties that are there. We’ve been up there visiting with the teams and getting familiar with the properties or great assets, great locations as you know that DC market is starting to show some signs of recovery, and for the foreseeable future we are enthused to be there and believe it will be a nice complement to our portfolio and don’t have any plans to make any changes.
Nick Joseph
Thanks.
Eric Bolton
You bet.
Operator
Thank you. And we’ll go ahead and take our next question from John Kim with BMO Capital Markets.
Please go ahead. Your line is open.
John Kim
Thank you. It sounds like supply growth is peaking for the most part of this year.
But I’m wondering if there are any market that you’re in where you think supply growth may be at risk of accelerating in 2018?
Thomas Grimes
John, it’s Tom, I think, you will see a little bit of supply growth in Austin, Nashville, and Atlanta that that tends to be more in the urban core area, we are not exposed to that in Nashville, we will see a little exposure to that in Atlanta, and light exposure to that in Austin. You are talking probably about 1,000 to 2,000 unit bump in the each of those markets.
Eric Bolton
John, this is Eric, I will tell you that I think based on just again, I’ve had a lot of conversations with developers over the last several months. And it’s a consistent message that financing is very difficult, right now.
And I mean equity capitals available but the financing is difficult, and on that basis it’s hard for me to see supply trends in 2018 being certainly any worse than what they are in 2017. And I would suggest that based on everything that we see right now, we likely we will see supply - I believe in our markets peak this year, and portfolio wide see a little moderation take place in 2018.
John Kim
Can you just - Eric, can you just kind of unwind that’s happening right now with the banks for financing development.
Eric Bolton
Well, I think that there has been a lot more information available and widely sort of put out there suggesting the supply trends and picked up quite a bit, particularly in the high-end of the market, and in some of the more urban locations. And as a consequence of that I think the financing environment has just become a little bit more cautious about funding and financing apartment construction at the moment.
And as a consequence of that again, I wasn’t actually in attendance, but I talked a lot of people coming out of the national housing conference last week. And that was absolutely consistent message that financing is very difficult to come by right now.
And we put on top of that the rise in land costs, construction costs, construction labor and particulars become increasingly challenging. It just hard to see at this point, how supply trends begin to elevate in any way from where they are today.
And in fact I would - as I said a moment ago I believe they will like to say fewer deliveries in 2018 versus what we are seeing in 2017.
John Kim
Okay. And I think, Tom, you mentioned in your prepared remarks that move onto home buying and single family rental declined this quarter.
And I’m wondering how much of that is seasonal or is that market driven as far as the market tightening.
Thomas Grimes
That’s a quarter-over-quarter comparison over prior year. So in other words it’s relative to same time last year.
So it take seasonality out of it, so that’s an absolute drop.
John Kim
So what do think this is occurring?
Thomas Grimes
I think the myriad - there is a myriad of reasons out there, and it was touched on in the journal this morning with the new home buying stats, the homeownership rate dropping again, I just think it is people pushing back major life decisions, they are buying homes, they’re getting myriad later, they’re buying homes later, and they’re investing in their pets. And so they tend to want to rent longer and value that flexibility.
John Kim
Great. Thank you.
Operator
Thank you. And we will take our next question from Tom Lesnick with Capital One.
Please go ahead. Your line is open.
Thomas Lesnick
Thanks. Good morning, guys.
I guess first, you mentioned construction financing being really hard to come by. You would think that would give REITs that much more of a cost of capital advantage.
And at the same time, you talked about your acquisition opportunities, basically looking to buy recently developed assets. So I’m just wondering, what is the calculus in your mind between doing development yourself versus buying recently developed assets?
How do you measure that risk adjusted return?
Eric Bolton
Well, generally, I’ll tell you Tom, we look to get a little bit better yield, higher yield on the development side, equation given the fact that we are taking on more risk and we also are tying up capital in a non-productive fashion longer. As a consequence of doing a development versus an acquisition.
So call it 100 basis points spread or something of that nature, maybe a little north of that is what we tend to often - or tend to look for. And given where we are right now, we are having a hard time making the numbers work on the development side given the reasons I spoke of a moment ago regarding land costs and construction costs generally particularly construction labor.
So we are just - we are not finding - and underwriting as realistically as we can. We really feel that it’s tough to pencil out development right now.
And on the acquisition side there has been likewise hard to make the numbers work, and hard to buy anything other than again the characteristics that I spoke up, which is really everything we’ve bought for last two or three years is some sort of recently developed or development by a regional developer that really doesn’t have the balance sheet or the wherewithal to sort of carry the deal for very long-time, or has impatient equity partner involved in the development that anxious to sort of monetize their investment, and I think that has supply trends continue to sort of come online this year, or new products come online this year. I continue to be helpful, we’ll find more that opportunity, and give us the chance to buy at a price point that is frankly pretty down close to replacement value, and without the construction risk associated with it.
That’s sort of how we think about it right now, and it continue to sort of stick to that level of discipline.
Thomas Lesnick
Got it. That’s very helpful.
Just one more from me. Now that you’ve got your hands on the Post assets, how would you triage the parts of the portfolio for redevelopment?
What are the first assets you’re going to consider and what are the metrics you’re looking at on that?
Eric Bolton
Tom, I think, I mean, I pick up on a little bit with triage. I mean, it’s not an emergency situation there in great locations, and they are well maintained.
We are really sort of thrilled with the opportunity. And you start with a little bit older assets, but the locations in places like Atlanta and Dallas are phenomenal, and there is a great core of opportunity in those two markets.
And then followed probably by the Tampa assets, and their locations and opportunities. And there is good bit of upside in Charlotte, and DC as well, which I think a pretty much rattled off everything that there is short of Orlando and Raleigh, which Orlando has some opportunity as well, though smaller because the assets are newer.
It is really just a get in - get us many test units and as we can do in those various markets, hone the scope and then move forward. I will tell you it is likely that the opportunity to redevelop on a per unit basis and the Post assets is going to be a little higher than the average 4,500 and we think we’ll get - we will get a larger rent bump for that, because of the locations, we can do more upgrades like in granite and countertops and get a return for them.
So we are excited not just in the volume, but in the sort of the bump in the quality, the bump that will get from the Post redevelopment opportunities.
Thomas Lesnick
Got it. Really appreciate that insight.
Nice quarter, guys.
Eric Bolton
You bet. Thanks, Tom.
Operator
Thank you. And our next question comes from Rich Anderson with Mizuho Securities.
Please go ahead. Your line is open.
Richard Anderson
Thank you. Good morning.
First of all, congrats on moving to NAREIT-defined FFO. I for one appreciate that a lot.
I hope more REITs follow suit. Second is on your AFFO guidance.
Is that a quote-unquote normalized AFFO or is that simply - is the difference just CapEx between your FFO guidance and your AFFO guidance?
Albert Campbell
Second, Rich, it is FFO guidance less than normal recurring CapEx pull out.
Richard Anderson
Okay. So you still have the merger costs and the debt mark to market in the AFFO?
Albert Campbell
Yes. You would take the $5.22 midpoint plus $0.15 and that would be more normalized FFO, yes.
Richard Anderson
Got you. You mentioned 30,000 units in redevelopment sort of cross hairs, roughly one-third of the portfolio.
How long do you think it’ll take to kind of get through that chunk of activity?
Eric Bolton
I would think that three to five years or better. We are very disciplined about the volume that we put through the pipe, not from a scalability production, but we think it’s vital to test the units side by side with non-renovated units.
So that we can look you guys in the eyes and be confident that we’ve gotten the return and we tested it against a unit that is not renovated and that return if real. So for that reason it takes a little bit of time, but we rather go steadily and know that we’re getting the return then get out there.
The other thing is that Rich is that we do these as apartments come. We don’t force turnover to occur, and I think that protects the economic side, but we did over 6000 years this year.
I mean, we’ve looked at may get to 7000 units or something like that. So you can do the math, as Tom said, it’s probably a three or four-year endeavor.
Richard Anderson
So if you did 7000 on your own, will that number actually go up, because you’re bigger company already think it stays in that range.
Albert Campbell
I think it will probably stay in that range, maybe a bit over but yes.
Thomas Grimes
The Post items will be additive, but not…
Richard Anderson
Right. More to choose from, more to choose from.
So by the time the fifth year comes along. What’s the pace by which units start to become redevelopable?
In other words, this is kind of circular right. I mean, by the time you’ll add to that redevelopment pool.
Do you have a sense of what number of units sort of get to a point just because of the process of age become redevelopment candidates.
Thomas Grimes
It really determines - depends on the market and if we feel like there is an opportunity to grow the top line reinvesting, and we’ve done that in some places and others we’ve never revisited again. So I mean, it’s truly asset by asset or market, sub-market by sub-market.
Albert Campbell
I’ll add to that, Rich. In our underwriting for those, we get our returns on their consulted basis with a less than 10 years underwriting with no kick-out value.
So it leaves us that opportunity. We choose to do that.
Richard Anderson
Right. And so also the number of tenants have put holes in the walls is also a function that I supposed to, but hopefully you don’t lease to many of those types of people.
Eric Bolton
No. We tightened our screening processes to help with that a little bit.
Richard Anderson
Okay, good. And last question is kind of big picture for Eric.
You guys with your Sun Belt interior focus have shown exactly what you want to show which is stability through different cycles, but I’m curious it is forever saying or do you foresee a period of time in the foreseeable future where coastal starts to be a winner again, and you just kind of have to kind of muscle your way through those things or do you think that there is something systemic about the business that puts the Sun Belt in interior locations and better position for a long time to come.
Eric Bolton
Well, we’re a big believer in the Sun Belt in the interior locations for several reasons. First and foremost it starts with really how do we want to - what sort of earnings profile are we trying to create over a full cycle.
What sort of earnings profile we’re trying to create over call it a 5 to 7, 8, 19 year horizon, and we think that ultimately, we can optimize that performance - that earnings performance over that horizon by first and foremost focusing our capital in markets where we think the demand is more likely than not to stay stable and or strong, and this region of the country arguably over that kind of a horizon is going to produce some of the best and least volatile job growth over that period of time. So we like the demand side dynamics in that regional country and choose to allocate our capital within that way.
Having said that we understand that these markets like all markets like coastal markets can have supply pressure from time to time, and what we tend to do is just really balance our capital, diversify our capital across this region and in order to try to mitigate some of that pressure. Whether it is both A and B pricing asset or A quality, B quality price assets, as well as suburban and urban locations and that’s what the part of the Post rational for us was the fact that it allows us to further diversify our footprint and further diversify our product and capital across what we see as a very dynamic growth region.
Richard Anderson
So the kind of leading question is, the next chapter of this Company years from now maybe isn’t to like tap into California or more on the East Coast as a means to balance that sort of discussion further or do you - you’re going to stay where you’re at, so to speak?
Eric Bolton
We like staying where we are Rich, and I’ll tell you the other attribute or the other factor that I really think a lot about is where can we take our shareholder capital and create a competitive advantage for it in what is a very, very competitive industry. And we think that a lot of these markets that we choose to compete in offer dynamics and competition frankly, that we can create a superior level of performance out of those markets and out of that create value.
Going to a lot of these more institutionally owned markets with pretty sophisticated capital and pretty sophisticated operators, the opportunity to really carve out a differentiation and carve out a competitive advantage I think becomes much more challenging. And ultimately, the value proposition is built around creating competitive advantage, holding on to that and then exploiting that.
And we think that the region we’re in allows that.
Richard Anderson
Okay, sounds good. Thanks, appreciate it.
Eric Bolton
You bet.
Operator
Thank you. And our next question comes from Drew Babin with Robert W.
Baird & Company. Please go ahead.
Your line is open.
Drew Babin
Good morning, guys.
Eric Bolton
Good morning, Drew.
Drew Babin
Couple of quick questions related to market balance, the large markets relative to the secondary markets. Do you plan to use your pipeline beyond 2017 to maybe increase your exposure in the secondary markets by using the [development there] [ph]?
Eric Bolton
What I would tell you, Drew, is really what we’re focused on increasingly is just focusing our capital on the best growth market opportunities or best growth markets that we see across the region that we focus on. And ultimately, it’s all about achieving diversification and balance, such that we create the best risk-adjusted earnings performance we can over the full cycle.
So some of these smaller markets that have very dynamic growth characteristics associated with the places like Charleston, South Carolina; Greenville, South Carolina, you’re going to continue to see us focus capital on markets like that. And of course, we continue to stay interested in markets like Atlanta, and Dallas, and Houston, and Phoenix as well so.
So it’s really more a function of where do we think the job growth, demand side of the equation is likely be the strongest, stay very balanced, and then balance within those markets both in more urban-oriented locations as well as some of the suburban or satellite locations, and then also be focused on kind of both an A and the B priced product. And ultimately, we think it sort of creates, as I said earlier, the earnings profile we’re after.
Drew Babin
And also, you talked before about Atlanta and Dallas as two potential markets, where you may manage exposure a little bit after the Post merger. In the disposition guidance for 2017, do you expect that some of those assets might be included in that number?
Is there anything specifically that is in there?
Albert Campbell
I think you can assume that some of those acquisitions will come - or dispositions I should say, will come out of those two markets. We are in the process of really evaluating that at this moment.
And we’ll have more say on that later this year. But with 14% of our NOI now coming out of the Atlanta area, that’s frankly a little more concentrated than I think we need to be long-term.
Drew Babin
Okay, just lastly on fourth quarter dispositions, what were the nominal and economic yields on those?
Albert Campbell
On the dispositions themselves, sort of the after all CapEx, if you will kind of a cash flow yield on the dispositions is around a 6.2. And I’m sorry, what was the other part of the - or nominal…?
Drew Babin
Just on nominal NOI as well.
Albert Campbell
Yes, it would…
Eric Bolton
Nominal was just over 7, that was for CapEx and [Nashville load] [ph].
Drew Babin
Right. All right, great.
Thanks, guys.
Operator
Thank you. And we’ll take our next question from Tayo Okusanya with Jefferies.
Please go ahead. Your line is open.
Omotayo Okusanya
Yes, good morning. Thanks for the details around the guidance.
Just a quick question, understand that the $20 million in G&A is built into it as kind of a ramp-up process, but could you talk about just total synergies that are built into the 2017 guidance of the annualized $60 million to $70 million you do expect from the Post deal?
Eric Bolton
Right, it’s a good question, Tayo. So 2017 is primarily focused on capturing the overhead.
The biggest impact will be from the overhead synergies of the $20 million. And as you mentioned, it will grow over the year.
But by the year-end, we will have captured on a runway basis that full $20 million that we talked about. And in addition to that, we will have some NOI synergies that we talked about that we will begin to capture more so in the third and fourth quarter they’ll begin grow.
And initially they will be focused on the pricing performance, in the revenue section and mostly revenue, a little bit of expense. But it’ll take 2018 to really to begin to see the most of that NOI additional synergy to be to be harvested.
And so, the majority of 2017 is overhead. We’d call it, $4 million to $6 million into our forecast for other synergies, NOI level synergies, and that’s really what we see.
And I will have - we also are seeing some balance sheet synergies, because as I mentioned, we got upgraded by S&P and right on the merger announcement. That immediately took our cost down on our financing instruments, our term loans, amount of credit.
And so we expect $2 million in interest savings right off the bat there. So those are really the three that you’ll see the impact in 2017, all three areas.
Omotayo Okusanya
And the total amount of that is what, like $25 million of the $60 million to $70 million you’re expecting or could you just give us a number?
Eric Bolton
I don’t have that total upright, but that’s about the right range.
Thomas Grimes
And Tayo, this is Tom. I’d say about, $20 million to $25 million for everything, including the cost of debt and NOI and overhead.
Omotayo Okusanya
That’s helpful. That’s good.
And then second question, fourth quarter results, I mean, some of your secondary markets did experience pretty negative Same Store to NOI growth. A lot of it seems to be driven by just huge increases in operating expense - Same Store OpEx.
Could you just talk a little bit about what’s kind of driving some of those big increases in some of those markets?
Eric Bolton
Primarily what you’re looking on the large number like Savannah is taxes to be honest with you, Tayo. And then on the coastal items, with Savannah, Jacksonville and Charleston, you also had some Hurricane Matthew storm mitigation expenses.
Omotayo Okusanya
Okay, that’s helpful. Okay.
Okay, that’s great. And then lastly, could you just talk a little bit about just kind of January, February trends in regards to asking rents and renewals and things of that nature?
Eric Bolton
Yeah, sure. For MAA average physical occupancy was 96.2% and consistent with last year’s record performance.
Exposures, we’re just under 7.2%, which is 22 bps better than last year. And, Tayo, that’s all current vacant plus notices, 60 days out.
And blended rents are up 2%, so about in line with where they were in the fourth quarter.
Omotayo Okusanya
Got you. Thank you.
Operator
Thank you. And our next question comes from Dennis McGill with Zelman & Associates.
Please go ahead. Your line is open.
Dennis McGill
Good morning, and thank you, guys. First question just had to do with the guidance for the full year, the 3% to 3.5% of top line.
How would that phase through the year by quarter, roughly?
Eric Bolton
That’s pretty consistent with a little increase as you move into the back part of the year, because of the synergies that we talked about on the Post side of the business. But pretty consistent with a little bit of ramping from that.
Dennis McGill
Okay. And then, the number you gave, I want to make sure I got this correctly, the 2.0% blended, that was the fourth quarter number just for legacy MAA?
Eric Bolton
2% on the rent - sorry, Dennis, I was looking at another side.
Dennis McGill
It’s okay. I think you disclosed 2% blended rent growth.
I just want to clarify, that was fourth quarter just for legacy MAA?
Eric Bolton
No, it was for the quarter legacy MAA. It was also January MAA.
Dennis McGill
Okay. And then, just for the fourth quarter then, can you split that between new lease and renewal as well?
Eric Bolton
Yes, sure. So new lease and renewal for MAA for the fourth quarter was renewals were 6.1 and then as expected new leases were about 1.4, so you have a seasonal slowdown there.
Dennis McGill
Yeah. And then also for the fourth quarter, any color you can provide legacy Post as far as Same Store metrics there, revenue, NOI as well?
Eric Bolton
Yeah, sure their revenue was 2.3, occupancy 95.8, and rent growth of 2.2.
Dennis McGill
Okay. And then, just last question, more a big picture, as everyone is trying to get their arms around supply and when it peaks, whether it’s this year, next year, mid-year, late year, et cetera, just curious, Eric, from your perspective, when we think about supply it’s beyond just when it’s delivered.
There’s a tail to it. There are some rolling effects that take some time to really get back to something more normal.
And wondered from your history and perspective in various markets, how do you think about that tail effect? When a product does come to market, how long does it really take to get back to a balance where the pricing pressure from new lease-ups and then when you cycle those original leases are fully out of the market?
Eric Bolton
Well I mean that how long it takes as a function of how much supply did come into the market, and then sort of how strong the demand side of the equation is, and just obviously ultimately just how strong the absorption is, I think that it’s going to vary, I think that we see nothing at this moment that causes us to believe that the demand side of the equation and demand dynamics are showing any signs of weakening. And so I think that if you take a market other than Houston where the demand side of the equation did in fact collapse, and so you take a market like Houston where it was the demand side of the equation that disrupted the calculus of what was happening in that market that’s a two-year kind of a process, I think, to kind of work through it as you wait for weak demand to take on what supply had been built up.
You take a market like say Nashville that’s been getting a lot of supply, but also having great job growth dynamics there. I think Nashville will see broadly is likely going to see a little weaker year this year.
But, again, as I was saying earlier the supply side of the equation looks to be showing signs of sort of tapping the brakes, and as long as the demand stay strong. I would think a market like Nashville is back sort of back on its feet in 2018, no problem.
So it just varies on those variables a little bit, but I think broadly speaking the markets where we see supply has caused moderation to occur. Absent any disruption on the demand side of the equation and absent any sort of acceleration of supply trends.
I think there’s reason to believe that 2018 shows a little more strength in 2017.
Dennis McGill
As you think about 2017 just in from first half, second half, is it fair to say as you guys look at that revenue pressure, most of that has already been felt from supply and you feel like the pricing pressure now has stabilized, which allows you to see pretty stable growth through the year?
Eric Bolton
Well, I think you have to kind of roll through it. We’ve had a number of new lease trends that have been under pressure for a while.
And ultimately it starts to have an impact on the renewal pricing as well, but so I think that - I think we’re going to see the pressure really throughout the course of 2017 and then by the time you get to early 2018, I think depending on the market, you could begin to see the pressure lesson. And as we sort of get a new lease pricing back on a healthy trajectory, and new lease prices kind of a leading indicator of what’s happening.
And right now the indication generally is more negative than positive, and I think it’s going to take the better part of this year to sort of get that trend reverse.
Dennis McGill
Okay. Sorry, so just last follow-up, I promise, but I want to make sure I understand this correctly, then.
If you’re assuming that new lease pressure does take some time through this year, then the fact that revenue growth is stable pretty much through the year is really only a function of the Post synergies, so absent the Post synergies, you’d see deceleration otherwise?
Eric Bolton
Well, yes. I mean, we would definitely see deceleration this year otherwise.
There’s no question about it, I think for all the reasons that we’ve just been talking about, I mean new lease truck trends are not as robust this year as they were last year, and ultimately that will mitigate what we’re able to do on renewals at some level. And so I mean the market conditions do suggest deceleration this year, and we are feeling that.
And I think that our situation is a little bit unique in that we do see some opportunity in the Post side of the portfolio that probably helps to mitigate some of that pressure and creates, what appears to be a more consistent performance year-over-year.
Dennis McGill
Okay. That makes a lot of sense.
I appreciate it. Thanks, guys.
Eric Bolton
Thanks, Dennis.
Operator
Thank you. And we will take our next question from Conor Wagner with Green Street Advisors.
Please go ahead. Your line is open.
Conor Wagner
Good morning. On the Post assets, what is the [Technical Difficulty] this year?
Eric Bolton
I’m sorry, Conor, you broke up there. We didn’t hear that question.
Conor Wagner
The impact of redevelopment on the Post assets this year, how much will that contribute to revenue growth in that portfolio?
Albert Campbell
I think about $1 million for the year for the full-year, I think it will take time for that program to ramp up and be as fully productive, as we expect it to be in 2018 and even going forward, but we’ve got, call it $1 million addition in 2017.
Conor Wagner
Great. Thank you.
And then what is your guys overall forecast for job growth for the year and how do you see that trending?
Eric Bolton
Well, broadly speaking, it seems like the economists generally are sort of gathering around an expectation of 150,000 to 200,000 jobs added a month, and we continue to believe that our markets in the south east, south west regions will get a good healthy component of that. So on a macro basis, we think that the employment trends in 2017 are pretty consistent to what we’ve been seeing in 2016.
Conor Wagner
Great. Thank you.
Then Eric, earlier you talked about taking shareholder capital to markets where you have competitive advantage. How does DC fit into that outlook for you?
Eric Bolton
Well, I also talked about the fact. We’re trying to create a balanced earnings profile and I think that the DC market has dynamics associated with it that are different and offer some diversification for us, and so we’re going to continue to evaluate that market and meanwhile harvest the opportunity that both of those assets that have some redevelopment associated with it and the recovery in that market have to offer harvest that opportunity for capital over the next couple years and then we’ll evaluate from there.
Conor Wagner
Great. Thank you so much.
Eric Bolton
Thanks, Conor.
Operator
Thank you. And our next question comes from Wes Golladay with RBC Capital Markets.
Please go ahead. Your line is open.
Wes Golladay
Good morning, guys. You mentioned that 14% in Atlanta might be a little too much.
What is your optimal limit for a market and over what time do you think Atlanta will get to that level?
Eric Bolton
I would generally tell you that once you get above 10% of the portfolio in a given market. I think it starts to create some nervousness at least on my part.
So there is no magic to that. I think to some degree a 10% or 12% allocation in a given market.
You have to also look at sort of how you diversify from a price point perspective yet, they look at how you diversify from a submarket perspective, you’ve to look at what is the redevelopment opportunity that may or may not exist in that portfolio. So there is a number of factors that we think about.
But I think that once you get to 10% I really start to challenge our thinking a little bit in terms of by doing more in that market and we have to have enough diversification there to support it. but I would think that for us, it’s probably a couple years or so to make that transition.
Wes Golladay
Okay. And looking at some of the one-off assets, it looks like you’re buying into supply.
How much competition are you seeing for these assets? Are some of these retrades?
Eric Bolton
Almost every one of them are retrade, and we still see - it’s not, I mean, it’s not as many people in the processes I will say a year or two ago, whereas when a product will come to market there will be 12 people in the tent, now there’s five or seven. But I can’t think of a deal that we bought for the last two years that wasn’t a rebound transaction where the deal had been on a contract before.
Wes Golladay
And what are your thoughts about Houston? Would you buy more into that market now that you’ve reduced your exposure?
Eric Bolton
We would, we would. We believe long in the merits of Houston long-term, its I think a much more diversified market that has been historically obviously still a lot of oil & gas there.
But yes, we’ve got capacity to do more Houston should the opportunities present themselves.
Wes Golladay
Okay. Thanks a lot and congrats on closing the merger.
Eric Bolton
Thanks.
Tim Argo
Thanks Wes.
Operator
Thank you. We’ll take our next question from Buck Horne with Raymond James.
Please go ahead. Your line is open.
Buck Horne
Hey, good morning, guys. Quick question for me on the balance sheet.
Just thinking about now that you’ve closed the deal and successfully you kind of rerated the balance sheet here. Do you think about utilizing a little bit more leverage potentially to drive some acceleration in the growth if you can do so without jeopardizing the new ratings you’ve got?
Is there any wiggle room to potentially use a little bit more leverage going forward?
Albert Campbell
Hey, Buck. This is Al.
We really want to protect the strength of our balance sheet for sure. We like who we are.
It’s big part of our - cost of capital is very important to produce some returns that we need for our investors. So we like that, so no significant change there.
I will tell you that this year if you take the amount of investment from the acquisitions we plan to make, funded with dispositions and internal capital. We are leveraging up a little bit, call it, between 50 to 100 basis points, still well below 35% debt to assets.
So it’s really very safe place to be. And I’ll tell you as you move into 2018 with development funding likely to decline some that will probably trickle back down a bit as our internal cash flow and earnings growth, internal cash flow picks up and even grows from there.
So summary of that is we like where we are. It may fluctuate a little bit around where we are as we execute our business plan, but no significant changes in that.
Buck Horne
Okay. And maybe following that with the internal cash flow you guys are looking to drive this here, how do you think about the payout ratio for the dividends?
And maybe longer-term what your target might be for the payout ratio?
Eric Bolton
Well, the way we look at is from a long-term perspective is what sort of growth rate in the dividend do we believe are our business model really supports. And right now the way we think about it, we think that we’ve got a model and a portfolio in place that will sustain sort of a core 6% earnings growth rate over a long period of time.
I mean, it will fluctuate a little bit year-over-year, but broadly we think we’ve got a business model supports that kind of 6% growth rate. And ultimately we think that, keeping the payout ratio kind of where it is, then by definition would mean kind of an annualized 6% growth rate in the dividend.
Now, as a consequence of some of the things that we’re doing with this Post portfolio and driving down our cost of capital, I mean, we may very well see our growth rate, I hope, start to improve a little bit beyond where it is right now. But ultimately, I think the dividend is more a function - and the growth in the dividend on a sustained recurring basis is more a function of sort of core organic growth rate of earnings that the company is supposed to - you know we don’t think about it so much in terms of payout ratio.
Buck Horne
Thanks, guys.
Operator
Thank you. And we’ll take our next question from Nick Yulico with UBS.
Please go ahead. Your line is open.
Nicholas Yulico
Thanks. Dallas is one market that screen says is having a fair amount of supply under way.
What are concessions like in the market? And are you seeing an impact to your pricing power yet?
Thomas Grimes
Hi, and Dallas is one that I probably should have mentioned as far as having supply come on board. We’re in net effect of rent shop, so the numbers that we have been giving you on our rents have been inclusive of concessions.
So I mean you’re seeing some people use them from time to time, half month or a month, something like that. But it is - we’ve had relatively good results in Dallas thus far.
But I think that’s one that has - we’ll be facing some supply headwind in 2017.
Nicholas Yulico
Okay, that’s helpful. Just last question, as you think about your Same Store expense guidance this year of 3% to 4%, is that growth likely to come down as you get into 2018 as you get some of the property-level expense synergies from Post?
So that let’s just assume here, Same Store revenue growth is the same next year, is this year we’re likely to see better same store NOI growth just from better expense growth?
Eric Bolton
I think it will be two areas you may see it come down, Nick, in the future. One is real estate taxes.
If you look at our expenses this year and what our guidance is, all the areas of our expenses other than real estate taxes are well under control. Taxes, which are about 30%, 35% of our operating expenses are the one pressure point, really Texas, Georgia, Tennessee in this year continue to be some pressure in those areas.
So I think that’s the one thing to consider. That over time hopefully will come down.
And Texas in particular is very aggressive. Think about Texas as backward looking thing.
2016 was a good year, there were a lot of transactions that support a low cap rate, so we expect values to push that. And the other areas we expect to be pretty modest under control.
And I do think as we move into 2018, 2019, we will see some capture from the Post side, which will hopefully blend the other areas, repair, maintenance and some of the other areas down as well. So in general, you’re correct with taxes and merger success.
Nicholas Yulico
That’s helpful. Thanks, everyone.
Operator
Thank you. And we’ll go ahead and take our next question from Jordan Sadler with KeyBanc.
Please go ahead. Your line is open.
Austin Wurschmidt
Hi, good morning. It’s Austin Wurschmidt here.
Just wanted to touch on acquisitions a bit, and what markets kind of screen to you that you would like to improve your diversification in terms of the balance of A and B product you have or urban-suburban exposure? And then also what does guidance assume in terms of the net contribution from acquisitions?
If you could provide any color there, it would be helpful.
Eric Bolton
Well, I’ll take the first one and let Al do the second. In terms of markets where I think that we may see some expansion, some growth and opportunities presents themselves with a market like Charlotte, where we don’t have a lot of exposure to the downtown more urban-oriented centers of Charlotte.
Most of our locations are suburban. And a lot of the supply pressure is taking place in Charlotte right now is more of the downtown, fringe downtown areas.
So I wouldn’t be surprised to see opportunities come out of that market, that fit the need that we have, somewhat similar story in Raleigh. And then also as Tom mentioned, Nashville is another market that I feel like offers that opportunity.
A lot of stuff going on in Nashville right now, downtown, The Gulch area, where we have no exposure to. And we like the performance dynamics of Nashville long term.
So those are three that come to mind offhand.
Albert Campbell
I’ll just add the spread for the year is pretty straightforward and simple in our model. We’d start from March through, say, November of the year, pretty even spread, a deal a month, something like that.
Also I mean there’s no science to that other than the spread that even as we feel the activity will likely be. And then I’d say, on the disposition side that’s different.
We have basically two waves that we expect something midyear and something later in the year, similar to what we did this year. That’s particularly how we do it.
Eric Bolton
And one thing to add on acquisitions, Austin, we’re assuming about 40% of those deals would be these lease-up opportunities that Eric’s talked about. So the blended yield may be perhaps a bit lower than a stabilized yield initially.
Albert Campbell
In 2017, growing 2018 and…
Austin Wurschmidt
That’s helpful. And then are you assuming that those get funded on the line or would you guys look to do a potential bond deal at some point in year to kind of pay - or cover the gap I guess in the dispositions and acquisitions?
Albert Campbell
Yes, initially certainly funded on the line. We look at the line as our liquidity for us to have flexibility move as we want to in acquisitions.
And then we move tactically throughout the year to - they have been working perfect. From our maturities to our capital plans, we’ll do one bond deal a year and use our line of credit to manage around that.
And so that’s kind of what we are thinking for 2017. We did postponed a deal we’re going to do late last year.
That’s kind of just moving into 2017. So we will likely early to mid-year be in the market potentially for fairly large deals to pay down our line of credit and to fund those acquisitions and development.
Austin Wurschmidt
That’s helpful. And then just last one for me.
Other income has been an item that has moved Same Store revenue around a bit and been a tailwind at certain points as well as a headwind. What do you assume in terms of growth in other income?
And is there any opportunity there within the Post portfolio to drive other income?
Eric Bolton
Broadly, and Tommy add some components to that. Broadly what we see in 2017 is, because of the components of other income, it’s going to grow a little slower than our rent growth.
And so that’s why what you saw in the fourth quarter, we had revenue growth of 36. We had effective rent growth of 39.
So some of the components of that are cable projects, are utility reimbursement program. They don’t tend to grow as fast or rents to some parts of the cycle.
And so, that’s actually taking our revenue going down just a bit in 2017.
Thomas Grimes
And, Jordan, where I would say the opportunity on the revenue side, on the Post is a sort of pricing practices, pricing management. We feel like there’s upside opportunity there despite the market and we believe the redevelopment is a real material opportunity.
Those are fundamental and those are long-term, and we’re excited about those opportunities.
Austin Wurschmidt
Great. Thanks, guys.
Operator
Thank you. And that does conclude our question-and-answer portion.
I will now hand it back over to your speakers for any additional or closing remarks.
Tim Argo
We don’t have any further remarks. Appreciate everybody for joining the call.
Operator
And that does conclude today’s program. We’d like to thank you for your participation.
Have a wonderful day and you may disconnect at any time.