Beverly Center Investor Event January 16, 2019 Evening’s Schedule
Time Subject Company Representatives 5:00 – 5:15 Welcome
5:15 – 6:00 Company Presentation William Taubman
6:00 – 6:45 Center Tour & Q&A William Taubman, Simon Leopold, Scottie Lee & Ralph Barnes
6:45 – 8:15 Cocktails & Dinner – Cal William Taubman, Simon Leopold, Mare Scottie Lee & Ralph Barnes
~ 8:30 Bus Drop-Off at Beverly Wilshire
Beverly Center - Investor Event– January 16, 2019 2 Taubman Team
William S. Taubman Chief Operating Officer William S. Taubman is chief operating officer of Taubman Centers, Inc. He is responsible for development, operations and leasing.
Mr. Taubman joined the company in 1986 from Oppenheimer & Co., Inc. in New York, where he was a financial analyst specializing in mergers and acquisitions. He is a graduate of Brown University where he received a bachelor's degree in Religious Studies, Philosophy and Russian Studies. He also holds a master's degree in Philosophy from Corpus Christi College of Cambridge University, Cambridge, England.
Mr. Taubman is a member of the Urban Land Institute (ULI) and the National Association of Real Estate Investment Trusts (NAREIT). He is immediate past Chairman and Chair of the Development Committee for the racial justice organization New Detroit. He also serves on the Board of Governors for the Museum of Arts & Design in New York, and is past Chairman of International Council of Shopping Centers (ICSC).
Simon J. Leopold Executive Vice President, Chief Financial Officer As Taubman’s chief financial officer and treasurer, Simon J. Leopold has senior responsibility for the company’s financial functions. He also is a member of the company’s Operating Committee. Simon joined Taubman in 2012 as treasurer and executive vice president, capital markets. He assumed the responsibilities of chief financial officer in 2016.
Previously, he served as managing director in the real estate investment banking groups at Deutsche Bank, KBW and UBS. Earlier in his career, Mr. Leopold worked in New York City government in a variety of urban planning and economic development positions in the Office of the Mayor, Department of City Planning and the city’s Economic Development Corporation.
Simon is a member of the National Association of Real Estate Investment Trusts (NAREIT), the International Council of Shopping Centers (ICSC), and the Urban Land Institute (ULI). He holds an undergraduate degree from the University of Michigan and an MBA from Yale University’s School of Management.
Beverly Center - Investor Event– January 16, 2019 3 Taubman Team
Scottie Lee Vice President, Strategy & Research In his role at Taubman, Mr. Lee is responsible for the Corporate Strategy, Research, Financial Planning & Analysis, and Financial Analytics functions for the Company. He is a member of the Company’s Core Leadership Team. He joined Taubman in 2007. Prior to Taubman, Mr. Lee was a management consultant at FTI Consulting/Helios Consulting (corporate strategy) and Vantage Point Consultants (legal) after working in the trading industry at Island Creek Capital and Alpart Trading.
Mr. Lee is a member of the International Council of Shopping Centers, including its North American Research Task Force, and the Urban Land Institute (ULI). He was a member of the inaugural class of ULI Michigan’s Larson Center for Leadership in 2012 and named to the 2015 class of “30 in Their Thirties” by dbusiness, Detroit’s Premier Business Journal. He holds an MBA with High Distinction from the University of Michigan’s Ross School of Business and a BS in Industrial Engineering & Management Sciences and Economics from Northwestern University.
Ralph Barnes General Manager, Beverly Center As the general manager of Beverly Center, Ralph Barnes is responsible for overseeing all functions related to the daily operations including retailer and community relations, marketing and sponsorship, as well as continuing to play a key role in high-profile, luxury leasing initiatives for Southern California’s premier fashion destination.
Ralph has over fifteen years in commercial property management and development. Since joining the center in 2008 Barnes had served as director of facilities and then as director of operations before taking on the role as general manager in 2013. Barnes currently serves as a Board member for the Los Angeles Chamber of Commerce, the West Hollywood Chamber of Commerce, the West Hollywood Travel & Tourism, and CAUSEUSA.
Beverly Center - Investor Event– January 16, 2019 4 Introduction to Beverly Center Beverly Center – 1982
• Opening in 1982, Beverly Center was developed by Sheldon Gordon, E. Phillip Lyon and A. Alfred Taubman on the site of a small amusement park called “Kiddieland”, an inspiration for Walt Disney’s “Disneyland” theme park • For the next 20+ years Beverly Center was recognized as the dominant retail asset in West L.A. and thrived as the surrounding community prospered Beverly Center - Investor Event– January 16, 2019 6 Beverly Center – 1982 - 2015
Beverly Center opened with Bullock’s and Broadway as In 1996, Bullock’s department store became a Macy’s store and department store anchors Broadway was converted into a Bloomingdale’s location
The renown escalators were inspired by those in the Pompidou The first Hard Rock Café in the country opened with the center in Centre in Paris 1982, averaging ~$9 million in annual sales over the next 15 years • Throughout the 1980’s and into the 2000’s Beverly Center was regarded as one of the top 10 regional mall assets in the country Beverly Center - Investor Event– January 16, 2019 7 Beverly Center - Location
•Source:Beverly City of Los Center Angeles Department is located of Transportation, at the Googlepoint Earth, where Tetrad Sitewisethe affluent communities of Hollywood, West Hollywood, Los Angeles and Beverly Hills come together, creating an urban retail community with a trade area of nearly 4 million people, as well as significant tourism Beverly Center - Investor Event– January 16, 2019 8 Brief Market History
● Beverly Center was regarded as one of the top 10 regional mall assets in the country from its opening in 1982 through the early 2000’s ● Exclusive fashion-forward brands and unique entertainment concepts served as the foundation of the center’s merchandise mix ● Beverly Center underwent targeted renovations in 1994, following the Northridge earthquake, and in 2000 where several aspects of the center were updated ● The opening of The Grove with Nordstrom in 2002, the expansion of Century City with a flagship Bloomingdale’s in the same period, and improved merchandising on the surrounding street retail (Melrose & Robertson) put competitive pressure on the center ● In 2014, Westfield Century City began construction on its major redevelopment and expansion ● In March 2016, Taubman announced the comprehensive reimagination of Beverly Center, with a goal of maintaining and improving the center’s position in the market, while increasing the asset’s long-term viability in the face of new, expanded and rejuvenated competition
Beverly Center - Investor Event– January 16, 2019 9 Investment Decision Investment Planning & Research – Understand Your Customer
MARKET RESEARCH PLANNING & DESIGN MERCHANDISING Kelton Studio Fuksas Ron Frasch & Robert Burke ● Engaged to better understand ● Chosen after winning an Associates the shopping habits of architectural competition ● Engaged to help curate a Angelenos and the key drivers conducted by Taubman, merchandise mix that would in their shopping preferences program was influenced by the create a modern, three- Kelton research dimensional shopping ● Employed a number of research experience techniques ● Fuksas’ projects include – Focus groups – Shenzhen Bao'an ● Instrumental in helping form our – Ethnography International Airport vision for the ground level of the – Online forums – Ferrari Headquarters and center, which features a – Surveys Research Center collection of restaurants – Conjoint analyses – New National Archives of featuring award-winning chefs France across cuisines, formats and ● Provided a comprehensive view – MyZeil Shopping Mall price points that are unique for of Beverly’s existing positioning (Frankfurt, Germany) a regional mall within L.A., strengths, weaknesses & opportunities to increase market share, which helped form a baseline for our decision-making process going forward
Beverly Center - Investor Event– January 16, 2019 11 Strengths & Strategic Improvements
Existing Strengths Areas of Strategic Improvement
● Only Location with High, Medium and Low Price ● Atmosphere/Outdoor Feel Points ● Parking & Navigation ● Strong Tourism Business ● Sit-down Restaurants ● Comprehensive Store Selection (including luxury) ● Fast-Casual Food ● Best Fast Fashion ● Anchor Store Redesign ● Power Shopping (quick trips to get a few things) ● Connect Center to Surrounding Neighborhood Deceleration from Sales Productivity Peak Levels
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Beverly Center - Investor Event– January 16, 2019 12 Full Scale Renovation – Identified Five Transformational Goals
◼ Add a new exterior perforated steel façade that captures light during all parts of the day
Contemporize the Interior & ◼ Reenergize the center with sun-lit space that blurs the lines between 1 inside and outside Exterior ◼ Add a programmable exterior LED lighting system, which allows the ✔ color of the center to coordinate with local events, similar to the Empire State Building
◼ New streetscape that combines modern architecture and drought- resistant greenery for a pleasant walking experience 2 Open the Center Up to the ◼ Add a row of street-level restaurants that open the center to the Surrounding Neighborhood vibrancy of West Third Street and embrace a pedestrian-oriented ✔ environment ◼ Transform lower-productivity, large-format spaces into vibrant chef- driven restaurants that draw traffic to the center from the surrounding 3 Dramatically Upgrade the neighborhood Collection of Food ◼ Upgrade food offerings, including fast-casual restaurants, that offer our ✔ shoppers a variety of tastes, prices and experiences ◼ A new, state-of-the-art smart parking system now guides visitors through the 3,000-space parking garage 4 Improve the Arrival, Parking and Departure Experience ◼ Add a valet off West Third Street to provide quick access to the street- ✔ level restaurants and retail ◼ Expand luxury footprint
◼ Revamp the merchandise plan and identify relevant brands for each 5 Elevate the Merchandising lifestyle and price point
◼ Add key flagship retailers to complete a collection of tenants that does ✔ not exist elsewhere in the market, and is very difficult to replicate Beverly Center - Investor Event– January 16, 2019 13 Investment Goals Goal #1: Contemporize the Exterior & Interior Before: Exterior – Beverly Blvd. & La Cienaga Before: 3rd Street & La Cienega
After: Exterior – Beverly Blvd. & La Cienaga After: 3rd Street & La Cienega
Beverly Center - Investor Event– January 16, 2019 15 Goal #1: Contemporize the Exterior & Interior
Before: Floor Openings & Skylight
Beverly Center - Investor Event– January 16, 2019 16 Goal #1: Contemporize the Exterior & Interior
After: Floor Openings & Skylight
Beverly Center - Investor Event– January 16, 2019 17 Goal #1: Contemporize the Exterior & Interior Before: Concourse – Level 7 Before: Grand Court
After: Concourse – Level 7 After: Grand Court
Beverly Center - Investor Event– January 16, 2019 18 Goal #2: Open the Center Up to Surrounding Neighborhood After: Arrival Experience Improvements • Streetscape Enhancements • Clearly Identified Entries • Third Street Valet Entry/Exit • New Restaurant Valet • Express Elevator to Roof Terrace
Before:
Beverly Center - Investor Event– January 16, 2019 19 Goal #2: Open the Center Up to Surrounding Neighborhood
• Transformed Bed Bath & Beyond and Grand Lux Cafe into an enviable line-up of five chef-driven full-service restaurants and four unique fast casual concepts on the New Third Street Valet Cedars-Sinai Pedestrian Connection street level to better connect to the vibrancy of West Third Street • The four fast casual restaurants should draw from Cedars-Sinai Hospital (est. 20,000 employees and visitors per day)
• VIP Room added to service our
stylist community, celebrities, Concept by entertainment industry professionals and influencers
Unique Fast Casual Dining Chef-Driven Full Service Restaurants Improved La Cienega Blvd. Entrance New VIP Room Beverly Center - Investor Event– January 16, 2019 20 Goal #3: Dramatically Upgrade the Collection of Food
We have dramatically upgraded the full service food offerings of the center by transforming a group of generic restaurants into a collection of unique, chef-driven concepts
Chef Akira Back Restauranteur John Restauranteur Laurent will open his Akira Kunkel opened his Halasz opened his James Beard Award Chef Josh Skenes Back Steak concept acclaimed restaurant newest concept, winner and Michelin- helms Saison, a at Beverly Center, a concept Yardbird FARMHOUSE, in March starred Chef Michael three Michelin star modern Korean Southern Table & 2018. The farm-to-table Mina opened his coastal restaurant recently steakhouse Bar, following restaurant has an Italian concept, Cal Mare ranked as one of the offering dry aged successful openings Executive Farmer, in November 2017 best restaurants in meat ranging from in Miami and Las Nathan Pietso, who the world and 30 days to 120 days Vegas oversees the farm fresh recognized as one of as well as sushi cuisine the two best restaurants in California
Concept by
Beverly Center - Investor Event– January 16, 2019 21 Goal #3: Dramatically Upgrade the Collection of Food
Third Street and the 6th floor now feature popular fast-casual restaurants, offering our shoppers a variety of tastes, experiences and prices
Relocation
Eggslut is known for Artisan bakery café Marugame Udon is a Tocaya Organica is a Easy’s is a fast-casual burger serving the “ultimate featuring fresh artisan popular Japanese udon Mexican fast-casual café by Eggslut creator Alvin breakfast sandwich breads and homemade restaurant on Kuhio food concept by Chris Cailan and L.A. restauranteur in Los Angeles.” pastries, sandwiches and Avenue in Waikiki, Oahu, Paciello and Mio Jeremy Fall, owner of Nighthawk Customers have salads. All offerings are Hawaii and throughout Danilovic. The Breakfast Bar, recently featured waited for more than homemade daily from Japan. The restaurant restaurant offers in the L.A. Times an hour in line for scratch with the highest offers fresh ingredients modern organic gourmet egg quality ingredients. and its authentic noodle Mexican food and is sandwiches. Eggslut Pitchoun is family owned making process mirrors committed to serving Level 6 is now open at and offers a true French the method used in sustainable ingredients Beverly Center and dining experience Sanuki, a region in Japan as well as fresh, never has more than 100K known for its udon frozen Instagram followers noodles hormone/steroid/anti biotic-free meats
Beverly Center - Investor Event– January 16, 2019 22 Goal #4 - Improve the Arrival, Parking and Departure Experience
Parking Deck Valet ● Advanced technology helps shoppers ● A new valet was added to service the easily enter/exit and navigate the deck restaurants on the street level ● The renovation increased the lighting in ● LED lights with programmable capabilities the deck and improved the aesthetics can match the exterior mesh LED lighting ● The deck was re-designed to improve ● VIP valet was renovated to be consistent navigation, traffic flow and customer with the overall project, including an orientation express elevator to Level 7
Level 2 Parking Deck
Level 2 & 3 ParkingRendering Decks Level 1 Restaurant Valet
Beverly Center - Investor Event– January 16, 2019 23 Goal #5: Elevate the Merchandising
Added retail offerings across every price level and fashion profile, Beverly Center has maintained and perfect for the cross-shopping practices of our modern customer expanded its premier collection of luxury tenants
Two new flagship tenants are being added to create a unique shopping experience that cannot be replicated in the market
In 2020, The Webster, a high-end designer Zara has opened a new 28,000 flagship boutique, will take the space square foot flagship location – their previously occupied by Capital Grille largest in the L.A. market
Beverly Center - Investor Event– January 16, 2019 24 Goal #5: Upgrade the Merchandising
Beyond the new tenants joining the center, many of the most important brands have decided to expand their existing presence within the center coincident with the renovation
Brand Major Store Investment at Beverly Center
Recently opened at the center and is already planning to expand due to its strong performance
Expanded twice already, currently at 4,900 SF and now in the process of expanding for a third time to 7,900 SF including adding a men’s store
Expanded from 2,800 SF to 4,300 SF
More than doubled their store size from 2,000 SF to 4,300 SF and converted from a men’s only to a dual gender store
Built a brand new store and converted from Versace Collection to Versace
Expanded from 4,600 SF to 6,200 SF
Opened a completely remodeled new store in Spring 2018
Expanded from 6,800 SF to 8,300 SF in June 2018
Doubled their store size from 2,800 SF to 5,700 SF in July 2018
More than doubled their store size from 2,100 SF to 4,500 SF in December 2017
Beverly Center - Investor Event– January 16, 2019 25 Conclusion Post-Investment Data Points
Early Indications of Success ● Delivered on schedule & on budget ● Improved customer and vehicular traffic ● Achieved our five transformational goals ● Strong initial restaurant performance ● 3Q18 YTD sales per square foot up ● Widely embraced by customers and double digits tenants ● 3Q18 YTD total sales up double digits
Sales Productivity Growth Stage Pre-Investment Post- Investment CAGR: +10.5%
CAGR: +4.2%
CAGR: -6.3%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 3Q18 Est.
Beverly Center - Investor Event– January 16, 2019 27 Conclusion
• Following our investment, we believe Beverly Center has resumed its trajectory to reestablish itself as one of the 10 best retail assets in the country • Sales per square foot are already approaching peak historical levels and are expected to grow significantly • Beverly Center will be one of about 10 assets in the country with 20 full luxury tenants • This project has completely reset the long-term trajectory of the iconic Beverly Center
Beverly Center - Investor Event– January 16, 2019 28