INVESTOR DAYS LONDON - JUNE 13-14, 2019 THE KEY ISSUES WE WANT TO ADDRESS DURING THESE TWO DAYS
1 2 3 THE WFD ACQUISITION OUR BALANCE SHEET, OUR STRATEGY & THE FUTURE DISPOSALS & IN THE US AND UK OF RETAIL DIVIDEND SUSTAINABILITY
4 5 IS OUR EUROPEAN WILL THE UR WAY GROWTH WORK IN THE SUSTAINABLE? FORMER WFD BUSINESS? THE WESTFIELD ACQUISITION The Westfield acquisition fits our strategy perfectly
Concentration Differentiation Innovation
88% of ex-WFD GMV in Unique platform of assets Complementary expertise Flagship malls in key global in design, development, markets marketing, digital and commercial partnerships
A unique opportunity to create a premier global operator
2019 INVESTOR DAYS 4 The Westfield acquisition rationale
1. Design the future of retail
2. Build the strongest portfolio to deliver consistent growth
3. Largest development pipeline to drive growth with flagship projects
4. Capitalize on best in class management teams
5. Synergies will deliver additional earnings and cash flows
6. Transaction to: Unlock NAV and REPS accretion €3.0 Bn of disposals to preserve strong balance sheet
7. Efficient structure for shareholders
8. Common strategy - clear action plan – best in class governance Westfield World Trade Center
2019 INVESTOR DAYS 5 The Westfield acquisition: what is different
1. Transaction diverted WFD senior management from US operations → delays in leasing and projects; no ex-UR input pending closing
2. Deterioration of retail environment in US and UK more severe than anticipated
3. Occupancy in recent developments
4. Some major projects need to be reviewed (size, returns)
Westfield London
2019 INVESTOR DAYS 6 THE FUTURE OF RETAIL The future of retail
THIS?
2019 INVESTOR DAYS 8 The future of retail
OR THIS?
2019 INVESTOR DAYS 9 The future of retail
Online efficiency
Proximity Destination convenience experience
2019 INVESTOR DAYS 10 WHAT HAS CHANGED SINCE 2016? Online sales penetration has continued to increase…
611 600 35.0% 551
30.0% 500 489
433 25.0% 400 336 20.0%
300 290 254 15.0% 207 12.1% 10.9% 200 180 9.8% 8.8% 10.0% 149 7.8% 127 134 7.0% 110 6.1% 5.3% 100 88 4.7% 70 3.6% 4.1% 2.9% 3.4% 5.0% 2.4% 2.0%
- 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Online market (€ Bn) Online sales as % of total sales
(1) Euromonitor internet retailing data for France, United States, UK, Italy, Czech Republic, Poland, Slovak Republic, Germany, Spain, Sweden, Denmark, Finland, Austria, Netherlands 2019 INVESTOR DAYS 12 … but varies from country to country
17.0%
14.7% 13.7% 13.7%
11.7% 11.0%
9.5% 8.8%
6.8% 6.7% 6.7%
5.2% 4.6%
UK Denmark NL US Czech Rep Germany Sweden France Slovakia Poland Austria Italy Spain
2019 INVESTOR DAYS 13 Amazon still represents ~50% of US online retail market…
Top 10 US Companies, Ranked by Retail Ecommerce sales share, 2018(1)
49.1%
6.6%
3.9%
3.7%
1.5%
1.3%
1.2%
1.2%
1.2%
1.1%
(1) According to eMarketer report – Top 10 US companies ranked by retail Ecommerce sales share, 2018. 2019 INVESTOR DAYS 14 … and no other major pure-player has emerged
Net Sales (€ Bn)(1) 166.2 (2)
128.8 117.3
91.3
69.7
5.4 2.6 (2) 2.2 2014 2015 2016 2017 2018
(1) With EUR/USD and EUR/GBP rates as at the end of each year (2) Including Online stores, Third-Party Seller Services (fees), Subscription services and Other 2019 INVESTOR DAYS 15 Online profitability remains very low
Operating Margin (%)
10 8
6 5 North America(1) 4 4 4 3 3 4 3 2 1 2 2016 2018 -0 2014 2015 2017 -2 -1 -2 -2 -2 -3 -3 -3 International
-6
(1) Including Whole Foods, Third-Party Seller Services, and Subscription services 2019 INVESTOR DAYS 16 Why?
Customer Cost Cost acquisition Low margins of delivery of returns costs
2019 INVESTOR DAYS 17 Customers are not free on the internet!
Cost per click Conversion Customer on Google rate(2): acquisition or Facebook(1): cost: $1-2 ~1.6% >$60
Marketing costs as % of sales 2.9%
2.2% 1.8% 1.4%
2015 2016 2017 2018
(1) AdEspresso; WordStream. (2) Wolfgang Digital; WordStream; ECN. Reflects median level conversion. 2019 INVESTOR DAYS 18 Distribution costs are rising…
Distribution costs as % of sales in UK
12.5% 12.1%
11.7% 11.1%
10.6% 10.3%
9.5%
2012 2013 2014 2015 2016 2017 2018
2019 INVESTOR DAYS 19 … as are costs of returns
% of items returned(1) 20%
8%
Bricks and mortar Ecommerce
50% 14% of millennials of UK consumers admit ordering say they have been items they intend “penalised” to return(2) for their returns(2)
(1) eMarketer (2) Barclaycard survey 2019 2019 INVESTOR DAYS 20 Margins are low for commodity products
9 kg
€0.83 EST. MARGIN €418
2019 INVESTOR DAYS 21 Stores have value
Customer Brand Differentiation Profitability experience awareness
2019 INVESTOR DAYS 22 Stores offer enhanced customer experience…
Westfield Century City, Nordstrom Champs Elysées, Louis Vuitton
Carré Sénart, Galeries Lafayette London, Harrods
2019 INVESTOR DAYS 23 … and their value increases with the “halo effect”
+37% +12% “When we close a store, we fire a customer.
Uplift in web traffic Average increase in online When we close a store we see in catchment sales when a store opens when a store opens(1) in the same catchment(2) our online sales in that particular market decrease.
So we have to expand £68 86% the productivity metric of a store to include online sales.”
Additional spend per Of digital spend still Paula Price, CFO of Macy's household from a click touches a store(2) and collect customer(2)
(1) ICSC – “The halo effect: How Bricks Impact Clicks” report (2) Revo studies 2019 INVESTOR DAYS 24 Retail is now 100% connected: offline goes online…
Westfield Stratford City, Zara
Gropius Passagen, H&M
2019 INVESTOR DAYS 25 … and online goes offline
Westfield UTC, Warby Parker
Shopping City Süd, Daniel Wellington
2019 INVESTOR DAYS 26 2019 INVESTOR DAYS 27 How high will online penetration grow?
(1) ~20% ? 30%? 40%? 50%?
(1) 2023 weighted forecast for countries where URW has presence: 18.6% - Euromonitor Stats 2019 INVESTOR DAYS 28 WHATEVER THE PENETRATION OF ONLINE SALES…
PHYSICAL RETAIL WILL STILL BE ESSENTIAL!
2019 INVESTOR DAYS 29 Retailers need to strategically allocate capital to:
Selectively expand their network Walmart Intelligent Retail Lab, Levittown, NY
Allocation of Capex (in $ Bn) Upgrade and transform stores
3.3 4.0 4.2 4.5 5.2
3.2 4.1 2.2 Invest in IT, supply chain and innovation 0.9 0.3
2.0 2.2 1.4 1.6 0.8
2015 2016 2017 2018 2019e
IT, supply chain and innovation New stores and clubs Remodels
2019 INVESTOR DAYS 30 FOR URW, WHATEVER THE PENETRATION OF ONLINE SALES, OUR CHALLENGE IS:
TO GROW MARKET SHARE
2019 INVESTOR DAYS 31 This is what we have done so far…
URW tenant sales consistently outperform the EU market +30.4%
+5.7%
100
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
URW Average National Sales Indices
Rebased to 100 in 2006 – cumulative growth 2019 INVESTOR DAYS 32 Retail apocalypse: myth or reality?
2019 INVESTOR DAYS 33 Not all retail is gloomy!
2019 INVESTOR DAYS 34 Even Amazon is opening stores…
# of Amazon physical retail locations 527
Amazon Books, Westfield UTC 492
1 35 2010 2015 2019
Amazon stores Wholefoods
2019 INVESTOR DAYS 35 … and not just Amazon
US DNVBs(1) Brand # Stores Brand # Stores
Warby Parker 74 MinimI by Moe’s 11 Bonobos 53 Chubbies 11 Untuckit 37 Reformation 11 Peloton 34 Sundance 11 Sierra Trading Post 33 B8ta 8 Sugarfina 33 Gorjana 8 Westfield Topanga, Peloton Westfield UTC, Gorjana Shinola 30 Outdoor Voices 8 Fabletics 25 Stance 8 Nespresso 25 Knot Standard 7 Indochino 21 Ministry of Supply 7 ELF 20 Rye 51 7 Casper 17 Blue Nile 6 Ballard Designs 13 Monica + Andy 6 Morphe Brushes 13 The Black Tux 6
Westfield Century City, Warby Parker Westfield Garden State Plaza, UNTUCKit
(1) Green Street Advisors Data 2019 INVESTOR DAYS 36 Where do they open? Flagship destinations!
43% of DNVB US stores are in "A" malls(1)
Other Mixed-Use 6% 4% Power Centers 2% Lifestyle/ Community Ctrs A+ 7% 28%
610 Malls A++ 44% 49% High Street stores 37%
A 17%
A- B+ or lower 4% 2%
(1) Green Street Advisors Data 2019 INVESTOR DAYS 37 Successful retailers are upsizing
Les Quatre Temps, Sephora Westfield London, Zara
Westfield Valley Fair, new Apple
2019 INVESTOR DAYS 38 New categories are emerging
Automotive
Parly 2, Mercedes-Benz Vélizy 2, Nissan
Food markets
Westfield London, Ichiba Westfield Mall of the Netherlands, Fresh!
Leisure & Entertainment
Westfield Century City, Dreamscape Westfield World Trade Center, Gloveworx
2019 INVESTOR DAYS 39 And people actually love to shop!
78% 95% >1.2 Bn of consumers of generation Z visits every year prefer to shop and 75% of Millennials in store(1) visited a Mall in Q1(2)
(1) ICSC Report - https://www.icsc.org/uploads/t07-subpage/ICSC-America-Marketplace.pdf (2) ICSC Report - Gen Z Shopping Behaviors Support Retail Real Estate – September 2018 2019 INVESTOR DAYS 40 We have the best assets and the right strategy
Concentration Differentiation Innovation
2019 INVESTOR DAYS 41 We have the best assets and the right strategy
Concentration Differentiation Innovation
Flagships Re-designing URW Lab Re-tenanting URW Link Re-marketing Digital Strategy
2019 INVESTOR DAYS 42 What makes Flagships unique?
Large and dynamic destination Unique position and service offering
>100,000 sqm +17% Iconic Entertainment Average GLA PP vs National Average(1) architecture & dining
16 Mn 4.8 Mn Connectivity Social experience Average Footfall Average Catchment Population(1) & events
Westfield Century City La Maquinista Vélizy 2 Forum des Halles
Westfield Stratford City Les Quatre Temps Westfield World Trade Center Westfield London
(1) CACI Retail Market 2019 – European perimeter only 2019 INVESTOR DAYS 43 Our presence in 2012
134 shopping centres in 14 countries GREATER PARIS AREA
LOS ANGELES
SAN DIEGO
2019 INVESTOR DAYS 44 Our presence today
92 shopping centres in 12 countries GREATER PARIS AREA
Standing Delivered / acquired
LOS ANGELES
SAN DIEGO
2019 INVESTOR DAYS 45 Creating a focused, high-quality portfolio
2012 2015 2018
# of shopping centres 134 106 92
Average Footfall 10.6 11.1 12.5 (in Mn)
Average NRI (in € Mn) 17.1 22.3 30.4
Average GMV (in € Mn) 302 451 716
2019 INVESTOR DAYS 46 More dominant assets
Assets with GMV above €1Bn FY-2015 FY-2018
Forum des Halles Forum des Halles(1) La Part-Dieu La Part-Dieu Les Quatre Temps Les Quatre Temps Parly 2 Parly 2(1) Vélizy 2 Vélizy 2(1) Mall of Scandinavia Carré Sénart(1) Westfield London CentrO Mall of Scandinavia Donau Zentrum CentrO Shopping City Süd Donau Zentrum Shopping City Süd Arkadia(1) Westfield Century City(1) Westfield Garden State Plaza Westfield Valley Fair(1) Westfield World Trade Center(1) Westfield London(1)
Westfield Stratford City Westfield Century City
(1) Asset extended / delivered 2019 INVESTOR DAYS 47 More valuable assets
Average GMV of retail assets(1) (€ Mn)
706
627
500
268 233
163 137
URW EU Peer 1 EU Peer 2 EU Peer 3 EU Peer 4 US Peer 3
(1) Estimates based on companies filings. EUR/GBP exchange rate as at end 2018. (2) EU Peers include: Eurocommercial , Hammerson (flagships), Klepierre, Intu Properties, Eurocommercial 2019 INVESTOR DAYS 48 More high footfall locations in Europe(1)
Top 30 European assets by footfall(1)
52 49 43 19 URW assets 39 among the Top 30
31 30 27 25 21 21 21 20 20 20 20 19 19 19 19 18 18 18 17 17 17 16 16 15 15 15
(1) In countries where URW operates, in Mn visitors, 2018. Source: Sites Commerciaux June 2019. Evry 2 has been added with the footfall disclosed on the landlords website, and Shopping City Süd footfall restated to include the entire complex 2019 INVESTOR DAYS 49 Best connected locations
% of EU assets connected to Metro or Tram lines(1)
67%
44% Forum des Halles
30% 29%
11%
URW Peer 1 Peer 2 Peer 3 Peer 4
Westfield Stratford City
(1) Based on assets referenced in CACI Retail Markets 2019 ranking - Property portfolio as at 12/31/2018 - Peers include: Klepierre, Hammerson, Intu, Eurocommercial 2019 INVESTOR DAYS 50 Wealthiest catchment areas in Europe…
Average Purchasing Power per Capita of URW’s catchment areas:
+17.3% vs. national average(1) 17.3%
13.8%
(2) 4.5% 4.0% Peers’ average 3.2% 3.0% 2.9% +3.8%
Peer 7
URW Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6
-3.2%
(1) CACI Retail Markets 2019 ranking for property portfolio as at 12/31/2018. Gross average - Only where URW has presence (2) Peers include Landsec, Eurocommercial, Klepierre, Altarea Cogedim, British Land, Hammerson, Intu 2019 INVESTOR DAYS 51 … across all markets… 13%
Purchasing Power per Capita of URW’s catchment areas vs. national average compared to peers -2% 26% Nordics
17% 37% 3% 30% -4% UK -7% 17% Germany
4% Central Europe
4% 20% France 5%
Peers’ Spain URW average(2)
(1) CACI Retail Markets 2019 ranking for property portfolio as at 12/31/2018. Gross Average (2) Peers include Landsec, Eurocommercial, Klepierre, Altarea Cogedim, British Land, Hammerson, Intu 2019 INVESTOR DAYS 52 … as well as in the US
Median Household Income(1) ($) Household Income Growth(2) 11.1% 10.9% 80,175 9.8% 9.7% 73,012 8.5% 70,865 70,525 67,977
Household Density(3) Mall GLA per Household(1)
1,667 1,614 23.7 24.8 1,275 20.4 1,091 17.4 17.7 931
URW Peer 1 Peer 2 Peer 3 Peer 4 BofAML Global Research “Asessing the Mall Indusrtry VII” October 2018 (1) In a seven-mile ring (2) Estimation on 5-Yr horizon (3) Per square mile Peers include: TCO, SPG, MAC, PEI 2019 INVESTOR DAYS 53 We have the best assets and the right strategy
Concentration Differentiation Innovation
Flagships Re-designing URW Lab Re-tenanting URW Link Re-marketing Digital Strategy
2019 INVESTOR DAYS 54 Re-designing: We have continuously upgraded our portfolio…
86 79 75 18 16 14
Carré Sénart
68 61 63
UR WFD URW
% GMV Extended / Refurbished since 2009 % GMV Built since 2009 Westfield Century City
2019 INVESTOR DAYS 55 Re-tenanting: …and proactively improved our tenant mix
Rotation rate(1) (%)
13.2 13.2 13.3 13.0 12.6 12.5
12.0 11.5 11.3 11.0 11.0
10.0
9.0 8.0 8.1 8.0 7.0 7.0
6.0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
(1) Rotation rate: (number of re-lettings + number of assignments and renewals with new concepts) / number of stores. Short term leases are excluded in 2017 and 2018. Continental Europe only. 2019 INVESTOR DAYS 56 Re-tenanting: …and proactively improved our tenant mix
In Austria In Austria In Poland In Germany In Poland In Slovakia In the UK st In Sweden In the UK 1 In Austria In the US In country
In the UK In France In the US In the US
In France In France In Sweden In Austria In France In the UK In Germany In Spain
In Czech Rep In France In the UK In Germany In Sweden
Selected signatures since 2015 2019 INVESTOR DAYS 57 Re-marketing: great events draw great footfall
Westfield World Trade Center, Nicki Minaj Concert Westfield London, 10th Birthday Concert Arkadia, Birthday
Westfield Stratford City, The VOID Star Wars Vélizy 2, Les Tables de Vélizy Opening Centrum Chodov, Extension opening
2019 INVESTOR DAYS 58 We have the best assets and the right strategy
Concentration Differentiation Innovation
Flagships Re-designing URW Lab Re-tenanting URW Link Re-marketing Digital Strategy
2019 INVESTOR DAYS 59 Innovation: unlocking further value
Increase desire Improve impact Increase agility for consumers for tenants for operations
2019 INVESTOR DAYS 60 A strong organization and ecosystem to deliver it
Build business relationship Lead innovation & transformation Early-stage investments with startups
Understand: monitor trends 43 proofs of concept in URW Investing €40 Mn in leading assets Venture Capital funds Transform: harness partnerships and innovation 11 long-lasting partnerships blisce/ to reshape our assets 100+ URW employees involved Involve: foster the culture of innovation within the Group
2019 INVESTOR DAYS 61 Accelerating through digital and data
Frictionless Additional Better experience for revenues for operations for visitors tenants URW
IT investment and infrastructure
9.5 Mn 73 loyalty members Connect Assets(1)
(1) Equipped by the end of 2019 2019 INVESTOR DAYS 62 The best assets and the right strategy drive superior LFL NRI growth
LFL NRI growth (%) 4.7% 4.3% 4.0% 3.8% 3.9% 3.4%
2013 2014 2015 2016 2017 2018
URW Peer 1 Peer 2 Peer 3 Peer 4
(1) Peers include: Intu, ECMPA, Klepierre, Hammerson 2019 INVESTOR DAYS 63 The best assets and the right strategy drive superior LFL NRI growth
LFL NRI cumulative growth 2013-18 (%) +26.6
+22.0
+12.4
+9.4
+1.3
URW LI ECMPA HMSO INTU URW Peer 1 Peer 2 Peer 3 Peer 4
Rebased to 100 in 2012 - Peers include: Klepierre, Intu Properties, Hammerson, Eurocommercial 2019 INVESTOR DAYS 64 A FEW WORDS ON DEVELOPMENT Developments have been a key source of growth and value creation for UR and WFD
Deliveries 2010-19(1): Valuation uplift(2): €14.3 Bn €2.6 Bn (3) Retail: €12.7 Bn +28.5% Offices: €1.6 Bn
Wroclavia Mall of Scandinavia Westfield Stratford City
(1) At 100% (2) Group Share - computed on the brownfield & redevelopment projects (excluding extensions & renovations) (3) Valuation uplift as % of the indexed project costs, at disposal or 3 year after delivery 2019 INVESTOR DAYS 66 And URW has the largest potential for the future
We have the largest development pipeline(1) … and it is highly diversified in the industry (€ Bn)…
Ext/Renovation Office/other 11.9 4% 16% Brownfield Office/other(2) 42% Brownfield retail
€11.9 Bn
2.6 1.1 1.0 0.7 0.6 38% Ext/ Renovation Retail URW EU Peer US Peer 2 US Peer 3 US Peer 4 US Peer 5
Note: Development pipeline for global retail peers (€bn) as at December 31, 2018 with a EUR/USD rate on 12/31/2018 at 1.148 Expected cost on proportionate basis (1) Peers include: Taubman, Macerich, Simon Property, Klepierre, Broofield - Source: Companies’ filings (2) Including residential and hotel units 2019 INVESTOR DAYS 67 THE QUESTION: HOW MUCH MORE RETAIL DOES THE MARKET NEED?
URW’S ANSWER: A ‘‘FRESH LOOK’’ AT OUR PIPELINE
OPPORTUNITY
FLEXIBILITY
2019 INVESTOR DAYS 68 Opportunity: the best standing assets have the best potential for densification Mixed-use projects in pipeline: • 21% of projects • 36% of URW TEC(1) • 42% of GLA
High footfall assets Highly connected urban assets Expert teams Land already owned: Solna • Low or no cost • No competition In the future, our parking lots! And we control timing
Westfield Stratford City, Cherry Park
2019 INVESTOR DAYS 69 Opportunity: just what is needed in retail… and much more!
Our current pipeline… … is even more diverse than it appears
Dining & Leisure ext / renovation Ext/ Renovation 9% Retail Retail ext/ renovation Offices ext / renovation 38% 22% 4%
Residential 3rd parties Brownfield Offices & (1) 7% Others 16% Residential brownfield 80% 50% 5% €11.9 Bn 2.5 Mn sqm (2) Retail Retail Hotels 5% 4% Ext/ Renovation Offices & Others Offices brownfield Retail brownfield 11% 42% 28% Brownfield Retail
Dining & Leisure brownfield 10%
(1) Including residential and hotel units (2) Including ext/ renovation/ densification and greenfield/ brownfield 2019 INVESTOR DAYS 70 Flexibility: phasing and funding optionality
Non-committed pipeline: 76% Phasing of extensions: • Leisure and dining, then retail Westfield Milan Pre-letting requirements before launch of works Right-sizing of retail Flexible funding models for residential • JV partners • Sale of building rights Potential to adapt to market conditions & construction costs Rosny 2
2019 INVESTOR DAYS 71 THE PREMIER GLOBAL DEVELOPER AND OPERATOR OF
FLAGSHIP SHOPPING DESTINATIONS
2019 INVESTOR DAYS 72 THE PREMIER GLOBAL DEVELOPER AND OPERATOR OF
FLAGSHIP DESTINATIONS
2019 INVESTOR DAYS 73 THANK YOU URW.COM
2019 INVESTOR DAYS 75