A RETAIL REAL ESTATE COMPANY
GLENDALE GALLERIA ALA MOANA CENTER
SOUTHWEST PLAZA FASHION SHOW WILLOWBROOK (NJ)
INVESTOR PRESENTATION MARCH 2017 OVERVIEW
S&P 500 REAL ESTATE INVESTMENT TRUST (a) MISSION STATEMENT Headquarters Chicago Own and operate best-in-class retail properties that provide an outstanding environment and Retail Properties 127 experience for our Communities, Retailers, Employees, Consumers and Shareholders. States 40 CORE VALUES Inline & Freestanding GLA 56 million • H – Humility Total Retail GLA 121 million • A – Attitude • Equity Market Cap $22 billion D – Do The Right Thing Enterprise Value $40 billion • T – Together • O – Own It
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WATER TOWER PLACE PIONEER PLACE PARK MEADOWS OAKBROOK CENTER
a) As of December 31, 2016. 2 EXECUTIVE TEAM
Marvin Levine, Sandeep Mathrani, Executive Vice President and Chief Executive Officer Chief Legal Officer
Shobi Khan, Brian McCarthy President and Executive Vice President, Chief Operating Officer Asset Management
Michael Berman, Julie Knudson, Executive Vice President and Senior Vice President and Chief Financial Officer Chief Human Resources Officer
Alan Barocas, Tara Marszewski, Senior Executive Vice President, Leasing Senior Vice President, Chief Accounting Officer
Richard Pesin, Executive Vice President, Anchors, Development and Construction 3 IRREPLACEABLE RETAIL REAL ESTATE IN THE U.S. GGP owns 100 of the top 500 regional shopping centers in the U.S.
Sales and NOI Contribution(a)
Top Retail Properties Sales PSF <10K SF(b) % of Company NOI(c)
Top 10 $835 24% Top 30 $737 51% Top 50 $664 69% Top 100 $582 96%
a) Retail properties ranked by trailing 12 months NOI ending December 31, 2016. Table excludes Christiana Mall. b) Sales per square foot for trailing 12 months ended December 31, 2016 for comparable tenants occupying space less than 10,000 square feet. 4 c) Company NOI for 2016 HIGH QUALITY RETAIL PROPERTIES
TOTAL U.S. RETAIL REAL ESTATE GLA GLA % of Total SF Per Capita (in millions) High Quality GLA High Quality(a) Regional Shopping Centers 495 1.6 40% High Quality(b) Open-Air Centers 732 2.3 60% Total 1,227 3.9 100%
Type Quality
Regional High Quality Shopping Centers Retail Real Estate 1.1 Billion SF 1.2 Billion SF 3.4 SF Per Capita 3.9 SF Per Capita
Mid to Low Quality High Quality Retail Real Estate Open-Air Centers 6.3 Billion SF High Quality Open-Air Centers 19.7 SF Per Capita Regional Shopping 6.4 Billion SF Centers 20.2 SF Per Capita
GGP controls 8.2% of all High Quality Retail Real Estate
a) “High Quality” represents malls rated B+ or better by Green Street Advisors. b) “High Quality” represents strip centers rated with a Trade Area Power score of 75-100 by Green Street Advisors. 5 THE U.S. IS OVER RETAILED
U.S. has the highest GLA per capita by far among all developed countries
(a) RETAIL REAL ESTATE GLA AND SALES PER CAPITA 30 $14,614 $16,000
$14,000 25 24 $10,953 $12,000 20 $9,239 $8,437 $10,000 15 $8,000 16 $6,495 $6,323 $6,000 10 11 $3,282 $4,000 RETAIL SF PER CAPITA 5 5 $2,000 4 RETAIL SALES PER CAPITA 3 2 0 $0 U.S. Canada Australia U.K. France China Germany Retail SF per Capita Retail Sales per Capita (in U.S. Dollars)
U.S. Regional Shopping Center Productivity Average Center Sales/SF (b) At Current $493 Assuming Reduction of GLA by 25% $602
a) ICSC Country Fact Sheets. b) At Current” is the average center sales per square foot data from Green Street Advisors, while “Assuming Reduction of GLA by 25%” removes 25% of lowest quality centers by 6 productivity and redistributes sales to remaining centers. CHANGING THE VOCABULARY RETAIL REAL ESTATE
Retailers, restaurants and entertainment venues are property type agnostic and want to be in high quality retail locations that attract heavy traffic.
Services Entertainment
Restaurants Grocery RETAIL REAL ESTATE Sources of Demand
7 CHANGING THE VOCABULARY RETAIL REAL ESTATE Shoppers want to see new uses at regional shopping centers
% OF CUSTOMERS WHO WOULD LIKE TO SEE RETAIL TYPE IN A REGIONAL SHOPPING CENTER 57% 55% 54%
49%
Bowling Alley Spa Grocery Store Brewery
GGP is adding these new uses to centers
Source: GGP Strategy & Analytics, 2017. Sample Size= 14,000 8 HIGH QUALITY CENTERS DRAW MORE TRAFFIC
GGP began tracking property-level traffic during the 2016 holiday shopping season.
Within the GGP portfolio, A properties draw 1.6X more shoppers than B+ properties and 2.1X more shoppers than B properties.
AVERAGEAverageWEEKLY WeeklyTRAFFIC Traffic BYby CenterMALL GGradeRADE BLACKBlackFRIDAY Friday2016 2016- – JANUARY January2017 2017
Sources: GGP proprietary traffic cameras installed in 95 properties. 9 REGIONAL SHOPPING CENTERS DRAW BETWEEN 50% AND 150% MORE MARKET RESIDENTS Within the largest U.S. markets, regional shopping centers consistently draw more market residents than other retail property types. AVERAGE VISITS TO CENTER PER QUARTER (a) BASED ON RESIDENTS AGE 18+ IN TOP 10 DMAS; CENTER GRADE BY GREEN STREET GGP REGIONAL SHOPPING CENTERS OTHER TYPES
695K Analysis of 371 retail centers covered in Nielsen Local data within the 10 most-populated DMAs in the United States reveals that residents (age 18+) 613K shop regional shopping centers nearly 2 times more often than lifestyle centers or strip centers, depending on the grade of center as determined by Green Street Advisors.
GGP centers within these markets draw approximately 2.5 times the number of residents compared to lifestyle or strip centers on a 376K quarterly basis.
265K 276K 238K
NUMBER OF 24 81 84 48CENTERS 62 72 GGP A CENTERS B CENTERS C OR LOWER LIFESTYLE STRIP CENTERS CENTERS CENTERS CENTERS
(a) Source for visits data is Nielsen Local 2014, 2015 Notes: DMAs Used: Atlanta, Boston, Chicago, Dallas, Houston, Los Angeles, New York City, Philadelphia, San Francisco/San Jose, Washington, DC. Excludes Mills and outlet properties 10 RETAIL CATEGORY SHARE OF GLA
U.S. retail is over-indexed in department stores and under-indexed in entertainment, food & beverage, and big box compared to other regions
Retail Category Share of Total GLA
50% 47% 46% 45%
40% 40% 36%
29% 30% 27% 23% 21% 20% 17% 17% 15% 15% 16% 15% 13% 13% 13% 11% 11% 10% 8% 8% 10% 6% 6%
0% Department Store Mini Major/Big Box Entertainment & Specialty Food & Beverage Non-Retail
USA UK Australia Asia Middle East
Cistri/Urbis. Regional data represents centers larger than 300,000 sf. 11 CURATION IS KEY TO PERFORMANCE RESTAURANTS PERSONAL CARE
HOME FURNISHINGS ENTERTAINMENT
APPAREL BIG BOX
ELECTRONICS GROCERY
12 EXPERIENTIAL RETAILING Experiences and changing consumption patterns are having a major impact on retail formats. In response to this change, GGP looks for opportunities to update centers by remerchandising and refreshing to maintain a differentiated consumer experience and thus a sustainable competitive advantage for the future.
Events & Social Sustainable Relevance Cycle Environment
Unique Curating the Food & Product Retail Entertainment Offerings Experience Differentiated Dominance in Experience Trade Area
Technology Sustainable Constant Competitive Evolution Advantage
13 OAKBROOK CENTER DEVELOPMENT CASE STUDY
Master Renovation (2012 & 2013 & 2014) Building H (2013) • Full mall common area space cosmetic update • Redevelop Bloomingdale's Home into The Container Store, Pirch, • Construction of three glass box pavilions ideal for and inline GLA. incubating newer retail concepts • Development Cost: $13.8M • Installation of a video screen in the common area for • Yield: 11% community events
Development 2011-2016 Development Results Development Pipeline
14 OAKBROOK CENTER DEVELOPMENT CASE STUDY
Neiman Marcus Restaurant Development (2013) Hotel (2014) • Convert lower level of Neiman Marcus into 2 restaurants, • Ground lease of existing hotel site to new operator for remodel. followed by multi-million dollar interior renovation of Neiman Marcus store.
Development 2011-2016 Development Results Development Pipeline
15 OAKBROOK CENTER DEVELOPMENT CASE STUDY
Parking Improvements (2016) Theater (2016) • Enhance customer experience and path-to-purchase through • Addition of new theater and food hall along with Building G parking improvements (aesthetic, architectural, and technological common area renovation. elements).
Development 2011-2016 Development Results Development Pipeline
16 OAKBROOK CENTER DEVELOPMENT CASE STUDY
Net value creation of $470M assuming a 3.75% cap rate on incremental NOI
2011 2017 Forecast Total Change % Change
Total Sales $349M $479M $130M 37% Sales PSF <10K SF $694 $992 $298 43%
Development 2011-2016 Development Results Development Pipeline
17 OAKBROOK CENTER DEVELOPMENT CASE STUDY
Continuing the Evolution of Oakbrook Sears + Edutainment Provider + Fitness Center Redevelop Sears box into downsized Sears, inline GLA, and an edutainment provider. Fitness center concept to replace Sears Auto Center footprint.
rendering subject to change
Development 2011-2016 Development Results Development Pipeline
18 REDEVELOPMENT ACTIVITIES